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

FORM 10-Q

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

For the quarterly period ended March 31, 1995

[ ] 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 1-7477

CRSS INC.
(Exact Name of registrant as specified in its Charter)

DELAWARE 74-1677382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

1177 WEST LOOP SOUTH, SUITE 800, HOUSTON, TEXAS 77027
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code (713) 552-2000

Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---

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

Class of Common Stock Outstanding at May 5, 1995
--------------------- --------------------------
$1 Par Value 12,808,096

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CRSS INC. AND SUBSIDIARIES

FORM 10-Q

MARCH 31, 1995

INDEX

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CRSS Inc.

Consolidated Balance Sheet-
March 31, 1995 and June 30, 1994 . . . . . . . . . . . . . . . . . . . 1

Consolidated Statement of Operations-Three and
Nine Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . 2

Consolidated Statement of Cash Flows-Three and Nine
Months Ended March 31, 1995 and 1994. . . . . . . . . . . . . . . . . . 3

Equity Investment Partnerships of CRSS Inc.

Combined Balance Sheet-
March 31, 1995 and June 30, 1994 . . . . . . . . . . . . . . . . . . . 4

Combined Statement of Operations-Three and
Nine Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . 5

Combined Statement of Cash Flows-Three and Nine
Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . 6

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 7

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . 8

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . 11

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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS

CRSS INC.
CONSOLIDATED BALANCE SHEET

March 31, June 30,
(DOLLARS IN THOUSANDS) 1995 1994
----- ----
(unaudited)

Assets
Current assets:
Cash and cash equivalents $ 21,519 $ 2,229
Accounts receivable 3,027 4,664
Deferred income taxes 1,959 1,959
Other current assets 6,432 5,546
Net current assets from discontinued operations 7,060 36,621
-------- --------
Total current assets 39,997 51,019
Property, plant and equipment, net 75,624 78,043
Net noncurrent assets from discontinued operations 7,326 7,326
Other assets:
Equity investment in partnerships 62,672 61,538
Other noncurrent assets 10,090 12,746
-------- --------
72,762 74,284
-------- --------
$195,709 $210,672
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 944 $ 946
Current portion of long-term obligations 3,200 3,096
Other current liabilities 5,407 9,510
-------- --------
Total current liabilities 9,551 13,552
Non-recourse project financing 59,098 60,937
Other long-term obligations 5,227 7,845
Deferred income taxes 42,046 40,452
Shareholders' equity:
Preferred stock, no par value, 2,000,000 shares authorized
but unissued - -
Common stock, $l.00 par value, 50,000,000 shares
authorized; issued March 31, 1995 - 16,651,000 shares
and June 30, 1994 - 16,492,000 16,651 16,492
Additional paid-in capital 70,546 69,253
Retained earnings 22,502 29,184
-------- --------
109,699 114,929
Treasury stock, at cost, 3,843,000 shares at
March 31, 1995 and 3,574,000 shares at June 30, 1994 (29,868) (26,946)
Other (44) (97)
-------- --------
79,787 87,886
-------- --------
$195,709 $210,672
======== ========

See Notes to Unaudited Consolidated and Combined Financial Statements

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CRSS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1995 1994
---- ---- ---- ----

Revenues:
Electricity and steam sales $ 6,432 $ 6,276 $19,218 $19,044
Operations and administrative service fees 797 765 2,473 2,881
Other revenues 25 26 77 76
------- ------- ------- -------
7,254 7,067 21,768 22,001

Costs and expenses:
Plant operations 5,445 5,330 16,619 15,837
General and administrative 2,585 572 7,563 4,745
Marketing and project development 834 710 1,832 1,992
------- ------- ------- -------
8,864 6,612 26,014 22,574
Equity income in partnerships 4,817 3,216 14,272 10,802
------- ------- ------- -------

Operating income from continuing operations 3,207 3,671 10,026 10,229

Other income (expense):
Non-operating income 260 19 741 209
Interest expense (1,733) (1,851) (5,290) (5,621)
Minority interest in earnings - 13 - (455)
------- ------- ------- -------
(1,473) (1,819) (4,549) (5,867)
------- ------- ------- -------

Earnings from continuing operations before income tax 1,734 1,852 5,477 4,362
Income tax expense 626 796 2,273 1,876
------- ------- ------- -------
Earnings from continuing operations 1,108 1,056 3,204 2,486

Earnings (loss) from discontinued operations, net of
income tax benefit of $3,277 for the nine months ended
March 31, 1995 and expense of $314 and $1,120
for the three and nine months ended March 31, 1994,
respectively - 244 (8,723) 1,028
------- ------- ------- -------

Net earnings (loss) $ 1,108 $ 1,300 $(5,519) $ 3,514
======= ======= ======= =======

Primary and fully diluted earnings (loss) per common share:
Earnings from continuing operations $ 0.09 $ 0.08 $ 0.25 $ 0.19
Net earnings (loss) $ 0.09 $ 0.10 $ (0.42) $ 0.27
======= ======= ======= =======

Weighted average common shares outstanding 12,904 13,105 13,062 13,061
======= ======= ======= =======
Dividends per common share $ 0.03 $ 0.03 $ 0.09 $ 0.09
======= ======= ======= =======

See Notes to Unaudited Consolidated and Combined Financial Statements.

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5
CRSS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

Nine Months Ended
March 31,
----------------------
(DOLLARS IN THOUSANDS) 1995 1994
---- ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 3,204 $ 2,486

ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Deferred income taxes 1,594 2,796
Depreciation and amortization 2,472 2,467
Equity income in partnerships (14,272) (10,802)
(Increase) decrease in receivables 1,637 (1,095)
Increase in other current assets (886) (628)
Decrease in accounts payable and other current
liabilities (3,600) (1,544)
Distributions from partnerships 13,138 5,534
Payments (to) from discontinued operations (22,217) 8,430
Other operating activities 68 (1,122)
------- --------
Net cash provided by (used in) operating activities (18,862) 6,522

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in investments in affiliates - (30,000)
Payments from discontinued operations - 572
Proceeds from sale of discontinued operations 42,983 -
------- --------
Net cash provided by (used in) investing activities 42,983 (29,428)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations (1,715) (1,580)
Proceeds from short-term borrowings - 9,200
Redemption of stock of subsidiary - (17,000)
Proceeds from exercise of stock options 933 668
Purchase of treasury shares (2,885) -
Contributions from minority interest - 5,700
Dividends paid on common stock (1,164) (1,149)
------- --------
Net cash used in financing activities (4,831) (4,161)
------- --------

Net increase (decrease) in cash and cash equivalents 19,290 (27,067)
Cash and cash equivalents at beginning of period 2,229 28,220
------- --------
Cash and cash equivalents at end of period $21,519 $ 1,153
======= ========

See Notes to Unaudited Consolidated and Combined Financial Statements.

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EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED BALANCE SHEET

March 31, June 30,
(DOLLARS IN THOUSANDS) 1995 1994
---- ----
(unaudited)

Assets
Current assets:
Cash and cash equivalents $ 24,247 $ 51,304
Accounts receivable 17,874 18,272
Accounts receivable from affiliates 2,672 2,735
Prepaid expenses and other assets 2,191 2,874
-------- --------
Total current assets 46,984 75,185
Restricted cash 59,102 47,392
Property, plant and equipment, net 481,781 488,525
Power purchase agreement, net 55,667 60,030
Other noncurrent assets 960 1,014
-------- --------
$644,494 $672,146
======== ========
Liabilities and Partners' Capital
Current liabilities:
Accounts payable $ 622 $ 72
Accounts and notes payable to affiliates 5,810 5,699
Current portion of long-term obligations 28,875 27,626
Operations and maintenance reserves 3,806 4,508
Other current liabilities 12,254 15,202
-------- --------
Total current liabilities 51,367 53,107
Non-recourse project financing 427,938 460,989
Other long-term obligations 39,433 34,661
Partners' capital 125,756 123,389
-------- --------
$644,494 $672,146
======== ========

Supplemental information:
Partners' capital $125,756 $123,389
Attributable to other partners (63,084) (61,851)
-------- --------
CRSS' equity investment in partnerships $ 62,672 $ 61,538
======== ========

See Notes to Unaudited Consolidated and Combined Financial Statements

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EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)

Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
(DOLLARS IN THOUSANDS) 1995 1994 1995 1994
---- ---- ---- ----

Revenues:
Electricity and steam sales $46,006 $46,140 $135,296 $134,865

Costs and expenses:
Plant operations 24,660 26,755 70,417 74,201
General and administrative 1,009 1,394 3,719 4,302
------- -------- -------- --------
25,669 28,149 74,136 78,503
------- -------- -------- --------
Operating income 20,337 17,991 61,160 56,362
Interest expense (10,628) (11,505) (32,434) (34,640)
------- -------- -------- --------

Net earnings $ 9,709 $ 6,486 $ 28,726 $ 21,722
======= ======== ======== ========

Supplemental information:
Net earnings $ 9,709 $ 6,486 $28,726 $21,722
Attributable to other partners (4,892) (3,270) (14,454) (10,920)
------- -------- -------- --------
CRSS' equity income in partnerships $ 4,817 $ 3,216 $ 14,272 $ 10,802
======= ======== ======== ========

See Notes to Unaudited Consolidated and Combined Financial Statements.

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EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)

Nine Months Ended
March 31,
------------
(DOLLARS IN THOUSANDS) 1995 1994
---- ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $28,726 $ 21,722

ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 22,158 20,954
Loss on replacement of equipment 130 189
Decrease in receivables 461 5,525
(Increase) decrease in prepaid expenses and other assets 682 (956)
Increase (decrease) in accounts payable and other current
liabilities (1,185) (234)
------- ---------
Net cash provided by operating activities 50,972 47,200

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (11,126) (18,184)
Increase in restricted cash (11,710) (12,253)
-------- ---------
Net cash used in investing activities (22,836) (30,437)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on non-recourse project financing (31,804) (40,034)
Proceeds from non-recourse project financing - 14,070
Increase in other long-term obligations 2,972 9,885
Contributions from partners - 30,000
Distributions to partners (26,361) (11,107)
-------- --------
Net cash provided by (used in) financing activities (55,193) 2,814
-------- --------

Net increase (decrease) in cash and cash equivalents (27,057) 19,577
Cash and cash equivalents at beginning of period 51,304 11,144
------ ------
Cash and cash equivalents at end of period $ 24,247 $ 30,721
======= =======

See Notes to Unaudited Consolidated and Combined Financial Statements.

6
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CRSS INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

The Consolidated Financial Statements include the accounts of CRSS Inc.
("CRSS") and its wholly-owned subsidiary, CRSS Capital, Inc. ("CRSS Capital"),
collectively referred to herein as the "Company".

The Combined Financial Statements include the accounts of the four less than
majority-owned power and cogeneration limited partnerships in which CRSS
Capital has equity interests ranging from 47.5 percent to 50 percent: Hopewell
Cogeneration Limited Partnership ("Hopewell"), Naheola Cogeneration Limited
Partnership ("Naheola"), Appomattox Cogeneration Limited Partnership
("Appomattox"), and Westwood Energy Properties Limited Partnership
("Westwood"), collectively referred to herein as the "Partnerships".

In the opinion of management, the accompanying unaudited Consolidated and
Combined Financial Statements contain all adjustments necessary to present
fairly the respective financial positions of the Company and the Partnerships
as of March 31, 1995, the results of operations for the three and nine months
ended March 31, 1995 and 1994 and cash flows for the nine months ended March
31, 1995 and 1994. All adjustments are of a normal recurring nature. These
unaudited Consolidated and Combined Financial Statements should be read in
conjunction with the audited Consolidated and Combined Financial Statements
included in the June 30, 1994 Annual Report to Shareholders. The results of
operations for the three and nine months ended March 31, 1995 are not
necessarily indicative of the results to be expected for the full fiscal year.
Certain amounts in the prior period Consolidated Financial Statements have been
reclassified to conform to the current year presentation.

NOTE 2. DISCONTINUED OPERATIONS

As of June 30, 1994, the design, engineering and construction management
segment was reflected as discontinued operations in conjunction with the
Company's plan to dispose of this business.

On July 21, 1994, the Company sold CRSS Architects, Inc. to Hellmuth, Obata &
Kassabaum, Inc. ("HOK"). Total consideration amounted to $6.8 million,
consisting of $4.8 million in cash at closing and a $2.0 million sharing of
future net cash distributions from the Peace Shield project, of which $0.6
million was received during the nine months ended March 31, 1995.

On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc. to Jacobs Engineering Group,
Inc. ("Jacobs"). Total consideration paid by Jacobs through March 31, 1995 was
$37.8 million in cash, representing $14.0 million over the aggregate book value
of the business acquired. Subsequent to March 31, 1995, the Company received
an additional $0.4 million from Jacobs as a final purchase price adjustment.

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10
Net assets from discontinued operations at March 31, 1995 consists primarily of
the assets and liabilities of the retained power plant contracts (primarily
receivables and payables), cash of $7.8 million held by CRSS's captive
insurance company net of claims reserves of $6.3 million, NaTec's investment in
the White River Nahcolite Minerals joint venture, deferred taxes, legal claims
reserves and accrued discontinuance costs.

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

RESULTS OF OPERATIONS

GENERAL
Electricity sales, steam sales and plant operations expense included in the
Company's Consolidated Statement of Operations consist of the revenues and
costs associated with the three Viking cogeneration facilities. These projects
are wholly-owned by CRSS Capital. Equity income in partnerships includes CRSS
Capital's interest in cogeneration facilities that are less than majority-
owned and are accounted for using the equity method. These partnerships
include the Hopewell, Naheola, Westwood, and Appomattox facilities. Operations
and administrative service fees arise from management services provided by CRSS
Capital to each project in which it maintains an ownership interest. Costs
associated with providing these services are included in general and
administrative expense. In addition to the components discussed previously,
costs and expenses included general and administrative overhead costs as well
as expenses related to the Company's project development efforts.

CONTINUING OPERATIONS
Consolidated earnings from continuing operations for the three months ended
March 31, 1995 were $1.1 million, or $0.09 per share, compared to $1.1 million,
or $0.08 per share, for the three months ended March 31, 1994. For the nine
months ended March 31, 1995, consolidated earnings from continuing operations
were $3.2 million, or $0.25 per share, compared to $2.5 million, or $0.19 per
share for the nine months ended March 31, 1994.

Total revenues for the three months ended March 31, 1995 of $7.3 million were
relatively consistent with the corresponding period of the prior year. For the
nine months ended March 31, 1995, total revenues were $21.8 million compared to
$22.0 million for the nine months ended March 31, 1994. The decrease was
primarily attributable to lower operations and maintenance services provided by
the Company to the Hopewell project during the current year.

Plant operations costs of $5.4 million for the three months ended March 31,
1995 were relatively consistent with prior year costs for the same period.
Higher wood fuel prices during the first quarter of the year resulted in an
increase in plant operations costs of $0.8 million for the nine months ended
March 31, 1995 as compared to the nine months ended March 31, 1994. The higher
wood fuel prices were attributable to difficulties in procuring adequate wood
supplies during the period.

General and administrative expenses for the quarter ended March 31, 1995 were
$2.0 million higher than the corresponding period of the prior year. The
increase is due to the prior year amount including approximately $0.7 million
of reimbursements of prior expenses related to a developmental project, a $0.7
million reduction to legal claims reserves due to favorable claims
developments, and approximately $0.5 million of collections of a receivable
that had

8
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previously been written off. General and administrative expenses for the nine
months ended March 31, 1995 of $7.6 million, were $2.8 million higher than the
prior year amount of $4.7 million. In addition to the items noted above, the
prior amount also included expense reimbursements of $1.6 million related to a
developmental project received during the first quarter.

Marketing and project development costs for the three months ended March
31,1995 were $0.8 million compared to $0.7 million for the three months ended
March 31, 1994. For the nine months ended March 31, 1995, marketing and
project development costs were $1.8 million compared to $2.0 million for the
corresponding period of the prior year. The decreases in current year costs
are primarily due to expense reimbursements received related to a current
developmental project.

Non-operating income increased $0.2 million and $0.5 million for the three and
nine months ended March 31, 1995, respectively, as compared to the
corresponding periods of the prior year. The increases are due to higher cash
balances available for investment in addition to higher rates of interest
during the current year. Interest expense, which is primarily related to the
long-term non-recourse debt used to finance the Viking cogeneration
facilities, was $0.1 million lower for the quarter ended March 31, 1995, and
$0.3 million lower for the nine months ended March 31, 1995 as compared to the
prior year amounts. The decreases are due to reductions in the outstanding
principal balances on the non-recourse debt.

Minority interest in earnings for the three and nine months ended March 31,
1994 represents the minority interest in CRSS Capital previously owned by
Paribas North America, Inc. ("Paribas"). The Company (via redemption by CRSS
Capital) repurchased all of the common stock of CRSS Capital owned by Paribas
on January 31, 1994 resulting in CRSS Capital becoming wholly-owned by the
Company.

EQUITY INCOME IN PARTNERSHIPS
Equity income in partnerships reflects CRSS Capital's 50 percent interest in
the Hopewell, Naheola, and Appomattox power and cogeneration facilities and the
47.5 percent interest in the Westwood facility.

Equity income in partnerships increased from $3.2 million for the three months
ended March 31, 1994 to $4.8 million for the three months ended March 31, 1995,
an increase of $1.6 million, or 50 percent. The increase is primarily due to
improved operating results at all four projects. Equity income in partnerships
for the nine months ended March 31, 1995 was $14.3 million compared to $10.8
million for the nine months ended March 31, 1994, representing an increase of
$3.5 million, or 32 percent. In addition to the items noted above, the
increase for the nine months ended March 31, 1995 is primarily due to the
Westwood project, which experienced an unscheduled outage during the first
quarter of the prior fiscal year. Also contributing to the current year
increase was a retroactive rate adjustment at the Appomattox facility during
the second quarter.

DISCONTINUED OPERATIONS
Earnings from discontinued operations for the three and nine months ended March
31, 1994 reflect the operating results of the design, engineering and
construction management segment which was classified as discontinued operations
as of June 30, 1994, in conjunction with the Company's plan to dispose of this
business. As further discussed below under "Liquidity and Capital Resources",
the Company sold its primary subsidiaries related to this business segment
during the first quarter of fiscal year 1995. As part of the sale
transactions, CRSS retained certain assets and liabilities, the majority of
which relate to four power plant engineering,

9
12
procurement, and construction contracts which were substantially complete or in
the later stages of completion. Additionally, the Company agreed to indemnify
the purchasers against certain legal claims. During the three months ended
September 30, 1994, the Company recorded an additional reserve of $9.5 million
for the discontinued design, engineering and construction management segment
related to changes in the estimates to complete these power plant contracts and
for additional legal claims reserves.

During the three months ended September 30, 1994, the Company also increased
its provision for the estimated loss on disposal of its holdings in NaTec
Resources, Inc. ("NaTec"), the discontinued acid rain/pollution control
segment, by an additional $2.5 million. See further discussion under
"Liquidity and Capital Resources".

CONSOLIDATED RESULTS
Consolidated net earnings for the three months ended March 31, 1995, were $1.1
million, or $0.09 per share versus net earnings of $1.3 million, or $0.10 per
share for the corresponding period of the prior year. For the nine months
ended March 31, 1995, consolidated net loss was $5.5 million, or $0.42 per
share versus net earnings of $3.5 million, or $0.27 per share for the nine
months ended March 31, 1994.

LIQUIDITY AND CAPITAL RESOURCES

Working capital at March 31, 1995, totalled $30.4 million, which included $21.5
million in cash and cash equivalents. As of June 30, 1994, working capital was
$37.5 million, which included cash and cash equivalents of $2.2 million. The
$14.0 million increase in cash and cash equivalents for the period from June
30, 1994 to March 31, 1995 is primarily due to the sale of the discontinued
design, engineering and construction management segment, as further discussed
below, and distributions from the equity investment partnerships of $13.1
million.

On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc., to Jacobs Engineering Group,
Inc. ("Jacobs"). Total consideration paid by Jacobs through March 31, 1995 was
$37.8 million in cash, representing $14.0 million over the aggregate book value
of the business acquired. Subsequent to March 31, 1995, the Company received
an additional $0.4 million from Jacobs as a final purchase price adjustment.

Cash payments related to the discontinued operations during the nine months
ended March 31, 1995 of $22.2 million consisted of working capital requirements
of the businesses prior to the sale, severance and other employee related
costs, legal fees and settlements, costs related to the retained power plant
engineering, procurement, and construction contracts, and closing costs.

The Company maintains a letter of credit facility with two banks. The facility
may be used to fund draws under existing outstanding letters of credit issued
thereunder, which totalled $9.0 million at March 31, 1995. The credit
facility, which is available through July 1, 1995 is subject to certain
restrictive covenants including, among others, liquidity ratio, tangible net
worth, and limitations on capital investments.

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13
The Company's non-recourse project financing represents long-term non-recourse
debt related to the Viking projects. The notes provide for interest payments
at 11.15 percent per annum due in quarterly installments of principal and
interest through the year 2009. The Company has entered into negotiations with
the lenders for the restructuring of the debt.

At March 31, 1995 cash totalling $0.6 million has been reserved for plant
maintenance on the Viking projects in accordance with the terms of the
non-recourse project financing. An additional $0.7 million is reserved for
debt service.

The Company has reached a settlement with James River Corporation regarding the
call notice it received on its interest in the Naheola partnership. The
project, which includes a chemical recovery boiler and cogeneration assets
located at James River's Naheola Mill in Pennington, Alabama, has been in
operation since March 1993. Under the terms of the settlement agreement, the
Company will receive $38.1 million, payable by May 19, 1995, in exchange for
its partnership interest.

NaTec has reached an agreement in principle (the "Acquisition Agreement") to
sell its interest in White River Nahcolite Minerals, Limited Liability Company
("White River") to North American Chemical Company. Under the terms of the
Acquisition Agreement, which is subject to various conditions, including
approval by the NaTec shareholders, NaTec will receive $10.0 million, payable
$6.0 million at closing with the balance to be paid with a non-interest bearing
note payable in quarterly installments according to a formula based on sales of
White River's production of sodium bicarbonate, over a period of five years.
The note is secured by the assets of White River. The Board of Directors of
NaTec has also approved the liquidation of NaTec, subject to shareholder
approval. Proceeds from the sale of NaTec's investment in White River will be
used to satisfy the claims of CRSS and other creditors, and CRSS as the holder
of NaTec's preferred stock. As of March 31, 1995, the Company has receivables
from NaTec of approximately $7.6 million consisting of notes, interest, and
dividends receivable. Effective April 14, 1995, CRSS converted a portion of
its NaTec Series A Cumulative Convertible Exchangeable Preferred Stock and all
of its NaTec Series B and Series C Cumulative Convertible Exchangeable
Preferred Stock into 1,402,749 shares of common stock. Upon this conversion,
the Company owns 13,499,449 shares, or approximately 50.2 percent of the
outstanding common shares of NaTec, and 44,380 shares, or 100 percent of the
outstanding preferred shares of NaTec.

Management believes that existing cash, cash flow from operations and project
distributions, and existing credit facilities will be sufficient to meet the
ongoing requirements of the operations of the Company. In addition, the above
sources can be supplemented with other external sources of funds to meet
additional cash requirements if necessary.

PART II. - OTHER INFORMATION

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

(a) Exhibits

27.1 Financial data schedule.

(b) Report on Form 8-K

None

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CRSS INC. AND SUBSIDIARIES

SIGNATURES

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

CRSS Inc.
---------
(Registrant)

Date May 8, 1995 /s/ Bruce W. Wilkinson
-------------------- --------------------------
Bruce W. Wilkinson
Chief Executive Officer and
Chairman of the Board

Date May 8, 1995 /s/ William J. Gardiner
--------------------- ----------------------------
William J. Gardiner
Senior Vice President/Chief
Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer)

15
EXHIBIT INDEX

Exhibit
No.
- -------

27.1 Financial Data Schedule