<PAGE>

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

                                    FORM 10-Q

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

                  For the quarterly period ended JUNE 30, 2000

                                       OR

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

         For the transition period from _______________ to _______________

                         Commission file 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 Identification No.)
 incorporation or organization)

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

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

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

 X  YES         NO
---         ---

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

Classes of Common Stock                     Shares Outstanding at August 9, 2000
-----------------------------               ------------------------------------
Common Stock, $.001 par value               15,216,964

This document contains 17 pages.

The Exhibit listing appears on Page 16.


<PAGE>

                                 QRS CORPORATION
                                    FORM 10-Q
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>      <C>                                                                                                  <C>
NUMBER
------

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

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

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

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

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

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of
         Operations...........................................................................................   12

Item 3.  Quantitative and Qualitative Disclosures about Market Risk...........................................   14


PART II.   OTHER INFORMATION

Item 1.  Legal Proceedings....................................................................................   15

Item 2.  Changes in Securities and Use of Proceeds............................................................   15

Item 3.  Defaults upon Senior Securities......................................................................   15

Item 4.  Submission of Matters to a Vote of Security Holders..................................................   15

Item 5.  Other Information....................................................................................   15

Item 6.  Exhibits and Reports on Form 8-K.....................................................................   16


SIGNATURES....................................................................................................   17
</TABLE>

                                       2


<PAGE>

PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                          ASSETS

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

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

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

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

Deferred income tax assets ................................................................            --           1,156
Capitalized product development costs - net of accumulated amortization of $7,126 at
   June 30, 2000 and $5,293 at December 31, 1999 ..........................................         9,898           8,088
Intangible assets - net of accumulated amortization of $12,691 at June 30, 2000 and
   $2,221 at December 31, 1999 ............................................................       158,436          20,758
Other assets ..............................................................................         1,444           1,466
                                                                                              ------------    ------------

     Total ................................................................................   $   257,337     $   126,955
                                                                                              ============    ============

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

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

Deferred income taxes .....................................................................         9,585              --
Deferred acquisition cost .................................................................         3,500           1,000
Deferred rent and other ...................................................................         1,850           1,240
                                                                                              ------------    ------------

     Total liabilities ....................................................................        32,895          22,380
                                                                                              ------------    ------------

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

Stockholders' equity:
     Preferred stock - $.001 par value; 10,000,000 shares authorized; none issued and
       outstanding ........................................................................            --              --
     Common stock - $.001 par value; 60,000,000 shares authorized; 15,225,986 shares
       issued and 15,000,661 shares outstanding at June 30, 2000; and 13,674,533
       shares issued and 13,647,208 shares outstanding at December 31, 1999 ...............       240,321          86,971
     Treasury stock; 225,325 shares at June 30, 2000 and 27,325 shares at December 31, 1999        (5,530)           (526)
     Accumulated other comprehensive loss - unrealized loss on investments ................           (20)           (136)
     Retained (deficit) earnings ..........................................................       (11,497)         17,905
                                                                                              ------------    ------------
         Total Stockholders' equity .......................................................       223,274         104,214
                                                                                              ------------    ------------
        Total .............................................................................     $ 257,337       $ 126,955
                                                                                              ============    ============
</TABLE>

            See notes to condensed consolidated financial statements.

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                                  JUNE 30,                        JUNE 30,
                                                                       -----------------------------   ----------------------------
                                                                            2000           1999            2000            1999
                                                                       -------------   ------------    -------------   ------------

<S>                                                                    <C>             <C>              <C>            <C>
Revenues ...........................................................   $     36,491    $    29,540      $    71,601    $    58,884

Cost of revenue ....................................................         20,905         14,852           39,936         29,870
                                                                       -------------   ------------    -------------   ------------

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

Operating expenses:
     Sales and marketing ...........................................          7,120          3,844           14,034          8,253
     Product development ...........................................          1,652          2,089            3,611          4,084
     General and administrative ....................................          5,769          2,785           10,348          5,267
     Amortization of intangible assets .............................          6,896            141           10,470            304
     In-process research and development ...........................             --             --           24,882             --
                                                                       -------------   ------------    -------------   ------------
         Total operating expenses ..................................         21,437          8,859           63,345         17,908
                                                                       -------------   ------------    -------------   ------------

Operating earnings (loss) ..........................................         (5,851)         5,829          (31,680)        11,106

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

Earnings (loss) from continuing operations before income taxes
   and minority interest ...........................................         (5,420)         6,322          (30,852)        12,163

Income tax expense (benefit) .......................................             (9)         2,402             (925)         4,621

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

Net earnings (loss) ................................................         (5,081)         3,920          (29,402)         7,542
                                                                       -------------   ------------    -------------   ------------
Other comprehensive (losses):
     Unrealized gain (loss) from marketable securities
      available for sale............................................            135           (127)             116           (114)
                                                                       -------------   ------------    -------------   ------------

Total comprehensive earnings (loss) ................................   $     (4,946)   $     3,793     $    (29,286)   $     7,428
                                                                       =============   ============    =============   ============

Basic earnings (loss) per share ....................................   $      (0.34)   $      0.30     $      (1.99)   $      0.57
                                                                       =============   ============    =============   ============

Shares used to compute basic earnings (loss) per share .............     15,164,975     13,250,813       14,745,126     13,127,742
                                                                       =============   ============    =============   ============

Diluted earnings (loss) per share (Note 3) .........................   $      (0.34)   $      0.28     $      (1.99)   $      0.54
                                                                       =============   ============    =============   ============

Shares used to compute diluted earnings (loss) per share (Note 3) ..     15,164,975     14,050,777       14,745,126     13,902,699
                                                                       =============   ============    =============   ============


           See notes to condensed consolidated financial statements.
</TABLE>

                                       4


<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                               SIX MONTHS ENDED
                                                                                                                   JUNE 30,
                                                                                                           -------------------------
                                                                                                              2000           1999
                                                                                                           ----------     ----------
<S>                                                                                                        <C>            <C>
Operating activities:
     Net earnings (loss) ...............................................................................   $ (29,402)     $   7,542
     Adjustment to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
         Depreciation and amortization .................................................................      15,107          2,834
         Minority interest in subsidiary ...............................................................        (525)            --
         In-process research and development ...........................................................      24,882             --
         Loss from disposal of property and equipment ..................................................          96             92
     Changes in assets and liabilities, net of effects of acquisitions:
         Accounts receivable ...........................................................................       1,203             92
         Prepaid expenses and other ....................................................................        (720)           (37)
         Prepaid income taxes ..........................................................................        (942)            --
         Deferred income taxes .........................................................................          52            350
         Accounts payable ..............................................................................      (7,254)           660
         Deferred revenue ..............................................................................       1,482             --
         Deferred rent and other .......................................................................         313            (29)
         Income taxes payable ..........................................................................          --         (1,687)
         Other accrued liabilities .....................................................................      (4,224)           338
                                                                                                           ---------     ---------

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

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

         Net cash used in investing activities .........................................................     (12,845)        (7,311)
                                                                                                           ---------     ---------

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

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

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

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

     Working capital, other than cash ..................................................................   $  (5,691)
     Property and equipment ............................................................................         539
     Other assets ......................................................................................          97
     Goodwill ..........................................................................................     101,672
     Other intangible assets ...........................................................................      46,476
     In-process research and development ...............................................................      24,882
     Other non-current liabilities .....................................................................      (5,296)
     Fair value of stock options assumed in acquisitions ...............................................      (9,367)
     Deferred income taxes .............................................................................     (17,865)
     Less: Common stock issued in connection with acquisitions .........................................    (131,177)
                                                                                                           ---------
     Acquisitions, net of cash acquired of $730 and fair value of common stock issued ..................   $   4,270
                                                                                                           =========
</TABLE>

            See notes to condensed consolidated financial statements.


                                       5
<PAGE>

                                 QRS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.      GENERAL

        Our products and services are organized and marketed as a comprehensive
        suite of services, including Electronic Commerce Services, such as
        messaging, service bureau, outsourcing and connectivity; Content
        Services, consisting primarily of the Keystone catalog service, digital
        photography and price auditing services; Application Services, such as
        global sourcing services, inventory management, logistics management
        services, and Marketplace Services, consisting of set-price trading and
        auctions, and vendor showroom.

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

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

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

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

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

2.      ACQUISITIONS

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

                                       6

<PAGE>


        On January 21, 2000, Image Info Inc. (Image Info), a New York
        corporation merged with and into WS Acquisition Corp. (WSC), a
        wholly-owned subsidiary of ours that was formed in January 2000,
        pursuant to an Agreement and Plan of Merger, dated January 16, 2000
        among us, WSC and Image Info (Merger Agreement). The total acquisition
        cost was $51,340,182, comprised of $5,000,000 paid in cash; $5,000,000
        in deferred acquisition cost to the former shareholders of Image Info;
        440,914 shares of our common stock valued at $41,040,182; and
        transaction costs of approximately $300,000. Under the terms of the
        Merger Agreement, we agreed to pay $2,500,000 each in 2001 and 2002 to
        the former shareholders of Image Info if revenue from the acquired
        business meets or exceeds certain levels in 2000 and 2001. Management
        has determined, based on the results of its 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 purchase price related to each acquisition has been allocated to the
        acquired assets and assumed liabilities on the basis of their estimated
        fair values as of the date of the acquisition, as determined by an
        independent appraisal. The financial statements reflect the preliminary
        allocation of the purchase price, as estimates of certain direct costs
        and liabilities associated with the transaction have not yet been
        finalized. During the second quarter of 2000, the Company adjusted the
        opening balance sheet of Image Info to properly reflect deferred revenue
        from maintenance and other service obligations. 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>
                                                                  Rockport      Image Info        Total
                                                                 ----------     ----------      ---------
<S>                                                              <C>            <C>             <C>

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

               Preliminary allocation of purchase price:
               Goodwill .....................................     $  69,825      $  31,847      $ 101,672
               Current technology ...........................        18,818         17,486         36,304
               Customer list and trademark ..................         2,438          2,283          4,721
               Fair value of other intangible assets ........            --          1,700          1,700
               Assembled workforce ..........................         2,813            938          3,751
               In-process research and development ..........        15,443          9,439         24,882
               Accounts receivable ..........................         1,928          1,047          2,975
               Prepaid and other current assets .............           226              6            232
               Property and equipment .......................           217            322            539
               Other assets .................................            54             43             97
               Cash .........................................           730             --            730
               Deferred income taxes ........................        (9,228)        (8,637)       (17,865)
               Liabilities assumed ..........................        (2,310)        (5,134)        (7,444)
                                                                  ---------      ---------      ---------
                 Total allocation of purchase price .........     $ 100,954      $  51,340      $ 152,294
                                                                  =========      =========      =========
</TABLE>

         The amounts allocated to intangible assets will be amortized on a
         straight-line basis over estimated useful lives of three to seven
         years. The amounts allocated to in-process research and development of
         $24,882,000 were charged to expense during the six months ended June
         30, 2000 as technological feasibility had not been established and no
         alternative future uses existed for the research projects at the
         acquisition dates.

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

                                       7

<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 transactions been consummated
         on such dates, nor does it give effect to the synergies, cost savings
         and other charges expected to result from the acquisitions.
         Accordingly, the pro forma financial results do not purport to be
         indicative of our results of operations as of the date hereof or for
         any period ended on the date hereof or for any other future date or
         period. During the second quarter of 2000, the 1999 Image Info revenues
         and net loss were adjusted to properly reflect deferred revenue from
         maintenance and other service obligations.

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

<TABLE>
<CAPTION>
                                                                              Six Months Ended
                                                                                   June 30,
                                                                       -------------------------------
                                                                           2000               1999
                                                                       -------------      ------------
<S>                                                                    <C>                <C>
         Revenues.................................................     $     73,094       $     65,061

         Net loss.................................................     $    (32,469)      $    (27,788)
                                                                       =============      ============

         Basic and diluted loss per share (Note 3)................     $      (2.16)      $      (1.93)
                                                                       =============      ============

         Shares used to compute basic and diluted loss
          per share (Note 3)  ....................................       15,102,483         14,383,449
                                                                       ============       ============
</TABLE>

         Basic and diluted pro forma loss per share was calculated based on our
         outstanding common stock at June 30, 2000 and 1999, which reflects
         814,794 and 440,914 shares of our common stock issued in connection
         with the acquisition of RockPort and Image Info, respectively.

3.       EARNINGS (LOSS) PER SHARE

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

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

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                                  JUNE 30,                            JUNE 30,
                                                        ---------------------------         ---------------------------
                                                            2000            1999                2000           1999
                                                        ------------   ------------         ------------   ------------
<S>                                                     <C>            <C>                  <C>            <C>
       Shares used to compute basic EPS................  15,072,835     13,250,813           14,745,126     13,127,742

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

       Shares used to compute diluted EPS..............  15,072,835     14,050,777           14,745,126     13,902,699
                                                        ============   ============         ============   ============
</TABLE>

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

4.       COMMON STOCK AND STOCK OPTIONS

         On May 11, 2000, our shareholders approved an amendment to our
         Certificate of Incorporation to increase the number of shares of common
         stock available for issuance by an additional 40,000,000 to a total of
         60,000,000 shares, and approved a series of amendments to our 1993
         Stock Option/Stock Issuance Plan including an increase in the number of
         shares of common stock authorized

                                       8

<PAGE>


         for issuance over the term of the 1993 plan by an additional 800,000
         shares. On May 11, 2000, our Board of Directors authorized an increase
         in the number of shares of common stock available for issuance under
         our 1997 Special Non-Officer Stock Option Plan from 450,000 shares to
         675,000 shares.

5.       TREASURY STOCK

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

6.       COMMITMENTS AND CONTINGENCIES

         We entered into a Business Partner Agreement with IBM for the purchase
         of $250 million of network services over a three-year period commencing
         January 1, 1998. The agreement includes specified annual minimum
         purchases and a graduated adjustment charge if total purchases fall
         below the total minimum amount. Effective July 1, 1999, this agreement
         was modified and the termination date was extended by one year to
         December 31, 2001. The minimum gross 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.

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

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

7.       RELATED PARTY TRANSACTIONS

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

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

                                       9


<PAGE>

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

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

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

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

8.       SEGMENT INFORMATION

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

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

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

<TABLE>
<CAPTION>
                                                    QRS                                  INTERCOMPANY          TOTAL
                                                   OTHER                                 ELIMINATIONS          -----
                                                  PRODUCTS           TRADEWEAVE          ------------
                                                -----------          ----------
<S>                                             <C>                  <C>                 <C>                 <C>
       Revenues                                  $  71,601            $      -             $        -        $  71,601

       Operating loss                              (24,451)             (7,229)                     -          (31,680)


       Total assets                                248,884               8,235                    218*         257,337
</TABLE>

                                      10


<PAGE>

<TABLE>
<CAPTION>
                                                    QRS                                  INTERCOMPANY          TOTAL
                                                   OTHER                                 ELIMINATIONS          -----
                                                  PRODUCTS           TRADEWEAVE          ------------
                                                -----------          ----------
<S>                                             <C>                  <C>                 <C>                 <C>
       Depreciation and amortization                14,262                 845                      -           15,107

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

       Capitalized product development
       costs                                         1,273               2,370                      -            3,643
</TABLE>
----------
*      The intercompany elimination is comprised of advances made to Tradeweave
       and deferred tax liabilities.

                                      11


<PAGE>


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

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

        GENERAL

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

        RESULTS OF OPERATIONS

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

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

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

        Product development expenses consist primarily of personnel and
        equipment costs related to research, development and implementation of
        new services and enhancement of existing services. Product development
        expenses were $1.7 million for the second quarter of 2000 and
        $2.1 million for the second quarter of 1999. Product development
        expenses were $3.6 million for the first six months of 2000 and

                                      12


<PAGE>


        $4.1 million for the first six months of 1999. We capitalized product
        development costs of $1.7 million (including $1.1 million for
        Tradeweave) and $497,000 in the second quarters of 2000 and 1999,
        respectively. We capitalized product development cost of $3.6 million
        (including $2.4 million for Tradeweave) and $965,000 for the six months
        of 2000 and 1999, respectively. The increase in capitalized product
        development costs in 2000 reflects significantly higher research
        and development activities for products that have reached
        technological feasibility. General and administrative expenses
        consist primarily of the personnel and related costs of our finance
        and administrative organizations, as well as professional fees and
        other costs. General and administrative expenses were $5.8 million
        for the second quarter of 2000 compared to $2.8 million for the
        second quarter of 1999. General and administrative expenses were
        $10.3 million for the first six months of 2000 compared to
        $5.3 million for the first six months of 1999. This increase was
        primarily due to increased investments in infrastructure and
        increased headcount to support a larger organization, and included
        Tradeweave expenses of $480,000 and $850,000 for the three and six
        months ended June 30, 2000.

        In connection with the acquisition of RockPort and merger with Image
        Info (discussed in Note 2 of Notes to Condensed Consolidated Financial
        Statements), we expensed $24.9 million of in-process research and
        development. These acquisitions also resulted in $148.1 million of
        intangible assets, which are being amortized over estimated useful lives
        of three to seven years.

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

        We recorded an income tax benefit of $9,000 and $925,000 for the three
        and six months ended June 30, 2000, respectively. The tax benefit as a
        percentage of pre-tax loss reflects the non-deductibility of purchase
        accounting amounts related to the acquisitions of RockPort and Image
        Info. We recorded an income tax expense of $2.4 million and $4.6 million
        for the three and six months ended June 30, 1999, respectively. Our
        income tax rate for the three and six months ended June 30, 1999 was
        38%.

        LIQUIDITY AND CAPITAL RESOURCES

        Our working capital was $61.5 million at December 31, 1999 and $50.8
        million at June 30, 2000. Cash, cash equivalents and marketable
        securities decreased from $47.3 million at December 31, 1999 to $30.6
        million at June 30, 2000. Total assets increased from $127.0 million at
        December 31, 1999 to $257.3 million at June 30, 2000 and total
        liabilities increased from $22.4 million at December 31, 1999 to $32.9
        million at June 30, 2000.

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

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

        Management believes that the cash resources available at June 30, 2000
        and cash anticipated to be generated from future operations will be
        sufficient for us to meet our working capital needs, capital
        expenditures and common stock repurchases for the next year. We have not
        paid any cash dividends to date and do not intend to pay cash dividends
        with respect to common stock in the foreseeable future.

                                      13


<PAGE>


       ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       INTEREST RATE RISK

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

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

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

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

       Average interest rate                4.72%                4.72%


       FOREIGN CURRENCY RISK

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

                                      14

<PAGE>


PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
                  None

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

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
                  None

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

(a) The annual meeting of stockholders was held on May 11, 2000.

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

    David A. Cole, Garth Saloner and Garen Staglin.

    The following directors are continuing to serve their terms:

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

(c) The matters voted upon at the meeting and results of the voting with
    respect to those matters are as follows:

<TABLE>
<CAPTION>
                                           FOR           AGAINST        WITHHELD        NOT
                                                                                       VOTED
<S>                                     <C>              <C>            <C>
a.   Election of Directors:
     David A. Cole                      11,798,087                       51,383
     Garth Saloner                      11,811,774                       37,696
     Garen Staglin                      11,811,608                       37,862



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

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


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

</TABLE>

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

ITEM 5.  OTHER INFORMATION

                  None

                                      15


<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                  A. EXHIBITS
EXHIBIT
NUMBER            DESCRIPTION
27.1              Financial Data Schedule

                  B. REPORTS ON FORM 8-K

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

                                      16

<PAGE>


SIGNATURES

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

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


                               /s/ John S. Simon
                             ---------------------------------------------------
August 14, 2000              John S. Simon
                             Chief Executive Officer

                              /s/ Shawn M. O'Connor
                             ---------------------------------------------------
August 14, 2000              Shawn M. O'Connor
                             President, Chief Operating Officer, Interim Chief
                             Financial Officer and Secretary


                                      17