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 December 31, 1999
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 0-29672
FORECROSS CORPORATION
CALIFORNIA 94-2823882
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
90 NEW MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94105
Address of principal executive offices)
TELEPHONE: (415) 543-1515
(Registrant's telephone 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. Yes X No .
Shares outstanding of the Registrant's common stock:
Class Outstanding at December 31, 1999
Common Stock, no par value 12,691,944
<PAGE>
FORECROSS CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets December 31, 1999 (unaudited) and September 30, 1999
Statements of Operations (unaudited) for the three months ended
December 31, 1999 and 1998
Statements of Cash Flows (unaudited) for the three months ended
December 31, 1999 and 1998
Notes to Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Recent Sales of Unregistered Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature Page
Exhibit Index
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FORECROSS CORPORATION
BALANCE SHEETS
Dec.31, Sept. 30,
1999 1999
------------ -----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,019 $ 2,740
Accounts receivable, including unbilled receivables of $74,285
and $77,384, net of allowance of $45,000 and $45,000, respectively . . 411,940 375,893
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . 27,655 45,070
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 452,614 423,703
Equipment and furniture, net . . . . . . . . . . . . . . . . . . . . . 211,535 277,532
Notes receivable from others . . . . . . . . . . . . . . . . . . . . . 69,642 68,707
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,365 42,365
------------ -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 776,156 $ 812,307
============ ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 691,644 $ 631,479
Accrued compensation and related benefits . . . . . . . . . . . . . . 834,679 682,533
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 164,950 158,090
Accrued commissions and distributors' fees . . . . . . . . . . . . . . 1,731,571 1,514,650
Payable to factor . . . . . . . . . . . . . . . . . . . . . . . . . . 442,943 861,427
Accrued warranty costs . . . . . . . . . . . . . . . . . . . . . . . . 198,233 184,828
Capital lease obligations due within one year. . . . . . . . . . . . . 24,067 23,215
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 692,087 684,652
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . 4,780,174 4,740,874
Deferred revenue, less current portion . . . . . . . . . . . . . . . . 839,166 980,418
Notes payable to officers, net . . . . . . . . . . . . . . . . . . . 756,561 750,176
Capital lease obligations, less current portion. . . . . . . . . . . . 13,718 19,716
------------ -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 6,389,619 6,491,184
------------ -----------
Shareholders' deficit:
Common stock, no par value; authorized 20,000,000 shares; issued and
outstanding 12,691,944 and 12,191,944, respectively . . . . . . . . . 5,144,582 5,044,582
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . . (10,758,045) (10,723,459)
------------ -----------
Total shareholders' deficit. . . . . . . . . . . . . . . . . . . . . . (5,613,463) (5,678,877)
------------ -----------
Total liabilities and shareholders' deficit. . . . . . . . . . . . . $ 776,156 $ 812,307
============ ============
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FORECROSS CORPORATION
STATEMENTS OF OPERATIONS
For the Three Months Ended
December 31,
--------------------------
1999 1998
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net revenue:
Services and maintenance . . . . . . . . $ 1,280,654 $ 623,665
Software licenses and distributorship
fees-related parties . . . . . . . . . 136,251 136,250
------------ ------------
Total net revenue . . . . . . . . . . 1,416,905 759,915
Cost of services and maintenance
including fees to related parties of
$41,000,and $31,000 . . . . . . . . . 552,052 642,606
------------ ------------
Gross margin . . . . . . . . . . . . . . 864,853 117,309
------------ ------------
Operating expenses:
Sales and marketing including fees to
related parties of $123,000 and
$107,000 . . . . . . . . . . . . . . . 276,725 224,860
Research and development . . . . . . . . 198,391 218,038
General and administrative . . . . . . . 282,469 309,534
------------ ------------
Total operating expenses . . . . . . . . 757,585 752,432
------------ ------------
Income (loss) from operations . . . . . 107,268 (635,123)
Interest expense, net. . . . . . . . . . (141,854) (133,988)
------------ ------------
Income (loss) before provision for
income taxes . . . . . . . . . . . . . (34,586) (769,111)
Provision for income taxes . . . . . . . - -
------------ ------------
Net income (loss). . . . . . . . . . . $ (34,586) $ (769,111)
============ ============
Net income (loss) per share - basic
and diluted . . . . . . . . . . . . . $ (0.00) $ (0.07)
============ ============
Weighted average shares used in
computing per share data . . . . . . . 12,316,944 11,766,112
============ ============
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
FORECROSS CORPORATION
STATEMENTS OF CASH FLOWS
For the Three Months
Ended December 31,
1999 1998
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Increase (decrease) in cash resulting from:
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . $ (34,586) $ (769,111)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities-
Value of common stock issued and value
assigned to extension of warrant term. . . . - 38,250
Depreciation and amortization. . . . . . . . . 65,997 75,993
Deferred Compensation. . . . . . . . . . . . . 118,631 -
Changes in operating assets and liabilities-
Accounts receivable. . . . . . . . . . . . . . (36,047) 459,636
Other assets and accrued interest on notes
receivable from officers . . . . . . . . . . 16,480 (1,394)
Accounts payable and accrued liabilities . . . 364,422 25,697
Deferred revenue . . . . . . . . . . . . . . . (133,817) (23,567)
------------ ----------
Net cash provided by (used in)operating
activities . . . . . . . . . . . . . . . . . . 361,080 (194,496)
------------ ----------
Cash flows from investing activities:
Payments received on loans to key employees - 150
------------ ----------
Cash flows from financing activities:
Proceeds from factoring of accounts receivable 643,925 1,090,336
Repayment of borrowings under factoring
arrangement . . . . . . . . . . . . . . . . . (1,062,409) (879,379)
Repayment of borrowings under notes payable
-officers. . . . . . . . . . . . . . . . . . (27,171) (67,420)
Proceeds from capital lease obligations. . . . - -
Repayment of borrowings under capitalized leases (5,146) (5,196)
Net proceeds from issuance of common shares . 100,000 -
------------ ----------
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . (350,801) 138,341
------------ ----------
Net increase (decrease) in cash. . . . . . . 10,279 (56,005)
Cash at beginning of period. . . . . . . . . . 2,740 98,249
------------ ----------
Cash at end of period . . . . . . . . . . . . $ 13,019 $ 42,244
============ ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest . . . $ 79,427 $ 30,712
============ ==========
Supplemental disclosures of non-cash investing
and financing activities:
Accrued interest on notes payable to officers $ 34,088 $ 31,292
============ ==========
Value of common stock issued and assigned to
extension of warrant term in exchange for
surrender of certain demand registration
rights and certain other consideration $ - $ 38,250
============ ==========
</TABLE>
4
<PAGE>
FORECROSS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. UNAUDITED INTERIM FINANCIAL STATEMENTS:
The unaudited interim financial statements of Forecross Corporation have been
prepared in conformity with generally accepted accounting principles, consistent
in all material respects with those applied in the Annual Report on Form 10-K
for the year ended September 30, 1999. The interim financial information is
unaudited, but in the opinion of management, includes all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the information set forth therein. The interim financial statements should be
read in connection with the financial statements and notes in the Company's
Annual Report on Form 10-K for the year ended September 30, 1999.
2. BASIS OF PRESENTATION AND GOING CONCERN:
Through December 31, 1999, the Company had sustained recurring losses from
operations and, at December 31, 1999, had a net capital deficiency and a net
working capital deficiency. These conditions raise substantial doubt about the
ability of the Company to continue as a going concern. During the remainder of
fiscal 2000, the Company expects to meet its working capital and other cash
requirements with cash derived from operations, short-term receivables and other
financing as required, private placement of stock and software license fees from
organizations desiring access to the Company's various product offerings. The
Company's continued existence is dependent upon its ability to achieve and
maintain profitable operations by controlling expenses and obtaining additional
business. Management believes that the combination of increased automation of
its migration services, the creation and marketing of new products which utilize
technology developed for year 2000 renovation, continued cost control, and the
early signs of renewed customer interest in migration projects should improve
the Company's profitability in fiscal 2000. However, there can be no assurance
that the Company's efforts to achieve and maintain profitable operations
will be successful. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
DEPENDENCE ON YEAR 2000 REVENUE:
The Company's revenue in fiscal 1999 and 1998 and the first quarter of fiscal
2000 resulted in large part from demand for Assess/2000 and Complete/2000TM
services and licenses. Year 2000 services and related revenue were 85% of total
revenue in the three months ended December 31, 1999 as compared to 91% in the
three months ended December 31, 1998. It is unlikely, however, that there will
be any material revenue generated from year 2000 contracts after December 31,
1999.
The Company has experienced a decline in its core migration services business.
The Company considers this a temporary development resulting from the pressure
placed on many of its prospective customers to address their year 2000 problem
to the exclusion of most or all other non-mission-critical projects.
Nonetheless, it is the Company's strategy to leverage customer relationships
and knowledge of customer application systems derived from its year 2000
services solutions to continue to grow its migration and other products and
services beyond the year 2000 market. While the Company has observed some early
indication of some renewed customer interest in migration projects, there can be
no assurance that the Company will be successful in obtaining such projects or
that the Company's strategy will be successful, and should the Company be unable
to market other products and services as demand in the year 2000 market
ends, whether as a result of competition, technological change or other factors,
the Company's business, results of operations and financial condition will be
materially and adversely affected.
The Company markets its products and services to customers for managing the
maintenance and redevelopment of mission-critical computer software systems. The
Company's agreements with its customers typically contain provisions designed to
limit the Company's exposure to potential product and service liability claims.
It is possible, however, that the limitation of liability provisions contained
in the Company's customer agreements may not be effective as a result of
existing or future federal, state, local or foreign laws or ordinances or
unfavorable judicial decisions. Although the Company has not experienced any
material product or service liability claims to date, the sale and support of
its products and services may entail the risk of such claims, which could
be substantial in light of the use of its products and services in mission-
critical applications. A successful product or service liability claim brought
against the Company could have a material adverse effect upon the Company's
business, operating results and financial condition.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures;
contingent assets and liabilities at the date of the financial statements; and
the reported amounts of revenue and expenses during the reporting period.
Accordingly, actual results could differ from those estimates. The most
significant estimates subject to future uncertainties are those relating to
calculations of percentage of completion for projects in process and estimations
of warranty liability. It is at least reasonably possible that the significant
estimates used will change within a year.
RECLASSIFICATIONS:
Certain prior-year amounts have been reclassified to conform to current year
presentation.
5
<PAGE>
4. CONCENTRATIONS OF CREDIT RISK AND FOREIGN SALES:
The Company performs ongoing credit evaluations of its customers and generally
does not require collateral on accounts receivable as the majority of the
Company's customers are large, well-established companies. Three customers
accounted for approximately 46%, 17% and 13% of the accounts receivable
balance at December 31, 1999, and four customers accounted for approximately
30%, 18%, 16% and 13% at September 30, 1999. Additionally, four customers,
including revenue from the Company's Distributors treated as resulting from one
customer, accounted for approximately 35%, 23%, 11% and 10% of total revenue
for the three months ended December 31, 1999. Four customers accounted for
approximately 30%, 19%, 19% and 15% of total revenue for the three months
December 31, 1998. During the first quarter of fiscal year 2000, 23% of total
revenue came from services to a firm located in Canada.
5. COMMON STOCK:
In January 2000, the Company completed a private placement of 1,175,000 shares
of common stock at $0.20 per share, resulting in gross proceeds of $235,000.
As part of that placement, the Company sold 500,000 shares of common stock and
received $100,000 in gross proceeds in December 1999. While we anticipate
conducting an additional private placement of stock before April, 2000, it is
uncertain how much additional cash we will be able to raise, and whether such
amounts raised will be sufficient to fund our short-term working capital needs.
6. SUBSEQUENT EVENT:
On January 24, 2000, Forecross announced the signing of a contract with a large
educational institution located in the western United States, for the migration
of certain of its computer applications. The aggregate value of the contract
was $2,000,000.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
------- -------------------------------------------------
The following summary of our material activities for the three months ended
December 31, 1999 and 1998 is qualified by, and should be read in conjunction
with the financial statements and related notes and other information contained
in this report. The financial results reported herein do not indicate the
financial results that we may achieve in any future period.
Other than the historical facts contained herein, this Quarterly Report contains
statements that are forward-looking, such as statements relating to plans for
future activities. Such forward-looking information involves important risks and
uncertainties that could significantly affect results in the future and,
accordingly, such results may differ from those expressed in any forward-looking
statements made by or on our behalf. These risks and uncertainties include,
but are not limited to, those relating to our growth strategy, customer
concentration, outstanding indebtedness, dependence on expansion, activities of
competitors, changes in federal or state laws and the administration of such
laws, protection of trademarks and other proprietary rights and the general
condition of the economy and its effect on the securities markets. For a
discussion of such risks and uncertainties see our Annual Report on Form 10K for
the fiscal year ended September 30, 1999.
6
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1998
Revenue for the three months ended December 31, 1999 was $1,417,000 as
compared to $760,000 in the same period of 1998, an increase of 86%. This
increase in revenue for the period reflects the completion of all outstanding
year 2000 contracts prior to December 31, 1999, including one higher margin year
2000 renovation project, valued at over $500,000. Year 2000 services revenue was
$1,042,000 for the first quarter of fiscal 2000 as compared to $551,000 in the
corresponding 1999 quarter. Backlog was $282,000 at December 31, 1999, as
compared to $1,172,000 at September 30, 1999 and $242,000 at December 31, 1998.
The reduction in backlog since September 30, 1999 reflects the end of year 2000
work, and the continued postponement of migration projects by many potential
clients. Backlog comparisons in upcoming quarters will likely reflect a
substantial increase because migration contracts generally tend to be both
larger in value and longer in duration than year 2000 contracts. The average
application migration project takes from six to eighteen months to complete,
whereas the average year 2000 project was completed in ten weeks or less.
Therefore, revenue associated with year 2000 projects was often booked,
recognized and completed without appearing in the quarterly or annual backlog
amount.
Gross margin was $865,000 and $117,000 for the three months ended December 31,
1999 and 1998, respectively. Gross margin percentages were 61% and 15% for the
these periods. Revenue from our year 2000 products and services did not reach
the level anticipated by us or by the industry in general. During the months
prior to and including the December 1998 quarter, we had added and maintained
significant resources, in terms of both personnel and facilities, to address the
anticipated year 2000 business. However, the lower-than-anticipated level of
revenue adversely affected gross margins in 1998. Cost reduction efforts that we
implemented during the three months ended December 31, 1998 to correct this
situation have been extended through the following twelve months. Such
reductions included reduction in pay for certain members of management, not
replacing certain staff members upon their departures, and laying off certain
staff members who were hired in anticipation of substantially more year 2000
business than actually occurred. Accordingly, excess idle capacity costs
incurred in the 1998 quarter were significantly mitigated in the corresponding
1999 quarter. In addition, gross profit results were improved by the higher
margin renovation project referred to above.
Sales and marketing expenses were $277,000 in the three months ended December
31, 1999 as compared to $225,000 in the same period of 1998. Distributor fees
were $123,000 in 1999 quarter as compared to $107,000 in the corresponding 1998
quarter.
Research and development expenses decreased to $198,000 at December 31, 1999
from $218,000 in the corresponding quarter of 1998. Development efforts in the
1999 quarter generally related to enhancements to our migration products, while
work performed in the quarter ending December 31, 1998 related to upgrades to
our year 2000 analysis and renovation tools.
General and administrative expenses were $282,000 and $310,000, in the three
months ended December 31, 1999 and 1998, respectively. Legal and accounting fees
were reduced approximately $20,000 in the 1999 quarter as compared to the same
quarter of 1998.
Net interest expense was $142,000 for the three months ended December 31, 1999
as compared to $134,000 in the 1998 quarter, reflecting the increased use in
1999 of short-term receivables financing, loans from our senior officers, and
extended payment terms from our distributors to meet our working capital needs.
The overall net loss for the three months ended December 31, 1999 was $35,000
or $0.00 per share compared with a loss of $769,000 or $0.07 per share for the
three months ended December 31, 1998 (based on the weighted average number of
shares outstanding during the respective periods).
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Through December 31, 1999, we have sustained recurring losses from operations
and, at December 31, 1999, we had a net capital deficiency and a net working
capital deficiency. These conditions raise substantial doubts about our
ability to continue as a going concern. See Note 2 of Notes to Financial
Statements.
For the three months ended December 31, 1999, operations were funded through
cash derived from short-term receivables financing, funds received as part of
the sale of stock in private transactions, and an increase in accounts payables
and accruals. Also during the quarter we completed the remaining work on all
outstanding year 2000 contracts, and collected payment on most of the year 2000
receivables. With the passing of the January 1, 2000 deadline, we do not
anticipate having year 2000 contracts as a material source of future revenue or
working capital.
We need additional financing in order to meet our working capital requirements.
In order to provide cash for continuing our operations we completed the sale of
common stock through a private placement. A portion ($100,000) of funds was
made available in December 1999, and the remaining $135,000 was received in
January 2000. While we anticipate conducting an additional private placement
of stock before the end of April, 2000, it is uncertain how much additional cash
we will be able to raise, and whether such amounts raised will be sufficient to
fund our short-term working capital needs. If we are unable to raise funds
through a private placement we will be required to seek additional financing,
which may not be available on commercially favorable terms or at all.
We continue to use a factoring agreement with a financial organization that
allows us to obtain financing by borrowing against our accounts receivable on a
recourse basis. At December 31, 1999, $443,000 was outstanding under the
agreement and at September 30, 1999, $861,000 was outstanding. The agreement,
established in October 1995, may be terminated by either the factor or us at any
time.
We are aggressively pursuing new opportunities for migration services contracts
as companies begin to consider new migration projects, and we expect additional
revenue in the second quarter of fiscal 2000 from some of the migration
contracts currently under negotiation. We continue to closely monitor our
sales pipeline, work in progress, collections and cash requirements to determine
whether the existing sources of financing are adequate to support our operations
or whether additional means of financing, including debt or equity financing,
may be required to satisfy our working capital and other cash requirements.
We believe that if we can obtain the anticipated level of new business, continue
the use of short-term receivables financing, and successfully complete the
private placement of the Company's securities in the second quarter of the
fiscal year, we will have sufficient funds to meet our needs through the balance
of fiscal 2000. There can be no assurance, however, that cash from operations
and the other sources described above will be achieved or will be sufficient for
our needs.
We anticipate that our capital expenditures for fiscal 2000 will be
between $50,000 and $100,000.
YEAR 2000 COMPLIANCE
In the months preceding December 31, 1999, we conducted a project to identify
all computer hardware and software, other significant equipment, and services on
which we rely that may have been be impacted by the year 2000 problem. Based on
the results of this project, and the fact that the calendar has already moved
past January 1, 2000, we believe that the hardware, software, equipment and
services on which we rely are year-2000 compliant. We continue to monitor this
issue to ensure that no date-related issues arise due to end-of-month or end-of-
quarter.
8
<PAGE>
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Recent Sales of Unregistered Securities
In December 1999, Forecross issued an aggregate of 500,000
shares of common stock, no par value per share, in a private
placement completed in January 2000. The shares were issued at a
purchase price of $.20 per share for gross proceeds of $100,000 in
cash in December 1999. An additional $135,000 in gross proceeds
were received by the Company in January 2000. All of the purchasers
in the private placement were accredited investors. The shares of
common stock issued by Forecross were exempt from the registration
requirements of the Securities Act under Section 4(2) of the
Securities Act, as amended, and Regulation D promulgated
thereunder, as transactions by an issuer not involving a public
offering.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Report on Form 8-K
(a). Index and Description of Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- --------------------------------------------------------------------------------
<C> <S>
3.1+ Restated Articles of Incorporation
3.2+ By-Laws
10.1+ Lease Agreement, dated January 1, 1997
between the Company and The Canada Life Assurance Company
10.2+ Form of Indemnification Agreement entered into
between the Company and each of its officers and
directors
10.3+ 1993 Restricted Stock Purchase Plan
10.4+ 1994 Stock Option Plan and Form of Option Agreement
10.5* Exclusive Distributor Agreement between the
Company and Gardner Solution 2000, L.L.C., and
Amendment
10.6* Exclusive Distributor Agreement between the
Company and Y2K Solutions, L.P.,
10.7* Software License Agreement between the Company
and Y2K Solutions, L.P.
10.8+ Factoring Agreement, dated October 30, 1995, between
the Company and Silicon Valley Financial Services
10.9+ Lease Expansion Proposal dated November 17, 1997, between
the Company and The Canada Life Assurance Company
10.10+ Factoring Modification Agreement, dated January 13, 1998, between the Company
and Silicon Valley Financial Services
10.11* Exclusive Distributor Agreement between the Company and CY2K Solutions, L.L.C.
10.12* Software License Agreement between the Company and CY2K Solutions, L.L.C.
10.13* Exclusive Distributor Agreement between the Company and PY2K Solutions, L.L.C.
10.14* Software License Agreement between the Company and PY2K Solutions, L.L.C.
16.1+ Notice of Change of Auditor dated September 23, 1997, issued to all holders of
common shares of Forecross Corporation
9
<PAGE>
16.2+ Letter dated September 23, 1997 from BDO Seidman, LLP to the British Columbia
Securities Commission and to the Vancouver Stock Exchange confirming the
accuracy of the information contained in the Notice of Change of Auditor of
Forecross Corporation dated September 23, 1997
16.3+ Letter dated September 23, 1997 from Coopers & Lybrand, L.L.P. to the British
Columbia Securities Commission and to the Vancouver Stock Exchange confirming
the accuracy of the information contained in the Notice of Change of Auditor of
Forecross Corporation dated September 23, 1997
16.4+ Letter dated September 23, 1997 from the Board of Directors of Forecross
Corporation to the shareholders of Forecross Corporation, the British Columbia
Securities Commission and the Vancouver Stock Exchange confirming the review of
the Board of Directors of the Notice of Change of Auditor and the related letter
dated September 23, 1997 from BDO Seidman, LLP and Coopers & Lybrand,
L.L.P.
27.1 Financial Data Schedule, December 31, 1999
<FN>
+ Previously filed as part of the Company's Form 10/A, effective June 16, 1998.
* The Company has requested that certain portions of the documents be given
confidential treatment. The entire documents, including the redacted portions,
have been filed with the SEC.
</TABLE>
(b). Reports on Form 8-K
None
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Registrant
FORECROSS CORPORATION
February 22, 2000 BY: /S/ Bernadette C. Castello
---------------------------------
Bernadette C. Castello
Senior Vice President and Chief Financial Officer
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
BALANCE SHEET AS OF DECEMBER 31, 1999 AND THE STATEMENT OF OPERATIONS FOR THE
THREE MONTHS ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 13019
<SECURITIES> 0
<RECEIVABLES> 456940
<ALLOWANCES> 45000
<INVENTORY> 0
<CURRENT-ASSETS> 452614
<PP&E> 1240145
<DEPRECIATION> 1028609
<TOTAL-ASSETS> 776156
<CURRENT-LIABILITIES> 4780174
<BONDS> 0
<COMMON> 5144582
0
0
<OTHER-SE> (10758045)
<TOTAL-LIABILITY-AND-EQUITY> 776156
<SALES> 0
<TOTAL-REVENUES> 1416905
<CGS> 552052
<TOTAL-COSTS> 552052
<OTHER-EXPENSES> 757585
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 141854
<INCOME-PRETAX> (34586)
<INCOME-TAX> 0
<INCOME-CONTINUING> (34586)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (34586)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
