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 June 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
July 14, 2000 was 12,400,356
<PAGE>
INFORTE CORP.
INDEX
Page No.
--------
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Balance sheets - December 31, 1999 and
June 30, 2000 1
Statements of income - Three and six months ended
June 30, 1999 and 2000 2
Statements of cash flows - Three and six months ended
June 30, 1999 and 2000 3
Notes to financial statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 3. Qualitative and Quantitative Disclosure About Market Risk 8
PART II. Other Information
Item 1 Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 9
Item 3 Defaults of Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
Exhibit 27.1 Financial Data Schedule 11
Exhibit 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)
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
INFORTE CORP.
BALANCE SHEETS
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,792,027 $52,896,329
Short-term investments - 7,650,000
Accounts receivable 6,924,250 12,290,131
Allowance for doubtful accounts (600,000) (1,150,000)
----------- ----------
Accounts receivable, net 6,324,250 11,140,131
Prepaid expenses and other current assets 681,563 1,415,523
Deferred income taxes 652,293 853,297
---------- ----------
Total current assets 11,450,133 73,955,280
Computers, purchased software, and property 2,165,022 3,013,126
Less accumulated depreciation and amortization 677,519 1,103,074
---------- ----------
Computers, purchased software, and property, net 1,487,503 1,910,052
Long-term investments - 15,819,306
Deferred income taxes 19,766 49,145
---------- ----------
Total assets $12,957,402 $91,733,783
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,352,472 $ 1,028,738
Income tax payable 311,512 562,039
Accrued expenses 4,122,175 5,672,792
Deferred revenue 4,870,579 10,388,090
---------- ----------
Total current liabilities 10,656,738 17,651,659
Stockholders' equity:
Common stock, $0.001 par value
Authorized- 50,000,000 shares;
Issued and outstanding- 12,396,622 as of June 30, 2000
9,721,154 as of December 31, 1999 9,721 12,397
Additional paid-in capital 411,886 69,322,014
Retained earnings 1,879,057 4,740,081
Accumulated other comprehensive income - 7,632
--------- ----------
Total stockholders' equity 2,300,664 74,082,124
--------- ----------
Total liabilities and stockholders' equity $12,957,402 $91,733,783
========== ==========
</TABLE>
See notes to financial statements.
1
<PAGE>
<TABLE>
INFORTE CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1999 2000 1999 2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $7,118,467 $16,393,162 $11,975,706 $28,683,162
Operating expenses:
Project personnel and related expenses 3,016,299 7,123,510 5,288,892 12,532,282
Sales and marketing 1,342,349 2,228,910 2,145,616 3,790,851
Recruiting, retention and training 599,215 2,100,327 1,032,677 3,506,623
Management and administrative 1,269,344 2,880,835 2,096,275 5,324,378
--------- ---------- ---------- ----------
Total operating expenses 6,227,207 14,333,582 10,563,460 25,154,134
Operating income 891,260 2,059,580 1,412,246 3,529,028
Interest income, net and other 23,624 900,979 51,834 1,241,480
--------- ---------- ---------- ----------
Pretax income 914,844 2,960,559 1,464,080 4,770,508
Income tax expense 365,532 1,131,140 329,033 1,909,484
--------- ---------- ---------- ----------
Net income $ 549,352 $ 1,829,419 $ 1,135,047 $ 2,861,024
Pro forma income tax expense 365,532 1,131,140 584,851 1,909,484
--------- ---------- ---------- ----------
Pro forma net income $ 549,352 $ 1,829,419 $ 879,229 $ 2,861,024
========= ========== ========== ==========
Pro forma earnings per share:
-Basic $0.07 $0.15 $0.10 $0.25
-Diluted $0.05 $0.13 $0.08 $0.22
Weighted average common shares outstanding:
-Basic 8,375,000 12,341,914 8,375,000 11,554,902
-Diluted 10,570,637 13,832,411 10,547,915 13,132,955
</TABLE>
See notes to financial statements
2
<PAGE>
<TABLE>
INFORTE CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -----------------------
1999 2000 1999 2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income $ 549,352 $ 1,829,419 $ 1,135,047 $ 2,861,024
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 117,514 237,786 219,218 467,398
Deferred income taxes (78,072) (193,990) (582,375) (230,383)
Changes in operating assets and liabilities
Accounts receivable (1,710,585) (923,585) (3,686,718) (4,815,881)
Prepaid expenses and other current assets 6,894 (173,261) (42,440) (733,960)
Accounts payable (108,749) (1,048,200) (2,745) (323,734)
Income tax payable (114,840) (277,270) 264,964 250,527
Accrued expenses and other 1,355,355 1,552,132 1,096,018 1,550,617
Deferred revenue 1,078,459 2,307,747 3,181,498 5,517,511
--------- ---------- ---------- ----------
Net cash provided by operating activities 1,095,328 3,310,778 1,582,467 4,543,119
Cash flows from investing activities
Note receivable - Stockholder 75,820 - 33,306 -
Purchase of investments - (6,913,266) - (23,455,684)
Purchases of property and equipment (226,805) (399,364) (348,674) (895,937)
--------- --------- ---------- ----------
Net cash used in investing activities (150,985) (7,312,630) (315,368) (24,351,621)
Cash flows from financing activities
Principal payments on note payable- Former
stockholder (10,293) - (20,351) -
Net proceeds from initial public offering - - - 66,860,251
Proceeds from stock option and purchase
Plans - 1,384,878 - 2,052,553
Sub-Chapter S distributions (929,216) - (929,216) -
--------- ---------- ---------- ----------
Net cash provided by (used in) financing
activities (939,509) 1,384,878 (949,567) 68,912,804
--------- ---------- ---------- ----------
Increase (decrease) in cash and cash
equivalents 4,834 (2,616,974) 317,532 49,104,302
Cash and cash equivalents, beg.of period 3,010,808 55,513,303 2,698,110 3,792,027
--------- ---------- ---------- ----------
Cash and cash equivalents, end of period $3,015,642 $52,896,329 $ 3,015,642 $52,896,329
========= ========== ========== ==========
</TABLE>
See notes to financial statements
3
<PAGE>
Inforte Corp.
Notes to financial statements
(Unaudited)
June 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 six month periods ended June 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 ("Basic EPS") by dividing net
income by the weighted average number of common shares outstanding. Diluted net
income per common share ("Diluted EPS") 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 June 30, Six Months Ended June 30,
-------------------------- -------------------------
1999 2000 1999 2000
-------------------------- -------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Basic weighted average shares 8,375,000 12,341,914 8,375,000 11,554,902
Effect of dilutive stock options 2,195,637 1,490,497 2,172,915 1,578,053
-------------------------- -------------------------
Diluted common and common
equivalent shares 10,570,637 13,832,411 10,547,915 13,132,955
=========================== =========================
</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 without the
one-time conversion to a C Corporation from a subchapter S Corporation in 1999.
(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.
4
<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;
5
<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.
1. 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 June 30, Six months ended June 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 42.4 43.5 44.2 43.7
Sales and marketing 18.9 13.6 17.9 13.2
Recruiting, retention,
and training 8.4 12.8 8.6 12.2
Management and administrative 17.8 17.6 17.5 18.6
Total operating expenses 87.5 87.4 88.2 87.7
Operating income 12.5 12.6 11.8 12.3
Interest income, net and other 0.3 5.5 0.4 4.3
Pretax income 12.9 18.1 12.2 16.6
Pro forma income tax expense 5.1 6.9 4.9 6.7
Pro forma net income 7.7 11.2 7.3 10.0
</TABLE>
Three months and six months ended June 30, 2000 and 1999
Revenues. Revenues increased 130% to $16.4 million for the quarter ended June
30, 2000 from $7.1 million for quarter ended June 30, 1999. For the six months
ended June 30, 2000, revenues increased 140% to $28.7 million from $12.0 million
for the six months ended June 30, 1999. This growth reflected increases in the
number of client engagements and in average revenue per client. For the quarter
ended June 30, 2000, we had 46 significant clients with each of these clients
contributing $1.4 million to revenue on average on an annualized basis. We had
28 significant clients during the quarter ended June 30, 1999, each contributing
$1.0 million to revenue on average on an annualized basis. Sequentially, revenue
grew 33% to $16.4 million in the June 2000 quarter from $12.3 million in the
March 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 future years.
6
<PAGE>
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 136% to $7.1 million for the quarter ended June 30, 2000,
from $3.0 million for quarter ended June 30, 1999. For the six months ended June
30, 2000, these expenses increased 137%. The increase was due to the hiring of
additional consulting professionals. We employed 321 consultants on June 30,
2000, up from 145 one year earlier.
Project personnel and related expenses represented 43.5% of revenues for the
quarter ended June 30, 2000, compared to 42.4% for the quarter ended June 30,
1999. The increase as a percentage of revenues was due to our successful efforts
to bring consultant utilization within our target range of 70%-80%. Utilization
was 75% for the quarter ended June 30, 2000, down from 88% in the June 1999
quarter. We are actively managing utilization levels within a target range of
70%-80% 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 43.7% of revenues for the six months ended June 30,
2000, compared to 44.2% for the same period in 1999. The expenses declined as a
percentage of revenues because the impact of price increases exceeded the impact
of consultant utilization rate decreases during this period.
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 66% to $2.2
million for the quarter ended June 30, 2000 from $1.3 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 13.6% for the quarter ended June 30, 2000 from 18.9% in
the second quarter of 1999. For the six months ended June 30, 2000, the expense
percentage as a percent of revenue decreased from 17.9% 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
intend to grow 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 251% to $2.1 million for the quarter ended June 30, 2000
from $0.6 million in the second 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 182 as of June 30,
1999 to 408 as of June 30, 2000. Compared to the prior year, recruiting,
retention, and training expenses in 2000 increased as a percentage of revenues
to 12.8% from 8.4% for the June quarter as significant investments were made in
advanced technology training courses. For the six months ended June 30, 2000,
the expenses increased as a percentage of sales to 12.2% from 8.6%, as hiring
occurred at a more rapid rate than the rate of revenue growth in the March 2000
quarter and as the company invested more in advanced technology training for
employees during the June 2000 quarter.
7
<PAGE>
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 127% to $2.9 million for the quarter ended June 30, 2000 from $1.3
million for the same period in 1999. These expenses increased 154% for the six
months ended June 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 17.6% in the quarter ended June 30, 2000,
similar to 17.8% for the quarter ended June 30, 1999. For the six months ended
June 30, 2000, management and administrative expenses increased as a percent of
revenue to 18.6% from 17.5% in the prior year period, 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 $52.9 million at June 30, 2000.
Short-term investments increased from zero as of December 31, 1999 to $7.7
million as of June 30, 2000. Long-term investments increased from zero as of
December 31, 1999 to $15.8 million as of June 30, 2000. In total, cash and cash
equivalents, short-term investments, and long-term investments increased from
$3.8 million to $76.4 million during the six months ended June 30, 2000, a rise
of $72.6 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
$4.5 million, and from cash received from employees participating in the stock
purchase and stock option plans of $2.1 million during the six months ended June
30, 2000, offset by capital expenditures.
Capital expenditures for each of the six months ended June 30, 2000 and 1999
were $0.9 million and $0.4 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 June 30, 2000 our accounts receivable (less deferred revenue) equaled 4
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 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.
We have a $2.5 million line of credit with Citibank, N.A. which bears interest
at the prime rate, which was 9.5% at June 30, 2000. The line of credit is
secured by substantially all our assets. No amounts were outstanding under the
line of credit at June 30, 2000 or December 31, 1999.
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.
8
<PAGE>
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 June 30, 2000
9
<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
July 24, 2000 ---------------------------------
Nick Padgett,
Chief Financial Officer
10
