<PAGE>

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

                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       or

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

                         COMMISSION FILE NUMBER 0-21958

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

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


                1400 MARINA WAY SOUTH, RICHMOND, CALIFORNIA 94804
          (Address of principal executive offices, including zip code)

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

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
  TITLE OF EACH CLASS                  NAME OF EACH EXCHANGE ON WHICH REGISTERED
  -------------------                  -----------------------------------------
<S>                                    <C>
         None                                             None
</TABLE>

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                    Common Stock, par value $0.001 per share
                                (Title of Class)

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

YES     X      NO
     -------        -------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [X]

The aggregate market value of voting stock held by non-affiliates of the
Registrant as of February 29, 2000 was approximately $1,343,823,000 based upon
the closing price of $94.375 for shares of the Registrant's common stock as
reported by the Nasdaq National Market). Shares of common stock held by each
officer, director and holder of five percent or more of the outstanding common
stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.

Number of shares of common stock outstanding as of February 29, 2000: 14,239,180

                       DOCUMENTS INCORPORATED BY REFERENCE

Designated portions of the following documents are incorporated by reference
into this Report on Form 10-K where indicated:

     1.  QRS Corporation Proxy Statement for the Annual Meeting of Stockholders
         to be held on or about May 11, 2000, Part III.

The exhibit index appears on Pages 51-53

<PAGE>

QRS CORPORATION

                          1999 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

<TABLE>
<S>               <C>                                                                                                <C>
PART I

ITEM 1            Business.........................................................................................     3

ITEM 2            Facilities.......................................................................................    15

ITEM 3            Legal Proceedings................................................................................    16

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

PART II

ITEM 5            Market for Registrant's Common Equity and Related Stockholder Matters............................    17

ITEM 6            Selected Financial Data..........................................................................    18

ITEM 7            Management's Discussion and Analysis of Financial Condition and
                  Results of Operations............................................................................    19

ITEM 7a           Quantitative and Qualitative Disclosures About Market Risk.......................................    24

ITEM 8            Financial Statements.............................................................................    25

ITEM 9            Changes in and Disagreements with Accountants on Accounting and
                  Financial Disclosure.............................................................................    46

PART III

ITEM 10           Directors and Executive Officers of the Registrant...............................................    47

ITEM 11           Executive Compensation...........................................................................    49

ITEM 12           Security Ownership of Certain Beneficial Owners and Management...................................    49

ITEM 13           Certain Relationships and Related Transactions...................................................    50

PART IV

ITEM 14           Exhibits, Financial Statement Schedules and Reports on Form 8-K..................................    51

                  SIGNATURES.......................................................................................    54
</TABLE>


                                       2
<PAGE>

                                     PART I

ITEM 1.  BUSINESS

        EXCEPT FOR THE HISTORICAL FINANCIAL INFORMATION CONTAINED HEREIN, THE
        MATTERS DISCUSSED IN THIS ANNUAL REPORT ON FORM 10-K MAY BE CONSIDERED
        "FORWARD-LOOKING" STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
        SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
        EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS INCLUDE DECLARATIONS
        REGARDING OUR INTENT, BELIEF OR CURRENT EXPECTATIONS. THESE
        FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
        INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES, AND OUR ACTUAL RESULTS
        COULD DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING
        STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
        FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE
        NOT LIMITED TO, THOSE LISTED UNDER "BUSINESS--RISK FACTORS" AND
        ELSEWHERE HEREIN, AND OTHER RISKS IDENTIFIED FROM TIME TO TIME IN OUR
        REPORTS AND REGISTRATION STATEMENTS FILED WITH THE SECURITIES AND
        EXCHANGE COMMISSION.

We are a leading provider of business-to-business electronic commerce ("B2B
eCommerce") services to the retail industry. Our services help our retailer,
vendor, manufacturer and carrier customers leverage information, electronic
networks, and Internet technologies to anticipate and respond to consumer demand
more rapidly, manage inventory levels, coordinate activity among trading
partners, and reduce operating costs. Our services provide a network and the
functionality that enables retailers and their trading partners to transact
business, share information, and collaborate on market and operational
decisions. Our services, which we deliver and can be accessed over the Internet
and proprietary networks, are organized into four major categories:

-    eCommerce Services, which enable companies to collaborate with their
     trading partners and electronically exchange critical business documents

-    Content Services, which enable companies to leverage important product
     information in their business operations, primarily using QRS KEYSTONE, the
     retail industry's largest database of U.P.C.s.

-    Application Services, which enable companies to access hosted applications
     to manage inventory and logistics operations and to utilize market research
     to analyze competitive pricing information

-    Marketplace Services, which provide an Internet marketplace to trade and
     auction first-run and excess merchandise

We market our services as a comprehensive family that provides our customers
with a single, integrated source for implementing B2B eCommerce practices.

Our business is subject to various risks and uncertainties that are described
herein under "Risk Factors."

We were incorporated in California in 1985 and reincorporated into Delaware in
October 1997. Except as otherwise noted, all references to "we" and "us" include
the subsidiaries of the Company.


                                       3
<PAGE>

INDUSTRY BACKGROUND

         THE GLOBAL RETAIL INDUSTRY

The retail industry is one of the world's largest and most complex sectors.
According to a recent industry study by Euromonitor, worldwide retail sales
exceeded $6.5 trillion in 1997, and the U.S. Department of Commerce estimated
retail sales in the United States to be in excess of $2.7 trillion in 1998. The
retail industry is also highly fragmented, composed of many buyers and sellers
ranging from large national retailers to specialty retailers and independent
operators, as well as thousands of suppliers, manufacturers and distributors.
Due to the fragmentation and the industry's low growth rate, competition for
retail customers is intense. The retail industry is also characterized by a wide
array of products, product options and short product life cycles. In addition,
an increasing number of shopping venues, such as retail stores, outlet malls,
mail order catalogs and the Internet, are available to consumers. As a result,
participants in the retail industry are focused on quickly responding to
consumer demand and operating as efficiently as possible to preserve margins.

         IMPACT OF THE INTERNET AND GROWTH OF B2B ECOMMERCE

The rapid adoption of the Internet is transforming the retail industry. With
over 140 million users at the end of 1998, growing to over 500 million users by
2003, as estimated by International Data Corporation, the Internet is not only
dramatically changing how businesses and individuals communicate, share
information and engage in commerce but it is expected to create a substantial
market for Internet-based retailing. This will result in new retail market
entrants, more consumer options and an increase in the overall level of
competition.

The Internet is also accelerating the adoption of B2B eCommerce. Until recently,
B2B eCommerce primarily occurred through the exchange of information over
proprietary networks. The Internet, however, offers a more open, universally
accessible business communications platform at a much lower cost than these
networks. As Internet reliability, speed and security improve, and as the number
of businesses that connect to the Internet increase, more retailers are
beginning to use the Internet to execute transactions, create online trading
communities, and exchange information with customers, suppliers and
distributors.

The Internet also allows retailers to expand access to new and existing
customers and suppliers. Historically, retailers have relied on their sales
forces and purchasing departments to develop and maintain customer and supplier
relationships. However, this model is constrained by the time and cost required
to exchange product, price, and other information while cost-effectively
locating new customers and suppliers and managing existing relationships. The
Internet provides a platform for retailers to efficiently exchange product and
industry information with their trading partners and to reach a global audience,
including suppliers, customers and business partners.

The Internet's substantial growth also creates market opportunities for
participants in the retail industry to streamline their supply chain by
replacing inefficient paper-based processes, upon which many retailers are still
heavily dependent, with eCommerce practices. The result is lower costs,
decreased inventory levels and improved productivity. Finally, the Internet
allows retailers and their trading partners to access real-time, accurate
information regarding products and prices, as well as shipping, packaging,
labeling and other trading requirements; thereby potentially increasing
operational efficiency by reducing the time, costs and resources required to
transact business. They also lower inventory levels and improve responsiveness
to customers and suppliers.


                                       4
<PAGE>

         IMPLEMENTATION OF B2B ECOMMERCE SERVICES

We believe retailers and their trading partners are implementing B2B eCommerce
services in several ways, as described below.

Retailers and their trading partners are taking advantage of advances in data
communications technologies and the availability of public networks to transmit
electronically transaction documents, such as purchase orders, invoices and
shipping instructions. The electronic exchange of documents facilitates rapid
and uniform communications among retailers, suppliers, transportation services
and financial institutions. It also reduces the opportunity for clerical error.
The transformation of paper records to an electronic format facilitates data
storage and analysis. Electronic exchange typically relies on common message
formats and standards ranging from electronic data interchange (EDI) to
extensible markup language (XML).

Retail companies are also automating their merchandise management practices by
installing networked point of sale terminals to verify product prices and track
merchandise and inventory levels automatically. These capabilities, along with
the rapid adoption of bar coding technologies, have led to the adoption of a
standardized product identification, numbering and communication format, known
as the universal product code or U.P.C. The use of U.P.C. data greatly increases
the efficiency with which retailers and vendors can mark, track and exchange
detailed product information. Today, for example, the average department store
carries more than one million products and product options at a time, and the
largest can carry as many as five million. Each retailer's products are produced
by hundreds, or in some cases thousands, of independent vendors. Importantly,
when U.P.C. data is used in conjunction with electronic document exchange,
retailers benefit through more accurate, secure and timely information exchange.

In addition, participants in the retail industry are using software applications
that leverage the data collected through eCommerce. These applications analyze
the data to assist in managing and optimizing the flow of products between
trading partners by managing inventory levels and replenishment as well as
product distribution and procurement. By collaborating with their trading
partners, we believe retail industry participants can achieve greater operating
efficiencies and improve their time to market.

Finally, retailers are leveraging the global availability, ease of use, and low
cost of web browsers and other Internet technologies to create new business
opportunities. Both new and established retailers are moving aggressively to
offer products over the Internet. These retailers are using the Internet to
reach customers outside of their local markets and quickly target a global
audience. In addition, retail industry participants are beginning to recognize
the Internet as a more efficient platform to exchange products and industry
information with their trading partners.

QRS SERVICES

Our services are designed to enable retailers, vendors, manufacturers, and
carriers to implement B2B eCommerce practices. Our services provide a network
between retailers and their trading partners as well as value-added
functionality that enables them to transact business, share information, and
collaborate on decisions regarding consumer demand, forecasting, inventory
management, production, and logistics. Our services are often integrated with
our customers' back-end and supply chain management systems in order to deliver
greater benefits and efficiencies.

Our services, which we deliver and can be accessed over the Interent and
proprietary networks, are organized into four major categories (described more
completely below), and are marketed as a comprehensive family that provides our
customers with a single, integrated source for implementing B2B eCommerce
practices. However, select services may be implemented on a stand-alone basis
and expanded incrementally, thereby allowing customers to integrate functions as
needed within their organizations. The following chart summarizes our services.


                                       5
<PAGE>

<TABLE>
<CAPTION>
CATEGORY                           SERVICE                                 DESCRIPTION
-----------------------------      -----------------------------------     -------------------------------------------
<S>                                <C>                                     <C>
eCommerce Services                 QRS ALLIANCE                            Allows our customers to electronically
                                                                           exchange business documents with their
                                                                           partners.

                                   QRS CONCOURSE                           Provides network connectivity for our
                                                                           electronic commerce services.

                                   QRS QUICKSTEP                           Allows smaller vendors and manufacturers
                                                                           to engage in eCommerce over the Internet.

                                   QRS PASSKEY                             Allows smaller retailers to engage in
                                                                           eCommerce over the Internet.

                                   QRS EC SERVICE BUREAU                   Enables any business to engage in
                                                                           eCommerce.

Content Services                   QRS KEYSTONE                            Provides access to our database of
                                                                           product information with over 71
                                                                           million items.

Application Services               QRS IMS                                 Allows vendors and manufacturers to
                                                                           leverage sales and inventory information
                                                                           for reporting, analysis and forecasting
                                                                           purposes.

                                   QRS LMS                                 Provides logistics information to improve
                                                                           the flow of merchandise and inventory
                                                                           management.

                                   RDS                                     Researches and manages data by collecting
                                                                           verifying and analyzing competitive
                                                                           retail pricing, promotion, and distribution
                                                                           information.

Marketplace Services               TRADEWEAVE                              Provides an Internet marketplace to trade
                                                                           and auction first-run and excess merchandise.
</TABLE>

ECOMMERCE SERVICES: Our eCommerce services provide a comprehensive solution for
retailers and their trading partners to collaborate and exchange critical
business documents electronically. Electronic exchanges reduce administrative
costs and improve the timeliness of information by automating the transmission
of orders and reducing paper-based processes that often result in inaccuracies
due to human error. By transforming paper documents into an electronic format,
our services also enable more effective data analysis and more cost-effective
data storage.

Our eCommerce services include QRS ALLIANCE, which provides document exchange
and messaging services; QRS CONCOURSE, which provides a foundation for B2B
eCommerce through reliable and cost-effective network connectivity using dial-up
and leased lines; QRS QUICKSTEP, which is used by small vendors and
manufacturers to trade with their large retailers; QRS PASSKEY, which is used by
small retailers to trade with their large vendors (QRS QUICKSTEP and QRS
PASSKEY, are both services that use Windows-based applications to enable
business documents to be created and transmitted electronically over the
Internet); QRS EC SERVICE BUREAU, which is an outsourced service for
electronically sending and receiving business documents that helps our customers
adopt B2B eCommerce without investing in in-house systems and expertise.


                                       6
<PAGE>

CONTENT SERVICES: Our content services enable companies to leverage important
product information in their business operations. Our customers use QRS Keystone
to access in real-time the retail industry's largest database of U.P.C. product
codes, with over 71 million items from more than 2,300 vendors covering a broad
range of retail categories including hard lines, soft goods and grocery. QRS
KEYSTONE classifies products by name, merchandise classification, style number
and U.P.C., as well as by size, color, and other relevant characteristics.
Product information is protected and is available only to trading partners
approved by the vendor or manufacturer. Our vendor and manufacturer customers
update QRS KEYSTONE on a regular basis. Typically, over 30% of the product
information is updated or changed monthly. We have developed proprietary
software and other methodologies to ensure the accuracy of the product
information. There are four methods for vendors and retailers to access QRS'
U.P.C. database: QRS KEYSTONE GENESIS, the original mainframe interface; QRS
KEYSTONE FOR WINDOWS, a Windows-based interface; QRS KEYSTONE REALTIME, a
proprietary computer-to-computer interface; and QRS KEYSTONE WEB, a web-based
interface.

APPLICATION SERVICES: Our application services enable companies to access, over
the Internet or a proprietary network, software applications used to support
their operations. We host our services and provide our customers with a high
level of security and back-up and operational support 24 hours a day, seven days
a week. Our customers benefit by reducing their upfront information technology
investments and implementation times and by gaining access to sophisticated
software applications that they otherwise may not have been able to afford.

Our application services include QRS IMS, QRS LMS and RDS. QRS IMS allows
retailers and vendors to leverage sales and inventory information for reporting,
analysis, and forecasting activities. As a result, both retailers and vendors
can improve their inventory management. With QRS IMS, retailers and vendors can
track product sales on a daily basis by product, size, color and specific store
location. QRS IMS provides companies online access to their trading partners'
sales and inventory information in order to facilitate collaboration, better
merchandising decisions, and quick response to consumer demand. In particular,
QRS IMS provides retailers and vendors with information on how specific products
are selling, thereby helping reduce stock-outs and excess inventory. As of
December 31, 1999, approximately 50 retailers, including Federated Department
Stores, May Company, Sears and Dillard Department Stores supplied the system
with daily sales information.

QRS LMS provides logistics information to improve the flow of merchandise and
facilitate the task of inventory management. With QRS LMS, retailers and vendors
can track products and shipments. As a result, companies can provide better
customer service by notifying trading partners of delivery delays. QRS LMS also
assists customers in reducing distribution cycle time, improving transportation
management, and notifying affected trading partners of impending delays or
disruptions in deliveries. In addition, QRS LMS maintains historical information
in a centralized location that allows trading partners to evaluate carrier
performance and efficiency. We provide QRS LMS as a hosted service which
customers can access over the Internet or a proprietary network.

RDS is a national market research and data management service that collects,
verifies and analyzes competitive pricing, promotion, and distribution
information. Our services include in-store collection of retail prices, scanned
price verification and pricing data analysis. Through our services, grocery
retailers analyze competitive pricing information in order to make better
informed inventory management decisions. RDS provides services to over 110
grocery retailers, including Kroger, Albertson's, Wal-Mart and Safeway. RDS
provides grocery retailers with insight into their operations as well as their
competitiveness.


                                       7
<PAGE>

MARKETPLACE SERVICES: Our recently introduced marketplace services initiative,
Tradeweave, provides retailers and vendors with an efficient Internet
marketplace to trade and auction first-run and excess merchandise. Buyers, which
may include retailers, distributors and agents, can search a large database of
products, compare product attributes, order products from multiple suppliers,
track order status and receive invoices online. At the same time, sellers have
access to a broad universe of potential buyers. This maximizes the value of
their inventory by reducing the need for costly mark-downs and controlling the
inventory disposal process. Tradeweave automates the entire selling and buying
process from product listing and ordering to invoicing and payment.

Historically, the disposal of excess merchandise in the retail industry has been
an inefficient process, often leading to costly mark-downs or unsold products.
By attracting a broad range of buyers and sellers, Tradeweave provides an
efficient platform to dispose of and purchase excess merchandise. In addition,
Tradeweave allows for a tiered-auction process, where sellers can auction their
excess merchandise to a pre-selected first tier of buyers before offering the
unsold items to additional tiers of buyers. Tradeweave also allows retail
industry participants to trade first-run merchandise and access information
about inventory and product availability in real-time.

CUSTOMERS

As of December 31, 1999, almost 400 retailers and 8,450 manufacturers, vendors
and carriers, representing various segments of the retail industry, utilize our
services, including 12 of the 15 largest U.S. retailers and 16 of the 20 largest
U.S. grocery chains based on revenues. Our customers include Federated
Department Stores, Dillard Department Store, Saks, Wal-Mart, Kroger, Safeway,
Albertson's, Sears, The Gap, Nike, Liz Claiborne, Levi Strauss & Co., Estee
Lauder, Nine West, Warnaco, Tommy Hilfiger Sportswear and Polo/Ralph Lauren.

The Company provides services and generates revenues by enabling certain hub
customers and their trading partners to conduct business over the Company's
network. Due to the large number of trading partners that transact business with
each other, including one or more hub customers, the difficulty of allocating
trading partner network services to individual hub customers, and the
differences in the manner in which hub customers and trading partners allocate
the cost of network services among each other, the Company cannot precisely
attribute revenues to particular trading relationships. While the Company
continues to refine its estimation techniques, the Company believes that no
individual customer or hub customer trading partnership exceeded 10% of total
revenues for any of the three years in the period ended December 31, 1999.

SALES AND MARKETING

We have a comprehensive marketing program that includes print advertising,
public relations campaigns, direct mailings, industry events including industry
conventions, trade shows, user groups, analyst programs, and speaking
engagements. We also use our website to enhance our market presence and generate
additional leads.

We sell our services primarily in the United States and Canada through our field
sales force and our telesales group. Our field sales force targets and works
with large customers, primarily large retailers, to facilitate and standardize
their B2B eCommerce processes with their trading partners.

When large retailers or vendors use our services they typically require their
trading partners also to use our services to transact with them. Large retailers
or vendors can have thousands of trading partners. Once a large retailer or
vendor becomes a customer, our telesales group then contacts their trading
partners to explain our services and enable them to transact with the retailer
or vendor. We seek a commitment from the retailer to sponsor a collaborative
program aimed at creating a minimum of 100 trading partnerships through QRS.

Sales prospects are drawn from a wide range of industry contacts, including
retail industry conventions, trade shows, technology user groups and referrals.
Our direct sales force employs a consultative approach, focusing upon
establishing the benefits of our services to senior management, including chief
executive officers, senior merchandising and MIS executives.


                                       8
<PAGE>

We have also developed cooperative vendor marketing programs to extend the reach
of our services from existing vendor customers to their retailers.

CUSTOMER SUPPORT

We provide comprehensive integration, training, and support services for our
customers. We also provide presale, consulting services to potential customers.
We employ experienced software development and customer service personnel to
assist customers in implementing and using our B2B eCommerce services. Our goal
is to ensure successful and rapid deployment and high levels of customer
satisfaction by facilitating open communications to quickly identify, analyze
and solve problems. We operate a 24-hour hotline for customers and have a
program to regularly contact our customers to ensure customer satisfaction,
currency of catalog data, and maximization of trading partner opportunities.
Other forms of customer support services include e-mail and web-based support,
documentation and updates.

IBM RELATIONSHIP

We do not operate our own value-added network and have formed a strategic
alliance with IBM to outsource our network operation. In addition, QRS and IBM
signed a retail industry marketing agreement under which we provide to IBM
certain professional services related to the retail industry. IBM charges us for
the network services used by our customers. We recently amended our agreement
with IBM to provide for the purchase of $335 million of network services over a
four-year period ending December 31, 2001. These charges are subject to
specified volume discounts and allowances. The agreement includes specified
annual minimum purchases and a graduated adjustment charge if total purchases
fall below the total minimum amount.

In April 1999, AT&T purchased IBM's Global Network and corporate networking
business. The services we purchase from IBM under our agreement include both
network connectivity and eCommerce related value added services. We have
continued to acquire our network service requirements pursuant to the terms of
our agreement with IBM with the delivery of a portion of these services provided
by AT&T.

DATA CENTER

We operate our primary data center at our Richmond, California offices. The data
center operates 24 hours a day, seven days a week, and is connected to our
network provider through three leased data circuits in two routings to ensure
availability. The data center consists primarily of leased mainframe,
client/server, disk storage, tape drive, and other peripheral technology to
provide online, batch, and back-up operations. Customer and content data is
backed up and shipped off-site daily. Our facility and data center are both
secured with controlled access doors, and the data center is equipped with a
Halon fire protection system, an uninterrupted power supply, and a diesel
generator permitting 24 hours of continuous electrical power. The data center
has a separate isolated power source from the remainder of the facility. We have
also contracted for an alternative operations facility in the event of physical
disaster.

SERVICE AND PRODUCT DEVELOPMENT

In order to compete actively in the B2B eCommerce services market, we will
invest in the development of new and existing services and supporting
technology. We have designed our service infrastructure to yield significant
benefits to our customers in performance, scalability, availability and
reliability. We are focused on the development and upgrading of our services
technology and architecture. We are not involved with the development,
maintenance and operation of the IBM value-added network.

In 1997, 1998 and 1999, we expensed $4.4 million, $4.3 million and $8.6 million
of product development costs and capitalized $1.3 million, $2.6 million and $5.8
million for the development and enhancement of our services. Capitalized product
development costs are amortized over three years.


                                       9
<PAGE>

PROPRIETARY RIGHTS

We regard certain features of our software and documentation as proprietary
information and rely on a combination of contract, copyright, trademark, trade
secret laws, and other measures for its protection. Although data provided to us
by our vendor customers is not proprietary to us, we seek to protect our product
information database through copyright laws. We have no patents, and existing
copyright laws afford only limited protection.

EMPLOYEES

At December 31, 1999, we had 460 full-time employees, including:

-        48 in service and product development
-        117 in operations
-        82 in sales and marketing
-        157 in customer support
-        56 in management, administration and finance

In addition, we employ 555 part-time employees, primarily in connection with
RDS. We also use contractors from time to time as our business requires.

Our employees are not covered by a collective bargaining agreement. We have
never experienced an employment-related work stoppage and we consider our
employee relations to be good.

RISK FACTORS

OUR OPERATING RESULTS MAY FLUCTUATE FROM QUARTER TO QUARTER.

Our future quarterly operating results may vary, and we could experience reduced
levels of earnings or losses in one or more quarters. Fluctuations in our
quarterly operating results could result from a variety of factors, including:

-        changes in the demand for our services
-        changes in our pricing policies or those of our competitors
-        market acceptance of new and enhanced versions of our services
-        changes in operating expenses
-        changes in our strategy
-        introduction of alternative technologies by our competitors
-        effect of potential acquisitions
-        industry and general economic factors

We have limited or no control over many of these factors. Due to all of these
factors and other risks discussed in this report, your period-to-period
comparisons of our results of operations may not reflect our future performance.

OUR MARKETPLACE SERVICES ARE EVOLVING, AND WE CANNOT BE SURE THEY WILL BE
SUCCESSFUL.

We are continuing to expand the breadth of our B2B eCommerce services through
our marketplace services initiative. In particular, we have introduced
Tradeweave, an Internet marketplace designed to facilitate the trade and auction
of first-run and excess merchandise. Tradeweave is new and unproven, and we
cannot assure you that it will be successful. Some of our existing customers
have agreed to participate in Tradeweave. None of these customers are obligated
to buy or sell any retail merchandise through Tradeweave. As a result, we cannot
assure you that these or any of our other customers will trade or auction
first-run or excess retail merchandise.


                                       10
<PAGE>

The implementation of Tradeweave has and is expected to continue to require
significant investment of both financial and management resources, and the
expenses related to Tradeweave have had and we expect will continue to have an
adverse impact on our operating results and earnings for the near term. We
expect that our operational and development costs related to Tradeweave will
increase significantly as we invest in infrastructure and product development,
and increase the sales and marketing efforts. We do not expect to derive
significant revenue from these services in the near future. The success of
Tradeweave will require, among other things, broad market acceptance by our
existing and future customers. If Tradeweave does not generate sufficient
revenues to achieve and maintain profitability, our investment in Tradeweave
could adversely affect our operating results and earnings in future quarters. If
our operating results and earnings fall below the expectations of public market
analysts and investors, the trading price of our common stock is likely to
decline.

THE SUCCESS OF OUR BUSINESS DEPENDS ON OUR CUSTOMERS' CONTINUING ACCEPTANCE OF
OUR B2B ECOMMERCE SERVICES.

Currently, our revenues are derived from the use of our B2B eCommerce services
by retailers and their trading partners. As a result, the success of our
business depends upon:

-    our current customers' adoption and acceptance of additional services that
     we currently offer and will offer in the future

-    our ability to attract new customers and their acceptance of our current
     and future service offerings

The retail industry is often characterized as being conservative in its approach
to adopting new technologies. Many of our customers are new to the use of B2B
eCommerce practices and may not have sufficient resources or properly trained
personnel to utilize our services. If we are unable to increase customer
acceptance of our current service offerings and achieve market acceptance of our
future service offerings, our business, financial condition, and results of
operations will be materially adversely affected.

THE MARKET FOR B2B ECOMMERCE SERVICES IS INTENSELY COMPETITIVE.

We compete with a number of companies providing B2B eCommerce services as well
as companies providing software and services to the retail industry. We believe
the principal factors on which we compete include:

-        breadth and quality of services
-        price
-        customer base
-        customer service and support
-        retail industry focus, presence and knowledge
-        product, merchandise and other related content
-        enabling inter-enterprise relationships

Many of our existing and potential competitors have financial, marketing or
technological resources that exceed our own resources, and we cannot assure you
that we will be able to compete successfully. Competition may affect our ability
to gain new customers and retain and expand business with our existing
customers. It may also affect the range of services we can offer to our
customers.

We expect competition to increase as more companies enter the market and
existing competitors continue to change and expand their service offerings. In
addition, in-house systems and third-party software providers are also
significant competitors to our services. Some of our potential competitors have
longer operating histories, larger customer bases, and greater brand recognition
in B2B eCommerce markets than we do. In addition, other companies may be
acquired by, receive investments from, or enter into other commercial
relationships with larger, well-established and well-financed companies. As a
result, some of our competitors with other revenue or


                                       11
<PAGE>

investment sources may be able to devote more resources to marketing and
promotional campaigns, adopt more aggressive pricing policies and devote
substantially more resources to website and systems development than we can,
which may adversely affect our business. Furthermore, some of our competitors,
in particular Internet companies, may not be bound by investors' expectations of
earnings and, therefore, may be able to allocate more resources to grow their
Internet operations.

NEW TECHNOLOGY COULD MAKE OUR EXISTING SERVICES OBSOLETE.

The market for B2B eCommerce services is characterized by rapidly changing
technology and continuously evolving standards. To be successful, we must adapt
by continually improving the performance, features, and reliability of our
services or else our services may become obsolete. We cannot assure you that we
will be able to respond in a timely manner to technological changes. The ability
of competitors to incorporate evolving standards and technologies successfully
into new services may make our services noncompetitive. Technological changes
could force us to lower the price of our services. If we fail to adapt to or
incorporate new standards or technology, it may have a material adverse effect
on our business and results of operations.

WE DEPEND ON IBM FOR MOST OF OUR ECOMMERCE SERVICES AND FOR A SUBSTANTIAL
PORTION OF OUR REVENUES.

Since 1988, we have used the IBM value-added network, or VAN, as the network
platform over which we provide customers with most of our eCommerce services. We
depend on the IBM VAN for a substantial part of our revenues, and such
dependence is expected to continue and last through the term of our contract,
which expires December 31, 2001. Because we have no right to control the
maintenance and operation of the IBM VAN, we do not control decisions that could
have a material adverse impact on the operation of the VAN and consequently, on
our business and results of operations. In addition, if IBM becomes unable or
unwilling to provide VAN services, we would either have to provide these
services directly or arrange for a third party to provide such services. We
cannot assure you that we would be able to do so on a timely basis, if at all,
or that the costs of any such arrangements would not materially adversely affect
our business and results of operations. Disruption or unavailability of the IBM
VAN may have a material adverse effect on our business and results of
operations.

IBM currently charges us for our use of its network and messaging services by
our customers. In the event that IBM decides to increase the prices that it
charges us or reduces the amount of discounts or allowances after our current
contract expires, we may not be able to pass along these changes to our
customers. If we are unable to do so, our business and results of operations
could be materially adversely affected. We have an agreement with IBM to
purchase $335 million of network services over a four-year period ending
December 31, 2001. This amount is subject to specified volume discounts and
allowances. The agreement includes specified annual minimum purchases and a
graduated adjustment charge if total purchases fall below the minimum amount. We
cannot assure you that we will meet the minimum purchase requirements, and if we
do not do so, we will have to pay more for IBM's network and messaging services
and our revenues may be adversely affected. We met our purchase commitment for
1998. However, we did not meet our annual purchase commitment in 1999 and
recorded an adjustment for $120,000. It is uncertain whether we will meet our
purchase commitment in 2000 and 2001.

IBM AND AT&T COULD DECIDE TO COMPETE AGAINST US.

In April 1999, AT&T purchased IBM's Global Network and corporate networking
business. We have continued to receive our network services pursuant to the
terms of our IBM agreements. If AT&T markets IBM network services to the retail
industry or directly to our customers or permits one or more of our competitors
to use and remarket IBM's network services to the retail industry, our business
and results of operations could be materially adversely affected. IBM and AT&T
are free to compete against us, and we cannot assure you that IBM and AT&T will
not choose to compete with us in the future. If AT&T or IBM were to become a
competitor, our business and results of operations may be materially adversely
affected.


                                       12
<PAGE>

WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE OUR GROWTH.

We have experienced significant revenue growth as we have added new retailers
and vendors, increased the number of trading partnerships and increased the size
of QRS KEYSTONE, our product information database. Maintaining profitability
during a period of expansion will depend, among other things, on our ability to
manage effectively our operations. More recently, we have significantly
increased our service offerings and customers both through internal growth and
acquisitions. In particular, we expect Tradeweave to require significant
additional expansion of our operations, employees, and infrastructure. If we are
unable to manage our growth effectively, it may have a material adverse effect
on our business and results of operations.

OUR SUCCESS DEPENDS UPON OUR ABILITY TO ATTRACT, TRAIN AND RETAIN KEY PERSONNEL.

Our success depends significantly upon the performance of our executive officers
and other key employees. We also need to attract, train, retain, and motivate
technical, managerial, and marketing personnel. Competition for qualified
personnel is intense, particularly with respect to Internet product and service
personnel. We cannot assure you that we will be able to continue to attract and
retain the qualified personnel necessary for the development of our business. If
we lose key personnel or fail to recruit necessary additional personnel, our
business and results of operations may be materially adversely affected.

FAILURE TO EXPAND THE INTERNET INFRASTRUCTURE COULD LIMIT OUR FUTURE GROWTH.

We increasingly rely on the Internet for the delivery of our services. The
recent growth in Internet traffic has caused frequent periods of decreased
performance. If Internet usage continues to grow rapidly, its infrastructure may
not be able to support these demands and its performance and reliability may
decline. If outages or delays on the Internet occur frequently or increase in
frequency, overall Internet usage, including usage of our services, could grow
more slowly or decline. Our ability to deliver services through the Internet to
customers is ultimately limited by and depends upon the speed and reliability of
both the Internet and our customers' internal networks. Consequently, the growth
of the market for our services, particularly Tradeweave, depends upon
improvements being made to the entire Internet as well as to our individual
customers' networking infrastructures to alleviate overloading and congestion.
If these improvements are not made, our customers' ability to utilize our
services will be hindered, and our business and results of operations may
suffer.

OUR SUCCESS DEPENDS IN PART ON OUR ABILITY TO INTRODUCE NEW SERVICES IN A TIMELY
MANNER.

Our future growth depends on our successful and timely introduction of new
services in existing and emerging markets. We cannot assure you that we will
successfully complete development or that if such development is completed, our
planned introduction of these services will gain market acceptance or will meet
the technical or other requirements of potential customers. To provide our
services, we rely on complex software, which may contain undetected errors or
failures. Software errors or delays could result in loss of, or delay in, market
acceptance of our services, which may have a material adverse effect on our
business, results of operations, and financial condition.

WE DEPEND ON SEVERAL KEY CUSTOMERS FOR OUR BUSINESS.

We provide services and generate revenues by enabling certain of our key retail
customers and their trading partners to conduct business over our network.
Estimated revenues attributable to all of the billings of any one of these
customers and its trading partners may exceed 10% of our total revenues in
future quarters. In addition, the retail industry has recently experienced
significant consolidation. If any of our retailer customers consolidate, it
could adversely affect our revenues. In addition, our customers could elect
either to develop their own B2B eCommerce services or to transfer all or a
significant portion of their activities to one of our competitors, which could
have a material adverse effect on our business and results of operations.


                                       13
<PAGE>

DAMAGE TO OUR DATA CENTER FACILITY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND RESULTS OF OPERATIONS.

Our content and application services, such as QRS KEYSTONE, run on a computer
system contained in our data center facility in Richmond, California. The data
center is located in a single facility and we have no present intention of
establishing an additional data center in a separate location. However, we have
arranged for use of off site computer facilities, if necessary, and have taken
other precautions to protect ourselves and our customers from events that could
interrupt delivery of our services. These precautions include off-site storage
of back-up data, fire protection, and physical security systems, an early
warning detection, and Halon fire extinguishing system. Notwithstanding these
precautions, we cannot assure you that a fire, earthquake, or other natural
disaster affecting the data center would not disable our computer system. Our
data center routes through independent AT&T hubs in San Francisco and Los
Angeles. In the event that service through these locations is interrupted, we
have back-up access through AT&T's Seattle hub. Any significant damage to our
data center or disruption of its connectivity to the IBM VAN network and/or AT&T
network could have a material adverse effect on our business and results of
operations.

WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY AND INFORMATION.

We rely on a combination of copyright, trade secret, and trademark laws and
nondisclosure agreements to protect our proprietary rights. Existing copyright
laws afford only limited protection and we may not be able to police
unauthorized use of our services, and proprietary technology, and information.
Unauthorized third parties may be able to copy our services or otherwise obtain
and use our proprietary technology and information. For example, if a competitor
were able to duplicate the information contained in our product information
database, our business could be adversely affected. Further, the laws of certain
countries in which our services may be distributed may not protect our services
and intellectual rights to the same extent as the laws of the United States. If
unauthorized third parties obtain and use our proprietary technology and
information, our business and results of operations may be materially adversely
affected.

FUTURE ACQUISITIONS OR INVESTMENTS COULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS.

We have made acquisitions in the past and we expect to acquire complementary
businesses or technologies in the future. The success of any acquisition will
depend upon, among other things, our ability to:

-        identify and evaluate the proposed acquisition of complementary
         businesses or technologies
-        complete the acquisition on reasonable terms
-        obtain any necessary financing
-        integrate effectively the acquired personnel, operations or
         technologies
-        retain customers and motivate key personnel

An acquisition could cause a distraction of our management and employees, an
increase in our expenses, an assumption of additional debt, and/or an issuance
of equity which could be dilutive to existing stockholders, and expose us to the
risk that we will fail to successfully implement the acquisition. This may
materially and adversely affect our results of operations and financial
condition.


                                       14
<PAGE>

OUR STOCK PRICE MAY FLUCTUATE SUBSTANTIALLY.

The market price of our common stock has fluctuated significantly since the
initial public offering of our common stock in August 1993. The market price of
our common stock could be subject to significant fluctuations in the future
based on factors including:

-        announcements of new services by us or by our competitors
-        fluctuations in our quarterly financial results
-        fluctuations in our competitors' quarterly financial results
-        changes in analysts' estimates of our financial performance or our
         failure to meet these estimates
-        conditions in the Internet commerce, information services, and high
         technology industries
-        conditions in the financial markets

The stock market in general has experienced extreme price and volume
fluctuations which have particularly affected the market prices for many high
technology companies and which have often been unrelated to the operating
performance of the specific companies. Many technology companies, including QRS,
have recently experienced historic highs in the market price of their equity
securities. We cannot assure you that the market price of our common stock will
not decline substantially from such historic highs or will not otherwise
continue to experience significant fluctuations in the future.

RESIDUAL PROBLEMS RELATING TO THE YEAR 2000 COULD NEGATIVELY AFFECT OUR
BUSINESS.

We completed the tasks we believed were necessary to confirm that our business
critical computer and other systems are able to function without disruption with
respect to the application of dating systems in Year 2000. There were no
significant product delivery or internal systems issues reported over the Year
2000 transition. Although we believe that all appropriate steps have been taken
to address Y2K readiness, there can be no guarantee that undetected errors or
defects associated with Year 2000 date functions will prevent a material adverse
impact on the results of operations and financial condition.

OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY MAKE A TAKEOVER MORE DIFFICULT.

We are a Delaware corporation. The Delaware General Corporation Law contains
certain provisions that may make a change in control of our company more
difficult or prevent the removal of incumbent directors. In addition, our
certificate of incorporation and bylaws contain provisions that have the same
effect. Under our agreement with Tradeweave, Inc., Peter R. Johnson and Garth
Saloner, the demand registration right of the minority stockholders of
Tradeweave, Inc. is affected by a change of control of QRS. Any of these
provisions may have a negative impact on the price of our common stock, may
discourage third-party bidders from making a bid for QRS or may reduce any
premiums paid to our stockholders for their common stock.

ITEM 2.  FACILITIES

We lease approximately 158,000 square feet of office space in Richmond,
California for our corporate headquarters. Of this total, leases with respect to
111,000 square feet expire on June 30, 2010 and a lease for the remaining 47,000
square feet expires on June 30, 2011. We lease approximately 20,000 square feet
of office space in San Francisco, California. This lease expires in October
2004. We also lease approximately 28,500 square feet of office space in New York
City, New York. A lease with respect to 10,000 square feet expires on April 1,
2007 and a lease for the remaining 18,500 square feet expires on March 1, 2010.
Finally, we lease additional office space in Torrance, California; New York
City, New York; and Richmond, Virginia. We believe that our current and future
facilities and extension agreements are adequate for our level of business and
growth requirements.


                                       15
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

We are not aware of any pending or threatened litigation against us that we
expect will have a material adverse effect on our business, financial condition,
liquidity, or operating results. However, legal claims are inherently uncertain
and we cannot assure you that we will not be adversely affected in the future by
legal proceedings.

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

None


                                       16
<PAGE>

                                     PART II

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

MARKET INFORMATION

Our Common Stock has been traded in the over-the-counter market on the Nasdaq
National Market under the symbol QRSI since our initial public offering in
August 1993. According to records of our transfer agent, we had approximately
163 stockholders of record as of February 29, 2000. Because many of such shares
are held by brokers and other institutions on behalf of stockholders, we are
unable to estimate the total number of beneficial holders of the Common Stock.
On July 13, 1999, the outstanding Common Stock of the Company split on a three
for two basis. The following table sets forth the low and high closing sales
prices of the Company's Common Stock for the two-year period ended December 31,
1999:

<TABLE>
<CAPTION>
PERIOD ENDED                                                 LOW             HIGH
-----------------------------------------------------     --------------    ------------
<S>                                                          <C>             <C>
For the Year ended December 31, 1998:
   First Quarter                                             $22.17          $35.67
   Second Quarter                                             19.54           34.50
   Third Quarter                                              18.00           25.13
   Fourth Quarter                                             14.25           32.00
For the Year ended December 31, 1999:
   First Quarter                                              27.92           42.83
   Second Quarter                                             31.25           56.58
   Third Quarter                                              44.00           64.13
   Fourth Quarter                                             47.75          105.00
</TABLE>

DIVIDEND POLICY

Our policy has been to reinvest earnings to fund future growth. Accordingly, we
have paid no cash dividends on our Common Stock and do not anticipate declaring
dividends on our Common Stock in the foreseeable future.


                                       17
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                            ---------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA                    1999(1)          1998(1)             1997              1996             1995(1)
                                            ---------------    -------------     -------------    ---------------    --------------
<S>                                          <C>                <C>               <C>              <C>                <C>
Revenues                                       $124,705           $91,926           $71,632          $56,746            $42,134
Operating earnings                               20,876            16,116            12,639            9,442              2,479
Earnings from continuing
   operations before income taxes                22,887            18,267            14,625           11,019              3,961
Income tax expense                                8,057             7,113             5,850            4,408              1,574
Minority interest                                   (89)                -                 -                -                  -
Discontinued operations -
   Gain from sale of software and
   services business (2)                              -               896                 -                -                  -
                                            ---------------    -------------     -------------    ---------------    --------------
Net earnings                                    $14,919           $12,050            $8,775           $6,611             $2,387
                                            ===============    =============     =============    ===============    ==============

Basic earnings per share (3):
   Continuing operations                          $1.12             $0.87             $0.69            $0.53              $0.19
   Discontinued operations                            -              0.07                 -                -                  -
                                            ---------------    -------------     -------------    ---------------    --------------
   Net earnings per share                         $1.12             $0.94             $0.69            $0.53              $0.19
                                            ===============    =============     =============    ===============    ==============

Diluted earnings per share (3):
   Continuing operations                          $1.05             $0.84             $0.67            $0.51              $0.19
   Discontinued operations                            -              0.07                -                 -                  -
                                            ---------------    -------------     -------------    ---------------    --------------
   Net earnings per share                         $1.05             $0.91             $0.67            $0.51              $0.19
                                            ===============    =============     =============    ===============    ==============
</TABLE>

(1)   1999, 1998 and 1995 results include the write-off of purchased in-process
      research and development of $963,000, $967,000 and $4,318,000,
      respectively. See Note 5 to Consolidated Financial Statements.

(2)   See Note 6 to Consolidated Financial Statements.

(3)   Earnings per share for 1998, 1997, 1996 and 1995 have been restated to
      retroactively reflect the three-for-two stock split. See Note 2 to
      Consolidated Financial Statements.

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                        (IN THOUSANDS)
                                     -------------------------------------------------------------------------------------
BALANCE SHEET DATA                       1999              1998              1997              1996             1995
                                     --------------    --------------    -------------     -------------    --------------
<S>                                   <C>               <C>              <C>               <C>               <C>
Working capital                           $61,524           $50,909          $42,544           $29,416           $30,248
Total assets                              126,955            83,005           64,002            55,946            46,592
Stockholders' equity                      104,214            67,954           54,729            43,570            35,430
</TABLE>


                                       18
<PAGE>

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

EXCEPT FOR THE HISTORICAL FINANCIAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS ANNUAL REPORT ON FORM 10-K MAY BE CONSIDERED FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
SUCH STATEMENTS INCLUDE DECLARATIONS REGARDING OUR INTENT, BELIEF, OR CURRENT
EXPECTATIONS. THESE FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES, AND OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING
STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED
TO, THOSE LISTED UNDER "BUSINESS--RISK FACTORS" AND ELSEWHERE HEREIN, AND OTHER
RISKS IDENTIFIED FROM TIME TO TIME IN OUR REPORTS AND REGISTRATION STATEMENTS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

GENERAL

Our products and services are organized and managed as a single product family,
including eCommerce Services, such as messaging, service bureau, outsourcing and
connectivity; Content Services, consisting primarily of the QRS Keystone catalog
service; and Application Services, such as price auditing (RDS), inventory
management services (IMS), logistics management services (LMS) and marketplace
services (Tradeweave) 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.

DELAWARE REINCORPORATION

On October 21, 1997, QRS Corporation reincorporated in Delaware (the
"Reincorporation") through the merger (the "Merger") of QuickResponse Services,
Inc., a California corporation ("QRS-California"), with and into QRS
Corporation. As a result of the Merger, the outstanding shares of QRS-California
were automatically converted into shares of QRS Corporation.

SUBSIDIARIES

In the fourth quarter of 1997, we formed a wholly owned Canadian sales
subsidiary, QRS Canada, Inc. and during the third quarter of 1998, we formed
a wholly owned United States subsidiary, QRS Sales and Services Corporation.
On July 13, 1999, we formed a wholly owned United States subsidiary, eMatch,
Inc., a Delaware corporation, which subsequently changed its corporate name
to Tradeweave, Inc. on October 21, 1999. On July 23, 1999, QRS Corporation
acquired the operations of Retail Data Services, Inc., and RDS, Inc. On
December 31, 1999, we transferred all operations of Retail Data Services,
Inc. and RDS, Inc. to QRS Sales and Services Corporation.

                                       19
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated the percentage of
revenues represented by certain line items in the Company's statements of
operations:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                  ----------------------------------------------------------
                                                     1999                 1998                 1997
                                                  ----------------     ----------------     ----------------
<S>                                                <C>                  <C>                  <C>
Revenues                                               100%                 100%                 100%
Cost of revenue                                         50                   55                   56
                                                  ----------------     ----------------     ----------------
Gross profit                                            50                   45                   44
Operating expenses:
     Sales and marketing                                14                   13                   13
     Product development                                 7                    5                    6
     General and administrative                          9                    8                    7
     Amortization of intangible assets                   2                    -                    -
     In-process research and
     development expenses                                1                    1                    -
                                                  ----------------     ----------------     ----------------
Total operating expenses                                33                   27                   26
                                                  ----------------     ----------------     ----------------
Operating earnings                                      17                   18                   18
Interest income                                          1                    2                    2
                                                  ----------------     ----------------     ----------------
Earnings before income taxes,
  minority interest, and
  extraordinary item                                    18%                  20%                  20%
                                                  ================     ================     ================
</TABLE>

         REVENUES

Revenues increased from $71.6 million in 1997 to $91.9 million in 1998 and to
$124.7 million in 1999, representing increases of 28% from 1997 to 1998 and 36%
from 1998 to 1999. These increases were primarily attributable to an overall
increase in customer base, higher usage of eCommerce and Content Services,
pricing adjustments, additional primetime usage and enhancements to our
services. The number of retailers and vendors, including carriers, increased
from 6,180 at December 31, 1997 to 7,719 at December 31, 1998 and to 8,834 at
December 31, 1999. 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. Customers increased the number, type and size of transactions
transmitted over the network, as well as the utilization of content services. We
expanded our product offerings in eCommerce, content and application services.

         COST OF REVENUE

Cost of revenue consists primarily of the cost of purchasing network services,
the cost of our data center and technical customer support services. Cost of
revenue increased from $40.5 million in 1997 to $50.9 million in 1998 and to
$62.9 million in 1999. These increases were principally due to increases in
purchased network services reflecting growth in network services purchased under
a long-term contract, discounted based upon a multi-year volume commitment and
an expanded customer support group reflecting growth in customers and products.
Cost of revenue as a percentage of revenues was 56% in 1997, 55% in 1998, and
50% in 1999. The decrease in cost of revenue as a percentage of revenues
reflects yield improvements and improved pricing on purchased network services,
partially offset by technical infrastructure expenditures to support newer
services.


                                       20
<PAGE>

         SALES AND MARKETING EXPENSES

Sales and marketing expenses consist primarily of personnel and related costs
in our sales and marketing organizations as well as the costs of various
marketing programs. Sales and marketing expenses increased from $9.0 million
in 1997 to $12.1 million in 1998 and to $18.0 million in 1999, reflecting the
general increase in the number of customers and the size of our operations.
Sales and marketing expenses represented 13% of revenues in each of 1997 and
1998 and 14% in 1999. Of the $18.0 million in 1999, $1.7 million related to
the launch of our online marketplace business, Tradeweave, Inc. The remaining
increase from 1998 to 1999 reflects our expansion of retailer and
vendor-specific coverage growth in our Program Sales and Enablement
organization, the group responsible for rapidly enabling trading partners for
key hub customers.

         PRODUCT DEVELOPMENT EXPENSES

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 decreased
slightly from $4.4 million in 1997 to $4.3 million in 1998 and increased to $8.6
million in 1999. Product development expenses, as a percentage of revenues was
6% in 1997, 5% in 1998 and 7% in 1999. In 1997, 1998 and 1999, we capitalized
$1.3 million, $2.6 million and $5.8 million of product development costs,
respectively. Of the $8.6 million expensed and the $5.8 million capitalized in
1999, $295,000 and $3.8 million, respectively, related to the launch of our
online marketplace business, Tradeweave, Inc. The change in capitalized product
development costs and the amount charged to expenses reflects significantly
higher research and development activities for new products or products that had
reached technological feasibility.

         GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses consist primarily of personnel and
related costs of our finance and administrative organizations, as well as
professional fees and other costs. General and administrative expenses
increased from $5.1 million in 1997 to $7.3 million in 1998 and to $11.3
million in 1999, including $360,000 related to Tradeweave, Inc., and
represented 7% of revenues in 1997, 8% in 1998 and 9% in 1999. The increase
was primarily due to increased headcount to support a larger organization.

         ACQUISITIONS

During the third quarter of 1998, we acquired the assets of Custom Information
Systems Corporation and the outstanding common shares of Mueller Associates,
Inc., dba the EDI Connection, both service bureaus. The total acquisition cost
was $4.2 million, comprised of $3.0 million paid in cash; 35,000 shares of
Common Stock valued at $802,000 issued from our treasury stock account;
liabilities assumed of $194,000 and $206,000 in transaction costs related to the
acquisitions. The acquisitions were accounted for as purchase transactions.

In connection with the acquisitions, $967,000, representing approximately 23% of
the purchase price of $4.2 million, was allocated to in-process research and
development. As technological feasibility had not been established and no
alternative future uses existed at the acquisition dates, this in-process
research and development was charged to expense. The five acquired projects
under development increase automation and reduce manual processes, replace
third-party software, and/or migrate existing products to a single platform. The
costs to complete these projects were approximately $600,000 in 1999. The
acquired companies had expended approximately $200,000 on these projects prior
to acquisition. The values for the technology under development were estimated
through the income approach by discounting to present value cash flows to be
derived from the future products. The revenue and expense projections were based
on historical trends and future expectations for the acquired companies and us.
We did not anticipate any operating expense reductions as a result of synergy. A
discount rate was developed by computing the weighted average cost of capital of
established companies similar in operations and then increased to reflect the
additional risk for technology under development since these products have not
reached technological feasibility.


                                       21
<PAGE>

We allocated $3.2 million of the purchase price to current assets, property,
equipment, and intangible assets. The amounts allocated to current assets,
property, and equipment were based on the fair market value of the related
assets and the amounts allocated to intangible assets, were determined on the
basis of the appraised value of the related intangible assets.

On July 23, 1999, we completed the acquisition of all the outstanding capital
stock of Retail Data Services, Inc. and RDS, Inc. (collectively, "RDS"). The
total acquisition cost was $21.2 million; comprised of $15.0 million paid in
cash; $3.0 million in deferred acquisition cost to the seller; 53,250 shares of
common stock valued at $2.8 million of which 11,000 shares of common stock were
issued from our treasury account; liabilities assumed of $171,000 and $250,000
in transaction costs related to the acquisition. Under the terms of the
Agreement, we are required to pay $2.0 million and $1.0 million in March 2000
and 2001, respectively to the seller if revenue from the acquired business meets
or exceeds certain levels in 1999 and 2000. RDS revenues for 1999 exceeded the
established level and we have determined, based on the results of our analysis
that it is highly probable that revenue from the acquired business will exceed
the established levels in 2000, and accordingly, the deferred payments to the
seller have been included in the acquisition cost. The acquisition was accounted
for as a purchase transaction.

In connection with this acquisition, $963,000, representing approximately 5% of
the purchase price, was allocated to in-process research and development. As
technological feasibility had not been established and no alternative future
uses existed at the acquisition date, this in-process research and development
was charged to expense. The two acquired projects under development included a
proprietary management database and a web site product offering for selling
syndicated pricing data. The costs to complete these projects were approximately
$35,000 in 1999. The acquired companies had expended approximately $81,000 on
these projects prior to acquisition. The values for the technology under
development were estimated through the income approach by discounting to present
value cash flows to be derived from the future products. The revenue and expense
projections were based on historical trends and future expectations for the
acquired companies and us. We did not anticipate any operating expense
reductions as a result of synergy. A discount rate was developed by computing
the weighted average cost of capital of established companies similar in
operations and then increased to reflect the additional risk for technology
under development since these products have not reached technological
feasibility.

The appraisal techniques used in our acquisitions included certain assumptions,
including, the extent, character and utility, the income generating or
cost-savings attributes, the nature and timing of the functional or economic
obsolescence and the relative risk and uncertainty associated with an investment
in intangible assets. These intangible assets are amortized over three to seven
years. Amortization expense as a percentage of revenue was 2% in 1999.

         INTEREST INCOME

Interest income consists primarily of interest earned on cash, cash equivalents
and investment securities. Interest income increased from $2.0 million in 1997
to $2.2 million in 1998 and decreased to $2.0 million in 1999. Changes in
interest income reflect the level of average investment balances in each year
and a shift from taxable to non-taxable marketable securities. On July 23, 1999,
we utilized $15.0 million in cash to acquire RDS and during the third quarter of
1998, we utilized $3.0 million in cash to acquire The EDI Connection and Custom
Information Systems Corporation, both service bureaus.

         INCOME TAX EXPENSE

Our income tax expense was $5.9 million, $7.1 million and $8.1 million for
fiscal years 1997, 1998 and 1999, respectively. Our income tax rate was 40% in
1997 and 39% in 1998. Our income tax rate of 35% for 1999 and 44% for future
years approximates the combined effective federal and state income tax rates.


                                       22
<PAGE>

         LIQUIDITY AND CAPITAL RESOURCES

Our working capital increased from $50.9 million at December 31, 1998 to $61.5
million at December 31, 1999. Cash, cash equivalents and short-term marketable
securities available for sale increased from $43.6 million at December 31, 1998
to $47.3 million at December 31, 1999. At December 31, 1998, $1.5 million of
marketable securities available for sale were classified as non-current assets
and, therefore, were not included in working capital. Total assets increased
from $83.0 million at December 31, 1998 to $127.0 million at December 31, 1999,
while total liabilities increased from $15.1 million at December 31, 1998 to
$22.4 million at December 31, 1999. The increase of $3.7 million in cash, cash
equivalents and short-term marketable securities from December 31, 1998 to
December 31, 1999 resulted primarily from positive cash flow and from the
exercise of stock options net of the use of $15.0 million in cash to acquire
RDS.

On April 22, 1997, we announced that our Board of Directors has authorized the
repurchase from time to time of up to $5 million of our common stock in both
open market and block transactions. Our Board of Directors authorized a $5
million increase in this repurchase amount on October 16, 1998. 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. We did not repurchase any of
our common stock during the year ended December 31, 1999.

Management believes that the cash, cash equivalents, and marketable securities
available for sale at December 31, 1999 and cash anticipated to be generated
from future operations will be sufficient to meet our working capital needs and
capital expenditures through 2000. However, we may choose to raise additional
cash through the sale of equity or debt prior to such time. We have no plans to
pay dividends with respect to Common Stock in the foreseeable future.

YEAR 2000 READINESS

We completed the tasks we believed were necessary to confirm that our business
critical computer and other systems are able to function without disruption with
respect to the application of dating systems in Year 2000. To accomplish these
tasks, we successfully executed a plan to achieve an uninterrupted transition
into the Year 2000. The scope of the Year 2000 plan included: (1) information
technology ("IT") such as software and hardware, (2) non-IT systems or embedded
technology such as micro-controllers contained in various safety systems,
facilities and utilities, and (3) readiness of key third parties, including
suppliers and customers. Remediation, integrated testing and replacement of both
IT applications and key non-IT systems were completed prior to December 31,
1999. There were no significant product delivery or internal systems issues
reported over the Year 2000 transition.

We expended approximately $425,000 in 1998 and $2.4 million in 1999 on
activities to prepare for Year 2000 readiness. We estimate spending
approximately $200,000 in additional Year 2000 readiness costs in the first
quarter and do not expect to incur any material additional amounts for this
effort through the remainder of 2000.

Since we experienced no major 2000 related issues internally or externally over
the year-end transition and through the first two months of 2000, we do not
believe that we will incur any material costs or experience material disruptions
in our business associated with the Year 2000. Although we believe that all
appropriate steps have been taken to address Y2K readiness, there can be no
guarantee that undetected errors or defects associated with Year 2000 date
functions will prevent a material adverse impact on the results of operations
and financial condition.


                                       23
<PAGE>

SUBSEQUENT EVENTS

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 approximately $52.8 million;
comprised of $5.0 million paid in cash; $5.0 million in deferred acquisition
cost to the former shareholders of Image Info; 440,913 shares of our common
stock valued at $41.1 million; liabilities assumed of $1.4 million
representing bonuses payable to the employees of Image Info and transaction
costs of approximately $300,000. Under the terms of the Merger Agreement, we
agreed to pay $2.5 million 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. Management has determined, based on the results of
our analysis that it is highly probable that revenue from the acquired
business will exceed the established levels, and accordingly, the deferred
acquisition cost to the former shareholders of Image Info has been included
in the acquisition cost. The acquisition will be accounted for as a purchase
transaction. We also agreed to grant stock options under our 1993 Stock
Option/Stock Issuance Plan to certain employees of Image Info to purchase
23,500 shares of our common stock at $96.00 per share. On January 27, 2000,
WSC changed its corporate name to Image Info.

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.
Pursuant to the Reorganization Agreement, we acquired substantially all of the
assets of RockPort in return for the payment to RockPort of 817,797 shares of
our common stock and our assumption of certain liabilities and obligations of
RockPort. We intend to use purchase accounting for the transaction.

ITEM 7A.  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 US issuers, such as the US Treasuries and agencies of the US
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 the marketable securities. Our guidelines do
not permit investments with maturities in excess of 24 months. At December 31,
1999, the weighted average maturity of the marketable securities portfolio was
225 days.

<TABLE>
<CAPTION>
                                                MATURITY                         FAIR VALUE AT
(Amounts in thousands)                        2000 & TOTAL                     DECEMBER 31, 1999
                                              ------------                     -----------------
<S>                                           <C>                              <C>
U.S. Government Agencies                         $13,031                           $12,895
   Average interest rate                            4.61%                             4.61%
</TABLE>

FOREIGN CURRENCY RISK

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


                                       24
<PAGE>


ITEM 8.                        FINANCIAL STATEMENTS

                           INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                    PAGE
<S>                                                                                <C>
      Independent Auditors' Report                                                   26

      Consolidated Balance Sheets                                                    27

      Consolidated Statements of Earnings and Comprehensive Earnings                 28

      Consolidated Statements of Stockholders' Equity                                29

      Consolidated Statements of Cash Flows                                          30

      Notes to Consolidated Financial Statements                                     32-45
</TABLE>


                                       25
<PAGE>


INDEPENDENT AUDITORS' REPORT





Board of Directors and Stockholders
QRS Corporation:

We have audited the accompanying consolidated balance sheets of QRS Corporation
and subsidiaries (the "Company") as of December 31, 1999 and 1998, and the
related consolidated statements of earnings and comprehensive earnings,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of 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 generally
accepted accounting principles.



DELOITTE & TOUCHE LLP

San Jose, California
February 4, 2000
(March 20, 2000 as to Note 17)


                                       26

<PAGE>

                               QRS CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                                       1999             1998
                                                                                                  --------------    --------------
<S>                                                                                                <C>               <C>
Current assets:
   Cash and cash equivalents................................................................          $34,412           $36,642
   Marketable securities, available-for-sale................................................           12,895             6,976
   Accounts receivable - net of allowance for doubtful accounts of $1,676 in 1999 and
      $1,036 in 1998........................................................................           25,964            19,059
   Deferred income tax assets ..............................................................              819               816
   Prepaid expenses and other ..............................................................            2,848             1,179
   Prepaid income taxes ....................................................................            4,726                 -
                                                                                                  --------------    --------------
           Total current assets.............................................................           81,664            64,672
                                                                                                  --------------    --------------

Property and equipment:
   Furniture and fixtures...................................................................            3,651             2,476
   Equipment................................................................................           15,737             9,133
   Leasehold improvements...................................................................            3,729             2,249
                                                                                                  --------------    --------------
                                                                                                       23,117            13,858
   Less accumulated depreciation............................................................            9,294             5,708
                                                                                                  --------------    --------------
           Total property and equipment ....................................................           13,823             8,150
                                                                                                  --------------    --------------

Marketable securities, available-for-sale...................................................                -             1,518
Deferred income tax assets..................................................................            1,156             1,578
Capitalized product development costs - net of accumulated amortization of $5,293 in 1999
   and $3,482 in 1998  .....................................................................            8,088             4,136
Intangible assets - net of accumulated amortization of $2,221 in 1999 and $225 in 1998 .....           20,758             2,805
Other assets................................................................................            1,466               146
                                                                                                  --------------    --------------
Total ......................................................................................         $126,955           $83,005
                                                                                                  ==============    ==============

                                                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable......................................................................       $10,508             $7,914
     Accrued incentive.....................................................................         1,796              1,710
     Income taxes payable..................................................................             -              1,823
     Accrued vacation......................................................................         1,195                818
     Deferred acquisition cost.............................................................         2,000                  -
     Other accrued liabilities.............................................................         4,641              1,498
                                                                                               -------------     -----------
                Total current liabilities..................................................        20,140             13,763

     Deferred rent and other...............................................................         2,240              1,288
                                                                                               -------------     -----------
                Total liabilities..........................................................        22,380             15,051
                                                                                               -------------     -----------

     Minority interest.....................................................................           361                 -

     Commitments and contingencies (Note 7)................................................             -                 -
     Stockholders' equity:
           Preferred stock - $0.01 par value; 10,000,000 shares authorized; none issued and             -                 -
             outstanding...................................................................
           Common stock - $0.001 par value; 20,000,000 shares authorized; 13,674,533 shares
             issued and 13,647,208 shares outstanding at December 31, 1999; and 12,919,187
             shares issued and 12,880,862 shares outstanding at December 31, 1998..........        86,971            66,002
            Treasury stock; 27,325 shares at December 31, 1999 and 38,325 shares at
              December 31, 1998............................................................          (526)             (740)
            Accumulated other comprehensive earnings (loss) - unrealized gain (loss) on
              investments..................................................................          (136)               63
           Retained earnings ..............................................................        17,905             2,629
                                                                                               -------------     -----------
                Total stockholders' equity ................................................       104,214            67,954
                                                                                               -------------     -----------
     Total  ...............................................................................      $126,955            $83,005
                                                                                               =============     ===========
</TABLE>
                 See notes to consolidated financial statements.


                                      27
<PAGE>

                                 QRS CORPORATION
         CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                                      1999              1998                1997
                                                                             ----------------   --------------    -----------------
<S>                                                                          <C>                <C>               <C>
Revenues.............................................................             $124,705          $91,926              $71,632

Cost of revenue......................................................               62,946           50,915               40,450
                                                                             ----------------   --------------    -----------------

Gross profit.........................................................               61,759           41,011               31,182
                                                                             ----------------   --------------    -----------------

Operating expenses:

       Sales and marketing...........................................               17,994           12,080                9,041
       Product development...........................................                8,645            4,309                4,365
       General and administrative....................................               11,285            7,314                5,137
       Amortization of intangible assets.............................                1,996              225                    -
       In-process research and development...........................                  963              967                    -
                                                                             ----------------   --------------    -----------------
          Total operating expenses...................................               40,883           24,895               18,543
                                                                             ----------------   --------------    -----------------

Operating earnings...................................................               20,876           16,116               12,639

Interest income .....................................................                2,011            2,151                1,986
                                                                             ----------------   --------------    -----------------

Earnings from continuing operations before income taxes and minority
    interest.........................................................               22,887           18,267               14,625
Income tax expense ..................................................                8,057            7,113                5,850
Minority interest in subsidiary......................................                  (89)               -                    -
                                                                             ----------------   --------------    -----------------

Earnings from continuing operations after income taxes and minority
    interest ........................................................               14,919           11,154                8,775
Discontinued operations:

    Gain from sale of software and services business.................                   -               896                    -
                                                                             ----------------   --------------    -----------------

Net earnings.........................................................               14,919           12,050                8,775

Other comprehensive earnings (loss):
     Unrealized gain (loss) from marketable securities
     available-for-sale..............................................                 (199)              72                 (51)
                                                                             ----------------   --------------    -----------------
Total comprehensive earnings.........................................              $14,720          $12,122               $8,724
                                                                             ================   ==============    =================

Basic earnings per share:
    Continuing operations ...........................................                $1.12            $0.87                $0.69
    Discontinued operations..........................................                    -             0.07                    -
                                                                             ----------------   --------------    -----------------
    Net earnings per share...........................................                $1.12            $0.94                $0.69
                                                                             ----------------   --------------    -----------------

Shares used to compute basic earnings per share .....................               13,322           12,812               12,696
                                                                             ================   ==============    =================

Diluted earnings per share:
   Continuing operations ............................................                $1.05            $0.84                $0.67
   Discontinued operations ..........................................                    -             0.07                    -
                                                                             ----------------   --------------    -----------------
   Net earnings per share ...........................................                $1.05            $0.91                $0.67
                                                                             ----------------   --------------    -----------------

Shares used to compute diluted earnings per share ...................               14,167           13,287               13,091
                                                                             ================   ==============    =================
</TABLE>
                 See notes to consolidated financial statements.


                                      28
<PAGE>

                                 QRS CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                   ACCUMULATED
                                                           COMMON STOCK                OTHER           RETAINED
                                                                                   COMPREHENSIVE       EARNINGS      STOCKHOLDERS'
                                                       SHARES       AMOUNT         EARNINGS (LOSS)     (DEFICIT)         EQUITY
                                                   --------------- -------------   --------------    --------------  ---------------

<S>                                                <C>             <C>                <C>          <C>               <C>
Balance, January 1, 1997.....................         12,610,830      $61,394            $42          $(17,866)         $43,570
Purchase of treasury stock ..................             (1,950)         (35)                                              (35)
Stock option compensation....................                              26                                                26
Exercise of stock options, including tax
    benefit..................................            154,905        2,015                                             2,015
Issuance of common stock under Employee
    Stock Purchase Plan......................             25,764          416                                               416
Exercise of warrants.........................              7,500           13                                                13
Other comprehensive loss-unrealized loss on
    marketable securities available-for-sale..
                                                                                         (51)                               (51)
Net earnings.................................                                                             8,775           8,775
                                                   ---------------  ------------   --------------    --------------  ---------------

Balance, December 31, 1997...................         12,797,049       63,829             (9)            (9,091)         54,729
Purchase of treasury stock ..................            (88,875)      (1,837)                                           (1,837)
Reissuance of treasury stock.................             52,500        1,132                              (330)            802
Exercise of stock options, including tax
    benefit..................................             98,325        1,686                                             1,686
Issuance of common stock under Employee
    Stock Purchase Plan......................             21,863          452                                               452
Other comprehensive earnings-unrealized gain on
    marketable securities available-for-sale
                                                                                          72                                 72
Net earnings.................................                                                            12,050          12,050
                                                   ---------------  ------------   --------------    --------------  ---------------

Balance, December 31, 1998...................         12,880,862       65,262             63              2,629          67,954

Exercise of warrants.........................             15,000           25                                                25
Reissuance of treasury stock.................             11,000          214                               357             571
Issuance of common stock.....................             42,250        2,192                                             2,192
Exercise of stock options, including tax
    benefit..................................            675,105       18,078                                            18,078
Issuance of common stock under Employee
    Stock Purchase Plan......................             23,175          683                                               683
Purchase of fractional shares from stock
    split....................................               (184)          (9)                                               (9)
Other comprehensive earnings-unrealized loss on
    marketable securities available-for-sale
                                                                                        (199)                              (199)
Net earnings.................................                                                            14,919          14,919
                                                   ---------------  ------------   --------------    --------------  ---------------
Balance, December 31, 1999                            13,647,208      $86,445          $(136)           $17,905        $104,214
                                                   ===============  ============   ==============    ==============  ===============
</TABLE>

                 See notes to consolidated financial statements.


                                      29
<PAGE>

                                 QRS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                        1999             1998            1997
                                                                                  ----------------   ------------    -------------
<S>                                                                               <C>                <C>             <C>
Operating activities:
    Net earnings ...............................................................     $ 14,919         $ 12,050         $  8,775
    Adjustment to reconcile net earnings to net cash provided by operating
    activities:

       Depreciation and amortization ...........................................        7,366            3,429            1,718
       Loss from disposal of property and equipment ............................          103              134                -
       Stock compensation ......................................................            -                -               26
       In-process research and development .....................................          963              967                -
       Gain from sale of software and services business ........................            -             (896)               -
       Minority interest in subsidiary .........................................          (89)               -                -
       Changes in assets and liabilities, net of effects of acquisitions:
             Accounts receivable ...............................................       (5,813)          (4,214)          (5,273)
          Prepaid expenses and other ...........................................       (1,669)             131             (119)
          Prepaid income taxes .................................................       (4,726)               -                -
          Deferred income tax assets ...........................................        7,856            1,684            3,902
          Accounts payable .....................................................        2,594            4,181           (1,747)
          Other accrued liabilities ............................................        1,312            2,141              510
          Deferred rent and other ..............................................          (48)             (47)            (632)
                                                                                     --------         --------         --------

             Net cash provided by operating activities .........................       22,768           19,560            7,160
                                                                                     --------         --------         --------

Investing activities:

    Sales (purchases) of marketable securities - available for sale (net) ......       (4,600)          10,272             (155)
        Purchase of property and equipment .....................................       (9,123)          (3,192)          (5,925)
    Capitalization of product development costs ................................       (5,763)          (2,555)          (1,274)
    Acquisition of businesses, net of cash acquired and stock issued ...........      (14,840)          (2,927)               -
    Other assets ...............................................................       (2,183)            (276)              (2)
    Payment of liabilities assumed in the acquisition of ShipNet ...............            -                -           (1,234)
                                                                                     --------         --------         --------

             Net cash provided by (used in) investing activities ...............      (36,509)           1,322           (8,590)
                                                                                     --------         --------         --------

Financing activities:

    Proceeds from employee stock purchase plan issuances .......................          683              452              416
    Exercise of stock options ..................................................       10,312            1,054            1,105
    Exercise of stock warrants .................................................           25                -               13
    Contributions from minority interest .......................................          500                -                -
    Purchase of fractional shares from stock split .............................           (9)               -                -
    Purchase of treasury stock .................................................            -           (1,837)             (35)
                                                                                     --------         --------         --------

             Net cash provided by (used in) financing activities ...............       11,511             (331)           1,499
                                                                                     --------         --------         --------

Net increase (decrease) in cash and cash equivalents ...........................       (2,230)          20,551               69
Cash and cash equivalents at beginning of year .................................       36,642           16,091           16,022
                                                                                     --------         --------         --------
Cash and cash equivalents at end of year .......................................     $ 34,412         $ 36,642         $ 16,091
                                                                                     ========         ========         ========
Other cash flow information:

    Taxes paid during the year .................................................     $  6,421         $  5,742         $  1,074
                                                                                     ========         ========         ========
Noncash investing and financing activities:

    Tax benefit from stock options exercised ...................................     $  7,766         $    632         $    910
    Tax benefit from acquisition of The EDI Connection .........................          329                -                -
    Reissuance of treasury stock ...............................................          571              802                -
    Issuance of common stock ...................................................        2,192                -                -
    Deferred acquisition cost ..................................................        3,000                -                -
    Unrealized gain (loss) on marketable securities available-for-sale .........         (199)              72              (51)
                                                                                                                     (continued)
</TABLE>
                    See notes to consolidated financial statements


                                      30
<PAGE>

                              QRS CORPORATION
              CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                           (DOLLARS IN THOUSANDS)

On July 23, 1999, we acquired the outstanding common shares of Retail Data
Services and its affiliate, RDS, Inc. During the third quarter of 1998, we
acquired the assets of Custom Information Systems Corporation and the
outstanding common shares of The EDI Connection. The purchase price was
allocated, as follows:

<TABLE>
<CAPTION>
                                                                                               1999               1998
                                                                                      ----------------  ---------------
<S>                                                                                        <C>                   <C>
    Working capital other than cash ............................................            $(1,329)              $(71)
    Property and equipment .....................................................                212                110
    Goodwill ...................................................................              7,588                736
    Other intangible assets ....................................................             11,169              1,987
    In-process research and development ........................................                963                967
    Other non-current liability ................................................            (1,000)                  -
    Less: common stock issued in connection with acquisitions ..................            (2,763)              (802)
                                                                                      ----------------  ---------------
    Acquisitions, net of cash acquired of $160 and $23, and stock issued .......            $14,840             $2,927
                                                                                      ================  ===============
</TABLE>

                 See notes to consolidated financial statements


                                       31
<PAGE>

                                 QRS CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:         DESCRIPTION OF THE BUSINESS

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; and Application Services, such as price auditing
(RDS), inventory management (IMS), and logistics management (LMS) services. We
launched a new marketplace services offering, Tradeweave, in January 2000.

NOTE 2:         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

On July 13, 1999, we formed a wholly owned United States subsidiary, eMatch,
Inc., a Delaware corporation. On October 21, 1999, eMatch, Inc. changed its
corporate name to Tradeweave, Inc., ("Tradeweave") a Delaware corporation (See
Note 14). During the third quarter of 1998 and fourth quarter of 1997, we formed
wholly owned United States and Canadian subsidiaries, QRS Sales and Services
Corporation and QRS Canada, Inc., respectively. On July 23, 1999, we acquired
the operations of Retail Data Services, Inc. and RDS, Inc., the assets and
operations of which were merged into QRS Sales and Services Corporation on
December 31, 1999. The accompanying financial statements include the accounts of
QRS Corporation and our wholly owned subsidiaries. All significant intercompany
transactions have been eliminated.

REVENUE RECOGNITION

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. Services revenues from our
three principal sources are recognized in the month in which the service is
performed.

CASH AND CASH EQUIVALENTS

We consider all highly liquid temporary investments with original maturities of
three months or less to be cash equivalents.

MARKETABLE SECURITIES, AVAILABLE-FOR-SALE

We classify our portfolio of marketable debt securities as "Available for Sale"
under Statement of Financial Accounting Standard ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." We classify those
marketable securities that mature in less than one year as short-term marketable
securities.

INTANGIBLE ASSETS

Intangible assets include certain contracts, proprietary databases, trademarks,
current technology, assembled workforce, non-compete agreements and goodwill
purchased in connection with the acquisitions of businesses, and are amortized
on a straight-line basis over their estimated useful lives, which range from
three to seven years. Amortization expense was $1,996,000 and $225,000 in 1999
and 1998, respectively.

PRODUCT DEVELOPMENT COSTS

We account for product development costs in accordance with SFAS No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed." We capitalize certain development costs related to our product
offerings based upon the establishment of technological feasibility. Capitalized
development costs are amortized over various periods up to three years. The
capitalization and ongoing assessment of recoverability of development costs
requires considerable judgment by management with respect to certain external
factors, including, but not limited to, technological and economic feasibility,
and estimated economic life. Costs incurred to maintain existing product
offerings are expensed as incurred. For the years ended December 31, 1999, 1998
and 1997, we capitalized product development costs of $5,763,000, $2,555,000 and
$1,274,000, respectively.


                                       32
<PAGE>

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated on a straight-line
basis over their estimated useful lives, which are generally three years for
software and five years for equipment and hardware. Leasehold improvements are
amortized over the remaining period of the lease or over the estimated useful
life of the improvement, whichever is shorter. Depreciation expense for the
years ended December 31, 1999, 1998 and 1997 was $3,559,000, $2,540,000 and
$1,490,000, respectively.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets and certain identifiable intangibles held and used by us are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.

STOCK OPTION COMPENSATION

SFAS No. 123 established accounting and disclosure requirements using a
fair-value based method of accounting for stock-based employee compensation
plans. As allowed under provisions of SFAS No. 123, we have chosen to continue
the intrinsic value based method and provide pro forma disclosures of net
earnings and earnings per share as if the accounting provisions of SFAS No. 123
had been adopted. See Note 10.

EARNINGS PER SHARE

We present our earnings per share on a dual basis, basic and diluted EPS as
required by SFAS No. 128, "Earnings per Share." Basic EPS excludes dilution and
is computed by dividing net earnings by the weighted average of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock.

STOCK SPLIT

On June 10, 1999, our Board of Directors authorized a three-for-two split of our
common stock for our stockholders of record as of June 21, 1999. All share and
per share amounts have been restated to retroactively reflect the stock split.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial instruments include cash and equivalents, customer receivables,
accounts payable, and certain other accrued liabilities. The carrying amounts of
these items are a reasonable estimate of their fair values.

USE OF ESTIMATES

The preparation of our 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
results could differ from these estimates.

COMPREHENSIVE EARNINGS

As required by SFAS No.130, "Reporting Comprehensive Income," we classify as
components of comprehensive earnings, all items recognized under accounting
standards, which include net earnings and unrealized gains and losses on
marketable securities that are classified as available-for-sale.

SEGMENT DISCLOSURES

Effective January 1, 1998, we adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." We have determined that we have two
reportable segments under the requirements of SFAS No. 131. The adoption of SFAS
No. 131 had no effect on our financial position. See Note 15.

RECLASSIFICATION

Certain prior year amounts have been reclassified to conform to the 1999
presentation.


                                       33
<PAGE>

NEW ACCOUNTING PRONOUNCEMENT

In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements". We are currently evaluating whether the guidance set forth in this
bulletin will have any effect on our consolidated financial statements. Any such
effects would be reflected and disclosed in our first quarter consolidated
financial statements for the year ending December 31, 2000.

NOTE 3:    MARKETABLE SECURITIES, AVAILABLE FOR SALE

Marketable securities, available-for-sale are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                  AMORTIZED           UNREALIZED            UNREALIZED
                                                    COST                 GAINS                  LOSSES               FAIR VALUE
                                             ------------------    -----------------     ------------------      ------------------
                                             <C>                       <C>                <C>                    <C>
DECEMBER 31, 1999
Debt issued by -

U.S. Government Agencies                             $13,031                   $8                 $(144)                 $12,895
                                             ------------------    -----------------     ------------------      ------------------
Short-term marketable

      Securities, available-for-sale                 $13,031                   $8                 $(144)                 $12,895
                                             ==================    =================     ==================      ==================

                                                   AMORTIZED         UNREALIZED             UNREALIZED
                                                     COST               GAINS                  LOSSES                FAIR VALUE
                                             ------------------    -----------------     ------------------      ------------------
DECEMBER 31, 1998 Debt issued by:

U.S. Government Agencies                              $1,500                  $18                                         $1,518
Corporate bonds                                        6,931                   57                    $(12)                 6,976
                                             ------------------    -----------------     ------------------      ------------------
Total marketable securities                            8,431                   75                     (12)                 8,494
Less long-term marketable
      Securities, available-for-sale                   1,500                   18                    -                     1,518
                                             ------------------    -----------------     ------------------      ------------------
Short-term marketable

      Securities, available-for-sale                  $6,931                  $57                    $(12)                $6,976
                                             ==================    =================     ==================      ==================
</TABLE>

NOTE 4:         INCOME TAXES

We account for income taxes using the asset and liability method under SFAS No.
109, "Accounting for Income Taxes." We provide a deferred tax expense or benefit
for differences between financial accounting and tax reporting. Deferred income
taxes represent future net tax effects of temporary differences between the
financial statement and tax bases of assets and liabilities, using enacted tax
rates in effect for the year in which the differences are expected to reverse.

The income tax expense (benefit) for the years ended December 31, 1999, 1998 and
1997 consisted of (in thousands):

<TABLE>
<CAPTION>
                                                          1999                   1998                1997
                                             ------------------      -----------------     ---------------
                    Current:

<S>                                                   <C>                    <C>                 <C>
                        Federal                       $6,500                 $4,604              $1,813
                        State                          1,510                  1,456               1,045
                                             ------------------      -----------------     ---------------
                                                       8,010                  6,060               2,858
                                             ------------------      -----------------     ---------------

                    Deferred:

                        Federal                          687                  1,154               2,749
                        State                           (640)                  (101)                243
                                             ------------------      -----------------     ---------------
                                                          47                  1,053               2,992
                                             ------------------      -----------------     ---------------

                        Total                         $8,057                 $7,113              $5,850
                                             ==================      =================     ===============
</TABLE>


                                       34
<PAGE>

Significant components of our deferred tax balances as of December 31, 1999 and
1998 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,            DECEMBER 31,
                                                                                           1999                     1998
                                                                                    --------------------    -------------------
Deferred tax assets:

<S>                                                                                  <C>                    <C>
           Purchased in-process research and development                                         $1,657                 $1,203
           Allowance for doubtful accounts                                                          631                    387
           Other reserves not currently deductible                                                  541                  1,370
           Deferred rent                                                                            508                    555
           Net operating loss carryforwards                                                         786                      -
           California enterprise zone credits                                                       482                      -
           Research and development credit carryforwards                                            505                      -
           State taxes                                                                                -                    132
                                                                                    --------------------    -------------------
                     Total deferred income tax assets                                             5,110                  3,647

Deferred tax liabilities:

           Deducted research and development expenses                                             2,502                    906
           Depreciation                                                                             293                    347
           State taxes                                                                              340                    -
                                                                                    --------------------    -------------------
                     Total deferred income tax liabilities                                        3,135                  1,253
                                                                                    --------------------    -------------------
Deferred income tax assets, net                                                                  $1,975                 $2,394
                                                                                    ====================    ===================
</TABLE>

A reconciliation of the federal statutory tax rate to our effective tax rate is
as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,
                                             ------------------------     --------------------------     ------------------------
                                                        1999                         1998                            1997
                                             ------------------------     --------------------------     ------------------------
<S>                                           <C>              <C>           <C>            <C>          <C>             <C>
  Provision at statutory tax rate ..........   $ 8,010             35%        $ 6,394             35%        $ 5,118          35%
  State income taxes, net of federal tax
         benefit ...........................     1,021              4             881              5             880           6
  Research and experimentation credits .....      (428)            (2)           (215)            (1)           (196)         (1)
  California enterprise zone credits .......      (313)            (1)              -              -               -           -
  Tax exempt interest ......................      (247)            (1)              -              -               -           -
  Minority interest in subsidiary ..........       (31)             -               -              -               -           -
  Other ....................................        45              -              53              -              48           -
                                               -------        -------         -------        -------         -------     -------

  Total ....................................   $ 8,057             35%        $ 7,113             39%        $ 5,850          40%
                                               =======        =======         =======        =======         =======     =======
</TABLE>

At December 31, 1999, we had net operating loss carryforwards available to
offset future federal and state taxable income of approximately $2,280,000,
which will expire in 2019. Research and development tax credit carryforwards of
approximately $285,000 and $220,000 are available to offset future federal and
California state taxes respectively, which will expire in 2019. We also have
California state enterprise zone credit carryforwards of approximately $482,000,
which have no expiration date, and are available to offset future California
state taxes.


                                       35
<PAGE>

NOTE 5:    ACQUISITIONS

On July 23, 1999, we completed the acquisition of all the outstanding capital
stock of Retail Data Services, Inc. and RDS, Inc. (collectively, "RDS"). The
total acquisition cost was $21,183,820; comprised of $15,000,000 paid in cash;
$3,000,000 in deferred acquisition cost to the seller; 53,250 shares of common
stock valued at $2,762,610 of which 11,000 shares of common stock were issued
from our treasury account; liabilities assumed of $171,210 and $250,000 in
transaction costs related to the acquisition. Under the terms of the Agreement,
we are required to pay $2,000,000 and $1,000,000 in March 2000 and 2001,
respectively to the seller if revenue from the acquired business meets or
exceeds certain levels in 1999 and 2000. RDS revenues for 1999 exceeded the
established level and we have determined, based on the results of our analysis
that it is highly probable that revenue from the acquired business will exceed
the established levels in 2000, and accordingly, the deferred payments to the
seller have been included in the acquisition cost. The acquisition was accounted
for as a purchase transaction.

The purchase price 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):

<TABLE>
<CAPTION>
<S>                                                                                                  <C>
           Cash................................................................................      $      15,000
           Estimated fair value of common stock issued..........................................             2,763
           Accrued transaction costs............................................................               250
           Deferred acquisition cost to seller..................................................             3,000
                                                                                                     -------------
                   Total purchase price.........................................................     $      21,013
                                                                                                     =============

           Preliminary allocation of purchase price:

            Goodwill...........................................................................      $       7,588
            Current technology.................................................................              4,190
            Customers list and trademark.......................................................              3,757
            Fair value of other intangible assets..............................................              1,687
            Assembled workforce................................................................              1,535
            In-process research and development................................................                963
            Accounts receivable................................................................              1,092
            Property and equipment.............................................................                212
            Cash...............................................................................                160
            Liabilities assumed................................................................               (171)
                                                                                                     -------------
                  Total allocation of purchase price...........................................      $      21,013
                                                                                                     =============
</TABLE>

The amount allocated to in-process research and development of $963,000 was
charged to expense during the year ended December 31, 1999 as technological
feasibility had not been established and no alternative future uses existed for
the research projects at the acquisition date.

The following unaudited pro forma financial results of us and RDS for the year
ended December 31, 1999 and 1998 give effect to the acquisition of RDS as if the
acquisition had occurred on January 1, 1999 (the first day of fiscal 1999) and
January 1, 1998, (the first day of fiscal 1998) and includes adjustments
(amortization of goodwill, in-process research and development charge, decrease
in interest income from 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.


                                       36
<PAGE>

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 transaction been consummated on such dates, nor does it
give effect to the synergies, cost savings and other charges expected to result
from the acquisition. 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.

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

<TABLE>
<CAPTION>
                                                                                               Years Ended December 31,
                                                                                          -----------------------------------
                                                                                                1999                  1998
                                                                                          ----------------     --------------

<S>                                                                                       <C>                  <C>
           Revenues...........................................................            $        129,925     $      100,101

           Earnings from continuing operations................................                      13,004              8,854
           Discontinued operations............................................                           -                896
                                                                                          ----------------     --------------
           Net earnings.......................................................            $         13,004             $9,750
                                                                                          ================     ==============
           Earnings per share - basic:

           Earnings from continuing operations................................            $           0.97     $         0.69
           Discontinued operations............................................                           -               0.07
                                                                                          ----------------     --------------
           Net earnings.......................................................             $          0.97     $         0.76
                                                                                           ===============     ==============

           Shares used to compute basic earnings per share....................                  13,351,183         12,865,299
                                                                                          ================         ==========

           Earnings per share - diluted:

           Earnings from continuing operations................................            $           0.92     $         0.66
           Discontinued operations............................................                           -               0.07
                                                                                          ----------------     --------------
           Net earnings.......................................................            $           0.92     $         0.73
                                                                                          ================     ==============
           Shares used to compute diluted earnings per share..................                  14,196,748         13,340,669
                                                                                          ================     ==============
</TABLE>

Basic and diluted pro forma earnings per share was calculated based on our
outstanding common stock at December 31, 1999 and 1998, and 53,250 shares of our
common stock issued in connection with the acquisition of RDS.

           During the third quarter of 1998, we acquired the assets of Custom
Information Systems Corporation and the outstanding common shares of Mueller
Associates, Inc. (dba EDI Connection), both service bureaus. The total
acquisition cost was $4,152,000, comprised of $2,950,000 paid in cash, 35,000
shares of common stock valued at $802,000 issued from our treasury stock
account, liabilities assumed of $194,000 and $206,000 in transaction costs
related to the acquisitions. The acquisitions were accounted for as purchase
transactions. In connection with the acquisitions, $967,000 of the purchase
price was allocated to in-process research and development and, as technological
feasibility had not been established and no alternative future uses existed at
the acquisition dates, charged to expense. We allocated $3,185,000 of the
purchase price to current assets, property and equipment and intangible assets.
The amounts allocated to current assets and property and equipment were based on
the fair market value of the related assets and the amounts allocated to
intangible assets were determined on the basis of the appraised value of the
related intangible assets.

           The appraisal techniques used for the acquisitions included certain
assumptions, including, the extent, character and utility, the income generating
or cost-savings attributes, the nature and timing of the functional or economic
obsolescence and the relative risk and uncertainty associated with an investment
in intangible assets.


                                       37
<PAGE>

NOTE 6:    SUBLEASE LOSS RESERVES AND DISCONTINUED OPERATIONS

On May 20, 1993, we divested our software and services business to Uniquest, a
publicly held company. In connection with the sale, we entered into various
agreements with the buyer, including the sublease of approximately 40,000 square
feet of office space through June 30, 2000. Minimum monthly lease payments
ranged from $53,000 to $75,000 through the seven-year term of the lease. There
were no sublease income or data cost reimbursements during 1997.

In May 1995, Uniquest ceased operations and made an assignment of assets for the
benefit of its creditors. In connection with the cessation of Uniquest's
operations, the Company's sublease with Uniquest was terminated. During the
quarter ended March 31, 1998, outstanding matters with regard to the Uniquest
bankruptcy were substantially resolved; accordingly, we recognized a gain on
sale of software and services business of $1,494,000 less applicable income
taxes of $598,000 for these discontinued operations. A sublease loss reserve of
$480,000 at March 31, 1998, representing the provisions established for
nonpayment by Uniquest of future sublease obligations was reclassified to
deferred rent and other and is being amortized over the remaining lease term
through June 30, 2010.

NOTE 7:   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 termination date was
extended by one year to December 31, 2001. The minimum gross revenue 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. We met the
minimum purchases in 1998. However, we did not meet our annual minimum purchase
commitment for 1999 and accrued an adjustment of $120,000.

Additionally, we signed a Retail Management agreement with IBM under which we
provide to IBM certain professional services related to the retail industry. We
recognized revenues of $1,250,000 and $1,000,000 during the years ended December
31, 1999 and 1998, respectively and recognized $1,000,000 during the fourth
quarter of 1997 related to these services.

On April 30, 1999, AT&T completed its acquisition of IBM Global Network business
(renamed AT&T Global Network Services). This acquisition reflected IBM's intent
to exit the telecommunications infrastructure side of its network business while
focusing on its e-business related services. The services purchased from IBM
under its agreement include both network connectivity and e-business related
value added services. After the close of the AT&T acquisition, we continue to
acquire our network service requirements from IBM with the delivery of a portion
of these services undertaken by AT&T.

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 a non-refundable $3,000,000
fee. 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 a
non-refundable $4,000,000 fee 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 will be
amortized to expense over three years. See Note 17 for subsequent developments.




                                       38
<PAGE>

In October 1999, we established an irrevocable letter of credit on behalf of
Tradeweave, for the amount of $825,000 with Wells Fargo Bank, N.A. as security
for its real property lease and general corporate purposes. The letter of credit
expires on September 28, 2000 with automatic renewal at the option of Wells
Fargo Bank, N.A. through September 28, 2004.

We lease office buildings and certain equipment under various non-cancelable
operating lease agreements expiring through the year 2011. The leases for office
buildings generally provide renewal options and additional rents based on
increases in operating expenses of the buildings.

Our corporate building lease agreement provided for significant periods of "free
rent" when no cash was required. The total cash payments over the life of the
lease were divided by the total number of months in the lease period and the
average rent is charged to expense each month during the lease period. During
the periods of "free rent," this expense creates a deferred liability, which is
amortized as a reduction to expense over the life of the lease.

Total rent expense related to these operating leases charged to continuing
operations for the years ended December 31, 1999, 1998 and 1997 was $3,236,000,
$1,781,000 and $1,372,000, respectively.

At December 31, 1999, future minimum payments under long-term operating leases
are as follows (in thousands):

Year ending December 31:

<TABLE>
<CAPTION>
<S>                                                                 <C>
       2000 ...................................................               $6,933
       2001 ...................................................                6,422
       2002 ...................................................                6,032
       2003 ...................................................                5,381
       2004 ...................................................                4,552
       2005 & thereafter ......................................               17,578
                                                                     --------------------

Total..........................................................              $46,898
                                                                     ====================
</TABLE>

NOTE 8:   MAJOR TRADING PARTNERSHIP PROGRAMS

We provide services and generate revenues by enabling certain hub customers and
their trading partners to conduct business over our network. Due to the large
number of trading partners that transact business with each other, including one
or more hub customers, the difficulty of allocating trading partner network
services to individual hub customers, and the differences in the manner in which
hub customers and trading partners allocate the cost of network services among
each other, we cannot precisely attribute revenues to particular trading
relationships. While we continue to refine our estimation techniques, we believe
that no individual customer or hub customer trading partnership exceeded 10% of
total revenues for any of the three years in the period ended December 31, 1999.

NOTE 9:   RETIREMENT SAVINGS PLANS

We implemented a 401(k) plan, which is a defined contribution plan for all
eligible employees. The plan allows discretionary, matching employer
contributions of up to 50% of the maximum allowable employee contribution
($10,000 in 1999 and 1998, $9,500 in 1997). The matching employer contributions
charged to continuing operations during 1999, 1998 and 1997 were approximately
$651,000, $522,000 and $324,000, respectively.

Effective December 1, 1997, we implemented a non-qualified deferred compensation
plan for certain employees whose contributions and the related employer matching
contributions under the 401(k) plan are restricted under the Internal Revenue
Code. The supplemental employer matching contributions under this plan charged
to continuing operations during 1999 and 1998 were $64,000 and $32,000,
respectively.


                                       39
<PAGE>

NOTE 10:        COMMON STOCK, STOCK OPTIONS AND WARRANTS

In 1989, our Board of Directors approved a Non-Qualified Stock Option Plan (the
"Plan"). The Plan was amended in 1990. The Plan provides for the granting of
options to certain employees and directors to purchase shares of our common
stock at prices determined by our Board of Directors.

In June 1993, our Board of Directors adopted an Employee Stock Purchase Plan
(the "Purchase Plan"). The Purchase Plan provides for the purchase of common
stock by eligible employees. A total of 225,000 shares of common stock have been
reserved for purchase under the Purchase Plan. The purchase price per share is
85% of the lower of (i) the fair market value of the common stock on the
participant's entry date (first business day in January, April, July and October
each year) into a purchase period (first business day in January and through the
last business day in December each year) or (ii) the fair market value on the
annual purchase date (the last business day in December each year). For a
participant whose entry date is subsequent to the start date of the purchase
period (first business day in January each year), the clause (i) value will not
be less than the fair market value of the common stock on the start date of the
purchase period. In 1999, 1998 and 1997, employees acquired 23,175 shares,
21,863 shares and 25,764 shares of common stock, respectively, under the
Purchase Plan. At December 31, 1999, 80,431 shares of common stock were
available for future purchases under the Purchase Plan.

In June 1993, our Board of Directors also approved the 1993 Stock Option/Stock
Issuance Plan (the "1993 Plan"). A total of 3,900,000 shares of common stock
have been reserved for issuance under this plan, which includes additional
allocations approved by the stockholders of 750,000, 750,000, 525,000 and
600,000 shares in May 1995, 1996, 1998 and 1999, respectively. The 1993 Plan is
divided into three separate components: (i) the Discretionary Option Grant
Program under which key employees (including officers), certain non-employee
directors and consultants may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock at an exercise price not less
than 85% of the fair market value of such shares on the grant date, (ii) the
Automatic Option Grant Program under which option grants will automatically be
made at periodic intervals to certain non-employee members of the Board to
purchase shares of Common Stock at an exercise price equal to 100% of the fair
market value of the option shares on the grant date, and (iii) the Stock
Issuance Program under which key employees (including officers), certain
non-employee and consultants may, in the Plan Administrator's discretion, be
issued shares of Common Stock directly, either through the purchase of such
shares at a price not less than 85% of their fair market value at the time of
issuance or as a bonus tied to the performance of services or our attainment of
financial objectives, without any cash payment required of the recipient.

All outstanding options under the 1993 Plan have been granted at fair market
value on the date of grant and vest in equal annual installments over periods up
to four years. Outstanding options granted under earlier plans were granted at
fair market value or lesser values, and vest over different periods, primarily
over periods up to four years.

In December 1997, our Board of Directors approved the 1997 Special Non-Officer
Stock Option Plan, which permits us to grant options to purchase up to 225,000
shares of common stock. The persons eligible to receive options through this
plan are those employees who are neither our executive officers nor members of
our Board of Directors. On February 15, 1999, our Board of Directors authorized
an increase in the number of shares of common stock available for issuance under
the 1997 Special Non-Officer Stock Option Plan from 225,000 shares to 450,000
shares. Options to purchase approximately 282,930 shares of common stock were
available for future grants under the plans as of December 31, 1999.



                                       40
<PAGE>


The following table shows the activity in our stock option plans:

<TABLE>
<CAPTION>
                                                                                                   NUMBER OF      WEIGHTED AVERAGE
                                                                                                    OPTIONS        EXERCISE PRICE
                                                                                                ----------------- ---------------
<S>                                                                                                <C>             <C>
Balance, December 31, 1996 (308,112 exercisable at $9.13 weighted average price per share) ....     1,259,019         $   12.64
    Granted ...................................................................................       921,975             21.09
    Exercised .................................................................................      (154,905)             7.13
    Canceled ..................................................................................       (63,367)            15.83
                                                                                                ----------------- ---------------
Balance, December 31, 1997 (480,870 exercisable at $12.24 weighted average price per share) ...     1,962,722             17.03
    Granted ...................................................................................       698,025             19.77
    Exercised .................................................................................       (98,325)            10.73
    Canceled ..................................................................................      (124,088)            22.15
                                                                                                ----------------- ---------------
Balance, December 31, 1998 (861,011 exercisable at $15.67 weighted average price per share ....     2,438,334             17.80
    Granted ...................................................................................       734,865             53.45
    Exercised .................................................................................      (675,106)            15.26
    Canceled ..................................................................................      (123,850)            19.96
                                                                                                ----------------- ---------------
Balance, December 31, 1999 (971,860 exercisable at $21.70 weighted average price per share ....     2,374,243         $   29.45
                                                                                                ================= ===============
</TABLE>

The weighted average fair value of options granted during 1999, 1998 and 1997
was $24.96, $9.08 and $9.45, respectively.

Warrants issued in connection with a line of credit to purchase 10,134 shares of
common stock at $12.33 were outstanding at December 31, 1999. These warrants
expire upon 30-day notification of the warrant holder. During 1999, warrants
issued in connection with the public offering to purchase 15,000 shares of
common stock were exercised.

The status of options outstanding as of December 31, 1999 is summarized as
follows:

<TABLE>
<CAPTION>
                                       OPTIONS OUTSTANDING                                            OPTIONS EXERCISABLE
-------------------------------------------------------------------------------------------   -------------------------------------
                                                        WEIGHTED
                                                        AVERAGE             WEIGHTED                                  WEIGHTED
     RANGE OF                                           REMAINING           AVERAGE                                    AVERAGE
     EXERCISE                   NUMBER                 CONTRACTUAL          EXERCISE                 NUMBER           EXERCISE
      PRICES                  OUTSTANDING                  LIFE               PRICE               EXERCISABLE           PRICE
----------------------     --------------------     ----------------    -------------------   --------------------  ---------------
<S>                          <C>                     <C>                  <C>                  <C>                 <C>
        $3.50-$3.50                  17,400                  3.3                  $3.50                17,400           $   3.50
          6.00-6.92                  30,188                  4.4                   6.73                29,813               6.74
         9.42-12.75                 193,525                  5.5                  11.20               193,525              11.20
        14.58-21.25               1,204,714                  7.6                  19.38               460,795              19.46
        23.71-32.50                 242,673                  7.9                  27.15               112,515              25.85
        36.67-54.13                 339,575                  9.0                  45.11               157,812              42.98
        63.56-75.75                 346,168                  9.8                  64.22                     -                  -
----------------------     --------------------     ----------------    -------------------   --------------------  ---------------
        $3.50-75.75               2,374,243                  7.9                 $29.45               971,860           $  21.70
======================     ====================     ================    ===================   ====================  ===============
</TABLE>

At December 31, 1999, the Tradeweave Board of Directors approved a Non-Qualified
Stock Option Plan (the "Tradeweave Plan"). The Tradeweave Plan provides for the
granting of options to certain employees, non-employees and non-employee
directors to purchase shares of Tradeweave common stock at prices determined by
Tradeweave's Board of Directors.

A total of 1,000,000 shares of Tradeweave common stock have been reserved for
issuance under this plan. The Tradeweave Plan is divided into two separate
components: (i) the Option Grant Program under which certain employees, certain
non-employee directors and non-employees may, at the discretion of the
Tradeweave Plan Administrator, be granted options to purchase shares of
Tradeweave common stock at an exercise price not less than 85% of the fair
market value of such shares on the grant date, if the person to whom the option
is granted is a


                                       41
<PAGE>

10% shareholder, then the exercise price per share shall not be less than 110%
of the fair market value per share of common stock on the option grant date, and
(ii) the Stock Issuance Program under which certain employees, non-employee
directors and non-employees may, at the Tradeweave Plan Administrator's
discretion, be issued shares of Tradeweave common stock directly through the
purchase of such shares at a price not less than 85% of their fair market value
at the time of issuance, if the person to whom the option is granted is a 10%
shareholder, then the exercise price per share shall not be less than 110% of
the fair market value per share of common stock on the option grant date.

All outstanding options under the Tradeweave Plan have been granted at fair
market value on the date of grant and vest 25% upon Optionee's completion of one
year of service measured from the vesting commencement date. The balance of the
options vest in a series of thirty-six successive equal monthly installments
upon Optionee's completion of each month of service over the thirty-six month
period measured from the first anniversary of the vesting commencement date.

Of the 1,000,000 shares available for grant, 541,750 options have been granted
and none of the options have been exercised or have vested as of December 31,
1999. The 541,750 outstanding options have an exercise price of $1 and a
weighted average remaining contractual life of 10 years.

We apply APB Opinion 25 and related Interpretations in accounting for our
employee stock-based compensation plans. Accordingly, no compensation cost has
been recognized for its stock option plans. Had compensation cost for our
stock-based plans been determined based on the fair value at the grant dates for
awards under those plans consistent with the method of SFAS No. 123, our net
earnings and net earnings per share would have been decreased to the pro forma
amounts indicated in the following table. As 1996 was the initial phase-in
period for applying this Statement, the pro forma results indicated are not
necessarily representative of the effects on pro forma disclosures of net
earnings for future periods as they exclude options that were granted prior to
January 1, 1995, with vesting periods in 1995 and later.

<TABLE>
<CAPTION>
                                                                                 YEARS ENDED DECEMBER 31,
                                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                               -----------------------------------------------------------------
                                                                     1999                   1998                    1997
<S>                                                               <C>                    <C>                      <C>
NET EARNINGS
As reported                                                           $14,919                $12,050                  $8,775
                                                               ==================      =================      ==================
Pro forma                                                             $ 9,268                $ 9,145                  $6,916
                                                               ==================      =================      ==================
BASIC EARNINGS PER SHARE
As reported                                                           $  1.12                $  0.94                  $ 0.69
                                                               ==================      =================      ==================
Pro forma                                                             $  0.70                $  0.71                  $ 0.54
                                                               ==================      =================      ==================
DILUTED EARNINGS PER SHARE
As reported                                                           $  1.05                $  0.91                  $ 0.67
                                                               ==================      =================      ==================
Pro forma                                                             $  0.65                $  0.69                  $ 0.53
                                                               ==================      =================      ==================
</TABLE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants made in 1999, 1998 and 1997 under the 1993 Plan and
for purchases made in 1999, 1998 and 1997 under the Employee Stock Purchase
Plan: risk-free interest rates are 5.49% in 1999, 4.59% in 1998 and 5.91% in
1997; expected volatility is 58.72% in 1999 (0% for the Tradeweave Plan), 56.3%
in 1998 and 51.4% in 1997; expected lives in all years are 12 to 18 months
beyond each incremental vesting period (total life of 2 to 5.5 years, depending
upon each grant's individual vesting schedule). No dividends are assumed for any
plan in any year.

NOTE 11:   TREASURY STOCK

On April 22, 1997, we announced that our Board of Directors has authorized the
repurchase from time to time of up to $5 million of its common stock in both
open market and block transactions. Our Board of Directors authorized a $5
million increase in this repurchase amount on October 16, 1998. Shares purchased
under this


                                       42
<PAGE>

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 its Common Stock at any time that management determines additional
purchases are not warranted. We have repurchased 90,825 shares of our common
stock since the inception of the buyback program; of which 88,875 shares were
repurchased during 1998 for $1,837,000 and 1,950 shares were repurchased during
1997 for $35,000. We did not repurchase any shares of our common stock during
the year ended December 31, 1999. During the third quarter of 1998, we reissued
52,500 shares of treasury stock valued at $802,000 in connection with the
acquisition of businesses. On July 23, 1999, we reissued 11,000 shares of
treasury stock valued at $571,000 in connection with the acquisition of RDS.
(See Note 5).

NOTE 12:        QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                1999 QUARTERLY
                                    ------------------------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT PER                 QUARTER             QUARTER            QUARTER            QUARTER                 YEAR
SHARE DATA                                ENDED               ENDED              ENDED              ENDED                  ENDED
                                        MARCH 31,            JUNE 30,           SEPT. 30,          DEC. 31,               DEC. 31,
                                          1999                1999                 1999             1999                   1999
                                    ----------------    ----------------     -------------     ----------------      ---------------
<S>                                 <C>                 <C>               <C>                 <C>                  <C>
Revenues                                  $29,344             $29,540           $32,389             $33,432              $124,705
Gross profit                               14,326              14,688            16,171              16,574                61,759
Net earnings                                3,621               3,920             3,662               3,715                14,919

Basic earnings per share                     0.28                0.30              0.27                0.27                  1.12
Diluted earnings per share                   0.26                0.28              0.26                0.26                  1.05
</TABLE>

<TABLE>
<CAPTION>
                                                                         1998 QUARTERLY
                                    ----------------------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT PER                 QUARTER             QUARTER            QUARTER            QUARTER                 YEAR
SHARE DATA                                ENDED               ENDED              ENDED              ENDED                  ENDED
                                        MARCH 31,            JUNE 30,           SEPT. 30,          DEC. 31,               DEC. 31,
                                          1998                1998                 1998             1998                   1998
                                    ----------------    ---------------     -------------     ----------------     ---------------
<S>                                  <C>                <C>               <C>                  <C>                 <C>
Revenues                                  $20,034            $20,830           $23,618              $27,444             $91,926
Gross profit                                8,779              9,146            10,383               12,703              41,011
Earnings from continuing operations
                                            2,463              2,659             2,471                3,563              11,154
Discontinued operations                       896                  -                 -                    -                 896
Net earnings                                3,359              2,659             2,471                3,563              12,050
Basic earnings per share:

Continuing operations                        0.19               0.21              0.19                 0.28                0.87
Discontinued operations                      0.07                  -                 -                    -                0.07
Net earnings                                 0.26               0.21              0.19                 0.28                0.94

Diluted earnings per share:

Continuing operations                        0.18               0.20              0.19                 0.27                0.84
Discontinued operations                      0.07                  -                 -                    -                0.07
Net earnings                                 0.25               0.20              0.19                 0.27                0.91
</TABLE>

NOTE 13: EARNINGS PER SHARE

We calculate basic EPS and diluted EPS in accordance with SFAS No. 128. Basic
EPS is calculated by dividing net earnings 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.


                                       43
<PAGE>

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

<TABLE>
<CAPTION>
                                                                            YEARS ENDED DECEMBER 31,
                                                     ----------------------------------------------------------------------------
                                                                   1999                           1998                      1997
                                                     ---------------------      ---------------------     -----------------------
<S>                                                  <C>                         <C>                        <C>
Shares used to compute basic EPS                           13,321,567                  12,812,049                 12,696,000
Add: Effect of dilutive securities                            845,565                     475,370                    395,094
                                                     ---------------------      ---------------------     -----------------------
Shares used to compute diluted EPS                         14,167,132                  13,287,419                 13,091,094
                                                     =====================      =====================     =======================
</TABLE>


NOTE 14: RELATED PARTY TRANSACTIONS

On November 30, 1999, we entered into a Common Stock Purchase Agreement (the
"Agreement") with our wholly-owned subsidiary, Tradeweave, 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 Agreement, Tradeweave issued 285,000 shares of its common
stock to Peter R. Johnson for $285,000 in cash; issued 90,000 shares of its
common stock to Garth Saloner for $90,000 in cash; and issued an additional
3,375,000 shares of its common stock to us for $3,375,000 in cash. On December
31, 1999, Tradeweave issued 95,000 shares of its common stock to Peter R.
Johnson for $95,000 in cash; issued 30,000 shares of its common stock to Garth
Saloner for $30,000 in cash; and issued 1,124,950 shares of its common stock to
us for $1,124,950 in cash. As of December 31, 1999, we owned 90% of the
outstanding common stock of Tradeweave.

NOTE 15:  SEGMENT INFORMATION

QRS services are marketed as a comprehensive suite of electronic commerce
offerings and are designed to function most powerfully in unison. A new venture,
Tradeweave, focusing on assisting retailers, vendors and manufacturers in the
disposition of surplus and mark-down apparel merchandise, 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 and 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. The accounting policies of the segment are
the same as those described in the summary of significant accounting policies
(Note 2). 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.


                                       44
<PAGE>

As Tradeweave was established during 1999, separate segment disclosure for
QRS Other Products for 1998 and 1997 is included on the face of the financial
statements and is not repeated here. Financial information for our business
segments for 1999 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                            QRS OTHER                             INTERCOMPANY
                                                             PRODUCTS           TRADEWEAVE        ELIMINATIONS           TOTAL
                                                             ---------          ----------        ------------           -----
<S>                                                         <C>                <C>                <C>                 <C>
      Revenues                                                $124,705           $      -           $     -             $124,705
      Operating earnings (loss)                                 23,312             (2,436)                -               20,876

      Total assets                                             122,654              6,751            (2,450)*            126,955

      Depreciation and amortization                              7,359                  7                 -                7,366

      Capital expenditures                                       8,778                345                 -                9,123

      Capitalized product development costs                      1,919              3,844                 -                5,763
</TABLE>
----------
*     The intercompany elimination is primarily comprised of current and
deferred tax benefits.

NOTE 16:  IMAGE INFO ACQUISITION

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 approximately $52,800,000;
comprised of $5,000,000 paid in cash; $5,000,000 in deferred acquisition cost
to the former shareholders of Image Info; 440,913 shares of our common stock
valued at $41,040,182; liabilities assumed of $1,431,500 representing bonuses
payable to the employees of Image Info and transaction costs of approximately
$300,000 related to the acquisition. Under the terms of the purchase
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. Management has determined, based on
the results of our analysis that it is highly probable that revenue from the
acquired business will exceed the established levels, and accordingly, the
deferred acquisition cost to the former shareholders of Image Info has been
included in the acquisition cost. The acquisition will be accounted for as a
purchase transaction. We also agreed to grant stock options under our 1993
Stock Option/Stock Issuance Plan to certain employees of Image Info to
purchase 23,500 shares of our common stock at $96.00 per share. On January
27, 2000, WSC changed its corporate name to Image Info.

NOTE 17:  SUBSEQUENT EVENTS

ROCKPORT TRADE SYSTEMS ACQUISITION

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.
Pursuant to the Reorganization Agreement, we acquired substantially all of the
assets of RockPort in return for the payment to RockPort of 817,797 shares of
our common stock and our assumption of certain liabilities and obligations of
RockPort. We intend to use purchase accounting for the transaction.

AMENDMENT TO bTRADE AGREEMENTS

In March 2000, the Company and bTrade agreed to modify their agreements
referred to in Note 7 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 the
above was to reduce the Company's accounts receivable from bTrade by $3,000,000
and its accounts payable to bTrade by an equal amount. Such adjustments,
which will not affect net earnings, will be recorded in the first quarter of
2000. In addition, the guaranteed minimum service fee to bTrade referrd to in
Note 7 was reduced to $1,000,000.

                                       45

<PAGE>

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

             Not applicable.


                                       46
<PAGE>

                                    PART III

ITEM 10.        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
NAME                                        AGE                  POSITION
----                                        ---                  --------
<S>                                       <C>    <C>
Peter R. Johnson (2)(3)                     51   Chairman of the Board of Directors
John Simon                                  43   Chief Executive Officer and Director
Shawn M. O'Connor                           40   President and Chief Operating Officer
Peter Papano                                50   Chief Financial Officer and Secretary
William Hammack                             50   Vice President, Human Resources
Philip Woodworth                            43   Vice President and General Manager
Tania Amochaev (3)                          50   Director
Steven D. Brooks (2)(3)                     48   Director, Chairman of the Audit Committee
David A. Cole                               57   Director
John P. Dougall                             56   Director
Garth Saloner, Ph.D. (1)(2)                 45   Director, Chairman of the Compensation Committee
Philip Schlein (1)                          66   Director
Garen K. Staglin (3)                        55   Director, Chairman of the Executive Committee
</TABLE>

(1)   Member of the Compensation Committee.
(2)   Member of the Audit Committee.
(3)   Member of the Executive Committee.

Mr. Johnson founded the Company in 1985 and has been Chairman of the Board since
the Company's inception. Mr. Johnson served as Chairman and CEO of the Company
from October1985 to March 1991 and again from January 1992 to May 1993. Before
founding the Company, Mr. Johnson was a Corporate General Manager of Myer
Emporium Limited, a large retailer in Australia. QRS sold PRJ & Associates to
Uniquest Incorporated in May 1993. Mr. Johnson served as the Chief Executive
Officer of Uniquest from December 1993 to December 1994. From 1995 to the
present, Mr. Johnson has been a private investor in and a consultant to a number
of technology companies. Mr. Johnson served as Chairman of NSB Retail Systems
PLC, a publicly held company in the United Kingdom, from 1995 through October
1999 and remains its Senior Director. Mr. Johnson is currently Chairman and CEO
of Tradeweave (a QRS company). Mr. Johnson is also a Director of Style365.com
and several other privately held technology companies.

Mr. Simon was named Chief Executive Officer in July 1998 and a director of the
Company in December 1997. Mr. Simon has held various positions with the Company
since 1988, including President from January 1998 until July 1998 and Executive
Vice President from January 1994 to December 1997. From 1980 to 1988, Mr. Simon
was employed by Carter Hawley Hale Stores, Inc., a retail company, most recently
as Senior Program Manager of its Information Services Division, and prior to
that held a number of merchandising, store management and information services
positions.

Mr. O'Connor joined the Company in February 1995 and became Vice President,
Chief Financial Officer and Secretary in March 1995. Mr. O'Connor was named
Chief Operating Officer in January 1998 and President in July 1998, and
currently serves in these two capacities. Before joining the Company, from 1992
to November 1994, Mr. O'Connor was Vice President and Chief Financial Officer
for Diasonics Ultrasound, Inc., a medical equipment manufacturer ("Diasonics
Ultrasound"). From 1988 to 1992, Mr. O'Connor held various management positions
with Diasonics Ultrasound.

Mr. Papano joined the Company in August 1998 as Vice President, Finance, Chief
Financial Officer and Secretary. Prior to joining the Company, from 1991 to May
1998, Mr. Papano served in two principal capacities at Knight-Ridder Information
Inc. (now known as the Dialog Corporation), a company in the information
business that primarily provides online search and current awareness information
products, including Chief Financial Officer from January 1994 to December 1997
and Senior Director of Finance from 1991 to December 1993. In addition, Mr.
Papano served as Chief Financial Officer for a subsidiary of Dialog Corporation
from December 1997 until May 1998. He began his career with GTE Corporation in
local and long distance telephone operations.


                                       47
<PAGE>

Mr. Hammack joined the Company in February 1999 as Vice President, Human
Resources. Before joining the Company, from February 1999, Mr. Hammack held the
position of Vice President, Human Resources for a division of the world-wide
operations of General Electric Medical Systems (f/k/a Diasonics Inc.).

Mr. Woodworth was named of Vice President of Product Marketing in October 1998.
Mr. Woodworth is responsible for the Company's products and product management
and the development of Internet and Internet technology services that complement
the retail industry and demand chain initiatives that the Company sponsors on
behalf of its retailer customers, vendors and carriers. Mr. Woodworth has worked
for the Company for over nine years and has held various positions, including
Vice President of Sales and Director of Projects. Prior to joining the Company,
Mr. Woodworth was employed in the data processing industry for 19 years.

Ms. Amochaev was named a director in May 1992. Ms. Amochaev served as the
President of the Company from May 1992 until February 1997, and as Chief
Executive Officer from May 1993 until February 1997. Before joining the Company,
from 1988 to 1992, Ms. Amochaev was Chief Executive Officer of Natural Language,
Inc., a client server database tool software company. From 1984 to 1987, Ms.
Amochaev was President and Chief Executive Officer of Comserv Corporation, a
manufacturing applications software company that was sold in 1987 to Management
Science America. Ms. Amochaev currently serves as a director of Walker
Interactive Systems, Inc., a financial software company, Government Technology
Services, Inc., a computer reseller to the government, and of Symantec
Corporation, a software company.

Mr. Brooks was named a director of the Company in January 1994. Mr. Brooks is a
Managing Director at Broadview Capital Partners ("Broadview"), a private equity
firm focused upon investments in the technology sector. Mr. Brooks joined
Broadview in February 1999. From September 1997 to Februray 1999, Mr. Brooks
served as a Managing Director of Donaldson Lufkin & Jenrette Securities
Corporation, an investment banking firm. From 1997 to August 1997, Mr. Brooks
has been a private investor and a consultant to technology companies. From 1994
to December 1996, Mr. Brooks served as Managing Director and Head of Global
Technology Investment Banking at Union Bank of Switzerland Securities, LLC. From
1988 to 1994, Mr. Brooks was a private investor and consultant to high
technology firms. From 1986 to 1988, Mr. Brooks served as Managing Partner of
investment banking at Robertson, Stephens & Co., an investment bank. Mr. Brooks
is a Director of Paychex, Inc., a national payroll processing and business
services company, and VERITAS Software Corporation, a storage management
software company, as well as several private companies.

Mr. Cole was named director of the Company in December 1999. Mr. Cole is the
Chairman of the Board of Kurt Salmon Associates, Inc., ("KSA") a premier global
management consulting firm that serves the Retail, Consumer Products, and Health
Care industries. The firm provides services in Strategy, Marketing, Information
Technology, Logistics, Operations and Sourcing to leadership companies. Mr. Cole
joined KSA in 1977 as a Managing Director and was Chairman and CEO from 1988
until 1999. Throughout his tenure as CEO, Mr. Cole played a key leadership role
in numerous projects, including Strategy, Organization Development, Information
Technology Operations and Sourcing in the Retailing and Consumer Products
industries. Mr. Cole is also a keynote speaker at industry conferences in North
American Europe and Asia.

Mr. Dougall has been a director of the company since July 1990. On February 5,
1999, Mr. Dougall became Group Chief Executive Officer for Plessy Asia Pacific.
From December 1997 to February 1999, Mr. Dougall was a private investor. From
November 1996 to November 1997, Mr. Dougall served as Chairman and Chief
Executive Officer for Aristocrat Leisure Limited, an Australian publicly listed
company and a supplier to gambling and entertainment companies. From January
1992 to September 1996, Mr. Dougall served as Chief Executive Officer of AWA
Limited, an electronics and telecommunications company. Mr. Dougall held various
executive positions with the Company from July 1990 to January 1992, serving as
President of the Company from February 1991 to June 1991 and as President and
Chief Executive Officer from June 1991 to January 1992. From February 1988 to
June 1990, Mr. Dougall was the Executive Director of Paxus Corporation, a
software services and outsourcing firm.


                                       48
<PAGE>

Dr. Saloner was named a director of the Company in December 1993. Dr. Saloner
has served as the Robert A. Magowan Professor of Strategic Management and
Economics at the Graduate School of Business at Stanford University since 1990.
He served as Associate Dean for Academic Affairs and Director of Research and
Course Development at Stanford from 1993 to 1996. From 1982 to 1990, Dr. Saloner
was a professor in the Economics Department of the Massachusetts Institute of
Technology. Dr. Saloner is a director of Charles River Associates, an economic
consulting firm, Brilliant Digital Entertainment, a 3D animation firm, and Next
Stage Entertainment, a firm engaged in building a network of live entertainment
theaters.

Mr. Schlein was named a director of the Company in February 1996. Mr. Schlein
has been a general partner of BMS Partners L.P., a venture partner of U.S.
Venture Partners, a venture capital firm, since April 1985. Mr. Schlein held
various executive positions with R.H. Macy & Company, Inc. from September 1957
to December 1973 and was President and Chief Executive Officer of its Macy's
California division from January 1974 to January 1985. Mr. Schlein currently
serves as a director of Burnham Pacific Incorporated, a commercial real estate
development and leasing company, Ross Stores, Inc., a clothing store chain, and
Resound Corporation, a hearing device manufacturing company, XOOM.com, Inc., an
eCommerce company, and bebe stores, inc., a producer of contemporary women's
apparel and accessories. Additionally, Mr. Schlein served as a director of Apple
Computer, Inc. from 1979 to 1987.

Mr. Staglin was named a director of the Company in 1991. Since 1991, Mr. Staglin
has served as the Chief Executive Officer and Chairman of the Board of Directors
of Safelite Glass Corporation, a replacement auto glass manufacturing and
retailing company. From 1980 to 1991, Mr. Staglin was a Vice President and
General Manager of Automatic Data Processing, a computer networking services
company. Since 1985, Mr. Staglin has been the owner and manager of Staglin
Vineyards. Mr. Staglin currently serves as a director of First Data Corporation,
a supplier of computer services for credit card processing and other financial
services and CyberCash, Inc., a provider of secure transaction services for the
Internet. In 1994, Mr. Staglin was named a member of the Advisory Council to the
Stanford Graduate School of Business.

The information required in this Item 10 with respect to compliance with Section
16(a) of the Exchange Act is hereby incorporated by reference from the
information under the caption "Compliance with Section 16(a) of the Exchange Act
of 1934" in the Company's definitive proxy statement (the "Proxy Statement").
The Proxy Statement will be filed with the Securities and Exchange Commission no
later than 120 days after the close of the Company's last fiscal year in
connection with the solicitation of proxies for its Annual Meeting of
Stockholders to be held on May 11, 1999.

ITEM 11.        EXECUTIVE COMPENSATION

Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, the
information called for in this Part III, Item 11 of Form 10-K is omitted since
the Company will file, not later than 120 days after the close of the fiscal
year ended December 31, 1999, with the Securities and Exchange Commission, its
Proxy Statement, which shall contain, under the caption "Executive Compensation
and Other Information," the information required by this item.

ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, the
information called for in this Part III, Item 12 of Form 10-K is omitted since
the Company will file, not later than 120 days after the close of the fiscal
year ended December 31, 1999, with the Securities and Exchange Commission, its
Proxy Statement, which shall contain, under the caption "Security Ownership Of
Certain Beneficial Owners and Management," the information required by this
item.


                                       49
<PAGE>

ITEM 13.             CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, the
information called for in this Part III, Item 13 of Form 10-K is omitted since
the Company will file, not later than 120 days after the close of the fiscal
year ended December 31, 1999, with the Securities and Exchange Commission, its
Proxy Statement, which shall contain, under the caption "Certain Relationships
and Related Transactions" the information required by this item.


                                       50
<PAGE>

                                     PART IV

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

The following documents are filed or incorporated by reference as part of this
Form 10-K:

(a)        ITEMS FILED AS PART OF REPORT:

           1.        FINANCIAL STATEMENTS
                     Independent Auditors' Report
                     Consolidated Balance Sheets
                     Consolidated Statements of Earnings
                     Consolidated Statements of Stockholders' Equity
                     Consolidated Statements of Cash Flows
                     Notes to Consolidated Financial Statements

           2.        FINANCIAL STATEMENT SCHEDULES

                     All schedules are omitted because they are not applicable
                     or not required or because the required information is
                     included in the financial statements or notes thereto.

(b)        REPORTS ON FORM 8-K

                     We filed a current Report on Form 8-K dated July 23, 1999
                     describing, pursuant to Item 2, an agreement to acquire all
                     of the issued and outstanding shares of RDS, and its
                     affiliate, RDS, Inc. On October, 5, 1999, we filed an
                     amendment to the Form 8-K, which included, pursuant to Item
                     7, the financial statements of RDS and pro forma
                     information.

                     We filed a current report on Form 8-K on December 1, 1999
                     announcing the launch of our new service, Tradeweave and
                     describing the stock purchase agreement entered into on
                     November 30, 1999 by us (the "Agreement") with our wholly
                     owned subsidiary, Tradeweave Inc., Peter R. Johnson and
                     Garth Saloner.

(c)        EXHIBITS

<TABLE>
<CAPTION>
NO.                                       DESCRIPTION

<S>       <C>
2.1        Agreement and Plan of Merger of QuickResponse Delaware, Inc. and
           QuickResponse Services, Inc.*****

3.1        Certification of Incorporation of the Company.*****

3.2        Certificate of Correction of Certificate of Incorporation of the
           Company.*****

3.3        Bylaws of the Company.*****

3.4        Certificate of Amendment of Certificate of Incorporation of the
           Company.

4.1        Specimen of Common Stock Certificate of the Registrant.*

10.1       1993 Stock Option/Stock Insurance Plan and forms of agreement
           thereunder.*

10.2       Employee Stock Purchase Plan.*

10.3       Form of 1990 Nonqualified Stock Option Agreement.*

10.4       Employment Agreement dated April 22, 1992 between the Registrant and
           Tania Amochaev.*

10.5       Employment Agreement dated March 1, 1993 between the Registrant and
           Tania Amochaev.*

10.6       Form of Indemnification Agreement.*

10.7       Lease Agreement dated April 27, 1990 between the Registrant and
           Schooner Drive Associates, a California Limited Partnership.*


                                       51
<PAGE>

10.8       Sublease dated May 1, 1993 between the Registrant and PRJ&, Inc.*

10.9       Preferred Stock Purchase and Debt Consolidation Agreement, dated as
           of March 22, 1991 among the Registrant, Peter R. Johnson and
           International Business Machines Corporation.*

10.10      First Amendment dated as of May 20, 1993 to the Preferred Stock
           Purchase and Debt Consolidation Agreement among the Registrant, Peter
           R. Johnson, and International Business Machines Corporation.*

10.11      Replacement Consolidated Convertible Notes dated March 22, 1991
           issued to International Business Machines Corporation.*

10.12      Security Agreement dated as of March 22, 1991 between the Registrant
           and International Business Machines Corporation.*

10.13      Warrant dated March 22, 1991 issued to International Business
           Machines Corporation.*

10.14      License Agreement dated March 22, 1991 between the Registrant and
           International Business Machines Corporation.*

10.15      First Amendment dated as of May 20, 1993 to the License Agreement
           between the Registrant and International Business Machines
           Corporation.*

10.16      Maintenance and Support Agreement dated March 22, 1991 between the
           Registrant and International Business Machines Corporation.*

10.17      First Amendment dated as of May 20, 1993 to the Maintenance and
           Support Agreement between the Registrant and International Business
           Machines Corporation.*

10.18      Marketing Agreement dated March 22, 1991 between the Registrant and
           International Business Machines Corporation.*

10.19      Common Stock Purchase Agreement dated April 3, 1989 by and among
           Registrant and Retail Shopping International (Aust) Pty. Ltd.,
           Barclays Investment Pty. Ltd., and Peter R. Johnson.*

10.20      Business Loan Agreement dated May 30, 1990 between Registrant and
           Silicon Valley Bank as amended on June 3, 1993.*

10.22      Warrant dated July 16, 1992 issued to Steven D. Brooks.*

10.23      Warrant dated March 31, 1993 issued to Steven D. Brooks.*

10.24      #     Volume Discount Agreement dated December 16, 1991 between the
           Registrant and International Business Machines Corporation.*

10.25      Facilities and Cost Sharing Agreement dated May 1, 1993 between the
           Registrant and PRJ&, Inc.*

10.26      Data Center Services Agreement dated April 30, 1993 between the
           Registrant and PRJ&, Inc.*

10.27      Agreement and Plan of Merger dated May 20, 1993 among the Registrant,
           Uniquest Incorporated, PRJ Acquisition Corp. and PRJ&, Inc.*

10.28      Consent and Release Agreement dated as of May 20, 1993 among the
           Registrant, PRJ&, Inc., Peter R. Johnson, Uniquest Incorporated and
           International Business Machines Corporation.*

10.29      Separation Agreement dated May 1, 1993 between the Registrant and
           PRJ&, Inc.*

10.30      Assignment, Bill of Sale and Assumption Agreement dated as of May 20,
           1993 between the Registrant and PRJ&, Inc.*

10.31      Escrow Agreement dated May 20, 1993 among the Registrant, Uniquest
           Incorporated and Bank of America NT&SA.*

10.32      Pledge Agreement dated as of May 20, 1993 between the Registrant and
           International Business Machines Corporation.*

10.33      Agreement dated as of July 13, 1993 between the Registrant and
           International Business Machines Corporation.*

10.34      #      Advantis Industry Remarketer Agreement dated as of
                  January 6, 1994 between Advantis and the Registrant.**

10.35      Uniquest Forbearance Agreement between Uniquest Incorporated and the
           Registrant.**

10.36      #      International Remarketer Agreement dated as of
                  November 11, 1996 between Advantis and the Registrant.***

10.37      #      Employment Agreement dated as of February 6, 1997 between
                  Registrant and Lynn Hazlett.***


                                       52
<PAGE>

10.38      Reserved.

10.39      Fourth Amendment, dated August 7, 1997, to Lease Agreement between
           the Registrant and Marina Westshore Partners, LLC, successor in
           interest to Schooner Drive Association, a California Limited
           Partnership.****

10.40      Option Agreement dated August 7, 1997 between the Registrant and
           Marina Westshore Partners, LLC.****

10.41      #      Employment Agreement dated as of December 24, 1997 between
                  Registrant and John Simon.*****

10.42      #      Employment Agreement dated as of December 24, 1997 between
                  Registrant and Shawn O'Connor.*****

10.43      #      Retail Management Agreement dated as of December 31, 1997
                  between Registrant and International Business Machines
                  Corporation.*****

10.44      #      Business Partner Agreement dated December 31, 1997 between
                  Registrant and International Business Machines
                  Corporation.*****

10.45      1997 Non-Officer Stock Plan.*****

10.46      Non-qualified Deferred Compensation Plan.*****

10.47      ##     Employment Agreement dated as of March 8, 1999 between
                  Registrant and John Simon.

10.48      ##     Employment Agreement dated as of March 8, 1999 between
                  Registrant and Shawn O'Connor.

10.49      Fifth Amendment, dated November 20, 1998, to Lease Agreement between
           the Registrant and Marina Westshore Partners, LLC.

10.50      Lease Agreement, dated, May 15, 1998, between the Registrant and
           Marina Westshore Partners, LLC.

10.51      First Amendment, dated November 20, 1998, between the Registrant and
           Marina Westshore Partners, LLC

10.52      Lease Agreement, dated November 20, 1998, between the Registrant and
           Marina Bay Partners.

21.1       Subsidiaries of the Registrant

23.1       Consent of Deloitte & Touche LLP, Independent Auditors.

24.1       Power of Attorney (see page 44).

27.1       Financial Data Schedule

*          Incorporated by reference to Exhibit of same number of the
           Registrant's Registration Statement on Form S-1 (Registration No.
           33-63938).

**         Incorporated by reference to Exhibit of same number filed with the
           Registrant's Annual Report on Form 10-K for the year ended December
           31, 1994.

***        Incorporated by reference to Exhibit of same number filed with the
           Registrant's Annual Report on Form 10-K for the year ended December
           31, 1996.

****       Incorporated by reference to Exhibit of same number filed with the
           Registrant's Quarterly Report on Form 10-Q for the period ended
           September 30, 1997.

*****      Incorporated by reference to Exhibit of same number filed with the
           Registrant's Annual Report on Form 10-K for the year ended December
           31, 1997.

******     Incorporated by reference to Exhibit of same number filed with the
           Registrant's Quarterly Report on Form 10-Q for the year ended
           September 30, 1999.

#          Confidential treatment has been granted with respect to portions of
           this document.

##         Confidential treatment has been requested with respect to portions


                                       53
<PAGE>

SIGNATURES

In accordance with 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, on this 24th day of March, 2000.

                                 QRS CORPORATION


                          /s/  Peter Papano
                          -----------------------------------------------------
                          Peter Papano, Chief Financial Officer and Secretary

                                POWER OF ATTORNEY

Each person whose signature appears below hereby appoints Peter Papano, acting
alone, his true and lawful attorney-in-fact with authority to execute in the
name of each person, and to file with the Securities and Exchange Commission,
together with any exhibits thereto and other documents therewith, any and all
amendments to this Annual Report on Form 10-K for the fiscal year ended December
31, 1999 necessary or advisable to enable QRS Corporation to comply with the
Securities Exchange Act of 1934, any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, which amendments may make
such other changes in the report as the aforesaid attorney-in-fact executing the
same deems appropriate.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 has been signed
by the following persons in the capacities indicated and on the dates indicated.

SIGNATURE                                                                            DATE

/s/ John S. Simon                                                             March 24, 2000
--------------------------------------------------------------------
John S. Simon, Chief Executive Officer and Director

/s/ Peter R. Johnson                                                          March 24, 2000
--------------------------------------------------------------------
Peter R. Johnson, Chairman of the Board of Directors

/s/ Tania Amochaev                                                            March 24, 2000
--------------------------------------------------------------------
Tania Amochaev, Director

/s/ Steven D. Brooks                                                          March 24, 2000
--------------------------------------------------------------------
Steven D. Brooks, Director

/s/ David A. Cole                                                             March 24, 2000
--------------------------------------------------------------------
David A. Cole Director

/s/ John P. Dougall                                                           March 24, 2000
--------------------------------------------------------------------
John P. Dougall, Director

/s/ Philip Schlein                                                            March 24, 2000
--------------------------------------------------------------------
Philip Schlein, Director

/s/ Garen K. Staglin                                                          March 24, 2000
--------------------------------------------------------------------
Garen K. Staglin, Director

/s/ Garth Saloner                                                             March 24, 2000
--------------------------------------------------------------------
Garth Saloner, Director
</TABLE>


                                       54