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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q

|ý                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
|--------------------------------------------- | -----------------------------------------------------------------------------------------
|For the Quarterly period ended March 31, 2002
|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               

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META Group, Inc.(Exact name of registrant as specified in its charter)

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

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

Yes ý        No o

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: The number of shares of the issuer's common stock, $.01 par
value per share, outstanding as of May 9, 2002 was 12,803,171.

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META Group, Inc.        INDEX

|          |                                                                                                  |    | Page
|--------- | ------------------------------------------------------------------------------------------------ | -- | ----
|Part I    | FINANCIAL INFORMATION                                                                            |    |     
|          | Item 1.    Financial Statements                                                                  |    |     
|          | Consolidated Balance Sheets:
    March 31, 2002 (unaudited) and December 31, 2001                |    | 3   
|          | Consolidated Statements of Operations (unaudited)
    Three months ended March 31, 2002 and 2001 |    | 4   
|          | Consolidated Statements of Cash Flows (unaudited)
    Three months ended March 31, 2002 and 2001 |    | 5   
|          | Notes to Consolidated Financial Statements (unaudited)                                           |    | 6   
|          | Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations |    | 11  
|          | Item 3.    Quantitative and Qualitative Disclosures About Market Risk                            |    | 21  
|Part II   | OTHER INFORMATION                                                                                |    |     
|          | Item 1.    Legal Proceedings                                                                     |    | 22  
|          | Item 6.    Exhibits and Reports on Form 8-K                                                      |    | 22  
|Signature |                                                                                                  | 23

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PART IFINANCIAL INFORMATION

Item 1.    Financial Statements

META Group, Inc.  CONSOLIDATED BALANCE SHEETS  (in thousands)

|                                             |                                                                                         | March 31,
2002                             |        | December 31,
2001 |        
|-------------------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ----------------- | -------
|
|Assets                                       |                                                                                        
|Current assets:                              |                                                                                         |                                            |        |                   |        
|                                             | Cash and cash equivalents                                                               |                                            | $      | 23,596            |        
|                                             | Accounts receivable, net                                                                |                                            |        | 32,145            |        
|                                             | Deferred commissions                                                                    |                                            |        | 857               |        
|                                             | Deferred tax asset                                                                      |                                            |        | 2,684             |        
|                                             | Other current assets                                                                    |                                            |        | 2,938             |        
|                                             |                                                                                         |                                            |        |                   |        
|                                             |                                                                                         | Total current assets                       |        |                   | 62,220 
|Non-current portion of accounts receivable   |                                                                                         |                                            | 1,502  |                   |        
|Furniture and equipment, net                 |                                                                                         |                                            | 10,707 |                   |        
|Deferred tax asset                           |                                                                                         |                                            | 10,327 |                   |        
|Goodwill and other intangibles, net          |                                                                                         |                                            | 35,759 |                   |        
|Investments and advances                     |                                                                                         |                                            | 7,587  |                   |        
|Other assets                                 |                                                                                         |                                            | 375    |                   |        
|                                             |                                                                                         |                                            |        |                   |        
|                                             |                                                                                         | Total assets                               |        | $                 | 128,477
|                                             |                                                                                         |                                            |        |                   |        
|Liabilities and Stockholders' Equity         |                                                                                        
|Current liabilities:                         |                                                                                         |                                            |        |                   |        
|                                             | Accounts payable                                                                        |                                            | $      | 3,771             |        
|                                             | Deferred revenues                                                                       |                                            |        | 45,542            |        
|                                             | Borrowings under revolving credit agreement                                             |                                            |        | 1,916             |        
|                                             | Current portion of long-term debt                                                       |                                            |        | 2,667             |        
|                                             | Accrued compensation                                                                    |                                            |        | 2,882             |        
|                                             | Accrued liabilities                                                                     |                                            |        | 5,831             |        
|                                             | Income taxes payable                                                                    |                                            |        | 797               |        
|                                             | Other current liabilities                                                               |                                            |        | 4,004             |        
|                                             |                                                                                         |                                            |        |                   |        
|                                             |                                                                                         | Total current liabilities                  |        |                   | 67,410 
|                                             | Long-term debt                                                                          |                                            |        | 4,444             |        
|                                             | Non-current portion of deferred revenues                                                |                                            |        | 4,467             |        
|                                             |                                                                                         |                                            |        |                   |        
|                                             |                                                                                         | Total liabilities                          |        |                   | 76,321 
|Minority interest in consolidated subsidiary |                                                                                         |                                            | 156    |                   |        
|Stockholders' equity:                        |                                                                                         |                                            |        |                   |        
|                                             | Preferred stock, $.01 par value per-share, authorized 2,000,000 shares; none issued     |                                            |        |                  |        
|                                             | Common stock, $.01 par value per-share, authorized 45,000,000 shares, issued 13,605,187 |                                            |        | 136               |        
|                                             | Paid-in capital                                                                         |                                            |        | 58,645            |        
|                                             | Retained earnings                                                                       |                                            |        | (5,765            | )      
|                                             | Accumulated other comprehensive loss                                                    |                                            |        | (357              | )      
|                                             | Treasury stock, at cost, 802,016 shares                                                 |                                            |        | (659              | )      
|                                             |                                                                                         |                                            |        |                   |        
|                                             |                                                                                         | Total stockholders' equity                 |        |                   | 52,000 
|                                             |                                                                                         |                                            |        |                   |        
|                                             |                                                                                         | Total liabilities and stockholders' equity |        | $                 | 128,477
|                                             |                                                                                         |                                            |        |                   |        

See
notes to consolidated financial statements.

3

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META Group, Inc.  CONSOLIDATED STATEMENTS OF OPERATIONS  (in thousands, except per-share data)  (unaudited)

|                                                             |                                  | For the three months ended
March 31, |       
|------------------------------------------------------------ | -------------------------------- | ------------------------------------ | ------
|
|Revenues:                                                    |                                  |                                      |       
|                                                             | Advisory services                |                                      | $     
|                                                             | Strategic consulting             |                                      |       
|                                                             | Published research products      |                                      |       
|                                                             |                                  |                                      |       
|                                                             |                                  | Total revenues                       |       
|                                                             |                                  |                                      |       
|Operating expenses:                                          |                                  |                                      |       
|                                                             | Cost of services and fulfillment |                                      |       
|                                                             | Selling and marketing            |                                      |       
|                                                             | General and administrative       |                                      |       
|                                                             | Depreciation and amortization    |                                      |       
|                                                             | Restructuring charge             |                                      |       
|                                                             |                                  |                                      |       
|                                                             |                                  | Total operating expenses             |       
|                                                             |                                  |                                      |       
|Operating loss                                               |                                  |                                      | (1,371
|Impairment loss                                              |                                  |                                      | (225  
|Other income, net                                            |                                  |                                      | 47    
|                                                             |                                  |                                      |       
|Loss before benefit for income taxes                         |                                  |                                      | (1,549
|Benefit for income taxes                                     |                                  |                                      | (218  
|Minority interest in income of consolidated subsidiary       |                                  |                                      | 22    
|                                                             |                                  |                                      |       
|Net loss                                                     |                                  | $                                    | (1,353
|                                                             |                                  |                                      |       
|Amounts per basic common share:                              |                                  |                                      |       
|                                                             | Net loss                         |                                      | $     
|                                                             |                                  |                                      |       
|Amounts per diluted common share:                            |                                  |                                      |       
|                                                             | Net loss                         |                                      | $     
|                                                             |                                  |                                      |       
|Weighted average number of basic common shares outstanding   |                                  |                                      | 12,803
|                                                             |                                  |                                      |       
|Weighted average number of diluted common shares outstanding |                                  |                                      | 12,803
|                                                             |                                  |                                      |       

See
notes to consolidated financial statements.

4

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META Group, Inc.  CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands)  (unaudited)

|                                                                                |                                                        | For the three months ended
March 31, |       
|------------------------------------------------------------------------------- | ------------------------------------------------------ | ------------------------------------ | ------
|
|Operating activities:                                                           |                                                        |                                      |       
|Net loss                                                                        |                                                        | $                                    | (1,353
|Adjustments to reconcile net loss to net cash provided by operating activities: |                                                        |                                      |       
|                                                                                | Depreciation and amortization                          |                                      |       
|                                                                                | Investment impairment                                  |                                      |       
|                                                                                | Minority interest in income of consolidated subsidiary |                                      |       
|                                                                                | Other non-cash charges                                 |                                      |       
|                                                                                | Deferred income taxes                                  |                                      |       
|                                                                                | Gain on sale of investment                             |                                      |       
|                                                                                | Changes in assets and liabilities:                     |                                      |       
|                                                                                |                                                        | Accounts receivable                  |       
|                                                                                |                                                        | Deferred commissions                 |       
|                                                                                |                                                        | Other current assets                 |       
|                                                                                |                                                        | Other assets                         |       
|                                                                                |                                                        | Accounts payable                     |       
|                                                                                |                                                        | Accrued liabilities                  |       
|                                                                                |                                                        | Other current liabilities            |       
|                                                                                |                                                        | Deferred revenues                    |       
|                                                                                |                                                        |                                      |       
|Net cash provided by operating activities                                       |                                                        |                                      | 4,392 
|                                                                                |                                                        |                                      |       
|Investing activities:                                                           |                                                        |                                      |       
|                                                                                | Capital expenditures                                   |                                      |       
|                                                                                | Proceeds from sale of investment                       |                                      |       
|                                                                                | Payments for acquisitions, net of cash acquired        |                                      |       
|                                                                                |                                                        |                                      |       
|Net cash used in investing activities                                           |                                                        |                                      | (501  
|                                                                                |                                                        |                                      |       
|Financing activities:                                                           |                                                        |                                      |       
|                                                                                | Proceeds from bank borrowings                          |                                      |       
|                                                                                | Repayments of bank borrowings                          |                                      |       
|                                                                                | Proceeds from exercise of stock options                |                                      |       
|                                                                                |                                                        |                                      |       
|Net cash (used in) provided by financing activities                             |                                                        |                                      | (1,849
|                                                                                |                                                        |                                      |       
|Effect of Exchange Rate Changes on Cash:                                        |                                                        |                                      | 121   
|                                                                                |                                                        |                                      |       
|Net increase in cash and cash equivalents                                       |                                                        |                                      | 2,163 
|Cash and cash equivalents, beginning of period                                  |                                                        |                                      | 21,433
|                                                                                |                                                        |                                      |       
|Cash and cash equivalents, end of period                                        |                                                        | $                                    | 23,596
|                                                                                |                                                        |                                      |       

See
notes to consolidated financial statements.

5

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META Group, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)

Note 1Interim Financial Statements

The accompanying unaudited consolidated financial statements include the accounts of META Group, Inc. (the "Company") and its subsidiaries and have been
prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for
complete financial statements. Certain prior year amounts have been reclassified to conform to the current year presentation.

In
the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items) necessary for a fair
presentation of results for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements and
footnote disclosures should be read in conjunction with the December 31, 2001 audited consolidated financial statements and the notes thereto included in the Company's
Form 10-K for the year ended December 31, 2001.

The
preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that
affect the amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from those estimates.

Note 2New Accounting Policies

Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142,Goodwill and Other
Intangible Assets("SFAS 142"). Under SFAS 142, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to
impairment tests on
an annual basis, or more frequently if certain indicators arise. Other intangible assets will continue to be amortized over their useful lives. During the quarter ended March 31, 2002, the
remaining useful lives of intangible assets being amortized were reviewed and deemed to be appropriate. The Company is required to complete a transitional impairment test of existing goodwill by
June 30, 2002 and final testing, if possible impairment has been identified, by the end of the year. As of March 31, 2002, the net carrying amount of goodwill was $30.3 million.
The Company also has other intangible assets, consisting of customer lists, intellectual property, content databases and a non-compete agreement, with a net carrying value of
$5.4 million. These other intangible assets have been assigned an estimated finite useful life, and are amortized on a straight-line basis over the number of years that approximate
their respective useful lives (ranging from four to seven years). Had the goodwill amortization ceased on January 1, 2001, the impact on net loss for the three months ended March 31,
2001 would have been a reduction to the previously reported loss of approximately $172,000. Basic and diluted earnings per share for the quarter ended March 31, 2001 would have been a loss of
$0.01 per share versus the previously reported loss of $0.02 per share.

6

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Note 3Income Taxes

During the quarters ended March 31, 2002 and 2001, the Company recorded an income tax benefit of $218,000 and $147,000, respectively, reflecting an
effective tax rate of 14% and 35%, respectively. The lower effective rate in the quarter ended March 31, 2002 was principally due to the impact of a full valuation allowance recorded for the
net operating loss carry-forwards generated by the Company's international subsidiaries due to the uncertainty of realizing the loss carry-forwards because of the start-up nature of these
subsidiaries, as well as the impact and tax nature of the impairment loss taken during the quarter ended March 31, 2002 for which the Company did not take a benefit and is currently not
deductible for tax purposes.

Note 4Comprehensive Income

Comprehensive loss for the three months ended March 31, 2002 and 2001 was as follows (in thousands):

Three months ended
March 31,2002

2001Net loss:

$
(1,353
)
$
(273
)Other comprehensive income (loss):Foreign currency translation adjustment


24


(426
)Unrealized gain on marketable securities, net of tax





96Total other comprehensive income (loss):


24


(330
)Comprehensive loss

$
(1,329
)
$
(603
)


Note 5Segment Reporting

The Company operates in three business segments: Advisory Services, Strategic Consulting and Published Research Products. The Company's operating segments are
managed separately, because each operating segment represents a strategic business unit that generally offers distinct products or services. Advisory Services provide comprehensive coverage of
relevant information technology and business-related issues faced by its clients through client/analyst interaction and published conclusions and recommendations to each client's specific IT
requirements. Strategic Consulting provides custom consulting services tailored to meet individual client requirements. Published Research Products offer various topic-specific reports designed to
serve both as complements to the Company's core services and as standalone deliverables that meet specific assessment requirements.

The
disaggregated financial results for the Company's operating segments have been prepared using a management approach, which is consistent with the basis and manner in which the
Company's management internally disaggregates financial information for the purposes of assistance in making internal operating decisions. The Company evaluates performance based on standalone segment
operating income, defined by the Company as the segment revenues less segment cost of sales and corporate selling, general and administrative allocations. General and administrative expenses are
allocated ratably based on each operating segments' respective headcount. Selling and marketing expenses are allocated ratably based on each operating segments' revenues. Management does not allocate
corporate assets, non-operating income (interest income), or income taxes when measuring segment results.

7

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Information
by operating segment is set forth below (in thousands):

Advisory
Services

Strategic
Consulting

Published
Research
Products

Consolidated
TotalThree months ended March 31, 2002Revenues

$
18,650

$
7,885

$
1,865

$
28,400Operating income (loss)


1,708


(3,238
)

159


(1,371
)Three months ended March 31, 2001Revenues

$
23,115

$
4,979

$
1,348

$
29,442Operating income (loss)


(1,905
)

(242
)

(633
)

(2,780
)


Note 6Acquisitions

During the quarter ended March 31, 2002, the Company recorded $0.9 million in additional goodwill in connection with contingent consideration earned
by Rubin Systems, Inc. ("RSI") in connection with the achievement of certain financial targets for the year ended December 31, 2001. The Company currently expects to pay $469,000 in cash
and issue $469,000 in the Company's common stock (which will be valued at the date of issuance) in the second quarter of 2002 in satisfaction of the contingent consideration. As of March 31,
2002, the Company recorded an aggregate of $2.9 million in consideration for the purchase of RSI. In the event certain financial targets are met, additional contingent consideration of
$2.5 million payable in cash and $1.25 million payable in stock may be paid through March 2004. In the event the aggregate number of shares issued in satisfaction of contingent
consideration exceeds 349,526, the remaining consideration will be payable in cash. The Company completed the acquisition of substantially all of the assets of RSI in October 2000. RSI is
wholly owned by Dr. Howard Rubin, a director and officer of the Company.

In
March 2002, the Company paid $0.4 million of contingent consideration to The Verity Group ("Verity"), an IT consulting company, as additional contingent consideration
earned during the year ended December 31, 2001. The consideration was recorded as additional goodwill. The Company acquired certain assets of Verity in 1997 for an initial payment of $1,000 in
cash and contingent consideration of up to $1.1 million in the event certain financial targets were met in each of the four years ended December 31, 2001. The aggregate consideration
paid by the Company amounted to approximately $1 million.

Effective
January 1, 2002, the Company's majority owned subsidiary in Germany, META Group AG ("META Germany"), acquired a majority interest in the Company's distributor in
Hungary, META Group Stratis, for approximately $327,000 paid in META Germany's stock. The purchase price has been allocated to the assets acquired and the liabilities assumed, based on estimated fair
values at the date of acquisition. Such allocation resulted in goodwill of approximately $214,000.

8

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Note 7Bank Debt

In November 2001, the Company entered into a $20 million amended and restated credit agreement with its bank (the "Facility"). On March 26,
2002, the Company entered into an amendment to the Facility, which, among other things, waived prior covenant defaults, reset existing covenants and added a new consolidated net income covenant. The
Facility consists of an $8 million term loan (the "Term Loan") payable in 36 monthly consecutive installments that commenced in December 2001, and a $12 million revolving
credit facility (the "Revolving Facility"). Both mature in November 2004. As of March 31, 2002, the total amount used under the Facility was $9.9 million, consisting of
$8.1 million in outstanding
borrowings ($7.1 million outstanding under the Term Loan and $1 million outstanding under the Revolving Facility) and $1.8 million in letters of credit issued on behalf of one of
the Company's independent sales representative organizations, META Germany, and as security for a portion of the Company's Stamford, CT premises lease. During the quarter ended March 31, 2002,
the Company paid $61,000 in interest on the Facility.

The
Facility has a borrowing base equal to 80% of the Company's eligible accounts receivable. Interest is payable at the rate of (i) LIBOR plus 2.5% or (ii) the higher of
(a) the Prime Rate or (b) the Federal Funds Rate plus 0.5%. The Facility is collateralized by the Company's accounts receivable, and requires payment of a commitment fee payable
quarterly, in arrears, of 0.25% based on the average, daily, unused portion of the Revolving Facility. The Facility contains a number of covenants that, among other things, restrict the ability of the
Company to incur additional indebtedness, pay dividends or other distributions, dispose of certain assets, enter into sale and leaseback transactions, create liens, make certain investments,
acquisitions or mergers, and that otherwise restrict corporate activities. In addition, the Company is required to maintain certain financial covenants, including a leverage ratio covenant, a
consolidated net income covenant, a fixed charge ratio covenant and a minimum EBITDA covenant.

As
of March 31, 2002, META Germany had a €1 million (approximately $870,000) line of credit with its local bank. The line bears interest at 8.5% and is
secured by a personal guarantee of META Germany's managing director and is collateralized by certain of META Germany's accounts receivable as well as shares of the Company held by META Germany. As of
March 31, 2002, META Germany was fully drawn on the line. In February 2002 the Company provided an irrevocable letter of credit for €1 million (approximately
$870,000) as collateral to META Germany's outstanding borrowings with its bank as a result of covenant defaults which were waived. The Company currently expects to cancel the letter of credit and
repay all amounts outstanding under the line of credit during the second quarter of 2002.

Note 8Impairment Loss

During the quarter ended March 31, 2002, the Company recorded a $225,000 impairment loss on its investment in Spikes Cavell & Co. ("Spikes Cavell"), a UK
based business that went into receivership in September 1999. Spikes Cavell's most significant asset is an earn-out due from a third party that purchased a portion of its business.
The amount of the earn-out is calculated based on the third party's financial results for the three years ended December 31, 2001 and is currently expected to be settled late in the
second quarter or early in the third quarter of 2002. During the quarter ended March 31, 2002, the Company held discussions with and obtained from Spikes Cavell's liquidator updated financial
information regarding the status of the claims filed in the liquidation proceeding and the estimated assets that the liquidator is expected to receive on behalf of Spikes Cavell. Based on those
discussions and a review of the underlying financial data provided by the liquidator, the Company adjusted its carrying value down to the estimated amounts to be realized upon the final liquidation of
Spikes Cavell. This resulted in a $225,000 impairment loss.

9

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Note 9Restructuring charge

In February 2002, the Company announced a restructuring whereby it reduced its workforce by 43 persons (representing 7% of the workforce at the time). As a
result of the restructuring, the Company incurred a $222,000 restructuring charge during the quarter ended March 31, 2002 for severance payments made during the quarter ended March 31,
2002.

Note 10Contingencies and Guarantees



Other than ordinary routine litigation incidental to the Company's business which the Company believes is unlikely to have a material adverse effect on its
business, the Company is not a party, nor is any of its property subject to, any pending legal proceedings.



The Company has a corporate guarantee in the amount of 7 million Belgian Francs (approximately $140,000) guaranteeing the local bank borrowings of one of
its former independent sales representative organizations. Additionally, the Company has provided a general corporate guarantee on behalf of META Germany in the amount of
€1 million (approximately $870,000) and a general corporate guarantee on behalf of its subsidiary in Switzerland in the amount of $160,000.

10

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

The discussion and analysis below contains trend analysis and other forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are subject to a number of risks and uncertainties. These forward-looking statements are typically
denoted in this Quarterly Report on Form 10-Q by words such as anticipate, believe, could, estimate, expect, intend, may, plan, project, should, or will and similar words (as well
as other words or expressions referencing future events, conditions or circumstances). Actual results could differ materially from those projected in the forward-looking statements as a result of the
risk factors, including the risk factors set forth below under "Certain Factors That May Affect Future Results." This discussion should be read in conjunction with the consolidated financial
statements and related notes for the periods specified. Further reference should be made to 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, 2001.

Overview

META Group, Inc. and its subsidiaries, 1422722 Ontario Inc. ("META Group Canada"), The Sentry Group, Inc., META Group Australia Holdings PTY
Limited ("META Group Australia"), META Group Singapore PTE Limited ("META Group Singapore"), Abundant Strategy SDN.BHD ("META Group Malaysia"), META Group France S.A., META Group AG ("META Germany")
and MG (Bermuda) Ltd. (collectively the "Company") is a leading independent research and consulting firm focusing on information technology ("IT") and business transformation strategies. The
Company's goal is to deliver objective, consistent, and actionable guidance to enable organizations to innovate more rapidly and effectively.

The
Company has three operating business segments: Advisory Services, Strategic Consulting and Published Research Products. The Advisory Services segment provides annually renewable
subscription services (focused on specific areas of IT, IT issues related to a specific vertical market, or the specific needs of those within the IT organization), service analyst briefing
engagements, and conferences. Supplementing these services are the Company's Infusion programs, which build on the business-focused analysis of Advisory Services by offering methodologies and
skill-based training needed to successfully manage specific business-critical issues. The Strategic Consulting segment provides strategic consulting engagements addressing clients' business and
technology issues. A significant portion of Strategic Consulting clients are also Advisory Services subscribers. The Published Research Products segment provides reports, studies and surveys offering
in-depth analysis of specific business or IT issues.

Advisory
Services revenues, which generally are annually renewable contracts and payable by clients in advance, constituted approximately 66% and 79% of the Company's total revenues for
the quarters ended March 31, 2002 and 2001, respectively. Advisory Services revenues attributable to international clients are billed and collected by the Company's independent sales
representative organizations and its wholly-owned subsidiaries in Canada, Australia, Singapore, Malaysia and France and its majority-owned subsidiary in Germany. The Company realizes Advisory Service
revenues from the international sales representative organizations at rates of 25% to 40% of amounts billed to those clients.

One
measure of the volume of the Company's Advisory Services business is its annualized "Contract Value," which the Company calculates as the aggregate annualized subscription revenue
recognized from all Advisory Services contracts in effect at a given point in time, without regard to the remaining duration of such contracts. Contract Value is not necessarily indicative of future
Advisory Services revenues. Contract Value was $73.2 million at March 31, 2002 versus $92.5 million at March 31, 2001, a 21% decrease.

11

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Revenues
from Strategic Consulting engagements comprised approximately 28% and 17% of the Company's total revenues for the quarters ended March 31, 2002 and 2001, respectively.
The majority of the Company's Strategic Consulting clients consist of Advisory Services clients seeking additional advice tailored to their individual IT requirements.

Revenues
from Published Research Products comprised approximately 7% and 5% of the Company's total revenues for the quarters ended March 31, 2002 and 2001, respectively.

The
Company's operating expenses consist of cost of services and fulfillment, selling and marketing expenses and general and administrative expenses. Cost of services and fulfillment
represents the costs associated with production and delivery of the Company's products and services and includes the costs of research, development, preparation of periodic reports, analyst telephone
consultations, executive briefings and conferences, research reports, consulting services, new product development, and all associated editorial and support services. Selling and marketing expenses
include the costs of salaries, commissions, related benefits for selling and marketing personnel, as well as travel and promotion, and bad debt expense associated with accounts and notes receivable
from its independent sales representative organizations. General and administrative expenses include the costs of the finance and accounting departments, in addition to the legal, human resources,
corporate IT and other administrative functions of the Company, as well as bad debt expense associated with accounts receivable from its domestic customers.

THREE MONTHS ENDED MARCH 31, 2002 AND 2001

REVENUESTotal revenues decreased 3.5% to $28.4 million in the quarter ended March 31, 2002 from
$29.4 million in the quarter ended March 31, 2001.

Revenues
from Advisory Services, which generally are derived from annually renewable contracts payable by clients in advance, decreased 19% to $18.7 million in the quarter ended
March 31, 2002 from $23.1 million in the quarter ended March 31, 2001, and decreased as a percentage of total revenues to 66% in the quarter ended March 31, 2002 from 79%
in the quarter ended March 31, 2001. The decrease in revenues from Advisory Services was principally due to decreased subscriptions to the Company's Advisory Services as a result of the
decrease in demand for such services that began in the second half of 2000 resulting from a decrease in IT spending as a result of general economic conditions. As the Company recognizes subscription
revenues ratably over the underlying contract period, Advisory Services revenues were adversely impacted during the quarter ended March 31, 2002 when compared to the quarter ended
March 31, 2001 by the continued decrease in billings that began in the second half of 2000. Advisory Services revenues attributable to international clients decreased 20% to $2.6 million
in the quarter ended March 31, 2002 from $3.2 million the quarter ended March 31, 2001, and remained constant as a percentage of Advisory Services revenue at 14%. The decrease in
Advisory Services revenue attributable to international clients was due principally to the decrease in subscription revenues resulting from the decrease in demand for the Company's Advisory Services
discussed above.

Strategic
Consulting revenues, which result from Strategic Consulting engagements addressing clients' business and technology issues, increased 58% to $7.9 million in the quarter
ended March 31, 2002 from $5 million in the quarter ended March 31, 2001, and increased as a percentage of total revenues to 28% from 17%. The increase was principally due to
incremental revenues from the acquisition of a majority interest in META Germany in December 2001, as well as increases in the Company's consulting revenues resulting from increased demand for
the Company's measurement, benchmarking, IT portfolio management offerings together with the Company's vendor analysis offerings that focus on cost reduction strategies. In addition, the Company
experienced an increase in the productivity of its domestic consulting staff on a per consultant basis during the quarter ended March 31, 2002 versus the year ago period.

12

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Published
Research Products revenues, which result from the sale of published research products offering in-depth analysis of specific business or IT issues, increased 38% to
$1.9 million in the quarter ended March 31, 2002 from $1.3 million in the quarter ended March 31, 2001, and increased as a percentage of total revenues to 7% from 5%. The
increase was principally due to incremental revenues from the acquisition of a majority interest in META Germany in December 2001, and, to a lesser extent, an increase in the Company's core
published research products as a result of increased demand for such products.

COST OF SERVICES AND FULFILLMENTCost of services and fulfillment decreased 8% to $15 million in the quarter ended
March 31, 2002 from $16.3 million in the quarter ended March 31, 2001 and decreased as a percentage of total revenues to 53% from 55%. The decrease was principally due to
decreases in payroll and payroll related costs (salaries, benefits and bonus expense) of the Company's research and fulfillment personnel and consultants as a result of the reductions in headcount
that occurred April 2001 and, to a lesser extent, February 2002, reduced travel costs also attributable to the decrease in headcount, and reduced outside consulting expenses. Such cost
reductions were partially offset by incremental expenses from the acquisition of a majority interest in META Germany in December 2001 and the establishment of META Group France in
September 2001.

SELLING AND MARKETING EXPENSESSelling and marketing expenses decreased 25% to $8.2 million in the quarter ended
March 31, 2002 from $11 million in the quarter ended March 31, 2001 and decreased as a percentage of total revenues to 29% from 37%. The decrease in selling and marketing expenses
was principally due to decreased salary, commission and travel expenses as a result of the reductions in headcount that occurred in April 2001 and, to a lesser extent, February 2002.
Commission expense decreased as a result of the Company's restructured sales commission plan for the plan year ended January 31, 2002, which resulted in a decrease in commissions paid to the
Company's sales personnel. The Company currently believes that it will experience decreased commission expense in 2002 when compared to 2001 in connection with the decrease in commissions paid under
the Company's sales commission plan for the year ended January 31, 2002. The reductions in salary and commission expenses were partially offset by incremental expenses from the acquisition of a
majority interest in META Germany in December 2001 and the establishment of META Group France in September 2001.

GENERAL AND ADMINISTRATIVE EXPENSESGeneral and administrative expenses increased 51% to $4.6 million in the quarter
ended March 31, 2002 from $3.1 million in the quarter ended March 31, 2001, and increased as a percentage of total revenues to 16% from 10%. The increase in general and
administrative expenses was principally due to incremental expenses from the acquisition of a majority interest in META Germany in December 2001, the establishment of META Group France in
September 2001, and, to a lesser extent, increases in salary and bonus expenses associated with the Company's administrative personnel.

DEPRECIATION AND AMORTIZATIONDepreciation and amortization expense decreased 7% to $1.7 million in the quarter ended
March 31, 2002 from $1.8 million in the quarter ended March 31, 2001 and remained constant as a percentage of total revenues at 6%. The decrease was principally due to lower
amortization of intangible assets as a result of the adoption of Statement of Financial Accounting Standards No. 142,Goodwill and Other Intangible
Assets("SFAS 142"). Pursuant to SFAS 142, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to
impairment tests on an annual basis, or more frequently if certain indicators arise. Other intangible assets will continue to be amortized over their useful lives, which range from four to seven
years.

RESTRUCTURING CHARGEIn February 2002, the Company announced a restructuring whereby it reduced its workforce by 43
persons (representing 7% of the workforce at the time). As a result of the restructuring, the Company incurred a $222,000 restructuring charge during the quarter

13

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ended March 31, 2002 for severance payments made during the quarter ended March 31, 2002. There were no restructuring charges during the quarter ended March 31, 2001. The Company
currently estimates that the reductions will result in cost savings of approximately $4.2 million in 2002, including approximately $3.8 million in payroll and related benefits savings,
and approximately $5.0 million per year thereafter.

IMPAIRMENT LOSSDuring the quarter ended March 31, 2002, the Company recorded a $225,000 impairment loss on its
investment in Spikes Cavell & Co. ("Spikes Cavell"), a UK based business that went into receivership in September 1999. Spikes Cavell's most significant asset is an earn-out due
from a third party that purchased a portion of its business. The amount of the earn-out is calculated based on the third party's financial results for the three years ended
December 31, 2001 and is currently expected to be settled by late in the second quarter or early in the third quarter of 2002. During the quarter ended March 31, 2002, the Company held
discussions with and obtained from Spikes Cavell's liquidator updated financial information regarding the status of the claims filed in the liquidation proceeding and the estimated assets that the
liquidator is expected to receive on behalf of Spikes Cavell. Based on those discussions and a review of the underlying financial data provided by the liquidator, the Company adjusted its carrying
value down to the estimated amounts to be realized upon the final liquidation of Spikes Cavell. This resulted in a $225,000 impairment loss. There was no impairment loss during the quarter ended
March 31, 2001.

OTHER INCOME, NETOther income, net, decreased to $47,000 during the quarter ended March 31, 2002 from
$2.4 million in the quarter ended March 31, 2001. The decrease is principally due to the $2.6 million gain recognized on the sale of its investment in Intermedia Group during the
quarter ended March 31, 2001. The decrease was partially offset by a decrease in interest expense recorded on its outstanding borrowings during the quarter ended March 31, 2002 versus
the same period in the previous year as a result of the decrease in outstanding borrowings during the quarter ended March 31, 2002 versus the same period in the previous year.

PROVISION FOR INCOME TAXESDuring the quarter ended March 31, 2002, the Company recorded an income tax benefit of
$218,000, reflecting an effective tax rate of 14%, versus an income tax benefit of $147,000 during the quarter ended March 31, 2001, reflecting an effective tax rate of 35%. The lower effective
rate in the quarter ended March 31, 2002 was principally due to the impact of a full valuation allowance recorded for the net operating loss carry-forwards generated by the Company's
international subsidiaries due to the uncertainty of realizing the loss carry-forwards because of the start-up nature of these subsidiaries, as well as the impact and tax nature of the
impairment loss taken during the quarter ended March 31, 2002 for which the Company did not take a benefit and is currently not deductible for tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

The Company funds its operations primarily through cash generated from operations, borrowings under its credit facility, and, to a lesser extent, from the sale of
its common stock. The Company generated $4.4 million of cash from operations during the three months ended March 31, 2002, compared to $4.9 million of cash generated from
operations in the same period of 2001. The decrease in cash generated from operations was principally due to decreases in accrued liabilities at March 31, 2002 versus the year ago period
primarily as a result of the timing of bonuses paid during the quarter ended March 31, 2002 versus the quarter ended March 31, 2001, and, to a lesser extent, from cash used in operations
in META Germany and META France. Such decreases were offset by increases in the Company's accounts payable balances at March 31, 2002 versus March 31, 2001, an increase in collections of
its outstanding accounts receivable and a decrease in sales commissions paid during the quarter ended March 31, 2002 when compared to the quarter ended March 31, 2001.

14

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The
Company used $0.2 million of cash in the three months ended March 31, 2002, compared to $1.1 million in the same period of 2001, for the purchase of furniture,
equipment, computers and related software and Web site infrastructure. The purchases that were made during the quarter ended March 31, 2002 were made principally to support the Company's Web
site and network infrastructure. The Company currently expects that additional purchases of equipment will be made during 2002 and that such expenditures will remain approximately the same when
compared to the 2001 levels. The Company has no material commitments for capital expenditures; however, the Company anticipates that it will continue to upgrade its internal systems to support its
business, including in particular its international subsidiaries.

During
the quarter ended March 31, 2002, the Company paid $0.4 million in cash to The Verity Group ("Verity"), an IT consulting company, as additional contingent
consideration earned during the year ended December 31, 2001. The consideration was recorded as additional goodwill. The Company acquired certain assets of Verity in 1997 for an initial payment
of $1,000 in cash and contingent consideration of up to $1.1 million in the event certain financial targets were met in each of the four years ended December 31, 2001. The aggregate
consideration paid by the Company amounted to approximately $1 million.

During
the quarter ended March 31, 2002, the Company recorded $0.9 million in additional goodwill in connection with contingent consideration earned by Rubin
Systems, Inc. ("RSI") in connection with the achievement of certain financial targets for the year ended December 31, 2001. The Company currently expects to pay $469,000 in cash and
issue $469,000 in the Company's common stock (which will be valued at the date of issuance) in the second quarter of 2002 in satisfaction of the contingent consideration. As of March 31, 2002,
the Company recorded an aggregate of $2.9 million in consideration for the purchase of RSI. In the event certain financial targets are met, additional contingent consideration of
$2.5 million payable in cash and $1.25 million payable in stock may be paid through March 2004. In the event the aggregate number of shares issued in satisfaction of contingent
consideration exceeds 349,526, the remaining consideration will be payable in cash. The Company
completed the acquisition of substantially all of the assets of RSI in October 2000. RSI is wholly owned by Dr. Howard Rubin, a director and officer of the Company.

In
January 2001, the Company paid $300,000 of contingent consideration to RSI as a result of the achievement of certain financial targets for the year ended December 31,
2000.

In
January 2001, the Company completed the acquisition of substantially all of the assets of two of its Asia Pacific distributors, one based in Sydney, Australia ("META Group
Australia"), and the other headquartered in Singapore ("META Group Singapore"). With these acquisitions, the distributors become wholly owned subsidiaries of META Group, Inc. The total purchase
price amounted to approximately $2.7 million, consisting of cash in the amount of $1.7 million, the forgiveness of accounts receivable from the distributor of $470,000, and the
assumption of certain liabilities.

Exclusive
of its acquisitions, the Company has historically made investments in and advances to several companies in parallel or synergistic industries. The Company did not make any such
investments or advances during the quarters ended March 31, 2002 and 2001. The balance of the Company's investments and advances was $7.6 million and $18.3 million at
March 31, 2002 and 2001, respectively. The Company follows a practice to review its individual investments and advances for impairment on a quarterly basis. This review includes the examination
of the estimated market value of each specific investment using peer group market comparables of public companies. Additionally, the Company reviews the business climate of each investee, its
historical financial results, its projected cash flow, its plans for the future and the likelihood of achieving such plans. Based on such review, a determination is made on a
case-by-case basis as to whether an investment is deemed to be permanently impaired and therefore requires an adjustment to the carrying value. The Company recorded an
impairment loss of $225,000 on its investment in Spikes Cavell during the quarter ended

15

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March 31, 2002 and recorded impairment losses of $9.2 million for the year ended December 31, 2001. The losses taken were determined on a specific identification method
considering each investee's particular facts and circumstances in existence at that time. The Company will continue to evaluate its investments for impairment every quarter, and based on its review,
may record additional impairment losses should the facts and circumstances in existence at that time merit such an adjustment.

In
March 2001, the Company closed on the sale of its investment in Intermedia Group. Cash proceeds were $2.94 million. The Company recognized a gain on the sale of
$2.6 million.

During
the quarter ended March 31, 2002, the Company repaid a total of $1.85 million in borrowings outstanding under its credit agreements.

As
of March 31, 2002, the total amount used under the Company's domestic facility was $9.9 million, consisting of $8.1 million in outstanding borrowings
($7.1 million outstanding under its term loan and
$1 million outstanding under its revolving facility) and $1.8 million in letters of credit issued on behalf of one of the Company's independent sales representative organizations, META
Germany, and as security for a portion of the Company's Stamford, CT premises lease. During the quarter ended March 31, 2002, the Company paid $61,000 in interest on the Facility. The Facility
has a borrowing base equal to 80% of the Company's eligible accounts receivable. Interest is payable at the rate of (i) LIBOR plus 2.5% or (ii) the higher of (a) the Prime Rate or
(b) the Federal Funds Rate plus 0.5%. The facility is collateralized by the Company's accounts receivable, and requires payment of a commitment fee payable quarterly, in arrears, of 0.25% based
on the average, daily, unused portion of the revolving facility. The facility contains a number of covenants that, among other things, restrict the ability of the Company to incur additional
indebtedness, pay dividends or other distributions, dispose of certain assets, enter into sale and leaseback transactions, create liens, make certain investments, acquisitions or mergers, and that
otherwise restrict corporate activities. In addition, the Company is required to maintain certain financial covenants, including a leverage ratio covenant, a fixed charge ratio covenant, a
consolidated net income covenant and a minimum EBITDA covenant.

As
of March 31, 2002, META Germany had a €1 million (approximately $870,000) line of credit with its local bank. The line bears interest at 8.5% and is
secured by a personal guarantee of META Germany's managing director and is collateralized by certain of META Germany's accounts receivable as well as shares of the Company held by META Germany. As of
March 31, 2002, META Germany was fully drawn on the line. In February 2002 the Company provided an irrevocable letter of credit for €1 million (approximately
$870,000) as collateral to META Germany's outstanding borrowings with its bank as a result of covenant defaults which were waived. The Company currently expects to cancel the letter of credit and
repay all amounts outstanding under the line of credit during the second quarter of 2002.

During
the quarter ended March 31, 2001 the Company received $1 million in borrowings under its line of credit and $31,000 in proceeds from the exercise of stock options.

As
of March 31, 2002, the Company had a corporate guarantee in the amount of 7 million Belgian Francs (approximately $140,000) guaranteeing the local bank borrowings of one
of its former independent sales representative organizations. Additionally, the Company has provided a general corporate guarantee on behalf of its majority owned subsidiary in Germany in the amount
of €1 million (approximately $870,000) and a general corporate guarantee on behalf of its subsidiary in Switzerland in the amount of $160,000.

In
September 2001, the Company initiated a voluntary stock option exchange offer for stock options with an exercise price greater than $12 per share to certain eligible employee
option holders. The Company's senior executives and members of the Board of Directors were not eligible to participate in the offer. In October 2001, the offer period expired and 752,469 stock
options were accepted for exchange and cancelled. The Company issued 697,770 options in April 2002 at the fair

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market value on the actual date of issuance to those eligible employees still employed at the date of grant.

In
February 2002, the Company announced a strategic reorganization to align the Company's resources with current market demand and to better position the Company for
profitability. As part of the reorganization, the Company reduced its workforce by 43 persons (representing 7% of the workforce at the time). The Company incurred a $222,000 restructuring charge
during the quarter ended March 31, 2002 for severance payments made during the quarter ended March 31, 2002. There were no restructuring charges during the quarter ended March 31,
2001.

As
of March 31, 2002, the Company had cash and cash equivalents of $23.6 million and negative working capital of $5.2 million. The increase in cash and cash
equivalents during the quarter ended March 31, 2002 is due principally to increased collections of its accounts receivable, decreases in commissions paid, and as a result of
cost-containment measures including, but not limited to, management of discretionary expenditures and employee expense policies. These increases were partially offset by repayments of
outstanding borrowings under its credit facilities, decreases in borrowings under its credit facilities, and payments to settle contingent consideration for acquisitions.

The
Company experienced a net loss of $1.35 million for the quarter ended March 31, 2002, and $0.3 million for the quarter ended March 31, 2001. To return to
profitability, the Company will need to, among other things, achieve revenue growth and/or maintain expenses below revenue levels. The Company cannot be certain whether, or when, any of these will
occur. If the Company fails to either achieve sufficient revenue growth or maintain expenses below revenue levels, any such failure will likely result in continued losses that would have a material
adverse effect on the Company's financial results and condition.

The
Company currently believes existing cash balances, anticipated cash flows from operations and borrowings under its credit facility will be sufficient to meet its working capital,
capital expenditure and credit facility payment requirements for the next 12 months. The Company intends to continue its efforts to improve its accounts receivable collections and manage
expenses. The Company also currently believes that decreases in and delays of IT spending as a result of general economic conditions are likely to continue to negatively impact its business for the
foreseeable future.

The
following summarizes the Company's contractual obligations and other commitments as of March 31, 2002 and the effect such obligations are currently expected to have on its
liquidity and cash flow in future periods (in thousands):

Twelve Months Ending March 31,2003

2004

2005

2006

2007

ThereafterOperating leases

$
5,360

$
5,085

$
4,809

$
3,744

$
3,595

$
4,969Term Loan


2,667


2,667


1,778Borrowings under revolving credit agreements


867





1,049
(1)Payments for contingent consideration


469
(2)$
9,363

$
7,752

$
7,636

$
3,744

$
3,595

$
4,969


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Critical Accounting Policies

Our significant accounting policies are described in Note 3 to our consolidated financial statements included in our Annual Report on
Form 10-K for the year ended December 31, 2001, filed with the SEC on April 1, 2002. However, certain of our accounting policies are particularly important to the
portrayal of our financial position and results of operations and may require the application of significant judgment by our management; as a result they are subject to an inherent degree of
uncertainty. In applying those policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on
our historical experience, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. Our significant
accounting policies include:



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CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

From time to time, information provided by the Company or statements made by its employees may contain "forward-looking" information that involves risks and
uncertainties. In particular, statements contained in this Form 10-Q that are not historical facts (including, but not limited to: statements concerning IT spending; general
economic conditions; anticipated revenues from Advisory Services, Strategic Consulting and Published Research Products; anticipated revenues from international operations; additional funding by the
Company of META Group Germany; anticipated costs of services and fulfillment, selling and marketing, and general and administrative; anticipated cost and expense levels relative to the Company's total
revenues; anticipated cost savings as a result of cost controls and cost reduction efforts; anticipated working capital; capital expenditures; capital requirements; cash flow and cash balances;
payment of contingent consideration for acquisitions and allocation of such to goodwill; collection of outstanding accounts receivable; credit facility borrowing capacity; credit facility payment
requirements; potential debt or equity financings; potential sales of the Company's strategic investments; acquisitions; goodwill; or other statements using words such as "anticipate", "believe",
"could", "estimate", "expect", "intend", "may", "plan", "project", "should" or "will") constitute forward-looking statements and are made under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The Company's actual results of operations and financial condition have varied and may in the future vary significantly from those stated in any forward-looking
statements. Factors that may cause such differences include, without limitation, the risks, uncertainties, and other information discussed below, as well as the accuracy of the Company's internal
estimates of revenue and operating expense levels. Each of these factors, and others, are discussed from time to time in the filings made by the Company with the Securities and Exchange Commission.

The
Company's future operating results are subject to substantial risks and uncertainties. The Company currently derives most of its revenues from subscriptions to its Advisory Services
and a significant amount of revenues from Strategic Consulting engagements. As a result, any decline in the Company's ability to secure subscription renewals or replace completed Strategic Consulting
engagements with new engagements may have a material adverse effect on the Company's results of operations. The Company's ability to secure subscription renewals, at favorable average selling prices,
as well as to successfully market and sell its Strategic Consulting services and Published Research Products, is dependent upon the Company's ability to deliver consistent, high-quality,
and timely analysis and advice with respect to issues, developments, and trends that clients view as important. The Company's successful delivery of such analysis and advice is, in turn, dependent
upon many factors, including,
among other things, its ability to: understand and anticipate rapidly changing technologies and market trends so as to keep its analysis focused on the changing needs of its clients; deliver products
and services of sufficiently high quality and timeliness to withstand competition from competitors that may have greater financial, 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 Consulting staff with the skills required for the
fulfillment of existing or potential Strategic Consulting engagements. The loss of any of the Company's senior management personnel, including Dale Kutnick (acting President, Chief Executive Officer
and Co-Research Director), could have a material adverse effect on the Company. The Company's ability to market and sell its products and services could also be adversely affected by the
emergence of new competitors into one or more of the market segments addressed by the Company's products and services, which could cause pricing pressure and loss of market share. The Company's
pricing strategy may limit the potential market for the Company's Advisory Services and Strategic Consulting

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engagements. As a result, the Company may be required to reduce prices for its Advisory Services and Strategic Consulting engagements or introduce new products with lower prices in order to expand or
maintain its market share. In addition, an increasing portion of the Company's revenues are attributable to international clients, which may be adversely affected by factors including difficulties in
finding distributors for its products and services, difficulties in developing and managing relationships with independent sales representative organizations, the financial health of individual sales
representative organizations, failure by the Company to replace sales representative agreements on terms beneficial to the Company or on a timely basis and clients' potential unwillingness to continue
to do business with the Company or its new distributor in the event that any existing agreements with independent sales representative organizations are terminated, integration of acquired foreign
subsidiaries into the Company's existing operations, difficulty in maintaining direct client contact, reliance on sales entities that the Company does not control, 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 its
independent sales representative organizations (because the Company relies on the sales representative organization to invoice and collect receivables), and adverse tax consequences. The Company's
future financial results also depend in part on the integration of recent acquisitions and potential acquisitions, as well as the development or acquisition of new products and services, which may not
successfully be achieved due to the inherent costs and risks associated with development, assimilation, and marketing of a new product or service, as well as the Company's limited experience in
introducing new products and services.

Furthermore,
the Company's quarterly operating results may fluctuate significantly due to various factors. Because a disproportionately large portion of the Company's Advisory Services
contracts expire in the fourth quarter of each year, the Company incurs operating expenses in the fourth quarter at a higher level than would otherwise be required by its sequential growth, and such
increased expenses are not normally offset immediately by higher revenues. In addition, the Company's operating results may fluctuate as a result of a variety of other factors, including operating
losses and the ability to achieve profitability, the Company's ability to manage expense levels and realize efficiencies from reorganizations, any failure by the Company to meet its working capital,
capital expenditure and credit facility payment requirements, borrowing under and compliance with the Company's credit facility, the timing and execution of the Company's strategic plans, the timing
and amount of new business generated by the Company, the inability of the Company to increase its penetration of existing customers and expand to additional customers, changes in the spending patterns
of the Company's target clients (including, but not limited to, decreases in IT spending), changes in market demand for IT research and analysis, competitive conditions in the industry, decreases in
spending on IT by
substantial commercial and governmental users of IT, general economic uncertainty and economic slowdown in the U.S. and abroad, failure to collect its outstanding accounts receivable, the level and
timing of renewals of subscriptions to Advisory Services, the level and timing of contracted Strategic Consulting services, the number, size and scope of Strategic Consulting engagements in which the
Company is engaged, the degree of completion of such engagements and the ability of the Company to match the skills of its consulting staff to consulting engagement opportunities, employee utilization
rates and the accuracy of estimates of resources required to complete ongoing Strategic Consulting engagements, the mix of domestic versus international business, the mix of Advisory Services revenues
versus Strategic Consulting and Published Research Products revenues, the timing of the development, introduction, marketing and market acceptance of new products and services, the integration of
acquired businesses into the operations of the Company, the timing of the acquisition and integration into the Company of new business, products, and services, the recruitment, retention and
development of research analysts, consultants, management and administrative staff, the Company's ability to collect its accounts receivable, strategic investments in entities that operate in parallel
or synergistic industries to the Company and any impairments thereof, including but not limited to any failure by the Company

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to sell its interest in strategic investments, goodwill and any impairment thereof, volatility and unpredictability of the Company's stock price, and other risks detailed in the Company's filings
with the Securities and Exchange Commission, including those discussed in the Company's annual report filed with the Securities and Exchange Commission on Form 10-K for the year
ended December 31, 2001. Due to these factors, the Company believes period-to-period comparisons of results of operations are not necessarily meaningful and should not
be relied upon as an indication of future results of operations. The potential fluctuations in the Company's operating results make it likely that, in some future quarter, the Company's operating
results will be below the expectations of securities analysts and investors, which would have a material adverse effect on the price of the Company's Common Stock.

Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's exposure to market risk for changes in interest rates relates primarily to borrowings under its $20 million credit facility, which consists
of a $12 million revolving credit line and an $8 million term loan. At March 31, 2001, there was $8.1 million in borrowings outstanding under this facility. Under the
facility, interest is computed on outstanding borrowings at the rate of (i) LIBOR plus 2.5% or (ii) the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus
0.5%. The Company believes that an increase or a decrease of ten percent in the effective interest rate on available borrowings on its facility, if fully utilized, would not have a material effect on
future results of operations.

The
Company is exposed to market risk as it relates to changes in the market value of its strategic investments. The Company made investments in and advances to companies in parallel or
synergistic industries to that of the Company's. During the quarter ended March 31, 2002, the Company recorded $0.2 million impairment losses on its investment in Spikes Cavell. As of
March 31, 2002, the Company had investments and advances totaling $7.6 million. These investments and advances are inherently risky because the investee companies are private companies
that are typically in the early development stages. Adverse changes in market conditions, like those experienced during the latter half of the year ended December 31, 2000 and during the year
ended December 31, 2001, and poor operating results of the underlying investments may result in the Company incurring additional losses or an inability to recover the remaining value of its
investments and advances.

The
Company is exposed to market risk as it relates to foreign currency exchange rates. Revenues and expenses in foreign currencies translate into higher or lower revenues and expenses
in U.S. dollars as the U.S. dollar weakens or strengthens against foreign currencies. Changes in foreign currency exchange rates may therefore negatively affect the Company's consolidated revenues and
expenses. Currency transaction gains or losses arising from transactions in currencies other than the functional currency of the Company's foreign subsidiaries are included in the results of
operations. Such gains and losses were not material to the Company's consolidated results of operations during the quarters ended March 31, 2001 and 2002. The Company has not entered into
foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.

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PART IIOTHER INFORMATION

Item 1.Legal Proceedings.

Other than ordinary routine litigation incidental to the Company's business which the Company believes is unlikely to have a material adverse effect on its
business, the Company is not a party, nor is any of its property subject to, any pending legal proceedings.

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



| |  | Exhibit
Number |  | Description                                                                                                   
| |  | -------------- |  | --------------------------------------------------------------------------------------------------------------
| |  | 10.1           |  | Amended and restated employment agreement between John A. Piontkowski and META Group, Inc. dated March 1, 2002
| |  | 11.1           |  | Statement regarding computation of per-share earnings                                                         



On
February 12, 2002, the Company filed a report on Form 8-K dated February 6, 2002, announcing (i) a strategic reorganization, including a 7%
workforce reduction, (ii) its estimated financial results for the quarter ended December 31, 2001, and (iii) its expectation to report its results for the fourth quarter and year
ended December 31, 2001 on February 21, 2002 after the market close, and its expectation to hold a conference call on February 22, 2002 to discuss the results and provide
expectations of future performance.

On
February 28, 2002, the Company filed a report on Form 8-K dated February 21, 2002, announcing (i) its financial results for the quarter and
year ended December 31, 2001, and (ii) that its operating loss for the quarter ended December 31, 2001 was greater than the operating loss estimated in its February 8, 2002
press release.

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SIGNATURE

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

|                   |  | META GROUP, INC.
|------------------ |  | ----------------
|                   |  |                 
|Date: May 15, 2002 |  | By:             

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EXHIBIT INDEX

|Exhibit
Number |  | Description                                                                                                    |  | Sequentially
Numbered
Page
|-------------- |  | -------------------------------------------------------------------------------------------------------------- |  | --------------------------
|10.1           |  | Amended and restated employment agreement between John A. Piontkowski and META Group, Inc. dated March 1, 2002 |  | *                         
|11.1           |  | Statement regarding computation of per-share earnings                                                          |  | *                         

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