<PAGE>

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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

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

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

                        For the quarterly period ended

                                March 31, 2001

                                      or

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

                   For the transition period from     to

                        Commission File Number 1-16061

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

              Delaware                              95-4799962
      (State of Incorporation)         (I.R.S. Employer Identification No.)

   5700 Wilshire Blvd., Suite 325                     90036
           Los Angeles, CA                          (Zip Code)
   (Address of principal executive
              offices)

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

  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                YES [X]  NO [ ]

  As of April 30, 2001, there were 65,043,000 shares of the Registrant's voting
common stock, par value $0.01 per share, issued and outstanding. No shares of
any other class of the capital stock of the Registrant are currently issued or
outstanding.

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<PAGE>

                             KEY3MEDIA GROUP, INC.

                              TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                                                      Page(s)
                                                                                                                      -------

Part I.   Financial Information
<S>  <C>                                                                                                        <C>
     Item 1.  Financial Statements:

              Condensed Consolidated Balance Sheets as of December 31, 2000 and
              March 31, 2001 (Unaudited).....................................................................            3

              Condensed Consolidated Statements of Operations (Unaudited) for the Three Months
              Ended March 31, 2000 and 2001..................................................................            4

              Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months
              Ended March 31, 2000 and 2001..................................................................            5

              Condensed Consolidated Statement of Changes in Shareholders' Equity (Unaudited) for
              The Three Months Ended March 31, 2001..........................................................            6

              Notes to Condensed Consolidated Financial Statements (Unaudited)...............................            7

     Item 2.  Management's Discussion and Analysis of Financial Condition and Results of
              Operations.....................................................................................            13

     Item 3.  Quantitative and Qualitative Disclosures About Market Risk.....................................            17

Part II.  Other Information

     Item 1.  Legal
              Proceedings.................................................................................               18

     Item 6.  Exhibits and Reports on Form
              8-K.........................................................................................               18
</TABLE>


                                       1
<PAGE>

             CAUTIONARY LEGEND REGARDING FORWARD-LOOKING STATEMENTS

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

  Because forward-looking statements involve risks and uncertainties, there are
many factors that could cause the actual results to differ materially from those
expressed or implied. These include, but are not limited to, economic
conditions, generally, and in the information technology industry in particular,
the timing of our events and their popularity with exhibitors, capital
expenditures and factors impacting our international operations. In addition,
the Registration Statement on Form S-1 (File No. 333-36828) and the Annual
Report on Form 10-K for the year ended December 31, 2000 (File No. 333-36828)
that we filed with the SEC contain important cautionary statements and discuss
many of the factors that could materially affect the accuracy of our forward-
looking statements and/or adversely affect our business, results of operations
and financial position under the captions (i) in the case of the Form S-1, "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and (ii) in the case of the Form 10-K, "Item 1:
Business - Certain Factors That May Affect our Businesses." These statements and
discussions are incorporated herein by reference.

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

                                       2
<PAGE>

                         PART I  FINANCIAL INFORMATION

Item 1.   Financial Statements

                             KEY3MEDIA GROUP, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<S>                                                               <C>                     <C>
                                                                     December 31,              March 31,
                                                                         2000                    2001
                                                                --------------------    --------------------
                                                                                              (unaudited)
Assets
Current assets:
     Cash and cash equivalents..........................                  $  109,914              $  108,510
     Accounts receivable, net...........................                      80,254                  67,386
     Prepaid event expenses.............................                       4,958                  13,284
     Deferred income taxes.............................. .                     1,745                   1,745
     Other current assets...............................                       2,970                   3,363
                                                                --------------------    --------------------
          Total current assets..........................                     199,841                 194,288
Property and equipment, net.............................                      12,342                  13,468
Intangible assets, net..................................                     843,999                 836,250
Deferred financing costs and other assets...............                       9,151                   8,283
                                                                --------------------    --------------------
          Total assets..................................                  $1,065,333              $1,052,289
                                                                ====================    ====================
Liabilities and Shareholders' Equity

Current liabilities:
     Current maturities of long-term obligations........                  $    1,584              $    1,471
     Accounts payable...................................                       8,485                   3,920
     Accrued  expenses..................................                      49,872                  14,640
     Deferred revenue...................................                      97,886                 146,417
     Other current liabilities..........................                      14,887                   9,154
                                                                --------------------    --------------------
          Total current liabilities.....................                     172,714                 175,602

Deferred income taxes...................................                      85,030                  85,030
Long-term obligations (net of current maturities).......                     367,081                 371,933
Other long-term liabilities.............................                       8,568                   8,536

Commitments and contingencies

Shareholders' equity:
     Common stock.......................................                         650                     650
     Additional paid-in-capital.........................                     422,171                 420,027
     Retained earnings..................................                      38,810                  14,827
     Accumulated comprehensive income (loss)............                      (3,836)                 (3,979)
     Deferred compensation..............................                     (25,855)                (20,337)
                                                                --------------------    --------------------
          Total shareholders' equity....................                     431,940                 411,188
                                                                --------------------    --------------------
          Total liabilities and shareholders' equity....                  $1,065,333              $1,052,289
                                                                ====================    ====================
</TABLE>

                            See accompanying notes.

                                       3
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                               For the three months
                                                 ended March 31,
                                             2000               2001
                                          ---------          ----------
<S>                                      <C>                <C>
Net revenues............................  $  21,147          $    8,017

Operating expenses:
    Cost of production..................      8,412               3,094
    Selling, general and administrative.     20,730              24,677
    Stock based compensation............        131               3,159
    Depreciation and amortization.......      9,192               9,081
                                          ---------          ----------
                                             38,465              40,011
                                          ---------          ----------

Loss from operations....................   (17,318)             (31,994)
                                          ---------          ----------
Other income (expenses):
    Interest expense....................    (5,661)             (13,349)
    Interest income.....................        90                1,356
    Other income (expense), net.........        70                  (18)
                                          ---------          ----------
                                             (5,501)            (12,011)
                                          ---------          ----------
Loss before income taxes................    (22,819)            (44,005)
Income tax benefit......................     (9,059)            (20,022)
                                          ---------          ----------
                     Net loss...........   $(13,760)           $(23,983)
                                          =========          ==========

Basic and diluted net loss per share....   $  (0.26)           $  (0.37)
Shares used in computing basic and diluted
net loss per common share...............     53,358              65,012
</TABLE>

                             See accompanying notes.

                                       4
<PAGE>

                             KEY3MEDIA GROUP, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                    For the three months
                                                                                       ended March 31,
                                                                                     2000           2001
                                                                                -------------- --------------
Cash flows from operating activities:
<S>                                                                              <C>            <C>
   Net loss..............................................................        $    (13,760)  $    (23,983)
   Adjustments to reconcile net loss to net cash provided by operating
   activities:
     Depreciation and amortization.......................................               9,192          9,081
     Stock-based compensation............................................                 131          3,159
     Non-cash interest expense...........................................                  --          6,059
     Loss on disposal of fixed asset.....................................                   1             --
     Foreign exchange (gain)/loss........................................                 (69)            93
     Deferred income taxes...............................................              (9,199)            --
   Changes in operating assets and liabilities:
     Accounts receivable.................................................               8,460         12,868
     Prepaid event expenses..............................................              (9,389)        (8,326)
     Other current assets................................................              (5,727)          (393)
     Other assets........................................................                 (58)            --
     Accounts payable....................................................              (5,780)        (4,565)
     Accrued expenses....................................................              (6,488)       (35,232)
     Deferred revenue....................................................              34,924         48,531
     Other liabilities...................................................               1,741         (5,765)
                                                                                -------------- --------------
   Total adjustments.....................................................              17,739         25,510
     Net cash provided by operating activities...........................               3,979          1,527
                                                                                -------------- --------------

Cash flows from investing activities:
   Purchase of property and equipment....................................                (481)        (2,551)
                                                                                -------------- --------------
     Net cash used in investing activities...............................                (481)        (2,551)
                                                                                -------------- --------------

Cash flows from financing activities:
   Net transactions with Softbank, ZDI and affiliates excluding non-cash
   transactions with affiliates..........................................                 755             --
   Increase/(decrease) in bank overdraft.................................               7,190             --
   Proceeds from the exercise of options to purchase common stock                          --            215
   Payment of long-term obligations......................................                  --           (452)
                                                                                -------------- --------------
     Net cash provided by (used in) financing activities.................               7,945           (237)
                                                                                -------------- --------------
Effects of exchange rate changes on cash.................................                 193           (143)
                                                                                -------------- --------------
Net increase (decrease) in cash and cash equivalents.....................              11,636         (1,404)
Cash and cash equivalents at beginning of period.........................               5,570        109,914
                                                                                -------------- --------------
Cash and cash equivalents at end of period...............................          $   17,206     $  108,510
                                                                                ============== ==============

Supplemental cash flow disclosures:
   Interest paid.........................................................          $    5,661     $    7,476
   Income taxes paid.....................................................                  --             --
</TABLE>

                            See accompanying notes.

                                       5
<PAGE>

                             KEY3MEDIA GROUP, INC.

     CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                   For the Three Months Ended March 31, 2001
                                  (Unaudited)
                                (in thousands)


<TABLE>
<CAPTION>
                                      Additional              Accumulated       Total
                              Common   paid-in     Retained  comprehensive  comprehensive    Deferred
                              stock    capital     earnings  income (loss)  income (loss)  compensation     Total
                             -------  ----------   --------  -------------  -------------  -------------  ---------
<S>                           <C>      <C>        <C>        <C>                           <C>            <C>
Balance at December 31,
    2000...................   $  650   $ 422,171  $  38,810  $    (3,836)                  $  (25,855)    $ 431,940
Proceeds from the exercise
    of options to purchase
    common stock...........        -         215          -             -                            -          215
Forfeiture of stock
    options....................    -     (1,432)          -             -                        1,432            -
Adjustment in fair value of
    options requiring variable
    accounting ............        -       (927)          -             -                          927            -
Amortization of deferred
    compensation...........        -           -          -             -                        3,159        3,159
Foreign currency
    translation adjustment.....    -           -          -         (143)          (143)             -        (143)
Net loss...................        -           -   (23,983)             -       (23,983)             -     (23,983)
                             -------  ----------  ---------  -------------  -------------  -------------  ---------
Balance at March 31, 2001..   $  650   $ 420,027  $  14,827  $    (3,979)    $  (24,126)   $  (20,337)    $ 411,188
                             =======  ==========  =========  =============  =============  =============  =========
</TABLE>



                            See accompanying notes.

                                       6
<PAGE>

                             KEY3MEDIA GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                   (in thousands, except per share amounts)

1.  Basis of Presentation, Organization and Nature of Operations

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

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

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

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

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

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

  The Company recorded $0 and $2,209 for centralized administrative charges from
ZDI for the three months ended March 31, 2001 and 2000, respectively.

                                       7
<PAGE>

                             KEY3MEDIA GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                   (in thousands, except per share amounts)


2.  Computation of Net Income (Loss) Per Share

  Basic net income per share is calculated using the weighted average of the
number of common shares outstanding, including the assumed issuance of shares to
ZDI shareholders in connection with the spin-off, as if such issuance occurred
at the beginning of 2000.

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


3.  Comprehensive Loss

  The components of comprehensive loss were as follows:

<TABLE>
<CAPTION>
                                                                    For the three months
                                                                      ended March 31,
                                                              -------------------------------
                                                                  2000               2001
                                                              ------------       ------------
<S>                                                           <C>                <C>
Net loss..................................................    $   (13,760)       $   (23,983)
  Other comprehensive adjustment:
  Foreign currency translation adjustment.................           (216)              (143)
                                                              ------------       ------------
Total comprehensive loss..................................    $   (13,976)       $   (24,126)
                                                              ============       ============

4.  Long-term Obligations

  Long-term Obligations consist of the following:
                                                                           March 31,
                                                              -------------------------------
                                                                  2000               2001
                                                              ------------       ------------

Note payable to Ziff-Davis, Inc.-related party............    $    382,002       $          -
Senior credit facility....................................               -            299,548
$75 million Zero coupon debentures, including accreted
    interest of $5,707 net of discount of $6,851..........               -             73,856
                                                              ------------       ------------
                                                                   382,002            373,404
Less current maturities...................................               -            (1,471)
                                                              ------------       ------------
Total                                                             $382,002           $371,933
                                                              ============       ============
</TABLE>

                                       8
<PAGE>

                             KEY3MEDIA GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                   (in thousands, except per share amounts)


4.  Long-term Obligations (continued)

  On August 3, 2000, the Company's wholly owned subsidiary, Key3Media Events,
entered into a credit facility with a syndicate of banks which consists of two
term loan facilities and a revolving credit facility. The initial principal
amount of the first term loan was $75,000 and it matures on August 3, 2005. The
first term loan requires repayment quarterly in annual amounts equal to 10% of
the original principal amount of the loan in the first year, 15% in the second
year, 20% in the third year, 25% in the fourth year and the remaining 30% in the
fifth and final year. The initial principal amount of the second term loan was
$255,000 and it matures on August 3, 2006. The second term loan requires
repayment in equal quarterly amounts during the final year of its term, subject
to amortization of approximately 1% per year prior to the final year. Key3Media
Events borrowed $330,000 under the term loan facilities on August 18, 2000. As
of March 31, 2001, Key3Media Events has repaid a total of $30,452 in principal
on these two term loan facilities. As a result of this prepayment, the above
repayment amounts have been revised.

  The revolving credit facility commits the banks to lend up to $50,000 to
Key3Media Events for general corporate purposes. Key3Media Events may borrow,
repay and re-borrow under the revolving loan facility until August 3, 2005, at
which time Key3Media Events must repay any amounts outstanding under the
revolving credit facility. As of March 31, 2001, Key3Media Events has no amounts
outstanding under the revolving credit facility.

  At Key3Media Events' election, loans under the credit facility bear interest
at a margin over, (1) the higher of the federal funds rate plus 1/2% and
Citibank, N.A.'s base rate or (2) the London interbank offered rate, or LIBOR.
The margin Key3Media Events pays will vary between 0.75% and 4.00% depending on
(a) what Key3Media Events chooses as its base rate and (b) the ratio of its
total debt to EBITDA as defined in the credit facility agreement. At March 31,
2001, the effective interest rate for the Senior Credit Facility was 9.6%.

  The credit facility contains various financial covenants including, amongst
other things, (i) limitations on dividends, (ii) limitations on the incurrence
of indebtedness, (iii) limitations on capital expenditures and (iv) maintenance
of minimum leverage and interest coverage ratios. The borrowings under the
credit facility are collateralized by substantially all of the assets of
Key3Media Events.

  On September 22, 2000, Key3Media Events entered in to a Rate Cap Transaction
Agreement with a bank which eliminates its exposure to interest rate increases
in LIBOR above 9.375% on $165,000 of borrowings under the credit facility. This
agreement terminates on October 2,2001.

  On August 18, 2000, the Company issued zero coupon senior debentures with an
initial principal amount of $75,000. The purchasers paid $72,938 for the
debentures and the warrants described below. The principal amount of the
debentures will accrete at a rate of 12% per year, compounded quarterly, for the
first five years and 15% per year, compounded quarterly, after that. If our
consolidated ratio of debt to EBITDA as defined in the debenture agreement in
the previous four quarters is higher than 4.50:1.00, the accretion rate will
increase by 1.25% until the ratio falls below 4.50:1.00 for the previous four
quarters. The debentures will mature in seven years and nine months. Accreted
interest calculated on an average annualized basis on the debentures was $5,707
as of March 31, 2001.

  The Company can redeem the debentures at any time before the first anniversary
of the issuance of the debentures at 112% of the initial principal amount. On or
after the first but before the fifth anniversary of the issuance, we can redeem
the debentures at 100% of their accreted principal amount. On or after the fifth
anniversary, we cannot redeem the debentures, until the maturity date.

                                       9
<PAGE>

                             KEY3MEDIA GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                   (in thousands, except per share amounts)

4.  Long-term Obligations (continued)

  The purchasers of our debentures received warrants to purchase 6,800 shares of
our common stock at $6.00 per share, subject to adjustment as described below
and to customary anti-dilution rights. Cashless exercise is permitted and the
warrants expire seven years after they are issued, except that if the number of
shares that may be purchased upon exercise of the warrants increases on any
anniversary of the issue date, then the warrants will expire as to those
additional shares seven years after that anniversary.

  If the debentures are redeemed within 22 months after they are issued (prior
to June 18, 2002), the number of shares that must be issued upon exercise of the
warrants will decrease by 523. If the debentures are still outstanding on the
following anniversaries, the number of shares that must be issued upon exercise
of the warrants will increase by 1,500 on each of the second and third
anniversaries of the issuance of the debentures and by 1,750 each of on the
fourth and fifth anniversaries.

  In connection with the issuance of warrants, the Company recorded a discount
on the debentures and an increase to paid-in-capital of $15,000, which
represents the value of the warrants on the date of issuance. The discount on
the debentures will be amortized as additional interest expense using the
effective interest rate method over the expected life of the debentures, which
Management currently believes may be less than 24 months from the date of their
issuance. The $15,000 value assigned to the warrants at their issuance date has
been determined using a Black-Scholes Pricing Model that includes assumptions as
to risk free interest rates, dividend yield, volatility and expected life of the
warrants.

  The debenture agreement contains some financial and reporting covenants such
as minimum leverage ratios and quarterly and annual reporting. The debentures
are subordinate to the credit facility and are collateralized by substantially
all of the assets of the Company.

  The Company incurred interest expense to related parties for the three months
ended March 31, 2001 and 2000 of $0 and $5,661, respectively.


5.  Stock Compensation

  The Company has granted options to purchase shares of its common stock with
exercise prices ranging from $5.00 to $12.80. Certain options granted to
employees who previously held options to purchase ZDI's ZD common stock or ZDNET
common stock, or stock of Softbank Corp. are subject to the accounting 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.
Additionally, certain employees of the Company continue to hold options to
purchase stock of Softbank Corp. and CNET Networks, Inc. (formerly ZDI and
ZDNet).

  The Company recognized $3,159 and $131 in amortization of deferred
compensation for the three months ended March 31, 2001 and 2000, respectively.

                                       10
<PAGE>

                             KEY3MEDIA GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                   (in thousands, except per share amounts)

6.  Commitments and Contingencies

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

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

  On August 18, 2000, the agreement with GES was terminated by Key3Media Events
pursuant to a 60 day notice of termination delivered by Key3Media Events to GES
on June 19, 2000.

  This litigation is in the early stages of discovery. Management and counsel
believe that GES' claims are excessive and lack merit and intend to vigorously
defend against them. In management's opinion, this litigation is not likely to
have a material adverse effect on the Company's financial position, results of
operations or cash flows.

  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.

7.  Segment Information

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

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

                                       11
<PAGE>

                             KEY3MEDIA GROUP, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                   (in thousands, except per share amounts)


7.  Segment Information (continued)

  Financial information by geographic areas is as follows:


<TABLE>
<CAPTION>
                                                            For the three months ended
                                                                     March 31,
<S>                                                       <C>             <C>
                                                                2000           2001
                                                           -------------   -------------
Net revenues:
     North America.......................................       $ 20,481      $    7,423
     Europe..............................................            346             291
     Far East............................................            320             303
                                                           -------------   -------------
         Total...........................................       $ 21,147      $    8,017
                                                           =============   =============
Other income (expense):
     North America.......................................       $     --      $ (12,031)
     Europe..............................................             70              19
     Far East............................................             --               1
                                                           -------------   -------------
         Total...........................................       $     70      $ (12,011)
                                                           =============   =============
Total assets:
     North America.......................................       $974,234      $1,039,810
     Europe..............................................         12,818          12,109
     Far East............................................            914             370
                                                           -------------   -------------
         Total...........................................       $987,966      $1,052,289
                                                           =============   =============
</TABLE>

7.  Subsequent Events

  On April 15, 2001, the Company filed a shelf registration with the Securities
and Exchange Commission to periodically sell up to $375 million in debt
securities, common and preferred stock, warrants, and depositary shares.

  On May 7, 2001, the Company announced that it has signed a nonbinding letter
of intent to acquire all of SOFTBANK America Inc.'s interest in SOFTBANK Forums,
Japan, Inc. ("SBFJ") in a stock-for-stock exchange. SOFTBANK America Inc. is
principally owned by SOFTBANK Corp. of Japan, the beneficial owner of a majority
of the outstanding common shares of the Company. The exact number of shares that
the Company will issue has not yet been determined, but it is expected to be in
the range of 2.5 to 3.0 million shares. SBFJ owns and operated tradeshows and
conferences in Japan.

                                       12
<PAGE>

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

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

  The Company utilizes the term EBITDA in the following discussion. EBITDA
represents income (or loss) before taxes plus depreciation and amortization, and
interest expense net of interest income. EBITDA should not be considered as an
alternative to, or more meaningful than, operating income as determined in
accordance with GAAP, or cash flows from operating activities as determined in
accordance with GAAP, and should not be considered 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 measures of other companies.

Results of Operations

Three Months Ended March 31, 2001 Compared with Three Months Ended March 31,
2000

  Our total revenue decreased $13.1 million, or 62.1%, to $8.0 million in the
first quarter of 2001 from $21.1 million in the comparable period in 2000.
Exhibitor services revenue decreased by $7.4 million, or 58.6%, to $5.3 million
in the first quarter of 2001 from $12.7 million in the comparable period in
2000. This decrease can be attributable primarily to the timing of our Seybold
Boston event, which was held in the first quarter of 2000 but was held in the
second quarter of 2001, and several other smaller regional events held in the
first quarter of 2000, that were either discontinued or postponed in 2001.

  Adjusting the results of operations for the three months ended March 31, 2000
to exclude the results for these events, exhibitor services revenue decreased
$0.9 million, or 14.8%, to $5.3 million in the three months ended March 31, 2001
from an adjusted exhibitor service revenue of $6.2 million in the first quarter
of 2000. This decrease was attributable to a $1.4 million decrease in exhibitor
revenue related to floor space partially offset by $0.5 million increase in
exhibitor revenue activity for management fee and other exhibitor service fee
income at our trade shows and conferences in 2001 compared to 2000. The average
rental rate per square foot paid by exhibitors decreased 9.0% to $30.06 in 2001
from an adjusted $33.02 in the comparable period in 2000. The events, which
occurred in the first quarter of 2001, versus events occurring in the first
quarter of 2000, were by design smaller in scope and size; consequently, they
had lower attendance and a lower average rental rate per square foot paid by
exhibitors.



                                       13
<PAGE>

In addition, net paid square footage decreased 47.4% in 2001 to 42,280 from an
adjusted 80,446 in the comparable period in 2000. This decrease is primarily due
to the repositioning of our Support Services event as a more focused offering.
In 2000, the Support Services event was combined with our Custom Relationship
Management event.

  Conference fees decreased $4.1, or 78.2%, to $1.1 million in the first quarter
of 2001 from $5.2 million in the comparable period in 2000.  This decrease was
principally attributable to the timing of our Seybold Boston event and the
discontinuance or postponement of several smaller regional events in 2001.
Excluding the results of these events for the three months ended March 31, 2000,
conference fees decreased $0.4 million or 23.5% to $1.1 million in 2001 compared
to adjusted conference fees of $1.5 million in the comparable period in 2000.
The number of participants at the conferences offered at our events decreased
33.1% to 1,356 in 2001 from an adjusted 2,028 in 2000. This decrease in
participants was partially offset by a 14.5% increase in the average revenue per
conference attendee in the first quarter of 2001 of $830 compared with the
adjusted revenue per conference attendee of $725 in the comparable period in
2000.

  Advertising and sponsorship revenues decreased $1.7 million, or 50.3%, to $1.6
million in the first quarter of 2001 from $3.3 million in the comparable period
in 2000. This decrease is primarily attributable to the timing of our Seybold
Boston event and the discontinuance or postponement of several smaller regional
events in 2001 partially offset by corporate sponsorship revenue earned for the
first time in 2001. Excluding the results of these events for the three months
ended March 31, 2000, advertising and sponsorship revenues increased $0.9
million or 133.8% to $1.6 million in 2001 compared to adjusted advertising and
sponsorship revenues of $0.7 million in the comparable period in 2000.

  Costs of production decreased $5.3 million, or 63.2%, to $3.1 million in the
first quarter of 2001 from $8.4 million in the comparable period in 2000.  As a
percentage of revenue, these costs represented 38.6% of revenue in 2001 compared
to 39.8% in 2000. The decrease on an absolute basis can be attributable to the
absence of the Seybold Boston event and the discontinuance or postponement of
several smaller regional events in 2001. Adjusting the results of operations for
these events for the three months ended March 31, 2000, costs of production were
$3.1 million for both 2001 and 2000. Adjusted costs of production represents
37.7% of adjusted revenue of $8.3 million for the three months ended March 31,
2000. The decrease in the first quarter of 2001 as a percentage of our revenue
compared to our adjusted results for the first quarter of 2000 reflects the
fixed cost nature of our business.

  SG&A expenses increased $4.0 million, or 19.0%, to $24.7 million in the first
quarter of 2001 from $20.7 million in the comparable period in 2000.  As a
percentage of revenue, SG&A represented 307.8% of revenue in the first quarter
of 2001 compared to 98.0% in the comparable period in 2000. Excluding the
results of Seybold Boston and the discontinuance or postponement of several
smaller regional events for the three months ended March 31, 2000, SG&A
represented 248.8% of adjusted revenue for the first quarter of 2000. These
percentages are typically much higher during our first quarter than for our full
year because of the seasonality of our events and revenues, most of which occur
in the second and fourth quarters. The increase in SG&A on an absolute and
percentage basis is primarily due to higher level of employment as well as
increased use of temporary and contract labor at our business locations in
Massachusetts and California and the addition of certain new senior managers in
March of 2001.

  Noncash stock-based compensation increased $3.0 million to $3.1 million in
2001 from $0.1 in 2000. The higher amount in 2001 is due to additional expense
arising from the issuance of options beginning in August 2000 with exercise
prices less than the market value at their date of grant to certain of our
employees.

                                       14
<PAGE>

  As a result of the foregoing, EBITDA decreased by $14.9 million, or 184.6%
from a loss of $8.0 million in the first quarter of 2000 to a loss of $22.9
million in the same period in 2001. After adjusting to exclude the noncash
stock-based compensation changes in both periods, adjusted EBITDA decreased by
$11.9 million, or 149.5%, from a loss of $7.9 million in the first quarter of
2000 to a loss of $19.8 million in the same period in 2001. After further
adjusting to exclude the results of Seybold Boston and the discontinuance or
postponement of several smaller regional events from our results for
the three months ended March 31, 2000, adjusted EBITDA decreased by $4.3
million, or 27.8%, from a loss of $15.5 million in the first quarter of 2000 to
a loss of $19.8 million in the same period in 2001

  Depreciation and amortization decreased $0.1 million, or 1.2%, to $9.1 million
in the first quarter of 2001 from $9.2 million in the comparable period in 2000.

  The provision for income tax benefit increased $10.9 million, or 121.0%, to
$20 million in the first quarter of 2001 from $9.1 million in the comparable
period in 2000. The Company estimates the effective tax rate for the year ending
2001 will be 45.5% versus the annual estimated effective rate of 39.7% used in
computing the benefit for the first quarter of 2000. Accordingly, the Company
has recorded a benefit of 45.5% of the loss before income taxes for the first
quarter of 2001.

  As a result of the foregoing, our net loss increased $10.2 million, or 74.3%,
to $24.0 million in the first quarter of 2001 from $13.8 million in the
comparable period in 2000.

Liquidity and Capital Resources

  As of March 31, 2001, our balance of cash and cash equivalents was $108.5
million. For the quarter, we met our liquidity needs principally through cash
balances held by the Company and cash generated from operating activities. Net
cash provided by operating activities was $1.5 million in the first quarter of
2001, compared to $4.0 million in the first quarter of 2000.

  Cash used for investing activities was $2.6 million in the first quarter of
2001, compared to $0.5 million in the first quarter of 2000.  These activities
primarily related to funding investments in property and equipment.

  We used $0.2 million in cash from financing activities in the first quarter of
2001, compared to cash provided of $7.9 million in the first quarter of 2000.
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.  As a result of these
practices, we historically had a working capital deficit and low cash balances.
Since April 13, 2000, we assumed responsibility for our cash management and
treasury activities as if we were an independent company.  At March 31, 2001, we
had working capital of $18.7 million and cash and cash equivalents of $108.5
million.  Unless we decide to prepay our borrowings, we do not expect to have
material working capital deficits in the future.

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

  Capital expenditures for the three months ended March 31, 2001 were $2.6
million.  We anticipate our capital expenditures for 2001 to total approximately
$15 million, including $9 million for our new infrastructure initiatives, $3
million for replacements and upgrades of property and equipment, $2 million for
expanded data center capacity and $1 million for tenant upgrades in our newly
leased corporate headquarters in Los Angeles and existing facilities located in
Needham, Massachusetts and Foster City, California.

                                       15
<PAGE>

  We have made substantial commitments for repayment of our term loans.  We
currently do not have any committed source of capital other than Key3Media
Events' revolving credit facility.  Up to $50.0 million is available to
Key3Media Events and its subsidiaries under the revolving credit facility,
subject to certain conditions. Under Key3Media Events' term loan facility, after
adjusting for the $30 million of early repayments we have made, we have
scheduled principal repayments in the following amounts: $1.14 million in 2001,
$5.66 million in 2002, $18.23 million in 2003, $21.98 million in 2004, $131.41
million in 2005 and $121.13 million in 2006. However, Key3Media Events must
prepay the term loans sooner if it sells assets not in the ordinary course of
business, issues additional debt or has excess cash flow during the term of the
loans.

  In addition, we currently believe we will be able to exercise our right to
redeem the debentures before June 2002.  If we redeem the debentures on this
date, then the redemption price will be $93,552,000, which is comprised of
$75,000,000 of principal and $18,552,000 of interest.  If we redeem the
debentures on their stated maturity date in May 2008, then the redemption price
will be $203,364,000 which is comprised of $75,000,000 of principal and
$128,364,000 of interest.  We may also be required to redeem the debentures if
we sell assets not in the ordinary course of business or issue additional debt.

  We also have to pay interest on Key3Media Events' term and revolving credit
loans.  Key3Media Events' term and revolving loans bear interest at floating
rates.  However, Key3Media Events entered into a rate cap transaction agreement
with a bank which eliminates its exposure to interest rate increases in LIBOR
above 9.375% on $165 million of borrowings under the credit facility.  This
agreement terminates in October 2001.  Accordingly, our liquidity and financial
condition are affected by changes in prevailing interest rates.

  On April 15, 2001, the Company filed a shelf registration with the Securities
and Exchange Commission to periodically sell up to $375 million in debt
securities, common and preferred stock, warrants, and depositary shares.

  On May 7, 2001, the Company announced that it has signed a nonbinding letter
of intent to acquire all of SOFTBANK America Inc.'s interest in SOFTBANK Forums,
Japan, Inc. ("SBFJ") in a stock-for-stock exchange. SOFTBANK America Inc. is
principally owned by SOFTBANK Corp. of Japan, the beneficial owner of a majority
of the outstanding common shares of the Company. The exact number of shares that
the Company will issue has not yet been determined, but it is expected to be in
the range of 2.5 to 3.0 million shares. SBFJ owns and operated tradeshows and
conferences in Japan.

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

Seasonality

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

Recent Accounting Pronouncements

  There are no recent accounting pronouncements that we believe will have a
material effect on our financial statements or results of operations after
adoption.

                                       16
<PAGE>

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

  We are exposed to various market risks, which include the potential loss
arising from adverse changes in market rates and prices such as foreign currency
exchange and interest rates.  We do not enter into derivatives or other
financial instruments for trading or speculative purposes.  We do not hedge our
foreign currency rate risk; however, as noted below, we have entered into an
interest rate cap agreement to manage and reduce the impact of changes in
interest rates.

  Currencies.  We maintain operations, cash and other assets in Europe, Canada,
Australia and Latin America.  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.

  Interest.  We rely significantly on long-term floating rate debt in our
capital structure.  Our credit facility with a syndicate of banks requires that
not less than $165.0 million of the facility be covered by interest rate cap
agreements which eliminate our exposure to interest rate increases in LIBOR
above 9.375%. Notwithstanding the preceding, a one percentage point increase in
interest rates for our long-term floating rate debt would result in a reduction
of pretax earnings and cash flows equal to $3.0 million.

                                       17
<PAGE>

                           PART II  OTHER INFORMATION

Item 1.   Legal Proceeding

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

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

On August 18, 2000, the agreement with GES was terminated by Key3Media Events
pursuant to a 60 day notice of termination delivered by Key3Media Events to GES
on June 19, 2000.

  The litigation is in the early stages of discovery. Management and counsel
believe that GES' claims are excessive and lack merit and intends to vigorously
defend against them. In management's opinion, this litigation is not likely to
have a material adverse effect on the Company's financial position, results of
operations or cash flows.

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

Item 6.   Exhibits and Reports on Form 8-K

(a) Exhibits

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

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

    10  Letter of Intent to acquire SB Forums between Key3Media Group, Inc. and
        SOFTBANK America Inc. dated April 27, 2001.

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

(b) Reports on Form 8-K

    No report on Form 8-K was filed by the Company during the three months
    ended March 31, 2001.

                                       18