AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 2000

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

AMR RESEARCH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 873200 04-2944158
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)

TWO OLIVER STREET, FIFTH FLOOR
BOSTON, MA 02109-4925
(617) 542-6600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

ANTHONY J. FRISCIA
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMR RESEARCH, INC.
TWO OLIVER STREET, FIFTH FLOOR
BOSTON, MA 02109-4925
(617) 542-6600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

COPIES TO:

ANTHONY J. MEDAGLIA, JR., P.C. MARTIN CARMICHAEL, III, P.C.
HUTCHINS, WHEELER & DITTMAR GOODWIN, PROCTER & HOAR LLP
A PROFESSIONAL CORPORATION EXCHANGE PLACE
101 FEDERAL STREET BOSTON, MASSACHUSETTS 02109
BOSTON, MASSACHUSETTS 02110 (617) 570-1000
(617) 951-6600

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the earlier
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------

CALCULATION OF REGISTRATION FEE

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PROPOSED
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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Common Stock, $0.01 par value per share..................... $75,000,000 $19,800
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.

SUBJECT TO COMPLETION -- SEPTEMBER 22, 2000

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PROSPECTUS
, 2000

LOGO
SHARES OF COMMON STOCK

AMR RESEARCH, INC.:

- We are a leading provider of research and analysis on e-business
strategies and technologies.

- We focus on industry-specific coverage of supply chain management,
customer management, enterprise management, business-to-business
e-commerce and all underlying enabling technologies.

PROPOSED SYMBOL AND MARKET:

- AMRR/Nasdaq National Market

THE OFFERING:

- - We are offering shares of our common stock.

- - The underwriters have an option to purchase an additional shares
from us to cover over-allotments.

- - This is our initial public offering, and no public market currently exists
for our shares.

- - We currently estimate that the initial public offering price of the shares
will be between $ and $ per share.

- - Closing: , 2000.

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Per Share Total

- -----------------------------------------------------------------------------------
Public offering price: $ $
Underwriting fees:
Proceeds to AMR Research:
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THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. NOR HAVE THEY MADE, NOR WILL THEY MAKE, ANY
DETERMINATION AS TO WHETHER ANYONE SHOULD BUY THESE SECURITIES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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DONALDSON, LUFKIN & JENRETTE
THOMAS WEISEL PARTNERS LLC
ADAMS, HARKNESS & HILL, INC.
WILLIAM BLAIR & COMPANY
DLJDIRECT INC.
3

INSIDE FRONT COVER OF PROSPECTUS:

[Graphic depicting a company research model appears here, consisting of a
series of concentric circles labeled "Business Strategy", "E-Business Strategy",
"B2B Marketplace Strategies", "Supply Chain Management", "Enabling
Technologies", and "Industry-Specific Implementation."]
4

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of our common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.

TABLE OF CONTENTS

Page

Prospectus Summary.................... 1
Risk Factors.......................... 6
Special Note Regarding Forward-Looking
Statements.......................... 11
Use of Proceeds....................... 12
Termination of S Corporation Election
and S Corporation Distributions..... 12
Dividend Policy....................... 12
Capitalization........................ 13
Dilution.............................. 14
Selected Consolidated Financial
Data................................ 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17

Page

Business.............................. 25
Management............................ 36
Relationships with Directors and
Related Transactions................ 42
Principal Stockholders................ 43
Description of Capital Stock.......... 45
Shares Eligible for Future Sale....... 48
Underwriting.......................... 49
Legal Matters......................... 51
Experts............................... 52
Where You Can Find More Information... 52
Index to Consolidated Financial
Statements.......................... F-1

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PROSPECTUS SUMMARY

The information below is only a summary of more detailed information
included in other sections of this prospectus. You should read the entire
prospectus including the "Risk Factors" and the financial statements and related
notes. Unless otherwise specified, all industry statistical data and projections
in this prospectus are estimates from reports published by AMR Research.

AMR RESEARCH

OUR BUSINESS

We are a leading provider of research and analysis on e-business strategies
and technologies. Our research offers a comprehensive view of the rapidly
evolving business processes fundamental to success in the new economy. We focus
on industry-specific coverage of supply chain management, customer management,
enterprise management, business-to-business e-commerce and all underlying
enabling technologies. Clients use our in-depth analysis to develop and
implement end-to-end e-business strategies consistent with their overall
business goals. We target our services to senior management, technology and
marketing professionals and business strategists at large enterprises and
technology and service vendors.

Our core research and analysis offering, the E-Business Advisory Service,
is provided through annual and multi-year subscription contracts. We offer
clients an integrated set of services, including monthly qualitative and
quantitative reports, daily and weekly news analysis, research analyst access
and participation at our executive conferences. Our interactive web site
facilitates personalized access to our research as well as proprietary
supporting data.

We believe our research is distinguished by the extensive industry
experience of our research analysts. As of August 31, 2000, our research
analysts averaged over 15 years of experience in a variety of industries,
including manufacturing, retail, software and technology, financial services and
management consulting.

Our client services team focuses on creating long-term, interactive client
relationships, which we believe has contributed to our high renewal rates.
During the twelve months ended June 30, 2000, approximately 80% of our client
contracts, as measured in units, and 102%, as measured by dollar value, were
renewed.

As of June 30, 2000, we had 887 client contracts for our E-Business
Advisory Service, a 35% increase from June 30, 1999. Our revenues were $25.4
million in 1999. Revenues increased 64% to $17.4 million for the six months
ended June 30, 2000, from $10.6 million for the six months ended June 30, 1999.
Our net income was $2.7 million in 1999 and $2.3 million for the six months
ended June 30, 2000.

MARKET OPPORTUNITY

We believe that the rapid growth of e-commerce and the related increase in
new technology-led business models have created significant opportunities and
challenges for traditional and emerging businesses. Domestic
business-to-business e-commerce transactions totaled approximately $215 billion
in 1999, representing less than 2% of the approximately $16.0 trillion of total
domestic commerce in 1999. We estimate that these transactions will grow to
approximately $5.7 trillion by 2004. To capitalize on this growth, traditional
and emerging businesses are making significant capital investments to implement
business process strategies and technology solutions critical to achieving their
core business goals, including supply chain management, customer relationship
management and e-commerce applications.

We believe that the development and implementation of these technology-led
business strategies require a close collaboration of senior business executives,
sales and marketing executives and technology professionals. These efforts are
complicated by the acceleration in the rate of technology change and by the
rapid growth in the number and complexity of new technology platforms and
applications.

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As a result of these trends, we believe there is a large and rapidly
growing demand for credible, independent and industry-specific advice in all
critical areas of e-business strategy, technology and applications. In
particular, we believe that a substantial market opportunity for providers of
this independent expertise exists among large, traditional companies that are
just beginning to embrace e-business opportunities, emerging new economy
businesses and technology and service vendors that are increasingly challenged
to maintain or gain competitive advantages. We expect demand will also increase
as e-business impacts new industries and expands into other geographic areas.

OUR STRATEGY

Our objective is to be recognized as the leading provider of e-business
research and analysis. Key elements of our strategy include:

- Expand our client base;

- Increase sales to existing clients;

- Introduce new research practices;

- Expand our international presence;

- Enhance the AMR Research brand; and

- Pursue selective acquisitions and strategic partnerships.

HISTORY

We were incorporated on December 22, 1986 in the Commonwealth of
Massachusetts and reincorporated in Delaware on July 31, 1996. Since December
22, 1986, we have elected to be taxed under subchapter S of the Internal Revenue
Code of 1986, as amended. Prior to the completion of this offering, our
stockholders will terminate this election and we will be subject to
corporate-level federal and state income taxes at prevailing corporate rates.

We maintain executive offices at Two Oliver Street, Boston, Massachusetts,
02109, with regional offices in London, England and Irvine, California. Our main
telephone number is (617) 542-6600. Our web site can be found at
www.amrresearch.com. Information contained on our web site is not intended to be
part of this prospectus and is not incorporated into this prospectus.

References to "we," "us" or "AMR Research" refer to AMR Research, Inc., its
subsidiary and all predecessor entities.

We have applied for and received service mark registrations for, among
others, "AMR Research". Any other trademark, trade name or service mark
appearing in this prospectus belongs to its holder.

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THE OFFERING

Common stock offered.......... shares

Common stock to be outstanding
after the offering............ shares

Use of proceeds............... We estimate that we will receive net proceeds
of approximately $ million from this
offering, assuming an initial public offering
price of $ per share. We plan to use
the net proceeds from this offering for
expansion of our research, sales and marketing
staffs, development of new research practices,
international expansion, technology and
leasehold improvements, potential acquisitions
and general corporate purposes.

Over-allotment option......... We have granted to the underwriters an option
to purchase up to an additional
shares solely to cover over-allotments.

Dividend policy............... We do not anticipate paying cash dividends in
the foreseeable future.

Proposed Nasdaq symbol........ AMRR

The outstanding share information is based on our shares outstanding as of
, 2000. This information excludes 5,777,869 shares of common stock
issuable upon the exercise of stock options outstanding under our option plan as
of August 31, 2000, with a weighted average exercise price of $1.33 per share.
In addition, this information excludes shares of common stock
reserved for future issuance under our stock option plans as of ,
2000.

Except as otherwise noted, all information in this prospectus assumes:

- no exercise of the underwriters' over-allotment option;

- a merger of our Class A common stock and Class B common stock into one
class of common stock, effected prior to this offering; and

- a five-for-two stock split, effected prior to this offering.

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)

The following tables present our summary financial and operating data. This
summary consolidated financial and operating data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and related notes included
elsewhere in this prospectus. These results, including the pro forma data, are
not necessarily indicative of results for any future period.

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- -----------------
1995 1996 1997 1998 1999 1999 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Revenues:
Research services.......... $ 3,656 $ 6,577 $10,451 $15,101 $22,097 $ 9,440 $15,383
Other...................... 860 630 1,229 2,831 3,287 1,151 2,024
------- ------- ------- ------- ------- ------- -------
Total revenues.......... 4,516 7,207 11,680 17,932 25,384 10,591 17,407
Operating expenses:
Cost of services........... 2,029 3,096 4,471 7,212 11,492 5,296 6,905
Sales and marketing........ 1,173 1,549 2,745 4,541 6,565 2,904 4,827
General and
administrative.......... 946 1,346 2,643 3,404 4,773 2,169 3,386
------- ------- ------- ------- ------- ------- -------
Total operating
expenses.............. 4,148 5,991 9,859 15,157 22,830 10,369 15,118
------- ------- ------- ------- ------- ------- -------
Operating income............. 368 1,216 1,821 2,775 2,554 222 2,289
Other income, net............ 73 123 167 235 242 122 139
------- ------- ------- ------- ------- ------- -------
Income before income tax
provision.................. 441 1,339 1,988 3,010 2,796 344 2,428
Income tax provision......... 7 42 92 160 121 15 106
------- ------- ------- ------- ------- ------- -------
Net income.............. $ 434 $ 1,297 $ 1,896 $ 2,850 $ 2,675 $ 329 $ 2,322
======= ======= ======= ======= ======= ======= =======

PRO FORMA DATA (UNAUDITED):
Historical income before
income tax provision....... $ 441 $ 1,339 $ 1,988 $ 3,010 $ 2,796 $ 344 $ 2,428
Pro forma income tax
provision (1).............. 187 566 841 1,266 1,203 148 1,003
------- ------- ------- ------- ------- ------- -------
Pro forma net income.... $ 254 $ 773 $ 1,147 $ 1,744 $ 1,593 $ 196 $ 1,425
======= ======= ======= ======= ======= ======= =======
Pro forma earnings per common
share (2):
Basic...................... $ 0.02 $ 0.07 $ 0.10 $ 0.15 $ 0.13 $ 0.02 $ 0.13
======= ======= ======= ======= ======= ======= =======
Diluted.................... $ 0.02 $ 0.07 $ 0.09 $ 0.13 $ 0.11 $ 0.01 $ 0.10
======= ======= ======= ======= ======= ======= =======

Weighted average common
shares outstanding:
Basic...................... 11,875 11,875 11,875 11,875 11,936 11,902 10,936
======= ======= ======= ======= ======= ======= =======
Diluted.................... 11,875 11,875 12,554 13,702 14,270 14,235 13,789
======= ======= ======= ======= ======= ======= =======

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AS OF DECEMBER 31, AS OF JUNE 30,
--------------------------------------------- -----------------
1995 1996 1997 1998 1999 1999 2000

SELECTED OPERATING DATA
(UNAUDITED):
Number of client contracts........ 238 368 501 582 758 655 887
Annual contract value (in
thousands)...................... $4,210 $7,600 $12,000 $16,900 $27,400 $21,900 $35,600
Total contract value (in
thousands)...................... $4,200 $8,100 $13,100 $20,500 $37,400 $26,600 $48,800
Number of employees............... 28 47 58 94 144 126 152

AS OF JUNE 30, 2000
---------------------------------------
PRO FORMA
ACTUAL PRO FORMA(3) AS ADJUSTED(4)
(UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents.................................. $ 9,460 $ 9,460
Deferred revenue........................................... 17,461 17,461
Working capital(5)......................................... (4,563) (7,798)
Total assets............................................... 20,413 20,413
Total stockholders' equity (deficit)(6).................... (2,365) (5,600)

- ------------------------------
(1) We have elected to be taxed, since December 22, 1986, under subchapter S of
the Internal Revenue Code of 1986, as amended, whereby individual
stockholders are liable for individual federal and certain state income
taxes on our taxable income. Prior to the completion of this offering, our
stockholders will terminate our S corporation election and we will be
subject to corporate-level federal and state income taxes at prevailing
corporate rates. Accordingly, the pro forma income tax adjustments represent
the income taxes that would have been recorded if we had been a C
corporation for the periods presented. See note 2 of notes to consolidated
financial statements.

(2) Pro forma basic and diluted earnings per common share are computed by
dividing pro forma net income by the weighted average number of shares of
common stock and, in the case of diluted earnings per common share, common
equivalent shares, outstanding during the period. See note 3 of notes to
consolidated financial statements.

(3) Pro forma to give effect to the (i) distributions of a portion of previously
undistributed S corporation earnings taxed or taxable to our stockholders of
approximately $2.6 million based on earnings through the termination of our
S corporation election; and (ii) termination of our S corporation election
and the recognition of a net deferred income tax liability of approximately
$600,000 as of June 30, 2000. See notes 2 and 12 of notes to consolidated
financial statements.

(4) Adjusted to reflect the sale of shares of common stock
offered hereby, at an assumed initial public offering price of $ per
share, after deducting the underwriting discount and estimated offering
expenses payable by us.

(5) Our working capital balances are generally negative because of the timing of
cash collections from our clients. Our client contracts are typically annual
and paid in advance. Accordingly, a substantial portion of our billings is
initially recorded as deferred revenue and amortized into revenue during the
term of the contact to which such billings relate.

(6) The stockholders' deficit at June 30, 2000 reflects our repurchase of
approximately 1.2 million shares for approximately $5.0 million during the
six months ended June 30, 2000. Additionally, the pro forma stockholders'
deficit as of June 30, 2000 reflects the distribution of $2.6 million and
the recognition of a net deferred income tax liability of approximately
$600,000 described in footnote (3) above.

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You
should carefully consider the risks below, together with the other information
contained in this prospectus, before you decide to purchase shares of our common
stock.

IF WE DO NOT ATTRACT AND RETAIN QUALIFIED PROFESSIONAL PERSONNEL, THE DEPTH AND
QUALITY OF OUR SERVICE MAY DECLINE, WHICH MAY NEGATIVELY IMPACT OUR ABILITY TO
GROW OUR BUSINESS.

Our success depends in large part on the continued contributions of our
senior management team, research staff and sales representatives. As of August
31, 2000, we employed 39 sales representatives and a research staff of 79
people, which includes 44 research analysts and a client services team of 35
employees. We expect to increase our hiring of research staff and sales
representatives significantly in the next few years. Thus, our future operating
results will depend largely on our ability to attract and retain qualified
personnel. We face intense competition in hiring and retaining personnel from,
among others, technology and software companies, market research and consulting
firms, print and electronic publishing companies and financial services
companies. None of our employees have signed employment agreements or non-
competition agreements, which could negatively impact our ability to prevent
employees from taking positions with competing firms. Many of these firms have
substantially greater financial resources than we do. In addition, some
personnel that we may attempt to hire could be subject to non-competition
agreements that could impede our recruitment efforts. To the extent that we are
unable to retain our existing management, research staff or sales
representatives or that we are unable to increase our research staff and the
number of sales representatives that we hire, we may not be able to remain
competitive or grow our business.

OUR BUSINESS MAY SUFFER IF WE HAVE DIFFICULTY IN ACQUIRING OR RETAINING
SUBSCRIBERS TO OUR E-BUSINESS ADVISORY SERVICE.

Our business and financial results are dependent on our ability to attract
and retain clients for our E-Business Advisory Service. Research services
revenue, as a percentage of our total revenues, was 84% in 1998 and 87% in 1999.
A significant decline in our renewal rates could have an adverse effect on our
revenues.

IF WE PROVE UNABLE TO ANTICIPATE MARKET TRENDS, OR IF WE FAIL TO PROVIDE
INFORMATION THAT IS USEFUL TO OUR CLIENTS, WE MAY NOT REMAIN COMPETITIVE AND OUR
GROWTH AND PROFITABILITY MAY SUFFER.

Our success depends in large part on our ability to anticipate, research
and analyze rapidly changing technologies and industries and on our ability to
provide this information in a timely and cost-effective manner. If our
predictions or projections about rapidly changing technologies and industries
prove to be wrong, or if we are unable to continually update our information,
our reputation may suffer and demand for our research services may decline. In
addition, if our existing and potential clients do not agree with our analysis
of market trends, our business and financial results may suffer.

Moreover, if we are unable to develop and introduce successful new services
and programs or make enhancements to existing programs in response to our
clients' needs, our business may also be adversely affected and our growth and
profitability may suffer.

RAPID GROWTH IN OUR BUSINESS COULD STRAIN OUR MANAGERIAL, OPERATIONAL AND
FINANCIAL RESOURCES.

The anticipated future growth of our business could strain our managerial,
operational and financial resources. We had 94 employees at December 31, 1998,
144 employees at December 31, 1999 and 172 employees at August 31, 2000. We
anticipate hiring a substantial number of research staff, sales representatives
and other employees in the next few years to expand our service offerings. We
also expect to continue to open additional offices. As we expand, we expect that
we will need to continually enhance our financial and managerial controls,
billing systems, reporting systems and procedures. In addition, as we

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expand we will also need to increase our employee training efforts. If we are
unable to manage our growth effectively, our business and financial results may
suffer.

WE ARE DEPENDENT ON KEY MANAGEMENT PERSONNEL FOR OUR FUTURE SUCCESS.

Our future success will depend in part on the continued service of a number
of our key management personnel. We have key man life insurance on Anthony J.
Friscia, our founder and Chief Executive Officer. None of our officers,
including Mr. Friscia, have employment agreements or are subject to non-compete
restrictions with us. The loss of any of our executive officers, in particular
Mr. Friscia, could harm our business and financial results.

WE MAY NOT BE ABLE TO SUCCESSFULLY MAKE OR INTEGRATE ACQUISITIONS OF OTHER
COMPANIES OR SERVICES.

In the past, we have not grown by acquiring other companies or services.
Although we have no present understanding or agreement relating to any
acquisition, we anticipate that there may be attractive acquisition
opportunities in the future. We cannot assure you, however, that we will be able
to complete future acquisitions successfully or to integrate an acquired entity
with our current business. In addition, the key personnel of the acquired
company may decide not to work for us. If we make acquisitions, we could have
difficulty integrating the acquired services. These difficulties could disrupt
our current business, distract our management and employees, increase our
expenses and adversely affect our results of operations. Furthermore, we may
incur debt or issue equity securities to pay for any future acquisitions. The
issuance of equity securities could be dilutive to our existing stockholders.

WE COULD FACE ADDITIONAL RISKS AND CHALLENGES IF WE CONTINUE TO EXPAND
INTERNATIONALLY.

Our business plan calls for accelerated international growth. We opened our
first international office in London, England in September of 1999. Revenues
generated from clients serviced outside the United States accounted for less
than 3% of our total revenues in 1999. International expansion may have an
adverse impact on results of operations in the near term. In addition, our
international operations are, and will be in the future, subject to many risks
that may adversely impact our efforts at expansion internationally, including
the following:

- political and economic conditions in various jurisdictions;

- fluctuations in currency exchange rates;

- tariffs and other trade barriers;

- adverse tax consequences; and

- difficulties in protecting intellectual property rights in international
jurisdictions.

The occurrence of any or all of these factors could impact our ability to
succeed in our international expansion and, as a result, could adversely affect
our overall growth.

WE FACE INTENSE COMPETITION IN PROVIDING OUR RESEARCH SERVICES, AND SUCH
COMPETITION MAY INCREASE IN THE FUTURE.

We may not be able to compete successfully against current or future
competitors, and the competitive pressures that we face may cause our business
and financial results to suffer. Our current and potential competitors include
many companies that have substantially greater financial, information gathering
and marketing resources than we have.

We expect competition to increase because of the business opportunities
presented by the growth of e-commerce around the world which drives investment
in e-business applications and technologies. Competition may also intensify as a
result of industry consolidation, because the markets in which we operate face
relatively few substantial barriers to entry. Furthermore, some of our
competitors may choose to provide additional or complementary services, such as
consulting services, that may enable them to

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compete more effectively in our target markets. In addition, our indirect
competitors include the internal planning and marketing staffs of our current
and prospective clients, as well as other information providers such as
electronic and print publishing companies, survey-based general market research
firms, and general business and consulting firms. Increased competition may
result in reduced profitability and loss of market share, as well as different
pricing, service or marketing decisions.

IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY OR FACE A CLAIM OF
INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE MAY LOSE OUR
INTELLECTUAL PROPERTY RIGHTS AND BE LIABLE FOR SIGNIFICANT DAMAGES.

We provide our proprietary research products to hundreds of different
companies throughout the world, including some companies that compete with us
directly or indirectly. As a result, any protective steps we have taken may be
inadequate to protect our intellectual property and to deter misappropriation of
the original research and analysis that we develop. We also may be unable to
detect the unauthorized use of our intellectual property or take appropriate
steps to enforce our intellectual property rights. Moreover, effective
trademark, copyright and trade secret protection may not be available in every
country in which we offer our research products and services to the extent these
protections are available in the United States.

Our failure to adequately protect our intellectual property, either in the
United States or abroad, could harm the AMR Research brand or our trademarks,
devalue our proprietary research and analysis and affect our ability to compete
effectively. Defending our intellectual property rights could result in the
expenditure of significant financial and managerial resources, which could harm
our business.

Furthermore, other parties may assert claims against us that we have
misappropriated a trade secret or infringed a patent, copyright, trademark or
other proprietary right belonging to them. Any infringement or related claims,
even if not meritorious, could be costly and time consuming to litigate, may
distract management from other tasks of operating the business and may result in
the loss of significant rights and the loss of our ability to operate our
business.

IF THE GROWTH IN E-COMMERCE AND RELATED CORPORATE INVESTMENT IN E-BUSINESS
STRATEGY, TECHNOLOGY AND APPLICATIONS DO NOT CONTINUE OR CONTINUE MORE SLOWLY
THAN ANTICIPATED, OUR BUSINESS AND FINANCIAL RESULTS MAY SUFFER.

Our success is partly dependent on the continued demand for external advice
from corporate users on all aspects of e-business strategy, technology and
applications. If the rate of growth in e-commerce and the related corporate
spending on e-business strategy, technology and applications do not continue or
continue more slowly than anticipated, our clients may not require the same
volume of services from us, and we may not be able to execute our growth
strategy. In that case, our profitability and our prospects could be adversely
affected.

OUR OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS AND FAIL TO MEET THE
EXPECTATIONS OF RESEARCH ANALYSTS OR INVESTORS, WHICH MAY CAUSE VOLATILITY OR A
DECLINE IN THE PRICE OF OUR STOCK.

Our revenues, expenses and operating results have varied in the past and
may fluctuate significantly in the future due to a variety of factors that are
outside of our control. These factors include, among others:

- the level and timing of new business and renewals of subscriptions to our
research services;

- changes in the market demand for research services or analysis regarding
e-business strategy, technology and applications; and

- increased competition.

The above factors could affect our quarterly as well as long-term financial
results. In particular, a reduction in the demand for our other services and
competition could have both short-term and long-term adverse effects on our
business.

8
13

Our revenues, expenses and operating results may also fluctuate
significantly in the future as a result of business decisions made by us. These
decisions include, among others:

- the timing of the introduction and marketing of our new research
services;

- decisions on expenditures; and

- the timing of acquisitions and the impact on our operations and our
operating results.

Sales of our research services are difficult to forecast accurately. If our
revenues fall short of expectations, we may not be able to adjust our fixed
expenses to compensate for this shortfall on a timely basis. Further, as a
strategy for remaining competitive, we may have to make pricing, service or
marketing decisions that could cause our business and financial results to
suffer.

Due to all the foregoing factors and other risks discussed in this section,
you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance. It is possible that in some
future periods our results of operations may be below the expectations of
research analysts or investors. In this event, the price of our common stock is
likely to decline.

OUR DIRECTORS AND OFFICERS WILL RETAIN SIGNIFICANT CONTROL AFTER THIS OFFERING,
WHICH MAY LEAD TO CONFLICTS WITH OTHER STOCKHOLDERS OVER CORPORATE GOVERNANCE
MATTERS.

Upon completion of this offering, our directors and officers will
beneficially own, in the aggregate, % of our outstanding common stock, or
% of our outstanding common stock if the over-allotment option is
exercised. These stockholders acting together will be able to exert substantial
influence over all matters requiring approval by our stockholders. These matters
include the election and removal of directors and any merger, consolidation or
sale of all or substantially all of our assets. In addition, they may dictate
the management of our business and affairs. This concentration of ownership
could have the effect of delaying, deferring or preventing a change in control,
or impeding a merger, consolidation, takeover or other business combination even
if such an event would benefit other stockholders.

OUR CORPORATE GOVERNANCE PROVISIONS MAY DETER A FINANCIALLY ATTRACTIVE TAKEOVER
ATTEMPT.

Provisions of our charter and by-laws may discourage, delay or prevent a
merger or acquisition that stockholders may consider favorable, including
transactions in which stockholders would receive a premium for their shares.
These provisions include the following:

- any action to be taken by stockholders must be taken at a meeting unless
by unanimous written consent;

- stockholders must comply with advance notice requirements before raising
a matter at a meeting of stockholders or nominating a director for
election;

- only our chairman, the president or the board of directors may call a
special meeting of stockholders;

- our board of directors is divided into three classes;

- no director may be removed at any time except for cause and by a majority
vote of the outstanding shares of voting stock; and

- our board of directors has the authority, without further action by the
stockholders, to fix the rights and preferences of and issue shares of
preferred stock.

FUTURE SALES OF OUR COMMON STOCK MAY NEGATIVELY AFFECT OUR STOCK PRICE.

Following this offering, we will have a large number of shares of common
stock outstanding and available for resale beginning at various points of time
in the future. Our stockholders who acquired their shares prior to this public
offering may be able to sell as many as shares of our common
stock in the public market beginning as soon as 180 days after the date of this
prospectus. The market
9
14

price of our common stock could decline as a result of sales of a large number
of shares of our common stock in the market, or the perception that such sales
could occur. In addition, these sales also might make it more difficult for us
to sell equity securities in the future at a price that we think is appropriate,
or at all.

OUR MANAGEMENT WILL RETAIN BROAD DISCRETION IN THE USE OF PROCEEDS FROM THIS
OFFERING AND MAY NOT OBTAIN A FAVORABLE RETURN ON THE USE OF THESE PROCEEDS.

We currently have no specific plans for a significant portion of our net
proceeds from this offering. Consequently, our management has broad discretion
as to how to spend the proceeds from this offering. They may spend these
proceeds in ways with which our stockholders may not agree. Management's
allocation of the proceeds of this offering may not benefit our business and the
investment of the proceeds may not yield a favorable return.

THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK, AND OUR STOCK MAY
EXPERIENCE SIGNIFICANT PRICE AND VOLUME FLUCTUATIONS.

The stock market has experienced significant price and volume fluctuations.
Prior to this offering, there has been no public market for our common stock. We
cannot predict the extent to which investor interest in us will lead to the
development of an active trading market or how liquid that market might become.
The market price of the common stock may decline below the initial public
offering price. The initial public offering price for the shares will be
determined by negotiations between us and the representatives of the
underwriters and may not be indicative of prices that will prevail in the
trading market.

In the past, companies that have experienced volatility in the market price
of their stock have been the object of securities class action litigation. If we
were the object of securities class action litigation, it could result in
substantial costs and a diversion of our management's attention and resources.

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE OF YOUR
INVESTMENT.

If you purchase shares of our common stock in this offering, you will
experience immediate and substantial dilution, in that the price you pay will be
substantially greater than the net tangible book value per share of the shares
you acquire. This dilution is due in large part to the fact that our earlier
investors paid substantially less than the public offering price when they
purchased their shares of common stock. You will experience additional dilution
upon the exercise of outstanding stock options to purchase common stock.

10
15

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking statements." These statements may
include statements regarding:

- our business strategy;

- plans for hiring additional personnel;

- entering into business combinations or strategic partnerships;

- adequacy of anticipated sources of funds, including the proceeds from
this offering; and

- other statements about our plans, objectives, expectations and intentions
contained in this prospectus that are not historical facts.

When used in this prospectus, the words "may," "will," "should," "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar
expressions are generally intended to identify forward-looking statements.
Because these forward-looking statements involve risks and uncertainties, actual
results could differ materially from those expressed or implied by these
forward-looking statements for a number of reasons, including those discussed
under "Risk Factors" and elsewhere in this prospectus. Following this offering,
we assume no obligation to update any forward-looking statements contained in
this prospectus.

11
16

USE OF PROCEEDS

We estimate net proceeds from the sale of shares of common
stock by us in this offering at an assumed initial public offering price of
$ per share will be $ million, after deducting the estimated
underwriting discount and assumed offering expenses.

We plan to use the net proceeds from this offering for expansion of our
research, sales and marketing staffs, development of new research practices,
international expansion, technology and leasehold improvements, potential
acquisitions and general corporate purposes. As of the date of this prospectus,
we have not made any specific expenditure plans with respect to these uses.
Accordingly, our management will retain broad discretion in the allocation of
the net proceeds of this offering. Pending these uses, we intend to invest the
proceeds in short-term, investment-grade, interest-bearing investments.

TERMINATION OF S CORPORATION ELECTION
AND S CORPORATION DISTRIBUTIONS

We have operated as an S corporation since December 22, 1986. As a result
of the S corporation election, our income has been taxed, for corporate-level
federal and state income tax purposes, directly to our stockholders, except for
certain state income taxes. Prior to the completion of this offering, our
stockholders will terminate the S corporation election and we will be subject to
corporate-level federal and state income taxes at prevailing corporate rates.
Termination of this election will result in us recording a tax expense and a net
deferred income tax liability during the quarter in which this offering is
completed. The change in tax status will result in us recording a net deferred
tax liability of approximately $600,000 as of the expected date of the
termination.

We have paid cash dividends of approximately $2.3 million, $3.8 million and
$1.0 million to our stockholders in the years ended December 31, 1998 and 1999
and the six months ended June 30, 2000. We distributed approximately $1.1
million on September 5, 2000, representing a portion of our undistributed S
corporation earnings. In addition, on September 18, 2000, our board of directors
declared a distribution to be made to stockholders prior to the offering
representing a portion of the anticipated undistributed S corporation earnings
through the termination of our S corporation election. This distribution is
expected to total $1.5 million and will be paid out of our cash balances. We
also have entered into a tax indemnification agreement with our current
stockholders. The agreement generally provides that we indemnify each of these
stockholders for adjustments causing an increase in his taxes (including
interest and penalties) resulting from adjustments initiated by taxing
authorities related to the periods after January 1, 1997 that we were an S
corporation, and that each such stockholder will pay to us an amount equal to
any decrease in his tax liability resulting from such adjustments.

DIVIDEND POLICY

We anticipate that following completion of this offering, our future
earnings will be retained for the development of our business, and we do not
anticipate paying any cash dividends on our common stock in the foreseeable
future.

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17

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2000. Our
capitalization is presented:

- on an actual basis;

- on a pro forma basis after giving effect to the distribution of a portion
of previously undistributed S corporation earnings taxed or taxable to
our stockholders of approximately $2.6 million, including $1.1 million
distributed on September 5, 2000 and $1.5 million declared on September
18, 2000, through the termination of our S corporation election and the
recognition of a net deferred income tax liability of approximately
$600,000, both to occur prior to completion of this offering; and

- on a pro forma as adjusted basis to reflect our receipt of the net
proceeds from the sale of shares of common stock in this
offering at an assumed initial public offering price of $ per
share after deducting the estimated underwriting discount and assumed
offering expenses of .

AS OF JUNE 30, 2000
--------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Note payable to stockholder................................ $ 1,600 $ 1,600
Stockholders' Equity (deficit):
Preferred stock, par value, $0.01 per share, 5,000 shares
authorized, none issued............................... -- --
Common stock, $0.01 par value, 100,000 shares authorized;
15,865 issued and 10,870 shares outstanding, actual
and pro forma; ....................................... 121 121
Additional paid-in capital............................... 661 661
Retained earnings (deficit).............................. 2,292 (943)
Deferred compensation.................................... (260) (260)
Treasury stock, at cost (4,995 shares, actual and pro
forma)................................................ (5,179) (5,179)
------- -------
Total stockholders' equity (deficit).................. (2,365) (5,600)
------- -------
Total capitalization.................................. $ (765) $(4,000) $
======= ======= ========

See "Selected Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and related notes included elsewhere in this prospectus.

13
18

DILUTION

The pro forma net tangible book value of the common stock as of June 30,
2000 was $ or $ per share, after giving effect to the (i)
distribution of a portion of previously undistributed S corporation earnings
taxed or taxable to our stockholders of approximately $2.6 million, including
$1.1 million distributed on September 5, 2000 and $1.5 million declared on
September 18, 2000, through the termination of our S corporation election, and
(ii) termination of our S corporation election and the recognition of a net
deferred income tax liability of approximately $600,000, both to occur upon
completion of this offering.

After giving effect to the sale of the common stock by us in this offering
at an assumed initial public offering price of $ per share and after
deducting the estimated underwriting discount and expenses of this offering, the
adjusted pro forma net tangible book value at June 30, 2000 would have been
$ or $ per share.

This offering will result in an increase in pro forma net tangible book
value per share of $ to existing stockholders and dilution in pro forma
net tangible book value per share of $ to new investors who purchase
common stock in this offering. Dilution is determined by subtracting pro forma
net tangible book value per share from the assumed initial public offering price
of $ . The following table illustrates this per share dilution:

Assumed initial public offering price per share............. $
Pro forma net tangible book value per share............... $
Increase attributable to sale of common stock in this
offering...............................................
--------
Pro forma net tangible book value per share after this
offering..................................................
--------
Dilution per share to new investors......................... $
========

If the underwriters' over-allotment option were exercised in full, the pro
forma net tangible book value per share after this offering would be $ per
share, the increase in net tangible book value per share to existing
stockholders would be $ per share, and the dilution to persons who purchase
common stock in this offering would be $ per share.

The table below summarizes, on a pro forma basis, as of June 30, 2000, the
following differences between our existing stockholders and new investors
purchasing our common stock in this offering:

- the number of shares purchased from us;

- the aggregate cash consideration paid; and

- the average price per share paid.

SHARES PURCHASED TOTAL CONSIDERATION
------------------ ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE

Existing stockholders................... % $ % $
New investors........................... $
------- --- -------- ---
Total......................... 100% $ 100% $
======= === ======== ===

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SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)

The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes included elsewhere in this prospectus. The consolidated balance sheet data
as of December 31, 1997, 1998 and 1999 and the consolidated statement of
operations data for the years ended December 31, 1997, 1998 and 1999 have been
derived from our audited consolidated financial statements included in this
prospectus. The consolidated balance sheet data as of December 31, 1995 and
1996, and the consolidated statement of operations data for 1995 and 1996 have
been derived from our unaudited financial statements not included in this
prospectus. The consolidated balance sheet data as of June 30, 2000 and the
consolidated statement of operations data for the six months ended June 30, 1999
and 2000 are derived from unaudited consolidated financial statements included
in this prospectus. The unaudited consolidated financial statements have been
prepared on the same basis as our audited consolidated financial statements
included in this prospectus and, in our opinion, include all necessary
adjustments, consisting only of normal recurring adjustments which we consider
necessary for a fair presentation of our results of operations and financial
position for these periods. These results, including the pro forma data, are not
necessarily indicative of results for any future period.

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- -----------------
1995 1996 1997 1998 1999 1999 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Revenues:
Research services.............. $ 3,656 $ 6,577 $10,451 $15,101 $22,097 $ 9,440 $15,383
Other.......................... 860 630 1,229 2,831 3,287 1,151 2,024
------- ------- ------- ------- ------- ------- -------
Total revenues............... 4,516 7,207 11,680 17,932 25,384 10,591 17,407
Operating expenses:
Cost of services............... 2,029 3,096 4,471 7,212 11,492 5,296 6,905
Sales and marketing............ 1,173 1,549 2,745 4,541 6,565 2,904 4,827
General and administrative..... 946 1,346 2,643 3,404 4,773 2,169 3,386
------- ------- ------- ------- ------- ------- -------
Total operating expenses..... 4,148 5,991 9,859 15,157 22,830 10,369 15,118
------- ------- ------- ------- ------- ------- -------
Operating income................. 368 1,216 1,821 2,775 2,554 222 2,289
Other income, net................ 73 123 167 235 242 122 139
------- ------- ------- ------- ------- ------- -------
Income before income tax
provision...................... 441 1,339 1,988 3,010 2,796 344 2,428
Income tax provision............. 7 42 92 160 121 15 106
------- ------- ------- ------- ------- ------- -------
Net income..................... $ 434 $ 1,297 $ 1,896 $ 2,850 $ 2,675 $ 329 $ 2,322
======= ======= ======= ======= ======= ======= =======
PRO FORMA DATA (UNAUDITED):
Historical income before income
tax provision.................. $ 441 $ 1,339 $ 1,988 $ 3,010 $ 2,796 $ 344 $ 2,428
Pro forma income tax
provision(1)................... 187 566 841 1,266 1,203 148 1,003
------- ------- ------- ------- ------- ------- -------
Pro forma net income........... $ 254 $ 773 $ 1,147 $ 1,744 $ 1,593 $ 196 $ 1,425
======= ======= ======= ======= ======= ======= =======
Pro forma earnings per common
share(2):
Basic.......................... $ 0.02 $ 0.07 $ 0.10 $ 0.15 $ 0.13 $ 0.02 $ 0.13
======= ======= ======= ======= ======= ======= =======
Diluted........................ $ 0.02 $ 0.07 $ 0.09 $ 0.13 $ 0.11 $ 0.01 $ 0.10
======= ======= ======= ======= ======= ======= =======
Weighted average common shares
outstanding:
Basic.......................... 11,875 11,875 11,875 11,875 11,936 11,902 10,936
======= ======= ======= ======= ======= ======= =======
Diluted........................ 11,875 11,875 12,554 13,702 14,270 14,235 13,789
======= ======= ======= ======= ======= ======= =======

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20

AS OF DECEMBER 31, AS OF JUNE 30,
--------------------------------------------- -----------------------
1995 1996 1997 1998 1999 1999 2000

SELECTED OPERATING DATA
(UNAUDITED):
Number of client contracts......... 238 368 501 582 758 655 887
Annual contract value (in
thousands)....................... $4,210 $7,600 $12,000 $16,900 $27,400 $21,900 $35,600
Total contract value (in
thousands)....................... $4,200 $8,100 $13,100 $20,500 $37,400 $26,600 $48,800
Number of employees................ 28 47 58 94 144 126 152

AS OF DECEMBER 31, AS OF JUNE 30, 2000
------------------------------------------------------- -----------------------------------------
1995 1996 1997 1998 1999 ACTUAL PRO FORMA(3) PRO FORMA
(UNAUDITED) (UNAUDITED) (UNAUDITED) AS ADJUSTED(4)

BALANCE SHEET DATA:
Cash and cash
equivalents........ $1,713 $2,692 $ 4,008 $ 6,178 $ 5,313 $ 9,460 $ 9,460
Deferred revenue..... 2,602 3,757 5,716 8,322 12,606 17,461 17,461
Working capital(5)... 104 509 1,350 616 (755) (4,563) (7,798)
Total assets......... 3,057 5,097 7,833 12,507 16,942 20,413 20,413
Total stockholders'
equity
(deficit)(6)....... 310 1,020 1,498 2,085 1,134 (2,365) (5,600)

- ------------------------------
(1) We have elected to be taxed, since December 22, 1986 under subchapter S of
the Internal Revenue Code of 1986, as amended, whereby individual
stockholders are liable for individual federal and certain state income
taxes on our taxable income. Prior to the completion of this offering, our
stockholders will terminate our S corporation election and we will be
subject to corporate-level federal and state income taxes at prevailing
corporate rates. Accordingly, the pro forma income tax adjustments represent
the income taxes that would have been recorded if we had been a C
corporation for the periods presented. See note 2 of notes to consolidated
financial statements.

(2) Pro forma basic and diluted earnings per common share are computed by
dividing pro forma net income by the weighted average number of shares of
common stock and, in the case of diluted earnings per common share, common
equivalent shares outstanding during the period. See note 3 of notes to
consolidated financial statements.

(6) The stockholders' deficit at June 30, 2000 reflects our repurchase of
approximately 1.2 million shares for approximately $5.0 million during the
six months ended June 30, 2000. Additionally, the pro forma stockholders'
deficit at June 30, 2000 reflects the distribution of $2.6 million and the
recognition of a net deferred income tax liability of approximately $600,000
described in footnote (3) above.

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21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with
the consolidated financial statements and related notes included elsewhere in
this prospectus. Except for historical information, the discussion in this
prospectus contains certain forward-looking statements that involve risks and
uncertainties.

OVERVIEW

We were founded in 1986 and initially focused on providing in-depth
research and analysis on technology-led business processes, such as supply chain
management, customer management and enterprise management, primarily in
manufacturing environments. Our extensive expertise in these business processes
well positioned us to capitalize on the rapid growth in e-business and the
related demand from both traditional and emerging businesses for independent
expert advice.

To capitalize on this growth opportunity, in late 1998 we developed a new
sales and marketing strategy and decided to invest in new industry practices and
expand geographically. In 1999, we rebranded our service offerings as the
E-Business Advisory Service, reorganized and increased the size of our research
staff and significantly increased the size of our sales and marketing
organizations. We launched our Retail Strategies and Utilities Strategies
practices in the fall of 1999. In addition, we opened our first office outside
of the United States in London, England in September 1999.

We derive substantially all of our revenues from contracts for the research
practices provided through our E-Business Advisory Service. These services
include our written research, access to our research analysts and admission to
our executive conference events. Contracts for our services are typically
renewable annually and payable in advance. Accordingly, a substantial portion of
our billings is initially recorded as deferred revenue. Research service revenue
is recognized ratably on a monthly basis over the term of the contract. By their
terms, the contracts are not refundable or cancelable. We also enter into
multi-year agreements, generally two to three years in length. At June 30, 2000,
approximately 17% of our clients held multi-year contracts.

Other revenue is generated primarily from our Contract Negotiation and
Benchmarking Service, conference events and speaking engagements. Our Contract
Negotiation and Benchmarking Service is a fixed-fee contract where we provide
clients with the critical information needed to negotiate enterprise software
licensing and integration agreements. Our conference revenue consists primarily
of revenue from individual attendees other than those receiving admission as
part of their E-Business Advisory Service contracts. Billings attributable to
other revenue are initially recorded as deferred revenue and then recognized as
revenue when services are performed. Other revenue represented approximately 13%
and 12% of our total revenues for the year ended December 31, 1999 and six
months ended June 30, 2000.

We have historically held our conferences during the second and fourth
quarter. Conference expenses normally exceed conference revenues and, as a
result, our operating margins are negatively impacted during these quarters.

We have a highly diversified client base, which includes large enterprises
and technology and service vendors, and no single client currently accounts for
more than 3% of revenue. Revenues related to operations outside the United
States accounted for less than 3% of our total revenues for each of the three

17
22

years ended December 31, 1999 and, accounted for approximately 5% during the six
month period ended June 30, 2000. Nearly all sales are recorded in U.S. dollars.

Total revenues have grown to $25.4 million in 1999 from $4.5 million in
1995, representing a compounded annual growth rate of 54%. Research services
revenue is a function of the number of client contracts we have and the value
paid for the services. We believe that the following are useful indicators of
our business performance:

- ANNUAL CONTRACT VALUE. The value of contracts to purchase research
services is an important measure of our business volume. We calculate
annual contract value as the total revenues recognizable during a
twelve-month period from all of our E-Business Advisory Service contracts
in force at a given time, which value includes any revenue from the
contracts that has already been recognized.

- TOTAL CONTRACT VALUE. Total contract value represents the total value of
all client contracts, including the value of all the years under
multi-year agreements. We calculate total contract value as the total
revenues recognizable under all of our E-Business Advisory Service
contracts in force at a given time, which value includes any revenue from
the contracts that has already been recognized. Total contract value is
different from deferred revenue, which represents unrecognized revenue
remaining on all billed contracts.

- NUMBER OF CLIENT CONTRACTS. The number of client contracts represents
the number of client contracts in effect at the end of each period.

- CONTRACT RENEWAL RATES. Our experience is that a substantial number of
our clients renew expiring contracts. At any given time, we calculate our
renewal rates based on the number of client contracts that came up for
renewal during the previous twelve-month period. The unit renewal rate
represents the number of renewing client contracts. The dollar renewal
rate represents the total E-Business Advisory Service dollars spent by
renewing clients compared to total dollars that came up for renewal
within the same period. For the purpose of these calculations, we treat
each anniversary of a multi-year contract as a renewal. While the dollar
renewal rate is not necessarily indicative of the future retention rate
of our revenue base, it has been a significant contributing factor to our
revenue growth.

The following table sets forth our total revenues for the years ended
December 31, 1997, 1998 and 1999 and the six months ended June 30, 1999 and June
30, 2000, as well as annual contract value, total contract value, number of
client contracts and renewal rates at the end of such periods.

SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------- --------------
1997 1998 1999 1999 2000
(DOLLARS IN MILLIONS)

Revenues........................................... $11.7 $17.9 $25.4 $10.6 $17.4
Annual contract value.............................. 12.0 16.9 27.4 21.9 35.6
Total contract value............................... 13.1 20.5 37.4 26.6 48.8

Number of client contracts......................... 501 582 758 655 887
Contract renewal rates:
Units............................................ 82% 77% 82% 79% 80%
Dollars.......................................... 92% 92% 97% 95% 102%

Our operating expenses consist of cost of services, sales and marketing
expenses, and general and administrative expenses. Cost of services represents
the costs associated with the production and delivery of our services, and
includes salaries, bonuses and related benefits for research and client services
personnel and all associated editorial, travel and support services. Sales and
marketing expenses include salaries, sales commissions, employee benefits,
travel expenses, promotional costs and other costs incurred in marketing

18
23

and selling our services. General and administrative expenses include the costs
of the operations, technology and finance groups and other administrative
functions.

We recorded deferred compensation of approximately $260,000, representing
the difference between the exercise price of stock options granted on June 23,
2000 and the fair value for accounting purposes of the underlying stock at the
date of grant. The deferred compensation of $260,000 will be amortized over the
four year vesting period of the options.

We have elected to be taxed, since December 22, 1986, under subchapter S of
the Internal Revenue Code, whereby the individual stockholders are liable for
individual federal and certain state income taxes on our taxable income. As a
result, we have not paid federal income taxes and paid reduced state income
taxes. Prior to the completion of this offering, our stockholders will terminate
our S corporation election and we will be subject to corporate-level federal and
state income taxes. Termination of this election will result in our recording a
tax expense and net deferred income tax liability during the quarter in which
the offering is completed. We estimate that the net deferred income tax
liability will be approximately $600,000 upon the expected date of termination.
The pro forma income tax provision in our historical financial statements
reflects the federal and state income taxes which would have been recorded if we
had been treated as a C corporation during the periods presented. We have
calculated these amounts based on an estimated effective tax rate for the
respective periods.

RESULTS OF OPERATIONS

The following table sets forth our results of operations as a percentage of
total revenues for the periods indicated:

SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------ --------------
1997 1998 1999 1999 2000
(UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Revenues:
Research services............................... 89% 84% 87% 89% 88%
Other........................................... 11 16 13 11 12
--- --- --- --- ---
Total revenues............................... 100 100 100 100 100
Operating expenses:
Cost of services................................ 38 40 45 50 40
Sales and marketing............................. 24 25 26 27 28
General and administrative...................... 22 19 19 21 19
--- --- --- --- ---
Total operating expenses..................... 84 84 90 98 87
--- --- --- --- ---
Operating income.................................. 16 16 10 2 13
Other income, net................................. 1 1 1 1 1
--- --- --- --- ---
Income before income tax provision................ 17 17 11 3 14
Income tax provision.............................. 1 1 -- -- 1
--- --- --- --- ---
Net income...................................... 16% 16% 11% 3% 13%
=== === === === ===

SIX MONTHS ENDED JUNE 30, 2000 AND 1999

REVENUES. Total revenues increased 64% to $17.4 million for the six months
ended June 30, 2000 from $10.6 million for the six months ended June 30, 1999.
Research services revenue increased 63% to $15.4 million for the six months
ended June 30, 2000 from $9.4 million during the same period a year ago. The
increases were primarily attributable to an increase in the number of client
contracts and an increase in the annual contract value per client. The number of
client contracts grew 35% to 887 at June 30, 2000 from 655 at June 30, 1999.
Annual contract value per client increased 20% to approximately $40,000 at

19
24

June 30, 2000 from approximately $33,000 at June 30, 1999, primarily due to an
increase in the number of practices purchased by our client companies. Annual
contract value grew 63% to $35.6 million at June 30, 2000 from $21.9 million at
June 30, 1999.

Other revenue increased 76% to $2.0 million for the six months ended June
30, 2000 from $1.2 million during the same period a year ago. The increase was
primarily attributable to higher revenue generated by our Contract Negotiation
and Benchmarking Service.

COST OF SERVICES. Cost of services increased 30% to $6.9 million for the
six months ended June 30, 2000 from $5.3 million during the same period a year
ago, due primarily to an increase in research analyst staffing and other
employee-related costs. Cost of services decreased as a percentage of total
revenues to 40% for the six months ended June 30, 2000 from 50% during the same
period a year ago. Costs for the 1999 period included increased research
infrastructure expenses, primarily employee-related costs, incurred to support
anticipated growth, without a corresponding increase in revenue during that
period.

SALES AND MARKETING. Sales and marketing expenses increased 66% to $4.8
million for the six months ended June 30, 2000 from $2.9 million during the same
period a year ago, due primarily to an increase in the number of sales personnel
and employee-related costs, including commissions, as well as travel expenses.
Sales and marketing expenses as a percentage of total revenues increased
slightly to 28% during the six months ended June 30, 2000 compared to 27% the
same period a year ago.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
56% to $3.4 million for the six months ended June 30, 2000 from $2.2 million
during the same period a year ago, due primarily to an increase in
employee-related costs connected with staffing increases in our operations,
technology and finance functions. General and administrative expenses as a
percentage of total revenues decreased to 19% during the six months ended June
30, 2000 from 21% for the six months ended June 30, 1999, reflecting our ability
to leverage these expenses over a higher revenue base.

YEARS ENDED DECEMBER 31, 1999 AND 1998

REVENUES. Total revenues increased 42% to $25.4 million for the year ended
December 31, 1999 from $17.9 million for the year ended December 31, 1998.
Research services revenue increased 46% to $22.1 million for the year ended
December 31, 1999 from $15.1 million during the prior year. These increases were
primarily attributable to growth in the number of client contracts and annual
contract value per client. The number of client contracts grew 30% to 758 at
December 31, 1999 from 582 at December 31, 1998. During that same year, annual
contract value per client increased 24% to approximately $36,000 from
approximately $29,000, due primarily to an increase in the number of services
per client. Annual contract value grew 62% to $27.4 million at December 31, 1999
from $16.9 million at December 31, 1998.

Other revenue increased 16% to $3.3 million in 1999 from $2.8 million for
the prior year. The increase was primarily attributable to higher revenue
generated by our Contract Negotiation and Benchmarking Service.

COST OF SERVICES. Cost of services increased 59% to $11.5 million in 1999
from $7.2 million during the prior year, due primarily to an increase in
research analyst staffing and other employee-related costs. Cost of services
increased as a percentage of total revenues to 45% in 1999 from 40% in 1998.
This increase resulted primarily from research infrastructure expenses,
primarily employee-related costs, incurred to support anticipated growth,
without a corresponding increase in revenues during that year.

SALES AND MARKETING. Sales and marketing expenses increased 45% to $6.6
million in 1999 from $4.5 million during the prior year, due primarily to an
increase in the number of sales personnel and employee-related costs, including
commissions, as well as travel expenses. Sales and marketing expenses, as a
percentage of total revenues, increased slightly to 26% in 1999 compared to 25%
in 1998.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
40% to $4.8 million in 1999 from $3.4 million during the prior year, due
primarily to an increase in employee-related costs

20
25

connected with staffing increases in our operations, technology and finance
functions. General and administrative expenses as a percentage of total revenues
remained at 19% for 1998 and 1999.

YEARS ENDED DECEMBER 31, 1998 AND 1997

REVENUES. Total revenues increased 54% to $17.9 million for the year ended
December 31, 1998 from $11.7 million for the year ended December 31, 1997.
Research services revenue increased 44% to $15.1 million for the year ended
December 31, 1998 from $10.5 million during the prior year. These increases were
primarily attributable to an increase in the number of client contracts and an
increase in the annual contract value per client. The number of clients grew 16%
to 582 at December 31, 1998 from 501 at December 31, 1997. During that same
year, the annual contract value per client increased 21% to approximately
$29,000 from approximately $24,000 due primarily to an increase in the number of
services purchased by our client companies. Annual contract value grew 41% to
$16.9 million at December 31, 1998 from $12.0 million at December 31, 1997.

Other revenue increased 130% to $2.8 million in 1998 from $1.2 million in
1997. The increase was primarily attributable to higher revenue generated by our
Contract Negotiation and Benchmarking Service.

COST OF SERVICES. Cost of services increased 61% to $7.2 million in 1998
from $4.5 million during the prior year, due primarily to an increase in
research analyst staffing and other employee-related costs. Cost of services
increased slightly as a percentage of total revenues to 40% in 1998 from 38% in
1997.

SALES AND MARKETING. Sales and marketing expenses increased 65% to $4.5
million in 1998 from $2.7 million in 1997, due primarily to an increase in the
number of sales personnel and employee-related costs, including commissions, as
well as travel expenses. Sales and marketing expenses as a percentage of total
revenues increased slightly to 25% in 1998 compared to 24% in 1997.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
29% to $3.4 million in 1998 from $2.6 million during the same period in the
prior year, due primarily to an increase in employee-related costs connected
with staffing increases in our operations, technology and finance functions.
General and administrative expenses as a percentage of total revenues decreased
to 19% in 1998 compared to 22% in 1997, reflecting our ability to leverage these
expenses over a higher revenue base.

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QUARTERLY RESULTS OF OPERATIONS DATA

The following tables set forth a summary of our unaudited consolidated
quarterly operating results for the last six quarters and such data expressed as
a percentage of total revenues. In our opinion, this information has been
prepared on a consistent basis with the audited consolidated financial
statements and includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the information for the period
presented when read in conjunction with the consolidated financial statements
and related notes included elsewhere in this prospectus. These results are not
necessarily indicative of results for any future period.

THREE MONTHS ENDED
--------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1999 1999 1999 1999 2000 2000
(IN THOUSANDS)

STATEMENT OF OPERATIONS DATA:
Revenues:
Research services.......... $4,413 $5,027 $5,774 $6,883 $6,870 $8,513
Other...................... 182 969 1,280 856 550 1,474
------ ------ ------ ------ ------ ------
Total revenues........... 4,595 5,996 7,054 7,739 7,420 9,987
Operating expenses:
Cost of services........... 2,220 3,076 2,983 3,213 3,131 3,774
Sales and marketing........ 1,271 1,633 1,737 1,924 2,222 2,605
General and
administrative........... 983 1,186 1,150 1,454 1,565 1,821
------ ------ ------ ------ ------ ------
Total operating
expenses............... 4,474 5,895 5,870 6,591 6,918 8,200
Operating income............. 121 101 1,184 1,148 502 1,787
Other income, net............ 66 56 45 75 57 82
------ ------ ------ ------ ------ ------
Income before income tax
provision.................. 187 157 1,229 1,223 559 1,869
Income tax provision......... 8 7 53 53 25 81
------ ------ ------ ------ ------ ------
Net income................. $ 179 $ 150 $1,176 $1,170 $ 534 $1,788
====== ====== ====== ====== ====== ======

THREE MONTHS ENDED
---------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1999 1999 1999 1999 2000 2000

STATEMENT OF OPERATIONS DATA:
Revenues:
Research services.......... 96% 84% 82% 89% 93% 85%
Other...................... 4 16 18 11 7 15
--- --- --- --- --- ---
Total revenues........... 100 100 100 100 100 100
Operating expenses:
Cost of services........... 48 51 42 41 42 38
Sales and marketing........ 28 27 25 25 30 26
General and
administrative........... 21 20 16 19 21 18
--- --- --- --- --- ---
Total operating
expenses............... 97 98 83 85 93 82
--- --- --- --- --- ---
Operating income............. 3 2 17 15 7 18
Other income, net............ 1 1 1 1 1 1
--- --- --- --- --- ---
Income before income tax
provision.................. 4 3 18 16 8 19
Income tax provision......... -- -- 1 1 1 1
--- --- --- --- --- ---
Net income................. 4% 3% 17% 15% 7% 18%
=== === === === === ===

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27

LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations through funds generated from operations.
Contracts for our E-Business Advisory Service, which constituted 87% of our
total revenues for the year ended December 31, 1999, are generally annually
renewable and payable in advance. We generated $3.0 million, $5.3 million and
$3.4 million in cash from operating activities during the years ended December
31, 1997, 1998 and 1999. During the six months ended June 30, 2000, we generated
$8.9 million in cash from operating activities.

Net cash used in investing activities was $1.1 million in 1997, $30,000 in
1998 and $654,000 in 1999. These investing activities consist of purchases and
redemptions of investments and capital expenditures. During the six months ended
June 30, 2000, net cash used in investing activities was $471,000. Investing
activities during the three years ended December 31, 1999 and the six months
ended June 30, 2000 consisted primarily of purchases of computer equipment,
furniture and leasehold improvements.

Net cash used in financing activities was $1.4 million, $2.3 million and
$3.6 million during the years ended December 31, 1997, 1998 and 1999. The cash
used during the three-year period has consisted primarily of distributions to
stockholders. During the six months ended June 30, 2000, net cash used in
financing activities amounted to $4.3 million, consisting of $1.0 million in
distributions to stockholders and $5.0 million for the repurchase of common
stock, which were offset by a $1.6 million loan from a stockholder and $163,000
in proceeds received from the exercise of options to purchase common stock.

On September 5, 2000, we distributed approximately $1.1 million
representing a portion of our undistributed S corporation earnings. In addition,
on September 18, 2000, our board declared a distribution of approximately $1.5
million to be made to stockholders prior to the offering representing a portion
of the anticipated undistributed S corporation earnings through the termination
of the S corporation election. These distributions of $2.6 million have been
reflected in the pro forma balance sheet as of June 30, 2000. Additionally, we
intend to pay the entire loan payable of $1.6 million to a stockholder by
September 30, 2000. We do not intend to make any other distribution to
stockholders prior to the completion of this offering.

As of June 30, 2000, we had $9.5 million in cash and cash equivalents. As
of June 30, 2000, we had no bank financing.

We plan to continue to introduce new research services and to aggressively
grow our client base. To this end, we will continue to invest in the hiring of
research and sales personnel and the infrastructure needed to support our
anticipated growth, including investments in technology and leasehold
improvements. Although we currently have no material capital commitments, we
expect that capital expenditures will substantially increase during the next two
years as a result of this growth. We believe that our current cash balance,
marketable securities and cash flows from operations, together with the net
proceeds from this offering, will satisfy our working capital, financing and
capital expenditure requirements for at least the next two years.

QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISKS

The functional currency of our foreign subsidiary is the U.S. dollar.
Nearly all of our transactions are settled in U.S. dollars. Accordingly, gains
and losses on currency transactions are not material.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument be recorded in the balance sheet as
either an asset or liability measured at its fair value. This statement also
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. SFAS 133 is
effective for fiscal years beginning after June 30, 1999. However, Statement

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28

of Financial Accounting Standards No. 137, "Deferral of the Effective Date of
SFAS No. 133," was issued to defer adoption of SFAS No. 133 to fiscal years
beginning after June 30, 2000. We do not expect that the adoption of SFAS No.
133 will have a material effect on our consolidated financial statements.

In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements filed with the
SEC. We are required to be in conformity with the provisions of SAB 101 by the
quarter ended June 30, 2000. However, Staff Accounting Bulletin No. 101B,
"Second Amendment: Revenue Recognition in Financial Statements," was issued to
defer adoption of SAB 101 to the quarter ending December 31, 2000. We do not
expect that the adoption of SAB 101 will result in a material effect on our
consolidated financial statements.

In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation--an interpretation of APB Opinion No. 25". FIN 44 clarifies the
application of APB No. 25 and among other issues clarifies the following: the
definition of an employee for purposes of applying APB No. 25; the criteria for
determining whether a plan qualifies as a noncompensating plan; the accounting
consequence of various modifications to the terms of previously fixed stock
options or awards; and the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 1, 2000, but certain
conclusions in FIN 44 cover specific events that occurred after either December
15, 1998 or January 12, 2000. We do not expect the application of FIN 44 to have
material effect on our consolidated financial statements.

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29

BUSINESS

OVERVIEW

As of June 30, 2000, we had 887 client contracts for our E-Business
Advisory Service, a 35% increase from June 30, 1999. Our revenues were $25.4
million in 1999. Revenues increased 64% to $17.4 million in the six months ended
June 30, 2000, from $10.6 million in the six months ended June 30, 1999. Our net
income was $2.7 million in 1999 and $2.3 million for the six months ended June
30, 2000.

MARKET OPPORTUNITY

- SUPPLY CHAIN MANAGEMENT. In 1999, software vendors realized
approximately $3.8 billion in revenues globally for supply chain
management software. This market is projected to grow to approximately
$20.3 billion in 2004, representing a compound annual growth rate of 40%;

- CUSTOMER RELATIONSHIP MANAGEMENT. In 1999, the global market for
customer relationship management software totaled approximately $4.4
billion in revenues and is projected to grow to approximately $20.8
billion in 2004, representing a compound annual growth rate of 36%; and

- E-COMMERCE APPLICATIONS. In 1999, the global market for e-commerce
applications, such as e-procurement software, trading exchange
infrastructure and customer-facing applications, totaled approximately
$1.7 billion in revenues and is projected to grow to approximately $16.0
billion in 2004, representing a compound annual growth rate of 35%.

25
30

increasingly challenged to maintain or gain competitive advantages. We expect
demand will also increase as e-business impacts new industries and expands into
other geographic areas.

OUR SOLUTION

We have designed our E-Business Advisory Service to help clients understand
and implement all the necessary components of a successful e-business strategy.
This service enables clients to make informed business planning and technology
purchasing decisions, establish new product and market strategies and invest in
emerging technology markets. Our solution provides our clients with:

- COMPREHENSIVE BUSINESS APPLICATIONS EXPERTISE. We believe that success
in the new economy requires an integrated, comprehensive approach to
incorporating e-business applications and technologies into an overall
business strategy. Our research spans the entire extended enterprise,
including supply chain management, customer management, enterprise
management, business-to-business e-commerce and all underlying enabling
technologies. Our approach to developing solutions links e-business
strategies to our clients' core business goals.

- INDUSTRY-SPECIFIC EXPERTISE. Because e-business presents a unique set of
issues and technology requirements for each industry, we have established
research teams dedicated to specific industries such as automotive,
consumer package goods, high technology and semiconductor,
pharmaceutical, retail and utilities. These research teams leverage the
expertise of our business applications practices to provide specialized
insights on the impact of emerging technologies on each industry's
existing business processes.

- EXPERIENCED RESEARCH ANALYSTS. We believe our research is distinguished
by the extensive industry experience of our research analysts. As of
August 31, 2000, our research analysts averaged over 15 years of
experience in a variety of industries, including manufacturing, retail,
software and technology, financial services and management consulting.
Our research analysts are trained to view our extensive and diverse
client base as not just the recipients of our best ideas, but also as
active partners in the development of those ideas. Leaders and
decision-makers within large enterprises and technology and service
vendors seek the advice of our research analysts, who are also featured
speakers at industry events and are frequently quoted in national and
international media. We believe that the experience and prominence of our
analysts allow us to identify emerging technology trends and provide
proprietary and compelling research.

- INTERACTIVE AND ONGOING ADVICE TO CLIENTS. Our client service team
manages every client relationship and provides efficient access to all of
our resources, including our research analysts. Through this interaction,
we build personal relationships with our clients and also acquire a
comprehensive view of the business and technical issues that are driving
industry decisions. Daily interaction with hundreds of software vendors
and end users shapes our research agenda and gives us the foundation to
forecast trends and conceptualize the future of the markets we analyze.
Our client services team focuses on creating long-term interactive client
relationships, which we believe has contributed to our high renewal
rates. During the twelve months ended June 30, 2000, approximately 80% of
our client contracts, as measured in units, and 102%, as measured by
dollar value, were renewed.

- ADVANCED ELECTRONIC DELIVERY CAPABILITIES. In addition to delivering our
research to our clients in print form, we extensively utilize electronic
delivery. Our web site, www.amrresearch.com, combines access to all of
our research and proprietary data with advanced personalization features
and easy, intuitive navigation and search capabilities. We are also
currently implementing a web-based knowledge management platform, which
will continuously incorporate information on an individual client's
preferences and areas of interest, enabling us to efficiently target
delivery of our research products and enhance our client service
capabilities.

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GROWTH STRATEGY

Our objective is to be recognized as the leading provider of e-business
research and analysis. Key elements of our strategy include the following:

- EXPAND OUR CLIENT BASE. We believe that the rapid growth of e-commerce
and the related increase in innovative strategies and technologies will
enable us to attract new clients. To take advantage of these
opportunities, we plan to continue increasing the size of our sales
force. As part of this increase, we are also adding a team of national
sales managers exclusively dedicated to our specific industry practices.
As of August 31, 2000, we had 39 sales representatives, up from 28 on
December 31, 1999.

- INCREASE SALES TO EXISTING CLIENTS. We are focused on maintaining our
high renewal rates and increasing sales to our existing clients. We
intend to leverage our relationship with existing clients by pursuing
sales of additional services to other decision-makers within those
organizations.

- INTRODUCE NEW RESEARCH PRACTICES. We have been successful in launching
new research practices and plan to launch additional practices to expand
our business applications, core technology and industry coverage. Over
the past year, we have introduced three new research practices: Retail
Strategies, Utilities Strategies and European E-Business Strategies. We
expect to introduce our Financial Industry Strategies practice in the
second quarter of 2001.

- EXPAND OUR INTERNATIONAL PRESENCE. We plan to capitalize on the rapidly
growing e-business research opportunity in Europe. As part of this
strategy, we opened our London, England office in September 1999. We are
expanding our locally-based research analyst group that provides local
research content. We also intend to continue to grow our European sales
force and to support our European growth with local executive
conferences.

- ENHANCE THE AMR RESEARCH BRAND. We intend to engage in public relations
and marketing efforts to promote our business in the United States and
abroad. These efforts will include ongoing marketing campaigns, continued
enhancements to our web site as well as the continued development of
strategic marketing and distribution relationships. We currently have an
editorial partnership with Fortune and plan to develop other strategic
media partnerships in order to build awareness of our brand. We also plan
to increase the number and types of conferences that we host. We believe
that these conferences provide an excellent opportunity to increase our
brand awareness.

- PURSUE SELECTIVE ACQUISITIONS AND STRATEGIC PARTNERSHIPS. We intend to
explore acquisitions and strategic partnerships that present attractive
opportunities to expand the breadth and scope of our research services
and our client base, both in the United States and abroad. Selective
acquisitions will also allow us to increase the number of our research
analysts and sales personnel.

E-BUSINESS ADVISORY SERVICE

Our core service, the E-Business Advisory Service, provides our clients
continuous access to a wide range of research and analysis focused on their
specific business and technology needs.

We currently have 17 practice areas available to clients of our E-Business
Advisory Service, including five business application practices, a core
technology practice, ten industry practices and a quantitative research
practice. These practices include three new coverage areas added in the past
year: Retail Strategies, Utilities Strategies and European E-Business
Strategies. A client can purchase all of our practices or individual practices
for a fixed annual or multi-year subscription fee. The price paid for service
contracts is a function of the number of practices purchased, the number of
research recipients within the client organization and the number of individuals
having client inquiry privileges.

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32

With a subscription to the E-Business Advisory Service, our clients receive
a comprehensive package that includes:

- PUBLISHED RESEARCH:

Strategic Reports: Monthly reports that contain in-depth analysis and
advice to help clients interpret current industry trends and make
decisions concerning the latest technologies and applications.

Alerts: Weekly event-driven reports that provide concise analysis of
emerging companies and the latest industry news such as new product
announcements, management changes and mergers and acquisitions.

AMR Outlook: Opinion pieces that feature our research analysts' insights
on trends to watch and their outlooks for the markets they cover.

The Executive View: Monthly reports that are targeted to business leaders
and that analyze key issues developing in selected industries.

- DEDICATED CLIENT MANAGEMENT. Our client services team proactively
manages every client relationship and provides efficient access to all of
our resources, including our research analysts. This team provides
clients with strategic advice, business planning support and expert
guidance on selecting technology solutions.

- EXECUTIVE CONFERENCES. Each client receives admission to our executive
conferences, which are attended by hundreds of business and information
technology executives and members of the press. Our conferences, which
typically run one to three days, feature presentations from our research
analysts and industry leaders.

Our published research is delivered to clients in print form and is also
accessible online. Our interactive web site facilitates personalized access to
our research as well as proprietary supporting data.

Through the E-Business Advisory Service, we provide research and analysis
in the following areas:

- BUSINESS APPLICATIONS PRACTICES. Analyze the critical software
applications that provide the technology for an effective e-business
strategy including customer management, supply chain management,
enterprise management and business-to-business e-commerce. These
practices also track and analyze the software providers in all major
business applications markets.

- CORE TECHNOLOGY PRACTICE. Analyzes the technologies that enable
effective e-business strategies. This includes coverage of internet and
network infrastructure, wireless communications, systems management,
security, database, data warehousing and enterprise application
integration.

- INDUSTRY PRACTICES. Address effective e-business strategies and
solutions for particular industries including automotive, consumer
package goods, high technology and semiconductor, pharmaceutical, retail
and utilities.

- QUANTITATIVE RESEARCH PRACTICE. Provides comprehensive market data on
all the markets we cover as well as survey-based reports on the business
and technology plans of decision-makers.

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33

The following is a description of the practices currently available through
our E-Business Advisory Service and a sampling of recent topics covered in each
practice:

- ------------------------------------------------------------------------------------------------
BUSINESS APPLICATIONS PRACTICES RECENT SAMPLE TOPICS
- ------------------------------------------------------------------------------------------------

SUPPLY CHAIN STRATEGIES: Provides advice on - Global logistics and e-fulfillment
how to develop a broad business-to-business - Supply chain collaboration
strategy to manage the extended enterprise, - Analysis of the home delivery market
including detailed analysis on supply chain
planning and execution systems, internet
commerce and related technology areas.
- ------------------------------------------------------------------------------------------------
CUSTOMER MANAGEMENT STRATEGIES: Provides - Prioritizing call centers, contact centers
analysis of both traditional and web-based and web self-service investments
strategies for finding, acquiring, selling - Integrating the internet into customer
to and retaining customers. Analysis management initiatives
includes coverage of customer relationship - Self-service and personalization strategies
management.
- ------------------------------------------------------------------------------------------------
ENTERPRISE MANAGEMENT STRATEGIES: Helps - Return on investment and benefit
clients evaluate, select and manage all realization strategies
enterprise-class applications, including - Application service provider analysis
enterprise resource planning, corporate - Emerging business automation applications
administrative applications (e.g., finance to watch
and human resources), procurement and
internet-related emerging business
automation applications.
- ------------------------------------------------------------------------------------------------
B2B MARKETPLACE STRATEGIES: Focuses on the - Private, independent and consortium trading
key decisions facing executives who are exchanges
evaluating, managing, participating in or - Content management strategies
developing digital marketplaces. - Integration requirements for successful
marketplaces
- ------------------------------------------------------------------------------------------------
EUROPEAN E-BUSINESS STRATEGIES: Provides - Business-to-business e-commerce adoption in
research and advice for businesses that are Europe
evaluating or creating e-business strategies - Analysis of European e-business consultants
in Europe. and systems integrators
- Trading exchange strategies in Europe
- ------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------
CORE TECHNOLOGY RESEARCH PRACTICE RECENT SAMPLE TOPICS
- ------------------------------------------------------------------------------------------------

ENABLING TECHNOLOGY STRATEGIES: Examines the - Enterprise architectures
infrastructure necessary to optimize, - Data warehousing and management
integrate and extend applications to support - Enterprise application integration
new business processes. - Systems management and security
- Network infrastructure
- Wireless technology
- Commerce servers and platforms
- Portals
- ------------------------------------------------------------------------------------------------

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All industry practices provide industry-specific research for executives,
managers and other professionals concerned with formulating e-business
strategies.

- ------------------------------------------------------------------------------------------------
INDUSTRY PRACTICES RECENT SAMPLE TOPICS
- ------------------------------------------------------------------------------------------------

AEROSPACE AND DEFENSE AND COMPLEX - Supply chain optimization
MANUFACTURING STRATEGIES - Build-to-order strategies
- Maintenance repair and operations and
service improvement
- ------------------------------------------------------------------------------------------------
TRANSPORTATION AND HEAVY EQUIPMENT - Trading exchanges
STRATEGIES - Dealer and channel management
- After-market access
- ------------------------------------------------------------------------------------------------
CONSUMER PACKAGED GOODS AND FOOD AND - Plant-to-retail logistics
BEVERAGE STRATEGIES - Trading exchanges
- E-fulfillment
- ------------------------------------------------------------------------------------------------
HIGH TECH AND SEMICONDUCTOR STRATEGIES - Collaborative product design and product
lifecycle management
- Contract manufacturing and demand-driven
manufacturing
- Enterprise relationship management and
customer service
- ------------------------------------------------------------------------------------------------
MILL PRODUCTS STRATEGIES - Plant-centric supply chains
- Bulk material logistics
- Business process outsourcing
- ------------------------------------------------------------------------------------------------
PHARMACEUTICAL AND BIOTECH STRATEGIES - Procurement management and strategic
sourcing
- Regulatory compliance
- New product development and introduction
- ------------------------------------------------------------------------------------------------
REFINING, PETROCHEMICALS AND PLASTICS - Trading exchanges
STRATEGIES - Bulk material logistics
- Plant lifecycle management
- ------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT STRATEGIES - On-line product configuration
- Wireless utilization and applications
- Contract manufacturing
- ------------------------------------------------------------------------------------------------
RETAIL STRATEGIES - Bringing e-commerce to the store
- E-fulfillment and supply chain management
- Merchandising and price optimization
- ------------------------------------------------------------------------------------------------
UTILITIES STRATEGIES - Customer information systems and enterprise
relationship management
- Impact of deregulation
- Energy trading exchanges
- ------------------------------------------------------------------------------------------------

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35

- ------------------------------------------------------------------------------------------------
QUANTITATIVE RESEARCH PRACTICE RECENT SAMPLE TOPICS
- ------------------------------------------------------------------------------------------------

MARKET ANALYSIS AND REVIEW SERIES: Provides - Size and growth forecasts for software,
clients with comprehensive primary research technology and information technology
on the markets for e-business applications services markets
and technologies including multi-year market - Vendor revenue forecasts
forecasts and analysis of key players and - Enterprise applications and e-commerce
industry trends. spending plans
- Technology infrastructure spending plans
- International market demographics
- ------------------------------------------------------------------------------------------------

OTHER SERVICES

Our other services include our Contract Negotiation and Benchmarking
Service, conferences and analyst speaking engagements.

CONTRACT NEGOTIATION AND BENCHMARKING SERVICE

Our Contract Negotiation and Benchmarking Service is sold as a fixed-fee
contract pursuant to which we provide clients with the critical information
needed to negotiate enterprise software licensing and integration agreements.
Through this service, we assist senior executives by guiding them through
contract negotiations, providing benchmarking data, defining contract parameters
and reviewing contract terms and conditions.

CONFERENCES

We host a series of executive conferences in various locations throughout
the year. Our conferences offer senior executives the opportunity to hear
first-hand the insights of our research analysts and industry leaders. These one
to three day events provide an excellent opportunity to showcase our research to
current and potential clients, increase the public profile of our research
analysts, generate favorable press and otherwise promote the AMR Research brand.

We intend to host the following conferences through the winter of 2001:

- ------------------------------------------------------------------------------------------------
CONFERENCE TOPIC
- ------------------------------------------------------------------------------------------------

2000 Annual Fall Executive Conference The Main Event: The Rematch for the Next New
Economy
- ------------------------------------------------------------------------------------------------
2000 Annual European Fall Executive The Race for B2B Leadership in an e-Unified
Conference Europe
- ------------------------------------------------------------------------------------------------
2001 Annual Software and Services Executive Software and Services Market Round-up:
Conference Leadership Strategies for 2001
- ------------------------------------------------------------------------------------------------
2001 Retail and Consumer Packaged Goods When Worlds Collide: The Changing Face of
Executive Conference Supplier-Customer Roles
- ------------------------------------------------------------------------------------------------

We have scheduled four additional conferences in the United States and
Europe through the fall of 2001.

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CLIENTS

We have a highly diversified client base which includes large enterprises
and technology and service vendors. The users of our E-Business Advisory Service
include senior management, technology and marketing professionals and business
strategists. We target multiple levels of decision-makers within an
organization.

Our client contracts have grown 35% to 887 as of June 30, 2000 from 655 as
of June 30, 1999. As of June 30, 2000, we had client contracts with
approximately 12% of the Fortune 1000 companies. We believe there is significant
opportunity to increase our penetration of existing client organizations by
pursuing sales of additional services to other decision-makers within those
organizations. We also expect that our client base will continue to grow as we
introduce new research practices and expand our geographic and industry
coverage.

Approximately 95% of our revenue is derived from sales in North America. We
believe that there are significant opportunities for our services
internationally, especially as e-commerce expands in other parts of the world.
Currently, no single client accounts for more than 3% of our annual contract
value.

Our interactive and continuous service model aimed at building long-term
customer relationships has resulted in high renewal rates. During the twelve
months ended June 30, 2000, approximately 80% of our client contracts, as
measured in units, and 102%, as measured by dollar value, were renewed.

The following is a representative list of our clients by industry:

AEROSPACE AND DEFENSE AND CONSUMER GOODS AND FOOD
COMPLEX MANUFACTURING CONSULTING AND BEVERAGE
- --------------------------- ---------- -------------------------
General Electric Co. Arthur Andersen L.L.P. Anheuser-Busch, Inc.
Honeywell, Inc. C-Bridge Internet Solutions, Gillette Company
Raytheon Co. Inc. Kraft Foods, Inc.
Textron Inc. CSC Consulting Group, Inc. Procter & Gamble Co.
United Technologies Corp. Deloitte & Touche LLP Unilever PLC
Ernst & Young LLP

E-BUSINESS SOFTWARE FINANCIAL HIGH TECH AND SEMICONDUCTOR
i2 Technologies Inc. Fidelity Investments Hewlett Packard Co.
Oracle Corporation Goldman Sachs & Co. IBM
PeopleSoft, Inc. Morgan Stanley Dean Witter Lucent Technologies Inc.
SAP AG Putnam Investment Management Motorola, Inc.
Siebel Systems Inc. Inc. Nortel Networks Corp.
RS Investment Management

PHARMACEUTICALS PROCESS MANUFACTURING RETAIL
Bristol Myers Squibb Co. Abbott Laboratories The Home Depot, Inc.
Eli Lilly and Company The Dow Chemical Company J.C. Penney Co. Inc.
Johnson & Johnson Minnesota Mining and Limited, Inc.
Merck & Co. Inc. Manufacturing, Inc. (3M) Marks & Spencer Ltd.
Pfizer Inc. Occidental Petroleum Corp. OfficeMax, Inc.
Rohm & Haas Company

TRANSPORTATION AND HEAVY
TRADING EXCHANGES EQUIPMENT UTILITIES
- ------------------ ------------------------- --------
EC Industries.com, Inc. ArvinMeritor, Inc. Air Liquide American Corp.
eChemicals, Inc. Deere & Company Bell South Telecommunications,
MetalSite, Inc. General Motors Corp. Inc.
RetailExchange.com, Inc. Harley Davidson, Inc. New York Power Authority
VerticalNet, Inc. PACCAR Inc. Northeast Utilities
Sempra Energy

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RESEARCH AND CLIENT SERVICE METHODOLOGY

We have developed a scaleable organizational structure and methodology that
allow us to deliver comprehensive information, analysis and action-ready advice
to a large and diverse client base. Our research analysts are organized into
integrated teams focused on business applications, core technology and specific
industries, which are supported by our client services organization. This
structure ensures that our research content and client interactions reflect the
in-depth subject expertise and industry experience of our research staff. Our
written reports, web site content, client briefings and teleconferences are all
collaborative efforts that combine the business applications expertise,
industry-specific knowledge and client focus of our organizational structure.

Our research analysts develop most of our written research, with frequent
assistance and contributions from client service managers and a separate team of
quantitative research specialists. Our research analysts use interviews,
surveys, product demonstrations, customer visits and in-depth briefings to
create and maintain profiles and analyses of the vendors in each industry. They
support this research with extensive proprietary data research, including market
forecasts, and executive and user surveys. All reports are subject to an
intensive peer review process in our research department and are then reviewed
by our in-house editorial staff for subject and copy editing. We maintain a
comprehensive set of style guides and other tools to ensure both readability and
consistency.

We believe our research is distinguished by its depth and relevance. We
recruit most of our research analysts from the industries that we serve, and
their extensive experience is reflected in our service offerings. As of August
31, 2000, our research analyst staff averaged over 15 years of experience in a
variety of industries, including manufacturing, retail, software and technology,
financial services and management consulting.

Our research strategy stresses extensive client contact and teamwork within
our research organization. Our business applications and core technology
analysts maintain a comprehensive understanding of the competitive issues and
trends driving the markets they cover. They also analyze the market positions
and strengths and weaknesses of the vendors within these markets. Our
industry-focused analysts leverage this expertise to assess the impact of these
findings on their particular industry. Our integrated approach also ensures that
we have multiple analysts engaged with each client, which we believe results in
both excellent service and unique research.

Because our research analysts routinely interact with users and vendors of
technology, as well as financial investors, they gain a broad perspective about
each market that is reflected in both our published research and our incisive
advice to clients. Each of these interactions is captured in our customer
relationship management system and our research database so that they can be
aggregated, analyzed and shared with the entire research staff. This
information, along with our extensive proprietary quantitative data, is the
basis for the strategic reports that we produce within each practice area.

Our practice teams frequently organize and facilitate special interest
group meetings, roundtable discussions, teleconferences and electronic
communities to allow clients to share their ideas and experiences. These groups
are also used to gather targeted research data and to validate new concepts.

SALES AND MARKETING

We sell and market our research services primarily through our direct sales
force, which has grown to 39 sales representatives as of August 31, 2000, up
from 28 representatives at the end of 1999 and 16 at the end of 1998. We expect
to significantly increase the number of our sales representatives as we grow our
business and expand our geographic presence. Our direct sales force is organized
by region and includes new business account executives, account managers focused
on renewals and sales of new services to existing accounts and an
industry-aligned corporate accounts team targeting Fortune 1000 accounts. We are
also increasing our efforts to identify and attract new clients through our web
site, as well as through integrated direct mail and telemarketing promotions.

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We have developed a number of strategies and programs to build awareness of
the AMR Research brand and to position us as the definitive source of research
and analysis on e-business strategies and technologies. We promote the AMR
Research brand to the press through regular research related discussions, press
releases, market data driven press conferences and scheduled press tours. In
August 2000, we launched the AMR Newswire to provide daily news analysis to our
key press contacts. Our analysts are frequently quoted in articles on e-business
topics that appear in major newspapers, leading business publications, and
industry periodicals. We currently have an editorial partnership with Fortune
and plan to develop other strategic media partnerships to build our brand
awareness.

We host executive conferences in various locations that are targeted to
senior executives and designed to enhance our visibility and reputation. We have
scheduled eight executive conferences through the fall of 2001. In addition, our
research analysts often speak at other industry and corporate events in order to
enhance our reputation and promote our research services. For example, in the
first eight months of 2000, our research analysts appeared at approximately 128
non-AMR Research events, conferences and forums around the world, and we intend
to increase this activity in the future.

COMPETITION

We believe that the principal competitive factors in our industry include
the ability to:

- deliver high quality, in-depth research and analysis;

- address the industry-specific needs of the user;

- offer services that meet the changing needs of a diverse and growing
client base; and

- provide high quality client services to support both strategic and
tactical decision-making.

We believe that we compete favorably with respect to each of these factors,
and that we are the only company whose research provides a comprehensive view of
business-to-business e-commerce in the context of the entire extended supply
chain for specific industries. While some research firms have begun to address
the e-business needs of specific industries, we believe their focus is more on
information technology, web strategy and market forecasts than on in-depth
industry-specific analysis of the extended supply chain. We believe our early
focus on the extended enterprise of specific industries uniquely qualifies us to
address our clients' emerging e-business challenges.

Forrester Research, Inc. and the Gartner Group, Inc. are our principal
competitors. More recently, Jupiter Media Metrix announced its intention to
compete directly in providing research products related to business-to-business
e-commerce. Our indirect competitors include the internal planning staffs of
current and prospective clients, as well as other information providers such as
survey-based general market research firms and general business consulting
firms. Some of our indirect competitors could choose to compete directly against
us in one or more market segments, although we do not see this as highly likely.

We believe that competition may increase as the e-business market grows and
as industries consolidate. Many of our current and potential competitors have
substantially greater financial resources than we have. This may allow them to
devote greater resources than we can to the promotion of their brands and to the
development and sale of their products and services. We cannot assure you that
we will be able to compete successfully against current and future competitors.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

In protecting our rights to our intellectual property, we rely on a
combination of trademark and copyright law, trade secret protections and
confidentiality agreements and other contractual arrangements with our employees
and third parties. We have registered three service marks and have two pending
applications in the United States. Our proprietary research is distributed to
hundreds of different companies throughout the world, including those that may
compete with us. As a result, our efforts may not be sufficient to protect our
intellectual property or deter the inappropriate use of our original research
and analysis. We also may be unable to detect the unauthorized use of, or take
appropriate steps to

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enforce, our intellectual property rights. Moreover, effective trademark,
copyright and trade secret protection may not be available in the country in
which we offer our research services.

Our failure to adequately protect our intellectual property, either in the
United States or abroad, could harm the development of our brand and may result
in a loss in value of our proprietary research and analysis. As a result, we may
not be able to compete effectively. Defending our intellectual property rights
could result in the expenditure of significant financial and managerial
resources, which could harm our financial results.

Although we believe that our proprietary rights do not infringe on the
intellectual property rights of others, other parties may assert claims against
us that we have misappropriated a trade secret or infringed a patent, copyright,
trademark or other proprietary right belonging to them. Any infringement or
related claims, even if not meritorious, could be costly and time consuming to
litigate, may distract management from other tasks of operating the business and
may result in the loss of significant rights.

EMPLOYEES

As of August 31, 2000, we employed a total of 172 persons, including 39
sales representatives and a research staff of 79 people, which includes 44
research analysts and a client services team of 35 employees. Of these
employees, 150 are located at our headquarters in Boston, Massachusetts, 11 are
located in Irvine, California and 11 are located in London, England. The
personnel in Irvine and London consist of sales, research, client services and
operations.

We believe that our compensation policy promoting employee ownership has
contributed to our high retention rates of research analysts and sales
representatives. As of August 31, 2000, approximately 87% of our employees owned
options to purchase shares of common stock. None of our employees has signed
employment or non-competition agreements, nor are they represented under
collective bargaining agreements. We believe that our relations with our
employees are good.

FACILITIES

Our headquarters are located in approximately 48,000 square feet of office
space in Boston, Massachusetts. This facility accommodates research, client
research, marketing, sales, contract negotiations and operations staff. The
current lease term of this facility expires May 31, 2005. During the third
quarter of this year, we signed an amendment to this lease for approximately
11,000 additional square feet at the same location. We also lease two other
facilities in Irvine, California and London, England. Each of these facilities
accommodates sales, research, client services and operations personnel.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers and their respective ages and
positions are as follows:

NAME AGE POSITION

Anthony J. Friscia..................... 44 Chairman of the Board, President and Chief Executive Officer
John V. Bermudez....................... 43 Senior Vice President, Research Operations
Robert B. Blakeley..................... 40 Senior Vice President and Chief Financial Officer
Michael DiPietro....................... 42 Senior Vice President, Global Client Services
Francis R. Gens........................ 45 Senior Vice President, Marketing and Business Development
Christian A. Johnson................... 35 Senior Vice President, Sales
Scott R. Lundstrom..................... 40 Senior Vice President and Chief Technology Officer
Bruce M. Richardson.................... 45 Senior Vice President, Research Strategy
James C. Shepherd...................... 50 Senior Vice President, Strategic Accounts
Karen M. Sullivan...................... 33 Vice President and Controller
Jeffrey M. Kaplan...................... 47 Director
Neal G. Litvack........................ 45 Director
David E. Van Zandt..................... 47 Director
Reuben Wasserman....................... 71 Director

The following sets forth certain biographical information with respect to
our executive officers and our directors.

ANTHONY J. FRISCIA founded AMR Research in 1986 and has served as a
Director and has held the office of President and Chief Executive Officer since
that time. Prior to founding AMR Research, Mr. Friscia served as Director of
Product Management at Concord Data Systems, Inc., a privately held networking
and communications company, from 1984 to 1986. From 1980 to 1983, he was
Director of the Integrated Manufacturing Research Service at Yankee Group, Inc.,
a privately held technology research and analysis firm, and from 1978 to 1980,
he worked in systems development at IBM.

JOHN V. BERMUDEZ has served as Senior Vice President, Research Operations
since December 1999. Mr. Bermudez joined AMR Research in 1995 and has held
several research management positions including Research Director from 1996 to
1997, Service Director, Supply Chain Strategies from 1997 to 1998 and Group Vice
President, Enterprise Applications Research from 1998 to 1999.

ROBERT B. BLAKELEY has served as Senior Vice President and Chief Financial
Officer since joining the company in 1999. Prior to joining AMR Research, Mr.
Blakeley served as the Vice President and Controller of XTRA Corporation, a
publicly held company specializing in leasing freight transportation equipment,
from 1996 to 1999 and as Corporate Controller of XTRA Corporation from 1991 to
1996.

MICHAEL DIPIETRO has served as Senior Vice President, Global Client
Services since June 2000. Mr. DiPietro joined AMR Research in 1989 and has held
several management positions including Vice President of Client Services from
1994 to 1999 and Senior Vice President of International Operations from 1999 to
June 2000.

FRANCIS R. GENS has served as Senior Vice President, Marketing and Business
Development since joining AMR Research in June 2000. Prior to joining AMR
Research, Mr. Gens held various executive positions at International Data
Corporation, a privately held technology market research firm, including Senior
Vice President of Internet and E-Business Research and Chief Analyst from 1995
to May 2000.

CHRISTIAN A. JOHNSON has served as Senior Vice President, Sales since
January 2000. Since joining AMR Research in 1995, Mr. Johnson has held several
sales management positions including Vice President of Sales from 1998 to 1999.
From 1994 to 1995, Mr. Johnson held the position of sales representative with
Gartner Group, Inc., a publicly held research and analysis company.

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41

SCOTT R. LUNDSTROM has served as Senior Vice President and Chief Technology
Officer since January 2000. Mr. Lundstrom joined AMR Research in 1996 and has
held several research management positions including Group Vice President and
Service Director of Emerging Technology Strategies from 1998 through 1999. Prior
to joining AMR Research, Mr. Lundstrom was the Vice President of Business
Development and Vice President of Product Management at Visibility, Inc., a
privately held application software company, from 1994 to 1996.

BRUCE M. RICHARDSON has served as Senior Vice President, Research Strategy
since 1999. Mr. Richardson joined AMR Research in 1988 and has held various
management positions since that time. From 1992 to 1994, Mr. Richardson left the
company to become Vice President of Marketing at Enterprise Planning Systems,
Inc., a privately held software company.

JAMES C. SHEPHERD has served as Senior Vice President, Strategic Accounts
since July 2000. Mr. Shepherd joined AMR in 1995 and was promoted to Vice
President of Research in 1996. Mr. Shepherd has held several management
positions at AMR, including Senior Vice President, Client Services from 1999
through July 2000. Prior to 1995, Mr. Shepherd was Director of Product Strategy
at Avalon Software, Inc., a privately held application software company.

KAREN M. SULLIVAN has served as Vice President and Controller since 1996.
Ms. Sullivan joined AMR Research in 1990 and has held several management
positions since that time.

JEFFREY M. KAPLAN has served as a Director of AMR Research since 1998. Mr.
Kaplan is Director of Strategic Marketing for Lucent NetworkCare Professional
Services, where he is responsible for marketing, including strategic positioning
and branding programs, alliance marketing, analyst and press relations, and
service program planning and development. Before obtaining this position in
1996, Mr. Kaplan served as Vice President/Service Director of Benchmarking
Services at META Group and as Director and Principal Analyst of Network
Integration Research at Dataquest Systems, Inc.

NEAL G. LITVACK has served as a Director of AMR Research since 1998. Mr.
Litvack has been President of Retail Marketing at Fidelity Investments since
April 2000. Mr. Litvack was Executive Vice President of Marketing at Nvest L.P.,
a holding company of money management firms from 1997 to April 2000. Prior to
joining Nvest, Mr. Litvack served over ten years at Fidelity Investments,
overseeing the marketing of mutual funds and discount brokerage services.

DAVID E. VAN ZANDT has served as a Director of AMR Research since 1998. Mr.
Van Zandt is Dean of Northwestern University's School of Law and specializes in
corporate law and international finance. Prior to becoming Dean in 1995, Mr. Van
Zandt held various academic positions within the law school, including Professor
of Law, since 1985. Earlier in his career, Mr. Van Zandt served as a law clerk
to the Honorable Harry A. Blackmun of the United States Supreme Court, and was
an attorney at Davis Polk & Wardwell in New York.

REUBEN WASSERMAN has served as a Director of AMR Research since 1990. Mr.
Wasserman is an independent business consultant focused on new business
ventures, mergers and acquisitions, portfolio divestitures, license technology
and operations troubleshooting. Mr. Wasserman is a member of the Board of
Directors of Cognex Corporation, a publicly held company specializing in machine
vision systems. From 1976 to 1985, he was Vice President of Advanced Planning
for Gould's Electronics Divisions where he was responsible for executing the
company's growth strategy in electronics.

ELECTION AND COMPENSATION OF DIRECTORS

Our certificate of incorporation provides for a classified board of
directors divided into three classes. Messrs. Wasserman and Kaplan will
initially serve as Class I Directors whose term of office will expire at the
annual meeting of stockholders to be held in 2001. Messrs. Van Zandt and Litvack
will initially serve as Class II Directors whose term of office will expire at
the annual meeting of stockholders to be held in 2002. Mr. Friscia will
initially serve as the sole Class III Director whose term of office will expire
at the annual meeting of stockholders to be held in 2003. At each annual meeting
of stockholders, beginning with the 2001 annual meeting, the successors to
directors whose terms will then expire will be elected to serve
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from the time of election and qualification until the third annual meeting
following election and until their successors have been duly elected and
qualified, or until their earlier resignation or removal, if any. To the extent
there is an increase or reduction in the number of directors, increase or
decrease in directorships resulting therefrom will be distributed among the
classes so that, as nearly as possible, each class will consist of an equal
number of directors. Three directors will be independent, as required by the
rules of the Nasdaq National Market. Currently, all directors, other than Mr.
Friscia, are independent.

Our current non-employee directors receive $1,000 per board meeting. They
are also reimbursed for the expenses they incur in attending meetings of the
board or board committees. Although our directors are not entitled to any
specified number of options as a result of their positions as directors, we have
granted in the past, and intend to grant in the future, non-qualified stock
options to our non-employee directors.

BOARD COMMITTEES

On September 18, 2000, we established Compensation and Audit Committees.
The Compensation Committee is comprised of Messrs. Kaplan, Van Zandt and
Litvack. The Compensation Committee reviews and evaluates the compensation and
benefits of all of our officers, reviews general policy matters relating to
compensation and employee benefits and makes recommendations concerning these
matters to the board of directors. The Compensation Committee also administers
our stock option plans. See "Management -- Benefit Plans."

The Audit Committee is comprised of Messrs. Wasserman, Van Zandt and
Litvack. The Audit Committee is governed by a charter that requires that each
member of the Audit Committee be independent and which identifies the roles and
responsibilities of the Audit Committee. The Audit Committee reviews, with our
independent auditors, the scope and timing of the auditors' services, the
auditors report on our consolidated financial statements following completion of
the auditors' audit, and our internal accounting and financial control policies
and procedures. In addition, the Audit Committee will make annual
recommendations to the board of directors for the appointment of independent
auditors for the ensuing year.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of our Compensation Committee are Messrs. Kaplan, Van Zandt and
Litvack. No interlocking relationship exists between our executive officers or
directors and the compensation committee of any other entity. The full board of
directors has in the past made all decisions regarding executive officer
compensation and the granting of stock options.

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EXECUTIVE COMPENSATION

The following table sets forth the compensation earned by our Chief
Executive Officer and each of our other most highly compensated executive
officers during the year ended December 31, 1999:

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- -------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY(1) BONUS(1) COMPENSATION OPTIONS COMPENSATION(2)

Anthony J. Friscia........ $222,000 $ 55,654 -- -- $22,140(3)
President and Chief
Executive Officer
Michael DiPietro.......... 160,000 132,250 $130,851(5) -- 8,000
Senior Vice President,
Global Client Services(4)
Bruce M. Richardson....... 155,000 124,250 -- 62,500 8,000
Senior Vice President,
Research Strategy(6)
Christian A. Johnson...... 125,000 84,400 -- 62,500 8,000
Vice President, Sales
James C. Shepherd......... 145,000 51,000 -- -- 8,000
Senior Vice President,
Strategic Accounts(7)

- ------------------------------
(1) Salary and bonus amounts are presented in the year earned. The payment of
such amounts may have occurred in other years.

(2) All other compensation paid to the named executive officers includes up to
$8,000 per year paid to our named executive officers under our 401(k) plan.

(3) All other compensation for Mr. Friscia includes $14,140 for health insurance
and life and disability benefits each year, but excludes distributions paid
to Mr. Friscia based on our S corporation earnings.

(4) At December 31, 1999, Mr. DiPietro served as Senior Vice President,
International Operations.

(5) Other annual compensation paid to Mr. DiPietro in 1999 was paid in
connection with a temporary relocation to London, England.

(6) All other compensation excludes any distributions paid to Mr. Richardson
based on our S corporation earnings.

(7) At December 31, 1999, Mr. Shepherd served as Senior Vice President, Client
Services.

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OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information regarding the option
grants made during the year ended December 31, 1999 to each of our named
executive officers in the Summary Compensation Table:

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
-------------------------------------------------------- ----------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(%) ($/SHARE) DATE 5%($) 10%($)

Anthony J. Friscia....... -- -- -- -- -- --
Michael DiPietro......... -- -- -- -- -- --
Bruce M. Richardson...... 62,500 3.9% $2.49 12/20/09 $97,793 $247,827
Christian A. Johnson..... 62,500 3.9 2.49 12/20/09 97,793 247,827
James C. Shepherd........ -- -- -- -- -- --

- ------------------------------
(1) In accordance with the rules of the SEC, shown are the gains or "option
spreads" that would exist for the respective options granted. These gains
are based on the assumed rates of annual compound stock price appreciation
of 5% and 10% from the date the option was granted over the full option
term. These assumed annual compound rates of stock price appreciation are
mandated by the rules of the SEC and do not represent our estimate or
projection of future common stock prices.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

The following table sets forth information regarding exercise of options
and the number and value of options held at December 31, 1999, by each of our
named executive officers in the Summary Compensation Table:

NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED-
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1999 AT DECEMBER 31, 1999(1)
---------------------------------- ----------------------------------
NAME EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)

Anthony J. Friscia.............. 97,655 58,595 $ $
Michael DiPietro................ 820,312 23,438
Bruce M. Richardson............. 507,810 179,690
Christian A. Johnson............ 57,291 130,209
James C. Shepherd............... 156,248 93,752

- ------------------------------
(1) Value is based on the difference between the option exercise price and an
assumed initial public offering price of $ per share, multiplied by
the number of shares of common stock underlying the option. No market
existed for the common stock prior to this offering.

BENEFIT PLANS

1996 OPTION PLAN

We adopted the 1996 Stock Option Plan in 1996. As of August 31, 2000, a
total of 6,369,750 shares have been reserved for issuance under the plan. As of
August 31, 2000, options to purchase a total of 5,777,869 shares were
outstanding under the plan. In addition, on September 18, 2000, the board
approved the grants of options to purchase approximately 400,000 shares under
the plan. After the adoption of the 2000 plan, no further grants shall be made
under this plan.

Each option has a maximum term of ten years. The exercise price of each
option may be paid in cash or in shares of our common stock valued at fair
market value on the grant date.

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2000 STOCK INCENTIVE PLAN

The 2000 Stock Option Plan, or the 2000 plan, provides for the granting of
incentive stock options as defined in Section 422 of the Internal Revenue Code,
nonqualified options and stock awards to our officers, employees, directors, and
consultants. The 2000 plan may be administered by our full board of directors or
by a committee appointed by the board and consisting of two or more members of
our board. The board or committee has the authority to take, among others, the
following actions:

(a) interpret and apply the 2000 plan; and

(b) determine the eligibility of an individual to participate in the
2000 plan.

No incentive stock options may be granted to an employee who, at the time
of the grant, owns more than 10% of the combined voting power of all classes of
our stock immediately prior to the grant of the option, unless the purchase
price of the stock is not less than 110% of the stock's fair market value on the
date of the grant and the option, by its terms, is not exercisable more than
five years from the date it is granted.

Vested options may be exercised in full at one time or in part from time to
time in amounts of 100 shares or more. The payment of the exercise price may be
made by delivery of cash, delivery of a check or by a cashless exercise as
determined by the board or committee and as set forth in the option agreement.
We may delay the issuance of shares covered by the exercise of an option until
the shares for which the option has been exercised have been registered or
qualified under the applicable federal or state securities laws, or our counsel
has opined that the shares are exempt from the registration requirements of
applicable federal or state securities laws.

The term of any option granted under the 2000 plan is limited to either 10
years, in the case of incentive stock options, or 15 years, in the case of
nonqualified stock options, but shall be subject in either case to earlier
termination in accordance with the terms of the holders' option agreement. Upon
the termination of an option holder's employment with us, his or her options
will terminate in accordance with the terms of the holders' option agreement.

The number of shares initially reserved for issuance upon the exercise of
options under the 2000 plan is, 2.0 million. In addition, on the first day of
each year, the number of shares available for issuance under the 2000 plan shall
be increased by an amount equal to 5% of total number of issued and outstanding
shares on that date. As of August 31, 2000, no options have been granted under
the 2000 plan.

2000 EMPLOYEE STOCK PURCHASE PLAN

The 2000 Employee Stock Purchase Plan has been adopted by the board of
directors and approved by the stockholders. The plan will become effective
immediately upon the effective date of this offering. The plan is designed to
allow eligible employees to purchase shares of our common stock, at semi-annual
intervals, through their periodic payroll deductions. A total of 500,000 shares
of common stock may be issued under the plan. In addition, on the first day of
each fiscal year, the number of shares available under the Plan shall be
increased by an amount equal to 1% of the stock outstanding on the last day of
the immediately preceding fiscal year.

The plan will have a series of successive offering periods, each with a
maximum duration of 24 months. However, the initial offering period will begin
on the effective date of this offering and will end on the last business day in
September 2002. Should the fair market value of the common stock on any
semi-annual purchase date be less than the fair market value on the first day of
the offering period, then the current offering period will automatically end,
and a new offering period will begin, based on the lower fair market value.

A participant may contribute up to 10% of his or her cash earnings through
payroll deductions and the accumulated payroll deductions will be applied to the
purchase of shares on the participant's behalf on each semi-annual purchase date
(the last business day in March and September of each year). The purchase price
per share will be 85% of the lower of the fair market value of our common stock
on the first day of the offering period or the fair market value on the
semi-annual purchase date. The first

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purchase date will occur on the last business day in March 2001. In no event,
however, may any participant purchase more than 2,000 shares per year.

LIMITATION OF LIABILITY; INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by the Delaware General Corporation Law, we have included in
our restated certificate of incorporation a provision to eliminate the personal
liability of our directors for monetary damages for breach or alleged breach of
their fiduciary duties as directors, other than breaches of their duty of
loyalty, actions not in good faith or which involve intentional misconduct, or
transactions from which they derive improper personal benefit. In addition, our
amended and restated bylaws provide that we are required to indemnify our
officers and directors under certain circumstances, including those
circumstances in which indemnification would otherwise be discretionary, and we
are required to advance expenses to our officers and directors as incurred in
connection with proceedings against them for which they may be indemnified. At
present, we are not aware of any pending or threatened litigation or proceeding
involving our directors, officers, employees or agents in which indemnification
would be required or permitted. We believe that our certificate of incorporation
and by-law provisions are necessary to attract and retain qualified persons as
directors and officers.

RELATIONSHIPS WITH DIRECTORS AND RELATED TRANSACTIONS

We have entered into a tax indemnification agreement with stockholders
relating to their respective income tax liabilities. These stockholders will
continue to be liable for personal income taxes on our income for all periods
prior to the time we cease to be an S corporation, while we will be liable for
all income taxes subsequent to the time it ceases to be an S corporation. The
agreement generally provides that we will indemnify each of these stockholders
for adjustments causing an increase in his taxes (including interest and
penalties) resulting from adjustments initiated by taxing authorities related to
the periods after January 1, 1997 that we were an S corporation, and that each
such stockholder will pay to us an amount equal to any decrease in his tax
liability resulting from such adjustments.

On December 31, 1999, we entered into a redemption agreement with an
employee stockholder to acquire on January 3, 2000, 1,094,750 shares of its
stock from Robert M. Saltz. The initial redemption value was approximately $2.7
million, which was paid in cash and a $1.2 million promissory note. Payments of
principal of $300,000, along with interest at a rate equal to 1.5% above prime
rate to be determined on each payment date, are due annually beginning January
1, 2001. The final redemption value was to be based upon the fair value of the
stock determined by our board of directors or resulting from a liquidation
event. On April 10, 2000, our board of directors determined the fair value for
the redemption transaction to be approximately $5 million. The increase in the
redemption value was paid in cash and an increase to the promissory note to $1.6
million. Additionally, we intend to pay the entire loan payable of $1.6 million
to a stockholder by September 30, 2000.

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PRINCIPAL STOCKHOLDERS

The following table sets forth information about the beneficial ownership
of our outstanding common stock on August 31, 2000, by (1) each person who is
known by us to own beneficially more than five percent of our common stock, (2)
each of our directors, (3) our chief executive officer and next four most highly
compensated executive officers and (4) all of our executive officers and
directors as a group. Except as noted below, we believe that the persons named
in the table have sole voting and investment power with respect to the shares of
common stock set forth opposite their names. The address of each of our
executive officers and directors is in care of AMR Research, Inc., Two Oliver
Street, 5th Floor, Boston, Massachusetts, 02109-4925.

In accordance with SEC rules, beneficial ownership includes any shares as
to which a person or entity has sole or shared voting power or investment power
and any shares as to which the person or entity has the right to acquire
beneficial ownership within 60 days after August 31, 2000 through the exercise
of any stock option or warrant. Percentage of beneficial ownership is based on
10,747,063 shares of common stock outstanding as of August 31, 2000.

SHARES OWNED PRIOR SHARES OWNED
TO THE OFFERING(1) AFTER THE OFFERING
----------------------- ------------------------
NUMBER PERCENTAGE NUMBER PERCENTAGE

Anthony J. Friscia(2)......................... 4,719,931 43.4% %
John R. Serafini, Jr.(3)...................... 2,213,281 20.6
Robert M. Saltz(4)............................ 2,227,400 20.5
James E. Heaton............................... 1,437,500 13.4
Michael DiPietro(5)........................... 833,332 7.2
Bruce M. Richardson(6)........................ 729,163 6.4
James C. Shepherd(5).......................... 208,331 1.9
Christian A. Johnson(5)....................... 83,331 *
Reuben Wasserman(5)........................... 78,124 *
David E. Van Zandt(7)......................... 57,541 *
Neal G. Litvack(8)............................ 33,456 *
Jeffrey M. Kaplan(8).......................... 11,781 *
All directors and executive officers as a
group (14 persons)(9)....................... 7,259,670 55.1

- ------------------------------
* less than 1% of outstanding common stock

(1) Except as otherwise noted below, we believe each beneficial owner has the
sole voting and investment power with respect to all shares of capital stock
(or options, warrants or other securities convertible into or exchangeable
for capital stock) shown as beneficially owned by him. All numbers and
percentages, except as otherwise noted, do not assume the exercise of
outstanding options or warrants. Pursuant to the rules of the Securities and
Exchange Commission, shares of common stock which an individual or group has
a right to acquire within sixty (60) days of August 31, 2000 pursuant to the
exercise of presently exercisable or outstanding options, warrants or
conversion privileges are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person or group shown in the table.

(2) This number includes 130,206 shares issuable upon exercise of stock options
that vest within sixty (60) days of August 31, 2000. This number also
includes 683,475 shares held by Mr. Friscia as trustee of trusts for the
benefit of the children of Mr. Saltz, as to which Mr. Friscia disclaims any
beneficial ownership.

(3) Includes 19,531 shares issuable upon exercise of options within sixty (60)
days of August 31, 2000.

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(4) Includes 109,375 shares issuable upon exercise of options within sixty (60)
days of August 31, 2000. Does not include 683,475 shares held by the
children of Mr. Saltz in trust, as to which Mr. Saltz disclaims any
beneficial ownership.

(5) All of these shares are issuable upon exercise of options within sixty (60)
days of August 31, 2000.

(6) Includes 572,913 shares issuable upon exercise of options that vest within
sixty (60) days of August 31, 2000.

(7) Includes 48,167 shares of common stock held by his spouse. Mr. Van Zandt
disclaims any beneficial ownership of the shares held by his spouse. Also
includes 9,374 shares issuable upon exercise of options within sixty (60)
days of August 31, 2000.

(8) Includes 9,374 shares issuable upon exercise of options within sixty (60)
days of August 31, 2000.

(9) Includes 2,439,039 shares that are issuable upon the exercise of options
within sixty (60) days of August 31, 2000.

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DESCRIPTION OF CAPITAL STOCK

Upon completion of the offering, our authorized capital stock will consist
of 100.0 million shares of common stock, $0.01 par value per share, of which
shares will be outstanding, and 5.0 million shares of preferred stock,
$0.01 par value per share, none of which will be outstanding. The following
description of our capital stock and certain provisions of our restated
certificate of incorporation, or the certificate of incorporation, and amended
and restated bylaws, or bylaws, is a summary and is qualified in its entirety by
the provisions of the certificate of incorporation and bylaws, copies of which
have been filed as exhibits to this Registration Statement of which this
prospectus is a part.

COMMON STOCK

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of the stockholders, including the election of
directors. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election if they choose to do so. The certificate of incorporation
does not provide for cumulative voting for the election of directors. Holders of
common stock are entitled to receive ratably such dividends subject to any
preferential dividend rights of any then outstanding preferred stock, if any, as
may be declared from time to time by the board of directors out of funds legally
available therefor, and shall be entitled to receive, pro rata, all assets of
AMR Research available for distribution to such holders upon liquidation subject
to any preferential rights of any then outstanding preferred stock. Holders of
common stock have no preemptive, subscription or redemption rights.

PREFERRED STOCK

We are authorized to issue "blank check" preferred stock, which may be
issued from time to time in one or more series upon authorization by our board
of directors. The board of directors, without further approval of the
stockholders, is authorized to fix the dividend rights and terms, conversion
rights, voting rights, redemption rights and terms, liquidation preferences and
any other rights, preferences, privileges and restrictions applicable to each
series of the preferred stock. The issuance of preferred stock, while providing
flexibility in connection with possible acquisitions and other corporate
purposes, could, among other things, adversely affect the voting power of the
holders of common stock and, under certain circumstances, make it more difficult
for a third party to gain control of AMR Research, discourage bids for our
common stock at a premium or otherwise adversely affect the market price of our
common stock. We currently have no plans to issue any preferred stock.

REGISTRATION RIGHTS

Pursuant to the terms of a registration rights agreement, after the closing
of this offering the holders of approximately 10.5 million shares of common
stock will be entitled to piggyback registration rights with respect to the
registration of their shares under the Securities Act, subject to various
limitations. These registration rights are subject to specific conditions and
limitations, among them the right of the underwriters of an offering to limit
the number of shares of common stock held by security holders with registration
rights to be included in a registration. Registration of any shares of the
shares of common stock held by security holders with registration rights would
result in shares becoming freely tradable without restriction under the
Securities Act immediately upon effectiveness of such registration.

CERTAIN CERTIFICATE OF INCORPORATION, BYLAW AND STATUTORY ANTI-TAKEOVER
PROVISIONS AFFECTING STOCKHOLDERS

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to some exceptions, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained that status with the approval of the board of
directors or unless the business combination is approved in a

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prescribed manner. A "business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder. Subject to various exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within three years
did own, 15% or more of our voting stock. This statute could prohibit or delay
the accomplishment of mergers or other takeover or change in control attempts
with respect to us and, accordingly, may discourage attempts to acquire us.

In addition, we have amended and restated various provisions of our
certificate of incorporation and our bylaws, which provisions will be in effect
upon the closing of the offering and are summarized below, may be deemed to have
an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt that a stockholder might consider in its best interest,
including those attempts that might result in a premium over the market price
for the shares held by stockholders.

BOARD OF DIRECTORS VACANCIES. Our bylaws authorize a majority of the board
of directors to fill vacant directorships or increase the size of the board of
directors. This authority may deter a stockholder from removing incumbent
directors and simultaneously gaining control of the board of directors by
filling the vacancies created by this removal with its own nominees.

STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS. Our certificate of
incorporation and bylaws provide that stockholders may take action by written
consent only if all stockholders entitled to vote on the matter consent to the
action in writing and written consents are filed with the records of the
meetings of stockholders. The certificate of incorporation and bylaws further
provide that special meetings of our stockholders may be called only by the
chairman of the board of directors, the president or the board of directors.

AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of
common stock and preferred stock are available for future issuance without
stockholder approval, subject to various limitations imposed by the Nasdaq
National Market. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued shares of common stock and preferred stock could make
more difficult or discourage an attempt to obtain control of us by means of a
proxy contest, tender offer, merger or otherwise.

CLASSIFIED BOARD. Our board of directors is divided into three classes.
Initially Class I will serve until the annual meeting of stockholders in 2001,
Class II will serve until the annual meeting of stockholders in 2002 and Class
III will serve until the annual meeting of stockholders in 2003. Following this
initial transition period, each class will serve for three years, with one class
being elected each year. Removal of a member of the board of directors with
cause requires a majority vote of the stockholders. Any vacancy on the board of
directors may be filled by a majority of the remaining directors then in office,
though less than a quorum, or a majority of the stockholders. A vote of at least
60% of the combined voting power of the outstanding stock, voting together as a
single class, is required to alter, amend or repeal the foregoing provisions.

DIRECTORS LIABILITY. The certificate of incorporation and bylaws provide
that no director shall be personally liable to us or our stockholders for
monetary damages for breach of fiduciary duty as a director notwithstanding any
provision of law imposing such liability, provided that, to the extent provided
by applicable law, neither the certificate of incorporation nor the bylaws shall
eliminate the liability of a director for (a) any breach of the director's duty
of loyalty to us or our stockholders, (b) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) acts or
omissions in respect of certain unlawful dividend payments or stock redemptions
or repurchases or (d) any transaction from which such director derives improper
personal benefit. The effect of this provision is to eliminate the rights of AMR
Research and our stockholders (through stockholders' derivative suits against
AMR Research) to recover monetary damages against a director for breach of the
fiduciary duty of care as a director (including breaches resulting from
negligent behavior) except in the situations described in clauses (a) through
(d)above. The limitations summarized above, however, do not affect the ability
of

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AMR Research or our stockholders to seek non-monetary based remedies, such as an
injunction or rescission, against a director for breach of his fiduciary duty,
nor would such limitations limit liability under the Federal securities laws.
Our bylaws provide that we shall, to the extent permitted by Delaware law, as
amended from time to time, indemnify and advance expenses to the currently
acting and former directors, officers, employees and agents of AMR Research or
of another corporation, partnership, joint venture, trust or other enterprise if
serving at our request arising in connection with their acting in such
capacities.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is .

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SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, AMR Research will have outstanding
shares of common stock. Of these shares, the shares offered hereby
( shares if the underwriters' over-allotment option is exercised in full)
will be freely tradable without restriction or further registration under the
Securities Act, unless purchased by "affiliates" of AMR Research as that term is
defined in Rule 144 described below. The remaining shares of common stock
outstanding upon closing of the offering are "restricted securities" as that
term is defined in Rule 144.

In general, under Rule 144, as amended, a person who has beneficially owned
shares for at least one year is entitled to sell in "brokers' transactions" or
to market makers, within any three-month period commencing 90 days after the
date of this prospectus, a number of shares that does not exceed the greater of
(i) one percent of the number of shares of common stock then outstanding,
approximately shares immediately after the completion of this offering,
or (ii) generally, the average weekly trading volume in our common stock during
the four calendar weeks preceding the required filing of a Form 144 with respect
to such sale. Sales under Rule 144 are generally subject to the availability of
current public information about AMR Research. Under Rule 144(k), a person who
is not deemed to have been an affiliate of AMR Research at any time during the
90 days preceding a sale, and who has beneficially owned the shares proposed to
be sold for at least two years, is entitled to sell such shares without having
to comply with the manner of sale, public information, volume limitation or
notice provisions of Rule 144. shares will become eligible for trading
under the exemption provided by Rule 144 beginning 90 days after the date on
which the registration statement of which this prospectus is a part becomes
effective, subject to the restrictions described above. Of these shares,
shares are subject to agreements that prohibit the stockholders from
selling or otherwise disposing of shares for a period of 180 days after the date
of this prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation.

Under Rule 701, persons who purchase shares upon exercise of options
granted prior to the effective date of this offering are entitled to sell such
shares 90 days after the effective date of this offering in reliance on Rule
144, without having to comply with the holding period requirements of Rule 144
and, in the case of non-affiliates, without having to comply with the public
information, volume limitation or notice provisions of Rule 144.
shares of common stock are eligible for sale in reliance on Rule 701 beginning
90 days after the date on which the registration statement of which this
prospectus is a part becomes effective. Of the shares eligible for sale in
reliance on Rule 701, shares are subject to agreements that prohibit
the stockholders from selling or otherwise disposing of shares for a period of
180 days after the date of this prospectus without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation.

Each of our directors, executive officers and substantially all of our
stockholders has agreed to certain restrictions on their ability to sell, offer,
contract or grant any option to sell, pledge, transfer or otherwise dispose of
shares of our common stock for a period of 180 days after the date of this
prospectus, without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation.

Prior to this offering, there has not been any public market for our common
stock. Future sales of substantial amounts of our common stock in the public
market could adversely affect the prevailing market prices and impair our
ability to raise capital through the sale of equity securities.

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UNDERWRITING

Subject to the terms and conditions contained in an underwriting agreement
dated , 2000, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation, Thomas Weisel Partners LLC,
Adams, Harkness & Hill, Inc., William Blair & Company, L.L.C. and DLJdirect
Inc., have severally agreed to purchase from us the number of shares of common
stock set forth opposite their names below:

UNDERWRITERS: NUMBER OF SHARES

Donaldson, Lufkin & Jenrette Securities Corporation.........
Thomas Weisel Partners LLC..................................
Adams, Harkness & Hill, Inc. ...............................
William Blair & Company, L.L.C. ............................
DLJdirect Inc. .............................................
Total.......................................................

The underwriting agreement provides that the obligations of the
underwriters to purchase and accept delivery of the shares of common stock
offered by this prospectus are subject to approval by their counsel of legal
matters concerning the offering and to conditions that must be satisfied by us.
The underwriters are obligated to purchase and accept delivery of all the shares
of common stock offered by this prospectus, other than those shares covered by
the over-allotment option described below, if any are purchased.

The underwriters initially propose to offer the shares of common stock in
part directly to the public at the initial public offering price set forth on
the cover page of this prospectus and in part to dealers, including the
underwriters, at such price less a concession not in excess of $ per
share. The underwriters may allow, and such dealers may re-allow, to other
dealers a concession not in excess of $ per share. After the initial
offering of the common stock, the public offering price and other selling terms
may be changed by the representatives at any time without notice. The
underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

An electronic prospectus will be available on the web site maintained by
DLJdirect Inc., an affiliate of Donaldson, Lufkin & Jenrette Securities
Corporation. Other than the prospectus in electronic format, the information on
this web site relating to the offering is not part of this prospectus and has
not been approved or endorsed by us or the underwriters, and should not be
relied on by prospective investors.

The following table shows the underwriting fees to be paid to the
underwriters by us in this offering. These amounts are shown assuming both no
exercise and full exercise of the underwriters' option to purchase additional
shares of our common stock.

PAID BY AMR RESEARCH
----------------------------
NO EXERCISE FULL EXERCISE

Per share................................................... $ $
Total.......................................................

We will pay the offering expenses, estimated to be $ .

We have granted to the underwriters an option, exercisable for 30 days
after the date of this prospectus, to purchase, from time to time, in whole or
in part, up to an aggregate of additional shares of common stock at the
initial public offering price less underwriting discounts and commissions. The
underwriters may exercise the option solely to cover over-allotments, if any,
made in connection with the offering. To the extent that the underwriters
exercise the option, each underwriter will become obligated, subject to
conditions contained in the underwriting agreement, to purchase its pro rata
portion of such additional shares based on the underwriters' percentage
underwriting commitment as indicated in the above table.

We have agreed to indemnify the underwriters against liabilities which may
arise in connection with the offering, including liabilities under the
Securities Act of 1933 and liabilities arising from breaches of

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the representations and warranties in the underwriting agreement, and to
contribute to payments that the underwriters may be required to make.

Our executive officers and directors and substantially all of our
stockholders are subject to agreements providing that, with certain limited
exceptions, we will not:

- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of
directly or indirectly any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock; or

- enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock, whether any such transaction described above is to be
settled by delivery of common stock or other securities, in cash or
otherwise

for a period of 180 days after the date of this prospectus without the prior
written approval of Donaldson, Lufkin & Jenrette Securities Corporation.

Donaldson, Lufkin & Jenrette Securities Corporation may release some or all
of these shares from such restrictions prior to the expiration of the lock-up
period, although it has no current intention of doing so. See "Shares Eligible
for Future Sale."

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners has been named as a lead or co-manager on numerous
public offerings of equity securities. Thomas Weisel Partners does not have any
material relationship with us or any of our officers, directors or other
controlling persons, except with respect to its contractual relationship with us
pursuant to the underwriting agreement entered into in connection with this
offering.

In addition, during such 180 day period, we have also agreed not to file
any registration statement with respect to the registration of any shares of
common stock or any securities convertible into or exercisable or exchangeable
for common stock, except for registration statements on Form S-8 registering
shares of common stock pursuant to our existing stock plans, without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation.

Prior to the offering, there has been no established trading market for our
common stock. The initial public offering price of the shares of common stock
offered by this prospectus will be determined by negotiation among us and the
underwriters. The factors to be considered in determining the initial public
offering price include:

- the history of and the prospects for the markets in which we compete;

- our past and present operations;

- our historical results of operations;

- our prospects for future financial performance;

- recent market prices of securities of generally comparable companies; and

- the general conditions of the securities markets at the time of the
offering.

The underwriters have reserved up to shares of our commons stock to
be sold in this offering for sale to some of our employees and associates of our
employees and directors, and to other individuals or companies who have
commercial arrangements or personal relationships with us. Through this directed
share program, we intend to ensure that those individuals and companies that
have supported us, or who are in a position to support us in the future, have
the opportunity to purchase our common stock at the same price that we are
offering our shares to the general public. Prospective participants will not
receive any investment materials other than a copy of this prospectus, and will
be permitted to participate in this offering at the initial public offering
price presented on the cover page of this prospectus. No commitment

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to purchase shares by any participant in the directed share program will be
accepted until after the registration statement of which this prospectus is part
is effective and an initial public offering price has been established. The
number of shares available for sale to the general public will be reduced by the
number of shares sold through the directed share program. Any shares reserved
for the directed share program which are not so purchased will be offered by the
underwriters to the general public on the same basis as the other shares offered
hereby.

Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the shares of common stock
offered in any jurisdiction where action for that purpose is required. The
shares of common stock offered may not be offered or sold, directly or
indirectly, nor may this prospectus or any other offering material or
advertisements in connection with the offer and sale of any such shares of
common stock be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with the applicable rules and
regulations of such jurisdiction. Persons into whose possession this prospectus
comes are advised to inform themselves about and observe any restrictions
relating to the offering and the distribution of this prospectus. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any shares of common stock offered in any jurisdiction in which such an
offer or a solicitation in unlawful.

In connection with the offering, some underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
ordinary shares. Specifically, the underwriters may create a syndicate short
position by making short sales of our ordinary shares and may purchase our
ordinary shares on the open market to cover syndicate short positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of ordinary shares than they are required to purchase in the offering.
Short sales can be either "covered" or "naked." "Covered" short sales are sales
made in an amount not greater than the underwriters' over-allotment option to
purchase additional shares in the offering. "Naked" short sales are sales in
excess of the over-allotment option. A naked short position is more likely to be
created if the underwriters are concerned that there may be downward pressure on
the price of the ordinary shares in the open market after pricing that could
adversely affect investors who purchase in the offering. The underwriters may
close out any covered short position by either exercising their over-allotment
portion or purchasing shares in the open market. In determining the source of
shares to close out the covered short position, the underwriters will consider,
among other things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase shares through the
over-allotment option. In addition, the underwriting syndicate may reclaim
selling concessions from syndicate members and selected dealers if they
repurchase previously distributed ordinary shares in syndicate covering
transactions, in stabilizing transactions or in some other way or if Donaldson,
Lufkin & Jenrette Securities Corporation receives a report that indicates
clients of such syndicate members have "flipped" the ordinary shares. These
activities may have the effect of raising or maintaining the market price of our
ordinary shares or preventing or retarding a decline in the market price of our
ordinary shares. As a result, the price of our ordinary shares may be higher
than the price that might otherwise exist in the open market. The underwriters
are not required to engage in these activities, and may end any of these
activities at any time.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for us by Hutchins, Wheeler & Dittmar, A Professional Corporation, Boston,
Massachusetts. A stockholder of Hutchins, Wheeler & Dittmar holds 24,085 shares
of our common stock. Certain legal matters in connection with the offering will
be passed upon for the underwriters by Goodwin, Procter & Hoar LLP, Boston,
Massachusetts.

51
56

EXPERTS

The consolidated financial statements as of December 31, 1998 and 1999, and
for each of the three years in the period ended December 31, 1999 included in
this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission, or SEC, for the common stock we are offering by this
prospectus. This prospectus does not contain all of the information set forth in
the registration statement and the exhibits and schedules thereto. For further
information with respect to us and our common stock, we make reference to the
registration statement and to the exhibits and schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by such reference. A copy of the registration statement may be
inspected by anyone without charge at the SEC's principal office in Washington,
D.C., and copies of all or any part of the registration statement may be
obtained from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of certain fees prescribed by the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. The SEC maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. The address of the web site
is www.sec.gov. Upon completion of the offering, we will be subject to the
information reporting requirements of the Securities Exchange Act of 1934, as
amended and, in accordance therewith, will file reports, proxy statements and
other information with the SEC.

We intend to furnish our stockholders with annual reports containing
consolidated financial statements audited by our independent public accountants
and quarterly reports for the first three fiscal quarters of each fiscal year
containing unaudited interim financial information.

52
57

AMR RESEARCH, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE

Report of Independent Accountants........................... F-2
Consolidated Balance Sheets as of December 31, 1998 and
1999, and June 30, 2000 (unaudited)....................... F-3
Consolidated Statements of Income for the years ended
December 31, 1997, 1998 and 1999, and for the six months
ended June 30, 1999 (unaudited) and 2000 (unaudited)...... F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999, and for the six months
ended June 30, 1999 (unaudited) and 2000 (unaudited)...... F-5
Consolidated Statements of Changes in Stockholders' Equity
(Deficit) for the years ended December 31, 1997, 1998 and
1999, and for the six months ended June 30, 2000
(unaudited)............................................... F-6
Notes to Consolidated Financial Statements.................. F-7

F-1
58

The restated Company's Certificate of Incorporation effecting the stock
split, merger of Class A and Class B common shares into one single class of
common stock, the increase in the number of authorized shares of common stock,
and the authorization of preferred stock as described in Note 12 to the
consolidated financial statements has not been filed at September 18, 2000. When
it has been filed, we will be in a position to furnish the following report:

/s/ PRICEWATERHOUSECOOPERS LLP

REPORT OF INDEPENDENT ACCOUNTANTS

"To the Board of Directors and Stockholders of
AMR Research, Inc.:

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, changes in stockholders' equity
(deficit) and cash flows present fairly, in all material respects, the financial
position of AMR Research, Inc. (the "Company") at December 31, 1999 and 1998,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

Boston, Massachusetts
March 29, 2000,
except for Note 12 for which the date
is September 18, 2000"

F-2
59

AMR RESEARCH, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

DECEMBER 31, PRO FORMA
----------------- JUNE 30, JUNE 30,
1998 1999 2000 2000
(UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................... $ 6,178 $ 5,313 $ 9,460 $ 9,460
Accounts receivable, net of allowance for
doubtful accounts of $270, $244 and $291 at
December 31, 1998 and 1999, and June 30, 2000,
respectively.................................. 4,019 7,521 6,283 6,283
Prepaid commissions............................. 595 1,751 1,893 1,893
Prepaid expenses and other current assets....... 246 468 579 579
------- ------- ------- -------
Total current assets....................... 11,038 15,053 18,215 18,215
Property and equipment, net..................... 1,156 1,399 1,628 1,628
Other assets.................................... 313 490 570 570
------- ------- ------- -------
Total assets............................... $12,507 $16,942 $20,413 $20,413
======= ======= ======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................ $ 954 $ 783 $ 1,211 $ 3,846
Deferred revenue................................ 8,322 12,606 17,461 17,461
Accrued expenses................................ 1,146 2,419 2,506 2,506
Note payable to stockholder..................... -- -- 1,600 1,600
Deferred income tax liability................... -- -- -- 600
------- ------- ------- -------
Total current liabilities.................. $10,422 $15,808 $22,778 $26,013

Commitments (Note 5)
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $0.01 par value, 100,000 shares
authorized; 15,625 shares issued and 11,875
outstanding at December 31, 1998; 15,725 shares
issued and 11,975 shares outstanding at December
31, 1999; 15,865 shares issued and 10,870 shares
outstanding at June 30, 2000; and pro forma
15,865 shares issued and 10,870 shares
outstanding at June 30, 2000.................... 119 120 121 121
Additional paid-in capital......................... -- 206 661 661
Retained earnings (deficit)........................ 2,166 1,008 2,292 (943)
Deferred compensation.............................. -- -- (260) (260)
Treasury stock, at cost (3,750 shares at December
31, 1998 and 1999; and, 4,995 shares at June 30,
2000 and pro forma)............................. (200) (200) (5,179) (5,179)
------- ------- ------- -------
Total stockholders' equity (deficit)....... 2,085 1,134 (2,365) (5,600)
------- ------- ------- -------
Total liabilities and stockholders' equity
(deficit)................................ $12,507 $16,942 $20,413 $20,413
======= ======= ======= =======

The accompanying notes are an integral part of the consolidated financial
statements
F-3
60

AMR RESEARCH, INC.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1997 1998 1999 1999 2000
(UNAUDITED)

REVENUES:
Research services........................... $10,451 $15,101 $22,097 $ 9,440 $15,383
Other....................................... 1,229 2,831 3,287 1,151 2,024
------- ------- ------- ------- -------
Total revenues......................... 11,680 17,932 25,384 10,591 17,407
OPERATING EXPENSES:
Cost of services............................ 4,471 7,212 11,492 5,296 6,905
Sales and marketing......................... 2,745 4,541 6,565 2,904 4,827
General and administrative.................. 2,643 3,404 4,773 2,169 3,386
------- ------- ------- ------- -------
Total operating expenses............... 9,859 15,157 22,830 10,369 15,118
------- ------- ------- ------- -------
Operating income............................ 1,821 2,775 2,554 222 2,289
Other income, net........................... 167 235 242 122 139
------- ------- ------- ------- -------
Income before income tax provision.......... 1,988 3,010 2,796 344 2,428
Income tax provision........................ 92 160 121 15 106
------- ------- ------- ------- -------
Net income.................................. $ 1,896 $ 2,850 $ 2,675 $ 329 $ 2,322
======= ======= ======= ======= =======
Weighted average common shares outstanding:
Basic....................................... 11,875 11,875 11,936 11,902 10,936
======= ======= ======= ======= =======
Diluted..................................... 12,554 13,702 14,270 14,235 13,789
======= ======= ======= ======= =======
Earnings per common share:
Basic....................................... $ 0.16 $ 0.24 $ 0.22 $ 0.03 $ 0.21
======= ======= ======= ======= =======
Diluted..................................... $ 0.15 $ 0.21 $ 0.19 $ 0.02 $ 0.17
======= ======= ======= ======= =======
UNAUDITED PRO FORMA DATA:
Historical income before income tax
provision................................. $ 1,988 $ 3,010 $ 2,796 $ 344 $ 2,428
Pro forma income tax provision.............. 841 1,266 1,203 148 1,003
------- ------- ------- ------- -------
Unaudited pro forma net income.............. $ 1,147 $ 1,744 $ 1,593 $ 196 $ 1,425
======= ======= ======= ======= =======
Unaudited pro forma earnings per common share:
Basic....................................... $ 0.10 $ 0.15 $ 0.13 $ 0.02 $ 0.13
======= ======= ======= ======= =======
Diluted..................................... $ 0.09 $ 0.13 $ 0.11 $ 0.01 $ 0.10
======= ======= ======= ======= =======

The accompanying notes are an integral part of the consolidated financial
statements
F-4
61

AMR RESEARCH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- ---------------------
1997 1998 1999 1999 2000
(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 1,896 $ 2,850 $ 2,675 $ 329 $ 2,322
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............ 149 196 389 181 242
Loss on sale of property and equipment... -- 35 22 19 --
Provision for doubtful accounts.......... 208 210 308 110 218
Changes in assets and liabilities:
Accounts receivable, net................. (2,738) (1,683) (4,159) (242) 1,020
Prepaid expenses and other current
assets................................. (56) (431) (963) (599) (270)
Accounts payable and accrued expenses.... 232 1,480 509 425 515
Deferred revenue......................... 3,316 2,606 4,634 1,687 4,855
------- ------- ------- ------- -------
Net cash provided by operating activities..... 3,007 5,263 3,415 1,910 8,902
------- ------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........... (273) (830) (654) (443) (471)
Redemptions (purchase) of investments......... (800) 800 -- (2,000) --
------- ------- ------- ------- -------
Net cash used in investing activities......... (1,073) (30) (654) (2,443) (471)
------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable to stockholder................... -- -- -- -- 1,600
Share purchases and stock option exercises.... -- -- 207 155 133
Share repurchases............................. -- -- -- -- (4,979)
Distribution to stockholders.................. (1,418) (2,263) (3,833) (3,035) (1,038)
------- ------- ------- ------- -------
Net cash used in financing activities......... (1,418) (2,263) (3,626) (2,880) (4,284)
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents................................. 516 2,970 (865) (3,413) 4,147
Cash and cash equivalents at beginning year... 2,692 3,208 6,178 6,178 5,313
------- ------- ------- ------- -------
Cash and cash equivalents at end of year...... $ 3,208 $ 6,178 $ 5,313 $ 2,765 $ 9,460
======= ======= ======= ======= =======

The accompanying notes are an integral part of the consolidated financial
statements
F-5
62

AMR RESEARCH, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)

COMMON STOCK TREASURY STOCK ADDITIONAL
----------------- ----------------- PAID-IN RETAINED DEFERRED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS COMPENSATION TOTAL

Balance at December 31, 1996........ 11,875 $119 3,750 $ (200) $ -- $ 1,101 -- $ 1,020
Net income..................... -- -- -- -- -- 1,896 -- 1,896
Stockholder distributions...... -- -- -- -- -- (1,418) -- (1,418)
------- ---- ----- ------- ---- ------- ----- -------
Balance at December 31, 1997........ 11,875 119 3,750 (200) -- 1,579 -- 1,498
Net income..................... -- -- -- -- -- 2,850 -- 2,850
Stockholder distributions...... -- -- -- -- -- (2,263) -- (2,263)
------- ---- ----- ------- ---- ------- ----- -------
Balance at December 31, 1998........ 11,875 119 3,750 (200) -- 2,166 -- 2,085
Net income..................... -- -- -- -- -- 2,675 -- 2,675
Stock purchases................ 95 1 -- -- 204 -- -- 205
Exercise of stock options...... 5 -- -- -- 2 -- -- 2
Stockholder distributions...... -- -- -- -- -- (3,833) -- (3,833)
------- ---- ----- ------- ---- ------- ----- -------
Balance at December 31, 1999........ 11,975 120 3,750 (200) 206 1,008 -- 1,134
Net income..................... -- -- -- -- -- 2,322 -- 2,322
Repurchase of common shares.... (1,245) -- 1,245 (4,979) -- -- -- (4,979)
Sale of common shares.......... 13 -- -- -- 50 -- -- 50
Stock issued for services...... 7 -- -- -- 63 -- -- 63
Exercise of stock options...... 120 1 -- -- 82 -- -- 83
Stockholder distributions...... -- -- -- -- -- (1,038) -- (1,038)
Issuance of stock options under
the 1996 Stock Option Plan... -- -- -- -- 260 -- (260) --
------- ---- ----- ------- ---- ------- ----- -------
Balance at June 30, 2000
(unaudited)....................... 10,870 $121 4,995 $(5,179) $661 $ 2,292 $(260) $(2,365)
======= ==== ===== ======= ==== ======= ===== =======

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

F-6
63

AMR RESEARCH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

1. BUSINESS

AMR Research, Inc. (the "Company") is a provider of research and analysis
on e-business strategies and technologies. The Company's research provides a
comprehensive view of the rapidly evolving business processes fundamental to
success in the new economy. The Company offers its clients an integrated set of
services, including monthly qualitative and quantitative studies, daily and
weekly news analysis, research analyst access and participation at its executive
conferences. The Company was incorporated in December 1986 and is incorporated
under the laws of the State of Delaware. In July 1999, the Company established
AMR Research International Limited, a wholly-owned subsidiary incorporated in
Delaware which operates through a branch in the United Kingdom.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION. The consolidated
financial statements of the Company include the accounts of the Company and its
wholly-owned subsidiary. All intercompany balances and transactions have been
eliminated. Certain prior year amounts have been reclassified to conform to the
current year's presentation.

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

UNAUDITED INTERIM FINANCIAL INFORMATION. The accompanying interim
consolidated financial statements at June 30, 2000, and for the six months ended
June 30, 1999 and 2000 and related footnote information are unaudited. It is
management's opinion that this accompanying financial information includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the Company's financial position, results of operations and
cash flows at the dates and for the periods indicated. The results for interim
periods are not necessarily indicative of the results that may be expected for
any future period.

PRO FORMA BALANCE SHEET. The unaudited pro forma balance sheet reflects
the termination of the Company's S corporation election prior to completion of
this offering and the recognition of a deferred income tax liability of
approximately $600,000 as of June 30, 2000.

CASH AND CASH EQUIVALENTS. The Company considers all investments that
mature within three months of acquisition to be cash equivalents.

CONCENTRATION OF CREDIT RISK. Carrying amounts of financial instruments
held by the Company, which include cash equivalents, marketable securities,
accounts receivable, accounts payable and accrued expenses, approximate fair
value because of the short period to maturity of these instruments. Financial
instruments that potentially expose the Company to a concentration of credit
risk principally consist of cash and cash equivalents, marketable securities and
accounts receivable. The Company grants credit to its customers during the
normal course of business and generally requires no collateral from its
customers. However, management routinely assesses the financial condition of its
customers and, as a consequence, believes that its trade accounts receivable
credit risk exposure is limited. No single customer accounted for greater than
10% of revenues or accounts receivable in any of the periods presented.

FOREIGN CURRENCY. The functional currency of the foreign subsidiary is the
U.S. dollar. Nearly all transactions of the Company are settled in U.S. dollars.
Gains and losses on currency transactions, which are immaterial, are included in
the income statement.

F-7
64
AMR RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

PROPERTY AND EQUIPMENT. Property and equipment are stated at cost and
depreciated on a straight-line basis over the respective estimated useful lives,
which are generally three to five years. Leasehold improvements are amortized
over the lesser of the lease term or estimated useful life.

Maintenance and repairs are expensed as incurred; improvements are
capitalized. Upon retirement or disposition, the cost of the asset disposed of
and related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is credited or charged to income.

REVENUE AND COMMISSION EXPENSE RECOGNITION. Revenue from the Company's
E-Business Advisory Service is recognized over the contract period, generally
ranging from one to three years, and as market analyses and review series
reports are delivered. The Company records a receivable and the related deferred
revenue for the billable amount of the contract upon execution. The Company also
records commission expense over the contract period in which the related
revenues are earned. Other revenues consist principally of revenues recognized
from contract negotiation and benchmarking services, speaking engagements and
conference events which are recognized as services are performed.

INCOME TAXES. The Company is taxed under the provisions of subchapter S of
the Internal Revenue Code. Under these provisions, the Company does not pay
corporate federal income taxes on its taxable income. Instead, the stockholders
are liable for individual taxes on their share of the Company's taxable income.
The Company has provided for income taxes in states in which it operated that
did impose certain taxes on S corporations. The Commonwealth of Massachusetts
taxes profits on S corporations with receipts exceeding $6 million. The
provision for income taxes of $92,000, $160,000 and $121,000 in 1997, 1998 and
1999 respectively, and $15,000 and $106,000 for the six months ended June 30,
1999 and 2000, respectively, relates to state income taxes.

As the Company has not been subject to federal income taxes, a
reconciliation of the effective tax rate to the federal statutory rate is not
meaningful. Additionally, no deferred tax asset or liability has been recorded
for 1997, 1998 and 1999 or at June 30, 1999 and 2000 due to immateriality.

Total stockholder distributions amounted to $1.4 million, $2.3 million and
$3.8 million during the years ended December 31, 1997, 1998 and 1999,
respectively and $3 million and $1 million during the six month periods ended
June 30, 1999 and 2000, respectively. Stockholder distributions are made, at
minimum, in amounts necessary to satisfy income tax liabilities of the
stockholders arising from the Company's taxable income.

Prior to the completion of the proposed initial public offering, the
stockholders the Company intend to terminate the S corporation status.
Subsequent to the termination, the Company will be subject to federal and state
corporate income taxes at applicable corporate rates. Accordingly, the
accompanying statements of income include a pro forma income tax adjustment
(using estimated effective income tax rates ranging from 41% to 43%) reflecting
the Company's income tax expenses as if the Company had been a C corporation.
This change in tax status will result in the Company recording a tax expense and
a net deferred tax liability of approximately $600,000 upon the filing date of
the termination.

The Company accounts for income taxes using the liability method as
required by Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes." Under this method, deferred income taxes are
recognized for the future tax consequences of differences between the tax and
financial accounting basis of assets and liabilities. Deferred income taxes are
based on enacted tax laws and statutory tax rates applicable to the periods in
which the differences are expected to affect taxable income. A valuation
allowance is required to reduce deferred tax assets if it is more likely than
not that some or all of the deferred tax assets will not be realized.

F-8
65
AMR RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

SERVICES DEVELOPMENT. All costs incurred in the development of new
services are expensed as incurred.

EARNINGS PER SHARE. The Company computes and reports earnings per share in
accordance with the provisions of SFAS No.128, "Earnings Per Share." The
computations of basic and diluted earnings per share are based upon the weighted
average number of common shares outstanding and potentially dilutive securities.
Potentially dilutive securities include stock options.

ACCOUNTING FOR STOCK-BASED COMPENSATION. The Company adopted SFAS No. 123,
"Accounting for Stock-Based Compensation," which permits entities to recognize
the fair value of all stock-based awards on the date of grant as expense over
the vesting period. Alternatively, SFAS No. 123 also allows entities to continue
to apply the provisions of APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and provide pro forma net income disclosures for option grants made
as if the fair value-based method defined in SFAS No. 123 had been applied.

Under APB Opinion No. 25, compensation expense would be recorded on the
date of grant only if the current market price of the underlying units exceeded
the exercise price. The Company has elected to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.

COMPREHENSIVE INCOME. Effective January 1, 1998, SFAS No. 130, "Reporting
Comprehensive Income," was adopted. This statement requires that all components
of comprehensive income be reported in the financial statements in the period in
which they are recognized. There was no difference between comprehensive income
and the Company's net income reported in the accompanying consolidated statement
of income for any of the periods reported.

SEGMENT REPORTING. The Company has adopted SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information," which requires companies to
report selected information about operating segments, as well as enterprise-wide
disclosures about products, services, geographic areas, and major customers.
Operating segments are determined based on the way management organizes its
business for making operating decisions and assessing performance. The Company
views and manages its operations as one business unit. As a result, the
accompanying financial statements and related notes represent all of the
financial information related to the Company's principal operating segment.
Other revenues consist of contract negotiation and benchmarking service,
speaking engagements and conference events which individually comprise less than
9% of revenues, and total assets for each of the three years ended December 31,
1997, 1998 and 1999. Revenues and assets related to operations outside the
United States accounted for less than 3% of the Company's total consolidated
revenues and assets for each of the three years ended December 31, 1997, 1998
and 1999.

NEW ACCOUNTING PRONOUNCEMENTS. In June 1998, the Financial Accounting
Standards Board issued SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities," which establishes accounting and reporting standards
requiring that every derivative instrument be recorded in the balance sheet as
either an asset or liability measured at its fair value. This statement also
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. SFAS 133 was to be
effective for fiscal years beginning after June 30, 1999. However, Statement of
Financial Accounting Standards No.137, "Deferral of the Effective Date of SFAS
No.133" was issued to defer adoption of SFAS No.133 to fiscal years beginning
after June 30, 2000. Management does not expect the adoption of SFAS No.133 will
have a material effect on its consolidated financial statements.

In December 1999, the Securities and Exchange Commission ("SEC") released
Staff Accounting Bulletin No.101 ("SAB 101"), which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with SEC. The Company is required to be in conformity with the

F-9
66
AMR RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

provisions of SAB 101 by the quarter ended June 30, 2000. However, Staff
Accounting Bulletin No. 101B, "Second Amendment: Revenue Recognition in
Financial Statements" was issued to defer adoption of SAB 101 to the quarter
ending December 31, 2000. Management does not expect the adoption of SAB 101
will have a material effect on its consolidated financial statements.

In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation -- an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB No. 25 and among other issues clarifies the
following: the definition of an employee for purposes of applying APB No. 25;
the criteria for determining whether a plan qualifies as a noncompensating plan;
the accounting consequence of various modifications to the terms of previously
fixed stock options or awards; and the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 is effective July 1, 2000,
but certain conclusions in FIN 44 cover specific events that occurred after
either December 15, 1998 or January 12, 2000. Management does not expect the
application of FIN will have a material effect on its consolidated financial
statements.

3. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income by the
basic weighted average number of common shares outstanding during the period.
Diluted earnings per common share is computed by dividing net income by the
diluted weighted average number of common shares, which includes all dilutive
potential common equivalent shares outstanding, during the period. Dilutive
potential common equivalent shares consist of common stock to be issued upon the
exercise of outstanding stock options. The dilutive effect of options has been
determined in accordance with the treasury-stock method. The following table
summarizes the basic and diluted weighted average common shares:

SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------- ----------------
1997 1998 1999 1999 2000
(IN THOUSANDS)

Basic weighted average common shares
outstanding......................... 11,875 11,875 11,936 11,902 10,936
Dilutive effect of options............ 679 1,827 2,334 2,333 2,853
------ ------ ------ ------ ------
Diluted weighted average common shares
outstanding......................... 12,554 13,702 14,270 14,235 13,789
====== ====== ====== ====== ======

4. SUPPLEMENTAL CASH FLOW INFORMATION

SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------- ---------------
1997 1998 1999 1999 2000
(IN THOUSANDS)

Cash paid for income taxes.................. $77 $159 $209 $77 $37
Non-cash financing activities:
Common stock issued for services
rendered............................. -- -- -- -- 63

In June 2000, the Company issued 7,500 shares of common stock to a vendor
for services rendered related to the Company's conference services. The Company
recorded a prepaid expense of $63,000 at June 30, 2000; the amount will be
expensed once the conference occurs in the fourth quarter of 2000.

F-10
67
AMR RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

5. PROPERTY AND EQUIPMENT

DECEMBER 31,
----------------
1998 1999
(IN THOUSANDS)

Purchased software.......................................... $ 386 $ 560
Computer and office equipment............................... 766 845
Furniture and fixtures...................................... 289 397
Leasehold improvements...................................... 251 283
------ ------
1,692 2,085
Less: accumulated depreciation.............................. (536) (686)
------ ------
Property and equipment, net................................. $1,156 $1,399
====== ======

6. COMMITMENTS

The Company leases office space under non-cancelable leases that expire
through 2005. In addition, the Company leases office equipment under various
non-cancelable operating leases that expire in 2000 and 2002.

At December 31, 1999, future minimum lease payments under non-cancelable
operating leases are as follows:

(IN THOUSANDS)

Year ending December 31,
2000.................................................... $1,305
2001.................................................... 1,503
2002.................................................... 1,441
2003.................................................... 1,409
2004.................................................... 1,400
Thereafter........................................... 421
------
$7,479
======

Rent expense was $419,000, $652,000 and $1.1 million for the years ending
December 31, 1997, 1998 and 1999, respectively.

7. STOCKHOLDERS' EQUITY

In September of 1998, the Company effected a five-for-four stock split of
the common stock in the form of a stock dividend. The Company also effected a
five-for-two stock split of the common stock in the form of a stock dividend in
June 1997. All information pertaining to the common stock and options has been
retroactively adjusted to reflect these stock splits.

8. STOCK OPTION PLAN

In 1996, the Company adopted the 1996 Stock Option Plan (the "Plan").
Incentive stock options and nonqualified stock options to purchase up to 6.1
million shares of the Company's common stock may be granted. The Plan is
administered by the Board of Directors. Options designated as incentive stock
options can be granted only to employees, including officers and directors who
are also employees. Options designated as nonqualified options may be granted to
officers, employees, consultants, directors and advisors of the Company. No
incentive stock options can be granted to employees with more than 10% of the
total combined voting power of all classes of stock unless the option exercise
price is at least 110% of the fair market value at the time it is granted.
Incentive stock options may not be granted at less than the

F-11
68
AMR RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

fair market value of the Company's common stock at the date of grant.
Nonqualified options may not be granted at less than 50% of the fair market
value of the common stock at the time the option is granted. Options granted
under the Plan are restricted as to transfer.

The exercise price of each option is established by the Board of Directors
at the time that the option is granted and specified in the option agreement.
The duration of the options is also subject to terms and conditions as the Board
specifies in the option agreements. Under the Plan, the option term cannot
exceed ten years.

Options granted under the Plan are exercisable as determined by the Board
of Directors but generally in the following manner. On the first anniversary
date, 25% shall vest, thereafter, additional shares shall vest on a monthly
basis, in arrears, as follows: at the end of each month after the first
anniversary date, an additional 2.1% of the shares will vest so that all the
shares will be vested by the fourth anniversary date.

Stock option activity during the years ended December 31, 1997, 1998 and
1999 was as follows:

NUMBER OF OPTIONS WEIGHTED-AVERAGE
(IN THOUSANDS) EXERCISE PRICE

Outstanding at December 31, 1996.................... 1,281 $0.03
Granted........................................ 2,219 0.51
Canceled....................................... (6) 0.51
----- -----
Outstanding at December 31, 1997.................... 3,494 0.34
Granted........................................ 765 1.88
Canceled....................................... (50) 0.53
----- -----
Outstanding at December 31, 1998.................... 4,209 0.62
Granted........................................ 1,587 2.35
Canceled....................................... (47) 0.92
Exercised...................................... (4) 0.51
----- -----
Outstanding at December 31, 1999.................... 5,745 1.09
===== =====
Exercisable at December 31, 1997.................... 1,181 0.03
===== =====
Exercisable at December 31, 1998.................... 2,084 0.23
===== =====
Exercisable at December 31, 1999.................... 2,904 0.42
===== =====

The following table summarizes information about stock options outstanding
at December 31, 1999:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------------------ ---------------------------------
NUMBER WEIGHTED-AVERAGE NUMBER
RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICE (IN THOUSANDS) CONTRACTUAL LIFE EXERCISE PRICE (IN THOUSANDS) EXERCISE PRICE

$0.03 1,281 3.7 $0.03 1,281 $0.03
0.51 2,136 7.4 0.51 1,370 0.51
0.77 98 8.3 0.77 43 0.77
2.08 1,160 9.1 2.08 210 2.08
2.49 1,070 9.9 2.49 -- --
----- -----
5,745 7.4 $1.09 2,904 $0.42
===== =====

F-12
69
AMR RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

The weighted-average fair value of options granted during 1997, 1998 and
1999 was $0.12, $0.38 and $0.71, respectively. Under SFAS No. 123, the fair
value of each employee option grant is estimated on the date of grant using the
Black-Scholes option price model to apply the minimum value method with the
following weighted-average assumptions used for grants made during 1997, 1998
and 1999:

YEAR ENDED DECEMBER 31,
-------------------------
1997 1998 1999

Expected life in years...................................... 5.0 6.0 6.0
Risk free interest rate..................................... 6.1 4.5 5.3
Volatility.................................................. -- -- --
Dividend yield.............................................. -- -- --

There was no compensation expense recorded in the Company's statements of
income related to stock-based employee compensation awards for the years ended
December 31, 1997, 1998, 1999. Deferred compensation of $260,000 was recorded
for the six month period ended June 30, 2000 related to the issuance of 59,375
stock options on June 23, 2000. The deferred compensation will be amortized over
4 years, the vesting period. Had compensation expense for the Company's Plan
been recorded based on fair value of the options at the grant date, as
prescribed by SFAS 123, the impact would have resulted in pro forma net income
as follows:

YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Pro forma net income................................. $1,859 $2,766 $2,464
Pro forma basic earnings per common share............ $ 0.16 $ 0.23 $ 0.21
Pro forma diluted earnings per common share.......... $ 0.15 $ 0.20 $ 0.17

The unaudited pro forma impact on reported net income for the years ended
December 31, 1997, 1998 and 1999 is not necessarily representative of the pro
forma impact on reported net income or loss for future years since additional
option grants are expected to be made in future years.

9. 401(k) PROFIT SHARING PLAN

The Company has a 401(k) plan covering substantially all of its employees.
The 401(k) plan allows for discretionary employer profit-sharing contributions
that are determined annually by the Board of Directors. Plan participants are
entitled to their vested portion of profit sharing contributions upon
termination of employment. Profit-sharing contributions for the plan years
ending December 31, 1997, 1998 and 1999 were $212,000, $338,000 and $550,000,
respectively.

10. RELATED PARTY TRANSACTIONS

In August 1999, the Company's legal counsel purchased for fair value 24,085
shares of common stock for $50,000. During 1999, this legal counsel provided
approximately $47,000 of legal services paid for by the Company.

At December 31, 1998, the Company had notes receivable of $100,000 from
members of management. The loans and interest were payable in installments over
a four-year period. These notes were completely paid in 1999.

In April, 2000, the Company sold 12,500 shares of common stock for $50,000
to a service provider for cash. During 2000, approximately $40,000 was paid by
the Company for services to this service provider.

On December 30, 1999, the Company entered into a redemption agreement with
a stockholder to acquire, on January 3, 2000, 1,097,750 shares of the Company's
common stock. The initial redemption

F-13
70
AMR RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

value was approximately $2.7 million, which was paid in cash and a $1.2 million
promissory note. Payments of principal of $300,000 and interest at 1 1/2% above
the prime rate, determined at the time of disbursement, are due annually
beginning January 1, 2001. The final redemption value will be based on the fair
value determined by the Board of Directors, or resulting from a liquidation
event, prior to July 1, 2000. See Note 12.

11. CERTAIN BALANCE SHEET ACCOUNTS

ALLOWANCE FOR DOUBTFUL ACCOUNTS

YEAR ENDED DECEMBER 31,
---------------------------
1997 1998 1999
(IN THOUSANDS)

Balance, beginning of period........................... $ 108 $ 175 $ 270
Provision for doubtful accounts........................ 208 210 308
Write-offs, net of recoveries.......................... (141) (115) (334)
----- ----- -----
Balance, end of period................................. $ 175 $ 270 $ 244
===== ===== =====

ACCRUED EXPENSES

YEAR ENDED DECEMBER 31,
------------------------
1998 1999
(IN THOUSANDS)

Payroll and related......................................... $ 966 $2,285
Other....................................................... 180 134
------ ------
$1,146 $2,419
====== ======

12. SUBSEQUENT EVENTS

On September 18, 2000, the Board of Directors approved a plan to merge all
Class A and Class B common stock into a single class of voting common stock.
Shares of Class A common stock will be distributed to holders of Class B common
stock at a ratio of 1 Class A common share to 1 Class B common share prior to
the offering. Class A common stock is now referred to as common stock and has
been presented retroactively in the Balance Sheet and Statement of Changes in
Stockholders' Equity.

On September 18, 2000, the Board of Directors approved a plan to increase
the authorized common stock from 33,975,000 shares to 100,000,000 shares and a
5-for-2 stock split of the common stock. Par value of common stock will remain
at $0.01 per share. The stock split will be effective prior to the offering.

The effect of the stock split has been recognized retroactively in the
stockholders' equity accounts on the balance sheets for all periods presented,
and in all share and per share data in the accompanying consolidated financial
statements and notes to the financial statements. Stockholders' equity accounts
on the balance sheets have been restated to reflect the reclassification of an
amount equal to the par value of the increase in issued common shares from the
additional paid-in capital account to the common stock account.

On September 18, 2000, the Board of Directors approved a plan to issue
"blank check" preferred stock consisting of 5,000,000 shares, with a par value
of $0.01 per share, that can be issued from time to time in one or more series
upon authorization by the Board of Directors. The Board of Directors, without
further approval of the stockholders, is authorized to fix the dividend rights
and terms, conversion rights, voting rights, redemption rights and terms,
liquidation preference and any other rights, preferences,

F-14
71
AMR RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

privileges and restrictions applicable to each series of preferred stock. No
preferred stock is outstanding at June 30, 2000.

On April 10, 2000, the Board of Directors finalized the redemption
transaction described in Note 10 and determined the fair value to be
approximately $5.0 million. The increase in the redemption value was paid in
cash and an increase to the promissory note to $1.6 million. The Company expects
to pay the promissory note in full before the end of September, 2000.

On June 23, 2000 the Board of Directors approved the repurchase of 125,000
shares of common stock at $10 per share for cash. The transaction was settled on
July 7, 2000.

On September 18, 2000 the Board of Directors approved the 2000 Stock Option
Plan ("Option Plan") that provides for the granting of incentive stock options,
non-qualified options and stock awards as defined in Section 422 of the Internal
Revenue Code to our officers, employees, directors, or consultants. The number
of shares initially reserved for issuance upon the exercise of options under the
Option Plan is 2,000,000. On the first day of each year, the number of shares
available for issuance under the Option Plan shall be increased by an amount to
equal 5% of the total number of issued and outstanding shares on that date. No
options have been granted under the Option Plan. The Company does not anticipate
any compensation expense resulting from issuance of stock options under the
Option Plan.

On September 18, 2000 the Board of Directors approved the 2000 Employee
Stock Purchase Plan ("Stock Purchase Plan"). The Stock Purchase Plan will become
effective immediately upon the effective date of the initial public offering.
The Stock Purchase Plan will allow eligible employees of the Company to purchase
shares of the Company's common stock, at semi-annual intervals, through periodic
payroll deductions. A total of 500,000 shares of common stock may be issued
under the Stock Purchase Plan. In addition, on the first day of each year, the
number of shares available for issuance under the 2000 plan shall be increased
by an amount equal to 1% of the total number of issued and outstanding shares on
the last day of the previous fiscal year. The purchase price will be 85% of the
lower of the fair market value of the Company's common stock on the offer date
after the effective date of the initial public offering or 85% of the fair
market value on the semi-annual purchase date. The first purchase will occur on
the last business day in March 2001.

On September 5, 2000, the Company distributed approximately $1,100,000
representing a portion of its undistributed S corporation earnings. In addition,
on September 18, 2000, the Board of Directors declared a distribution to be made
to stockholders prior to the Company's planned initial public offering of a
portion of the anticipated undistributed S corporation earnings through the
termination of the S corporation election. These distributions, which are
expected to approximate $2,600,000, have been reflected in the pro forma balance
sheet as of June 30, 2000. Prior to its planned initial public offering, the
Company plans to enter into a tax indemnity agreement with each of its existing
stockholders.

F-15
72

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 2000

LOGO

SHARES OF COMMON STOCK

------------------------
PROSPECTUS
------------------------

DONALDSON, LUFKIN & JENRETTE

THOMAS WEISEL PARTNERS LLC
ADAMS, HARKNESS & HILL, INC.
WILLIAM BLAIR & COMPANY
DLJdirect INC.

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

We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of AMR
Research, Inc. have not changed since the date hereof.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Until (25 days after the date of this prospectus) all dealers that
effect transactions in these shares of common stock may be required to deliver a
prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as an underwriter and with respect to their unsold
allotments or subscriptions.
- --------------------------------------------------------------------------------
73

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses (other than the underwriting discount) payable in
connection with the sale of the common stock offered hereby are as follows, all
of which will be paid by the Company:

AMOUNT

SEC Registration fee........................................ $19,800
NASD filing fee............................................. 8,000
Nasdaq National Market fee..................................
Printing expenses...........................................
Legal fees and expenses.....................................
Blue Sky fees and expenses..................................
Accounting Fees and expenses................................
Transfer agent and registrar fees and expenses..............
Miscellaneous...............................................
-------
Total:.................................................... $
=======

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The registrant's certificate of incorporation in effect as of the date
hereof, and the registrant's restated certificate of incorporation to be in
effect upon the closing of this offering (collectively, the "Certificate")
provide that, except to the extent prohibited by the Delaware General
Corporation Law, as amended (the "DGCL"), the registrant's directors shall not
be personally liable to the registrant or its stockholders for monetary damages
for any breach of fiduciary duty as directors of the registrant. Under Delaware
law, the directors have a fiduciary duty to the registrant which is not
eliminated by this provision of the certificate and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of
non-monetary relief will remain available. In addition, each director will
continue to be subject to liability under the DGCL for breach of the director's
duty of loyalty to the registrant, for acts or omissions which are found by a
court of competent jurisdiction to be not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are prohibited by DGCL. This provision
also does not affect the directors' responsibilities under any other laws, such
as the Federal securities laws or state or Federal environmental law. The
registrant intends to obtain liability insurance for its officers and directors
prior to the closing of this offering.

Section 145 of the DGCL provides as follows:

A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact the he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent or another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interest of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

II-1
74

A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and a manner he
reasonably believed to in or not opposed to the best interest of the corporation
and except that no indemnification shall be made in respect to any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

In addition, pursuant to our certificate of incorporation and bylaws, we
shall indemnify our directors and officers against expenses (including judgments
or amounts paid in settlement) incurred in any action, civil or criminal, to
which any such person is a party by reason of any alleged act or failure to act
in his capacity as such, except as to a matter as to which such director or
officer shall have been finally adjudged not to have acted in good faith in the
reasonable belief that his action was in the best interest of the corporation.

The underwriting agreement between AMR Research and the underwriters of
this offering provides that the underwriters are obligated, under certain
circumstances, to indemnify our directors, officers and controlling persons
against certain liabilities, including liabilities under the Securities Act.
Reference is made to the form of Underwriting Agreement filed at Exhibit 1.1
hereto.

We're in the process of obtaining directors and officers liability
insurance for the benefit of our directors and certain of our officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the three year period of time ending August 31, 2000, AMR Research
issued the following securities as summarized below. None of the securities has
been registered under the Securities Act.

(a) Issuances of Common Stock.

During 1999, the Company sold 102,673 shares of Class B Common Stock to
individuals, including Mr. Litvack, at a price of $2.08 per share. During 2000,
the Company sold 12,500 shares of Class B Common Stock to an individual and
issued 7,500 shares of Class B Common Stock to an individual in return for
services rendered, at a price per share, in both cases, of $4.00 per share. The
sales and issuances of securities were exempt from the registration requirements
of the Securities Act in reliance on Section 4(2) thereof, or Regulation D
promulgated thereunder, as transactions by an issuer not involving a public
offering.

(b) Grants of Stock Options.

From September 1, 1997 to August 31, 1998, the Company granted options to
purchase 170,313 shares, with a weighted average exercise price of $0.65 per
share.

From September 1, 1998 to August 31, 1999, the Company granted options to
purchase 847,563 shares, with a weighted average exercise price of $2.08 per
share.

From September 1, 1999 to August 31, 2000, the Company granted options to
purchase 1,694,375 shares, with a weighted average exercise price of $2.88 per
share. The granting of above stock options did not require registration under
the Securities Act, or an exemption therefrom, insofar as such grants did not
involve a "sale" of securities as such term is used in Section 2(3) of the
Securities Act. The issuance of stock upon the exercise of options is exempt
from the registration requirements of the Securities Act in reliance on Rule 701
promulgated under Section 3(b) of the Securities Act as transactions by an
issuer
II-2
75

pursuant to compensatory benefit plans and contracts relating to compensation as
provided under such Rule 701.

ITEM 16. EXHIBITS

NO. DESCRIPTION OF DOCUMENTS

1.1* Form of Underwriting Agreement
3.1* Form of Restated Certificate of Incorporation of the
Registrant
3.2* Form of Amended and Restated Bylaws of the Registrant
5.1* Form of Opinion of Hutchins, Wheeler & Dittmar, A
Professional Corporation
10.1 Shareholders' Agreement, dated as of July 31, 1996, among
the Registrant and certain of its stockholders (the
"Shareholders' Agreement")
10.2 First Amendment to Shareholders' Agreement
10.3 1996 Stock Option Plan
10.4* 2000 Employee Stock Purchase Plan
10.5* 2000 Stock Incentive Plan
10.6 Lease dated August 12, 1992, between MLH Income Realty
Partnership V and the Registrant for the premises located at
2 Oliver Street, Boston, MA (the "Boston Lease")
10.7 First Amendment to the Boston Lease, dated December 31, 1994
10.8 Second Amendment to the Boston Lease, dated January 23, 1996
10.9 Third Amendment to the Boston Lease, dated October 15, 1996
10.10 Fourth Amendment to the Boston Lease, dated January 8, 1998
10.11 Fifth Amendment to the Boston Lease, dated July 27, 1998
10.12 Sixth Amendment to the Boston Lease, dated December 30, 1999
10.13 Seventh Amendment to the Boston Lease, dated August 25, 2000
21.1 Subsidiary
23.1 Consent of PricewaterhouseCoopers LLP
23.2* Consent of Hutchins, Wheeler & Dittmar, A Professional
Corporation (included in Exhibit 5.1)
24.1 Power of Attorney (included in the signature page of the
registration statement)
27.1 Financial Data Schedule
27.2 Financial Data Schedule

- ------------------------------
* To be filed by amendment

All other schedules for which provisions are made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.

II-3
76

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing of this offering specified in the underwriting agreement
certificates in such denomination and registered in such names as required by
the underwriters to permit proper delivery to each purchaser.

The undersigned registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective; and (2) for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 14 above, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-4
77

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amended registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Boston, Massachusetts, on
September 22, 2000.

AMR RESEARCH, INC.

By: /s/ ANTHONY J. FRISCIA

------------------------------------
Anthony J. Friscia

We, the undersigned officers and directors of AMR Research, Inc. hereby
severally constitute and appoint Anthony J. Friscia to sign for us and in our
names in the capacities indicated below, the Registration Statement on Form S-1
filed herewith and any and all pre-effective and post-effective amendments to
said Registration Statement, and, in connection with any registration of
additional securities pursuant to Rule 464(b) under the Securities Act of 1933,
to sign any abbreviated registration statement and any and all amendments
thereto, and to file the same, with all exhibits thereto and other documents in
connection therewith, in each case, with the Securities and Exchange Commission,
and generally do all such things in our names and on our behalf in our
capacities consistent with the provisions of the Securities Act of 1933, as
amended, and all requirements of the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE

/s/ ANTHONY J. FRISCIA President and Chief Executive September 22, 2000
- --------------------------------------------------- Officer and Chairman of the
Anthony J. Friscia Board (Principal Executive
Officer)

/s/ ROBERT B. BLAKELEY Chief Financial Officer September 22, 2000
- --------------------------------------------------- (Principal Financial and
Robert B. Blakeley Accounting Officer)

/s/ JEFFREY M. KAPLAN Director September 22, 2000
- ---------------------------------------------------
Jeffrey M. Kaplan

/s/ NEAL G. LITVACK Director September 22, 2000
- ---------------------------------------------------
Neal G. Litvack

/s/ DAVID E. VAN ZANDT Director September 22, 2000
- ---------------------------------------------------
David E. Van Zandt

/s/ REUBEN WASSERMAN Director September 22, 2000
- ---------------------------------------------------
Reuben Wasserman

II-5
78

EXHIBIT INDEX

NO. DESCRIPTION OF DOCUMENTS

- ------------------------------
* To be filed by amendment