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

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

FORM 10-Q/A

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

For the quarterly period ended JUNE 30, 2000

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

For the transition period from to
----- ----- -------------

Commission file number 0-21958

QRS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

DELAWARE 68-0102251
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

1400 MARINA WAY SOUTH, RICHMOND, CA 94804
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(Address of principal executive offices) (Zip code)

(510) 215-5000
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(Registrant's phone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

X YES NO
- --- ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Classes of Common Stock Shares Outstanding at August 9, 2000
- --------------------------- ------------------------------------
Common Stock, $.001 par value 14,824,193

This document contains 18 pages.

The Exhibit listing appears on Page 17.

QRS CORPORATION
FORM 10-Q/A
INDEX

NUMBER PAGE
- ------ ----

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999.......... 3

Condensed Consolidated Statements of Operations and Comprehensive Earnings (Loss) for
the Three and Six Months Ended June 30, 2000 and 1999.................................... 4

Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2000 and 1999................................................................... 5

Notes to Condensed Consolidated Financial Statements..................................... 6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................... 13

Item 3. Quantitative and Qualitative Disclosures about Market Risk............................... 15

PART II. OTHER INFORMATION

Item 1. Legal Proceedings........................................................................ 16

Item 2. Changes in Securities and Use of Proceeds................................................ 16

Item 3. Defaults upon Senior Securities.......................................................... 16

Item 4. Submission of Matters to a Vote of Security Holders...................................... 16

Item 5. Other Information........................................................................ 16

Item 6. Exhibits and Reports on Form 8-K......................................................... 17

SIGNATURES........................................................................................ 18

This Form 10-Q/A is being filed to amend Items 1 and 2 of Part I to revise
our financial statements to reflect certain adjustments to the allocation of
the purchase price recorded for the acquisition of RockPort Trade Systems,
Inc. in March 2000; to exclude shares of common stock held in escrow from
shares outstanding and the related weighted average shares outstanding; and
to exclude in-process research and development from pro forma financial
information. No other sections of our Form 10-Q for the quarter and six
months ended June 30, 2000 have been amended. Except as discussed in Note 7
of the Notes to the Condensed Consolidated Financial Statements, this Form
10-Q/A has not been updated to give effect to any events subsequent to the
filing of the Form 10-Q for the quarter and six months ended June 30, 2000.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QRS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

ASSETS
------

(REVISED: NOTE 7)
JUNE 30, DECEMBER 31,
2000 1999
----------------- ------------

Current assets:
Cash and cash equivalents.................................................... $ 23,595 $ 34,412
Marketable securities available for sale..................................... 6,994 12,895
Accounts receivable-net of allowance for doubtful accounts of $1,964 at
June 30, 2000 and $1,676 at December 31,1999............................... 27,737 25,964
Deferred income tax assets................................................... 819 819
Prepaid expenses and other................................................... 3,900 2,848
Prepaid income taxes......................................................... 5,668 4,726
--------- ---------

Total current assets..................................................... 68,713 81,664
--------- ---------

Property and equipment:
Furniture and fixtures....................................................... 4,579 3,651
Equipment.................................................................... 20,415 15,737
Leasehold improvements....................................................... 4,267 3,729
--------- ---------
29,261 23,117
Less accumulated depreciation and amortization............................... (10,415) (9,294)
--------- ---------

Total.................................................................... 18,846 13,823
--------- ---------

Deferred income tax assets........................................................ - 1,156
Capitalized product development costs - net of accumulated amortization of $7,126
at June 30, 2000 and $5,293 at December 31, 1999............................... 9,898 8,088
Intangible assets - net of accumulated amortization of $13,023 at June 30, 2000
and $2,221 at December 31, 1999................................................ 165,106 20,758
Other assets...................................................................... 1,444 1,466
--------- ---------

Total........................................................................ $ 264,007 $ 126,955
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable............................................................. $ 3,544 $ 10,508
Accrued incentive............................................................ 1,462 1,796
Accrued vacation............................................................. 2,142 1,195
Deferred payments............................................................ 2,600 2,000
Deferred revenue............................................................. 4,034 -
Other accrued liabilities.................................................... 4,178 4,641
--------- ---------

Total current liabilities................................................ 17,960 20,140

Deferred income taxes............................................................. 9,805 -
Deferred payments................................................................. 3,500 1,000
Deferred rent and other........................................................... 1,850 1,240
--------- ---------

Total liabilities............................................................ 33,115 22,380
--------- ---------

Minority interest................................................................. 1,168 361

Stockholders' equity:
Preferred stock - $.001 par value; 10,000,000 shares authorized; none
issued and outstanding..................................................... -- --
Common stock - $.001 par value; 60,000,000 shares authorized;
15,225,986 shares issued and 14,607,890 shares outstanding at
June 30, 2000; and 13,674,533 shares issued and 13,647,208 shares
outstanding at December 31, 1999........................................... 240,321 86,971
Treasury stock; 225,325 shares at June 30, 2000 and 27,325 shares at
December 31, 1999.......................................................... (5,530) (526)
Accumulated other comprehensive loss - unrealized loss on investments........ (20) (136)
Retained (deficit) earnings.................................................. (5,047) 17,905
--------- ---------
Total Stockholders' equity............................................... 229,724 104,214
--------- ---------
Total........................................................................ $ 264,007 $ 126,955
========= =========

See notes to condensed consolidated financial statements.

QRS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE EARNINGS (LOSS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
(REVISED: NOTE 7) (REVISED: NOTE 7)
2000 1999 2000 1999
----------------- ----------- ----------------- -----------

Revenues ................................................. $ 36,491 $ 29,540 $ 71,601 $ 58,884
Cost of revenue........................................... 20,905 14,852 39,936 29,870
---------- ---------- ---------- ----------

Gross profit.............................................. 15,586 14,688 31,665 29,014

Operating expenses:
Sales and marketing.................................. 7,120 3,844 14,034 8,253
Product development.................................. 1,652 2,089 3,611 4,084
General and administrative........................... 5,769 2,785 10,348 5,267
Amortization of intangible assets.................... 7,145 141 10,802 304
In-process research and development.................. -- -- 17,880 --
---------- ---------- ---------- ----------
Total operating expenses......................... 21,686 8,859 56,675 17,908
---------- ---------- ---------- ----------

Operating earnings (loss)................................. (6,100) 5,829 (25,010) 11,106

Interest income........................................... 431 493 828 1,057
---------- ---------- ---------- ----------

Earnings (loss) before income taxes
and minority interest.................................. (5,669) 6,322 (24,182) 12,163

Income tax expense (benefit).............................. (166) 2,402 (705) 4,621

Minority interest in subsidiary........................... (330) -- (525) --
---------- ---------- ---------- ----------

Net earnings (loss)....................................... (5,173) 3,920 (22,952) 7,542
---------- ---------- ---------- ----------
Other comprehensive earnings (loss):
Unrealized gain (loss) from marketable securities
available for sale 135 (127) 116 (114)
---------- ---------- ---------- ----------

Total comprehensive earnings (loss)....................... $ (5,038) $ 3,793 $ (22,836) $ 7,428
========== ========== ========== ==========

Basic earnings (loss) per share........................... $ (0.35) $ 0.30 $ (1.59) $ 0.57
========== ========== ========== ==========

Shares used to compute basic earnings (loss) per share.... 14,772,204 13,250,813 14,448,476 13,127,742
========== ========== ========== ==========

Diluted earnings (loss) per share......................... $ (0.35) $ 0.28 $ (1.59) $ 0.54
========== ========== ========== ==========

Shares used to compute diluted earnings (loss) per share.. 14,772,204 14,050,777 14,448,476 13,902,699
========== ========== ========== ==========

See notes to condensed consolidated financial statements.

QRS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
--------------------------
2000 1999
---------- --------

Operating activities:
Net earnings (loss).............................................................. $ (22,952) $ 7,542
Adjustment to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization................................................ 15,439 2,834
Minority interest in subsidiary.............................................. (525) -
In-process research and development.......................................... 17,880 -
Loss from disposal of property and equipment................................. 96 92
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable.......................................................... 1,203 92
Prepaid expenses and other................................................... (720) (37)
Prepaid income taxes......................................................... (942) -
Deferred income taxes........................................................ 272 350
Accounts payable............................................................. (7,254) 660
Deferred revenue............................................................. 1,482 -
Deferred rent and other...................................................... 313 (29)
Income taxes payable ........................................................ - (1,687)
Other accrued liabilities.................................................... (4,224) 338
--------- --------

Net cash provided by operating activities.................................... 68 10,155
--------- --------

Investing activities:
Sales (purchases) of marketable securities - available for sale (net)............ 6,017 (3,353)
Purchase of property and equipment............................................... (7,515) (2,519)
Proceeds from disposal of property and equipment................................. 131 -
Capitalized product development costs............................................ (3,643) (965)
Other assets..................................................................... 118 (474)
Payment of deferred payments..................................................... (2,000) -
Payment of transaction costs..................................................... (1,683) -
Acquisition of businesses, net of cash acquired and fair value of
common stock issued............................................................ (4,270) -
--------- --------
Net cash used in investing activities........................................ (12,845) (7,311)
--------- --------

Financing activities:
Proceeds from exercise of stock options and stock warrants....................... 5,283 7,576
Contributions from minority interest............................................. 1,681 -
Purchase of treasury stock....................................................... (5,004) -
--------- --------
Net cash provided by financing activities.................................... 1,960 7,576
--------- --------

Net increase (decrease) in cash and cash equivalents.................................. (10,817) 10,420
Cash and cash equivalents at beginning of period...................................... 34,412 36,642
--------- --------
Cash and cash equivalents at end of period............................................ $ 23,595 $ 47,062
========= ========

Other cash flow information:
Taxes paid during the period.......................................................... $ 69 $ 5,958
========= ========
Noncash financing activities:
Tax benefit from stock options exercised......................................... $ 7,523 $ 4,713
Deferred payments................................................................ 5,000 -
Fair value of common stock issued in acquisitions................................ 131,177 -
Fair value of stock options assumed in acquisitions.............................. 9,367 -
Unrealized gain (loss) on investments............................................ 116 (114)

On March 10, 2000, we acquired substantially all the assets of RockPort Trade
Systems, Inc. and on January 21, 2000, we acquired the outstanding capital stock
of Image Info Inc. The purchase prices were allocated, as follows:

Working capital, other than cash................................................. $ (5,487)
Property and equipment........................................................... 539
Other assets..................................................................... 97
Goodwill......................................................................... 108,469
Other intangible assets.......................................................... 46,476
In-process research and development ............................................. 17,880
Other non-current liabilities.................................................... (5,295)
Fair value of stock options assumed in acquisitions.............................. (9,367)
Deferred income taxes............................................................ (17,865)
Less: Common stock issued in connection with acquisitions........................ (131,177)
---------
Acquisitions, net of cash acquired of $730 and fair value of common stock issued. $ 4,270
=========

See notes to condensed consolidated financial statements.

QRS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. GENERAL

We have prepared the condensed consolidated balance sheet as of
June 30, 2000, the condensed consolidated statements of operations and
comprehensive earnings (loss) and the condensed consolidated statements
of cash flows for the three and six months ended June 30, 2000 and 1999,
without audit. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at
June 30, 2000 and 1999 and for all periods presented have been made. The
condensed consolidated balance sheet as of December 31, 1999 is derived
from our audited consolidated financial statements as of that date.

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as permitted by
regulations of the Securities and Exchange Commission. It is suggested
that these interim condensed consolidated financial statements be read
in conjunction with the annual audited consolidated financial statements
and notes thereto included in our Annual Report on Form 10-K for the
year ended December 31, 1999.

This Report on Form 10-Q/A represents an amendment to the our Report on
Form 10-Q for the second quarter of fiscal 2000 filed with the
Securities and Exchange Commission on August 14, 2000. This Report has
been amended to revise the financial statements as of and for the three
and six-month periods ended June 30, 2000, as described in Note 7.

The preparation of our consolidated financial statements in conformity
with generally accepted accounting principles necessarily requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the balance sheet dates and the reported amounts of
revenues and expenses for the periods presented. Actual amounts may
differ from such estimates.

The results of operations for the periods ended June 30, 2000 and 1999
are not necessarily indicative of the operating results anticipated for
the full year.

Certain reclassifications have been made to the 1999 amounts to conform
to the 2000 presentation.

2. ACQUISITIONS

On March 10, 2000, we acquired substantially all of the assets of
RockPort Trade Systems, Inc., a Massachusetts corporation (RockPort),
pursuant to an Agreement and Plan of Reorganization (Reorganization
Agreement), dated February 29, 2000. The total acquisition cost was
$100,953,407, comprised of 814,794 shares of our common stock valued at
$90,136,703; transaction costs of approximately $1,450,000 and
$9,366,704 in stock compensation related to stock options assumed. We
assumed the liabilities of RockPort under its RockPort Stock Option Plan
(RockPort Plan) and the outstanding stock options of RockPort that
converted to options to purchase 89,645 shares of our common stock. As a
result, we recorded stock compensation of $9,366,704, which has been
included in the acquisition cost and represents the estimated fair value
of the outstanding stock options of RockPort assumed. The acquisition
was accounted for as a purchase transaction.

On January 21, 2000, Image Info Inc. (Image Info), a New York
corporation merged with and into WS Acquisition Corp. (WSC), a
wholly-owned subsidiary of ours that was formed in January 2000,
pursuant to an Agreement and Plan of Merger, dated January 16, 2000
among us, WSC and Image Info (Merger Agreement). The total acquisition
cost was $51,340,182, comprised of $5,000,000 paid in cash; $5,000,000
in payments due to the former shareholders of Image Info; 440,914 shares
of our common stock valued at $41,040,182; and transaction costs of
approximately $300,000. Under the terms of the Merger Agreement, we
agreed to pay $2,500,000 each in 2001 and 2002 to the former
shareholders of Image Info if revenue from the acquired business meets
or exceeds certain levels in 2000 and 2001. The deferred payments to the
former shareholders of Image Info have been included in the acquisition
cost. The acquisition was accounted for as a purchase transaction.

The purchase price related to each acquisition has been allocated to the
acquired assets and assumed liabilities on the basis of their estimated
fair values as of the date of the acquisition, as determined by an
independent appraisal. The financial statements reflect the preliminary
allocation of the purchase price, as estimates of certain direct costs
and liabilities associated with the transaction have not yet been
finalized. The fair value of the assets acquired and liabilities
assumed, based on the preliminary allocation of the purchase price, is
summarized as follows (in thousands):

(Revised: Note 7) (Revised: Note 7)
Rockport Image Info Total
----------------- ---------- -----------------

Cash............................................. $ - $ 5,000 $ 5,000
Estimated fair value of common stock issued...... 90,137 41,040 131,177
Fair value of stock options assumed.............. 9,367 - 9,367
Accrued transaction costs........................ 1,450 300 1,750
Deferred payments................................ - 5,000 5,000
--------- --------- ---------
Total purchase price.......................... $ 100,954 $ 51,340 $ 152,294
========= ========= =========

Preliminary allocation of purchase price:
Goodwill.......................................... $ 76,622 $ 31,847 $ 108,469
Current technology................................ 18,818 17,486 36,304
Customer list and trademark....................... 2,438 2,283 4,721
Fair value of other intangible assets............. - 1,700 1,700
Assembled workforce............................... 2,813 938 3,751
In-process research and development............... 8,441 9,439 17,880
Accounts receivable............................... 2,133 1,047 3,180
Prepaid and other current assets.................. 226 6 232
Property and equipment............................ 217 322 539
Other assets...................................... 54 43 97
Cash.............................................. 730 - 730
Deferred income taxes............................. (9,228) (8,637) (17,865)
Liabilities assumed............................... (2,310) (5,134) (7,444)
--------- ---------- --------
Total allocation of purchase price........ $ 100,954 $ 51,340 $ 152,294
========= ========== =========

During the second quarter of 2000, we adjusted the opening balance sheet
of Image Info to properly reflect the fair value of maintenance and
other service obligations. The amounts allocated to intangible assets
will be amortized on a straight-line basis over estimated useful lives
of three to seven years. The amounts allocated to in-process research
and development ("IPR&D") of $17,880,000 were charged to expense during
the six months ended June 30, 2000 as technological feasibility had not
been established and no alternative future uses existed for the research
projects at the acquisition dates.

The following unaudited pro forma financial results of QRS, RockPort and
Image Info for the six months ended June 30, 2000 and 1999 give effect
to the acquisition of RockPort and Image Info as if the acquisitions had
occurred on the first day of the periods presented and includes
adjustments (increase in amortization of intangible assets, IPR&D
charge, decrease in interest income from the increase in the use of cash
and the related income tax adjustments) directly attributable to the
acquisition and expected to have a continuing impact on the combined
company. The unaudited pro forma financial information has been prepared
based on preliminary estimates of certain direct costs and liabilities
associated with the transaction, and amounts actually recorded may
change upon final determination of such amounts. Specifically,
additional information is expected to be obtained for accrued expenses
related to the acquisition.

The unaudited pro forma financial results are provided for comparative
purposes only and are not necessarily indicative of what our actual
results would have been had the forgoing transactions been consummated
on such dates, nor does it give effect to the synergies, cost savings
and other charges expected to result from the acquisitions. Accordingly,
the pro forma financial results do not purport to be indicative of our
results of operations as of the date hereof or for any period ended on
the date hereof or for any other future date or period. During the
second quarter of 2000, the 1999 Image Info revenues and net loss were
adjusted to properly reflect the fair value of maintenance and other
service obligations.

Unaudited Pro Forma Financial Information (in thousands, except share
and per share amounts):

Six Months Ended
June 30,
-------------------------------------
(Revised: Note 7)(Revised: Note 7)
2000 1999
---- ----

Revenues................................................. $ 73,094 $ 65,061
========== ==========

Net loss................................................. $ (8,073) $ (3,392)
========== ==========

Basic and diluted loss per share (Note 3)................ $ (0.55) $ (0.24)
========== ==========

Shares used to compute basic and diluted loss
per share (Note 3) .................................... 14,805,833 14,086,799
========== ==========

Basic and diluted pro forma loss per share was calculated based on our
outstanding common stock at June 30, 2000 and 1999, which reflects
814,794 and 440,914 shares of our common stock issued in connection with
the acquisition of RockPort and Image Info, respectively. At June 30,
2000, 226,105 shares and 166,666 shares of our common stock issued in
connection with the acquisitions of RockPort and Image Info,
respectively were held in Escrow and have been excluded from the shares
used to compute basic and diluted loss per share.

3. EARNINGS (LOSS) PER SHARE

Basic EPS is calculated by dividing net earnings (loss) for the period
by the weighted average common shares outstanding for that period.
Diluted EPS takes into account the effect of dilutive instruments, such
as stock options, and uses the average share price for the period in
determining the number of incremental shares that are to be added to the
weighted average number of shares outstanding.

The following is a summary of the calculation of the number of shares
used in calculating basic and diluted EPS:

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------

2000 1999 2000 1999
---------- ---------- ---------- ----------

Shares used to compute basic EPS.............. 14,772,204 13,250,813 14,448,476 13,127,742

Add: effect of dilutive securities........... - 799,964 - 774,957
---------- ---------- ---------- ----------

Shares used to compute diluted EPS............. 14,772,204 14,050,777 14,448,476 13,902,699
========== ========== ========== ==========

Diluted loss per share for the three and six months ended June 30, 2000
and diluted pro forma loss per share for the six months ended June 30,
2000 and 1999 (Note 2) were the same as basic loss per share because the
potential common shares outstanding during the period are antidilutive.

4. COMMON STOCK AND STOCK OPTIONS

On May 11, 2000, our shareholders approved an amendment to our
Certificate of Incorporation to increase the number of shares of common
stock available for issuance by an additional 40,000,000 to a total of
60,000,000 shares, and approved a series of amendments to our 1993 Stock
Option/Stock Issuance Plan including an increase in the number of shares
of common stock authorized for issuance over the term of the 1993 plan
by an additional 800,000 shares. On May 11, 2000, our Board of Directors
authorized an increase in the number of shares of common stock available
for issuance under our 1997 Special Non-Officer Stock Option Plan from
450,000 shares to 675,000 shares.

5. TREASURY STOCK

On May 4, 2000, our Board of Directors increased the funds available to
repurchase common stock from time to time by $5 million to a total of
$15 million. We are authorized to repurchase common stock in both open
market and block transactions. Shares purchased under this program will
be held in the corporate treasury for future use including employee
stock option grants and the employee stock purchase plan. We may
discontinue purchases of our common stock at any time that management
determines additional purchases are not warranted. During May 2000, we
repurchased 198,000 shares of our common stock for $5 million.

6. COMMITMENTS AND CONTINGENCIES

We entered into a Business Partner Agreement with IBM for the purchase
of $250 million of network services over a three-year period commencing
January 1, 1998. The agreement includes specified annual minimum
purchases and a graduated adjustment charge if total purchases fall
below the total minimum amount. Effective July 1, 1999, this agreement
was modified and the termination date was extended by one year to
December 31, 2001. The minimum gross purchase commitment for the term of
the modified agreement was increased from $250 million to $335 million
in consideration of an increase in the application discounts. The
agreement provides for the payment of penalties if the minimum gross
purchase commitment is not met. As of June 30, 2000, we did not meet the
gross minimum purchase commitment under the agreement and have accrued
an adjustment of $120,000.

In December 1999, we entered into two concurrent transactions with
CommPress, Inc. a.k.a. bTrade (bTrade), an unaffiliated company. In one
transaction, we licensed our Keystone catalog software to bTrade for
$3,000,000. The arrangement grants bTrade a non-exclusive,
non-transferable license to be used solely in certain industry segments.
The license has a term of one year and automatically renews unless
either party terminates the arrangement. In the other transaction,
bTrade licensed its bTrade messaging software to us for $4,000,000 and a
guaranteed minimum service fee of $5,000,000 over 3 years (the term of
the arrangement). The arrangement grants a non-transferable,
non-exclusive license to the messaging software and the ability to
market and resell the related services to our customer base. Due to the
concurrent execution of the two contracts, they were deemed to be
non-monetary transactions. As the fair value of the products and
services exchanged and received could not be reasonably determined, we
recorded the transactions on a net basis and the resulting net asset of
$1,000,000 is being amortized to expense over three years.

In March 2000, we agreed to modify our agreements with bTrade such that
the Keystone catalog license agreement was rescinded and the bTrade
messaging software license agreement was amended to reduce the license
fee from $4,000,000 to $1,000,000. The net effect of these modifications
was to reduce our accounts receivable from bTrade by $3,000,000 and our
accounts payable to bTrade by an equal amount. This adjustment, which
did not affect earnings, was recorded during the three months ended
March 31, 2000. In addition, the guaranteed minimum service fee to
bTrade discussed above was reduced to $1,000,000.

7. REVISIONS

During the third quarter of 2000, we made an adjustment to the
allocation of the purchase price recorded for the acquisition of
RockPort. The adjustment results from a subsequent review of the facts
underlying the IPR&D projects that were under development at RockPort at
the acquisition date. As a result of that review, we concluded that one
of those IPR&D projects involved the development of internal use
software, and did not entail expenditures that are within the scope of
Statement of Financial Accounting

Standards No. 2, ACCOUNTING FOR RESEARCH AND DEVELOPMENT COSTS.
Consequently, the estimated fair value of that project was excluded from
the purchase price allocation previously made to IPR&D. This resulted in
the previously reported write-off of IPR&D in the amount of $24.9
million (of which $15.4 million related to the RockPort acquisition)
being reduced by approximately $7.0 million to $17.9 million, and
goodwill being increased by the same amount. This adjustment also
required a revision of the previously reported amortization of
intangible assets and the related income tax benefit. During the third
quarter of 2000, we also excluded the write-off of IPR&D in the amount
of $17.9 million, which was previously included in our unaudited pro
forma financial information (Note 2) because we considered the IPR&D
write-off to be a non-recurring charge for purposes of presenting
unaudited pro forma financial information. These matters require that
our previously reported unaudited amounts be revised, as follows (in
thousands):

As Previously
Reported As Revised
-------- ----------

Condensed Consolidated Balance Sheet Data As of June 30, 2000
-------------------------------------------------------------
Intangible assets, net....................................... $ 158,436 $ 165,106
Total assets................................................. $ 257,337 $ 264,007
Deferred income taxes........................................ $ 9,585 $ 9,805
Total liabilities............................................ $ 32,895 $ 33,115
Retained deficit............................................. $ (11,497) $ (5,047)
Total Stockholders' equity................................... $ 223,274 $ 229,724
Total Stockholders' equity and liabilities................... $ 257,337 $ 264,007

Condensed Consolidated Statement of Operations Data for the Three Months Ended June 30, 2000
--------------------------------------------------------------------------------------------
Amortization of intangible assets............................ $ 6,896 $ 7,145
Income tax benefit........................................... $ (9) $ (166)
Net loss..................................................... $ (5,081) $ (5,173)
Basic and diluted loss per share............................. $ (0.34) $ (0.35)
Shares used to compute basic and diluted loss per share...... 15,164,975 14,772,204

Condensed Consolidated Statement of Operations Data for the Six Months Ended June 30, 2000
------------------------------------------------------------------------------------------
Amortization of intangible assets............................ $ 10,470 $ 10,802
In-process research and development.......................... $ 24,882 $ 17,880
Income tax benefit........................................... $ (925) $ (705)
Net loss..................................................... $ (29,402) $ (22,952)
Basic and diluted loss per share............................. $ (1.99) $ (1.59)
Shares used to compute basic and diluted loss per share 14,745,126 14,448,476

Pro Forma Financial Results for the Six Months Ended June 30, 2000
------------------------------------------------------------------
Net loss..................................................... $ (32,469) $ (8,073)
Basic and diluted loss per share............................. $ (2.16) $ (0.55)
Shares used to compute basic and diluted loss per share...... 15,102,483 14,805,833

Pro Forma Financial Results for the Six Months Ended June 30, 1999
------------------------------------------------------------------
Net loss...................................................... $ (27,788) $ (3,392)
Basic and diluted loss per share.............................. $ (1.93) $ (0.24)
Shares used to compute basic and diluted loss per share....... 14,383,449 14,086,799

8. RELATED PARTY TRANSACTIONS

On November 30, 1999, we entered into a Common Stock Purchase Agreement
(the "Common Stock Agreement") with Tradeweave, our wholly owned
subsidiary, Peter R. Johnson, Chairman of our Board of Directors, and
Garth Saloner, a member of our Board of Directors and Chairman of the
Compensation Committee of our Board of Directors. Under the terms of the
Common Stock Agreement, during 1999, Tradeweave issued 1,520,000 shares
of its common stock to Peter R. Johnson for $380,000 in cash, 480,000
shares of its common stock to Garth Saloner for $120,000 in cash, and an
additional 17,999,800 shares of its common stock to QRS for $4,499,950
in cash (for a total of 18,000,000 shares of Common Stock owned by QRS).
During the six-month period ended June 30, 2000, Tradeweave issued
400,000 shares of its common stock to Peter R. Johnson for $100,000 in
cash and 1,131,000 shares of its common stock to various Tradeweave
employees for $282,750 in cash pursuant to exercises of Tradeweave stock
options.

On June 30, 2000, we entered into a Preferred Stock Purchase Agreement
(the "Preferred Stock Agreement") with Tradeweave, Peter R. Johnson and
Garth Saloner. Under the terms of the Preferred

Stock Agreement, during the month of June 2000, Tradeweave issued
529,115 shares of its Series A preferred stock to Peter R. Johnson for
$1,034,000 in cash, 135,093 shares of its Series A preferred stock to
Garth Saloner for $264,000 in cash, and 4,964,678 shares of its Series A
preferred stock to QRS for $9,702,000 in cash.

Each share of Series A preferred stock is convertible into one share of
Tradeweave common stock at the option of the holder, subject to certain
antidilution provisions. The holders of the preferred stock receive a
preference in liquidation. A merger, acquisition, sale of voting control
or sale of substantially all of the assets of the Company in which the
shareholders of the Company do not own a majority of the outstanding
shares of the surviving corporation shall be deemed to be a liquidation.
The holders of the Series A preferred stock are entitled to receive
noncumulative dividends in preference to any dividend on Tradeweave's
common stock at the rate of 8% of the original purchase price per annum,
when and as declared by Tradeweave's Board of Directors. In addition,
the holders of the Series A preferred stock are entitled to participate
pro rata in any dividends paid on Tradeweave's common stock on an
as-if-converted basis.

On June 30, 2000, the Tradeweave Board of Directors authorized a
four-for-one split of their common and Series A preferred stock for
their stockholders of record as of June 30, 2000. All Tradeweave share
amounts have been restated to retroactively reflect the stock split.

As of June 30, 2000, we owned 84.6% of the outstanding stock of
Tradeweave.

9. SEGMENT INFORMATION

QRS services are marketed as a comprehensive suite of electronic
commerce offerings and are designed to function most powerfully in
unison. Tradeweave, offering set-price trading and auctions for the
disposition of surplus and markdown apparel merchandise, vendor
showroom, and collaborative assortment planning, commenced planning and
developmental activities in the latter half of 1999. Although the
Tradeweave marketplace service offering is integrated with other QRS
products, Tradeweave was established as a start-up and separate legal
entity in order to minimize the time to launch this service. Management
evaluates its performance separately from the other QRS products. During
1999, Tradeweave was in a development stage and its service offering was
launched in mid-January 2000.

Accordingly, we classify our business interests into two reportable
segments: QRS Other Products and Tradeweave. We evaluate performance and
allocate resources based on revenues and operating earnings (loss),
which includes allocated corporate general and administrative costs and
income tax expense or benefit recorded to Tradeweave. Unallocated assets
include corporate cash and equivalents, the net book value of corporate
facilities and related information systems, deferred tax amounts and
other corporate long-lived assets.

As Tradeweave was established during the third quarter of 1999, separate
segment disclosure for QRS Other Products for the six months ended June
30, 1999 is included on the face of the financial statements and is not
repeated here. Financial information for our business segments for the
six months ended June 30, 2000 is as follows (in thousands):

QRS
OTHER
PRODUCTS
(REVISED: INTERCOMPANY TOTAL (REVISED:
NOTE 7) TRADEWEAVE ELIMINATIONS NOTE 7)
------- ---------- ------------ -------

Revenues $ 71,601 $ - $ - $ 71,601

Operating loss (17,781) (7,229) - (25,010)

Total assets 255,554 8,235 218* 264,007

Depreciation and amortization 14,594 845 - 15,439

Capital expenditures 6,496 1,019 - 7,515

Capitalized product development
costs 1,273 2,370 - 3,643

- ----------
* The intercompany elimination is comprised of advances made to Tradeweave
and deferred tax liabilities.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS, WHICH INVOLVE RISKS
AND UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF
INTENSE COMPETITION IN THE ELECTRONIC COMMERCE BUSINESS, OUR DEPENDENCE
ON KEY RETAILERS, OUR ABILITY TO SUCCESSFULLY INTRODUCE NEW PRODUCTS AND
SERVICES, OUR DEPENDENCE ON THE AT&T/IBM GLOBAL NETWORK AND OTHER RISK
FACTORS SET FORTH IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999.

GENERAL

Our products and services are organized and marketed as a comprehensive
suite of services, including Electronic Commerce Services, such as
messaging, service bureau, outsourcing and connectivity; Content
Services, consisting primarily of the Keystone catalog service, digital
photography and price auditing services; Application Services, such as
global sourcing services, inventory management, logistics management
services, and Marketplace Services, consisting of set-price trading and
auctions, and vendor showroom, that is expected to generate revenue in
2000. We derive revenues from three principal and related sources: fees
for utilization of network services including the transmission of
standard business documents over a network, monthly charges for
accessing content services, and subscription and usage fees for
application services.

RESULTS OF OPERATIONS

Revenues increased by 24% to $36.5 million for the second quarter of
2000, from $29.5 million for the second quarter of 1999. Revenues
increased by 22% to $71.6 million during the first six months of 2000,
from $58.9 million for the first six months of 1999. These increases
were primarily attributable to revenues from our expanded product
offerings (including acquired businesses) in Content and Applications
Services. There was an overall increase in our customer base with higher
usage of Content Services. The number of retailers and vendors,
including carriers, increased from 8,034 as of June 30, 1999 to 9,116 as
of June 30, 2000. The number of catalog trading partnerships increased
as a result of the increase in the number of customers and their trading
links with each other. The number of eCommerce trading partnerships
remained constant for the second quarter of 2000. There was no revenue
from the Tradeweave product line.

Cost of revenue consists primarily of the cost of purchasing network
services and the cost of our data center and technical customer support
services. Cost of revenue increased by 41% to $20.9 million for the
second quarter of 2000, from $14.9 million for the second quarter of
1999. Cost of revenue increased by 34% to $39.9 million for the first
six months of 2000, from $29.9 million for the first six months of 1999.
These increases were principally due to increases in our data center and
technical customer support services group reflecting growth in customers
and our expanded product offerings in content services and applications
services. Tradeweave customer and technical support services, including
amortization of capitalized product development costs of $2.0 million
and $3.4 million were incurred during the three and six months ended
June 30, 2000, respectively. Purchased network services decreased,
reflecting minimal growth in network services purchased under a
long-term contract, discounted based upon a multi-year volume
commitment. The gross profit margin was 43% and 50% for the second
quarters of 2000 and 1999, respectively.

Sales and marketing expenses consist primarily of personnel and related
costs of our sales and marketing organizations, as well as the costs of
various marketing programs. Sales and marketing expenses increased by
85% to $7.1 million for the second quarter of 2000, from $3.8 million
for the second quarter of 1999. Sales and marketing expenses increased
by 70% to $14.0 million for the first six months of 2000, from $8.3
million for the first six months of 1999. This increase reflects our
expansion of retailer and vendor-specific coverage and growth in our
Program Sales and Enablement organization, the group responsible for
rapidly enabling trading partners for key hub customers as well as the
sales organizations to support our expanded product offerings in content
and application services. We incurred $1.4 million and $2.8 million of
marketing costs during the three and six months ended June 30, 2000,
respectively to launch the Tradeweave product.

Product development expenses consist primarily of personnel and
equipment costs related to research, development and implementation of
new services and enhancement of existing services. Product development
expenses were $1.7 million for the second quarter of 2000 and $2.1
million for the second

quarter of 1999. Product development expenses were $3.6 million for the
first six months of 2000 and $4.1 million for the first six months of
1999. We capitalized product development costs of $1.7 million
(including $1.1 million for Tradeweave) and $497,000 in the second
quarters of 2000 and 1999, respectively. We capitalized product
development cost of $3.6 million (including $2.4 million for Tradeweave)
and $965,000 for the six months of 2000 and 1999, respectively. The
increase in capitalized product development costs in 2000 reflects
significantly higher research and development activities for products
that have reached technological feasibility.

General and administrative expenses consist primarily of the personnel
and related costs of our finance and administrative organizations, as
well as professional fees and other costs. General and administrative
expenses were $5.8 million for the second quarter of 2000 compared to
$2.8 million for the second quarter of 1999. General and administrative
expenses were $10.3 million for the first six months of 2000 compared to
$5.3 million for the first six months of 1999. This increase was
primarily due to increased investments in infrastructure and increased
headcount to support a larger organization, and included Tradeweave
expenses of $480,000 and $850,000 for the three and six months ended
June 30, 2000.

In connection with the acquisition of RockPort and merger with Image
Info, we expensed $17.9 million of in-process research and development
(See Notes 2 and 7 to Condensed Consolidated Financial Statements. These
acquisitions also resulted in $154.9 million of intangible assets, which
are being amortized over estimated useful lives of three to seven years
(See Notes 2 and 7 to Condensed Consolidated Financial Statements).

Interest income consists primarily of interest earned on cash, cash
equivalents and investment securities. Interest income was $431,000 and
$493,000 for the second quarters of 2000 and 1999, respectively.
Interest income was $828,000 and $1.1 million for the first six months
of 2000 and 1999, respectively. Changes in interest income reflect the
level of average investment balances in each period and a shift from
taxable to non-taxable marketable securities. On January 21, 2000, we
utilized $5.0 million in cash to acquire Image Info and during May 2000,
we utilized $5.0 million in cash to repurchase 198,000 shares of our
common stock.

We recorded an income tax benefit of $166,000 and $705,000 for the three
and six months ended June 30, 2000, respectively (See Note 7 to
Condensed Consolidated Financial Statements). The tax benefit as a
percentage of pre-tax loss reflects the non-deductibility of purchase
accounting amounts related to the acquisitions of RockPort and Image
Info. We recorded an income tax expense of $2.4 million and $4.6 million
for the three and six months ended June 30, 1999, respectively. Our
income tax rate for the three and six months ended June 30, 1999 was
38%.

LIQUIDITY AND CAPITAL RESOURCES

Our working capital was $61.5 million at December 31, 1999 and $50.8
million at June 30, 2000. Cash, cash equivalents and marketable
securities decreased from $47.3 million at December 31, 1999 to $30.6
million at June 30, 2000. Total assets increased from $127.0 million at
December 31, 1999 to $264.0 million at June 30, 2000 and total
liabilities increased from $22.4 million at December 31, 1999 to $33.1
million at June 30, 2000 (See Note 7 to Condensed Consolidated Financial
Statements).

The decrease of $16.7 million in cash, cash equivalents and marketable
securities from December 31, 1999 to June 30, 2000 resulted primarily
from the payment of $8.0 million for acquisitions, $11.2 million for
capital expenditures (including product development costs) and $5
million to repurchase our common stock, partially offset by proceeds
from exercise of stock options and sales of marketable securities.

Management believes that the cash resources available at June 30, 2000
and cash anticipated to be generated from future operations will be
sufficient for us to meet our working capital needs, capital

expenditures and common stock repurchases for the next year. We have not
paid any cash dividends to date and do not intend to pay cash dividends
with respect to common stock in the foreseeable future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

Our exposure to market risk associated with changes in interest rates
relates primarily to our investment portfolio of marketable securities.
We do not use derivative financial instruments in our investment
portfolio. The stated objectives of our investment guidelines are to
preserve principal, meet liquidity needs and deliver maximum yield
subject to the previous conditions. The guidelines limit maturity,
concentration, and eligible investments to high credit quality U.S.
issuers, such as the U.S. Treasuries and agencies of the U.S.
Government, and highly rated banks and corporations. Our marketable
securities profile includes only those securities with active secondary
or resale markets to ensure portfolio liquidity.

The table below presents principal amounts and related weighted average
interest rates due by date of maturity for our marketable securities.
Our guidelines do not permit investments with maturities in excess of 24
months. At June 30, 2000, the weighted average maturity and interest
rate of the marketable securities portfolio was 126 days.

MATURITY FAIR VALUE AT
(Amounts in thousands) 2000 JUNE 30, 2000
----- -------------

U.S. Government Agencies $7,061 $6,994

Average interest rate 4.72% 4.72%

FOREIGN CURRENCY RISK

We have no significant investments outside the United States and do not
have material foreign currency risk.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
None

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On January 21, 2000 we issued 440,914 shares of our common
stock in connection with the acquisition of all the
outstanding capital stock of Image Info. On March 10, 2000, we
issued 814,794 shares of our common stock in connection with
the acquisition of substantially all of the assets of
RockPort.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders was held on May 11, 2000.

(b) The following directors were elected at the meeting to a term of
three years:

David A. Cole, Garth Saloner and Garen Staglin.

The following directors are continuing to serve their terms:

Peter R. Johnson, Tania Amochaev, Steven D. Brooks, John P. Dougall,
Philip Schlein and John S. Simon.

NOT
FOR AGAINST WITHHELD VOTED
---------- ---------- -------- ---------

a. Election of Directors: 11,798,087 51,383
David A. Cole 11,811,774 37,696
Garth Saloner 11,811,608 37,862
Garen Staglin

b. Approve an amendment to QRS' Certificate of
Incorporation to increase the number of
authorized shares 10,787,359 1,070,066 2,045 10,000

c. Approve a series of amendments to QRS' 1993
Stock Option/Stock Issuance Plan 5,973,297 4,835,083 23,195 1,017,895

d. Ratify the appointment of Deloitte & Touche
as QRS' independent auditors for the fiscal
year ending December 31, 2000 11,767,434 1,563 704 79,769

The foregoing matters are described in further detail in our definitive proxy
statement dated April 10, 2000 for the Annual Meeting of Stockholders held on
May 11, 2000.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A. EXHIBITS

EXHIBIT
NUMBER DESCRIPTION

27.1 Financial Data Schedule

B. REPORTS ON FORM 8-K

On May 23, 2000, we filed an amendment to the Form 8-K dated
March 24, 2000, which included, pursuant to Item 7, the
financial statements of RockPort Trade Systems, Inc., and pro
forma information.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized and in the capacity indicated.

QRS CORPORATION
---------------------------
(Registrant)

\s\ John S. Simon
---------------------------
February 6, 2001 John S. Simon
Chief Executive Officer

February 6, 2001 \s\ Samuel M. Hedgpeth III
---------------------------
Samuel M. Hedgpeth III
Chief Financial Officer