UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 000-29239
INFORTE CORP.
(Exact name of registrant as specified in its charter)
Delaware 36-3909334
(State of incorporation) (IRS Employer Identification No.)
150 North Michigan Avenue, Suite 3400, Chicago, Illinois 60601
(Address of principal executive offices, including ZIP code)
(312) 540-0900
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
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) Yes X No ___, and (2) has
been subject to such filing requirements for the past 90 days. Yes X No ___
The number of shares outstanding of the Registrant's Common Stock as of
September 30, 2000 was 12,569,575.
<PAGE>
INFORTE CORP.
INDEX
Page No.
-------
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Balance sheets - December 31, 1999 and
September 30, 2000 1
Statements of income - Three and nine months ended
September 30, 1999 and 2000 2
Statements of cash flows - Three and nine months ended
September 30, 1999 and 2000 3
Notes to financial statements 4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-9
Item 3. Qualitative and Quantitative Disclosure About Market Risk 10
PART II. Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Use of Proceeds 10
Item 3 Defaults of Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5 Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
Exhibit 27.1 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
INFORTE CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,792,027 $ 38,226,516
Short-term investments - 27,167,323
Accounts receivable 6,924,250 13,606,517
Allowance for doubtful accounts (600,000) (1,150,000)
---------- ---------
Accounts receivable, net 6,324,250 12,456,517
Prepaid expenses and other current assets 681,563 1,668,845
Deferred income taxes 652,293 841,171
---------- ---------
Total current assets 11,450,133 80,360,372
Computers, purchased software, and property 2,165,022 3,844,265
Less accumulated depreciation and amortization 677,519 1,204,195
---------- ---------
Computers, purchased software, and property, net 1,487,503 2,640,070
Long-term investments - 14,442,823
Deferred income taxes 19,766 77,166
---------- ---------
Total assets $ 12,957,402 $ 97,520,431
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,352,472 $ 325,319
Income tax payable 311,512 677,837
Accrued expenses 4,122,175 7,045,741
Deferred revenue 4,870,579 11,899,327
---------- ----------
Total current liabilities 10,656,738 19,948,224
Stockholders' equity:
Common stock, $0.001 par value
Authorized- 50,000,000 shares;
Issued and outstanding- 12,569,575 as of September 30, 2000
9,721,154 as of December 31, 1999 9,721 12,570
Additional paid-in capital 411,886 70,732,687
Retained earnings 1,879,057 6,812,981
Accumulated other comprehensive income - 13,969
--------- ----------
Total stockholders' equity 2,300,664 77,572,207
-------- ----------
Total liabilities and stockholders' equity $12,957,402 $ 97,520,431
========== ==========
</TABLE>
See notes to financial statements.
1
<PAGE>
INFORTE CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
1999 2000 1999 2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $8,559,159 $17,790,784 $20,534,865 $46,473,946
Operating expenses:
Project personnel and related expenses 3,603,840 7,910,215 8,892,732 20,442,497
Sales and marketing 1,465,472 2,359,848 3,611,088 6,150,699
Recruiting, retention and training 936,638 1,731,123 1,969,315 5,237,746
Management and administrative 1,479,291 3,525,504 3,575,566 8,849,882
--------- ---------- ---------- ----------
Total operating expenses 7,485,241 15,526,690 18,048,701 40,680,824
Operating income 1,073,918 2,264,094 2,486,164 5,793,122
Interest income, net and other 43,650 1,053,800 95,484 2,295,280
--------- ---------- ---------- ----------
Pretax income 1,117,568 3,317,894 2,581,648 8,088,402
Income tax expense 446,627 1,244,994 775,660 3,154,478
--------- ---------- ---------- ----------
Net income $ 670,941 $ 2,072,900 $ 1,805,988 $ 4,933,924
Pro forma income tax expense 446,627 1,244,994 1,031,478 3,154,478
--------- ---------- ---------- ----------
Pro forma net income $ 670,941 $ 2,072,900 $ 1,550,170 $ 4,933,924
========= ========== ========== ==========
Pro forma earnings per share:
-Basic $0.08 $0.17 $0.19 $0.42
-Diluted $0.06 $0.15 $0.15 $0.37
Weighted average common shares
outstanding:
-Basic 8,385,190 12,459,701 8,378,434 11,858,703
-Diluted 10,831,245 13,946,224 10,684,440 13,398,673
</TABLE>
See notes to financial statements
2
<PAGE>
INFORTE CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -----------------------
1999 2000 1999 2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income $ 670,941 $2,072,900 $ 1,805,988 $ 4,933,924
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation and amortization 149,555 350,651 368,773 818,049
Deferred income taxes 190,316 (15,895) (392,059) (246,278)
Changes in operating assets and liabilities
Accounts receivable 834,130 (1,316,386) (2,852,588) (6,132,267)
Prepaid expenses and other current assets (473,551) (253,322) (515,991) (987,282)
Accounts payable 722,598 (703,419) 719,853 (1,027,153)
Income tax payable (34,576) 115,798 230,388 366,325
Accrued expenses and other 1,019,698 1,372,949 2,115,716 2,923,566
Deferred revenue (446,053) 1,511,237 2,735,445 7,028,748
--------- ---------- ---------- ----------
Net cash provided by operating activities 2,633,058 3,134,513 4,215,525 7,677,632
Cash flows from investing activities
Note receivable - Stockholder 106,190 - 139,496 -
Purchase of investments - (18,155,738) - (41,611,422)
Purchases of property and equipment (521,821) (1,059,434) (870,495) (1,955,371)
--------- --------- ---------- ----------
Net cash used in investing activities (415,631) (19,215,172) (730,999) (43,566,793)
Cash flows from financing activities
Principal payments on note payable- Former
stockholder (3,484) - (23,835) -
Net proceeds from initial public offering - - - 66,860,251
Proceeds from stock option and purchase
plans 26,888 1,410,846 26,888 3,463,399
Sub-chapter S distributions - - (929,216) -
--------- ---------- ---------- ----------
Net cash provided by (used in) financing
activities 23,404 1,410,846 (926,163) 70,323,650
--------- ---------- ---------- ----------
Increase (decrease) in cash and cash
equivalents 2,240,831 (14,669,813) 2,558,363 34,434,489
Cash and cash equivalents, beg.of period 3,015,642 52,896,329 2,698,110 3,792,027
--------- ---------- ---------- ----------
Cash and cash equivalents, end of period $5,256,473 $38,226,516 $ 5,256,473 $38,226,516
========= ========== ========== ==========
</TABLE>
See notes to financial statements
3
<PAGE>
Inforte Corp.
Notes to financial statements
(Unaudited)
September 30, 2000
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by
Inforte Corp. ("Inforte") pursuant to the rules and regulations of the
Securities and Exchange Commission regarding interim financial reporting.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements
and should be read in conjunction with the financial statements and notes
thereto for the year ended December 31, 1999 included in Inforte's Registration
Statement on Form S-1 (File No. 333-92325). The balance sheet at December 31,
1999 has been derived from the audited financial statements at that date but
does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
accompanying financial statements reflect all adjustments (consisting solely of
normal, recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of results for the interim periods presented.
The results of operations for the three and nine month periods ended September
30, 2000 are not necessarily indicative of the results to be expected for the
full fiscal year. Certain previously reported amounts have been reclassified to
conform with current presentation format.
(2) NET INCOME PER COMMON SHARE
Inforte computes basic earnings per share by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per
common share is computed by dividing net income by the weighted average number
of common shares and dilutive common share equivalents then outstanding.
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
-------------------------- -------------------------
1999 2000 1999 2000
-------------------------- -------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Basic weighted average shares 8,385,190 12,459,701 8,378,434 11,858,703
Effect of dilutive stock options 2,446,055 1,486,523 2,306,006 1,539,970
-------------------------- --------------------------
Diluted common and common
equivalent shares 10,831,245 13,946,224 10,684,440 13,398,673
=========================== ==========================
</TABLE>
(3) SHORT-TERM AND LONG-TERM INVESTMENTS
Inforte considers all investments with original maturities of less than one
year from the respective balance sheet dates to be short-term investments and
all investments with maturities greater than one year from the balance sheet
dates to be long-term investments. In accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," Inforte has categorized its marketable securities as
"available-for-sale."
(4) PRO FORMA INCOME TAXES
Prior to 1999 Inforte was operating as a subchapter S Corporation. As a
subchapter S Corporation, Inforte was not subject to federal income taxes;
rather such income was included in the taxable income of stockholders. The pro
forma income tax expense, net income and earnings per share for 1999 are stated
on a pro forma basis to reflect what would have been reported had we been a C
Corporation in 1999.
4
<PAGE>
(5) STOCKHOLDERS' EQUITY
On February 17, 2000 the Securities and Exchange Commission declared the
Company's Registration Statement on Form S-1 (File No. 333-92325), covering an
aggregate of 2,300,000 shares of common stock at an offering price of $32.00 per
share, effective. Net proceeds to the Company from the sale of 2,300,000 shares,
after deducting underwriting discounts and commissions of $5,152,000 and
offering expenses of $1,587,749 were $66,860,251.
(6) NEW ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation--an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25, the criteria for determining whether a plan qualifies as a
noncompensatory plan, the accounting consequence of various modifications to the
terms of previously fixed stock options or awards, and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. For options
granted to date, the Company does not expect the application of FIN 44 to have a
material impact on the Company's financial position or results of operations.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
You should read the following discussion in conjunction with
our financial statements, together with the notes to those statements, included
elsewhere in this Form 10-Q. The following discussion contains forward-looking
statements that involve risks, uncertainties, and assumptions such as statements
of our plans, objectives, expectations, and intentions. Our actual results may
differ materially from those discussed in these forward-looking statements
because of the risks and uncertainties inherent in future events that include,
but are not limited to, those identified under the caption "Risk Factors"
appearing on pages 6-11 in our prospectus dated February 17, 2000, and
incorporated herein by reference, as well as factors discussed elsewhere in this
Form 10-Q. Actual results may differ from forward-looking results for a number
of reasons, including but not limited to, Inforte's ability to: (i) effectively
train professional staff with advanced technology and business strategy skills;
(ii) attract and retain clients and satisfy our clients' expectations; (iii)
recruit and retain qualified professionals; (iv) accurately estimate the time
and resources necessary for the delivery of our services; and (v) build and
maintain marketing relationships with leading software vendors. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, or projected. All forward-looking statements included in
this document are made as of the date hereof, based on information available to
Inforte on the date thereof, and Inforte assumes no obligation to update any
forward-looking statements.
Overview
Inforte Corp. is a leading eBusiness integrator that focuses on velocity --
delivering better, faster eBusiness strategies and solutions to clients that
empower them to compete successfully in the Internet economy. Inforte offers the
unique combination of eStrategy, business-to-consumer and business-to-business
eCommerce, supply-chain integration, and premier customer experience design and
management capabilities required to build end-to-end eBusiness solutions that
are integrated across clients' value chains. Inforte's client-advocacy approach
and delivery methodology, "Velocity to Value," has enabled Inforte to achieve
100 percent client referenceability and industry-leading project efficiency
metrics. Founded in 1993, Inforte has offices in Chicago, Dallas, Los Angeles
and San Francisco, and 100 percent of its employees are owners.
The majority of our revenues are from professional services performed on a
fixed-price basis; however, we also perform services on a time-and-materials
basis. Typically, the first portion of an engagement involves a strategy project
or a discovery phase lasting 30 to 60 days, which we perform on a fixed-price
basis. This work enables us to determine with our clients the scope of
successive phases for design and implementation, which in total generally last
three to nine months, and to decide whether we will perform these additional
phases for a fixed price or on a time-and-materials basis. Whether we use fixed
pricing or time-and-material pricing depends upon our assessment of the
project's risk, and how precisely our clients are able to define the scope of
activities they wish us to perform. Fixed prices are based on estimates from
senior personnel in our consulting organization who project the length of the
engagement, the number of people required to complete the engagement, and the
skill level and billing rates of those people. We then adjust the fixed price
based on various qualitative risk factors such as the aggressiveness of the
delivery deadline and the technical complexity of the solution.
We ask clients to pay 25%-50% of our fixed-price projects in advance to enable
us to secure a project team in a timeframe that is responsive to the client's
needs. We bill the remainder in advance of the work performed based upon a
predetermined billing schedule over the course of the engagement. We do not
perform work under milestone-based billing schedules. We recognize revenues from
fixed-price contracts on the percentage-of-completion method, based on the ratio
of costs incurred to total estimated costs. Amounts billed before we perform
services are classified as deferred revenue. We bill time-and-materials projects
twice per month on the 15th and last day of each month. We recognize
time-and-materials revenues as we perform the services. We do not include in our
revenues the reimbursable expenses we charge to our clients, on either
fixed-price or time-and-material projects.
Our revenues and earnings may fluctuate from quarter to quarter based on factors
within and outside of our control. These include:
o the variability in market demand for Internet professional services;
6
<PAGE>
o the seasonal spending by our clients has typically caused sequential
revenue growth in the first half of each calendar year to be higher
than sequential revenue growth in the second half of the calendar
year.
o the length of the sales cycle associated with our service offerings;
o the number, size, and scope of our projects;
o the efficiency with which we deliver projects and use our people;
o the compensation that we pay our people; and
o our ability to keep discretionary expenses within budget.
If revenues do not increase at a rate at least equal to increases in expenses,
our results of operations could be materially and adversely affected.
7
<PAGE>
RESULTS OF OPERATIONS
---------------------
The following table sets forth the percentage of revenues of certain items
included in Inforte's statement of income:
<TABLE>
<CAPTION>
% of Revenue
Three months ended Sept.30, Nine months ended Sept. 30,
1999 2000 1999 2000
<S> <C> <C> <C> <C>
Revenues 100.0 100.0 100.0 100.0
Operating expenses:
Project personnel and
related expenses 42.1 44.5 43.3 44.0
Sales and marketing 17.1 13.3 17.6 13.2
Recruiting, retention,
and training 10.9 9.7 9.6 11.3
Management and administrative 17.3 19.8 17.4 19.0
Total operating expenses 87.5 87.3 87.9 87.5
Operating income 12.5 12.7 12.1 12.5
Interest income, net and other 0.5 5.9 0.5 4.9
Pretax income 13.1 18.7 12.6 17.4
Pro forma income tax expense 5.2 7.0 5.0 6.8
Pro forma net income 7.8 11.7 7.5 10.6
</TABLE>
Three months and nine months ended September 30, 2000 and 1999
Revenues. Revenues increased 108% to $17.8 million for the quarter ended
September 30, 2000 from $8.6 million for quarter ended September 30, 1999. For
the nine months ended September 30, 2000, revenues increased 126% to $46.5
million from $20.5 million for the nine months ended September 30, 1999. This
growth reflected increases in the number of client engagements and in average
revenue per client. For the quarter ended September 30, 2000, we had 50
significant clients with each of these clients contributing $1.4 million to
revenue on average on an annualized basis. We had 32 significant clients during
the quarter ended September 30, 1999, each contributing $1.0 million to revenue
on average on an annualized basis. Sequentially, revenue grew 9% to $17.8
million in the September 2000 quarter from $16.4 million in the June 2000
quarter. Historically our business has experienced a stronger sequential growth
rate in the first half of the year compared to the sequential growth rate in the
second half. We believe this seasonality stems from the calendar year operations
of most clients and their access to new budget money in the first half of the
year. We believe a pattern of lower sequential growth in our third and fourth
quarters will continue in calendar 2000 and in future years.
Project personnel and related expenses. Project personnel and related expenses
consist primarily of compensation and fringe benefits for our professional
employees who deliver consulting services and non-reimbursable project costs.
All labor costs for project personnel are included in project personnel and
related expenses, with the exception of the time spent attending training
classes. Internal projects or unassigned time between projects appear in project
personnel and related expenses as they are not considered training costs. These
expenses increased 119% to $7.9 million for the quarter ended September 30,
2000, from $3.6 million for quarter ended September 30, 1999. For the nine
months ended September 30, 2000, these expenses increased 130%. The increase was
due to the hiring of additional consulting professionals. We employed 348
consultants on September 30, 2000, up from 177 one year earlier.
Project personnel and related expenses represented 44.5% of revenues for the
quarter ended September 30, 2000, compared to 42.1% for the quarter ended
September 30, 1999. The increase as a percentage of revenues was due to our
successful efforts to bring consultant utilization near the low end of our
target range of 70%-80%. We actively manage utilization levels so that our
consultants can maintain a balanced life style and can invest more time in
training and skill development. Project personnel and related expenses
represented 44.0% of revenues for the nine months ended September 30, 2000,
compared to 43.3% for the same period in 1999. The expense increase as a
percentage of revenue was also due to consultant utilization rate decreases
during this nine month period.
8
<PAGE>
Sales and marketing. Sales and marketing expenses consist primarily of
compensation, benefits, and travel costs for employees in the market
development, practice development, and client development groups and costs to
execute marketing programs. Sales and marketing expenses increased 61% to $2.4
million for the quarter ended September 30, 2000 from $1.5 million in the same
period in 1999. The spending increase was due to the growth in our practice
development and client development sales forces and increased marketing
activities to develop the Inforte brand. Sales and marketing expenses as a
percentage of revenues decreased to 13.3% for the quarter ended September 30,
2000 from 17.1% in the third quarter of 1999. For the nine months ended
September 30, 2000, the expense percentage as a percent of revenue decreased
from 17.6% in 1999 to 13.2% in 2000. We deliberately grew sales and marketing
expenses at a faster rate than the rate of revenue growth in 1999. Having made
these investments in 1999, we have intentionally grown sales and marketing
expenses at a slower rate than the rate of revenue growth in 2000.
Recruiting, retention, and training. Recruiting, retention, and training
expenses consist of compensation, benefits, and travel costs for personnel
engaged in human resources; costs to recruit new employees; costs of human
resources programs; and training costs, including travel and labor costs. These
expenses increased by 85% to $1.7 million for the quarter ended September 30,
2000 from $0.9 million in the third quarter of 1999. Of the dollar spending
increase, approximately 50% was due to increased training expenses, such as
software certification courses, programming classes, and skill development
training courses. The remaining spending was related to the recruiting and
retention of employees. The number of employees grew from 227 as of September
30, 1999 to 438 as of September 30, 2000. Compared to the prior year,
recruiting, retention, and training expenses in 2000 decreased as a percentage
of revenues to 9.7% from 10.9% for the September quarter as hiring occurred at a
lower rate of growth than the rate of revenue growth. For the nine months ended
September 30, 2000, the expenses increased as a percentage of sales to 11.3%
from 9.6% in the prior year period, as the company invested more in advanced
technology training for employees.
Management and administrative. Management and administrative expenses consist
primarily of compensation, benefits, and travel costs for management, finance,
information technology, and facilities personnel, together with rent,
telecommunications, audit, and legal costs, and depreciation and amortization of
capitalized computers, purchased software, and property. These expenses
increased 138% to $3.5 million for the quarter ended September 30, 2000 from
$1.5 million for the same period in 1999. These expenses increased 148% for the
nine months ended September 30, 2000. The increase occurred in all areas cited
above due to the ongoing growth of our business. As a percentage of revenue,
management and administrative expenses were 19.8% in the quarter ended September
30, 2000, up from 17.3% for the quarter ended September 30, 1999. For the nine
months ended September 30, 2000, management and administrative expenses
increased as a percent of revenue to 19.0% from 17.4% in the prior year period.
Expenses as a percentage of revenue grew for both the quarter and nine months as
facilities and technology spending grew more rapidly than the rate of revenue
growth, and due to investor relations spending required in 2000 once Inforte
became a public company.
Liquidity and capital resources. Cash and cash equivalents increased from
$3.8 million as of December 31, 1999 to $38.2 million at September 30, 2000.
Short-term investments increased from zero as of December 31, 1999 to $27.2
million as of September 30, 2000. Long-term investments, which are entirely cash
investments with maturities of up to two years, increased from zero as of
December 31, 1999 to $14.4 million as of September 30, 2000. In total, cash and
cash equivalents, short-term investments, and long-term investments, increased
from $3.8 million to $79.8 million during the nine months ended September 30,
2000, a rise of $76.0 million. This increase is from the net proceeds of $66.9
million from the issuance of 2,300,000 shares of common stock in Inforte's
initial public offering on February 17, 2000, from cash provided by operating
activities of $7.7 million, and from cash received from employees participating
in the stock purchase and stock option plans of $3.5 million during the nine
months ended September 30, 2000, offset by capital expenditures.
Capital expenditures for each of the nine months ended September 30, 2000 and
1999 were $2.0 million and $0.9 million respectively. These expenditures were
primarily for computer equipment and software, leasehold improvements, and
office furniture. We expect that capital expenditures will continue to increase
to the extent we continue to increase our headcount or expand our operations.
As of September 30, 2000 our accounts receivable (less deferred revenue) equaled
3 days of sales outstanding. However, since December 31, 1997, days of sales
outstanding have been as high as 41 days. We believe our current days of sales
outstanding is unsustainably low, and we expect it will rise going forward. We
do not, however, expect it to rise above
9
<PAGE>
normal industry levels of current days of sales outstanding and believe that we
will have adequate cash flow to manage our working capital needs in the ordinary
course of business.
Inforte believes that its current cash, cash equivalents, and short-term
investments will be sufficient to meet working capital and capital expenditure
requirements for the foreseeable future.
Item 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
In all categories of cash, cash equivalents and short-term and long term
investments, Inforte invests only in securities of high credit quality. All
investments bear a minimum Standard & Poor's rating of A1, Moody's investor
service rating of P1, or equivalent. Inforte believes that it does not have any
material market risk exposure with respect to financial instruments.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matter to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial data schedule.
99.1 Risk Factors discussion appearing on pages 6-11 of Inforte's
Form S-1 (Registration No. 333-92325) (filed as an exhibit to
Inforte Corp.'s Form 10-Q filed May 15, 2000 (Commission File
Number 000-29239) and incorporated herein by reference).
(b) Reports on Form 8K
Inforte did not file any reports on Form 8-K during the three months
ended September 30, 2000
10
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Inforte Corp.
By: /s/ NICK PADGETT
October 31, 2000 ---------------------------------
Nick Padgett,
Chief Financial Officer
11
