<PAGE>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

  FOR THE YEAR ENDED DECEMBER 31, 2002        COMMISSION FILE NUMBER: 001-16061

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

             DELAWARE                                     95-4799962
(State or other jurisdiction of                        (I.R.S. employer
 incorporation or organization)                       identification no.)

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

                                 (323) 954-6000
              (Registrant's telephone number, including area code)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                              Title of each class:

                     Common stock, par value $0.01 per share

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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K:[X]

         As of April 2, 2003 there were 68,531,919 shares of the registrant's
common stock outstanding.

         Based upon the March 31, 2003 closing price of $0.0036 per share, the
aggregate market value of the Registrant's outstanding common stock held by
non-affiliates is approximately $113,773. (If all the Registrant's convertible
preferred stock had been converted on such date, the aggregate market value
would be approximately $180,778.)

================================================================================

<PAGE>

                              KEY3MEDIA GROUP, INC.

         ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
FORM 10-K ITEM NUMBER                                                                                             PAGE NO.
---------------------                                                                                             --------
<S>                                                                                                               <C>
PART I.........................................................................................................       1
     Item 1.      Business.....................................................................................       1
     Item 2.      Properties...................................................................................      15
     Item 3.      Legal Proceedings............................................................................      15
     Item 4.      Matters Submitted to a Vote of Security Holders..............................................      17

PART II........................................................................................................      18
     Item 5.      Market for Registrant's Common Equity and Related Stockholder Matters........................      18
     Item 6.      Selected Financial Data......................................................................      19
     Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations........      21
     Item 7A.     Quantitative and Qualitative Disclosures about Market Risk...................................      36
     Item 8.      Financial Statements and Supplementary Data..................................................      36
     Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.........      36

PART III.......................................................................................................      36
     Item 10.     Directors and Executive Officers of the Registrant...........................................      36
     Item 11.     Executive Compensation.......................................................................      38
     Item 12.     Security Ownership of Certain Beneficial Owners and Management...............................      48
     Item 13.     Certain Relationships and Related Transactions...............................................      49

PART IV........................................................................................................      50
     Item 14.     Controls and Procedures......................................................................      50
     Item 15.     Exhibits, Financial Statement Schedule, and Reports on Form 8-K..............................      50

Signatures.....................................................................................................      56
Power of Attorney..............................................................................................      57
Index To Financial Statements And Financial Statement Schedule.................................................     F-1
</TABLE>

                           FORWARD LOOKING STATEMENTS

                  Certain matters discussed in this Annual Report on Form 10-K
are "forward-looking statements," including statements about Key3Media Group,
Inc.'s ("KeyMedia") future results, plans and goals and other events which have
not yet occurred. These statements are intended to qualify for the safe harbors
from liability provided by the Private Securities Litigation Reform Act of 1995.
You can find many (but not all) 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 Key3Media's actual
results to differ materially from those expressed or implied in this release.
These include, but are not limited to, economic conditions generally and in the
information technology industry in particular; the timing of Key3Media's events
and their popularity with exhibitors, sponsors and attendees; technological
changes and developments; intellectual property rights; competition; capital
expenditures; and factors impacting Key3Media's international operations. On
February 3, 2003, Key3Media voluntarily filed for protection and reorganization
under the federal bankruptcy code as a result of declining operating profits
caused in part by the persistent difficulties experienced by participants in the
IT industry and the related reductions in IT marketing budgets, a general
downturn in the economy and the continuing adverse consequences of the September
11, 2001 terrorist attacks on the travel industry which have been further
negatively impacted by the commencement of hostilities in Iraq during March
2003. Each of these developments have and will continue to adversely affect
participation and attendance at Key3Media's 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. We discuss some of
these and other factors that could cause actual results to differ from those
expressed or implied by forward looking statements in "Item 1 -- Business --
Certain Factors That May Affect Our Businesses". We do not plan to update any
forward-looking statements.

                                       1

<PAGE>
                                     PART I

                                 KEY RISK FACTOR

         WE HAVE FILED FOR PROTECTION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
AND BELIEVE OUR SHARES HAVE NO VALUE

                  As a result of the continuing difficulties being experienced
by our operations, our high debt load and the other factors described in "Item 1
-- Business", we filed for protection and reorganization under chapter 11 of the
U.S. Bankruptcy Code on February 3, 2003. We are seeking approval of a plan of
reorganization which, if completed, will discharge any and all interests or
claims that holders of our common stock and preferred stock have with respect to
our company and its assets. As a result, we believe our shares no longer have
any value and do not believe any investor should pay anything for such shares.
Under the expected plan of reorganization, holders of our 11.25% Senior
Subordinated Notes due 2011 (the "Notes") other than Thomas Weisel Capital
Partners and certain of its affiliates (collectively, "TWCP") will share ratably
with other unsecured creditors in distributions of $2.5 million in cash, 40% of
the net proceeds of an insurance claim up to a maximum of $4 million, warrants
to purchase up to 5% of the reorganized company's equity with a strike price at
the reorganization value, and potential additional minor assets that remain
subject to final negotiation. TWCP has agreed to forego its pro rata share of
the foregoing distributions. Although it is not possible to predict with
certainty what the ultimate distributions will be to those holders of our Notes,
it is virtually certain that whatever they receive will, in present value terms,
represent only a very small percentage of the aggregate principal amount of, and
accrued interest on, our Notes. Accordingly, we believe our Notes have very
little value and any potential purchaser of our Notes should proceed with
extreme caution. If our company is liquidated instead of reorganized, we believe
that the holders of our shares and the holders of our Notes would likely receive
nothing. For a more detailed description of the risks involved with our company,
see "Item 1 -- Business -- Risk Factors".

ITEM 1.  BUSINESS

         IMPORTANT CAUTIONARY NOTE CONCERNING THE DESCRIPTION OF OUR BUSINESS

                  As described above in "Key Risk Factor" and below in "Risk
Factors", we have filed for protection under chapter 11 of the U.S. Bankruptcy
Code. We do not know whether we will successfully reorganize our company. In the
event we do, we expect the nature and scope of our operations will be
significantly different and much more limited than they have been historically.
The description of our business set forth in the following paragraphs describes
our businesses as they were conducted through December 31, 2002, the period
through which we have included financial statements. If we are able to
reorganize successfully, we expect to produce a total of 19 tradeshow and
conference events in 2003, down from 26 in 2002, focusing on a single national
event for each of our major brands and continue to operate in the United States
out of our principal west coast locations in Los Angeles and Foster City after
the closure of our office in Needham, Massachusetts in December 2002.

                  Key3Media Group, Inc. was incorporated in 2000 to hold
Ziff-Davis Inc.'s portfolio of tradeshow businesses. We were spun off from
Ziff-Davis in August 2000. Our principal executive offices are located at 5700
Wilshire Blvd., Suite 325, Los Angeles, CA 90036, our telephone number is (323)
954-6000 and our Internet website is http://www.key3media.com. We are a
reporting company that files reports with the Securities and Exchange Commission
(the "SEC"). Copies of our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to such reports are available
free of charge on our website as soon as reasonably practicable after such
material is electronically filed with or furnished to the SEC. Additionally, the
public may read and copy any materials we file with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, NW, Washington, DC 20549 or at the SEC's
Internet website http://www.sec.gov. Information about the SEC can be obtained
by calling 1-800-SEC-0330. When we use the terms "Key3Media", "Registrant", "we"
and "our", we mean, prior to the spin-off, the portfolio of tradeshow and other
event businesses formerly held by Ziff-Davis Inc. and, after the spin-off,
Key3Media Group, Inc., a Delaware corporation, and its subsidiaries.

                                       1

<PAGE>

                  We produce, manage and promote a portfolio of tradeshows,
conferences and other events for the information technology, or IT, industry.
Our events provide community, content and commerce for vendors, resellers, large
volume end-users and others involved in the IT industry, including consultants
and other advisors. In 2002, we provided face-to-face marketplaces for
business-to-business marketing, sales and education in the IT industry for more
than 530,000 participants at 26 owned and operated events, including co-located
events.

                  In 2002, our COMDEX and NetWorld+Interop events were the top
two business-to-business IT industry tradeshow brands in the United States when
measured by revenue from exhibit space rentals based on statistical data
obtained from Tradeshow Week, a leading industry publication. We also produce
customized events for specific IT vendors and specific segments of the IT
industry. At our events, we rent space to exhibitors and receive commissions
from third parties who provide services to our exhibitors. We also charge fees
for conferences and sell advertising and sponsorships. In 2002, our revenue was
$151.5 million and our net loss was $795.9 million.

                  We have events which focus on the full spectrum of the IT
industry and others that target particular segments of the industry. We believe
that we can enhance our revenue by creating multiple revenue streams from a
portfolio of events with different targeted audiences and limited attendee
overlap. Our customized events allow us to build close relationships with
individual IT vendors and better understand their products and marketing needs.
These relationships also help us identify and keep current with emerging trends
in the IT industry.

                  Our COMDEX tradeshows cover the full spectrum of the IT
industry. Our COMDEX Fall 2002 tradeshow was the largest business-to-business
tradeshow in the United States for any industry when measured by revenue from
exhibit space rentals and attendance (including exhibitor personnel). In 2002,
we offered 12 COMDEX events in 10 countries and our owned and operated COMDEX
events generated about 22% of our revenue. Our NetWorld+Interop tradeshows focus
on the networking, Internet and telecommunications sectors of the IT industry,
although our shows outside the United States also address broader aspects of the
IT industry. In 2002, we held four NetWorld+Interop tradeshows in three
countries and we owned and operated all of them. These four NetWorld+Interop
tradeshows generated approximately 34% of our revenue in 2002.

                  We currently employ approximately 350 people, including sales,
marketing, operational and corporate service personnel. Of these, approximately
280 are in the United States and the balance are in France, Sweden, Japan and
Canada. We also employ temporary personnel from time to time. None of our United
States employees are covered by a collective bargaining agreement. We believe
that we have good relations with our employees.

INDUSTRY OVERVIEW

                  Tradeshows, conferences and other business-to-business events
provide face-to-face interaction between buyers and sellers and offer
educational and networking opportunities for attendees. Tradeshow Week has
estimated that there are over 13,000 trade and consumer events held annually
worldwide. The spectrum of these events is fairly broad, with individual shows
distinguishing themselves by their style, the nature and level of sophistication
of their content, organizational efficiency and, most importantly, by their
attendance record.

                  With the recent difficulties experienced in the IT industry,
exhibitors have become much more selective in choosing events and more sensitive
to the returns they can generate from their marketing investments. Exhibitors
consider not only exhibit space rental costs, but also other event-related costs
such as exhibit design and production, transportation, travel, lodging and
entertainment costs and event-related promotions. We believe that our revenues,
net paid square footage of exhibit space and conference participants have been
adversely affected by the persistent difficulties experienced by participants in
the IT industry and the related reductions in IT marketing budgets, a general
downturn in the economy and the continuing adverse consequences of the September
11, 2001 terrorist attacks on the travel industry which have been further
negatively impacted by the commencement of hostilities in Iraq during March
2003. See "Certain Factors That May Affect Our Businesses" and "Item
7--Management's Discussion and Analysis of Financial Condition and Results of
Operations".

                  As an alternative to exhibiting at events, some IT vendors
host private events such as regional conferences, product demonstrations,
user-group meetings, road shows and educational demonstrations. While these
allow vendors to engage customers in a more controlled environment, they
typically involve much smaller audiences than attend larger industry events. We
believe that our larger industry leading events present better opportunities for
our

                                        2

<PAGE>

exhibitors to launch new products and services, establish and enhance their
brands with customers and the media and maintain the face-to-face connection
with their buyers. We also believe that the "see and be seen" aspect of our
events is very important to exhibitors who are seeking to maximize the returns
from their sales and marketing efforts.

OUR EVENTS

                  In 2002, we produced 26 owned and operated events, including
co-located events. In 2002, these events were attended by a total of more than
530,000 participants. In addition to the events we own and operate, we license
our brands to foreign tradeshow operators for use in connection with 7 events
held outside of the United States. We refer to these as our international
contract events. Most of our international contract events are operated under
the COMDEX or NetWorld+Interop brands.

                  Generally, our events have three features in common, although
the emphasis may vary:

                  - an exposition floor on which exhibitors and attendees
                    interact face-to-face;

                  - conferences designed to inform and educate IT professionals;
                    and

                  - keynote speakers and product launches.

                  We produce events under a number of different brand names,
including COMDEX, NetWorld+Interop, Seybold Seminars, JavaOne, and BCR/NGN. Our
two most important brands in terms of revenues are COMDEX and NetWorld+Interop.
We classify our events as "horizontal" events if they cover the full spectrum of
the IT industry and "vertical" events if they focus only on particular segments
of the IT industry. Our COMDEX tradeshows are horizontal events and all our
other events are vertical. NetWorld+Interop and Seybold Seminars are our largest
vertical events. Our JavaOne conference is our largest customized event.
VoiceCon, Opticon, Next Generation Networks and Next Generation Ventures are
vertical events that focus on the networking and Internet Protocol communication
industries. In addition to our branded events, we conduct a series of customized
vertical events through our Studios division.

                  The following table summarizes the scope and reach of our
principal branded and customized events:

<TABLE>
<CAPTION>
       NAME                TYPE              TARGET AUDIENCE                 FOCUS               2002 LOCATIONS
--------------------     ----------     --------------------------   ---------------------   -----------------------
<S>                      <C>            <C>                          <C>                     <C>
COMDEX                   Horizontal     Full spectrum of IT          Chief information       Athens, Basel, Beijing,
                                        industry                     officers, chief         Chicago, Gotenborg,
                                                                     technology officers,    Jeddah, Las Vegas,
                                                                     business managers and   Paris, Sao Paulo,
                                                                     corporate consumers     Seoul, Toronto,
                                                                                             Vancouver
NetWorld+Interop         Vertical       Network engineers and        Computer networking,    Atlanta, Las Vegas,
                                        developers                   the Internet and        Paris, Tokyo
                                                                     telecommunications
Seybold Seminars         Vertical       Publishing professionals     Web and desktop         New York, San Francisco
                                        and web designers            publishing and print
JavaOne                  Vertical       Independent and enterprise   Java technology         San Francisco
                                        software platform
                                        developers
BCR/NGN                  Vertical       Network engineers,           Networking, Internet    Burlingame, Boston, San
-   VoiceCon                            developers and Venture       Protocol                Jose, Washington D.C.
-   Opticon                             Capitalists
-   Next Generation
    Networks
</TABLE>

                                        3

<PAGE>

<TABLE>
<CAPTION>
       NAME                TYPE              TARGET AUDIENCE                 FOCUS               2002 LOCATIONS
--------------------     ----------     --------------------------   ---------------------   -----------------------
<S>                      <C>            <C>                          <C>                     <C>
-   Next Generation
    Ventures
CRM/Support Services     Vertical       Business managers            Help desk and           San Diego
                                                                     technical support
Studios                  Vertical       Various                      IT needs of specific    Various
                                                                     vendors and markets
</TABLE>

         COMDEX

                  Our COMDEX tradeshows cover the full spectrum of the IT
industry. Our COMDEX Fall 2001 tradeshow was the largest tradeshow in the United
States when measured by revenue from exhibitor space rentals and attendance
(including exhibitor personnel). In 2002, we offered 12 COMDEX tradeshows in 10
countries.

                  Our COMDEX tradeshows cover a broad range of new technologies
at every stage, from their development and introduction to commercial maturity.
Many of the most significant business technology, digital and computer products
launched over the past 20 years occurred at COMDEX tradeshows, including the
launch of the IBM PC, Lotus 1-2-3, Windows 3.1, Windows CE and DVD. Microsoft
featured its X-Box at our COMDEX Fall show in 2001.

                  IT and Internet technologies form an integral part of our
COMDEX tradeshows. While maintaining our coverage of the full spectrum of the IT
industry, we are currently highlighting nine key technology areas:

                  -   Information Security -- Security will be a top spending
                      priority for companies throughout 2003. COMDEX will focus
                      on information security, biometrics, anti-virus,
                      firewalls, security services and security management
                      software.

                  -   Digital Imaging and Document Management -- Whether
                      outputting to paper or the Web, enterprise publishing has
                      gone digital, as has document management and distribution.
                      COMDEX will focus on the technologies and solutions that
                      drive efficiency, productivity and creativity for
                      businesses.

                  -   Digital Lifestyles -- The convergence of personal and
                      professional life is driving significant technology and
                      services innovation. COMDEX will focus on how the PC
                      continues to emerge as the digital hub of the home,
                      becoming the center of creativity. With education and
                      special programs attendees will explore whether the PC is
                      the most versatile device for the transition from
                      productivity to creativity.

                  -   Software Platforms and Solutions -- Operating systems,
                      utility applications, analytics, collaborative software,
                      supply chain management, CRM, ERP, database, e-commerce,
                      e-business -- there is no better comparative platform than
                      COMDEX, which also features, Key3Media's Customer 360
                      event.

                  -   Web Services -- The burgeoning set of technologies that
                      allow software to offer identical functions on multiple
                      devices will be highlighted, including XML, SOAP, WSDL and
                      UDDI.

                  -   Infrastructure -- This zone will focus on network
                      infrastructure equipment, integration, storage solutions
                      including SANs, VPNs, managed services, hosting, content
                      delivery and more.

                  -   Networking and communications -- Products that provide the
                      broadband infrastructure for the delivery of data, voice
                      and video, while focusing on such issues as network
                      security and virtual private networking.

                  -   eMobility and Wireless -- Businesses are going mobile at
                      an ever increasing pace. Data access, devices,
                      applications, security and connectivity solutions must be
                      explored in great detail to ensure

                                        4

<PAGE>

                      business viability. WAP, HomeRF, WiFi, wireless Ethernet,
                      broadband, fixed wireless and more will be featured in
                      this zone.

                  -   OEM and International Components manufacturers --
                      Technology vendors and channel members have been building
                      relationships at COMDEX for 23 years. As technologies
                      converge and emerge, COMDEX will continue to be fertile
                      ground for new partnerships that will drive new solutions.

                  Our COMDEX Fall tradeshow is a five-day tradeshow we hold in
Las Vegas in November of each year. Although we offer other COMDEX shows, COMDEX
Fall is the single tradeshow that brings the entire IT industry together. COMDEX
Fall has international appeal. It includes a large number of country- and
region- sponsored pavilions designed to introduce attendees to the products and
technologies from their local regions. In 2002, it was attended by over 10,000
international attendees. In total, COMDEX Fall 2002 was attended by more than
1,000 exhibitors occupying 325,000 square feet of exhibitor space and over
120,000 attendees. In 2002, exhibitors for COMDEX Fall included: Microsoft
Corporation, Hewlett-Packard Co., Nokia Corp, Samsung Electronics Co., Palm
Inc., Computer Associates International, Inc., and Xerox Corporation.

                  Despite a recovery in 2000, our COMDEX Fall tradeshow
experienced a decline in revenues, exhibit space rentals and attendees in 2002,
and 2001. We believe that the declines in 2001 were due primarily to adverse
conditions in the IT industry and the events of September 11th and their effect
on travel. Moreover, we believe the declines in 2002 resulted from the prolonged
downturn in the IT industry and the related reductions in marketing budgets
compounded by the absence of the new product introductions that generally act to
draw audiences to events and the continuing adverse consequences of September 11
on travel budgets.

         NETWORLD+INTEROP

                  Our NetWorld+Interop tradeshows are our largest branded
vertical events. They focus on the rapidly growing and converging fields of
computer networking, the Internet and telecommunications, although our shows
outside the United States also address broader aspects of the IT industry.

                  Our largest NetWorld+Interop tradeshow is held each year in
Las Vegas and, in 2002, was the second largest business-to-business IT tradeshow
in the United States when measured by revenue from exhibit space rentals. In
2002, our owned and operated NetWorld+Interop events generated approximately 34%
of our revenues. In 2002, our NetWorld+Interop tradeshow in Las Vegas had
approximately 470 exhibiting companies occupying over 275,000 net square feet of
exhibit rental space and approximately 2,500 attendees.

                  NetWorld+Interop has always focused on new and emerging
networking technologies. We are continuing this tradition by offering at our
NetWorld+Interop 2002 events conferences highlighting the construction of new
public networks with integrated voice/data/video delivery systems and the
emergence of new embedded networks with software that can be used to update the
network's circuits and chips remotely without physical upgrade.

                  The NetWorld+Interop tradeshow in Las Vegas features
InteropNet, a live, multi-platform, vendor-sponsored network that interconnects
exhibitors and attendees to one another and to the Internet. Exhibitors at our
2002 NetWorld+Interop tradeshows included: AT&T Corp., Cisco Systems Inc., Intel
Corporation, Computer Associates International, Inc., Microsoft Corporation and
Nortel Networks Corporation.

                  Our NetWorld+Interop tradeshow experienced a decline in
revenues, exhibit space rentals and attendees in 2002, and 2001. We believe that
the declines in 2001 were due primarily to adverse conditions in the IT industry
and the events of September 11th and their effect on travel. Moreover, we
believe the declines in 2002 resulted from the prolonged downturn in the IT
industry and the related reductions in marketing budgets compounded by the
absence of the new product introductions that generally act to draw audiences to
events and the continuing adverse consequences of September 11 on travel
budgets.

                                        5

<PAGE>

         SEYBOLD SEMINARS

                  Our Seybold Seminars are vertical events that target the
latest technologies and products, design tools and applications for web and
desktop print publishing. We hold our largest Seybold Seminars event each fall
in San Francisco. In 2002, our Seybold Seminars in San Francisco had
approximately 150 exhibiting companies occupying over 55,000 net square feet of
exhibit space and approximately 18,000 attendees. We also hold a Seybold
Seminars event on the east coast in the first half of each year. In 2002, we
moved this event to New York from Boston. Major exhibitors at the Seybold
Seminars events include Apple Computer, Inc., Adobe Systems Incorporated,
Hewlett-Packard Co. and Macromedia, Inc. This east coast event will not be
produced in 2003.

         JAVAONE

                  We believe our JavaOne event is the largest software developer
conference in the world and the premier source of technical education on the
latest developments for the Java technology platform. Attendees at JavaOne are
typically either independent or enterprise software developers. JavaOne is
unlike our other events in that exhibitors are invited by Sun Microsystems, Inc.
to participate in the conference. As a result, most of our revenue from JavaOne
is from conference fees, with over 10,000 attendees at our 2002 event. Our
secondary revenue is derived from sales of sponsorships and exhibitor space fees
with 230 exhibitors for 2002. Exhibitors at JavaOne 2002 included: Apple
Computer, Inc., Fujitsu Software Corporation, Hewlett-Packard Company-Network
Services, International Business Machines Corporation and Motorola.

                  We own and produce the JavaOne event under an exclusive
license agreement from Sun Microsystems, the inventor and developer of Java
technology, which expires in July 2004. See "-- Trademarks and Licenses".

         STUDIOS

                  Our Studios division, Key3Studios, produces a wide range of
events in the United States and international markets. These events include
technical, sales, marketing and educational conferences, road shows, seminars,
corporate meetings, exhibitions, trade shows and executive forums. By working as
a "strategic marketing partner", Key3Studios helps its clients penetrate new
markets, create and develop community building activities, build brand
recognition and educate and build awareness among their most important customers
and buying prospects.

                  In 2002, Studios clients included Intel Corporation, Sun
Microsystems, Microsoft Corporation, Texas Instruments and WebCT.

         VON CONFERENCES AND SIP SUMMITS

                  In September 2001, we acquired two event brands from
pulver.com: Voice on the Net (VON) Conferences and Session Initiation Protocol
(SIP) Summits. pulver.com is considered one of the industry leaders in the
networking and initiation protocol communications sectors. There are six VON
Conferences around the world each year, which focus on the convergence of the
telecom and Internet industries. There are currently two SIP Summits each year.
SIP is a signaling protocol used for Internet conferencing, telephony, presence,
events notification and instant messaging. In January 2003, we sold this
business back to its prior owner.

         NGN AND BCR

                  In September 2001, we acquired the Opticon, VoiceCon, Next
Generation Networks (NGN) and Next Generation Ventures conferences and
tradeshows and Business Communications Review (BCR) magazine from BCR
Enterprises, Inc. and McQuillan Ventures. The events focus on computer, optical,
voice and other types of networking technology. Business Communications Review
magazine is a leading magazine for enterprise network managers and other
communications professionals that provides analysis of networking technology,
trends, management issues, pricing, and regulation.

                                       6

<PAGE>

         INTERNATIONAL EXPOSITIONS

                  Internationally, we have two primary methods of operation. We
own and operate some of our largest international events and operate the others
as international contract events. We own and operate the NetWorld+Interop events
in France and Japan and two COMDEX events in Canada. In addition, we owned, but
did not operate, a COMDEX event in Mexico in 2001 although we have terminated
our contracts for this event and another COMDEX event in Argentina in 2002. We
also own and operate the Technology in Government Week event in Ottawa, Canada.
We run our owned and operated international shows essentially in the same manner
as our U.S. shows, although we modify our offerings and procedures to fit the
local environment.

                  The arrangements for our international contract events differ
by event, but have some common characteristics. Typically, we have no equity
interest in these events, but instead receive a guaranteed minimum fee and a
portion of the profits above agreed benchmark amounts. We license the brands to
the foreign operator and provide it with branding, sales and marketing services,
but we usually do not have a direct management role. The contracts typically
give each party the right to terminate after one year's notice, and upon
termination the license is revoked and both parties are subject to a prohibition
on competing within the market for two years.

                  On June 15, 2001, our wholly owned subsidiary, Key3Media
Events, completed its acquisition of all of SOFTBANK America Inc.'s interest in
SB Forums. SB Forums owns and operates tradeshows and conferences in Japan,
including the NetWorld+Interop Tokyo tradeshow, one of the largest IT tradeshows
in Japan, which takes place in the summer of each year, and several custom
events scheduled throughout the year. For more information about these events,
refer to the section entitled "Related Party Transactions -- Acquisition of SB
Forums" in our definitive proxy statement.

                  In late November 2001, we announced the acquisition of
ExpoNova Events & Exhibitions, Scandinavia's premier IT tradeshow organizer.
Founded in 1996, ExpoNova has grown rapidly to become a leading organizer
throughout Scandinavia for the IT, telecom and marketing sectors. ExpoNova
currently produces events including COMDEX Nordic, PubTech/Ondemand, Information
Management, Business Software, Nordic Telecom Week, and other
technology-oriented exhibitions and conferences. The transaction closed in
January 2002. We have also agreed to purchase IW Nordic Expo Ab, an affiliated
Sweden-based company that will continue to produce Internet World Sweden and
Internet World Norway. There are 13 ExpoNova events currently produced in
Scandinavia each year.

                  In November 2001, we announced we were working with the U.S.
Department of Commerce to develop several programs to assist U.S.-based IT
companies interested in doing business overseas. Since 1995, the U.S. Commercial
Service has brought thousands of international buyers representing more than 100
countries to our tradeshows all over the world. The U.S. Commercial Service
matches our event exhibitors with international buyers in a number of ways.
Before the show, exhibitors fill out detailed questionnaires about their
business and potential partners they are seeking. This information is then
entered into an online matchmaking system called COMDEX Connect, which organizes
the data and pairs companies as business objectives match.

MANAGEMENT OF EVENTS

                  We manage all of our owned and operated events on a
decentralized basis. We assign a general manager for each event who is
responsible for all aspects of the event including the profitability of the
event. Each event has dedicated employee teams consisting of both direct reports
and shared centralized resources in each of the following areas:

                  - sales;

                  - marketing communications and media; and

                  - operations.

                  The employee teams report directly to the general manager for
the event as well as to the heads of their respective departments.

                                       7

<PAGE>

         SALES

                  Our events provide a face-to-face forum for
business-to-business sales, business marketing, and professional education for
the IT industry. We maintain three groups of sales professionals to maximize
event revenue in each of these areas.

                  Exhibit Space Rentals. We maintain a staff of dedicated sales
professionals who report directly to our event general managers. These
professionals attend their respective events to ensure client satisfaction and
to accept reservations for exhibit space at the following year's event by
participating exhibitors. Historically, between 60% and 70% of the ensuing
year's exhibit space is contracted at the current year's event, although in 2001
and 2002 the percentages were lower due to the difficulties being experienced in
the IT industry and the events of September 11th. Throughout the year, our
exhibition sales staff is responsible for encouraging exhibitor upgrades,
reducing exhibitor churn and ensuring timely payment of remaining installments.
Our exhibition sales staff also prospects for new clients and sells remaining
exhibit space using telemarketing or, for larger customers, in-person sales
calls.

                  Advertising and Sponsorships. Our event marketing staff is
responsible for selling advertising and sponsorships to participating exhibitors
at our events, including banner advertising, brochure and program advertising,
website advertising, and keynote, luncheon and other event sponsorships. This
group is centralized and individual sales professionals are assigned to one or
more events.

                  Conferences. We also have a sales team that is responsible for
selling the special conferences we provide at our events directly to the
attendees. A team of conference sales professionals is dedicated to each event
for the four months preceding that event.

         MARKETING COMMUNICATIONS AND MEDIA

                  Our marketing department oversees all aspects of creating and
delivering brand and product messaging including creative production, direct
response marketing, public relations and market research. This group works with
all forms of media presentation.

                  Direct Response Marketing Group. Our direct response marketing
group's goal is to maximize event attendance while ensuring attendee quality.
Using proprietary and other direct marketing lists, this group develops mailing
and telemarketing lists for our conference salespersons.

                  Conference Content Staff. Our content staff is responsible for
developing the themes and topics comprising conference programs at all of our
events, including the recruitment of all speakers and other panel participants.

                  Creative Production. Our creative production staff works with
our event general managers and content staff to create the layout of and produce
all event-related publications.

         OPERATIONS

                  Our operations staff is responsible for all event logistics,
including the activities described below. Our operations group also participates
in exhibitor contract administration with respect to our responsibilities in
each of these areas.

                  Venue Management. Our venue management group contracts with
hotels or convention centers for exhibition space and meeting rooms. This group
is responsible for identifying appropriate venues, negotiating per-square-foot
rates and for ongoing contract maintenance. We have venues under contract for
COMDEX Fall and NetWorld+Interop Las Vegas for each of the next three years.

                  Vendor Management. We maintain agreements with several
professional vendors, including florists, booth architects and designers, travel
agencies and moving companies who assist our exhibitors in creating and
transporting their exhibits. We collect a commission each time an exhibitor uses
one of our preferred vendors. Our

                                       8

<PAGE>

vendor management group is primarily responsible for facilitating introductions
between our vendors and exhibitors and collecting fees from chosen vendors.

                  Housing. We collect commissions for rooms rented by event
participants in surrounding area hotels and also, to a far lesser extent,
purchase local hotel rooms in advance at discounts and resell them. Our housing
group is responsible for negotiating all housing rental and commission rates and
guaranteeing room availability for the length of the event.

                  Registration. Our registration group tracks the number and
other characteristics of exhibitors, attendees and paid conference attendees,
including tutorial participants.

                  Logistics. Our logistics staff runs the floor at all events,
including setting up, maintaining and closing down the event. They are present
at every event to handle floor space allocation issues and interface directly
with vendors, exhibitors and venue staff to ensure the smooth running of any
event.

         KEY VENDORS

                  We enter into contracts with our third party suppliers. Under
these contracts, we usually agree to promote the services offered by the
suppliers to our exhibitors in exchange for the suppliers' agreement to give us
a certain percentage of their revenue from our exhibitors. The size of the
commissions we receive varies between 10% and 25%.

                  In 2002, we used Freeman Decorating Co. ("Freeman"), GES
Exposition Services ("GES"), and Champion Exposition Services, Inc. ("Champion")
as our principal "decorators". In the tradeshow industry, decorators offer to
provide various services to us and to exhibitors to assist them create, set up,
maintain and remove their exhibits. We recommend and promote our decorator's
services to our exhibitors at most of our United States and Canadian events. The
services that our decorators provide to us and to exhibitors include shipping,
installation and dismantling of booth structures and contents, furniture and
fixture rental, trash removal and similar services.

         TRADEMARKS AND LICENSES

                  Because we have developed strong brand awareness for our
principal events, we believe our trademarks and service marks are critical to
our success. We rely on trademark law, as well as licensing agreements, to
protect our intellectual property rights. We have registered our material
trademarks in the United States and in certain other key countries. For example,
"COMDEX" is registered in the United States and over 25 other countries.
Effective trademark protection may not be available in every country in which we
operate.

                  As a result of an assignment made by Novell, Inc. in December
2001, we now own the trademarks "NetWorld+Interop", "NetWorld" and "Interop".
Prior to this assignment, Novell owned the trademark "NetWorld", we owned the
trademark "Interop" and we shared with Novell the intellectual property rights
to the "NetWorld+Interop" trademark. As part of our consideration for this
assignment, we paid Novell with free booth and discounted overflow space,
marketing opportunities, and other benefits at a discount. Our agreement with
Novell expires on December 31, 2004, but we will retain ownership of the
"NetWorld+Interop" and "NetWorld" trademarks after any termination.

                  Sun Microsystems owns the trademarks "Java" and "JavaOne" and
has licensed them to us until July 2004. We own and operate the JavaOne
conferences and are entitled to all revenue from the conferences. Sun
Microsystems occupies substantial space at the conferences, helps secure
sponsors, and is responsible for the special conference content. We jointly own
the attendee database. Our current arrangement terminates after the conference
in June 2004.

         COMPETITION

                  The IT events industry is highly competitive and is
characterized by low barriers to entry. Although we believe we are the largest
producer of events for the IT industry in the United States when measured by
revenue

                                       9

<PAGE>

from exhibit space rentals, we face competition from tradeshow management
companies that operate in other and more diverse industries, including the
following companies:

                  -   Deutsche Messe AG (DMAG) is one of the world's largest
                      trade fair and exhibit organizers. It owns and operates
                      the CeBIT tradeshow held annually in Hanover, Germany,
                      which is the largest IT tradeshow in the world. In June
                      2003, DMAG will produce a CeBIT event in New York;

                  -   Jupiter Media, an information provider, has announced
                      their intention to produce Computer Digital Expo as a
                      competitive event to COMDEX which is scheduled to run
                      concurrent with COMDEX in Las Vegas in 2003.

                  -   CMP Media Inc., a subsidiary of United News & Media plc,
                      publishes Information Week, Internet Week and Computer
                      Reseller News. Its exhibition businesses include
                      e-business expo and PC Expo;

                  -   Advanstar Communications, Inc., publishes newspapers and
                      magazines that serve a variety of markets including the
                      internet/e-business segment. It manages 79 tradeshows and
                      conferences in North America, Latin America, Europe and
                      Asia;

                  -   IDG is a multi-national, multimedia publishing company
                      focused on the technology market. It produces more than
                      168 conferences and events in 35 countries;

                  -   Reed Exhibit Companies, a subsidiary of Reed Elsevier plc,
                      organizes over 470 tradeshows and consumer events in 29
                      countries;

                  -   Penton Media, Inc., is a publishing company that produces
                      more than 130 tradeshows and conferences throughout the
                      world. It covers various industries including IT and owns
                      Internet World;

                  -   DMG World Media, a wholly owned subsidiary of the Daily
                      Mail and General Trust plc, a FTSE 100 company, operates
                      over 260 public and trade exhibitions worldwide;

                  -   VS&A Communications Partners is a private equity investor
                      which owns several trade show companies in a variety of
                      industries;

                  -   VNU Expositions, Inc., a wholly owned subsidiary of VNU,
                      operates more than 50 trade shows around the world in a
                      variety of industry segments; and

                  -   Other top show operators include PriMedia publishing and
                      Hall-Erickson Inc.

                  We also compete for advertising dollars with other forms of
media, including print publishing and the Internet. We must make our events more
attractive to exhibitors and attendees than the other alternatives available to
them or we will lose advertising dollars to our competitors.

RISK FACTORS

         WE HAVE FILED FOR PROTECTION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
         AND BELIEVE OUR SHARES HAVE NO VALUE

                  As a result of the continuing difficulties being experienced
by our operations, our high debt load and the other factors described in this
"Item 1 -- Business", we filed for protection and reorganization under chapter
11 of the U.S. Bankruptcy Code on February 3, 2003. We are seeking approval of a
plan of reorganization which, if completed, will discharge any and all interests
or claims that holders of our common stock and preferred stock have with respect
to our company and its assets. As a result, we believe our shares no longer have
any value and do not believe any investor should pay anything for such shares.
Under the expected plan of reorganization, holders of our Notes due 2011, other
than TWCP, will share ratably with other unsecured creditors in distributions of
$2.5 million in cash, 40% of the net proceeds of an insurance claim up to a
maximum of $4 million, warrants to purchase up to

                                       10

<PAGE>

5% of the reorganized company's equity with a strike price at the reorganization
value, and potential additional minor assets that remain subject to final
negotiation. TWCP has agreed to forego its pro rata share of the foregoing
distributions. Although it is not possible to predict with certainty what the
ultimate distributions will be to those holders of our Notes, it is virtually
certain that whatever they receive will, in present value terms, represent only
a very small percentage of the aggregate principal amount of, and accrued
interest on, our Notes. Accordingly, we believe our Notes have very little value
and any potential purchaser of our Notes should proceed with extreme caution. If
we are liquidated instead of reorganized, we believe that the holders of our
shares and the holders of our Notes would likely receive nothing.

         WE SERVE THE IT INDUSTRY, WHICH HAS RECENTLY EXPERIENCED DIFFICULTIES
         AND CAN CHANGE RAPIDLY

                  All of our events currently serve vendors and customers in the
IT industry. Many participants in the IT industry have experienced declining
revenues, reduced or negative cash flows and declining share prices. Some
industry participants have announced lay-offs and other cost-cutting measures,
and we believe many others are implementing similar initiatives. If these or
future developments cause our exhibitors and attendees to reduce significantly
their tradeshow budgets and travel and entertainment expenses, our revenues and
results of operations will be affected adversely. The marketing decisions of
some of our larger exhibitors could also influence the decisions of other
exhibitors. Because most of our exhibitors are required to pay for their exhibit
space on a non-refundable basis six months before the event, exhibit space
rentals may not immediately reflect the full impact of a downturn. In addition
to its recent difficulties, the IT industry is a rapidly evolving industry in
which trends and preferences can shift quickly as new technologies and products
are introduced. If we fail in the future to identify and focus our events on the
most important emerging trends and preferences in the IT industry, it could
adversely affect our results of operations.

         THE TERRORIST ATTACKS ON THE UNITED STATES AND THE OUTBREAK OF
         HOSTILITIES IN IRAQ HAVE NEGATIVELY AFFECTED OUR TRADE SHOWS AND
         CONFERENCES AND ARE LIKELY TO CONTINUE TO DO SO IN THE FUTURE

                  On September 11, 2001, the United States was attacked by
terrorists using hijacked commercial airplanes. The United States and other
countries have responded with concerted action against the suspected terrorists.
There have been several cases of deliberate anthrax infection in the United
States which are also suspected to be terrorist attacks. In addition armed
forces of the United States along with certain other countries commenced hostile
activities with military and paramilitary forces of Iraq in March 2003. These
events and the ongoing uncertainty they have created have to a certain degree
adversely affected the economy in general and the tradeshow and conference
industry in particular. There has been a decline in air travel and tradeshow 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 business, results of operation 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 tradeshows
and conferences.

         THERE WAS A GENERAL DOWNTURN IN THE U.S. ECONOMY IN 2001 THAT CONTINUED
         INTO 2002

                  There was a general downturn in the U.S. economy in 2001 that
continued into 2002, not only due in part to the difficulties in the IT industry
and the events of September 11th but also due to other economic factors and
conditions. If these trends continue or become worse, they could adversely
affect the ability and willingness of exhibitors, attendees and advertisers to
participate in our events and the extent of that participation. This could
materially and adversely affect our business, results of operations and
financial condition.

         ALL OF OUR MAJOR DOMESTIC TRADESHOWS AND EVENTS HAD LOWER RESULTS IN
         2002 THAN IN 2001

                  Due in part to the adverse conditions and developments
referred to above, all of our major domestic tradeshows and events had lower
revenues and contributions to earnings in 2002 than in 2001. Exhibition space
rentals, conference participation, advertising and sponsorship, commissions from
third party service providers to our

                                       11

<PAGE>

exhibitors, attendance and resign rates were all generally down at these events
in 2002. We expect these trends to continue for an indeterminate time in the
future. These trends adversely affected our results of operations for 2002 and
if they continue in the future our business, results of operations and financial
condition could be adversely affected.

         OUR REVENUES AND RESULTS DEPEND SIGNIFICANTLY ON A FEW IMPORTANT IT
         TRADESHOWS THAT HAVE EXPERIENCED ADVERSE RESULTS IN RECENT YEARS

                  Historically, we have derived a significant portion of our
revenues from a few of our trade shows, and we expect that our reliance on these
shows will continue in the future. In 2002, we derived about 22% of our revenue
from tradeshows that we owned and operated under the COMDEX brand name and
approximately 18% from our COMDEX Fall tradeshow in particular. We also derived
approximately 34% of our revenue from our NetWorld+Interop tradeshows including
23% from our largest two domestic tradeshows under this brand. Although we are
seeking to diversify our portfolio of tradeshows, our revenues and results of
operations depend substantially on the success of our COMDEX Fall and top two
domestic NetWorld+Interop tradeshows. We had five major events that occurred
during 2002: JavaOne, COMDEX Spring, NetWorld+Interop Las Vegas, Seybold
Seminars New York and COMDEX Fall. Compared to the prior year, paid attendance
was down at JavaOne and each of these events experienced significant declines in
exhibit space rentals, conference participation and attendees. If these trends
continue in the future at our events, it will adversely affect our results of
operation.

         OUR SUBSTANTIAL INDEBTEDNESS HAS ADVERSELY AFFECTED OUR FINANCIAL
         CONDITION

                  We have a significant amount of indebtedness. As of December
31, 2002, we borrowed $81.8 million on a senior secured basis under our senior
bank revolving credit facility and had $306.3 million of outstanding
indebtedness including accrued and unpaid interest which was due on December 16,
2002 represented by our 11.25% senior subordinated notes. This level of
indebtedness could have important consequences for our shareholders, including
the following:

                  -   failure to pay the interest that was due on December 16,
                      2002 by January 15, 2003 resulted in an event of default
                      under the terms of our senior subordinated note indenture
                      agreement. A default under the indenture agreement creates
                      a cross default under the terms of our Amended and
                      Restated Credit Agreement. We did not make the required
                      payment of interest by January 15, 2003 which contributed
                      to our determination to voluntary file for bankruptcy
                      protection on February 3, 2003;

                  -   it limits our ability to borrow money or sell stock for
                      our working capital, capital expenditures, debt service
                      requirements or other purposes;

                  -   it limits our flexibility in planning for, or reacting to,
                      changes in our business;

                  -   we will be more highly leveraged than some of our
                      competitors, which places us at a competitive
                      disadvantage;

                  -   it makes us more vulnerable to a downturn in our business
                      or the economy;

                  -   a substantial portion of our cash flow from operations is
                      dedicated to payments in respect of our indebtedness and
                      would not be available for other purposes; and

                  -   a material adverse effect on our business and financial
                      condition due to our inability to service our indebtedness
                      or obtain additional financing, as needed.

         RESTRICTIVE COVENANTS IN OUR DEBTOR-IN-POSSESSION (DIP) CREDIT AND
         GUARANTY AGREEMENT MAY RESTRICT OUR ABILITY TO OPERATE AND REACT TO
         COMPETITIVE AND OTHER CHANGES IN OUR INDUSTRY

                  Our DIP credit and guaranty agreement limits our ability,
among other things, to:

                                       12

<PAGE>

                  -   incur additional indebtedness or contingent obligations;

                  -   pay dividends or make distributions to our stockholders;

                  -   make investments;

                  -   issue equity;

                  -   sell assets; and

                  -   acquire the assets of, or merge or consolidate with, other
                      companies.

                  In addition, the DIP credit and guaranty agreement maintains a
requirement that the bankruptcy court confirm the Plan of Reorganization on or
before June 30, 2003. If this requirement in not met, then there is an Event of
Default under this agreement.

         RESTRICTIVE COVENANTS IN OUR SENIOR BANK REVOLVING CREDIT FACILITY AND
         THE INDENTURE MAY RESTRICT OUR ABILITY TO PURSUE OUR BUSINESS
         STRATEGIES

                  Our senior bank revolving credit facility and the indenture
under which our senior subordinated notes were issued limit our ability, among
other things, to:

                  -   incur additional indebtedness or contingent obligations;

                  -   pay dividends or make distributions to our stockholders;

                  -   repurchase or redeem our stock;

                  -   make investments;

                  -   grant liens;

                  -   make capital expenditures;

                  -   enter into transactions with our stockholders and
                      affiliates;

                  -   sell assets; and

                  -   acquire the assets of, or merge or consolidate with, other
                      companies.

                  In the event we are unable to comply with the financial
covenants in our senior bank revolving credit facility and are unsuccessful in
obtaining waivers with respect to our noncompliance, our lenders would have the
option to require us to immediately repay all of our borrowings under the
facility. We do not currently have sufficient funds to make such a repayment. In
addition, any acceleration of the borrowings under our senior bank revolving
credit facility would be an event of default in respect of our senior
subordinated notes and could result in the acceleration of the maturity of those
notes (although the subordination provisions of the notes would require the
prior payment of the bank borrowings). We do not currently have sufficient funds
to repay our senior subordinated notes in full.

     OUR HISTORICAL INFORMATION MAY NOT BE INDICATIVE OF OUR FUTURE RESULTS

                  We were a division of Ziff-Davis Inc. until August 18, 2000
and we have operated as an independent public company only since that date. The
historical financial information included in this Annual Report does not reflect

                                       13

<PAGE>

what our results of operations, financial position and cash flows would have
been if we had been a separate stand-alone entity during the periods presented
and may not be indicative of our future results.

         THE IT EVENTS INDUSTRY IS HIGHLY COMPETITIVE AND WE MAY LOSE
         EXHIBITORS, ATTENDEES AND ADVERTISING AND SPONSORSHIP REVENUE TO OUR
         COMPETITORS, WHICH WOULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS

                  The IT events industry is highly competitive and is
characterized by low barriers to entry. We compete with various established
tradeshows, including those produced by the Deutsche Messe AG, (CeBIT); CMP
Media, Inc., a subsidiary of United News and Media plc, produces PCExpo;
Advanstar Communications, Inc. (Telexpo Brazil); IDG World Expo, a division of
International Data Group (Comnet) Reed Exhibition Companies; and Penton Media,
Inc. (Internet World). Some of our competitors are larger and have greater
financial resources than we do. We also face competition from a growing number
of new small and mid-sized regional events and events focusing on particular
segments of the IT industry. At most tradeshows, participation by key exhibitors
is important because it helps attract other exhibitors and attendees. If we were
to lose any of our key exhibitors to our competitors, it could make our events
less attractive to other exhibitors and attendees. We also compete for
advertising dollars with other forms of media, including print publishing and
the Internet. We must make our events more attractive to exhibitors and
attendees than the other alternatives available to them or our business will
suffer.

         IF WE CANNOT RETAIN KEY PERSONNEL, IT MAY ADVERSELY AFFECT OUR RESULTS
         OF OPERATIONS

                  Our success depends to a significant extent on the continued
service of key management personnel. The loss or interruption of the services of
our senior management personnel or the inability to attract and retain other
qualified management, sales, marketing and technical employees could also have
an adverse effect on our financial condition or results of operations. We do not
have any key man insurance. Since our restructuring process began, we have lost
some senior operating personnel.

         THE SEASONALITY OF OUR REVENUE MAY ADVERSELY AFFECT THE MARKET PRICES
         FOR OUR SHARES

                  Although we receive the majority of fees we generate from our
events in advance, we record them as revenue only when the events occur. Because
of the timing of our largest tradeshows, our revenue is seasonal. Our revenue is
usually higher during the second and fourth quarters of each calendar year,
primarily because our largest NetWorld+Interop event occurs in the second
quarter and our largest COMDEX event occurs in the fourth quarter. This
seasonality causes our operating results to vary considerably from quarter to
quarter and these fluctuations could adversely affect the market price of our
common stock.

         WE ARE SUBJECT TO RISKS RELATED TO INTERNATIONAL OPERATIONS

                  We operate a multinational business and, accordingly, we are
subject to risks inherent in international operations, including:

                  -   the difficulty of enforcing agreements and collecting
                      receivables through some foreign legal systems;

                  -   fluctuations in the exchange rates between the U.S. dollar
                      and the currencies of the foreign countries in which we
                      operate;

                  -   tax rates in some foreign countries may exceed those of
                      the United States and foreign earnings may be subject to
                      withholding requirements or the imposition of tariffs,
                      exchange controls or other restrictions; and

                  -   general economic and political conditions in the countries
                      in which we operate may have an adverse effect on our
                      operations in those countries or on our ability to
                      generate exhibitors from those countries at our domestic
                      tradeshows and conferences.

                  We do not hedge our foreign currency exchange rate risk. As we
continue to expand our business globally, our success will depend, in part, on
our ability to anticipate and effectively manage these and other risks.

                                       14

<PAGE>

ITEM 2.  PROPERTIES

                  Our headquarters are in Los Angeles, California. We also have
office space in Northern California, Illinois, Japan, France, Canada and Sweden
as well as a sales branch in Massachusetts. We lease all of our material
offices. We believe that our existing space is adequate to meet our needs for
the immediate future and future growth can be accommodated by leasing additional
or alternate space.

ITEM 3.  LEGAL PROCEEDINGS

                  The following discussion pertains to legal proceedings that
existed as of February 3, 2003, the date we filed our petition for relief under
chapter 11 of the U.S. Bankruptcy Code. By operation of Section 362 of the U.S.
Bankruptcy Code, generally all actions and proceedings against us were
automatically stayed on February 3, 2003, subject to further proceedings in the
bankruptcy court.

                  On August 31, 2001, Key3Media Events 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 $1.4 million. We
entered into a lease for new office space in Needham and relocated to its new
offices on October 1, 2001. We estimate that our total annual occupancy costs
under the new lease will be approximately $1.7 million 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 $6.5 million, treble damages,
attorneys' fees, costs and expenses, pre-judgment interest and costs of suit. In
December 2001, Key3Media Events filed an answer and counterclaim to the
Interface complaint and a motion to dismiss the Mass. Gen L. c. 93A claim. The
counterclaim included causes of action for (i) breach of contract, (ii) breach
of implied covenant of good faith and fair dealing, (iii) tortious interference
with business relationship, (iv) trespass, (v) breach of the covenant of quiet
enjoyment and constructive eviction, (vi) violation of Mass. Gen L. c. 93A,
(vii) a request for declaratory relief, (viii) civil conspiracy and (ix) fraud.
In February 2002, Interface filed an opposition to motion to dismiss and an
amended complaint alleging breach of contract, breach of implied covenant of
good faith and fair dealing and violations of Mass. Gen L. c. 93A. Also in
February 2002, Key3Media Events filed an answer and counterclaim to the amended
complaint and a motion to dismiss the Mass. Gen L. c. 93A claim and Interface
filed a motion to dismiss counts (iii), (v), (vi), (viii) and (ix) of the
counterclaim. In March 2002, Interface filed a second amended complaint adding a
claim for trustee process and to add Fleet Bank of Massachusetts and Citizens
Bank of Massachusetts as trustee defendants. Interface also filed a motion for
Ex Parte Approval of Trustee Process Attachment. The court denied the ex parte
motion, however the court subsequently held a hearing at which it found that
Interface had established a reasonable likelihood of prevailing on its claims
and it awarded a trustee attachment in the amount of $711,111 representing rent
for the period of October 2001 through May 2002. On September 26, 2002 Interface
was awarded an attachment on certain of Key3Media Events' assets in the amount
of $711,111 located in Massachusetts and on or before October 15, 2002,
Interface attached these assets. Interface has withdrawn its Massachusetts
attachment with respect to all but $67,000 in cash and has obtained an
attachment on $711,000 in a parallel action in the Superior Court, County of Los
Angeles, State of California. The California Action was filed on August 21,
2002, for the sole purpose of seeking pre-judgment attachments in California
based on the Massachusetts claims. Interface obtained a Right to Attach Order in
California on or about October 24, 2002, and subsequently levied upon that
Order. In December 2002, a Third Party Claim was filed in the California Action
by Morgan Stanley & Co. asserting a superior interest in the assets Interface
was seeking to attach. Before the Third Party Claim was adjudicated, a Notice of
Stay was filed in California as a result of the bankruptcy petition. The two
parallel cases are stayed, as of February 3, 2003, pursuant to the automatic
stay provisions of Section 362 of the U.S. Bankruptcy Code..

                  On November 15, 2002, Interface Group Massachusetts, LLC filed
a complaint in United States District Court, District of Massachusetts, against
our chairman, Fredric D. Rosen alleging tortious interference with respect to
the lease that is the subject of the dispute in the litigation between Key3Media
Events and Interface in Massachusetts. On November 25, 2002, Mr. Rosen, as
chairman, requested we indemnify him and the claim was

                                       15

<PAGE>

submitted to our directors and officers' liability insurer. On January, 22,
2003, Rosen filed a motion to dismiss. On April 10, 2003, the motion to dismiss
was granted on personal jurisdiction grounds.

                  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, Inc. counter sued 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 $3.0 million arising from breaches related to
COMDEX/Fall 2000 and over $2.0 million arising from breaches related to
COMDEX/Fall 2001. On July 22, 2002, Key3Media Events sought and was granted
leave to amend its complaint. On July 23, 2002, Key3Media Events filed its first
amended complaint. The amended complaint included causes of action for
declaratory relief, injunctive relief, breach of contract, tortious
interference, civil conspiracy, intentional misrepresentation/fraud, predatory
price fixing and restraint of trade. The amended complaint seeks injunctive and
declaratory relief, compensatory damages, punitive damages, treble damages,
interest and attorneys' fees. On July 29, 2002, the Venetian and Interface
Group-Nevada, Inc. filed a motion to dismiss the intentional
misrepresentation/fraud, predatory price fixing and restraint of trade causes of
action. On September 19, 2002, the Venetian and Interface Group-Nevada, Inc.,
filed their answer to the first amended complaint and counterclaim for breach of
contract, unjust enrichment, breach of implied covenant of good faith and fair
dealing, negligent and intentional misrepresentation, accounting, abuse of
process, intentional interference with contract and declaratory relief and
seeking compensatory damages in excess of $10,000 and punitive damages in excess
of $10,000 and declaratory relief. A jury trial was scheduled for January 21,
2003 but subsequently postponed. The case was stayed on February 3, 2003,
pursuant to the automatic stay provisions of Section 362 of the U.S. Bankruptcy
Code. Interface has subsequently moved to have the case transferred to federal
court.

                  On or about December 27, 2001, Key3Media Events filed a
complaint against Krause International, Inc., E.J. Krause & Associates
(Argentina), Inc., and E.J. Krause & Associates, Inc. (collectively, "Krause"),
with respect to Krause's management of COMDEX Argentina 2001. The complaint
includes causes of action for breach of contract, misrepresentation and fraud,
fraudulent misrepresentation, negligent misrepresentation, and tortious
interference with business relations and seeks actual damages, punitive damages,
interest, attorneys' fees and costs. On or about February 8, 2002, Krause
answered the complaint, and filed a counter-claim alleging breach of contract,
unjust enrichment, and an additional claim for breach of contract. The
counter-claim seeks damages in the amount of $451,983 plus interest, and
reasonable attorneys' fees and costs. The parties have subsequently filed
various responsive documents including a reply to the counterclaim by Key3Media
Events and a motion to dismiss by Krause. On or about March 27, 2002, counsel
for Krause requested permission to amend its counter-claim to add E.J. Krause y
Asociados Argentina S.R.L., an Argentine corporation owned in part by Reed
Elsevier Overseas BV, as a third party, to add additional counter-claims and to
request compensatory damages of not less than $10.5 million and punitive damages
of $10.0 million. On or about April 12, 2002, Krause and E.J. Krause Asociados
Argentina S.R.L. filed their answer and first amended counterclaim alleging
breach of contract, unjust enrichment, fraudulent inducement to contract, breach
of implied covenant of good faith and fair dealing, intentional
misrepresentation, constructive fraud, negligent misrepresentation, breach of
fiduciary duty, torts arising from breach of contract and tortious interference
with prospective advantage. The amended counterclaim seeks compensatory damages
of not less than $10.5 million and punitive damages of $10.0 million. On or
about August 30, 2002, E.J. Krause & Associates, Inc. filed a similar answer and
counterclaim. The case was stayed on February 3, 2003, pursuant to the automatic
stay provisions of Section 362 of the U.S. Bankruptcy Code.

                  On or about February 4, 2002, Key3Media Events filed a
complaint against Krause International, Inc., E.J. Krause and Associates, Inc.
and E.J. Krause de Mexico SA de CV (collectively, "Krause"), with respect to
Krause's management of COMDEX Mexico for the years 2001 and 2002. The complaint
alleges breach of oral contract, breach of written contract, declaratory relief,
breach of covenant of good faith and fair dealing, breach of fiduciary duty,
fraud, negligent misrepresentation, and violation of California Business and
Professions Code Section 17200

                                       16

<PAGE>

and seeks actual damages, punitive and exemplary damages in an amount of at
least $10.0 million, attorneys' fees and costs, disgorgement and interest. On or
about March 12, 2002, Krause filed a motion to dismiss the complaint on the
grounds of improper venue or, alternately, to change venue to the United States
District Court for the District of Maryland. A hearing was held on this issue on
April 29, 2002 and on May 9, 2002, the court granted the portion of the motion
for transfer of venue. Key3Media Events' subsequent motion for reconsideration
was denied. On or about July 26, 2002 Krause filed an answer and counterclaim
for breach of contract, unjust enrichment, fraudulent inducement to contract,
breach of implied covenant of good faith and fair dealing, intentional
misrepresentation, constructive fraud, negligent misrepresentation, torts
arising from breach of contract and tortious interference with prospective
advantage. The amended counterclaim seeks compensatory damages of not less than
$10.6 million and punitive damages of $10.0 million. The case was stayed on
February 3, 2003 pursuant to the automatic stay provisions of Section 362 of the
U.S. Bankruptcy Code.

                  On July 1, 2002, Commerce and Industry Insurance Company
("CIC") sued us for declaratory relief in the Supreme Court of the State of New
York. The complaint arises out of our event cancellation policy with CIC
covering its 2001 COMDEX/Fall event. On July 31, 2002, we sued CIC in the
Superior Court of the State of California, County of Los Angeles, for breach of
contract, tortious breach of implied covenant of good faith and fair dealing and
declaratory relief arising out of our event cancellation policy with CIC
covering its 2001 Networld + Interop/Atlanta and 2001 COMDEX/Fall events. Our
complaint seeks compensatory damages of $9.1 million and $52.4 million with
respect to the 2001 Networld + Interop/Atlanta and 2001 COMDEX/Fall events,
respectively, punitive damages, interest and reasonable attorneys' fees. The
dispute arises out of CIC's response to our insurance claim for losses incurred
in connection with these two events as a result of the tragedies of September
11, 2001. We and CIC have moved to dismiss or stay the other party's suit in New
York and California, respectively. On November 5, 2002, the California court
rejected CIC's motion to dismiss or stay the California action. The New York
court has not yet rendered a decision on our pending motion to dismiss or stay
the New York action. On March 10, 2003, CIC filed a motion for summary
adjudication of the second, fourth and fifth causes of action in the California
case, all of which relate to the 2001 COMDEX/Fall event; on April 10, 2003 we
filed our response. A hearing on the motion is scheduled for April 24, 2003. The
parties have engaged in various settlement discussions but have not reached an
agreement.

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

                  We and our subsidiaries are subject to various other claims
and legal proceedings arising in the normal course of business. Our management
believes that the ultimate liability, if any, in the aggregate will not be
material to our financial position, results of operations or cash flows.

ITEM 4.  MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS

                  There were no matters submitted to a vote of security holders
during the fourth quarter of the year ended December 31, 2002.

                   EXECUTIVE OFFICERS OF KEY3MEDIA GROUP, INC.

                  Set forth below are the name, age, present title, principal
occupation, and certain biographical information for the past five years for our
executive officers, all of whom have been appointed by and serve at the pleasure
of our board of directors.

FREDRIC D. ROSEN, 59

                  Fredric D. Rosen was hired by Ziff-Davis in March 2000 to
become our Chairman and Chief Executive Officer. In the 18 months preceding his
employment by Ziff-Davis, he was a consultant and private investor. Mr. Rosen
was previously President & Chief Executive Officer of Ticketmaster Group, Inc.,
a position he held for more than 16 years, from 1982 to 1998. Mr. Rosen is also
a member of the board of directors of Playboy.com, Inc., a private company.

                                       17

<PAGE>

JASON E. CHUDNOFSKY, 59

                  Jason E. Chudnofsky is the Vice Chairman and Chief Operating
Officer of Key3Media Group, Inc. and serves as the Vice Chairman, President and
the Chief Executive Officer of Key3Media Events. Mr. Chudnofsky has worked at
Key3Media Events since 1998. He has been a director of Ziff-Davis since 1998.
From 1988 to 1997, Mr. Chudnofsky was President of the Trade Show Division of
The Interface Group which was renamed SOFTBANK COMDEX when that division was
acquired by SOFTBANK in 1995. In addition, Mr. Chudnofsky served as President
and Chief Executive Officer of the Sands Expo and Convention Center Division
from 1990 to 1995. Mr. Chudnofsky has over 15 years of experience in the events,
tradeshow and conference industry. Mr. Chudnofsky is a member of the board of
directors of Tech Corporation, Folio Exhibits, Inc., and Quantum Clicks, Inc.

PETER B. KNEPPER, 54

                  Peter B. Knepper was hired by Ziff-Davis in March 2000 to be
our Executive Vice President and Chief Financial Officer. In the year preceding
his employment by Ziff-Davis, he was a private investor and consultant providing
strategic planning and financial management services. Mr. Knepper was previously
Senior Vice President and Chief Financial Officer of Ticketmaster Group, Inc., a
position he held for more than ten years, from 1988 to 1998.

NED S. GOLDSTEIN, 47

                  Ned S. Goldstein was hired by Ziff-Davis in March 2000 to be
our Executive Vice President and General Counsel. In 1998, Mr. Goldstein
co-founded The Etechnology Companies, L.L.C. ("Etech"), a consulting, investment
and lobbying firm specializing in new economy companies and issues. Before
co-founding Etech, Mr. Goldstein was previously Senior Vice President and
General Counsel of Ticketmaster Group, Inc., a position he held for more than 11
years, from 1987 to 1998. Mr. Goldstein is a member of the board of directors of
M.Cam, Inc. a private company specializing in intellectual property valuation.

ROBERT PRIEST-HECK, 36

                  Robert Priest-Heck is the Chief Operating Officer of our
subsidiary, Key3Media Events, Inc., formerly ZD Events. Mr. Priest-Heck has
worked at Key3Media Events, Inc. since 1998 and has served in a variety of
positions, including Executive Vice President of Operations and Director of
International Operations. Prior to joining Key3Media Events, Mr. Priest-Heck
held a variety of positions at Ziff-Davis and its subsidiaries and held
management positions with Hyatt Hotels.

EUGENE L. COBUZZI, 46

                  Eugene L. Cobuzzi was named as our Executive Vice-President of
Operations and Strategic Planning in January of 2002. Mr. Cobuzzi had been a
Senior Vice-President of Key3Media Events, Inc., focused on company operations,
major vendor relationships, and mergers and acquisitions since January of 2001.
Before joining our company, Mr. Cobuzzi developed new business opportunities in
the digital music distribution space for Real Networks. Prior to that, Mr.
Cobuzzi spent 15 years at Ticketmaster Corporation in a variety of executive
positions including Chief Operating Officer and director.

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

                  Information relating to the principal market in which our
common stock is traded and the high and low sales prices per share for each full
quarterly period for the two most recent fiscal years is set forth below. As of
April 2, 2003, there were approximately 352 holders of record of our common
stock.

                  Our common stock commenced trading on the New York Stock
Exchange ("NYSE") under the symbol "KME" on August 21, 2000. Prior to that date,
there was no public market for our common stock. On July 29, 2002,

                                       18

<PAGE>

the NYSE suspended the trading of our common stock and the NYSE commenced
procedures to delist the shares from the exchange. The NYSE said it was taking
this action due to the abnormally low recent selling prices of the shares. We
discussed these matters with the NYSE and decided not to challenge the NYSE's
actions. On July 31, 2002, our common stock began trading on Over-The-Counter
Bulletin Board under the symbol KMED, which was subsequently changes to
KMEDQ.OB. The following table sets forth, for the periods indicated, the high
and low closing prices per share for our common stock as reported by the
Consolidated Tape Association:

<TABLE>
<CAPTION>
                                                                    2002                             2001
                                                           ------------------------         -----------------------
                                                            HIGH            LOW              HIGH              LOW
                                                           -------        ---------         -------          ------
<S>                                                        <C>            <C>               <C>              <C>
First Quarter....................................           $5.45          $ 4.40           $13.31            $9.85
Second Quarter...................................           $4.83          $ 0.38           $12.50            $9.41
Third Quarter....................................           $0.40          $ 0.01           $11.35            $3.30
Fourth Quarter...................................           $0.05          $0.007           $ 5.90            $3.00
</TABLE>

<TABLE>
<CAPTION>
                                                                                                         NUMBER OF
TITLE OF CLASS                                                                                        RECORD HOLDERS
--------------                                                                                       --------------
<S>                                                                                                  <C>
Common Stock..................................................................................              352
Series A 5.5% Convertible Redeemable Preferred Stock..........................................                1
Series B 5.5% Convertible Redeemable Preferred Stock..........................................               11
</TABLE>

                  During 2001 and 2002 no dividends were declared. Our board of
directors does not intend to pay any dividends in the foreseeable future.
Instead, we will retain any future earnings to finance the operation and
expansion of our business. In addition, our ability to pay dividends in the
future is restricted by the terms of our credit facility and senior subordinated
notes.

                  The following table sets forth the number of securities to be
issued upon exercise of outstanding options warrants and rights:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                               NUMBER OF SECURITIES
                                                                                            REMAINING AVAILABLE FOR
                                                                                               FUTURE ISSUANCE UNDER
                                       NUMBER OF SECURITIES TO       WEIGHTED-AVERAGE           EQUITY COMPENSATION
                                       BE ISSUED UPON EXERCISE       EXERCISE PRICE OF           PLANS (EXCLUDING
                                       OF OUTSTANDING OPTIONS,     OUTSTANDING OPTIONS,       SECURITIES REFLECTED IN
            PLAN CATEGORY                WARRANTS AND RIGHTS        WARRANTS AND RIGHTS           COLUMN (a))
----------------------------------------------------------------------------------------------------------------------
                                                  (a)                         (b)                           (c)
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                         <C>                      <C>
Equity compensation plans
approved security holders                    27,748,820                   $ 7.51                     3,271,366
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders                         --                       --                            --
----------------------------------------------------------------------------------------------------------------------
   Total                                     27,748,820                   $ 7.51                     3,271,366
----------------------------------------------------------------------------------------------------------------------
</TABLE>

ITEM 6.  SELECTED FINANCIAL DATA

                  The following selected financial data should be read in
conjunction with, and are qualified by reference to, our audited consolidated
and audited combined financial statements and the notes thereto contained
elsewhere in this Annual Report. The selected financial data presented is for
the five-year period ended December 31, 2002. The consolidated statement of
operations data for the years ended December 31, 2002, 2001 and 2000 and the
consolidated balance sheet data as of such dates are derived from our
consolidated audited financial statements for such years, which have been
audited by Ernst & Young LLP, independent auditors and are included herein. The
combined statement of operations data for the year ended December 31, 1999 are
derived from our audited combined financial statements for such year, which has
been audited by PricewaterhouseCoopers LLP, our previous independent
accountants, and are included herein. The combined statement of operations data
for the year ended December 31, 1998 and the combined balance sheet data as of
December 31, 1999 and 1998 are derived from our audited combined financial
statements for those years, which have been audited by PricewaterhouseCoopers
LLP, but which are not included herein.

                                       19

<PAGE>

                  Our historical financial information may not be indicative of
our future performance as an independent company.

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                        ----------------------------------------------------------------------------
                                                           1998            1999           2000             2001            2002
                                                        -----------    -----------    -----------      -----------       -----------
                                                                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                     <C>            <C>            <C>              <C>              <C>
CONSOLIDATED/COMBINED STATEMENT OF
OPERATIONS DATA:
Net revenues ......................................     $   269,135    $   251,411    $   286,901      $   249,169      $   151,461
Operating expenses:
   Cost of production .............................          75,445         74,131         78,497           86,028           56,917
   Selling, general & administrative ..............          76,508         88,066        106,231          105,733           84,807
   Restructuring costs ............................              --             --             --               --            7,351
   Non-recurring compensation charge ..............              --             --          2,977               --               --
   Staff reduction severance charges ..............              --             --             --            1,709            2,780
   Reduction of goodwill and other intangibles ....              --             --             --               --          363,000
   Stock based compensation .......................             252            522          7,967              188            1,821
   Depreciation & amortization ....................          41,180         38,132         36,688           39,984           17,674
                                                        -----------    -----------    -----------      -----------      -----------
Operating income (loss) ...........................          75,750         50,560         54,541           15,527         (382,889)
Interest income ...................................           2,816            487          3,264            2,869              362
Interest expense(1) ...............................         (45,860)       (23,300)       (39,359)         (45,102)         (39,793)
Equity in income of joint venture .................           2,658          1,649             --               --               --
Gain on the sale of joint venture
   interest(2) ....................................              --         13,746             --               --               --
Other, net ........................................             (28)           (71)           (17)           6,496             (407)
                                                        -----------    -----------    -----------      -----------      -----------
Income (loss) before income taxes, discontinued
   operations, extraordinary items, and cumulative
   effect .........................................          35,336         43,071         18,429          (20,210)        (422,727)
Provision (benefit) for income taxes ..............          16,080         17,082          9,867           (5,125)          (4,854)
Net income (loss) on discontinued operations ......              --             --             --            1,229          (33,450)
Extraordinary items, net of tax benefit ...........              --             --             --           (7,540)              --
Cumulative effect, net ............................              --             --             --               --         (344,615)
                                                        -----------    -----------    -----------      -----------      -----------
Net income (loss) .................................     $    19,256    $    25,989    $     8,562      $   (21,396)     $  (795,938)
                                                        ===========    ===========    ===========      ===========      ===========
Net income (loss) attributable to common
   shareholders:
   Net income (loss) ..............................     $    19,256    $    25,989    $     8,562      $   (21,396)        (795,938)
   Accretion on convertible preferred
     stock ........................................              --             --             --             (318)          (3,931)
                                                        -----------    -----------    -----------      -----------      -----------
   Net income (loss) attributable to common
     shareholders .................................     $    19,256    $    25,989    $     8,562      $   (21,714)     $  (799,869)
                                                        ===========    ===========    ===========      ===========      ===========
Net income (loss) per common share--Basic:
Before extraordinary items (after accretion on
   preferred stock) ...............................     $      0.36    $      0.49    $      0.15      $     (0.23)     $     (6.16)
Discontinued operations ...........................              --             --             --             0.02            (0.49)
Extraordinary items ...............................              --             --             --            (0.13)              --
Cumulative effect .................................              --             --             --               --            (5.04)
                                                        -----------    -----------    -----------      -----------      -----------
Net income (loss) per common share ................     $      0.36    $      0.49    $      0.15      $     (0.33)     $    (11.69)
                                                        ===========    ===========    ===========      ===========      ===========
Net income (loss) per common share--Diluted:
Before extraordinary items (after accretion on
   preferred stock) ...............................     $      0.36    $      0.49    $      0.14      $     (0.23)     $     (6.16)
Discontinued operations ...........................              --             --             --             0.02            (0.49)
Extraordinary items ...............................              --             --             --            (0.12)              --
Cumulative effect .................................              --             --             --               --            (5.04)
                                                        -----------    -----------    -----------      -----------      -----------
Net income (loss) per common share ................     $      0.36    $      0.49    $      0.14      $     (0.33)     $    (11.69)
                                                        ===========    ===========    ===========      ===========      ===========
</TABLE>

                                       20

<PAGE>

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                        ----------------------------------------------------------------------------
                                                           1998            1999           2000             2001            2002
                                                        -----------    -----------    -----------      -----------       -----------
                                                                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                     <C>            <C>            <C>              <C>              <C>
Shares used in computing basic net income (loss)
   per common share ...............................          53,358         53,358         57,589           66,809           68,402
Shares used in computing diluted net income (loss)
   per common share ...............................          53,358         53,358         59,949           66,809           68,402
OTHER DATA:
EDITDA(3) .........................................     $   119,560    $    90,270    $    91,212      $    62,007      $  (365,622)
EBITDA adjusted for stock-based compensation,
   non-recurring compensation, restructuring,
   goodwill and intangible and staff reduction
   severance charges ..............................         119,812         90,792        102,156           63,904            9,300
CONSOLIDATED/COMBINED STATEMENT OF CASH FLOWS DATA:
Net cash provided by (used in) operating activities     $    81,559    $    87,812    $    97,698      $       469      $   (54,020)
Net cash provided by (used in) investing activities         (11,663)        (5,150)        (7,540)        (118,462)          19,378
Net cash provided by (used in) financing activities         (75,635)       (86,526)        14,088           49,772            1,619
CONSOLIDATED/COMBINED BALANCE SHEET DATA:
   (AT PERIOD END):
Cash and cash equivalents .........................     $    10,385    $     5,570    $   109,914      $    41,384      $     7,819
Property and equipment, net .......................          11,488         10,028         12,342           18,812            9,487
Intangible assets .................................         907,048        875,526        843,999          871,938           73,904
Total assets ......................................       1,014,526        978,345      1,065,333        1,056,709          129,018
Total long-term debt (including current portion) ..         382,002        382,002        368,665          370,000          371,769
Total shareholders' equity (deficit) ..............     $   452,916    $   396,392    $   431,940      $   484,703      $  (308,896)
</TABLE>

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

(1)  Interest expense related to debts payable to Ziff-Davis and SOFTBANK for
     fiscal year 1998 through August 2000. For the period September 2000 to June
     26, 2001, interest expense related to our credit facility and debentures.
     After June 26, 2001, interest expense related to our senior bank credit
     facility and our unsecured senior subordinated notes.

(2)  Represents gain on sale of Expo Comm.

(3)  EBITDA represents income before taxes plus depreciation and amortization,
     interest expense net of interest income and excluding any gain on the sale
     of joint venture interest. 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. Our management believes
     EBITDA provides meaningful additional information on our operating results
     and on our ability to service our long-term debt and other obligations and
     to fund our operations. Because EBITDA is not calculated in the same manner
     by all companies, the representation herein may not be comparable to other
     similarly titled measured of other companies.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         WE HAVE FILED FOR PROTECTION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
         AND BELIEVE OUR SHARES HAVE NO VALUE

                  As a result of the continuing difficulties being experienced
by our operations, our high debt load and the other factors described in this
"Item 7 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations", we filed for protection and reorganization under chapter
11 of the U.S. Bankruptcy Code on February 3, 2003. We are seeking approval of a
plan of reorganization which, if completed, will discharge any and

                                       21

<PAGE>

all interests or claims that holders of our common stock and preferred stock
have with respect to our company and its assets. As a result, we believe our
shares no longer have any value and do not believe any investor should pay
anything for such shares. Under the expected plan of reorganization, holders of
our Notes other than TWCP will share ratably with other unsecured creditors in
distributions of $2.5 million in cash, 40% of the net proceeds of an insurance
claim up to a maximum of $4 million, warrants to purchase up to 5% of the
reorganized company's equity with a strike price at the reorganization value,
and potential additional minor assets that remain subject to final negotiation.
TWCP has agreed to forego its pro rata share of the foregoing distributions.
Although it is not possible to predict with certainty what the ultimate
distributions will be to those holders of our Notes, it is virtually certain
that whatever they receive will, in present value terms, represent only a very
small percentage of the aggregate principal amount of, and accrued interest on,
our Notes. Accordingly, we believe our Notes have very little value and any
potential purchaser of our Notes should proceed with extreme caution. If our
company is liquidated instead of reorganized, we believe that the holders of our
shares and the holders of our Notes would likely receive nothing. For a more
detailed description of the risks involved with our company, see "Item 1 --
Business -- Risk Factors".

                  The discussion below should be read in conjunction with our
historical audited consolidated and audited combined financial statements, the
notes thereto and the comparative summary of selected historical financial data
contained elsewhere herein. Certain reclassifications have been made to prior
period data to conform to current year presentations. Our historical results may
not be indicative of future results and we may engage in new or different
business activities and practices in the future. In addition to historical
information, the following discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors including those set forth under "Item 1 -- Business -- Certain Factors
that May Affect our Business" and elsewhere herein.

                  We utilize the term EBITDA in the following discussion. EBITDA
represents income before interest expense, net of interest income, taxes,
depreciation and amortization. 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. Our 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.

DEVELOPMENTS IN 2002

         STRATEGIC REVIEW, EXPENSE REDUCTION PROGRAMS AND RESTRUCTURING

                  On July 28, 2002, we announced the undertaking of a strategic
review of our operations in response to the sustained economic downturns being
experienced in the information technology, networking and trade show industries
and the effects of September 11, 2001 on our operations. The review initially
focused on our operations in light of the recent trend toward reduced market
demand with a view to modifying our operating structure as necessary to compete
in the current operating environment. We engaged financial and legal advisors to
assist us in evaluating our available options. On September 18, 2002, we
announced that we were reducing and consolidating our event schedule for 2003
and closing our regional office in Needham, Massachusetts, completing the
initial phase of this strategic review.

                  As a result of the strategic review and other developments
described above, our board of directors decided we could not continue to operate
our businesses in the near term under our existing capital structure and that it
would be in the best long-term interests of the holders of our shares and debt
obligations to explore a possible restructuring (with or without additional
capital), sale, business combination and/or other reorganization transaction
which, if consummated could result in a change of control of our company. On or
about November 22, 2002, we commenced a structured process through our financial
advisor Houlihan Lokey Howard & Zukin to explore these alternatives.

                                       22

<PAGE>

         BANKRUPTCY FILING

                  On February 3, 2003, we filed voluntary petitions for
reorganization under Chapter 11 of the federal bankruptcy laws in the United
States Bankruptcy Court for the District of Delaware (the "Court"). We decided
to seek judicial reorganization based upon a comprehensive recapitalization plan
designed to provide a strong financial foundation for the company. The plan is
backed by investment funds managed by TWCP, which, with certain of its
affiliates, owns approximately 68% of our bank debt and approximately 38% of our
Notes as of February 3, 2003. On February 4, 2003, the Court gave interim
approval for $12.5 million of a $30.0 million debtor-in-possession Credit and
Guaranty Agreement ("DIP Credit Facility") to be provided by TWCP for payment of
permitted pre-petition claims, working capital needs, and other general
corporate purposes. On March 26, 2003, the Court gave final approval of the DIP
Credit Facility for the full $30.0 Million. A further description of the
bankruptcy filing is included in footnotes to the consolidated financial
statements appearing elsewhere in this Form 10-K.

         NYSE DELISTING

                  On July 29, 2002, NYSE suspended the trading of our common
stock and the NYSE commenced procedures to delist our shares from the exchange.
The NYSE said it was taking this action due to the abnormally low recent selling
prices of the shares. On July 31, 2002, our common stock began trading on
Over-The-Counter Bulletin Board under the symbol KMEDQ.OB.

         FINANCING TRANSACTIONS

                  On June 26, 2002, we further amended our Amended and Restated
Credit Facility to modify the existing financial covenants until April 1, 2003,
after we determined that we might be in non-compliance with our financial
covenants for the quarter ending June 30, 2002. On December 16, 2002, we failed
to pay the semi-annual interest payment due on our 11.25% senior subordinated
notes ("the Notes"). This non-payment of interest continued past the 30-day
grace period and became an event of default in respect of the Notes. Further,
this event of default under the Notes constituted a cross-default under our
Amended and Restated Credit Facility. On January 23, 2003 and January 28, 2003,
we further amended our Amended and Restated Credit Facility. These amendments,
among other things, provided consents to the subordination of liens in
connection with us obtaining debtor-in-possession financing in a contemplated
filing under Chapter 11 of the U.S. Bankruptcy Code and waivers for certain
defaults that existed at each amendment date.

                  On July 2, 2002, we converted 50,000 shares of our 5.5% Series
B Convertible Preferred Stock to 254,500 shares of our common stock. On November
7, 2002 and November 25, 2002, we repurchased a total of 1,400,000 shares of our
5.5% Series B Convertible Preferred Stock for $5 dollars. Also on November 27,
2002, we converted 80,000 shares of our 5.5% Series B Convertible Preferred
Stock to 80,000 shares of our 5.5% Series A Convertible Preferred Stock.

                  A further description of the terms and conditions of these
debt and equity transactions is included in the "Liquidity and Capital
Resources" section of this Item 7 and in the footnotes to the consolidated
financial statements appearing elsewhere in this Form 10-K.

         ACQUISITIONS AND DISPOSITIONS

                  On January 7, 2002, we completed the acquisition of ExpoNova
Events & Exhibitions ("ExpoNova") previously announced on November 30, 2001. In
connection with this acquisition, ExpoNova retained and subsequently exercised a
right to require us to purchase another tradeshow and conference business
subject to certain conditions on April 9, 2002. On January 24, 2003, we
completed the sale of the assets of our Key3Media VON Events (VON) subsidiary to
Pulver.com VON Events, Inc., an affiliate of the prior owners of the VON events.
In connection with this sale, we were required to account for the operations of
these assets as discontinued operations and make certain reclassification to
prior year financial statements to conform to this new presentation. A further
description of the terms and conditions of this acquisition and disposition is
included in footnotes to the consolidated financial statements appearing
elsewhere in this Form 10-K.

                                       23

<PAGE>

         OTHER

                  Bruce M. Ramer resigned as a director of our company on July
15, 2002, James A. Wiatt resigned as a director on July 25, 2002, James E. Moore
resigned as a director on August 8, 2002, John A. Pritzker resigned as a
director on August 23, 2002, G. Andrea Botta resigned as a director on August
28, 2002, Pamela C. Alexander resigned as a director on October 3, 2002, and
Eric Hippeau resigned as a director on December 19, 2002, in each case citing
demands on their time except for Mr. Botta and Mr. Hippeau who did not provide
reasons. Additionally, Michael B. Solomon resigned as a director on January 6,
2003, without providing a reason.

REVENUE

                  To date, our revenue has been derived principally from:

                  -   exhibitor services revenue, which consists of the fees we
                      receive from IT vendors to rent exhibit space at our
                      events and the commissions and discounts we receive from
                      third parties who provide services to our exhibitors;

                  -   fees paid by attendees to participate in conferences that
                      we offer at our events; and

                  -   advertising and sponsorship fees.

                  Historically, exhibitor services revenue has ranged from 68%
to 74% of our total revenue. Exhibit space rental revenue accounts for a
substantial majority of exhibitor services revenue and fluctuates as a result of
changes in the amount of net square feet of exhibit space rentals and our rental
rates. The balance of exhibitor services revenue depends upon the demand for and
pricing of the third-party services that we promote to our exhibitors. At most
of our annual events, we generally rent a majority of the exhibit space for the
next year's event. Exhibitors are contractually required to pay for exhibit
space rentals in advance in two or three installments. The last installment is
usually due six months from the contract date or, if the contract is signed
after this date, the date of the contract. We recognize exhibitor services
revenue when the related event occurs. As a result, a significant portion of our
cash and cash equivalents and accounts receivable represent deferred revenues
for events to occur at a later date. Historically we maintained insurance on our
three largest events in amounts sufficient to cover a substantial portion of
lost exhibit space rental revenue for certain event cancellations covered by the
policy in question. The events of September 11th have significantly affected the
market for this type of insurance. We are currently negotiating the terms of
policies for our COMDEX Fall and certain other events in 2003. While we believe
we will be able to reach agreement on these policies, it seems clear from our
negotiations that the cost of this insurance will be greater than in past years
and that the policies will contain an exclusion for event cancellations due to
terrorist actions.

                  Conference fees have ranged from 15% to 20% of our total
revenue and consist of the fees we charge attendees to participate in the
conferences we offer at our events and, to a very minor extent, the fees paid by
attendees to attend our events. While attendees must obtain tickets for our
events, these tickets are usually distributed on a complimentary basis and only
permit attendees to visit the exhibit floor and other generally available
portions of the events.

                  Advertising and sponsorship fees paid by our exhibitors
generate approximately 6% to 12% of our total revenue. This revenue comes
primarily from the following sources:

                  -   advertising in Preview, a newspaper distributed before
                      some of our larger events to pre-registrants and certain
                      prior year attendees;

                  -   advertising in Program Exhibits Guide, a guide to the
                      exhibitors distributed before and during our events;

                  -   advertising in Show Daily, a daily newspaper we distribute
                      during some of our larger events;

                  -   advertising on billboards and banners at and around our
                      event venues; and

                                       24

<PAGE>

                  -   sponsorships of key areas and promotional materials
                      throughout our event venues.

We currently sell advertising and sponsorships almost exclusively to our
exhibitors on an event-by-event basis. We believe that with the strength of our
brands and audiences, we have opportunities to expand these sales beyond our
exhibitor base and the IT industry. We also believe we have significant
opportunities to generate additional revenue by selling advertising and
sponsorships across multiple events and brands and by introducing promotional
activities at our events.

                  We market our events under a limited number of brands. The
table below presents revenue for our principal brands over the last three years,
excluding international contract events discussed below under "Description of
Business--International Expositions."

<TABLE>
<CAPTION>
                                                                        2000             2001            2002
                                                                    -----------      -----------      -----------
                                                                                     (IN THOUSANDS)
<S>                                                                 <C>              <C>              <C>
COMDEX.........................................................     $    98,534      $    65,830      $    32,858
NetWorld+Interop...............................................          98,889          101,363           51,291
Seybold Seminars...............................................          22,416           16,252            6,924
JavaOne........................................................          25,663           26,364           16,917
</TABLE>

                  The table below presents the total net square feet of exhibit
space rentals, the number of exhibitors, the number of conference participants
and the estimated number of attendees for our largest events within each of our
principal brands over the last three years.

<TABLE>
<CAPTION>
                                                                          2000              2001              2002
                                                                         ------            -----             -----
<S>                                                                      <C>               <C>               <C>
COMDEX
     Total net square feet (in thousands)....................             1,286              838               426
     Total exhibitors........................................             3,265            2,417             1,363
     Total conference participants...........................             9,887            4,667             3,318
     Estimated total attendees (in thousands)................               430              292               194

NetWorld+Interop
     Total net square feet (in thousands)....................             1,087            1,140               637
     Total exhibitors........................................             1,927            2,130             1,215
     Total conference participants...........................             9,232            6,900             4,763
     Estimated total attendees (in thousands)................               170              226               267

Seybold Seminars
    Total net square feet (in thousands).....................               237              167                77
    Total exhibitors.........................................               608              408               208
    Total conference participants............................             6,537            3,281             2,218
    Estimated total attendees (in thousands).................                58               38                28

JavaOne(1)
     Total conference participants...........................            11,237            8,291             4,894
     Estimated total attendees (in thousands)................                20               20                10
</TABLE>

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

(1) Unlike our tradeshows, JavaOne is a conference from which we derive most of
    our revenue from the fees attendees pay to attend the conference. Although
    we do derive secondary revenue from exhibit space rental fees, it is not
    material and, accordingly, exhibitor information has been omitted from this
    table.

OPERATING COSTS

         COST OF PRODUCTION

                  We record as cost of production all costs we pay to third
parties that are directly associated with an event. The largest components of
these costs are event-specific advertising and attendee marketing, venue rental,
costs of

                                       25

<PAGE>

temporary personnel, conference content and other costs related to event
production, including hospitality and lodging. In the case of COMDEX Fall, we
currently have the Las Vegas Convention Center under contract through 2007,
subject to the acceptance of the lease(s) in our bankruptcy filing. In the case
of our events, contractual rights with venues vary. Although we do not have a
contractual right to use the venues beyond the contract period, we believe that
venue owners will generally give us the first chance to rent the space in the
ensuing years. While we have experienced recent increases in the venue rental
rates, we have been generally able to pass these increased costs on to our
exhibitors. Costs incurred prior to the occurrence of an event are recorded as
prepaid event costs and expensed as events occur; thereby matching event costs
with event revenues.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

                  SG&A consists of payroll and benefit costs for our employees,
office rental expenses, legal, accounting and all other expenses not directly
associated with an event (other than depreciation and amortization). For part of
2000 and prior, SG&A has included charges from Ziff-Davis for administrative
services, including legal, tax and financial accounting, management information,
telecommunications, and human resources services. In general, Ziff-Davis charged
us for these services based upon our utilization; however, where measuring
utilization was impractical, Ziff-Davis apportioned these charges among the
businesses in its ZD division based upon relative headcount or revenue. In
addition, Ziff-Davis managed most of our treasury activities. Since the
spin-off, we no longer rely on Ziff-Davis for these services and provide them
ourselves. In addition, we have new expenses as an independent public company
that we did not have in the past. We may also incur new or different expenses as
our business changes over time.

         DEPRECIATION AND AMORTIZATION

                  As of December 31, 2002, we had $73.9 million, net, of
intangibles. These intangibles consist primarily of goodwill and trade names
from our acquisition of COMDEX in 1995, ZD Expos in 1994 and ExpoNova in 2002.
In June 2001, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 142, "Goodwill and Other Intangibles Assets" (SFAS No.
142). We adopted SFAS No. 142 in the first quarter of 2002 and recorded a
non-cash charge of $344.6 million, net to reduce the carrying value of goodwill
and other intangibles related to the COMDEX reporting unit to their fair
estimated value. See "Recent Accounting Pronouncements" for additional
information.

                  Our depreciation relates to the depreciation of property and
equipment, principally computers and similar equipment. As of December 31, 2002,
we had $9.5 million of property and equipment, net.

         INTEREST EXPENSE

                  In prior periods, interest expense related to amounts owed to
affiliates of SOFTBANK and Ziff-Davis. From August 18, 2000 to June 26, 2001,
this expense related to our bank credit facility and debentures. Subsequent to
June 26, 2001, this expense related to our senior subordinated notes and senior
bank revolving credit facility.

         NON-GAAP FINANCIAL MEASURE

                  We believe that, although not prescribed under generally
accepted accounting principles ("GAAP"), EBITDA and Adjusted EBITDA provide
stockholders and potential investors with valuable measures in evaluating our
operating performance. The most directly comparable GAAP measure, operating
income (loss), includes depreciation and amortization, restructuring costs,
non-recurring compensation charge, staff reduction severance charges, reduction
of goodwill and other intangibles and stock based compensation. EBITDA and
Adjusted EBITDA exclude these items because they do not directly influence the
ongoing operations of the business. It is important to note, however, that not
all companies calculate adjusted EBITDA in the same manner, and adjusted EBITDA
as presented may not be comparable to similarly titled measures by other
companies.

A reconciliation of our operating income (loss) to our adjusted EBITDA for 2002,
2001 and 2000 is as follows (in thousands):

                                       26

<PAGE>

<TABLE>
<CAPTION>
                                                 2000          2001       2002
                                               ---------    ---------   ---------
<S>                                            <C>          <C>         <C>
Operating income (loss) ....................   $  54,541    $  15,527   $(382,889)
Other income (expense), net ................         (17)       6,496        (407)
                                               ---------    ---------   ---------
Adjusted operating income (loss) ...........      54,524       22,023    (383,296)
Plus: Depreciation & amortization ..........      36,688       39,984      17,674
                                               ---------    ---------   ---------
EBITDA .....................................      91,212       62,007    (365,622)

Plus:
Restructuring costs ........................          --           --       7,351
Non-recurring compensation charge ..........       2,977           --          --
Staff reduction severance charges ..........          --        1,709       2,780
Reduction of goodwill and other intangibles           --           --     363,000
Stock based compensation ...................       7,967          188       1,821
Adjusted EBITDA ............................   $ 102,156    $  63,904   $   9,330
                                               =========    =========   =========
</TABLE>

RESULTS OF OPERATIONS

                  The following table sets forth our combined and consolidated
statement of operations data expressed as a percentage of revenue for the
periods presented:

<TABLE>
<CAPTION>
                                                                                    YEARS ENDED DECEMBER 31,
                                                                                2000          2001         2002
                                                                               ------        ------      -------
<S>                                                                            <C>           <C>         <C>
Net revenue
     Exhibitor services................................................         68.74%        72.35%       74.23%
     Conference fees...................................................         19.58%        15.66%       18.19%
     Advertising & sponsorship.........................................         11.68%        11.99%        6.47%
     Other.............................................................            --            --         1.11%
                                                                               ------        ------       ------
         Total net revenue.............................................        100.00%       100.00%      100.00%
Cost of production.....................................................         27.36%        34.53%       37.58%
Selling, general & administrative expense..............................         37.03%        42.43%       55.99%
Restructuring costs....................................................            --            --         4.85%
Reduction in goodwill and other intangibles............................            --            --       239.67%
Staff reduction severance charges......................................            --          0.69%        1.84%
Non-recurring compensation charge......................................          1.04%           --           --
Stock based compensation...............................................          2.78%         0.08%        1.20%
Depreciation & amortization............................................         12.79%        16.05%       11.67%
Operating income (loss)................................................         19.01%         6.23%     (252.80)%
Interest expense, net..................................................         12.58%        16.95%       26.03%
Other income (expense), net............................................         (0.01)%        2.61%       (0.27)%
Income (loss) before income taxes, discontinued operations,
extraordinary items and cumulative effect..............................          6.42%        (8.11)%    (279.10)%
Provision (benefit) for income taxes...................................          3.44%        (2.06)%      (3.20)%
Extraordinary items, net of tax benefit................................            --         (3.03)%         --
Discontinued operations................................................            --         (0.49)%     (22.08)%
Cumulative effect......................................................            --            --      (227.53)%
Net income (loss)......................................................          2.98%        (8.59)%    (525.51)%
</TABLE>

                                      27

<PAGE>

         2002 COMPARED WITH 2001

                  In 2002, our revenues, net paid square footage of exhibit
space, and conference participants continue to decline due primarily to on-going
difficulties in the economy in general and in the IT industry in particular and
the related reductions in IT marketing and travel budgets, along with the
continuing effects of September 11, 2001. In addition, we have made certain
reclassifications to the consolidated financial statements for 2001 to conform
to the presentation in the consolidated financial statements for 2002.

                  Our total revenue decreased $97.7 million, or 39.2%, to $151.5
million in 2002 from $249.2 million in 2001. This decrease was primarily
attributable to lower overall revenue at most of our major events, mainly our
COMDEX Fall, N+I Las Vegas, N+I Atlanta and JavaOne events. The decrease in
revenue for these four events in 2002 from 2001 was approximately $79.0 million

                  Exhibitor services revenue decreased by $67.9 million, or
37.6%, to $112.4 million in 2002 from $180.3 million in 2001. This decrease was
primarily due to a 39.8% decrease in net paid square footage and a 5.3% decrease
in average rental rate per square foot and a $15.6 million decrease in other
exhibit revenue activity. The net paid square footage decreased from 2,262,124
in 2001 to 1,362,864 in 2002 and the average rental rate per square foot paid by
exhibitors decreased 5.3% to $50.86 in 2002 from $53.68 in 2001. These decreases
were primarily due to the continuing difficulties in the IT industry. The $15.6
million decrease in other exhibit revenue resulted principally from lower
exhibitor participation at the COMDEX Fall, N+I Las Vegas, N+I Atlanta and
Seybold Seminars San Francisco events.

                  Conference fees decreased $11.5 million, or 29.4%, to $27.6
million in 2002 from $39.0 million in 2001. This decrease was principally
attributable to the lower conference attendance at most of our major events,
mainly at our JavaOne and N+I Las Vegas events, and a decrease of 7.5% in the
average revenue per conference attendee in 2002 of $1,368 compared with $1,478
in 2001. The number of participants at our conferences decreased 23.7% to 20,146
in 2002 from 26,394 in 2001.

                  Advertising and sponsorship revenues decreased $20.1 million,
or 67.2%, to $9.8 million in 2002 from $29.9 million in 2000. This decrease was
primarily attributable to lower advertising and sponsorship revenue for our
COMDEX Fall, N+I Las Vegas, N+I Atlanta and JavaOne events.

                  In 2002, we recorded $1.7 million of income related to
proceeds from insurance claims. The majority of this amount, $1.6 million, was
earned in connection with a claim submitted for our Next Generation Network
event held in November 2001, which was adversely impacted by the events of
September 11, 2001. We had no such income in 2001.

                  Cost of production decreased $29.1 million, or 33.8%, to $56.9
million in 2002 from $86.0 million in 2001. As a percentage of revenue, cost of
production represented 37.6% of revenue in 2002 compared to 34.5% in 2001. The
aggregate dollar decrease in cost of production was attributable to the reduced
size and scope of all of our major events. The percentage increase reflects our
lower revenues and the fixed cost component of our cost of production.

                  SG&A expenses decreased $20.9 million, or 19.8%, to $84.8
million in 2002 from $105.7 million in 2001. As a percentage of revenue, SG&A
expenses represented 56.0% of revenue in 2002 compared to 42.4% in 2001. The
decrease in SG&A expenses on a dollar basis was primarily due to the effects of
a staff reduction program that commenced in September 2001 and continued through
2002, and other cost reduction programs implemented during 2002 to reduce our
temporary personnel and travel and entertainment costs, partially off-set by
higher rent expense, insurance costs and professional and legal service fees.
The percentage increase primarily reflects our lower revenues.

                  In 2002, we recorded $7.4 million of restructuring costs
related to the closure of our Needham, Massachusetts regional office and
abandonment of the related lease obligation, professional service fees incurred
in connection with our strategic review and loss on write-down of property and
equipment principally due to the closure of our regional office. In 2001, we had
no such costs.

                                       28

<PAGE>

                  Staff reduction severance charge increased $1.1 million to
$2.8 million in 2002 from $1.7 million in 2001. The increase was attributable to
the incremental reduction of personnel that principally worked at our Needham,
Massachusetts regional office.

                  In 2002, in connection with our strategic review that
commenced during the third quarter, we conducted a review of our goodwill and
intangible assets and recorded a total non-cash charge of $396.1 million to
reduce the value of goodwill and other intangibles related to our portfolio of
reporting units to their estimated fair value. This charge is recorded in our
consolidated statement of operations for the year as follows: $363.0 million in
the line item "Reduction of goodwill and other intangibles" and $33.1 million in
the line item "Net income (loss) on discontinued operations" related to the sale
of the assets of VON subsequent to December 31, 2002. The strategic review and
resulting charge recognizes the sustained economic downturns experienced in the
economy in general and specifically in the information technology and networking
industries we service as shown by the significant decline in our results of
operations. We used a combination of discounted cash flow methodology and
relative market measures to determine fair value. In 2001, we had no such
charge.

                  Noncash stock-based compensation increased $1.6 million to
$1.8 million in 2002 from $0.2 million in 2001. The increase was attributable to
the reversal of previously recorded expense in 2001, resulting from the
application of variable accounting stock-based compensation valuation
principles. 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.

                  Other income (expense), net decreased $6.9 million or 106.3%,
to expense of $0.4 million in 2002 from income of $6.5 million in 2001. The
decrease was attributable to $6.7 million of other income from ending the GES
litigation in 2001.

                  As a result of the foregoing, EBITDA decreased by $427.6
million, or 689.9%, to an EBITDA loss of $365.6 million in 2002 from an EBITDA
gain of $62.0 million in 2001. After adjustments to exclude the effects of
restructuring costs, staff reduction severance charges, reduction in goodwill
and other intangibles and non-cash stock-based compensation, adjusted EBITDA
would have been $9.3 million in 2002, a decrease of $54.6 million, or 85.4%,
from adjusted EBITDA in 2001 of $63.9 million.

                  Depreciation and amortization decreased $22.3 million, or
55.8%, to $17.7 million in 2002 from $40.0 million in 2001. The decrease is
principally due to our adoption of Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets," (SFAS No. 142) effective
January 1, 2002 and the elimination of depreciation expense for fixed assets
that were fully depreciated in the first half of 2002. SFAS No. 142 requires,
among other things, that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead tested for impairment at least
annually in accordance with the provisions of SFAS No. 142. We recognized
approximately $12.8 million of amortization expense in 2001 related to goodwill
and intangible assets with indefinite useful lives.

                  Net interest expense decreased $2.8 million to $39.4 million
in 2002 from $42.2 million in 2001. The decrease is principally due to a lower
average interest rate (including amortization of deferred financing costs) on
our primary debt obligations in 2002 than in 2001.

                  The benefit for income tax decreased $0.3 million to $4.9
million for 2002 from $5.1 million in 2001. As a percentage of income (loss)
before income taxes, this balance represents 25.4% in 2001 compared to 1.1% in
2002. Our income tax benefit as a percentage of loss before income taxes
decreased principally to the increase in non-deductible amounts in 2002
including reductions in goodwill and other intangibles.

                  Net income (loss) on discontinued operations decreased $34.7
million, to net loss of $33.5 million in 2002 from net income of $1.2 million in
2001. The decrease was primarily attributable to a $33.1 million reduction in
goodwill related to the VON assets in 2002.

                                       29

<PAGE>

                  In 2001, in connection with the repayment of our bank
indebtedness and repurchase of our zero coupon debentures on June 26, 2001, we
recognized an extraordinary loss on retirement of debt of $9.1 million, net of
tax benefit of $3.4 million. This amount represents the write-off of unamortized
original issue discount assigned to the warrants issued with the zero coupon
debentures retired and unamortized debt issuance costs. We also recognized an
extraordinary gain of $1.6 million, net of tax provision of $0.6 million, in
connection with the exchange of $10.0 million face amount of senior subordinated
notes for $7.5 million of Series B preferred stock in December 2001. This
extraordinary gain represents the difference in exchange value of the securities
off-set by the unamortized debt issuance costs attributable to the exchanged and
cancelled senior subordinated notes. In 2002, we had no such charges.

                  In connection with the adoption of SFAS No. 142, on January 1,
2002 we recognized a cumulative effect of a change in accounting principle of
$344.6 million, net of tax benefit of $80.4 million. This amount represents the
difference between the fair value and carrying value of goodwill and other
intangibles related to the COMDEX reporting unit as of January 1, 2002. In 2001,
we had no such charge.

                  As a result of the foregoing, we incurred a net loss of $795.9
million in 2002 compared to net loss of $21.4 million in 2001.

         2001 COMPARED WITH 2000

                  We believe that the decreases in our revenues, net paid square
footage of exhibit space, and conference participants in 2001 were attributed to
continuing difficulties in the economy in general and in the IT industry in
particular, the related reductions in IT marketing and travel budgets and the
terrorist attacks that occurred on September 11, 2001. We held three of our most
significant events during the year on and after the September 11th tragedy. We
held our N+I Atlanta event on September 11, 2001 to September 13, 2001, our
Seybold Seminars San Francisco event on September 25, 2001 to September 27,
2001, and our COMDEX Fall event on November 12, 2001 to November 16, 2001.

                  Our total revenue decreased $37.7 million, or 13.2%, to $249.2
million in 2001 from $286.9 million in 2000. This decrease was primarily
attributable to lower overall revenue at most of our major events including
COMDEX Fall, N+I Atlanta and Seybold Seminars San Francisco, partially off-set
by the addition of operating results from acquired businesses in 2001. SB Forums
was acquired on June 1, 2001 and the NGN and BCR assets were acquired in two
separate transactions on September 10, 2001. After adjusting revenue for the
year ended December 31, 2001 to exclude the effects of these acquired
businesses, our revenue for the year would have been $226.4 million, a decrease
of $60.5 million, or 21.1%, from $286.9 million in 2000.

                  Exhibitor services revenue decreased by $16.9 million, or
8.6%, to $180.3 million in 2001 from $197.2 million in 2000. This decrease was
primarily due to a 20.5% decrease in net paid square footage partially off-set
by a 3.6% increase in average rental rate per square foot and a $9.1 million
increase in other exhibit revenue activity. The net paid square footage
decreased from 2,847,214 in 2000 to 2,262,124 in 2001. This decrease was
primarily due to the continuing difficulties in the IT industry and the events
of September 11th partially off-set by the inclusion of SB Forums' N+I Tokyo
event and NGN's Next Generation event. Excluding the effect of the N+I Tokyo and
Next Generation events, net paid square footage decreased 28.1% in 2001 to
2,047,624. The average rental rate per square foot paid by exhibitors increased
3.6% to $53.68 in 2001 from $51.79 in 2000. The increase is primarily
attributable to the higher rate charged per net paid square foot at our major
events in 2001 than in 2000. For instance, our rate increases for the COMDEX
Fall, N+I Las Vegas and N+I Atlanta events, our three largest square footage
events, were 3% or higher in 2001 over 2000. The $9.1 million increase in other
exhibit revenue resulted principally from (i) $5.8 million of revenue from SB
Forums' event and conference business; (ii) $0.6 million and $0.4 million from
BCR's training business and NGN's publication business, respectively; and (iii)
an increase of $1.9 million for JavaOne relating to higher fees charged in 2001.

                  Conference fees decreased $17.1 million, or 30.5%, to $39.0
million in 2001 from $56.2 million in 2000. This decrease was principally
attributable to the lower conference attendance at most of our major events,
mainly at our COMDEX Fall, N+I Las Vegas, N+I Atlanta, JavaOne and Seybold
Seminars San Francisco events, partially off-set by the inclusion of SB Forums'
N+I Tokyo event and NGN's Next Generation event. Excluding the effect of the N+I
Tokyo and Next Generation, adjusted conference fees decreased $18.0 million, or
32.0% in 2001. The

                                       30

<PAGE>

number of participants at our conferences decreased 39.0% to 26,394 in 2001 from
43,292 in 2000. This decrease in participants was partially off-set by a 13.9%
increase in the average revenue per conference attendee in 2001 of $1,478
compared with $1,297 in 2000. Excluding the effects of the N+I Tokyo and Next
Generation events, the number of conference participants decreased to 24,283, or
43.9% in 2001 and the average revenue per conference attendee increased to
$1,573, or 21.2%, in 2001.

                  Advertising and sponsorship revenues decreased $3.6 million,
or 10.9%, to $29.9 million in 2001 from $33.5 million in 2000. This decrease was
primarily attributable to lower advertising and sponsorship revenue for our
COMDEX Fall and N+I Atlanta events partially off-set by a full year of corporate
sponsorship revenue earned in 2001 and inclusion of our N+I Tokyo event.
Excluding the effects of N+I Tokyo, adjusted advertising and sponsorship
revenues decreased $4.6 million, or 13.6% in 2001.

                  Cost of production increased $7.5 million, or 9.6%, to $86.0
million in 2001 from $78.5 million in 2000. As a percentage of revenue, cost of
production represented 34.5% of revenue in 2001 compared to 27.4% in 2000. The
aggregate dollar and percentage increases in cost of production were
attributable to the inclusion of operating results from businesses acquired in
2001 whose cost of production as a percentage of revenue was higher than our
historical experience. The percentage increase also reflects our lower revenues
and the fixed cost component of our cost of production. Excluding operating
results from these acquired businesses, cost of production decreased $5.7
million, or 7.2% in 2001 compared to 2000. Cost of production represents 32.2%
of revenue in 2001 after adjusting for the effects of the acquired businesses.

                  SG&A expenses decreased $0.5 million, or 0.5%, to $105.7
million in 2001 from $106.2 million in 2000. As a percentage of revenue, SG&A
expenses represented 42.4% of revenue in 2001 compared to 37.0% in 2000. The
decrease in SG&A expenses on a dollar basis was primarily due to the effects of
a staff reduction program that commenced in September 2001 and other cost
reduction programs implemented during the year off-set by incremental SG&A
expenses resulting from the recently acquired businesses. Excluding the results
of businesses acquired in 2001, SG&A expenses decreased by $3.5 million, or
3.3%, in 2001 from 2000. SG&A expenses represent 45.4% of revenue in 2001 after
adjusting for the effects of the acquired businesses.

                  In 2001, we recorded a $1.7 million staff reduction severance
charge related to severance and benefits due to employees terminated during the
period from August to December 2001. In 2000, we had a non-recurring
compensation charge of $3.0 million related to payments due two of our
executives who elected to exercise the termination provisions included in their
employment agreements.

                  Noncash stock-based compensation decreased $7.8 million to
$0.2 million in 2001 from $8.0 million in 2000. The decrease was attributable to
the reversal of previously recorded expense, resulting from the application of
variable accounting stock-based compensation valuation principles. 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.

                  Other income (expense), net decreased $0.4 million or 1.0%, to
expense of $35.7 million in 2001 from expense of $36.1 million in 2000. The
decrease was attributable to $6.7 million of other income from ending the GES
litigation almost all of which was off-set by an increase in net interest
expense. Net interest expense increased due to the higher average debt balance
and a higher interest rate on our primary debt obligation in 2001 over 2000.

                  As a result of the foregoing, EBITDA decreased by $19.4
million, or 32.0%, to $62.0 million in 2001 from $91.2 million in 2000. After
adjustments to exclude the effects of businesses acquired in 2001, non-cash
stock-based compensation, non-recurring compensation and staff reduction
severance charges and other income from ending the GES litigation, adjusted
EBITDA would have been $50.7 million in 2001, a decrease of $51.4 million, or
50.3%, from adjusted EBITDA in 2000 of $102.2 million.

                  Depreciation and amortization increased $3.3 million, or 9.0%,
to $40.0 million in 2001 from $36.7 million in 2000. The increase is principally
due to depreciation expense from increased purchases of property and equipment

                                       31

<PAGE>

in 2001 over 2000. Our depreciation and amortization expense in future years
will be impacted by the implementation of recent accounting standards. See
"Recent Accounting Pronouncements."

                  The provision for income tax decreased $15.0 million to a
benefit for income tax of $5.1 million for 2001 from a provision of $9.9 million
in 2000. As a percentage of income (loss) before income taxes, this balance
represents 25.4% in 2001 compared to 53.5% in 2000. Our income tax expense
(benefit) as a percentage of income (loss) before income taxes decreased
primarily because of the effect of foreign operations and changes in 2001
compared to 2000 for expenses not deductible for tax purposes relating primarily
to executive compensation and debenture interest.

                  In connection with the repayment of our bank indebtedness and
repurchase of our zero coupon debentures on June 26, 2001, we recognized an
extraordinary loss on retirement of debt of $9.1 million, net of tax benefit of
$3.4 million. This amount represents the write-off of unamortized original issue
discount assigned to the warrants issued with the zero coupon debentures retired
and unamortized debt issuance costs. We also recognized an extraordinary gain of
$1.6 million, net of tax provision of $0.6 million, in connection with the
exchange of $10.0 million face amount of senior subordinated notes for $7.5
million of Series B preferred stock in December 2001. This extraordinary gain
represents the difference in exchange value of the securities off-set by the
unamortized debt issuance costs attributable to the exchanged and cancelled
senior subordinated notes.

                  As a result of the foregoing, we incurred a net loss of $21.4
million in 2001 compared to net income of $8.6 million in 2000.

LIQUIDITY AND CAPITAL RESOURCES

                  On December 31, 2002, our balance of cash and cash equivalents
was $7.8 million and we had a working capital deficit of $406.8 million compared
to cash and cash equivalents of $41.4 million and a working capital deficit of
$16.9 million at December 31, 2001. This decrease in cash and cash equivalents
was primarily attributable to net cash used in operating activities and the use
of cash to purchase property and equipment and acquire businesses in 2002
off-set by the return of part of the cash purchase price for businesses acquired
in 2001. The increase in the working capital deficit was principally due to the
reclassification of our long-term debt obligations to currently payable
resulting from the interest payment default that occurred subsequent to December
31, 2002.

                  During 2002, we met our liquidity needs principally through
cash reserves, and the return of part of the cash purchase price for businesses
acquired in 2001. Net cash used in operating activities was $54.0 million in
2001, compared to net cash provided by operating activities of $0.5 million and
$97.7 million in 2001 and 2000, respectively. These decreases were primarily
attributable to continued lower levels of profitability and a net reduction in
working capital.

                  Net cash provided by investing activities was $19.4 million in
2002, compared to net cash used in investing activities of $118.5 million and
$7.4 million in 2001 and 2000, respectively. Net cash provided by investing
activities in 2002 was comprised of $22.0 million of cash purchase price
returned for businesses acquired in 2001 partially off-set by $0.7 million used
to purchase property and equipment and $1.9 million used to acquire businesses.
Net cash used in investing activities in 2001 was comprised of $14.8 million
used to purchase property and equipment and $103.7 million used to acquire
businesses, compared to net cash used in investing activities in 2000 of $7.4
million used to purchase property and equipment.

                  Net cash provided by financing activities was $1.6 million,
$49.8 million, and $14.1 million in 2002, 2001 and 2000, respectively. The
activity for 2002 related to $1.7 million of addition borrowings under our
Amended and Restated Credit Facility off-set by $0.1 million of offering costs
related to the issuance of preferred stock in 2001. The activity for 2001
related principally to the refinancing and retirement of indebtedness in June
2001, net borrowings under our revolving credit facility for use in acquiring
businesses and issuance of convertible preferred stock. 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.

                                       32

<PAGE>

                  In connection with our spin-off from Ziff-Davis on August 18,
2000, we raised approximately $75.0 million through the issuance of zero coupon
senior debentures with detachable warrants and sold 11,641,950 shares of our
common stock for $6.00 per share. Additionally, our subsidiary Key3Media Events
borrowed $330.0 million from a syndicate of banks. The proceeds of these
transactions were used to repay and refinance Key3Media Events' existing
indebtedness of $382.0 million and to fund a cash dividend to Ziff-Davis of
$43.0 million, and the balance was retained for working capital and general
corporate purposes. In 2000, we made early repayments of $30.0 million on our
bank borrowings.

                  On December 16, 2002, we failed to pay the semi-annual
interest payment due on our Notes. This non-payment of interest continued past
the 30-day grace period and became an event of default in respect of the Notes.
Further, this event of default under the Notes constituted a cross-default under
our Amended and Restated Credit Facility. On January 23, 2003 and January 28,
2003, we further amended our Amended and Restated Credit Facility. As a result
of the continuing difficulties being experienced by our operations, our high
debt load and the other factors described above in "Item 1 -- Business", we
filed for protection and reorganization under the U.S. Bankruptcy Code on
February 3, 2003.

                  Following our Petition Date of February 3, 2003, we utilized
our cash reserves, cash flow from operations and debtor-in-possession financing
as our primary sources of working capital. In conjunction with our filing under
Chapter 11, we entered into a $30 million debtor-in-possession Credit and
Guaranty Agreement ("DIP Credit Facility") with Thomas Weisel Capital Partners
("TWCP"). On February 4, 2003, the Court gave interim approval for up to $12.5
million of funding under the DIP Credit Facility and on March 26, 2003, the
Court gave final approval for the entire $30.0 million DIP Credit Facility. The
DIP Credit Facility has been afforded superpriority claim status in the Chapter
11 case and is collateralized by liens on certain of our assets (subject to
valid and unavoidable prepetition liens and certain other permitted liens) and
provides that proceeds be used for payment of permitted pre-petition claims,
working capital needs, and other general corporate purposes. Borrowings under
the DIP Credit Facility bear interest at 7.0% per annum and interest is payable
the last business day of the month. The DIP Credit Facility stipulates that a
participation fee be paid on all borrowings at an amount not to exceed 1% of the
total principal amount of borrowings.

                  Under the DIP Credit Facility, we are required, among other
things, to maintain specified levels of selling, general and administrative
expenses (as defined), provide cash reporting and ensure that accounts payables
are paid with forty-five (45) days, unless such amounts are disputed in good
faith. The DIP Credit Facility also contains other customary covenants,
including certain reporting requirements and covenants that restrict our ability
to incur or create liens, indebtedness and guarantees, make dividend payments,
sell or dispose of assets, and enter into affiliate transactions, mergers and
consolidations. Failure to satisfy these covenants would (in some cases, after
the expiration of a grace period) result in an event of default that could
cause, absent the receipt of appropriate waivers, the funds necessary to
maintain our operations to become unavailable. The DIP Credit Facility contains
other customary events of default, including a provision that the Court must
enter the Plan of Reorganization on or before June 30, 2003. The maturity date
of the DIP Credit Facility is June 30, 2003, with a twelve (12) month extension
at the discretion of the lender after our request for extension is submitted.

                  Our cash needs are satisfied through working capital generated
by our business and funds available under our DIP Credit Facility. The level of
cash generated by our business is dependent, in significant part, on our level
of sales and the credit extended by our vendors. Since our filing for
reorganization under Chapter 11, most of our vendors have resumed normal trade
terms. In addition, while we have experienced since the filing lower than
expected sales, we have plans for the remainder of the year to restore our
businesses and maintain a cost structure that maximizes our cash resources. If,
however, we experience a significant disruption of terms with our vendors, sales
fail to improve, and/or the DIP Credit Facility for any reason becomes
unavailable and/or actual results differ materially from our expectations, our
compliance with financial covenants and our cash resources could be adversely
affected.

                  With regards to our other capital transaction, we converted
50,000 shares of our 5.5% Series B Convertible Preferred Stock to 254,500 shares
of our common stock on July 2, 2002. On November 7, 2002 and November 25, 2002,
we repurchased a total of 1,400,000 shares of our 5.5% Series B Convertible
Preferred Stock for $5 dollars. Also on November 27, 2002, we converted 80,000
shares of our 5.5% Series B Convertible Preferred Stock to 80,000 shares of our
5.5% Series A Convertible Preferred Stock.

                                       33

<PAGE>

                  Following is a summary of our contractual obligations as of
December 31, 2002 (in millions), excluding any borrowing under the DIP Credit
Facility:

<TABLE>
<CAPTION>
                                                         PAYMENTS DUE BY PERIOD
                                     -------------------------------------------------------------
                                                  LESS THAN 1   BETWEEN 2-3   BETWEEN 4-5  AFTER 5
CONTRACTUAL OBLIGATIONS               TOTAL          YEAR          YEARS         YEARS      YEARS
-----------------------              --------     -----------   -----------   -----------  -------
<S>                                  <C>          <C>           <C>           <C>          <C>
Long-term debt ...................   $  371.8      $  371.8       $    --       $   --     $   --
Operating leases .................       34.3           5.9          12.6          8.9        6.9
                                     --------      --------       -------       ------     ------
Total Contractual Cash Obligations   $  406.1      $  377.7       $  12.6       $  8.9     $  6.9
                                     ========      ========       =======       ======     ======
</TABLE>

                  In connection with the January 7, 2002 purchase of ExpoNova
Events & Exhibitions, a portion of the purchase price was placed in an escrow
account, subject to the determination of the final purchase price. To the extent
the final purchase price is calculated to be more or less than the initial
estimate, then, subject to the bankruptcy, we would be required to make an
additional payment to the sellers or entitled to a return of purchase price. As
of December 31, 2002, we had $0.3 million currently held in escrow.

                  As of April 11, 2003, we borrowed $14 million under the DIP
Credit Facility and have a remaining $16 million of borrowings available.

SEASONALITY

                  Our revenue is highly seasonal, but our cash flows are more
stable. This is because our customers pay us for an event during the 12 months
preceding the event, but we do not recognize the payments we receive as revenue
until the event occurs. Historically, our largest events occur in the second
quarter (NetWorld+Interop, 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 one year may
be held in a different quarter in other years.

MANAGEMENT'S DISCUSSION OF CRITICAL ACCOUNTING POLICIES

                  Management believes that the accounting policies discussed
below are important to an understanding of our financial statements because they
require management to exercise judgment and estimate the effects of uncertain
matters in the preparation and reporting of financial results. Accordingly,
management cautions that these policies and the judgments and estimates they
involve are subject to revision and adjustment in the future. While they involve
less judgment, management believes that the other accounting policies discussed
in footnote 3 to the consolidated financial statements included elsewhere in
this Form 10-K are also important to an understanding of our financial
statements.

                  We determine our allowance for doubtful accounts using a
number of factors including historical collection experience, the financial
prospects of specific customers and market sectors, and general economic
conditions. Generally, we establish an allowance for doubtful accounts based on
our collection experience when measured by the amount of time an account
receivable is past its payment due date. In certain circumstances where we
believe an account is unable to meet its financial obligations to us, we record
a specific allowance for doubtful accounts to reduce the account receivable to
the amount we believe will be collected. In some instances, we have been able to
collect on past due amounts when accounts execute a contract for a subsequent
trade show, seminar, conference or exposition.

                  We evaluate our long-lived assets for impairment based on
accounting pronouncements that require management to assess fair value of these
assets by estimating the future cash flows that will be generated by the assets
and then selecting an appropriate discount rate to determine the present value
of these future cash flows. An evaluation for impairment must be conducted when
circumstances indicate that an impairment may exist; but not less frequently
than on an annual basis. The determination of impairment is subjective and based
on facts and circumstances specific to our company and the relevant long-lived
asset. Factors indicating an impairment condition exists may include permanent
declines in cash flows, continued decreases in utilization of a long-lived asset
or a change in business strategy. At December 31, 2002, we have a net intangible
asset balance of $73.9 million and a

                                       34

<PAGE>

net property and equipment balance of $9.5 million. For additional information
regarding long-lived assets, see the "Recent Accounting Pronouncements" section
of this Item 7 and footnote 3, "Summary of Significant Accounting Policies"
included in the consolidated financial statements appearing elsewhere in this
Form 10-K.

                  For 2002, we recorded a full valuation allowance for our net
deferred tax assets and net operating loss carryforwards. The valuation
allowance was calculated in accordance with the provisions of SFAS 109, which
places primary importance our operating results in the most recent three-year
period when assessing the need for a valuation allowance. Although we believe
that our results for the last three years were heavily affected by temporary but
persistent difficulties experienced by the industry we serve, impairments and
planned restructuring activities, which were undertaken to right-size our cost
structure, the cumulative losses represented sufficient negative evidence to
require a valuation allowance under the provisions of SFAS 109. We intend to
maintain a valuation allowance until sufficient positive evidence exists to
support its reversal. Until such time, except for minor foreign tax provisions,
the Company will have no reported tax provision, net of valuation allowance
adjustments.

                  Restructuring costs and staff reduction severance charges
include estimated costs for severance benefits, lease termination expenses and
other costs. If the future payments of these costs were to differ from our
estimates, we may need to increase or decrease our related reserves.
Specifically, for leased premises that we no longer occupy, management makes
certain assumptions as to when or if these premises will be subleased and at
what price. Assumptions include the number of years of any sublease, square
footage, market trends, property locations, and the price per square foot. These
assumptions involve significant judgments and estimations. We have based our
assumptions on current market information.

RECENT ACCOUNTING PRONOUNCEMENTS

                  In July 2001, the Financial Accounting Standards Board (FASB)
issued Statements of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets," (SFAS No. 142) effective for fiscal years beginning after
December 15, 2001. SFAS No. 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead be tested for
impairment at least annually in accordance with the provisions of SFAS No. 142.
SFAS No. 142 also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of."

                  We adopted SFAS 142 effective January 1, 2002. Based on the
evaluation performed to adopt SFAS No. 142, we recorded a non-cash charge of
$344.6 million, net of tax benefit of $80.4 million, to reduce the carrying
value of goodwill and other intangibles related to the COMDEX reporting unit to
their estimated fair value. This charge is nonoperational in nature and is
reported as a cumulative effect of an accounting change in the consolidated
statement of operations appearing elsewhere in this Form 10-K. We utilized a
combination of discounted cash flow methodology and relative market measures to
determine fair value.

                  As a result of a strategic review of our operations undertaken
during the third quarter ending September 30, 2002 and an updated review of our
operations in the fourth quarter ending December 31, 2002, we conducted an
evaluation of our goodwill and intangible assets. Based on the results of this
evaluation, we recorded an additional non-cash charge of $396.1 million to
reduce the value of goodwill and other intangibles related to our portfolio of
reporting units to their estimated fair value. This charge is recorded in the
consolidated statement of operations appearing elsewhere in this Form 10-K as
follows: $363.0 million in the line item "Reduction of goodwill and other
intangibles" and $33.1 million in the line item "Net income (loss) on
discontinued operations" related to the sale of the assets of VON subsequent to
December 31, 2002. We utilized a combination of discounted cash flow methodology
and relative market measures to determine fair value in these evaluations.

                  In October 2001, FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supercedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of," however it retains the fundamental provisions of SFAS
No. 121 related to the recognition and measurement of the impairment of
long-lived assets to be "held and used." In addition, SFAS No. 144 provides,
among other things, more guidance on estimating cash flows when performing a
recoverability

                                       35

<PAGE>

test and establishes more restrictive criteria to classify an asset as "held for
sale." Our adoption of the provisions of SFAS No. 144 on January 1, 2002 did not
effect our financial position or results of operations.

                  In April 2002, FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical
Corrections." For most companies, SFAS No. 145 will require, among other things,
gains and losses on extinguishments of debt to be classified as income or loss
from continuing operations rather than as extraordinary items as previously
required under SFAS No. 4. We will adopt the provisions of SFAS No. 145 related
to the rescission of SFAS No. 4 on January 1, 2003. At such time, we will
reclassify the extraordinary loss and gain on extinguishments of debt to
continuing operations for prior periods. With regards to other provisions of
SFAS No. 145, we have adopted them and such adoption did not effect our
financial position or results of operations.

                  In June 2002, FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses financial and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The principal difference
between SFAS No. 146 and EITF No. 94-3 relates to the requirements for
recognition of a liability for a cost associated with an exit or disposal
activity. SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred while
EITF No. 94-3 requires that the liability be recognized at the date of an
entity's commitment to an exit plan. The provisions of SFAS No. 146 are
effective for exit or disposal activities that are initiated after December 15,
2002, with early application encouraged. We adopted SFAS No. 146 in the second
quarter 2002.

ITEM 7A. 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 grading or speculative purposes. We do not
hedge our foreign currency rate risk. We entered into an interest rate cap
agreement, however, in August 2000 to manage and reduce the impact of changes in
interest rates on not less than $165 million of the borrowings under our senior
credit facility. This interest rate cap agreement expired in 2001 and we did not
enter into a new agreement.

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

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                  See Part IV, Item 14 of this Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         DIRECTORS CONTINUING IN OFFICE -- TERM EXPIRING IN 2005

            Edward A. Bennett, 56                          Director since 2000

                  Mr. Bennett is President of Need Studios, and Chairman of
Softnet Systems, a publicly traded company on Nasdaq. He is also the co-founder
of 212/Investcorp Technology Ventures, and Vaultus, a wireless solutions
company. Prior to this, Mr. Bennett was President and CEO of Prodigy Services,
President and CEO of MTV Networks' VH-1 Music Television network, and spent 14
years in various executive positions at Viacom.

                                       36

<PAGE>

         DIRECTORS CONTINUING IN OFFICE -- TERM EXPIRING IN 2004

                  Jason E. Chudnofsky, 59                   Director since 2000

                  Jason E. Chudnofsky is the Vice Chairman and Chief Operating
Officer of Key3Media Group, Inc. and serves as the Vice Chairman, President and
Chief Executive Officer of Key3Media Events. Mr. Chudnofsky has worked at
Key3Media Events since 1998. He has been a director of Ziff-Davis since 1998.
From 1988 to 1997, Mr. Chudnofsky was President of the Trade Show Division of
The Interface Group which was renamed SOFTBANK COMDEX when that division was
acquired by SOFTBANK in 1995. In addition, Mr. Chudnofsky served as President
and Chief Executive Officer of the Sands Expo and Convention Center Division
from 1990 to 1995. Mr. Chudnofsky has over 15 years of experience in the events,
tradeshow and conference industry. Mr. Chudnofsky is a member of the board of
directors of Tech Corporation and Folio Exhibits, Inc.

         DIRECTORS CONTINUING IN OFFICE -- TERM EXPIRING IN 2003

         Ronald D. Fisher, 55                               Director since 2000

                  Ronald D. Fisher has been the Vice Chairman of SOFTBANK
Holdings Inc. since 1995. From 1990 to 1995, Mr. Fisher was the Chief Executive
Officer of Phoenix Technologies Ltd., a leading developer and marketer of
systems software products for personal computers. From 1984 through 1989, Mr.
Fisher was the President of Interactive Systems Corporation. His prior
experience also includes senior management positions at Visicorp, TRW and ICL
(USA). In addition to being a director of SOFTBANK Corp., Mr. Fisher serves on
the board of directors of E*Trade, GSI Commerce, InsWeb Corporation, Optimark
Holdings Inc., and VieFinancial Group.

         Fredric D. Rosen, 59                               Director since 2000

                  Fredric D. Rosen was hired by Ziff-Davis in March 2000 to
become our Chairman and Chief Executive Officer. In the 18 months preceding his
employment by Ziff-Davis, he was a consultant and private investor. Mr. Rosen
was previously President & Chief Executive Officer of Ticketmaster Group, Inc.,
a position he held for more than 16 years, from 1982 to 1998. Mr. Rosen is also
a member of the board of directors of Playboy.com, Inc., a subsidiary of a
public company.

                  There are no family relationships among any directors or
executive officers of Key3Media.

         BOARD OF DIRECTORS' COMMITTEES

                  Edward A. Bennett and Ronald D. Fisher are the members of our
Audit Committee. Mr. Fisher joined our Audit Committee on August __, 2003. Mr.
Bennett is an independent member of our Audit Committee as independence is
defined in Section 303.01(B)(2)(a) and (3) of the NYSE's listing standards. Mr.
Fisher is employed by SOFTBANK Inc., which, until December 20, 2002, owned
almost a majority of our stock. The primary purpose of our Audit Committee,
chaired by Mr. Bennett, is to assist the Board of Directors in its oversight of
our internal controls and financial statements and the audit process. The Audit
Committee is also responsible for recommending for approval by the Board of
Directors a firm of independent auditors whose duty it is to audit our
consolidated financial statements for the fiscal year in which they are
appointed. The report of the Audit Committee is included below.

                  Ronald D. Fisher and Edward A. Bennett are the members of our
Nominating and Compensation Committee. Our Nominating and Compensation Committee
is responsible for reviewing and approving compensation levels for all of our
senior executives. The Nominating and Compensation Committee is also responsible
for administering our 2000 Stock Option and Incentive Plan.

                  Fredric D. Rosen, Jason E. Chudnofsky and Ronald D. Fisher,
are the members of our Executive Committee. The Executive Committee has, and may
exercise, all the powers and authority of the Board in the management of the
business and affairs of Key3Media except to the extent prohibited by the
Delaware General

                                       37

<PAGE>

Corporation Law at the relevant time, and may authorize the seal of Key3Media to
be affixed to all papers which may require it.

         SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

                  Section 16(a) of the Securities Exchange Act of 1934 requires
our directors, executive officers and persons who own more than 10% of a
registered class of our equity securities to file reports of ownership of, and
transactions in, our securities with the Securities and Exchange Commission.
Such directors, executive officers and 10% shareholders are also required to
furnish us with copies of all Section 16(a) reports they file.

                  Based solely on a review of the copies of such reports we
received, and on written representations from certain reporting persons, we
believe that all Section 16(a) filing requirements applicable to our directors,
executive officers and 10% shareholders were complied with during fiscal year
2002 except as follows: None

ITEM 11. EXECUTIVE COMPENSATION

                  The following table contains certain compensation information
for Fredric D. Rosen, who has served as our chief executive officer since March
2000, and the four other most highly compensated executive officers who were
serving as our executive officers at the end of our last completed fiscal year.
All of the information in this and the next two tables reflects compensation
paid in accordance with our compensation and benefit plans.

<TABLE>
<CAPTION>
                                                               LONG-TERM COMPENSATION
                                                                                   AWARDS
                                                                OTHER                      SECURITIES
                                                               ANNUAL                      UNDERLYING              ALL OTHER
                            ANNUAL COMPENSATION                COMPEN-      RESTRICTED      OPTIONS/                COMPEN-
NAME AND PRINCIPAL                    SALARY        BONUS      SATION     STOCK AWARD(s)      SARs      PAYOUTS     SATION
     POSITION              YEAR        ($)           ($)        ($)           ($)             (#)(1)                 ($)
     (a)                   (b)         (c)           (d)        (e)           (f)              (g)        (h)        (i)
<S>                        <C>      <C>           <C>          <C>        <C>              <C>         <C>     <C>
Fredric D. Rosen           2002     1,200,000             0                                                      124,561 (2)
Chairman and Chief         2001     1,500,000             0                                                       91,679 (2a)
Executive Officer          2000     1,250,000     1,000,000                                 9,573,333             33,456 (2b)

Jason E. Chudnofsky        2002       760,000             0                                                       40,175 (3)
Vice Chairman and Chief    2001       950,000             0                                                       38,745 (3a)
Operating Officer          2000       805,141       300,000                                 3,750,000          2,087,916 (3b)

Peter B. Knepper           2002       525,000       150,000                                                       25,718 (4)
Executive Vice-President   2001       525,000       150,000                                                       35,179 (4a)
and Chief Financial        2000       440,865       200,000                                 1,000,000             12,791 (4b)
Officer

Ned S. Goldstein           2002       525,000       150,000                                                       35,169 (5)
Executive Vice President,  2001       525,000       150,000                                                       36,351 (5a)
General Counsel and        2000       440,865       200,000                                 1,000,000             20,840 (5b)
Secretary

Robert Priest-Heck         2002       500,000       125,000                                                       14,510 (6)
Chief Operating Officer    2001       500,000       125,000                                                       16,910 (6a)
Key3Media Events, Inc      2000       417,691       150,000                                   500,000             16,051 (6b)
</TABLE>

(1)  These options, which were granted under the Key3Media 2000 Stock Option and
     Incentive Plan, will vest over four years from the date of grant.

                                       38

<PAGE>

(2)  Represents $51,929 for health, life and disability insurance premiums and
     $72,632 for medical reimbursement paid by the company.

(2a) Represents $39,434 for health, life and disability insurance premiums and
     $52,245 for medical reimbursement paid by the company.

(2b) Represents $27,388 for health, life and disability insurance premiums and
     $6,068 for medical reimbursement paid by the company.

(3)  Represents $29,919 for health, life and disability insurance premiums,
     matching contributions of $3,333 to the executive's 401(k) plan and $6,923
     for medical reimbursement paid by the company.

(3a) Represents $30,787 for health, life and disability insurance premiums,
     matching contributions of $3,425 to the executive's 401(k) plan and $4,533
     for medical reimbursement paid by the company.

(3b) Represents $2,053,129 paid to the executive as part of Key3Media's
     non-recurring compensation charge of $3.9 million related to compensation
     granted by former owner Ziff-Davis to two executives of Key3Media, $29,396
     for health, life and disability insurance premiums, matching contributions
     of $5,250 to the executive's 401(k) plan and $141 for medical
     reimbursements paid by the company.

(4)  Represents $19,704 for health, life and disability insurance premiums,
     matching contributions of $4,000 to the executive's 401(k) plan and $2,014
     for medical reimbursement paid by the company.

(4a) Represents $22,594 for health, life and disability insurance premiums,
     matching contributions of $4,442 to the executive's 401(k) plan and $8,143
     for medical reimbursement paid by the company.

(4b) Represents health, life and disability insurance premiums paid for by the
     company.

(5)  Represents $18,795 for health, life and disability insurance premiums,
     matching contributions of $4,000 to the executive's 401(k) plan and $12,374
     for medical reimbursement paid by the company.

(5a) Represents $22,276 for health, life and disability insurance premiums,
     matching contributions of $5,242 to the executive's 401(k) plan and $8,833
     for medical reimbursement paid by the company.

(5b) Represents $10,457 for health, life and disability insurance premiums,
     matching contributions of $5,250 to the executive's 401(k) plan and $5,133
     for medical reimbursement paid by the company.

(6)  Represents $12,677 for health, life and disability insurance premiums and
     matching contributions of $1,833 to the executive's 401(k) plan.

(6a) Represents $14,032 for health, life and disability insurance premiums and
     matching contributions of $2,878 to the executive's 401(k) plan.

(6b) Represents $10,801 for health, life and disability insurance premiums and
     matching contributions of $5,250 to the executive's 401(k) plan.

                                       39

<PAGE>

                              OPTION GRANTS IN 2002

                  We granted stock options to purchase 100,000 shares of our
common stock at $6.50 per share to Eugene Cobuzzi on January 14, 2002.

         AGGREGATED OPTION EXERCISES IN 2002 AND YEAR-END OPTION VALUES

                  The following table summarizes aggregate option exercises by
each of the persons named in the Summary Compensation Table during 2002 and the
value of the options held by them as of December 31, 2002:

<TABLE>
<CAPTION>
                                                                    Number of Securities                   Value of Unexercised
                                                                  Underlying Unexercised                 In-the-Money Options at
                              Shares Acquired     Value             Options at Year-End(#)                      Year-End($)
Name and Principal Position    On Exercise(#)  Realized ($)   Exercisable         Unexercisable      Exercisable       Unexercisable
<S>                           <C>              <C>            <C>                 <C>                <C>               <C>
Fredric D. Rosen                    --                  --      7,778,247           1,795,086         $       --         $       --
Chairman and Chief
Executive Officer

Jason E. Chudnofsky                 --                  --      2,890,621             859,379         $       --         $       --
Vice Chairman and                                                 215,749(1)               --             54,189
Chief Operating Officer                                            35,685(2)                             214,108

Peter B. Knepper                    --                  --        812,491             187,509         $       --         $       --
Executive Vice-President
and Chief Financial
Officer

Ned S. Goldstein                    --                  --        812,491             187,509         $       --         $       --
Executive Vice President,
General Counsel and
Secretary

Robert Priest-Heck                  --                  --        343,750             156,250         $       --         $       --
Chief Operating Officer             --                  --             --                  --                 --                 --
Key3Media Events, Inc.           6,307(2)       $  207,921          2,240(2)            1,725(2)          13,440             10,350
</TABLE>

(1)  Options originally granted by Ziff-Davis and ZDNet to purchase Ziff-Davis
     common stock and ZDNet common stock, converted to options to purchase CNET
     common stock. After the spin-off of Key3Media, ZDNet merged with CNET and
     the number of shares and exercise price were adjusted accordingly.

(2)  Options to purchase SOFTBANK common stock.

                                       40

<PAGE>

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS

                  The following summaries address all of the material provisions
of our employment contracts with Messrs. Rosen, Chudnofsky, Knepper, Goldstein
and Priest-Heck but are qualified in their entirety by the complete text of
those agreements which we filed as exhibits to our registration statement on
Form S-1 (No. 333-36828). Additionally, we anticipate that all of the employment
agreements below will be terminated pursuant to a plan reorganization. As part
of our reorganization, we are currently negotiating a Key Employee Retention
Program (the "KERP") which will replace the terms of the employment contracts
summarized below. Under the terms of the expected KERP, certain key employees
would receive between $3.4 million and $4.7 million depending on the achievement
of certain performance targets. On March 27, 2003, Mr. Rosen offered to forego
the cash payments that would have be due him pursuant to the proposed KERP,
thereby reducing the cost of the KERP by between approximately $0.9 and 1.4
million. The terms of the KERP have not been finalized and the KERP will not be
effective until approved by the Bankruptcy Court.

                  Fredric D. Rosen. We have entered into an employment agreement
with Fredric D. Rosen pursuant to which Mr. Rosen is entitled to:

                  -   a base salary of at least $1,500,000 per year;

                  -   a performance bonus equal to an escalating percentage of
                      incremental growth in "EBITDA";

                  -   a discretionary bonus in an amount to be determined by our
                      Board of Directors or its Nominating and Compensation
                      Committee;

                  -   options to purchase 9,573,333 of the shares of our Common
                      Stock in accordance with our Key3Media 2000 Stock Option
                      and Incentive Plan; and

                  -   a term life insurance policy in the amount of $5 million.

                  The amount of the performance bonus for each year will be
based on a percentage of the incremental growth in EBITDA for that year over the
prior year (or earlier prior year if there has been an interim decrease in
EBITDA). The percentage by which Mr. Rosen's performance bonus will be
calculated will vary depending on the rate of the growth in EBITDA but will not
exceed 5%. For this purpose "EBITDA" means our consolidated reported earnings
for that year, as adjusted to:

                  -   add back interest, taxes, depreciation and amortization,
                      all as determined by our independent auditors;

                  -   exclude unusual non-recurring items;

                  -   exclude charges related to his performance bonus, similar
                      bonuses paid to other executive officers and any other
                      earnings-related bonuses exceeding $150,000 per year;

                  -   exclude any charges to earnings attributable to payments
                      to affiliates that are in excess of the fair market value
                      of goods sold or services rendered; and

                  -   exclude the effect of non-cash stock based compensation,
                      calculated in a manner consistent with our financial
                      reporting.

                  EBITDA for 2000 shall be adjusted by the Compensation
Committee to reflect a normalized situation, taking into account special costs
and expenses which may be incurred in that year.

                  If there is a change in control, as defined in his contract,
of our company, Mr. Rosen's options will vest immediately and become immediately
exercisable or he may elect a cash payment in place of the options. The amount
of the cash payment for the options will be determined based on the manner of
the change of control. In

                                       41

<PAGE>

addition, Mr. Rosen will, upon a change of control, receive an amount which, on
an after-tax basis (including federal income and excise taxes, and state and
local income taxes) is equal to the excise tax, if any, imposed by the Internal
Revenue Code.

                  Our contract with Mr. Rosen expires on February 28, 2005. We
may terminate his employment for cause or disability (each as defined in his
contract), without cause, or upon his death. Mr. Rosen may terminate his
employment for good reason (as defined in his contract) upon 30 days' written
notice. Any termination of his employment is subject to the following
conditions:

                  -   Regardless of the reason for such termination, we will pay
                      him his base salary through the date of the termination.

                  -   If his employment is terminated as a result of his
                      disability or death, we will pay to him or his estate one
                      year's worth of base compensation plus the prorated
                      portion of any annual incentive bonus he would have
                      received for the year of such termination.

                  -   If we terminate his employment for cause or he voluntarily
                      terminates his own employment, but without good reason, we
                      will have no additional obligations to him.

                  -   If we terminate his employment other than for disability
                      or cause or he terminates his employment for good reason,
                      then we will pay him both twice his then current salary
                      and twice his most recent performance bonus, spread over
                      the succeeding two years, and all of his options to
                      purchase our stock will fully vest.

                  Mr. Rosen's employment contract prohibits him, without our
written consent, from competing with us or our subsidiaries for a period of two
years commencing upon the termination of his employment.

                  Jason E. Chudnofsky. We have entered into an employment
agreement with Jason E. Chudnofsky pursuant to which he is entitled to:

                  -   a base salary of at least $950,000 per year;

                  -   a performance bonus equal to 40% of the annual performance
                      bonus received by Mr. Rosen, or, if Mr. Rosen has been
                      replaced by a successor, then a performance bonus equal to
                      an escalating percentage of incremental growth in EBITDA
                      (defined in the same way as for Mr. Rosen), but will not
                      exceed 2%;

                  -   a discretionary bonus comprised of cash and/or stock equal
                      to 40% of the discretionary bonus received by Mr. Rosen,
                      or Mr. Rosen's successor;

                  -   options to purchase 750,000 shares of our Common Stock in
                      accordance with the Key3Media 2000 Stock Option and
                      Incentive Plan; and

                  -   a life insurance policy in the amount of $2 million.

                  In addition to the options to purchase 750,000 shares that Mr.
Chudnofsky is entitled to pursuant to his employment agreement with us, he still
retains options to purchase 3,000,000 shares of our Common Stock, which he was
awarded under his initial contract with us.

                  If there is a change in control, as defined in his contract,
of our company, Mr. Chudnofsky's options will vest immediately and become
immediately exercisable or he may elect to receive a cash payment in place of
the options. The amount of the cash payment for the options will be determined
based on the manner of the change of control. In addition, Mr. Chudnofsky will,
upon a change of control, receive an amount which, on an after-tax basis
(including federal income and excise taxes, and state and local income taxes) is
equal to the excise tax, if any, imposed by the Internal Revenue Code.

                                       42

<PAGE>

                  Our contract with Mr. Chudnofsky expires on December 31, 2004.
We may terminate his employment for cause or disability (each as defined in his
contract), without cause, or upon his death. Mr. Chudnofsky may terminate his
employment at any time for good reason. Any termination of his employment is
subject to the following conditions:

                  -   Regardless of the reason for such termination, we will pay
                      him his base salary through the date of the termination.

                  -   If his employment is terminated as a result of his
                      disability or death, we will pay to him or his estate one
                      year's worth of base compensation plus the prorated
                      portion of any annual incentive bonus he would have
                      received for the year of such termination.

                  -   If we terminate his employment for cause, or Mr.
                      Chudnofsky voluntarily terminates his own employment
                      without good reason, we will have no additional
                      obligations to him.

                  -   If we terminate his employment at the end of the term of
                      his contract other than for disability or cause or Mr.
                      Chudnofsky terminates his employment at any time for good
                      reason, then we will (i) pay Mr. Chudnofsky his base
                      salary at the level in effect as of the date of
                      termination, (ii) pay Mr. Chudnofsky twice his most recent
                      performance bonus, spread over the succeeding two years,
                      and (iii) fully vest all options of Common Stock granted
                      to him under our Key3Media 2000 Stock Option and Incentive
                      Plan.

                  Mr. Chudnofsky's employment contract prohibits him, without
our written consent, from competing with us or our subsidiaries for a period of
two years commencing upon the termination of his employment.

                  Peter B. Knepper. We have entered into an employment
agreement, dated as of March 1, 2000, with Peter B. Knepper pursuant to which
Mr. Knepper is entitled to:

                  -   a base annual salary of at least $525,000 in the first
                      three contract years and $550,000 during the final two
                      contract years;

                  -   a performance bonus in an amount to be determined by our
                      Board of Directors or its Nominating and Compensation
                      Committee; provided, however, that in no event shall the
                      bonus be less than $125,000 for the first contract year
                      and $150,000 for the final four contract years;

                  -   options to purchase 1,000,000 shares of our Common Stock
                      in accordance with the Key3Media 2000 Stock Option and
                      Incentive Plan; and

                  -   a term life insurance policy in the amount of $2 million.

                  If there is a change in control, as defined in his contract,
of our company, Mr. Knepper's options will vest immediately and become
immediately exercisable or he may elect to receive a cash payment in place of
the options. The amount of the cash payment for the options will be determined
based on the manner of the change in control. In addition, Mr. Knepper will,
upon a change in control, receive an amount which, on an after-tax basis
(including federal income and excise taxes, and state and local income taxes)
equal to the excise tax, if any, imposed by the Internal Revenue Code.

                  Our contract with Mr. Knepper expires on February 28, 2005. We
may terminate his employment for cause or without cause (as defined in his
contract) or if he has a disability (as defined in his contract). Mr. Knepper
may terminate his employment at any time for good reason (as defined in his
contract). Any termination of his employment is subject to the following
conditions:

                  -   Regardless of the reason for such termination, we will pay
                      him his base salary through the date of the termination.

                                       43

<PAGE>

                  -   If his employment is terminated as a result of his
                      disability or death, we will pay to him or his estate one
                      year's worth of base compensation plus the prorated
                      portion of any annual performance bonus he would have
                      received for the year of such termination.

                  -   If we terminate his employment for cause or Mr. Knepper
                      voluntarily terminates his own employment, but without
                      good reason, we will have no additional obligations to
                      him.

                  -   If we terminate his employment, other than for disability
                      or cause, or Mr. Knepper terminates his employment for
                      good reason, then we will pay him both twice his then
                      current salary and twice his most recent performance
                      bonus, spread over the succeeding two years, and all of
                      his options to purchase our Common Stock will fully vest.

                  Mr. Knepper's employment contract prohibits him, without our
written consent, from competing with us or our subsidiaries for a period of two
years commencing upon the termination of his employment.

                  Ned S. Goldstein. We have entered into an employment
agreement, dated as of March 1, 2000, with Ned S. Goldstein pursuant to which
Mr. Goldstein is entitled to:

                  -   a base salary of at least $525,000 per year in the first
                      three contract years and $550,000 during the final two
                      contract years;

                  -   a performance bonus in an amount to be determined by our
                      Board of Directors or its Nominating and Compensation
                      Committee; provided, however, that in no event shall the
                      bonus be less than $125,000 for the first contract year
                      and $150,000 for the final four contract years;

                  -   options to purchase 1,000,000 shares of our Common Stock
                      in accordance with the Key3Media 2000 Stock Option and
                      Incentive Plan; and

                  -   a term life insurance policy in the amount of $2 million.

                  If there is a change in control, as defined in his contract,
of our company, Mr. Goldstein's options will vest immediately and become
immediately exercisable or he may elect to receive a cash payment in place of
the options. The amount of the cash payment for the options will be determined
based on the manner of the change in control. In addition, Mr. Goldstein will,
upon a change in control, receive an amount which, on an after-tax basis
(including federal income and excise taxes, and state and local income taxes) is
equal to the excise tax, if any, imposed by the Internal Revenue Code.

                  Our contract with Mr. Goldstein expires on February 28, 2005.
We may terminate his employment for cause or disability (each as defined in his
contract), without cause, or upon his death. Mr. Goldstein may terminate his
employment at any time for good reason (as defined in his contract). Any
termination of his employment is subject to the following conditions:

                  -   Regardless of the reason for such termination, we will pay
                      him his base salary through the date of the termination.

                  -   If his employment is terminated as a result of his
                      disability or death, we will pay to him or his estate one
                      year's worth of base compensation plus the prorated
                      portion of any annual performance bonus he would have
                      received for the year of such termination.

                  -   If we terminate his employment for cause or he voluntarily
                      terminates his own employment, but without good reason, we
                      will have no additional obligations to him.

                  -   If we terminate his employment other than for disability
                      or cause, or he terminates his employment for good reason,
                      then we will pay him both twice his then current base
                      salary and twice his most recent

                                       44

<PAGE>

                      performance bonus, spread over the succeeding two years,
                      and all of his options to purchase our Common Stock will
                      fully vest.

                  Mr. Goldstein's employment contract prohibits him, without our
written consent, from competing with us or our subsidiaries for a period of two
years commencing upon the termination of his employment.

                  Robert Priest-Heck. We have entered into an employment
agreement, dated as of July 2000, with Robert Priest-Heck pursuant to which Mr.
Priest-Heck is entitled to:

                  -   a base salary of $500,000 per year;

                  -   a performance bonus in an amount to be determined by our
                      Board of Directors or its Nominating and Compensation
                      Committee; provided, however, that in no event shall the
                      bonus for a full year be less than $125,000;

                  -   options to purchase 500,000 shares of our Common Stock in
                      accordance with the Key3Media 2000 Stock Option and
                      Incentive Plan.

                  Our contract with Mr. Priest-Heck expires on June 30, 2004. We
may terminate his employment for cause, for disability (each as defined in his
contract), without cause, or in the event of death. Mr. Priest-Heck may
terminate his employment at any time for good reason (as defined in his
contract). Any termination of his employment is subject to the following
conditions:

                  -   Regardless of the reason for such termination, we will pay
                      him all compensation through the date of the termination,
                      including (unless the termination is for cause) a pro rata
                      portion of the performance bonus.

                  -   If Mr. Priest-Heck's employment terminates for any reason
                      other than for or by virtue of cause, death, disability,
                      or his voluntary termination, we will pay the base salary
                      and performance bonus for the remainder of the contract.

                  Mr. Priest-Heck's employment contract prohibits him, without
our written consent, from competing with us or our subsidiaries for a period of
two years commencing upon the termination of his employment.

COMPENSATION OF DIRECTORS

                  Directors who are also our employees or consultants receive no
additional compensation for their services as directors. Directors who are not
our employees receive fees of $1,000 for each meeting of the Board of Directors
and $1,000 for each meeting of any committee of the Board of Directors that they
attend.

                                       45

<PAGE>

                          STOCK PRICE PERFORMANCE GRAPH

                  The following graph compares the performance of an investment
in Common Stock from August 21, 2000 through December 31, 2002 with an
investment in the S&P 500 Index or in the NASDAQ Non-Financial Index from July
31, 2000 through December 31, 2002. The graph assumes $100 was invested on
August 21, 2000 in the Common Stock and July 31, 2000 in the S&P 500 Index and
in the NASDAQ Non-Financial Index and the reinvestment of dividends on the date
of payment without payment of any commissions. Dollar amounts in the graph are
rounded to the nearest whole dollar. The performance shown in the graph
represents past performance and should not be considered an indication of future
performance.

               COMPARISON OF 28 MONTH CUMULATIVE TOTAL RETURN *
                AMONG KEYMEDIA GROUP, INC., THE S & P 500 INDEX
                       AND THE NASDAQ NON-FINANCIAL INDEX

                              [PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
                                      Cumulative Total Return
                              ---------------------------------------------
                              8/18/2000      12/00       12/01       12/02
<S>                            <C>          <C>          <C>         <C>
KEY3MEDIA GROUP INC            100.00       203.13       88.83        0.15
S & P 500                      100.00        92.73       81.71       63.65
NASDAQ NON-FINANCIAL           100.00        63.04       48.21       31.52
</TABLE>

* $100 Invested on 8/8/00 In stock or on 7/31/00 in Index-including
reinvestment of dividents. Fiscal year ending December 31,

Copyright @ 2002 Standard & Poors, a division of The McGraw-Hill Companies, Inc.
All rights reserved. www.researchdatagroup.com/S&P.htm

                                       46

<PAGE>

                          REPORT OF THE AUDIT COMMITTEE

                  The Audit Committee's purpose is to assist the Board of
Directors in its oversight of Key3Media's internal controls, financial
statements and the audit process. The Board of Directors, in its business
judgment, has determined that all members of the Committee are "independent", as
required by applicable listing standards of the NYSE. The Committee operates
pursuant to a Charter that was last amended and restated by the Board on March
27, 2002.

                  Management is responsible for the preparation, presentation
and integrity of Key3Media's financial statements, accounting and financial
reporting principles and internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations. The
independent auditors, Ernst & Young LLP, are responsible for performing an
independent audit of the consolidated financial statements in accordance with
generally accepted auditing standards.

                  In performing its oversight role, the Audit Committee has
considered and discussed the audited financial statements with management and
the independent auditors. The Committee has also discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees, as currently in effect. The
Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as currently in effect. The
Committee has also considered whether the provision of information technology
consulting services relating to financial information systems design and
implementation and other non-audit services by the independent auditors is
compatible with maintaining the auditors' independence and has discussed with
the auditors the auditors' independence.

                  Based on the reports and discussions described in this Report,
and subject to the limitations on the role and responsibilities of the Committee
referred to below and in the Charter, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Annual Report on Form 10-K for the year ended December 31, 2002.

                  The members of the Audit Committee are not professionally
engaged in the practice of auditing or accounting and are not experts in the
fields of accounting or auditing, including in respect of auditor independence.
Members of the Committee rely without independent verification on the
information provided to them and on the representations made by management and
the independent auditors. Accordingly, the Audit Committee's oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee's considerations and discussions referred to above do not assure that
the audit of Key3Media's financial statements has been carried out in accordance
with generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles or that
Ernst & Young LLP is in fact "independent".

                                                                AUDIT COMMITTEE:

                                                               Edward A. Bennett
                                                                Ronald D. Fisher

                                       47

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                       BENEFICIAL OWNERSHIP OF MANAGEMENT

                  The following table contains information about our common
stock beneficially owned by Fredric D. Rosen, our current Chairman and Chief
Executive Officer, and our four other most highly compensated executive
officers, by each of our directors and by all of our directors and executive
officers as a group.

<TABLE>
<CAPTION>
                                                               Number of      Percent of
                 Beneficial Owner(1)                           Shares(#)       Class (%)
-------------------------------------------------------       ----------      ----------
<S>                                                           <C>             <C>
Executive officers named in summary compensation table:
Fredric D. Rosen(2)                                            7,778,247         10.19
Jason E. Chudnofsky(3)                                         2,890,621          4.05
Peter B. Knepper(4)                                              897,491          1.29
Ned S. Goldstein(4)                                              897,491          1.29
Robert Priest-Heck(5)                                            354,577              *

Our directors:
Fredric D. Rosen                                               7,778,247         10.19
Edward A. Bennett(6)                                              68,331              *
Jason E. Chudnofsky                                            2,890,621          4.05
Ronald D. Fisher(7)                                               29,164              *
Michael B. Solomon(8)                                         53,789,066         43.97
Our directors and executive officers as a group               12,915,922         15.63
</TABLE>

*  Less than one percent.

(1)  For purposes of this table, "beneficial ownership" is determined in
     accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
     pursuant to which a person or group of persons is deemed to have
     "beneficial ownership" of common stock that such person or group has the
     right to acquire within 60 days after April 2, 2003. For purposes of
     computing the percentage of outstanding Common Stock held by each person or
     group, any shares that such person or group has the right to acquire within
     60 days after April 2, 2003 are deemed outstanding but are not deemed
     outstanding for purposes of computing the percentage of any other person or
     group.

(2)  Holding includes right to acquire beneficial ownership of 7,778,247 shares
     of Common Stock within 60 days through the exercise of stock options
     granted under the Key3Media 2000 Stock Option and Incentive Plan. Mr. Rosen
     also owns unexercisable options to acquire 1,795,086 shares of our Common
     Stock.

(3)  Holding includes right to acquire beneficial ownership of 2,890,621 shares
     of Common Stock within 60 days through the exercise of stock options
     granted under the Key3Media 2000 Stock Option and Incentive Plan. Mr.
     Chudnofsky also owns unexercisable options to acquire 859,379 shares of our
     Common Stock.

(4)  Holding includes right to acquire beneficial ownership of 812,496 shares of
     Common Stock within 60 days through the exercise of stock options granted
     under the Key3Media 2000 Stock Option and Incentive Plan. Mr. Knepper and
     Mr. Goldstein each also own unexercisable options to acquire 187,509 shares
     of our Common Stock.

(5)  Holding includes right to acquire beneficial ownership of 343,750 shares of
     Common Stock within 60 days. Mr. Priest-Heck also owns unexercisable
     options to acquire 156,250 shares of our Common Stock.

(6)  Mr. Bennett has the right to acquire 26,664 shares of Common Stock and has
     options that are unexercisable on 13,336 shares of Common Stock.

(7)  Mr. Fisher has the right to acquire 26,664 shares of Common Stock and has
     options that are unexercisable on 13,336 shares of Common Stock.

(8)  Mr. Solomon is the managing member of Gladwyne Catalyst GenPar LLC, a
     Delaware limited liability company ("Gladwyne GenPar"), which is a managing
     member of Invemed Catalyst GenPar LLC, a Delaware limited liability company
     ("Catalyst GenPar"), the general partner of Invemed Catalyst Fund, L.P.
     ("Invemed"). As a managing member of Gladwyne GenPar, Mr. Solomon may be
     deemed to share voting and dispositive power over Invemed's shares. The
     table includes (i) 0 shares of Common Stock, (ii) 26,666 shares of Common
     Stock that would be held by Invemed upon exercise of options to purchase
     such shares, (iii) 49,780,000 shares of Common Stock that would be held by
     Invemed upon conversion of its 1,000,000 shares of Series A Preferred Stock
     (representing 100% of the Series A class) and 3,982,400 shares of Common
     Stock that would be held by Invemed upon conversion of its 80,000 shares of
     Series B Preferred Stock (representing approximately 13.8% of the Series B
     class). Mr. Solomon disclaims beneficial ownership of these securities in
     excess of his pecuniary interest therein. Mr. Solomon resigned as a
     director on January 6, 2003.

                                       48

<PAGE>

                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

                  Based on filings made under Section 13(d) and Section 13(g) of
the Securities Exchange Act of 1934, the only persons known by us to be
beneficial owners of more than 5% of our Common Stock as of April 2, 2003 are
set forth in the following table:

<TABLE>
<CAPTION>
        BENEFICIAL OWNER(1)                         NUMBER OF SHARES(#)      PERCENT OF CLASS(%)
-----------------------------------                 ------------------       ------------------
<S>                                                 <C>                      <C>
Triax Holdings Ltd.                                     36,700,170                 53.6
Morgan Stanley Dean Witter & Co.(2)                      6,287,000                  8.5
PG Investors III, Inc.(2)                                1,227,673                  1.8
Princes Gate Investors III, L.P.(2)                      4,753,052                  6.5
Invemed Catalyst Fund, L.P.(3)                          53,789,066                 44.0
</TABLE>

(1)  For purposes of this table, "beneficial ownership" is determined in
     accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
     pursuant to which a person or group of persons is deemed to have
     "beneficial ownership" of Common Stock that such person or group has the
     right to acquire within 60 days after April 2, 2003. For purposes of
     computing the percentage of outstanding Common Stock held by each person or
     group, any shares that such person or group has the right to acquire within
     60 days after April 2, 2003 are deemed outstanding but are not deemed
     outstanding for purposes of computing the percentage of any other person or
     group.

(2)  Princes Gate Investors, III L.P. owns warrants to acquire 4,753,052 shares
     of our Common Stock. The general partner of Princes Gate Investors, III
     L.P. is PG Investors III, Inc., a wholly owned subsidiary of Morgan Stanley
     Dean Witter & Co. Certain other investors have given PG Investors III, Inc.
     sole investment management authority over their warrants to acquire
     1,227,673 shares of our Common Stock. In addition, Morgan Stanley Dean
     Witter & Co., through other wholly owned subsidiaries, has shared voting
     and dispositive power over an additional 296,275 shares of our Common
     Stock. Therefore, through its affiliates, Morgan Stanley Dean Witter & Co.
     has shared power to vote or dispose of 6,277,000 shares of our Common Stock
     obtainable upon exercise of the warrants. Princess Gate Investors, III
     L.P.'s address is that of Morgan Stanley Dean Witter & Co. at 1585
     Broadway, New York, NY 10036.

(3)  Invemed directly owns 0 shares of Common Stock and has the right to acquire
     26,666 shares of Common Stock upon exercise of options to purchase such
     shares. This number also includes 49,780,000 shares of Common Stock that
     would be held by Invemed upon conversion of its 1,000,000 shares of Series
     A Preferred Stock (representing 100% of the Series A class) and 3,982,400
     shares of Common Stock that would be held by Invemed upon conversion of its
     80,000 shares of Series B Preferred Stock (representing approximately 13.8%
     of the Series B class). Invemed's address is 375 Park Avenue, Suite 2205,
     New York, New York 10152. The general partner of Invemed is Catalyst
     GenPar. The managing members of Catalyst GenPar are Gladwyne GenPar, and
     Invemed Securities, Inc., a New York corporation ("Invemed Securities").
     The business address of Gladwyne GenPar is 600 The Times Building, Ardmore,
     PA 19003. The business address of Invemed Securities is 375 Park Avenue,
     Suite 2205, New York, New York 10152. The members of Gladwyne GenPar are
     Michael B. Solomon, Philip P. Young, Suzanne M. Present, Robert B.
     Friedman, William M. Sams and Kathryn Casoria. The controlling shareholder
     of Invemed Securities is Kenneth G. Langone. Catalyst GenPar, as the
     general partner of Invemed, has the sole power to vote and dispose of the
     9,696,383 shares of Common Stock beneficially owned by Invemed. Each of
     Gladwyne GenPar and Invemed Securities, as managing members of Catalyst
     GenPar, may be deemed to have shared voting and dispositive power over
     Invemed's shares. Each of Gladwyne GenPar, Invemed Securities, the members
     of Gladwyne GenPar and Mr. Langone disclaim beneficial ownership of such
     shares in excess of their respective interests therein.

CHANGE IN CONTROL

                  Under the terms of our expected plan of reorganization, TWCP
will become the majority owner of our company upon confirmation of the plan.
Additionally, it is expected that all existing equity interests will be expunged
upon confirmation of the plan of reorganization.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                           RELATED PARTY TRANSACTIONS

         REGISTRATION RIGHTS AGREEMENTS

                  We have granted to SOFTBANK and its affiliates customary
registration rights with respect to the shares they received in the distribution
in connection with the spin-off of our company from Ziff-Davis in 2000. On
December 20, 2002, SOFTBANK sold its shares to Triax Holdings Ltd. SOFTBANK had
the power to assign its registration rights but we are not aware if they have
done so. We also have granted registration rights to Invemed Catalyst Fund L.P.
("Invemed"), as purchaser of our Series A Preferred Stock. Additionally, we
granted registration rights to all of the purchasers of our Series B Preferred
Stock.

                                       49

<PAGE>

         WARRANTS

                  The purchasers of zero coupon debentures we issued in 2000 and
redeemed in 2001 received warrants to purchase 6.8 million shares of our Common
Stock at $6.00 per share subject to customary anti-dilution rights. The warrants
can be exercised at any time, in whole or in part. Cashless exercise is
permitted and the warrants will expire in 2007. Since the zero coupon debentures
were redeemed within 22 months after they were issued, the number of shares
issuable upon exercise of the warrants was decreased by 523,000, leaving a total
of 6.3 million warrants outstanding. See "Financing".

         CONVERTIBLE PREFERRED STOCK

                  On November 27, 2001, we sold to Invemed 1,000,000 shares of
our Series A Preferred Stock for $25.00 per share. As a condition to this sale
to Invemed, on the same date we also sold 1,080,000 shares of our Series B
Preferred Stock for $25.00 per share. On December 11, 2001 we sold an additional
300,000 shares of the Series B Preferred Stock in exchange for $10.0 million
aggregate principal amount of our 11.25% senior subordinated notes due 2011. For
purposes of this exchange, the senior subordinated notes were valued at $7.5
million and the Series B Preferred Stock was issued at $25.00 per share. On
December 19, 2001 we sold an additional 600,000 shares of our Series B Preferred
Stock for $25.00 per share. In each case, the Series A and Series B Preferred
Stock was issued in a private placement exempt from the registration
requirements of the Securities Act of 1933 (the "Securities Act"). In aggregate,
we raised $67.0 million in cash and exchanged $10 million aggregate principal
amount (valued at $7.5 million for purposes of the exchange) of our senior
subordinated notes for shares of our convertible preferred stock from the sales
and exchange. For a more detailed description of the terms of the Series A and
Series B Preferred Stock, see "Financing".

                  The terms of the Series A and Series B Preferred Stock are
identical except that the conversion rights of the Series A Preferred stock were
subject to shareholder approval. On February 7, 2002, at a special meeting of
shareholders, our shareholders approved Invemed's right to convert its Series A
Preferred Stock.

         NTH DEGREE CONTRACT

                  In February 2001, we entered into a contract with Nth Degree,
Inc. to provide various exhibitor services to our Comdex Susecu and
NetWorld+Interop Sao Paulo events held in Sao Paulo, Brazil. Under this
contract, we receive 10% of the revenue generated by Nth Degree from its sale of
services to exhibitors. Nth Degree generated approximately $140,000 from
exhibitor service sales at Comdex Susecu and NetWorld+Interop Sao Paulo. Darren
Roy, the son-in-law of our director and executive officer Mr. Chudnofsky, was
employed by Nth Degree when we entered into the contract in 2001.

                                    PART IV

ITEM 14. CONTROLS AND PROCEDURES

                  Within the 90-day period prior to the filing of this report,
an evaluation was carried out under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-14(c) under the Securities
Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the design and operation of these
disclosure controls and procedures were effective. No significant changes were
made in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

                  (a) Documents filed as part of this Report:

                  1. Consolidated and Combined Financial Statements

                                       50

<PAGE>

                  The consolidated and combined financial statements required to
be filed in this Annual Report on Form 10-K are listed on page F-1 hereof. The
required statements appear on pages F-4 hereof.

                  2. Financial Statement Schedule

                  The financial statement schedule required in this Annual
Report on Form 10-K is listed on page F-1 hereof. The required schedule appears
on pages F-28 hereof.

                  3. Exhibits

2.1               Asset Purchase Agreement, dated as of September 10, 2001, by
                  and among Key3Media Art Events, Inc., BCR Enterprises, Inc.,
                  McQuillan Ventures, John M. McQuillan and Jerry A. Goldstone
                  (incorporated by reference to Exhibit 2.1 to the Registrant's
                  Current Report on Form 8-K, filed September 24, 2001).

2.2               Asset Purchase Agreement, dated as of September 10, 2001, by
                  and among Key3Media Art Events, Inc., BCR Enterprises, Inc.
                  and Jerry A. Goldstone (incorporated by reference to Exhibit
                  2.2 to the Registrant's Current Report on Form 8-K, filed
                  September 24, 2001).

2.3               Asset Purchase Agreement, dated as of September 10, 2001, by
                  and among Key3Media VON Events, Inc., pulver.com, Inc.,
                  pulver.com Europe, Ltd., pulver.com Asia Pacific, Ltd.,
                  pulver.com Conferences, Inc. and Jeffrey Pulver (incorporated
                  by reference to Exhibit 2.3 to the Registrant's Current Report
                  on Form 8-K, filed September 24, 2001).

3.1               Amended and Restated Certificate of Incorporation of Key3Media
                  Group, Inc.*

3.2               Amended and Restated By-Laws of Key3Media Group, Inc.*

4.1               Form of Senior Debt Indenture, between Key3Media Group, Inc.
                  and The Bank of New York, as trustee (incorporated by
                  reference to Exhibit 4.1 to the Registrant's registration
                  statement on Form S-3/A (No. 333-58808-01), filed on May 18,
                  2001).

4.2               Form of Subordinated Debt Indenture between Key3Media Group,
                  Inc. and The Bank of New York, as trustee (incorporated by
                  reference to Exhibit 4.2 to the Registrant's registration
                  statement on Form S-3/A (No. 333-58808-01), filed on May 18,
                  2001).

4.3               Form of senior debt securities of Key3Media Group, Inc.
                  (included in Exhibit 4.1).

4.4               Form of subordinated debt securities of Key3Media Group, Inc.
                  (included in Exhibit 4.2).

4.5               Subordinated Debt Indenture between Key3Media Group, Inc., as
                  issuer, Key3Media Events, Inc., as subsidiary guarantor, and
                  The Bank of New York, as trustee, dated as of June 26, 2001
                  (incorporated by reference to Exhibit 4.1 to the Registrant's
                  Current Report on Form 8-K, filed June 26, 2001).

4.6               Form of Note (incorporated by reference to Exhibit 4.2 to the
                  Registrant's Current Report on Form 8-K, filed June 26, 2001).

4.7               Amended and Restated Credit Agreement dated as of June 26,
                  2001 among Key3Media Group, Inc., Morgan Stanley Senior
                  Funding, Inc., Morgan Stanley & Co. Incorporated, The Bank of
                  New York, UBS Warburg LLC and certain lenders and guarantors
                  named in the Agreement (incorporated by reference to Exhibit
                  4.1 to the Registrant's Quarterly Report on Form 10-Q for
                  period ended June 30, 2001).

4.7.1             Amendment No. 2 to the Amended and Restated Credit Agreement,
                  dated November 9, 2001, by and between Key3Media Group, Inc.,
                  the banks, financial institutions, institutional lenders and
                  Morgan Stanley Senior Funding, Inc. (incorporated by reference
                  to Exhibit 99.1 to the Registrant's Quarterly Report on Form
                  10-Q for period ended September 30, 2001).

                                       51

<PAGE>

4.7.2             Amendment No. 3 to the Amended and Restated Credit Agreement,
                  dated June 26, 2002, by and between Key3Media Group, Inc., the
                  banks, financial institutions, institutional lenders and
                  Morgan Stanley Senior Funding, Inc. (incorporated by reference
                  to Exhibit 4.1 to the Registrant's Current Report on Form 8-K,
                  filed June 28, 2002).

4.7.3             Amendment No. 4 to the Amended and Restated Credit Agreement,
                  dated January 24, 2003, by and between Key3Media Group, Inc.,
                  the banks, financial institutions, institutional lenders and
                  Morgan Stanley Senior Funding, Inc.

4.7.4             Amendment No. 5 to the Amended and Restated Credit Agreement,
                  dated January 28, 2003, by and between Key3Media Group, Inc.,
                  the banks, financial institutions, institutional lenders and
                  Morgan Stanley Senior Funding, Inc.

4.8               Certificate of Designations of Series A 5.5% Convertible
                  Redeemable Preferred Stock (incorporated by reference to
                  Exhibit 4.1 to the Registrant's registration statement on Form
                  S-3 (No. 333-75866), filed on December 21, 2001).

4.9               Certificate of Correction filed to correct error in the
                  Certificate of Designations of Series A 5.5% Convertible
                  Redeemable Preferred Stock (incorporated by reference to
                  Exhibit 4.2 to the Registrant's registration statement on Form
                  S-3 (No. 333-75866), filed on December 21, 2001).

4.10              Certificate of Designations of Series B 5.5% Convertible
                  Redeemable Preferred Stock (incorporated by reference to
                  Exhibit 4.3 to the Registrant's registration statement on Form
                  S-3 (No. 333-75866), filed on December 21, 2001).

4.11              Certificate of Correction filed to correct error in the
                  Certificate of Designations of Series B 5.5% Convertible
                  Redeemable Preferred Stock (incorporated by reference to
                  Exhibit 4.4 to the Registrant's registration statement on Form
                  S-3 (No. 333-75866), filed on December 21, 2001).

4.12              Registration Rights Agreement, dated November 27, 2001,
                  between Key3Media Group, Inc. and Invemed Catalyst Fund, L.P.
                  (incorporated by reference to Exhibit 4.5 to the Registrant's
                  registration statement on Form S-3 (No. 333-75866), filed on
                  December 21, 2001).

4.13              Registration Rights Agreement, dated November 27, 2001,
                  between Key3Media Group, Inc. and William M. Sams
                  (incorporated by reference to Exhibit 4.6 to the Registrant's
                  registration statement on Form S-3 (No. 333-75866), filed on
                  December 21, 2001).

4.14              Registration Rights Agreement, dated November 27, 2001,
                  between Key3Media Group, Inc. and ValueAct Capital Partners,
                  L.P., ValueAct Capital Partners II, L.P., and ValueAct Capital
                  International, Ltd. (incorporated by reference to Exhibit 4.7
                  to the Registrant's registration statement on Form S-3 (No.
                  333-75866), filed on December 21, 2001).

4.15              Registration Rights Agreement, dated December 20, 2001,
                  between Key3Media Group, Inc. and the signatories listed
                  therein (incorporated by reference to Exhibit 4.18 to the
                  Registrant's registration statement on Form S-3 (No.
                  333-75866), filed on December 21, 2001).

4.16              Final Order of United States Bankruptcy Court for the District
                  of Delaware, dated March 26, 2003, authorizing Key3Media Group
                  Inc.'s Debtor-in Possession ("DIP") Financing.

4.17              Post-Petition Credit and Guaranty Agreement, dated March 26,
                  2003, by and between Key3Media Group, Inc. and its affiliates,
                  the DIP Lender Parties named therein and the Wilmington Trust
                  Company.

10.1              Distribution Agreement, dated August, 2000, among Ziff-Davis
                  Inc., Key3Media Group, Inc. and Key3Media Events Inc.*

                                       52

<PAGE>

10.2              NETWORLD License and Production Agreement, dated as of
                  December 14, 1998, by and between Novell, Inc. and ZD Events
                  Inc. (which was renamed Key3Media Events Inc.).*

10.3              Letter of Intent for JavaOne 1999-2001, dated July 15, 1998,
                  between Sun Microsystems, Inc.*

10.3.1            Amendment dated December 2000 to Letter of Intent for JavaOne
                  between Sun Microsystems, Inc. and Key3Media Events Inc.
                  (incorporated by reference to Exhibit 10.3.1 to the
                  Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 2000).

10.5              Key3Media 2000 Stock Option and Incentive Plan.*+

10.6              Employment Agreement, as amended, dated as of March 1, 2000,
                  between Ziff-Davis Inc. (now Key3Media Group, Inc.) and
                  Fredric D. Rosen.*+

10.6.1            Amendment to Employment Agreement, dated October 5, 2001, by
                  and between Key3Media Group, Inc. and Fredric D. Rosen
                  (incorporated by reference to Exhibit 10.1 to the Registrant's
                  Quarterly Report on Form 10-Q for period ended September 30,
                  2001).+

10.7              Employment Agreement, dated as of March 3, 2000, between ZD
                  Events Inc. (now Key3Media Events, Inc.) Ziff-Davis Inc. and
                  Jason E. Chudnofsky.*+

10.7.1            Employment Agreement, dated as of December 18, 2000, between
                  Key3Media Group, Inc. and Jason E. Chudnofsky (incorporated by
                  reference to Exhibit 10.3.1 to the Registrant's Annual Report
                  on Form 10-K for the year ended December 31, 2000).+

10.7.2            Amendment to Employment Agreement, dated October 5, 2001, by
                  and between Key3Media Group Inc. and Jason E. Chudnofsky
                  (incorporated by reference to Exhibit 10.2 to the Registrant's
                  Quarterly Report on Form 10-Q for period ended September 30,
                  2001).+

10.8              Employment Agreement, as amended, dated as of March 1, 2000,
                  between ZD Events Inc. (now Key3Media Events, Inc.) and Peter
                  B. Knepper.*+

10.9              Employment Agreement, as amended, dated as of March 1, 2000,
                  between ZD Events Inc. (now Key3Media Events, Inc.) and Ned S.
                  Goldstein.*+

10.10             Employment Agreement, dated as of July 1, 2000, between
                  Key3Media Events, Inc. and Robert Priest-Heck.*+

10.11             Employment Agreement dated January 7, 2002, between Key3Media
                  Group, Inc. and Eugene L. Cobuzzi. (incorporated by reference
                  to Exhibit 10.11 to the Registrant's Annual Report on Form
                  10-K for year ended December 31, 2001).+

10.12             Letter of Intent to acquire SOFTBANK Forums Japan, Inc.
                  between Key3Media Group, Inc. and SOFTBANK America Inc. dated
                  April 27, 2001 (incorporated by reference to Exhibit 10 to the
                  Registrant's Quarterly Report on Form 10-Q for period ended
                  March 31, 2001).

10.13             Purchase Agreement between Key3Media Events, Inc., SOFTBANK
                  America Inc. and SOFTBANK Forums Japan, Inc., dated June 1,
                  2001 (incorporated by reference to Exhibit 10 to the
                  Registrant's Current Report on Form 8-K, filed June 26, 2001).

10.14             Stock Purchase Agreement, dated November 13, 2001, by and
                  between Key3Media Group, Inc. and Invemed Catalyst Fund, L.P.
                  incorporated by reference to Exhibit 10.3 to the Registrant's
                  Quarterly Report on Form 10-Q for period ended September 30,
                  2001).

                                       53

<PAGE>

10.15             Registration Rights Agreement, dated November, 2001, by and
                  between Key3Media Group, Inc. and Invemed Catalyst Fund L.P.
                  (included as Exhibit B to Exhibit 10.13).

12.1              Statement re computation of ratios of earnings to fixed
                  charges. (incorporated by reference to Exhibit 12.1 to the
                  Registrant's registration statement on Form S-3 (No.
                  333-58808), filed on April 12, 2001).

12.2              Statement re computation of ratios of earnings to fixed
                  charges (incorporated by reference to Exhibit 12.1 to the
                  Registrant's registration statement on Form S-3/A (No.
                  333-58808-01), filed on May 18, 2001).

16.1              Letter from PricewaterhouseCoopers LLP, dated December 6,
                  2000.**

21.1              List of Subsidiaries of Key3Media Group, Inc.

23.1              Consent of Ernst & Young LLP.

--------------------
*        Incorporated by reference to the corresponding exhibit to the
         Registrant's registration statement on Form S-1 (No. 333-36828).

**       Incorporated by reference to the corresponding exhibit to the
         Registrant's current report of Form 8-K filed on December 6, 2000 (No.
         333-36828).

+        This exhibit is a management contract or a compensatory plan or
         arrangement.

                  (b) Reports on Form 8-K:

                  On June 28, 2002, we filed a Current Report on Form 8-K (Items
5 and 7) announcing an amendment to Key3Media's senior credit facility.

                  On July 12, 2002, we filed a Current Report on Form 8-K (Items
5 and 7) concerning our continued listing on the New York Stock Exchange.

                  On July 17, 2002, we filed a Current Report on Form 8-K (Item
5) announcing the resignation of Bruce M. Ramer as a director of Key3Media.

                  On July 30, 2002, we filed a Current Report on Form 8-K (Item
5) announcing the resignation of James A. Wiatt as a director of Key3Media.

                  On August 12, 2002, we filed a Current Report on Form 8-K
(Item 5) announcing the resignation of James E. Moore as a director of
Key3Media.

                  On August 14, 2002, we filed a Current Report on Form 8-K
(Item 9) concerning the signing of the certifications required by Section 906 of
the Sarbanes-Oxley Act.

                  On August 28, 2002, we filed a Current Report on Form 8-K
(Item 5) announcing the resignation of John A. Pritzker as a director of
Key3Media and announcing an adjustment to the purchase price and escrow
arrangement for our Voice on Net Conferences and Sessions Initiation Protocol
Summits acquisition.

                  On August 30, 2002, we filed a Current Report on Form 8-K
(Item 5) announcing the resignation of G. Andrea Botta as a director of
Key3Media.

                  On October 7, 2002, we filed a Current Report on Form 8-K
(Item 5) announcing the resignation of Pamela C. Alexander as a director of
Key3Media.

                                       54

<PAGE>

                  On December 17, 2002, we filed a Current Report on Form 8-K
(Item 5 and 7) concerning our failure to make an interest payment on our senior
subordinated notes.

                  On December 23, 2002, we filed a Current Report on Form 8-K
(Item 5) announcing the resignation of Eric Hippeau as a director of Key3Media.

                  On January 3, 2002, we filed a Current Report on Form 8-K
(Item 1) announcing that Triax Holdings Ltd. purchase of a controlling stake in
our company from SOFTBANK America, Inc. and SOFTBANK Holdings, Inc.

                  On January 8, 2002, we filed a Current Report on Form 8-K
(Item 5) announcing the resignation of Michael B Solomon as a director of
Key3Media.

                                       55

<PAGE>

                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) 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/ NED S. GOLDSTEIN
                                                  ------------------------------
                                         Name:    Ned S. Goldstein
                                         Title:   Executive Vice President,
                                                  General Counsel and Secretary

Date: April 15, 2003




                                         By:      /s/ PETER B. KNEPPER
                                                  ------------------------------
                                         Name:    Peter B. Knepper
                                         Title:   Executive Vice President and
                                                  Chief Financial Officer

Date: April 15, 2003


                                       56

<PAGE>

                                POWER OF ATTORNEY

                  KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Ned S. Goldstein, and each of
them severally, his or her true and lawful attorney-in-fact with power of
substitution and resubstitution to sign in his or her name, place and stead, in
any and all capacities, to do any and all things and execute any and all
instruments that such attorney may deem necessary or advisable under the
Securities Exchange Act of 1934 and any rules, regulations and requirements of
the U.S. Securities and Exchange Commission in connection with this Annual
Report on Form 10-K and any and all amendments hereto, as fully for all intents
and purposes as he or she might or could do in person, and hereby ratifies and
confirms all said attorneys-in-fact and agents, each acting alone, and his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on behalf of the registrant and in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
              SIGNATURE                                      CAPACITY                             DATE
------------------------------------     -----------------------------------------------      ---------------
<S>                                      <C>                                                  <C>
         /s/ FREDRIC D. ROSEN              Director, Chairman and Chief Executive Officer     April 15, 2003
-------------------------------------               (Principal Executive Officer
           Frederic D. Rosen

        /s/ JASON E. CHUDNOFSKY          Director, Vice Chairman and Chief Operating          April 15, 2003
-------------------------------------                        Officer
          Jason E. Chudnofsky

         /s/ EDWARD A. BENNETT                                Director                        April 15, 2003
-------------------------------------
           Edward A. Bennett

         /s/ RONALD D. FISHER                                 Director                        April 15, 2003
-------------------------------------
           Ronald D. Fisher

         /s/ PETER B. KNEPPER               Executive Vice President and Chief Financial      April 15, 2003
-------------------------------------        Officer (Principal Financial and Accounting
           Peter B. Knepper                                   Officer)
</TABLE>

                                       57

<PAGE>

                                  CERTIFICATION

                  I, Fredric D. Rosen, certify that:

                  1.       I have reviewed this annual report on Form 10-K of
Key3Media Group, Inc.;

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

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

                  4.       The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

                           (a)      designed such disclosure controls and
                  procedures to ensure that material information relating to the
                  registrant, including its consolidated subsidiaries, is made
                  known to us by others within those entities, particularly
                  during the period in which this annual report is being
                  prepared;

                           (b)      evaluated the effectiveness of the
                  registrant's disclosure controls and procedures as of a date
                  within 90 days prior to the filing date of this annual report
                  (the "Evaluation Date"); and

                           (c)      presented in this annual report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures based on our evaluation as of the Evaluation
                  Date;

                  5.       The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):

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

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

                  6.       The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

                                                   /s/ Fredric D. Rosen
                                                   ----------------------------
                                         Name:     Fredric D. Rosen
                                         Title:    Chief Executive Officer and
                                                   Chairman of the Board

Date: April 15, 2003

                                       58

<PAGE>

                                  CERTIFICATION

                  I, Peter B. Knepper, certify that:

                  1.       I have reviewed this annual report on Form 10-K of
Key3Media Group, Inc.;

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

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

                  4.       The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

                           (a)      designed such disclosure controls and
                  procedures to ensure that material information relating to the
                  registrant, including its consolidated subsidiaries, is made
                  known to us by others within those entities, particularly
                  during the period in which this annual report is being
                  prepared;

                           (b)      evaluated the effectiveness of the
                  registrant's disclosure controls and procedures as of a date
                  within 90 days prior to the filing date of this annual report
                  (the "Evaluation Date"); and

                           (c)      presented in this annual report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures based on our evaluation as of the Evaluation
                  Date;

                  5.       The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):

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

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

                  6.       The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

                                                  /s/ Peter B. Knepper
                                                  -----------------------------
                                         Name:    Peter B. Knepper
                                         Title:   Executive Vice President and
                                                  Chief Financial Officer

Date: April 15, 2003

                                       59

<PAGE>

                      (This page intentionally left blank)

                                       60

<PAGE>

                              KEY3MEDIA GROUP, INC.

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
                           ITEMS 15(a)(1) AND 15(a)(2)

                                                                  PAGE REFERENCE
                                                                  --------------
FORM 10-K

CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Auditors-Ernst & Young LLP....................    F-2
Consolidated Balance Sheets-December 31, 2001 and 2002..............    F-3
Consolidated Statements of Operations-Three-year period
  ended December 31, 2002.............................................  F-4
Consolidated Statements of Changes in Shareholders' Equity
  (Deficit) and Comprehensive Income (Loss) Three-year period ended
  December 31, 2002...................................................  F-6
Consolidated Statements of Cash Flows-Three-year period ended
  December 31, 2002...................................................  F-7
Notes to Consolidated Financial Statements............................  F-9
Financial Statement Schedule-Valuation and Qualifying Accounts........  S-1


                                       F-1

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors
Key3Media Group, Inc.

         We have audited the accompanying consolidated balance sheets of
Key3Media Group, Inc. and subsidiaries as of December 31, 2002 and 2001, and the
related consolidated statements of operations, shareholders' equity (deficit),
and cash flows for each of the three years in the period ended December 31,
2002. Our audits also included the financial statement schedule listed in the
Index at Item 15(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Key3Media Group, Inc. and subsidiaries at December 31, 2002 and 2001 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States. Also in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth herein.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As more fully discussed in Note 2,
the Company has incurred recurring operating losses and has filed for
bankruptcy. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans concerning these matters are
also described in Note 2. The 2002 financial statements do not include
adjustments that might result from the outcome of this uncertainty.

As discussed in Note 6 to the consolidated financial statements, on January 1,
2002 the Company adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets".

                                                   /s/  ERNST & YOUNG LLP

Los Angeles, California
April 10, 2003

                                       F-2

<PAGE>

                              KEY3MEDIA GROUP, INC.

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,     DECEMBER 31,
                                                                                   2001             2002
                                                                               ------------     ------------
<S>                                                                            <C>              <C>
ASSETS
Current assets:
     Cash and cash equivalents ...........................................     $    41,384      $     7,819
     Accounts receivable, net ............................................          46,333           13,165
     Prepaid event expenses ..............................................           4,539            3,043
     Deferred income taxes ...............................................           1,402               --
     Assets held for sale ................................................             700              323
     Other current assets ................................................           3,217            6,766
                                                                               -----------      -----------
       Total current assets ..............................................          97,575           31,116
Property and equipment, net ..............................................          18,812            9,487
Intangible assets, net ...................................................         871,938           73,904
Assets held for sale .....................................................          56,411            4,864
Deferred financing costs and other assets ................................          11,973            9,647
                                                                               -----------      -----------
       Total assets ......................................................     $ 1,056,709      $   129,018
                                                                               ===========      ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:

     Current maturities of long-term obligations .........................     $        --      $   371,769
     Accounts payable ....................................................          22,261            7,972
     Accrued expenses ....................................................          27,347           37,082
     Deferred revenue ....................................................          62,043           19,532
     Liabilities related to assets held for sale .........................           1,139              523
     Other current liabilities ...........................................           1,659            1,036
                                                                               -----------      -----------
       Total current liabilities .........................................         114,449          437,914
Deferred income taxes ....................................................          87,557               --
Long-term obligations (net of current maturities) ........................         370,000               --

COMMITMENTS AND CONTINGENCIES
  Shareholders' equity:
     Preferred stock - $0.01 par value with an aggregate liquidation value
       of $74,818 in 2001 and $78,749 in 2002; authorized 200,000,000
       shares; issued and outstanding, 2,980,000 in 2001 and 1,530,000 in
       2002 ..............................................................              30               15
     Common stock - $0.01 par value: authorized 200,000,000 shares; issued
       and outstanding, 68,099,575 in 2001 and 68,531,919 in 2002 ........             681              685
     Additional paid-in-capital ..........................................         476,474          476,234
     Retained earnings (deficit) .........................................          17,414         (778,686)
     Accumulated comprehensive loss ......................................          (4,085)          (4,257)
     Deferred compensation ...............................................          (5,811)          (2,887)
                                                                               -----------      -----------
       Total shareholders' equity (deficit) ..............................         484,703         (308,896)
                                                                               -----------      -----------
       Total liabilities and shareholders equity (deficit) ...............     $ 1,056,709      $   129,018
                                                                               ===========      ===========
</TABLE>

                             See accompanying notes.

                                       F-3
<PAGE>

                              KEY3MEDIA GROUP, INC.

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

<TABLE>
<CAPTION>
                                                                           YEARS ENDED DECEMBER 31,
                                                                 --------------------------------------------
                                                                     2000             2001            2002
                                                                 -----------       ----------      ----------
<S>                                                              <C>               <C>             <C>
Net revenues:
   Services..................................................... $   286,901       $  249,169      $  149,778
   Proceeds from insurance claim................................           -                -           1,683
                                                                 -----------       ----------      ----------
                                                                     286,901          249,169         151,461
Operating expenses:
   Cost of production...........................................      78,497           86,028          56,917
   Selling, general and administrative..........................     106,231          105,733          84,807
   Restructuring costs..........................................           -                -           7,351
   Non-recurring compensation charge............................       2,977                -               -
   Staff reduction severance charges............................           -            1,709           2,780
   Reduction of goodwill and other intangibles..................           -                -         363,000
   Stock based compensation.....................................       7,967              188           1,821
   Depreciation and amortization................................      36,688           39,984          17,674
                                                                 -----------       ----------      ----------
                                                                     232,360          233,642         534,350
                                                                 -----------       ----------      ----------
Income (loss) from operations...................................      54,541           15,527        (382,889)
                                                                 -----------       ----------      ----------
Other income (expenses):
   Interest expense.............................................     (39,359)         (45,102)        (39,793)
   Interest income..............................................       3,264            2,869             362
   Other income (expense), net..................................         (17)           6,496            (407)
                                                                 -----------       ----------      ----------
                                                                     (36,112)         (35,737)        (39,838)
                                                                 -----------       ----------      ----------
Income (loss) before income taxes, discontinued operations,
   extraordinary items and cumulative effect of accounting
   change.......................................................      18,429          (20,210)       (422,727)
Income tax provision (benefit)..................................       9,867           (5,125)         (4,854)
                                                                 -----------       ----------      ----------
Income (loss) before discontinued operations, extraordinary
   items and cumulative effect of accounting change.............       8,562          (15,085)       (417,873)
Net income (loss) on discontinued operations....................                        1,229         (33,450)
Extraordinary loss on retirement of debt (net of tax benefit of
   $3,383)......................................................           -           (9,146)              -
Extraordinary gain on conversion of debt to preferred stock
   (net of tax provision of $594)...............................           -            1,606               -
Cumulative effect of accounting change, net of tax..............           -                -        (344,615)
                                                                 -----------       ----------      ----------
      Net income (loss)......................................... $     8,562       $  (21,396)     $ (795,938)
                                                                 ===========       ==========      ==========
Net income (loss) attributable to common shareholders:
Net income (loss)............................................... $     8,562       $  (21,396)     $ (795,938)
Accretion on convertible preferred stock........................           -             (318)         (3,931)
                                                                 -----------       ----------      ----------
Net income (loss) attributable to common shareholder............ $     8,562       $  (21,714)     $ (799,869)
                                                                 ===========       ==========      ==========

Net income (loss) per common share-Basic:
Before extraordinary items (after accretion on
   preferred stock)............................................. $      0.15       $    (0.23)     $    (6.16)
Net income (loss) on discontinued operations....................           -             0.02           (0.49)
Extraordinary loss on retirement of debt........................           -            (0.14)              -
Extraordinary gain on conversion of debt to preferred stock.....           -             0.02               -
Cumulative effect of accounting change..........................           -                -           (5.04)
                                                                 -----------       ----------      ----------
Net income (loss) per common share.............................. $      0.15       $    (0.33)     $   (11.69)
                                                                 ===========       ==========      ==========
</TABLE>

                             See accompanying notes.

                                       F-4

<PAGE>

                              KEY3MEDIA GROUP, INC.
               CONSOLIDATED STATEMENTS OF OPERATIONS - (CONTINUED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                           YEARS ENDED DECEMBER 31,
                                                                    -----------------------------------------
                                                                      2000            2001            2002
                                                                    --------       ----------      ----------
<S>                                                                 <C>            <C>             <C>
Net income (loss) per common share-Diluted:
Before extraordinary items (after accretion on preferred
   stock).......................................................    $   0.14       $    (0.23)     $    (6.16)
Net income (loss) on discontinued operations ....................          -             0.02           (0.49)
Extraordinary loss on retirement of debt ........................          -            (0.14)              -
Extraordinary gain on conversion of debt to preferred stock .....          -             0.02               -
Cumulative effect of accounting change ..........................          -                -           (5.04)
                                                                    --------       ----------      ----------
Net income (loss) per common share..............................    $   0.14       $    (0.33)     $   (11.69)
                                                                    ========       ==========      ==========
Shares used in computing basic net income (loss) per common
   stock ........................................................     57,589           66,809          68,402
Shares used in computing diluted net income (loss) per common
   stock ........................................................     59,949           66,809          68,402
Pro forma basic net income per share (unaudited) ................   $   0.13       $        -      $        -
Pro forma diluted net income per share (unaudited) ..............   $   0.13       $        -      $        -
Shares used in computing pro forma basic net income per common
   share ........................................................     65,000                -               -
Shares used in computing pro forma diluted net income per
   common stock .................................................     67,360                -               -
</TABLE>

                             See accompanying notes.

                                       F-5

<PAGE>

                              KEY3MEDIA GROUP, INC.

      CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
                         AND COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                  ADDITIONAL     RETAINED      ACCUMULATED
                                             DIVISION    PREFERRED    COMMON       PAID-IN       EARNINGS     COMPREHENSIVE
                                             CAPITAL       STOCK      STOCK        CAPITAL      (DEFICIT)     INCOME (LOSS)
                                            ----------   ---------   --------     ----------    ----------    -------------
<S>                                         <C>          <C>         <C>          <C>           <C>           <C>
Balance at January 1, 2000...............   $ 328,022    $      -    $      -     $       -     $  73,246     $    (3,894)
Net transactions with affiliates.........       9,851           -           -             -             -               -
Transaction related to spin off from ZDI:
   Adjustment of deferred income taxes...     (32,027)          -           -             -             -               -
   Issuance of common stock to ZDI.......    (305,846)          -         534       305,312             -               -
   Dividend..............................           -           -           -             -       (42,998)              -
Sale of common stock, net of
   issuance costs........................           -           -         116        66,562             -               -
Issuance of warrants to purchase
   common stock..........................           -           -           -        15,000             -               -
Deferred compensation related to
   stock options.........................           -           -           -        34,507             -               -
Amortization of deferred compensation....           -           -           -           378             -               -
Forfeiture of options to purchase
   common stock..........................           -           -           -        (1,975)            -               -
Adjustment to benefit of pre-spin
   tax loss retained by ZDI..............           -           -           -         2,387             -               -
Foreign currency translation
   adjustment............................           -           -           -             -             -              58
Net income...............................           -           -           -             -         8,562               -
                                            ---------    --------    --------     ----------    ---------     -----------

Total comprehensive income...............

Balance at December 31, 2000.............           -           -         650       422,171        38,810          (3,836)
Issuance of preferred stock, net of
   issuance of costs.....................           -          27           -        65,573             -               -
Conversion of debt to preferred stock....           -           3           -         7,497             -               -
Proceeds from the exercise of
   options to purchase common stock......           -           -           1           722             -               -
Forfeiture of stock options..............           -           -           -        (2,257)            -               -
Adjustment in fair value of options
   requiring variable accounting.........           -           -           -       (17,599)            -               -
Amortization of deferred compensation....           -           -           -             -             -               -
Common stock issued for business
   acquired  (see note 5)................           -           -          30           367             -               -

Foreign currency translation
   adjustment............................           -           -           -             -             -            (249)
Net loss.................................           -           -           -             -       (21,396)              -
                                            ---------    --------    --------     ----------    ---------     -----------
Total comprehensive loss.................

Balance at December 31, 2001.............           -          30         681       476,474        17,414          (4,085)
Offering costs related to preferred
   stock issuance in December 2001.......           -           -           -          (150)            -               -
Conversion of preferred stock to
   common stock..........................           -          (1)          2           161          (162)              -
Purchase of preferred stock..............           -         (14)          -            14             -               -
Forfeiture of options to purchase
   common stock..........................           -           -           -          (414)            -               -
Adjustment in fair value of options                 -           -           -          (689)            -               -
   requiring variable accounting.........
Amortization of deferred compensation....           -           -           -             -             -               -
Issuance of common stock to acquire
   a business............................           -           -           2           838             -               -
Foreign currency translation
   adjustment............................           -           -           -             -             -            (172)
Net loss.................................           -           -           -             -      (795,938)              -
                                            ---------    --------    --------     ---------     ---------     -----------
Balance at December 31, 2002.............   $       -    $     15    $    685     $ 476,234     $(778,686)    $    (4,257)
                                            =========    ========   =========     =========     =========    ============
</TABLE>

<TABLE>
<CAPTION>
                                                 TOTAL
                                              COMPREHENSIVE      DEFERRED
                                              INCOME (LOSS)    COMPENSATION     TOTAL
                                              -------------    ------------   ---------
<S>                                           <C>              <C>            <C>
Balance at January 1, 2000...............                      $     (982)    $ 396,392

Net transactions with affiliates.........                               -         9,851
Transaction related to spin off from ZDI:
   Adjustment of deferred income
   taxes.................................                               -       (32,027)
   Issuance of common stock to ZDI.......                               -             -
   Dividend..............................                               -       (42,998)
Sale of common stock, net of
   issuance costs........................                               -        66,678
Issuance of warrants to purchase
   common stock..........................                               -        15,000
Deferred compensation related to
   stock options.........................                         (34,507)            -
Amortization of deferred compensation....                           7,589         7,967
Forfeiture of options to purchase
   common stock..........................                           1,975             -
Adjustment to benefit of pre-spin
   tax loss retained by ZDI..............                               -         2,387
Foreign currency translation
   adjustment............................     $        58              70           128
Net income...............................           8,562               -         8,562
                                              -----------      ----------     ---------

Total comprehensive income...............     $     8,620
                                              ===========

Balance at December 31, 2000.............                         (25,855)      431,940
Issuance of preferred stock, net of
   issuance of costs.....................                               -        65,600
Conversion of debt to preferred stock....                               -         7,500
Proceeds from the exercise of
   options to purchase common stock......                               -           723
Forfeiture of stock options..............                           2,257             -
Adjustment in fair value of options
   requiring variable accounting.........                          17,599             -
Amortization of deferred compensation....                             188           188
Common stock issued for business
   acquired  (see note 5)................                               -           397

Foreign currency translation
   adjustment............................     $      (249)              -          (249)
Net loss.................................         (21,396)              -       (21,396)
                                              -----------      ----------     ---------
Total comprehensive loss.................     $   (21,645)
                                              ===========

Balance at December 31, 2001.............                          (5,811)      484,703
Offering costs related to preferred
   stock issuance in December 2001.......                               -          (150)
Conversion of preferred stock to
   common stock..........................                               -             -
Purchase of preferred stock..............                               -             -
Forfeiture of options to purchase
   common stock..........................                             414             -
Adjustment in fair value of options                                   689             -
   requiring variable accounting.........
Amortization of deferred compensation....                           1,821         1,821
Issuance of common stock to acquire
   a business............................                               -           840
Foreign currency translation
   adjustment............................     $      (172)              -          (172)
Net loss.................................        (795,938)              -      (795,938)
                                              -----------      ----------     ---------
Balance at December 31, 2002.............     $  (796,110)     $   (2,887)    $(308,896)
                                              ===========      ==========     =========
</TABLE>

                             See accompanying notes

                                      F-6

<PAGE>

                              KEY3MEDIA GROUP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                    YEARS ENDED DECEMBER 31,
                                                                                          -----------------------------------------
                                                                                             2000          2001           2002
                                                                                          ----------   -------------   ------------
<S>                                                                                       <C>          <C>             <C>
Cash flows from operating activities:
   Net income (loss) ..................................................................   $   8,562    $    (21,396)   $ (795,938)
   Adjustments to reconcile net income (loss) to net cash provided by (used in)
     operating activities:
     Extraordinary loss on retirement of debt .........................................          --          12,529             --
     Extraordinary gain on conversion of debt to preferred stock ......................          --          (2,200)            --
     Cumulative effect of accounting change ...........................................          --              --        344,615
     Reduction of goodwill and other intangibles ......................................          --              --        396,130
     Depreciation and amortization ....................................................      36,688          40,788         20,086
     Stock based compensation .........................................................       7,967             188          1,821
     Non-cash interest expense ........................................................      10,213          12,261          2,120
     Loss on disposal of property and equipment .......................................          61              93          1,371
     Foreign exchange (gain) loss .....................................................          45             104             50
     Deferred income taxes ............................................................      (3,968)          2,870         (5,770)
   Changes in operating assets and liabilities, net of effect from acquired businesses:
     Accounts receivable ..............................................................     (10,871)         38,241         34,251
     Prepaid event expenses ...........................................................        (374)          3,357          2,314
     Other current assets .............................................................      (1,018)            (74)        (3,027)
     Other assets .....................................................................         (39)             18            206
     Accounts payable .................................................................      13,162          (1,184)       (14,203)
     Accrued expenses .................................................................      26,694         (23,352)         9,370
     Deferred revenue .................................................................      12,087         (51,751)       (46,023)
     Other liabilities ................................................................      (1,511)        (10,023)        (1,393)
                                                                                          ---------    ------------    -----------
         Total adjustments ............................................................      89,136          21,865        741,918
                                                                                          ---------    ------------    -----------
         Net cash provided by (used in) operating activities ..........................      97,698             469        (54,020)
                                                                                          ---------    ------------    -----------
Cash flows from investing activities:
   Purchase of property and equipment .................................................      (7,415)        (14,755)          (742)
   Return of purchase price from acquired businesses ..................................          --              --         21,985
   Acquisition of businesses, net of cash acquired ....................................          --        (103,707)        (1,865)
   Purchase of intangible assets ......................................................        (125)             --             --
                                                                                          ---------    ------------    -----------
         Net cash provided by (used in) investing activities ..........................      (7,540)       (118,462)        19,378
                                                                                          ---------    ------------    -----------
Cash flows from financing activities:
   Net transactions with Softbank, ZDI and affiliates excluding non-cash transactions
     with affiliates...................................................................       7,170              --             --
   Increase (decrease) in bank overdraft ..............................................      (2,351)             --             --
   Borrowing under new credit facility ................................................     330,000              --             --
   Proceeds from the issuance of zero coupon senior debentures with detachable warrants      75,000              --             --
   Proceeds from the sale of common stock, net ........................................      69,851              --             --
   Proceeds from the exercise of options to purchase common stock .....................          --             723             --
   Payment of costs associated with the issuance of long-term obligations .............     (10,582)        (12,975)            --
   Retirement of zero coupon senior debentures and accreted interest ..................          --         (83,576)            --
   Proceeds from issuance of senior subordinated notes ................................          --         300,000             --
   Borrowings under amended and restated senior bank credit facility ..................          --         110,000          1,769
   Repayment of borrowings under revolving credit facility ............................          --         (30,000)            --
</TABLE>

                             See accompanying notes.

                                      F-7

<PAGE>

                              KEY3MEDIA GROUP, INC.

               CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      YEARS ENDED DECEMBER 31,
                                                                               -----------------------------------
                                                                                  2000         2001         2002
                                                                               ---------    ----------   ---------
<S>                                                                             <C>         <C>          <C>
   Repayment of long-term obligations to ZDI and bank borrowings retained by    (382,002)          --           --
   ZDI
   Repayment of long-term obligations under the new credit facility ........     (30,000)    (300,000)          --
   Proceeds from the issuance of preferred stock, net ......................          --       65,600         (150)
   Payment of dividend to ZDI ..............................................     (42,998)          --           --
                                                                               ---------    ---------    ---------
     Net cash provided by financing activities .............................      14,088       49,772        1,619
                                                                               ---------    ---------    ---------
Effects of exchange rate changes on cash ...................................          98         (309)        (542)
                                                                               ---------    ---------    ---------
Net (decrease) increase in cash and cash equivalents .......................     104,344      (68,530)     (33,565)
Cash and cash equivalents at beginning of year .............................       5,570      109,914       41,384
                                                                               ---------    ---------    ---------
Cash and cash equivalents at end of year ...................................   $ 109,914    $  41,384    $   7,819
                                                                               =========    =========    =========

Supplemental cash flow disclosures:
   Interest paid ...........................................................   $  28,897    $  36,630    $  21,500
   Income taxes paid (refunded) ............................................   $     137    $     902         (741)
Non-cash financing activities:
   Conversion of senior subordinated notes to preferred stock ..............   $      --    $  10,000    $      --
   Capital contribution through payment of stock issuance cost by ZDI ......   $   2,681    $      --    $      --
   Conversion of preferred stock to common stock ...........................   $      --    $      --    $     163
</TABLE>

                            See accompanying notes.

                                      F-8

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

1.       ORGANIZATION AND NATURE OF OPERATIONS

                  Key3Media Group, Inc. (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 and Japan.

                  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
$6.00 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, $0 and $2,490 for centralized
administrative charges from ZDI for the years ended December 31, 2002, 2001, and
2000 respectively. The financial statements are not necessarily indicative of
results that would have occurred if the activities of the Company had been a
separate stand-alone entity prior to August 18, 2000.

2.       PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE AND BASIS OF
PRESENTATION

                  On February 3, 2003 ("Petition Date") Key3Media Group, Inc.
and five of its U.S. subsidiaries (collectively "the Debtors") filed voluntary
petitions for reorganization under Chapter 11 of the federal bankruptcy laws
("Bankruptcy Code" or "Chapter 11") in the United States Bankruptcy Court for
the District of Delaware ("Court"). The reorganization is being jointly
administered under the caption "In re Key3Media Inc., et al. case No. 03-10323."
Included in the Consolidated Financial Statements are subsidiaries operating
outside of the United States, which have not commenced Chapter 11 cases or other
similar proceedings elsewhere, and are not Debtors. Key3Media Group, Inc. and
all of its consolidated subsidiaries are collectively referred to herein as
"Key3Media," or "the Company." The Company decided to seek judicial
reorganization based upon a comprehensive recapitalization plan designed to
provide a strong financial foundation for the Company. The plan is backed by

                                       F-9

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

investment funds managed by Thomas Weisel Capital Partners ("TWCP"), which owns
as of February 3, 2003, approximately 68% of Key3Media's bank debt and
approximately 38% of its 11.25% Senior Subordinated notes due 2011.

                  On February 4, 2003, the Court gave interim approval for
$12,500 of a $30,000 debtor-in-possession Credit and Guaranty Agreement ("DIP
Credit Facility") to be provided by TWCP for payment of permitted pre-petition
claims, working capital needs, and other general corporate purposes. On March
26, 2003, the Court gave final approval of the DIP Credit Facility, which
requires the Company, amongst other things, to maintain certain financial
covenants and restricts liens, indebtedness, capital expenditures, dividend
payments and sales of assets. In addition, the DIP Credit Facility maintains a
requirement that the Court enter the Plan of Reorganization on or before June
30, 2003. If this requirement in not met, then there is an Event of Default
under the DIP Credit Facility.

                  As a debtor-in-possession, Key3Media is authorized to continue
to operate as an ongoing business, but may not engage in transactions outside
the ordinary course of business without the approval of the Court, after notice
and an opportunity for hearing. Under the Bankruptcy Code, actions to collect
pre-petition indebtedness, as well as most other pending litigation, are stayed
and other contractual obligations against Key3Media may not be enforced. In
addition, under the Bankruptcy Code, Key3Media may assume or reject executory
contracts, including lease obligations. Parties affected by these rejections may
file claims with the Court in accordance with the reorganization process. Absent
an order from the Court, substantially all pre-petition liabilities are subject
to settlement under a plan of reorganization to be voted upon by creditors and
approved by the Court.

                  The accompanying consolidated financial statements do not
purport to reflect or provide for the consequences of the bankruptcy
proceedings. In particular, these consolidated financial statements do not
purport to show (a) as to assets, their realizable value on a liquidation basis
or their availability to satisfy liabilities; (b) as to liabilities, the amounts
that may be allowed for claims or contingencies, or the status and priority
thereof; (c) as to stockholder accounts, the effect of any changes that may be
made in the capitalization of the Company; and (d) as to operations, the effect
of any changes that may be made in its business.

                  The Company's consolidated financial statements have been
prepared on a going concern basis, which contemplates continuity of operations,
realization of assets and the liquidation of liabilities and commitments in the
normal course of business. The Company's recurring losses and bankruptcy filing
raise substantial doubt about the Company's ability to continue as a going
concern. The ability of Key3Media to continue as a going concern is predicated
upon numerous issues, including the Company's ability to achieve the following:

                           -        Implement its long-term strategy to
                                    revitalize its business and return Key3Media
                                    to profitability;

                           -        Take appropriate action to offset the
                                    negative effects that the Chapter 11 filing
                                    has had on the business, including the loss
                                    in customers and the impairment of vendor
                                    relations;

                           -        Operate within the framework of the DIP
                                    Credit Facility, including its limitations
                                    on capital expenditures, its financial
                                    covenants, the ability to generate cash
                                    flows from operations or seek other sources
                                    of financing and the availability of
                                    projected vendor credit terms;

                           -        Attract, motivate and/or retain key
                                    executives and other employees;

                           -        Confirmation by the Court of the Company's
                                    plan of reorganization.

                  These challenges are in addition to those operational and
competitive challenges faced by Key3Media in connection with its general
business activities.

                                      F-10

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  Principles of Consolidation

                  The consolidated financial statements include the accounts of
Key3Media Group, Inc. and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.

                  Cash and Cash Equivalents

                  Cash and cash equivalents include cash on deposit and highly
liquid investments with original maturities at time of purchase of three months
or less.

                  Concentrations of Risk

                  Financial instruments, which potentially subject the Company
to concentrations of credit risk, are principally cash and cash equivalents and
accounts receivable. The Company maintains its cash and cash equivalents with
various high credit financial institutions. At times, cash and cash equivalents
may be in excess of federally insured limits or, with respect to international
operations, there may be no insurance. The Company has not experienced losses in
these accounts. The Company generally bills its customers in advance of the
commencement of an event and does not require collateral from its customers. As
a result of the timing of the billing and collection of a substantial portion of
accounts receivable, the Company has limited its credit risk in the event a
customer does not pay.

                  Significant revenue and earnings are generated from our
NetWorld+Interop tradeshows and JavaOne conference brands. The Company owns the
service mark "Interop" and Novell has assigned the combined mark "Networld +
Interop" to the Company in an agreement dated December 17, 2001. The Company
also licenses the name "JavaOne" from Sun Microsystems which expires in July
2004. If these licenses terminate and are not renewed, the Company would not be
able to produce events using these service marks and that could adversely affect
revenues and results of operations.

                  Fair Value of Financial Instruments

                  The Company's financial instruments recorded on the
consolidated balance sheets include cash and cash equivalents, accounts
receivable and accounts payable. The carrying amount of these financial
instruments approximates fair value because of their short-term maturity. The
fair value of the Company's indebtedness is discussed in Note 4.

                  Property and Equipment

                  Property and equipment have been recorded at cost. Major
replacements and improvements are capitalized while general repairs and
maintenance costs are charged to expense as incurred. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets as
follows: computers and equipment two to seven years, furniture and fixtures five
to ten years and leasehold improvements the shorter of their estimated useful
lives or lease periods.

                  Intangible Assets

                  Intangible assets consist principally of trade names,
advertiser and exhibitor lists, and goodwill. Trade names are recorded at their
estimated fair value using the "relief from royalty" approach. The
"relief-from-royalty" approach is based upon the savings that an intangible
asset owner will realize from owning the intangible asset instead of paying a
rent or royalty for the use of that asset. Advertiser and exhibitor lists have
been recorded at their

                                      F-11

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

estimated fair value as determined by an "income" approach. Amortization of
intangible assets is computed on a straight-line basis over their estimated
useful lives.

                  The Company assesses the recoverability of its intangible
assets whenever events or changes in circumstances indicate that expected future
cash flows (undiscounted and without interest charges) may not be sufficient to
support its carrying value. If undiscounted cash flows are not sufficient to
support the recorded value, an impairment loss is recognized to reduce the
carrying value of the intangibles to its estimated recoverable amount. The
impairment loss would be measured as the amount by which the carrying amount of
the asset exceeds the fair value of the asset.

                  Revenue Recognition

                  Trade show, conference, customized marketing and education
program revenue, less agency commissions, cash discounts, and non-cash discounts
are recognized when the events are conducted. Payments received in advance of
trade shows, conferences and customized marketing and education programs are
initially reported on the balance sheet as deferred revenue.

                  The Company enters into barter transactions with certain
vendors where booth space at trade shows or conferences is exchanged for
advertising or the Company and the vendor exchange advertising. These
transactions are not included in the consolidated statements of operations. If
these transactions had been included, the Company would have recorded additional
revenue and expense of approximately $8,649, $7,186, $2,903 for the years ended
December 31, 2000, 2001, and 2002, respectively.

                  Computation of Net (Loss) Income Per Share and Pro Forma Net
Income Per Share

                  Basic net income (loss) per common share is computed by
dividing the net income (loss) attributable to common shareholders by 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.

                  Diluted earnings per common share is calculated by dividing
the net income (loss) attributable to common shareholders by the weighted
average number of shares of common stock 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 plus the dilutive effect of
stock options, warrants and preferred stock calculated using the treasury stock
method.

                  Pro forma basic net income per share is computed by dividing
the net income (loss) attributable to common shareholders by the weighted
average of the number of common shares outstanding, including the assumed
issuance of shares to Initial Public Offering shareholders in connection with
the spin-off, as if such issuances occurred at the beginning of 2000. Pro forma
diluted earnings per share is calculated by dividing the net income (loss)
attributable to common shareholders on the weighted average number of shares of
common stock outstanding, including the assumed issuance of shares to Initial
Public Offering shareholders in connection with the spin-off, as if such
issuances occurred at the beginning of 2000 plus the dilutive effect of stock
options and warrants, calculated using the treasury stock method.

                                      F-12

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

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

<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                     ------------------------------------------
                                                                          2000           2001           2002
                                                                     -----------    -----------    ------------
<S>                                                                  <C>            <C>            <C>
Net income (loss)...............................................     $     8,562    $   (21,396)   $   (795,938)
Accretion on convertible preferred stock........................               -           (318)         (3,931)
                                                                     -----------    -----------    ------------
Net income (loss) attributable to common shareholders...........     $     8,562    $   (21,714)   $   (799,869)
                                                                     -----------    -----------    ------------
Weighted average common shares..................................          57,589         66,809          68,402
                                                                     -----------    -----------    ------------
Denominator for basic calculation...............................          57,589         66,809          68,402
                                                                     -----------    -----------    ------------
Net income (loss) per common share-basic........................     $      0.15    $     (0.33)   $     (11.69)
                                                                     ===========    ===========    ============

Weighted average effect of anti-dilutive securities:
    Warrants....................................................             972              -               -
    Stock options...............................................           1,388              -               -
    Preferred stock.............................................               -              -               -
                                                                     -----------    -----------    ------------
Total weighted average effect of anti-dilutive securities.......           2,360              -               -
                                                                     -----------    -----------    ------------
Denominator for diluted calculation.............................          59,949         66,809          68,402
                                                                     -----------    -----------    ------------
Net income (loss) per common share-diluted......................     $      0.14    $     (0.33)   $     (11.69)
                                                                     ===========    ===========    ============
</TABLE>

                  A summary of the shares used to compute unaudited pro forma
earnings per share is as follows:

<TABLE>
<CAPTION>
                                                                                                    YEAR ENDED
                                                                                                   DECEMBER 31,
                                                                                                       2000
                                                                                                   ------------
<S>                                                                                                <C>
Net income....................................................................................     $      8,562
                                                                                                   ------------
Weighted average common shares................................................................           65,000
                                                                                                   ------------
Denominator for basic calculation.............................................................           65,000
                                                                                                   ------------
Net income per share-basic....................................................................     $       0.13
                                                                                                   ============

Weighted average effect of anti-dilutive securities:
Warrants......................................................................................              972
Stock options.................................................................................            1,388
                                                                                                   ------------
Total weighted average effect of anti-dilutive securities.....................................            2,360
                                                                                                   ------------
Denominator for diluted calculation...........................................................           67,360
                                                                                                   ------------
Net income per share-diluted..................................................................     $       0.13
                                                                                                   ============
</TABLE>

                  Operating Costs and Expenses

                  Cost of production includes the direct costs of organizing,
producing and managing trade shows, seminars, conferences and expositions. These
costs are capitalized as prepaid and expensed in the month in which the event is
conducted.

                  Foreign Currency Translation

                  The assets and liabilities of foreign operations are
translated at the current exchange rate and elements of shareholders' equity are
translated at historical exchange rates at year-end. Revenue and expense
accounts are translated at the average exchange rate during the periods
presented. Gains or losses from foreign currency transactions are included in
earnings as incurred. Translation adjustments are included as a separate
component of shareholders' equity (deficit).

                                      F-13

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  Advertising

                  The Company generally expenses the cost of advertising as
incurred.

                  Income Taxes

                  The Company utilizes the liability method of accounting for
income taxes. Under the liability method, deferred taxes are determined based on
the difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the years in which the
differences are expected to reverse. Net deferred tax assets are recorded when
it is more likely than not that such tax benefits will be realized.

                  The activities of the Company were included in the
consolidated federal income tax return filed by ZDI (from May 4, 1998 through
August 18, 2000). However, the tax provision shown on the consolidated statement
of operations for fiscal year 2000 was prepared as though the activities of the
Company were filed in income tax returns on a stand-alone basis. The tax benefit
arising from the change in the deferred tax accounts and the Company's interim
loss through August 18, 2000 was reflected in the accompanying consolidated
statement of operations, however as the operating tax asset was utilized by Ziff
Davis, the amount of the asset was reflected as a distribution to Ziff Davis.
The effect of recording the income tax provision on a stand-alone basis as of
August 18, 2000 resulted in an aggregate reduction in Division Equity of
$32,027.

                  Use of Estimates

                  The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amount reported in
the financial statements. Actual results may differ from these estimates.

                  Related Party Transactions

                  During 2001, the Company recorded event related cost of
approximately $140 charged by a vendor who employed a relative by marriage of an
officer and director of the Company.

                  Stock-Based Compensation

                  Statement of Financial Accounting Standards No. 123 (SFAS
123),"Accounting for Stock-Based Compensation" encourages, but does not require,
companies to adopt a fair value based method for determining the expense related
to stock-based compensation. The Company records stock-based compensation using
the intrinsic value method as prescribed under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and Financial
Accounting Standards Board (FASB) Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation-an interpretation of APB Opinion No.
25 (FIN 44)."

                  New Accounting Pronouncements

                  In July 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 142 "Goodwill and
Other Intangible Assets," which establishes financial accounting and reporting
for acquired goodwill and other intangible assets and supercedes APB Opinion No.
17, "Intangible Assets." The Company adopted SFAS No. 142 beginning with the
first quarter of 2002. See Note 6 for further discussion on the Company's
adoption of SFAS No. 142.

                  In October 2001, FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supercedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of," however it retains the fundamental provisions of SFAS
No. 121 related to

                                      F-14

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

the recognition and measurement of the impairment of long-lived assets to be
"held and used." In addition, SFAS No. 144 provides, among other things, more
guidance on estimating cash flows when performing a recoverability test and
establishes more restrictive criteria to classify an asset as "held for sale."
The Company's adoption of the provisions of SFAS No. 144 on January 1, 2002 did
not effect its financial position or results of operations.

                  In April 2002, FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical
Corrections." For most companies, SFAS No. 145 will require, among other things,
gains and losses on extinguishments of debt to be classified as income or loss
from continuing operations rather than as extraordinary items as previously
required under SFAS No. 4. The Company will adopt the provisions of SFAS No. 145
related to the rescission of SFAS No. 4 on January 1, 2003. At such time, the
Company will reclassify the extraordinary loss and gain on extinguishments of
debt to continuing operations for prior periods. With regards to other
provisions of SFAS No. 145, the Company has adopted them and such adoption did
not effect its financial position or results of operations.

                  In June 2002, FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses financial and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The principal difference
between SFAS No. 146 and EITF No. 94-3 relates to the requirements for
recognition of a liability for a cost associated with an exit or disposal
activity. SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred while
EITF No. 94-3 requires that the liability be recognized at the date of an
entity's commitment to an exit plan. The provisions of SFAS No. 146 are
effective for exit or disposal activities that are initiated after December 15,
2002, with early application encouraged. The Company adopted SFAS No. 146 in the
second quarter of 2002.

                  Reclassification

                  Certain reclassifications were made to the prior year
consolidated financial statements to conform to current year presentation.

4.       LONG-TERM OBLIGATIONS

                  Long-term Obligations consist of the following:

<TABLE>
<CAPTION>
                                                                                            DECEMBER 31,
                                                                                    ---------------------------
                                                                                       2001            2002
                                                                                    -----------    ------------
<S>                                                                                 <C>            <C>
Borrowings under Amended and Restated Credit Facility...........................    $    80,000    $     81,769
11.25%, senior subordinated notes...............................................        290,000         290,000
                                                                                    -----------    ------------
                                                                                        370,000         371,769
Less current maturities.........................................................              -        (371,769)
                                                                                    -----------    ------------
Total...........................................................................    $   370,000    $          -
                                                                                    ===========    ============
</TABLE>

                  On December 16, 2002, the Company failed to pay the
semi-annual interest payment due on its 11.25% senior subordinated notes (the
"Notes"). This non-payment of interest continued past the 30 day grace period
and became an event of default in respect of the Notes. Further, this event of
default under the Notes constituted a cross-default under the Company's Amended
and Restated Credit Facility.

                  In addition, as of December 31, 2002, the Company is not in
compliance with the financial and certain other covenants contained in its
Amended and Restated Credit Facility.

                                      F-15

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  The net proceeds from the offering of the Notes on June 26,
2001, which approximated $292,000 after deducting the underwriting discount and
other sale expenses, and cash on hand, were used by the Company to repay its
existing term loan bank borrowings and to repurchase and retire zero coupon
debentures issued in August 2000 in connection with the spin-off from ZDI.

                  The Notes bear interest at a rate of 11.25% per annum, payable
semi-annually on June 15 and December 15 of each year and may be redeemed
beginning on June 15, 2006. 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. 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 bank
credit facility previously entered into on August 3, 2000 by eliminating the
term loan facility and increasing the revolving credit facility with its
syndicate of banks committing to lend up to $150,000 for general corporate
purposes, which could include acquisitions. The Company may borrow, repay and
re-borrow under the increased revolving loan facility until June 26, 2004, at
which time it must repay any outstanding amounts. Loans under the Amended and
Restated Credit Facility are guaranteed by the Company's wholly owned
subsidiaries (other than foreign and unrestricted subsidiaries, as defined) and
are secured by substantially all of their assets.

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

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

                  On November 27, 2001, the Company raised $52,000 through the
private placement of 1,000 shares of 5.5% Series A Convertible Preferred Stock
and 1,080 shares of 5.5% Series B Convertible Preferred Stock, in each case for
$25.00 per share. Concurrent with the issuance of this convertible preferred
stock, the Company repaid $30,000 of the borrowings under the Amended and
Restated Credit Facility and further amended that facility to replace its
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
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 limit the total senior debt to $120,000; total
debt to $410,000 and annual capital expenditures to $15,000. 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.

                                      F-16

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  On June 26, 2002, the Company further amended its Amended and
Restated Credit Facility. This amendment modifies the existing financial
covenants until April 1, 2003, including replacing the fixed charge coverage
ratio with minimum quarterly EBITDA requirements through March 31, 2003, and
limits total senior debt to $100,000 and total debt to $390,000. In addition,
the margin percentage that the Company must pay on its loans under the Amended
and Restated Credit Facility changed to a range of 1.00% to 4.00% from the prior
range of 1.00% to 3.25%, depending on which rate the Company chooses as its base
ratio and the ratio of its total debt to EBITDA, as defined.

                  On January 23, 2003 and January 28, 2003, the Company further
amended its Amended and Restated Credit Facility. These amendments, amongst
other things, provided consents to the sale of the VON assets and subordination
of liens in connection with the Company obtaining debtor-in-possession
financing, and waivers for certain other technical defaults that existed at each
amendment date.

                  On December 12, 2001, the Company issued 300 shares of 5.5%
Series B Convertible Preferred Stock in a private placement in exchange for
$10,000 face amount of its Notes. For the purpose of this exchange, the Notes
were valued at $7,500 and the convertible preferred shares were issued for
$25.00 per share. In connection with this exchange, the Company recorded an
extraordinary gain on conversion of debt to preferred stock of $1,606 (net of
taxes of $594) representing the difference between the face value of the Notes
and the value of the convertible preferred stock less the write-off of
unamortized debt issuance costs allocated to the Notes converted to preferred
stock.

                  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 $9,146 (net of a tax
benefit of $3,383) representing the write-off of unamortized debt issuance costs
and unamortized debt discount recorded in August 2000, the original issuance
date of the debentures.

                  The Company incurred interest expense to related parties for
the years ended December 31, 2000, 2001 and 2002 of $15,522, $0 and $0,
respectively.

                  The unaudited estimated fair value of the Notes included in
current maturities of long-term obligations as of December 31, 2002 was in the
approximate range of $4,000 to $8,000 while the fair value of the borrowings
under the Amended and Restated Credit Facility as of December 31, 2002 cannot be
reasonably estimated. The fair value of the Notes was determined based on recent
market information.

                  Maturities of long-term debt for the next five years and
thereafter are:

<TABLE>
<CAPTION>
                                                                                                      TOTAL
                                                                                                   ------------
Year ending December 31:
<C>                                                                                                <C>
2003......................................................................................         $    371,769
2004......................................................................................                    -
2005......................................................................................                    -
2006......................................................................................                    -
2007......................................................................................                    -
Thereafter................................................................................                    -
                                                                                                   ------------
Total.....................................................................................         $    371,769
                                                                                                   ============
</TABLE>

                                      F-17

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

5.       BUSINESS COMBINATIONS AND DISPOSITIONS

                  Business Combinations

                  On January 7, 2002, the Company completed its acquisition of
ExpoNova Events & Exhibitions ("ExpoNova") previously announced on November 30,
2001. The Company paid an estimated initial purchase price of $3,360 in cash and
issued 178 shares of its common stock with a fair value approximating $840 for a
total purchase price of $4,200. Additionally, in connection with this
acquisition, ExpoNova retained and subsequently exercised a right to require the
Company to purchase another tradeshow and conference business subject to certain
conditions. The exercise of this put resulted in no additional payments as
consideration by the Company when it completed this purchase transaction on
April 9, 2002. The initial purchase price was determined by applying a multiple
to the average EBITDA (as defined in the purchase agreement) for the years 2000,
2001, and 2002. For the purpose of the closing, an estimate of 2001 and 2002
EBITDA was used to calculate the estimated initial purchase price with ten
percent of the total cash and securities given as consideration placed into
escrow. Upon the final determination of the purchase price, the escrow amount
and additional amounts, if any, due to each party will be distributed as
required by the purchase agreement.

                  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 data shows the estimated initial purchase price
for each acquisition described above and the respective changes for each
purchase price from the date of acquisition to December 31, 2002:

<TABLE>
<CAPTION>
                                                PULVER         BCR          NGN        EXPONOVA       TOTAL
                                               ---------    ---------    ---------     ---------    ---------
<S>                                            <C>          <C>          <C>           <C>          <C>
Cash and cash equivalents..................    $       -    $       -    $       -     $   1,706    $   1,706
Accounts receivable and prepaid expenses...          654        1,314        1,036         2,046        5,050
Fixed assets, net..........................            -            -            -           163          163
Identifiable intangible assets.............        7,245            -        1,367             -        8,612
Goodwill...................................       33,965       12,339       38,661         4,954       89,919
Accounts payable and accrued expenses......            -         (565)         (13)       (1,780)      (2,358)
Deferred revenue...........................       (2,772)      (1,452)      (3,044)       (2,889)     (10,157)
Common stock issued........................            -            -            -          (840)        (840)
                                               ---------    ---------    ---------     ---------    ---------
Total cash paid............................       39,092       11,636       38,007         3,360       92,095
Working capital adjustments................        2,410          702        2,022             -        5,134
Common stock issued........................            -            -            -           840          840
                                               ---------    ---------    ---------     ---------    ---------
Purchase price at December 31, 2002........    $  41,502    $  12,338    $  40,029     $   4,200    $  98,069
                                               =========    =========    =========     =========    =========
</TABLE>

                                      F-18

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

<TABLE>
<CAPTION>
                                                PULVER         BCR          NGN        EXPONOVA       TOTAL
                                               ---------    ---------    ---------     ---------    ---------
<S>                                            <C>          <C>          <C>           <C>          <C>
Initial purchase price at time of acquisition  $  59,957    $  13,765    $  44,582     $  4,200     $ 122,504
Net return of purchase price charged to
   Goodwill in fiscal year 2001............       (2,450)           -            -             -       (2,450)
Net return of purchase price charged to
   Goodwill in fiscal year 2002............      (16,005)      (1,427)      (4,553)            -      (21,985)
                                               ---------    ---------    ---------     ---------    ---------
Purchase price at December 31, 2002........    $  41,502    $  12,338    $  40,029     $   4,200    $  98,069
                                               =========    =========    =========     =========    =========
</TABLE>

                  The following table shows the portion of the estimated initial
purchase price currently held in escrow for each acquisition described above as
of December 31, 2002:

<TABLE>
<CAPTION>
                                                PULVER         BCR          NGN        EXPONOVA       TOTAL
                                               ---------    ---------    ---------     ---------    ---------
<S>                                            <C>          <C>          <C>           <C>          <C>
Balance at December 31, 2001...............    $  20,250    $   1,377    $   4,458     $     420    $  26,505
Return of purchase price to Company........      (16,005)      (1,427)      (4,553)            -      (21,985)
Payment of escrow proceeds to Seller.......       (4,245)           -       (4,278)            -       (8,523)
Additional escrow funding by Seller........            -           50        4,373             -        4,423
Reduction in fair value of common stock....            -            -            -           (82)         (82)
                                               ---------    ---------    ---------     ---------    ---------
Purchase price at December 31, 2002........    $       -    $       -    $       -     $     338    $     338
                                               =========    =========    =========     =========    =========
</TABLE>

                  The estimated initial purchase price was 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 resulted in total acquired identifiable intangible
assets related primarily to exhibitor lists of $8,612, which are being amortized
on a straight-line basis over 3 years. The resulting total goodwill of $89,919
has not been amortized but has been subjected to impairment testing in
accordance with SFAS No. 142. See note 7.

                  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 average EBITDA attributable to the
Pulver Assets for 2000 and 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, 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. During the third quarter ended September 30,
2002, the Company and the sellers of the Pulver assets agreed to eliminate the
provisions related to purchase price adjustments for 2002, 2003 and 2004 and set
a final purchase price of $41,502; accordingly, the balance of funds held in
escrow were distributed.

                  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.

                  As of December 31, 2002, the purchase prices for BCR and NGN
were determined resulting in a final determination of purchase price for BCR;
however in connection with the final determination of purchase price for NGN,
the Company and the sellers of NGN agreed to a preliminary final purchase price
based upon applying a multiple to the average EBITDA for years 2000 and 2001
which did not include any proceeds from a pending insurance claim for event
interruption and cancellation submitted by NGN's sellers for one of its events
which they believed was impacted by the events that occurred on September 11,
2001. The determination of this preliminary

                                      F-19

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

final purchase price required NGN's sellers to deposit $4,373, into the escrow
as a potential return of purchase price pending resolution of the insurance
claim previously noted. During the fourth quarter ended December 31, 2002, the
Company and the sellers of the NGN assets agreed to eliminate the provisions
related to purchase price adjustments for 2002 and 2003 and set a final purchase
price of $40,029; accordingly, the balance of funds held in escrow were
distributed.

                  In connection with the insurance claim noted above, the
insurance company accepted a proof of loss on September 6, 2002, in the amount
of $1,562. This amount, plus an addition amount of $121 related to an event that
the Company held during September 11, 2001 in Atlanta, Georgia, is classified in
the accompanying consolidated statement of operations as "Proceeds from
insurance claim."

                  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.

                  On June 1, 2001, the Company's wholly owned subsidiary,
Key3Media Events, acquired and received from Softbank America Inc. ("SB
America") all the outstanding equity shares of Softbank Forums Inc. ("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 was based
on an estimate that SB Forums' EBITDA for 2001 will be $3,000. Based on SB
Forums' EBITDA for 2001, the Company was not required to issue any additional
shares in connection with this acquisition.

                  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 recorded the acquisition as of this
closing date. Accordingly, the results of SB Forums are included in the
Company's consolidated statement of operations beginning June 1, 2001.
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.

                  Disposition of Business

                  On January 24, 2003, the Company completed the sale of the
assets of its Key3Media VON Events, Inc. (VON) subsidiary to Pulver.com VON
Events, Inc., an affiliate of the prior owners of the VON events. The Company
has accounted for these operations as discontinued operations in the
accompanying consolidated financial statements. For the years ended December 31,
2001 and 2002, VON's revenues were $3,151 and $4,637, respectively. The
Company's net income (loss) from operations from VON was income of $1,229 and a
loss of $33,450 for the years ended December 31, 2001 and 2002, respectively.
The operating loss for 2002 included a write down of the value of the goodwill
associated with the VON events in the amount of $33,130.

                                      F-20

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  The components of the assets held for sale and the liabilities
related to the assets held for sale in the consolidated balance sheet are as
follows:

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                 -----------------------
                                                                   2001          2002
                                                                 ---------     ---------
<S>                                                              <C>           <C>
Accounts receivables..........................................   $     699     $     312
Prepaid event costs...........................................           1            11
                                                                 ---------     ---------
Assets held for sale, current.................................   $     700     $     323
                                                                 =========     =========
Goodwill and other intangibles................................   $  57,215     $   8,080
Accumulated amortization......................................        (804)       (3,216)
                                                                 ---------     ---------
Assets held for sale, noncurrent..............................   $  56,411     $   4,864
                                                                 =========     =========
Accounts payable..............................................   $      77     $     165
Accrued expenses..............................................         122            41
Deferred revenue..............................................         939           317
Other liabilities.............................................           1             -
                                                                 ---------     ---------
Liabilities related to assets held for sale, current..........   $   1,139     $     523
                                                                 =========     =========
</TABLE>

6.       CHARGES AND NON-RECURRING ITEMS

                  Reduction of Goodwill and Other Intangibles

                  In July 2001, FASB issued SFAS No. 142 "Goodwill and Other
Intangible Assets," which establishes financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No. 17,
"Intangible Assets." The Company adopted SFAS No. 142 beginning with the first
quarter of 2002. SFAS No. 142 requires that goodwill and intangible assets that
have indefinite useful lives not be amortized but, instead, tested at least
annually for impairment while intangible assets that have finite useful lives
continue to be amortized over their respective useful lives. Accordingly, the
Company ceased amortization of all goodwill, which is its only intangible asset
with an indefinite useful life, on January 1, 2002, and will continue to
amortize its intangible assets with finite useful lives, consisting primarily of
trade names and advertiser and exhibitor lists, over their respective useful
lives.

                  SFAS No. 142 requires that goodwill and other intangibles be
tested for impairment using a two-step process. The first step is to determine
the fair value of the reporting unit, which may be calculated using a discounted
cash flow methodology, and compare this value to its carrying value. If the fair
value exceeds the carrying value, no further work is required and no impairment
loss would be recognized. The second step is an allocation of the fair value of
the reporting unit to all of the reporting unit's assets and liabilities under a
hypothetical purchase price allocation. Based on the evaluation performed to
adopt SFAS No. 142, the Company recorded a non-cash charge of $344,615, net of
tax benefit of $80,385, to reduce the carrying value of goodwill and other
intangibles related to the COMDEX reporting unit to their estimated fair value.
This charge is nonoperational in nature and is reported as a cumulative effect
of an accounting change in the accompanying consolidated statement of
operations. The Company utilized a combination of discounted cash flow
methodology and relative market measures to determine fair value.

                  As a result of the strategic review of its operations
undertaken during the third quarter ending September 30, 2002, which lead to the
announced reduction and consolidation of its event schedule for 2003 and closing
of its regional office in Needham, Massachusetts, and an updated review of its
operations in the fourth quarter ending December 31, 2002, the Company conducted
an evaluation of its goodwill and intangible assets. Based on the results of
this evaluation, the Company recorded an additional non-cash charge of $396,130
to reduce the value of goodwill and other intangibles related to its portfolio
of reporting units to their estimated fair value.

                                      F-21

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

This charge is recorded in the accompanying consolidated statement of operations
as follows: $363,000 in the line item "Reduction of goodwill and other
intangibles" and $33,130 in the line item "Net income (loss) on discontinued
operations" related to the sale of the assets of VON subsequent to December 31,
2002. The strategic review and resulting charge recognizes the sustained
economic downturns experienced in the information technology and networking
industries serviced by the Company as shown by the significant decline in the
results of operations of the Company. A combination of discounted cash flow
methodology and relative market measures was used by the Company to determine
fair value in connection with these evaluations.

                  The following table reflects the Company's comparative net
income (loss) before the cumulative effect of accounting change and goodwill
amortization under SFAS No. 142:

<TABLE>
<CAPTION>
                                                                               YEARS ENDING DECEMBER 31,
                                                                         ------------------------------------
                                                                           2000           2001        2002
                                                                         ---------     ---------    ---------
<S>                                                                      <C>           <C>          <C>
Reported income (loss) before cumulative effect of
    accounting change..................................................  $   8,562     $ (21,396)   $(451,323)
Add back: Goodwill amortization, net of taxes..........................      6,313         9,372            -
                                                                         ---------     ---------    ---------
Adjusted income (loss) before cumulative effect of
    accounting change..................................................     14,875       (12,024)    (451,323)
Cumulative effect of accounting change.................................          -             -     (344,615)
                                                                         ---------     ---------    ---------
Adjusted net income (loss).............................................     14,875     $ (12,024)   $(795,938)
                                                                         =========     =========    =========

Basic earnings per common share:
Reported income (loss) before cumulative effect of
    accounting change (after accretion of on preferred stock)..........  $    0.15     $   (0.33)   $   (6.65)
Goodwill amortization, net of taxes....................................       0.11          0.14            -
                                                                         ---------     ---------    ---------
Adjusted income (loss) before cumulative effect of
    accounting change..................................................       0.26         (0.19)       (6.65)
Cumulative effect of accounting change.................................          -             -        (5.04)
                                                                         ---------     ---------    ---------
Adjusted net income (loss).............................................  $    0.26     $   (0.19)   $  (11.69)
                                                                         =========     =========    =========

Diluted earnings per common share:
Reported income (loss) before cumulative effect of
    accounting change (after accretion of on preferred stock)..........  $    0.14     $   (0.33)   $   (6.65)
Goodwill amortization, net of taxes....................................       0.11          0.14            -
                                                                         ---------     ---------    ---------
Adjusted income (loss) before cumulative effect of
    accounting change..................................................       0.25         (0.19)       (6.65)
Cumulative effect of accounting change.................................          -             -        (5.04)
                                                                         ---------     ---------    ---------
Adjusted net income (loss).............................................  $    0.25     $   (0.19)   $  (11.69)
                                                                         =========     =========    =========
</TABLE>

                                      F-22

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  The following table displays the intangible assets that
continue to be subject to amortization and aggregate amortization expense and
intangible assets not subject to amortization:

<TABLE>
<CAPTION>
                                                                             AS OF DECEMBER 31, 2002
                                                                 ----------------------------------------------
                                                                 GROSS CARRYING      ACCUMULATED
                                                                     AMOUNT          AMORTIZATION        NET
                                                                 --------------      ------------      --------
<S>                                                              <C>                 <C>               <C>
Intangibles subject to amortization:
Trade names...................................................   $      418,000      $    350,628      $ 67,372
Other.........................................................            3,347             1,769         1,578
                                                                 --------------      ------------      --------
                                                                        421,347           352,397        68,950
Intangibles not subject to amortization:
Goodwill......................................................            4,954                 -         4,954
                                                                 --------------      ------------      --------
Total.........................................................   $      426,301      $    352,397      $ 73,904
                                                                 ==============      ============      ========
</TABLE>

<TABLE>
<CAPTION>
Estimated amortization expense:
<S>                                                                              <C>
     For the year ended 12/31/03............................................     $        3,880
     For the year ended 12/31/04............................................     $        3,635
     For the year ended 12/31/05............................................     $        3,635
     For the year ended 12/31/06............................................     $        3,635
     For the year ended 12/31/07............................................     $        3,635
     Thereafter.............................................................     $       50,530
</TABLE>

                  The following table displays the activity of the goodwill
balance from December 31, 2001 to December 31, 2002:

<TABLE>
<CAPTION>
                                          COMDEX      FORUMS        PULVER        NGN         OTHER      TOTAL
                                         --------    --------       -------     -------     ---------   --------
<S>                                      <C>         <C>            <C>         <C>         <C>         <C>
Balance at December 31, 2001........     $277,642    $160,424       $49,970     $41,195     $  13,766   $542,997
Goodwill acquired during the year...            -           -             -           -         4,954      4,954
Adjustments to purchase price.......            -           -       (16,005)          -        (3,961)   (19,966)
Impairment losses ..................     (277,642)          -             -           -             -   (277,642)
Reduction of goodwill ..............            -    (158,820)      (33,130)    (41,195)       (9,805)  (242,950)
Reclassified as held for sale.......            -           -          (835)          -             -       (835)
Write-off of fully amortized balance            -      (1,604)            -           -             -     (1,604)
                                         --------    --------       -------     -------     ---------   --------
Balance at December 31, 2002........    $       -    $      -       $     -     $     -     $   4,954   $  4,954
                                         ========    ========       =======     =======     =========   ========
</TABLE>

                  Staff Reduction Severance Charges

                  In the second half of 2001, the Company initiated several cost
reduction and expense containment programs that reduced its temporary employment
costs, travel and entertainment expenses and most significantly, its total
employment costs through staff reductions. The Company continued these cost
reductions efforts in 2002 through reviewing its organizational structure and
consolidating certain operations.

                  On July 26, 2002, the Company announced that it was
undertaking a strategic review of its operations in response to the sustained
economic downturns being experienced in the information technology, networking
and trade show industries. On September 18, 2002, the Company announced the
completion of the initial phase of its strategic business review which includes
a consolidation of the 2003 event schedule and the closing of its regional
office in Needham, Massachusetts. As a result of these actions and previously
untaken cost reduction efforts in the first half of 2002, the Company recorded a
charge of $2,779 for the year ended December 31, 2002. These charges are
classified in the consolidated statement of operations as "Staff Reduction
Severance Charges" and related to termination and benefit costs incurred as a
result of staff reductions.

                                      F-23

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  The following table displays a rollforward of the accrual
balance related to the Staff Reduction Severance Charges:

<TABLE>
<CAPTION>
                                                                                   TOTAL
                                                                              -------------
<S>                                                                           <C>
Balance at January 1, 2001                                                    $           -
    Accruals/Charges......................................................            1,709
    Payments/Utilization..................................................             (609)
                                                                              -------------
Balance at December 31, 2001                                                          1,100
    Accruals/Charges......................................................            2,779
    Payments/Utilization..................................................           (3,709)
                                                                              -------------
Balance at December 31, 2002..............................................    $         170
                                                                              =============
</TABLE>

                  Restructuring costs

                  In addition to staff reduction severance charges, the Company
incurred additional costs in fiscal year 2002 in connection with the strategic
review undertaken in the second half of 2002. These costs are as follows:

<TABLE>
<CAPTION>
                                                                                   TOTAL
                                                                              -------------
<S>                                                                           <C>
Costs associated with abandonment of leased facility......................    $       4,607
Professional service fees.................................................            1,373
Loss on write-down of property & equipment................................            1,371
                                                                              -------------
                                                                              $       7,351
                                                                              =============
</TABLE>

                  The Company recognized a charge of $4,607 in connection with
the abandonment of its Needham, Massachusetts facility and related lease
obligation. The charge was determined by calculating the present value of
remaining lease payments less an estimate of sublease rental income on this
facility. In addition, the Company recognized a loss of $1,371 on the write-down
of property and equipment principally due to the abandonment of the Needham,
Massachusetts facility. The charge of $1,373 related to professional fees
incurred in connection with the strategic review and restructuring options
available to the Company.

                  Non-recurring compensation charge

                  In December 2000, two executives of the Company elected to
exercise their rights under the termination provisions included in their
respective employment agreements. This action resulted in a one time
non-recurring compensation charge of $2,977 for the required termination
payments. Subsequently, the Company and one of these executives entered into a
new four-year employment agreement in December, 2000.

7.       BALANCE SHEET COMPONENTS

                  Accounts receivable consist of the following:

<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,
                                                                                ------------------------
                                                                                   2001         2002
                                                                                ---------    -----------
<S>                                                                             <C>          <C>
Accounts receivable.......................................................      $  48,666    $    14,741
Less: allowance for doubtful accounts and cancellation....................         (2,333)        (1,576)
                                                                                ---------    -----------
                                                                                $  46,333    $    13,165
                                                                                =========    ===========
</TABLE>

                                      F-24

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                 -------------------------
                                                                                    2001           2002
                                                                                 ----------     ----------
<S>                                                                              <C>            <C>
Computers and equipment...................................................       $  40,246      $  13,646
Leasehold improvements....................................................           4,582          2,829
Furniture and fixtures....................................................           4,929          2,854
Construction in progress..................................................             812            100
                                                                                 ---------      ---------
                                                                                    50,569         19,429
Less: accumulated depreciation and amortization...........................         (31,757)        (9,942)
                                                                                 ---------      ---------
                                                                                 $  18,812      $   9,487
                                                                                 =========      =========
</TABLE>

                  During fiscal year 2002, the Company wrote-off $21,906 of
fixed assets that were fully depreciated. Also in fiscal year 2002, the Company
wrote-off $9,863 of fixed assets with a net book value of $871 and wrote-down
certain fixed assets by $500, principally due to the closure of the Needham,
Massachusetts facility. The resulting loss of $1,371 is recorded in the
"Restructuring costs" line in the accompanying consolidated statement of
operations.

                  Depreciation and amortization expense for the years ended
December 31, 2000, 2001 and 2002 was $5,226, $8,311 and $8,396, respectively.

                  Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                                                                DECEMBER 31,
                                                                          RANGE OF      ----------------------------
                                                                       LIVES IN YEARS          2001            2002
                                                                       --------------   ------------    ------------
<S>                                                                    <C>              <C>             <C>
Goodwill:
    Softbank COMDEX...............................................                      $   277,642     $         -
    Softbank Forums, Inc..........................................                          160,424               -
    NGN...........................................................                           41,195               -
    BCR...........................................................                           13,766               -
    ExpoNova......................................................                                -           4,954
                                                                                        -----------     -----------
                                                                                            493,027           4,954
Trade names:
    COMDEX........................................................            20            418,000         418,000
                                                                                        -----------     -----------
                                                                                            418,000         418,000

Advertiser and exhibitor lists:
    COMDEX Fall...................................................            27            135,990               -
    COMDEX Spring.................................................            17             12,000               -
    NGN...........................................................             3              3,386               -
                                                                                        -----------     -----------
                                                                                            151,376               -

Other intangibles                                                         2.5 to 15          15,582           3,347
                                                                                        -----------     -----------
                                                                                          1,077,985         426,301
Less: accumulated amortization....................................                         (206,047)       (352,397)
                                                                                        -----------     -----------
                                                                                        $   871,938     $    73,904
                                                                                        ===========     ===========
</TABLE>

                                      F-25

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  Amortization expense for the years ended December 31, 2000,
2001 and 2002 was $31,462, $32,477 and $11,690, respectively. For fiscal years
2001 and 2002, $804 and $2,412, respectively, was reclassed to net income (loss)
on discontinued operations.

                  During 2001, the Company wrote-off $8,290 of fully amortized
other intangible assets. The majority of the balance related to an intangible
asset totaling $6,700 obtained in the SB Forums acquisition at a historical
basis.

                  As previously noted, the Company adopted SFAS 142 on July 1,
2001. SFAS 142 prohibits the amortization of goodwill and intangible assets with
indefinite useful lives arising from acquisitions completed after June 30, 2001.
Consequently, the Company did not amortize the goodwill that arose from the
acquisition of the Pulver, BCR and NGN assets. Additionally, SFAS 142 contains
non-amortization provisions for goodwill and intangible assets with indefinite
useful lives that arose prior to June 30, 2001 effective as of January 1, 2002.
The Company recognized approximately $12,800 of amortization expense in 2001 for
goodwill that was not amortized after January 1, 2002.

                  Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                      ------------------------------
                                                                                           2001             2002
                                                                                      -------------    -------------
<S>                                                                                   <C>              <C>
Payroll and related employee benefits............................................     $       4,587    $       2,750
Accrued interest.................................................................             1,579           18,032
Income and related taxes payable.................................................             1,296            1,426
Other accrued expenses...........................................................            19,885           14,874
                                                                                      -------------    -------------
                                                                                      $      27,347    $      37,082
                                                                                      =============    =============
</TABLE>

8.       INCOME TAXES

                  Income (loss) before income taxes is attributable to the
following jurisdictions:

<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                 --------------------------------------------------
                                                                      2000              2001              2002
                                                                 -------------     -------------     --------------
<S>                                                              <C>               <C>               <C>
United States...............................................     $      18,533     $     (24,047)    $    (423,057)
Foreign.....................................................              (104)            3,837               330
                                                                 -------------     -------------     -------------
Total.......................................................     $      18,429     $     (20,210)    $    (422,727)
                                                                 =============     =============     =============
</TABLE>

                  Components of the provision (benefit) for income taxes related
to continuing operations are as follows:

<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                 --------------------------------------------------
                                                                      2000              2001              2002
                                                                 -------------     -------------     --------------
<S>                                                              <C>               <C>               <C>
U.S. Federal income taxes:
Current.....................................................     $       2,353     $     (14,301)    $        (756)
Deferred....................................................             6,157             8,145            (5,385)
State and local income taxes:
Current.....................................................               168              (884)             (134)
Deferred....................................................               440               619              (385)
Foreign.....................................................               749             1,296             1,806
                                                                 -------------     -------------     -------------
Income tax provision (benefit) before extraordinary items...     $       9,867     $      (5,125)    $      (4,854)
                                                                 =============     =============     =============
</TABLE>

                                      F-26

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  A reconciliation of the U.S. federal statutory tax rate to the
Company's effective tax rate on income (loss) before income taxes and
extraordinary items is as follows:

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                                                      ------------------------------
                                                                        2000       2001        2002
                                                                      --------   -------     -------
<S>                                                                   <C>        <C>         <C>
Federal statutory tax rate..................................            35.0%     (35.0%)     (35.0%)
State and local taxes (net of federal tax benefit)..........             2.0       (1.3)       (0.1)
Effect of foreign operations................................             4.1       11.7         0.1
Non-deductible executive compensation.......................             6.5        0.6           -
Non-deductible debenture interest...........................             1.8        1.7           -
Amortization of nondeductible goodwill......................             1.1        0.9         0.2
Valuation allowance.........................................               -          -        33.7
Other, including meals and entertainment....................             3.0       (5.6)          -
                                                                        ----      -----        ----
Effective tax rate..........................................            53.5%     (27.0%)      (1.1%)
                                                                        ====      =====        ====
</TABLE>

                  Following is a summary of the components of the deferred tax
accounts:

<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                                   --------------------------------
                                                                                         2001              2002
                                                                                   ---------------   --------------
<S>                                                                                <C>               <C>
Current deferred tax asset...................................................      $        1,402    $        1,027
Noncurrent deferred tax asset and (liability):
Basic difference in intangible asset.........................................            (104,433)           22,609
Net operating loss and other carry forward...................................                 939            65,384
Other........................................................................              15,937            (4,875)
                                                                                   --------------    --------------
Gross noncurrent deferred tax liability......................................             (87,557)           83,118
Valuation allowance..........................................................                   -           (84,145)
                                                                                   --------------    --------------
Net deferred tax liability....................................................     $      (87,557)   $            -
                                                                                   ==============    ==============
</TABLE>

For tax purposes, the Company had available, at December 31, 2002, net operating
loss carry-forwards for regular federal income tax purposes of approximately
$235,000, which begin to expire in 2018. The Company's net operating loss
carry-forwards and other tax attributes are subject to limitations in the event
of a change in ownership as defined by the Internal Revenue Code or in the event
these assets are used to offset a gain on the cancellation of indebtedness as a
result of the Company's emergence from chapter 11. Accordingly, full utilization
of these net operating loss carry-forwards is not assured.

9.       STOCK COMPENSATION PLANS

                  The disclosures described below set forth the various
compensation plans implemented by the Company and by Softbank and ZDI only to
the extent such plans affect the employees of the Company.

                  Key3Media Group, Inc. 2000 Stock Option and Incentive Plan

                  The Board of Directors of the Company adopted the Key3Media
Group, Inc. 2000 Stock Option and Incentive Plan (the "Plan") on August 21,
2000. Under the terms of the Plan, all employees, officers, directors and
consultants of the Company are eligible to participate. The Nominating and
Compensation Committee of the Board of Directors establish the option price and
the vesting schedule of each stock grant. The initial number of shares
authorized for option grants under the Plan was 23,933. In the event the Company
issues additional shares of common stock, as defined, the total number of
additional shares of common stock authorized for option grants shall equal 33
1/3% of the additional shares of common stock issued at the time. The Company
has authorized 24,888 shares of common stock to be granted at December 31, 2002.

                  On August 21, 2000, the Company made certain options grants to
employees who previously held options to purchase stock of ZDI, ZDNet, and
Softbank Corp. As a consequence, these options are subject to the accounting

                                      F-27

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

treatment described in FIN 44 which requires 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.

                  Softbank Executive Stock Option Plans

                  The Softbank Executive Stock Option Plans provide for the
granting of nonqualified stock options (the "Softbank Options") to purchase the
common stock of Softbank Corp., a publicly traded company in Japan, to officers,
directors and key employees of ZDI, including certain employees of the Company
prior to the spin-off. Under the Plans, options have been granted at exercise
prices equal to the closing market price in Japan's public equities market
(market price denominated in Japanese yen) on the date of grant. Substantially
all options granted become exercisable in various installments over the first
six anniversaries of the date of grant and expire ten years after the date of
grant.

                  Certain employees of the Company who continue to hold options
to purchase stock of Softbank Corp. were granted accelerated vesting rights that
resulted in additional deferred stock compensation of $1,137 and non-cash stock
based compensation expense of $1,382 for the year ended December 31, 2000.

                  Option Grants

                  Information relating to the Key3Media Group, Inc. 2000 Stock
Option and Incentive Plan is as follows:

<TABLE>
<CAPTION>
                                                                                                        WEIGHTED
                                                                                    WEIGHTED          AVERAGE FAIR
                                                                  NUMBER OF       AVERAGE  PER      MARKET VALUE AS
                                                                   SHARES      OPTION PRICE SHARE    DATE OF GRANT
                                                                  ---------    ------------------  ----------------
<S>                                                               <C>          <C>                 <C>
Shares outstanding under options at January 1, 2000.........             -     $         -         $           -
          Granted at market prices..........................         1,249           10.73                 10.73
          Granted at price exceeding market.................         8,212           11.00                  6.00
          Granted at price below market.....................        13,388            5.12                  6.16
          Exercised.........................................             -               -                     -
          Forfeited.........................................          (566)           6.39                     -
                                                                  --------     -----------         -------------
Shares outstanding under options at December 31, 2000.......        22,283            7.57                     -
          Granted at market prices..........................         1,807           11.51                 11.51
          Granted at price exceeding market.................           653            6.71                  6.10
          Granted at price below market.....................           105            5.00                  6.00
          Exercised.........................................          (145)           5.00                     -
          Forfeited.........................................        (1,802)           6.66                     -
                                                                  --------     -----------         -------------
Shares outstanding under options at December 31, 2001.......        22,901            7.93                     -
          Granted at market prices..........................                                                   -
          Granted at price exceeding market.................           742            5.49                  4.55
          Granted at price below market.....................             -               -                     -
          Exercised.........................................             -               -                     -
          Forfeited.........................................        (2,171)           6.81                     -
                                                                  --------     -----------         -------------
Shares outstanding under options at December 31, 2002.......        21,472     $      7.95
                                                                  ========     ===========
</TABLE>

                                      F-28

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

<TABLE>
<CAPTION>
                                            OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                             ------------------------------------------------      ------------------------------
                                            WEIGHTED AVERAGE       WEIGHTED                           WEIGHTED
                                                REMAINING          AVERAGE                            AVERAGE
                                NUMBER      CONTRACTUAL LIFE    EXERCISE PRICE       NUMBER        EXERCISE PRICE
RANGE OF EXERCISE PRICES     OUTSTANDING       (IN YEARS)         PER SHARE        EXERCISABLE       PER SHARE
------------------------     -----------    ------------------  --------------     -----------     --------------
<S>                          <C>            <C>                 <C>                <C>             <C>
     $ 5.00 - $ 5.33            10,397             7.7             $  5.00            6,586           $  5.00
     $ 5.34 - $10.00             1,145             8.5             $  7.43              340           $  7.83
     $10.01 - $12.80             9,930             7.7             $ 11.10            6,354           $ 11.06
                                ------                                               ------
           Total                21,472                                               13,280
                                ======                                               ======
</TABLE>

                  SFAS No. 123, "Accounting for Stock-Based Compensation,"
("SSFAS 123"), requires the Company to disclose pro forma information regarding
options grants made to its employees. SFAS 123 specifies certain valuation
techniques that produce estimated compensation charges that are included in the
pro forma results below. These amounts have not been reflected in the Company's
Consolidated Statement of Income, because APB 25. "Accounting for Stock Issued
to Employee," specifies that no compensation charge arises when the price of the
employees' stock options equal the market value of the underlying stock at the
grant date, as in the case of certain options granted to the Company's
employees.

                  SFAS 123 pro forma numbers are as follows for December 31 (in
thousands, except per share amount and percentages):

<TABLE>
<CAPTION>
                                                                2000                2001                2002
                                                              --------           ----------         -----------
<S>                                                           <C>                <C>                <C>
Net income (loss)- as reported..............................  $  8,562           $ (21,396)         $ (795,938)
Net income (loss)- pro forma................................  $  4,509           $ (35,223)         $ (809,770)
Basic net income (loss) per common share - as reported......  $   0.15           $   (0.33)         $   (11.69)
Diluted net income (loss) per common share - as reported....  $   0.14           $   (0.33)         $   (11.69)
Basic net income (loss) per common share - pro forma........  $   0.08           $   (0.53)         $   (11.84)
Diluted net income (loss) per common share - pro forma......  $   0.08           $   (0.53)         $   (11.84)
</TABLE>

Key3Media Options

<TABLE>
<CAPTION>
                                                                     2000               2001               2002
                                                                    ------             ------             ------
<S>                                                                 <C>                <C>                <C>
Risk-free interest rate.....................................          6.2%               4.5%               3.5%
Dividend yield..............................................            -                  -                  -
Volatility factor...........................................           46%                74%               226%
Expected life...............................................         3 yrs              3 yrs              3 yrs
</TABLE>

                  The weighted average fair value of options granted during the
years ended December 31, 2000, 2001 and 2002 was $2.20, $5.01 and $4.31,
respectively.

                  The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimates, in
management's opinion the existing models do not necessarily provide a reliable
single measure of the fair value of the Company's options.

                                      F-29

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

10.      EMPLOYEE BENEFIT PLAN

                  Defined Contribution Plans

                  The Company sponsors the Key3Media Events 401(k) Plan (the
"Plan") to provide retirement benefits for its employees. As allowed under
Section 401(k) of the Internal Revenue Code, the Plan provided tax-deferred
salary deductions for eligible employees. Employees may contribute from 1% to
20% of their annual compensation, limited to a maximum annual amount as set
periodically by the Internal Revenue Service. The Company matches employee
contributions at 50% for the first 4% contributed by employees. All matching
contributions vest over four years. In addition, the Plan provides for
discretionary contributions as determined by the Company's Management based on
the Company's performance during the past year. Such contributions vest over
five years and will be allocated to eligible participants in proportion to their
current investment allocation.

                  Prior to August 18, 2000, ZDI and its subsidiaries maintained
various defined contribution retirement plans. Substantially all of the
Company's employees were eligible to participate in one of these plans under
which the Company made annual contributions. In addition, employees were
permitted to make contributions to the plan in which they participated, subject
to certain limitations. The Company matched employee contributions up to certain
specified percentages. Employees were generally eligible to participate in a
plan upon joining the Company and received matching contributions immediately
upon commencement of employment. Additionally, employees became eligible to
receive a discretionary contribution after one year of employment.

                  In connection with the spin-off on August 18, 2000, the
investment balances of employees under the various ZDI defined contribution
retirement plans were transferred to the Key3Media Events 401(k) Plan if their
employment continued with the Company.

                  The Company made contributions to the above noted plans of
$346, $622 and $444 for the years ended December 31, 2000, 2001 and 2002,
respectively.

11.      COMMITMENTS AND CONTINGENCIES

                  The following discussion pertains to legal proceedings that
existed as of February 3, 2003, the date the Company filed its petition for
relief under chapter 11 of the U.S. Bankruptcy Code. By operation of Section 362
of the U.S. Bankruptcy Code, generally all actions and proceedings against the
Company were automatically stayed on February 3, 2003, subject to further
proceedings in the bankruptcy court.

On August 31, 2001, Key3Media Events 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. The Company entered into a lease for new
office space in Needham and relocated to its new offices on October 1, 2001. The
Company estimates that its 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-judgment interest and costs of suit. In December 2001, Key3Media Events
filed an answer and counterclaim to the Interface complaint and a motion to
dismiss the Mass. Gen L. c. 93A claim. The counterclaim included causes of
action for (i) breach of contract, (ii) breach of implied covenant of good faith
and fair dealing, (iii) tortious interference with business relationship, (iv)
trespass, (v) breach of the covenant of quiet enjoyment and constructive
eviction, (vi) violation of Mass. Gen L. c. 93A, (vii) a request for declaratory
relief, (viii) civil conspiracy and (ix) fraud. In February 2002, Interface
filed an opposition to motion

                                      F-30

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

to dismiss and an amended complaint alleging breach of contract, breach of
implied covenant of good faith and fair dealing and violations of Mass. Gen L.
c. 93A. Also in February 2002, Key3Media Events filed an answer and counterclaim
to the amended complaint and a motion to dismiss the Mass. Gen L. c. 93A claim
and Interface filed a motion to dismiss counts (iii), (v), (vi), (viii) and (ix)
of the counterclaim. In March 2002, Interface filed a second amended complaint
adding a claim for trustee process and to add Fleet Bank of Massachusetts and
Citizens Bank of Massachusetts as trustee defendants. Interface also filed a
motion for Ex Parte Approval of Trustee Process Attachment. The court denied the
ex parte motion, however the court subsequently held a hearing at which it found
that Interface had established a reasonable likelihood of prevailing on its
claims and it awarded a trustee attachment in the amount of $711 representing
rent for the period of October 2001 through May 2002. On September 26, 2002
Interface was awarded an attachment on certain of Key3Media Events' assets in
the amount of $711 located in Massachusetts and on or before October 15, 2002,
Interface attached these assets. Interface has withdrawn its Massachusetts
attachment with respect to all but $67 in cash and has obtained an attachment on
$711 in a parallel action in the Superior Court, County of Los Angeles, State of
California. The California Action was filed on August 21, 2002, for the sole
purpose of seeking pre-judgment attachments in California based on the
Massachusetts claims. Interface obtained a Right to Attach Order in California
on or about October 24, 2002, and subsequently levied upon that Order. In
December 2002, a Third Party Claim was filed in the California Action by Morgan
Stanley & Co. asserting a superior interest in the assets Interface was seeking
to attach. Before the Third Party Claim was adjudicated, a Notice of Stay was
filed in California as a result of the bankruptcy petition. The two parallel
cases are stayed, as of February 3, 2003, pursuant to the automatic stay
provisions of Section 362 of the U.S. Bankruptcy Code.

                  On November 15, 2002, Interface Group Massachusetts, LLC filed
a complaint in United States District Court, District of Massachusetts, against
the Company's chairman, Fredric D. Rosen, alleging tortious interference with
respect to the lease that is the subject of the dispute in the litigation
between Key3Media Events and Interface in Massachusetts. On November 25, 2002,
Rosen, as chairman, requested indemnity from the Company and the claim was
submitted to the Company's directors and officers' liability insurer. On
January, 22, 2003, Rosen filed a motion to dismiss. On April 10, 2003, the
motion to dismiss was granted on personal jurisdiction grounds.

                  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 counter sued 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. On July 22, 2002, Key3Media Events
sought and was granted leave to amend its complaint. On July 23, 2002, Key3Media
Events filed its first amended complaint. The amended complaint included causes
of action for declaratory relief, injunctive relief, breach of contract,
tortious interference, civil conspiracy, intentional misrepresentation/fraud,
predatory price fixing and restraint of trade. The amended complaint seeks
injunctive and declaratory relief, compensatory damages, punitive damages,
treble damages, interest and attorneys' fees. On July 29, 2002, the Venetian and
Interface Group-Nevada, Inc. filed a motion to dismiss the intentional
misrepresentation/fraud, predatory price fixing and restraint of trade causes of
action. On September 19, 2002, the Venetian and Interface Group-Nevada, Inc.,
filed their answer to the first amended complaint and counterclaim for breach of
contract, unjust enrichment, breach of implied covenant of good faith and fair
dealing, negligent and intentional misrepresentation, accounting, abuse of
process, intentional interference with contract and declaratory relief and
seeking compensatory damages in excess of $10 and punitive damages in excess of
$10 and declaratory relief. A jury trial was scheduled for January 21, 2003 but
subsequently postponed. The case

                                      F-31

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

was stayed on February 3, 2003, pursuant to the automatic stay provisions of
Section 362 of the U.S. Bankruptcy Code. Interface has subsequently moved to
have the case transferred to federal court.

                  On or about December 27, 2001, Key3Media Events filed a
complaint against Krause International, Inc., E.J. Krause & Associates
(Argentina), Inc., and E.J. Krause & Associates, Inc. (collectively, "Krause"),
with respect to Krause's management of COMDEX Argentina 2001. The complaint
includes causes of action for breach of contract, misrepresentation and fraud,
fraudulent misrepresentation, negligent misrepresentation, and tortious
interference with business relations and seeks actual damages, punitive damages,
interest, attorneys' fees and costs. On or about February 8, 2002, Krause
answered the complaint, and filed a counter-claim alleging breach of contract,
unjust enrichment, and an additional claim for breach of contract. The
counter-claim seeks damages in the amount of $452 plus interest, and reasonable
attorneys' fees and costs. The parties have subsequently filed various
responsive documents including a reply to the counterclaim by Key3Media Events
and a motion to dismiss by Krause. On or about March 27, 2002, counsel for
Krause requested permission to amend its counter-claim to add E.J. Krause y
Asociados Argentina S.R.L., an Argentine corporation owned in part by Reed
Elsevier Overseas BV, as a third party, to add additional counter-claims and to
request compensatory damages of not less than $10,451 and punitive damages of
$10,000. On or about April 12, 2002, Krause and E.J. Krause Asociados Argentina
S.R.L. filed their answer and first amended counterclaim alleging breach of
contract, unjust enrichment, fraudulent inducement to contract, breach of
implied covenant of good faith and fair dealing, intentional misrepresentation,
constructive fraud, negligent misrepresentation, breach of fiduciary duty, torts
arising from breach of contract and tortious interference with prospective
advantage. The amended counterclaim seeks compensatory damages of not less than
$10,451 and punitive damages of $10,000. On or about August 30, 2002, E.J.
Krause & Associates, Inc. filed a similar answer and counterclaim. The case was
stayed on February 3, 2003, pursuant to the automatic stay provisions of Section
362 of the U.S. Bankruptcy Code.

                  On or about February 4, 2002, Key3Media Events filed a
complaint against Krause International, Inc., E.J. Krause and Associates, Inc.
and E.J. Krause de Mexico SA de CV (collectively, "Krause"), with respect to
Krause's management of COMDEX Mexico for the years 2001 and 2002. The complaint
alleges breach of oral contract, breach of written contract, declaratory relief,
breach of covenant of good faith and fair dealing, breach of fiduciary duty,
fraud, negligent misrepresentation, and violation of California Business and
Professions Code Section 17200 and seeks actual damages, punitive and exemplary
damages in an amount of at least $10,000, attorneys' fees and costs,
disgorgement and interest. On or about March 12, 2002, Krause filed a motion to
dismiss the complaint on the grounds of improper venue or, alternately, to
change venue to the United States District Court for the District of Maryland. A
hearing was held on this issue on April 29, 2002 and on May 9, 2002, the court
granted the portion of the motion for transfer of venue. Key3Media Events'
subsequent motion for reconsideration was denied. On or about July 26, 2002
Krause filed an answer and counterclaim for breach of contract, unjust
enrichment, fraudulent inducement to contract, breach of implied covenant of
good faith and fair dealing, intentional misrepresentation, constructive fraud,
negligent misrepresentation, torts arising from breach of contract and tortious
interference with prospective advantage. The amended counterclaim seeks
compensatory damages of not less than $10,670 and punitive damages of $10,000.
The case was stayed on February 3, 2003, pursuant to the automatic stay
provisions of Section 362 of the U.S. Bankruptcy Code.

                  On July 1, 2002, Commerce and Industry Insurance Company
("CIC") sued the Company for declaratory relief in the Supreme Court of the
State of New York. The complaint arises out of the Company's event cancellation
policy with CIC covering its 2001 COMDEX/Fall event. On July 31, 2002, the
Company sued CIC in the Superior Court of the State of California, County of Los
Angeles, for breach of contract, tortious breach of implied covenant of good
faith and fair dealing and declaratory relief arising out of the Company's event
cancellation policy with CIC covering its 2001 Networld + Interop/Atlanta and
2001 COMDEX/Fall events. The complaint seeks compensatory damages of $9,147 and
$52,423 with respect to the 2001 Networld + Interop/Atlanta and 2001 COMDEX/Fall
events, respectively, punitive damages, interest and reasonable attorneys' fees.
The dispute arises out of CIC's response to the Company's insurance claim for
losses incurred in connection with these two events as a result of the tragedies
of September 11, 2001. Each of the Company and CIC have moved to dismiss or stay
the other party's suit in New York and California, respectively. On November 5,
2002, the California court rejected CIC's motion to

                                      F-32

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

dismiss or stay the California action. The New York court has not yet rendered a
decision on the Company's pending motion to dismiss or stay the New York action.
On March 10, 2003, CIC filed a motion for summary adjudication of the second,
fourth and fifth causes of action in the California case, all of which relate to
the 2001 COMDEX/Fall event; on April 10, 2003 Key3Media filed its response. A
hearing on the motion is scheduled for April 24, 2003. The parties have engaged
in various settlement discussions but have not reached an agreement.

                  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.

12.      OPERATING LEASE COMMITMENTS

                  Operating Leases and Sublease Arrangements

                  The Company leases certain office facilities and certain
furniture and equipment under operating leases expiring through 2010. Some of
these facility leases contain renewal options and provisions adjusting the lease
payments based upon changes in the consumer price index.

                  Following is a schedule of future minimum lease payments under
operating lease arrangements that have initial or remaining noncancelable lease
terms in excess of one year at December 31, 2002:

<TABLE>
<CAPTION>
<S>                                                                                   <C>
Years ending December 31:
    2003.........................................................................     $     5,933
    2004.........................................................................           6,245
    2005.........................................................................           6,328
    2006.........................................................................           5,607
    2007.........................................................................           3,259
    Thereafter...................................................................           6,902
                                                                                      -----------
                                                                                      $    34,274
                                                                                      ===========
</TABLE>

                  Rent expense amounted to approximately $5,026, $6,668 and
$9,500 for the years ended December 31, 2000, 2001, and 2002, respectively.

                  Included in cost of production is the rental fee for venues
that hold our exhibits. The agreements related to these rental arrangements
generally permit cancellations and require a termination fee based on the
cancellation date. The rental fee amount for the years ended December 31, 2000,
2001, and 2002, approximated $6,500, $11,200 and $7,300, respectively.

13.      SHAREHOLDERS' EQUITY

                  The total amount of authorized capital stock of the Company is
600,000 shares, consisting of 200,000 shares of common stock, par value $0.01
per share, 200,000 shares of non-voting common stock, par value $0.01 per share,
and 200,000 shares of preferred stock, par value $0.01 per share. The Company
has the following shares outstanding as of December 31, 2002:

                                      F-33

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

<TABLE>
<CAPTION>
                                                                            TOTAL
                                                                            ------
<S>                                                                         <C>
Common stock.........................................................       68,532
Series A 5.5% Convertible Redeemable Preferred Stock.................        1,080
Series B 5.5% Convertible Redeemable Preferred Stock.................          450
</TABLE>

                  On November 27, 2001, the Company raised $52,000 through the
private placement of 1,000 shares of 5.5% Series A Convertible Preferred Stock
and 1,080 shares of 5.5% Series B Convertible Preferred Stock, in each case for
$25.00 per share. Both of these series of preferred stock convert into shares of
Key3Media common stock at a conversion price of $5.55 per share, subject to
adjustment. The terms for each of the series are identical. The liquidation
preference is $25.00 per share plus accrued but unpaid dividends, which accrues
at the rate of 5.39% per annum prior to November 27, 2002 and at a rate of 5.5%
after November 27, 2002, payable quarterly commencing on February 27, 2002 when,
as and if declared by the Board of Directors. However, if all or any portion of
any quarterly dividends is not paid, then the liquidation preference will
increase by the amount of such unpaid dividend per share. In addition to the
quarterly dividend, the holders of Preferred Stock will share equally in any
dividends declared or paid to holders of the Common Stock and are entitled to
vote on all matters on which the Common Stock is entitled to vote on an as
converted basis.

                  Both series of Preferred Stock have automatic and mandatory
conversion features. On November 27, 2001, each share of Preferred Stock will
automatically convert into the number of shares of Common Stock equal to the
adjusted liquidation preference divided by the lesser of the then current
conversion price or the current market price of the Common Stock, in each case
determined as of such date. The mandatory conversion feature is triggered at any
time after the volume-weighted average closing price of the Common Stock trades
at or above 150% of the then current conversion price for 60 consecutive days.
The Company must mandatorily convert each share of the Preferred Stock into the
number of shares of Common Stock equal to the adjusted liquidation preference
divided by the conversion price, in each case determined as of the conversion
date. Moreover, the Company may not redeem the Preferred Stock at its own option
prior to November 27, 2004 unless the mandatory conversion feature is triggered
earlier.

                  On December 12, 2001, the Company issued 300 shares of 5.5%
Series B Convertible Preferred Stock in a private placement in exchange for
$10,000 face amount of our 11.25% Senior Subordinated Notes (the "Notes") due
2011. For the purpose of this exchange, the Notes were valued at $7,500 and the
convertible preferred shares were issued for $25.00 per share. In connection
with this exchange, the Company recorded an extraordinary gain on retirement of
debt of $6,606 (net of taxes of $594) representing the difference between the
face value of the Notes and the value of the convertible preferred stock less
the write-off of unamortized debt issuance costs allocated to the Notes
converted to preferred stock.

                  On July 2, 2002, the Company converted 50 shares of its 5.5%
Series B Convertible Preferred Stock to 255 shares of its common stock. On
November 7, 2002 and November 25, 2002, the Company repurchased a total of 1,400
shares of its 5.5% Series B Convertible Preferred Stock for $5 dollars. Also on
November 27, 2002, the Company converted 80 shares of its 5.5% Series B
Convertible Preferred Stock to 80 shares of its 5.5% Series A Convertible
Preferred Stock.

                  As of December 31, 2002, the Company still had warrants
outstanding to purchase 6,277 shares of its' common stock at $6.00 per share.
These warrants were issued in connection with the issuance of zero coupon
debentures in August 2000. Cashless exercise is permitted and the warrants
expire on August 18, 2007.

                                      F-34

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

                  Shares reserved for future issuance as of December 31, 2002:

<TABLE>
<CAPTION>
                                                                                  RESERVED
                                                                                   SHARES
                                                                                  --------
<S>                                                                               <C>
Reserved for issued & outstanding Series A Preferred Stock..................        1,080
Reserved for issued & outstanding Series B Preferred Stock..................          450
Reserved for issued & outstanding warrants related to debentures............        6,277
Reserved for issuances under 2000 Stock Option & Incentive Plan.............       24,888
</TABLE>

14.      SEGMENT INFORMATION

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

                  Financial information by geographic areas is as follows:

<TABLE>
<CAPTION>
                                                                               YEAR ENDED DECEMBER 31,
                                                                ----------------------------------------------------
                                                                      2000              2001               2002
                                                                ---------------   ---------------    ---------------
<S>                                                             <C>               <C>                <C>
Net revenues:
     North America.........................................     $       273,502   $       216,731    $       120,440
     Europe................................................              11,964            12,954             10,659
     Far East..............................................               1,435            19,484             20,362
                                                                ---------------   ---------------    ---------------
        Total..............................................     $       286,901   $       249,169    $       151,461
                                                                ===============   ===============    ===============

Other income (expense):
     North America.........................................     $       (36,237)  $       (35,649)   $       (39,668)
     Europe................................................                 116                31                (26)
     Far East..............................................                   9              (119)              (144)
                                                                ---------------   ---------------    ---------------
        Total                                                   $       (36,112)  $       (35,737)   $       (39,838)
                                                                ===============   ===============    ===============

Total assets:
     North America.........................................     $     1,048,772   $     1,041,674    $       111,202
     Europe................................................              15,975             6,604             12,336
     Far East..............................................                 586             8,431              5,480
                                                                ---------------   ---------------    ---------------
        Total..............................................     $     1,065,333   $     1,056,709    $       129,018
                                                                ===============   ===============    ===============
</TABLE>

                                      F-35

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

         As discussed in Note 5, the sale of the assets of VON required the
Company to account for these operations as discontinued operations for all
periods presented in the accompanying consolidated statements of operations. The
reclassification of the VON operations is reflected in the "As Reclassified"
tables below. The following is a summary of selected quarterly financial data
for the years ended December 31, 2002 and 2001 on an "As Reclassified" and "As
Previously Reported" presentation:

<TABLE>
<CAPTION>
                                                                              AS PREVIOUSLY REPORTED
                                                             -------------------------------------------------------
                                                                                2002 QUARTER ENDED
                                                             -------------------------------------------------------
                                                              MARCH 31      JUNE 30      SEPTEMBER 30    DECEMBER 31
                                                             ---------     ---------     ------------    -----------
<S>                                                          <C>           <C>           <C>             <C>
Revenues ................................................    $  34,350     $  38,832     $     38,382    $    39,897
Gross Margin ............................................       16,570        29,176           23,997         24,801
Restructuring costs .....................................            -             -                -          7,351
Staff reduction and severance charges ...................          182           658              744          1,196
Net loss before discontinued operations and
    cumulative effect ...................................      (15,599)      (10,327)        (315,664)       (76,283)
Discontinued operations .................................            -             -                -        (33,450)
    Cumulative effect, net ..............................     (344,615)            -                -              -
Net loss ................................................     (360,214)      (10,327)        (315,664)      (109,733)
Loss before discontinued operations and cumulative
    effect (after accretion on preferred stock) per
    common share-Basic and Diluted ......................    $   (0.24)    $   (0.17)    $      (4.62)   $     (1.12)
Discontinued operations per common share ................    $       -     $       -     $          -    $     (0.49)
Cumulative effect per common share ......................    $   (5.05)    $       -     $          -    $         -
Net loss per common share (after accretion on
    preferred stock) per common share-Basic and
    Diluted .............................................    $   (5.29)    $   (0.17)    $      (4.62)   $     (1.61)
</TABLE>

<TABLE>
<CAPTION>
                                                                                  AS RECLASSIFIED
                                                             -------------------------------------------------------
                                                                                2002 QUARTER ENDED
                                                             -------------------------------------------------------
                                                             MARCH 31       JUNE 30      SEPTEMBER 30    DECEMBER 31
                                                             ---------     ---------     ------------    -----------
<S>                                                          <C>           <C>           <C>             <C>
Revenues ................................................    $  34,264     $  35,853     $     38,368    $    42,976
Gross Margin ............................................       16,560        27,376           23,947         26,661
Restructuring costs .....................................            -             -                -          7,351
Staff reduction and severance charges ............. .....          182           658              744          1,196
Net income (loss) before discontinued operations
    and cumulative effect ...............................      (14,780)      (11,292)        (287,899)      (103,902)
Discontinued operations .................................         (819)          965          (27,765)        (5,831)
Cumulative effect, net ..................................     (344,615)            -                -              -
Net income (loss) .......................................     (360,214)      (10,327)        (315,664)      (109,733)
Income (loss) before discontinued operations and
    cumulative effect (after accretion on preferred
    stock) per common share-Basic and Diluted ...........    $   (0.23)    $   (0.18)    $      (4.22)   $     (1.53)
Discontinued operations per common share ................    $   (0.01)    $    0.01     $      (0.40)   $     (0.08)
Cumulative effect per common share ......................    $   (5.05     $       -     $          -    $         -
Net income (loss) per common share (after accretion
    on preferred stock) per common share-Basic and
    Diluted .............................................    $   (5.29)    $   (0.17)    $      (4.62)   $     (1.61)
</TABLE>

                                      F-36

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

<TABLE>
<CAPTION>
                                                                               AS PREVIOUSLY REPORTED
                                                             -------------------------------------------------------
                                                                                2001 QUARTER ENDED
                                                             -------------------------------------------------------
                                                              MARCH 31      JUNE 30      SEPTEMBER 30    DECEMBER 31
                                                             ---------     ---------     ------------    -----------
<S>                                                          <C>           <C>           <C>             <C>
Revenues ................................................    $   8,017     $ 115,656     $     51,383    $    77,164
Gross Margin ............................................        4,923        78,174           33,641         48,699
Staff reduction and severance charges ...................            -             -              308          1,401
Net income (loss) before extraordinary items ............      (23,983)       16,716           (3,651)        (2,938)
Extraordinary items, net ................................            -        (9,309)               -          1,769
Net income (loss) .......................................      (23,983)        7,407           (3,651)        (1,169)
Income (loss) before extraordinary items (after
    accretion on preferred stock) per common share-
    Basic ...............................................    $   (0.37)    $    0.25     $      (0.05)   $     (0.05)
Income (loss) before extraordinary items (after
    accretion on preferred stock) per common share-
    Diluted .............................................    $   (0.37)    $    0.23     $      (0.05)   $     (0.05)
Extraordinary items per common share-Basic ..............            -         (0.14)               -           0.03
Extraordinary items per common share-Diluted ............            -         (0.13)               -           0.03
Net income (loss) per common share (after accretion
    on preferred stock) per common share-Basic ..........    $   (0.37)    $    0.11     $      (0.05)   $     (0.02)
Net income (loss) per common share (after accretion
    on preferred stock) per common share-Diluted ........    $   (0.37)    $    0.10     $      (0.05)   $     (0.02)
</TABLE>

<TABLE>
<CAPTION>
                                                                                 AS RECLASSIFIED
                                                             -------------------------------------------------------
                                                                                2001 QUARTER ENDED
                                                             -------------------------------------------------------
                                                              MARCH 31      JUNE 30      SEPTEMBER 30    DECEMBER 31
                                                             ---------     ---------     ------------    -----------
<S>                                                          <C>           <C>           <C>             <C>
Revenues ................................................    $   8,017     $ 115,656     $     51,381    $    74,115
Gross Margin ............................................        4,923        78,174           33,677         46,367
Staff reduction and severance charges ...................            -             -              308          1,401
Net income (loss) before discontinued operations
    and extraordinary items .............................      (23,983)       16,716           (3,563)        (4,255)
Discontinued operations .................................            -             -              (88)         1,317
Extraordinary items, net ................................            -        (9,309)               -          1,769
Net income (loss) .......................................      (23,983)        7,407           (3,651)        (1,169)
Income (loss) before discontinued operations
    and extraordinary items (after accretion on
    preferred stock) per common share-Basic .............    $   (0.37)    $    0.25     $      (0.05)   $     (0.07)
Income (loss) before discontinued operations and
    extraordinary items (after accretion on preferred
    stock) per common share-Diluted .....................    $   (0.37)    $    0.23     $      (0.05)   $     (0.07)
Discontinued operations per common share-Basic ..........            -             -                -           0.02
Discontinued operations per common share-Diluted ........            -             -                -           0.02
Extraordinary items per common share-Basic ..............            -         (0.14)               -           0.03
Extraordinary items per common share-Diluted ............            -         (0.13)               -           0.03
Net income (loss) per common share (after accretion
    on preferred stock) per common share-Basic ..........    $   (0.37)    $    0.11     $      (0.05)   $     (0.02)
Net income (loss) per common share (after accretion
    on preferred stock) per common share-Diluted ........    $   (0.37)    $    0.10     $      (0.05)   $     (0.02)
</TABLE>

16. SUBSEQUENT EVENTS (UNAUDITED)

         On January 24, 2003, the Company completed the sale of the assets of
its Key3Media VON Events subsidiary to pulver.com. The Company purchased the VON
events from pulver.com in September of 2001.

                                      F-37

<PAGE>

                              KEY3MEDIA GROUP, INC.

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

         On February 3, 2003, the Company filed voluntary petitions for
reorganization under Chapter 11 of the federal bankruptcy laws. See Note 2 for
additional information.

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

         In connection with the issuance of the Company's $290,000 unsecured
senior subordinated notes (Notes), the Company's U.S.-based subsidiaries,
Key3Media Events. Key3Media Von Events, and Key3Media BCR Events, Inc.,
guaranteed the payment of principal, premium and interest on the 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, 2001 and 2002 and for
the three years ended December 31, 2002.

                                      F-38

<PAGE>

                              KEY3MEDIA GROUP, INC.

                           CONSOLIDATING BALANCE SHEET
                                 (IN THOUSANDS)

                                DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                                                  ELIMINATIONS
                                                        PARENT                                         AND
                                                       COMPANY     SUBSIDIARY   SUBSIDIARY NON-   CONSOLIDATING
                                                         ONLY      GUARANTOR      GUARANTORS         ENTRIES      CONSOLIDATED
                                                      ---------    ----------   ---------------   -------------   ------------
<S>                                                   <C>          <C>          <C>               <C>             <C>
ASSETS
Current assets:
        Cash and cash equivalents .................   $      24    $   5,026      $   2,769        $      --      $   7,819
        Accounts receivable, net ..................          --        7,711          5,454               --         13,165
        Prepaid events expenses ...................          --        1,407          1,636               --          3,043
        Deferred income taxes .....................          --        1,402             --           (1,402)            --
        Assets held for sale ......................          --          323             --               --            323
        Other current assets ......................      16,298       13,401          1,174          (24,107)         6,766
                                                      ---------    ---------      ---------        ---------      ---------
                Total current assets ..............      16,322       29,270         11,033          (25,509)        31,116
        Intercompany receivable ...................     413,451        6,169          8,039         (427,659)            --
        Property and equipment, net ...............          --        8,997            490               --          9,487
        Intangibles assets, net ...................          --       67,617          6,287               --         73,904
        Assets held for sale ......................          --        4,864             --               --          4,864
        Investment in subsidiaries ................    (260,973)      93,333             --          167,640             --
        Deferred financing costs and other assets .       9,719           26            (98)              --          9,647
                                                      ---------    ---------      ---------        ---------      ---------
                Total assets ......................   $ 178,519    $ 210,276      $  25,751        $(285,528)     $ 129,018
                                                      =========    =========      =========        =========      =========

LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
        Current maturities of long-term obligations   $ 371,769    $      --      $      --        $      --      $ 371,769
        Accounts payable ..........................          --        4,644          3,328               --          7,972
        Accrued expenses ..........................      18,056       14,756          4,270               --         37,082
        Deferred revenue ..........................          --       13,233          6,299               --         19,532
        Liabilities related to assets held for sale          --          523             --               --            523
        Other current liabilities .................          --         (216)         1,252               --          1,036
                                                      ---------    ---------      ---------        ---------      ---------
                Total current liabilities .........     389,825       32,940         15,149               --        437,914
        Intercompany payable ......................          --      421,492          6,167         (427,659)            --
        Deferred income taxes .....................          --       25,509             --          (25,509)            --
Shareholders' equity
        Preferred stock ...........................          15           --             --               --             15
        Common stock ..............................         685           --             --               --            685
        Additional paid-in-capital ................     569,567      386,557         12,185         (492,075)       476,234
        Retained deficit ..........................    (778,686)    (656,222)        (3,493)         659,715       (778,686)
        Accumulated comprehensive loss ............          --           --         (4,257)              --         (4,257)
        Deferred compensation .....................      (2,887)          --             --               --         (2,887)
                                                      ---------    ---------      ---------        ---------      ---------
             Total shareholders' equity (deficit) .    (211,306)    (269,665)         4,435          167,640       (308,896)
                                                      ---------    ---------      ---------        ---------      ---------
             Total liabilities & shareholders'
             equity (deficit) .....................   $ 178,519    $ 210,276      $  25,751        $(285,528)     $ 129,018
                                                      =========    =========      =========        =========      =========
</TABLE>

                                      F-39

<PAGE>

                              KEY3MEDIA GROUP, INC.

                           CONSOLIDATING BALANCE SHEET
                                 (IN THOUSANDS)

                                DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                                        ELIMINATIONS
                                                          PARENT                                             AND
                                                         COMPANY       SUBSIDIARY    SUBSIDIARY NON-    CONSOLIDATING
                                                          ONLY         GUARANTOR       GUARANTORS          ENTRIES     CONSOLIDATED
                                                       -----------    -----------    ---------------    -------------  ------------
<S>                                                    <C>            <C>            <C>                <C>            <C>
ASSETS
Current assets:
        Cash and cash equivalents ...................  $    24,953    $    13,682      $     2,749       $        --    $    41,384
        Accounts receivable, net ....................           --         37,811            8,522                --         46,333
        Prepaid events expenses .....................           --          4,182              357                --          4,539
        Deferred income taxes .......................           --          1,402               --                --          1,402
        Assets held for sale ........................           --            700               --                --            700
        Other current assets ........................       15,293          1,193            2,062           (15,331)         3,217
                                                       -----------    -----------      -----------       -----------    -----------
                Total current assets ................       40,246         58,970           13,690           (15,331)        97,575
        Intercompany receivable .....................      409,183          5,493            7,864          (422,540)            --
        Property and equipment, net .................           --         18,347              465                --         18,812
        Intangibles assets, net .....................           --        870,648            1,290                --        871,938
        Assets held for sale ........................           --         56,411               --                --         56,411
        Investment in subsidiaries ..................      513,088        111,117               --          (624,205)            --
        Deferred financing cost and other assets ....       11,839            148              (14)               --         11,973
                                                       -----------    -----------      -----------       -----------    -----------
                Total assets ........................  $   974,356    $ 1,121,134      $    23,295       $(1,062,076)   $ 1,056,709
                                                       ===========    ===========      ===========       ===========    ===========

LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
        Accounts payable ............................  $        --    $    17,244      $     5,017       $        --    $    22,261
        Accrued expenses ............................        2,701         21,006            3,640                --         27,347
        Deferred revenue ............................           --         55,704            6,339                --         62,043
        Liabilities related to assets held for sale .           --          1,139               --                --          1,139
        Other current liabilities ...................           --            711              948                --          1,659
                                                       -----------    -----------      -----------       -----------    -----------
                Total current liabilities ...........        2,701         95,804           15,944                --        114,449
        Intercompany payable ........................           --        417,045            5,498          (422,543)            --
        Deferred income taxes .......................        1,750        101,135               --           (15,328)        87,557
        Long-term obligations (net of current
        maturities) .................................      370,000             --               --                --        370,000
Shareholders' equity
        Preferred stock .............................           30             --               --                --             30
        Common stock ................................          681             --               --                --            681
        Additional paid-in-capital ..................      587,591        408,541            7,985          (527,643)       476,474
        Retained earnings (deficit) .................       17,414         98,609           (2,047)          (96,562)        17,414
        Accumulated comprehensive loss ..............           --             --           (4,085)               --         (4,085)
        Deferred compensation .......................       (5,811)            --               --                --         (5,811)
                                                       -----------    -----------      -----------       -----------    -----------
             Total shareholders' equity .............      599,905        507,150            1,853          (624,205)       484,703
                                                       -----------    -----------      -----------       -----------    -----------
             Total liabilities & shareholders' equity  $   974,356    $ 1,121,134      $    23,295       $(1,062,076)   $ 1,056,709
                                                       ===========    ===========      ===========       ===========    ===========
</TABLE>

                                      F-40

<PAGE>

                              KEY3MEDIA GROUP, INC.

                      CONSOLIDATING STATEMENT OF OPERATIONS
                                 (IN THOUSANDS)

                          YEAR ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                                                 ELIMINATIONS
                                                        PARENT                                       AND
                                                       COMPANY     SUBSIDIARY   SUBSIDIARY NON-  CONSOLIDATING
                                                         ONLY      GUARANTOR      GUARANTORS        ENTRIES      CONSOLIDATED
                                                      ---------    ----------   ---------------  -------------   ------------
<S>                                                   <C>          <C>          <C>              <C>             <C>
Net revenues:
      Services ....................................   $      --    $ 122,446      $  31,231        $  (3,899)       $ 149,778
      Proceeds from insurance claim ...............          --        1,683             --               --            1,683
                                                      ---------    ---------      ---------        ---------        ---------
                                                             --      124,129         31,231           (3,899)         151,461

Operating expenses:
      Cost of production ..........................          --       39,108         17,809               --           56,917
      Selling, general and administrative .........         935       75,608          8,474             (210)          84,807
      Restructuring costs .........................          --        7,351             --               --            7,351
      Staff reduction and severance charges .......          --        2,622            158               --            2,780
      Reduction of goodwill and other intangibles .          --      363,000             --               --          363,000
      Stock based compensation ....................       1,821           --             --               --            1,821
      Depreciation and amortization ...............          --       17,115            559               --           17,674
                                                      ---------    ---------      ---------        ---------        ---------
                                                          2,756      504,804         27,000             (210)         534,350
                                                      ---------    ---------      ---------        ---------        ---------
Income (loss) from operations .....................      (2,756)    (380,675)         4,231           (3,689)        (382,889)
Other income (expenses):
        Interest expense ..........................     (39,688)        (107)          (101)             103          (39,793)
        Interest income ...........................         103          218            144             (103)             362
        Intercompany activity .....................          --           --         (3,689)           3,689               --
        Other income (expense), net ...............          --           39           (446)              --             (407)
                                                      ---------    ---------      ---------        ---------        ---------
                                                        (39,585)         150         (4,092)           3,689          (39,838)
                                                      ---------    ---------      ---------        ---------        ---------
Income (loss) before income taxes, discontinued
     operations and cumulative effect of accounting
     changes ......................................     (42,341)    (380,525)           139               --         (422,727)
Income tax provision (benefit) ....................      (2,680)      (3,759)         1,585               --           (4,854)
                                                      ---------    ---------      ---------        ---------        ---------
Income (loss) before discontinued operations and
     cumulative effect of accounting changes ......     (39,661)    (376,766)        (1,446)              --         (417,873)
Net loss on discontinued operations ...............          --      (33,450)            --               --          (33,450)
Cumulative effect of accounting changes, net of tax          --     (344,615)            --               --         (344,615)
Equity in earnings (loss) of subsidiaries .........    (756,277)          --             --          756,277               --
                                                      ---------    ---------      ---------        ---------        ---------

Net income (loss) .................................   $(795,938)   $(754,831)     $  (1,446)       $ 756,277        $(795,938)
                                                      =========    =========      =========        =========        =========
</TABLE>

                                      F-41

<PAGE>

                              KEY3MEDIA GROUP, INC.

                      CONSOLIDATING STATEMENT OF OPERATIONS
                                 (IN THOUSANDS)

                          YEAR ENDED DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                                       ELIMINATIONS
                                                             PARENT                                         AND
                                                            COMPANY    SUBSIDIARY   SUBSIDIARY NON-    CONSOLIDATING
                                                              ONLY     GUARANTOR      GUARANTORS          ENTRIES      CONSOLIDATED
                                                          ----------   ----------   ---------------    -------------   -------------
<S>                                                       <C>          <C>          <C>                <C>             <C>
Net revenues..........................................    $       -     $ 219,889     $   33,766        $   (4,486)     $   249,169
Operating expenses:
      Cost of production..............................            -        68,254         17,774                 -           86,028
      Selling, general and administrative............           586        98,610          6,617               (80)         105,733
      Staff reduction and severance charges...........            -         1,709              -                 -            1,709
      Stock based compensation........................          188             -              -                 -              188
      Depreciation and amortization...................            -        38,917          1,067                 -           39,984
                                                          ---------     ---------     ----------        ----------     ------------
                                                                774       207,490         25,458               (80)         233,642
                                                          ---------     ---------     ----------        ----------     ------------
Income (loss) from operations.........................         (774)       12,399          8,308            (4,406)          15,527
Other income (expenses):
        Interest expense..............................      (30,668)      (14,460)          (101)              127          (45,102)
        Interest income...............................          263         2,628            105              (127)           2,869
        Intercompany activity.........................            -             -         (4,406)            4,406                -
        Other income (expense), net...................            -         6,633           (137)                -            6,496
                                                          ---------     ---------     ----------        ----------     ------------
                                                            (30,405)       (5,199)        (4,539)            4,406          (35,737)
                                                          ---------     ---------     ----------        ----------     ------------
Income (loss) before income taxes, discontinued
      operations and extraordinary items..............      (31,179)        7,200          3,769                 -          (20,210)
Income tax provision (benefit)........................       (8,418)        2,207          1,086                 -           (5,125)
                                                          ---------     ---------     ----------        ----------     ------------
Income (loss) before discontinued operations and
      extraordinary item..............................      (22,761)        4,993          2,683                 -          (15,085)
Net income on discontinued operations.................            -         1,229              -                 -            1,229
Extraordinary loss on retirement of debt, net of tax..       (4,194)       (4,952)             -                 -           (9,146)
Extraordinary gain on conversion of debt to
      preferred stock, net of tax.....................        1,606             -              -                 -            1,606
                                                          ---------     ---------     ----------        ----------     ------------
                                                            (25,349)        1,270          2,683                 -          (21,396)
Equity in earnings (loss) of subsidiaries.............        3,953             -              -            (3,953)               -
                                                          ---------     ---------     ----------        ----------     ------------

Net income (loss).....................................    $ (21,396)    $   1,270     $    2,683        $   (3,953)    $    (21,396)
                                                          =========     =========     ==========        ==========     ============
</TABLE>

                                      F-42

<PAGE>

                              KEY3MEDIA GROUP, INC.

                      CONSOLIDATING STATEMENT OF OPERATIONS
                                 (IN THOUSANDS)

                          YEAR ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                                                        ELIMINATIONS
                                                           PARENT                                           AND
                                                          COMPANY       SUBSIDIARY    SUBSIDIARY NON-  CONSOLIDATING
                                                            ONLY         GUARANTOR      GUARANTORS        ENTRIES      CONSOLIDATED
                                                       ------------    ------------   --------------   -------------   ------------
<S>                                                    <C>             <C>            <C>              <C>             <C>
Net revenues.......................................    $          -    $   275,002    $     14,924       $   (3,025)   $    286,901
Operating expenses:
      Cost of production...........................               -         71,949           6,548                -          78,497
      Selling, general and administrative..........              79        101,698           4,454                -         106,231
      Non-recurring consideration charges..........               -          2,977               -                -           2,977
      Stock based compensation.....................           7,299            668               -                -           7,967
      Depreciation and amortization................               -         36,342             346                -          36,688
                                                       ------------    -----------    ------------       ----------    ------------
                                                              7,378        213,634          11,348                -         232,360
                                                       ------------    -----------    ------------       ----------    ------------
Income (loss) from operations......................          (7,378)        61,368           3,576           (3,025)         54,541
Other income (expenses):
        Interest expense...........................          (9,392)       (29,967)              -                -         (39,359)
        Interest income............................              69          3,050             145                -           3,264
        Intercompany activity......................               -              -          (3,025)           3,025               -
        Other income (expense), net................               -              -             (17)               -             (17)
                                                       ------------    -----------    ------------       ----------    ------------
                                                             (9,323)       (26,917)         (2,897)           3,025         (36,112)
                                                       ------------    -----------    ------------       ----------    ------------

Income (loss) before income taxes..................         (16,701)        34,451             679                -          18,429
Income tax provision (benefit).....................          (5,900)        15,501             266                -           9,867
                                                       ------------    -----------    ------------       ----------    ------------
                                                            (10,801)        18,950             413                -           8,562
Equity in earnings (loss) of subsidiaries..........          19,363              -               -          (19,363)              -
                                                       ------------    -----------    ------------       ----------    ------------
Net income (loss)..................................    $      8,562    $    18,950   $         413       $  (19,363)   $      8,562
                                                       ============    ===========    ============       ==========    ============
</TABLE>

                                      F-43

<PAGE>

                              KEY3MEDIA GROUP, INC.

                      CONSOLIDATING STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

                          YEAR ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                                                      ELIMINATIONS
                                                                                                           AND
                                                           PARENT      SUBSIDIARY       SUBSIDIARY    CONSOLIDATING
                                                        COMPANY ONLY   GUARANTORS     NON-GUARANTORS     ENTRIES      CONSOLIDATED
                                                       -------------   -----------    --------------  -------------   ------------
<S>                                                    <C>             <C>            <C>             <C>             <C>
Cash flows from operating activities:
  Net loss...........................................   $ (795,938)    $ (754,831)      $  (1,446)     $  756,277     $  (795,938)
  Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
    Cumulative effect of accounting change...........            -        344,615               -               -         344,615
    Reduction of goodwill and other intangibles......            -        396,130               -               -         396,130
    Depreciation and amortization....................            -         19,527             559               -          20,086
    Stock based compensation.........................        1,821              -               -               -           1,821
    Non-cash interest expense........................        2,120              -               -               -           2,120
    Equity in earnings (loss) of subsidiaries........      756,277              -               -        (756,277)              -
    Loss on disposal of fixed assets.................            -          1,351              20               -           1,371
    Foreign exchange loss............................            -              -              50               -              50
    Deferred income taxes............................       (2,680)        (2,916)           (174)              -          (5,770)
  Changes in operating assets and liabilities, net
    of effect from acquired business: ...............
    Accounts receivable..............................            -         30,487           3,764               -          34,251
    Prepaid event expenses...........................            -          2,765            (451)              -           2,314
    Other current assets.............................          (75)        (4,533)          1,581               -          (3,027)
    Other assets.....................................            -            122              84               -             206
    Accounts payable.................................            -        (11,999)         (2,204)              -         (14,203)
    Accrued expenses.................................       15,355         (6,331)            346               -           9,370
    Deferred revenue.................................            -        (43,093)         (2,930)              -         (46,023)
    Other liabilities................................            -           (928)           (465)              -          (1,393)
                                                        ----------     -----------     ----------      ----------     -----------
        Total adjustments............................      772,818        725,197             180        (756,277)        741,918
                                                        ----------     -----------     ----------      ----------     -----------
        Net cash used in operating activities........      (23,120)       (29,634)         (1,266)              -         (54,020)
                                                        ----------     -----------     ----------      ----------     -----------

Cash flows from investing activities:

  Purchase of property and equipment.................            -           (578)           (164)              -            (742)
  Return of purchase price from acquired business ...            -         21,985               -               -          21,985
  Acquisition of business, net of cash acquired .....            -         (3,360)          1,495               -          (1,865)
                                                        ----------     -----------     ----------      ----------     -----------
        Net cash provided by investing activities....            -         18,047           1,331               -          19,378
                                                        ----------     -----------     ----------      ----------     -----------

Cash flows from financing activities:
  Net transactions with Softbank, ZDI and affiliates
    excluding non-cash transactions with affiliates..       (3,428)         2,931             497               -               -
  Borrowings under amended and restated senior bank
    credit facility..................................        1,769              -               -               -           1,769
  Proceeds from the issuance of preferred stock, net.         (150)             -               -               -            (150)
                                                        ----------     -----------     ----------      ----------     -----------
        Net cash provided by (used in) financing
         activities..................................       (1,809)         2,931             497               -           1,619
                                                        ----------     -----------     ----------      ----------     -----------
Effects of exchange rate changes on cash.............            -              -            (542)              -            (542)
                                                        ----------     -----------     ----------      ----------     -----------
Net increase (decrease) in cash and cash equivalents.      (24,929)        (8,656)             20               -         (33,565)
Cash and cash equivalents at beginning of period.....       24,953         13,682           2,749               -          41,384
                                                        ----------     -----------     ----------      ----------     -----------
Cash and cash equivalents at end of period...........   $       24     $    5,026      $    2,769      $        -     $     7,819
                                                        ==========     ===========     ==========      ==========     ===========
</TABLE>

                                      F-44

<PAGE>

                              KEY3MEDIA GROUP, INC.

                      CONSOLIDATING STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

                          YEAR ENDED DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                                      ELIMINATIONS
                                                           PARENT                                          AND
                                                          COMPANY      SUBSIDIARY   SUBSIDIARY NON-   CONSOLIDATING
                                                            ONLY       GUARANTORS     GUARANTORS          ENTRIES      CONSOLIDATED
                                                        -----------    ----------   --------------   -------------     ------------
<S>                                                     <C>            <C>          <C>              <C>               <C>
Cash flows from operating activities:
    Net income (loss)..............................     $  (21,396)    $    1,270     $    2,683       $   (3,953)       $ (21,396)
    Adjustments to reconcile net income (loss) to
       net cash provided by (used in) operating
       activities:
       Extraordinary loss on retirement of debt....          5,745          6,784              -                -           12,529
       Extraordinary gain on conversion of debt to
preferred stock....................................         (2,200)             -              -                -           (2,200)
       Depreciation and amortization...............              -         39,721          1,067                -           40,788
       Stock based compensation....................            188              -              -                -              188
       Non-cash interest expense...................         11,348            913              -                -           12,261
       Loss on disposal of property and equipment..              -             93              -                -               93
       Equity in earnings (loss) of subsidiaries...         (3,953)             -              -            3,953                -
       Foreign exchange loss.......................              -              -            104                -              104
       Deferred income taxes.......................              -         18,198              -          (15,328)           2,870
   Changes in operating assets and liabilities, net
         of effect from acquired businesses:
         Accounts receivable.......................              -         33,317          4,924                -           38,241
         Prepaid event expenses....................              -          1,515          1,842                -            3,357
         Other current assets......................         (9,380)           499         (6,521)          15,328              (74)
         Other assets..............................              -            (59)            77                -               18
         Accounts payable..........................              -         (3,287)         2,103                -           (1,184)
         Accrued expenses..........................          2,701        (30,824)         4,771                -          (23,352)
         Deferred revenue..........................              -        (42,136)        (9,615)               -          (51,751)
         Other liabilities.........................              -         (9,282)          (741)               -          (10,023)
                                                        ----------     ----------     ----------       ----------        ---------
         Total adjustments.........................          4,449         15,452         (1,989)           3,953           21,865
                                                        ----------     ----------     ----------       ----------        ---------
         Net cash provided by (used in) operating
           activities..............................        (16,947)        16,722            694                -             469

Cash flows from investing activities:
    Purchase of property and equipment.............              -        (14,434)          (321)               -          (14,755)
    Acquisition of businesses, net of cash acquired              -       (111,320)         7,613                -         (103,707)
                                                        ----------     ----------     ----------       ----------        ---------
        Net cash provided by (used in) investing
          activities...............................              -       (125,754)         7,292                -         (118,462)

Cash flows from financing activities:
    Net transactions with Softbank, ZDI and
       affiliates excluding non-cash transactions
       with affiliates.............................       (312,649)       321,000         (8,351)               -                -
    Proceeds from the exercise of options to
       purchase common stock.......................            723              -              -                -              723
    Payment of costs associated with the issuance of
        long- term obligations.....................        (12,975)             -              -                -          (12,975)
    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 amended and restated senior bank
    revolving credit facility......................        110,000              -              -                -          110,000
    Repayment of borrowings under revolving credit
      facility                                             (30,000)             -              -                -          (30,000)
    Repayment of long-term obligations under new
credit

       facility....................................              -       (300,000)             -                -         (300,000)
    Proceeds from the issuance of preferred stock,
      net..........................................         65,600              -              -                -           65,600
                                                        ----------     ----------     ----------       ----------        ---------
        Net cash provided by (used in) financing
        activities.................................         37,123         21,000         (8,351)               -           49,772
                                                        ----------     ----------     ----------       ----------        ---------
Effects of exchange rate changes on cash...........              -              -           (309)               -             (309)
                                                        ----------     ----------     ----------       ----------        ---------
Net increase (decrease) in cash and cash equivalents        20,176        (88,032)          (674)               -          (68,530)
Cash and cash equivalents at beginning of period...          4,777        101,714          3,423                -          109,914
                                                        ----------     ----------     ----------       ----------        ---------
Cash and cash equivalents at end of period.........     $   24,953     $   13,682     $    2,749       $        -        $  41,384
                                                        ==========     ==========     ==========       ==========        =========
</TABLE>

                                      F-45

<PAGE>

                              KEY3MEDIA GROUP, INC.

                      CONSOLIDATING STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

                          YEAR ENDED DECEMBER 31, 2000
<TABLE>
<CAPTION>
                                                                                                      ELIMINATIONS
                                                          PARENT                                          AND
                                                         COMPANY      SUBSIDIARY        SUBSIDIARY    CONSOLIDATING
                                                           ONLY       GUARANTORS      NON-GUARANTORS     ENTRIES      CONSOLIDATED
                                                       ---------      ----------      --------------  -------------   ------------
<S>                                                    <C>            <C>             <C>             <C>             <C>
Cash flows from operating activities:
    Net income (loss)..............................    $    8,562     $   18,950        $      413    $    (19,363)   $      8,562
    Adjustments to reconcile net income (loss) to
      net cash
       provided by (used in) operating activities:
       Depreciation and amortization...............             -         36,342               346               -          36,688
       Stock based compensation....................         7,299            668                 -               -           7,967
       Non-cash interest expense...................         9,391            822                 -               -          10,213
       Loss on disposal of property and equipment..             -              -                61               -              61
       Equity in earnings (loss) of subsidiaries...       (19,363)             -                 -          19,363               -
       Foreign exchange loss.......................             -              -                45               -              45
       Deferred income taxes.......................         1,750         (5,693)              (25)              -          (3,968)
    Changes in operating assets and liabilities:
         Accounts receivable.......................             -         (9,816)           (1,055)              -         (10,871)
         Prepaid event expenses....................             -           (394)               20               -            (374
         Other current assets......................        (5,913)            78             4,817               -          (1,018)
         Other assets..............................             -            (11)              (28)              -             (39)
         Accounts payable..........................             -         13,059               103               -          13,162
         Accrued expenses..........................             -         31,325            (4,631)              -          26,694
         Deferred revenue..........................             -         12,330              (243)              -          12,087
         Other liabilities.........................             -           (629)             (882)              -          (1,511)
                                                       ----------     ----------        ----------    ------------    ------------
         Total adjustments.........................        (6,836)        78,081            (1,472)         19,363          89,136
                                                       ----------     ----------        ----------    ------------    ------------
         Net cash provided by (used in) operating
            activities.............................         1,726         97,031            (1,059)              -          97,698

Cash flows from investing activities:
    Purchase of property and equipment.............             -         (7,039)             (376)              -          (7,415)
    Purchase of intangible assets..................             -           (125)                -               -            (125)
                                                       ----------     ----------        ----------    ------------    ------------
         Net cash used in  investing activities....             -         (7,164)             (376)              -          (7,540)

Cash flows from financing activities:
        Net transactions with  Softbank, ZDI and
           affiliates excluding  non-cash
           transactions with affiliates............       (96,740)       101,127             2,783               -           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................................        75,000              -                 -               -          75,000
        Proceeds from the sale of common stock,
           net.....................................        69,851              -                 -               -          69,851
        Payment of cost associated with the
           issuance of long-term  obligations......        (2,062)        (8,520)                -               -         (10,582)
        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.................             -        (30,000)                -               -         (30,000)
        Payment of dividend to ZDI.................       (42,998)             -                 -               -         (42,998)
                                                       ----------     ----------        ----------    ------------    ------------
          Net cash provided by financing activities         3,051          8,254             2,783               -          14,088
                                                       ----------     ----------        ----------    ------------    ------------
Effects of exchange rate changes on cash...........             -              -                98               -              98
                                                       ----------     ----------        ----------    ------------    ------------
Net increase in cash and cash equivalents..........         4,777         98,121             1,446               -         104,344
Cash and cash equivalents at beginning of period...             -          3,593             1,977               -           5,570
                                                       ----------     ----------        ----------    ------------    ------------
Cash and cash equivalents at end of period.........    $    4,777     $  101,714        $    3,423    $          -    $    109,914
                                                       ==========     ==========        ==========    ============    ============
</TABLE>

                                      F-46

<PAGE>

                                    SCHEDULE

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        BALANCE AT     ADDITIONS/DELETION                   BALANCE AT
                                                       BEGINNING OF      CHARGED TO                           END OF
                                                          PERIOD        EXPENSE/REVENUE      DEDUCTIONS       PERIOD
                                                      ------------     ------------------    ----------     ----------
<S>                                                   <C>              <C>                   <C>            <C>
YEAR ENDED DECEMBER 31, 2000
Allowance for doubtful accounts....................     $    3,628       $     3,324         $   (3,614)    $    3,338
Reserve for sales allowance........................            256             2,660             (2,692)           224
                                                        ----------       -----------         ----------     ----------
          Total....................................     $    3,884       $     5,984         $   (6,306)    $    3,562
                                                        ==========       ===========         ==========     ==========

YEAR ENDED DECEMBER 31, 2001
Allowance for doubtful accounts....................     $    3,338       $      (180)        $   (1,120)    $    2,038
Reserve for sale allowance.........................            224             4,864             (4,793)           295
                                                        ----------       -----------         ----------     ----------
          Total....................................     $    3,562       $     4,684         $   (5,913)    $    2,333
                                                        ==========       ===========         ==========     ==========

YEAR ENDED DECEMBER 31, 2002
Allowance for doubtful accounts....................     $    2,038       $       115         $     (577)    $    1,576
Reserve for sales allowance........................            295               464               (759)             -
                                                        ----------       -----------         ----------     ----------
          Total....................................     $    2,333       $       579         $   (1,336)    $    1,576
                                                        ==========       ===========         ==========     ==========
</TABLE>

                                      S-1