=========================
                        SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   -----------
                                    FORM 10-Q
                                   -----------

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

                         FOR THE QUARTERLY PERIOD ENDED

                                  JUNE 30, 2001

                                       OR

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                      FOR THE TRANSITION PERIOD FROM      TO

                         COMMISSION FILE NUMBER 1-16061

                              KEY3MEDIA GROUP, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

      DELAWARE                                                       95-4799962
      (STATE OF INCORPORATION)              (I.R.S. EMPLOYER IDENTIFICATION NO.)


      5700 WILSHIRE BLVD., SUITE 325
      LOS ANGELES, CA                                                     90036
      (ADDRESS OF PRINCIPAL EXECUTIVE                                (ZIP CODE)
      OFFICES)


       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (323) 954-6000


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. YES [X] NO [ ]


As of August 13, 2001, there was 65,063,000  shares of the  Registrant's  voting
common stock, par value $0.01 per share,  issued and  outstanding.  No shares of
any other class of the capital stock of the Registrant  are currently  issued or
outstanding.


<PAGE>


                              KEY3MEDIA GROUP, INC.

                                TABLE OF CONTENTS


                                                                         Page(s)
                                                                         ------

Part I.   Financial Information

  Item 1.  Financial Statements:


       Condensed Consolidated Balance Sheets as of December 31, 2000
          and June 30, 2001 (Unaudited).............................         2

       Condensed Consolidated Statements of Operations for the
          Three and Six Months ended June 30, 2000 and 2001
          (Unaudited)...............................................         3

       Condensed Consolidated Statements of Cash Flows for the
          Six Months ended June 30, 2000 and 2001
          (Unaudited)...............................................         4

       Condensed Consolidated Statement of Changes in Shareholders'
          Equity and Comprehensive Income for the Six Months Ended
          June 30, 2001 (Unaudited).................................         5

        Notes to Condensed Consolidated Financial Statements
          (Unaudited)...............................................         6

  Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations................................        21

  Item 3.  Quantitative and Qualitative Disclosures About Market
           Risk.....................................................        26

Part II.    Other Information

  Item 1.  Legal Proceedings........................................        26

  Item 2.  Exhibits and Reports on Form 8-K.........................        27



                                      -i-
<PAGE>


             CAUTIONARY LEGEND REGARDING FORWARD-LOOKING STATEMENTS

     Some of the  information in this Form 10-Q may  constitute  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the  Securities  Exchange  Act of 1934,  both as  amended.  These
forward-looking statements are subject to various risks and uncertainties. These
forward-looking statements include, without limitation, statements regarding our
future  business  plans and  strategies  and our future  financial  position  or
results of operations, as well as other statements that are not historical.  You
can find many of these  statements  by  looking  for words like  "will",  "may",
"believes",  "expects",  "anticipates",  "plans" and "estimates" and for similar
expressions.

     Because forward-looking  statements involve risks and uncertainties,  there
are many factors that could cause the actual results to differ  materially  from
those  expressed or implied.  These  include,  but are not limited to,  economic
conditions  generally and in the information  technology industry in particular,
the timing of our events and their  popularity  with  exhibitors,  attendees and
advertisers,  technological  changes  and  developments,   competitors,  capital
expenditures and factors  impacting our international  operations.  In addition,
the sections entitled "Risk Factors" and  "Management's  Discussion and Analysis
of Financial  Condition and Results of Operations" in the Prospectus  Supplement
dated June 22, 2001 that we filed with the SEC under Rule 424(b) relating to our
11.25%  Senior  Subordinated  Notes Due 2001 and the section  entitled  "Item 1.
Business - Certain Factors That May Affect our Business" in the Annual Report on
Form  10-K for the year  ended  December  31,  2001  that we filed  with the SEC
contain  important  cautionary  statements  and discuss many of the factors that
could materially  affect the accuracy of our  forward-looking  statements and/or
adversely  affect our business,  results of operations  and financial  position.
These statements and discussions are incorporated herein by reference.

     If there are any subsequent written or oral forward-looking statements made
by us or any person acting on our behalf,  they are qualified in their  entirety
by the  cautionary  statements  and  factors  contained  or  referred to in this
section. We do not undertake any obligation to release publicly any revisions to
any forward-looking statements to reflect events or circumstances after the date
of this document or the date on which any subsequent  forward-looking  statement
is made or to reflect the occurrence of unanticipated events.


<PAGE>


                          PART I FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                              KEY3MEDIA GROUP, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                   DECEMBER 31,     JUNE 30,
                                                                       2000           2001
                                                                   -----------     -----------
                                                                                    (unaudited)
<S>                                                                <C>             <C>
ASSETS
Current assets:
    Cash and cash equivalents ...............................      $   109,914     $    33,019
    Accounts receivable, net ................................           80,254          58,907
    Prepaid event expenses ..................................            4,958           8,274
    Deferred income taxes ...................................            1,745           1,745
    Other current assets ....................................            2,970           3,552
                                                                   -----------     -----------
        Total current assets ................................          199,841         105,497
Property and equipment, net .................................           12,342          15,428
Intangible assets, net ......................................          843,999         829,082
Deferred financing costs and other assets ...................            9,151          13,066
                                                                   -----------     -----------
        Total assets ........................................      $ 1,065,333     $   963,073
                                                                   ===========     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Current maturities of long-term obligations .............      $     1,584     $        --
    Accounts payable ........................................            8,485          11,888
    Accrued expenses ........................................           49,872          27,997
    Deferred revenue ........................................           97,886         108,077
    Other current liabilities ...............................           14,887           8,855
                                                                   -----------     -----------
        Total current liabilities ...........................          172,714         156,817

Deferred income taxes .......................................           85,030          85,030
Long-term obligations (net of current maturities) ...........          367,081         300,000
Other long-term liabilities .................................            8,568              81

Commitments and contingencies

Shareholders' equity:
     Common stock ...........................................              650             651
     Additional paid-in-capital .............................          422,171         418,770
     Retained earnings ......................................           38,810          22,234
     Accumulated comprehensive loss .........................           (3,836)         (3,966)
     Deferred compensation ..................................          (25,855)        (16,544)
                                                                   -----------     -----------
        Total shareholders' equity ..........................          431,940         421,145
                                                                   -----------     -----------
        Total liabilities and shareholders' equity ..........      $ 1,065,333     $   963,073
                                                                   ===========     ===========

</TABLE>

                             See accompanying notes.

                                      -2-
<PAGE>


                              KEY3MEDIA GROUP, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                       For the three months                  For the six months
                                                                            Ended June 30,                     ended June 30,
                                                                    ---------------------------         ---------------------------
                                                                       2000              2001              2000               2001
                                                                    ---------         ---------         ---------         ---------
<S>                                                                 <C>               <C>               <C>               <C>

Net revenues ...............................................        $  93,916         $ 115,656         $ 115,063         $ 123,673
Operating expenses:
    Cost of production .....................................           25,484            37,482            33,896            40,576
    Selling general and administrative .....................           26,790            27,989            47,520            52,666
    Stock based compensation ...............................              537             2,065               668             5,224
    Depreciation and amortization ..........................            9,263             9,685            18,455            18,766
                                                                    ---------         ---------         ---------         ---------
                                                                       62,074            77,221           100,539           117,232
                                                                    ---------         ---------         ---------         ---------
Income from operations .....................................           31,842            38,435            14,524             6,441
Other income (expenses):
    Interest expense .......................................           (7,008)          (11,989)          (12,669)          (25,338)
    Interest income ........................................              292             1,123               382             2,479
    Other income (expense), net ............................               (5)            6,656                65             6,638
                                                                    ---------         ---------         ---------         ---------
                                                                       (6,721)           (4,210)          (12,222)          (16,221)
                                                                    ---------         ---------         ---------         ---------
Income (loss) before income taxes and
    extraordinary item .....................................           25,121            34,225             2,302            (9,780)
Income tax provision (benefit) .............................            9,972            17,509               913            (2,513)
                                                                    ---------         ---------         ---------         ---------
Income (loss) before extraordinary loss
    on retirement of debt ..................................           15,149            16,716             1,389            (7,267)
Extraordinary loss on retirement of debt
    (net of tax benefit of $3,220) .........................               --            (9,309)               --            (9,309)
                                                                    ---------         ---------         ---------         ---------
         Net income (loss) .................................        $  15,149         $   7,407         $   1,389         $ (16,576)
                                                                    =========         =========         =========         =========
Net income (loss) per share - Basic:
Net  income (loss) before extraordinary item ...............        $    0.28         $    0.25         $    0.03         $   (0.11)
                                                                    ---------         ---------         ---------         ---------
Extraordinary loss on retirement of debt ...................               --             (0.14)               --             (0.14)
                                                                    ---------         ---------         ---------         ---------
Net income (loss) per share ................................        $    0.28         $    0.11         $    0.03         $   (0.25)
                                                                    =========         =========         =========         =========
Net income (loss) per share - Diluted:
Net income (loss) before extraordinary item ................        $    0.28         $    0.23         $    0.03         $   (0.11)
Extraordinary loss on retirement of debt ...................               --             (0.13)               --             (0.14)
                                                                    ---------         ---------         ---------         ---------
Net income (loss) per share ................................        $    0.28         $    0.10         $    0.03         $   (0.25)
                                                                    =========         =========         =========         =========
Shares used in computing basic
     net income  (loss) per share (see Notes
     2 and 5) ..............................................           53,358            66,035            53,358            65,521
Shares used in computing diluted
     net income  (loss) per share (See Notes
     2 and 5) ..............................................           53,358            72,680            53,358            65,521

</TABLE>

                             See accompanying notes.

                                      -3-

<PAGE>


                              KEY3MEDIA GROUP, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          For the six months
                                                                                             ended June 30,
                                                                                        2000             2001
                                                                                     ----------       ----------
<S>                                                                                   <C>             <C>
Cash flows from operating activities:
   Net income (loss) ...........................................................      $   1,389       $ (16,576)
   Adjustments to reconcile net income (loss) to net cash provided by
     operating activities:
     Extraordinary loss on retirement of debt ..................................             --          12,529
     Depreciation and amortization .............................................         18,455          18,766
     Stock-based compensation ..................................................            668           5,224
     Non-cash interest expense .................................................             --          11,431
     Loss on disposal of fixed asset ...........................................             61              --
     Foreign exchange (gain)/loss ..............................................            (64)             79
     Deferred income taxes .....................................................            773              --
   Changes in operating assets and  liabilities, net of effect from
     acquired company:
     Accounts receivable .......................................................           (394)         24,286
     Prepaid event expenses ....................................................         (8,966)         (1,301)
     Other current assets ......................................................            442            (409)
     Other assets ..............................................................            (78)           (505)
     Accounts payable ..........................................................         (5,974)          1,820
     Accrued expenses ..........................................................          5,593         (22,245)
     Deferred revenue ..........................................................         45,511             611
     Other liabilities .........................................................             88         (16,201)
                                                                                      ---------       ---------
   Total adjustments ...........................................................         56,115          34,085
     Net cash provided by operating activities .................................         57,504          17,509
                                                                                      ---------       ---------
Cash flows from investing activities:
   Purchase of property and equipment ..........................................         (1,747)         (6,331)
   Net cash received in a business combination .................................             --           7,728
     Net cash provided by (used in) investing activities .......................         (1,747)          1,397
                                                                                      ---------       ---------
Cash flows from financing activities:
   Net transactions with Softbank, ZDI and affiliates excluding non-cash
     transactions with affiliates ..............................................          2,680             --
   Increase/(decrease) in bank overdraft .......................................          3,626             --
   Proceeds from the exercise of options to purchase common stock ..............             --             290
   Repayment of long-term obligations under credit facility ....................             --        (300,000)
   Retirement of zero coupon senior debentures and accreted interest ...........             --         (83,576)
   Proceeds from issuance of senior subordinated notes..........................             --         300,000
   Payment of costs associated with the issuance of long-term
     obligations ...............................................................             --         (12,425)
                                                                                      ---------       ---------
     Net cash provided by (used in) financing activities .......................          6,306         (95,711)
                                                                                      ---------       ---------
Effects of exchange rate changes on cash .......................................            (99)            (90)
                                                                                      ---------       ---------
Net increase (decrease) in cash and cash equivalents ...........................         61,964         (76,895)
Cash and cash equivalents at beginning of period ...............................          5,570         109,914
                                                                                      ---------       ---------
Cash and cash equivalents at end of period .....................................      $  67,534       $  33,019
                                                                                      =========       =========
Supplemental cash flow disclosures:
   Interest paid ...............................................................      $   5,661       $  22,331
   Income taxes paid ...........................................................             --              --
  Noncash Financing Activity:
   Additional  paid-in capital resulting from anticipated  stock issuance
     in connection with a busines acquired .....................................      $      --       $     397
Reduction in notes payable to affiliates as a result of bank borrowings
     retained by affiliates.....................................................      $     150       $      --

</TABLE>


                             See accompanying notes.

                                      -4-
<PAGE>


                              KEY3MEDIA GROUP, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND
           COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2001
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                      ADDITIONAL               ACCUMULATED       TOTAL
                                            COMMON     PAID-IN     RETAINED   COMPREHENSIVE  COMPREHENSIVE   DEFERRED
                                            STOCK      CAPITAL     EARNINGS   INCOME (LOSS)  INCOME (LOSS) COMPENSATION  TOTAL
                                          ---------   ----------   ---------  -------------  ------------- ------------ --------
<S>                                       <C>         <C>          <C>          <C>           <C>          <C>         <C>
Balance at December 31,
  2000 ................................   $     650   $ 422,171    $  38,810    $  (3,836)                $ (25,855)   $ 431,940
Proceeds from the exercise
  of options to purchase
  common stock ........................           1         289           --           --                        --          290
Forfeiture of stock options ...........          --      (2,422)          --           --                     2,422           --
Adjustment in fair value of
     options requiring variable
     accounting .......................          --      (1,665)          --           --                     1,665           --
Amortization of deferred
     compensation .....................          --          --           --           --                     5,224        5,224
Common stock issued for business
     acquired (see Note 5) ............          --         397           --           --                        --          397
Foreign currency translation
     adjustment .......................          --          --           --         (130)         (13)          --         (130)
Net loss ..............................          --          --      (16,576)          --      (16,576)          --      (16,576)
                                          ---------   ---------    ---------    ---------    ---------    ---------    ---------
Balance at June 30, 2001 ..............   $     651   $ 418,770    $  22,234    $  (3,966)   $ (16,706)   $ (16,544)   $ 421,145
                                          =========   =========    =========    =========    =========    =========    =========

                             See accompanying notes

                                      -5-
</TABLE>


<PAGE>


                              KEY3MEDIA GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1.  BASIS OF PRESENTATION, ORGANIZATION AND NATURE OF OPERATIONS

     These  unaudited  condensed  consolidated  financial  statements  have been
prepared  by  the  management  of  Key3Media  Group,  Inc.  (the  "Company")  in
accordance with generally accepted  accounting  principles for interim financial
information  and the  applicable  rules and  regulations  of the  Securities and
Exchange  Commission.  Accordingly,  they do not  include  all  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  However,  in the  opinion  of  management,  the  interim
financial  statements reflect all adjustments  necessary for a fair presentation
of the results  for the periods  presented.  The results of  operations  for the
interim periods are not  necessarily  indicative of the results of operations to
be expected for the full year.

     These unaudited condensed  consolidated financial statements should be read
together  with the  Company's  Annual  Report  on Form  10-K for the year  ended
December 31, 2000 and the audited  consolidated  financial  statements contained
therein.

     The  Company  is  a  leading  producer  of   business-to-business   events,
principally  trade shows,  conferences,  and customized  marketing and education
programs with operations in the United States, Canada, Europe, Japan, Mexico and
Australia.

     In  March  2000,   Ziff-Davis  Inc.  ("ZDI")   announced  its  decision  to
recapitalize and spin-off its trade show and conference  business to the holders
of ZDI's ZD common stock as part of a comprehensive restructuring. On August 18,
2000,  ZDI completed the spin-off of the Company,  which had been formed in 2000
to hold ZDI's  trade show and  conference  business.  In  addition to the 53,358
shares of the  Company's  common  stock that were issued to holders of ZD common
stock in the spin-off,  the Company  raised  approximately  $75,000  through the
issuance of zero coupon senior  debentures with  detachable  warrants and raised
approximately  $70,000 through the sale of 11,642 shares of its common stock for
$6 per share.  Concurrently,  the Company's  wholly owned  subsidiary  Key3Media
Events, Inc.  ("Key3Media  Events") borrowed $330,000 from a syndicate of banks.
The proceeds of these transactions were used to repay Key3Media Events' $382,000
of existing  indebtedness  and to fund a $43,000  cash  dividend to ZDI, and the
balance was retained for working capital and general corporate purposes.

     Prior to June 1, 2000,  ZDI  provided  to the Company  certain  centralized
administrative  services  including but not limited to, legal, tax and financial
accounting,  management  information,  telecommunications  and human  resources.
Since June 1, 2000, the Company has provided these services for itself.  Charges
for the services provided by ZDI were generally based upon utilization; however,
where measuring  utilization was impractical,  ZDI used  percentages  based upon
headcount or revenue in determining  charges for these  services.  Management of
the  Company  believes  the  allocated  cost of the  centralized  administrative
services  approximated  the cost it would have  incurred if it had  obtained the
same administrative services from unaffiliated third parties.


                                      -6-

<PAGE>

                              KEY3MEDIA GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1.  BASIS OF PRESENTATION, ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED)

     A portion of the cost of administrative  services charged to the Company by
ZDI included amounts for certain cash management and treasury activities.  These
activities  included the investment of surplus cash and the issuance,  repayment
and repurchase of short-term and long-term debt. The Company generally  remitted
its cash receipts (other than receipts of foreign  operations or operations that
were not wholly  owned) to ZDI,  and ZDI  generally  funded the  Company's  cash
disbursements (other than disbursements of foreign operations or operations that
were not wholly  owned),  on a periodic  basis.  The cash funding  described was
accounted for within Division  Capital and, upon the April 13, 2000 signing of a
loan agreement with two banks, the Company assumed  responsibility  for its cash
management and treasury activities.

     The Company recorded $0 and $2,490 for centralized  administrative  charges
from ZDI for the six months ended June 30, 2001 and 2000, respectively.

     In June 2001, the Company refinanced its long-term obligations as described
in Note 4.


2.  COMPUTATION OF NET INCOME (LOSS) PER SHARE

     Basic net income (loss) per share is calculated  using the weighted average
of the number of common shares  outstanding,  including the assumed  issuance of
shares to ZDI shareholders in connection with the spin-off,  as if such issuance
occurred at the beginning of 2000.  Additionally  at June 30, 2001, the weighted
average of the number of common  shares  outstanding  includes  the 2,955 shares
that will be  initially  issued to  SOFTBANK  America  Inc.  ("SB  America")  in
consideration  for the Company's  acquisition of SOFTBANK Forums Japan, Inc ("SB
Forums") when the  transaction  is approved by the Company's  shareholders  at a
special meeting on August 30, 2001, as more fully described in Note 5.

     Diluted  net  income  (loss)  per share is  calculated  using the  weighted
average  of the  number of common  shares  outstanding,  including  the  assumed
issuance of shares to ZDI  shareholders in connection  with the spin-off,  as if
such  issuance  occurred at the  beginning  of 2000 and the initial  issuance of
shares to SB America Inc. in connection  with the  acquisition of SB Forums plus
the dilutive effect of stock options and warrants, calculated using the treasury
method.  These dilutive securities were excluded from the calculation of diluted
net  loss  per  share  as  the  effect  of  their   inclusion  would  have  been
antidilutive.

     A summary of the shares used to compute historical earnings per share is as
follows:

<TABLE>
<CAPTION>
                                                              For the three months       For the six months
                                                                 ended June 30,             ended June 30,
                                                            -----------------------     ---------------------
                                                                2000          2001        2000         2001
                                                            -----------------------     ---------------------
<S>                                                           <C>          <C>          <C>          <C>
Net income (loss) .......................................     $ 15,149     $  7,407     $  1,389     $(16,576)
                                                              --------     --------     --------     --------
Weighted average common shares ..........................       53,358       66,035       53,358       65,521
                                                              --------     --------     --------     --------
Denominator for basic calculation .......................       53,358       66,035       53,358       65,521
                                                              --------     --------     --------     --------
Net income (loss) per share-basic .......................     $   0.28     $   0.11     $   0.03     $  (0.25)

Weighted average effect of anti-dilutive securities:
      Warrants ..........................................           --        2,752           --           --
      Stock options .....................................           --        3,893           --           --
                                                              --------     --------     --------     --------
Total weighted average effect of anti-dilutive securities:          --        6,645           --           --
                                                              --------     --------     --------     --------
Denominator for diluted calculation .....................       53,358       72,680       53,358       65,521
                                                              --------     --------     --------     --------
Net income (loss) per share-diluted .....................     $   0.28     $   0.10     $   0.03     $  (0.25)
                                                              ========     ========     ========     ========
</TABLE>

                                      -7-

<PAGE>


                              KEY3MEDIA GROUP, INC.

                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                             STATEMENTS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


3.  COMPREHENSIVE INCOME (LOSS)

    The components of comprehensive income (loss) were as follows:

<TABLE>
<CAPTION>
                                               For the three months        For the six months
                                                  ended June 30,              ended June 30,
                                              ----------------------     -----------------------
                                                2000          2001         2000          2001
                                              --------      --------     --------      --------
<S>                                           <C>           <C>          <C>           <C>

Net income (loss) .......................     $ 15,149      $  7,407     $  1,389      $(16,576)
Other comprehensive adjustment:
   Foreign currency translation..........         (116)           13         (332)         (130)
                                              --------      --------     --------      --------
Total comprehensive income (loss)........     $ 15,033      $  7,420     $  1,057      $(16,706)
                                              ========      ========     ========      ========
</TABLE>


4.  LONG-TERM OBLIGATIONS

    Long-term Obligations consist of the following:

<TABLE>
<CAPTION>
                                                                   June 30,
                                                            ----------------------
                                                              2000          2001
                                                            --------      --------
<S>                                                         <C>           <C>
Note payable to Ziff-Davis Inc.-related party ..........    $232,002      $     --
Notes payable to Banks .................................     150,000            --
11.25%, senior subordinated notes ......................          --       300,000
                                                            --------      --------
                                                             382,002       300,000
Less current maturities ................................          --            --
                                                            --------      --------
Total ..................................................    $382,002      $300,000
                                                            ========      ========
</TABLE>

     On  June  26,  2001,  the  Company  issued  $300,000  of  unsecured  senior
subordinated  notes (the "Notes")  that mature on June 15, 2011.  The Notes bear
interest  at a rate of 11.25% per annum,  payable  semi-annually  on June 15 and
December 15 of each year.  The net proceeds  from the offering of the Notes were
approximately $292,000, after deducting the underwriting discount and other sale
expenses. These net proceeds and cash on hand, were used by the Company to repay
its existing term loan bank  borrowings and to repurchase and retire zero coupon
debentures issued in August 2000 in connection with the spin-off from ZDI.

     The  Notes  may be  redeemed  beginning  on June  15,  2006  at an  initial
redemption  price of 105.625% of the principal  amount,  plus accrued and unpaid
interest.  The redemption price declines ratably each year after 2006 to 100% of
their principal amount, plus accrued and unpaid interest to the redemption date,
beginning on June 15, 2009. In addition, the Company may redeem a portion of the
Notes in one or more  redemptions  prior to June 15, 2004 using  certain  equity
proceeds  as long as the  aggregate  principal  amount of the Notes  outstanding
after each  redemption  is at least  $195,000.  The Notes are  guaranteed by the
Company's  wholly owned  subsidiary,  Key3Media  Events,  Inc., as to principal,
premium, if any, and interest. In addition, the Notes are subordinated to all of
the  Company's  senior  indebtedness  (as  defined)  and  will  be  structurally
subordinated  to all liabilities of the  subsidiaries  that do not guarantee the
Notes. If the Company acquires or creates new  subsidiaries,  in most cases they
will be required to guarantee  the Notes.  The Notes contain  various  financial
covenants  including,  amongst other things,  (i)  limitations  on dividends and
other restricted  payments,  (ii) limitations on the incurrence of indebtedness,
and (iii) limitations on sale or exchange of assets.

                                      -8-

<PAGE>


                              KEY3MEDIA GROUP, INC.

                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                             STATEMENTS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


     Concurrent  with the issuance of the Notes and  repayment of existing  term
loan bank borrowings,  the Company amended and restated its bank credit facility
previously  entered into on August 3, 2000 by eliminating the term loan facility
and  increasing  the  revolving  credit  facility  with its  syndicate  of banks
committing to lend up to $150,000 for general  corporate  purposes,  which could
include  acquisitions.  The Company may borrow,  repay and  re-borrow  under the
increased  revolving  loan  facility  until June 26, 2004, at which time it must
repay any  outstanding  amounts.  Loans under the Amended  and  Restated  Credit
Facility are guaranteed by the Company's wholly owned  subsidiaries  (other than
foreign  and  unrestricted  subsidiaries,  as  defined)  and will be  secured by
substantially all of their assets.

     Subject  to  certain  conditions,  our new  bank  credit  revolving  credit
facility  does not prohibit us from  borrowing on a term loan basis an aggregate
principal amount of up to $200,000. These borrowings can be senior and can share
in the collateral securing the revolving credit facility. In addition, we may be
required  to prepay any term loans under this part of the credit  facility  from
the net cash  proceeds  of  assets  sales  outside  the  ordinary  course of our
business,  the net cash proceeds of additional  debt and a portion of our excess
cash flow (as defined in our amended and restated credit  agreement).  No lender
has committed to lend us money under this provision.

     At the  Company's  election,  loans under the Amended and  Restated  Credit
Facility will bear interest at a margin over either (1) a base rate equal to the
higher of the federal funds rate plus 1/2% and Citibank, N.A.'s base rate or (2)
the Eurodollar rate (as defined). The margin that the Company must pay will vary
between 1.00% and 3.25%  depending on which rate the Company chooses as its base
rate and the ratio of its total debt to EBITDA (earnings before interest, taxes,
depreciation  and  amortization)  as defined in the Amended and Restated  Credit
Facility.  The Amended and Restated Credit Facility  contains various  financial
covenants  including,  amongst other things, (i) limitations on dividends,  (ii)
limitations  on the  incurrence of  indebtedness,  (iii)  limitations on sale or
exchange  of assets  and (iv)  maintenance  of  minimum  leverage  and  interest
coverage ratios.

     On August 18, 2000, the Company issued zero coupon senior  debentures  with
an initial  principal  amount of $75,000.  The  purchasers  paid $72,938 for the
debentures  and the  warrants  described  below.  The  principal  amount  of the
debentures accreted at a rate of 12% per year, compounded quarterly. The Company
repurchased all of these outstanding debentures on June 26, 2001. As part of the
redemption  of the  debentures,  523 warrants to purchase  common  shares of the
Company's stock were cancelled.  As of June 30, 2001, warrants to purchase 6,277
shares of the  Company's  common  stock at $6.00 per share  remain  outstanding.
Cashless exercise is permitted and the warrants expire on August 18, 2007.

     In connection with the repayment of all of its term loans and repurchase of
all of the  outstanding  debentures on June 26, 2001, the Company  recognized an
extraordinary  loss on  retirement  of debt of $9,309  (net of a tax  benefit of
$3,220)  representing  the  write-off of  unamortized  debt  issuance  costs and
unamortized debt discount recorded in August 2000.

     The Company incurred interest expense to related parties for the six months
ended June 30, 2001 and 2000 of $0 and $11,619, respectively.


5.  BUSINESS COMBINATION

     On June 1, 2001, the Company's wholly owned  subsidiary,  Key3Media Events,
acquired and received  from SB America all the  outstanding  equity shares of SB
Forums for a purchase price equal to (i) ten times the EBITDA (as defined) of SB
Forums for 2001 minus (ii) $450.  The  Company  will pay the  purchase  price in
shares  of its  common  stock,  which  will be  valued at $10 per share for this
purpose. Because SB America owns a majority of the Company's common stock, under
the rules of the New York Stock  Exchange the  issuance  must be approved by the
Company's shareholders.  A special meeting of the Company's shareholders will be
held to approve  the  transaction  on August 30,  2001 and because SB America is
entitled  to vote it will be  approved.  Once this  approval  is  obtained,  the
Company  will  initially  issue 2,955  shares of its common stock to SB America,
which is based on an  estimate  that SB Forums'  EBITDA for 2001 will be $3,000.
The number of shares issued will be adjusted when SB Forums'  EBITDA for 2001 is
finally determined.  If that EBITDA is between $2,800 and $3,200 , no adjustment
will be made.

                                      -9-

<PAGE>


                              KEY3MEDIA GROUP, INC.

                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                             STATEMENTS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


     Because  SB  America  owned in excess of fifty  (50)  percent of the voting
common shares of the Company at the June 1, 2001 closing of this transaction and
continued to be a majority shareholder through the record date for voting on the
transaction,  the Company has recorded the  acquisition  as of its closing date.
Furthermore, as this transaction is between companies under common control, this
business  combination  has been recorded using the historical  cost basis of the
assets and liabilities acquired;  consequently,  the fair value of common shares
to be initially issued of approximately  $29,800 was reduced by $29,403 to equal
the historical  cost of the net assets acquired of $397. This reduction in value
was accomplished by adjusting additional paid in capital.

     Pro forma results of operations have not been presented because the effects
of this acquisition were not material to the reported results.


6.  STOCK COMPENSATION

     The Company has granted options to purchase shares of its common stock with
exercise  prices  ranging  from  $5.00 to  $12.80.  Certain  options  granted to
employees  who  previously  held options to purchase  stock of ZDI,  ZDNet,  and
Softbank  Corp.  are subject to the  accounting  treatment  described in FIN 44,
"Accounting  for  Certain   Transactions   involving  Stock   Compensation,   an
interpretation of APB Opinion No. 25." This accounting  pronouncement  requires,
amongst other things,  recording the fair value of these options at the close of
each  accounting  period and recognizing the change in fair value from period to
period as an increase or decrease in stock based compensation.

     The  Company  recognized  $5,224  and  $668  in  amortization  of  deferred
compensation for the six months ended June 30, 2001 and 2000, respectively.


7.  COMMITMENTS AND CONTINGENCIES

     On March 17, 2000, Key3Media Events sued GES Exposition Services,  Inc. for
breach of  contract  in the United  States  District  Court for the  District of
Massachusetts. The Company believed that GES was withholding commissions that it
was required to pay to Key3Media  Events under  contract.  The Company  believed
that GES owed  Key3Media  Events  approximately  $9,000 as of March 31, 2001. On
June  19,  2000,  GES  filed  an  answer,  counterclaim  and  jury  demand.  Its
counterclaim  alleged that Key3Media Events breached the contract,  violated its
fiduciary  duty toward GES and  converted GES property to the benefit and use of
Key3Media Events.  GES asked the court to award  unspecified  damages as well as
declaratory and injunctive  relief.  The Company received  subsequent  pleadings
filed by GES alleging damages of approximately $33,000 on a variety of different
legal theories plus additional damages for lost future profits of $20,000.

     On March 9, 2001,  Key3Media Events filed an Amended Complaint that alleged
a number of additional  claims including  breach of the Delaware  Consumer Fraud
Act and the Delaware  Deceptive Trade Practices Act, as well as various business
torts. On April 18, 2001, in response to Key3Media  Events'  Amended  Complaint,
GES filed an answer,  counterclaim and jury demand.  The filing alleged a number
of  additional  counterclaims  including  breach  of  Delaware  Deceptive  Trade
Practices Act and unjust  enrichment and  restitution,  as well as other various
business torts.

     In  July  2001,  the  Chairman  of the  Company  and the  Chairman  of Viad
Corporation,  the parent of GES, have agreed to end the litigation. As a result,
advance  payments  previously  received  from GES that were recorded as deferred
revenue  (included in other long-term  liabilities) and a net receivable  amount
from GES were  eliminated  from the Company's  balance sheet.  As a result,  the
Company's second quarter 2001 other income (expense),  net, includes an increase
of  approximately  $6,700.  The Company and GES are in the process of discussing
possible future business relations.


                                      -10-

<PAGE>


                              KEY3MEDIA GROUP, INC.

                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                             STATEMENTS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


     Our wholly  owned  subsidiary,  Key3Media  Events,  leases  office space in
Needham,  Massachusetts.  The annual rental payments (net of operating expenses)
for the space are  approximately  $1,400 and the  occupancy of the space extends
through 2006,  subject to the terms and conditions of the lease. We have entered
into a lease for new office  space in Needham and intend to relocate our offices
there in the fourth quarter of 2001. We estimate that our total annual occupancy
costs under the new lease will be approximately  $1,700 greater than those under
the existing space.  Key3Media Events may be subject to a claim for liability in
respect of its existing space.

     In connection with its spin-off from ZDI, the Company and its  subsidiaries
have received an indemnification from ZDI against all liabilities not related to
its  businesses,  including the class actions and  derivative  litigation  filed
against  ZDI  discussed  in the  Company's  Registration  Statement  on Form S-1
(No.333-36828).

     The Company and its  subsidiaries  are subject to various  other claims and
legal proceedings arising in the normal course of business.  Management believes
that the ultimate  liability,  if any, in the aggregate  will not be material to
the Company's financial position, results of operations or cash flows.


                                      -11-

<PAGE>


                              KEY3MEDIA GROUP, INC.

                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                             STATEMENTS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


8.  SEGMENT INFORMATION

     The Company  had adopted  SFAS No.  131,  "Disclosure  about  Segment of an
Enterprise and Related  Information" ( "SFAS No. 131 "), which was effective for
the year ended December 31, 1998.

     The Company operates in one business segment, the production and management
of trade shows,  conferences,  and customized  marketing and education programs.
The Company  holds  events  either  directly or through  international  contract
events.

     Financial information by geographic areas is as follows:

<TABLE>
<CAPTION>
                                                    For the three months           For the six months
                                                        ended June 30,               ended June 30,
                                                  ------------------------      -------------------------
                                                     2000          2001            2000            2001
                                                  ---------      ---------      ---------       ---------
<S>                                               <C>            <C>            <C>             <C>
Net revenues:
   North America ...........................      $  93,396      $ 102,785      $ 113,877       $ 110,208
   Europe ..................................            520            629            866             920
   Far East ................................           --           12,242            320          12,545
                                                  ---------      ---------      ---------       ---------
      Total ................................      $  93,916      $ 115,656      $ 115,063       $ 123,673
                                                  =========      =========      =========       =========
Other income (expense):
   North America ...........................      $  (6,740)     $  (4,202)     $ (12,329)      $ (16,233)
   Europe ..................................             17             (1)           100              18
   Far East ................................              2             (7)             7              (6)
                                                  ---------      ---------      ---------       ---------
      Total ................................      $  (6,721)     $  (4,210)     $ (12,222)      $ (16,221)
                                                  =========      =========      =========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                        As of June 30,
                                                  -------------------------
                                                     2000           2001
                                                  ----------     ----------
<S>                                               <C>            <C>
Total assets:
   North America ...........................      $1,011,248     $  937,887
   Europe ..................................          13,189         12,481
   Far East ................................           1,281         12,705
                                                  ----------     ----------
      Total ................................      $1,025,718     $  963,073
                                                  ==========     ==========
</TABLE>


9.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTOR AND SUBSIDIARY NON-GUARANTOR

     In  connection  with the  issuance of the  Company's  $300,000  Notes,  the
Company's U.S.-based subsidiary,  Key3Media Events, Inc., guaranteed the payment
of  principal,  premium  and  interest  on the  Notes on a  senior  subordinated
unsecured   basis.   Presented  below  is  condensed   consolidating   financial
information for the parent company  (Key3Media Group, Inc.) only, the subsidiary
guarantor only and the subsidiary  non-guarantors  as a group as of December 31,
2000 and June 30, 2001 and for the three and six months  ended June 30, 2000 and
2001.


                                      -12-
<PAGE>


                              KEY3MEDIA GROUP, INC.
                      CONDENSED CONSOLIDATING BALANCE SHEET
                                 (IN THOUSANDS)

                                DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                                        ELIMINATIONS
                                               PARENT                                        AND
                                               COMPANY     SUBSIDIARY     SUBSIDIARY    CONSOLIDATING
                                                ONLY        GUARANTOR    NON-GUARANTORS   ENTRIES       CONSOLIDATED
                                            -----------    -----------   -------------- --------------  ------------
<S>                                         <C>            <C>            <C>                 <C>       <C>
ASSETS
Current Assets:
   Cash and cash equivalents ............   $     4,777    $   101,714    $     3,423             --    $   109,914
   Accounts receivable, net .............            --         69,747         10,507             --         80,254
   Prepaid events expenses ..............            --          4,774            184             --          4,958
   Deferred tax asset ...................            --          1,745             --             --          1,745
   Other current assets .................         5,913          1,692          1,265         (5,900)         2,970
                                            -----------    -----------    -----------    -----------    -----------
       Total current assets .............        10,690        179,672         15,379         (5,900)       199,841
   Intercompany receivable ..............        96,534          5,613             --       (102,147)          --
   Property and equipment, net ..........            --         12,011            331             --         12,342
   Intangibles assets, net ..............            --        842,591          1,408             --        843,999
   Investment in subsidiaries ...........       398,018             --             --       (398,018)            --
   Other assets .........................   $     1,336    $     7,787    $        28    $        --    $     9,151
                                            -----------    -----------    -----------    -----------    -----------
       Total Assets .....................   $   506,578    $ 1,047,674    $    17,146    $  (506,065)   $ 1,065,333
                                            ===========    ===========    ===========    ===========    ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
   Current maturities of long-term
      obligations .......................   $        --    $     1,584    $        --    $        --    $     1,584
   Accounts payable .....................            --          7,467          1,018             --          8,485
   Accrued expenses .....................            --         51,373          4,399         (5,900)        49,872
   Deferred revenue .....................            --         91,512          6,374             --         97,886
   Other current liabilities ............            --         14,574            313             --         14,887
                                            -----------    -----------    -----------    -----------    -----------
       Total current liabilities ........            --        166,510         12,104         (5,900)       172,714
   Intercompany payable .................            --         96,134          6,013       (102,147)            --
   Deferred taxes .......................         1,750         83,280             --             --         85,030
   Long-term obligations (net of current
      Maturities) .......................        68,665        298,416             --             --        367,081
   Other long-term liabilities ..........            --          8,561              7             --          8,568
Shareholders' equity
   Common Stock .........................           650             --             --             --            650
   Additional paid in capital ...........       422,171        297,821          7,588       (305,409)       422,171
   Retained earnings ....................        38,810         97,339         (4,730)       (92,609)        38,810
   Other comprehensive income (loss) ....            --             --         (3,836)            --         (3,836)
   Deferred compensation ................       (25,468)          (387)            --             --        (25,855)
                                            -----------    -----------    -----------    -----------    -----------
       Total shareholders' equity .......       436,163        394,773           (978)      (398,018)       431,940
                                            -----------    -----------    -----------    -----------    -----------
       Total  liabilities & shareholders'
         equity .........................   $   506,578    $ 1,047,674    $    17,146    $  (506,065)   $ 1,065,333
                                            ===========    ===========    ===========    ===========    ===========
</TABLE>

                                      -13-
<PAGE>


                              KEY3MEDIA GROUP, INC.
                      CONDENSED CONSOLIDATING BALANCE SHEET
                                 (IN THOUSANDS)

                                  JUNE 30, 2001

<TABLE>
<CAPTION>
                                                                                           ELIMINATIONS
                                               PARENT                                          AND
                                               COMPANY      SUBSIDIARY      SUBSIDIARY    CONSOLIDATING
                                                 ONLY        GUARANTOR    NON-GUARANTORS     ENTRIES     CONSOLIDATED
                                             -----------    -----------   --------------  -------------- ------------
<S>                                           <C>            <C>            <C>            <C>           <C>
ASSETS
Current Assets:
    Cash and cash equivalents ...........     $   5,174      $  16,585      $  11,260      $    --        $  33,019
    Accounts receivable, net ............          --           50,236          8,671           --           58,907
    Prepaid events expenses .............          --            7,968            306           --            8,274
    Deferred tax asset ..................          --            1,745           --             --            1,745
    Other current assets ................            49          1,762          1,741           --            3,552
                                              ---------      ---------      ---------      ---------      ---------
       Total current assets .............         5,223         78,296         21,978           --          105,497
    Intercompany receivable .............       307,905          5,285          1,391       (314,581)          --
    Property and equipment, net .........          --           14,932            496           --           15,428
    Intangibles assets, net .............          --          827,358          1,724           --          829,082
    Investment in subsidiaries ..........      (397,683)          --             --         (397,683)          --
    Other assets ........................        17,409            668            (11)          --           13,066
                                              ---------      ---------      ---------      ---------      ---------
       Total Assets .....................     $ 723,220      $ 926,539      $  25,578      $(712,264)     $ 963,073
                                              =========      =========      =========      =========      =========

LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
    Current maturities of long-term
        obligations .....................          --             --             --             --             --
    Accounts payable ....................          --            6,831          5,057           --           11,888
    Accrued expenses ....................        (4,028)        25,668          6,357           --           27,997
    Deferred revenue ....................          --          100,347          7,730           --          108,077
    Other current liabilities ...........          --            5,582          3,273           --            8,855
                                              ---------      ---------      ---------      ---------      ---------
       Total current liabilities ........        (4,028)       138,428         22,417           --          156,817
    Intercompany payable ................          --          308,828          5,753       (314,581)          --
    Deferred taxes ......................         1,750         83,280           --             --           85,030
    Long-term obligations (net of current
        maturities) .....................       300,000           --             --             --          300,000
    Other long-term liabilities .........          --               73              8           --               81
Shareholders' equity
    Common Stock ........................           651           --             --             --              651
    Additional paid in capital ..........       418,770        297,821          7,588       (305,409)       418,770
    Retained earnings ...................        22,234         98,496         (6,222)       (92,274)        22,234
    Other comprehensive income
        (loss) ..........................          --             --           (3,966)        (3,966)
    Deferred compensation ...............       (16,157)          (387)          --             --          (16,544)
                                              ---------      ---------      ---------      ---------      ---------
       Total shareholders' equity .......       425,498        393,930         (2,600)      (397,683)       421,145
                                              ---------      ---------      ---------      ---------      ---------
       Total liabilities & shareholders'
         equity .........................     $ 723,220      $ 926,539      $  25,578      $(712,264)     $ 963,073
                                              =========      =========      =========      =========      =========

</TABLE>

                                      -14-


<PAGE>



                              KEY3MEDIA GROUP, INC.
                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

                     FOR THE SIX MONTHS ENDED JUNE 30, 2001


<TABLE>
<CAPTION>

                                                                                                       ELIMINATIONS
                                                            PARENT                       SUBSIDIARY         AND
                                                           COMPANY       SUBSIDIARY         NON-       CONSOLIDATING
                                                             ONLY         GUARANTOR      GUARANTORS        ENTRIES     CONSOLIDATED
                                                          ---------      ----------      ----------    -------------   ------------
<S>                                                       <C>             <C>             <C>             <C>             <C>
Net revenues .......................................      $      --       $ 112,254       $  14,204       $  (2,785)      $ 123,673
Operating Expenses:
      Cost of production ...........................             --          32,732           7,844              --          40,576
      Selling, general and administrative ..........            140          49,911           2,615              --          52,666
      Stock-based compensation .....................          5,224              --              --              --           5,224
      Depreciation and amortization ................             --          18,477             289              --          18,766
                                                          ---------       ---------       ---------       ---------       ---------
                                                              5,364         101,120          10,748              --         117,232
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) from operations ......................         (5,364)         11,134           3,456          (2,785)          6,441
Other income (expenses)
      Interest expense .............................        (10,907)        (14,423)             (8)             --         (25,338)
      Interest income ..............................            157           2,315               7              --           2,479
      Intercompany activity ........................             --              --          (2,785)          2,785              --
      Other expense, net ...........................             --           6,691             (53)             --           6,638
                                                          ---------       ---------       ---------       ---------       ---------
                                                            (10,750)         (5,417)         (2,839)          2,785         (16,221)
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) before income taxes and
      extraordinary loss on retirement of
      debt .........................................        (16,114)          5,717             617              --          (9,780)
Income tax provision (benefit) .....................         (4,141)          1,469             159              --          (2,513)
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) before extraordinary loss
      on retirement of debt ........................        (11,973)          4,248             458              --          (7,267)
Extraordinary loss on retirement of debt ...........         (4,268)         (5,041)             --              --          (9,309)
Equity in earnings (loss) of Subsidiaries ..........           (335)             --              --             335              --
                                                          ---------       ---------       ---------       ---------       ---------
Net income (loss) ..................................      $ (16,576)      $    (793)      $     458       $     335       $ (16,576)
                                                          =========       =========       =========       =========       =========

</TABLE>



                                      -15-

<PAGE>



                              KEY3MEDIA GROUP, INC.
                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

                     FOR THE SIX MONTHS ENDED JUNE 30, 2000


<TABLE>
<CAPTION>

                                                                                                         ELIMINATIONS
                                                            PARENT                       SUBSIDIARY           AND
                                                           COMPANY     SUBSIDIARY      NON-GUARANTORS    CONSOLIDATING
                                                            ONLY        GUARANTOR      [GRAPHIC OMITTED]    ENTRIES     CONSOLIDATED
                                                          ---------       ---------       ---------       ---------       ---------
<S>                                                       <C>             <C>             <C>            <C>              <C>

Net revenues .......................................      $      --       $ 112,471       $   2,744       $    (152)      $ 115,063
Operating Expenses:
      Cost of production ...........................             --          31,886           2,010              --          33,896
      Selling, general and administrative ..........             --          45,399           2,121              --          47,520
      Stock-based compensation .....................             --             668              --              --             668
      Depreciation and amortization ................             --          18,286             169              --          18,455
                                                          ---------       ---------       ---------       ---------       ---------
                                                                 --          96,239           4,300              --         100,539
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) from operations ......................             --          16,232          (1,556)           (152)         14,524
Other income (expenses): ...........................             --
      Interest expense .............................             --         (12,669)             --                         (12,669)
      Interest income ..............................             --             339              43              --             382
      Intercompany activity ........................             --            (152)             --             152              --
      Other expense, net ...........................             --              (1)             66              --              --
                                                          ---------       ---------       ---------       ---------       ---------
                                                                 --         (12,483)            109             152         (12,222)
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) before income taxes and
      extraordinary loss on retirement of
      debt .........................................             --           3,749          (1,447)             --           2,302
Income tax provision (benefit) .....................             --             949            (367)             --             913
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) before extraordinary loss
      on retirement of debt ........................             --           2,800          (1,411)      $      --           1,389
Extraordinary loss on retirement of debt ...........             --              --              --              --              --
                                                          ---------       ---------       ---------       ---------       ---------
Net income (loss) ..................................      $      --       $   2,800       $  (1,411)      $      --       $   1,389
                                                          =========       =========       =========       =========       =========
</TABLE>



                                      -16-


<PAGE>


                              KEY3MEDIA GROUP, INC.
                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

                    FOR THE THREE MONTHS ENDED JUNE 30, 2001

<TABLE>
<CAPTION>

                                                                                                        ELIMINATIONS
                                                            PARENT                        SUBSIDIARY         AND
                                                           COMPANY        SUBSIDIARY         NON-       CONSOLIDATING
                                                             ONLY         GUARANTOR       GUARANTORS       ENTRIES      CONSOLIDATED
                                                          ---------       ---------       ----------      ----------    ------------
<S>                                                       <C>             <C>             <C>             <C>             <C>
Net revenues .......................................      $      --       $ 104,495       $  13,610       $  (2,449)      $ 115,656
Operating Expenses:
      Cost of production ...........................             --          29,841           7,641              --          37,482
      Selling, general and  administrative .........             65          26,548           1,376              --          27,989
      Stock-based compensation .....................          2,065              --              --              --           2,065
      Depreciation and amortization ................             --           9,497             188              --           9,685
                                                          ---------       ---------       ---------       ---------       ---------
                                                              2,130          65,886           9,205              --          77,221
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) from operations ......................         (2,130)         38,609           4,405          (2,449)         38,435
Other income (expenses):
      Interest expense .............................         (5,324)         (6,657)              8              --         (11,989)
      Interest income ..............................             55           1,068              --              --           1,123
      Intercompany activity ........................             --              --          (2,449)          2,449              --
      Other expense, net ...........................             --           6,691             (35)             --           6,656
                                                          ---------       ---------       ---------       ---------       ---------
                                                             (5,269)          1,102          (2,492)          2,449          (4,210)
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) before income taxes and
      extraordinary loss on retirement of
      debt .........................................         (7,399)         39,711           1,913              --          34,225
Income tax provision (benefit) .....................           (176)         17,526             159              --          17,509
                                                          ---------       ---------       ---------       ---------       ---------
Income (loss) before extraordinary loss
      on retirement of debt ........................         (7,223)         22,185           1,754              --          16,716
Extraordinary loss on retirement of debt ...........         (4,268)         (5,041)             --              --          (9,309)
Equity in earnings (loss) of Subsidiaries ..........         18,898              --              --         (18,898)             --
                                                          ---------       ---------       ---------       ---------       ---------
Net income (loss) ..................................      $   7,407       $  17,144       $   1,754       $ (18,898)      $   7,407
                                                          =========       =========       =========       =========       =========
</TABLE>



                                      -17-


<PAGE>


                              KEY3MEDIA GROUP, INC.
                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

                    FOR THE THREE MONTHS ENDED JUNE 30, 2000

<TABLE>
<CAPTION>

                                                                                                        ELIMINATIONS
                                                            PARENT                        SUBSIDIARY         AND
                                                           COMPANY        SUBSIDIARY         NON-       CONSOLIDATING
                                                             ONLY         GUARANTOR       GUARANTORS       ENTRIES      CONSOLIDATED
                                                          ---------       ---------       ----------      ----------    ------------
<S>                                                        <C>             <C>             <C>             <C>             <C>

Net revenues .......................................       $     --        $ 92,298        $  1,409        $    209        $ 93,916
Operating Expenses:
      Cost of production ...........................                         23,946           1,538                          25,484
      Selling, general and administrative ..........             --          25,728           1,062              --          26,790
      Stock-based compensation .....................             --             537              --              --             537
      Depreciation and amortization ................             --           9,187              76              --           9,263
                                                           --------        --------        --------        --------        --------
                                                                 --          59,398           2,676              --          62,074
                                                           --------        --------        --------        --------        --------
Income (loss) from operations ......................             --          32,900          (1,267)            209          31,842
Other income (expenses):
      Interest expense .............................             --          (7,008)             --              --          (7,008)
      Interest income ..............................             --             267              25              --             292
      Intercompany activity ........................             --            (152)            361            (209)             --
      Other expense, net ...........................             --              (1)             (4)             --              (5)
                                                           --------        --------        --------        --------        --------
                                                                 --          (6,894)            382            (209)         (6,721)
                                                           --------        --------        --------        --------        --------
Income (loss) before income taxes and
      extraordinary loss on retirement
      debt .........................................             --          26,006            (885)             --          25,121
Income tax provision (benefit) .....................             --          10,039             (67)             --           9,972
                                                           --------        --------        --------        --------        --------
Income (loss) before extraordinary loss
      on retirement of debt ........................             --          15,967            (818)             --          15,149
Extraordinary loss on retirement of debt ...........             --              --              --              --              --
Net income (loss) ..................................       $     --        $ 15,967        $   (818)       $     --        $ 15,149
                                                           ========        ========        ========        ========        ========
</TABLE>



                                      -18-


<PAGE>


                              KEY3MEDIA GROUP, INC.
                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

                     FOR THE SIX MONTHS ENDED JUNE 30, 2000

<TABLE>
<CAPTION>
                                                                                                        ELIMINATIONS
                                                            PARENT                        SUBSIDIARY         AND
                                                           COMPANY        SUBSIDIARY         NON-       CONSOLIDATING
                                                             ONLY         GUARANTOR       GUARANTORS       ENTRIES      CONSOLIDATED
                                                          ---------       ---------       ----------      ----------    ------------
<S>                                                        <C>             <C>             <C>             <C>             <C>
Cash Flow from operating activities:
   Net income (loss) ..................................    $    --         $  2,800        $ (1,411)       $     --        $  1,389
   Adjustments  to reconcile net income (loss) to net
     cash provided by (used in) operating activities:
   Depreciation and amortization ......................         --           18,286             169              --          18,455
   Stock-based compensation ...........................         --              668              --              --             668
   (Gain) loss on disposal of fixed assets ............         --               --              61              --              61
   Foreign exchange (gain) loss .......................         --               --             (64)             --             (64)
   Deferred income taxes ..............................         --              798             (25)             --             773
Changes in operating assets & liabilities:
   Accounts receivable ................................         --           (4,406)          4,012              --            (394)
   Prepaid events expenses ............................         --           (7,738)         (1,228)             --          (8,966
   Other current assets ...............................         --              909            (467)             --             442
   Other assets .......................................         --              (78)             --              --             (78)
   Accounts payable ...................................         --           (5,906)            (68)             --          (5,974)
   Accrued expenses ...................................         --            6,787          (1,194)             --           5,593
   Deferred revenue ...................................         --           42,484           3,027              --          45,511
   Other liabilities ..................................         --              359            (271)             --              88
                                                           -------         --------        --------        --------        --------
         Total adjustments ............................         --           52,163           3,952              --          56,115
                                                           -------         --------        --------        --------        --------
         Net cash provided by operating activities ....         --           54,963           2,541              --          57,504

Cash flows from investing activities:
   Purchase of property & equipment ...................         --           (1,710)            (37)             --          (1,747)
   Purchase of intangible assets ......................         --               --              --              --              --
                                                           -------         --------        --------        --------        --------
         Net cash used in investing activities ........         --           (1,710)            (37)             --          (1,747)

Cash flows from financing activities:
   Net transactions with Softbank, ZDI & affiliates
     excluding non-cash transactions with affiliates ..         --            3,646            (966)             --           2,680
   Increase (decrease) in bank overdraft ..............         --            3,626              --              --           3,626
                                                           -------         --------        --------        --------        --------
         Net cash  provided  by (used  in)
           financing activities .......................         --            7,272            (966)             --           6,306

Effects of exchange rate changes on cash ..............         --               --             (99)             --             (99)
Net increase in cash and cash equivalents .............         --           60,525           1,439              --          61,964
Cash and cash equivalents at the beginning of period ..         --            3,593           1,977              --           5,570
                                                           -------         --------        --------        --------        --------

Cash and cash equivalents at the end of period ........    $    --         $ 64,118        $  3,416        $     --        $ 67,534
                                                           =======         ========        ========        ========        ========
</TABLE>



                                      -19-

<PAGE>


                              KEY3MEDIA GROUP, INC.
                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

                     FOR THE SIX MONTHS ENDED JUNE 30, 2001


<TABLE>
<CAPTION>
                                                                                                          ELIMINATIONS
                                                                PARENT                       SUBSIDIARY        AND
                                                               COMPANY      SUBSIDIARY          NON-      CONSOLIDATING
                                                                 ONLY        GUARANTOR       GUARANTORS      ENTRIES    CONSOLIDATED
                                                              ---------     ----------      -----------   ------------- ------------
<S>                                                           <C>            <C>            <C>            <C>            <C>
Cash Flow from operating activities:
    Net income (loss) ...................................     $ (16,576)     $    (793)     $     458      $     335      $ (16,576)
    Adjustments  to reconcile  net income (loss) to
       net cash provided by (used in) operating
       activities:
       Extraordinary loss on retirement .................         5,745          6,784             --             --         12,529
       Depreciation and amortization ....................            --         18,477            289             --         18,766
       Stock-based compensation .........................         5,224             --             --             --          5,224
       Non-cash interest expense ........................        10,518            913             --             --         11,431
       Equity in earnings (loss) of subsidiaries ........           335             --             --           (335)            --
       Foreign exchange (gain) loss .....................            --             66             13             --             79
    Changes in operating  assets & liabilities,
    net of effect from acquired Company:
       Accounts receivable ..............................            --         19,511          4,775             --         24,286
       Prepaid events expenses ..........................            --         (3,194)         1,893             --         (1,301)
       Other current assets .............................         5,864            (70)        (6,203)            --           (409)
       Other assets .....................................            --           (579)            74             --           (505)
       Accounts payable .................................            --           (636)         2,456             --          1,820
       Accrued expenses .................................        (4,028)       (23,755)         5,538             --        (22,745)
       Deferred revenue .................................            --          8,835         (8,224)            --            611
       Other liabilities ................................            --        (17,480)         1,279             --        (16,201)
                                                              ---------      ---------      ---------      ---------      ---------
            Total Adjustments ...........................        23,658          8,872          1,890           (335)        34,085
                                                              ---------      ---------      ---------      ---------      ---------
            Net cash  provided  by  (used  in) operating
              operating activities ......................         7,082          8,079          2,348             --         17,509

Cash flows from investing activities:
    Purchase of property & equipment ....................            --         (6,151)          (180)            --         (6,331)
    Net cash received in a business combination .........            --             --          7,728             --          7,728
                                                              ---------      ---------      ---------      ---------      ---------
            Net cash  provided  by  (used  in)
              investing activities ......................            --         (6,151)         7,548             --          1,397

Cash flows from financing activities:
    Net transactions with affiliates excluding
       non-cash transactions with affiliates ............      (210,974)       212,943         (1,969)            --             --
    Increase (decrease) in bank overdraft ...............            --             --             --             --             --
    Proceeds  from  the  exercise  of  options  to
       purchase common stock ............................           290             --             --             --            290
    Repayment of long-term obligations under
       credit facility ..................................            --       (300,000)            --             --       (300,000)
    Retirement  of zero coupon  senior  debentures
       and accreted Interest ............................       (83,576)            --             --             --        (83,576)
    Borrowing under new credit facility .................       300,000             --             --             --        300,000
    Payment of costs  associated with the issuance
       of long- term obligations ........................       (12,425)            --             --             --        (12,425)
                                                              ---------      ---------      ---------      ---------      ---------
            Net cash  provided  by (used  in)
              financing activities ......................        (6,685)       (87,057)        (1,969)            --        (95,711)

Effects of exchange rate changes on cash ................            --             --            (90)            --            (90)
Net increase (decrease) in cash and cash
    equivalents .........................................           397        (85,129)         7,837             --        (76,895)
Cash and cash equivalents at the beginning of
    period ..............................................         4,777        101,714          3,423             --        109,914
                                                              ---------      ---------      ---------      ---------      ---------
Cash and cash equivalents at the end of period ..........     $   5,174      $  16,585      $  11,260      $      --      $  33,019
                                                              =========      =========      =========      =========      =========
</TABLE>



                                      -20-

<PAGE>


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

     The  discussion  below should be read in  conjunction  with our  historical
consolidated financial statements and the notes thereto.  Historical results and
percentage  relationships  set forth in the consolidated  financial  statements,
including trends which might appear, should not be taken as indicative of future
operations.   The  Company   considers   portions  of  this  information  to  be
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933 and  Section 21E of the  Securities  Exchange  Act of 1934,  both as
amended, with respect to the Company's expectations for future periods.

     The Company  utilizes the term EBITDA in the following  discussion.  EBITDA
represents income before taxes plus depreciation and amortization,  and interest
expense  net  of  interest  income.  EBITDA  should  not  be  considered  as  an
alternative  to, or more  meaningful  than,  operating  income as  determined in
accordance  with GAAP,  cash flows from  operating  activities  as determined in
accordance  with GAAP,  or as a measure of liquidity.  The Company's  management
believes  EBITDA  provides  meaningful  additional  information on its operating
results and on its ability to service its long-term  debt and other  obligations
and to fund its operations.  Because EBITDA is not calculated in the same manner
by all  companies,  the  representation  herein may not be  comparable  to other
similarly titled measures of other companies.


RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2000

     Management of the Company  believes that the changes in revenues,  net paid
square footage of exhibit space and number of conference  participants discussed
below,  including  instances where increases are indicated,  have been adversely
affected by the  continuing  economic  difficulties  in the IT  industry  and by
reductions  in  marketing  and travel  budgets  throughout  the IT  industry  in
general.

     Our total revenue  increased $21.7 million,  or 23.1%, to $115.7 million in
the second quarter of 2001 from $93.9 million in the comparable  period in 2000.
This  increase is  attributable  in large part to two factors that  impacted the
second  quarter  of 2001 but not the second  quarter of 2000:  the timing of our
Seybold  Seminars Boston event,  which was held in the first quarter of 2000 but
was held in the second quarter of 2001, and the addition of operating results of
SOFTBANK Forums Japan, Inc.,  ("SFI"),  principally from its N+I Tokyo event. We
acquired SFI on June 1, 2001. After adjusting revenue for the three months ended
June 30, 2001 to exclude the effect of these items,  our total  revenue for this
period would have been $97.9 million,  an increase of $4.0 million, or 4.3% from
the comparable period in 2000.

     Exhibitor  services revenue increased by $20.5 million,  or 37.1%, to $75.9
million in the  second  quarter  of 2001 from  $55.4  million in the  comparable
period in 2000.  This  increase is primarily  attributable  to the timing of our
Seybold  Seminars Boston event,  the addition of operating  results from SFI and
higher event related  revenue at our N+I Las Vegas event.  Excluding the effects
of Seybold Seminars Boston and SFI,  exhibitor revenue for the second quarter of
2001 would have been $62.9 million,  an increase of $7.5 million,  or 13.5% from
the  comparable  period in 2000. The average rental rate per square foot paid by
exhibitors decreased 5.9% to $53.12 in the second quarter of 2001 from $56.43 in
the comparable  period in 2000.  This decrease is primarily  attributable to the
inclusion  of SFI's N+I Tokyo event in the  average  rental  rate,  which had an
average rental rate of approximately $41.00 per square foot. Excluding N+I Tokyo
and Seybold  Seminars  Boston,  the average  rental rate per square foot paid by
exhibitors  increased 2.2% to $57.65 in the second quarter of 2001. In addition,
net paid square footage increased 37.7% in the second quarter of 2001 to 925,949
from 672,290 in the comparable period in 2000. This increase is primarily due to
the timing of our Seybold  Seminars  Boston  event and the addition of SFI's N+I
Tokyo event.  Excluding N+I Tokyo and Seybold Seminars  Boston,  net paid square
footage decreased 3.4% in the second quarter of 2001 to 649,740.

     Conference  fees  decreased  $2.7,  or 8.8%, to $27.6 million in the second
quarter  of 2001 from  $30.3  million  in the  comparable  period in 2000.  This
decrease was principally  attributable to the lower conference attendance at our
N+I Las Vegas and Java One events,  partially offset by the inclusion of Seybold
Seminars  Boston and SFI's N+I Tokyo event.  Excluding  the effects of N+I Tokyo
and Seybold Seminars Boston, adjusted conference fees decreased $5.4 million, or
17.9%  in the  second  quarter  of  2001.  The  number  of  participants  at our
conferences  decreased 11.6% to


                                      -21-

<PAGE>

17,169 in the second  quarter of 2001 from  19,431 in the  comparable  period in
2000. This decrease in participants  was partially  offset by a 3.2% increase in
the average revenue per conference  participant in the second quarter of 2001 of
$1,609  compared  with $1,560 in the  comparable  period in 2000.  Excluding the
effects  of the SFI's N+I Tokyo and our  Seybold  Seminars  Boston  events,  the
number of conference  participants  decreased to 13,177,  or 32.2% in the second
quarter of 2001 and the average revenue per conference  participant increased to
$1,887, or 20.9% in the second quarter of 2001.

     Advertising and sponsorship  revenues increased $3.9 million,  or 47.4%, to
$12.1 million in the second  quarter of 2001 from $8.2 million in the comparable
period in 2000. This increase is primarily  attributable to the inclusion in the
second quarter of 2001 corporate  sponsorship  revenue,  SFI's N+I Tokyo and our
Seybold Seminars Boston events. Excluding these events, adjusted advertising and
sponsorship  revenues increased $2.0 million, or 24.1%, in the second quarter of
2001.

     Costs of production  increased $12.0 million, or 47.1%, to $37.5 million in
the second quarter of 2001 from $25.5 million in the comparable  period in 2000.
As a percentage  of revenue,  actual costs of  production  represented  32.4% of
revenue in the second quarter of 2001 compared to 27.1% in the comparable period
of 2000.  The  increase on a dollar basis is  attributable  to the timing of our
Seybold  Seminars event and the addition of SFI's operating  results.  Excluding
Seybold Seminars and N+I Tokyo, costs of production  increased $1.9 million,  or
7.5%, in the second quarter of 2001.

     SG&A  expenses  increased  $1.2  million,  or 4.5%, to $28.0 million in the
second quarter of 2001 from $26.8 million in the comparable period in 2000. As a
percentage of revenue,  SG&A expenses represented 24.2% of revenue in the second
quarter of 2001 compared to 28.5% in the comparable period in 2000. The increase
in SG&A  expenses  on a dollar  basis  is  primarily  due to  higher  levels  of
employment,  increased use of temporary and contract labor and additional  costs
associated with being a public company.

     Noncash stock-based  compensation increased $1.5 million to $2.1 million in
2001 from $0.5 million in 2000.  The higher amount in the second quarter of 2001
is due to additional  expense arising from the issuance of options  beginning in
August 2000 with  exercise  prices  less than the market  value at their date of
grant to certain of our employees.

     As a result of the foregoing,  EBITDA increased by $13.7 million, or 33.3%,
to $54.8  million in the second  quarter of 2001 from $41.1  million in the same
period in 2000. After adjusting to exclude the noncash stock-based  compensation
charges in both periods,  adjusted EBITDA increased by $15.2 million,  or 36.5%,
to $56.8  million in the second  quarter of 2001 from $41.6  million in the same
period in 2000. After adjusting to exclude the effects of SFI`s operations,  the
Seybold  Seminars Boston event,  the amount  resulting from the GES agreement to
settle and noncash  stock-based  compensation,  adjusted  EBITDA would have been
$42.8 million in the second  quarter of 2001,  an increase of $1.1  million,  or
2.7%,  from actual EBITDA adjusted for noncash  stock-based  compensation in the
comparable period in 2000.

     Depreciation  and  amortization  increased  $0.4 million,  or 4.6%, to $9.7
million in the second quarter of 2001 from $9.3 million in the comparable period
in 2000.

     Other income (expense) decreased $2.5 million, or 37.4%, to expense of $4.2
million from an expense of $6.7 million in this  comparable  period in 2000. The
decrease is attributable to an increase in interest expense, net of $4.2 million
offset by inclusion  of $6.7 million of income from the GES  agreement to settle
in 2001.

     The  provision for income tax increased  $7.5 million,  or 75.6%,  to $17.5
million in the  second  quarter  of 2001 from  $10.0  million in the  comparable
period in 2000.  The Company  estimates that our effective tax rate for the year
ending 2001 will be 25.7% compared to the annual estimated effective tax rate of
39.7%  used  in  computing   expense  for  the  quarter  ended  June  30,  2000.
Accordingly,  the  provision  for income tax for the second  quarter of 2001 was
adjusted  to reflect a provision  of 25.7% of the income  (loss)  before  income
taxes and extraordinary item for the six months ended June 30, 2001.

                                      -22-

<PAGE>


     We recognized an extraordinary  loss on retirement of debt of $9.3 million,
net of tax benefit of $3.2 million,  in the second quarter of 2001 in connection
with our repayment of bank  indebtedness  and our  repurchase of our zero coupon
debentures on June 26, 2001. This amount represents the write-off of unamortized
debt  discount  resulting  from the original  issuance of warrants with the zero
coupon debentures and unamortized debt issuance costs.

     As a result of the foregoing,  our net income  decreased  $7.7 million,  or
51.1%,  to $7.4 million in the second  quarter of 2001 from $15.1 million in the
comparable period in 2000.


SIX MONTHS ENDED JUNE 30, 2001 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2000

     Management of the Company  believes that the changes in revenues,  net paid
square footage of exhibit space and number of conference  participants discussed
below,  including  instances where increases are indicated,  have been adversely
affected by the  continuing  economic  difficulties  in the IT  industry  and by
reductions  in  marketing  and travel  budgets  throughout  the IT  industry  in
general.

     Our total revenue increased $8.6 million, or 7.5%, to $123.7 million in the
six months ended June 30, 2001 from $115.1 million in the  comparable  period in
2000. This increase is primarily attributable to the addition of SFI's operating
results,  principally  from its N+I Tokyo event,  from June 1, 2001, the date on
which we acquired SFI. After adjusting revenue for the six months ended June 30,
2001 to exclude the effects of this item,  our revenue for the period would have
been $112.9, a decrease of $2.2 million,  or 1.9%, from the comparable period in
2000.

     Exhibitor  services revenue increased by $13.1 million,  or 19.3%, to $81.2
million  in the six  months  ended  June 30,  2001  from  $68.1  million  in the
comparable  period in 2000.  This  increase  is  primarily  attributable  to the
addition of operating  results from SFI and higher event related  revenue at our
N+I Las Vegas event.  Excluding the effects of SFI,  adjusted  exhibitor revenue
for the six months  ended  June 30,  2001  would  have been  $72.6  million,  an
increase of $4.6  million,  or 6.7%,  from the  comparable  period in 2000.  The
average rental rate per square foot paid by exhibitors  decreased 1.7% to $52.11
in the six months  ended June 30, 2001 from $53.00 in the  comparable  period in
2000.  This  decrease is primarily  attributable  to the  inclusion of SFI's N+I
Tokyo event in 2001,  which had an average rental rate of  approximately  $41.00
per square foot. Excluding the effects of N+I Tokyo, the average rental rate per
square foot paid by exhibitors  increased 4.2% to $55.23 in the six months ended
June 30, 2001. In addition,  net paid square footage  increased 11.2% in the six
months ended June 30, 2001 to 968,229 from 870,733 in the  comparable  period in
2000.  This increases is primarily due to the addition of SFI's N+I Tokyo event.
Excluding N+I Tokyo,  net paid square footage  decreased 12.3% in the six months
ended June 30, 2001 to 763,329.

     Conference  fees decreased $6.7 million,  or 19.0%, to $28.7 million in the
six months ended June 30, 2001 from $35.5  million in the  comparable  period in
2000.  This  decrease  was  principally  attributable  to the  lower  conference
attendance  at our N+I Las Vegas and Java One  events,  partially  offset by the
inclusion of SFI's N+I Tokyo event.  Excluding the effect of N+I Tokyo, adjusted
conference  fees decreased  $7.6 million,  or 21.3% in the six months ended June
30, 2001.  The number of  participants  at our  conferences  decreased  27.3% to
18,525 in the six  months  ended  June 30,  2001 from  25,474 in the  comparable
period in 2000. This decrease in participants was offset by an 11.4% increase in
the average revenue per conference  participant in the six months ended June 30,
2001 of $1,552 compared with $1,393 in the comparable period in 2000.  Excluding
the  effects of SFI's N+I Tokyo  event,  the number of  conference  participants
decreased  to  16,414,  or 35.6% in the second  quarter of 2001 and the  average
revenue per  conference  participant  increased  to $1,701,  or 22.2% in the six
months ended June 30, 2001.

     Advertising and sponsorship  revenues increased $2.2 million,  or 19.3%, to
$13.7  million in the six months  ended June 30, 2001 from $11.5  million in the
comparable  period in 2000.  This  increase  is  primarily  attributable  to the
inclusion  in the six  months  ended  June 30,  2001 of SFI's N+I  Tokyo  event.
Excluding this event,  adjusted  advertising and sponsorship  revenues increased
$0.8 million, or 7.1%, in the six months ended June 30, 2001.


                                      -23-

<PAGE>


     Costs of production  increased $6.7 million,  or 19.7%, to $40.6 million in
the six months ended June 30, 2001 from $33.9 million in the  comparable  period
in 2000.  As a percentage  of revenue,  actual costs of  production  represented
32.8% of revenue in the six months ended June 30, 2001  compared to 29.5% in the
comparable  period  of  2000.  The  increase  on a  dollar  basis  is  primarily
attributable to the addition of SFI's operating results for the six months ended
June 30, 2001. Excluding SFI's operating results,  costs of production increased
$0.4 million, or 1.1% in the six months ended June 30, 2001.

     SG&A expenses increased $5.1 million, or 10.8%, to $52.7 million in the six
months ended June 30, 2001 from $47.5 million in the comparable  period in 2000.
As a percentage of revenue,  SG&A expenses  represented  42.6% of revenue in the
six months  ended June 30, 2001  compared to 41.3% in the  comparable  period in
2000. The increase in SG&A expenses on a dollar basis is primarily due to higher
levels  of  employment,  increased  use of  temporary  and  contract  labor  and
additional costs associated with being a public company.

     Noncash stock-based  compensation increased $4.6 million to $5.2 million in
the six months ended June 30, 2001 from $0.7 million in the comparable period in
2000.  The  higher  amount  in the six  months  ended  June  30,  2001 is due to
additional expense arising from the issuance of options beginning in August 2000
with  exercise  prices  less  than the  market  value at their  date of grant to
certain of our employees.

    As a result of the foregoing,  EBITDA decreased by $1.2 million, or 3.6%, to
$31.8  million in the six months  ended June 30, 2001 from $33.0  million in the
same  period  in  2000.  After  adjustments  to  exclude  the  effects  of SFI's
operations,  the amount  resulting  from the GES agreement to settle and noncash
stock-based  compensation,  adjusted EBITDA would have been $26.2 million in the
six months  ended June 30,  2001,  a decrease of $7.5  million,  or 22.3%,  from
actual EBITDA  adjusted for noncash  stock-based  compensation in the comparable
period of 2000 of $33.7 million.

     Depreciation  and  amortization  increased $0.3 million,  or 1.7%, to $18.8
million in six months ended June 30, 2001 from $18.5  million in the  comparable
period in 2000.

     Other income  (expense)  increased  $4.0 million,  or 32.7%,  to expense of
$16.2  million  in the six  months  ended  June 30,  2001 from  expense of $12.2
million in the  comparable  period in 2000. The increase is  attributable  to an
increase in interest expense, net of $10.6 million partially offset by inclusion
of $6.7 million of income from the GES agreement to settle in 2001.

     The provision for income tax benefit increased $3.4 million,  or 375.2%, to
$2.5  million  for the six months  ended  June 30,  2001 from an expense of $0.9
million in the  comparable  period in 2000.  We estimate  that our effective tax
rate  for the year  ending  2001  will be  25.7%  versus  the  annual  estimated
effective  tax rate of 39.7% used in computing  expense for the six months ended
June 30, 2000. Accordingly, we have recorded a provision for income tax of 25.7%
of the income  (loss)  before  income taxes and  extraordinary  item for the six
months ended June 30, 2001.

     We recognized an extraordinary  loss on retirement of debt of $9.3 million,
net of tax benefit of $3.2 million,  in the second quarter of 2001 in connection
with our repayment of our bank  indebtedness  and  repurchase of our zero coupon
debentures on June 26 2001. This amount  represents the write-off of unamortized
debt  discount  resulting  from the original  issuance of warrants with the zero
coupon debentures and unamortized debt issuance costs.

     As a result of the  foregoing,  we had a net loss of $16.6  million for the
six months  ended June 30, 2001  compared  to net income of $1.4  million in the
comparable period in 2000.


                                      -24-


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     On June 30,  2001,  our  balance  of cash and cash  equivalents  was  $33.0
million and we had negative working capital of $51.3 million. For the six months
ended June 30, 2001, we met our liquidity needs principally through cash held by
the Company and cash generated from operating  activities.  Net cash provided by
operating  activities  was $17.5  million in the six months ended June 30, 2001,
compared to $57.5 million in the comparable period in 2000.

     Net cash  provided  by  investing  activities  was $1.4  million in the six
months ended June 30, 2001,  compared to cash used in  investing  activities  of
$1.7 million in the  comparable  period in 2000.  During the first six months of
2001,we received $7.7 million of cash from the SFI acquisition and invested $6.3
million in property and equipment.

     We used $95.7 million in cash from  financing  activities in the six months
ended June 30, 2001,  compared to cash provided by financing  activities of $6.3
million in the comparable period in 2000. These activities  principally  related
to refinancing and retirement of indebtedness in 2001.  Prior to April 13, 2000,
we, as a wholly owned  subsidiary  of  Ziff-Davis,  relied on  Ziff-Davis'  cash
management  and treasury  functions and remitted most of the cash we did not use
in our business to Ziff-Davis.  Since April 13, 2000, we assumed  responsibility
for our cash  management  and treasury  activities as if we were an  independent
company.

     Our cash  flows are not as  volatile  as our  revenues,  because we receive
payments for events during the year but recognize  them as revenue only when the
corresponding event occurs.

     On  June  26,  2001,  the  Company  issued  $300,000  of  unsecured  senior
subordinated  notes (the "Notes")  that mature on June 15, 2011.  The Notes bear
interest  at a rate of 11.25% per annum,  payable  semi-annually  on June 15 and
December 15 of each year.  The net proceeds  from the offering of the Notes were
approximately $292,000, after deducting the underwriting discount and other sale
expenses.  These net proceeds and cash on hand were used by the Company to repay
its existing term loan bank  borrowings and to repurchase and retire zero coupon
debentures issued in August 2000 in connection with the spin-off from ZDI.

     The  Notes  may be  redeemed  beginning  on June  15,  2006  at an  initial
redemption  price of 105.625% of the principal  amount,  plus accrued and unpaid
interest.  The redemption price declines ratably each year after 2006 to 100% of
their principal amount, plus accrued and unpaid interest to the redemption date,
beginning on June 15, 2009. In addition, the Company may redeem a portion of the
Notes in one or more  redemptions  prior to June 15, 2004 using  certain  equity
proceeds  as long as the  aggregate  principal  amount of the Notes  outstanding
after each  redemption  is at least  $195,000.  The Notes are  guaranteed by the
Company's  wholly owned  subsidiary,  Key3Media  Events,  Inc. as to  principal,
premium, if any, and interest. In addition, the Notes are subordinated to all of
the  Company's  senior  indebtedness  (as  defined)  and  will  be  structurally
subordinated  to all liabilities of the  subsidiaries  that do not guarantee the
Notes. If the Company acquires or creates new  subsidiaries,  in most cases they
will be required to guarantee  the Notes.  The Notes contain  various  financial
covenants  including,  amongst other things,  (i)  limitations  on dividends and
other restricted  payments,  (ii) limitations on the incurrence of indebtedness,
and (iii) limitations on sale or exchange of assets.

     Concurrent  with the issuance of the Notes and  repayment of existing  term
loan bank borrowings,  the Company amended and restated its bank credit facility
previously  entered into on August 3, 2000 by eliminating the term loan facility
and  increasing  the  revolving  credit  facility  with its  syndicate  of banks
committing to lend up to $150,000 for general  corporate  purposes,  which could
include  acquisitions.  The Company may borrow,  repay and  re-borrow  under the
increased  revolving  loan  facility  until June 26, 2004, at which time it must
repay any  outstanding  amounts.  Loans under the Amended  and  Restated  Credit
Facility are guaranteed by the Company's wholly owned  subsidiaries  (other than
foreign  and  unrestricted  subsidaries,  as  defined)  and will be  secured  by
substantially all of the their assets.

     Subject  to  certain  conditions,  our new  bank  credit  revolving  credit
facility  does not prohibit us from  borrowing on a term loan basis an aggregate
principal amount of up to $200,000. These borrowings can be senior and can share
in the collateral securing the revolving credit facility. In addition, we may be
required  to prepay any term loans under this part of the credit  facility  from
the net cash  proceeds  of  assets  sales  outside  the  ordinary  course of our
business,  the net cash proceeds of additional  debt and a portion of our excess
cash flow (as defined in our amended and restated credit  agreement).  No lender
has committed to lend us money under this provision.

     At the  Company's  election,  loans under the Amended and  Restated  Credit
Facility will bear interest at a margin over either (1) a base rate equal to the
higher of the federal funds rate plus 1/2% and Citibank, N.A.'s base rate or (2)
the Eurodollar rate (as defined). The margin that the Company must pay will vary
between 1.00% and 3.25%  depending on which rate the Company chooses as its base
rate and the ratio of its total debt to EBITDA (earnings before interest, taxes,
depreciation  and  amortization)  as defined in the Amended and Restated  Credit
Facility.  The Amended and Restated Credit Facility  contains various  financial
covenants  including,  amongst other things, (i) limitations on dividends,  (ii)
limitations  on the  incurrence of  indebtedness,  (iii)  limitations on sale or
exchange  of assets  and (iv)  maintenance  of  minimum  leverage  and  interest
coverage ratios.

     On  April  15,  2001,  the  Company  filed a shelf  registration  with  the
Securities and Exchange  Commission to periodically sell up to $375.0 million in
debt securities, common and preferred stock, warrants, and depository shares. On
June 26,  2001,  the  Company  issued  $300  million  of the  Notes  under  this
registration statement.


                                      -25-


<PAGE>

     Based  upon  current  and  anticipated  levels  of  operations,  management
believes  that our cash on hand and cash  flow  from  operations  combined  with
borrowings  available  under our amended and restated  credit  facility  will be
sufficient  to  enable  us to meet our cash  operating  requirements,  including
rental payments,  scheduled interest payments on debt and capital  expenditures.
We will,  however,  be subject to general economic  conditions and to financial,
business and other factors, including factors beyond our control.


SEASONALITY

     Our revenue is seasonal, but our cash flows are stable. This is because our
customers pay us for an event during the 12 months  preceding the event,  but we
do not  recognize  the  payments we receive as revenue  until the event  occurs.
Historically,  our largest  events occur in the second  quarter (N+I, Las Vegas)
and the fourth quarter (COMDEX Fall).  As a result,  the majority of our revenue
is recorded in these quarters.  We may also experience seasonal  fluctuations as
events  held in one  quarter  in the  current  year  may be held in a  different
quarter in future years.


RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial  Accounting  Standards No. 141,  "Business  Combination," and No. 142,
"Goodwill and Other  Intangible  Assets,"  effective for fiscal years  beginning
after December 15, 2001.  Under the new rules,  goodwill and  intangible  assets
deemed to have indefinite  lives will no longer be amortized but will be subject
to annual  impairment tests in accordance with the Statements.  Other intangible
assets will continue to be amortized over their useful lives.

     The Company will apply the new rules on  accounting  for goodwill and other
intangible  assets  beginning  in the  first  quarter  of  2002,  which  include
performing required impairment tests of goodwill and indefinite lived intangible
assets as of January 1, 2002.  Consequently,  the Company has not yet determined
what the effect of these tests will be on the earnings and financial position of
the Company.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to various  market risks,  which include the potential  loss
arising from adverse changes in market rates and prices such as foreign currency
exchange and interest rates. We do not enter into derivatives or other financial
instruments  for trading or  speculative  purposes.  We do not hedge our foreign
currency rate risk.

     Currencies.  We  maintain  operations,  cash and other  assets  in  Europe,
Canada,  Japan,  Australia  and Latin  America.  The results of  operations  and
financial position of our foreign  operations are principally  measured in their
respective currencies and translated into U.S. dollars. As a result, exposure to
foreign currency gains and losses exists.

     Interest.  Prior to June 26,  2001,  we relied  significantly  on long-term
floating rate debt in our capital  structure.  Our bank credit facility prior to
its  amendment and  restatement  in June 2001 required that not less than $165.0
million of the  facility  be  covered  by  interest  rate cap  agreements  which
eliminated  our exposure to interest rate  increases in LIBOR above  9.375%.  We
repaid our borrowings  under this credit  facility on June 26, 2001. Our amended
and restated credit facility does not have a similar requirement.


PART II OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     On March 17, 2000, Key3Media Events sued GES Exposition Services,  Inc. for
breach of  contract  in the United  States  District  Court for the  District of
Massachusetts. The Company believed that GES was withholding commissions that it
was required to pay to Key3Media  Events under  contract.  The Company  believed
that GES owed Key3Media Events approximately $9 million as of March 31, 2001. On
June  19,  2000,  GES  filed  an  answer,  counterclaim  and  jury  demand.  Its
counterclaim  alleged that Key3Media Events breached the contract,  violated its
fiduciary  duty toward GES and  converted GES property to the benefit and use of
Key3Media Events.  GES asked the court to award  unspecified  damages as well as
declaratory and injunctive  relief.  The Company received  subsequent  pleadings
filed by GES


                                      -26-


<PAGE>


alleging  damages of  approximately  $33 million on a variety of different legal
theories plus additional damages for lost future profits of $20 million.

     On March 9, 2001,  Key3Media Events filed an Amended Complaint that alleged
a number of additional  claims including  breach of the Delaware  Consumer Fraud
Act and the Delaware  Deceptive Trade Practices Act, as well as various business
torts. On April 18, 2001, in response to Key3Media  Events'  Amended  Complaint,
GES filed an answer,  counterclaim and jury demand.  The filing alleged a number
of  additional  counterclaims  including  breach  of  Delaware  Deceptive  Trade
Practices Act and unjust  enrichment and  restitution,  as well as other various
business torts.

     In  July  2001,  the  Chairman  of the  Company  and the  Chairman  of Viad
Corporation,  the parent of GES, have agreed to end the litigation. As a result,
advance  payments  previously  received  from GES that were recorded as deferred
revenue  (included in other long-term  liabilities) and a net receivable  amount
from GES were  eliminated  from the Company's  balance sheet.  As a result,  the
Company's second quarter 2001 other income  (expense),  net includes an increase
of  approximately  $6.7  million.  The  Company  and GES are in the  process  of
discussing possible future business relations.

     Our wholly  owned  subsidiary,  Key3Media  Events,  leases  office space in
Needham,  Massachusetts.  The annual rental payments (net of operating expenses)
for the space are  approximately  $1.4  million and the  occupancy  of the space
extends through 2006,  subject to the terms and conditions of the lease. We have
entered  into a lease for new office space in Needham and intend to relocate our
offices  there in the fourth  quarter of 2001. We estimate that our total annual
occupancy costs under the new lease will be  approximately  $1.7 million greater
than those under the existing space.  Key3Media Events may be subject to a claim
for liability in respect of its existing space.

     In connection with its spin-off from ZDI, the Company and its  subsidiaries
have received an indemnification from ZDI against all liabilities not related to
its  businesses,  including the class actions and  derivative  litigation  filed
against  ZDI  discussed  in the  Company's  Registration  Statement  on Form S-1
(No.333-36828).

     The Company and its  subsidiaries  are subject to various  claims and legal
proceedings  arising in the normal course of business.  Management believes that
the ultimate  liability,  if any, in the  aggregate  will not be material to the
Company's financial position, results of operations or cash flows.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

     4.1 Amended and Restated  Credit  Agreement dated as of June 26, 2001 among
Key3Media Group, Inc., Morgan Stanley Senior Funding, Inc., Morgan Stanley & Co.
Incorporated,  The Bank of New York,  UBS Warburg  LLC and  certain  lenders and
guarantors named in the Agreement.

     (b) Reports on Form 8-K

     The  following  reports  on Form 8-K were filed by the  Company  during the
three months ended June 30, 2001.

    June 26, 2001 - Addition of exhibits to previously filed registration
statement on Form S-3 (File Number 333-58808).

     June 26, 2001 - Description of SOFTBANK Forums Japan acquisition as of June
1, 2001,  proposal to issue $300  million  senior  subordinated  notes due 2011,
execution of new facility lease agreement and operating  results for four of our
major events.

     June 11, 2001 - Revised audited  consolidated  financial statements for the
years ended  December  31,  2000,  1999 and 1998 and as of December 31, 2000 and
1999,  and unaudited  consolidated  financial  statements for the quarters ended
March 31, 2001 and 2000,  and as of March 31, 2001 and 2000 in  connection  with
the registration statement on Form S-3 and requirements pursuant to Rule 3-10 of
Regulation S-X.


                                      -27-