<PAGE>

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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

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



             FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 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
</Table>

                         COMMISSION FILE NUMBER 1-16061

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

                             KEY3MEDIA GROUP, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                   DELAWARE                                      95-4799962
           (State of Incorporation)                 (I.R.S. Employer Identification No.)

        5700 WILSHIRE BLVD., SUITE 325                             90036
               LOS ANGELES, CA                                   (Zip Code)
   (Address of principal executive offices)
</Table>

              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 November 12, 2001, there were 68,099,575 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.

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<PAGE>

                             KEY3MEDIA GROUP, INC.

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                               PAGE(S)
                                                                               -------
<S>              <C>                                                           <C>
Part I.  Financial Information
     Item 1.     Financial Statements:
                 Condensed Consolidated Balance Sheets as of December 31,
                   2000 and September 30, 2001 (Unaudited)...................         3
                 Condensed Consolidated Statements of Operations for the
                   Three and Nine Months ended September 30, 2000 and 2001
                   (Unaudited)...............................................         4
                 Condensed Consolidated Statements of Cash Flows for the Nine
                   Months ended September 30, 2000 and 2001 (Unaudited)......         5
                 Condensed Consolidated Statement of Changes in Shareholders'
                   Equity and Comprehensive Income for the Nine Months ended
                   September 30, 2001 (Unaudited)............................         7
                 Notes to Condensed Consolidated Financial Statements
                   (Unaudited)...............................................         8
     Item 2.     Management's Discussion and Analysis of Financial Condition
                   and Results of Operations.................................        26
     Item 3.     Quantitative and Qualitative Disclosures About Market
                   Risk......................................................        34
Part II.  Other Information
     Item 1.     Legal Proceedings...........................................        35
     Item 2.     Exhibits and Reports on Form 8-K............................        36
</Table>

                                        1
<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 terrorist attacks on September 11, 2001 have adversely affected the economy
generally and significantly decreased air travel in particular. These
developments have and will continue to adversely affect participation and
attendance at our events, although we are not able to quantify or reliably
estimate the future impact that these matters may have on our businesses,
results of operations or financial condition. See "Recent Development." 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.

                                        2
<PAGE>

                          PART I FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             KEY3MEDIA GROUP, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  2000           2001
                                                              ------------   -------------
                                                                              (UNAUDITED)
                                                                     (IN THOUSANDS)
<S>                                                           <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................   $  109,914     $   27,988
  Accounts receivable, net..................................       80,254         40,498
  Prepaid event expenses....................................        4,958          8,798
  Deferred income taxes.....................................        1,745          1,745
  Other current assets......................................        2,970          2,878
                                                               ----------     ----------
          Total current assets..............................      199,841         81,907
Property and equipment, net.................................       12,342         19,111
Intangible assets, net......................................      843,999        939,726
Deferred financing costs and other assets...................        9,151         12,698
                                                               ----------     ----------
          Total assets......................................   $1,065,333     $1,053,442
                                                               ==========     ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term obligations...............   $    1,584     $       --
  Accounts payable..........................................        8,485         14,394
  Accrued expenses..........................................       49,872         34,319
  Deferred revenue..........................................       97,886         89,200
  Other current liabilities.................................       14,887          8,148
                                                               ----------     ----------
          Total current liabilities.........................      172,714        146,061
Deferred income taxes.......................................       85,030         86,623
Long-term obligations (net of current maturities)...........      367,081        410,000
Other long-term liabilities.................................        8,568             67
Commitments and contingencies
Shareholders' equity:
  Common stock..............................................          650            681
  Additional paid-in-capital................................      422,171        402,187
  Retained earnings.........................................       38,810         18,583
  Accumulated comprehensive loss............................       (3,836)        (4,132)
  Deferred compensation.....................................      (25,855)        (6,628)
                                                               ----------     ----------
          Total shareholders' equity........................      431,940        410,691
                                                               ----------     ----------
          Total liabilities and shareholders' equity........   $1,065,333     $1,053,442
                                                               ==========     ==========
</Table>

                            See accompanying notes.
                                        3
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                       FOR THE THREE MONTHS    FOR THE NINE MONTHS
                                                        ENDED SEPTEMBER 30,    ENDED SEPTEMBER 30,
                                                       ---------------------   -------------------
                                                         2000        2001        2000       2001
                                                       ---------   ---------   --------   --------
                                                                       (UNAUDITED)
                                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                    <C>         <C>         <C>        <C>
Net revenues.........................................   $60,531     $51,483    $175,594   $175,156
Operating expenses:
  Cost of production.................................    16,666      17,842      50,562     58,418
  Selling, general and administrative................    25,694      26,439      73,214     79,105
  Stock based compensation...........................     2,776      (7,040)      3,444     (1,816)
  Depreciation and amortization......................     9,009      10,406      27,464     29,172
                                                        -------     -------    --------   --------
                                                         54,145      47,647     154,684    164,879
                                                        -------     -------    --------   --------
Income from operations...............................     6,386       3,836      20,910     10,277
Other income (expenses):
  Interest expense...................................   (10,849)     (9,780)    (23,518)   (35,118)
  Interest income....................................     1,072         257       1,454      2,736
  Other income (expense), net........................       (90)        (96)        (25)     6,542
                                                        -------     -------    --------   --------
                                                         (9,867)     (9,619)    (22,089)   (25,840)
                                                        -------     -------    --------   --------
Loss before income taxes and extraordinary item......    (3,481)     (5,783)     (1,179)   (15,563)
Income tax benefit...................................    (1,382)     (2,132)       (469)    (4,645)
                                                        -------     -------    --------   --------
Loss before extraordinary loss on retirement of
  debt...............................................    (2,099)     (3,651)       (710)   (10,918)
Extraordinary loss on retirement of debt (net of tax
  benefit of $3,220).................................        --          --          --     (9,309)
                                                        -------     -------    --------   --------
          Net loss...................................   $(2,099)    $(3,651)   $   (710)  $(20,227)
                                                        =======     =======    ========   ========
Net loss per share -- Basic and Diluted:
Net loss before extraordinary item...................   $ (0.04)    $ (0.05)   $  (0.01)  $  (0.16)
Extraordinary loss on retirement of debt.............        --          --          --      (0.14)
                                                        -------     -------    --------   --------
Net loss per share...................................   $ (0.04)    $ (0.05)   $  (0.01)  $  (0.30)
                                                        =======     =======    ========   ========
Shares used in computing basic and diluted net loss
  per share (see Notes 2 and 5)......................    58,731      68,054      55,149     66,375
</Table>

                            See accompanying notes.
                                        4
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                              FOR THE NINE MONTHS ENDED
                                                                    SEPTEMBER 30,
                                                              -------------------------
                                                                 2000          2001
                                                              -----------   -----------
                                                                     (UNAUDITED)
                                                                   (IN THOUSANDS)
<S>                                                           <C>           <C>
Cash flows from operating activities:
  Net loss..................................................   $    (710)    $ (20,227)
  Adjustments to reconcile net loss to net cash provided by
    operating activities:
    Extraordinary loss on retirement of debt................          --        12,529
    Depreciation and amortization...........................      27,464        29,172
    Stock based compensation................................       3,444        (1,816)
    Non-cash interest expense...............................       2,598        11,848
    Loss on disposal of fixed asset.........................          61            --
    Foreign exchange loss...................................          35           191
    Deferred income taxes...................................      (6,355)        1,593
  Changes in operating assets and liabilities, net of effect
    from acquired businesses:
    Accounts receivable.....................................       3,763        44,775
    Prepaid event expenses..................................      (7,744)         (901)
    Other current assets....................................        (568)          265
    Other assets............................................         (78)            6
    Accounts payable........................................      (3,874)        4,326
    Accrued expenses........................................      16,250       (16,502)
    Deferred revenue........................................      49,455       (25,533)
    Other liabilities.......................................       5,022       (16,922)
                                                               ---------     ---------
         Total adjustments..................................      89,473        43,031
                                                               ---------     ---------
         Net cash provided by operating activities..........      88,763        22,804
                                                               ---------     ---------
Cash flows from investing activities:
  Purchase of property and equipment........................      (4,477)      (12,108)
  Acquisitions of businesses, net of cash acquired..........          --      (106,242)
                                                               ---------     ---------
         Net cash used in investing activities..............      (4,477)     (118,350)
                                                               ---------     ---------
Cash flows from financing activities:
  Net transactions with Softbank, ZDI and affiliates
    excluding non-cash transactions with affiliates.........       7,170            --
  Increase in bank overdraft................................      (2,351)           --
  Proceeds from the exercise of options to purchase common
    stock...................................................          --           693
  Borrowings under credit facility..........................     330,000            --
  Proceeds from the issuance of zero coupon senior
    debentures with detachable warrants.....................      72,938            --
  Proceeds from the sale of common stock....................      69,851            --
  Payment of long-term obligations to ZDI and bank
    borrowings retained by ZDI..............................    (382,002)           --
  Repayment of long-term obligations under credit
    facility................................................     (10,000)     (300,000)
  Retirement of zero coupon senior debentures and accreted
    interest................................................          --       (83,576)
  Proceeds from issuance of senior subordinated notes.......          --       300,000
  Borrowings under revolving credit facility................          --       110,000
  Payment of dividend to ZDI................................     (42,998)           --
  Payment of costs associated with the issuance of long-term
    obligations.............................................      (8,962)      (12,975)
                                                               ---------     ---------
         Net cash provided by financing activities..........      33,646        14,142
                                                               ---------     ---------
Effects of exchange rate changes on cash....................          37          (522)
                                                               ---------     ---------
Net increase (decrease) in cash and cash equivalents........     117,969       (81,926)
Cash and cash equivalents at beginning of period............       5,570       109,914
                                                               ---------     ---------
Cash and cash equivalents at end of period..................   $ 123,539     $  27,988
                                                               =========     =========
                                See accompanying notes.
</Table>

                                        5
<PAGE>
                             KEY3MEDIA GROUP, INC.

         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)

<Table>
<Caption>
                                                              FOR THE NINE MONTHS ENDED
                                                                    SEPTEMBER 30,
                                                              -------------------------
                                                                 2000          2001
                                                              -----------   -----------
                                                                     (UNAUDITED)
                                                                   (IN THOUSANDS)
<S>                                                           <C>           <C>
Supplemental cash flow disclosures:
  Interest paid.............................................   $   5,661     $  22,618
  Income taxes paid.........................................          --           763
Non-cash Financing Activity:
  Issuance of common stock in a business acquisition........   $      --     $     397
  Capital contribution through payment of stock issuance
    costs by ZDI............................................       2,681            --
  Adjustment to deferred income tax.........................      32,027            --
  Issuance of common stock to ZDI...........................     305,846            --
</Table>

                            See accompanying notes.
                                        6
<PAGE>

                             KEY3MEDIA GROUP, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
                 SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001

<Table>
<Caption>
                                         ADDITIONAL               ACCUMULATED        TOTAL
                                COMMON    PAID-IN     RETAINED   COMPREHENSIVE   COMPREHENSIVE     DEFERRED
                                STOCK     CAPITAL     EARNINGS       LOSS            LOSS        COMPENSATION    TOTAL
                                ------   ----------   --------   -------------   -------------   ------------   --------
                                                                      (UNAUDITED)
                                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<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          692          --           --                              --          693
Forfeiture of stock options...     --       (2,841)         --           --                           2,841           --
Adjustment in fair value of
  options requiring variable
  accounting..................     --      (18,202)         --           --                          18,202           --
Amortization of deferred
  compensation................     --           --          --           --                          (1,816)      (1,816)
Common stock issued for
  business acquired (see Note
  5)..........................     30          367          --           --                              --          397
Foreign currency translation
  adjustment..................     --           --          --         (296)           (296)             --         (296)
Net loss......................     --           --     (20,227)          --         (20,227)             --      (20,227)
                                 ----     --------    --------      -------        --------        --------     --------
Balance at September 30,
  2001........................   $681     $402,187    $ 18,583      $(4,132)       $(20,523)       $ (6,628)    $410,691
                                 ====     ========    ========      =======        ========        ========     ========
</Table>

                            See accompanying notes.
                                        7
<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 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 ZDI 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.

     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 nine months ended September 30, 2001 and 2000, respectively.

                                        8
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

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

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, "Business Combination," (SFAS No. 141)
and "Goodwill and Other Intangible Assets," (SFAS No. 142) 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 an annual impairment test 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. During 2002, the
Company will perform the first of the required impairment tests of goodwill and
indefinite lived intangible assets as of January 1, 2002 and has not yet
determined what the effect of these tests will be on the earnings and financial
position of the Company.

     Certain amounts in the financial statements and notes thereto have been
reclassified to conform to 2001 classifications.

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 September 30, 2001, the
weighted average of the number of common shares outstanding includes 2,955
common shares initially issued to SOFTBANK America Inc. ("SB America") as
consideration for the Company's acquisition of SOFTBANK Forums Japan, Inc ("SB
Forums").

     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 potentially 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 NINE MONTHS
                                                 ENDED SEPTEMBER 30,    ENDED SEPTEMBER 30,
                                                ---------------------   --------------------
                                                  2000        2001        2000       2001
                                                ---------   ---------   --------   ---------
<S>                                             <C>         <C>         <C>        <C>
Net loss......................................   $(2,099)    $(3,651)   $  (710)   $(20,227)
                                                 -------     -------    -------    --------
Weighted average common shares................    58,731      68,054     55,149      66,375
                                                 -------     -------    -------    --------
Denominator for basic calculation.............    58,731      68,054     55,149      66,375
                                                 -------     -------    -------    --------
Net loss per share -- basic...................   $ (0.04)    $ (0.05)   $ (0.01)   $  (0.30)
                                                 =======     =======    =======    ========
</Table>

                                        9
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

<Table>
<Caption>
                                                FOR THE THREE MONTHS    FOR THE NINE MONTHS
                                                 ENDED SEPTEMBER 30,    ENDED SEPTEMBER 30,
                                                ---------------------   --------------------
                                                  2000        2001        2000       2001
                                                ---------   ---------   --------   ---------
<S>                                             <C>         <C>         <C>        <C>
Weighted average effect of anti-dilutive
  securities:
  Warrants....................................        --          --         --          --
  Stock.......................................        --          --         --          --
                                                 -------     -------    -------    --------
Total weighted average effect of anti-dilutive
  securities..................................        --          --         --          --
                                                 -------     -------    -------    --------
Denominator for diluted calculation...........    58,731      68,054     55,149      66,375
                                                 -------     -------    -------    --------
Net loss per share -- diluted.................   $ (0.04)    $ (0.05)   $ (0.01)   $  (0.30)
                                                 =======     =======    =======    ========
</Table>

3.  COMPREHENSIVE LOSS

     The components of comprehensive loss were as follows:

<Table>
<Caption>
                                                FOR THE THREE MONTHS    FOR THE NINE MONTHS
                                                 ENDED SEPTEMBER 30,    ENDED SEPTEMBER 30,
                                                ---------------------   --------------------
                                                  2000        2001        2000       2001
                                                ---------   ---------   --------   ---------
<S>                                             <C>         <C>         <C>        <C>
Net loss......................................   $(2,099)    $(3,651)   $  (710)   $(20,227)
Other comprehensive adjustment:
  Foreign currency translation................       (32)       (166)      (364)       (296)
                                                 -------     -------    -------    --------
Total comprehensive loss......................   $(2,131)    $(3,817)   $(1,074)   $(20,523)
                                                 =======     =======    =======    ========
</Table>

4.  LONG-TERM OBLIGATIONS

     Long-term Obligations consist of the following:

<Table>
<Caption>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  2000           2001
                                                              ------------   -------------
<S>                                                           <C>            <C>
Senior credit facility......................................    $300,000       $     --
$75 million zero coupon debentures including accreted
  interest of $3,386, net of discount of $9,721.............      68,665             --
Borrowings under revolving credit facility..................          --        110,000
11.25%, senior subordinated notes...........................          --        300,000
                                                                --------       --------
                                                                 368,665        410,000
Less current maturities.....................................      (1,584)            --
                                                                --------       --------
Total.......................................................    $367,081       $410,000
                                                                ========       ========
</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
issuance expenses. These net proceeds and cash on hand, were used by the Company
to repay its term loan bank borrowings under its senior bank credit facility and
to repurchase and retire zero coupon debentures issued in August 2000 in
connection with the spin-off from ZDI.

                                        10
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

     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 subsidiaries, Key3Media Events, Key3Media Von Events Inc.
and Key3Media BCR 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 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 the 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 senior 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 senior bank credit facility until June 26, 2004, at which time it
must repay any outstanding amounts. Loans under the senior bank credit facility
are guaranteed by the Company's wholly owned subsidiaries (other than foreign
and unrestricted subsidiaries, as defined) and are secured by substantially all
of their assets.

     Subject to certain conditions, our senior bank 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 senior bank credit facility. In addition, we may be required to prepay
any term loans under this part of the senior bank 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 senior bank 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 senior bank credit facility.
The senior bank credit facility contains various financial covenants including,
amongst other things, (i) limitations on dividends, (ii) limitations on the
incurrence of indebtedness, (iii) limitations on the sale or exchange of assets
and (iv) maintenance of minimum leverage and interest coverage ratios.

     In connection with the acquisition of certain tradeshow and conference
assets in three separate transactions, as described in Note 5, the Company
borrowed under its revolving credit facility $50,000 and $60,000 on September 5,
2001 and September 10, 2001, respectively.

     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. As noted
above, 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 September 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.
                                        11
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

     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 nine
months ended September 30, 2001 and 2000 of $0 and $15,522, respectively.

5.  BUSINESS COMBINATIONS

     On September 10, 2001, the Company, in three separate transactions,
acquired: (i) the Next Generation Networks and Next Generation Ventures
tradeshows and conferences (the "NGN Assets"), (ii) the Opticon and VoiceCon
tradeshows and conferences and the Business Communications Review magazine (the
"BCR Assets"); and (iii) the Voice on the Net Conferences and Session Initiation
Protocol Summits (collectively, the "Pulver Assets"). Each of the BCR Assets and
the NGN Assets relate to events that target the networking industry while the
Pulver Assets relate to events that target the networking and Internet Protocol
communications industries. The Company acquired these assets to strengthen its
presence in the networking trade show and event business.

     In connection with each of these acquisitions, the initial purchase price
was determined by applying a multiple to the average EBITDA (as defined in the
purchase agreements) for the years 2000 and 2001 attributable to each group of
assets acquired. For purposes of each acquisition closing, an estimate of 2001
EBITDA was used to calculate the estimated initial purchase price with a portion
of this estimated initial purchase price placed into an escrow account pending
final determination of the initial purchase price based upon audited financial
results for 2001. Upon the final determination of the initial purchase price,
the escrow amounts and additional amounts, if any, due each party will be
distributed as required by the purchase agreements. The following table shows
the estimated initial purchase price and the portion of the estimated initial
purchase price currently held in escrow for each acquisition:

<Table>
<Caption>
                                                 ESTIMATED
                                              INITIAL PURCHASE   AMOUNT IN
                                                   PRICE          ESCROW
                                              ----------------   ---------
<S>                                           <C>                <C>
NGN Assets..................................      $ 44,582        $ 4,458
BCR Assets..................................        13,765          1,377
Pulver Assets...............................        59,957          5,000
                                                  --------        -------
                                                  $118,304        $10,835
                                                  ========        =======
</Table>

     In each of the NGN and BCR purchase agreements there is an incentive
provision to increase the purchase price of the assets acquired. To the extent
that (i) revenues for the year 2003 are greater than the average revenue for
2000 and 2001, and provided that (ii) the percentage that EBITDA bears to
revenue for 2003 is not less than the comparable percentage of average revenue
for 2000 and 2001, then additional purchase consideration will be due each
seller. For the portion of revenue increase up to $3,000, the additional
consideration will be the amount of the increase; for that portion of the
revenue increase from $3,001 to $6,000 the additional consideration will be 1.25
times the amount of the increase; and for that portion of the increase from the
above $6,000 the additional increase will be 1.5 times the amount of the
increase.

     The Pulver asset purchase agreement includes provisions for purchase price
adjustments in each of 2002, 2003 and 2004. In each instance, EBITDA for the
year will be compared to the EBITDA attributable to the Pulver Assets for 2001
(the "Base EBITDA"). If the EBITDA for any such year exceeds the Base EBITDA,
then the purchase price will increase by an amount equal to 50% of such excess
multiplied by 8.75; conversely,

                                        12
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

if the EBITDA for any such year is less than the Base EBITDA, then the purchase
price will decrease by an amount equal to 50% of the shortfall multiplied by
8.75. Notwithstanding the foregoing, the maximum increase or decrease in
purchase price for any year is $6,000 provided however, if the price increases
as a result of the EBITDA for 2002, then the maximum increase or decrease will
be $5,000 for each subsequent year.

     These acquisitions have been recorded using the purchase method of
accounting. Accordingly, the accompanying consolidated statements of operations
do not include any revenues and expenses related to these acquisitions prior to
the respective closing dates.

     The estimated initial purchase price related to the above acquisitions is
allocated as follows:

<Table>
<S>                                                           <C>
Accounts receivable and prepaid expenses....................  $  3,004
Identifiable intangibles....................................    10,631
Goodwill....................................................   107,381
Accounts payable and accrued expenses.......................      (578)
Deferred revenue............................................    (7,268)
                                                              --------
Total cash paid.............................................   113,170
Working capital included in purchase price..................     5,134
                                                              --------
Estimated initial purchase price............................  $118,304
                                                              ========
</Table>

     This estimated initial purchase price has been preliminarily allocated
based on the estimated fair values of the assets acquired at their date of
purchase subject to final determination of the initial purchase price. This
preliminary allocation has resulted in acquired identifiable intangible assets
of $10,631, which are being amortized on a straight-line basis over 3 years. The
resulting preliminary goodwill of $107,381 is not amortized but will be
subjected to an annual impairment test in accordance with SFAS No. 142.

     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 of SB Forums for
2001 minus (ii) $450. The Company paid the purchase price in shares of its
common stock, which were valued at $10 per share for this purpose. The Company
initially issued 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 may 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.

     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
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.

                                        13
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

     Following are the Company's unaudited pro forma results for the nine months
ended September 30, 2000 and 2001, respectively, assuming the acquisitions
described above occurred on January 1, 2000:

<Table>
<Caption>
                                                              FOR THE NINE MONTHS
                                                              ENDED SEPTEMBER 30,
                                                              -------------------
                                                                2000       2001
                                                              --------   --------
<S>                                                           <C>        <C>
Net revenues................................................  $220,812   $194,141
Income (loss) before extraordinary loss.....................     3,060    (12,100)
Net income (loss)...........................................     3,060    (21,409)
Income (loss) before extraordinary loss per
  share -- diluted..........................................      0.05      (0.18)
Net income (loss) per share -- diluted......................      0.05      (0.31)
</Table>

     These pro forma results of operations have been prepared for comparative
purposes only and are not necessarily indicative of the results of operations
which actually would have resulted had the acquisitions occurred on January 1,
2000.

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.

     For the three months ended September 30, 2001, the Company recognized the
reversal of $7,040 of deferred compensation expense as a result of the fair
value accounting treatment described in FIN 44. For the nine months ended
September 30, 2001 and 2000, the Company recognized the reversal of $1,816 of
deferred compensation expense and $3,444 in amortization expense of deferred
compensation.

7.  COMMITMENTS AND CONTINGENCIES

     On March 17, 2000, Key3Media Events sued GES Exposition Services, Inc.
("GES") 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. GES counterclaimed alleging 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 alleged damages of approximately
$33,000 on a variety of different legal theories plus additional damages for
lost future profits of $20,000.

     In July 2001, the Chairman of the Company and the Chairman of Viad
Corporation, the parent of GES, 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 further result,
the Company's second quarter 2001 other income (expense), net includes an
increase of approximately $6,700. A stipulation of dismissal with prejudice
evidencing the companies' agreement to end the litigation was filed with the
court on October 19, 2001. The Company and GES are in the process of discussing
possible future business relations.

                                        14
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

     On August 31, 2001, our wholly owned subsidiary, Key3Media Events, Inc.,
provided notice of termination of its then existing leased office space in
Needham, Massachusetts to the landlord of the existing space. The annual rental
payments (net of operating expenses) for the prior space were approximately
$1,400. We have entered into a lease for new office space in Needham and
relocated to our new offices on October 1, 2001. We estimate that our total
annual occupancy costs under the new lease will be approximately $1,700 greater
than those under the prior lease. The landlord of the prior office space has
taken the position that Key3Media Events is in breach of the lease agreement and
that it did not have the right to terminate the lease. On or about November 6,
2001, Interface Group -- Massachusetts, LLC, the landlord under the prior lease
sued Key3Media Events in the Superior Court County of Norfolk, Commonwealth of
Massachusetts for breach of contract, breach of the implied covenant of good
faith and fair dealing and violations of Mass. Gen L. c. 93A (unfair and
deceptive acts and practices). The landlord has requested payment of rent for
the remainder of the term of the lease in an amount in excess of $6,500, treble
damages, attorneys' fees, costs and expenses, pre-judgement interest and costs
of suit. An answer to the complaint is due within 20 days of its service upon
Key3Media Events.

     Key3Media Events is the plaintiff and counter-defendant in a case filed
October 18, 2000 in the Eighth Judicial District Court, Clark County, Nevada.
The suit arises out of a dispute between Key3Media Events, Inc., on the one
hand, and the Venetian Casino Resort, LLC, and Interface Group-Nevada, Inc., on
the other hand, concerning COMDEX/Fall. Key3Media Events initiated the action,
seeking damages and injunctive relief against defendants for their alleged
actual and threatened breaches of lease, meeting space, and credit extension
agreements in connection with the COMDEX/Fall 2000 show. The Venetian and
Interface Group-Nevada countersued for compensatory damages "in excess of
$10,000" based on an asserted breach of an alleged oral agreement to host
keynote speeches at The Venetian, asserted breach of an alleged agreement not to
sublease certain facilities, intentional misrepresentation, and breach of the
implied covenant of good faith and fair dealing. The counterclaims include a
prayer for punitive damages. On October 19, 2001, the counter-defendants
specified their alleged damages in their supplemental response to plaintiff's
third request for production of documents. The response alleged damages of over
$3,000 arising from breaches related to Comdex/Fall 2000 and over $2,000 arising
from breaches related to Comdex/Fall 2001. The case is in discovery.

     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.

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.

                                        15
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

<Table>
<Caption>
                                                                  AS OF SEPTEMBER 30,
                                                                -----------------------
                                                                   2000         2001
                                                                ----------   ----------
<S>                                         <C>       <C>       <C>          <C>
Total assets:
  North America...........................                      $1,063,589   $1,042,238
  Europe..................................                          12,904        6,656
  Far East................................                             844        4,548
                                                                ----------   ----------
          Total...........................                      $1,077,337   $1,053,442
                                                                ==========   ==========
</Table>

9.  SUBSEQUENT EVENTS

     On November 14, 2001, the Company announced that it entered into an
agreement to amend its senior bank credit facility to avoid potential covenant
problems under the facility. It also announced plans to raise at least $50,000
from the sale of convertible preferred or common stock. The Company must raise
at least $50,000 in order for the amendment to the credit agreement to become
effective. The Company received a commitment from a related party to purchase
$25,000 of the convertible preferred stock which is conditioned, among other
things, on the effectiveness of the amendment to the credit agreement. The
amount of convertible preferred or common stock the Company sells will depend on
market conditions. If the Company is not able to raise at least $50,000 from the
sale of convertible preferred or common stock, it intends to seek other
amendments or waivers of the covenants under its senior bank credit facility and
to pursue other options to avoid covenant compliance problems which are likely
to occur by the end of the first quarter of 2002.

     The amendment to the credit facility will replace existing covenants to
maintain a minimum interest coverage ratio and maximum senior debt and total
debt to pro forma EBITDA ratios with new covenants that will require the
maintenance of a ratio of pro forma EBITDA to fixed charges (which will include
interest, domestic taxes and annual capital expenditures of up to $5,000 ) of at
least 1.1:1 and to limit its total senior debt to $110,000 (or $120,000 if
$10,000 in principal amount of the Notes is exchanged for convertible preferred
stock), its total debt to $410,000 and its annual capital expenditures to
$15,000. The Company must also repay $30,000 of its outstanding borrowings under
the credit facility with part of the proceeds from the sale of the convertible
preferred stock and reduce the borrowing limit under the facility from $150,000
to $110,000 (or $120,000 if $10,000 in principal amount of the Notes is
exchanged for convertible preferred stock). The revised covenants will remain in
effect until there have been two consecutive quarters in which the Company's pro
forma EBITDA for the last twelve months is more than $85,000, after which time
the existing covenants will come back into effect.

     If our sale of convertible preferred stock to a related party closes as
planned, we will grant that related party registration rights. We have filed a
form of the Registration Rights Agreement as Exhibit 10.4.

     The convertible preferred stock is expected to have the following terms.
The convertible preferred stock will be entitled to cash dividends when, as and
if declared by the Company's board of directors at the annual rate of 5.5% of
the applicable liquidation preference per share, and no more, which will accrue
and be payable quarterly, in effect at the beginning of the relevant quarterly
dividend period. The liquidation preference per share will initially be $25.00,
but if the Company does not pay in cash the quarterly dividends on any dividend
payment date, the liquidation preference per share will increase by the amount
of such unpaid quarterly dividends per share. In addition, to these quarterly
dividends, the convertible preferred stock will also be entitled to participate
in any dividends or distributions paid on the common shares on an as converted
basis. The convertible preferred stock will also vote together with the common
stock on an as converted basis on all matters on which the common stock is
entitled to vote. Each share of convertible preferred stock will be convertible
at any time by the holder into a number of shares of common stock equal to the
(A) then accreted liquidation preference plus (B) any accrued and unpaid
dividends multiplied by the ratio of the then conversion price over the than
current market price, divided by the then current conversion price. The

                                        16
<PAGE>
                             KEY3MEDIA GROUP, INC.

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

conversion price will initially be $5.75 but will be subject to customary
anti-dilution adjustments. The Company may redeem all or any part of the shares
of convertible preferred stock at any time beginning on the third anniversary of
their issue date at their accreted liquidation preference plus accrued but
unpaid quarterly dividends for the then current dividend period plus a premium
on the initial liquidation preference which is 3.5% in the first year in which
the shares can be redeemed and declines ratably to zero after the fourth year in
which they can be redeemed. The Company may also cause the convertible preferred
stock to be converted into a number of shares of common stock equal to (A) the
then accreted liquidation preferred plus (B) any accrued and unpaid dividend
multiplied by the ratio of the then current market price, divided by the lower
of (i) the current conversion price and (ii) 95% of the than current market
price, at any time after the volume-weighted average of the closing price of the
common stock for 60 consecutive trading days equals or exceeds 150% of the then
current conversion price. The revised covenants will remain in effect until
there have been two consecutive quarters in which the Company's pro forma EBITDA
for the last twelve months is more than $85,000, after which time the existing
covenants will come back into effect.

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

     The Company's U.S.-based subsidiaries, Key3Media Events, Key3Media Von
Events, and Key3Media BCR Events, Inc. have guaranteed the payment of principal,
premium and interest on the Company's $300,000 unsecured senior subordinated
notes. Presented below is condensed consolidating financial information for the
parent company (Key3Media Group, Inc.) only, the subsidiary guarantors only and
the subsidiary non-guarantors as a group as of December 31, 2000 and September
30, 2001 and for the three and nine months ended September 30, 2000 and 2001.

                                        17
<PAGE>

                             KEY3MEDIA GROUP, INC.

                     CONDENSED CONSOLIDATING BALANCE SHEET
                               DECEMBER 31, 2000

<Table>
<Caption>
                                                                               ELIMINATIONS
                                       PARENT                                       AND
                                      COMPANY    SUBSIDIARY     SUBSIDIARY     CONSOLIDATING
                                        ONLY     GUARANTOR    NON-GUARANTORS      ENTRIES      CONSOLIDATED
                                      --------   ----------   --------------   -------------   ------------
                                                                 (IN THOUSANDS)
<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
  Accumulated comprehensive 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>

                                        18
<PAGE>

                             KEY3MEDIA GROUP, INC.

                     CONDENSED CONSOLIDATING BALANCE SHEET
                               SEPTEMBER 30, 2001

<Table>
<Caption>
                                                                              ELIMINATIONS
                                      PARENT                                       AND
                                     COMPANY    SUBSIDIARY     SUBSIDIARY     CONSOLIDATING
                                       ONLY     GUARANTORS   NON-GUARANTORS      ENTRIES      CONSOLIDATED
                                     --------   ----------   --------------   -------------   ------------
                                                                (IN THOUSANDS)
<S>                                  <C>        <C>          <C>              <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents........  $  5,423   $   20,669      $ 1,896        $        --     $   27,988
  Accounts receivable, net.........        --       34,588        5,910                 --         40,498
  Prepaid events expenses..........        --        8,125          673                 --          8,798
  Deferred tax asset...............        --        1,745           --                 --          1,745
  Other current assets.............    12,805        1,793        1,119            (12,839)         2,878
                                     --------   ----------      -------        -----------     ----------
          Total current assets.....    18,228       66,920        9,598            (12,839)        81,907
  Intercompany receivable..........   409,700        6,293        8,389           (424,382)            --
  Property and equipment, net......        --       18,613          498                 --         19,111
  Intangibles assets, net..........        --      938,192        1,534                 --        939,726
  Investment in subsidiaries.......   509,067      113,567           --           (622,634)            --
  Other assets.....................    12,552          156          (10)                --         12,698
                                     --------   ----------      -------        -----------     ----------
          Total assets.............  $949,547   $1,143,741      $20,009        $(1,059,855)    $1,053,442
                                     ========   ==========      =======        ===========     ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable.................  $     --   $   12,581      $ 1,813        $        --     $   14,394
  Accrued expenses.................     9,407       20,981        6,513             (2,582)        34,319
  Deferred revenue.................        --       85,872        3,328                 --         89,200
  Other current liabilities........        --        7,728          420                 --          8,148
                                     --------   ----------      -------        -----------     ----------
          Total current
            liabilities............     9,407      127,162       12,074             (2,582)       146,061
  Intercompany payable.............        --      419,146        5,236           (424,382)            --
  Deferred taxes...................     1,750       95,130           --            (10,257)        86,623
  Long-term obligations (net of
     current maturities)...........   410,000           --           --                 --        410,000
  Other long-term liabilities......        --           57           10                 --             67
Shareholders' equity:
  Common stock.....................       681           --           --                 --            681
  Additional paid-in-capital.......   515,754      410,991        7,985           (532,543)       402,187
  Retained earnings................    18,583       91,255       (1,164)           (90,091)        18,583
  Accumulated comprehensive loss...        --           --       (4,132)                --         (4,132)
  Deferred compensation............    (6,628)          --           --                 --         (6,628)
                                     --------   ----------      -------        -----------     ----------
          Total shareholders'
            equity.................   528,390      502,246        2,689           (622,634)       410,691
                                     --------   ----------      -------        -----------     ----------
          Total liabilities &
            shareholders' equity...  $949,547   $1,143,741      $20,009        $(1,059,855)    $1,053,442
                                     ========   ==========      =======        ===========     ==========
</Table>

                                        19
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001

<Table>
<Caption>
                                                                            ELIMINATIONS
                                    PARENT                                       AND
                                   COMPANY    SUBSIDIARY     SUBSIDIARY     CONSOLIDATING
                                     ONLY     GUARANTORS   NON-GUARANTORS      ENTRIES      CONSOLIDATED
                                   --------   ----------   --------------   -------------   ------------
                                                              (IN THOUSANDS)
<S>                                <C>        <C>          <C>              <C>             <C>
Net revenues.....................  $     --    $152,167       $26,423          $(3,434)       $175,156
Operating expenses:
  Cost of production.............        --      46,266        12,152               --          58,418
  Selling, general and
     administrative..............       181      74,479         4,445               --          79,105
  Stock based compensation.......    (1,816)         --            --               --          (1,816)
  Depreciation and
     amortization................        --      28,504           668               --          29,172
                                   --------    --------       -------          -------        --------
                                     (1,635)    149,249        17,265               --         164,879
                                   --------    --------       -------          -------        --------
Income (loss) from operations....     1,635       2,918         9,158           (3,434)         10,277
Other income (expenses):
  Interest expense...............   (20,689)    (14,424)           (5)              --         (35,118)
  Interest income................       203       2,462            71               --           2,736
  Intercompany activity..........        --          --        (3,434)           3,434              --
  Other expense, net.............        --       6,691          (149)              --           6,542
                                   --------    --------       -------          -------        --------
                                    (20,486)     (5,271)       (3,517)           3,434         (25,840)
                                   --------    --------       -------          -------        --------
Income (loss) before income taxes
  and extraordinary loss on
  retirement of debt.............   (18,851)     (2,353)        5,641               --         (15,563)
Income tax provision (benefit)...    (5,410)     (1,310)        2,075               --          (4,645)
                                   --------    --------       -------          -------        --------
Income (loss) before
  extraordinary loss on
  retirement of debt.............   (13,441)     (1,043)        3,566               --         (10,918)
Extraordinary loss on retirement
  of debt........................    (4,268)     (5,041)           --               --          (9,309)
Equity in earnings (loss) of
  Subsidiaries...................    (2,518)         --            --            2,518              --
                                   --------    --------       -------          -------        --------
Net income (loss)................  $(20,227)   $ (6,084)      $ 3,566          $ 2,518        $(20,227)
                                   ========    ========       =======          =======        ========
</Table>

                                        20
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000

<Table>
<Caption>
                                                                            ELIMINATIONS
                                    PARENT                                       AND
                                    COMPANY   SUBSIDIARY     SUBSIDIARY     CONSOLIDATING
                                     ONLY     GUARANTOR    NON-GUARANTORS      ENTRIES      CONSOLIDATED
                                    -------   ----------   --------------   -------------   ------------
                                                               (IN THOUSANDS)
<S>                                 <C>       <C>          <C>              <C>             <C>
Net revenues......................  $    --    $173,065       $ 3,762          $(1,233)       $175,594
Operating expenses:
  Cost of production..............       --      48,345         2,217               --          50,562
  Selling, general and
     administrative...............       71      69,947         3,196               --          73,214
  Stock based compensation........    2,776         668            --               --           3,444
  Depreciation and amortization...       --      27,164           300               --          27,464
                                    -------    --------       -------          -------        --------
                                      2,847     146,124         5,713               --         154,684
                                    -------    --------       -------          -------        --------
Income (loss) from operations.....   (2,847)     26,941        (1,951)          (1,233)         20,910
Other income (expenses):
  Interest expense................   (2,319)    (21,199)           --               --         (23,518)
  Interest income.................       --       1,401            53               --           1,454
  Intercompany activity...........       --          --        (1,233)           1,233              --
  Other expense, net..............       --         (61)           36               --             (25)
                                    -------    --------       -------          -------        --------
                                     (2,319)    (19,859)       (1,144)           1,233         (22,089)
                                    -------    --------       -------          -------        --------
Income (loss) before income
  taxes...........................   (5,166)      7,082        (3,095)              --          (1,179)
Income tax provision (benefit)....   (2,050)      1,617           (36)              --            (469)
                                    -------    --------       -------          -------        --------
                                     (3,116)      5,465        (3,059)              --            (710)
Equity in earnings (loss) of
  Subsidiaries....................    2,406          --            --           (2,406)             --
                                    -------    --------       -------          -------        --------
Net income (loss).................  $  (710)   $  5,465       $(3,059)         $(2,406)       $   (710)
                                    =======    ========       =======          =======        ========
</Table>

                                        21
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001

<Table>
<Caption>
                                                                            ELIMINATIONS
                                    PARENT                                       AND
                                    COMPANY   SUBSIDIARY     SUBSIDIARY     CONSOLIDATING
                                     ONLY     GUARANTORS   NON-GUARANTORS      ENTRIES      CONSOLIDATED
                                    -------   ----------   --------------   -------------   ------------
                                                               (IN THOUSANDS)
<S>                                 <C>       <C>          <C>              <C>             <C>
Net revenues......................  $    --    $39,913         $1,219          $ (649)        $51,483
Operating expenses:
  Cost of production..............       --     13,534          4,308              --          17,842
  Selling, general and
     administrative...............       41     24,568          1,830              --          26,439
  Stock based compensation........   (7,040)        --             --              --          (7,040)
  Depreciation and amortization...       --     10,027            379              --          10,406
                                    -------    -------         ------          ------         -------
                                     (6,999)    48,129          6,517              --          47,647
                                    -------    -------         ------          ------         -------
Income (loss) from operations.....    6,999     (8,216)         5,702            (649)          3,836
Other income (expenses):
  Interest expense................   (9,782)        (1)             3              --          (9,780)
  Interest income.................       46        147             64              --             257
  Intercompany activity...........       --         --           (649)            649              --
  Other expense, net..............       --         --            (96)             --             (96)
                                    -------    -------         ------          ------         -------
                                     (9,736)       146           (678)            649          (9,619)
                                    -------    -------         ------          ------         -------
Income (loss) before income taxes
  and extraordinary loss on
  retirement of debt..............   (2,737)    (8,070)         5,024              --          (5,783)
Income tax provision (benefit)....   (1,269)    (2,779)         1,916              --          (2,132)
                                    -------    -------         ------          ------         -------
                                     (1,468)    (5,291)         3,108              --          (3,651)
Equity in earnings (loss) of
  Subsidiaries....................   (2,183)        --             --           2,183              --
                                    -------    -------         ------          ------         -------
Net income (loss).................  $(3,651)   $(5,291)        $3,108          $2,183         $(3,651)
                                    =======    =======         ======          ======         =======
</Table>

                                        22
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000

<Table>
<Caption>
                                                                            ELIMINATIONS
                                    PARENT                                       AND
                                    COMPANY   SUBSIDIARY     SUBSIDIARY     CONSOLIDATING
                                     ONLY     GUARANTOR    NON-GUARANTORS      ENTRIES      CONSOLIDATED
                                    -------   ----------   --------------   -------------   ------------
                                                               (IN THOUSANDS)
<S>                                 <C>       <C>          <C>              <C>             <C>
Net revenues......................  $    --    $60,594        $ 1,018          $(1,081)       $ 60,531
Operating expenses:
  Cost of production..............       --     16,459            207               --          16,666
  Selling, general and
     administrative...............       71     24,548          1,075               --          25,694
  Stock based compensation........    2,776         --             --               --           2,776
  Depreciation and amortization...       --      8,878            131               --           9,009
                                    -------    -------        -------          -------        --------
                                      2,847     49,885          1,413               --          54,145
                                    -------    -------        -------          -------        --------
Income (loss) from operations.....   (2,847)    10,709           (395)          (1,081)          6,386
Other income (expenses):
  Interest expense................   (2,319)    (8,530)            --               --         (10,849)
  Interest income.................       --      1,062             10               --           1,072
  Intercompany activity...........       --        152         (1,233)           1,081              --
  Other expense, net..............       --        (60)           (30)              --             (90)
                                    -------    -------        -------          -------        --------
                                     (2,319)    (7,376)        (1,253)           1,081          (9,867)
                                    -------    -------        -------          -------        --------
Income (loss) before income
  taxes...........................   (5,166)     3,333         (1,648)              --          (3,481)
Income tax provision (benefit)....   (2,050)       668             --               --          (1,382)
                                    -------    -------        -------          -------        --------
                                     (3,116)     2,665         (1,648)              --          (2,099)
Equity in earnings (loss) of
  Subsidiaries....................    2,406         --             --           (2,406)             --
                                    -------    -------        -------          -------        --------
Net income (loss).................  $  (710)   $ 2,665        $(1,648)         $(2,406)       $ (2,099)
                                    =======    =======        =======          =======        ========
</Table>

                                        23
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000

<Table>
<Caption>
                                                                                      ELIMINATIONS
                                                PARENT                 SUBSIDIARY         AND
                                               COMPANY    SUBSIDIARY      NON-       CONSOLIDATING
                                                 ONLY     GUARANTORS   GUARANTORS       ENTRIES        CONSOLIDATED
                                               --------   ----------   ----------   ----------------   ------------
                                                                          (IN THOUSANDS)
<S>                                            <C>        <C>          <C>          <C>                <C>
Cash flows from operating activities:
  Net income (loss)..........................  $   (710)  $   5,465     $ (3,059)       $(2,406)        $    (710)
  Adjustments to reconcile net income (loss)
    to net cash provided by (used in)
    operating activities:
  Depreciation and amortization..............        --      27,164          300             --            27,464
  Stock-based compensation...................     2,776         668           --             --             3,444
  Non-cash interest expense..................       574       2,024           --             --             2,598
  Loss on disposal of fixed assets...........        --          --           61             --                61
  Equity in earnings (loss) of
    subsidiaries.............................    (2,406)         --           --          2,406                --
  Foreign exchange loss......................        --          --           35             --                35
  Deferred income taxes......................        --      25,697      (32,052)            --            (6,355)
Changes in operating assets & liabilities:
  Accounts receivable........................      (205)        267        3,701             --             3,763
  Prepaid event expenses.....................        --      (6,340)      (1,404)            --            (7,744)
  Other current assets.......................        --         233         (801)            --              (568)
  Other assets...............................        --      (8,267)       8,189             --               (78)
  Accounts payable...........................        --      (3,845)         (29)            --            (3,874)
  Accrued expenses...........................       207      15,436          607             --            16,250
  Deferred revenue...........................        --      44,954        4,501             --            49,455
  Other liabilities..........................        --       5,758         (736)            --             5,022
                                               --------   ---------     --------        -------         ---------
         Total adjustments...................       946     103,749      (17,628)         2,406            89,473
                                               --------   ---------     --------        -------         ---------
         Net cash provided by (used in)
           operating activities..............       236     109,214      (20,687)            --            88,763
Cash flows from investing activities:
  Purchase of property & equipment...........        --      (4,096)        (381)            --            (4,477)
                                               --------   ---------     --------        -------         ---------
         Net cash used in investing
           activities........................        --      (4,096)        (381)            --            (4,477)
Cash flows from financing activities:
  Net transactions with Softbank, ZDI &
    affiliates excluding non-cash
    transactions with affiliates.............   (94,863)     78,919       23,114             --             7,170
  Increase (decrease) in bank overdraft......        --      (2,351)          --             --            (2,351)
  Borrowings under new credit facility.......        --     330,000           --             --           330,000
  Proceeds from the issuance of zero coupon
    senior debentures with detachable
    warrants.................................    72,938          --           --             --            72,938
  Proceeds from the sale of common stock.....    69,851          --           --             --            69,851
  Payment of cost associated with the
    issuance of long-term obligations and
    issuance of stock........................      (442)     (8,520)          --             --            (8,962)
  Repayment of long-term obligations to ZDI
    and bank borrowings retained by ZDI......        --    (382,002)          --             --          (382,002)
  Repayment of long-term obligations under
    the new credit facility..................        --     (10,000)          --             --           (10,000)
  Payment of dividend to ZDI.................   (42,998)         --           --             --           (42,998)
                                               --------   ---------     --------        -------         ---------
         Net cash provided by financing
           activities........................     4,486       6,046       23,114             --            33,646
Effects of exchange rate changes on cash.....        --          48          (11)            --                37
Net increase in cash and cash equivalents....     4,722     111,212        2,035             --           117,969
Cash and cash equivalents at beginning of
  period.....................................        --       3,593        1,977             --             5,570
                                               --------   ---------     --------        -------         ---------
Cash and cash equivalents at end of period...  $  4,722   $ 114,805     $  4,012        $    --         $ 123,539
                                               ========   =========     ========        =======         =========
</Table>

                                        24
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001

<Table>
<Caption>
                                                                                      ELIMINATIONS
                                                 PARENT                  SUBSIDIARY        AND
                                                 COMPANY    SUBSIDIARY      NON-      CONSOLIDATING
                                                  ONLY      GUARANTORS   GUARANTORS      ENTRIES      CONSOLIDATED
                                                ---------   ----------   ----------   -------------   ------------
                                                                          (IN THOUSANDS)
<S>                                             <C>         <C>          <C>          <C>             <C>
Cash flows from operating activities:
  Net income (loss)...........................  $ (20,227)  $  (6,084)    $  3,566      $  2,518       $ (20,227)
  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.............         --      28,504          668            --          29,172
    Stock-based compensation..................     (1,816)         --           --            --          (1,816)
    Non-cash interest expense.................     10,935         913           --            --          11,848
    Equity in earnings (loss) of
      subsidiaries............................      2,518          --           --        (2,518)             --
    Foreign exchange loss.....................         --         106           85            --             191
    Deferred income taxes.....................         --      11,850           --       (10,257)          1,593
  Changes in operating assets & liabilities,
    net of effect from acquired businesses:
    Accounts receivable.......................         --      37,239        7,536            --          44,775
    Prepaid event expenses....................         --      (2,427)       1,526            --            (901)
    Other current assets......................     (6,892)       (101)      (5,581)       12,839             265
    Other assets..............................         --         (67)          73            --               6
    Accounts payable..........................         --       5,114         (788)           --           4,326
    Accrued expenses..........................      9,407     (30,971)       7,644        (2,582)        (16,502)
    Deferred revenue..........................         --     (12,907)     (12,626)           --         (25,533)
    Other liabilities.........................         --     (15,350)      (1,572)           --         (16,922)
                                                ---------   ---------     --------      --------       ---------
         Total adjustments....................     19,897      28,687       (3,035)       (2,518)         43,031
                                                ---------   ---------     --------      --------       ---------
         Net cash provided by (used in)
           operating activities...............       (330)     22,603          531            --          22,804
Cash flows from investing activities:
  Purchase of property & equipment............         --     (11,869)        (239)           --         (12,108)
  Acquisition of businesses, net of cash
    acquired..................................         --    (113,970)       7,728            --        (106,242)
                                                ---------   ---------     --------      --------       ---------
         Net cash provided by (used in)
           investing activities...............         --    (125,839)       7,489            --        (118,350)
Cash flows from financing activities:
  Net transactions with affiliates excluding
    non-cash transactions with affiliates.....   (313,166)    322,191       (9,025)           --              --
  Proceeds from the exercise of options to
    purchase common stock.....................        693          --           --            --             693
  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)
  Proceeds from issuance of senior
    subordinated notes........................    300,000          --           --            --         300,000
  Borrowing under revolving credit facility...    110,000          --           --            --         110,000
  Payment of costs associated with the
    issuance of long-term obligations.........    (12,975)         --           --            --         (12,975)
                                                ---------   ---------     --------      --------       ---------
         Net cash provided by (used in)
           financing activities...............        976      22,191       (9,025)           --          14,142
Effects of exchange rate changes on cash......         --          --         (522)           --            (522)
Net increase (decrease) in cash and cash
  equivalents.................................        646     (81,045)      (1,527)           --         (81,926)
Cash and cash equivalents at beginning of
  period......................................      4,777     101,714        3,423            --         109,914
                                                ---------   ---------     --------      --------       ---------
Cash and cash equivalents at end of period....  $   5,423   $  20,669     $  1,896      $     --       $  27,988
                                                =========   =========     ========      ========       =========
</Table>

                                        25
<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.

RECENT DEVELOPMENTS

     On September 10, 2001, the Company, in three separate transactions,
acquired: (i) the Next Generation Networks and Next Generation Ventures
tradeshows and conferences (the "NGN Assets"), (ii) the Opticon and VoiceCon
tradeshows and conferences and the Business Communications Review magazine (the
"BCR Assets"), and (iii) the Voice on the Net (VON) Conferences and Session
Initiation Protocol Summits (collectively, the "Pulver Assets"). The BCR Assets
and NGN Assets relate to events that target the networking industry, while the
Pulver Assets relate to events that target the networking and Internet Protocol
communication industries. The Company acquired these assets to strengthen its
presence in the networking trade show and conference business. A description of
the terms and conditions of these purchase transactions is included in Note 5 to
the condensed consolidated financial statements appearing elsewhere in this Form
10-Q.

     On September 11, 2001, the United States was attacked by terrorists using
hijacked commercial airplanes. The United States and other countries responded
with concerted action against the suspected terrorists. There have recently been
several cases of anthrax infection in the United States which are suspected to
be acts of terrorism. These events and the ongoing uncertainty they have created
have adversely affected the economy in general and the trade show and conference
industry in particular. There has been a decline in air travel and trade show
and conference attendance due to, among other things, the public's general
reluctance to travel and fears concerning additional acts of terrorism, as well
as reduced operations by airlines due to, among other things, decreased demands
for air travel, new security directives and increased costs. While we cannot
predict how these events or any similar events that may occur in the future will
affect our businesses, results of operations or financial condition, it is
likely that our trade shows and conferences will be negatively affected at least
in the near future. Continued negative market conditions due to acts of
terrorism, any future occurrences of similar actions and potential responsive
actions by the United States and other countries that perpetuate or aggravate
the current climate of fear and uncertainty could cause more disruption of our
trade shows and conferences.

     COMDEX/Fall opened on November 12, 2001 with approximately 640,000 net
square feet of exhibition floor space occupied. The Company generally requires
exhibitors to pay for their exhibition space a substantial amount of time before
the show is held and is entitled to keep those payments if an exhibitor cancels
before the show. Including this cancellation revenue, the Company has received
payment to date for the equivalent of approximately 715,000 net square feet of
exhibition space. As a result of the events of September 11th and the continuing
difficulties in the IT industry, we believe that COMDEX/Fall and the BCR, NGN
and VON events in the fourth quarter will have lower revenue than previously
anticipated from exhibition space, conference fees, advertising and sponsorship
and fees we receive from third parties who provide services that we promote to
our exhibitors.

                                        26
<PAGE>

     On November 14, 2001, we announced that we have entered into an agreement
to amend our senior bank credit facility to avoid potential covenant problems
under the facility. We also announced our plan to raise at least $50 million
from the sale of convertible preferred or common stock. We must raise at least
$50 million in order for the amendment to our senior bank credit facility to
become effective. We have received a commitment from a related party to purchase
$25 million of the convertible preferred stock which is conditioned upon, among
other things, the effectiveness of the amendment to our senior bank credit
facility. The amount of convertible preferred or common stock that we sell will
depend on market conditions. If we are not able to raise at least $50 million
from the sale of convertible preferred or common stock, we intend to seek other
amendments or waivers of the covenants under our senior bank credit facility and
to pursue other options to avoid covenant compliance problems which are likely
to occur by the end of the first quarter of 2002. The amendment to our credit
facility and the expected terms of the convertible preferred stock are described
below under "Liquidity and Capital Resources".

RESULTS OF OPERATIONS

     The comparability of our results of operations for the three and nine month
periods ending September 30, 2001 with our results for the comparable periods in
2000 is significantly affected because we held our N+I Paris event in the third
quarter of 2001 and in the fourth quarter of 2000. In order to improve the
comparability of these periods, we have excluded the results from N+I Paris from
our 2001 results in appropriate places in the following discussion. In 2001,
revenues from our N+I Paris event increased by about 6.3%, exhibit service
revenues from the event increased by about 5.7%, and advertising and
sponsorships from the event increased by about 13.2%, in each case compared to
2000. The average rental rate decreased by 6.3% and the net paid square footage
at the event decrease by 10.2% in 2001 compared to 2000. The increase in revenue
in 2001 over 2000 is principally due to the favorable exchange rate in the
current period. We do not generate conference revenues at N+I Paris.

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

     The Company believes that the changes in revenues, net paid square footage
of exhibit space, and conference participants were adversely effected by the
continuing difficulties in the IT industry and reductions in IT marketing and
travel budgets and the events that occurred on September 11, 2001. We held our
second and third largest events during the quarter on and after the September
11th tragedy. We held our N+I Atlanta event on September 11, 2001 through
September 13, 2001 and our Seybold Seminars San Francisco event on September 25,
2001 to September 27, 2001.

     Our total revenue decreased $9.0 million, or 14.9%, to $51.5 million in the
third quarter of 2001 from $60.5 million in the comparable period in 2000. This
decrease is principally attributable to lower overall revenue at two of our
major events, N+I Atlanta and Seybold Seminars San Francisco, partially offset
by the timing of our N+I Paris event, which was held in the third quarter of
2001 but was held in the fourth quarter of 2000. After adjusting revenue for the
three months ended September 30, 2001 to exclude the effect of our N+I Paris
event, our total revenue for this period would have been $40.7 million, a
decrease of $19.9 million, or 32.8% from the comparable period in 2000.

     Exhibitor services revenue decreased by $1.0 million, or 2.3%, to $42.0
million in the third quarter of 2001 from $43.0 million in the comparable period
in 2000. This decrease is primarily attributable to lower square footage at our
N+I Atlanta and Seybold Seminars San Francisco events and lower event related
revenue from our custom event business partially offset by the timing of our N+I
Paris event. Excluding the effect of N+I Paris, exhibitor revenue for the third
quarter of 2001 would have been $32.1 million, a decrease of $11.0 million, or
25.5%, from the comparable period in 2000. The average rental rate per square
foot paid by exhibitors decreased 8.3% to $48.24 in the third quarter of 2001
from $52.60 in the comparable period in 2000. This decrease is primarily
attributable to the inclusion of the N+I Paris event in the average rental rate,
which had an average rental rate of approximately $39.00 per square foot.
Excluding the effect of N+I Paris, the average rental rate per square foot paid
by exhibitors increased 0.6% to $52.90 in the third quarter of 2001. In
addition, net paid square footage increased 3.1% in the third quarter of 2001 to
594,659 from 576,593 in the comparable period in 2000. This increase is
primarily due to the timing of our N+I Paris event partially offset
                                        27
<PAGE>

by the decrease in net paid square footage for our N+I Atlanta and Seybold
Seminars San Francisco events from the prior year. Excluding the effect of N+I
Paris, net paid square footage decreased 31.3% in the third quarter of 2001 to
396,392. The combined net paid square footage decrease for the N+I Atlanta and
Seybold Seminar San Francisco events in 2001 from 2000 is 36.3%.

     Conference fees decreased $5.9 million, or 64.8%, to $3.2 million in the
third quarter of 2001 from $9.1 million in the comparable period in 2000. This
decrease was principally attributable to the lower conference attendance at our
N+I Atlanta and Seybold Seminars San Francisco events and to a lesser extent the
discontinuance or postponement of two smaller regional events in 2001. Because
our N+I Paris event does not have conference revenues, the timing of this event
did not have any effect on our conference fees for the period. The number of
participants at our conferences decreased 64.6% to 2,989 in the third quarter of
2001 from 8,433 in the comparable period in 2000. The decrease in conference
fees was also affected by a 0.7% decrease in the average revenue per conference
attendee in the third quarter of 2001 of $1,072 compared with $1,080 in the
comparable period in 2000. We believe the events of September 11, 2001
contributed in part to the overall decrease in conference attendance at our N+I
Atlanta and Seybold Seminars San Francisco events as they were held on September
11, 2001 to September 13, 2001 and September 25, 2001 to September 27, 2001,
respectively. Conference fees for the N+I Atlanta and Seybold Seminars San
Francisco events decreased 64.0% in 2001 over 2000 on a combined basis.

     Advertising and sponsorship revenues decreased $2.1 million, or 25.6%, to
$6.2 million in the third quarter of 2001 from $8.4 million in the comparable
period in 2000. This decrease is primarily attributable to lower advertising and
sponsorship revenue for our N+I Atlanta and Seybold Seminars San Francisco
events and to a lesser extent the discontinuance or postponement of two smaller
regional events in 2001, partially offset by timing of our N+I Paris event and
corporate sponsorship revenue earned for the first time in 2001. Excluding the
effect of N+I Paris, adjusted advertising and sponsorship revenues decreased
$3.0 million, or 35.7%, in the third quarter of 2001.

     Cost of production increased $1.2 million, or 7.1%, to $17.8 million in the
third quarter of 2001 from $16.7 million in the comparable period in 2000. As a
percentage of revenue, cost of production represented 34.7% of revenue in the
third quarter of 2001 compared to 27.5% in the comparable period of 2000. The
aggregate dollar and percentage increases in cost of production are principally
attributable to the timing of our N+I Paris event partially offset by lower
costs at our major shows this period. Excluding the effect of N+I Paris, cost of
production decreased $3.0 million, or 18.1%, in the third quarter of 2001
compared to the third quarter of 2000 and represented 33.6% of third quarter
revenue. Our cost of production increased as a percentage of our revenue because
our revenue declined more than our costs, reflecting the fixed cost nature of
our cost of production.

     SG&A expenses increased $0.7 million, or 2.9%, to $26.4 million in the
third quarter of 2001 from $25.7 million in the comparable period in 2000. As a
percentage of revenue, SG&A expenses represented 51.4% of revenue in the third
quarter of 2001 compared to 42.4% in the comparable period in 2000. The increase
in SG&A expenses on a dollar basis is primarily due to the additional SG&A
expenses resulting from recently acquired businesses. Excluding the results of
NGN, BCR, Pulver and SOFTBANK Forums Inc. (SFI), SG&A expenses decreased by $0.3
million, or 1.2 %, in the third quarter of 2001 compared to the comparable
period in 2000.

     During August 2000, we granted stock options to certain of our employees
who were previously employed by Ziff-Davis that we must account for under
variable accounting valuation principles. Using this accounting treatment we
must record the fair value of these options at the close of each accounting
period and recognize the increase or decrease in fair value from period to
period as an increase or decrease in stock-based compensation. For the three
months ended September 30, 2001, we recognized a reversal of $7.0 million of
non-cash stock-based compensation expense compared to $2.8 million of non-cash
stock-based compensation expense for the same period in 2000. The fair value of
these variable accounting options at September 30, 2001 was lower than their
fair value when calculated at June 30, 2001, thereby resulting in a reversal of
previously recorded expense for the current period.

                                        28
<PAGE>

     As a result of the foregoing, EBITDA decreased by $1.2 million, or 7.6%, to
$14.1 million in the third quarter of 2001 from $15.3 million in the same period
in 2000. After adjusting to exclude the effects of the non-cash stock-based
compensation charges in both periods, adjusted EBITDA decreased by $11.0
million, or 60.7%, to $7.1 million in the third quarter of 2001 from $18.1
million in the same period in 2000. After further adjusting to exclude the
effects of N+I Paris, adjusted EBITDA would have been $0.5 million in the third
quarter of 2001, a decrease of $17.6 million, or 97.4%, from adjusted EBITDA in
the comparable period in 2000.

     Depreciation and amortization increased $1.4 million, or 15.5%, to $10.4
million in the third quarter of 2001 from $9.0 million in the comparable period
in 2000.

     Other income (expense) decreased $0.2 million or 2.5%, to expense of $9.6
million in the three months ended September 30, 2001 from expense of $9.9
million in the comparable period in 2000. The decrease is attributable to a
decrease in interest expense, net.

     The benefit for income tax increased $0.8 million, or 54.3%, to $2.1
million in the third quarter of 2001 from $1.4 million in the comparable period
in 2000. We estimate that the effective tax rate for the year ending 2001 will
be 28.0% compared to the annual estimated effective tax rate of 39.7% used in
computing expense for the quarter ended September 30, 2000. Accordingly, the
provision for the third quarter of 2001 was adjusted to reflect a provision of
28.0% of the loss before income taxes inclusive of the extraordinary item for
the nine months ended September 30, 2001.

     As a result of the foregoing, our net loss increased $1.6 million, or
73.9%, to $3.7 million in the third quarter of 2001 from $2.1 million in the
comparable period in 2000.

  NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2000

     The Company believes that the changes in revenues, net paid square footage
of exhibit space, and conference participants were adversely effected by
continuing difficulties in the IT industry and reductions in IT marketing and
travel budgets and, to a lesser extent, the events that occurred on September
11, 2001.

     Our total revenue decreased $0.4 million, or 0.2%, to $175.2 million in the
nine months ended September 30, 2001 from $175.6 million in the comparable
period in 2000. This decrease is primarily attributable to the lower overall
revenue at two of our major events, N+I Atlanta and Seybold Seminars San
Francisco, and the discontinuance or postponement of several smaller regional
events in 2001 partially offset by the timing of our N+I Paris event, which was
held in the third quarter of 2001 but was held in the fourth quarter of 2000 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 nine months ended September 30, 2001 to exclude the
effects SFI and the N+I Paris event, our revenue for the period would have been
$152.8 million, a decrease of $22.8 million, or 13.0%, from the comparable
period in 2000.

     Exhibitor services revenue increased by $12.1 million, or 10.9%, to $123.2
million in the nine months ended September 30, 2001 from $111.1 million in the
comparable period in 2000. This increase is primarily attributable to the
addition of operating results from SFI and the N+I Paris event partially offset
by lower exhibitor revenues at our N+I Atlanta and Seybold Seminars San
Francisco events. Excluding the effects of SFI and N+I Paris, adjusted exhibitor
revenue for the nine months ended September 30, 2001 would have been $103.4
million, a decrease of $7.7 million, or 6.9%, from the comparable period in
2000. The average rental rate per square foot paid by exhibitors decreased 3.8%
to $50.64 in the nine months ended September 30, 2001 from $52.64 in the
comparable period in 2000. This decrease is primarily attributable to the
inclusion of SFI's N+I Tokyo event and the timing of the N+I Paris event in
2001, with each having an average rental rate of approximately $39.00 per square
foot. Excluding the effects of the N+I Tokyo and N+I Paris events, the average
rental rate per square foot paid by exhibitors increased 4.0% to $54.72 in the
nine months ended September 30, 2001. In addition, net paid square footage
increased 8.0% in the nine months ended September 30, 2001 to 1,562,888 from
1,447,366 in the comparable period in 2000. This increase is primarily due to
the addition of SFI's N+I Tokyo event and the timing of the N+I Paris event.
Excluding the

                                        29
<PAGE>

effects of N+I Tokyo and N+I Paris, net paid square footage decreased 19.9% in
the nine months ended September 30, 2001 to 1,159,721.

     Conference fees decreased $12.6 million, or 28.3%, to $32.0 million in the
nine months ended September 30, 2001 from $44.6 million in the comparable period
in 2000. This decrease was principally attributable to the lower conference
attendance at most of our major events, mainly at our N+I Las Vegas, N+I
Atlanta, JavaOne and Seybold Seminars San Francisco events, partially offset by
the inclusion of SFI's N+I Tokyo event. Excluding the effect of N+I Tokyo,
adjusted conference fees decreased $13.5 million, or 30.2% in the nine months
ended September 30, 2001. Because our N+I Paris event does not have conference
revenue, the timing of this event did not have an effect on our conference fees
for the period. The number of participants at our conferences decreased 36.5% to
21,514 in the nine months ended September 30, 2001 from 33,907 in the comparable
period in 2000. This decrease in participants was offset by a 13.0% increase in
the average revenue per conference attendee in the nine months ended September
30, 2001 of $1,485 compared with $1,315 in the comparable period in 2000.
Excluding the effects of SFI's N+I Tokyo event, the number of conference
participants decreased to 19,403, or 42.8% in the nine months ended September
30, 2001 and the average revenue per conference attendee increased to $1,604, or
22.0% in the nine months ended September 30, 2001.

     Advertising and sponsorship revenues increased $0.1 million, or 0.4%, to
$20.0 million in the nine months ended September 30, 2001 from $19.9 million in
the comparable period in 2000. This increase is primarily attributable to the
inclusion in the nine months ended September 30, 2001 of our N+I Tokyo and N+I
Paris events and corporate sponsorship revenue earned for the first time in 2001
off-set by lower advertising and sponsorship revenue for our N+I Atlanta and
Seybold Seminars San Francisco events and to a lesser extent the discontinuance
or postponement of five smaller regional events in 2001. Excluding the effects
of N+I Tokyo and N+I Paris, adjusted advertising and sponsorship revenues
decreased $1.7 million, or 8.4% in the nine months ended September 30, 2001.

     Cost of production increased $7.9 million, or 15.5%, to $58.4 million in
the nine months ended September 30, 2001 from $50.6 million in the comparable
period in 2000. As a percentage of revenue, cost of production represented 33.4%
of revenue in the nine months ended September 30, 2001 compared to 28.8% in the
comparable period of 2000. The aggregate dollar and percentage increases in cost
of production are primarily attributable to the inclusion of SFI's operating
results and the timing of the N+I Paris event for the nine months ended
September 30, 2001. Excluding SFI's operating results and the N+I Paris event,
cost of production decreased $2.4 million, or 4.7% in the nine months ended
September 30, 2001 compared to the same period of 2000. Cost of production
represents 33.0% of revenue in the nine months of 2001 after adjusting for the
effects of N+I Paris.

     SG&A expenses increased $5.9 million, or 8.0%, to $79.1 million in the nine
months ended September 30, 2001 from $73.2 million in the comparable period in
2000. As a percentage of revenue, SG&A expenses represented 45.2% of revenue in
the nine months ended September 30, 2001 compared to 41.7% in the comparable
period in 2000. The increase in SG&A expenses on a dollar basis is primarily due
to higher levels of employment, additional costs associated with being a public
company, and incremental SG&A expenses resulting from recently acquired
businesses. Excluding the results of NGN, BCR, Pulver and SFI, SG&A expenses
increased by $4.6 million, or 6.3%, in the nine months ended September 30, 2001
from the comparable period in 2000.

     During August 2000, we granted stock options to certain of our employees
who were previously employed by Ziff-Davis that we must account for under
variable accounting valuation principles. Using this accounting treatment we
must record the fair value of these options at the close of each accounting
period and recognize the increase or decrease in fair value from period to
period as an increase or decrease in stock-based compensation. For the nine
months ended September 30, 2001, we recognized a reversal of $1.8 million of
non-cash stock-based compensation expense compared to $3.4 million of non-cash
stock-based compensation expense for the same period in 2000. The fair value of
these variable accounting options at September 30, 2001, was lower than their
fair value when calculated at June 30, 2001, thereby resulting in a reversal of
previously recorded expense for the current period.

                                        30
<PAGE>

     Other income (expense) increased $3.8 million or 17.0%, to expense of $25.8
million in the nine months ended September 30, 2001 from expense of $22.1
million in the comparable period in 2000. The increase is attributable to an
increase in interest expense, net, partially offset by $6.7 million of other
income from ending the GES litigation.

     As a result of the foregoing, EBITDA decreased by $2.4 million, or 4.9%, to
$46.0 million in the nine months ended September 30, 2001 from $48.3 million in
the same period in 2000. After adjustments to exclude the effects of SFI's
operations, the N+I Paris event, the amount of other income from ending the GES
litigation and non-cash stock-based compensation, adjusted EBITDA would have
been $26.4 million in the nine months ended September 30, 2001, a decrease of
$25.4 million, or 49.0%, from adjusted EBITDA in the comparable period of 2000
in $51.8 million.

     Depreciation and amortization increased $1.7 million, or 6.2%, to $29.2
million in the nine months ended September 30, 2001 from $27.5 million in the
comparable period in 2000.

     The provision for income tax benefit increased $4.2 million to $4.6 million
for the nine months ended September 30, 2001 from a benefit of $0.5 million in
the comparable period in 2000. We estimate that the effective tax rate for the
year ending 2001 will be 28.0% versus the annual estimated effective tax rate of
39.7% used in computing expense for the nine months ended September 30, 2000.
Accordingly, we have recorded a provision of 28.0% of the loss before income
taxes inclusive of the extraordinary item for the nine months ended September
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 the 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, our net loss increased $19.5 million to $20.2
million for the nine months ended September 30, 2001 from $0.7 million in the
comparable period in 2000.

LIQUIDITY AND CAPITAL RESOURCES

     On September 30, 2001, our balance of cash and cash equivalents was $28.0
million and we had negative working capital of $64.2 million compared to
positive working capital of $5.2 million at September 30, 2000. The decrease is
principally due to the use of cash to refinance the Company's indebtedness in
June 2001 and a decrease in net cash provided by operating activities.

     For the nine months ended September 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 $22.8 million in the
nine months ended September 30, 2001, compared to $89.0 million in the
comparable period in 2000.

     Net cash used in investing activities was $118.4 million of which $12.1
million was used to purchase property and equipment and $106.2 million was used
to acquire businesses in the nine months ended September 30, 2001, compared to
$4.5 million used to purchase property and equipment in the comparable period in
2000.

     Net cash provided by financing activities was $14.1 million in the nine
months ended September 30, 2001, compared to $33.6 million in the comparable
period in 2000. Had we not borrowed $110.0 million under our revolving credit
facility for use in acquiring businesses, we would have had net cash used in
financing activities of $95.9 million which relates principally to the
refinancing and retirement of indebtedness in June 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 have assumed
responsibility for our cash management and treasury activities as if we were an
independent company.

                                        31
<PAGE>

     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.

     Capital expenditures for the nine months ended September 30, 2001 were
$12.1 million. We anticipate our capital expenditures for 2001 to total
approximately $15 million, including $9 million for our new infrastructure
initiatives, $3 million for replacements and upgrades of property and equipment,
$2 million for expanded data center capacity and $1 million for tenant upgrades
in our leased corporate headquarters in Los Angeles, California and facilities
located in Needham, Massachusetts and Foster City, California.

     On June 26, 2001, we issued $300.0 million of our 11.25% senior
subordinated notes due 2011 (the "Notes"). We may redeem any of the Notes
beginning on June 15, 2006. The initial redemption price is 105.625% of their
principal amount plus accrued interest. In addition, before June 15, 2004, we
may redeem up to 35% of the original aggregate principal amount of the Notes at
a redemption price of 111.250% of their principal amount plus accrued interest.
The Notes are junior to all of our senior indebtedness. The Notes are unsecured
and will rank equally with any other unsecured senior subordinated indebtedness
we incur. All of our domestic restricted subsidiaries, including Key3Media
Events, Inc., Key3Media Von Events, Inc. and Key3Media BCR Events, Inc., have
guaranteed the Notes on a senior subordinated basis. Each guarantee will be
unsecured and will be junior to all senior indebtedness of the subsidiary
guarantor.

     Additionally on June 26, 2001, we amended and restated our senior bank
credit facility with a syndicate of banks to commit the banks to lend up to
$150.0 million to the Company on a revolving basis for general corporate
purposes, which could include acquisitions. We may borrow, repay and re-borrow
under this revolving senior bank credit facility until the third anniversary of
the closing date at which time we must repay any outstanding amounts. We will
pay commitment fees to the banks to the extent that we do not borrow the full
$150.0 million committed amount.

     Subject to certain conditions, our senior bank credit facility does not
prohibit us from borrowing on a term loan basis an aggregate principal amount of
up to $200.0 million. These borrowings can be senior and can share in the
collateral securing the senior bank credit facility. In addition, we may be
required to prepay any term loans under this part of the senior bank credit
facility from the net cash proceeds of asset 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 our election, loans under our senior bank 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 in senior bank credit facility). The margin we pay
will vary between 1.0% and 3.25% depending on which rate we choose and the ratio
of our total debt to EBITDA.

     The Company borrowed $50.0 million on September 5, 2001 and $60.0 million
on September 10, 2001 under this revolving credit facility in connection with
the acquisition of certain assets in three separate transactions.

     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 $300.0 million of the unsecured senior
subordinated notes under this registration statement.

     On November 14, 2001, we announced that we have entered into an agreement
to amend our senior bank credit facility to avoid potential covenant problems
under the facility. We also announced our plan to raise at least $50 million
from the sale of convertible preferred or common stock. We must raise at least
$50 million in order for the amendment to our senior bank credit facility to
become effective. We have received a commitment from a related party to purchase
$25 million of the convertible preferred stock which is conditioned upon, among
other things, the effectiveness of the amendment to our senior bank credit
facility. The amount of convertible preferred or common stock that we sell will
depend on market conditions. If we are not able to raise at least $50 million
from the sale of convertible preferred or common stock, we intend to seek

                                        32
<PAGE>

other amendments or waivers of the covenants under our senior bank credit
facility and to pursue other options to avoid covenant compliance problems which
are likely to occur by the end of the first quarter of 2002.

     The amendment to our senior bank credit facility will replace our existing
covenants to maintain a minimum interest coverage ratio and maximum senior debt
and total debt to pro forma EBITDA ratios with new covenants that will require
us to maintain a ratio of pro forma EBITDA to fixed charges (which will include
interest, domestic taxes and annual capital expenditures of up to $5 million) of
at least 1.1:1 and to limit our total senior debt to $110 million (or $120
million if we exchange $10 million principal amount of our Notes for convertible
preferred stock), our total debt to $410 million and our annual capital
expenditures to $15 million. We must also repay $30 million of our outstanding
borrowings under the senior bank credit facility with part of the proceeds from
the sale of the convertible preferred or common stock and reduce the borrowing
limit under the facility from $150 million to $110 million (or $120 million if
we exchange $10 million principal amount of our Notes for convertible preferred
stock). The revised covenants will remain in effect until we have two
consecutive quarters in which our pro forma EBITDA for the last twelve months is
more than $85 million, after which time the existing covenants will come back
into effect.

     If our sale of convertible preferred stock to a related party closes as
planned, we will grant that related party registration rights. We have filed a
form of the Registration Rights Agreement as Exhibit 10.4.

     The convertible preferred stock is expected to have the following terms.
The convertible preferred stock will be entitled to cash dividends when, as and
if declared by our board of directors at the annual rate of 5.5% of the
applicable liquidation preference per share, and no more, which will accrue and
be payable quarterly, in effect at the beginning of the relevant quarterly
dividend period. The liquidation preference per share will initially be $25.00,
but if we do not pay in cash the quarterly dividends on any dividend payment
date, the liquidation preference per share will increase by the amount of such
unpaid quarterly dividends per share. In addition to these quarterly dividends,
the convertible preferred stock will also be entitled to participate in any
dividends or distributions paid on the common shares on an as converted basis.
The convertible preferred stock will also vote together with the common stock on
an as converted basis on all matters on which the common stock is entitled to
vote. Each share of convertible preferred stock will be convertible at any time
by the holder into a number of shares of common stock equal to the (A) then
accreted liquidation preference plus (B) any accrued and unpaid dividends
multiplied by the ratio of the conversion price over the then current market
price, divided by the then current conversion price. The conversion price will
initially be $5.75 but will be subject to customary anti-dilution adjustments.
We may redeem all or any part of the shares of convertible preferred stock at
any time beginning on the third anniversary of their issue date at their
accreted liquidation preference plus accrued but unpaid quarterly dividends for
the then current dividend period plus a premium on the initial liquidation
preference which is 3.5% in the first year in which we can redeem the shares and
declines ratably to zero after the fourth year in which we can redeem. The
Company may also cause the convertible preferred stock to be converted into a
number of shares of common stock equal to (A) the then accreted liquidation
preferred plus (B) any accrued and unpaid dividend multiplied by the ratio of
the then current market price, divided by the lower of (i) the current
conversion price and (ii) 95% of the than current market price, at any time
after the volume-weighted average of the closing price of the common stock for
60 consecutive trading days equals or exceeds 150% of the then current
conversion price.

     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 senior bank 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.

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SEASONALITY

     Our revenue is seasonal, but our cash flows are realizable throughout the
year. 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 an annual impairment test 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. During 2002, the
Company will perform the first of the required impairment tests of goodwill and
indefinite lived intangible assets as of January 1, 2002 and 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.

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                           PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     On March 17, 2000, Key3Media Events, our wholly owned subsidiary, sued GES
Exposition Services, Inc. ("GES") 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 $9.0 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 alleging damages of
approximately $33.0 million on a variety of different legal theories plus
additional damages for lost future profits of $20.0 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, 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 further result,
the Company's second quarter 2001 other income (expense), net includes an
increase of approximately $6.7 million. A stipulation of dismissal with
prejudice evidencing the companies' agreement to end the litigation was filed
with the court on October 19, 2001. The Company and GES are in the process of
discussing possible future business relations.

     On August 31, 2001, our wholly owned subsidiary, Key3Media Events, Inc.,
provided notice of termination of its then existing leased office space in
Needham, Massachusetts to the landlord of the existing space. The annual rental
payments (net of operating expenses) for the prior space were approximately
$1,400. We have entered into a lease for new office space in Needham and
relocated to our new offices on October 1, 2001. We estimate that our total
annual occupancy costs under the new lease will be approximately $1,700 greater
than those under the prior lease. The landlord of the prior office space has
taken the position that Key3Media Events is in breach of the lease agreement and
that it did not have the right to terminate the lease. On or about November 6,
2001, Interface Group -- Massachusetts, LLC, the landlord under the prior lease,
sued Key3Media Events in the Superior Court, County of Norfolk, Commonwealth of
Massachusetts for breach of contract, breach of the implied covenant of good
faith and fair dealing and violations of Mass. Gen L. c. 93A (unfair and
deceptive acts and practices). The landlord has requested payment of rent for
the remainder of the term of the lease in an amount in excess of $6,500, treble
damages, attorneys' fees, costs and expenses, pre-judgement interest and costs
of suit. An answer to the complaint is due within 20 days of its service upon
Key3Media Events.

     Key3Media Events is the plaintiff and counter-defendant in a case filed
October 18, 2000, in the Eighth Judicial District Court, Clark County, Nevada.
The suit arises out of a dispute between Key3Media Events, Inc. on the one hand,
and the Venetian Casino Resort, LLC, and Interface Group-Nevada, Inc., on the
other hand, concerning COMDEX/Fall. Key3Media Events initiated the action,
seeking damages and injunctive relief against defendants for their alleged
actual and threatened breaches of lease, meeting space, and credit extension
agreements in connection with the COMDEX/Fall 2000 show. The Venetian and
Interface Group-Nevada countersued for compensatory damages "in excess of
$10,000" based on an asserted breach of an alleged oral agreement to host
keynote speeches at The Venetian, asserted breach of an alleged agreement not to
sublease certain facilities, intentional misrepresentation, and breach of the
implied covenant of good faith and fair dealing. The counterclaims include a
prayer for punitive damages. On October 19, 2001, the counter-

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defendants specified their alleged damages in their supplemental response to
plaintiff's third request for production of documents. The response alleged
damages of over $3.0 million arising from breaches related to Comdex/Fall 2000
and over $2.0 million arising from breaches related to Comdex/Fall 2001. The
case is in discovery.

     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.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

     10.1  Amendment to Employment Agreement, dated October 5, 2001, by and
           between Key3Media Group, Inc. and Fredric D. Rosen.

     10.2  Amendment to Employment Agreement, dated October 5, 2001, by and
           between Key3Media Group Inc. and Jason E. Chudnofsky.

     10.3  Stock Purchase Agreement, dated November 13, 2001, by and between
           Key3Media Group, Inc. and Invemed Catalyst Fund, L.P.

     10.4  Registration Rights Agreement, dated November   , 2001, by and
           between Key3Media Group, Inc. and Invemed Catalyst Fund L.P.
           (included as Exhibit B to Exhibit 10.3 Stock Purchase Agreement,
           dated November 13, 2001, by and between Key3Media Group, Inc. and
           Invemed Catalyst Fund L.P. of this 10-Q).

     99.1  Amendment No. 2 to the Amended and Restated Credit Agreement, dated
           November 9, 2001, by and between Key 3 Media Group, Inc., the banks,
           financial institutions and institutional lenders and Morgan Stanley
           Senior Funding, Inc.

     (b)  Reports on Form 8-K

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

     September 24, 2001 -- Description of acquisitions of the following assets
in three separate transactions: (i) the assets related to the Next Generation
Networks and Next Generations Network Ventures conferences and tradeshows (the
"NGN Assets"), (ii) the assets related to the Opticon and VoiceCon tradeshows
and the Business Communications Review magazine (the "BCR Assets"), and (iii)
the assets related to Voice on the Net Conferences and Sessions Initiation
Protocol Summits (collectively, the "Pulver Assets").

     November 13, 2001 -- Amends the Current Report on Form 8-K filed on
September 24, 2001 to include the audited financial statements and pro forma
financial information required with respect to the acquisitions listed above.

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                                   SIGNATURE

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

                                          KEY3MEDIA GROUP, INC.

                                          By:     /s/ PETER B. KNEPPER
                                            ------------------------------------
                                            Name: Peter B. Knepper
                                            Title: Chief Financial and
                                              Accounting Officer
Date: November 14, 2001