----

----

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION****WASHINGTON, D.C. 20549**

**FORM10-Q**
| **ý** | **QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------|----------------------------------------------------------------------------------------------|

**For the Quarterly period ended June 30, 2001**

**OR**
| **o** | **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 0-27280**

**META Group, Inc.**(Exact name of registrant as specified inits charter)

| **Delaware**                     |   | **06-0971675**                     |
|----------------------------------|--------|------------------------------------|
|                                  |   |                                    |
| (State or other jurisdiction  of |   | (IRS Employer  Identification No.) |
| incorporation or  organization)  |   |                               |

 

| **208  Harbor Drive, Stamford, Connecticut   06912-0061** |
|----------------------------------------------------------------|
|                                                                |
| (Address of principal  executive offices, including Zip Code)  |
|                                                           |
| **(203)  973-6700**                                            |
|                                                                |
| (Registrant’s  telephone number, including area code)     |
|                                                           |

----

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

             Yes       ý                       No        o

Indicate the number of shares outstandingof each of the issuer’s classes of common stock, as of the latest practicabledate: The number of shares of the issuer’s Common Stock, $.01 par value pershare, outstanding as of August 1, 2001 was 12,829,922.

----

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**META Group, Inc.**

**INDEX**

| **Part I**    | **FINANCIAL  INFORMATION**                                                                         |                                                                                        |
|---------------|----------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|          |                                                                                               |                                                                                        |
|          | Item 1.                                                                                            | Financial  Statements                                                                       |   |
|          |                                                                                               |                                                                                        |
|          | Consolidated Balance  Sheets:  June 30, 2001 (unaudited) and December 31, 2000                     |                                                                                        |
|          |                                                                                               |                                                                                        |
|          | Consolidated  Statements of Income (unaudited):  Three and six months ended June 30, 2001 and 2000 |                                                                                        |
|          |                                                                                               |                                                                                        |
|          | Consolidated  Statements of Cash Flows (unaudited):  Six months ended June 30, 2001 and 2000       |                                                                                        |
|          |                                                                                               |                                                                                        |
|          | Notes to  Consolidated Financial Statements (unaudited):                                           |                                                                                        |
|          |                                                                                               |                                                                                        |
|          | Item  2.                                                                                           | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
|          |                                                                                               |                                                                                        |
|          | Item  3.                                                                                           | Quantitative  and Qualitative Disclosures About Market Risk                                 |   |
|          |                                                                                               |                                                                                        |
| **Part II**   | **OTHER INFORMATION**                                                                              |                                                                                        |
|          |                                                                                               |                                                                                        |
|          | Item 1.                                                                                            | Legal Proceedings                                                                           |   |
|          |                                                                                               |                                                                                        |
|          | Item  2.                                                                                           | Changes  in Securities and Use of Proceeds                                                  |   |
|          |                                                                                               |                                                                                        |
|          | Item  4.                                                                                           | Submission  of Matters to a Vote of Security Holders                                        |   |
|          |                                                                                               |                                                                                        |
|          | Item 6.                                                                                            | Exhibits  and Reports on Form 8-K                                                           |   |
|          |                                                                                               |                                                                                        |
| **Signature** |                                                                                               |

**PART I - FINANCIAL INFORMATION**

             **Item 1.****FinancialStatements**

**META Group, Inc.**

**CONSOLIDATED BALANCE SHEETS****(in thousands)**

|                                           | **June  30,**                                                                                        |   | **December  31,** |   |
|------------------------------------------------|------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                           | **2001**                                                                                             |   | **2000**          |   |
|                                           | ****                                                                                                 |   | ****              |   |
|                                           | (unaudited)                                                                                          |   |              |   |
|                                           |                                                                                                 |   |              |   |
| **Assets**                                     |                                                                                                 |   |              |   |
| Current assets:                                |                                                                                                 |   |              |   |
|                                           | Cash and cash  equivalents                                                                           | $      | 20,382            |   | $ | 3,622 |   |
|                                           | Accounts receivable,  net                                                                            | 42,116 |              | 57,825 |   |
|                                           | Deferred commissions                                                                                 | 5,020  |              | 3,428  |   |
|                                           | Deferred tax asset                                                                                   | 4,444  |              | 5,806  |   |
|                                           | Other current assets                                                                                 | 2,262  |              | 3,555  |   |
|                                           |                                                                                                      |   |                   |   |
|                                           | Total current assets                                                                                 | 74,224 |              | 74,236 |   |
|                                           |                                                                                                 |   |              |   |
| Marketable securities                          | 6,794                                                                                                |   | 6,719             |   |
| Non-current portion of  accounts receivable    | 1,910                                                                                                |   | 4,444             |   |
| Furniture and  equipment, net                  | 13,682                                                                                               |   | 14,712            |   |
| Deferred tax asset                             | 5,310                                                                                                |   | 3,733             |   |
| Goodwill and other  intangibles, net           | 25,776                                                                                               |   | 23,532            |   |
| Investments and  advances                      | 17,857                                                                                               |   | 18,818            |   |
| Other assets                                   | 6,047                                                                                                |   | 6,269             |   |
|                                           |                                                                                                      |   |                   |   |
|                                           | Total assets                                                                                         | $      | 151,600           |   | $ | 152,463 |   |
|                                           |                                                                                                      |   |                   |   |
|                                           |                                                                                                 |   |              |   |
| **Liabilities and Stockholders’  Equity** |                                                                                                 |   |              |   |
| Current liabilities:                           |                                                                                                 |   |              |   |
|                                           | Accounts payable                                                                                     | $      | 1,391             |   | $ | 4,856 |   |
|                                           | Deferred revenues                                                                                    | 44,645 |              | 44,087 |   |
|                                           | Bank note payable                                                                                    | 21,900 |              | 20,900 |   |
|                                           | Accrued compensation                                                                                 | 3,868  |              | 6,086  |   |
|                                           | Accrued liabilities                                                                                  | 3,265  |              | 3,849  |   |
|                                           | Income taxes payable                                                                                 | 203    |              | 176    |   |
|                                           | Other current liabilities                                                                            | 1,028  |              | 463    |   |
|                                           |                                                                                                      |   |                   |   |
|                                           | Total current  liabilities                                                                           | 76,300 |              | 80,417 |   |
| Non-current portion of  deferred revenues      | 5,477                                                                                                |   | 6,338             |   |
|                                           |                                                                                                      |   |                   |   |
|                                           | Total liabilities                                                                                    | 81,777 |              | 86,755 |   |
|                                           |                                                                                                 |   |              |   |
| Stockholders’ equity:                     |                                                                                                 |   |              |   |
|                                           | Preferred stock, $.01  par value, authorized 2,000,000 shares, none issued                           | – |              | – |   |
|                                           | Common stock, $.01 par  value, authorized 45,000,000 shares, issued 13,476,938 and 11,619,025 shares | 135    |              | 116    |   |
|                                           | Paid-in capital                                                                                      | 57,932 |              | 52,874 |   |
|                                           | Retained earnings                                                                                    | 12,276 |              | 13,198 |   |
|                                           | Accumulated other  comprehensive loss                                                                | (200   | )                 | (160   | ) |
|                                           | Treasury stock, at  cost                                                                             | (320   | )                 | (320   | ) |
|                                           |                                                                                                      |   |                   |   |
|                                           | Total stockholders’  equity                                                                     | 69,823 |              | 65,708 |   |
|                                           |                                                                                                      |   |                   |   |
|                                           | Total liabilities and  stockholders’ equity                                                     | $      | 151,600           |   | $ | 152,463 |   |
|                                           |                                                                                                      |   |                   |   |
|                                                |                                                                                                      |        |                   |        |  |  |  |  |

Seenotes to consolidated financial statements.

**META Group, Inc.**

**CONSOLIDATED STATEMENTS OF INCOME****(in thousands, except per share data)**(unaudited)

|                                                                      | **For  the three months ended**                                  |   | **For  the six months ended** |   |
|---------------------------------------------------------------------------|------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                      | **June 30,**                                                     |   | **June 30,**                  |   |
|                                                                      | ****                                                             |   | ****                          |   |
|                                                                      | **2001**                                                         |   | **2000**                      |   | **2001** |   | **2000** |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      |                                                             |   |                          |   |   |   |   |   |
| Revenues:                                                                 |                                                             |   |                          |   |   |   |   |   |
|                                                                      | Research and advisory  services                                  | $      | 21,956                        |   | $ | 22,947 |   | $ | 45,071 |   | $ | 43,652 |   |
|                                                                      | Strategic consulting                                             | 7,452  |                          | 7,272  |   | 12,431 |   | 12,022 |   |
|                                                                      | Published research  products                                     | 1,317  |                          | 1,889  |   | 2,665 |   | 3,579 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      |                                                             |   |                          |   |   |   |   |   |
|                                                                      | Total revenues                                                   | 30,725 |                          | 32,108 |   | 60,167 |   | 59,253 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
| Operating expenses:                                                       |                                                             |   |                          |   |   |   |   |   |
|                                                                      | Cost of services and fulfillment                                 | 15,671 |                          | 15,849 |   | 31,987 |   | 29,826 |   |
|                                                                      | Selling and marketing                                            | 9,343  |                          | 8,011  |   | 20,329 |   | 15,712 |   |
|                                                                      | General and  administrative                                      | 4,002  |                          | 2,671  |   | 7,089 |   | 5,122 |   |
|                                                                      | Depreciation and  amortization                                   | 1,974  |                          | 1,069  |   | 3,807 |   | 1,774 |   |
|                                                                      | Restructuring charge                                             | 359    |                          |   |   | 359 |   |   |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      |                                                             |   |                          |   |   |   |   |   |
|                                                                      | Total operating  expenses                                        | 31,349 |                          | 27,600 |   | 63,571 |   | 52,434 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      |                                                             |   |                          |   |   |   |   |   |
| Operating (loss)  income                                                  | (624                                                             | )      | 4,508                         |   | (3,404 | ) | 6,819 |   |
| Other income  (expense), net                                              | (128                                                             | )      | 277                           |   | 2,232 |   | 632 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      |                                                             |   |                          |   |   |   |   |   |
| Income (loss) before  provision (benefit) for income taxes                | (752                                                             | )      | 4,785                         |   | (1,172 | ) | 7,451 |   |
| Provision (benefit)  for income taxes                                     | (103                                                             | )      | 1,969                         |   | (250 | ) | 3,053 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
| Income (loss) before  cumulative effect of change in accounting principle | (649                                                             | )      | 2,816                         |   | (922 | ) | 4,398 |   |
| Cumulative effect of  change in accounting principle                      |                                                             |   |                          |   |   |   | (2,438 | ) |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
| Net (loss) income                                                         | $                                                                | (649   | )                             | $      | 2,816 |   | $ | (922 | ) | $ | 1,960 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      |                                                             |   |                          |   |   |   |   |   |
| Amounts per basic  common share:                                          |                                                             |   |                          |   |   |   |   |   |
|                                                                      | Income (loss) before  cumulative effect of change in accounting: | $      | (.06                          | )      | $ | .26 |   | $ | (.08 | ) | $ | .41 |   |
|                                                                      | Cumulative effect of  change in accounting:                      |   |                          |   |   |   |   | $ | (.23 | ) |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      | Net (loss) income                                                | $      | (.06                          | )      | $ | .26 |   | $ | (.08 | ) | $ | .18 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      |                                                             |   |                          |   |   |   |   |   |
| Amounts per diluted  common share:                                        |                                                             |   |                          |   |   |   |   |   |
|                                                                      | Income before  cumulative effect of change in accounting:        | $      | (.06                          | )      | $ | .24 |   | $ | (.08 | ) | $ | .37 |   |
|                                                                      | Cumulative effect of  change in accounting:                      |   |                          |   |   |   |   | $ | (.20 | ) |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      | Net (loss) income                                                | $      | (.06                          | )      | $ | .24 |   | $ | (.08 | ) | $ | .17 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                      |                                                             |   |                          |   |   |   |   |   |
| Weighted average  number of basic common shares outstanding               | 11,099                                                           |   | 10,738                        |   | 11,069 |   | 10,666 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
| Weighted average  number of diluted common shares outstanding             | 11,099                                                           |   | 11,832                        |   | 11,069 |   | 11,923 |   |
|                                                                      |                                                                  |   |                               |   |  |   |  |   |
|                                                                           |                                                                  |        |                               |        |  |  |  |  |  |  |  |  |  |  |

Seenotes to consolidated financial statements.

 

**META Group, Inc.**

**CONSOLIDATED STATEMENTS OF CASHFLOWS****(in thousands)**(unaudited)

|                                                                                                 | **For  the six months ended**                             |          |
|------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|---------------|
|                                                                                                 | **June  30,**                                             |          |
|                                                                                                 | ****                                                      |          |
|                                                                                                 | **2001**                                                  |          | **2000** |   |
|                                                                                                 | ****                                                      |          | **** |   |
|                                                                                                 |                                                      |          |   |   |
| **Operating activities:**                                                                            |                                                      |          |   |   |
| Net (loss) income                                                                                    | $                                                         | (922          | ) | $ | 1,960 |   |
| Adjustments to  reconcile net (loss) income to net cash provided by (used in) operating  activities: |                                                      |     |   |   |
|                                                                                                 | Cumulative effect of change  in accounting                |          |   | 2,438 |   |
|                                                                                                 | Depreciation and  amortization                            | 3,807         |   | 1,774 |   |
|                                                                                                 | Provision for doubtful  accounts                          |          |   | 200 |   |
|                                                                                                 | Gain on sale of  investment                               | (2,563        | ) | – |   |
|                                                                                                 | Deferred income taxes                                     | (250          | ) |   |   |
|                                                                                                 | Other non-cash charges                                    | 266           |   | 136 |   |
|                                                                                                 | Changes in assets and  liabilities:                       |          |   |   |   |
|                                                                                                 | Accounts receivable                                       | 13,256        |   | (7,279 | ) |
|                                                                                                 | Deferred commissions                                      | (1,592        | ) | (1,024 | ) |
|                                                                                                 | Other current assets                                      | 1,295         |   | (3,923 | ) |
|                                                                                                 | Other assets                                              | 4,485         |   | (1,037 | ) |
|                                                                                                 | Accounts payable                                          | (3,465        | ) | 361 |   |
|                                                                                                 | Accrued expenses and  other current liabilities           | (1,851        | ) | (4,655 | ) |
|                                                                                                 | Deferred revenues                                         | (855          | ) | (793 | ) |
|                                                                                                 |                                                           |          |  |   |
| Net cash provided by  (used in) operating activities                                                 | 11,611                                                    |          | (11,842 | ) |
|                                                                                                 |                                                           |          |  |   |
|                                                                                                 |                                                      |          |   |   |
| **Investing activities:**                                                                            |                                                      |          |   |   |
|                                                                                                 | Capital expenditures                                      | (1,446        | ) | (5,251 | ) |
|                                                                                                 | Payments for  acquisitions                                | (2,573        | ) | (847 | ) |
|                                                                                                 | Proceeds from sale of  investment                         | 2,940         |   | – |   |
|                                                                                                 | Investments and  advances                                 | 400           |   | (250 | ) |
|                                                                                                 |                                                           |          |  |   |
| Net cash used in  investing activities                                                               | (679                                                      | )             | (6,348 | ) |
|                                                                                                 |                                                           |          |  |   |
|                                                                                                 |                                                      |          |   |   |
| **Financing activities:**                                                                            |                                                      |          |   |   |
|                                                                                                 | Proceeds from exercise  of stock options                  | 7             |   | 3,755 |   |
|                                                                                                 | Proceeds from employee  stock purchase plan               | 164           |   | 679 |   |
|                                                                                                 | Proceeds from line of  credit                             | 1,000         |   | 5,100 |   |
|                                                                                                 | Private placement of  common stock, net of offering costs | 4,603         |   | – |   |
|                                                                                                 | Reacquisition of  shares – current stockholder       | –        |   | (661 | ) |
|                                                                                                 |                                                           |          |  |   |
| Net cash provided by  financing activities                                                           | 5,774                                                     |          | 8,873 |   |
|                                                                                                 |                                                           |          |  |   |
| Effect of exchange  rate changes on cash                                                             | 54                                                        |          |   |   |
|                                                                                                 |                                                           |          |   |   |
| Net increase  (decrease) in cash and cash equivalents                                                | 16,760                                                    |          | (9,317 | ) |
| Cash and cash  equivalents, beginning of period                                                      | 3,622                                                     |          | 10,106 |   |
|                                                                                                 |                                                           |          |  |   |
| Cash and cash  equivalents, end of period                                                            | $                                                         | 20,382        |   | $ | 789 |   |
|                                                                                                 |                                                           |          |  |   |
|                                                                                                      |                                                           |               |  |  |  |  |  |  |

Seenotes to consolidated financial statements.

**META Group, Inc.**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS****(UNAUDITED)**

**Note 1 - Interim FinancialStatements**

             The accompanying unaudited interimfinancial statements have been prepared in accordance with generally acceptedaccounting principles for interim financial information and pursuant to therules and regulations of the Securities and Exchange Commission for reportingon Form 10-Q. Accordingly, certain information and footnote disclosuresrequired for complete financial statements are not included herein. It isrecommended that these financial statements be read in conjunction with thefinancial statements and related notes of META Group, Inc. (the “Company”) asreported in the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2000. In the opinion of management, all adjustments (consisting ofnormal recurring adjustments) considered necessary for a fair presentation offinancial position, results of operations and cash flows at the dates and forthe periods presented have been included. Results for interim periods are notnecessarily indicative of results for the entire year.

**Note 2 – Change in Accounting**

             Inthe fourth quarter of 2000, the Company adopted the provisions of StaffAccounting Bulletin No. 101 “Revenue Recognition in Financial Statements” (“SAB101”). The Company identified certain newer Advisory Services product offeringscontaining multiple service elements where revenue was recognized as theservices were performed. The Company elected to record these multiple elementcontracts on the straight-line method over the contract term, consistent withthe treatment of the Company’s other traditional Advisory Services productofferings because it is the Company’s belief that the straight-line method ismost appropriate given the increased sales volumes and the varying usagepatterns by customers of the underlying services. As required by SAB 101, theCompany retroactively adopted the provisions effective January 1, 2000;accordingly, the results of operations for the three and six months ended June30, 2000 have been restated from the previously reported amounts.

**Note 3 - Income Taxes**

             During the quarter and six monthsended June 30, 2001, the Company recorded a tax benefit of $102,000 and$250,000, respectively, reflecting an effective tax rate of 13.6% and 21.34%,respectively.  The Company has recordeda full valuation allowance for the net operating loss carry-forwards generatedby its wholly-owned subsidiaries in Canada, Australia and Singapore due to theuncertainty of realizing the loss carry-forwards due to the start-up nature ofthe organizations.

**Note 4 – Marketable Securities**

Marketable securities at June 30, 2001and December 31, 2000 include the following (in thousands):

|                                          | **June  30, 2001**     |   |
|-----------------------------------------------|------------------------|--------|
|                                          | ****                   |   |
|                                          |                   |   | **Gross** |   |   |   |
|                                          |                   |   | **Unrealized** |   |   |   |
|                                          |                   |   | **Holding** |   |   |   |
|                                          | **Cost**               |   | **Gains  (Losses)** |   | **Fair  Value** |   |
|                                          | ****                   |   | **** |   | **** |   |
|                                          |                   |   |   |   |   |   |
| U.S. government issued  mortgage backed bonds | $                      | 6,996  |   | $ | (202 | ) | $ | 6,794 |   |
|                                          |                        |   |  |   |  |   |
|                                          |                   |   |   |   |   |   |
|                                          |                   |   |   |   |   |   |
|                                          | **December  31, 2000** |   |
|                                          | ****                   |   |
|                                          |                   |   |   |   |   |   |
| U.S. government issued  mortgage backed bonds | $                      | 6,996  |   | $ | (277 | ) | $ | 6,719 |   |
|                                          |                        |   |  |   |  |   |

The contractual maturities of marketablesecurities at June 30, 2001 are as follows (in thousands):

|                                       | **June  30, 2001** |   |
|--------------------------------------------|--------------------|--------|
|                                       | ****               |   |
|                                       | **Cost**           |   | **Fair  Value** |   |
|                                       |                    |   |  |   |
| Due after one year  through thirteen years | $                  | 6,996  |   | $ | 6,794 |   |
|                                       |                    |   |  |   |
|                                            |                    |        |  |  |  |  |

Actual maturities may differ fromcontractual maturities because the borrower has the right to call theobligations.

**Note 5 – Comprehensive Income**

             Totalcomprehensive income for the three and six months ended June 30, 2001 and 2000was as follows (in thousands):

|                                             | **Three  months ended June 30,** |   | **Six  months ended June 30,** |   |
|--------------------------------------------------|----------------------------------|--------|--------------------------------|--------|
|                                             | **2001**                         |   | **2000**                       |   | **2001** |   | **2000** |   |
|                                             |                                  |   |                                |   |  |   |  |   |
|                                             |                             |   |                           |   |   |   |   |   |
| Net (loss) income                                | $                                | (649   | )                              | $      | 2,816 |   | $ | (922 | ) | $ | 1,960 |   |
| Other comprehensive  (loss) income, net of tax:  |                             |   |                           |   |   |   |   |   |
| Foreign currency  translation adjustment         | 341                              |   | –                         |   | (85 | ) |   |   |
| Unrealized gain (loss)  on marketable securities | (51                              | )      | –                         |   | 45 |   | 41 |   |
|                                             |                                  |   |                                |   |  |   |  |   |
| Comprehensive (loss)  income                     | $                                | (359   | )                              | $      | 2,816 |   | $ | (962 | ) | $ | 2,001 |   |
|                                             |                                  |   |                                |   |  |   |  |   |

**Note 6 – Segment Reporting**

             TheCompany operates in three business segments: Research and Advisory Services,Strategic Consulting and Published Research Products.  The Company’s reportable segments are separately managedstrategic business segments.  Eachoperating segment offers different products/services, and suchproducts/services are sold via different distribution channels.  The Company’s interim segment informationdisclosures are presented consistent with the way management operates itsbusiness.  Revenue and operating incomeinformation for the three operating segments is set forth below (in thousands):

|                                  | **Research  and  Advisory  Services** |    | **Strategic  Consulting** |   | **Published  Research  Products** |   | **Consolidated  Total** |    |
|---------------------------------------|---------------------------------------|---------|---------------------------|--------|-----------------------------------|--------|-------------------------|---------|
|                                  | ****                                  |    | ****                      |   | ****                              |   | ****                    |    |
|                                  |                                  |    |                      |   |                              |   |                    |    |
| **Three months ended June 30,  2001** |                                  |    |                      |   |                              |   |                    |    |
|                                  |                                  |    |                      |   |                              |   |                    |    |
| Revenues                              | $                                     | 21,956  |                      | $      | 7,452                             |   | $                       | 1,317   |   | $ | 30,725 |   |
| Operating income                      | 529                                   |    | 370                       |   | (1,523                            | )      | (624                    | )  |
|                                  |                                  |    |                      |   |                              |   |                    |    |
| **Three months ended June 30,  2000** |                                  |    |                      |   |                              |   |                    |    |
|                                  |                                  |    |                      |   |                              |   |                    |    |
| Revenues                              | $                                     | 22,947  |                      | $      | 7,272                             |   | $                       | 1,889   |   | $ | 32,108 |   |
| Operating income                      | 3,410                                 |    | 1,454                     |   | (356                              | )      | 4,508                   |    |
|                                  |                                  |    |                      |   |                              |   |                    |    |
| **Six months ended June 30,  2001**   |                                  |    |                      |   |                              |   |                    |    |
|                                  |                                  |    |                      |   |                              |   |                    |    |
| Revenues                              | $                                     | 45,071  |                      | $      | 12,431                            |   | $                       | 2,665   |   | $ | 60,167 |   |
| Operating income                      | (1,376                                | )  | 128                       |   | (2,156                            | )      | (3,404                  | )  |
|                                  |                                  |    |                      |   |                              |   |                    |    |
| **Six Months ended June 30,  2000**   |                                  |    |                      |   |                              |   |                    |    |
|                                  |                                  |    |                      |   |                              |   |                    |    |
| Revenues                              | $                                     | 43,652  |                      | $      | 12,022                            |   | $                       | 3,579   |   | $ | 59,253 |   |
| Operating income                      | 6,418                                 |    | 843                       |   | (442                              | )      | 6,819                   |    |

**Note 7 – Acquisitions**

             In January 2001, the Companyacquired substantially all of the assets of two of its Asia Pacificdistributors, one based in Sydney, Australia (“META Group Australia”), and theother headquartered in Singapore (“META Group Singapore”). With these acquisitions,the distributors became wholly owned subsidiaries of META Group, Inc. The totalpurchase price amounted to approximately $2.9 million, consisting of cash inthe amount of $1.9 million, the forgiveness of accounts receivable from thedistributor of $470,000, and the assumption of certain liabilities. Theacquisition was accounted for under the purchase method.  Accordingly, the purchase price has beenallocated to the assets acquired and the liabilities assumed, based onestimated fair values at the date of acquisition.  Such preliminary allocation resulted in goodwill of $1.6 million,which is being amortized over 20 years.

             Duringthe six months ended June 30, 2001, the Company paid $500,000 and issued$250,000 in common stock (57,084 shares) for contingent consideration to RubinSystems, Inc. (“RSI”), as a result of the achievement of certain financialtargets in connection with the acquisitition of substantially all of the assetsof RSI in October 2000.  In the eventcertain future financial targets are met, additional contingent considerationof $3.75 million payable in cash and $1.875 million payable in stock may bepaid through March 2004. In the event the aggregate number of shares issued insatisfaction of additional contingent consideration exceeds 349,526 shares, theremaining consideration will be payable in cash.  The additional consideration was allocated to intangible assets,which are amortized over a period of four to seven years. RSI is wholly ownedby Dr. Howard Rubin, a director and officer of the Company.

**Note 8 – Line of Credit**

             InSeptember 2000, the Company entered into a $25 million one-year seniorrevolving credit facility (the “Facility”) with its bank, which upon expirationwould convert into a five-year term loan payable in 60 consecutive monthlyinstallments. Pursuant to the terms of the Facility before the amendmentdescribed below, interest was payable at the rate of (i) LIBOR plus 1.75% or(ii) the higher of the Prime Rate or the Federal Funds Rate plus 0.5%. TheFacility is collateralized by the Company’s marketable securities and accountsreceivable. As of June 30, 2001, the total outstanding amount under theFacility was $23.05 million, consisting of $21.9 million in borrowings and$1.15 million in letters of credit issued on behalf of certain of the Company’sindependent sales representative organizations and as security for theCompany’s Stamford, CT premises lease. The Facility requires payment of acommitment fee payable quarterly, in arrears, of 0.25% based on the average,daily, unused portion. The Facility contains a number of covenants that, amongother things, restrict the ability of the Company to incur additionalindebtedness, pay dividends or other distributions, dispose of certain assets,enter into sale and leaseback transactions, create liens, make certaininvestments, acquisitions or mergers, and that otherwise restrict corporateactivities.  In addition, the Company isrequired to maintain certain financial covenants, including, but not limitedto, a leverage ratio covenant, a fixed charge ratio covenant and a minimumEBITDA covenant. On March 30, 2001 the Company entered into an amendment to theFacility, which among other things, waived prior covenant defaults, resetcovenants, and increased the interest rate by 25 basis points to LIBOR plus2.0%. Pursuant to the amended Facility, the only covenant subject to testing in2001 is the minimum EBITDA covenant. During the six months ended June 30, 2001,the Company paid $686,000 in interest expense.

**Note 9 – Private Placement of the Company’s Common Stock**

             InJune 2001 the Company completed a private placement of its common stock wherebythe Company issued 1,726,617 shares of its common stock for $2.78 per share to Dale Kutnick, the Company’s Chairman of theBoard, Chief Executive Officer and Co-Research Director, and additionalpurchasers affiliated with Francis J. Saldutti, Harry Gruner and GeorgeMcNamee, each of whom is a member of the Company’s Board of Directors (the“Board”). The Board approved thetransaction after receiving the favorable recommendation of a Special Committeeof the Board consisting of three disinterested Board members. The SpecialCommittee retained BNY Capital Markets, Inc. as its financial advisor to rendera fairness opinion on the transaction. Total proceeds to the Companywere $4,603,000, net of offering costs of approximately $197,000. The common stock offered in the private placementhas not been registered with the Securities and Exchange Commission and may notbe offered or sold in the United States absent registration or an applicableexemption from registration requirements. The Company has agreed, however, tofile a registration statement with the Securities and Exchange Commission toregister the shares issued (other than those issued to Mr. Kutnick) uponrequest, such registration to be effective no earlier than December 31, 2001.

**Note 10 – Restructuring**

             InApril 2001, the Company announced a restructuring whereby it reduced itsworkforce by 100, or 15% in the quarter ended June 30, 2001. In addition, theCompany’s president and the Company’s co-research director and president andchief executive officer of metagroup.com resigned. As a result of therestructuring, the Company incurred a $359,000 restructuring charge during thequarter ended June 30, 2001 for severance payments made during the quarterended June 30, 2001.

**Note 11 – Sale of Limited Partnership Interest**

             InJune 2001, the Company sold its limited partnership interest in the JMI EquitySide Fund, L.P. (the “Fund”) to affiliates of the Fund and an unrelated thirdparty for total proceeds of $3.15 million. Distributions from the Fund inexcess of a return of capital and the Company’s cost of capital were intendedto fund payouts under the Company’s META Group/JMI Long-Term Incentive Plan forits key employees. Prior to the Company's sale of its interest in the Fund,each participant in the META Group/JMI Long-Term Incentive Plan waived his orher rights to receive such payouts in consideration for stock options granted bythe Company.  The Company recorded aloss on the sale of $26,000. Mr. Harry Gruner, a director of the Company, is amanaging member of JMI Side Associates, L.L.C, the general partner of the Fund,is affiliated with certain of the other purchasers, and purchased approximatelythree percent of the limited partnership interests sold by the Company.

**Note 12 – Sale of Investment**

             InMarch 2001, the Company closed on the sale of its investment in IntermediaGroup.  Cash proceeds were $2.94million.  The Company recognized a gainon the sale of $2.56 million.

**Note 13 – Recent Accounting Pronouncements**

             EffectiveJanuary 1, 2001, the Company adopted Statement of Financial AccountingStandards No. 133 (“SFAS 133”), “Accounting for Derivative Instruments andHedging Activities.” SFAS 133, as amended, establishes accounting and reportingstandards for derivative instruments, including certain derivative instrumentsembedded in other contracts and for hedging activities. Under SFAS 133, certaincontracts that were not formerly considered derivatives may now meet thedefinition of a derivative. The adoption of SFAS 133 did not have an impact onthe consolidated financial position, results of operations, or cash flows ofthe Company.

             InJuly 2001, Statement of Financial AccountingStandards No. 141 (“SFAS 141”) "Business Combinations" and Statement of Financial Accounting Standards No.142 (“SFAS 142”) "Goodwill and Other Intangible Assets" werereleased. The related statements address financial accounting and reporting forbusiness combinations and acquired goodwill and other intangible assets. SFASNo. 141 is effective for all business combinations initiated after June 30,2001. SFAS No. 142 is effective for all fiscal years beginning after December15, 2001, however early adoption is permitted. As required by SFAS 142, theCompany will perform an impairment test on goodwill and other intangible assetsas of the adoption date. Thereafter, the Company will perform impairment testsannually and whenever events or circumstances occur indicating that goodwill orother intangible assets might be impaired. Amortization of goodwill and certainother intangible assets, including those recorded in past businesscombinations, will cease. The Company is required to adopt SFAS 142 in fiscal2002. The Company is currently assessing the impact that SFAS No. 142 will haveon its financial position and results of operations.

| **Item  2.**                             | **MANAGEMENT’S DISCUSSION AND  ANALYSIS OF FINANCIAL** |
|------------------------------------------|-------------------------------------------------------------|
| **CONDITION  AND RESULTS OF OPERATIONS** |

*The discussion and analysis below contains trend analysisand other forward-looking statements. Actual results could differ materiallyfrom those projected in the forward-looking statements as a result of the riskfactors set forth below under “Certain Factors That May Affect Future Results”and in the Company’s other filings with the Securities and Exchange Commission,principally the Company’s Annual Report on Form   10-K for the year ended December 31, 2000.*

**Overview**

             METAGroup, Inc. (“META Group”, together with its subsidiaries, The Sentry Group,Inc. [“Sentry”], 1422722 Ontario Inc. [“META Group Canada”], META GroupAustralia Holdings PTY Limited [“META Group Australia”], Cenntinum PTE Limited[“META Group Singapore”], and MG (Bermuda) Ltd. – collectively, the “Company”),is a leading independent research and consulting firm focusing on informationtechnology (“IT”) and business transformation strategies.  The Company’s goal is to deliver objective,consistent, and actionable guidance to enable organizations to innovate morerapidly and effectively.

             TheCompany has three operating business segments: Advisory Services, StrategicConsulting and Published Research Products. The Advisory Services segment provides annually renewable subscriptionservices (focused on specific areas of IT, IT issues related to a specificvertical market or the specific needs of those within the IT organization),service analyst briefing engagements and conferences.  Included in the Company’s Advisory Services are the Company’sInfusion programs, which build on the business-focused analysis of AdvisoryServices by offering tools, templates and interactive workshops that providemethodology and skill based training needed to successfully manage specificbusiness-critical issues. The Strategic Consulting segment provides strategicconsulting engagements addressing clients’ business and technologychallenges.  The Published ResearchProducts segment provides reports, studies, surveys and in-depth analysis of specificbusiness or IT issues.

             AdvisoryServices revenues constituted approximately 71% of the Company’s total revenuesfor the quarters ended June 30, 2001 and 2000, respectively.  Billings attributable to the Company’sAdvisory Services are initially recorded as deferred revenues and then recognizedpro rata over the contract term. Advisory Services revenues attributable tointernational clients are billed and collected by the Company’s independentsales representative organizations and its wholly-owned subsidiaries in Canada,Australia and Singapore. The Company realizes revenues from the internationalsales representative organizations at rates of 25% to 75% of amounts billed tothose clients.

             Onemeasure of the volume of the Company’s business is its annualized “ContractValue,” which the Company calculates as the aggregate annualized subscriptionrevenue recognized from all Advisory Services contracts in effect at a givenpoint in time, without regard to the remaining duration of such contracts.Contract Value was $87.8 million at June 30, 2001 versus $91.8 million at June30, 2000, a 4% decrease.

             Revenuesfrom Strategic Consulting engagements comprised approximately 24% and 23% ofthe Company’s total revenues for the quarters ended June 30, 2001 and 2000,respectively. The Company recognizes revenues on Strategic Consultingengagements as the work is performed. The majority of the Company’s Strategic Consulting clients consist ofAdvisory Services clients seeking additional advice tailored to their individualIT requirements.

             TheCompany’s operating expenses consist of cost of services and fulfillment,selling and marketing expenses and general and administrative expenses. Cost ofservices and fulfillment represents the costs associated with production anddelivery of the Company’s products and services and includes the costs ofresearch, development and preparation of periodic reports, analyst telephoneconsultations, executive briefings and conferences, published research,consulting services, new product development, and all associated editorial andsupport services. Selling and marketing expenses include the costs of salaries,commissions and related benefits for such personnel, travel and promotion.General and administrative expenses include the costs of the finance andaccounting departments, legal, human resources, corporate IT and otheradministrative functions of the Company.

             Inthe fourth quarter of 2000, the Company adopted the provisions of StaffAccounting Bulletin No. 101 “Revenue Recognition in Financial Statements” (“SAB101”). The Company identified certain newer Advisory Services product offeringscontaining multiple service elements where revenue was recognized as theservices were performed. The Company elected to record these multiple elementcontracts on the straight-line method over the contract term, consistent withthe treatment of the Company’s other traditional Advisory Services productofferings because it is the Company’s belief that the straight-line method ismost appropriate given the increased sales volumes and the varying usagepatterns by customers of the underlying services. As required by SAB 101, theCompany retroactively adopted the provisions effective January 1, 2000;accordingly, the results of operations for the quarter and six months endedJune 30, 2000 have been restated from the previously reported amounts.

**THREE MONTHS ENDED JUNE 30,2001 AND 2000**

REVENUES  Total revenues decreased 4% to $30.7 million in the quarterended June 30, 2001 from $32.1 millionin the quarter ended June 30, 2000.

Revenues from Advisory Services, whichgenerally are derived from annually renewable contracts payable by clients inadvance, decreased 4% to $21.9 million in the quarter ended June 30, 2001 from$22.9 million in the quarter ended June 30, 2000, and remained constant as apercentage of total revenues at 71%. The decrease in revenues from AdvisoryServices was due to an overall decrease in IT spending as a result of generaleconomic conditions that occurred across all of the Company’s AdvisoryServices.

Advisory Services revenues attributableto international clients increased 27% in the quarter ended June 30, 2001 fromthe quarter ended June 30, 2000 and increased as a percentage of AdvisoryServices revenue to 21% in the quarter ended June 30, 2001 from 16% in the quarterended June 30, 2000. Such increase in Advisory Services revenue attributable tointernational clients was due principally to incremental revenues as a resultof the acquisitions of META Group Canada, META Group Australia and META GroupSingapore, and were partially offset by a general slowdown in IT spendingexperienced internationally.

Strategic Consulting revenues, whichresult from strategic consulting engagements addressing clients’ business andtechnology issues, increased 2.5% to $7.5 million in the quarter ended June 30,2001 from $7.3 million in the quarter ended June 30, 2000, and increased as apercentage of total revenues to 24% in the quarter ended June 30, 2001 from 23%in the quarter ended June 30, 2000.  Theincrease was principally due to the increased demand for IT outsourcing and IToperations market consulting services which address the needs of companiesseeking IT cost savings, and incremental revenues from the acquisitions of METAGroup Canada, META Group Australia, META Group Singapore and Rubin Systems,Inc. These factors were partially offset by an overall decrease in IT spendingas a result of general economic conditions.

Published Research Products revenues,which result from the sale of publications offering in-depth analysis of singlebusiness or IT issues, decreased 30% to $1.3 million in the quarter ended June30, 2001 from $1.9 million in the quarter ended June 30, 2000, and decreased asa percentage of total revenues to 4% in the quarter ended June 30, 2001 from 6%in the quarter ended June 30, 2000.  Thedecrease was principally due to a change in the mix of products sold by theCompany’s inside sales channel (telephone professionals that sell the Company’sPublished Research Products) from selling only the Company’s traditionalpublication products to in addition selling bundled packages of products andservices that combine traditional publications with service analyst inquiry andselling Web-based subscription products that consist primarily of contentdeveloped by the Company’s Advisory Services personnel. Revenues from the salesof these bundled products and services and Web-based subscription products arerecognized as Advisory Services revenue.

COST OF SERVICES ANDFULFILLMENT  Cost of services and fulfillment decreased1% to $15.7 million in the quarter ended June 30, 2001 from $15.8 million inthe quarter ended June 30, 2000 and increased as a percentage of total revenuesto 51% in the quarter ended June 30, 2001 from 49% in the quarter ended June30, 2000. The decrease was principally due to a decrease in royalty payments tothird parties that produce content included in certain products and servicessold by the Company, and, to a lesser extent, due to a decrease in travel costsby the Company’s analysts and consultants. The decrease was partially offset byan increase in payroll and payroll related expenses (payroll taxes andbenefits) for analysts and fulfillment personnel as a result of the Company’sincrease in headcount during the second half of 2000 undertaken to support theCompany’s clients, and, to a lesser extent, from incremental costs as a resultof the acquisitions of META Group Canada, META Group Australia, META GroupSingapore and Rubin Systems, Inc.

SELLING AND MARKETINGEXPENSES  Selling and marketing expenses increased16.6% to $9.3 million in the quarter ended June 30, 2001 from $8.0 million inthe quarter ended June 30, 2000 and increased as a percentage of total revenuesto 30% in the quarter ended June 30, 2001 from 25% in the quarter ended June 30,2000. The increase in selling and marketing expenses was principally due toincreased commission expenses associated with increased commissions paid underthe Company’s sales commission plan for the plan year ended January 31, 2001.The increased commission payments were principally due to financial incentivescontained in the Company’s sales commission plan when it reorganized thepreviously separate sales forces in 2000. Because the Company amortizescommission payments over the subscription period in which the related AdvisoryServices revenues are amortized to income, the Company has experiencedincreased commission expense in the quarter ended June 30, 2001 when comparedto the quarter ended June 30, 2000. The Company has restructured its sales commissionplan for the plan year ending January 31, 2002 in an attempt to decreasecertain financial incentives and reduce total commissions paid. In addition,the Company incurred greater marketing expenses internationally in connectionwith the acquisition of META Group Canada, META Group Australia and META GroupSingapore and in connection with marketing support of its independent salesrepresentative organizations.

GENERAL ANDADMINISTRATIVE EXPENSES  General and administrative expensesincreased 49.8% to $4.0 million in the quarter ended June 30, 2001 from $2.7million in the quarter ended June 30, 2000 and increased as a percentage oftotal revenues to 13% in the quarter ended June 30, 2001 from 8% in the quarterended June 30, 2000. The increase in expenses was principally due toincremental costs associated with the acquisitions of META Group Canada, METAGroup Australia and META Group Singapore, and, to a lesser extent, as a resultof increased legal fees and increased employee benefit costs as a result ofbenefit provider rate increases assessed in the second half of 2000.

DEPRECIATION ANDAMORTIZATION  Depreciation and amortization expenseincreased 85% to $1.97 million in the quarter ended June 30, 2001 from $1.1million in the quarter ended June 30, 2000. The increase in depreciation andamortization expense was principally due to higher levels of property andequipment on hand during the quarter ended June 30, 2001 versus the same periodof 2000 and higher levels of goodwill and other intangible assets on handduring the same period due to the payment of contingent consideration andacquisitions consummated in 2000 and the six months ended June 30, 2001.

RESTRUCTURING CHARGE   As mentioned above, in April 2001, theCompany announced a restructuring whereby it reduced its workforce by 100 or15% in the quarter ended June 30, 2001. As a result of the restructuring, theCompany incurred a $359,000 restructuring charge during the quarter ended June30, 2001 for severance payments made during the quarter ended June 30, 2001.There were no restructuring charges in 2000. See Note 10 to the consolidatedfinancial statements.

OTHER INCOME  Other income decreased to $128,000 of otherexpense (net) in the quarter ended June 30, 2001 from $277,000 of other income(net) in the quarter ended June 30, 2000 due principally to an increase ininterest expense recorded on outstanding borrowings under the Company’s line ofcredit. See “Management’s Discussion and Analysis of Financial Condition andResults of Operations – Liquidity and Capital Resources” and Note 8 to theconsolidated financial statements.

PROVISION FOR INCOMETAXES  During the quarter ended June 30, 2001, theCompany recorded an income tax benefit of $103,000 reflecting an effective taxrate of 13.6%, compared to a provision for income taxes of $1.97 millionrecorded for the quarter ended June 30, 2000. The lower effective rate in 2001was principally due to the full valuation allowance recorded for the netoperating loss carry-forwards generated by its wholly-owned subsidiaries inCanada, Australia and Singapore due to the uncertainty of realizing the losscarry-forwards due to the start-up nature of the organizations.

**SIX MONTHS ENDED JUNE 30, 2001 AND 2000**

REVENUES  Total revenues increased 1.5% to $60.2 millionin the six months ended June 30, 2001 from $59.3 million in the six monthsended June 30, 2000.

Revenues from Advisory Services increased3.25% to $45.1 million in the sixmonths ended June 30, 2001 from $43.7 million in the six months endedJune 30, 2000. The increase in revenues from Advisory Services was principallydue to incremental revenues from the acquisitions of META Group Canada, METAGroup Australia and META Group Singapore, and, to a lesser extent, due to anincrease in domestic Advisory Service revenue as a result of increasedpenetration into the small and medium-sized enterprise market accomplished in2000 and the addition of the Company’s Web-based subscription products thatprimarily consist of content developed by the Company’s Advisory Servicespersonnel and sold by the Company’s inside sales force. Such increases werepartially offset by an overall decrease in IT spending as a result of generaleconomic conditions. Advisory Services revenues attributable to internationalclients increased 18% in the six months ended June 30, 2001 from the six monthsended June 30, 2000, and increased as a percentage of Research and AdvisoryServices revenues to17%from 15%.

Strategic Consulting revenues increased3% to $12.4 million in the six months ended June 30, 2001 from $12.0 million inthe six months ended June 30, 2000, and increased as a percentage of totalrevenues to 21% from 20%.  The increasewas primarily due to the growth of the Company’s core consulting business dueprincipally to the increased demand for IT outsourcing and IT operations marketconsulting services which address the needs of companies seeking IT costsavings, and incremental revenues from the acquisitions of META Group Canada,META Group Australia, META Group Singapore and Rubin Systems, Inc., and waspartially offset by a decrease in revenues from Internet security planning andoperations services (which are provided under the Company’s outsourcingagreement with META Secur e-Com Solutions). Additionally, Strategic Consultingrevenues were partially offset by a reduction in headcount in the Company’sStrategic Consulting practice that occurred in January 2001 due to an imbalancebetween the skill sets of the Company’s then available consulting staff andexisting consulting projects.

Published Research Products revenuesdecreased 25.5% to $2.7 million in the six months ended June 30, 2001 from $3.6million in the six months ended June 30, 2000 and decreased as a percentage oftotal revenues to 4% from 6%.  Thedecrease in revenues was principally due to the change in the mix of productssold by the Company’s inside sales channel from selling only the Company’straditional publication products to in addition selling bundled packages ofproducts and services that combine traditional publications with serviceanalyst inquiry and selling Web-based subscription products that consistprimarily of content developed by the Company’s Advisory Services personnel.Revenues from the sales of these bundled products and services and Web-basedsubscription products are recognized as Advisory Services revenue. In addition,revenues from the Company’s Published Research Products have decreased as aresult of a change in the spending patterns of the Company’s target clients asa result of the decrease in IT spending and general economic conditions.

COST OF SERVICES ANDFULFILLMENT  Cost of services and fulfillment increased7% to $32 million in the six months ended June 30, 2001 from $29.8 million inthe six months ended June 30, 2000 and increased as a percentage of totalrevenues to 34% from 27%.  The increasewas principally due to increased payroll and payroll related costs for analyst,consultant and fulfillment positions as a result of an increase in headcount insuch positions and, to a lesser extent, from incremental costs from theacquisitions of META Group Canada, META Group Australia and META GroupSingapore. Such increases were partially offset by decreases in royalties paidto third parties that produce content included in certain products and servicessold by the Company as well as decreases in travel costs incurred by theCompany’s analysts, consultants and fulfillment personnel.

SELLING AND MARKETINGEXPENSES  Selling and marketing expenses increased 29%to $20.3 million in the six months ended June 30, 2001 from $15.7 million inthe six months ended June 30, 2000 and increased as a percentage of totalrevenues to 34% from 27%. The increase in selling and marketing expenses wasdue principally to increased commission expenses associated with the expandeddomestic sales force that sells the Company’s Advisory Services and StrategicConsulting services and inside sales force that principally sells the Company’sPublished Research Products. In addition, the Company incurred greater marketingexpenses internationally in connection with the acquisitions of META GroupCanada, META Group Australia and META Group Singapore and in connection withmarketing support of its independent sales representative organizations. Theheadcount increases in selling and marketing were undertaken in 2000 inanticipation of higher revenue growth rates than the revenue growth ratesachieved in 2000. Consequently, in April 2001, the Company reduced itsworkforce by approximately 15% in order to better align its resources withmarket demand. While the Company’s headcount reductions occurred across theorganization, the majority of the headcount reduction occurred in selling andmarketing. As a result, the Company’s selling and marketing expenses in thequarter ended June 30, 2001, when compared to the first quarter of 2001,decreased. However, because the Company amortizes commission payments over thesubscription period in which the related Advisory Services revenues areamortized to income, the Company experienced increased commission expense in2001 when compared to 2000 in connection with the increased commissions paidunder the Company’s sales commission plan for the plan year ended January 31,2001. The increased payments were principally due to financial incentivescontained in the Company’s sales commission plan when it reorganized thepreviously separate sales forces in 2000. The Company has restructured itssales commission plan for the plan year ending January 31, 2002 in an attemptto decrease certain financial incentives and reduce total commissions paid.

GENERAL ANDADMINISTRATIVE EXPENSES  General and administrative expensesincreased 38% to $7.1 million in the six months ended June 30, 2001 from $5.1million in the six months ended June 30, 2000 and increased as a percentage oftotal revenue to 12% from 9%. The increase in expenses was principally due toincreased salary and benefit costs, facilities costs (consisting of rent,telephone and utilities), legal costs and incremental costs as a result of theacquisitions of META Group Canada, META Group Australia and META GroupSingapore.

DEPRECIATION ANDAMORTIZATION  Depreciation and amortization expenseincreased to $3.8 million in the six months ended June 30, 2001 from $1.8million in the six months ended June 30, 2000. The increase in depreciation andamortization expense was principally due to higher levels of property andequipment on hand during the six months ended June 30, 2001 versus the sameperiod of 2000 and higher levels of goodwill and other intangible assets onhand during the same period due to the payment of contingent consideration in2000 and acquisitions consummated during 2000 and the six months ended June 30,2001.

RESTRUCTURING CHARGE   As mentioned above, in April 2001, theCompany announced a restructuring whereby it reduced its workforce by 100 or15% in the quarter ended June 30, 2001. As a result of the restructuring, theCompany incurred a $359,000 restructuring charge during the quarter ended June30, 2001 for severance payments made during the quarter ended June 30, 2001.There were no restructuring charges in 2000. See Note 10 to the consolidatedfinancial statements.

OTHER INCOME  Other income increased to $2.2 million inthe six months ended June 30, 2001 from $0.6 million in the six months endedJune 30, 2000. The increase was principally due to a $2.6 million gainrecognized on the sale of its investment in Intermedia Group. Proceeds from thesale were $2.94 million. The gain was partially offset by interest expenserecorded on the Company’s outstanding borrowings under its line of credit. See“Management’s Discussion and Analysis of Financial Condition and Results ofOperations – Liquidity and Capital Resources” and Note 8 to the consolidatedfinancial statements.

PROVISION FOR INCOMETAXES  During the six months ended June 30, 2001,the Company recorded an income tax benefit of $250,000 versus a provision forincome taxes of $3.1 million for the six months ended June 30, 2000, reflectingan effective tax rate of 21% and 41%, respectively. The decrease in theeffective tax rate is due to the full valuation allowance recorded for the netoperating loss carry-forwards generated by its wholly-owned subsidiaries inCanada, Australia and Singapore due to the uncertainty of realizing the losscarry-forwards due to the start-up nature of the organizations.

LIQUIDITY AND CAPITALRESOURCES

             TheCompany funds its operations primarily through cash generated from operations,borrowings under its revolving credit facility, and, to a lesser extent, fromthe sale of its common stock. The Company generated $11.6 million of cash fromoperations during the six months ended June 30, 2001, compared to $11.8 millionused in operations during the same period of 2000. The increase in cashgenerated from operations was principally due to an increase in collections ofits outstanding accounts receivable and proceeds from the Company’s sale of itslimited partnership interest in the JMI Equity Side Fund, L.P., partiallyoffset by decreases in accounts payable, accrued expenses and other currentliabilities and an increase in deferred commissions.

             InJune 2001, the Company sold its limited partnership interest in the JMI EquitySide Fund, L.P. (the “Fund”) to affiliates of the Fund and an unrelated thirdparty for total proceeds of $3.15 million. Distributions from the Fund inexcess of a return of capital and the Company’s cost of capital were intendedto fund payouts under the Company’s META Group/JMI Long-Term Incentive Plan forits key employees. Prior to the Company's sale of its interest in the Fund,each participant in the META Group/JMI Long-Term Incentive Plan waived his orher rights to receive such payouts in consideration for stock options grantedby the Company. The Company recorded a loss on the sale of $26,000. Mr. HarryGruner, a director of the Company, is a managing member of JMI Side Associates,L.L.C, the general partner of the Fund, is affiliated with certain of the otherpurchasers, and purchased approximately three percent of the limitedpartnership interests sold by the Company.

             TheCompany used $1.4 million of cash in the six months ended June 30, 2001compared to $5.2 million in the same period of 2000 for the purchase offurniture, equipment, computers and related software for use by the Company’semployees. While the Company currently expects to continue to make additionalpurchases of equipment, the Company currently believes that such expenditureswill decrease significantly when compared to such expenditure levels in 2000.The Company has no material commitments for capital expenditures.

             InMarch 2001, the Company closed on the sale of its investment in IntermediaGroup.  Cash proceeds were $2.94million.  The Company recognized a gainon the sale of $2.56 million. In May 2001, the Company received approximately$440,000 in cash representing a repayment of a portion of the Company’sinvestment in a convertible promissory note of Syndicated Research Group, Inc.plus accrued interest thereon.

             InJanuary 2001, the Company completed the acquisition of substantially all of theassets of two of its Asia Pacific distributors, one based in Sydney, Australia(“META Group Australia”), and the other headquartered in Singapore (“META GroupSingapore”). With these acquisitions, the distributors became wholly ownedsubsidiaries of META Group, Inc. The total purchase price amounted toapproximately $2.9 million, consisting of cash in the amount of $1.9 million,the forgiveness of accounts receivable from the distributor of $470,000, andthe assumption of certain liabilities.

             Duringthe six months ended June 30, 2001, the Company paid $500,000 and issued$250,000 in stock (57,084 shares) for contingent consideration to RubinSystems, Inc. (“RSI”), as a result of the achievement of certain financialtargets in connection with the acquisition of substantially all of the assetsof RSI in October 2000.  In the eventcertain future financial targets are met, additional contingent considerationof $3.75 million payable in cash and $1.875 million payable in stock may bepaid through March 2004. In the event the aggregate number of shares issued insatisfaction of contingent consideration exceeds 349,526 shares, the remainingconsideration will be payable in cash. The additional consideration was allocated to intangible assets, whichare amortized over a period of four to seven years. RSI is wholly owned by Dr.Howard Rubin, a director and officer of the Company.

             InJune 2001 the Company completed a private placement of its common stock wherebythe Company issued 1,726,617 shares of its common stock for $2.78 per share to Dale Kutnick, the Company’s Chairman of theBoard, Chief Executive Officer and Co-Research Director, and additionalpurchasers affiliated with Francis J. Saldutti, Harry Gruner and GeorgeMcNamee, each of whom is a member of the Company’s Board of Directors (the“Board”). The Board approved thetransaction after receiving the favorable recommendation of a Special Committeeof the Board consisting of three disinterested Board members. The SpecialCommittee retained BNY Capital Markets, Inc. as its financial advisor to rendera fairness opinion on the transaction. Total proceeds to the Companywere $4,603,000, net of offering costs of approximately $197,000. The common stock offered in the private placementhas not been registered with the Securities and Exchange Commission and may notbe offered or sold in the United States absent registration or an applicableexemption from registration requirements. The Company has agreed, however, tofile a registration statement with the Securities and Exchange Commission toregister the shares issued (other than those issued to Mr. Kutnick) uponrequest, such registration to be effective no earlier than December 31, 2001

             Duringthe six months ended June 30, 2001 the Company received $1 million inborrowings under its line of credit and $171,000 in proceeds from the exerciseof stock options and its stock purchase plan compared to $4.4 million inproceeds from the exercise of stock options and its stock purchase plan in thesame period of last year.

             InSeptember 2000, the Company entered into a $25 million one-year seniorrevolving credit facility (the “Facility”) with its bank, which upon expirationwould convert into a five-year term loan payable in 60 consecutive monthlyinstallments. Pursuant to the terms of the Facility before the amendmentdescribed below, interest was payable at the rate of (i) LIBOR plus 1.75% or(ii) the higher of the Prime Rate or the Federal Funds Rate plus 0.5%. TheFacility is collateralized by the Company’s marketable securities and accountsreceivable. As of June 30, 2001, the total outstanding amount under theFacility was $23.05 million, consisting of $21.9 million in borrowings and$1.15 million in letters of credit issued on behalf of certain of the Company’sindependent sales representative organizations and as security for theCompany’s Stamford, CT premises lease. The Facility requires payment of acommitment fee payable quarterly, in arrears, of 0.25% based on the average,daily, unused portion. The Facility contains a number of covenants that, amongother things, restrict the ability of the Company to incur additionalindebtedness, pay dividends or other distributions, dispose of certain assets,enter into sale and leaseback transactions, create liens, make certaininvestments, acquisitions or mergers, and that otherwise restrict corporateactivities.  In addition, the Company isrequired to maintain certain financial covenants, including, but not limitedto, a leverage ratio covenant, a fixed charge ratio covenant and a minimumEBITDA covenant. On March 30, 2001, the Company entered into an amendment tothe Facility, which among other things, waived prior covenant defaults, resetcovenants, and increased the interest rate by 25 basis points to LIBOR plus2.0%. Pursuant to the amended Facility, the only covenant subject to testing in2001 is the minimum EBITDA covenant.

             Asof June 30, 2001, the Company had cash of $20.4 million, marketable securitiesof $6.8 million and negative working capital of $2.1 million. The increase incash and cash equivalents during the six months ended June 30, 2001 is dueprincipally to increased collections on its accounts receivable, proceeds fromthe private placement of its common stock, proceeds from the sale of itslimited partnership interest in the JMI Equity Side Fund, L.P. and cashreceived from the sale of the Company’s investment in Intermedia Group, offsetby increased commission payments and payments to fund its acquisitions. Integrationand implementation issues experienced during the Company’s ongoinginfrastructure upgrades contributed to the Company’s significant decrease incollections of outstanding accounts receivable during the year ended December31, 2000.  In the first half of 2001,the Company experienced some of the benefits of its ongoing attempts to remedyits collection challenges. The Company continues to address its collectionissues by, among other things, assigning management and sales personnelincreased responsibility in the overall collection effort.

             TheCompany experienced a net loss of $922,000 for the six months ended June 30,2001. In April 2001, the Company announced a restructuring in order to betteralign its resources with market demand. As part of its restructuring, theCompany reduced its workforce by 100, or 15%. In addition, the Company’spresident, Larry R. DeBoever, and the Company’s co-research director andpresident and chief executive officer of metagroup.com, Peter Burris, resigned.As a result, the Company anticipates an annual estimated cost savings ofapproximately $10 million, including approximately $8 million in payroll andrelated benefits savings. Such savings began to materialize in the second halfof the second quarter. The Company, however, recorded a one-time cash charge of$359,000 in the second quarter of 2001 for severance payments made during thequarter ended June 30, 2001. If the Company fails to achieve sufficient revenuegrowth, maintain operating expenses below revenue levels or fails to continueto improve collection of its accounts receivable then any such failure willlikely result in continued operating losses which would have a material adverseeffect on the Company’s financial results and condition.

             TheCompany believes that existing cash balances, anticipated cash flows fromoperations and borrowings under its credit facility will be sufficient to meetits working capital, capital expenditure and credit facility paymentrequirements for the next twelve months. However, the Company currentlybelieves that decreases in and delays of IT spending as a result of generaleconomic conditions are likely to continue to negatively impact its business.The Company will continue its efforts to improve its accounts receivable collections.In addition, in the second quarter of 2001, the Company adopted substantialcost-containment measures, including a 15% reduction in its workforce andaggressive management of discretionary expenditures. See "Certain FactorsThat May Affect Future Results" below.

**CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS**

             Fromtime to time, information provided by the Company or statements made by itsemployees may contain "forward-looking" information involving risksand uncertainties. In particular, statements contained in this Form 10-Q thatare not historical facts (including, but not limited to, statements concerninganticipated costs of selling and marketing expense levels, purchases ofequipment, anticipated capital expenditure levels, operating losses, estimatedcost savings and reductions, including the timing of the impact of such savingsand reductions, anticipated working capital and credit facility paymentrequirements, the collection of outstanding accounts receivable, changes in thespending patterns of the Company's target clients, including but not limited todecreases in and delays of IT spending and general economic conditions) constitute forward-looking statements andare made under the safe harbor provisions of the Private Securities LitigationReform Act of 1995. The Company’s actual results of operations and financialcondition have varied and may in the future vary significantly from thosestated in any forward-looking statements. Factors that may cause suchdifferences include, without limitation, the risks, uncertainties, and otherinformation discussed below, as well as the accuracy of the Company’s internalestimates of revenue and operation expense levels. Each of these factors, andothers, are discussed from time to time in the filings made by the Company withthe Securities and Exchange Commission.

             TheCompany’s future operating results are subject to substantial risks anduncertainties. The Company currently derives most of its revenues fromsubscriptions to its Research and Advisory Services.  The Company, however, derives a significant amount of revenuesfrom Strategic Consulting engagements. As a result, any decline in the Company’s ability to secure subscriptionrenewals or replace completed Strategic Consulting engagements with newengagements may have a material adverse effect on the Company’s results ofoperations. The Company’s ability to secure subscription renewals, at favorableaverage selling prices, as well as to successfully market and sell itsStrategic Consulting services and Published Research Products, is dependentupon the Company’s ability to deliver consistent, high-quality, and timelyanalysis and advice with respect to issues, developments, and trends thatclients view as important. The Company’s successful delivery of such analysisand advice is, in turn, dependent upon many factors, including, among otherthings, its ability to: understand and anticipate rapidly changing technologiesand market trends so as to keep its analysis focused on the changing needs of itsclients, deliver products and services of sufficiently high quality andtimeliness to withstand competition from competitors that may have greaterfinancial, information gathering, and marketing resources than the Company,recruit and retain highly talented professionals in a competitive job market,and match the skills and competencies of the Company’s Strategic Consultingstaff with the skills required for the fulfillment of existing or potentialStrategic Consulting engagements.  Theloss of any of the Company’s senior management personnel, including DaleKutnick (President, Chief Executive Officer and Co-Research Director), couldhave a material adverse effect on the Company. The Company’s ability to market and sell its products and services couldalso be adversely affected by the emergence of new competitors into one or moreof the market segments addressed by the Company’s products and services, whichcould cause pricing pressure and loss of market share. The Company’s pricingstrategy may limit the potential market for the Company’s Research and AdvisoryServices and Strategic Consulting engagements. As a result, the Company may be required to reduce prices for itsResearch and Advisory Services and Strategic Consulting engagements orintroduce new products with lower prices in order to expand or maintain itsmarket share.  In addition, asignificant portion of the Company’s revenues are attributable to internationalclients, which may be adversely affected by factors including difficulties indeveloping and managing relationships with independent international salesrepresentative organizations, reliance on sales entities that the Company doesnot control, greater difficulty in maintaining direct client contact,fluctuations in exchange rates, adverse political and economic conditions,tariffs and other trade barriers, longer accounts receivable collection cycles,greater accounts receivable collection risk with respect to sales through itsindependent sales representative organizations (because the Company relies onthe sales representative organizations to invoice and collect receivables),adverse tax consequences, and the financial health of individual salesrepresentative organizations. The Company’s future financial results alsodepend in part on the integration of recent acquisitions and potentialacquisitions, as well as the development or acquisition of new products andservices, which may not successfully be achieved due to the inherent costs andrisks associated with development, assimilation, and marketing of a new productor service, as well as the Company’s limited experience in introducing newproducts and services.

             Furthermore,the Company’s quarterly operating results may fluctuate significantly due tovarious factors. Because a disproportionately large portion of the Company’sResearch and Advisory Services contracts expire in the fourth quarter of eachyear, the Company incurs operating expenses in the fourth quarter at a higherlevel than would otherwise be required by its sequential growth, and suchincreased expenses are not normally offset immediately by higher revenues. Inaddition, the Company’s operating results may fluctuate as a result of avariety of other factors, including operating losses, any failure by theCompany to execute its financing plans, the Company's ability to manage expenselevels, any failure by the Company to meet its working capital, capitalexpenditure and credit facility payment requirements, the Company's ability tomanage growth and implement systems and processes required by such growth, thetiming and execution of the Company's strategic plans, the level and timing ofrenewals of subscriptions to Research and Advisory Services, the level andtiming of contracted Strategic Consulting Services, the timing and amount ofnew business generated by the Company, the mix of domestic versus internationalbusiness, the mix of Research and Advisory Services revenues versus StrategicConsulting and Published Research Products revenues, the number, size and scopeof Strategic Consulting engagements in which the Company is engaged, the degreeof completion of such engagements and the ability of the Company to match theskills of its consulting staff to consulting engagement opportunities, thetiming of the development, introduction, and marketing of new products andservices, the integration of acquired businesses into the operations of theCompany, the timing of the acquisition and integration into the Company of newbusiness, products, and services, the timing of the delivery of PublishedResearch Products sold by the Company, the timing of the hiring of researchanalysts, consultants and sales representatives, employee utilization rates andthe accuracy of estimates of resources required to complete ongoing Strategic Consultingengagements, the recruitment, retention and development of research analysts,consultants, management and administrative staff, the availability of outsideconsultants needed to fulfill certain service offerings, changes in thespending patterns of the Company’s target clients, the Company’s ability tocollect its accounts receivable, changes in market demand for IT research andanalysis, competitive conditions in the industry, decreases in spending on ITby substantial commercial and governmental users of IT, general economicuncertainty and economic slowdown in the U.S. and abroad, borrowings under theCompany’s revolving credit facility, strategic investments in entities thatoperate in parallel or synergistic industries to the Company, including but notlimited to any failure by the Company to sell its interest in strategicinvestments, volatility and unpredictability of the Company’s stock price andother risks detailed in the Company's filings with the Securities and ExchangeCommission, including those discussed in the Company's annual report filed withthe Securities and Exchange Commission on Form 10-K for the year ended December31, 2000. Due to these factors, the Company believes period-to-periodcomparisons of results of operations are not necessarily meaningful and shouldnot be relied upon as an indication of future results of operations. Thepotential fluctuations in the Company’s operating results make it likely that,in some future quarter, the Company’s operating results will be below theexpectations of securities analysts and investors, which would have a materialadverse effect on the price of the Company’s common stock.

**Item 3.**             **QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK**

             Referenceshould be made to the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2000 for quantitative and qualitative disclosure of the Company’smarket risk.  There have been nomaterial changes to the market risk information included in the Company’sAnnual Report on Form 10-K for the year ended December 31, 2000.

**PART II- OTHER INFORMATION**

Item1.  Legal Proceedings.

             Asdisclosed in the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2000, the Company is a party to certain legal proceedings arisingin the ordinary course of business.  TheCompany, however, believes that none of these proceedings is likely to have amaterial adverse effect on the Company’s business, results of operations orfinancial condition.

Item2.  Changes in Securities and Use ofProceeds.

             OnJune 28, 2001, the Company completed a private placement of its common stockwhereby the Company issued 1,726,617 shares of its common stock (the"Private Placement Shares") for $2.78 per share to Dale Kutnick, theCompany's Chairman of the Board, Chief Executive Officer and Co-ResearchDirector; First Albany Corporation, an investment banking firm affiliated withGeorge C. McNamee, a director of the Company; JMI Equity Fund IV, L.P., JMIEquity Fund IV (AI), L.P., JMI Euro Equity Fund IV, L.P. and JMI Equity SideFund, L.P., venture capital limited partnerships affiliated with Harry Gruner,a director of the Company; and Ardent Research Partners, LTD and ArdentResearch Partners, L.P., a money management firm affiliated with Francis J.Saldutti, a director of the Company (collectively, the "Private PlacementPurchasers"), pursuant to a certain Common Stock Purchase and SaleAgreement by and among META Group, Inc. and the Private Placement Purchasersdated as of June 15, 2001. Total proceeds to the Company were $4.8 million withoffering costs of approximately $197,000.

             OnOctober 27, 2000, the Company completed the acquisition of substantially allthe assets of Rubin Systems, Inc. (“RSI”). Pursuant to the terms of the AssetPurchase Agreement among RSI, Howard Rubin and the Company dated as of October27, 2000, RSI received an initial payment of $750,000 in cash and  $375,000 in common stock (36,874 shares). Inthe event certain financial targets are met, contingent consideration of $3.75million payable in cash and $1.875 million payable in stock may be paid to RSIthrough March 2004.  During the sixmonths ended June 30, 2001, the Company paid $500,000 and issued $250,000 instock (57,084 shares, the “Rubin Contingent Shares”) for contingent consideration.In the event the aggregate number of shares issued in satisfaction ofadditional contingent consideration exceeds 349,526 shares, the remainingconsideration will be payable in cash. RSI was wholly-owned by Howard Rubin, a director and officer of theCompany.

             ThePrivate Placement Shares and the Rubin Contingent Shares were issued inreliance upon exemptions from the registration provisions of the Securities Actof 1933, as amended (the "Act"), set forth in Section 4(2) thereofand Rule 506 of Regulation D of the General Rules and Regulations under the Actpromulgated by the Securities and Exchange Commission ("RegulationD").  In their respective purchaseagreements, the Private Placement Purchasers and RSI made certainrepresentations to the Company as to its investment intent, level ofsophistication, access to information and status as an accredited investor asdefined in Rule 501(a) of Regulation D. The Private Placement Shares and theRubin Contingent Shares are subject to restrictions on transfer absentregistration under the Act or exemption therefrom. The Company is required toregister all shares issued to RSI. TheCompany has also agreed to file a registration statement with the Securitiesand Exchange Commission to register the Private Placement Shares (other thanthose issued to Mr. Kutnick) upon the request of the Private PlacementPurchasers, such registration to be effective no earlier than December 31,2001.

Item4.  Submission of Matters to a Vote ofSecurity Holders.

             OnMay 24, 2001, the Company held its Annual Meeting of Stockholders. At suchAnnual Meeting, the stockholders of the Company voted (i) on the election ofthree Class III Directors to serve for a three-year term and until theirsuccessors have been duly elected and qualified; (ii) to approve the amendmentand restatement of the Company’s Amended and Restated 1995 Stock Plan and to(a) increase the number of shares of Common Stock issuable over the term of theAmended and Restated 1995 Stock Plan by 1,875,000 shares to 6,375,000 shares inthe aggregate and (b) set the exercise price per share of non-qualified stockoptions at no less than the fair market value of the Common Stock on the dateof the grant (the “Stock Plan Proposal”); (iii) to approve the amendment and restatementof the Corporation's 1995 Non-Employee Director Stock Option Plan and toincrease the number of shares of Common Stock issuable over the term of the1995 Non-Employee Director Stock Option Plan by 125,000 shares to 350,000shares in the aggregate (the “Non-Employee Director Stock Option PlanProposal”); and (iv) to approve the amendment and restatement of theCorporation's Amended and Restated 1995 Employee Stock Purchase Plan and toincrease the number of shares of Common Stock issuable over the term of theAmended and Restated 1995 Employee Stock Purchase Plan by 375,000 shares to750,000 shares in the aggregate (the “Employee Stock Purchase Plan Proposal”).

The number of votes cast for there-election of the Class III Directors listed below were as follows:

| Nominees        | Number  of Shares |   |
|-----------------|-------------------|--------|
|            |                   |   |
|            | For               |   | Against |   | Withhold  Authority |   |
|            |                   |   |  |   |  |   |
| Michael Simmons | 9,246,088         |   | - |   | 468,906 |   |
| George McNamee  | 9,032,473         |   | - |   | 682,521 |   |
| Howard A. Rubin | 8,976,112         |   | - |   | 738,882 |   |

Each of Dale Kutnick, Francis Saldutti,Harry Gruner and Gayl W. Doster continued as directors of the Company after theAnnual Meeting of Stockholders.

The number of votes cast for the approvaland adoption of the Stock Plan Proposal were as follows:

| Number  of Shares |
|-------------------|
|                   |
| For               |   | Against |   | Abstain |   | Unvoted |
|                   |   |  |   |  |   |  |
| 5,435,296         |   | 2,863,155 |   | 3,091 |   | 1,413,452 |

The number of votes cast for the approvaland adoption of the Non-Employee Director Stock Option Plan Proposal were asfollows:

| Number  of Shares |
|-------------------|
|                   |
| For               |   | Against |   | Abstain |   | Unvoted |
|                   |   |  |   |  |   |  |
| 7,367,518         |   | 931,133 |   | 2,891 |   | 1,413,452 |

The number of votes cast for the approvaland adoption of the Employee Stock Purchase Plan Proposal were as follows:

| Number  of Shares |
|-------------------|
|                   |
| For               |   | Against |   | Abstain |   | Unvoted |
|                   |   |  |   |  |   |  |
| 8,093,572         |   | 204,789 |   | 3,181 |   | 1,413,452 |

Item 6.  Exhibits and Reports on Form 8-K.

             (a)         Exhibits.

| Exhibit  Number |   | Description                                                                                                                                                                                                 |
|-----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |   |                                                                                                                                                                                                             |
| 2.1             |   | Agreement  of Purchase and Sale by and among META Group, Inc., JMI Equity Side Fund,  L.P., JMI Side Associates, L.L.C. and the purchasers listed on the signature  pages thereto dated as of June 15, 2001 |
|            |   |                                                                                                                                                                                                        |
| 4.1             |   | Common  Stock Purchase and Sale Agreement by and among META Group, Inc. and the  purchasers listed on the signature pages thereto dated as of June 15, 2001                                                 |
|            |   |                                                                                                                                                                                                        |
| 10.1            |   | Form  of META Group Inc./JMI Long Term Incentive Compensation Plan Waiver and  Release Agreement                                                                                                            |
|            |   |                                                                                                                                                                                                        |
| 11.1            |   | Statement  regarding computation of per-share earnings                                                                                                                                                      |

             (b)        Reports on Form 8-K.

             OnApril 10, 2001 the Company filed a Current Report on Form 8-K dated April 5,2001 announcing (i) a restructuring, (ii) the resignation of two members of itssenior management team, and (iii) a planned reduction to its workforce byapproximately 100 employees, or 15% of its workforce.

             OnJune 20, 2001, the Company filed a Current Report on Form 8-K dated June 15,2001 announcing that it entered into a definitive agreement on June 15, 2001 toraise approximately $4.8 million in gross proceeds through a private placementof its common stock.

**SIGNATURE**

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

|                              | **META  Group, Inc.** |
|-----------------------------------|-----------------------|
|                              |                  |
| Date:   August 14, 2001 | By:                   | /s/  John A. Piontkowski |
|                              |                  |  |
|                              |                  | John  A. Piontkowski |
|                              |                  | Senior  Vice President, Finance, Chief Financial Officer, Secretary and Treasurer |
|                              |                  | (Principal  Financial and Accounting Officer) |

 

**EXHIBIT INDEX**

| Exhibit  Number |   | Description                                                                                                                                                                                                 |   | Sequentially  Numbered  Page |   |
|-----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|
|                 |   |                                                                                                                                                                                                             |   |                              |   |
| 2.1             |   | Agreement of Purchase  and Sale by and among META Group, Inc., JMI Equity Side Fund, L.P., JMI Side  Associates, L.L.C. and the purchasers listed on the signature pages thereto  dated as of June 15, 2001 |   | *                            |   |
|            |   |                                                                                                                                                                                                        |   |                         |   |
| 4.1             |   | Common Stock Purchase  and Sale Agreement by and among META Group, Inc. and the purchasers listed on  the signature pages thereto dated as of June 15, 2001                                                 |   | *                            |   |
|            |   |                                                                                                                                                                                                        |   |                         |   |
| 10.1            |   | Form of META Group  Inc./JMI Long Term Incentive Compensation Plan Waiver and Release Agreement                                                                                                             |   | *                            |   |
|            |   |                                                                                                                                                                                                        |   |                         |   |
| 11.1            |   | Statement regarding  computation of per-share earnings                                                                                                                                                      |   | *                            |   |

* Exhibit included in EDGAR filing withSecurities and Exchange Commission.

__________________