INT MEDIA GROUP INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2001

OR

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

For the transition period from ____________ to ____________

Commission file number: 333-76331

INT MEDIA GROUP, INCORPORATED
(Exact name of Registrant as specified in its charter)

DELAWARE 06-1542480
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

23 OLD KINGS HIGHWAY SOUTH 06820
DARIEN, CONNECTICUT (Zip Code)
(Address of principal executive offices)

(203) 662-2800
(Registrant's telephone number, including area code)

SECURITIES REGISTERED UNDER SECTION 12(b)
OF THE ACT: NONE
SECURITIES REGISTERED UNDER SECTION 12(g)
OF THE ACT: COMMON STOCK $.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./ /

The aggregate market value of voting common stock held by non-affiliates of
the registrant as of March 25, 2002, based upon the last sale price of such
common stock on that date as reported by the Nasdaq National Market was
$79,545,861.

The number of shares of the outstanding registrant's Common Stock as of
March 25, 2002, was 25,333,077.

Information required by Part III of this Form 10-K, to the extent not set
forth herein, is incorporated by reference from the registrant's definitive
proxy statement for its 2002 annual meeting of stockholders, which will be filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934 within 120
days after the end of the fiscal year to which this Form 10-K relates.

INT MEDIA GROUP, INCORPORATED

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this Form 10-K which are not historical facts are
"forward-looking statements" that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve risks and uncertainties, that could cause
actual results to differ materially from those described in the forward-looking
statements. The potential risks and uncertainties address a variety of subjects
including, for example: the competitive environment in which INT Media Group
competes; the unpredictability of INT Media Group's future revenues (including
those resulting from online advertising on INT Media Group's Web sites and
related Internet media properties), expenses, cash flows and stock price; INT
Media Group's investments in international and venture investments; any material
change in INT Media Group's intellectual property rights; and continued growth
and acceptance of the Internet and information technology. For a more detailed
discussion of such risks and uncertainties, refer to INT Media Group's reports
filed with the Securities and Exchange Commission pursuant to the Securities Act
of 1933 and the Securities Exchange Act of 1934. The forward-looking statements
included herein are made as of the date of this Form 10-K, and INT Media Group
assumes no obligation to update the forward-looking statements after the date
hereof.

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PART I

ITEM 1. BUSINESS

INTRODUCTION

INT Media Group owns and operates the internet.com and EarthWeb.com network
of over 150 Web sites and related Internet media properties, (as of
February 28, 2002), focused solely on the Internet industry and information
technology ("IT"). In addition to over 150 Web sites, our network includes over
200 e-mail newsletters, which are periodical publications delivered by
electronic mail; over 400 online discussion forums, which are electronic message
centers where members of specific interest groups review messages left by others
and leave their own messages; and over 70 moderated e-mail discussion lists,
which are similar to online discussion forums, except that members' messages are
transmitted and received by e-mail broadcast. Our network is organized into 16
subject areas, or vertical content channels. These vertical content channels
serve our Internet users, which include Internet industry and information
technology professionals, Web developers and experienced Internet users. Our INT
Media Events Division also produces nearly 40 offline conferences and trade
shows on Internet and IT-specific topics that are aligned with our network of
Web sites and e-mail newsletters. In addition, our INT Media Research Division
publishes research reports analyzing the Internet and information technologies
worldwide. We provide our audience, or community of Internet users, with the
following resources:

- real-time Internet industry - archives of definitive industry
and IT news publications

- market information about emerging - discussion forums
products and technologies

- tutorials, training and skills - software downloads
development

- buyer's guides and products reviews - expert advice

- Internet and IT market research - Internet and IT conferences and
trade shows

We also provide advertisers and vendors with a means through which they can
reach our community of Internet industry and information technology
professionals, many of whom either make or influence Internet and IT purchasing
decisions. We have had over 2,500 advertisers and exhibitors on our network and
at our conferences and trade shows.

We have rapidly built a network of Internet media properties through
internal development and acquisitions. We have experience identifying,
evaluating, acquiring and integrating Internet media properties that are
complementary to our content offerings and services. From July 1995 through
February 28, 2002, we made 73 acquisitions of Internet media properties,
consisting of 102 Web sites, 107 e-mail newsletters, 125 online discussion
forums and 162 moderated e-mail discussion lists.

In January 2002, there were over 20 million unique visitors to our network
of Web sites that generated over 240 million page views. We distributed over 31
million copies of our e-mail newsletters to over 5 million subscribers in
January 2002. We also distributed over 41 million messages to more than 70,000
moderated e-mail discussion list subscribers in January 2002.

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Our objective is to maintain and strengthen our position as a provider of
business information focused on the Internet industry and information
technology. We intend to achieve this objective by continuing to execute the
following strategies:

- increase our proprietary content offerings and services;

- expand revenue opportunities;

- grow through targeted acquisitions;

- enhance worldwide brand recognition; and

- increase our international presence.

Prior to the acquisition of Mecklermedia Corporation by Penton Media, Inc.
("Penton Media") in November 1998, we operated since December 1994 as one of
three divisions that comprised Mecklermedia. Our predecessor Web sites,
mecklerweb.com and iworld.com, were also dedicated to covering the Internet
industry and information technology. In connection with this acquisition, Penton
Media determined that Mecklermedia's Internet business was not consistent with
its planned strategic direction. To address this issue, Alan M. Meckler,
Mecklermedia's Chairman and Chief Executive Officer, purchased an 80.1% interest
in INT Media Group LLC, a business formed by Penton Media to hold the Internet
business acquired from Mecklermedia. As of March 15, 2002, Mr. Meckler
beneficially owned approximately 53.5% of our outstanding common stock.

INT Media Group, Incorporated was incorporated on April 5, 1999 in the State
of Delaware. internet.com LLC was merged with and into internet.com Corporation
upon consummation of our initial public offering in June 1999. On May 24, 2001,
internet.com Corporation received approval at its annual meeting of stockholders
to change its name from internet.com Corporation to INT Media Group,
Incorporated. Our principal executive offices are located at 23 Old Kings
Highway South, Darien, Connecticut 06820 and our telephone number is (203)
662-2800.

INDUSTRY BACKGROUND

The Internet has emerged as a global distribution network for real-time
news, resources and product and service information, an environment for online
communities and a marketplace in which commerce is conducted. International Data
Corporation (IDC) estimates that the number of Internet users will grow from 500
million in 2001 to 1.0 billion in 2005. The Business-to-Business (B2B) Internet
market is projected to experience rapid growth with notable research firms
forecasting trillion dollar markets for worldwide B2B e-commerce by the end of
2004 as businesses increasingly realize that e-commerce technologies offer
enormous potential for streamlining purchasing, sales and other transactions.
eMarketer charts the 2001 B2B e-commerce market at $450 million with five-fold
growth to $2.7 trillion by 2004. IDC forecasts the 2004 market at $2.2 trillion
worldwide, while other analyst firms are even more bullish with Forrester
predicting $6.3 trillion and Gartner Group $7.9 trillion. With the lines between
the Internet and IT markets becoming less distinct each day, another critical
indicator to gauge market growth is IT spending, which undoubtedly is driven by
Internet/e-commerce initiatives. Gartner/Dataquest projects a robust future for
Worldwide IT with spending levels reaching $4.3 trillion in 2005, up 60% from
$2.7 trillion in 2001.

To best exploit the growth of the Internet and information technology,
businesses must stay abreast of Internet-related technologies and products as
well as develop and maintain the skills necessary to utilize these technologies
and products. A broader set of executive management and business professionals
is increasingly participating in Internet and information technology
implementation decisions with information technology professionals. As a result,
Internet and IT-related topics need to be addressed from a variety of business
and technology perspectives to effectively communicate the value of deploying
and integrating Internet and information technologies.

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The increasing use of the Internet is dramatically affecting the operating
methods of profit and not-for-profit businesses and other organizations. These
businesses and organizations are dedicating an increasing amount of personnel
and financial resources to integrating and effectively using the Internet and IT
to expand and enhance their operations. As a result, these businesses and
organizations have a rapidly growing need for personnel with specialized skills
and knowledge in technologies that can effectively build and manage their
Internet and information technology infrastructures.

THE INT MEDIA GROUP SOLUTION

We provide our community of Internet users with a wide variety of content
offerings and services to aid them in their daily work and purchasing decisions.
Our solution addresses the needs of three constituencies - Internet users,
advertisers and vendors.

BENEFITS FOR OUR COMMUNITY OF INTERNET USERS

CONTENT. Our network of Web sites, e-mail newsletters, online discussion
forums and moderated e-mail discussion lists provides Internet and IT news and
information, which is updated on a daily basis. This Internet and IT news and
information help our community of Internet users to enhance their job
performance by providing them with up-to-date information and resources about
the Internet industry and information technology. Our network consists of
proprietary content as well as services for the Internet industry and
information technology, including:

- news;

- analysis;

- tutorials, training and skills development;

- market information about emerging products and technologies;

- buyers' guides and product reviews;

- Internet and IT market research; and

- expert advice.

Unlike traditional media, our network provides our community of Internet
users with real-time Internet and IT news and information. These users can
easily search our network by using a host of search and navigation tools.

COMMUNITY. Our network of Web sites, e-mail newsletters, online discussion
forums and moderated e-mail discussion lists provides our community of Internet
users the ability to discuss and solve technical problems and share information
by contributing materials and communicating with each other. Users submit and
share software code and development tools that are then published and archived
on our network. We believe that creating a sense of community through these
services fosters loyalty and affinity among our community of Internet users and
increases the amount of time they spend using our services. These services
include:

- ONLINE DISCUSSION FORUMS. We offer over 400 online discussion forums,
categorized by vertical content areas for the Internet industry and
information technology, that enable users to share information and
resources in order to help each other solve technical problems. We
archive these online discussion forums, creating an online knowledge
repository for future reference.

- MODERATED E-MAIL DISCUSSION LISTS. We offer over 70 moderated e-mail
discussion lists, which have over 70,000 subscribers. These lists, which
are moderated by skilled INT Media Group personnel, are categorized by
subject or vertical content areas for the Internet industry and
information technology and enable subscribers to conveniently share
information and resources and solve technical problems.

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- QUESTION AND ANSWER SERVICES. We offer question and answer services
that enable users to submit technical questions related to the Internet
industry and information technology as well as our content offerings and
services. Answers from skilled INT Media Group personnel are published
online in searchable formats.

- TECHNICAL JOB LISTINGS. Through jobs.internet.com and in conjunction
with a commerce agreement with Dice Inc., we provide our community of
Internet users with access to Internet industry and information
technology job openings. These job openings can be searched by job type,
salary range and geographic location.

COMMERCE. Our network of Web sites, e-mail newsletters, online discussion
forums and moderated e-mail discussion lists provides our community of Internet
users the ability to evaluate, compare and purchase Internet and IT-related
products and services provided by e-commerce vendors. We receive either fixed
fees for advertising, bounties for new customers or revenue sharing of 10% to
50% of the sales made by the e-commerce vendors as a result of links from our
network, or in some cases combinations of advertising, bounties and revenue
sharing. Through INT Media Research, we publish research reports analyzing the
Internet and information technology sectors worldwide. Through
Allnetresearch.com, we sell paid research reports offered by over 90 third party
publishers. Through LinuxCentral.com and BSDCentral.com we sell hardware,
software and other products geared for the Linux and Open Source community.
Through our Career Channel, we offer paid job listings that can be searched by
job type, salary range and geographic location. These commerce offerings provide
our users with access to the following goods and services, among others:

- domain name registrations;

- software and hardware;

- technical books and training materials;

- Internet and IT research reports;

- employment classifieds;

- opt-in e-mail list brokerage;

- online press release distribution;

- Web site hosting services;

- Web site security services; and

- business to business product and services exchange.

BENEFITS FOR ADVERTISERS AND VENDORS

We provide advertisers and vendors with targeted channels to reach our
highly focused community of Internet users, 84% of whom either make or influence
purchasing decisions, according to a survey we commissioned from Informative
LLC. We believe that our Internet users represent a large and targeted online
community of Internet industry and information technology professionals, Web
developers and experienced Internet users. We believe our advertisers and
vendors can enhance the effectiveness of their advertising by customizing
advertisements and placing them on targeted channels and pages on our network.
We also provide vendors with a much needed distribution channel and the ability
to focus their marketing efforts in a cost effective manner.

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Our Web sites, e-mail newsletters, online discussion forums and moderated
e-mail discussion lists attract a focused community of business and professional
Internet users, as compared to more broadly focused Web sites. According to a
survey we commissioned from Informative LLC, which was conducted from
January 2002 through March 2002, some key demographics of our community of
Internet users include:

- 84% are involved in purchasing Internet and information technology
products and services for their companies and organizations,
including hardware, software, networking and Internet access;

- 81% purchased products online within the past six months;

- 57% have Internet technology or information technology job titles;
another 28% are in corporate management;

- the average annual household income of the group exceeds $68,000;

- 65% are in the desirable 25-44 age group; and

- 59% have at least one college degree.

OUR BUSINESS STRATEGY

Our objective is to maintain and strengthen our position as a provider of
business information focused solely on the Internet industry and information
technology. We intend to achieve this objective by continuing to execute the
following key strategies:

INCREASE OUR PROPRIETARY CONTENT OFFERINGS AND SERVICES. We will strengthen
our existing content offerings and services by continuing to improve our
proprietary content available for our community of Internet users. Our editorial
team, comprised of over 60 employees and over 100 freelance contributors as of
February 28, 2002, creates proprietary content for our network on a daily basis.
We will continue to identify emerging topics of interest and then create and
aggregate content for those topics through internal development and acquisitions
of additional Web sites, e-mail newsletters, online discussion forums and
moderated e-mail discussion lists.

EXPAND REVENUE OPPORTUNITIES. For the year ended December 31, 2001, a
majority of our revenues were derived from advertising. We are continuing to
develop additional revenue sources, including e-commerce agreements and
offerings; conferences and trade shows; permission based opt-in e-mail list
rentals; paid subscription services; research reports; postal list rentals;
content and brand licensing; online press release distribution services; and
venture fund management fees. See "Revenue Opportunities."

GROW THROUGH TARGETED ACQUISITIONS. From July 1995 through February 28,
2002, we made 73 acquisitions, which included 102 Web sites, 107 e-mail
newsletters, 125 online discussion forums and 162 moderated e-mail discussion
lists. We expect to continue to pursue strategic acquisitions to strengthen our
content offerings and services. We may also acquire Internet media properties to
obtain valuable brands, expertise or access to new users, advertisers and
vendors. We believe that by acquiring Internet media properties, we can
integrate them into our network and improve their traffic and revenue results.
In addition, we believe that acquiring Web sites, e-mail newsletters, online
discussion forums and moderated e-mail discussion lists generally has increased
the overall traffic on our existing network. We intend to use the experience
gained from our numerous acquisitions in order to identify, evaluate, acquire
and integrate Web sites and other media properties, which are complementary to
our network.

ENHANCE WORLDWIDE BRAND RECOGNITION. We will continue to expand the
combination of online and offline advertising and promotional campaigns to
enhance the recognition of internet.com and our other brands. We intend to
continue to promote the internet.com brand as a leading source of online content
focused on the Internet industry. In addition, we will continue to promote our
branded Internet services, such as EarthWeb.com, SearchEngineWatch.com, Web
Developer.com and ClickZ.com under the

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internet.com and EarthWeb.com network through online and offline advertising and
other promotional activities. We also provide access to limited versions of our
editorial content to others at no charge to promote our brands and generate
traffic. Our marketing and branding campaigns are designed to increase overall
brand awareness. This increased brand awareness will help drive additional
traffic to our network and create additional advertising impressions, which in
turn will create additional advertising, e-commerce and other revenue
opportunities. As a result, this growth in user traffic should make our network
more valuable to advertisers and vendors. Our marketing and branding campaigns
will reinforce to users, advertisers and vendors that the internet.com brand
represents technical competence, comprehensiveness, timeliness and objectivity.

INCREASE OUR INTERNATIONAL PRESENCE. The Internet is also rapidly growing
internationally and we intend to utilize our experience to continue to develop
and acquire Web sites, e-mail newsletters, online discussion forums and
moderated e-mail discussion lists with an international focus in order to expand
our global presence. We have launched internet.com country and regional Web
sites for Asia, Australia Germany, Japan, Korea and Turkey. These international
editions are produced by our employees, freelance contributors and, in some
cases, licensees in the geographic areas they serve and provide daily Internet
and information technology news from the country or region in either English or
the primary language.

REVENUE OPPORTUNITIES

ADVERTISING. For the year ended December 31, 2001, a majority of our
revenues were generated from advertising on our Web sites, online discussion
forums, e-mail newsletters and moderated e-mail discussion lists. These media
properties are also expected to contribute to increased advertising revenues in
the future.

E-COMMERCE AGREEMENTS AND OFFERINGS. We have entered into a number of
e-commerce agreements, which generally include either a fixed fee for
advertising, a bounty for new customer accounts or revenue sharing of 10% to 50%
of the sales made by the e-commerce vendor as a result of links from our
network, or in some cases combinations of advertising, bounties and revenue
sharing. E-commerce agreements typically are a minimum of three months in
duration.

We also provide our user community with various e-commerce offerings.
Through INT Media Research, we publish research reports analyzing the Internet
and information technologies sectors worldwide. Through Allnetresearch.com, we
sell paid research reports offered by over 90 third party publishers. Through
LinuxCentral.com and BSDCentral.com, we sell hardware, software and other
products geared for the Linux and Open Source community. Through our CAREERS
CHANNEL, we offer paid job listings that can be searched by job type, salary
range and geographic location.

CONFERENCES AND TRADE SHOWS. Through our INT Media Events Division, we offer
conferences and trade shows focused on Internet and IT-specific topics that are
of interest to our community of Internet users. We are able to efficiently
promote these conferences and trade shows through our network. We generate
revenues from attendee registrations, exhibition space and advertiser and vendor
sponsorships. Proceeds from the sale of attendee registrations, exhibition space
and advertiser and vendor sponsorships are deferred and recognized as revenue at
the time the conferences and trade shows are held.

PERMISSION BASED OPT-IN E-MAIL LIST RENTALS. We currently offer for rental
our permission based opt-in e-mail list names relating to over 270 Internet and
IT-specific topics. Members of our community of Internet users volunteer, or
"opt-in," to be included on these lists to receive e-mail product offerings and
information relevant to their Internet interests. Subscribers to these
permission based opt-in e-mail lists receive e-mail announcements of special
offers relating to each topic subscribed. We generate revenues on a per use
basis for the rental of our list names.

PAID SUBSCRIPTION SERVICES. Paid subscription services relate to customer
subscriptions to our paid e-mail newsletters and services,
SearchEngineWatch.com, TheCounter.com, WinDrivers.com,
WallStreetResearchNet.com, UnclaimedDomains.com, DomainBook.com, AlertIPO.com
and

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NanotechPlanet.com, which are sold through our network and through affiliate
relationships. Revenue from subscriptions is recognized ratably over the
subscription period. Deferred revenues relate to the portion of collected
subscription fees, which has not yet been recognized as revenue.

RESEARCH REPORTS. Through our INT Media Research Division, we publish and
sell research reports that analyze the Internet and information technology
sectors worldwide. Revenues are recognized upon delivery of the reports to the
purchasers.

LICENSING AGREEMENTS. We license our editorial content and brands to third
parties for fixed fees and royalties based on the licensee's revenues generated
by the licensed content. We license selected portions of our editorial content
to print publishers. We license one-time rights to reprint individual articles,
online or in print, to third parties through licensing of reprints and copyright
permission requests. We also provide access to limited versions of our editorial
content to others at no charge, to promote our brands and generate traffic.

ONLINE PRESS RELEASE DISTRIBUTION SERVICES. Through InternetNewsBureau.com,
we provide paid e-mail based press release distribution services. These press
releases are e-mailed to over 5,900 registered journalists.

VENTURE FUND MANAGEMENT FEES. We are the portfolio manager of internet.com
Venture Fund I LLC, a $5.0 million venture fund formed in March 1999,
internet.com Venture Fund II LLC, a $15.0 million venture fund formed in
September 1999, and internet.com Venture Partners III LLC, a $75.0 million
venture fund formed in January 2000, all of which invest in early-stage
content-based Internet properties that are not competitive with INT Media Group.
We earn management fees for the day-to-day operation and general management of
the funds. We are also entitled to 20% of the realized gains on investments made
by these funds. We invested $700,000 in the initial fund and $1.8 million in the
second fund, which are now fully invested. We committed $10.4 million in the
third fund, of which $3.1 million has been invested as of December 31, 2001. The
remaining $4.3 million in the initial fund, $13.2 million in the second fund and
$64.6 million in the third fund were invested or committed by third party
investors.

CONTENT OFFERINGS AND SERVICES

We offer a broad range of content offerings and services to serve the needs
of our community of Internet users for content, community and commerce, as well
as the needs of advertisers and vendors in targeting our community of Internet
users. Our network is organized into the following 16 vertical content
categories, or channels:

- INTERNETNEWS CHANNEL - Provides real-time coverage of Internet industry
and information technology news events from around the world. Our staff
of 13 analysts and journalists file approximately 35 original items daily
in the following vertical Internet news categories: business, finance,
Internet service provider, or ISP, Web developer, E-commerce, Internet
advertising, wireless, network infrastructure and Internet stocks. We
enhance our original coverage of Internet industry and IT news events
through an agreement with Comtex News Network to carry selected Internet
news items.

- INTERNET TECHNOLOGY CHANNEL - Provides access to Internet news,
analyses, tutorials, reviews and resource guides to help our users
integrate evolving Internet technologies. Internet media properties in
the Internet Technology Channel cover many topics, including corporate
intranet implementation, Web servers and Internet and information
technology products.

- WEB DEVELOPER CHANNEL - Provides our users who are responsible for
building and maintaining Web sites with communication services and the
latest information and trends for Web site development. We provide
tutorials, applets and script downloads and online resource directories

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to Web developers. In addition, we provide community-building resources
through online discussion forums, frequently asked questions and
moderated e-mail discussion lists.

- ECOMMERCE/MARKETING CHANNEL - Provides Internet marketers and
e-commerce professionals with information resources, market research and
sales and marketing techniques. This channel includes tutorials for
gaining better placement in search engines, summaries of the latest
Internet market research and information about Internet advertising and
promotion.

- INTERNET RESOURCES CHANNEL - Provides access to subscription services
to our e-mail newsletters, information about Internet and IT industry
events, nanotechnology news and information, and other Internet
resources.

- ASP RESOURCES CHANNEL. - Provides news, analysis, commentary and
community interaction to help Application Service Provider ("ASP")
professionals do their jobs and buy products and services more
efficiently.

- ISP RESOURCES CHANNEL - Provides information for professionals in the
Internet Service Provider ("ISP") and Competitive Local Exchange Carrier
("CLEC") industries, including ISP-Planet.com, CLEC-Planet.com and
ISP-Lists.com, a collection of 33 e-mail discussion lists used by more
than 48,000 professionals in the ISP industry to communicate with their
colleagues.

- INTERNET INVESTING CHANNEL - Provides stock and financial news,
information and analysis about Internet companies. This channel includes
the Internet Stock Report, which includes daily analysis of Internet
stocks; ISDEX, The Internet Stock Index, a proprietary index of 50
publicly traded Internet stocks; Alert-IPO.com, a subscription service
reporting on the market for initial public offerings, WSRN.com (Wall
Street Research Net), a subscription service offering financial reports
for investors, and VCBuzz.com, an information resource for venture
capitalists.

- INTERNATIONAL CHANNEL - Provides Internet and IT news and information
for specific countries or regions including Asia, Australia, Germany,
Japan, Korea and Turkey.

- DOWNLOAD CHANNEL - Helps experienced Internet users evaluate and
retrieve freeware and shareware software in a variety of categories
including business, developer, utilities, multimedia and games.

- LINUX/OPEN SOURCE CHANNEL - Provides news, tutorials, information
resources and e-commerce services for technology professionals
implementing and maintaining Linux and/or open source technologies.

- INTERNET LISTS CHANNEL - A collection of Web-based directories that
allow users to find and evaluate ISPs, ASPs, Web design firms, trade
shows and online casinos.

- WINDOWS INTERNET TECHNOLOGY CHANNEL - Provides news, tutorials, and
information resources for technology professionals implementing and
maintaining Internet and intranet applications using Microsoft
Corporation technologies including Windows Active Server Pages and Back
Office.

- WIRELESS INTERNET CHANNEL - Provides comprehensive coverage of the
technologies, services and products for users of wireless networks
(including Wi-Fi and 802.11), Personal Digital Assistants (PDAs),
wireless communicators (such as RIM Blackberry) as well as daily coverage
of innovative products and services for mobile Internet use.

- EARTHWEB CHANNEL - Provides a comprehensive set of solutions to a broad
range of IT and Internet professionals including all job titles from CTOs
to programmers.

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- CAREER CHANNEL - Provides access to Internet and IT job listings posted
by thousands of employers across the country.

EDITORIAL

We maintain editorial offices in Darien, Connecticut; New York, New York;
South San Francisco, California; and Cambridge, Massachusetts. In addition,
editorial personnel work from home offices throughout the United States and in
Australia and Singapore. Freelance contributors and analysts are also located
both domestically and in 12 countries worldwide.

Our editorial team, comprised of over 60 employees and over 100 freelance
contributors as of February 28, 2002, creates considerable proprietary content
each month.

MARKETING AND SALES

MARKETING. We employ a combination of online and offline advertising and
promotional campaigns to promote our content offerings and services to our
community of Internet users, advertisers and vendors. User advertising includes
cross-promotion on our network, advertising in trade publications and at trade
shows and promotional links from Web sites that attract demographically similar
audiences. We believe that this strategy maintains the high quality and unique
focus of our community of Internet users. We have participated in various
Internet industry events, including Internet World, ISPCON and AdTech trade
shows. We have also used print advertising, which has appeared in BOARDWATCH,
INTERNET WORLD, TELE.COM, RED HERRING, UPSIDE, WIRELESS WEEK, NANOTECHNOLOGY
MAGAZINE, HOSTING TECH, KNOWLEDGE MANAGEMENT, XML JOURNAL and SOFTWARE MAGAZINE,
among other publications.

Our marketing efforts are directed largely at acquiring advertising clients
and commerce agreements. We principally use offline and online advertising,
direct mail and event sponsorships for customer acquisition. ADVERTISING AGE,
ADWEEK, B2B MAGAZINE, TECHNOLOGY MARKETING, ONLINE ADVERTISING DISCUSSION LIST
and SRDS are among the venues used to deliver our promotional messages. In
addition, we have a strategic agreement with Penton Media, which provides for an
exchange of services to be provided by each party. This agreement expires on
November 23, 2003.

Services provided by Penton Media to us under this agreement include the
following:

- one full-page advertisement at no charge in each issue of INTERNET
WORLD magazine and BOARDWATCH magazine;

- exhibit and sales office space at no charge for each U.S. Internet
World and ISPCON trade show; and

- prominent hanging media banners for Internet World and ISPCON trade
shows.

We provide a minimum of 2.3 million advertising impressions each month on
our network to Penton Media.

Our conference and trade show marketing initiatives are focused mainly on
leveraging the existing users of our network. We extensively cross-promote our
events through targeted electronic campaigns that include: Web banners, e-mail
newsletter ads, dedicated e-mail messages to select e-mail newsletter subscriber
databases and opt-in e-mail messages. To supplement our internal marketing
efforts, we also execute highly targeted traditional direct mail campaigns by
mailing postcards to select lists in targeted geographic areas. The postcards
serve as an event overview and an invitation to visit our Web sites to obtain
further information. Mailing lists and print advertisements are bartered with
media companies in exchange for a presence at our conferences and trade shows.

ADVERTISING SALES. We believe that we have been able to obtain revenue from
advertising on our Web sites, online discussion forums, e-mail newsletters and
moderated e-mail discussion lists because we enable clients to efficiently and
effectively reach targeted segments of the Internet community. Based on

11

a survey we commissioned which was conducted from January 2002 through
March 2002, 84% of our community of Internet users reports that they either make
or influence purchasing decisions. We believe that targeting this influential
audience allows us to sell advertising space at rates that are higher than the
average rates charged by online services aimed at more general audiences.

Our sales force is organized by geographic regions as follows: East,
Northeast, Southeast/Midwest, Northwest/Southwest, West, Canada, Europe, Asia,
and Australia.

Over 2,500 advertisers have placed advertisements on our network. For the
year ended December 31, 2001, our top 20 advertisers together accounted for 23%
of our revenues. Based on revenues, the following were our 20 largest
advertisers during the year ended December 31, 2001:

AT&T Microsoft Corporation
Cisco Systems Oracle Corporation
Compaq Computer Corporation Rackspace Managed Hosting
Compuware Corporation Rational Software
EarthLink, Inc. RightNow Technologies, Inc.
Engage, Inc. Sprint Corporation
Hewlett-Packard Company Sun Microsystems, Inc.
Intel Corporation Verio Inc.
International Business Machines Corporation VeriSign, Inc.
Macromedia, Inc. WebTrends Corporation

E-COMMERCE SALES, CONFERENCE AND TRADE SHOW SALES AND LICENSING. We offer
e-commerce, licensing and other business development arrangements to maximize
the potential of our proprietary content and community of Internet users. We
identify potential e-commerce vendors, licensees and other potential business
development opportunities and generally enter into contracts of three to 12
months' duration. E-commerce agreements generally include an advance against
revenue with revenue sharing of 10% to 50% of the sales made by the e-commerce
vendor as a result of links from our network.

We offer conferences and trade shows focused on Internet and IT-specific
topics that are of interest to our community of Internet users. We are able to
efficiently promote these conferences and trade shows through our network. We
generate revenues from attendee registrations, exhibition space and advertiser
and vendor sponsorships.

Licensing arrangements allow third parties to reproduce our editorial
content and brands either for print or online use. We are typically paid per-use
in the case of book and print rights, including reprints of articles published
on our network, and monthly in cases where our editorial content is published in
electronic form.

COMPETITION

We believe we compete on the basis of our brand recognition and our
proprietary content offerings and services focused solely on the Internet
industry and information technology. We believe that we are differentiated
relative to our competitors due to our vertical focus of providing content,
community and commerce to Internet industry and information technology
professionals, Web developers and experienced Internet users.

The market for Internet-based services is relatively new, intensely
competitive and rapidly changing. Since the advent of commercial services on the
Internet, the number of online services competing for users' attention and
spending has proliferated. We expect that competition will continue to
intensify. We compete with other companies, which direct a portion of their
overall Web content at the Internet professional community, such as CNET, Inc.
and CMP Media Inc. We also compete for circulation and advertising impressions
with general interest portal and destination Web sites as well as traditional
media.

12

Many of our current and potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing and other resources than we have. These competitors
may be able to respond more quickly to new or emerging technologies and changes
in customer requirements and to devote greater resources to the development,
promotion and sale of their products and services than we can. The number of
companies competing for the attention and spending of our community of Internet
users has increased and we expect it to continue to increase.

TECHNOLOGY AND OPERATIONS

We have developed an expandable operations infrastructure using open
standard hardware and software systems. We make our Web sites, e-mail
newsletters, online discussion forums and moderated e-mail discussion lists
available using multiple Sun Microsystems, Inc. and Wintel-based servers that
run on Sun Solaris, Microsoft NT, Windows 2000 and Linux operating systems. We
license software from the following parties, among others: Web and e-mail
servers from Netscape Communications Corporation; Web and database servers from
Microsoft Corporation; database servers from Oracle Corporation, Informix
Corporation and Microsoft Corporation; an advertising management system from
Real Media, Inc.; a content management system from Vignette Corporation; a
streaming media server from RealNetworks, Inc.; a spidering, content indexing,
personalization and categorization system from Autonomy, Inc.; discussion forums
from Web Crossing Inc., and firewalls from Network Associates Inc.

We maintain redundant server capacity in a data center operated by Qwest
Communications, Inc. In the event that production servers fail, we can restore
service quickly using spare servers. We have redundant Internet circuits
diversely routed within Qwest's network and with redundant network equipment
configured for automatic fail over. All of our servers are powered by
uninterruptible power supplies, and the data center is on multiple power grids.
In addition, Qwest maintains a diesel-powered generator and fuel supply in the
event of extended outages. All of our production systems are copied each night
to backup tapes that are stored at an off-site storage facility. We maintain a
quality assurance process to constantly monitor our servers, processes and
network connectivity. We have implemented these redundancies and backup systems
in order to minimize the risk associated with damage from fire, power loss,
telecommunications failure, break-ins, computer viruses and other events beyond
our control.

INTELLECTUAL PROPERTY

We seek protection of our proprietary content, logos, brands and software
relating to our Web sites, e-mail newsletters, online discussion forums and
moderated e-mail discussion lists and attempt to protect them by relying on
trademark, copyright, trade secret and other laws and restrictions. We currently
have no patents or patents pending and do not anticipate that patents will
become a significant part of our intellectual property in the foreseeable
future. We pursue the registration of our trademarks and service marks in the
United States and internationally, and have applied for registration in the
United States and numerous other countries for a number of our trademarks and
service marks. We also pursue copyright registration of our content in the
United States. We might not be able to obtain effective trademark, copyright and
trade secret protection in every country in which we distribute our services or
make them available through the Internet, and it is difficult for us to police
unauthorized use of our proprietary information.

We have applied for registration of our trademarks and service marks in the
United States and in over 75 other countries. We have encountered obstacles to
registration of some marks in several of these countries.

Legal standards relating to the validity, enforceability and scope of
protection of proprietary rights in Internet-related businesses are uncertain
and still evolving. As a result, we cannot assure the future viability or value
of our proprietary rights. We might not have taken adequate steps to prevent the
misappropriation or infringement of our intellectual property. Any such
infringement or misappropriation, should it occur, might harm our business,
results of operations and financial condition. In addition, we may have to file
lawsuits in the future to perfect or enforce our intellectual property rights,
to protect our trade secrets or to determine the validity and scope of the
proprietary rights of

13

others. These lawsuits could result in substantial costs and divert our
resources and the attention of our management. As a result, our business,
results of operations and financial condition would suffer.

Our business activities may infringe upon the proprietary rights of others,
and other parties might assert infringement claims against us. From time to
time, we have been, and expect to continue to be, subject to claims in the
ordinary course of our business including claims of alleged infringement of the
trademarks, service marks and other intellectual property rights of third
parties. If similar claims are made against us in the future, those claims and
any resultant litigation might subject us to liability for damages, result in
invalidation of our proprietary rights and, even if not meritorious, could be
time consuming and expensive to defend and could result in the diversion of our
resources and the attention of our management. As a result, our business,
results of operations and financial condition would suffer.

We generally obtain our content and some of our technology from our
employees or pursuant to work-for-hire arrangements. We also license technology
and content from third parties. In such license arrangements, we generally
obtain representations as to origin and ownership of such content and technology
and the licensors have generally agreed to defend, indemnify and hold us
harmless from any third party claims that such technology or content violates
the rights of another. We cannot be sure that these third party technology and
content protections will be effective or sufficient or that we will be able to
maintain such content or technology on commercially reasonable terms. As a
result, our business, results of operations and financial condition would
suffer.

We have licensed in the past, and expect to license in the future,
proprietary rights, such as trademarks or copyrighted material, to third
parties. While we attempt to ensure that the quality of our brands and content
are maintained by such licensees, we cannot be sure that such licensees will not
take actions that might decrease the value of our brands, proprietary rights or
reputation, which would harm our business, prospects, financial condition and
results of operations.

DOMAIN NAMES

We own the Internet domain name "internet.com," as well as numerous other
domain names both in the United States and internationally. Domain names
generally are regulated by Internet regulatory bodies. The regulation of domain
names in the United States and in foreign countries is subject to change.
Regulatory bodies could establish additional top-level domains, appoint
additional domain name registrars or modify the requirements for holding domain
names. As a result, we might not acquire or maintain the "internet.com" or
comparable domain name in all the countries in which we conduct business.

14

The relationship between regulations governing domain names and laws
protecting trademarks and similar proprietary rights is unclear and still
evolving. Therefore, we might be unable to prevent third parties from acquiring
domain names that infringe or otherwise decrease the value of our trademarks and
other proprietary rights.

EMPLOYEES

The following table sets forth a breakdown of our employees as of
February 28, 2002:

We have never had a work stoppage and no personnel are represented under
collective bargaining agreements. We consider our relations with our personnel
to be good.

15

ITEM 2. PROPERTIES

We lease approximately 25,000 square feet of office space in two facilities
in Darien, Connecticut that house our principal administrative, editorial,
sales, marketing, and information technology operations. In addition, we lease
approximately 11,000 square feet of office space in New York, New York, that is
used by editorial, sales, marketing and information technology personnel, and
approximately 7,000 square feet of office space in San Francisco, California
that is used primarily by sales personnel. We also have domestic operating
leases in: Cambridge and Westboro, Massachusetts; Washington, D.C.; and Clinton
Township, Michigan. These locations range in size from 1,600 to 2,900 square
feet and expire between August 2002 and April 2005. In addition, we have
international operating leases in Australia, Germany and Singapore.

We believe that the general condition of our leased real estate is good and
that our facilities are suitable for the purposes for which they are being used.
We believe that our current facilities will be adequate to meet our needs for
the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

Messrs. Alan M. Meckler and Christopher S. Cardell, who are stockholders,
executive officers and directors of INT Media Group, were stockholders,
executive officers and directors of Mecklermedia Corporation prior to its
acquisition by Penton Media in November 1998. In addition, Messrs. Gilbert F.
Bach and Michael J. Davies, who are directors of INT Media Group, were directors
of Mecklermedia Corporation prior to its acquisition by Penton Media. A
complaint seeking class action status was filed in Delaware Chancery Court on
June 16, 1999 by a former stockholder of Mecklermedia Corporation alleging that
Messrs. Meckler, Cardell, Bach and Davies, as well as the other directors of
Mecklermedia Corporation, breached their fiduciary duties of care, candor and
loyalty in connection with the approval of the sale of Mecklermedia Corporation
to Penton Media at the price paid by Penton Media and the related sale of 80.1%
of the Internet business of Mecklermedia Corporation to Mr. Meckler at the price
paid by Mr. Meckler. Among other things, this plaintiff has alleged that the
price paid by Penton Media for the purchase of Mecklermedia Corporation, and the
price paid by Mr. Meckler for an 80.1% stake in the Internet business of
Mecklermedia Corporation, were inadequate. This former stockholder of
Mecklermedia Corporation has asserted claims for unspecified damages. The
plaintiff also named INT Media Group, Incorporated as a defendant seeking that a
constructive trust be established consisting of any benefits derived by the
defendants in respect of the allegations set forth in the complaint. On
August 20, 1999, all of the defendants, including INT Media Group and Messrs.
Meckler, Cardell, Bach and Davies, served an answer to the complaint generally
denying the allegations therein, denying that the directors of Mecklermedia
Corporation breached any fiduciary duties, and asserting certain affirmative
defenses. All of the defendants intend to continue to vigorously defend
themselves.

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

None

16

PART II

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

The common stock of INT Media Group began trading publicly on the Nasdaq
Stock Market on June 25, 1999, under the symbol "INTM". Prior to that date,
there was no public market for our common stock. The following table sets forth
for the periods indicated the high and low sale prices of our common stock.

As of February 28, 2002, there were 58 holders of record of our common
stock, although we believe that the number of beneficial owners of our common
stock is substantially higher.

DIVIDEND POLICY

We have never declared or paid a cash dividend and do not anticipate doing
so in the foreseeable future. We expect to retain earnings to finance the
expansion and development of our business.

RECENT SALES OF UNREGISTERED SECURITIES

On September 8, 2000, we issued an aggregate of 211,382 shares of INT Media
Group common stock, with an aggregate market value at such time of approximately
$5.8 million, as partial consideration for the acquisition by INT Media Group of
substantially all of the assets of ClickZ, Inc., a Massachusetts corporation
("ClickZ"). All of the shares of INT Media Group common stock issued in this
transaction were issued to ClickZ in a non-public offering pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), under Section 4(2) of the 1933 Act. This sale was made
without general solicitation or advertising. ClickZ and its principal
stockholders represented to us that ClickZ was a sophisticated investor, that it
had been given the opportunity to obtain from us all information that it
requested to evaluate the investment and that the shares were being acquired for
investment purposes only.

17

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the
financial statements of INT Media Group, the accompanying notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The selected financial data of the iWorld division of Mecklermedia
for the years ended September 1997 and 1998, and for the period from
October 1, 1998 through November 23, 1998, are derived from financial statements
of the iWorld division of Mecklermedia. The selected financial data for the
period from inception (November 24, 1998) through December 31, 1998 and for the
years ended December 31, 1999, 2000 and 2001, as well as the balance sheet data
as of December 31, 2000 and 2001, are derived from the financial statements of
INT Media Group. These financial statements have been audited by Arthur Andersen
LLP, independent public accountants. See "Index to Financial Statements."

The financial information of the iWorld division of Mecklermedia included
herein is not necessarily indicative of the results of operations, financial
position and cash flows of INT Media Group had it been a stand-alone entity at
such times. It is also not necessarily indicative of the results of operations,
financial position and cash flows of INT Media Group in the future. The share
information reflects the conversion of INT Media Group from a limited liability
company into a corporation as if such conversion had occurred at the beginning
of each period indicated.

- ----------
(1) Represents the financial data of the iWorld division of Mecklermedia
Corporation.

(2) Represents the financial data of INT Media Group.

18

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

OVERVIEW

We own and operate a network of Web sites, e-mail newsletters, online
discussion forums and moderated e-mail discussion lists focused solely on the
Internet industry and information technology ("IT"). Our network consists of 16
subject areas, or vertical content channels, that contain over 150 Web sites,
over 200 e-mail newsletters, over 400 online discussion forums and over 70
moderated e-mail discussion lists focused solely on the Internet industry and
IT. During the month of January 2002, we delivered over 240 million page views
to over 20 million unique visitors and over 31 million copies of our e-mail
newsletters to over 5 million subscribers, and over 41 million messages were
distributed to over 70,000 subscribers to our moderated e-mail discussion lists.
Our INT Media Events Division produces nearly 40 offline conferences and trade
shows on Internet and IT-specific topics that are aligned with our network of
Web sites and e-mail newsletters. In addition, our INT Media Research Division
publishes research reports analyzing the Internet and information technology
sectors worldwide.

We were formed in November 1998 following the acquisition of Mecklermedia by
Penton Media. As part of the acquisition, Penton Media agreed to contribute all
the assets of Mecklermedia's Internet media business division, iWorld, to a
newly formed limited liability company, internet.com LLC. As part of this
acquisition agreement, we reserved 4% of our total membership units for
discretionary grants to our employees. The grants were completed in March 1999.
As these membership units vested upon the completion of our initial public
offering, we recorded an $8.0 million compensation charge concurrent with the
completion of our initial public offering in June 1999. Prior to the acquisition
of Mecklermedia by Penton Media, iWorld operated as one of three business lines,
which comprised Mecklermedia. Our predecessor Web sites, MecklerWeb and
iWorld.com, were also dedicated to covering Internet and IT developments.

We generate revenues from the following sources:

- advertising on our Web sites, e-mail newsletters, online discussion
forums and moderated e-mail discussion lists;

- e-commerce agreements and offerings;

- conferences and trade shows;

- permission based opt-in e-mail list rentals;

- paid subscription services;

- research reports;

- licensing of our editorial content and brands;

- online press release distribution services; and

- venture fund management fees.

We barter a portion of the unsold advertising impressions generated by our
network for advertising and promotion in media properties owned by third
parties. In addition, INT Media Group barters portions of unsold advertising
impressions for equity interests in certain of our venture funds' portfolio
companies. We did not record the effects of this barter in our financial
statements for the year ended December 31, 1999. Beginning in January 2000, in
accordance with Emerging Issues Task Force Issue No. 99-17, "Accounting for
Advertising Barter Transactions," we have prospectively recorded revenues and
expenses from barter transactions at their estimated fair values. Revenues
related to barter transactions were approximately $4.1 million and $5.4 million
and expenses were $2.1 million and $2.9 million, respectively, for the years
ended December 31, 2000 and 2001.

19

For the years ended December 31, 2000 and 2001, a majority of our revenues
were derived from advertising. We recognize advertising revenue ratably in the
period the advertising is displayed, provided that no significant company
obligations remain outstanding and collection of the resulting receivable is
probable. Such obligations typically include guarantees of a minimum number of
advertising impressions, or times an advertisement is viewed by users of INT
Media Group's Web sites and related Internet media properties. We use a direct
sales force to sell advertising to companies and advertising agencies.

Our e-commerce agreements and offerings generally include advertising on our
Web sites, bounties for new customers or revenue sharing for sales made by the
e-commerce vendors as a result of links from our network, or in some cases
combinations of advertising, bounties and revenue sharing. We recognize the
advertising component of these agreements ratably in the period the advertising
is displayed, provided that no significant company obligations remain and
collection of the remaining receivable is probable. Generally, bounties and
revenue sharing agreements require a monthly minimum fee from INT Media Group's
customers. Revenues from these agreements are recognized in the month they are
earned.

Our conferences and trade shows generate revenues from attendee
registrations, exhibition space and from advertiser and vendor sponsorships.
Proceeds from the sale of attendee registrations, exhibition space and
advertiser and vendor sponsorships are deferred and recognized as revenue at the
time the conferences and trade shows are held.

We currently offer for rental our permission based opt-in e-mail list names
relating to over 270 Internet and IT-specific topics. Members of our community
of Internet users volunteer, or "opt-in", to be included on these lists to
receive e-mail product offerings and information relevant to their Internet and
information technology interests. Subscribers to these permission based opt-in
e-mail lists receive e-mail announcements of special offers relating to each
topic subscribed. We generate revenues on a per use basis for the rental of our
list names. Revenue from permission based opt-in list rentals is recognized at
the time of use by the renter.

Paid subscription services relate to customer subscriptions to our paid
e-mail newsletters and services, SearchEngineWatch.com, TheCounter.com,
WinDrivers.com, WallStreetResearchNet.com, UnclaimedDomains.com, DomainBook.com,
AlertIPO.com and NanotechPlanet.com, which are sold through our network and
through affiliate relationships. Revenue from subscriptions is recognized
ratably over the subscription period. Deferred revenues relate to the portion of
collected subscription fees, which has not yet been recognized as revenue.

Through our INT Media Research Division, we publish and sell research
reports that analyze the Internet and information technology sectors worldwide.
Revenues are recognized upon delivery of the reports to the purchasers.

Our licensing agreements vary in structure, with INT Media Group generating
fixed fees, royalties or both for access to our editorial content and brands. We
generally license our editorial content and brands to offline and online media
companies. Revenues are recognized ratably over the period of the licensing
agreements.

Online press release distribution revenues are generated through
InternetNewsBureau.com. We distribute e-mail based press releases to over 5,900
registered journalists. Revenue from this service is recorded on a per use basis
and recognized at the time of distribution.

Venture fund management fees relate to management fees earned for the
day-to-day operation and general management of internet.com Venture Fund I LLC,
internet.com Venture Fund II LLC and internet.com Venture Partners III LLC.
Management fees are recognized ratably over the period in which services are
rendered. In addition, INT Media Group is entitled to 20% of the realized gains
earned from portfolio investments, which are recognized at the time of
distribution from the venture capital funds.

20

From July 1995 through February 28, 2002, we made 73 acquisitions of
Internet media properties, consisting of 102 Web sites, 107 e-mail newsletters,
125 online discussion forums and 162 moderated e-mail discussion lists. We
expect to continue to pursue strategic acquisitions to strengthen our content
offerings and services. All of INT Media Group's acquisitions have been
accounted for as purchases.

We have sustained losses on a quarterly and annual basis in the past, and
because costs are largely fixed in the short term, we expect to be vulnerable to
significant fluctuations in operating losses if actual revenues fall below
anticipated levels. Furthermore, given the rapidly evolving nature of our
business, our operating results are difficult to forecast and period-to-period
comparison of our operating results will not be meaningful and should not be
relied upon as any indication of future performance. Due to these and other
factors, many of which are outside our control, quarterly-operating results may
fluctuate significantly in the future.

RESULTS OF OPERATIONS

The following table sets forth certain statement of operations data as a
percentage of revenues for the periods indicated:

YEARS ENDED DECEMBER 31, 2000 AND 2001

REVENUES. Revenues were $52.1 million for the year ended December 31, 2000
and $44.0 million for the year ended December 31, 2001, representing a decrease
of 16%. This change was primarily due to a reduction in advertising revenues. A
majority of our revenues relate to advertising on our network of Web sites,
e-mail newsletters, online discussion forums and moderated e-mail discussion
lists. While we anticipate that advertising revenues will continue to represent
a majority of our revenues for the foreseeable future, we believe that revenues
from e-commerce agreements and offerings, conferences and trade shows,
permission based opt-in e-mail list rentals, paid subscription services,
research reports, licensing, online press release distribution services and
venture fund management fees will continue to expand and diversify our future
revenue streams.

21

COST OF REVENUES. Cost of revenues primarily consists of expenses associated
with editorial, communications infrastructure, Web site hosting and conferences
and trade shows. Cost of revenues was $23.0 million for the year ended
December 31, 2000 and $22.1 million for the year ended December 31, 2001,
representing a decrease of 4%. This change was primarily due to a reduction of
editorial, technology and operations personnel and a decrease in expenses for
freelance contributors, partially offset by office and workforce redundancy
costs. As a percentage of revenues, cost of revenues was 44% for the year ended
December 31, 2000 and 50% for the year ended December 31, 2001.

ADVERTISING, PROMOTION AND SELLING. Advertising, promotion and selling
expenses primarily consist of costs related to sales and marketing staff, sales
commissions and promotion costs. Advertising, promotion and selling expenses
were $18.3 million for the year ended December 31, 2000 and $18.5 million for
the year ended December 31, 2001, representing a 1% increase. This change was
primarily due to increased conference marketing expenses and workforce
redundancy costs offset by a reduction of advertising sales personnel. As a
percentage of revenues, advertising, promotion and selling expenses were 35% for
the year ended December 31, 2000 and 42% for the year ended December 31, 2001.

GENERAL AND ADMINISTRATIVE. General and administrative expenses primarily
consist of salaries, professional fees, facilities costs and provisions for
losses on accounts receivable. General and administrative expenses were $10.2
million for the year ended December 31, 2000 and $12.0 million for the year
ended December 31, 2001, representing an 18% increase. This change was primarily
due to increased provision for losses on accounts receivable. As a percentage of
revenues, general and administrative expenses were 20% for the year ended
December 31, 2000 and 27% for the year ended December 31, 2001.

DEPRECIATION AND AMORTIZATION. Depreciation of property and equipment was
$2.1 million for the year ended December 31, 2000 and $2.7 million for the year
ended December 31, 2001, representing a 30% increase. As a percentage of
revenues, depreciation of property and equipment was 4% for the year ended
December 31, 2000 and 6% for the year ended December 31, 2001. Amortization of
intangibles was $24.9 million for the year ended December 31, 2000 and $33.8
million for the year ended December 31, 2001, representing a 36% increase. This
increase was primarily due to the amortization of acquired Web sites and related
Internet media properties. As a percentage of revenues, amortization of
intangibles was 48% for the year ended December 31, 2000 and 77% for the year
ended December 31, 2001.

IMPAIRMENT OF INTANGIBLES. Long-lived assets and certain identifiable
intangibles are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. An impairment loss is recognized when the sum of undiscounted
expected future cash flows is less than the carrying amount of such assets. The
measurement for such impairment loss is based on estimated fair values. Fair
values have been determined based upon estimated future cash flows. During 2001,
INT Media Group determined that certain intangible assets associated with
various acquired Web sites and related Internet media properties were impaired.
As a result of this determination, INT Media Group has recorded a non-cash
charge of approximately $54.2 million.

MINORITY INTERESTS. Minority interests represent the minority stockholders'
proportionate share of losses of INT Media Group's majority-owned consolidated
international subsidiaries.

EQUITY LOSSES FROM INTERNATIONAL AND VENTURE FUND INVESTMENTS, NET. Equity
losses represent INT Media Group's net equity interests in the investments in
internet.com venture funds and international joint ventures.

LOSS ON INVESTMENTS AND OTHER, NET. During the year ended December 31, 2001,
INT Media Group determined that the declines in value from INT Media Group's
accounting basis for certain of our investments in internet.com venture fund
portfolio companies was other than temporary. INT Media Group recognized losses
totaling $1.9 million related to investment impairment.

22

INTEREST INCOME, NET. Interest income was approximately $4.8 million for the
year ended December 31, 2000 and $1.4 million for the year ended December 31,
2001.

PROVISION FOR INCOME TAXES. INT Media Group recorded a provision for income
taxes of $205,000 for the year ended December 31, 2000 and $2,000 for the year
ended December 31, 2001 related to foreign income tax liabilities which were
recorded based upon estimated foreign tax rates.

YEARS ENDED DECEMBER 31, 1999 AND 2000

REVENUES. Revenues were $16.1 million for the year ended December 31, 1999
and $52.1 million for the year ended December 31, 2000, representing an increase
of 224%. This change was primarily due to an increase in advertising revenues.

COST OF REVENUES. Cost of revenues was $8.4 million for the year ended
December 31, 1999 and $23.0 million for the year ended December 31, 2000,
representing an increase of 175%. This change was primarily due to the increased
hiring of editorial, technology and operations personnel and expenses for
freelance contributors. The increase was offset by capitalization of certain
costs under the Emerging Issues Task Force Issue No. 00-2, "Accounting for Web
Site Development Costs" ("EITF 00-2"), of $742,000 for the year ended
December 31, 2000. As a percentage of revenues, cost of revenues was 52% for the
year ended December 31, 1999 and 44% for the year ended December 31, 2000.

ADVERTISING, PROMOTION AND SELLING. Advertising, promotion and selling
expenses were $7.5 million for the year ended December 31, 1999 and $18.3
million for the year ended December 31, 2000, representing an increase of 142%.
This change was primarily due to increased hiring of advertising sales personnel
and the recording of barter advertising. As a percentage of revenues,
advertising, promotion and selling expenses were 47% for the year ended
December 31, 1999 and 35% for the year ended December 31, 2000.

GENERAL AND ADMINISTRATIVE. General and administrative expenses were $4.4
million for the year ended December 31, 1999 and $10.2 million for the year
ended December 31, 2000, representing a 129% increase. This change was primarily
due to the hiring of additional personnel and increased provisions for losses on
accounts receivable. As a percentage of revenues, general and administrative
expenses were 28% for the year ended December 31, 1999 and 20% for the year
ended December 31, 2000.

DEPRECIATION AND AMORTIZATION. Depreciation of property and equipment was
$673,000 for the year ended December 31, 1999 and $2.1 million for the year
ended December 31, 2000, representing a 212% increase. As a percentage of
revenues, depreciation of property and equipment was 4% for both the year ended
December 31, 1999 and 2000. Amortization of intangibles was $9.8 million for the
year ended December 31, 1999 and $24.9 million for the year ended December 31,
2000, representing a 154% increase. This increase was primarily due
to the amortization of acquired Web sites and related Internet media properties.
As a percentage of revenues, amortization of intangibles was 61% for the year
ended December 31, 1999 and 48% for the year ended December 31, 2000.

NON-CASH COMPENSATION CHARGE. In March 1999, internet.com LLC granted 4% of
its total membership units at the time to certain of its employees. As these
membership units vested upon the completion of our initial public offering in
June 1999, INT Media Group recorded an $8.0 million compensation charge
concurrent with the completion of our initial public offering on June 25, 1999.

MINORITY INTEREST. Minority interest represents the minority stockholders'
proportionate share of losses of INT Media Group's majority-owned consolidated
international subsidiaries.

EQUITY LOSS FROM INTERNATIONAL AND VENTURE FUND INVESTMENTS, NET. Equity
losses represent INT Media Group's net equity interests in the investments in
international joint ventures and the internet.com venture funds. Equity losses
from international joint ventures were $318,000 for the year ended
December 31, 2000. Equity losses from the internet.com venture funds were
approximately $1.1 million for the year ended December 31, 2000.

23

LOSS ON INVESTMENTS AND OTHER, NET. During the year ended December 31, 2000,
INT Media Group determined that the declines in value from INT Media Group's
accounting basis for certain of our investments in internet.com venture fund
portfolio companies was other than temporary. INT Media Group recognized losses
totaling $216,000 related to investment impairment, net of a gain on the
distribution of GOTO.com common stock received from internet.com Venture Fund I
LLC.

INTEREST INCOME, NET. Interest income, net of interest expense, was $688,000
for the year ended December 31, 1999 and $4.8 million for the year ended
December 31, 2000.

PROVISION FOR INCOME TAXES. INT Media Group recorded a provision for income
taxes of $205,000 for the year ended December 31, 2000 related to foreign income
tax liabilities.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have funded operations primarily with cash from our
initial and follow-on public offerings, borrowings under a line of credit and
the capital contributions of members of internet.com LLC. On June 25, 1999, we
completed our initial public offering of 3,400,000 shares of our common stock at
$14.00 per share. Net proceeds to INT Media Group aggregated approximately $43.0
million (net of underwriters' commission and offering expenses of $4.7 million).
On June 30, 1999, INT Media Group paid the outstanding balance under its line of
credit of approximately $5.0 million and terminated the line of credit. On
February 1, 2000, we completed our follow-on public offering of 3,750,000 shares
of common stock priced at $60.00 per share, of which 1,750,000 shares were sold
by INT Media Group and 2,000,000 shares were sold by Penton Media, Inc. Net
proceeds received by INT Media Group from the follow-on offering were
approximately $98.3 million. INT Media Group did not receive any of the proceeds
from the sale of shares by Penton Media, Inc.

As of December 31, 2001, INT Media Group had total current assets of $32.2
million and total current liabilities of $9.3 million, or working capital of
$22.9 million.

Net cash used in operating activities was approximately $3.5 million for the
year ended December 31, 1999, $1.4 million for the year ended December 31, 2000
and $5.4 million for the year ended December 31, 2001. Net cash used in
operating activities for the year ended December 31, 1999 was primarily a result
of our net losses adjusted for a non-cash compensation charge, depreciation and
amortization, and increases in accounts receivable and prepaid expenses, offset
by an increase in accounts payable, accrued expenses and deferred revenues. Net
cash used in operating activities for the year ended December 31, 2000 was a
result of our net losses adjusted for depreciation and amortization, non-cash
barter transactions, provision for losses on accounts receivable, and increases
in accounts payable and accrued expenses offset by increases in accounts
receivable and prepaids and other. Net cash used in operating activities for the
year ended December 31, 2001 was primarily a result of our net losses adjusted
for depreciation and amortization, impairment of intangibles, non-cash barter
transactions, provision for losses on accounts receivable and decreases in
accounts payable and accrued expenses, offset by decreases in accounts
receivable and prepaids and other.

Net cash used in investing activities was approximately $25.0 million for
the year ended December 31, 1999, $55.3 million for the year ended December 31,
2000 and $29.5 million for the year ended December 31, 2001. Net cash used in
investing activities was primarily a result of acquisitions of Web sites and
related Internet media properties and capital expenditures. Capital expenditures
were $2.5 million for the year ended December 31, 1999, $3.7 million for the
year ended December 31, 2000 and $1.9 million for the year ended December 31,
2001.

Net cash provided by financing activities was approximately $46.3 million
for the year ended December 31, 1999, $98.7 million for the year ended December
31, 2000 and $55,000 for the year ended December 31, 2001. Net cash provided by
financing activities was a result of our initial public offering, borrowings
under our line of credit, a private placement of equity securities, net proceeds
from our follow-on public offering and from the exercise of stock options.

24

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2000, the Emerging Issues Task Force reached a consensus on Issue
No. 99-17, "Accounting for Advertising Barter Transactions," to be effective for
transactions entered into after January 20, 2000. The consensus states that
advertising barter transactions should be accounted for at fair value and the
fair value recognized disclosed in the financial statements, if there is
verifiable objective evidence provided by sufficient cash transactions received
by the seller of the advertising or similar advertising. Accordingly, INT Media
Group began to record the financial statement effects of barter transactions at
their estimated fair value, prospectively, beginning in January 2000.

As of July 1, 2000, INT Media Group adopted Emerging Issues Task Force Issue
00-2, "Accounting for Web Site Development Costs." As a result, INT Media Group
is now capitalizing costs incurred for the development of internal Web sites,
which had previously been expensed as a component of cost of revenues. INT Media
Group continues to expense all costs incurred that relate to the planning and
post-implementation phases of development. These charges are included in cost of
revenues in the accompanying statements of operations. Amounts capitalized are
included in intangible assets in the accompanying balance sheets and the related
amortization is included in amortization expense in the accompanying statements
of operations. These capitalized costs are being amortized over three years.

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS
No. 141 requires that the purchase method of accounting be used for all business
combinations subsequent to June 30, 2001 and specifies criteria for recognizing
intangible assets acquired in a business combination. SFAS No. 142 requires that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead be tested for impairment at least annually. Intangible
assets with definite useful lives will continue to be amortized over their
estimated useful lives. SFAS No. 142 is effective for fiscal years beginning
after December 15, 2001. On January 1, 2002, SFAS No. 142 became effective and
as a result, INT Media Group will cease to amortize the remaining $5.3 million
of net goodwill.

Also in July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". This standard addresses the financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The standard is effective for
fiscal years beginning after June 15, 2002. INT Media Group's management does
not expect the adoption of SFAS No. 143 to have a material impact on INT Media
Group's financial results.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". This standard addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. The standard
is effective for fiscal years beginning after June 15, 2002. INT Media Group's
management does not expect the adoption of SFAS No. 144 to have a material
impact on INT Media Group's financial results.

25

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are described in Note 3 to the
consolidated financial statements included in Item 8 of this Form 10-K. Our
critical accounting policies are as follows:

REVENUE RECOGNITION. Our revenue recognition policy is significant because
our revenue is a key component of our results of operations. In addition, our
revenue recognition determines the timing of certain expenses, such as
commissions. We follow very specific and detailed guidelines in measuring
revenue.

ESTIMATING VALUATION ALLOWANCES. Our management must make estimates of the
amount of our accounts receivables that may be not collected. Management
specifically analyzes accounts receivable and analyzes historical bad debts,
customer concentrations, customer credit-worthiness, current economic trends and
changes in our customer payment terms when evaluating the adequacy of the
allowance for doubtful accounts. Our accounts receivable balance was $6.5
million, net of allowance for doubtful accounts of $1.8 million, as of
December 31, 2001.

VALUATION OF LONG-LIVED ASSETS. We assess the impairment of long-lived
assets whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. Factors we consider important which could trigger
an impairment review include the following:

- significant underperformance relative to expected historical or
projected future operating results;

- significant changes in the manner of INT Media Group's use of the
acquired assets or the strategy for INT Media Group's overall
business;

- significant negative industry or economic trends;

- significant decline in INT Media Group's stock price for a sustained
period; and

- INT Media Group's market capitalization relative to net book value.

When we determine that the carrying value of long-lived assets may not be
recoverable based upon the existence of one or more of the above indicators of
impairment, we measure any impairment based on estimated fair values. Fair
values have been determined based upon estimated future cash flows. During the
year ended December 31, 2001, INT Media Group recognized $54.2 million and $1.9
million of impairment losses related to its goodwill and other long-lived
assets, respectively. Net intangible assets and other long-lived assets were
$6.8 million and $2.4 million, respectively, as of December 31, 2001.

On January 1, 2002, SFAS No. 142 became effective and as a result, INT Media
Group will cease to amortize the remaining $5.3 million of net goodwill.

26

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

We have no derivative financial instruments or derivative commodity
instruments. We have invested our net proceeds from our follow-on public
offering on February 1, 2000 in short-term, interest-bearing, investment grade
securities. Our transactions are generally conducted, and our accounts are
denominated, in United States dollars. Accordingly, we are not exposed to
significant foreign currency risk.

27

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INT MEDIA GROUP, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

28

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of INT Media Group, Incorporated:

We have audited the accompanying consolidated balance sheets of INT Media
Group, Incorporated (a Delaware Corporation) and subsidiaries as of December 31,
2000 and 2001, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the years ended December 31, 1999, 2000
and 2001. 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 auditing standards generally
accepted in the United States. 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 accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of INT Media Group,
Incorporated and subsidiaries as of December 31, 2000 and 2001, and the results
of their operations and their cash flows for the years ended
December 31, 1999, 2000 and 2001, in conformity with accounting principles
generally accepted in the United States.

As discussed in Note 3 to the consolidated financial statements, in 2000,
the Company changed its accounting for Web site development costs and for barter
transactions in accordance with Emerging Issues Task Force Issue No. 00-2 and
Issue No. 99-17, respectively.

ARTHUR ANDERSEN LLP

Stamford, Connecticut
March 14, 2002

29

INT MEDIA GROUP, INCORPORATED

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2000 AND 2001

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

See notes to consolidated financial statements.

30

INT MEDIA GROUP, INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(1) Represents the combined financial data of predecessor business and INT Media
Group.

See notes to consolidated financial statements.

31

INT MEDIA GROUP, INCORPORATED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

NOTE:

Immediately prior to the closing of its initial public offering,
internet.com LLC converted its business form to a corporation. This
reorganization was effected by merging internet.com LLC into a newly formed
Delaware corporation called INT Media Group, Incorporated. Each member of
internet.com LLC received shares of INT Media Group, Incorporated common stock
in exchange for their membership units at a rate of 16,215.891 shares per
membership unit. All share and per share data have been retroactively adjusted
to reflect the reorganization. The net losses for the year ended December 31,
1999 have been charged to additional paid-in capital to the extent the loss
related to the period prior to the initial public offering.

See notes to consolidated financial statements.

32

INT MEDIA GROUP, INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

(IN THOUSANDS)

(1) Represents the combined financial data of predecessor business and INT Media
Group.

See notes to consolidated financial statements.

33

INT MEDIA GROUP, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

1. THE COMPANY

INT Media Group, Inc. is a leading provider of global real-time news,
information and media resources for Internet industry and information technology
professionals, Web developers and experienced Internet users. INT Media Group
includes the internet.com and EarthWeb.com network of over 150 Web sites and
over 200 e-mail newsletters that generate 240 million page views monthly. The
network is organized into 16 vertical content channels to serve Internet users,
which include Internet industry and information technology professionals, Web
developers and experienced Internet users. Our INT Media Events Division
includes nearly 40 offline conferences and trade shows on Internet and
IT-specific topics that are aligned with our Network of Web sites and e-mail
newsletters. In addition, our INT Media Research Division publishes research
reports analyzing the Internet and information technologies sectors worldwide.

Since all of INT Media Group's products and services relate to providing
Internet-related information to Internet industry and information technology
professionals, Web developers and experienced Internet users, its success is
dependent on the continued growth of the Internet and information technology.

On June 25, 1999, INT Media Group completed an initial public offering
("IPO") of 3,400,000 shares of common stock at $14.00 per share. Net proceeds to
INT Media Group aggregated approximately $42.9 million.

Immediately prior to the closing of its initial public offering,
internet.com LLC converted its business form to a corporation. This
reorganization was effected by merging internet.com LLC into a newly formed
Delaware corporation called internet.com Corporation. On May 24, 2001,
internet.com Corporation received approval at its annual meeting of stockholders
to change its name from internet.com Corporation to INT Media Group,
Incorporated.

These financial statements have been presented as if INT Media Group had
always been a corporation.

On February 1, 2000, INT Media Group completed a follow-on offering of
3,750,000 shares of common stock priced at $60.00 per share, of which 1,750,000
shares were sold by INT Media Group and 2,000,000 shares were sold by Penton
Media, Inc. Net proceeds received by INT Media Group from the follow-on offering
were approximately $98.3 million. INT Media Group did not receive any of the
proceeds from the sale of shares by Penton Media, Inc.

2. HISTORY

internet.com LLC was formed as part of the acquisition of Mecklermedia
Corporation by Internet World Media, a wholly-owned subsidiary of Penton Media
(a publicly-owned corporation). During the negotiation of this acquisition,
Penton Media indicated that it did not wish to retain all of iWorld Corporation,
Mecklermedia's Internet business, because it believed that the Internet business
was inconsistent with its strategic direction. However, Penton Media indicated
that it wanted Internet World Media to maintain a minority interest in the
Internet business due to its belief that the Internet business had the potential
to become profitable in the future. As a result, Alan M. Meckler, Mecklermedia's
Chairman and Chief Executive Officer, agreed to purchase an 80.1% interest in
the Internet business from Internet World Media for a total of $18.0 million in
cash and a warrant valued at $284,000

34

immediately following the acquisition of Mecklermedia by Internet World Media,
which imputed a purchase price of $22.8 million. On November 24, 1998,
Mecklermedia was acquired by Internet World Media in an all-cash tender offer.
Following its purchase of Mecklermedia, Internet World Media caused iWorld
Corporation to be merged into internet.com LLC, a newly-formed Delaware Limited
Liability Company. Internet World Media then sold 80.1% of its membership
interest in internet.com LLC to Alan M. Meckler (including four trusts for the
benefit of his children) for a total of $18.0 million in cash and a warrant.
Internet World Media retained a 19.9% interest in internet.com LLC and a warrant
to acquire up to an additional 128 membership units in internet.com LLC
(representing 2,075,634 shares of our common stock) for up to $3.0 million. For
accounting purposes, the warrant was valued at $284,000, which reflected the
present value of the strike price using a risk free rate of return over a
three-year term, as compared to the cash price per share paid to Penton Media.
This warrant was exercised by Penton Media on June 24, 1999.

Immediately prior to the closing of the IPO, internet.com LLC converted its
business form to a corporation. This reorganization was effected by merging
internet.com LLC into a newly formed Delaware corporation called INT Media
Group, Incorporated. Each member of internet.com LLC received shares of INT
Media Group, Incorporated common stock in exchange for their membership units at
a rate of 16,215.891 shares per membership unit. All share and per share data
have been retroactively adjusted to reflect the reorganization.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of INT Media Group, its majority-owned and wholly owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation. Certain reclassifications have been made to the
prior year financial statements to conform to the current year presentation.

REVENUE RECOGNITION. INT Media Group generates its revenues from eight
primary sources: the sale of advertising on its Web sites, e-mail newsletters,
online discussion forums and moderated e-mail discussion lists; e-commerce
agreements and offerings; conferences and trade shows; permission based opt-in
e-mail list rentals; paid subscription services; research reports; licensing of
editorial content and brands; online press release distribution services and
venture fund management fees.

ADVERTISING REVENUES. Advertising revenue is recognized ratably
in the period the advertising is displayed, provided that no
significant company obligations remain and collection of the resulting
receivable is probable. Company obligations typically include
guarantees of a minimum number of advertising impressions, or times
that an advertisement is viewed by users of INT Media Group's Web
sites and related Internet media properties.

E-COMMERCE REVENUES. Our e-commerce agreements and offerings
generally include advertising on our Web sites, bounties for new
customers or revenue sharing for sales made by the e-commerce vendors
as a result of links from our network, or in some cases combinations
of advertising, bounties and revenue sharing. We recognize the
advertising component of these agreements ratably in the period the
advertising is displayed, provided that no significant company
obligations remain and collection of the remaining receivable is
probable. Generally, bounties and revenue sharing agreements require a
monthly minimum fee from INT Media Group's customers. Revenues from
these agreements are recognized in the month they are earned.

CONFERENCES AND TRADE SHOWS. Conferences and trade shows generate
revenue from attendee registrations, exhibition space and from
advertiser and vendor sponsorships. Revenue for conferences and trade
shows is recognized in the period in which the conference and trade
show is held. Deferred revenues relate to the portion of collected
conference registration fees, exhibition space and advertiser and
vendor sponsorships that have been collected prior to the commencement
of the conferences and trade shows.

35

PERMISSION BASED OPT-IN E-MAIL LIST RENTAL REVENUES. Permission
based opt-in e-mail list revenue relates to customer subscriptions to
our opt-in e-mail lists. Revenue is recorded on a per use basis for
the rental of our list names. Revenue from permission based opt-in
list rentals is recognized at the time of the use by the renter.

PAID SUBSCRIPTION REVENUES. Paid subscription services relate to
customer subscriptions to our paid e-mail newsletters and services,
SearchEngineWatch.com, TheCounter.com, WinDrivers.com,
WallStreetResearchNet.com, UnclaimedDomains.com, DomainBook.com,
AlertIPO.com and NanotechPlanet.com, which are sold through our
network and through affiliate relationships. Revenue from
subscriptions is recognized ratably over the subscription period.
Deferred revenues relate to the portion of collected subscription fees
that has not yet been recognized as revenue.

RESEARCH REPORT REVENUES. Through our INT Media Research
Division, we publish and sell research reports that analyze the
Internet and information technologies sectors worldwide. Revenues are
recognized upon delivery of the reports to the purchasers.

LICENSING REVENUES. The licensing agreements vary, with INT Media
Group generating fixed fees, royalties or both for access to editorial
content and brands produced by INT Media Group. Such amounts are
recognized as revenue in the month earned.

ONLINE PRESS RELEASE DISTRIBUTION SERVICES. Online press release
distribution revenues are generated through InternetNewsBureau.com. We
distribute e-mail based press releases to over 5,900 registered
journalists. Revenue from this service is recorded on a per use basis
and recognized at the time of distribution.

VENTURE FUND MANAGEMENT FEES. Venture fund management fees relate
to management fees earned for the day-to-day operation and general
management of internet.com Venture Fund I LLC, internet.com Venture
Fund II LLC and internet.com Venture Partners III LLC. Management fees
are recognized ratably over the period the services are rendered. In
addition, INT Media Group is entitled to 20% of the realized gains
from the portfolio investments, which are recognized at the time of
distribution from the venture funds.

USE OF ESTIMATES IN THE FINANCIAL STATEMENTS. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

CONCENTRATION OF CREDIT RISK. Financial instruments that potentially
subject INT Media Group to a significant concentration of credit risk consist
primarily of cash and accounts receivable. INT Media Group deposits the majority
of its cash with a single financial institution. Most of INT Media Group's
accounts receivable as of December 31, 2000 and 2001 are from information
technology-related businesses.

For the year ended December 31, 1999, one customer accounted for 10% of
revenues. No customer accounted for 10% or more of our revenues for the years
ended December 31, 2000 and 2001.

CASH AND CASH EQUIVALENTS. INT Media Group considers all highly liquid
investments purchased with original maturities of three months or less to be
cash equivalents. At December 31, 2000 and 2001, INT Media Group had no
investments with maturities greater than three months.

FINANCIAL INSTRUMENTS. The recorded amounts of financial instruments such
as cash and cash equivalents, accounts receivable and accounts payable
approximate their fair values due to their short maturities.

36

PROPERTY AND EQUIPMENT. Depreciation of computer equipment and software is
provided for by the straight-line method over estimated useful lives ranging
from three to five years. Depreciation of furniture, fixtures and equipment is
provided for by the straight-line method over estimated useful lives ranging
from five to ten years. Leasehold improvements are amortized over the shorter of
their useful lives or the lease term.

Maintenance and repair expenditures are charged to appropriate expense
accounts in the period incurred: replacements, renewals and betterments are
capitalized. Upon the sale or other disposition of property, the cost and
accumulated depreciation of such properties are eliminated from the accounts and
the gains or losses thereon are reflected in operations.

INTANGIBLE ASSETS. Intangible assets are being amortized using the
straight-line method over three years.

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets and certain identifiable
intangibles are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. An impairment loss is recognized when the sum of undiscounted
expected future cash flows is less than the carrying amount of such assets. The
measurement for such impairment loss is based on estimated fair values. Fair
values have been determined based upon estimated future cash flows. During 2001,
INT Media Group determined that certain intangible assets associated with
various acquired Web sites and related Internet media properties were impaired.
As a result of this determination, INT Media Group has recorded a non-cash
charge of approximately $54.2 million.

INVESTMENTS IN INTERNET.COM VENTURE FUNDS. Although INT Media Group has
less than a 20% interest in the internet.com venture funds, the investments are
accounted for on the equity basis of accounting as INT Media Group has
significant influence as the managing member of the funds. These investments are
reviewed whenever events or changes in circumstances indicate that the carrying
amount of these investments may not be recoverable.

ACCRUED WEB SITE ACQUISITION PAYMENTS. Accrued Web site acquisition
payments consist of future amounts payable under purchase agreements for Web
sites and related Internet media properties.

ADVERTISING AND PROMOTION EXPENSE. INT Media Group expenses advertising and
promotion costs as incurred. Advertising and promotion expense was $670,000,
$3.8 million and $3.4 million for the years ended December 31, 1999, 2000 and
2001, respectively. Included in these amounts are expenses related to barter
transactions of approximately $2.1 million and $2.9 million for the years ended
December 31, 2000 and 2001, respectively.

INCOME TAXES. INT Media Group accounts for income taxes using the asset and
liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred income tax assets and liabilities of changes in tax recognized in
income in the period that includes the date. Valuation allowances have been
established torates is deferred tax assets to the amount expected to be
realized.

STOCK BASED COMPENSATION. INT Media Group grants to certain employees stock
options with an exercise price equal value of the shares at the date of grant.
INT Media Group accounts for stock option grants in accordance with Accounting
Principles Board Opinion 25, "Accounting for Stock Issued to Employees," and,
accordingly, recognizes no compensation expense for such grants.

In October 1995, The Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation". As permitted under the provisions of SFAS No. 123,
INT Media Group (SFAS) changed its method of accounting for

37

stock-based compensation; however, SFAS No. 123 requires additional footnote
disclosures relating to the effect of using a fair value based method of
accounting for stock-based compensation cost.

RECENT ACCOUNTING PRONOUNCEMENTS. In January 2000, the Emerging Issues Task
Force reached a consensus on Issue No. 99-17, "Accounting for Advertising Barter
Transactions," to be effective for transactions entered into after January 20,
2000. The consensus states that advertising barter transactions should be
accounted for at fair value and the fair value recognized disclosed in the
financial statements, if there is verifiable objective evidence provided by
sufficient cash transactions received by the seller of the advertising or
similar advertising. Accordingly, INT Media Group began to record the financial
statement effects of barter transactions at their estimated fair value,
prospectively, beginning in January 2000. Revenues related to barter
transactions were approximately $4.1 million and $5.4 million and expenses were
$2.1 million and $2.9 million, respectively, for the years ended December 31,
2000 and 2001.

As of July 1, 2000, INT Media Group adopted Emerging Issues Task Force
Issue 00-2, "Accounting for Web Site Development Costs." As a result, INT Media
Group is now capitalizing costs incurred for the development of internal Web
sites, which had previously been expensed as a component of cost of revenues.
INT Media Group continues to expense all costs incurred that relate to the
planning and post-implementation phases of development. These charges are
included in cost of revenues in the accompanying statements of operations.
Amounts capitalized are included in intangible assets in the accompanying
balance sheets and the related amortization is included in amortization expense
in the accompanying statements of operations. These capitalized costs are being
amortized over three years. INT Media Group had capitalized $742,000 and $1.2
million as of December 31, 2000 and 2001, respectively, and recorded related
amortization expense of $75,000 and $478,000 for the years ended December 31,
2000 and 2001, respectively.

In July 2001, the FASB issued SFAS No. 141, "Business Combinations", and
SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that
the purchase method of accounting be used for all business combinations
subsequent to June 30, 2001 and specifies criteria for recognizing intangible
assets acquired in a business combination. SFAS No. 142. requires that goodwill
and intangible assets with indefinite useful lives no longer be amortized, but
instead be tested for impairment at least annually. Intangible assets with
definite useful lives will continue to be amortized over their estimated useful
lives. SFAS No. 142 is effective for fiscal years beginning after December 15,
2001. On January 1, 2002, SFAS No. 142 became effective and as a result, INT
Media Group will cease to amortize the remaining $5.3 million of net goodwill.

Also in July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". This standard addresses the financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The standard is effective for
fiscal years beginning after June 15, 2002. INT Media Group's management does
not expect the adoption of SFAS No. 143 to have a material impact on INT Media
Group's financial results.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This standard addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
The standard is effective for fiscal years beginning after June 15, 2002. INT
Media Group's management does not expect the adoption of SFAS No. 144 to have a
material impact on INT Media Group's financial results.

4. COMPUTATION OF NET LOSS PER SHARE

Basic loss per share is computed using the weighted average number of
common shares outstanding during the period. Dilutive loss per share is computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Common equivalent shares consist of the
incremental common shares issuable upon the exercise of stock options. Common
equivalent shares are excluded from the calculation if their effect is
anti-dilutive.

38

Computations of basic and diluted net loss per share for the years ended
December 31, 1999, 2000 and 2001, respectively as follows.
(in thousands, except per share amounts):

5. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following (in thousands):

6. INTANGIBLE ASSETS

Intangible assets consisted of the following (in thousands):

In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed of", an impairment
review is performed whenever events or circumstances indicate that the carrying
value of long-lived assets, including goodwill, may not be recoverable. Certain
factors that INT Media Group considers important which could trigger an
impairment review include, but are not limited to, significant underperformance
relative to historical or projected future operating results and significant
negative industry or economic trends.

The carrying value of long-lived assets, including goodwill, is considered
to be impaired when the anticipated undiscounted cash flow from such assets is
less than its carrying value. In that event, a loss is recognized based on the
amount by which the carrying value exceeds the fair value. Fair value is
determined based upon estimated future cash flows.

39

During 2001, INT Media Group determined that certain intangible assets
associated with various acquired Web sites and related Internet media properties
were impaired. As a result of this determination, INT Media Group has recorded a
non-cash charge of approximately $54.2 million, which reduced the carrying value
goodwill in the above table.

7. ACQUISITIONS

For the years ended December 31, 2000 and 2001, INT Media Group made 28 and
two acquisitions of Web sites and related Internet media properties for a total
of $40.3 million and $9.7 million, respectively. These acquisitions were
accounted for as purchases. Fifteen of these acquisitions for the year ended
December 31, 2000 provided for contingent payments to be made after the
acquisition date based upon the achievement of certain objectives. The acquired
Web sites and related Internet media properties have minimal tangible assets or
liabilities.

On September 8, 2000, INT Media Group consummated the acquisition of all
the assets of ClickZ, Inc., a Massachusetts corporation ("ClickZ"), pursuant to
an asset purchase agreement, dated September 8, 2000, by and among INT Media
Group and the stockholders of ClickZ. The consideration paid in the acquisition
of ClickZ consisted of cash in the amount of $10.0 million and 211,382
restricted shares of INT Media Group's common stock.

On December 22, 2000, INT Media Group agreed to acquire certain assets and
to assume certain liabilities of EarthWeb Inc., a Delaware corporation
("EarthWeb"), pursuant to an asset purchase agreement, dated December 22, 2000,
by and between INT Media Group and EarthWeb. The consideration paid in the
acquisition of EarthWeb consisted of $500,000 in cash plus the assumption of
certain de minimus liabilities of EarthWeb. In addition, INT Media Group agreed
to provide EarthWeb with advertising impressions on INT Media Group's network of
Web sites over a three-year period. INT Media Group valued this barter agreement
at $2.7 million, which is included as a component of deferred revenue at
December 31, 2000 and 2001.

On March 5, 2001, INT Media Group completed its acquisition of Intermedia
Group, Inc., a Massachusetts corporation ("IMG"), pursuant to a stock purchase
agreement by INT Media Group and the stockholders of IMG. IMG is an integrated
conference, consulting and event management firm specializing in emerging
information technology markets.

A substantial majority of the purchase price of all the acquisitions made
during the years ended December 31, 2000 and 2001 has been recorded as an
intangible asset on a preliminary basis and is being amortized over an estimated
useful life of three years. On January 1, 2002, SFAS No. 142 became effective
and as a result, INT Media Group will cease to amortize the remaining net
intangible asset. The purchase accounting for these acquisitions is finalized at
a later date not to exceed one year from the purchase date of the acquisitions.

The unaudited pro forma information below presents results of operations as
if all the acquisitions occurred as of January 1, 2000. The unaudited pro forma
information is not necessarily indicative of the results of operations of the
combined companies had these events occurred at the beginning of the period
presented nor is it indicative of future results (in thousands, except per share
amounts):

40

8. INVESTMENTS AND OTHER ASSETS

Investments and other assets consisted of the following (in thousands):

internet.com Venture Fund I LLC ("Fund I"), internet.com Venture Fund II
LLC ("Fund II") and internet.com Venture Partners III LLC ("Fund III") (or
collectively referred to as the "Funds") were organized on March 23, 1999,
September 7, 1999 and January 7, 2000, respectively, as Delaware limited
liability companies. I-Venture Management LLC, a wholly owned subsidiary of INT
Media Group, is the managing member and acts as the Funds' investment manager
and makes all investment decisions on behalf of both Funds. INT Media Group is
responsible for the day-to-day operation of the Funds.

The Funds' investment objective is to maximize capital appreciation through
investments in Internet related companies that have a broad focus on content
outside the areas of e-business and Internet technology and are believed to have
high growth potential.

As of December 31, 2000 and 2001, INT Media Group had a 14%, 12% and 14%
investment in each of Fund I, Fund II and Fund III, respectively. Acting as the
managing member of the Funds, INT Media Group has significant influence over the
operations of the funds, and accordingly, INT Media Group accounts for these
investments on the equity basis of accounting, subject to review for impairment.
As of December 31, 2001, INT Media Group was fully invested in Fund I and Fund
II and had approximately $7.3 million of capital commitments to Fund III.

INT Media Group is entitled to approximately a 2% management fee for the
day-to-day management of the Funds, which amounted to $107,000, $1.1 million and
$1.3 million for the years ended December 31, 1999, 2000 and 2001, respectively.
As of December 31, 2000 and 2001, amounts owed to INT Media Group for management
fees were $47,000 and $11,000, respectively.

INT Media Group has entered into barter advertising agreements with certain
portfolio companies of Fund I, Fund II and Fund III. In exchange for advertising
on INT Media Group's network of Web sites, INT Media Group has received equity
interests in these portfolio companies. INT Media Group's equity interest is
less than 20%, accordingly INT Media Group accounts for these investments on the
cost basis of accounting. The cost has been determined based upon the value of
the equity interests received. These investments are reviewed for impairment by
the management of INT Media Group on a quarterly basis.

9. PREFERRED STOCK

On June 25, 1999, in conjunction with its IPO, INT Media Group authorized
the issuance of 4,000,000 shares of preferred stock, $.01 par value (the
"Preferred Stock").

The Board of Directors has the authority, without further vote or action by
the stockholders, to issue the undesignated shares of Preferred Stock in one or
more series and to fix all rights, qualifications, preferences, limitations and
restrictions of each series, including dividend rights, voting rights, terms of

41

redemption, redemption prices, liquidation preferences and the number of shares
constituting any series or the designation of such series.

10. NON-CASH COMPENSATION CHARGE

In March 1999, internet.com LLC granted 4% of its total membership units at
the time to certain of its employees. As these membership units vested upon the
completion of the IPO, INT Media Group recorded an $8.0 million compensation
charge concurrent with the completion of the IPO on June 25, 1999.

11. INCOME TAXES

No benefit for federal and state income taxes was reported in the financial
statements for the period from inception (November 24, 1998) through December
31, 1998, as internet.com had elected to be taxed as a partnership prior to the
reorganization of internet.com LLC into a subchapter C-Corporation that took
effect immediately prior to the closing of the IPO. The federal and state income
tax effects of INT Media Group's results of operations were recorded by the
members of internet.com LLC in their respective income tax returns for the
period from inception (November 24, 1998) through the consummation of the IPO on
June 25, 1999.

INT Media Group did not provide for any current or deferred United States
federal or state income taxes for any of the periods presented because it has
experienced operating losses since inception.

As of December 31, 2000 and 2001, INT Media Group had future federal and
state income tax benefits as follows (in thousands):

INT Media Group has a valuation allowance as of December 31, 2000 and 2001,
which fully offsets its deferred income tax assets. Due to INT Media Group's
brief operating history and recent historical losses, there is no assurance that
INT Media Group will generate sufficient taxable income in the future to be able
to realize any or all of the deferred tax assets.

As of December 31, 2001, INT Media Group has approximately $21.9 million of
net operating losses for federal income tax purposes, which begin to expire in
2018. INT Media Group also has $5.4 million of net operating loss carryforwards
for state income tax purposes, which begin to expire in 2003.

42

A reconciliation setting forth the difference between INT Media Group's
effective income tax rate and the U.S. Federal statutory income tax rate is as
follows (in thousands):

12. COMMITMENTS AND CONTINGENCIES

INT Media Group has entered into various operating leases for each of its
office facilities. Generally under the lease agreements, INT Media Group is
obligated to pay a proportionate share of all electricity, heating, ventilation
and air conditioning costs for these premises. Rent expense for leased
facilities was $460,000, $1.5 million and $1.8 million for the years ended
December 31, 1999, 2000 and 2001, respectively.

Future annual minimum lease payments under all operating leases are as
follows (in thousands):

INT Media Group has entered into employment agreements with two of its
officers with terms ranging from six months to one year.

A complaint seeking class action status was filed in Delaware Chancery
Court on June 16, 1999 by a former shareholder of Mecklermedia Corporation
alleging that certain officers and directors of Mecklermedia Corporation
breached their fiduciary duties in connection with the sale of Mecklermedia
Corporation to Penton Media. This former shareholder of Mecklermedia Corporation
has asserted claims for damages against the officers and directors and has also
named INT Media Group, Incorporated as a defendant seeking that a constructive
trust be established. All of the defendants deny such allegations and intend to
vigorously defend themselves.

INT Media Group is subject to legal proceedings and claims that arise in
the ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position or results of operations of INT Media Group.

43

13. EMPLOYEE BENEFIT PLAN

INT Media Group has a defined contribution plan, which qualifies under
Section 401(k) of the Internal Revenue Code for employees meeting certain
service requirements. The plan allows eligible employees to contribute up to 15%
of their compensation to the plan. At the discretion of the board of directors,
INT Media Group may also make contributions each year for the benefit of all
eligible employees under the plan. There were no discretionary contributions for
the years ended December 31, 1999, 2000 and 2001, respectively.

14. STOCK INCENTIVE PLAN

In April 1999, INT Media Group established a stock incentive plan under
which INT Media Group may issue qualified incentive or nonqualified stock
options to employees, including officers, consultants and directors up to an
aggregate of 10,000,000 shares of common stock of which 592,350 options were
granted immediately prior to the IPO. The exercise price of the options granted
under the stock incentive plan will not be less than the fair market value of
the shares of INT Media Group's common stock on the date of grant. The plan will
terminate on April 15, 2009.

A summary of the status of INT Media Group's stock option plan as of
December 31, 2000 and 2001, and changes during the years ending December 31,
2000 and 2001 are presented below:

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions used for
grants in 2000 and 2001: risk-free interest rates of 5.96% and 4.09%
respectively; expected lives of 3 years; expected dividend rate of zero; and
expected volatility of 150% and 146%, respectively.

44

The following table summarizes information about stock options outstanding
at December 31, 2001:

INT Media Group applies Accounting Principles Board Opinion No. 25 in
accounting for its stock option plan. Accordingly, no compensation expense has
been recognized for its stock option plan.

The following table reflects pro forma net loss and loss per share had INT
Media Group elected to adopt the fair value approach of SFAS No. 123 (in
thousands, except per share amounts):

These pro forma amounts may not be representative of future disclosures
since the estimated fair value of stock options is amortized to expense over the
vesting period, and additional options may be granted in future years.

15. RELATED PARTY TRANSACTIONS

INT Media Group, Internet World Media, Inc. and Penton Media, Inc. entered
into a services agreement, whereby INT Media Group agreed to provide certain
services to Internet World Media, Inc. and Penton Media, Inc. in return for
services to be provided to INT Media Group by Internet World Media, Inc. and
Penton Media, Inc. This services agreement expires November 23, 2003.

I-Venture Management LLC, a wholly owned subsidiary of INT Media Group
serves as the managing member of internet.com Venture Fund I LLC, internet.com
Venture Fund II LLC and

45

internet.com Venture Partners III LLC. Certain directors and officers of INT
Media Group serve as directors and officers of I-Venture Management LLC.

INT Media Group made a $180,000 non-interest-bearing loan to one of its
stockholders in 1997, which is still outstanding and is included in other assets
as of December 31, 2001.

16. QUARTERLY FINANCIAL SUMMARY (UNAUDITED)

46

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

None.

47

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated herein by reference to INT Media Group's Proxy Statement for its
Annual Meeting of Stockholders to be held in 2002.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated herein by reference to INT Media Group's Proxy Statement for its
Annual Meeting of Stockholders to be held in 2002.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated herein by reference to INT Media Group's Proxy Statement for its
Annual Meeting of Stockholders to be held in 2002.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated herein by reference to INT Media Group's Proxy Statement for its
Annual Meeting of Stockholders to be held in 2002.

48

PART IV

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

INDEX TO EXHIBITS

(a)

(1) FINANCIAL STATEMENTS: See INT Media Group, Incorporated --
Index to Consolidated Financial Statements at Item 8 on page 28 of
this report.

(2) FINANCIAL STATEMENT SCHEDULE: Schedule II -- Valuation and
Qualifying Accounts

(3) INDEX TO EXHIBITS

* Incorporated herein by reference to the Registrant's Registration
Statement on Form S-1 (File No. 333-76331).
** Incorporated herein by reference to the Registrant's Current
Report on Form 8-K filed on September 11, 2000.
*** Filed herewith.
+ Compensatory plans and arrangements for executives and others.

49

(b) Reports on Form 8-K

None.
50

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.

March 29, 2002

INT Media Group, Incorporated

By: /s/ Alan M. Meckler
-----------------------------------
Name: Alan M. Meckler
Title: Chairman 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 dates indicated.

/s/ Alan M. Meckler Chairman of the Board, Chief Executive
-------------------------------- Officer and Director (Principal
Alan M. Meckler Executive Officer)

/s/ Christopher S. Cardell President, Chief Operating Officer and
-------------------------------- Director
Christopher S. Cardell

/s/ Christopher J. Baudouin Chief Financial Officer (Principal
-------------------------------- Financial and Accounting Officer)
Christopher J. Baudouin

/s/ Gilbert F. Bach Director
--------------------------------
Gilbert F. Bach

/s/ Michael J. Davies Director
--------------------------------
Michael J. Davies

/s/ William A. Shutzer Director
--------------------------------
William A. Shutzer

51

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of INT Media Group, Incorporated:

We have audited in accordance with generally accepted auditing standards
the consolidated financial statements of INT Media Group, Incorporated included
in this Form 10-K and have issued our report thereon dated March 14, 2002. Our
audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. Schedule II is the responsibility of the company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
Schedule II has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Stamford, Connecticut
March 14, 2002

S-1

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

ALLOWANCE FOR DOUBTFUL ACCOUNTS

INT MEDIA GROUP, INCORPORATED
(IN THOUSANDS)

S-2