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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

   /x/         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998

                                       OR

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

              For the transition period from ____________ to _____

                         Commission file number 0-23059


                             HEALTHWORLD CORPORATION
           (Exact name of the registrant as specified in its charter)


             Delaware                                    13-3922288
  (State or other jurisdiction              (I.R.S. Employer identification No.)
of incorporation or organization)


                 100 Avenue of the Americas, New York, NY 10013
                    (Address of principal executive offices)


                                 (212) 966-7640
                         (Registrant's telephone number)

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $0.01 par value

         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 /x/ No /_/

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

          As at March 10, 1999, approximately 7,427,987 shares of Common Stock
of the Registrant were issued and outstanding and the aggregate market value of
voting common stock held by non-affiliates was $43,557,759.

                      DOCUMENTS INCORPORATED BY REFERENCE:

         Portions of the Registrant's definitive Proxy Statement for its 1999
annual meeting of stockholders to be filed pursuant to Regulation 14A are hereby
incorporated by reference into Part III of this Form 10-K.


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                             HEALTHWORLD CORPORATION
                 INDEX TO ANNUAL REPORT ON FORM 10-K FILED WITH
                     THE SECURITIES AND EXCHANGE COMMISSION
                          YEAR ENDED DECEMBER 31, 1998

                               ITEMS IN FORM 10-K

                                                                            Page
                                                                            ----

                                     PART I

Item 1.  Business............................................................  2
Item 2.  Properties.......................................................... 14
Item 3.  Legal Proceedings................................................... 15
Item 4.  Submission of Matters to a Vote of Security Holders................. 15

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder
             Matters......................................................... 16
Item 6.  Selected Consolidated Financial Data................................ 17
Item 7.  Management's Discussion and Analysis of Financial Condition and
             Results of Operations........................................... 19
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.......... 29
Item 8.  Financial Statements and Supplementary Data......................... 29
Item 9.  Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure........................................ 56

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.................. 56
Item 11. Executive Compensation.............................................. 56
Item 12. Security Ownership of Certain Beneficial Owners and
             Management...................................................... 56
Item 13. Certain Relationships and Related Transactions...................... 56

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..... 57


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                                     PART I

         This 1998 Annual Report on Form 10-K contains statements which
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Those statements include statements regarding the
intent, belief or current expectations of the Registrant and its management
team. The Registrant's stockholders and prospective investors are cautioned that
any such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements. Such risks and
uncertainties include, among other things, competitive, economic and regulatory
factors in the healthcare marketing and communications industry and the
pharmaceutical and healthcare industry, general economic conditions, the ability
of the Registrant to manage its growth and successfully implement its business
strategy and other risks and uncertainties that are discussed herein.

Item 1.  BUSINESS

         On November 12, 1997, Healthworld Corporation acquired (the
"Consolidation"), in exchange for shares of its Common Stock, all of the issued
and outstanding common stock of each of (i) Girgenti, Hughes, Butler & McDowell,
Inc. and its affiliated entities ("GHB&M") and (ii) Milton Marketing Group
Limited and its subsidiaries ("Milton"). Unless otherwise indicated, all
references herein to the "Company" include (i) GHB&M and Milton and give effect
to the Consolidation, and (ii) include all of the other subsidiaries of
Healthworld Corporation formed or acquired subsequent to the Consolidation.
Unless otherwise indicated, all references herein to "Healthworld" refer to
Healthworld Corporation prior to the consummation of the Consolidation.

         Overview

         The Company is an international communications and contract sales
marketing organization specializing in healthcare. The Company provides many of
the world's largest pharmaceutical and healthcare companies with a comprehensive
range of integrated strategic marketing services designed to accelerate the
acceptance of new products and to sustain their growth. These integrated
services include advertising and promotion, contract sales, consulting, medical
education, public relations, marketing research, publishing, interactive
multimedia and database marketing services. The Company offers its clients
global reach and expertise through its operations in the United States, France,
Spain and the United Kingdom, and through Healthworld B.V., a world-wide network
of licensed independent marketing and communications agencies.

 
         Healthworld was incorporated in Delaware on September 12, 1996 and
conducted no operations prior to the consummation of the Consolidation on
November 12, 1997. In connection with the Consolidation, the entities comprising
GHB&M and Milton became wholly-owned subsidiaries of Healthworld on November 12,
1997. In July 1998, the Company acquired 80% of the capital stock of HFT, a
French holding company, which owns 100% of the capital stock of Torrent S.A., a
French healthcare communications agency, and its subsidiaries



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(collectively, the "HFT Group Companies"). In addition, in July 1998, the
Company acquired all of the capital stock of Colwood House Medical Publications
(UK) Limited ("Colwood"), a United Kingdom medical education company. In October
1998, the Company acquired all of the capital stock of CPA Espana, S.L. ("CPA
Spain"), a healthcare communications agency located in Madrid, Spain. These
acquisitions are sometimes collectively referred to herein as the "1998
Acquisitions". See "Management's Discussion and Analysis of Financial Condition
and Results of Operations Liquidity and Capital Resources".

         The Company conducts all of its operations in the United States through
GHB&M (the "U.S. Operations"), in the United Kingdom through Milton and Colwood,
in France through the HFT Group Companies and in Spain through CPA Spain. The
Operations of Milton, Colwood, the HFT Group Companies and CPA Spain are
collectively referred to herein as the "European Operations". GHB&M and Milton
have been operating in the marketing and communications industry since April
1986 and August 1978, respectively. See the Company's consolidated financial
statements contained elsewhere herein for additional financial information with
respect to the U.S. Operations and the European Operations.

         In November 1997, the Company consummated an initial public offering
(the "IPO"), pursuant to which the Company issued and sold an aggregate of
2,415,000 shares of its common stock, $.01 par value per share (the "Common
Stock").

         The Company's principal executive offices are located at 100 Avenue of
the Americas, New York, New York 10013. The Company's telephone number is (212)
966-7640.

         Services

         The Company provides a variety of communications and contract sales
services to its clients ranging from the execution of a discrete marketing
project to taking responsibility for a clients overall marketing message, which
enables the Company to incorporate a wide variety of its services into one
integrated marketing campaign. The Company seeks to develop brand loyalty and
awareness for its clients at all stages of a product's life-cycle and approaches
each project by carefully evaluating the product, the client's goals with
respect to such product and industry and competitive considerations.

         Revenues from the Company's U.S. Operations are derived primarily from
providing advertising and promotion, consulting and medical education services
to its clients. In addition, the Company offers other communications services
through its U.S. Operations to clients, including public relations, marketing
research, publishing, interactive multimedia and database marketing services. In
February 1998, the Company's U.S. Operations began offering contract sales
services to its healthcare related clients. Revenues from the Company's European
Operations are derived primarily from providing contract sales services and
advertising and promotion services. As a result of the Company's acquisition of
Colwood in July 1998, the Company's European Operations also began providing
medical education services.



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         Communications Services

         Advertising and Promotion. The Company's traditional advertising and
promotion services include developing creative concepts to be used in
advertising campaigns for pharmaceutical and other healthcare products and
applying such creative concepts to the development and production of a wide
variety of marketing and promotional materials, including: medical journal
advertisements, direct mail materials, sales force brochures, hospital displays,
convention exhibit panels, drug sample packages and reminder promotional items.
Such campaigns are targeted almost exclusively to physicians, nurses and other
healthcare providers as well as wholesale distributors. The Company also
analyzes marketing research data, which is either developed by the Company
(through various methods including focus group studies, telephone interview
studies and mailings) or obtained from its clients and other third-party
sources, to determine the most appropriate audience to target as well as the
types of marketing and promotional materials to employ in a campaign.

         In response to the growth of direct-to-consumer marketing ("DTC")
campaigns during the last five years, GHB&M expanded its advertising and
promotion services to include DTC. The Company believes that GHB&M was one of
the first firms to develop a DTC campaign for prescription drugs and has become
an industry leader in developing such DTC campaigns based on the number of DTC
assignments it has performed. Through a dedicated team engaged exclusively in
developing DTC campaigns, the Company believes it offers more specialized and
comprehensive services to its clients than firms which focus primarily on the
promotion of consumer products, generally, or on non-DTC advertising and
promotion of pharmaceutical products. In fiscal 1996, 1997 and 1998, the
Company's revenues from DTC assignments represented 20%, 16% and 11%,
respectively, of the Company's total revenues.
 

         The Company's U.S. Operations generated revenues from advertising and
promotion services of approximately $9.6 million in fiscal 1996, $13.0 million
in fiscal 1997 and $15.7 million in fiscal 1998, constituting 67%, 71% and 68%,
respectively, of its U.S. Operations' consolidated revenues. The Company's
European Operations generated revenues from advertising and promotion services
of approximately $3.1 million in fiscal 1996, $3.4 million in fiscal 1997 and
$5.8 million in fiscal 1998, constituting 31%, 20% and 14%, respectively, of the
European Operations' consolidated revenues. The Company's total revenues from
advertising and promotion services were approximately $12.7 million in fiscal
1996, $16.4 million in fiscal 1997 and $21.5 million in fiscal 1998,
constituting 52%, 46% and 34%, respectively, of the Company's total revenues.

         Consulting. The Company's consulting services include strategic
planning, new product development, clinical and regulatory affairs and health
economics. Clients retain the Company to assist them in the development of
strategic and business plans. Typically, the Company investigates and studies
the results of clinical trials and marketing research studies to formulate a
strategic direction for a client's products. The Company may recommend to its
clients, among other things, conducting cost effectiveness clinical studies,
extending patent life protection through line extensions, considering various
approaches to dealing with the FDA and developing pricing strategies and
specific clinical trials to support certain marketing objectives. The Company
currently subcontracts clinical and regulatory affairs and health economics



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consulting services to independent companies specializing in such services.
While the Company is currently considering expanding to provide such regulatory
affairs and health economics consulting services "in-house", there can be no
assurance that the Company will, in the future, expand into such services.

         The Company's U.S. Operations generated revenues from its consulting
services of approximately $1.8 million in fiscal 1996, $2.8 million in fiscal
1997 and $3.5 million in fiscal 1998, constituting 13%, 15% and 15%,
respectively, of the consolidated revenues of the Company's U.S. Operations, and
8%, 8% and 6%, respectively, of the Company's total revenues. The Company's
European Operations currently do not provide consulting services.

 
         Medical Education. The Company develops medical education programs
targeted primarily to healthcare providers that are tied closely to the strategy
and marketing goals of its pharmaceutical and healthcare clients, including
continuing medical education programs for which physicians obtain credit and are
required to complete in order to maintain their licenses. In addition to
planning, implementing and managing symposia, workshops and other conferences
that commonly utilize a multi-disciplinary faculty to address the full spectrum
of care on featured topics, the Company creates newsletters, articles, slide
lecture kits and posters. The Company also assists pharmaceutical and other
healthcare companies in developing, writing and placing journal articles and
supplements; and offers specialized training programs which incorporate new
training technologies that can be applied in selling pharmaceutical products to
non-traditional purchasers, including managed care organizations and public
health officials. The Company offers such services throughout a product's
life-cycle, including prior to regulatory approval, in order to create awareness
and generate interest among the healthcare community about such product prior to
such approval.

         The Company's U.S. Operations generated revenues from its medical
education services of approximately $1.4 million in fiscal 1996, $1.2 million in
fiscal 1997 and $1.6 million in fiscal 1998, constituting 10%, 7% and 7%,
respectively, of the consolidated revenues of the Company's U.S. Operations. The
Company's European Operations, which began offering medical education services
in July 1998 as a result of the Company's acquisition of Colwood, generated
revenues from its medical education services of approximately $1.7 million in
fiscal 1998, constituting 4% of the consolidated revenues of the Company's
European Operations. The Company's total revenues from medical education
services were approximately $1.4 million in fiscal 1996, $1.2 million in fiscal
1997 and $3.3 million in fiscal 1998, constituting 6%, 4% and 5%, respectively,
of the Company's total revenues.

         Public Relations. The Company provides a broad range of public
relations services to its clients, including tactical development, media
relations, crisis management, special events, public sponsorship packages,
professional and patient association liaison, grant and fellowship initiatives,
editorial projects, graphic design and video production. The Company typically
integrates its public relations programs into its overall marketing campaign for
a client. The Company believes that its in-depth knowledge of professional trade
and consumer media and its strong media contacts provide it with ongoing
opportunities to place high impact stories publicizing client products and
services.



                                       5
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         Marketing Research. The Company develops and offers its clients
specialized research programs to measure the "return on investment" ("ROI") of
its DTC and other marketing programs. The ROI model utilized by the Company is a
proprietary model based on a consumer products research methodology that has
been adapted and modified for use with respect to prescription drugs. Through
the use of its ROI model, the Company has established normative data that it
will use as benchmarks for future ROI studies. The Company believes that data
from such programming assists the Company and its clients in determining the
most effective means of marketing a particular product.

         Publishing. The Company offers management publications to
pharmaceutical companies as a marketing tool with respect to drugs used for long
term therapy for chronic conditions or illnesses such as asthma, arthritis,
ulcers, heart disease, diabetes and obesity. In addition, the Company believes
that such patient management publications can be utilized by insurers and
managed care companies as part of a disease specific patient management program
designed to educate a patient as to his or her disease, including treatment
options and lifestyle advice which may lead to an overall reduction in the cost
of treatment and care.

         Interactive Multimedia. The Company may from time to time incorporate
interactive multimedia and other new technologies into its programs and
campaigns. The Company has utilized virtually all existing digital formats,
including laser disc, kiosks, on-line and CD-ROM and owns an extensive archive
of over 4,000 medical illustrations which it incorporates in such multimedia
formats. The Company offers website design and updating, demographics targeting,
statistical measurement and list analysis.

         Database Marketing. The Company employs database technology to develop
and implement marketing campaigns that are targeted to specific audience
profiles. The Company utilizes its own or its clients' databases as well as
databases it leases from third parties (including the American Medical
Association).

         Revenues from public relations, marketing research, publishing,
interactive multimedia and database marketing services did not, in the
aggregate, constitute more than 7% of the Company's total revenues in any fiscal
year.

         Contract Sales Services

         The Company offers a flexible range of contract sales services which
are delivered primarily through dedicated sales teams. The Company's contract
sales teams form a network of trained professionals that provides clients with
substantial flexibility in selecting the extent and costs of promoting products
as well as the clients' level of involvement in managing the sales effort.
Dedicated sales teams are comprised of sales representatives recruited by the
Company, in accordance with client specifications, to conduct sales efforts for
a particular client. Dedicated sales teams can be managed by the Company or can
report directly to the client, depending on client preference.

         The Company believes that speed of recruitment, quality of training and
management of sales representatives, supported by information technology, are
key to providing clients with a sales force tailored to meet their geographic
and scheduling needs. The Company's



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ability to assemble a sales team quickly is a product of combining the talents
of experienced personnel for screening and interviewing candidates with the use
of information technology to expedite recruitment. The Company believes that it
can recruit a client-specific national sales force in as few as eight to twelve
weeks, depending on the assignment. Sound hiring procedures, supplemented by the
Company's internal training and development programs, help to ensure the quality
of recruited personnel.

         Currently, the Company provides its contract sales services in the
United States primarily to healthcare related companies and in the United
Kingdom primarily to consumer product, utility and healthcare related companies.
The Company hires sales personnel on a project-by-project basis, with the actual
number of representatives retained contingent upon a particular assignment. As
of December 31, 1998, the Company employed, either on a part-time or full-time
basis, approximately 800 contract sales representatives. The Company began
providing contract sales services to pharmaceutical and other healthcare product
companies in the United Kingdom in May 1997 and in the United States in February
1998.

         In February 1998, the Company began offering contract sales services in
the United States through Headcount LLC ("Headcount"), a limited liability
company which is managed by two senior managers both of whom have prior
experience in managing a contract sales organization dedicated specifically to
the pharmaceutical industry. The Company owns 85% of the members' equity in
Headcount and such senior managers own the remaining 15% of the members' equity.
The Company and such senior managers have entered into an operating agreement
with respect to, among other things, the business and management of Headcount
and the transfer or other disposition of any members' equity in Headcount. The
Company's contract sales operations in the United States currently focus, and
will continue to focus, primarily on pharmaceutical and other healthcare
products and services.

         The Company's European Operations generated revenues from its contract
sales services of approximately $6.6 million in fiscal 1996, $13.3 million in
fiscal 1997 and $32.6 million in fiscal 1998, constituting 67%, 78% and 81%,
respectively, of the consolidated revenues of the Company's European Operations.
The Company's U.S. Operations, which in prior years did not offer contract sales
services, generated revenues from its contract sales services of approximately
$795,000 in fiscal 1998, constituting 3% of the consolidated revenues of the
Company's U.S. Operations. The Company's total revenues from contract sales
services were approximately $6.6 million in fiscal 1996, $13.3 million in fiscal
1997 and $33.4 million in fiscal 1998, constituting 27%, 38% and 53%,
respectively, of the Company's total revenues.

         Healthworld B.V.

         Healthworld B.V. is a world-wide network of licensed independent
marketing and communications agencies which began operating in August 1993.
Healthworld B.V. was organized as a Dutch corporation by the Company and two
other founding licensees in response to the founders' belief that pharmaceutical
and other healthcare companies will increasingly seek to retain marketing and
communications companies with international reach and experience. Healthworld
B.V. generally operates as a trade organization through which its licensed
agencies provide business referrals to one another and, where appropriate, work
with other licensed agencies with respect to projects which require expertise in
other geographic markets. As such,



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Healthworld B.V. does not generate revenues from operations and is funded solely
by membership fees and royalty payments from its licensees. Healthworld B.V.
enables its member agencies to utilize the creative talents of other member
agencies that have expertise and knowledge of particular countries or geographic
regions to develop consistent and integrated multinational campaigns for the
clients of such member agencies.

         Healthworld B.V. currently consists of the Company, through GHB&M in
the United States, Milton in the United Kingdom, the HFT Group Companies in
France and CPA Spain in Spain, and other licensed independent marketing and
communications agencies located in Canada, Colombia, Denmark, Finland, Germany,
Holland, Hungary, Italy, Norway, Russia and Sweden. Member agencies are
carefully selected based on, among other things, quality of work, local
reputation, client base and certain other organizational and financial criteria.
Each member agency has entered into a license agreement with Healthworld B.V.
which provides, among other things, that such agency will perform services for
the clients of any other member agency upon request by such other member agency.
In addition, each such license agreement provides for the member agency to pay a
royalty fee to Healthworld B.V. and permits such member agency to use certain of
Healthworld's trademarks, including the "Healthworld" name, within its
geographic market.

         The Company owns 87% of the capital stock of Healthworld B.V., and the
remainder is owned by 6 other member agencies. Each agency that enters into a
license agreement with Healthworld B.V. is given the opportunity to become a
shareholder of Healthworld B.V. Healthworld B.V. is managed by a Board of
Directors consisting of five members, and the Company is entitled to designate 3
members.

         Although to date, Healthworld B.V. has neither conducted significant
operations nor contributed materially to the Company's operations, the Company
believes that Healthworld B.V. has enabled the Company to attract additional
clients based upon the Company's ability to offer more extensive global reach
and expertise.

         Strategy

         The Company's strategy is to capitalize on continued growth in
marketing and communications spending by pharmaceutical and other healthcare
companies by (i) maintaining and enhancing its creative excellence and technical
expertise, (ii) offering its clients a comprehensive range of integrated
services, (iii) continuing to specialize in healthcare marketing and
communications services, (iv) increasing its contract sales services, and (v)
further expanding globally. The Company intends to implement its strategy
through internal development and potential acquisitions.

         Maintain and Enhance Creative Excellence and Technical Expertise. The
Company seeks to recruit the best available creative talent to maintain its
creative excellence. The Company believes that its creative talent enables it to
develop new ways to effectively promote its clients' products. The Company
believes that it is an industry leader in the development of DTC campaigns for
prescription drugs and in the development of marketing strategies and campaigns
for "switching" a drug from prescription to over-the-counter (non-prescription)
status based on the number of assignments the Company has performed in such


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respective areas. GHB&M, which has consistently been recognized in the industry
as one of the top healthcare communications agencies, was named "Agency of the
Year" in 1993 and 1996 by Med Ad News, a medical advertising and communications
trade publication, based on a number of criteria, including creative marketing
ability and account wins and losses, and was a finalist for such award in 1992
and 1994. The Company was recently named as a finalist for the 1999 Agency of
the Year competition. GHB&M was also named "Most Creative Agency" by Med Ad News
in 1995 and the Company was nominated as a finalist for such award in 1999,
based on a poll of the presidents of the top 50 communications agencies. The
Company maintains a high level of technological expertise and utilizes new
interactive multimedia and other new technologies in its programs and campaigns.

         Offer a Comprehensive Range of Integrated Services. The Company
believes that its clients are continuing to expand their sales and marketing
efforts and require marketing and communications companies that can provide a
comprehensive range of integrated services. The Company's communications
services include advertising and promotion, consulting, medical education,
public relations, publishing, interactive multimedia and database marketing
services. The Company also provides contract sales and marketing research
services. Through such diversification, the Company is able to provide a
specific service or cross-sell multiple services to its clients within a fully
integrated campaign. The Company believes that it will continue to realize
significant benefits by capitalizing on available opportunities which may arise
to increase the number of services it provides.

         Continued Specialization in Healthcare. The Company will continue to
focus on providing its services primarily to pharmaceutical and other healthcare
companies. The Company believes that its expertise in, and understanding of, the
business, consumer, scientific, medical and regulatory issues relating to the
healthcare industry are critical in developing the most effective marketing
campaigns and strategies with respect to pharmaceutical and other healthcare
products and services. The Company's staff includes physicians, pharmacists,
biologists and other personnel with extensive experience in providing marketing
and communications services to healthcare companies. The Company intends to
continue to recruit experienced healthcare and scientific professionals to
ensure that its knowledge base remains up to date.

         Expansion of Contract Sales Services. Companies are increasingly
outsourcing certain marketing and sales services to contract sales
organizations. Historically, the Company's contract sales organization operated
only in the United Kingdom and provided its services primarily to consumer
products, utility and other non-healthcare related companies. In May 1997, the
Company began providing contract sales services to pharmaceutical and other
healthcare companies in the United Kingdom in order to take advantage of the
increased use by such companies of contract sales forces to market their
products. In February 1998, the Company began offering contract sales services
in the United States and such operations currently focus, and will continue to
focus, primarily on pharmaceutical and other healthcare products. The Company
believes that contract sales will enable it to complement its existing
communications services in the United States with a flexible sales force
designed to augment its clients' sales activities.

         The successful expansion of the Company's contract sales operations in
the United Kingdom and in the United States will be dependent on a number of
factors, including (i)



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its ability to effectively compete against the in-house sales departments of
pharmaceutical companies and contract sales organizations specializing in
pharmaceutical and other healthcare products, (ii) the hiring, training and
retention of qualified management personnel, and (iii) the ability to integrate
such contract sales operations into the Company's current structure. An
inability to manage future growth, compete effectively or successfully integrate
such contract sales operations could have a material adverse effect on the
Company's business, financial condition or results of operations.

         Extend Global Reach. The Company believes that pharmaceutical and other
healthcare companies will increasingly seek to retain marketing and
communications companies with international reach and experience. The Company
believes that it is well-positioned to address such future demand through its
U.S. Operations, its European Operations and through Healthworld B.V., a
world-wide network of licensed independent advertising agencies located in 11
other countries of which the Company is a founding licensee. Healthworld B.V.
generally operates as a trade organization through which its licensed agencies
provide business referrals to one another. In addition, Healthworld B.V. enables
the Company and its other member agencies to utilize the creative talents of
other member agencies that have expertise and knowledge of particular countries
or geographic regions in order to develop consistent and integrated
multinational campaigns for its clients. The Company currently intends to
continue to expand the Healthworld B.V. network and will regularly evaluate
opportunities to expand its business into new markets.

         Growth Through Acquisitions. In July 1998, the Company acquired all of
the capital stock of Colwood, a United Kingdom medical education company, and
80% of the capital stock of the HFT Group Companies, a French healthcare
communications agency, and, in October 1998, the Company acquired all of the
capital stock of CPA Spain, a healthcare communications company located in
Madrid, Spain. The Company intends to pursue further acquisitions of marketing
and communications companies specializing in healthcare in its existing markets
and elsewhere, including possibly acquiring additional Healthworld B.V. licensed
independent agencies. Although the Company believes that opportunities for
future acquisitions are currently available, due to considerable acquisitions
and consolidations in the marketing and communications industry in recent years,
increased competition for acquisition candidates exists and may continue in the
future. Consequently, there may be fewer acquisition opportunities available to
the Company as well as higher acquisition prices. There can be no assurance that
the Company will be able to identify, acquire, manage or successfully integrate
acquired businesses without substantial costs, delays or operational or
financial problems. While the Company regularly evaluates and discusses
potential acquisitions, the Company currently has no understandings, commitments
or agreements with respect to any acquisitions. While the Company may be
required to obtain additional financing to fund such future acquisitions,
currently the Company does not have any current commitments or arrangements for
additional financing and there can be no assurance that the Company will be able
to obtain additional financing on acceptable terms or at all.

         Clients

         The Company's communications clients are primarily pharmaceutical and
other healthcare companies, including healthcare service providers and
manufacturers of diagnostic



                                       10
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equipment, medical equipment, medical devices and medical supplies. The Company
currently provides its contract sales services in the United States to
healthcare related companies and in the United Kingdom primarily to consumer
products, utility and healthcare related companies. The Company's major clients
include many of the world's largest pharmaceutical companies; and the Company
has enjoyed long-standing relationships with many of such clients.

         The Company's revenues are highly dependent upon the advertising, sales
and marketing expenditures of pharmaceutical and other healthcare companies and
other non-healthcare clients. Generally, such clients are not bound to
individual communications and contract sales companies, and any client of the
Company could at any time in the future and for any reason, including a
prolonged economic recession or regulatory problems with respect to a product,
reduce its marketing budget, transfer its business to another agency or take
in-house all or part of the business performed by the Company.

         The Company derives a large portion of its revenues from a small number
of clients. These clients generally do not engage the Company on an exclusive
basis and may engage different companies for different services with respect to
their products or with respect to a particular product. Moreover, the contracts
with the Company's clients generally have a term of up to one year and are
generally renewable. Typically, such contracts may be terminated by the client
on short notice. As a result, the Company's results of operations may be
materially adversely affected by the loss of one or more of its clients, the
deterioration of the Company's relationship with any of its major clients, a
decline in the business of its major clients or a decline in the marketing and
communications spending by its major clients, either generally or with respect
to specific products for which the Company is engaged.

         For the 1996, 1997 and 1998 fiscal years, the five largest clients of
the Company represented an aggregate of 52%, 46% and 43%, respectively, of the
Company's total revenues. For the 1996, 1997 and 1998 fiscal years, American
Home Products (through its Wyeth-Ayerst Laboratories and Whitehall Laboratories
divisions) accounted for approximately 27%, 19% and 8%, respectively, of the
Company's total revenues, and Sterling Gas Utility Company accounted for
approximately 0%, 4% and 14%, respectively, of the Company's total revenues.

         Client conflicts of interest are inherent in the marketing and
communications industry, particularly with respect to pharmaceutical and other
healthcare clients for whom the Company performs services, due to the
proprietary nature of such clients' products. The Company's ability to compete
for new clients and assignments is limited by the Company's general practice,
and the practice followed by many of the Company's competitors, of not
representing competing products simultaneously. In addition, the Company is
often contractually precluded from representing a competing product. As a
result, the Company may not be retained by existing, new or potential clients
with respect to certain products if the Company provides marketing or
communications services with respect to competing products.

         Intellectual Property

         In 1997, the Company entered into a 50-year license agreement (the
"License Agreement") with Healthworld B.V. pursuant to which Healthworld B.V.
granted the Company rights to use the "Healthworld" and "Healthworld
Communications" trademarks, the tradename



                                       11
<PAGE>

"Healthworld" and the Healthworld logo, for $1.00 per year. Under the License
Agreement, Healthworld B.V. must obtain the Company's prior written consent
before further licensing such licensed property. Healthworld B.V. has trademarks
registered with the United States Patent and Trademark Office for the words
"Healthworld" and "Healthworld Communications" which expire in March 2004 and
for the Healthworld name together with its logo which expires in May 2005.
Healthworld B.V. also has trademarks registered or applications for such
registrations pending for the tradename "Healthworld" and the Healthworld logo
in the United Kingdom and in each of the other countries in which licensed
Healthworld B.V. agencies are located, as well as several other countries. The
Company considers all United States and European trademarks to be material to
its operations.

         Competition

         The healthcare communications and contract sales industries throughout
the United States and Europe are highly competitive. The Company competes with
many other marketing, communications and contract sales firms, including
international and regional full-service and specialty firms. Consolidation
within the pharmaceutical and healthcare industries as well as a trend by
pharmaceutical and healthcare companies to limit outsourcing of sales, marketing
and communications services to fewer organizations has heightened the
competition among such service providers. In addition, many of the larger
consumer product marketing and communications companies have acquired specialty
healthcare marketing and communications companies, which themselves have been
increasingly consolidating in recent years. For instance, each of Bozell,
Jacobs, Kenyon & Eckhardt, Grey Advertising, Interpublic Group, Omnicom Group
Inc., Saatchi & Saatchi Advertising Affiliates Holdings, Inc. and Young &
Rubicam Inc. has one or more divisions specializing in healthcare marketing and
communications. Many of these companies have substantially greater financial
resources, personnel and facilities than the Company. If the trend toward
consolidation continues, the Company may face greater competition for its
clients and for acquisition candidates. Although the Company believes it is able
to compete on the basis of the quality of its creative product, service,
reputation and personal relationships with clients, there can be no assurance
that the Company will be able to maintain its competitive position in the
industry.

         With respect to contract sales services provided to consumer products
and utility companies in the United Kingdom, the Company currently competes
against in-house sales departments of such companies and contract sales
organizations operating in the United Kingdom, many of which are larger and have
substantially greater financial resources. With respect to contract sales
services targeted to pharmaceutical and medical devices, the Company currently
competes in the United Kingdom and the United States against the in-house sales
departments of pharmaceutical companies and local contract sales organizations
specializing in pharmaceutical and medical device products. The primary
competitive factor affecting contract sales and marketing services is the
ability to quickly assemble, train and manage large qualified sales forces to
handle broad scale sales campaigns. The Company believes that it competes
favorably in these areas in the United Kingdom with respect to its
non-healthcare related contract sales services. However, with respect to
healthcare related contract sales services, there can be no assurance that the
Company will compete favorably in these areas in the United Kingdom or in the
United States.



                                       12
<PAGE>

         While there are relatively low barriers to entry into the marketing and
communications industry as a whole, the Company believes that its specific
expertise with respect to the pharmaceutical and healthcare industry
distinguishes it from prospective competitors attempting to develop healthcare
communications businesses. Notwithstanding the Company's expertise, it expects
that it will face additional competition from new entrants into the industry in
the future. There can be no assurance that existing or future competitors will
not develop or offer marketing communications services and products that provide
significant performance, creative, technical or other advantages over those
offered by the Company.

         Government Regulation

         While there are no laws that specifically regulate the healthcare
communications industry, the healthcare and pharmaceutical industries are
generally subject to a high degree of government regulation, and the trend is
toward regulation of increasing stringency. Federal, state, local and foreign
laws and regulations affect the permissible form, content and timing of
marketing activities involving pharmaceutical and other healthcare products.
Some of these laws relate to general considerations such as truthfulness,
comparative advertising and the relative responsibilities of clients and
advertising firms. Other laws, such as the Food, Drug and Cosmetics Act and the
anti-fraud and abuse laws and regulations affecting the Medicare, Medicaid and
other governmental healthcare programs, regulate the form, content and/or timing
of marketing activities involving pharmaceutical and other healthcare products,
including the permissible activities the Company may undertake to develop
markets for its clients' products. The Company has implemented a rigorous review
process, emphasizing the importance of compliance with regulatory matters. In
addition, the Company's clients generally follow a rigorous internal review
process.

         The healthcare industry is subject to changing political, economic and
regulatory influences that may affect pharmaceutical and other healthcare
companies, particularly with respect to spending by such companies on marketing
and communications services to promote their products. Numerous governments have
undertaken efforts to control growing healthcare costs through legislation,
regulation and voluntary agreements with medical care providers and
pharmaceutical and other healthcare product companies. Implementation of
government healthcare reform may adversely affect marketing expenditures by
pharmaceutical and other healthcare companies which could decrease the business
opportunities available to the Company. Management is unable to predict the
likelihood of healthcare reform legislation being enacted or the effects such
legislation would have on the Company. In addition, the success of the Company's
growth strategy depends on its ability to take advantage of certain industry
trends, including continued increases in overall spending levels by
pharmaceutical and other healthcare companies for marketing and communications
services. Such growth in spending levels has evolved rapidly in recent years,
and the Company is unable to predict whether such growth in spending will
continue at present levels or at all. The Company's results of operations could
be materially adversely affected in the event the Company is unable to respond
effectively to the enactment of healthcare reform legislation or changing
industry trends which may affect future spending levels by pharmaceutical and
other healthcare companies for marketing and communications services.



                                       13
<PAGE>

         Employees

         As of December 31, 1998, the Company employed 1,126 employees on a
full-time and part-time basis. The Company's U.S. Operations employed 173
employees of which 38 were part-time. The part-time employees worked primarily
in contract sales. The Company's European Operations employed 953 employees of
which 260 were part-time. Approximately 770 of the 953 employees were involved
in contract sales. The Company is not a party to any collective bargaining
agreement and the Company's employees are not represented by any labor union.
The Company considers its relationship with its employees to be good. The
Company's success depends, in large part, upon its ability to attract, develop,
motivate and retain highly skilled creative and technical employees, of which
there can be no assurance.
 

Item 2.  PROPERTIES.

         The Company maintains corporate headquarters in New York City in a
leased facility which occupies approximately 44,600 square feet of office space.
The lease for such office space is due to expire on December 31, 2009 and has
escalating rent currently at the base rate of $750,000 per annum which will
increase to $970,000 per annum from December 2003 through the expiration of the
lease. In October 1998, the Company entered into a lease for an additional
22,000 square feet of office space in the building where it maintains its
corporate headquarters. Currently this space is being sublet to an unaffiliated
tenant for a two-year period expiring in September 2000. Any amounts in excess
of the Company's rental payments received from the sublessee are remitted to the
rental agent.

         The Company leases approximately 18,000 square feet of office space in
various locations in the United Kingdom, of which 2,800 square feet are
currently sublet to third parties. The aggregate annual base rent for all of the
Company's United Kingdom facilities is approximately $386,000. The Company owns
approximately 5,300 square feet of office space in the United Kingdom obtained
as a result of the Colwood acquisition in July 1998.

         The Company leases approximately 2,400 square feet of office space in
Madrid, Spain. The aggregate annual base rent for all of the Company's Spain
locations is approximately $40,000.

         The Company leases approximately 7,104 square feet of office space in
France. The aggregate annual base rent for all of the Company's France locations
is approximately $115,000.

         The Company believes that its existing facilities are adequate to meet
its current operating needs and that suitable additional space would be
available to the Company on reasonable terms should the Company require
additional space to accommodate future operations or expansion.



                                       14
<PAGE>

Item 3.  LEGAL PROCEEDINGS.

         The Company is a party in various lawsuits incidental to its business
operations. In the opinion of the Company, none of such litigation in which it
is currently a party will have a material adverse effect on the Company's
financial condition or its operations as a result of an unfavorable outcome.

         The Company, as part of its business, develops marketing and
communications campaigns and materials for, and provides contract sales services
with respect to, pharmaceutical and other healthcare products, including newly
developed drugs. As a result, the Company may, in the future, be subject to
certain types of litigation, including claims arising from false or misleading
statements made with respect to the use or efficacy of such pharmaceutical and
healthcare products or, in limited circumstances, product liability claims.
Certain of the Company's contracts with its clients provide for the client to
indemnify the Company against such liabilities. In addition, the Company
maintains liability insurance, although there can be no assurance that the
coverage maintained by the Company will be sufficient to cover all future
claims. In certain limited circumstances, however, the Company is obligated to
indemnify its clients with respect to such claims and liabilities. The Company
could be materially and adversely affected if it were required to pay damages or
bear the costs of defending any claim outside the scope of, or in excess of, a
contractual indemnification provision or beyond the level of insurance coverage
or in the event that an indemnifying party does not fulfill its indemnification
obligations. Even if any such claim was without merit, defending against such
claim could result in adverse publicity and diversion of management's time and
attention and could have a material adverse effect on the Company.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not applicable.



                                       15
<PAGE>

                                     PART II

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

         On December 4, 1997, the Company completed its IPO, pursuant to which
it issued and sold an aggregate of 2,415,000 shares of Common Stock. The Common
Stock has been listed for quotation on The Nasdaq National Market under the
symbol "HWLD" since November 21, 1997, the date that the Company's Registration
Statement on Form S-1 relating to the IPO was declared effective by the
Securities and Exchange Commission. As of March 16, 1999, there were
approximately 24 holders of record of the Common Stock. The Company believes
that as of March 16, 1999, there were approximately 910 beneficial owners of the
Common Stock.

         The following table sets forth the range of high and low sales prices
for the Company's Common Stock for the periods indicated:

                                  1998                          1997
                        --------------------------    --------------------------
                               Sales Price                   Sales Price
                        --------------------------    --------------------------
   Quarter Ended           High          Low             High          Low
   ------------------   ------------ -------------    ------------ -------------

   March 31              $    19.38     $    9.75              --            --
   June 30                    19.00         12.00              --            --
   September 31               17.50         12.13              --            --
   December 31                15.63         10.25       $   12.75     $    9.00



         Dividends

         Prior to the consummation of the Consolidation on November 12, 1997,
the companies comprising GHB&M (other than Syberactive, Inc. ("Syberactive"),
which was always treated as a C corporation) elected to be treated as S
corporations whereby income or loss of each of such companies was allocated to
its stockholders by inclusion in their respective individual income tax returns.
As a result of the consummation of the Consolidation, the status of each of the
companies comprising GHB&M (other than Syberactive) as S corporations terminated
and each of the companies comprising GHB&M became subject to federal and state
income taxes at applicable corporate rates.

         In connection with the termination of the status of each of the
companies comprising GHB&M (other than Syberactive) as S corporations, GHB&M
entered into an agreement under which, prior to the consummation of the
Consolidation, GHB&M sold approximately $2.6 million of its accounts receivable
to an unaffiliated financial institution at a discount rate equal to 2% of the
gross face amount of the accounts receivable sold (the "Accounts Receivable
Sale"). Immediately prior to the consummation of the Consolidation, GHB&M made
distributions (the "S corporation Distributions") to its stockholders of $3.7


                                       16
<PAGE>

million in the aggregate from existing cash balances for the payment by such
stockholders of taxes due on GHB&M's estimated 1997 S corporation earnings
through the date of the Consolidation (including taxable earnings arising from
the Accounts Receivable Sale).

         Healthworld has never declared or paid a dividend on its Common Stock.
The companies comprising GHB&M, as S corporations (other than Syberactive, which
has always been treated as a C corporation), made cash distributions to the
stockholders of GHB&M of an aggregate of $1.5 million in fiscal 1996, $498,000
in fiscal 1997 and, immediately prior to the consummation of the Consolidation
on November 12, 1997, made the S corporation Distributions of approximately $3.7
million. The companies comprising Milton paid no cash dividends on their common
stock to the stockholders of Milton in fiscal 1996 and an aggregate of $160,000
in fiscal 1997. 

         The Company intends to retain all future earnings, if any, to finance
the expansion of its business and for general corporate purposes, including
future acquisitions, and does not anticipate paying any cash dividends on its
Common Stock for the foreseeable future. Any future determination to pay cash
dividends will be at the discretion of the Board of Directors and will be
dependent on the Company's financial condition, results of operations, financial
requirements and such other factors as the Board of Directors deems relevant.

Item 6.  SELECTED CONSOLIDATED FINANCIAL DATA.

         The following selected consolidated financial data as of and for the
years ended December 31, 1996, 1997 and 1998 have been derived from the
Company's audited Consolidated Financial Statements which are included elsewhere
herein and should be read in conjunction with those Consolidated Financial
Statements and notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations. The following selected
consolidated financial data as of and for the year ended December 31, 1994 and
as of December 31, 1995 have been derived from the Company's audited
Consolidated Financial Statements not included herein.



                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                        -----------------------------------------------------------
                                                                 (In thousands, except per share data)
                                                          1994        1995         1996         1997         1998
                                                        -------      -------     --------      -------      -------

<S>                                                     <C>          <C>         <C>           <C>          <C>
Statement of Income Data:
Revenues......................................          $13,081      $16,767      $24,209      $35,292      $63,677
                                                        -------      -------     --------      -------      -------
Operating expenses
     Salaries and related costs...............            7,890        9,857       15,733       24,186       47,296
     Other operating expenses.................            3,385        4,015        4,581        5,427        8,450
     Depreciation and amortization............              328          410          627          849        1,129
                                                        -------      -------     --------      -------      -------
                                                         11,603       14,282       20,941       30,462       56,875
                                                        -------      -------     --------      -------      -------

Income from operations........................            1,478        2,485        3,268        4,830        6,802
Interest (expense) income, net................              (14)          (2)         (69)          86          642
                                                        -------      -------     --------      -------      -------
Income before provision for income taxes and
     minority interests.......................            1,464        2,483        3,199        4,916        7,444
Provision for income taxes....................              136          283          524          719        2,976
Minority interests in net earnings of subsidiary             39           68          124          192           42
                                                        -------      -------     --------      -------      -------
Net income....................................          $ 1,289      $ 2,132     $  2,551      $ 4,005      $ 4,426
                                                        =======      =======     ========      =======      =======

Pro forma information (1) :
     Net income...............................          $1,289      $2,132         $2,551       $4,005      $ 4,426
     Pro forma adjustment for income
         taxes................................             477         755            781        1,304          ---
                                                       -------      ------         ------       ------      -------
     Pro forma net income.....................         $   812      $1,377         $1,770       $2,701        4,426
                                                       =======      ======         ======       ======      =======

Pro forma per share information (1): 
    Net income per common share:
         Basic................................            $0.17        $0.29        $0.37        $0.54        $0.60
                                                          =====        =====        =====        =====        =====
         Diluted..............................            $0.17        $0.29        $0.37        $0.54        $0.58
                                                          =====        =====        =====        =====        =====

Net income per share information: 
    Net income per common share:
         Basic................................         $   0.27     $   0.45     $   0.54     $   0.80     $   0.60
                                                       ========     ========     ========     ========     ========
         Diluted..............................         $   0.27     $   0.45     $   0.54     $   0.79     $   0.58
                                                       ========     ========     ========     ========     ========

Common shares used in computing
    per share amounts:
         Basic................................            4,741        4,741        4,741        5,037        7,415
                                                          =====        =====        =====        =====        =====
         Diluted..............................            4,741        4,741        4,741        5,047        7,592
                                                          =====        =====        =====        =====        =====

<CAPTION>
                                                                           As of December 31,
                                                     ---------------------------------------------------------------
                                                                             (In thousands)
                                                       1994          1995         1996         1997          1998
                                                       ----          ----         ----         ----          ----
<S>                                                    <C>          <C>          <C>          <C>           <C>
Balance Sheet Data:
Working capital...............................         $ 2,391      $ 3,904      $ 4,132      $18,953       $ 9,534
Total assets..................................          13,913       16,688       20,536       41,809        50,871
Long-term debt, including current portion.....             733        1,223        1,419        1,156           384
Stockholders' equity..........................           3,880        5,235        6,372       24,766        29,201
</TABLE>

----------

(1)  Gives pro forma effect to C corporation taxation for GHB&M for the years
     ended December 31, 1994, 1995, 1996 and 1997



                                       18
<PAGE>

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

         The following discussion should be read in conjunction with the
Company's audited Consolidated Financial Statements and notes thereto appearing
elsewhere herein.

         Introduction

         Healthworld was incorporated in Delaware on September 12, 1996 and
conducted no operations prior to the consummation of the Consolidation on
November 12, 1997. Healthworld is a holding company whose principal assets are
the common stock of GHB&M, Milton, the HFT Group Companies, Colwood, and CPA
Spain. Healthworld entered into separate Agreements and Plans of Organization
(the "Consolidation Agreements") in October 1997 with the stockholders of GHB&M
and Milton and, pursuant thereto, acquired GHB&M and Milton on November 12,
1997. As a result of the Consolidation, all of the shares of GHB&M and Milton
(including the minority interests in the subsidiaries of Milton) were acquired
by Healthworld, and GHB&M and Milton became wholly-owned subsidiaries of
Healthworld.

         The Consolidation has been accounted for as a pooling of interests,
which method of accounting assumes that GHB&M and Milton have been combined from
inception and restates the historical financial statements for the periods prior
to the consummation of the Consolidation as though GHB&M and Milton had been
combined from inception. The acquisition by Healthworld of the minority
interests in certain of the subsidiaries comprising Milton occurred
simultaneously with the acquisition by Healthworld of GHB&M and Milton Marketing
Group Limited, and has been accounted for under the purchase method of
accounting.
 
         In July 1998, the Company acquired 80% of the capital stock of HFT, a
French holding company, which owns 100% of the capital stock of Torrent SA, a
French healthcare communications agency, which in turn owns 100% of the capital
stock of Aigue Marine SARL and Katchina Productions SARL, each a French company.
In addition, in July 1998, the Company acquired all of the capital stock of
Colwood, a United Kingdom medical education company. Subsequently, in October
1998, the Company acquired all of the capital stock of CPA Spain, a healthcare
communications agency located in Madrid, Spain. The 1998 Acquisitions have been
accounted for using the purchase method of accounting, whereby the excess
purchase price over the fair value of the respective net assets acquired is
recorded as goodwill.
 
         General

         The Company offers its clients a comprehensive range of integrated
services throughout a product's life-cycle, from the development stage
(pre-regulatory approval) to product launch and continuing through the
post-launch stage and, if applicable, such product's switch from prescription to
over-the-counter status. The Company derives its revenues from fees generated
from providing communications and contract sales services to its clients.

         The Company has provided contract sales services since January 1994.
Historically, the Company's contract sales organization operated only in the
United Kingdom and provided its services primarily to consumer products
companies, utilities and other non-healthcare related companies. In May 1997,
the Company began providing contract sales



                                       19
<PAGE>

services to pharmaceutical and other healthcare companies in order to take
advantage of the increased use by such companies in the United Kingdom of
contract sales forces to market their products. In February 1998, the Company
began offering contract sales services in the United States, and such operations
currently focus, and will continue to focus, primarily on pharmaceutical and
other healthcare products.

         Historically, the Company's results of operations have been subject to
quarterly fluctuations. Generally, the Company's revenues and profits have been
lowest in the first quarter and highest in the fourth quarter. The Company's
quarterly revenue trends result from a number of factors including, among other
things, the timing of commencement, completion or cancellation of major projects
and industry billing practices which are tied to clients' annual marketing
budgets, while the Company's communications services expenses generally remain
constant throughout the year. The Company's quarterly results may fluctuate as a
result of such factors and a number of additional factors, including delays or
costs associated with acquisitions, government regulatory initiatives and
general conditions in the healthcare industry. The Company believes that because
of such fluctuations, quarterly comparisons of its financial results cannot be
relied upon as an indication of future performance.

         Milton and Colwood operate only in the United Kingdom, the HFT Group
Companies operate only in France, and CPA Spain operates only in Spain. As a
result, the Company is susceptible to foreign exchange rate fluctuations between
the British Pound Sterling, the French Franc and the Spanish Peseta,
respectively, and the U.S. Dollar. The Company's financial statements are
denominated in U.S. Dollars, and accordingly, changes in the exchange rate
between the British Pound Sterling, the French Franc and the Spanish Peseta
against the U.S. Dollar will affect the translation of the European Operations'
financial results into U.S. Dollars for purposes of reporting the Company's
consolidated financial results.



                                       20
<PAGE>

         Results of Operations

         The following table sets forth certain total income statement data of
the Company expressed as a percentage of revenues for the periods indicated.


<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                              -------------------------------------------
                                                                   1996           1997            1998
                                                              -----------     -----------     -----------
         <S>                                                  <C>             <C>             <C>
         Statement of Income Data:
         Revenues ....................................              100.0%          100.0%          100.0%
          Operating expenses
               Salaries and related costs ............               65.0            68.5            74.3
               General and office expenses ...........               18.9            15.4            13.3
               Depreciation and amortization .........                2.6             2.4             1.7
                                                              -----------     -----------     -----------
                                                                     86.5            86.3            89.3

          Income from operations .....................               13.5            13.7            10.7
          Interest (expense) income, net .............               (0.3)            0.2             1.0
                                                              -----------     -----------     -----------
          Income before provision for income taxes
               and minority interests ................               13.2            13.9            11.7
          Provision for income taxes .................                2.2             2.0             4.6
          Minority interests in net earnings of
               subsidiary ............................                0.5             0.6             0.1
                                                              -----------     -----------     -----------
         Net income ..................................               10.5%           11.3%           7.0%
                                                              ===========     ===========     ===========

         Pro forma information:
              Income before provisions for income
                 taxes and minority interests ........               13.2%           13.9%
              Pro forma provision for income taxes                    5.4             5.6
              Minority interests in net earnings of
                 subsidiaries.........................                0.5             0.6
                                                              -----------     -----------
              Pro forma net income...................                 7.3%            7.7%
                                                              ===========     ===========
</TABLE>

 ---------

*Percentages may not correspond to financial statements due to rounding.



                                       21
<PAGE>

Fiscal 1998 Compared to Fiscal 1997

         Revenues

                  Revenues for 1998 were $63.7 million, an increase of $28.4
million, or 80.4%, from $35.3 million for 1997. Contract sales revenues
increased to $33.5 million, an increase of 150.9% from $13.3 million in 1997.
This was attributable to the growth of the contract sales operation in the
United Kingdom, which resulted primarily from additional field marketing
business from existing clients. Communications revenues for 1998 increased to
$30.2 million, an increase of 37.7% from $22.0 million for 1997. Of such
increase, approximately $3.8 million was attributable to revenues derived as a
result of business generated by the 1998 Acquisitions in 1998. The remaining
increase was primarily attributable to the growth of the Company's United States
advertising and promotion services, which resulted from continued growth out of
existing client relationships as well as assignments from new clients.

         Salaries and Related Costs

                  Salaries and related costs for 1998 were $47.3 million, an
increase of $23.1 million, or 95.6%, from $24.2 million for 1997. Salaries and
related costs include all compensation and related benefits for all employees
and contracted talent. Such increase was attributable to (i) approximately $16.0
million of additional salaries and related costs commensurate with the growth of
the Company's U.K. and U.S. contract sales operations, (ii) approximately $2.8
million relating to the additional support staff hired to handle the increased
level of contract sales business activity in the U.K., and salaries related to
the start-up of the U.S. contract sales division, (iii) approximately $2.2
million related to the growth of the Company's U.S. communications business, and
(iv) approximately $1.9 million related to staffing costs incurred in connection
with the 1998 Acquisitions. Salaries and related costs represented 74.3% of
revenues in 1998, compared to 68.5% in 1997. Such increase, as a percentage of
revenues, was primarily attributable to the growth of the Company's U.K.
contract sales operations and the corresponding increase in labor costs and
increased staffing costs for such operations. Generally, labor costs associated
with contract sales operations are greater as a percentage of corresponding
revenues than those for the Company's other services.

         General and Office Expenses

                  General and office expenses for 1998 were $8.5 million, an
increase of $3.0 million or 55.7%, from $5.4 million for 1997. General and
office expenses primarily include occupancy and related costs, client
development and other related administrative costs. Such increase was
attributable to (i) increased business development costs and start-up costs for
the U.S. contract sales division of approximately $1.2 million, (ii) $470,000 of
write-off costs associated with the loss of Ionica, a large U.K. contract sales
client (this client filed for receivership, the United Kingdom equivalent of
bankruptcy in the United States, in 1998), (iii) increased occupancy and
occupancy related costs of approximately $360,000, (iv) increased professional
and other related costs of approximately $289,000, partially attributable to
costs associated with the transition of the Company from a private company to a
public company and (v) $693,000 of additional costs as a result of the 1998
Acquisitions. General and office expenses represented 13.3% of revenues in 1998,
compared to 15.4% of revenues in 1997. The decrease in general and office
expenses, as a percentage of revenues, was primarily attributable to general and
office expenses generally being fixed relative to increases in the Company's
revenues.



                                       22
<PAGE>

         Depreciation and Amortization

                  Depreciation and amortization for 1998 was $1.1 million, an
increase of $280,000 or 33.0% from $849,000 for 1997. The increase was primarily
attributable to additional amortization expenses related to the 1998
Acquisitions, which were accounted for under the purchase method of accounting.
Depreciation and amortization represented 1.8% of revenues for 1998, compared to
2.4% for 1997.

         Income From Operations

                  Income from operations for 1998 was $6.8 million, an increase
of $2.0 million, or 40.8%, from $4.8 million for 1997. Income from operations
represented 10.7% of revenues for 1998, compared to 13.7% for 1997, the decrease
being attributable to (i) start-up costs for the U.S. and U.K. medical contract
sales businesses, (ii) $470,000 of write-off costs associated with the loss of
Ionica, a large U.K. contract sales client, and (iii) the sharp increase in the
Company's U.K. contract sales revenues, the profit margins of which are
generally lower than those of the communications segment.

         Interest (Expense) Income, Net

                  Interest (expense) income, net for 1998 was $642,000, an
increase of $556,000 from $86,000 for 1997, resulting primarily from higher cash
and cash equivalents balances for 1998 primarily attributable to the receipt of
the net proceeds from the Company's IPO, which resulted in net offering proceeds
of $16.4 million (net of related expenses). The IPO was consummated in November
1997.

         Provision for Income Taxes

                  The provision for income taxes for 1998 was $3.0 million, an
increase of $2.3 million from $719,000 for 1997. Such increase was primarily
attributable to the Company being taxed as a C corporation for 1998. Through the
date of the Consolidation, certain of the companies comprising GHB&M were
treated as S corporations, pursuant to which income or loss of each of such
companies was allocated to its stockholders by inclusion in their respective
individual income tax returns.

         Net Income

                  Net income for 1998 was $4.4 million, an increase of $421,000,
or 10.5%, from $4.0 million for 1997. Net income represented 7.0% of revenues
for 1998 compared to 11.3% for 1997. Net income on a pro forma basis for 1997
was 7.7% of revenues.



                                       23
<PAGE>

Fiscal 1997 Compared to Fiscal 1996

         Revenues

                  Revenues for 1997 were $35.3 million, an increase of $11.1
million, or 45.8%, from $24.2 million for 1996. Of such increase, (i) $6.7
million was attributable to the growth of the Company's contract sales
operations, of which $3.3 million was attributable to business from new clients
and $3.4 million was attributable to net new projects from existing clients and
(ii) $3.3 million and $984,000 was attributable to revenues from advertising and
promotion and consulting services, respectively, of which approximately $1.0
million was attributable to business from new clients and the remaining amount
resulted primarily from new projects from existing clients.

         Salaries and Related Costs

                  Salaries and related costs for 1997 were $24.2 million, an
increase of $8.5 million, or 53.7%, from $15.7 million for 1996. Such increase
was primarily attributable to (i) $4.9 million of additional labor and other
direct costs related to the Company's contract sales operations, and $700,000
relating to additional management staff for increased contract sales operations,
(ii) $1.3 million relating to additional staff hired to support the increased
level of business activity in the United States and (iii) $800,000 relating to
staffing costs in the United Kingdom incurred in anticipation of increased
business activity in advertising and promotion and public relations which did
not occur in the period. Salaries and related costs represented 68.5% of
revenues in 1997 compared to 65.0% in 1996. Such increase, as a percentage of
revenues, was primarily attributable to the growth of the Company's contract
sales operations and the corresponding increase in labor costs of such
operations, and increases in salaries and other costs. Generally, labor costs
associated with contract sales operations are greater as a percentage of
corresponding revenues than those for the Company's other services.

         General and Office Expenses

                  General and office expenses for 1997 were $5.4 million, an
increase of $846,000, or 18.5%, from $4.6 million for 1996. Such increase was
primarily attributable to (i) additional rent and occupancy costs of $500,000
primarily related to expanded office space in the United Kingdom and (ii)
increased costs of $300,000 primarily related to increased business development
costs, and the growth of the Company's contract sales operations. General and
office expenses represented 15.4% of revenues in 1997, compared to 18.9% in
1996. The decrease in other operating expenses, as a percentage of revenues, was
primarily attributable to such expenses generally being fixed relative to
increases in the Company's revenues.

         Depreciation and Amortization

                  Depreciation and amortization for 1997 was $849,000, an
increase of $222,000, or 35.4%, from $627,000 for 1996. Depreciation and
amortization represented 2.4% of revenues in 1997, compared to 2.6% in 1996.



                                       24
<PAGE>

         Income from Operations

                  Income from operations for 1997 was $4.8 million, an increase
of $1.6 million, or 47.8%, from $3.3 million for 1996. Income from operations
represented 13.7% of revenues in 1997, compared to 13.5% in 1996.

         Interest (Expense) Income, Net

                  Interest (expense) income, net for 1997 was $86,000, an
increase of $155,000 from ($69,000) for 1996, resulting primarily from higher
cash and cash equivalents balances for 1997 primarily attributable to the
receipt of $16.4 million of net proceeds (net of related expenses) from the
Company's IPO. The IPO was consummated in November 1997.

         Provision for Income Taxes

                  The provision for income taxes fluctuated in 1996, 1997 and
1998 primarily as a result of the dollar amount of income before provision for
income taxes. It should be noted that the low effective income tax rate in 1996
and 1997 is primarily the result of the Company's U.S. subsidiaries being
treated as S Corporations rather than C Corporations for the period up until
November 12, 1997.

         Net Income

                  Net income for 1997 was $4.0 million, an increase of $1.5
million, or 57.0%, from $2.6 million for 1996. Net income represented 11.3% of
revenues for 1998 compared to 10.5% for 1996.



                                       25
<PAGE>

Liquidity and Capital Resources

                  In November 1997, the Company consummated its IPO, pursuant to
which the Company issued and sold an aggregate of 2,415,000 shares of Common
Stock (including 315,000 shares issued and sold in December 1997 pursuant to the
exercise by the underwriters of an over-allotment option) at a per share price
of $9.00. The net proceeds received by the Company in the IPO were $16.4
million, after deducting underwriting discounts and commissions, an
underwriters' non-accountable expense allowance and other expenses payable by
the Company in connection with the IPO.

                  During fiscal 1998, cash provided by operations was
approximately $4.5 million, and primarily consisted of net income for the period
of approximately $4.4 million, non-cash charges of approximately $1.5 million,
an increase in advance billings of $851,000 and an increase in accounts payable
of $490,000. This was partially offset by an increase in accounts receivable of
approximately $2.0 million and an increase in unbilled production charges of
approximately $1.3 million. Cash used in investing activities was approximately
$14.7 million and was attributable to (i) approximately $12.3 million in cash
spent acquiring new businesses, net of cash received in such acquisitions, (ii)
approximately $1.6 million increase in restricted cash primarily related to
amounts placed in an interest-bearing escrow account to be used for potential,
future earn-out payments related to the acquisition of Colwood and (iii) capital
expenditures, net of approximately $970,000. Cash used in financing activities
was approximately $1.5 million and consisted of repayments of bank loans and a
line of credit of approximately $1.3 million, and capital lease payments of
$135,000.

                  The Company's working capital was approximately $9.5 million
at December 31, 1998, compared to approximately $19.0 million at December 31,
1997. The decrease in working capital at December 31, 1998, as compared to
December 31, 1997, was primarily attributable to the initial cash payments and
related expenses for the 1998 Acquisitions partially offset by cash provided by
operations of $4.5 million.

                  The Company maintains relationships with a number of banks in
the United States and Europe which have extended various secured and unsecured,
uncommitted and committed lines of credit in amounts sufficient to meet the
Company's cash needs. At December 31, 1998, the Company had a $3.5 million
secured, uncommitted line of credit in the United States expiring June 30, 1999
(currently being renegotiated), and secured and unsecured, committed lines of 
credit and overdraft facilities outside of the United States in an aggregate 
amount of approximately $1.9 million. The Company presently has no amounts 
outstanding to date under such lines of credit or overdraft facilities.
 

                  In July 1998, the Company acquired the HFT Group Companies, a
French healthcare communications agency. The Company's initial cash purchase
price was 20.3 million French Francs (approximately US$3.4 million) including
expenses related to the acquisition. Total amounts to be paid in connection with
the acquisition, including potential, future earn-out payments to take place on
or prior to April 15, 2000 and April 15, 2002 based upon a multiple of operating
income of the HFT Group Companies and the seller's option to sell and the


                                       26
<PAGE>

Company's option to purchase the remaining 20% of the capital stock of HFT, will
not exceed 48.0 million French Francs (approximately US$8.1 million).

                  In July 1998, the Company acquired all of the capital stock of
Colwood, a United Kingdom medical education company. The Company's initial cash
purchase price was (pound)4.5 million (approximately US$7.5 million) including
expenses related to the acquisition. Total amounts to be paid in connection with
the acquisition, including potential, future earn-out payments to take place in
April 2000 and August 2001 based upon Colwood achieving certain targeted
operating profits, are not to exceed approximately (pound)8.0 million
(approximately US$13.3 million).

                  Pursuant to the acquisition agreement with respect to the
Colwood transaction, the Company deposited an amount equal to (pound)1.0 million
(approximately US$1.7 million) in an interest-bearing escrow account to be
applied towards the potential, future earn-out payments to be made in April 2000
and August 2001, and may be required to deposit into such escrow account
additional amounts based on net operating profits to be applied towards such
potential, future earn-out payments. Accordingly, such committed amounts will
not be available for working capital purposes.

                  In October 1998, the Company acquired all of the capital stock
of CPA Spain, a healthcare communications agency located in Madrid, Spain. The
Company's initial cash purchase price was approximately 261 million Spanish
Pesetas (approximately US$1.9 million) including expenses related to the
acquisition. Total amounts to be paid in connection with the acquisition,
including potential, future earn-out payments to take place in April 2000 and
April 2003 based upon CPA Spain achieving certain targeted operating profits,
are not to exceed approximately 710 million Spanish Pesetas (approximately
US$5.1 million).

                  In fiscal 1998, the Company spent approximately $970,000 for
capital expenditures, primarily related to the European Operations. The Company
anticipates that capital expenditures for the 1999 fiscal year will total
approximately $1.0 million. Such expenditures will primarily include spending
associated with the expansion of the Company's New York offices and the
acquisition of additional office furniture and computer equipment for the
Company's U.S. and U.K. offices.

                  In connection with the Consolidation, the Company will pay to
one of Milton's former minority stockholders no later than July 31, 1999 an
amount in cash up to approximately $320,000 based on the profits earned by PDM
Communications Limited.

                  Management believes that cash generated from the Company's
operations and available to the Company under various lines of credit are
adequate to support its short-term cash requirements for capital expenditures
and maintenance of working capital.

                  Inflation did not have a significant impact upon the results
of the Company during fiscal 1996, 1997 or 1998.



                                       27
<PAGE>

Impact of Year 2000

                  The Year 2000 issue results from the inability of some
computer programs to identify the year 2000 properly, potentially leading to
errors or system failure. A company's business may be adversely affected if it,
or any of its suppliers, customers or other third parties with whom it transacts
business (including banks and governmental agencies), have not resolved the Year
2000 issue in a timely manner.

                  The Company's internal computing systems are primarily limited
to hardware and software for its financial systems, such as general ledger,
accounts receivable and accounts payable systems, and word processing, database
and graphic design systems. The Company is not dependent on large legacy
systems, and the Company believes that it could replace any of its software or
systems, if necessary, quickly and at reasonable expense.

                  The Company has completed its internal review with respect to
Year 2000 issues. The Company does not believe Year 2000 issues, within its
internal information systems, will have a material adverse effect on the
Company's business, financial condition or results of operations. The Company
believes that its internal computer systems used in its U.S. Operations and
France are currently Year 2000 compliant, and that those used in its United
Kingdom and Spanish operations, to the extent not already Year 2000 compliant,
will be made Year 2000 compliant by June 1999.

                  The Company has completed its review of the Year 2000
readiness of its clients and vendors in the United States and France and
believes, based upon such review, that such parties should not cause a material
disruption in the Company's business due to Year 2000 issues. The Company is
currently working with critical third parties in the United Kingdom and Spain to
determine the impact of Year 2000 issues on the various third party businesses
and operations in the United Kingdom and Spain and the collateral impact, if
any, on the business and operations of the Company and the plans to address Year
2000 issues where third party systems interface with the Company's systems.

                  To date, the cost of the Company's Year 2000 assessment and
compliance efforts has not been material to the Company's results of operations
or liquidity and the Company does not anticipate that the cost of completing its
assessment and compliance project will be material to its results of operations
or liquidity in 1999. The Company is not aware, at this time, of any Year 2000
non-compliance that will materially affect the Company.



                                       28
<PAGE>

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK.

         The Company, as a result of doing business outside of the United
States, is susceptible to foreign exchange rate fluctuations. Milton and Colwood
operate only in the United Kingdom, the HFT Group Companies operate only in
France, and CPA Spain operates only in Spain. As a result, the Company is
susceptible to rate fluctuations between the British Pound Sterling, the French
Franc and the Spanish Peseta, respectively, and the U.S. Dollar. The Company's
financial statements are denominated in U.S. Dollars, and accordingly, changes
in the exchange rate between the British Pound Sterling, the French Franc and
the Spanish Peseta against the U.S. Dollar will affect the translation of the
European Operations' financial results into U.S. Dollars for purposes of
reporting the Company's consolidated financial results. The Company does not
utilize derivative financial instruments to hedge against changes in foreign
exchange rates or for any other purpose.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The following financial information is included on the pages indicated:

         Report of Independent Public Accountants.............................30
         Consolidated Balance Sheets..........................................31
         Consolidated Statements of Income....................................32
         Consolidated Statements of Stockholders' Equity......................33
         Consolidated Statements of Cash Flows................................34
         Notes to Consolidated Financial Statements...........................35



                                       29
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Healthworld Corporation and subsidiaries:

We have audited the accompanying consolidated balance sheets of Healthworld
Corporation (a Delaware Corporation) and subsidiaries as of December 31, 1997
and 1998 (Note 3), and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Healthworld Corporation and
subsidiaries as of December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.

                                                         /s/ ARTHUR ANDERSEN LLP

Melville, New York
February 17, 1999



                                       30
<PAGE>


                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                        ----------------------------------------------------
                                                                                 1997                        1998
                                                                        ------------------------    ------------------------

                                ASSETS

<S>                                                                     <C>                          <C>
Current Assets:
     Cash and cash equivalents.....................................                     $18,092                     $ 6,472
     Accounts receivable, net......................................                      14,269                      18,889
     Unbilled production charges...................................                       1,501                       3,151
     Other current assets..........................................                       1,004                       1,501
                                                                        ------------------------    ------------------------
Total current assets...............................................                      34,866                      30,013

Restricted cash....................................................                         300                       1,860
Property and equipment, net........................................                       2,434                       4,443
Goodwill, net......................................................                       3,670                      14,266
Other assets.......................................................                         539                         289
                                                                        ------------------------    ------------------------
                                                                                              $                           $
                                                                                         41,809                      50,871
                                                                        ========================    ========================

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Bank loans and overdrafts.....................................                     $   634                     $    --
     Current portion of long-term debt.............................                         702                         135
     Current portion of capitalized lease obligations..............                         125                          74
     Accounts payable..............................................                       1,836                       4,247
     Accrued expenses..............................................                       6,148                       7,739
     Advance billings..............................................                       6,468                       7,982
     Other current liabilities.....................................                          --                         302
                                                                        ------------------------    ------------------------
Total current liabilities..........................................                      15,913                      20,479

Long-term debt.....................................................                         230                         116
Capitalized lease obligations......................................                          99                          59
Minority interests.................................................                          --                         111
Deferred rent......................................................                         768                         888
Other liabilities..................................................                          33                          17
                                                                        ------------------------    ------------------------
Total liabilities..................................................                      17,043                      21,670
                                                                        ------------------------    ------------------------

Commitments and contingencies (Note 16)

Stockholders' Equity:
     Preferred stock, $.01 par value; 1,000,000 shares
          authorized; no shares outstanding                                                   --                           --
     Common stock, $.01 par value; 20,000,000 shares 
          authorized; and 7,415,000 and 7,415,167 shares
          outstanding, respectively...............................                           74                          74
     Additional paid-in capital....................................                      22,746                      22,748
     Retained earnings.............................................                       1,931                       6,357
     Accumulated other comprehensive income........................                          15                          22
                                                                        ------------------------    ------------------------
Total stockholders' equity.........................................                      24,766                      29,201
                                                                        ========================    ========================
                                                                                        $41,809                     $50,871
                                                                        ========================    ========================
</TABLE>

        The accompanying notes to consolidated financial statements are an
integral part of these statements.



                                       31
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                 ---------------------------------------------------
                                                     1996              1997               1998
                                                 --------------    --------------    ---------------

<S>                                                <C>               <C>              <C>          
Revenues....................................       $    24,209       $    35,292      $      63,677
                                                 --------------    --------------    ---------------

Operating expenses:
   Salaries and related costs...............            15,733            24,186             47,296
   General and office expenses..............             4,581             5,427              8,450
   Depreciation and amortization............               627               849              1,129
                                                 --------------    --------------    ---------------
                                                        20,941            30,462             56,875

Income from operations......................             3,268             4,830              6,802
Interest (expense) income, net..............              (69)                86                642
                                                 --------------    --------------    ---------------
Income before provision for income taxes
   and minority interests ..................             3,199             4,916              7,444
Provision for income taxes..................               524               719              2,976
Minority interests in net earnings of
   subsidiaries.............................               124               192                 42
                                                 --------------    --------------    ---------------
Net income..................................       $      2,551      $     4,005      $       4,426
                                                 ==============    ==============    ===============

Per share information (Note 12):
   Net income per common share:
   Basic....................................       $      0.54       $      0.80      $        0.60
                                                 ==============    ==============    ===============
   Diluted..................................       $      0.54       $      0.79      $        0.58
                                                 ==============    ==============    ===============

   Common shares used in computing per
      share amounts:
   Basic....................................             4,741             5,037              7,415
                                                 ==============    ==============    ===============
   Diluted..................................             4,741             5,047              7,592
                                                 ==============    ==============    ===============

Pro forma information (Notes 12 & 13):
   Income before provision for income
     taxes and minority interests...........       $     3,199       $     4,916
   Pro forma provision for income taxes ....             1,305             2,023
   Minority interests in net earnings of
     subsidiaries...........................               124               192
                                                 --------------    --------------
   Pro forma net income.....................       $     1,770       $     2,701
                                                 ==============    ==============

Pro forma per share information:
   Pro forma net income per common share:
     Basic..................................       $      0.37       $      0.54
                                                 ==============    ==============
     Diluted................................       $      0.37       $      0.54
                                                 ==============    ==============

   Common shares used in computing pro 
     forma per share amounts:
     Basic..................................             4,741             5,037
                                                 ==============    ==============
     Diluted................................             4,741             5,047
                                                 ==============    ==============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
                              of these statements.



                                       32
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                               
                                                                                               Accumulated Other 
                          Comprehensive         Common         Additional         Retained       Comprehensive   
                              Income             Stock       Paid-in Capital      Earnings        Income (Loss)           Total
                          -------------------------------- ------------------ --------------- -----------------------------------

<S>                            <C>           <C>               <C>                <C>            <C>               <C>          
Balance, December 31, 1995...                $         47      $         256      $    4,939     $             (6) $       5,236

Comprehensive income:
   Net income................        2,551                                             2,551                               2,551
   Other comprehensive income
     - foreign currency 
     translation adjustments.           72                                                                      72            72
                               ------------
Comprehensive income.........        2,623
                               ============
Distributions to stockholders                                                        (1,487)                             (1,487)
                                            -------------- ------------------ --------------- -----------------------------------
Balance, December 31, 1996...                          47                256           6,003                    66         6,372

Comprehensive income:
   Net income................        4,005                                             4,005                               4,005
   Transition loss in foreign    
       subsidiaries..........          (35)                                              (35)                                (35)
   Other comprehensive income
   (loss) - foreign currency
   translation adj.'s .......          (51)                                                                    (51)          (51)
                               ------------ 
Comprehensive income.........        3,919
                               ============
Initial public offering of
   common stock, net of cost
   of offering...............                          24             16,421                                              16,445
Issuance of common stock for
   acquisition of minority   
   interests.................                           3              2,329                                               2,332
Distributions to
   stockholders .............                                                        (4,197)                             (4,197)
Dividends....................                                                          (105)                               (105)
Undistributed earnings in "S"
   corporation...............                                          3,740         (3,740)                                  --
                                            -------------- ------------------ --------------- -----------------------------------
Balance, December 31, 1997...                          74             22,746           1,931                    15        24,766

Comprehensive income:
   Net income................        4,426                                             4,426                               4,426
   Other comprehensive
      income - foreign    
      currency translation
      adjustments............            7                                                                       7             7
                               ------------
Comprehensive income.........        4,433
                               ============
Exercise of stock options....                                              2                                                   2
                                            -------------- ------------------ --------------- -----------------------------------
Balance, December 31, 1998...                $         74        $    22,748      $    6,357     $              22  $     29,201
                                            ============== ================== =============== ===================================
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
                              of these statements.



                                       33
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                                  ----------------------------------------------------
                                                                       1996               1997              1998
                                                                  ----------------    -------------    ---------------
<S>                                                               <C>                  <C>             <C>
Cash flows from operating activities:
     Net income...............................................         $    2,551       $    4,005       $      4,426
     Adjustments to reconcile net income to net cash
         provided by operating activities:
         Depreciation and amortization........................                627              849              1,129
         Deferred rent........................................                 23              103                120
         Deferred income taxes ...............................                 89             (643)               180
         Transition loss .....................................                 --              (35)                --
         Minority interests in net earnings of subsidiaries...                124              192                 42
         Loss (gain) on sale of fixed assets..................                 18             (17)               (14)
     Changes in operating assets and liabilities, net of
        effects from acquisitions of businesses:
         Accounts receivable..................................            (2,141)          (2,519)            (2,010)
         Unbilled production charges..........................              1,562               61            (1,345)
         Other current assets.................................               (46)            (379)              (117)
         Other assets.........................................               (88)               69                292
         Accounts payable.....................................              (507)            (610)                490
         Advance billings.....................................                221              200                851
         Accrued expenses.....................................                998            4,082                464
         Other current liabilities............................                 --               --                 16
         Other liabilities....................................                 18             (48)               (36)
                                                                  ----------------    -------------    ---------------
sNet cash provided by operating activities.....................              3,449            5,310              4,488
                                                                  ----------------    -------------    ---------------

Cash flows from investing activities:
         Capital expenditures, net............................              (720)          (1,071)              (970)
         Proceeds from the sale of fixed assets...............                 50              100                 93
         Businesses acquired, net of cash received............              (242)               --           (12,273)
         Restricted cash, net.................................                 --               --            (1,560)
                                                                  ----------------    -------------    ---------------
Net cash (used in) investing activities.......................              (912)            (971)           (14,710)
                                                                  ----------------    -------------    ---------------

Cash flows from financing activities:
         Net proceeds from initial public offering............                 --           16,445                 --
         Payment of majority stockholder dividends............                 --            (105)                 --
         Payments of minority interest shareholders' dividends                 --             (55)                 --
         Proceeds from exercise of stock options..............                 --               --                  2
         Net proceeds from (repayment of) line of credit......                109            (400)              (634)
         Distributions to stockholders........................            (1,487)          (4,197)                 --
         Proceeds from bank loans.............................                 --              255                 --
         Issuance of bank loans and long-term debt............                300               --                 --
         Repayment of bank loans and long-term debt...........              (289)            (262)              (688)
         Capital lease repayments.............................               (77)            (151)              (135)
                                                                  ----------------    -------------    ---------------
Net cash (used in) provided by financing activities...........            (1,444)           11,530            (1,455)
                                                                  ----------------    -------------    ---------------
Effect of exchange rates on cash..............................               (17)                9                 57
                                                                  ----------------    -------------    ---------------
Net increase (decrease) in cash and cash equivalents..........              1,076           15,878           (11,620)
Cash and cash equivalents at beginning of year................              1,138            2,214             18,092
                                                                  ----------------    -------------    ---------------

Cash and cash equivalents at end of year......................          $   2,214       $   18,092        $     6,472
                                                                  ================    =============    ===============
Supplemental disclosure of cash flow information:
         Cash paid for:
         Taxes................................................         $      131     $        851        $     2,415
                                                                  ================    =============    ===============
         Interest.............................................         $      129     $        139      $          64
                                                                  ================    =============    ===============
Supplemental schedule of noncash investing activities:
         Capital leases for new equipment ....................         $       --     $         --      $          43
                                                                  ================    =============    ===============
         Issuance of stock for acquisition of minority interests       $       --      $     2,332       $         --
                                                                  ================    =============    ===============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
                              of these statements.

                                       34
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 1.  ORGANIZATION

         On November 12, 1997, Healthworld Corporation acquired (the
"Consolidation"), in exchange for shares of its Common Stock, all of the issued
and outstanding common stock of each of (i) Girgenti, Hughes, Butler & McDowell,
Inc. and its affiliated entities ("GHB&M") and (ii) Milton Marketing Group
Limited and its subsidiaries ("Milton"). Unless otherwise indicated, all
references herein to the "Company" give effect to the Consolidation and include
GHBM, Milton and each of Healthworld Corporation's other subsidiaries. The
Consolidation was accounted for under the pooling of interests method of
accounting. Accordingly, the Company's consolidated financial statements and
notes thereto have been restated to include the results of GHB&M and Milton for
all periods presented.

         In July 1998, the Company acquired 80% of the capital stock of HFT, a
French holding company, which owns 100% of the capital stock of Torrent S.A., a
French healthcare communications agency, which in turn owns 100% of the capital
stock of Aigue Marine SARL and Katchina Productions SARL, each a French company
(collectively, the "HFT Group Companies"). In addition, in July 1998, the
Company acquired all of the capital stock of Colwood House Medical Publications
(UK) Limited ("Colwood"), a United Kingdom medical education company. In October
1998, the Company acquired all of the capital stock of CPA Espana, S.L. ("CPA
Spain"), a healthcare communications agency located in Madrid, Spain. The
acquisitions of the aforementioned companies (collectively, the "1998
Acquisitions"), have been accounted for using the purchase method of accounting,
whereby the excess initial purchase price over the fair value of net assets
acquired has been recorded as goodwill (Note 6).

         Certain amounts in the financial statements for prior periods have been
reclassified to conform to the current year presentation for comparative
purposes.

NOTE 2.  BUSINESS

         The Company is an international communications and contract sales
marketing organization specializing in healthcare. The Company provides many of
the world's largest pharmaceutical and healthcare companies with a comprehensive
range of strategic marketing services designed to accelerate acceptance of new
products and to sustain their growth. These integrated services include
advertising and promotion, contract sales, consulting, publishing, medical
education, public relations, interactive multimedia, database marketing and
marketing research services. The Company offers its clients global reach and
expertise through its operations in the United States, the United Kingdom,
France and Spain and through Healthworld B.V., a world-wide network of licensed
independent marketing and communications agencies.



                                       35
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)


NOTE 3.  SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
of the Company and its majority and wholly-owned subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation.

Restatement

         As discussed in Note 1, the Company completed the Consolidation on
November 12, 1997, which was accounted for under the pooling of interests method
of accounting. Accordingly, the Company's consolidated financial statements and
notes thereto have been restated to include the results of GHB&M and Milton for
the years ended December 31, 1996 and 1997.

Fiscal Year Change

         In December 1997, the Company changed the fiscal year end of Milton
from November 30 to December 31 to eliminate the one month lag in reporting. The
one month lag was eliminated during the fourth quarter of 1997 as an adjustment
to retained earnings of $(35).

Foreign Currency Translation

         All assets and liabilities of the Company's European subsidiaries are
translated into United States Dollars. Assets and liabilities of Milton and
Colwood are translated from British Pounds Sterling, those of the HFT Group
Companies are translated from French Francs and those of CPA Spain are
translated from Spanish Pesetas at year-end exchange rates. Income and expense
items for the Company's European subsidiaries are translated at average exchange
rates prevailing during each fiscal year. The resulting translation adjustments
are recorded as a separate component of stockholders' equity.

Revenue Recognition

         Revenues and fees are derived from clients for creative concept
development, production of advertising and promotional materials and the supply
of long and short-term personnel for client marketing purposes. For services
such as the production of advertising and promotion materials, fees are
recognized when the production materials are completed. With respect to services
such as consulting, publishing and public relations, the Company is either paid
a monthly retainer or bills on an actual time incurred basis, which, in each
case, the Company recognizes as income each



                                       36
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

month to match its monthly payroll and operating costs. Revenues associated with
contract sales services are recognized as such services are provided and payroll
expenses are incurred.

         Accounts receivable includes fees recognized, project costs, and media
and production costs incurred on behalf of clients, which are paid for by the
Company and billed to clients. The Company records gross contract revenues for
contract sales services. The related direct costs are included in salaries and
related costs on the accompanying consolidated statements of income.

Concentration of Credit Risk

         The Company provides services to a range of clients operating mostly in
the healthcare, consumer products and utility industries. For the years ended
December 31, 1996 and 1997, the Company had one client which constituted
approximately 26.9% and 18.8% of total revenues, respectively, and for the year
ended December 31, 1998, the Company had one client which accounted for
approximately 14.1% of total revenues. The Company extends credit to all
qualified clients, but does not believe that it is exposed to any undue
concentration of credit risk to any significant degree. At December 31, 1997 and
1998, no single customer accounted for more than 10% of the Company's total
trade receivables. The Company maintains reserves for potential credit losses,
but has not experienced any material losses from individual clients or groups of
clients.

Cash and Cash Equivalents

         For purposes of the consolidated balance sheets and consolidated
statements of cash flows, the Company considers all highly liquid instruments
purchased with original maturities of three months or less to be cash
equivalents.

Unbilled Production Charges

         Unbilled production charges consists principally of costs incurred in
producing marketing communications for clients and field marketing personnel to
be billed. Such amounts will be billed to clients at either a defined stage of
the project or when production is complete.



                                       37
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

Property and Equipment

         Property and equipment is stated at cost, net of accumulated
depreciation and amortization. Depreciation and amortization are computed using
both accelerated and straight-line methods over the following periods:

Buildings....................................30 years
Motor vehicles...............................4-8 years
Furniture and equipment......................4-14 years
Leasehold improvements.......................Lesser of lease term or useful life
Equipment held under capital leases..........Lesser of lease term or useful life


Equipment Held Under Capital Leases

         Equipment held under capital leases is accounted for in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 13, "Accounting for
Leases", and is recorded in property and equipment. The present value of the
related liability is included in capitalized lease obligations.

Goodwill

         Goodwill represents the Company's excess purchase price over the fair
value of net assets acquired and is being amortized on a straight-line basis.
Amounts recognized to date have been amortized over 30 years from the original
date of acquisition. Amortization expense of goodwill for the years ended
December 31, 1996, 1997 and 1998 amounted to $42, $78 and $259 respectively.

Accounting for Long-Lived Assets

         During 1996, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
This statement requires the Company to review long-lived assets, including
certain intangibles and goodwill, for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The provisions of SFAS No. 121 have had no impact on the financial
statements for all periods presented.

Advance Billings

         Advance billings consists of progress billings for production jobs that
are not completed, as well as accrued media placements that have been billed to
clients.



                                       38
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

Income Taxes

         The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". This statement requires an asset and liability
approach for measuring deferred taxes based on temporary differences between the
financial statement and income tax bases of assets and liabilities existing at
each balance sheet date using enacted rates for the years in which the taxes are
expected to be paid or recovered.

         As a result of the Consolidation, the entities comprising GHB&M (other
than Syberactive, Inc., which was already treated as a C corporation) are no
longer treated as S corporations. Deferred tax assets and liabilities were
established in the fourth quarter of 1997 due to the termination of GHB&M's S
corporation status on November 12, 1997. This resulted in a credit to the
provision for income taxes of $404 for the year ended December 31, 1997 (Note
11).

Stock-Based Compensation

         In 1997, the Company adopted the provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation", by continuing to apply the provisions
of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees", while providing the required pro forma disclosures as if
the fair value method had been applied (Note 14).

Fair Value of Financial Instruments

         The Company accounts for the fair value of its financial instruments in
accordance with SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments". The carrying value of all financial instruments reflected in the
accompanying balance sheets approximates fair value at December 31, 1997 and
1998, respectively.

Use of Estimates

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

Recently Issued Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities". This
statement establishes



                                       39
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999 and will not require retroactive restatement of prior period
financial statements. This statement requires the recognition of all derivative
instruments as either assets or liabilities in the balance sheet measured at
fair value. Derivative instruments will be recognized as gains or losses in the
period of change. If certain conditions are met where the derivative instrument
has been designated as a fair value hedge, the hedged item may also be marked to
market through earnings thus creating an offset. If the derivative is designed
and qualifies as a cash flow hedge, the changes in fair value of the derivative
instrument may be recorded in comprehensive income. The Company does not
presently make use of derivative instruments.

NOTE 4.  RESTRICTED CASH

         In connection with the Colwood acquisition, the Company deposited an
amount equal to (pound)1,000 (approximately US$1,700) in an interest-bearing
escrow account to be applied towards potential, future earn-out payments. For
1997 and 1998, in connection with the lease for office space, the Company was
required to establish irrevocable standby letters of credit with face amounts of
$300 and $200, respectively. The Company set aside certificates of deposit in
the amounts of $300 and $200 in 1997 and 1998, respectively, as collateral for
such letters of credit.

NOTE 5.  PROPERTY AND EQUIPMENT

         Property and equipment consists of the following at December 31,

<TABLE>
<CAPTION>
                                                                          1997              1998
                                                                     ---------------    -------------

           <S>                                                       <C>                <C>     
           Land.................................................          $      --       $      334
           Buildings............................................                 --              439
           Motor vehicles.......................................                261              614
           Furniture and equipment..............................              3,704            4,964
           Leasehold improvements...............................                942            1,091
           Equipment held under capital leases..................                295              200
                                                                     ---------------    -------------
                                                                              5,202            7,642

           Less: accumulated depreciation and
              amortization.....................................              (2,768)          (3,199)
                                                                     ---------------    -------------
                                                                          $   2,434        $   4,443
                                                                     ===============    =============
</TABLE>

         Depreciation and amortization expense for the years ended December 31,
1996, 1997 and 1998 amounted to approximately $585, $771 and $870, respectively.



                                       40
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 6.  ACQUISITIONS OF BUSINESSES

Milton Cater Limited ("MCL")

         MCL was formed in April 1996, and the Company acquired 51% of its
equity in May 1996. The remaining 49% of MCL's equity was owned by a key
employee and was purchased by the Company on November 12, 1997 for no
consideration pursuant to a prior agreement between Milton and the minority
stockholder.

Milton Marketing Limited ("MML")

         In April 1996, the Company acquired an additional 7.5% interest in MML
for $234, which increased the Company's interest in MML to 92.5%. The
acquisition of the 7.5% interest was accounted for using the purchase method of
accounting. The excess purchase price over the fair value of the minority share
of net assets was $188 and has been recorded as goodwill. As described above the
remaining 7.5% interest was acquired on November 12, 1997.

PDM Communications Limited ("PDM")

         In November 1996, the Company acquired a 75% interest in PDM for a cash
purchase price of $32. The minority stockholder had a put option and the Company
had a call option with respect to the remaining 25% of the shares not owned by
the Company. This acquisition was accounted for using the purchase method of
accounting and the purchase price was allocated to the assets purchased and the
liabilities assumed based on their fair values at the date of acquisition. The
excess purchase price over the fair value of the net assets acquired was $523
and has been recorded as goodwill. On November 12, 1997 the Company exercised
its call option as fully described above. The Company may be required under
certain circumstances to remit to a prior PDM stockholder up to approximately
$320 no later than July 31, 1999.

Minority Interests

         On November 12, 1997, the Company acquired the remaining minority
interests in all Milton subsidiaries. In accordance with the terms of the
acquisitions, the Company issued 259 shares of common stock in exchange for all
minority shareholders' interest in their respective companies. These
acquisitions were accounted for using the purchase method of accounting. The
excess purchase price over the fair value of the minority interest share of the
net assets acquired was $2,046 and has been recorded as goodwill.



                                       41
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

The HFT Group Companies

         In July 1998, the Company acquired 80% of the capital stock of HFT, a
French holding company, which owns 100% of the capital stock of Torrent, a
French healthcare communications agency, which in turn owns 100% of the capital
stock of Aigue Marine SARL and Katchina Productions SARL, each a French company.
The initial cash purchase price paid by the Company was approximately 20,300
French Francs (approximately US$3,400) including expenses related to the
acquisition. Total amounts to be paid in connection with the acquisition,
including potential, future earn-out payments to take place on or prior to April
15, 2000 and April 15, 2002 based upon (i) a multiple of operating income of the
HFT Group Companies, and (ii) the seller's option to sell and the Company's
option to purchase the remaining 20% of the capital stock of HFT, will not
exceed 48,000 French Francs (approximately US$8,100). The acquisition has been
accounted for using the purchase method of accounting, whereby the excess of the
initial purchase price over the fair value of the net assets acquired, 1,600
French Francs (approximately US$267), after removing minority interests, was
recorded as goodwill. Total goodwill recorded on the purchase was approximately
$3,100.

Colwood

         In July 1998, the Company acquired all of the capital stock of Colwood,
a United Kingdom medical education company. The initial cash purchase price paid
by the Company was (pound)4,500 (approximately US$7,500) including expenses
related to the acquisition. Total amounts to be paid in connection with the
acquisition, including potential, future earn-out payments to take place in
April 2000 and August 2001 based upon Colwood achieving certain targeted
operating profits, are not to exceed approximately (pound)8,000 (approximately
US$13,300). Pursuant to the acquisition agreement, the Company deposited an
amount equal to (pound)1,000 (approximately US$1,700) in an interest-bearing
escrow account to be applied towards the potential, future earn-out payments,
and may potentially be required to deposit into such escrow account additional
amounts, based on net operating profits, to be applied towards such payments.
The acquisition has been accounted for using the purchase method of accounting,
whereby the excess of the initial purchase price over the fair value of the net
assets acquired, (pound)891 (approximately US$1,500), was recorded as goodwill.
Total goodwill recorded on the purchase was (pound)3,600 (approximately
US$6,000).

CPA Spain

         In October 1998, the Company acquired all of the capital stock of CPA
Spain, a healthcare communications agency located in Madrid, Spain. The initial
cash purchase price paid by the Company was approximately 261,000 Spanish
Pesetas (approximately US$1,900) including expenses related to the acquisition.
Total amounts to be paid in connection with the



                                       42
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

acquisition, including potential, future earn-out payments to take place in
April 2000 and April 2003 based upon CPA Spain achieving certain targeted
operating profits, are not to exceed approximately 710,000 Spanish Pesetas
(approximately US$5,100). The acquisition has been accounted for using the
purchase method of accounting, whereby the excess of the initial purchase price
over the fair value of the net assets acquired, 24,900 Spanish Pesetas
(approximately US$164), was recorded as goodwill. Total goodwill recorded on the
purchase was $1,700.

         The results of operations of these acquisitions are included in the
consolidated financial statements from the respective dates of acquisition.

         Summarized below are the unaudited pro forma results of operations for
the years ended December 31, 1996, 1997 and 1998 of the Company as though the
acquisitions of MCL, MML, PDM and the remaining minority interests in certain of
Milton's subsidiaries had occurred at the beginning of 1996, and the
acquisitions of the HFT Group Companies, Colwood and CPA Spain had occurred at
the beginning of 1997. Adjustments have been made for income taxes, amortization
of goodwill, interest income and minority interests in net earnings of
subsidiaries related to these transactions.

<TABLE>
<CAPTION>
                                                                           Twelve Months Ended
                                                                               December 31,
                                                              --------------------------------------------
                                                                   1996           1997             1998
                                                              ------------    -----------     ------------

           <S>                                                <C>             <C>             <C>
           Pro Forma:
               Revenues....................................    $  24,596       $  44,144       $  68,696
               Net income..................................        1,459           2,663           4,285

               Basic net income per common share...........    $    0.31       $    0.53       $    0.58
                                                              ============    ===========     ============
               Diluted net income per common share.........    $    0.31       $    0.53       $    0.56
                                                              ============    ===========     ============
</TABLE>

         These pro forma results of operations are not necessarily indicative of
the actual results of operations that would have occurred had the acquisitions
been made at the beginning of 1996, 1997 or 1998 or of results which may occur
in the future.



                                       43
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 7.  BANK LOANS AND OVERDRAFTS

         The Company has the following loans and overdraft facilities
outstanding at December 31,

<TABLE>
<CAPTION>
                                                                          1997                1998
                                                                     ----------------    ---------------

<S>                                                                  <C>                 <C>
Term loan (a)....................................................         $    345                 232
Term note/loan (b)...............................................              125                  19
Business development loan (c)....................................               10                  --
Overdraft facility (d)...........................................              634                  --
4% loan notes (e)................................................              452                  --
                                                                     ----------------    ---------------
                                                                             1,566                 251

Less: current portion............................................           (1,336)               (135)
                                                                     ================    ===============
                                                                           $   230                 116
                                                                     ================    ===============
</TABLE>

----------

(a)  During November 1995, a bank provided a Term Loan of $588 to the Company
     which bears interest at the UK base rate (6.25% as of December 31, 1998)
     plus 2% per annum and is payable in installments of $58 every May and
     November with the final installment due in November 2000. The Term Loan
     requires the Company to maintain certain financial covenants. As of
     December 31, 1998, the Company was in compliance with all of the provisions
     of the Term Loan.

(b)  During February 1996, a bank provided a Term Loan of $300 to finance the
     construction of additional office space in the United States. This Term
     Loan bears interest at 7.75% per annum and is payable in 36 monthly
     installments commencing March 1996.

(c)  This loan bore interest at 10.5% per annum and matured in April 1998.

(d)  The Company has in place an overdraft facility with a bank, which bears
     interest at the UK base rate plus 1.75% per annum. As of December 31, 1997
     and 1998 the outstanding balance was approximately $634 and $0,
     respectively, while the overdraft facility limits were approximately $820
     and $1,245, respectively.



                                       44
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 7.  BANK LOANS AND OVERDRAFTS (continued)

(e)  In connection with the Milton Headcount Limited acquisition, the Company
     issued a $462, 4% unsecured note, which was paid in full in July 1998.



         At December 31, 1998, maturities of debt are as follows:

           1999............................................         $   135
           2000............................................             116
                                                               -------------
                                                               -------------
                                                                    $   251
                                                               =============

         The Company has several credit facilities with various financial
institutions. At December 31, 1997 and 1998, there was $634 and $0,
respectively, outstanding under the collective Company facilities.



                                       45
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 8.  CAPITALIZED LEASE OBLIGATIONS

         The Company has entered into capital leases for computer equipment and
motor vehicles. The lease payments are payable monthly on a straight-line basis.
The assets relating to the leases are capitalized and amortized over a period
approximating the lease period.

         Minimum future lease payments under capital leases as of December 31,
1998 are as follows:

           1999.......................................        $     87
           2000.......................................              53
           2001.......................................               8
                                                           ------------
           Total minimum lease payments...............             148

           Less: amounts representing interest........              15
                                                           ------------

           Present value of minimum lease payments....         $   133
                                                           ============

         Interest rates on capitalized leases vary from 11% to 15% and are
imputed based on the lessor's implicit rate of return.


NOTE 9.  ACCRUED EXPENSES

         Major components of accrued expenses at December 31, included:

                                             1997              1998
                                        ----------------    ------------

Salaries and related costs..........          $   2,887       $   2,370
Value added tax.....................              1,393           2,068
Income taxes........................                902           1,297
Other...............................                680           1,673
Offering costs......................                286              --
Acquisition costs...................                 --             331
                                        ----------------    ------------
                                        ----------------    ------------

                                              $   6,148       $   7,739
                                        ================    ============



                                       46
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 10. COMPREHENSIVE INCOME

         In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income", which establishes standards for reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
Comprehensive income consists of net income and foreign currency translation
adjustments which are Consolidated Statement of Stockholder's Equity. No
provision for income taxes has been made with respect to foreign currency
translation adjustments because all earnings of foreign subsidiaries are
expected to be permanently reinvested outside the United States.

NOTE 11. INCOME TAXES

         Income taxes have been provided for using the liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes". The provision for
income taxes is recorded at an effective rate of 14.6% and 40.0% for the fiscal
years ended December 31, 1997 and 1998, respectively. Prior to the Consolidation
in 1997, certain of the entities comprising GHB&M were treated as S corporations
and were not subject to Federal corporate income taxes.

         The provision for income taxes was comprised of the following at
December 31,

<TABLE>
<CAPTION>
                                                                1996                 1997                 1998
                                                         -------------------    ----------------    -----------------

<S>                                                      <C>                    <C>                 <C>
Current:
     Federal.........................................               $    --          $      301            $   1,371
     State and local.................................                    69                 681                  463
     Foreign.........................................                   366                 380                  962
                                                         -------------------    ----------------    -----------------
                                                                   $    435           $   1,362            $   2,796
                                                         ===================    ================    =================

Deferred:
     Federal.........................................                    --                (16)                  130
     State and local.................................                    89               (223)                   50
                                                         -------------------    ----------------    -----------------
                                                                         89               (239)                  180
Deferred taxes resulting from
     subchapter "S" corporation termination..........                    --               (404)                   --
                                                         -------------------    ----------------    -----------------
Total................................................             $     524            $    719            $   2,976
                                                         ===================    ================    =================
</TABLE>



                                       47
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 11. INCOME TAXES (continued)

         Reconciliation of the statutory Federal income tax rate to the
Company's effective tax rate is as follows:

<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                                --------------------------------
                                                                                          1997             1998
                                                                                ---------------    -------------

           <S>                                                                  <C>                <C>  
           U.S. Federal statutory rate........................................          34.0%             34.0%
           State and local taxes, net of Federal benefit......................           6.1               4.5
           Tax effect resulting from foreign operations.......................           0.6               1.0
           Income from "S" corporation period taxable to shareholders.........         (21.3)               --
           Deferred taxes resulting from subchapter "S" corporation
                    termination...............................................          (8.2)               --
           Non-deductible foreign tax losses..................................           1.8                --
           Non-deductible goodwill amortization...............................           0.5               1.2
           Other..............................................................           1.1              (0.7)
                                                                                ---------------    -------------

           Effective income tax rate..........................................          14.6%             40.0%
                                                                                ===============    =============
</TABLE>

         Significant components of deferred tax assets are as follows:


<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                                --------------------------------
                                                                                     1997              1998
                                                                                ---------------    -------------

           <S>                                                                  <C>                <C>
           Current deferred tax assets and liabilities:
                Accounts receivable...........................................      $       55         $     25
                Various accruals and other....................................              36             (31)
                                                                                ---------------    -------------
                                                                                            91              (6)
           Non-current deferred tax assets:
                Deferred rent.................................................             328              245
                                                                                ---------------    -------------

           Total deferred tax asset...........................................      $      419       $      239
                                                                                ===============    =============
</TABLE>

         No provision for U.S. income taxes has been made for $2,895 of
cumulative unremitted earnings of foreign subsidiaries at December 31, 1998
because those earnings are expected to be permanently reinvested outside the
United States.



                                       48
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 12. NET INCOME PER COMMON SHARE

         In accordance with SFAS No. 128, "Earnings Per Share", basic earnings
per common share amounts were computed by dividing net earnings by the weighted
average number of common shares outstanding, excluding any potential dilution.
Diluted earnings per common share amounts were computed by reflecting potential
dilution from the exercise of stock options.

         The following chart provides a reconciliation of information used in
calculating the per share amounts, for the twelve month periods ended December
31, 1996, 1997 and 1998:

<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                                  ----------------------------------------------------
                                                                       1996               1997              1998
                                                                  ----------------    -------------    ---------------

<S>                                                               <C>                 <C>              <C>         
Net income....................................................         $    2,551       $    4,005       $      4,426
Pro forma provision for income taxes..........................                781            1,304                 --
                                                                  ================    =============    ===============
Pro forma net income..........................................              1,770            2,701              4,426
                                                                  ================    =============    ===============


Basic common shares outstanding...............................              4,741            5,037              7,415
Effect of dilutive securities:
   Stock options..............................................                 --               10                177
                                                                  ----------------    -------------    ---------------
Diluted shares outstanding                                                  4,741            5,047              7,592

Basic net income per common share.............................        $      0.37       $     0.54      $        0.60
                                                                  ================    =============    ===============
Diluted net income per common share...........................        $      0.37       $     0.54      $        0.58
                                                                  ================    =============    ===============
</TABLE>


NOTE 13. PRO FORMA NET INCOME

         Pro forma net income for the twelve month periods ended December 31,
1996 and 1997 includes the pro forma effect of a C corporation income tax
provision as if each of the companies comprising GHB&M (other than Syberactive,
Inc., which was already treated as a C corporation) were treated as C
corporations for the entire period.



                                       49
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 14. STOCK BASED COMPENSATION PLANS

         On October 13, 1997, the Board of Directors adopted the 1997 Stock
Option Plan (the "1997 Plan"). The 1997 Plan authorized the granting of stock
options to purchase up to an aggregate of 710 shares of the Company's common
stock. On June 10, 1998, the Board of Directors adopted an amendment to the 1997
Plan to increase by 700 the aggregate number of shares of the Company's common
stock available under the 1997 Plan, which amendment was approved by the
Company's stockholders on June 10, 1998. The awards can take the form of
Incentive Stock Options ("ISOs") and Non-qualified Stock Options ("NQSOs").
Awards may be granted to key employees, directors and consultants. ISOs and
NQSOs are granted in terms not to exceed ten years and become exercisable as set
forth when the award is granted. Options may be exercised in whole or in part.
The exercise price of the ISOs and NQSOs is the market price of the Company's
common stock on the date of grant. Any plan participant who is granted ISOs and
possesses more than 10% of the voting rights of the Company's outstanding common
stock must be granted options at an option price of at least 110% of fair market
value on the date of grant and the option must be exercised within five years
from the date of grant. Under the 1997 Plan, ISOs and NQSOs have been granted to
key employees and directors for terms of up to ten years, at exercise prices
ranging from $9.00 to $16.50 and are exercisable in whole or in part at the
stated times from the date of grant up to three years from the date of grant.

         The following is a summary of stock option activity granted under the
1997 Plan and related information for the years ended December 31, 1997 and
1998:

<TABLE>
<CAPTION>
                                                                                         Weighted Average
                                       Qualified      Non-Qualified        Total          Exercise Price
                                      ------------- ------------------- -------------    ----------------
                                                              (actual amounts)

<S>                                   <C>            <C>                <C>              <C>
Balance at December 31, 1996                    --                  --            --                 --
Granted...........................         361,250             179,500       540,750          $    9.09
Exercised.........................              --                  --            --                 --
Forfeited.........................         (1,250)                  --       (1,250)               9.00
                                      ------------- ------------------- -------------    ----------------

Balance at December 31,1997                360,000             179,500       539,500               9.07

Granted...........................         177,151             349,849       527,000              13.38
Exercised.........................           (167)                  --         (167)              11.13
Forfeited.........................        (17,649)            (16,500)      (34,149)              10.90
                                      ------------- ------------------- -------------    ----------------

Balance at December 31, 1998               519,335             512,849     1,032,184          $   11.20
</TABLE>



                                       50
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

         The Company accounts for awards granted to employees and directors
under APB No.25, under which no compensation cost has been recognized for stock
options granted. Had compensation cost for these stock options been determined
consistent with SFAS No. 123, the Company's net income and earnings per share
would have been reduced to the following pro forma amounts:

                                                           1997            1998
                                                           ----            ----

          Net income:           As reported           $   2,701     $     4,426
                                Pro forma                 2,582           3,270

          Basic EPS:            As reported           $    0.54     $      0.60
                                Pro forma                  0.51            0.44

          Diluted EPS:          As reported           $    0.54     $      0.58
                                Pro forma                  0.51            0.43

         The fair value of each option is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions:

                                                       1997          1998
                                                     ----------    ---------

        Expected life (years)......................      4.4           4.5
        Risk free interest rate....................     5.79%         5.75%
        Volatility.................................       43%           60%
        Dividend yield.............................        0%            0%
        Remaining contractual life (years)              8.78          8.34

         The weighted average fair value of options granted at fair value
(market price) and at an exercise price above the fair market price was $3.88
and $3.77, respectively, in 1997 and $7.09 and $7.72, respectively, in 1998. The
weighted average exercise price of options granted at fair value (market price)
and those granted at exercise prices above fair market price was $9.01 and
$9.90, respectively, in 1997 and $13.32 and $16.50, respectively, in 1998.

         The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts as the Company anticipates additional awards in
future years.



                                       51
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 15. SEGMENT AND GEOGRAPHIC INFORMATION

         The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". SFAS No. 131 establishes standards for
reporting information about operating segments and related disclosures about
products and services, geographic areas and major customers. The accounting
policies of the operating segments are the same as those described in the
Summary of Significant Accounting Policies.

         The Company is organized based on the services that it offers. Under
this organizational structure, the Company operates in two principal operating
segments: communications and contract sales. The Company's communications
operations provides integrated services to clients which includes advertising
and promotion, consulting, medical education, public relations, publishing,
database marketing, interactive media and marketing research services. The
Company's contract sales operations involve forming dedicated sales teams to
provide clients with substantial flexibility in selecting the extent and costs
of promoting products as well as the clients' level of involvement in managing
the sales effort.

         Segment information is as follows:

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                         ------------------------------------------------------
                                             1996                1997               1998
                                         --------------     ---------------    ----------------
           <S>                           <C>                <C>                <C>
           Revenues:
             Communications...........     $    17,573        $     21,962        $     30,233
             Contract Sales...........           6,636              13,330              33,444
                                         --------------     ---------------    ----------------
                                           $    24,209        $     35,292        $     63,677

           Income from operations:
             Communications...........    $      2,458        $      3,525       $       5,998
             Contract Sales...........             810               1,305                 804
                                         --------------     ---------------    ----------------
                                          $      3,268        $      4,830       $       6,802

           Interest (expense) income              (69)                  86                 642
                                         --------------     ---------------    ----------------
           Income before taxes........    $      3,199        $      4,916       $       7,444

<CAPTION>
                                                             As of December 31,
                                         ------------------------------------------------------
                                             1996                1997               1998
                                         --------------     ---------------    ----------------
           <S>                           <C>                <C>                <C>
           Total assets:
             Communications...........     $    17,237         $    34,168        $     40,725
             Contract Sales...........           3,299               7,641              10,146
                                         --------------     ---------------    ----------------
                                           $    20,536         $    41,809        $     50,871

           Expenditures for additions
             to fixed assets:
             Communications...........   $         545       $         867      $          585
             Contract Sales...........             175                 204                 385
                                         --------------     ---------------    ----------------
                                         $         720        $      1,071      $          970
</TABLE>



                                       52
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

         One customer in the communications segment represented $6.6 million, or
18.8%, of the Company's consolidated revenues for the year ended December 31,
1997, and one customer in the contract sales segment was responsible for $9.0
million, or 14.1%, of the Company's consolidated revenues for the year ended
December 31, 1998.

         Geographic information is as follows:

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                         -------------------------------------------------------
                                              1996                1997                1998
                                         ----------------    ---------------     ---------------
           <S>                           <C>                 <C>                 <C>
           Revenues:
             Domestic.................       $    14,314       $     18,172        $     23,149
             Foreign..................             9,895             17,120              40,528
                                         ----------------    ---------------     ---------------
                                             $    24,209       $     35,292        $     63,677

           Income from operations:
             Domestic.................      $      2,183       $      3,710       $       4,165
             Foreign..................             1,085              1,120               2,637
                                         ----------------    ---------------     ---------------
                                            $      3,268       $      4,830       $       6,802

                                                           As of December 31,
                                         -------------------------------------------------------
                                              1996                1997                1998
                                         ----------------    ---------------     ---------------
           Identifiable assets:
             Domestic.................       $    14,049        $    31,365        $     19,975
             Foreign..................             6,487             10,444              30,896
                                         ----------------    ---------------     ---------------
                                             $    20,536        $    41,809        $     50,871
</TABLE>




                                       53
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

NOTE 16. COMMITMENTS AND CONTINGENCIES

Leases

         The Company has entered into various leases for property. All leases
are payable in quarterly installments, and are accounted for on a straight-line
basis over the term of the lease.

         The following is a schedule of the minimum annual lease payments due:

           1999...............................    $  1,302
           2000...............................       1,302
           2001...............................       1,286
           2002...............................       1,252
           2003...............................       1,097
           Thereafter.........................       6,243

         Total rent expense incurred for the years ended December 1996, 1997 and
1998 was approximately $1,043, $1,196 and $1,359, respectively.

Employment Agreements

         The Company has entered into employment agreements (the "Agreements")
with certain key employees. The agreements contain provisions for base salary
and incentives dependent upon certain performance measures, and are subject to
termination by either party. The aggregate annual minimum base compensation
required by the Agreements is approximately $2,719.

Defined Contribution Plans

         The Company has a defined contribution plan (the "Contribution Plan")
that is intended to qualify under Section 401(k) of the Internal Revenue Code
("IRC"). All domestic employees, except those who have not attained the age of
21, are eligible to participate in the Contribution Plan. Participants may
contribute, through payroll deductions, up to 15% of their base compensation,
not to exceed IRC limitations. The Company matches up to 4% of salary for
participating employees. For the years ended December 31, 1996, 1997 and 1998
the Company contributed $124, $172 and $246, respectively.

         The Company makes non-contractual payments into the personal pension
plans of various European senior managers. For the years ended December 31,
1996, 1997 and 1998, the Company contributed $41, $56 and $72, respectively.



                                       54
<PAGE>

                    HEALTHWORLD CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

Litigation

         In the normal course of business, the Company is a party to various
claims and/or litigation. Management believes that the settlement of all such
claims and/or litigation, considered in the aggregate will not have a material
adverse effect on the Company's financial position and results of operations.

NOTE 17. QUARTERLY FINANCIAL INFORMATION (unaudited)

         The following is a summary of unaudited quarterly financial information
for the years ended 1997 and 1998:

<TABLE>
<CAPTION>
                                                                    Year Ended December 31, 1997
                                                 --------------------------------------------------------------------
                                                       First        Second               Third              Fourth
                                                     Quarter        Quarter             Quarter             Quarter
                                                 --------------    --------------    ---------------     ------------

<S>                                              <C>               <C>               <C>                 <C>      
Revenues....................................      $      6,278      $      7,473      $       9,435      $    12,106
Income from operations......................               216               899              1,723            1,992
Net income..................................               191               762              1,374            1,678
Pro forma information (1) :
   Pro forma net income.....................               105               491                914            1,191
   Pro forma basic earnings per share(2)....      $       0.02      $       0.10      $        0.19      $      0.20
   Pro forma diluted earnings per
     share(2)...............................      $       0.02      $       0.10      $        0.19      $      0.20

<CAPTION>
                                                                    Year Ended December 31, 1998
                                                 --------------------------------------------------------------------
                                                       First        Second               Third              Fourth
                                                     Quarter        Quarter             Quarter             Quarter
                                                 --------------    --------------    ---------------     ------------

<S>                                              <C>               <C>               <C>                 <C>      
Revenues....................................      $     13,988      $     14,877      $      16,919      $    17,893
Income from operations......................               324             1,731              2,511            2,236
Net income..................................               304             1,131              1,494            1,497
Basic earnings per share(2).................      $       0.04      $       0.15      $        0.20      $      0.20
Diluted earnings per share(2)...............      $       0.04      $       0.15      $        0.20      $      0.20
</TABLE>

----------

(1)  Gives pro forma effect to C corporation taxation for GHB&M

(2)  The sum of the quarters does not equal the full year per share amounts
     included in the accompanying statement of income due to the effect of the
     weighted average number of shares outstanding during the fiscal year as
     compared to the quarters.



                                       55
<PAGE>

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

         None.


                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this item is incorporated herein by
reference from the portion of the Company's definitive Proxy Statement for its
1999 annual meeting of stockholders to be filed with the Securities and Exchange
Commission on or prior to 120 days following the end of the Company's fiscal
year under the headings "Proposal 1 - Election of Directors," "Executive
Officers" and "Security Ownership."

Item 11. EXECUTIVE COMPENSATION

         The information required by this item is incorporated herein by
reference from the portion of the Company's definitive Proxy Statement for its
1999 annual meeting of stockholders to be filed with the Securities and Exchange
Commission on or prior to 120 days following the end of the Company's fiscal
year under the heading "Executive Compensation."

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item is incorporated herein by
reference from the portion of the Company's definitive Proxy Statement for its
1999 annual meeting of stockholders to be filed with the Securities and Exchange
Commission on or prior to 120 days following the end of the Company's fiscal
year under the heading "Security Ownership."

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item is incorporated herein by
reference from the portion of the Company's definitive Proxy Statement for its
1999 annual meeting of stockholders to be filed with the Securities and Exchange
Commission on or prior to 120 days following the end of the Company's fiscal
year under the heading "Related Transactions."



                                       56
<PAGE>

                                     PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)  1.  Financial Statements

         The following financial statements of the Company are included under
         Item 8 of this report:

         Report of Independent Public Accountants.

         Consolidated Balance Sheets as of December 31, 1997 and December 31,
         1998.

         Consolidated Statements of Income for the fiscal years ended December
         31, 1996, December 31, 1997 and December 31, 1998.

         Consolidated Statements of Stockholders' Equity for the fiscal years
         ended December 31, 1996, December 31, 1997 and December 31, 1998.

         Consolidated Statements of Cash Flows for the fiscal years ended
         December 31, 1996, December 31, 1997 and December 31, 1998.

         Notes to the Consolidated Financial Statements.

     2.  Financial Statement Schedules

         The following schedules are filed as a part of this Item 14:

         None.

     3.  Exhibits

         The exhibits listed in the accompanying Exhibit Index are filed as a
         part of this Report.

(b) 1. Reports on Form 8-K filed During the Last Quarter.

                  On October 5, 1998, the Company filed with the Securities and
         Exchange Commission an Amendment No. 1 to Current Report on Form 8-K,
         for which the Date of Report was July 23, 1998, reporting the
         acquisition by the Company on July 23, 1998 of the HFT Group Companies
         and on July 24, 1998 of Colwood. Such Amendment contained, with respect
         to Colwood, a Balance sheet, a Statement of Income, a Statement of
         Shareholders' Equity and a Statement of Cash Flows as of and for the
         year ended April 30, 1998 and, with respect to Healthworld Corporation,
         on an unaudited pro forma combining basis, Balance Sheets as of June
         30, 1998 and Statements of Income for the six months ended June 30,
         1998 and the year ended December 31, 1997.



                                       57
<PAGE>


                                INDEX TO EXHIBITS

 Exhibit
 Number                         Description
 -------                        -----------

  2.01 (1)  ----  Letter of Intent between Girgenti, Hughes, Butler & McDowell,
                  Inc. ("GH") and its affiliated entities and Milton Marketing
                  Group Limited and its subsidiaries, dated November 14, 1996,
                  as amended July 24, 1997.
            
  2.02 (1)  ----  Agreement and Plan of Organization by and among the
                  Registrant, Steven Girgenti, Francis Hughes, William Butler
                  and Herbert Ehrenthal, dated as of October 23, 1997.
            
  2.03 (1)  ----  Agreement and Plan of Organization between the Registrant and
                  William Leslie Milton, dated as of October 23, 1997.
            
  2.04 (1)  ----  Agreement and Plan of Organization by and between the
                  Registrant and Michael Garnham, dated as of October 23, 1997.
            
  2.05 (1)  ----  Agreement and Plan of Organization between the Registrant and
                  Leonard Moreton, dated as of October 23, 1997.
            
  2.06 (1)  ----  Agreement and Plan of Organization between the Registrant and
                  Michael Bourne, dated as of October 23, 1997.
            
  2.07 (2)  ----  Share Purchase Agreement between Dominique Agostini and
                  Healthworld International Holdings, Inc., dated July 23, 1998
                  (as translated from the French document).
            
  2.08 (2)  ----  Agreement for the sale and purchase of the share capital of
                  Colwood House Medical Publications (UK) Limited, dated July
                  24, 1998.
            
  2.09 (2)  ----  Deed of Indemnity among Clive Davies, Stephen Cantle and
                  Healthworld Holdings Limited, dated July 24, 1998.
            
  3.01 (1)  ----  Restated Certificate of Incorporation of the Registrant.
            
  3.02 (1)  ----  Amended and Restated Bylaws of the Registrant. 
            
  4.01 (1)  ----  Specimen Common Stock Certificate.
            
 10.01 (1)  ----  Term Loan Facility, dated November 6, 1995, by and between
                  Siteinput Limited (n/k/an/ Milton Marketing Group Limited) and
                  Bank of Scotland, as amended by letter dated July 23, 1997.
           
 10.02 (1)  ----  Line of Credit between The Chase Manhattan Bank, N.A.
                  ("Chase") and GH and each of its affiliated entities, dated
                  January 22, 1996.

 10.03 (1)  ----  Line of Credit between Chase and GH and each of its affiliated
                  entities, dated January 17, 1997.

 10.04 (1)  ----  Promissory Note made by GH and its affiliated entities for the
                  benefit of Chase, dated January 31, 1996.
 
 10.05(1)(3) ---  Registrant's 1997 Incentive Stock Option Plan.



                                       58
<PAGE>

 Exhibit
 Number                         Description
 -------                        -----------

 10.06 (3)(4)---  Amendment to Registrant's 1997 Incentive Stock Option Plan.

 10.07(1)(3) ---  Form of Employment Agreement by and between the Registrant and
                  Steven Girgenti.

 10.08 (1)(3) --- Form of Employment Agreement by and between the Registrant and
                  William Leslie Milton.

 10.09 (1)(3) --- Form of Employment Agreement by and between GH and William
                  Butler.

 10.10 (1)(3) --- Form of Employment Agreement by and between GH and Herbert
                  Ehrenthal.

 10.11 (1)(3) --- Employment Agreement by and between GH and Francis Hughes.

 10.12 (1)(3) --- Employment Agreement by and between the Registrant and Stuart
                  Diamond.
 
 10.13 (3)  ----  Amendment to Employment Agreement by and between Registrant
                  and Stuart Diamond.

 10.14 (1)  ----  License Agreement between the Registrant and Healthworld, B.V.

 10.15 (1)  ----  Lease for office space located at 100 Avenue of the Americas,
                  New York, NY, between The Rector, Church-Wardens and Vestrymen
                  of Trinity Church in the City of New York and GH, dated July
                  15, 1994.

 10.16 (1)  ----  Agreement for the sale and purchase of share capital of
                  Effective Sales Personnel Limited between Gloria Olive Sargent
                  and Siteinput Limited, dated November 8, 1995.

 10.17 (1)  ----  Supplemental Agreement relating to the sale and purchase of
                  share capital of Effective Sales Personnel Limited between
                  Gloria Olive Sargent and Siteinput Limited, dated November 29,
                  1996.

 10.18 (1)  ----  Agreement for the sale and purchase of shares in PDM
                  Communications Limited among Leonard Moreton, Lizabeth Jenny
                  Moreton, Leonard Moreton & Co. and Siteinput Limited, dated
                  November 26, 1996.

 10.19 (1)  ----  Agreement for the sale and purchase of shares in PDM
                  Communications Limited between William Annandale and Siteinput
                  Limited, dated November 21, 1996.

 10.20 (1)  ----  Joint Venture Agreement between Siteinput Limited and Claire
                  Denise Cater, dated May 23, 1996.

 10.21 (1)  ----  Share Sale Agreement between Wendy Carter and Siteinput
                  Limited dated April 4, 1996.

 10.22 (1)  ----  Overdraft Facility, dated November 6, 1995, between Siteinput
                  Limited and Bank of Scotland.



                                       59
<PAGE>

 Exhibit
 Number                         Description
 -------                        -----------

 10.23 (1)  ----  Multi Option Facility by and between Bank of Scotland and
                  Milton Marketing Group Limited, Milton Marketing Limited,
                  Milton Cater Limited, Milton Headcount Limited, Effective
                  Sales Personnel Limited and PDM Communications Ltd.

 10.24 (1)  ----  Form of Employment Agreement by and between Milton Headcount
                  Limited and Michael Garnham.

 10.25 (1)  ----  Line of Credit between Chase and GH and each of its affiliated
                  entities, dated October 23, 1997.

 10.26 (1)  ----  Accounts Receivable Purchase Agreement, dated November 11,
                  1997, by and between GH and The CIT Group/Commercial Services,
                  Inc.

 10.27 (1)  ----  Guaranty, dated November 11, 1997, by and between the
                  Registrant and GH and each of its affiliated entities in favor
                  of the CIT Group/Commercial Services, Inc.

 
 21.01      ----  Subsidiaries of the Registrant.

    23      ----  Consent of Arthur Andersen LLP.

 27.01      ----  Financial Data Schedule.

----------

(1)  Filed as an Exhibit to the Company's Registration Statement on Form S-1
     (Registration Statement No. 333-34751), which was declared effective by the
     Securities and Exchange Commission on November 21, 1997, and incorporated
     herein by reference.

 
(2)  Filed as an Exhibit to the Company's Current Report on Form 8-K filed with
     the Securities and Exchange Commission on August, 8, 1998 and incorporated
     herein by reference.
 

(3)  Management contract or compensatory plan or arrangement identified pursuant
     to Item 14(a)(3) of this report.

(4)  Filed as an Exhibit to the Company's Registration Statement on Form S-8
     (Registration Statement No. 333-66117), which was filed on October 26,
     1998, and incorporated herein by reference.

                                       60
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                           HEALTHWORLD CORPORATION

       March 25, 1999                      By:  /s/ Steven Girgenti
--------------------------                     --------------------------------
            Date                                    Steven Girgenti
                                                 Chairman of the Board and
                                                  Chief Executive Officer


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


<TABLE>
<CAPTION>

          SIGNATURE                                              TITLE                      DATE

<S>                                       <C>                                            <C>
                                          Chairman of the Board and Chief 
     /s/ Steven Girgenti                  Executive Officer                              March 25, 1999
--------------------------------------
       Steven Girgenti

                                          Executive Vice President, Chief       
                                          Financial Officer (Principal Financial
                                          and Accounting Officer), Treasurer and
      /s/ Stuart Diamond                  Secretary                                      March 25, 1999
--------------------------------------
        Stuart Diamond

  /s/ William Leslie Milton               Vice Chairman of the Board and President       March 25, 1999
--------------------------------------
    William Leslie Milton

      /s/ Francis Hughes                  Director                                       March 25, 1999
--------------------------------------
        Francis Hughes

       /s/ Peter Knight                   Director                                       March 25, 1999
--------------------------------------
         Peter Knight

       /s/ Colin Lloyd                    Director                                       March 25, 1999
--------------------------------------
         Colin Lloyd

      /s/ Jonah Shacknai                  Director                                       March 25, 1999
--------------------------------------
        Jonah Shacknai

        /s/ Alex Spizz                    Director                                       March 25, 1999
--------------------------------------
          Alex Spizz
</TABLE>

                                      61