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

                               ----------------

                                   FORM 10-K
(Mark
One)

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

                  For the fiscal year ended December 31, 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 No. 000-29239

                               ----------------

                                 INFORTE CORP.
            (Exact name of registrant as specified in its charter)

                               ----------------

               Delaware                              36-3909334
     (State or other jurisdiction                 (I.R.S. Employer
   of incorporation or organization)           Identification Number)

      150 North Michigan Avenue,
     Suite 3400, Chicago, Illinois                      60601
    (Address of principal executive                  (Zip Code)
               offices)

      Registrant's telephone number, including area code: (312) 540-0900

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

          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.001 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 on Part III of this Form 10-K or any amendment to
this Form 10-K. [X]

On March 5, 2001, 12,733,097 shares of the Registrant's common stock were
outstanding. The aggregate market value of common stock held by non-affiliates
of the Registrant was approximately $58,000,000.

Certain portions of the Registrant's definitive proxy statement dated March
22, 2001 for the Annual Meeting of Stockholders to be held April 25, 2001 are
incorporated by reference into Part III of this report.

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                                 Inforte Corp.
                                   Form 10-K

                               December 31, 2000

                               Table of Contents

<TABLE>
<CAPTION>
 Item                                                                   Page No.
 ----                                                                   --------
                                     Part I

 <C>  <S>                                                               <C>
 1.   Business.......................................................       3
 2.   Properties.....................................................      13
 3.   Legal Proceedings..............................................      13
 4.   Submission of Matters to a Vote of Security Holders............      13
 4A.  Executive Officers of the Registrant...........................      13

                                    Part II

 5.   Market for Registrant's Common Equity and Related Stockholder
      Matters........................................................      15
 6.   Selected Consolidated Financial Data...........................      16
 7.   Management's Discussion and Analysis of Financial Condition and
      Results of Operations..........................................      17
 7A.  Quantitative and Qualitative Disclosures About Market Risk.....      23
 8.   Financial Statements and Supplementary Data....................      23
 9.   Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure...........................................      41

                                    Part III

 10.  Directors and Executive Officers of the Registrant.............      41
 11.  Executive Compensation.........................................      41
 12.  Security Ownership of Certain Beneficial Owners and Management.      41
 13.  Certain Relationships and Related Transactions.................      41

                                    Part IV

 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-
      K..............................................................      42
      SIGNATURES.....................................................      43
</TABLE>

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                                    PART I

ITEM 1. BUSINESS

The information in this document contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements are based upon current expectations that involve risks and
uncertainties. Any statements contained in this document that are not of
historical fact, are intended to be, and are, "forward-looking statements,"
which involve known and unknown risks. We generally use the following terms
and similar expressions to identify forward-looking statements: "anticipate,"
"believe," "estimate," "expect," "intend," "may," "plan," "potential,"
"should," "could" and "will." Our actual results could differ from those
indicated by the forward-looking statements made in this report. Accordingly,
you should not place undue reliance on these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, or performance. Additionally, we do not assume responsibility for
the accuracy or completeness of these statements. We are under no duty to
update any of the forward-looking statements in this document to conform these
statements to actual results or to changes in our expectations.

Overview

Strategic technology consultancy Inforte Corp. helps create long-term return
on investment and sustainable advantages for clients by maximizing the
convergence of business strategy and technology across the value chain.
Inforte delivers strategic technology consulting, comprehensive demand chain
management solutions and solutions that optimize supply chain integration. Our
services help our clients maximize revenue, operate more efficiently and
improve their competitive positions.

Our client base consists primarily of Global 2000 companies. Representative
clients in the past year included Alcatel, CUNA Mutual, Intuit, McKinsey &
Company, Option One Mortgage, Palm, PRIMEDIA, Sun Microsystems, Toshiba,
Yahoo! and Zurich American Insurance. Our proprietary approach to planning and
delivering projects, Velocity-to-Value (V2V), and rigorous delivery
methodologies have produced industry-leading project-efficiency metrics to
help ensure that we deliver projects on time and within budget. We believe
that this approach, coupled with our technology strategy, business operations
and technology skills, has enabled us to achieve high levels of client
satisfaction.

Inforte has grown rapidly since our inception in September 1993. Through the
end of 2000, our revenue has at least doubled each year, with all growth
internally generated rather than through mergers or acquisitions. As of
December 31, 2000, we employed 442 people in our offices in Atlanta, Chicago,
Dallas, London, Los Angeles, New York and San Francisco. Reflecting the
importance we place on employee motivation and ownership, each of our
employees is a stock or option holder.

Industry Background

Widespread acceptance of information technology and the Internet has created
numerous opportunities for companies seeking growth and increased efficiencies
in highly competitive and rapidly changing markets. Although companies are
eager to capture the opportunities presented by information technology, the
analysis, design and implementation of an effective technical solution
requires special skills and expertise that many companies do not possess.
These special skills include the ability to:

  . assess the strategic implications of technology for a business;

  . integrate new online business processes with existing capabilities for
    processing business transactions internally and with customers and
    suppliers;

  . develop creative initiatives for brand, content and user experience;

  . implement the technology required to support these solutions.

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The availability of high quality professionals experienced in creating,
implementing and integrating advanced technology solutions is limited. It is
often inefficient and difficult for companies seeking to implement their own
advanced solutions to hire, train and retain in-house personnel. As a result,
businesses engage professional services firms to help them design and
implement these solutions.

The Inforte Solution

Inforte provides strategic technology consulting and integration services that
enable companies to create and deploy information technology solutions
company-wide. Key elements of the Inforte solution include:

Value Chain Business Integration. Inforte provides clients value chain-wide
technology solutions integrated with software systems that support customer
relationships, supplier relationships and internal operations. For example, a
solution could give customers online search, selection and payment
capabilities, link customer order information directly to our client's
production facility and link the production facility with third-party
suppliers. A solution could also allow detailed customer profiling based on
their past purchasing behavior, time and location visited on the Web site, as
well as their use of other communication channels such as mail and telephone.
Our solutions include:

  . Technology strategy--developing a strategy that takes advantage of the
    latest technology;

  . Demand chain management--enabling companies to achieve a 360-degree view
    of their customers and partners along with the ability to manage all
    customer and partner interactions;

  . Business-to-consumer electronic commerce--enabling businesses to transact
    sales and services with consumers over the Internet;

  . Business-to-business electronic commerce--allowing businesses to use the
    Internet to interact with suppliers of goods and services;

  . Internal operations management--facilitating interactions between a
    company and its employees through the use of the latest technology.

Inforte solutions enable clients to use technology to build and maintain
sustainable competitive positions and improve their operational efficiencies.
We believe that we are one of the few professional services firms that possess
all the skills necessary to offer strategic technology solutions across a
company's entire value chain.

Advanced Technological Skills. Inforte identifies and uses the latest
technology to design and build solutions for clients to interact with
customers and suppliers and to process business transactions effectively.
Inforte has extensive experience working with applications from leading
software vendors, such as Ariba, Blue Martini, i2 Technologies, Siebel Systems
and Vignette. We believe that our experience using these applications and
deploying enterprise-wide systems gives our consultants functional skills and
insights into a wide range of business processes. Additionally, many of these
software vendors are also customers of ours, engaging us to deploy solutions
in their internal environments and develop solutions that integrate their
products with products of other software vendors.

To continuously maintain the high level of advanced technological skills among
our staff, Inforte employs a group of individuals whose sole purpose is to
capture, organize and disseminate our knowledge capital internally.

Collaborative Client Involvement. We believe our solutions are successful
because they are developed in collaboration with our clients. Because the
ultimate success of any project will depend upon the client's ability to
effectively operate and support the related systems and technology on an on-
going basis, our co-management approach is designed to include substantial
client participation in all phases of the project. This allows the client to
have a thorough understanding of what has been done, how it was completed and
why it was performed. The collaborative environment is supported by a highly
accessable online knowledge base that includes project deliverables. We
believe our co-management philosophy differs from that of many service
providers, who limit the client's role in project delivery. Additionally, we
encourage our clients to use our web sites,

                                       4
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www.eStrategy.com and www.inforte.com, to inspire thinking about new ways to
apply advanced technologies in today's digital economy. We believe our
collaborative knowledge transfer philosophy has contributed to consistently
high project success rates and client satisfaction.

Inforte Strategy

Inforte's strategy is to continue to capitalize on information technology
evolution and advancement. We intend to expand our relationships with existing
clients and to develop relationships with additional Global 2000 companies and
emerging enterprises. The following are the key elements of our strategy:

Maintain Advanced Solution Focus. Inforte focuses on providing clients with
advanced solutions that combine the latest technology with innovative business
approaches. As technology constantly evolves, leading to new advanced
solutions, we attempt to continually update our offerings for clients by
combining the latest technology with innovative business models. We will
continue to seek to identify early technology trends and work closely with the
providers of leading-edge technologies so that we offer our clients the most
advanced technology solutions available. We expect this to enhance our ability
to generate assignments from existing and new clients, achieve high margins,
maintain our position of technological leadership and provide challenging
assignments to our employees.

Ensure Continued Client Satisfaction. Inforte strives to ensure high client
satisfaction. We survey clients each quarter to assess their satisfaction and
to link management compensation to these results. Our quarterly surveys ask
clients open-ended questions on measurements they consider important and ask
them to numerically score us on these factors. For comparability purposes, our
client surveys also request numerical scores on nine set factors, including
expertise, project management skills, business understanding, price and
responsiveness.

Continue to Attract and Retain High Quality Personnel. Inforte's advanced
solution focus requires that we retain highly motivated, intelligent people of
exceptional quality. We believe the best way to continue to attract and retain
highly qualified personnel is to provide an intellectually challenging
environment, compensation equal to or better than our competitors and a strong
corporate culture.

Continue Superior External and Internal Business Execution. We believe the
most critical factor for successful operations and growth of a strategic
consulting business is consistently delivering high quality services on a
timely basis and within budget. Inforte emphasizes continuous improvement of
our delivery expertise, including our V2V methodology, knowledge management
and other internal processes to compete effectively in the future. We continue
to refine the systems and processes that comprise our internal infrastructure,
which we consider to be advanced for a company of our size.

Inforte Services

Inforte works with clients to determine how they can best design and implement
advanced solutions to effectively capitalize on the latest information
technology. In most client engagements, our Strategic Services practice first
develops an overall strategic plan for using technology to create new online
business operations and to integrate the client's internal operations and
external relationships with customers and suppliers. After defining this plan,
our two other practice groups create, design and implement the solutions
recommended in the plan. Our Customer Experience Management practice focuses
on processes and technologies that help our clients to effectively manage
their customer and partner relationships. Our Strategic Operations Management
practice focuses on the integration and implementation of these systems with
the client's existing infrastructure as well as managing supplier
relationships, internal processes and technologies and building digital
markets that bring buyers and sellers together. All three service groups often
work together to provide the most effective technology solutions to our
clients.

All Inforte projects are governed by our V2V project delivery methodology. We
structure and price our projects in shorter, multiple phases to ensure that
each phase meets the client's business objectives. Strategic Services

                                       5
<PAGE>

engagements typically last 30 to 60 days, depending on scope. Customer
Experience Management and Strategic Operations Management projects generally
last three to nine months, with significant functionality typically delivered
every three months.

Strategic Services

Inforte's Strategic Services practice applies its knowledge of business
processes and technology to define the client's strategy for using information
technology to improve its business. A team of experienced strategy consultants
works closely with the client's senior executives to work through strategic
scenarios, provide recommendations and specify how to implement the agreed-
upon approach.

The technology strategy created by Strategic Services defines the steps
necessary to implement advanced solutions that will help a client achieve
sustainable competitive advantage. Our Strategic Services practice also
identifies significant changes needed in the client's structure, business
processes and external relationships with suppliers and partners, and makes
recommendations for implementing these changes while minimizing disruptions to
the client's existing business.

Customer Experience Management

Our Customer Experience Management practice delivers solutions that not only
provide our clients with information about their customers and partners, but
also enrich and personalize the customers' and partners' online experiences.
Our project teams work closely with the client's senior sales, service,
marketing and technology executives to design new business processes and
technical systems, customize software applications from third-party vendors
and implement the overall solutions.

Our Customer Experience Management practice delivers the following types of
solutions:

  . Business process design in the areas of electronic commerce, sales,
    service and marketing

  . Web sites for selling to or servicing customers

  . Dynamic online communities so that customers with similar interests may
    interact with each other

  . Internet-based processes and technologies that facilitate brand-building,
    user experience design, tailored marketing strategies, personalized
    interaction with customers and the tracking of all customer interactions

  . Internet-based and other software platforms required to link together all
    sales, service and marketing channels to provide a comprehensive profile
    of a customer's interactions with a business.

Strategic Operations Management

Our Strategic Operations Management practice focuses on projects aimed at
helping our clients use technology to improve internal communications and
business processes and to provide closer external links to suppliers. This
improves the coordination of customers ordering products online and suppliers
fulfilling those orders.

Our Strategic Operations Management practice delivers the following types of
solutions for clients:

  . Business process design along the supply chain, which includes
    purchasing, order fulfillment, logistics, transportation and warehouse
    management

  . Employee self-service for goods and services, including corporate travel,
    benefits administration, time reporting and expense management

  . Trading exchanges, often referred to as "hubs," that provide a central
    location for organizations to trade with each other, quickly access
    information about logistics and delivery and automate inter-company
    transactions

  . Linking of supplier operations to the sales and service operations of the
    business in real-time.

                                       6
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Clients

During 2000 our top five clients equaled 31 percent of total revenue and our
top ten clients equaled 46 percent of total revenue. No single customer
provided Inforte with over 10 percent of total 2000 revenue.

Sales and Marketing

Inforte markets with a team-selling approach that combines dedicated sales
professionals from our practice development and client development groups with
our senior delivery executives and practice area leaders. We believe our team
model is superior to a traditional professional services sales model where one
individual must manage the sales process in addition to providing the
services. Our practice development group focuses on selling to new customers,
while our client development group focuses on maintaining and extending
relationships with existing customers.

We use a proprietary sales and marketing methodology called SAMM to capture
detailed information on sales opportunities. SAMM is based on a heavily
customized enterprise relationship management system to track potential
contracts at each of the 11 stages of our sales cycle. We project revenue
based on a probability analysis of each sales opportunity, allowing us to
manage continually our hiring needs and spending plans.

Our market development efforts are designed to build Inforte's brand name and
recognition in the marketplace and generate leads for new business. Our
activities include seminars and briefings that target corporate executives,
public speaking opportunities, attendance at industry conferences, regular
meetings with industry analysts, public relations programs, electronic
brochures and use of Web site properties such as inforte.com and
eStrategy.com.

We complement our internal sales and marketing processes with selected
formalized industry alliances. We receive leads from a number of well-known
software vendors with whom we have strategic, non-exclusive marketing
relationships, including Ariba, Blue Martini, i2 Technologies, Siebel Systems
and Vignette. We continually search for leading software vendors with whom we
can share business leads, and expect to add new relationships from time to
time, as well as work with other software vendors with whom we do not have
formalized relationships.

People & Culture

We have grown from 63 people at the end of 1997 to 122 people at the end of
1998 to 257 people at the end of 1999 to 442 employees as of December 31,
2000. Of these, 340 are consultants, 31 are in sales and marketing, including
19 quota-based sales personnel, 18 are in human resources and 53 are
management or administrative personnel. None of our employees is represented
by a labor union, and we believe our employee relations are excellent.

We consider our culture to be rewarding and fun, and think it is a key reason
we are able to attract and retain high quality employees. We have
sophisticated recruiting, retention and career development processes that have
resulted in ratios for internal employee referrals, offers-to-acceptances and
voluntary turnover that we believe are among the best in the industry. All
employees receive stock options when they join Inforte, as we believe that
equity ownership is an important component of employee motivation and
compensation.

Competition

We compete in the information technology professional services market, which
is highly competitive. We expect this competition to intensify as the market
evolves. We believe that our competitors fall into several categories,
including the following:

  . Accenture and the consulting arms of global accounting firms

  . Technology consulting firms such as eLoyalty, Proxicom and Sapient

                                       7
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  . Large systems integration or outsourcing firms such as Computer Sciences
    Corp., EDS and IBM Global Services

  . Strategy consulting firms such as Bain, Booz.Allen & Hamilton, Boston
    Consulting Group, DiamondCluster and McKinsey

  . Professional services divisions of software application vendors

  . Internal information technology departments of current and potential
    clients.

Many of our competitors have longer operating histories, larger client bases,
longer relationships with clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than us.

However, we believe that only a few of our competitors possess all of the
skills necessary to offer the comprehensive integration of internal
operations, customer relationships and supplier relationships that we provide.
We do expect that many of these competitors will evolve their service
offerings over time to more closely match our current capabilities.

We believe that the principal competitive factors in the information
technology professional services market are: a strategy offering, a complete
integration model that combines customer experience with the supply chain, a
proven record of project delivery and high customer satisfaction. We believe
that our service offerings allow us to compete favorably in all of the above
areas.

There are relatively low barriers to entry into the information technology
professional services market. Existing or future competitors may develop or
offer services that are comparable or superior to ours at a lower price, which
could cause our revenues to decline.

Legal Proceedings

From time to time, we may be involved in litigation incidental to the conduct
of its business. To date, we have never been a party to any material legal
proceedings.

Risk Factors

In addition to other information in this Form 10-K, the following risk factors
should be carefully considered in evaluating Inforte and its business because
such factors currently may have a significant impact on Inforte's business,
operating results and financial condition. As a result of the risk factors set
forth below and elsewhere in this Form 10-K, and the risk factors discussed in
Inforte's other Securities and Exchange Commission filings, actual results
could differ materially from those projected in any forward-looking
statements.

                           RISKS RELATED TO INFORTE



If we fail to identify and successfully transition to the latest and most
advanced solutions or keep up with an evolving industry, we will not compete
successfully for clients and our profits may decrease.

We focus on providing our clients solutions that employ the latest
technologies. If we fail to identify the latest and most advanced solutions,
or if we identify but fail to successfully transition our business to these
advanced solutions, our reputation and our ability to compete for clients and
the best employees could suffer. If we cannot compete successfully for
clients, our revenues may decrease. Also, if our projects do not involve the
latest and most advanced solutions, they would generate lower fees.

Because our market changes rapidly, some of the most important challenges
facing us are the need to:

  . effectively use advanced technologies;

  . continue to develop our strategic and technical expertise;

                                       8
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  . influence and respond to emerging industry standards and other
    technological changes;

  . enhance our current services; and

  . develop new services that meet changing customer needs.

All of these challenges must be met in a timely and cost-effective manner. We
cannot assure you that we will succeed in effectively meeting these
challenges.

If we fail to satisfy our clients' expectations, our existing and continuing
business could be adversely affected.

If we fail to satisfy the expectations of our clients, we could damage our
reputation and our ability to retain existing clients and attract new clients.
In addition, if we fail to perform our engagements, we could be liable to our
clients for breach of contract. Although most of our contracts limit the
amount of any damages to the fees we received, we could still incur
substantial cost, negative publicity, and diversion of management resources to
defend a claim, and as a result, our business results could suffer.

If we are unable to accurately forecast our quarterly revenue our
profitability may be reduced.

Recently, the level of spending by clients and potential clients on
information technology in the United States has become less certain. We
believe the uncertainty stems from the rapid slowing of growth in Gross
Domestic Product in the United States during the second half of calendar 2000.
In some cases the uncertainty has reduced the overall number of projects
available for bid. In other cases the uncertainty has resulted in project
deferrals, project scope reductions or limited follow-on projects at existing
clients. While our revenue forecast methods are sophisticated and have proven
accurate historically, we believe the recent environment adds greater risk and
uncertainty to our forecasts. If we fail to accurately forecast revenue, our
actual results may differ materially from the amounts planned, and our
profitability may be reduced.

We may be unable to hire and retain employees who are highly skilled, which
would impair our ability to perform client services.

If we are unable to hire and retain highly-skilled individuals, our ability to
retain existing business and compete for new business will be harmed.
Individuals who have the experience and expertise to perform the services we
provide to our clients are limited and competition for these individuals is
intense. To attract and retain these individuals, we invest a significant
amount of time and money. In addition, we expect that an important component
of overall compensation for our employees will continue to be equity. If our
stock price does not increase over time, it may be more difficult to retain
employees who have been compensated with stock options.

If we fail to adequately manage our growth, our profitability may be reduced.

If we cannot keep pace with our growth, we will be unable to maintain high
client satisfaction, reducing our profitability. Our business has grown
dramatically over the past several years. For example, our revenue has
increased from $13.4 million in 1998, to $30.1 million in 1999 and to $63.8
million in 2000. If our growth exceeds our expectations, our current
managerial resources and infrastructure may be inadequate to handle the
growth. Also, our senior management team has limited collective experience
managing a business the current size of Inforte or a public company.

If our marketing relationships with software vendors deteriorate, we would
lose their client referrals.

We currently have marketing relationships with software vendors, including
Ariba, Blue Martini, i2, Siebel, and Vignette. Although we have historically
received a large number of business leads from these software vendors to
implement their products, they are not required to refer business to us and
they may terminate these relationships at any time. If our relationships with
these software vendors deteriorate, we may lose their client

                                       9
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leads and our ability to develop new clients could be negatively impacted. Any
decrease in our ability to obtain clients may cause a reduction in our
revenues.

If we are unable to rapidly integrate third-party software, we may not deliver
solutions to our clients on a timely basis, resulting in lost revenues and
potential liability.

In providing client services, we recommend that our clients use software
applications from a variety of third-party vendors. If we are unable to
implement and integrate this software in a fully functional manner for our
clients, we may experience difficulties that could delay or prevent the
successful development, introduction, or marketing of services. Software often
contains errors or defects, particularly when first introduced or when new
versions or enhancements are released. Despite internal testing and testing by
current and potential clients, our current and future solutions may contain
serious defects due to third-party software or software we develop or
customize for clients. Serious defects or errors could result in liability for
damages, lost revenues, or a delay in implementation of our solutions.

Our revenues could be negatively affected by the loss of a large client or our
failure to collect a large account receivable.

At times, we derive a significant portion of our revenue from large projects
for a limited number of varying clients. In 1998, our five largest clients
accounted for 36% of revenue and our ten largest clients accounted for 56% of
revenue. In 1999, our five largest clients accounted for 36% of revenue and
our ten largest clients accounted for 55% of revenue. In 2000, our five
largest clients accounted for 31% of revenue and our ten largest clients
accounted for 46% of revenue. Although these large clients vary from time to
time and our long-term revenues do not rely on any one client, our revenues
could be negatively affected if we were to lose one of these clients or if we
were to fail to collect a large account receivable.

In addition, many of our contracts are short-term and provide that our clients
can reduce or cancel our services without incurring any penalty. If our
clients reduce or terminate our services, we would lose revenue and would have
to reallocate our employees and our resources to other projects to attempt to
minimize the effects of that reduction or termination. Accordingly,
terminations, including any termination by a major client, could adversely
impact our revenues.

If we estimate incorrectly the time required to complete our projects, we will
lose money on fixed-price contracts.

A majority of our contracts are fixed-price contracts, rather than contracts
in which the client pays us on a time and materials basis. We must estimate
the number of hours and the materials required before entering into a fixed-
price contract. Our future success will depend on our ability to continue to
set rates and fees accurately and to maintain targeted rates of employee
utilization and project quality. If we fail to accurately estimate the time
and the resources required for a project, any required increase in the time
and resources to complete the project could cause our profits to decline.

Fluctuations in our quarterly revenues and operating results due to cyclical
client demand may lead to reduced prices for our stock.

Our quarterly revenues and operating results have fluctuated significantly in
the past and we expect them to continue to fluctuate significantly in the
future. Historically, we have experienced our greatest sequential growth
during the first and second quarters. We typically experience significantly
lower sequential growth in the third and fourth quarters. We attribute this to
the budgeting cycles of our customers, most of whom have calendar-based fiscal
years and as a result are more likely to incur the expense of our services
during the first half of the year. During 2001, we do not expect this normal
seasonal growth pattern, and have adjusted our recruiting and spending plans
accordingly. Our cautious expectations for the first half of 2001 and
potentially the entire year are based upon the slower U.S. economic growth
during the second half of 2000 and business trends during the

                                      10
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first two months of 2001. If we are unable to predict the cyclical client
demand in a slower growth or distressed economic environment, our expenses may
be disproportionate to our revenue on a quarterly basis and our stock price
may be adversely affected.

Others could claim that we infringe on their intellectual property rights,
which may result in substantial costs, diversion of resources and management
attention, and harm to our reputation.

A portion of our business involves the development of software applications
for specific client engagements. Although we believe that our services do not
infringe on the intellectual property rights of others, we may be the subject
of claims for infringement, which even if successfully defended could be
costly and time-consuming. An infringement claim against us could materially
and adversely affect us in that we may:

  . experience a diversion of our financial resources and management
    attention;

  . incur damages and litigation costs, including attorneys' fees;

  . be enjoined from further use of the intellectual property;

  . be required to obtain a license to use the intellectual property,
    incurring licensing fees;

  . need to develop a non-infringing alternative, which could be costly and
    delay projects; and

  . have to indemnify clients with respect to losses incurred as a result of
    our infringement of the intellectual property.

Because we are newer and smaller than many of our competitors, we may not have
the resources to effectively compete, causing our revenues to decline.

Many of our competitors have longer operating histories, larger client bases,
longer relationships with clients, greater brand or name recognition, and
significantly greater financial, technical, marketing, and public relations
resources than we do. We may be unable to compete with the full-service
consulting companies entering the information technology professional services
market, including the consulting divisions of the largest global accounting
firms, who are able to offer their clients a wider range of services. If our
clients decide to take their information technology professional services
projects to these companies, our revenues may decline. In addition, new
professional services companies may provide services similar to ours at a
lower price, which could cause our revenues to decline.

                         RISKS RELATED TO OUR INDUSTRY

If the rate of adoption of advanced information technology slows
substantially, our revenues may decrease.

We market our services primarily to firms that want to adopt Internet-based
information technology that provides an attractive return on investment or
helps provides a sustainable competitive advantage. Our revenues could
decrease if companies decide not to integrate the latest technologies into
their businesses due to economic factors, governmental regulations, financial
constraints, or other reasons.

Inforte's market research suggests that the level information technology
spending in the United States is closely linked with the growth rate of the
Gross Domestic Product (GDP). The recent slowdown in the GDP growth rate has
caused a slower rate of adoption of advanced information technology by our
target clients. We expect information technology spending and Inforte revenue
to be highly dependent on the health of the US economy.

If the supply of information technology companies and personnel continues to
exceed demand, this may adversely impact the pricing of our projects and our
ability to win business.

Late in 2000 many firms in our industry announced significant employee layoffs
and lower utilization rates of billable personnel. An oversupply of technology
professionals may reduce the price clients are willing to pay for

                                      11
<PAGE>

our services. An oversupply may also increase the talent pool for potential
clients who may choose to complete projects in-house rather than use an
outside consulting firm such as Inforte. Lower utilization rates increase the
likelihood that a competitor will reduce their price to secure business in
order to improve their utilization rate. The extent to which pricing and our
ability to win business may be impacted is a function of both the magnitude
and duration of the supply and demand imbalance in our industry.

              RISKS RELATED TO THE OWNERSHIP OF OUR COMMON STOCK

Our stock price could be extremely volatile, like many technology stocks.

Recently, the market prices of securities of technology companies,
particularly information technology services companies, have been highly
volatile. We expect continued high volatility in our stock price, with prices
at times bearing no relationship to Inforte's operating performance.

Volatility of our stock price could result in expensive class action
litigation.

If our common stock suffers from volatility like the securities of other
technology companies, we could be subject to securities class action
litigation similar to that which has been brought against companies following
periods of volatility in the market price of their common stock. Litigation
could result in substantial costs and could divert our resources and senior
management's attention. This could harm our productivity and profitability.

Officers and directors own a significant percentage of outstanding shares and,
as a group, control a vote of stockholders.

As of December 31, 2000 the executive officers and directors set forth below,
own approximately 51% of the outstanding shares of our common stock and own
individually the percentage set forth opposite their names:

<TABLE>
      <S>                  <C>
      . Philip S. Bligh    24.4%

      . Stephen C.P. Mack  20.9%

      . Nick Padgett        6.2%
</TABLE>

If the stockholders listed above act or vote together with other employees who
own significant shares of our common stock they will have the ability to
control the election of our directors and the approval of any other action
requiring the approval of our stockholders, including any amendments to the
certificate of incorporation and mergers or sales of all or substantially all
assets, even if the other stockholders perceive that these actions are not in
their best interests.

The authorization of preferred stock, a staggered board of directors and
supermajority voting requirements will make a takeover attempt more difficult,
even if the takeover would be favorable for stockholders.

Inforte's certificate of incorporation and bylaws may have the effect of
deterring, delaying or preventing a change in control of Inforte. For example,
our charter documents provide for:

  . the ability of the board of directors to issue preferred stock and to
    determine the price and other terms, including preferences and voting
    rights, of those shares without stockholder approval;

  . the inability of our stockholders to act by written consent or to call a
    special meeting;

  . advance notice provisions for stockholder proposals and nominations to
    the board of directors;

  . a staggered board of directors, with three-year terms, which will
    lengthen the time needed to gain control of the board of directors; and

  . supermajority voting requirements for stockholders to amend provisions of
    the charter documents described above.

                                      12
<PAGE>

We are also subject to Delaware law. Section 203 of the Delaware General
Corporation Law prohibits us from engaging in a business combination with any
significant stockholder for a period of three years from the date the person
became a significant stockholder unless, for example, our board of directors
approved the transaction that resulted in the stockholder becoming an
interested stockholder. Any of the above could have the effect of delaying or
preventing changes in control that a stockholder may consider favorable.

ITEM 2. PROPERTIES

Our headquarters are located in Chicago, Illinois. Senior management, sales,
marketing, human resources, and administrative personnel, as well as the
Chicago-based consultants use this facility. We have two subleases for a total
of 50,765 square feet in Chicago. The primary space is 33,065 square feet,
which expires in December 2005 with no option to renew. Additionally, we
sublease 17,700 square feet, which expires in June 2006 with no option to
renew. We have regional offices that are used by regional management, sales,
and recruiting personnel, as well as consultants residing in the region. We
lease 22,529 square feet in Irvine, California, which expires in July 2006
with an option to renew. We lease 4,480 square feet in Irving, Texas, which
expires in May 2005 with an option to renew. We have also entered into various
short-term leases for professional office space in San Mateo, California,
Jersey City, New Jersey, Atlanta, Georgia, and London, England.

ITEM 3. LEGAL PROCEEDINGS

Not applicable.

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

Not applicable.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The following table provides information with respect to our executive
officers:

<TABLE>
<CAPTION>
            Name         Age                     Position
            ----         ---                     --------
      <S>                <C> <C>
      Philip S. Bligh    33  President, Chief Executive Officer, and Chairman
      Stephen C.P. Mack  35  Chief Operating Officer and Director
      Nick Padgett       34  Chief Financial Officer and Director
      Dave Sutton        37  Executive Vice President
      Douglas Turk       31  Executive Vice President
</TABLE>

Philip S. Bligh co-founded Inforte and has served as chairman of the board of
directors of Inforte since inception in September 1993. Mr. Bligh also
currently serves as president and chief executive officer. Before founding
Inforte, Mr. Bligh served in various technology consulting roles for Accenture
from October 1988 to February 1991 and as a project manager for Systems
Software Associates, an enterprise software provider, from April 1991 through
Inforte's founding. Mr. Bligh holds a B.S. in chemical engineering from
University College London, England and serves as an adjunct professor in
management at DePaul University's Kellstadt Graduate School of Business.

Stephen C.P. Mack joined Inforte in October 1994 and has served as a director
since that time. Mr. Mack is currently Inforte's chief operating officer,
overseeing our consulting, human resource and international organizations.
Before joining Inforte, from February 1988 to October 1994, Mr. Mack worked at
Accenture, where he was, most recently, a project manager responsible for the
design and implementation of enterprise-wide operational and decision support
systems for large, multinational corporations. Mr. Mack holds a Master's
degree in engineering and management from the University of Birmingham,
England.

Nick Padgett has served as Inforte's chief financial officer since December
1997. Mr. Padgett has been a director of Inforte since its founding in
September 1993. Before joining Inforte, Mr. Padgett served as an equity

                                      13
<PAGE>

research analyst for William Blair & Company, from August 1994 to December
1997. Before William Blair, Mr. Padgett served in various technology
consulting roles for Accenture from June 1988 to September 1992. Mr. Padgett
holds an M.B.A. from the Amos Tuck School of Business Administration at
Dartmouth College and a B.S. in computer science from Western Illinois
University.

David Sutton joined Inforte in September 1999, serving as vice president of
the Strategic Services Group. Currently, as executive vice president Mr.
Sutton directs the global consulting practice areas. Before joining Inforte,
Mr. Sutton was a vice president at Computer Sciences Corporation (CSC),
serving in the CSC Index management consulting unit there from September 1994
to September 1999. Prior to CSC, Mr. Sutton served in various management
consulting roles with BDM International from January 1994 to January 1996, GRC
International from May 1987 to August 1994 and Booz.Allen & Hamilton from
January 1986 to May 1987. Mr. Sutton holds an M.B.A. from George Washington
University and a BS in computer science engineering from the University of
Virginia.

Douglas Turk joined Inforte in June 1997 and has served in various senior
management roles. Currently, as executive vice president Mr. Turk directs
global business development. Before joining Inforte, Mr. Turk co-founded
Reservations On-Line, an e-commerce company that provided technology solutions
for the distribution of reservations and tickets, and served as director of
operations there from January 1996 to March 1997. Prior to Reservations On-
Line, Mr. Turk served as a business analyst and team leader at EDS from May
1992 to June 1994. Before EDS, Mr. Turk served as an accountant with Wortzman
Company from June 1991 to April 1992. Mr. Turk holds J.D. and M.B.A. degrees
from DePaul University and a B.S. in business administration from John Carroll
University.

Key Employees

We have many other key employees. A partial listing follows:

  Executive Vice President
  Nick Heyes

  Senior Vice President
  Philip Clement
  Frank Suljic

  Vice President
  Art Ash                           Richard Ingleton           Carlos Navarro
  Adrian Ball                       Terry Kiely                Roger Neale
  Robert Beach                      Andrew LaCivita            Michael
  Scott Crawford                    Tom Madison                Passilla
  Daniel Gathof                     Ron Meyer                  Simon Prowse
  Kevin Gothelf                     Richard Miller             Christian
  Jeff Hiser                                                   Sprinkle
                                                               Darius Vaskelis

                                      14
<PAGE>

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

Our common stock is traded on the Nasdaq National Market under the symbol
"INFT." Our initial public offering of stock was February 17, 2000 at $32.00
per share. The price range reflected in the table below, is the highest and
lowest closing sale price for our stock as reported by the Nasdaq National
Market during each quarter the stock had been publicly traded. Our present
policy is to retain earnings, if any, to finance future growth. We have never
paid cash dividends and have no present intention to pay cash dividends. In
January 2001, Inforte announced that the board of directors approved a stock
repurchase program that allows Inforte to buy up to $25 million of Inforte
shares. The program has no expiration and will be used to make periodic
purchases at Inforte's discretion to offset the dilutive impact from Inforte's
stock option and employee stock purchase programs. As of March 5, 2001, there
were approximately 4,766 stockholders, including stockholders of record and
holders in street name, and the price per share of our common stock was $8.81.

<TABLE>
<CAPTION>
                                              Three Months Ended
                            -------------------------------------------------------
                            Mar. 31, 2000 Jun. 30, 2000 Sep. 30, 2000 Dec. 31, 2000
                            ------------- ------------- ------------- -------------
   <S>                      <C>           <C>           <C>           <C>
   Price range per share:
     Low...................    $48.00        $22.25        $31.06        $10.81
     High..................    $80.44        $51.38        $56.13        $36.75
</TABLE>

                                      15
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with our
financial statements and related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
in this Form 10-K. The statement of operations data for the years ended 1998,
1999 and 2000 and the balance sheet data as of December 31, 1999 and 2000 are
derived from our audited financial statements, which are included elsewhere in
this Form 10-K. The statement of operations data for the year ended December
31, 1996 and 1997 and the balance sheet data as of December 31, 1996, 1997 and
1998 are derived from our audited financial statements, which are not included
in this Form 10-K.

<TABLE>
<CAPTION>
                                                Year ended December 31,
                                         ---------------------------------------
                                          1996    1997    1998    1999    2000
                                         ------  ------  ------- ------- -------
                                         (in thousands, except per share data)
<S>                                      <C>     <C>     <C>     <C>     <C>
Statement of Operations Data:
Revenues...............................  $1,999  $5,056  $13,447 $30,088 $63,839
Operating expenses:
  Project personnel and related
   expenses............................   1,324   2,722    6,830  12,846  28,182
  Sales and marketing..................     174     829    1,467   4,949   8,584
  Recruiting, retention, and training..      51     694    1,165   2,987   6,360
  Management and administrative........     153     951    2,692   5,617  12,831
                                         ------  ------  ------- ------- -------
Total operating expenses...............   1,702   5,196   12,154  26,399  55,957
                                         ------  ------  ------- ------- -------
Operating income (loss)................     297    (140)   1,293   3,689   7,882
Interest income (expense), net and
 other.................................      (4)    (22)      23     147   3,387
                                         ------  ------  ------- ------- -------
Income (loss) before income taxes......     293    (162)   1,316   3,836  11,269
Income tax expense.....................     --      --       --    1,287   4,395
                                         ------  ------  ------- ------- -------
Net income (loss)......................  $  293  $ (162) $ 1,316 $ 2,549 $ 6,874
                                         ======  ======  ======= ======= =======
Earnings per share
  Basic................................                                  $  0.57
                                                                         =======
  Diluted..............................                                  $  0.51
                                                                         =======
Weighted-average common shares
 outstanding:
  Basic................................                                   12,051
                                                                         =======
  Diluted..............................                                   13,501
                                                                         =======
Pro forma information (unaudited):
Income (loss) before pro forma income
 taxes.................................  $  293  $ (162) $ 1,316 $ 3,836
Pro forma income tax expense (benefit)
 (1)...................................     119     (51)     539   1,542
                                         ------  ------  ------- -------
Pro forma net income (loss)............  $  174  $ (111) $   777 $ 2,294
                                         ======  ======  ======= =======
Pro forma earnings per share
 (unaudited):
  Basic................................  $ 0.03  $(0.02) $  0.14 $  0.27
                                         ======  ======  ======= =======
  Diluted..............................  $ 0.02  $(0.02) $  0.08 $  0.21
                                         ======  ======  ======= =======
Weighted-average common shares
 outstanding:
  Basic................................   6,096   5,264    5,517   8,636
                                         ======  ======  ======= =======
  Diluted..............................   9,108   5,264   10,143  10,786
                                         ======  ======  ======= =======
Balance Sheet Data (at period end):
Cash and short-term and long-term
 marketable securities.................  $   11  $   66  $ 2,698 $ 3,792 $82,997
Working capital........................     356     155    1,006     793  65,318
Total assets...........................     529   1,168    5,581  12,957  99,903
Long-term debt, net of current portion.      62      24      --      --      --
Stockholders' equity...................     363     250    1,661   2,301  83,044
</TABLE>
(1) During the three years ended December 31, 1998, Inforte operated as a sub-
    chapter S corporation under the Internal Revenue Code and in some of the
    states in which we did business. As a result, any taxable earnings or loss
    flowed through to Inforte stockholders. The pro forma net income (loss)
    data assumes that Inforte was subject to income tax had we always operated
    as a C corporation. In 1999, Inforte was a C corporation; however, the
    conversion from a sub-chapter S corporation to a C corporation resulted in
    a tax benefit for accounting purposes due to the recording of deferred tax
    benefits, increasing earnings per share. The pro forma earnings per share
    for the year ended December 31, 1999 reflects the earnings per share
    Inforte would have reported without the one-time conversion to a C
    corporation.

                                      16
<PAGE>

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

You should read the following discussion in conjunction with "Selected
Financial Data" and our financial statements, together with the notes to those
statements, included elsewhere in this Form 10-K. The following discussions
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, particularly those identified in "Risk Factors."

                                   OVERVIEW

Strategic technology consultancy Inforte Corp. helps create long-term return
on investment and sustainable advantages for clients by capitalizing on the
convergence of business strategy and technology across the value chain. We
deliver strategic technology consulting, comprehensive demand chain management
solutions, plus solutions that optimize supply chain integration. Our client
advocacy approach and rigorous delivery methodologies have garnered the trust
of Global 2000 clients, produced industry-leading project-efficiency metrics
and helped Inforte earn references from 100 percent of its clients. Founded in
1993, Inforte is headquartered in Chicago and has offices in Atlanta, Dallas,
London, Los Angeles, New York and San Francisco.

Inforte works with clients to determine how they can best design and implement
advanced solutions to effectively capitalize on the latest information
technology. The majority of revenue is 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:

  . the variability in market demand for strategic technology professional
    services;

  . 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. In
    2001 we expect the impact from general economic factors to have a much
    greater impact on quarterly revenue than the typical seasonal factors;

                                      17
<PAGE>

  . the degree of competitive pricing;

  . the length of the sales cycle associated with our service offerings;

  . the number, size, and scope of our projects;

  . the efficiency with which we deliver projects and use our people;

  . the compensation that we pay our people; and

  . 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.

Results of Operations

The following table sets forth the percentage of revenues of certain items
included in Inforte's statement of operations:

<TABLE>
<CAPTION>
                                                               Year ended
                                                              December 31,
                                                            -------------------
                                                            1998   1999   2000
                                                            -----  -----  -----
<S>                                                         <C>    <C>    <C>
Revenues................................................... 100.0% 100.0% 100.0%
Operating expenses:
  Project personnel and related expenses...................  50.8   42.7   44.1
  Sales and marketing......................................  10.9   16.4   13.4
  Recruiting, retention and training.......................   8.7    9.9   10.0
  Management and administrative............................  20.0   18.7   20.1
                                                            -----  -----  -----
Total operating expenses...................................  90.4   87.7   87.7
                                                            -----  -----  -----
Operating income...........................................   9.6   12.3   12.3
Interest income, net and other.............................   0.2    0.5    5.3
                                                            -----  -----  -----
Income before income taxes.................................   9.8   12.7   17.7
                                                            -----  -----  -----
Income tax expense.........................................                 6.9
                                                                          -----
Net income.................................................                10.8%
                                                                          =====
Pro forma information:
Income before pro forma income taxes.......................   9.8   12.7
Pro forma income tax expense (unaudited)...................   4.0    5.1
                                                            -----  -----
Pro forma net income (unaudited)...........................   5.8%   7.6%
                                                            =====  =====
</TABLE>

Years ended December 31, 1999 and 2000

Revenues. Revenues increased $33.8 million or 112% to $63.8 million for the
year ended December 31, 2000 from $30.1 million for the year ended December
31, 1999. This growth reflected increases in the number of client engagements
and in average revenue per client. For the year ended December 31, 2000, we
had 43 significant clients with each of these clients contributing $1.3
million to revenue on average. We had 29 significant clients during the year
ended December 31, 1999, each contributing $0.9 million to revenue on average.
We did not have a client accounting for more than 10% of our revenues in
either 1999 or 2000. On a quarterly basis, revenue followed typical seasonal
patterns with higher sequential growth during the first half of 2000.

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

                                      18
<PAGE>

expenses. These expenses increased $15.3 million or 119% to $28.2 million for
the year ended December 31, 2000, from $12.8 million for year ended December
31, 1999. The increase was due to the hiring of additional consulting
professionals. We employed 340 and 196 consultants on December 31, 2000 and
1999, respectively.

Project personnel and related expenses represented 44.1% of revenues for the
year ended December 31, 2000, compared to 42.7% for the year ended December
31, 1999. The increase as a percentage of revenues was due to lower
utilization which caused revenue per consultant to grow at a slower rate than
the rate of employee compensation. Revenue per consultant increased to
$214,000 for the year ended December 31, 2000 from $210,000 in 1999. In the
first half of 2000 we actively managed utilization levels downward so that our
consultants could maintain a more balanced life style and could invest more
time in training and skill development. Later in the year, utilization
declined as a weakening economy reduced demand for our services. We expect
this factor to continue into 2001, likely causing project personnel and
related expenses to increase as a percentage of revenue in 2001.

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 $3.6
million or 73% to $8.6 million for the year ended December 31, 2000 from $4.9
million 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 13.4% for the year ended December 31, 2000
from 16.4% in the same period in 1999. During 1999 we grew sales and marketing
expenses at a faster rate than the rate of revenue growth in 1999. Having made
these investments in 1999, we grew sales and marketing expenses at a slower
rate than the rate of revenue growth in 2000. In the fourth quarter of 2000 we
grew our salesforce 27% compared to the third quarter of 2000. This year-end
investment in sales personnel may cause sales and marketing to increase as a
percent of revenue in 2001.

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. These expenses increased by $3.4
million or 113% to $6.4 million for the year ended December 31, 2000 from $3.0
million in the year of 1999. Of the dollar spending increase, approximately
one-half 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 257 as of December 31, 1999 to
442 as of December 31, 2000, an increase of 185. As a percentage of revenues,
recruiting, retention and training remained steady at 10.0% and 9.9% for the
years ended December 31, 2000 and 1999, respectively. We anticipate a slower
rate of hiring in 2001. As a result, we presently expect recruiting, retention
and training costs to decline as a percentage of revenue in 2001.

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 $7.2 million or 128% to $12.8 million for the year ended December
31, 2000 from $5.6 million for the same period in 1999. The increase occurred
in all areas cited above due to the ongoing growth of our business. For the
year ended December 31, 2000, management and administrative expenses increased
as a percent of revenue to 20.1% from 18.7% 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.

Interest income, net and other. Interest income, net and other consist
primarily of interest income, interest expense and other non-operating
expenses. During the year ended December 31, 2000, interest income, net and
other was $3.4 million, an increase of $3.2 million over interest income, net
and other of $0.1 million for the year ended December 31, 1999. The increase
resulted from higher average cash balances in 2000 as compared to 1999
primarily due to our initial public offering, and also due to our positive
cash generation throughout the year.

                                      19
<PAGE>

During 2000, interest income represented about one-third of Inforte's pre-tax
income. As a result, fluctuations in interest rates can have a significant
impact on our interest income, our tax rate and our earnings per share. We
estimate that the impact on interest income from a 1 percentage point change
in interest rates could change our annual earnings per share by approximately
$0.04 per diluted share. Our estimate is calculated using December 31, 2000
investment balances and diluted shares outstanding.

Income tax expense. Income tax expense for the year ended December 31, 2000
was 39.0% of pre-tax income in 2000 versus pro forma income tax expense of
40.2% of pre-tax income in 1999. Income tax expense for the year ended
December 31, 2000 was $4.4 million, an increase of $2.9 million or 185%, as
compared to pro forma income tax expense of $1.5 million in 1999. The increase
in income tax expense was primarily due to higher taxable income in 2000. Pre-
tax income for the year ended December 31, 2000 was $11.3 million, as compared
to $3.8 million in 1999. The decline in tax rate from a pro forma tax rate of
40.2% in 1999 to a tax rate of 39.0% in 2000 was primarily due to a lower
average tax rate on interest income resulting from some investments in tax-
advantaged securities.

Years ended December 31, 1998 and 1999

Revenues. Revenues increased $16.6 million or 124% to $30.1 million for the
year ended December 31, 1999 from $13.4 million in 1998. This increase
reflected the increasing size of our client engagements. For the year ended
December 31, 1999, on an annualized basis, we had 29 clients accounting for
90% of our revenue, with each of these clients contributing $933,000 to
revenue on average. This average revenue per client grew from $412,000 in
1998. The number of clients generating 90% of our revenue was also 29 in 1998.
We did not have a client accounting for more than 10% of our revenue in either
1999 or 1998.

Project personnel and related expenses. Project personnel and related expenses
increased $6.0 million or 88% to $12.8 million for the year ended December 31,
1999 from $6.8 million in 1998. The increase was due to the hiring of
additional consulting professionals. We employed 196 consultants on December
31, 1999, up from 93 one year earlier. Project personnel and related expenses
represented 42.7% of revenues for the year ended December 31, 1999, compared
to 50.8% in 1998. The decrease as a percentage of revenues was due to rising
revenue per consultant which increased to $210,000 for the year ended December
31, 1999 from $178,000 in 1998.

Sales and marketing. Sales and marketing expenses increased $3.5 million 237%
to $4.9 million for the year ended December 31, 1999 from $1.5 million in
1998. Of the dollar spending increase, approximately 70% was due to increased
sales spending related to the growth in our salesforce, with the remainder due
to increased marketing spending, including activities to reinforce the Inforte
brand. Consequently, sales and marketing expenses as a percentage of revenues
increased to 16.4% for the year ended December 31, 1999 from 10.9% in 1998.

Recruiting, retention and training. Recruiting, retention and training
expenses increased by $1.8 million or 156% to $3.0 million for the year ended
December 31, 1999 from $1.2 million in 1998. Of the dollar spending increase,
approximately 50% was due to increased recruiting spending related to the
ongoing increase in our number of employees, with the remainder due to
increased spending on human resources programs and training activities.
Recruiting, retention and training expenses as a percentage of revenues
increased to 9.9% for the year ended December 31, 1999 from 8.7% in 1998. This
increase occurred due to an increased rate of recruiting spending in 1999,
relative to the prior year. The number of employees grew from 122 as of
December 31, 1998 to 257 as of December 31, 1999, an increase of 135.

Management and administrative. Management and administrative expenses
increased $2.9 million or 109% to $5.6 million for the year ended December 31,
1999 from $2.7 million in 1998. This increase occurred in all areas cited
above due to the ongoing growth of our business. Management and administrative
expenses as a percentage of revenues declined to 18.7% for the year ended
December 31, 1999 from 20.0% in 1998, as we leveraged fixed costs over a
greater revenue base.

                                      20
<PAGE>

Interest income, net and other. During the year ended December 31, 1999,
interest income, net and other was $147,000, an increase of $124,000, over
interest income, net and other of $23,000 for the year ended December 31,
1998. The increase resulted from higher average cash balances in 1999 as
compared to 1998 primarily due to our positive cash flows from operations.

Income tax expense. Pro forma income tax expense for the year ended December
31, 1999 was 40.2% of pre-tax income versus pro-forma income tax expense of
40.9% of pre-tax income in 1998.

Liquidity and Capital Resources

Cash and cash equivalents increased from $3.8 million as of December 31, 1999
to $42.4 million at December 31, 2000. Short-term marketable securities
increased from zero as of December 31, 1999 to $26.2 million as of December
31, 2000. Long-term marketable securities increased from zero as of December
31, 1999 to $14.4 million as of December 31, 2000. Short-term and long-term
marketable securities are entirely conservative available-for-sale securities
consisting of commercial paper, municipal notes and bonds, corporate bonds and
corporate auction preferreds. In total, cash and cash equivalents, short-term
and long-term marketable securities increased from $3.8 million to $83.0
million during the year ended December 31, 2000, a rise of $79.2 million. This
increase is from the net proceeds of $66.9 million from the issuance of
2,300,000 shares of common stock in our initial public offering on February
17, 2000, cash provided by operating activities of $10.5 million, and cash
received from employees participating in the stock purchase and stock option
plans of $4.4 million during the year ended December 31, 2000, offset by
capital expenditures of $2.7 million.

Capital expenditures for years ended December 31, 2000, 1999 and 1998 were
$2.7 million and $1.4 million and $0.7 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 December 31, 2000 our accounts receivable (less deferred revenue)
equaled 3 days of sales outstanding. However, since December 31, 1997,
quarter-ending 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.

Net cash provided by operating activities for the year ended December 31, 2000
totaled $10.5 million. Net cash provided by operating activities in the year
ended December 31, 2000 was primarily attributed to net income of $6.9
million, and to a lesser extent the increases in accrued expenses and other of
$3.6 million and deferred revenue of $3.7 million. These cash flows provided
by operating activities were partially offset by the increases in accounts
receivable of $2.9 million and prepaid expense and other current assets of
$1.2 million. Net cash provided by operating activities for the year ended
December 31, 1999 totaled $4.3 million. Net cash provided by operating
activities in the year ended December 31, 1999 was primarily attributed to net
income of $2.5 million, and increases in accrued expenses and other of $2.6
million and deferred revenue of $3.0 million. These cash flows provided by
operating activities were partially offset by the increase in account
receivable of $4.3 million.

Net cash used in investing activities for the year ended December 31, 2000
totaled $43.2 million, used primarily to purchase of short-term and long-term
investments of $40.5 million and to a lesser extent to purchase computers,
purchased software, and property of $2.7 million. Net cash used in investing
activities for 1999 was $1.2 million, used primarily to purchase computers,
purchased software and property of $1.4 million.

                                      21
<PAGE>

Net cash provided by financing activities for the year ended December 31, 2000
totaled $71.3 million, consisting of the proceeds from our initial public
offering of $66.9 million and proceeds from stock issued under stock option
and purchase plans of $4.4 million. Net cash used in financing activities for
the year ended December 31, 1999 totaled $2.0 million, consisting primarily of
distributions to sub-chapter S corporation stockholders of $2.1 million to
enable them to pay income taxes.

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. Net working capital as of December
31, 2000 and 1999 was $65.3 million and $0.8 million, respectively.

Recent Developments

In January 2001 the Inforte board of directors approved a stock repurchase
program that allows Inforte to buy up to $25 million of Inforte shares. The
program has no expiration date and will be used to make periodic purchases at
Inforte's discretion to offset the dilutive impact from Inforte's stock option
and employee stock purchase programs.

Recent Accounting Pronouncements

In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 137,
which modified the effective date of SFAS 133 to all fiscal quarters of all
fiscal years beginning after June 15, 2000. SFAS 133, as amended, requires
that all derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the
type of hedge transaction. The adoption of SFAS 133 had no effect on the
accompanying financial statements when adopted by Inforte on January 1, 2001.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). This bulletin provides guidance from the staff on applying
generally accepted accounting principles to revenue recognition in financial
statements. In June 2000, the SEC issued SAB 101B that further delayed the
implementation date. Inforte adopted SAB 101 in 2000. The implementation of
SAB 101 did not have a material effect on the financial position or results of
operations of Inforte.

In March 2000, the FASB issued Financial Accounting Standards Board
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
clarified 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 was effective July 1, 2000, but certain conclusions in FIN
44 cover specific events that occurred after either December 15, 1998 or
January 12, 2000. Inforte has adopted FIN 44 and the application of FIN 44 did
not have a material impact on its results of operations or financial position.

In July, 2000, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 00-15, "Classification in the Statement of Cash Flows of the Income
Tax Benefit Received by a Company upon exercise of a Nonqualified Employee
Stock Option". Issue No. 00-15 addresses how a company should classify and
disclose the reduction of income tax paid as a result of the deduction
triggered by employee exercise of stock options (the income tax benefit
realized) if the income tax benefit realized is credited to equity and does
not reduce the income tax expense. We adopted issue No. 00-15 beginning
January 1, 2000 and have classified the reduction of income tax paid from non-
qualified disposition of employee stock options as part of operating cash
flows in our Statement of Cash Flows for the period ending December 31, 2000.

                                      22
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

Near the end of 2000, we expanded our operations into Europe. We do not expect
to generate revenue from our European operations until 2001. Going forward, we
expect the percent of revenue generated outside of the United States to grow
gradually. As a result, our financial results could be affected by factors
such as changes in foreign currency exchange rates or weak economic conditions
in foreign markets.

Interest Rate Risk

As of December 31, 2000 Inforte's total short-term and long-term marketable
securities equaled $83.0 million. During 2000, interest income represented
about one-third of Inforte's pre-tax income. As a result, fluctuations in
interest rates can have a significant impact on our interest income and our
earnings per share. We estimate that the impact on interest income from a 1
percentage point change in interest rates could change our annual earnings per
share by approximately $0.04 per diluted share. Our estimate is calculated
using December 31, 2000 investment balances and diluted weighted average
shares outstanding.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements, and the related notes thereto, of Inforte
and the Report of Independent Auditors are filed as a part of this Form 10-K.

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Report of Independent Auditors.............................................  24
Balance Sheets.............................................................  25
Statements of Operations ..................................................  26
Statements of Stockholders' Equity.........................................  27
Statements of Cash Flows...................................................  28
Notes to the Financial Statements..........................................  29
</TABLE>

                                      23
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors
Inforte Corp.

We have audited the accompanying balance sheets of Inforte Corp. as of December
31, 2000 and 1999, and the related statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2000. Our audits also included the financial statement schedule listed in
the Index at Item 14. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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 Inforte Corp. at December 31,
2000 and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.

                                          /s/ Ernst & Young LLP

Chicago, Illinois
January 25, 2001

                                       24
<PAGE>

                                 INFORTE CORP.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                             December 31,
                                                        -----------------------
                                                           1999        2000
                                                        ----------- -----------
<S>                                                     <C>         <C>
Assets
Current assets:
  Cash and cash equivalents............................ $ 3,792,027 $42,391,880
  Short-term marketable securities.....................         --   26,220,945
  Accounts receivable, less allowance for doubtful
   accounts of $600,000 in 1999 and $1,150,000 in 2000.   6,324,250   9,235,795
  Prepaid expenses and other current assets............     681,563   1,905,936
  Income taxes recoverable.............................         --    1,545,769
  Deferred income taxes................................     652,293     876,581
                                                        ----------- -----------
    Total current assets...............................  11,450,133  82,176,906
Computers, purchased software and property, net........   1,487,503   2,977,167
Long-term marketable securities........................         --   14,383,998
Deferred income taxes..................................      19,766     364,905
                                                        ----------- -----------
    Total assets....................................... $12,957,402 $99,902,976
                                                        =========== ===========
Liabilities and stockholders' equity
Current liabilities:
  Accounts payable..................................... $ 1,352,472 $   582,591
  Income taxes payable.................................     311,512         --
  Accrued expenses.....................................   4,122,175   7,702,466
  Deferred revenue.....................................   4,870,579   8,574,055
                                                        ----------- -----------
    Total current liabilities..........................  10,656,738  16,859,112
Stockholders' equity:
  Preferred stock, $0.001 par value; 5,000,000 shares
   authorized, none issued and outstanding at December
   31, 2000............................................         --          --
  Common stock, $0.001 par value in 2000; authorized--
   50,000,000 shares; issued and outstanding--9,721,154
   at December 31, 1999, and 12,702,926 at December 31,
   2000................................................       9,721      12,703
  Additional paid-in capital...........................     411,886  74,192,205
  Retained earnings....................................   1,879,057   8,753,017
  Accumulated other comprehensive income...............         --       85,939
                                                        ----------- -----------
    Total stockholders' equity.........................   2,300,664  83,043,864
                                                        ----------- -----------
    Total liabilities and stockholders' equity......... $12,957,402 $99,902,976
                                                        =========== ===========
</TABLE>

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

                                       25
<PAGE>

                                 INFORTE CORP.

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                 Year ended December 31,
                                           -----------------------------------
                                              1998        1999        2000
                                           ----------- ----------- -----------
<S>                                        <C>         <C>         <C>
Revenues.................................. $13,447,034 $30,088,477 $63,838,960
Operating expenses:
  Project personnel and related expenses..   6,830,187  12,845,711  28,182,001
  Sales and marketing.....................   1,467,334   4,949,494   8,583,729
  Recruiting, retention and training......   1,164,771   2,986,896   6,360,341
  Management and administrative...........   2,691,545   5,617,572  12,830,506
                                           ----------- ----------- -----------
    Total operating expenses..............  12,153,837  26,399,673  55,956,577
                                           ----------- ----------- -----------
Operating income..........................   1,293,197   3,688,804   7,882,383
Interest income, net and other............      22,604     147,187   3,386,406
                                           ----------- ----------- -----------
Income before income taxes................   1,315,801   3,835,991  11,268,789
Income tax expense........................         --    1,286,661   4,394,829
                                           ----------- ----------- -----------
Net income................................ $ 1,315,801 $ 2,549,330 $ 6,873,960
                                           =========== =========== ===========
Earnings per share:
  Basic...................................                         $      0.57
                                                                   ===========
  Diluted.................................                         $      0.51
                                                                   ===========
Pro forma net income data (unaudited):
  Pro forma income tax expense............ $   538,730 $ 1,542,479
                                           ----------- -----------
  Pro forma net income.................... $   777,071 $ 2,293,512
                                           =========== ===========
  Pro forma earnings per share:
    Basic................................. $      0.14 $      0.27
                                           =========== ===========
    Diluted............................... $      0.08 $      0.21
                                           =========== ===========
Weighted Average common shares
 outstanding:
  Basic...................................   5,517,329   8,635,537  12,050,560
                                           =========== =========== ===========
  Diluted.................................  10,142,768  10,786,978  13,501,447
                                           =========== =========== ===========
</TABLE>


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

                                       26
<PAGE>

                                 INFORTE CORP.

                       STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                              Common Stock                                             Accumulated
                          --------------------   Additional                               Other         Total
                          Number Of                Paid-In      Notes     Retained    Comprehensive Stockholders'
                            Shares    Amount       Capital    Receivable  Earnings       Income        Equity
                          ---------- ---------  ------------- ---------- -----------  ------------- -------------
<S>                       <C>        <C>        <C>           <C>        <C>          <C>           <C>
Balance January 1, 1998.   5,500,000 $ 118,500  $         --   $    --   $   131,363     $   --      $   249,863
 Exercise of stock
  options...............   2,860,000   116,000            --        --           --          --          116,000
 Issuance of common
  stock.................      15,000    13,050            --        --           --          --           13,050
 Note receivable from
  stockholder...........         --        --             --    (33,306)         --          --          (33,306)
 Net income and
  comprehensive income..         --        --             --        --     1,315,801         --        1,315,801
                          ---------- ---------  -------------  --------  -----------     -------     -----------
Balance at December 31,
 1998...................   8,375,000   247,550            --    (33,306)   1,447,164         --        1,661,408
 Exercise of stock
  options...............   1,346,154   174,057            --        --           --          --          174,057
 Subchapter S
  distributions.........         --        --             --        --    (2,117,437)        --       (2,117,437)
 Proceeds from note
  receivable............         --        --             --     33,306          --          --           33,306
 Reclassification of
  amount due to change
  from no par value
  stock to $0.001 par
  value share...........         --   (411,886)       411,886       --           --          --              --
 Net income and
  comprehensive income..         --        --             --        --     2,549,330         --        2,549,330
                          ---------- ---------  -------------  --------  -----------     -------     -----------
Balance at December 31,
 1999...................   9,721,154     9,721        411,886       --     1,879,057         --        2,300,664
 Stock option and
  purchase plans........     681,772       682      4,448,654       --           --          --        4,449,336
 Proceeds from public
  offering..............   2,300,000     2,300     66,857,951       --           --          --       66,860,251
 Compensation recognized
  related to stock
  options...............         --        --          50,000       --           --          --           50,000
 Tax benefit of
  disqualifying
  dispositions of stock
  options...............         --        --       2,423,714       --           --          --        2,423,714
 Currency translation
  adjustments...........         --        --             --        --           --        9,088           9,088
 Unrealized gain on
  available-for-sale
  securities............         --        --             --        --           --       76,851          76,851
 Net income.............         --        --             --        --     6,873,960         --        6,873,960
                                                                                                     -----------
 Comprehensive income...         --        --             --        --           --          --        6,959,899
                          ---------- ---------  -------------  --------  -----------     -------     -----------
Balance at December 31,
 2000...................  12,702,926 $  12,703  $  74,192,205  $    --   $ 8,753,017     $85,939     $83,043,864
                          ========== =========  =============  ========  ===========     =======     ===========
</TABLE>

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

                                       27
<PAGE>

                                 INFORTE CORP.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                              Year ended December 31,
                                        --------------------------------------
                                           1998         1999          2000
                                        -----------  -----------  ------------
<S>                                     <C>          <C>          <C>
Cash flows from operating activities
Net income............................  $ 1,315,801  $ 2,549,330  $  6,873,960
Adjustments to reconcile net income to
 net cash provided by operating
 activities:
Depreciation and amortization.........      204,199      555,368     1,225,187
Non-cash compensation.................          --           --         50,000
Deferred income taxes.................          --      (672,059)     (569,427)
  Changes in operating assets and
   liabilities:
    Accounts receivable...............   (1,067,234)  (4,299,992)   (2,911,545)
    Prepaid expenses and other current
     assets...........................      (71,546)    (583,923)   (1,224,373)
    Accounts payable..................      312,973      875,488      (769,881)
    Income taxes .....................          --       311,512       566,433
    Accrued expenses and other........    1,211,581    2,622,451     3,580,291
    Deferred revenue..................    1,792,228    2,951,151     3,703,476
                                        -----------  -----------  ------------
Net cash provided by operating
 activities...........................    3,698,002    4,309,326    10,524,121
                                        -----------  -----------  ------------
Cash flows from investing activities
Note receivable--Stockholder..........          --       139,496           --
Purchases of marketable securities....          --           --    (40,549,732)
Purchases of property and equipment...     (740,967)  (1,387,690)   (2,693,211)
                                        -----------  -----------  ------------
Net cash used in investing activities.     (740,967)  (1,248,194)  (43,242,943)
                                        -----------  -----------  ------------
Cash flows from financing activities
Net repayments of line of credit......     (300,000)         --            --
Principal payments on note payable--
 Former stockholder...................      (37,994)     (23,835)          --
Proceeds from issuance of common
 stock................................       13,050          --     66,860,251
Stock option and purchase plans ......          --       174,057     4,449,336
Sub-chapter S distributions...........          --    (2,117,437)          --
                                        -----------  -----------  ------------
Net cash provided (used in) by
 financing activities.................     (324,944)  (1,967,215)   71,309,587
                                        -----------  -----------  ------------
Effect of change in exchange rates on
 cash.................................          --           --          9,088
                                        -----------  -----------  ------------
Net increase in cash and cash
 equivalents..........................    2,632,091    1,093,917    38,599,853
Cash and cash equivalents, beginning
 of year..............................       66,019    2,698,110     3,792,027
                                        -----------  -----------  ------------
Cash and cash equivalents, end of
 year.................................  $ 2,698,110  $ 3,792,027  $ 42,391,880
                                        ===========  ===========  ============
Noncash activities:
    Note receivable--Stockholder......  $  (116,000) $       --   $        --
</TABLE>


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

                                       28
<PAGE>

                                 INFORTE CORP.

                       NOTES TO THE FINANCIAL STATEMENTS

1. Nature of Business

Inforte Corp. (Inforte) is a strategic technology consultancy that helps
create long-term return on investment and sustainable advantages for clients
by capitalizing on the convergence of business strategy and technology across
the value chain. Inforte delivers strategic technology consulting,
comprehensive demand chain management solutions, plus solutions that optimize
supply chain integration.

2. Reincorporation

In 2000, Inforte's Board of Directors authorized, and stockholders approved,
the reincorporation of Inforte in the State of Delaware. Following the
reincorporation, Inforte is authorized to issue 50,000,000 shares of $0.001
par value Common Stock.

3. Significant Accounting Policies

Cash and Cash Equivalents

All highly liquid investments with maturities of three months or less when
purchased are considered cash equivalents. Cash and cash equivalent balances
consist of obligations of U.S. banks, high-grade commercial paper and other
high quality, short-term obligations of U.S. companies. At December 31, 2000,
Inforte classified its cash equivalent investments, totaling approximately
$39.7 million, as available-for-sale. These investments are stated at
amortized costs, which approximates fair value.

Financial Instruments

Short-term and long-term marketable securities are available-for-sale
securities which are recorded at fair market value. The difference between
amortized cost and fair market value, net of tax effect, is shown as a
separate component of stockholders' equity. The cost of securities available-
for-sale is adjusted for amortization of premiums and discounts to maturity.
Interest and amortization of premiums and discounts for all securities are
included in interest income. Realized gains and losses from sales of
available-for-sale securities were not material for any period presented. At
December 31, 2000, unrealized gains and associated income taxes relating to
these available-for-sale securities were $125,987 and $49,136, respectively,
and were accounted for in other comprehensive income.

Computers, Purchased Software, and Property

Computers, purchased software, and property are stated at cost. Inforte
provides for depreciation and amortization using the straight-line method over
their estimated useful lives as follows:

<TABLE>
<CAPTION>
      Asset Classification                           Estimated Useful Life
      --------------------                           ---------------------
      <S>                                       <C>
      Office furniture.........................            3-5 years
      Computers and equipment..................            2-3 years
      Purchased software.......................            2-3 years
      Leasehold improvements................... Estimated useful life or life of
                                                  lease (whichever is shorter)
</TABLE>

Significant improvements are capitalized and depreciated. Upon retirement or
sale, the cost of the assets disposed of and the related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
included in the results of operations.


                                      29
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)

Revenue Recognition

Revenues pursuant to fixed-fee contracts are generally recognized as services
are rendered on the percentage-of-completion method of accounting based on the
ratio of costs incurred to total estimated costs. The cumulative impact of any
revision in estimates of the percent complete is reflected in the period in
which the changes become known. Revenues pursuant to time-and-material
contracts are generally recognized as services are performed. Amounts billed
prior to rendering services are classified as deferred revenue. Revenues
exclude reimbursable expenses chargeable to the client.

Stock-Based Compensation

As permitted by Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," (SFAS 123), Inforte uses the
intrinsic value menthod to account for stock options as set forth in
Accounting Principals Board No. 25, "Accounting for Stock Issued to
Employees", (APB 25). Accordingly, no compensation cost has been recognized
under SFAS No. 123 for Inforte's stock option plans, except as indicated in
Note 9. The compensation expense appearing in the financial statements relates
to stock options that were granted to a member of the Board of Directors.

Income taxes

Deferred income taxes are provided in accordance with the provisions of SFAS
No. 109, "Accounting for Income Taxes" on all differences between the tax
bases of assets and liabilities and their reported amounts in the financial
statements based upon enacted statutory tax rates in effect at the balance
sheet date.

Earnings Per Share

Under SFAS No. 128, "Earnings per Share," Inforte presents both basic net
income per share and diluted net income per share. Basic net income per share
is based on the weighted average number of shares outstanding during the
period. Diluted net income per share reflects the per share effect of dilutive
stock options.

Comprehensive Income

During 1998, Inforte adopted SFAS No. 130, "Reporting Comprehensive Income."
SFAS 130 establishes standards for reporting comprehensive income and its
components in the body of the financial statements. Comprehensive income
includes net income as currently reported under generally accepted accounting
principles and also considers the effect of additional economic events that
are not required to be recorded in determining net income but are rather
reported as a separate component of stockholders' equity. Inforte reports
foreign currency translation gains and losses and unrealized gains and losses
on marketable securities as a component of comprehensive income.

Foreign Currency Translation

The functional currency of Inforte's foreign operations is the local currency.
Accordingly, all assets and liabilities are translated into United States
dollars using period-end exchange rates and all revenues and expenses are
translated using weighted average rates during the period. Translation gains
and losses are accumulated as a component of stockholders' equity. Net gains
and losses resulting from foreign exchange transactions are included in the
statements of operations and were not significant during the periods
presented.


                                      30
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)

Concentration of Credit Risk

Inforte's financial instruments consist of cash and cash equivalents, short-
term and long-term marketable securities, accounts receivable and accounts
payable. At December 31, 1999 and 2000, the fair value of these instruments
approximated their financial statement carrying amounts.

Inforte performs periodic credit evaluations of its customers' financial
condition and generally does not require collateral. Inforte maintains an
allowance for potential credit losses, and such losses have been within
management's expectations.

For the year ended December 31, 1998 no customer accounted for more than 10%
of revenue and no customer accounted for more than 10% of accounts receivable
at December 31, 1998. For the year ended December 31, 1999, two customers
accounted for 5% and 4%, respectively, of revenue and 19% and 11%,
respectively, of accounts receivable at December 31, 1999. For the year ended
December 31, 2000, one customer accounted for 1% of revenue and 11% of
accounts receivable at December 31, 2000.

Use of Accounting Estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications were made to the 1998 financial statements to
conform with the 1999 and 2000 presentation.

4. Financial Instruments

The portfolio of short-term and long-term marketable securities (including
cash and cash equivalents) consisted of the following:

<TABLE>
<CAPTION>
                                              Year ended December 31, 2000
                                        ----------------------------------------
                                         Amortized  Gross Unrealized Fair Market
                                           Cost          Gains          Value
                                        ----------- ---------------- -----------
      <S>                               <C>         <C>              <C>
      Cash............................. $ 2,741,023     $    --      $ 2,741,023
      Commercial paper.................  11,862,824          --       11,862,824
      Municipal notes/bonds............  29,689,043      103,870      29,792,913
      Corporate bonds..................   3,389,913       22,117       3,412,030
      Corporate auction preferreds.....  35,100,084          --       35,100,084
      Certificate of deposit...........      87,949          --           87,949
                                        -----------     --------     -----------
                                        $82,870,836     $125,987     $82,996,823
                                        ===========     ========     ===========
</TABLE>

Inforte considers all marketable securities with maturities of one year or
less as of December 31, 2000 to be short term. Long-term marketable securities
consist of marketable securities with remaining maturities of greater than
twelve months.

                                      31
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)


Contractual maturities of investments in debt securities (excluding commercial
paper) at December 31, 2000:

<TABLE>
<CAPTION>
                                                                    Fair Market
                                                     Amortized Cost    Value
                                                     -------------- -----------
      <S>                                            <C>            <C>
      Less than one year............................  $18,799,189   $18,818,760
      Due in 1-2 years..............................   14,279,767    14,386,183
                                                      -----------   -----------
      Investment in debt securities.................  $33,078,956   $33,204,943
                                                      ===========   ===========
</TABLE>

5. Computers, Purchased Software, and Property

Computers, purchased software and property at December 31 consist of the
following:

<TABLE>
<CAPTION>
                                                              1999       2000
                                                           ---------- ----------
      <S>                                                  <C>        <C>
      Office furniture.................................... $   60,652 $  313,677
      Computers and equipment.............................  1,384,679  2,582,633
      Leasehold improvements..............................    417,633    788,382
      Purchased software..................................    302,058    850,978
                                                           ---------- ----------
                                                            2,165,022  4,535,670
      Less: Accumulated depreciation and amortization.....    677,519  1,558,503
                                                           ---------- ----------
                                                           $1,487,503 $2,977,167
                                                           ========== ==========
</TABLE>

6. Note Payable to Former Stockholder

The note payable to the former stockholder had an interest rate of 9.25% and
was repaid in 1999. Interest paid on the note was $9,476 in 1998 and $741 in
1999.

7. Income Taxes and Distribution to Shareholders

Prior to 1999, the stockholders of Inforte elected, under Subchapter S of the
Internal Revenue Code, to include Inforte's income or loss in their personal
federal and state income tax returns. Accordingly, Inforte was generally not
subject to federal or state income taxes in these years. Inforte continued to
be subject to state income taxes either by statute or election in certain
states. There were no federal taxes paid in 1998 and $1,306,000 and $3,470,215
was paid in 1999 and 2000, respectively. State income taxes paid were $1,800
in 1998 and $258,923 and $974,066 in 1999 and 2000, respectively. The
stockholders of Inforte terminated their S corporation election as of January
1, 1999. During 1999 Inforte distributed $2,117,437 to former S Corporation
stockholders.

                                      32
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)


Income tax expense for the years ended December 31, 1999 and 2000 consists of
the following:

<TABLE>
<CAPTION>
                                                            1999        2000
                                                         ----------  ----------
      <S>                                                <C>         <C>
      Current:
        Federal......................................... $1,578,053  $4,348,692
        State...........................................    380,667     615,564
                                                         ----------  ----------
                                                          1,958,720   4,964,256
      Deferred:
        Federal.........................................   (541,448)   (498,819)
        State...........................................   (130,611)    (70,608)
                                                         ----------  ----------
                                                           (672,059)   (569,427)
                                                         ----------  ----------
                                                         $1,286,661  $4,394,829
                                                         ==========  ==========
</TABLE>

The reconciliation of income taxes computed using the federal statutory rate
of 34% and 35% for the years ended December 31, 1999 and 2000, respectively,
is as follows:

<TABLE>
<CAPTION>
                                                                    1999  2000
                                                                    ----  ----
      <S>                                                           <C>   <C>
      Federal income tax at the statutory rate..................... 34.0% 35.0%
      State income tax, net of federal tax benefit.................  4.6   5.0
      Nondeductible expenses.......................................  1.6   1.6
      Tax exempt and tax advantaged interest income................       (6.3)
      Recording of net deferred tax asset due to termination of S
       corporation status.......................................... (6.7)
      Other........................................................  --    3.7
                                                                    ----  ----
                                                                    33.5% 39.0%
                                                                    ----  ----
</TABLE>

The tax effects of temporary differences that give rise to deferred tax assets
and liabilities at December 31, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                              December 31,
                                                           --------------------
                                                             1999       2000
                                                           --------  ----------
      <S>                                                  <C>       <C>
      Deferred income tax assets:
        Allowance for doubtful accounts................... $234,000  $  459,425
        Book over tax depreciation........................    3,046     170,347
        Accrued bonuses and vacation pay..................  297,313     189,152
        Other.............................................  142,816     227,179
        Deferred rent.....................................   83,407     240,574
                                                           --------  ----------
      Gross deferred tax assets...........................  760,582   1,286,677
      Deferred income tax liability:
        Use of cash basis for income tax purposes.........  (88,523)    (45,191)
                                                           --------  ----------
        Deferred income tax liability.....................  (88,523)    (45,191)
                                                           --------  ----------
      Net deferred income tax asset....................... $672,059  $1,241,486
                                                           ========  ==========
</TABLE>

                                      33
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)


8. Earnings per Share

The following table sets forth the computation of basic and diluted earnings
per share.

<TABLE>
<CAPTION>
                                                  Year ended December 31,
                                              --------------------------------
                                                 1998       1999       2000
                                              ---------- ---------- ----------
<S>                                           <C>        <C>        <C>
Numerator
Numerator for basic and diluted earnings per
 common share:
    Net income............................... $1,315,801 $2,549,330 $6,873,960
                                              ========== ========== ==========
    Pro forma net income (unaudited)......... $  777,071 $2,293,512
                                              ========== ==========
Denominator
Denominator for basic earnings per common
 share:
  Weighted-average shares....................  5,517,329  8,635,537 12,050,560
                                              ---------- ---------- ----------
Effect of dilutive securities:
Employee stock options.......................  4,625,439  2,151,441  1,450,887
                                              ---------- ---------- ----------
Denominator for diluted earnings per common
 share:
    Adjusted weighted-average shares......... 10,142,768 10,786,978 13,501,447
                                              ========== ========== ==========
</TABLE>

9. Related Party Transactions

Transactions with related parties are entered into only upon approval by a
majority of the independent directors of Inforte and only with terms
comparable to those that would be available from unaffiliated parties.

A note receivable with recourse was executed between Inforte and one of its
stockholders in December 1998 related to the exercise of stock options. There
were no interest payments required while the note was outstanding, and the
term was indefinite as it could be repaid at any time. The note bore interest
at 7.75% which was accrued annually. This note and accrued interest were
repaid in full on September 30, 1999.

At December 31, 1998, Inforte had a note receivable from a stockholder for
$33,306 classified as a reduction of stockholders' equity, which was
subsequently repaid through a distribution to the stockholder in April 1999.
In October 2000 Inforte issued 62,500 options to a non-employee member of the
Board of Directors, in exchange for advisory services. The options were issued
at the fair market value of the Inforte stock on the grant date and vest over
the service period which is estimated to be three years. The options expire at
the end of ten years. These options were accounted for under FAS 123, and the
total expense to be recorded over the service period equals $400,000, the fair
value of the services provided.

10. Stockholders' Equity

Stock Option and Incentive Plans

The 1995 Incentive Stock Option Plan (the "1995 Plan") provides for the
issuance of incentive stock options and nonqualified stock options to officers
and other key employees of Inforte. Inforte has reserved an aggregate of
4,900,000 shares for issuance under the 1995 Plan, of which 365,000 were
available for grant as of December 31, 2000. As of December 31, 2000, Inforte
does not intend to issue any additional options under the 1995 Plan. The stock
options may be exercised only to the extent that they have vested in
accordance with provisions determined by the Board of Directors with terms not
to exceed 10 years.

On December 31, 1997, the stockholders approved the 1997 Incentive
Compensation Plan (the "1997 Plan"), which permits the grant of stock options
and other stock awards to employees and directors of Inforte. On

                                      34
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)

December 1, 1999, the stockholders approved the Amended and Restated Inforte
Corp. 1997 Incentive Compensation Plan. Inforte has reserved an aggregate of
4,000,000 shares of common stock for issuance through this 1997 Plan, plus
annual increases beginning in 2001 equal to the lessor of: (1) 1,000,000
shares, (2) 5% of the outstanding shares, or (3) a number determined by the
Board of Directors. Of the shares of common stock available under this 1997
Plan, 1,236,042 were available for grant as of December 31, 2000. The 1997
Plan authorizes the grant of both incentive and nonqualified stock options,
and further authorizes the grant of stock appreciation rights independently of
or with respect to options granted or outstanding. Stock options generally
have 10-year terms and vest in accordance with provisions determined by the
Board of Directors. A restricted stock program, performance program and bonus
shares program have also been established under the 1997 Plan. Awards under
the restricted stock program and performance program are earned over a period
of time upon the achievement of certain performance objectives. Restricted
share grants may not be sold or otherwise disposed of until the restrictions
lapse. Performance shares are payable in cash, common stock, or a combination
thereof when earned. Bonus shares allow participants to elect to receive
shares of common stock in lieu of a portion or all of cash bonuses paid by
Inforte. Stock appreciation rights and restricted stock have not been granted
to date.

A summary of stock option information follows:

<TABLE>
<CAPTION>
                                          1995 Plan             1997 Plan
                                     --------------------- --------------------
                                                 Weighted-            Weighted-
                                                  Average              Average
                                       Number    Exercise   Number    Exercise
                                     of Shares     Price   of Shares    Price
                                     ----------  --------- ---------  ---------
<S>                                  <C>         <C>       <C>        <C>
Outstanding on January 1, 1998.....   4,875,000   $ 0.05     125,975   $  0.24
Granted............................         --       --      573,875      0.47
Exercised..........................  (2,860,000)    0.04         --        --
Canceled...........................    (215,000)    0.03     (25,950)     0.37
                                     ----------   ------   ---------   -------
Outstanding on December 31, 1998...   1,800,000     0.06     673,900      0.43
Granted............................         --       --      960,375      5.35
Exercised..........................  (1,237,500)    0.03    (108,654)     1.21
Canceled...........................    (125,000)    0.02     (34,075)     1.53
                                     ----------   ------   ---------   -------
Outstanding on December 31, 1999...     437,500     0.16   1,491,546      3.52
Granted............................         --       --    1,295,980     30.32
Exercised..........................    (200,000)    0.14    (301,367)     1.78
Canceled...........................         --       --     (132,222)    18.12
                                     ----------   ------   ---------   -------
Outstanding on December 31, 2000...     237,500   $ 0.17   2,353,937   $ 17.68
                                     ==========   ======   =========   =======
Exercisable at December 31, 2000...      31,250   $ 0.20     230,198   $ 11.37
Available for grant at December 31,
 2000..............................     365,000            1,236,042
Weighted average fair value of
 options granted during twelve
 months ended December 31, 2000....                                    $ 19.54
</TABLE>

                                      35
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)


                                   1995 Plan

<TABLE>
<CAPTION>
                                   Options Outstanding      Options Exercisable
                               ---------------------------- --------------------
                                         Weighted
                                          Average
                                         Remaining Weighted             Weighted
                                           Life    Average  Exercisable Average
                               Number of    (in    Exercise Options at  Exercise
Range of Exercise Prices        Options   years)    Price    12/31/00    Price
------------------------       --------- --------- -------- ----------- --------
<S>                            <C>       <C>       <C>      <C>         <C>
  $0.05-$0.24.................  237,500     6.7     $0.17     31,250     $0.20
                                =======     ===     =====     ======     =====
</TABLE>

                                   1997 Plan

<TABLE>
<CAPTION>
                                   Options Outstanding      Options Exercisable
                               ---------------------------- --------------------
                                         Weighted
                                          Average
                                         Remaining Weighted             Weighted
                                           Life    Average  Exercisable Average
                               Number of    (in    Exercise Options at  Exercise
Range of Exercise Prices        Options   years)    Price    12/31/00    Price
------------------------       --------- --------- -------- ----------- --------
<S>                            <C>       <C>       <C>      <C>         <C>
  $0.24-$1.43.................   468,685    7.7     $ 0.74     74,633    $ 0.69
  $3.50-$7.00.................   642,822    8.8     $ 6.37    108,069    $ 6.90
  $13.75-$32.00...............   747,059    9.6     $24.33     22,272    $29.32
  $32.01-$71.81...............   495,371    9.5     $38.35     25,224    $46.33
                               ---------    ---     ------    -------    ------
    Total..................... 2,353,937    9.0     $17.68    230,198    $11.37
                               =========    ===     ======    =======    ======
</TABLE>

As permitted by SFAS No. 123 stock option and incentive plans are accounted
for in accordance with APB Opinion No. 25 and related interpretations.
Generally, no compensation expense is recognized for stock options if exercise
prices equal the market value of the underlying shares of stock at the
measurement date. To date, Inforte has granted options with exercise prices
equal to market value on the measurement date (generally, the date of grant).

In October 2000 Inforte issued 62,500 options to a member of the Board of
Directors in exchange for advisory services as described in Note 9.

Had all stock options and incentive plans been accounted for at fair value in
accordance with SFAS No. 123, Inforte's net income on a pro forma basis would
have been:

<TABLE>
<CAPTION>
                                                    Year ended December 31,
                                                 ------------------------------
                                                   1998      1999       2000
                                                 -------- ---------- ----------
<S>                                              <C>      <C>        <C>
Net income:
  As reported (pro forma for 1998 and 1999)..... $777,071 $2,293,512 $6,873,960
  Pro forma as adjusted.........................  765,221  2,190,451  3,998,036
  Pro forma as adjusted earnings per share--
   diluted...................................... $   0.08 $     0.20 $     0.30
</TABLE>

The fair value of stock options used to compute pro forma net income and pro
forma net income per share is the estimated present value at grant date using
the minimum value option-pricing model in 1998 and 1999 and the Black Scholes
option pricing model in 2000. The option pricing models assumptions were:
dividend yield of 0%, risk-free interest rates ranging from 4.62% to 6.0%, 80%
volatility and a weighted-average expected option life of four years.

                                      36
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)


11. Lease Commitments

At December 31, 2000, Inforte was obligated for future minimum lease payments
under operating leases that have initial or remaining noncancelable terms in
excess of one year, as follows:

<TABLE>
      <S>                                                           <C>
      2001......................................................... $ 1,982,256
      2002.........................................................   2,283,679
      2003.........................................................   2,363,786
      2004.........................................................   2,493,006
      2005 and thereafter..........................................   3,158,596
                                                                    -----------
      Total minimum lease payments................................. $12,281,323
                                                                    ===========
</TABLE>

Rent expense for operating leases was $284,017, $631,265 and $1,706,267 for
the years ended December 31, 1998, 1999 and 2000, respectively.

12. Benefit Plan

Inforte sponsors a 401(k) savings plan covering all employees. Inforte has not
made any matching or discretionary contributions to the plan. Administrative
costs during 1998, 1999 and 2000 related to this plan are not considered
material.

13. Pro Forma Income Taxes (Unaudited)

The pro forma provision (benefit) for income taxes reflects the income tax
expense that would have been reported if Inforte had been a C corporation. The
components of pro forma income taxes are as follows:

<TABLE>
<CAPTION>
                                                                     Year Ended
                                                                    December 31,
                                                                        1998
                                                                    ------------
      <S>                                                           <C>
      Pro forma income taxes:
      Current:
        Federal....................................................   $438,766
        State......................................................    105,842
                                                                      --------
          Total current............................................    544,608
      Deferred:
        Federal....................................................     (4,736)
        State......................................................     (1,142)
                                                                      --------
          Total deferred...........................................     (5,878)
                                                                      --------
          Total pro forma income taxes.............................   $538,730
                                                                      ========
</TABLE>

The following table reconciles the expected corporate federal income tax
expense (computed by multiplying Inforte's income before income taxes by 34%)
to Inforte's pro forma income tax expense:

<TABLE>
<CAPTION>
                                                                     Year Ended
                                                                    December 31,
                                                                        1998
                                                                    ------------
      <S>                                                           <C>
      Expected pro forma income tax expense........................   $447,372
      State income taxes, net of federal tax effect................     69,103
      Other permanent items........................................     22,255
                                                                      --------
                                                                      $538,730
                                                                      ========
</TABLE>

                                      37
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)


Deferred income 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
basis. Deferred income 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 rates is
recognized in income in the period that includes the enactment date.

The tax effects of temporary differences that give rise to significant
portions of the unaudited pro forma deferred income tax assets and liability
as of December 31, 1998, are presented below:

<TABLE>
<CAPTION>
                                                                       As of
                                                                    December 31,
                                                                        1998
                                                                    ------------
      <S>                                                           <C>
      Pro forma deferred income tax assets:
        Allowance and deferrals....................................   $115,058
        Accrued bonuses and vacation pay...........................    140,739
        Other......................................................    133,239
        Depreciation...............................................         11
                                                                      --------
      Gross deferred income tax assets.............................    389,047
      Pro forma deferred income tax liability:
        Use of cash basis for income tax purposes..................   (133,229)
                                                                      --------
        Deferred income tax liability..............................   (133,229)
                                                                      --------
      Net deferred income tax asset................................   $255,818
                                                                      ========
</TABLE>

14. Quarterly Financial Results (unaudited)

The following tables set forth certain unaudited quarterly results of
operations of Inforte for 1999 and 2000. The quarterly operating results are
not necessarily indicative of future results of operations.

                                      38
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)


In 1999, Inforte was a C corporation; however, the conversion from a sub-
chapter S corporation to a C corporation resulted in a tax benefit for
accounting purposes due to the recording of deferred tax benefits, increasing
Inforte's earnings per share. The pro forma earnings per share for the year
ended December 31, 1999 reflects the earnings per share Inforte would have
reported without the one-time conversion to a C corporation.

<TABLE>
<CAPTION>
                                         Three Months Ended (unaudited)
                                   --------------------------------------------
                                    Mar. 31,    Jun. 30,   Sep. 30,   Dec. 31,
                                      1999        1999       1999       1999
                                   ----------  ---------- ---------- ----------
      <S>                          <C>         <C>        <C>        <C>
      Statement of Operations
       Data:
      Revenues...................  $4,857,239  $7,118,467 $8,559,159 $9,553,612
      Operating expenses:
        Project personnel and
         related expenses........   2,272,593   3,016,299  3,603,840  3,952,979
        Sales and marketing......     803,267   1,342,349  1,465,472  1,338,406
        Recruiting, retention and
         training................     433,462     599,215    936,638  1,017,581
        Management and
         administrative..........     826,931   1,269,344  1,479,291  2,042,006
                                   ----------  ---------- ---------- ----------
      Total operating expenses...   4,336,253   6,227,207  7,485,241  8,350,972
                                   ----------  ---------- ---------- ----------
      Operating income...........     520,986     891,260  1,073,918  1,202,640
      Interest income, net, and
       other.....................      28,210      23,624     43,650     51,703
                                   ----------  ---------- ---------- ----------
      Income before income
       taxes.....................     549,196     914,884  1,117,568  1,254,343
      Income tax expense
       (benefit).................     (36,499)    365,532    446,627    511,001
                                   ----------  ---------- ---------- ----------
      Net income.................  $  585,695  $  549,352 $  670,941 $  743,342
                                   ==========  ========== ========== ==========
      Pro forma information
       (unaudited):
      Income before pro forma
       income taxes..............     549,196     914,884  1,117,568  1,254,343
      Pro forma income tax
       expense...................     219,319     365,532    446,627    511,001
                                   ----------  ---------- ---------- ----------
      Pro forma net income.......  $  329,877  $  549,352 $  670,941 $  743,342
                                   ==========  ========== ========== ==========
      Pro forma earnings per
       share (unaudited):
        Diluted..................  $     0.03  $     0.05 $     0.06 $     0.07
                                   ==========  ========== ========== ==========
      Weighted-average common
       shares outstanding:
        Diluted..................  10,522,899  10,570,637 10,831,245 11,000,835
                                   ==========  ========== ========== ==========
</TABLE>

                                      39
<PAGE>

                                 INFORTE CORP.

                NOTES TO THE FINANCIAL STATEMENTS--(Continued)


<TABLE>
<CAPTION>
                                       Three Months Ended (unaudited)
                               -----------------------------------------------
                                Mar. 31,    Jun. 30,    Sep. 30,    Dec. 31,
                                  2000        2000        2000        2000
                               ----------- ----------- ----------- -----------
      <S>                      <C>         <C>         <C>         <C>
      Statement of Operations
       Data:
      Revenues................ $12,290,000 $16,393,162 $17,790,784 $17,365,014
      Operating expenses:
        Project personnel and
         related expenses.....   5,408,772   7,123,510   7,910,215   7,739,504
        Sales and marketing...   1,561,941   2,228,910   2,359,848   2,433,030
        Recruiting, retention
         and training.........   1,406,296   2,100,327   1,731,123   1,122,595
        Management and
         administrative.......   2,443,543   2,880,835   3,525,504   3,980,624
                               ----------- ----------- ----------- -----------
      Total operating
       expenses...............  10,820,552  14,333,582  15,526,690  15,275,753
                               ----------- ----------- ----------- -----------
      Operating income........   1,469,448   2,059,580   2,264,094   2,089,261
      Interest income, net,
       and other..............     340,501     900,979   1,053,800   1,091,126
                               ----------- ----------- ----------- -----------
      Income before income
       taxes..................   1,809,949   2,960,559   3,317,894   3,180,387
      Income tax expense......     778,344   1,131,140   1,244,994   1,240,351
                               ----------- ----------- ----------- -----------
      Net income (loss)....... $ 1,031,605 $ 1,829,419 $ 2,072,900 $ 1,940,036
                               =========== =========== =========== ===========
      Earnings per share
        Diluted(1)............ $      0.08 $      0.13 $      0.15 $      0.14
                               =========== =========== =========== ===========
      Weighted-average common
       shares outstanding:
        Diluted...............  12,431,917  13,832,411  13,946,224  13,803,361
                               =========== =========== =========== ===========
</TABLE>
--------
(1) Sum of quarters does not equal year due to differences in average shares
    outstanding.

15. Segment Reporting

Inforte engages in business activities in one operating segment, which
provides consulting services primarily on a fixed-price, fixed-time frame
basis. Inforte's services are delivered to clients primarily in North America,
and Inforte's long-lived assets are located primarily in North America.

16. Changes in Securities and Use of Proceeds

On February 17, 2000 the SEC declared Inforte's Registration Statement on Form
S-1 (File No. 333-92325) effective. On February 28, 2000, Inforte closed its
offering of an aggregate of 2,300,000 shares of its Common Stock at an
offering price of $32.00 per share. Net proceeds to Inforte, of $66,860,251
were invested in cash and marketable securities for general corporate use.

17. Subsequent Event

In January 2001, Inforte announced that the board of directors approved a
stock repurchase program that allows Inforte to buy up to $25 million of
Inforte shares. The program has no expiration date and will be used to make
periodic purchases at Inforte's discretion to offset the dilutive impact from
Inforte's stock option and employee stock purchase programs.

                                      40
<PAGE>

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

None

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning Inforte's directors is incorporated herein by reference
to Inforte's definitive proxy statement with respect to its 2001 annual meeting
of stockholders to be filed with the Securities and Exchange Commission within
120 days after the end of the fiscal year covered by this Form 10-K.
Information concerning Inforte's executive officers is included in Part I of
this report under the caption "Executive Officers of the Registrant."

ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation is incorporated herein by
reference to Inforte's definitive proxy statement with respect to its 2001
annual meeting of stockholders to be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year covered by this
Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information concerning ownership of Inforte's stock is incorporated herein by
reference to Inforte's definitive proxy statement with respect to its 2001
annual meeting of stockholders to be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year covered by this
Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information concerning certain relationships and related transactions involving
Inforte's directors and executive officers is incorporated herein by reference
to Inforte's definitive proxy statement with respect to its 2001 annual meeting
of stockholders to be filed with the Securities and Exchange Commission within
120 days after the end of the fiscal year covered by this Form 10-K.


                                       41
<PAGE>

                                    PART IV

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

                             Financial Statements

Inforte's financial statements included in Item 8 of this report are listed in
the index preceding the financial statements.

                  Statement Schedules and Reports on Form 8-K

                         Financial Statement Schedules


      (i) Schedule II--Valuation and Qualifying Accounts.

                                   Exhibits

<TABLE>
 <C>    <S>
    3.1 Certificate of Incorporation. Incorporated herein by reference to
        Exhibit 3 to Inforte's Form S-1, as amended, Registration No. 333-
        92325.

    3.2 Amended and Restated Bylaws. Incorporated herein by reference to
        Exhibit 3.2 to Inforte's Form S-1, as amended, Registration No. 333-
        92325.

 H 10.3 Amended and Restated 1995 Incentive Stock Option Plan. Incorporated
        herein by reference to Exhibit 10.3 to Inforte's Form S-1, as amended,
        Registration No. 333-92325.

 H 10.4 Amended and Restated 1997 Incentive Compensation Plan. Incorporated
        herein by reference to Exhibit 10.4 to Inforte's Form S-1, as amended,
        Registration No. 333-92325.

 H 10.5 Form of Stock Option Agreement. Incorporated herein by reference to
        Exhibit 10.5 to Inforte's Form S-1, as amended, Registration No. 333-
        92325.

   10.6 Amended and Restated 1999 Employee Stock Purchase Plan. Incorporated
        herein by reference to Exhibit 10.6 to Inforte's Form S-1, as amended,
        Registration No. 333-92325.

 H 10.7 Form of Director/Officer Indemnification Agreement. Incorporated herein
        by reference to Exhibit 10.7 to Inforte's Form S-1, as amended,
        Registration No. 333-92325.

   10.8 Shareholder Loan Agreement. Incorporated herein by reference to Exhibit
        10.7 to Inforte's Form S-1, as amended, Registration No. 333-92325.

   23.1 Consent of Independent Auditors.
</TABLE>
--------
H  Management or compensatory plan or arrangement required to be filed
   pursuant to item 14(c) of Form 10-K.

                              Reports on Form 8-K

None.


                                      42
<PAGE>

                                SIGNATURE PAGE

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 on March 15, 2001.

                                          Inforte Corp.

                                          By___________________________________
                                             Philip S. Bligh, President, Chief
                                              Executive Officer, and Chairman

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.

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----

<S>                                    <C>                        <C>
                                       President, Chief Executive   March 15, 2001
______________________________________  Officer, and Chairman
           Philip S. Bligh

                                       Chief Operating Officer      March 15, 2001
______________________________________  and Director
          Stephen C. P. Mack

                                       Chief Financial Officer,     March 15, 2001
______________________________________  Chief Accounting Officer,
             Nick Padgett               and Director

                                       Director                     March 15, 2001
______________________________________
          Edgar D. Jannotta

                                       Director                     March 15, 2001
______________________________________
           Ray C. Kurzweil

                                       Director                     March 15, 2001
______________________________________
          Michael E. Porter

                                       Director                     March 15, 2001
______________________________________
               Al Ries
</TABLE>

                                      43
<PAGE>

                                                                     SCHEDULE II

                       VALUATION AND QUALIFYING ACCOUNTS

                                 INFORTE CORP.

<TABLE>
<CAPTION>
                                            Additions
                                        -----------------
                               Balance  Charged
                                 at     to Costs Charged             Balance at
                              Beginning   and    to Other              End of
                              of Period Expenses Accounts Deductions   Period
                              --------- -------- -------- ---------- ----------
<S>                           <C>       <C>      <C>      <C>        <C>
Description
Year ended December 31, 1998
  Reserves and allowances
   deducted from asset
   accounts
  Allowance for doubtful
   accounts.................. $ 20,000  $255,000  $   --    $   --   $  275,000
Year ended December 31, 1999
  Reserves and allowances
   deducted from asset
   accounts
  Allowance for doubtful
   accounts.................. $275,000  $325,000  $   --    $   --   $  600,000
Year ended December 31, 2000
  Reserves and allowances
   deducted from asset
   accounts
  Allowance for doubtful
   accounts.................. $600,000  $550,000  $   --    $   --   $1,150,000
</TABLE>

                                       44
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
 <C>    <S>
    3.1 Certificate of Incorporation. Incorporated herein by reference to
        Exhibit 3 to Inforte's Form S-1, as amended, Registration No. 333-
        92325.

    3.2 Amended and Restated Bylaws. Incorporated herein by reference to
        Exhibit 3.2 to Inforte's Form S-1, as amended, Registration No. 333-
        92325.

 H 10.3 Amended and Restated 1995 Incentive Stock Option Plan. Incorporated
        herein by reference to Exhibit 10.3 to Inforte's Form S-1, as amended,
        Registration No. 333-92325.

 H 10.4 Amended and Restated 1997 Incentive Compensation Plan. Incorporated
        herein by reference to Exhibit 10.4 to Inforte's Form S-1, as amended,
        Registration No. 333-92325.

 H 10.5 Form of Stock Option Agreement. Incorporated herein by reference to
        Exhibit 10.5 to Inforte's Form S-1, as amended, Registration No. 333-
        92325.

   10.6 Amended and Restated 1999 Employee Stock Purchase Plan. Incorporated
        herein by reference to Exhibit 10.6 to Inforte's Form S-1, as amended,
        Registration No. 333-92325.

 H 10.7 Form of Director/Officer Indemnification Agreement. Incorporated herein
        by reference to Exhibit 10.7 to Inforte's Form S-1, as amended,
        Registration No. 333-92325.

   10.8 Shareholder Loan Agreement. Incorporated herein by reference to Exhibit
        10.7 to Inforte's Form S-1, as amended, Registration No. 333-92325.

   23.1 Consent of Independent Auditors.
</TABLE>
--------
H  Management or compensatory plan or arrangement required to be filed
   pursuant to item 14(c) of Form 10-K.

                                       1