FORECROSS CORP, S-1/A, 2000-09-29

FORECROSS CORP
S-1/A, 2000-09-29
PREPACKAGED SOFTWARE

Previous: CALPINE CORP, S-3, EX-25.3, 2000-09-29

Next: FORECROSS CORP, S-1/A, EX-5.1, 2000-09-29

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 28, 2000
REGISTRATION NO. 333-75203
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________
AMENDMENT NO. 2 TO FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________
FORECROSS CORPORATION
(Exact name of Registrant as specified in its charter)

CALIFORNIA 7372 94-2823882
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)

90 NEW MONTGOMERY STREET
SAN FRANCISCO, CA 94105
TELEPHONE: (415) 543-1515; FACSIMILE: (415) 543-6701
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)

BERNADETTE C. CASTELLO
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
90 NEW MONTGOMERY STREET
SAN FRANCISCO, CA 94105
TELEPHONE: (415) 543-1515; FACSIMILE: (415) 543-6701

(Name, address, including zip code, and telephone
number, including area code,
of agent for service)
__________________

COPIES OF COMMUNICATIONS TO:
ANDREW J. COSENTINO, ESQ.
PIPER MARBURY RUDNICK & WOLFE LLP
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020-1104
TELEPHONE: (212) 835-6188; FACSIMILE: (212) 835-6001

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the securities act, please check the following box and list
the securities act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities act, check the following box and list the securities act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the securities act, check the following box and list the securities act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

__________________

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY OUR EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE AN AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

<PAGE>
PROSPECTUS

FORECROSS CORPORATION

3,153,102 SHARES OF COMMON STOCK AND 1,073,268 SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS

This prospectus relates to the sale of up to an aggregate of 4,226,370
shares of our common stock consisting of 3,153,102 shares of our common stock
and 1,073,268 shares of common stock to be issued upon exercise of warrants
which may be offered for sale from time to time by the selling stockholders
listed on pages 43-44.

This prospectus is filed to comply with our undertaking to register shares of
our common stock and shares issuable upon exercise of warrants issued in recent
private placements.

Our common stock is currently quoted on the Nasdaq OTC Bulletin Board under the
trading symbol "FRXX.OB." On September 27, 2000, the last sale price of our
common stock was $1.12 per share.

WE URGE YOU TO READ CAREFULLY THE "RISK FACTORS" SECTION BEGINNING ON PAGE 6
WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH AN INVESTMENT IN FORECROSS AND
THESE SECURITIES BEFORE YOU MAKE YOUR INVESTMENT DECISION.

___________________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

___________________________

THE DATE OF THIS PROSPECTUS IS SEPTEMBER __, 2000.

<PAGE>
TABLE OF CONTENTS

- 2 -
<PAGE>
PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding us and the securities being offered for sale by means of
this prospectus and our financial statements and notes to those statements
appearing elsewhere in this prospectus. The summary highlights information
contained elsewhere in this prospectus. It is not complete and may not contain
all of the information that you should consider before investing in our company.

Assess/2000, Renovate/2000, Confirm2000, and Complete/2000 are our
trademarks. This prospectus may also contain trade names or trademarks of other
companies.

FORECROSS CORPORATION

We develop, market and sell sophisticated software and associated services
to large computer-using organizations for the automated conversion of existing
business software applications to new computing environments. This conversion
process is usually referred to as migration from one software or hardware
platform to another. Our products are designed to automate, after various
individual parameters and options are established, up to 100% of the actual
migration from one database or source language to another. Our automated
processing contrasts with slower and more error-prone traditional migration
technologies which rely upon programmers replacing existing code manually on a
line-by-line basis. It has been our experience that 95% or more of the business
application programs commonly found in large computerized organizations can be
migrated with 100% automation. The remaining 5% can usually be processed with
80% or more automation. Migrated applications are functionally equivalent to
their unconverted counterparts, and, in our experience, maintainability and
performance in the new environment are typically unaffected or enhanced. Each
of our products includes a significant number of customization options which can
be selected by the user to achieve specific conversion objectives.

CORPORATE BACKGROUND

Our predecessor company, Jonescast, Inc., was organized in 1982 under the
laws of the State of California. Our principal executive offices are located at
90 New Montgomery Street, San Francisco, California 94105. Our telephone number
is (415) 543-1515 and our facsimile number is (415) 543-6701.

USE OF PROCEEDS

Other than the proceeds from the exercise of the warrants to purchase
shares of our common stock covered by this prospectus, we will not receive any
of the proceeds from the sale of the shares. The holders of the warrants are not
obligated to exercise their warrants, and we may not receive any proceeds from
this offering. Any proceeds we receive from the exercise of the warrants will be
used for working capital and general corporate purposes. See "Use of Proceeds"
on page 11.

RISK FACTORS

An investment in the securities involves a high degree of risk. Prospective
investors should carefully review the section entitled "Risk Factors" beginning
on page 6, as well as other information provided in this prospectus.

- 3 -
<PAGE>
THE OFFERING

Shares offered by the selling stockholders 3,153,102 shares of common stock and
1,073,268 shares of common stock
issuable upon exercise of warrants.

Dividend policy. . . . . . . . . . . . . . We intend to retain any earnings to
finance the development and growth
of our business. Accordingly, we do
not anticipate that we will declare
any cash dividends on our common
stock for the foreseeable future.
See "Dividend Policy" on page 12.

Nasdaq OTCBB trading symbol. . . . . . . . "FRXX.OB"

_____________________

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that have been made
pursuant to the provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are not historical facts, but rather
are based on our current expectations, estimates and projections about our
industry, our beliefs and assumptions. Words like "may," "could," "would,"
"will," "anticipates," "expects," "intends," "plans," "projects," "believes,"
"seeks," "estimates" and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to various risks, uncertainties and other factors,
some of which are beyond our control, are difficult to predict and could cause
actual results to differ materially from those expressed or forecasted in the
forward-looking statements.

These risks and uncertainties include, but are not limited to, those
relating to our growth strategy, working capital needs, customer concentration,
outstanding indebtedness, activities of competitors, changes in federal or state
laws and the administration of these laws, protection of trademarks and other
proprietary rights and the general condition of the economy and its effect on
the market for our products and services and on the securities markets.

Other risks and uncertainties are described in "Risk Factors" and elsewhere
in this prospectus. We caution you not to place undue reliance on these
forward-looking statements, which reflect our management's view only as of the
date of this prospectus. We are not obligated to update these statements or
publicly release the result of any revisions to them to reflect events or
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events.
_____________________

- 4 -
<PAGE>
SUMMARY FINANCIAL DATA

The summary financial data set forth below has been prepared in accordance with
generally accepted accounting principles, and is derived from the financial
statements and the notes to those statements appearing elsewhere in this
prospectus, except for the balance sheet data as of September 30, 1997 which
does not appear in this prospectus. The summary financial data set forth below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the historical financial
statements and notes included in this prospectus.

<TABLE>
<CAPTION>
Year Ended September 30, Nine Months Ended June 30,
---------------------------------------- ------------ ---------------
1999 1998 1997 2000 1999
------------ ------------ ------------ ------------ --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Total net revenues $ 3,460,351 $ 7,168,752 $ 5,775,038 $ 2,923,288 $ 2,623,656
Gross margin 714,618 2,749,405 2,408,430 1,952,288 724,256
Loss from operations (2,177,449) (2,022,742) (975,856) (1,118,994) (1,480,368)
Net loss (2,731,380) (2,328,652) (1,045,511) (1,395,715) (1,878,556)
Net loss per share - basic and
diluted $ (0.23) $ (0.20) $ (0.09) $ (0.10) $ (0.16)
Shares used in computing per
share data 12,060,919 11,761,920 11,681,035 13,620,528 12,021,611

September 30, June 30,
---------------------------------------- ------------
1999 1998 1997 2000
------------ ------------ ------------ ------------
(Unaudited)
Balance Sheet Data:
Cash and cash equivalents $ 2,740 $ 98,249 $ 275,243 $ 85,274
Working capital (deficit) (4,317,171) (1,735,813) 442,765 (1,125,756)
Total assets 812,307 1,995,719 3,301,051 862,149
Deferred revenue, long-term 980,418 1,545,417 2,110,417 556,668
Long-term debt and capital
lease obligations (net of
current portion) 769,892 673,059 - 3,189
Shareholders' deficit (5,678,877) (3,276,564) (995,912) (1,460,921)
</TABLE>

- 5 -
<PAGE>
RISK FACTORS

You should carefully consider the risks described below before making a
decision to invest in our company. If any of the following risks actually
occur, our business, financial condition or results of operations could be
materially adversely affected. If that happens, the trading price of our stock
could decline, and you may lose all or part of your investment. This prospectus
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in the
forward-looking statements as a result of many factors, including the risks we
face as described below and elsewhere in this prospectus.

WE HAVE INCURRED NET LOSSES SINCE COMMENCING BUSINESS AND MAY NOT ACHIEVE
PROFITABILITY

We have not historically been profitable. As of June 30, 2000, we have
suffered cumulative operating losses aggregating $12,119,174. We may not be
able to achieve profitability on a consistent basis or at all.

WE HAVE NEGATIVE WORKING CAPITAL AND MAY NEED TO RAISE ADDITIONAL CAPITAL IN THE
FUTURE IN ORDER TO CONTINUE AS A GOING CONCERN

At June 30, 2000, we had a net shareholder's deficit of $1,460,921, and a net
working capital deficiency of $1,125,756. Our working capital has fallen below
levels that were customary for our business previously. These conditions raise
substantial doubts about our ability to continue as a going concern. We may not
meet our working capital and other cash requirements with cash derived from
operations, short-term receivables and other financing as required. We also
must continue to improve the efficiency of our operations to achieve and
maintain positive cash flow from operations. If adequate funds are not
available when required or on acceptable terms, we may be required to delay,
scale back or eliminate our product development activities and sales and
marketing efforts. If this were to become necessary, it could adversely affect
our business, results of operations and prospectus.

THE PRICE OF OUR COMMON STOCK HAS HISTORICALLY BEEN HIGHLY VOLATILE, WHICH MAY
MAKE IT MORE DIFFICULT FOR YOU TO RESELL SHARES WHEN YOU WANT AT PRICES YOU FIND
ATTRACTIVE

Our stock price has been volatile since our initial public offering on the
Vancouver Stock Exchange in 1994. For example, during the 52-week period ended
June 30, 2000, the market price of our common stock ranged from $0.11 to $5.81.
We believe that our stock price may fluctuate in response to a number of
factors, including:

- quarterly fluctuations in the results of our operations;

- announcements of technological innovations or new products by us or our
competitors;

- changes in revenue or earnings estimates by securities analysts;

- changes in accounting principles or their application;

- new reports relating to trends in our markets; and

- the operating and stock performance of other companies that investors may
deem comparable.

- 6 -
<PAGE>
In addition, the stock market in general, and the market prices for
technology-related companies in particular, have experienced extreme volatility
that often has been unrelated to the operating performance of those companies.
These broad markets and industry fluctuations may adversely affect the price of
our common stock, regardless of our operating performance. Fluctuations in our
common stock price may, in turn, adversely affect our ability to attract and
retain qualified personnel, and to gain access to capital and financing if
needed.

OUR FUTURE REVENUES ARE UNPREDICTABLE AND OUR FINANCIAL RESULTS MAY FLUCTUATE

We have experienced quarterly and other fluctuations in revenues and operating
results and expect these fluctuations to continue in the future. We believe
that these fluctuations have been attributable, in significant part, to:

- the timing, size and nature of our contracts with our customers;

- the performance of our distributors;

- the timing of the introduction of new products or services by our
competitors;

- the decision of potential customers to perform projects using internal
resources;

- changes in our operating expenses;

- personnel changes; and

- fluctuations in economic and financial market conditions.

Our expenses are to a large extent fixed. We may not be able to adjust our
spending quickly if our revenues fall short of our expectations. Further, we
may make pricing, purchasing, service, marketing, acquisition or financing
decisions that could adversely affect our business results. Accordingly, any
significant shortfall in revenue relative to our expectations would have an
immediate and material adverse effect on our business.

WE BEAR THE RISK OF CONTRACTUAL COST OVERRUNS WHICH COULD ADVERSELY AFFECT OUR
CASH FLOWS

Most of our migration contracts are for a fixed fee. Although the contracts
contain provisions allowing us to charge additional fees to our customers in the
event that unanticipated or "out of scope" work must be done, we nevertheless
bear the risk of cost overruns. Material cost overruns on our contracts could
adversely affect our cash flows which would impact negatively on our liquidity
and business.

OUR OPERATING RESULTS COULD VARY UNEXPECTEDLY IF WE INACCURATELY ESTIMATE
CONTRACT COMPLETION COSTS

A significant percentage of our revenue that is derived from migration contracts
is recognized on the percentage-of-completion method, which requires revenue to
be recorded over the term of the contract. A loss is recorded at the time when
current estimates of project costs exceed unrecognized revenue. Our operating
results may be adversely affected by inaccurate estimates of contract completion
costs.

FUTURE PRODUCTS OR THE OCCURRENCE OF EVENTS OR CIRCUMSTANCES WHICH REDUCE THE
ADVANTAGES OF MIGRATION USING HIGHLY AUTOMATED SOFTWARE PROCESSES COULD REDUCE
THE COMPETITIVENESS OF OUR PRODUCTS

- 7 -
<PAGE>
We are not currently aware of any direct competitors that license, use or sell
fully automated, near-complete migration software, although we are aware of some
vendors who offer or use migration software which is less automated than our
own. However, other software developers and vendors may create software
directed at our market. If this should happen, or if the costs and risks
associated with an enterprise rewriting its business applications for the new
technologies are otherwise significantly reduced, it is possible that
significantly fewer enterprises will choose the migration alternative using our
products which would impact negatively on our revenues and business.

MANY ACTUAL AND POTENTIAL COMPETITORS FOR MIGRATION PROJECTS HAVE STRONGER BRAND
NAMES AND GREATER RESOURCES THAN WE HAVE WHICH COULD ALLOW THEM TO TAKE MARKET
SHARE FROM US

We have competitors in the form of service organizations, including accounting
and computer consulting companies, which provide a combination of automated and
manual conversion. Many of those organizations have substantially greater human
and financial resources, and greater brand recognition, than we do. These
companies may have significant competitive advantages through other lines of
business and existing business relationships which may cause potential or
current customers to use their products and services instead of ours.

WE DEPEND ON A SMALL NUMBER OF CUSTOMERS AND A RELATIVELY SMALL NUMBER OF
PROJECTS FOR OUR REVENUES WHICH MEANS THAT THE LOSS OF ONE CUSTOMER MAY HAVE AN
ADVERSE IMPACT ON OUR BUSINESS

The results of our operations are attributable to a limited number of orders,
the average size of which is approximately $500,000. During the year ended
September 30, 1999, Harris Trust (16%), our distributors, when treated as one
customer (16%), Brown Brothers Harriman & Company (12%), ACS (11%) and Sapiens
(11%) represented 66% of total revenues. The president and chief executive
officer of one of our distributors, Gardner Solutions 2000, L.L.C., is also the
chief executive officer of Y2K Solutions, L.P., CY2K Solutions, L.L.C. and PY2K
Solutions, L.L.C., our other distributors. During the year needed September 30,
1998, Brown Brothers Harriman & Company (40%), Charles Schwab & Co., Inc. (12%),
and our distributors, when treated as one customer (10%), represented 62% of
total revenues. During the fiscal year ended September 30, 1997, our
distributors, treated as one customer (17%), NCR Corporation (15%), Aetna Life
Insurance Company (11%) and Brown Brothers Harriman & Company (10%) represented
53% of total revenues. The loss or deferral of one or more significant sale(s)
or failure to collect on a significant accounts receivable from any customer
could cause substantial fluctuations in our results of operations. While we
believe that the market for our migration services will offer the opportunity to
expand the number of customers and projects in process at any given time, we may
not be successful in our sales efforts or there may be a weakening in customer
demand which would have an immediate material adverse effect on our business and
results of operations.

THE MARKET DEMAND FOR OUR PRODUCTS MAY BE MORE LIMITED THAN WE ESTIMATE WHICH
COULD AFFECT OUR ABILITY TO GROW THE BUSINESS AND BECOME PROFITABLE

- 8 -
<PAGE>
The market for our migration products may be smaller than we project, whether
because companies in the marketplace elect for budgetary or other reasons not to
pursue automated migration or any other form of software conversion, or business
they do so at a rate that is much lower than we expect. Any decrease in the
demand for our products would decrease our revenues, cash flows and operations.

OUR MARKETING STRATEGY MAY BE UNSUCCESSFUL, WHICH COULD IMPACT NEGATIVELY ON OUR
BUSINESS IF WE DO NOT ATTRACT ENOUGH CUSTOMERS

We market our migration products and services directly. Successful
implementation of the marketing plan requires, among other things, that our
sales and marketing personnel clearly communicate to potential customers our
ability to complete migration projects successfully. Our sales and marketing
personnel may not have the necessary understanding of the technology and the
marketplace and communication skills to implement this marketing strategy
successfully. In addition, our marketing strategy might otherwise be
unsuccessful. If our marketing strategy is unsuccessful, we may not attract the
necessary customers to execute our business plan.

WE MAY HAVE SIGNIFICANT EXPOSURE TO PRODUCT AND SERVICE LIABILITY CLAIMS WHICH
COULD RESULT IN PAYMENTS TO SETTLE CLAIMS AND/OR THE DIVERSION OF MANAGEMENT'S
ATTENTION FROM OPERATING THE BUSINESS

We market our products and services to customers for managing the migration of
mission-critical computer software systems. Our agreements with our customers
typically contain provisions designed to limit our exposure to potential product
and service liability claims. It is possible, however, that the limitation of
liability provisions contained in our 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. We have not experienced any
material product or service liability claims to date but the sale and support of
our products and services may entail the risk of these claims. We do not
presently maintain insurance coverage for our products and services and a
successful product or service liability claim brought against us could have a
material adverse effect on our business, operating results and financial
condition.

WE MAY BE UNABLE TO FULFILL MARKET REQUIREMENTS FOR THE DEVELOPMENT OF COMPLEX
COMPUTER SOFTWARE AND POTENTIALLY LOSE MARKET SHARE OF OUR BUSINESS

The development of the complex, large-scale, multiple environment computer
software required in our business presents a difficult engineering challenge.
It is possible that we may not be able to continue to develop products
responsive to market requirements on a timely or cost-effective basis, or at
all. If that should happen, there is a risk that other competing products might
be launched earlier and capture a significant part of the market we target.

WE MAY REQUIRE ADDITIONAL MANAGEMENT TO SUCCESSFULLY GROW OUR BUSINESS

The present management has been responsible for the growth of the business to
date, but does not have significant experience in managing the growth of
maturing businesses. The competition for personnel with the required skills is
intense, and we may not be able to locate, attract and retain management
personnel. Failure to do so could have an adverse impact on our business.

- 9 -
<PAGE>

OUR DIRECTORS AND OFFICERS EXERCISE SIGNIFICANT INFLUENCE OVER OUR COMPANY

As of June 30, 2000, our current directors and officers beneficially own
approximately 20% of our outstanding common shares. As a result, our current
directors and officers will continue to exercise significant influence over
the affairs of Forecross.

WE DEPEND ON OUR ABILITY TO RETAIN KEY PERSONNEL AND ATTRACT NEW QUALIFIED
PERSONNEL

Our progress to date has to a significant extent been dependent on the skills of
key personnel, including Kim O. Jones and Bernadette C. Castello, the founders
and principal shareholders and, respectively, the president and chief executive
officer, and the senior vice president and chief financial officer of Forecross.
We have not entered into employment contracts with these or any other members of
management or other employees. In addition, competition for highly skilled
technical, management, financial, marketing and sales, and other personnel in
the computer industry is intense. Loss of the services of any of our present
key personnel, or an inability to attract and retain needed additional personnel
could have a materially adverse effect on us. In addition, we sometimes rely on
qualified, experienced subcontractors to support our migration services. The
inability to find and retain sufficient qualified subcontractors may adversely
impact our operations.

WE MAY BE UNABLE TO PROTECT THE INTELLECTUAL PROPERTY WHICH IS CRUCIAL TO OUR
BUSINESS

The protection of our intellectual property rights in our software and operating
methodology is crucial to our business. We may not be able to adequately
protect our products and technologies by law and contract against infringement
by others. In addition, monitoring and identifying unauthorized use of our
technology may prove to be difficult for us. The cost, distraction, and time
required to do so, including litigation against possible infringers, may be so
substantial as to frustrate our ability to guard adequately against
infringement.

OTHER COMPANIES MAY CLAIM WE ARE INFRINGING UPON THEIR PROPRIETARY TECHNOLOGY.
THESE CLAIMS ARE COSTLY TO DEFEND AND COULD LIMIT OUR ABILITY TO USE VARIOUS
TECHNOLOGIES IN THE FUTURE

Given the nature of our business, third parties may bring infringement claims
against us or claim that our use of various technologies violates a patent. We
are not aware of any claims. However, any claim of infringement, with or
without merit, could be time consuming to defend, result in costly litigation,
divert management attention, require us to enter into costly royalty or
licensing arrangements or prevent us from using important technologies or
methods. If any of those conditions should occur, our business and financial
condition could be materially and adversely affected.

SINCE COMPANIES LOOK TO CUT COSTS IN THEIR MIS DEPARTMENT, GENERAL ECONOMIC AND
MARKET CONDITIONS MAY AFFECT OUR BUSINESS SIGNIFICANTLY

Our products are designed for large organizations which typically make
significant investments in their MIS departments. Expenditures by organizations
on their MIS departments tend to vary in cycles that reflect overall economic
conditions. Our business is, therefore, vulnerable to variations in economic
conditions generally, or to those variations which affect the economic prospects
of corporations and organizations in our target market, and which could affect
the capital spending or budget cycles of prospective customers.

- 10 -
<PAGE>
VARIOUS EVENTS COULD RESULT IN A DILUTION OF YOUR OWNERSHIP OF OUR COMMON STOCK

As of June 30, 2000, we had 15,053,380 shares of common stock outstanding and
2,185,368 potential common stock shares including warrants and stock options.
The exercise prices of the common stock equivalents range from $0.58 to $11.50
per share. These securities also provide for antidilution protection upon the
occurrence of stock splits, redemptions, mergers and other similar transactions.
If one or more of these events occurs, then the number of shares of our common
stock that may be acquired upon exercise would increase. If exercised, these
securities will result in a dilution to your percentage ownership of our common
stock.

NET OPERATING LOSS CARRYFORWARDS OF FORECROSS MAY BE SEVERELY LIMITED

Forecross's Federal and State loss carryforwards were approximately $8,013,000
and $3,936,000, respectively, as of June, 2000. These net operating loss
carryforwards expire at various dates through 2015 and under Section 382 of the
Internal Revenue Code may be limited due to ownership changes. Future stock
issuances may result in an ownership change of Forecross under Section 382.
Section 382 contains rules that limit the ability of a company to offset
pre-ownership change net operating losses and credit carryovers against
post-ownership change taxable income when voting ownership changes by more than
50% in any three-year period. As a result, our net operating loss carryforwards
could be severely limited in the future for use to offset any of our income in
any particular year.

USE OF PROCEEDS

We will not receive any of the proceeds of this offering. However, an
aggregate of up to 1,073,268 shares of common stock, subject to adjustment
for stock dividends, splits, reverse splits, recapitalizations or other similar
transactions, covered by this prospectus are issuable upon the exercise of
warrants. The holders of the warrants are not obligated to exercise their
warrants. If the warrants are exercised in full by payment of their respective
stated exercise prices in cash, then we will receive gross proceeds of
approximately $2,784,000 from the exercise of the warrants, which we will use
for working capital and general corporate purposes.

Expenses we are expected to incur in connection with this registration are
estimated at approximately $75,000. The selling stockholders will pay all of
their underwriting commissions and discounts and counsel fees and expenses in
connection with the sale of the shares covered by this prospectus.

- 11 -
<PAGE>
DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the development
and expansion of our business and, therefore, we do not anticipate declaring or
paying any cash dividends on our common stock in the foreseeable future. Our
payment of cash dividends, if any, will depend upon our general financial
condition and other factors deemed relevant by our board of directors.

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2000.
You should read this information in conjunction with our financial statements
and the notes to those financial statements included elsewhere in this
prospectus, and with the section entitled "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

June 30, 2000
---------------

Common stock no par value; 20,000,000 shares
authorized, 15,053,380 shares issued and outstanding $ 9,677,253
Additional Paid-in Capital 981,000
Accumulated deficit (12,119,174)
---------------
Total capitalization $ (1,460,921)
===============

- 12 -
<PAGE>
SELECTED FINANCIAL DATA

The selected financial data set forth below with respect to the fiscal years
ended September 30, 1999, 1998 and 1997 and the balance sheet data at September
30, 1999 and 1998 are derived from the audited financial statements included
elsewhere in this prospectus. The financial data for the years ended September
30, 1996 and 1995 and the balance sheet data at September 30, 1997, 1996 and
1995 are derived from audited financial statements not included in this
prospectus. The financial data for the nine-month periods ended June 30, 2000
and 1999, and the balance sheet data at June 30, 2000, are derived from
unaudited financial statements included elsewhere in this prospectus. The
unaudited financial statements have been prepared on the same basis as the
audited financial statements and, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the information set forth in those statements. The operating
results for the nine months ended June 30, 2000 are not necessarily indicative
of the results that may be expected for the year ending September 30, 2000 or
any other future period. The information set forth below should be read in
conjunction with the audited financial statements and notes included elsewhere
in this prospectus and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" following this table.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------------------- ------------ --------------------------
1999 1998 1997 1996 1995 2000 1999
------------ ------------ ------------ ------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>

STATEMENTS OF OPERATIONS DATA:
Net revenues:
Services and maintenance $2,915,347 $6,623,752 $4,930,456 $2,199,672 $1,445,009 $2,514,541 $2,214,903
Software licenses and
distributorship fees
-related parties 545,004 545,000 844,582 200,000 10,071 408,747 408,753
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total net revenues 3,460,351 7,168,752 5,775,038 2,399,672 1,455,080 2,923,288 2,623,656
Cost of services and
maintenance 2,745,733 4,419,347 3,366,608 1,431,489 738,986 971,000 1,899,400
------------ ------------ ------------ ------------ ------------ ------------ ------------
Gross margin 714,618 2,749,405 2,408,430 968,183 716,094 1,952,288 724,256
------------ ------------ ------------ ------------ ------------ ------------ ------------
Operating expenses:
Sales and marketing 1,047,300 1,838,126 1,490,479 711,545 685,360 523,800 766,899
Research and development 728,239 1,520,709 1,006,768 253,743 358,133 728,472 574,684
General and administrative 1,116,528 1,413,312 887,039 332,500 446,031 1,819,010 863,041
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses 2,892,067 4,772,147 3,384,286 1,297,788 1,489,524 3,071,282 2,204,624
------------ ------------ ------------ ------------ ------------ ------------ ------------
Loss from operations (2,177,449) (2,022,742) (975,856) (329,605) (773,430) (1,118,994) 1,480,368
Interest and other
(expense), net (553,131) (305,110) (68,855) (129,141) (37,720) (275,921) (397,388)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Loss before provision
for income taxes (2,730,580) (2,327,852) (1,044,711) (458,746) (811,150) (1,394,915) (1,877,756)
Provision for income taxes (800) (800) (800) (2,300) (31,616) (800) (800)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net loss $(2,731,380) $(2,328,652) $(1,045,511) $ (461,046) $ (842,766) $(1,395,751) $(1,878,556)
============ ============ ============ ============ ============ ============ ============

Net loss per share -
basic and diluted $ (0.23) $ (0.20) $ (0.90) $ (0.04) $ (0.08) $ (0.10) $ (0.16)
============ ============ ============ ============ ============ ============ ============
Dividends - - - - - - -
============ ============ ============ ============ ============ ============ ============
Shares used in computing per
share data 12,060,919 11,761,920 11,681,035 11,370,804 10,344,934 13,620,528 12,021,611
BALANCE SHEET DATA:
Cash and cash equivalents $ 2,740 $ 98,249 $ 275,243 $ 99,427 $ 14,474 $ 85,274
Working capital (deficit) (4,317,171) (1,735,813) 442,765 (1,077,531) (890,040) (1,125,756)
Total assets 812,307 1,995,719 3,301,051 726,896 410,801 862,149
Deferred revenue, long-term 980,418 1,545,417 2,110,417 - - 556,668
Long-term debt and capital
lease obligations 769,892 673,059 - 223,923 262,593 3,189
Shareholders' deficit (5,678,877) (3,276,564) (995,912) (1,120,649) (999,092) (1,460,921)
</TABLE>

- 13 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations includes forward-looking statements with respect to
our future financial performance. These forward-looking statements are subject
to various risks and uncertainties, including the factors described under "Risk
Factors" and elsewhere in this prospectus, that could cause our actual results
to differ materially from historical results or those currently anticipated.

The following summary of our material activities for the years ended
September 30, 1999, 1998 and 1997, and the nine-month periods ended June 30,
2000 and 1999, are qualified by, and should be read in conjunction with, the
financial statements and accompanying notes to the financial statements included
at the end of this prospectus. Each recipient of this prospectus is urged to
read this prospectus in its entirety.

BACKGROUND AND OVERVIEW

From the commencement of operations of our predecessor companies in June
1982, the goal of our business has been to focus a small group of skilled
technicians on providing automated solutions to the specialized niche
requirements of the MIS departments of medium to large enterprise computing
organizations seeking to adopt their business applications software to a
changing technology, economic and business environment.

From 1982 through 1988, we developed and licensed specialized migration
software products to service providers and other software vendors for delivery
to the MIS marketplace. Our customers during this period included Price
Waterhouse, LLP, KPMG Peat Marwick, IBM Corporation, On-Line Software
International, Inc., Pansophic Systems, Inc., Fujitsu, Ltd., Sterling Software
and Cincom Systems, Inc.

From 1989 through 1992, our revenues were derived from software development
contracts with other software vendors, royalties from various consulting firms,
and software product license fees. At the same time, we continued to develop
additional commercial migration software products.

From 1992 through 1997, we developed and implemented a strategy of using
internal sales and marketing resources instead of relying on third parties, and
focused on pursing migration services contracts as compared to the previous
focus on development contracts. Major customers using our migration services
have included Bank of Montreal, Bear Stearns & Co. Inc., Kimberly Clark
Corporation, New Brunswick Telephone and Union Gas Limited.

In addition to the migration services contracts, and in response to our
customers' year 2000 migration demands and using the technology we had developed
over the past fifteen years, during 1996 and 1997 and we introduced our
Complete/2000 software products and related services and methodologies. In June
1996, we authorized our first exclusive distributorship and sold our first
software license for the Assess/2000 product. Initial customer projects
commenced during fiscal 1997. During 1997, additional sets of Assess/2000
licenses were sold, additional exclusive distributorships were authorized, and
additional customer projects were signed and commenced. We recognize the fees
associated with exclusivity, software licenses, technical training and
maintenance and support over the contractual term.

- 14 -
<PAGE>

In 1999, we commenced the development of additional tools that serve to
extend our offerings in the legacy migration area. These tools include a product
for testing the migrated applications, a tool for ensuring that application
standards and rules remain in force as the applications are maintained and a
suite of tools aimed at moving legacy applications to the internet. Called
L2X-SmartXML, these tools provide the native software infrastructure to enable
large-scale commerce projects to succeed with a second generation technical
solution. SmartXML inserts the functionality for XML data exchange directly into
mainframe programs, eliminating middleware, decreasing costs and increasing
business flexibility. SmartXML consists of a suite of software modules
applicable to mainframe CICS programs, batch programs, reports, data file
exchanges and support for mainframe programmers. SmartXML is available now as a
part of our product and service offerings. We currently intend to commercialize
these tools and offer product licenses to them to our customers.

RESULTS OF OPERATIONS

NINE MONTHS ENDED JUNE 30, 2000 COMPARED TO NINE MONTHS ENDED JUNE 30, 1999

Total revenue for the nine months ended June 30, 2000 was $2,923,000 as
compared to $2,624,000 for the same period of 1999, an increase of 11. Year
2000 services revenue was $1,072,000 as compared to $1,831,000 for the same
period of 1999.

Migration services revenue was $1,213,000 as compared to $241,000 a year
ago. Revenue from consulting totaled $229,000 as compared to $143,000 in 1999,
and revenue from the amortization of deferred year 2000 distributor licenses and
fees remained at $409,000 for both year-to-date periods.

Gross margin was $1,952,000 and $724,000 for the nine months ended June 30,
2000 and 1999, respectively. Gross margin percentages were 67% and 28% for these
periods. The increased gross margin percentage was due to reductions in cost of
revenue and reflects, in part, efforts over the past year to control costs and
improve efficiencies through attrition and by adjusting staff levels for the
reduction and end of year 20000 business.

Sales and marketing expenses were $524,000 for the nine months ended June
30, 2000 as compared to $766,000 for the same period of 1999. Distributor
commissions were $55,000 compared to $333,000 for the previous year.

Year-to-date research and development expenses were $728,000 as compared to
$575,000 in the prior year, which reflect the increase in development efforts in
2000 for enhancements to our migration products and new XML-related offerings.

- 15 -
<PAGE>
General and administrative expenses were $1,819,000 and $863,000, for the
respective year-to-date periods. Most of this increase in 2000 was due to the
non-recurring $954,000 non-cash compensation expense related to the issuance of
common stock and warrants in a March 31, 2000 private placement.

Net interest and other expense was $276,000 for the nine months ended June
30, 2000 as compared to $397,000 in 1999. This reduction reflects the benefit
of the conversion of much of our non-bank debt to equity in March 2000.

The overall net loss for the nine months ended June 30, 2000 was $1,396,000
or $0.10 per share compared with a loss of $1,879,000 or $0.16 per share for the
nine months ended June 30, 1999, based on the weighted average number of shares
outstanding during the respective periods.

YEAR ENDED SEPTEMBER 30, 1999 COMPARED TO YEAR ENDED SEPTEMBER 30, 1998

Revenue for the year ended September 30, 1999 was $3,460,000 as compared to
$7,169,000 for the same period in 1998, a decrease of $3,709,000 or 52%. The
components of this reduction were a decrease in migration services revenue of
$2,287,000 and a decrease in year 2000 services revenue of $1,422,000. While it
is possible that we may obtain additional year 2000 business in fiscal year
2000, it is not likely that our future revenues will consist materially of year
2000 revenues. One project, which began in 1997 and was completed in February
1999, and which involved both migration and year 2000 services, provided
$386,000 in revenue in 1999 compared to $2,804,000 in 1998. Also contributing
to the reduced year 2000 revenue was the fact that the majority of year 2000
projects completed in 1999 were the lower priced and less difficult confirmation
audits rather than renovations. Backlog was $1,172,000 at September 30, 1999 as
compared to $531,000 at September 30, 1998.

The increase in backlog is attributable primarily to the signing of several
contracts near the end of September 1999, including a consulting project for
$200,000 and a migration project for $150,000. Because year 2000 contracts,
unlike application migration projects, are generally of much shorter duration,
typically completed in eight weeks or less, a project may be booked, recognized
and completed without appearing in the quarterly or annual backlog amount.

Gross margin was $715,000 and $2,749,000 in 1999 and 1998, respectively.
The gross margin percentage was 21% in 1999 and 38% in 1998. Cost of revenue was
reduced to $2,745,000 in 1999 as compared to $4,420,00 in 1998, with $837,000 of
the reduction coming from eliminating the use of subcontractors and consultants
who were primarily involved in migration work, and $384,000 of the reduction
coming from salaries and benefits. While the revenue from the year 2000 products
and services made up the bulk of 1999 revenue, it has not reached the level
anticipated by Forecross and the industry in general. We maintained substantial
resources in 1999 to address the year 2000 market, and the lower than
anticipated level of revenue adversely impacted gross margins.

Sales and marketing expenses were $1,047,000 in 1999 as compared to
$1,838,000 in 1998. Distributor fees were $497,000 in 1999 as compared to
$1,037,000 in 1998. Decreases in commissions on migration business reduced
expenses by $172,000 between 1999 and 1998.

Research and development expenses decreased to $728,000 in 1999 from
$1,521,000 in 1998, due to a decrease in the number of personnel required to
support the development activity associated with the Complete/2000 product and
enhancements to existing software products.

- 16 -
<PAGE>
General and administrative expenses were $1,117,000 and $1,413,000 in 1999
and 1998, respectively, reflecting reductions in personnel and decreased use of
legal, audit, and other professional services in connection with our Form 10
registration statement completed in 1998.

Net interest expense was $553,000 for the year ended September 30, 1999 as
compared to $305,000 in 1998, reflecting the increased use in 1999 of short-term
receivables financing, loans from senior officers of Forecross to meet our
working capital needs, and interest accrued on revenue sharing amounts due to
distributors.

The overall net loss for the year ended September 30, 1999 was $2,731,000
or $0.23 per share compared with a loss of $2,329,000 or $0.20 per share for the
year ended September 30, 1998, based on the weighted average number of shares
outstanding during the respective periods. The net loss for the three months
ended September 30, 1999 was $853,000 as compared to a net loss of $669,000 in
1998, and a net loss of $543,000 for the three months ended June 30, 1999. The
net loss per share was $0.07 for the three months ended September 30, 1999,
$0.06 for the comparable period in 1998, and $0.04 for the three months ended
June 30, 1999.

The provision for income tax expense is the tax payable for the period plus
the change during the period in deferred tax assets and liabilities. Due to the
uncertainty of realization, a valuation allowance has been provided to eliminate
the net deferred tax assets as September 30, 1999 and 1998. See notes 2 and 7 of
the notes to the financial statements.

YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO YEAR ENDED SEPTEMBER 30, 1997

Revenue for the year ended September 30, 1998 was $7,169,000 as compared to
$5,775,000 in 1997, an increase of 24%. This increase in revenues for the
period reflected several factors:

- revenue of $4,364,000 from year 2000 assessment and renovation
contracts and the amortization of Assess/2000 software licenses in
1998 as compared to $1,788,000 in 1997;

- the decrease in revenue from the amortization of exclusive
distributorship agreements of $110,000 in 1998 compared to $660,000 in
1997; and

- the decrease in migration services revenue to $2,695,000 in 1998 as
compared to $3,326,000 in 1997. Backlog was $531,000 at September 30,
1998 as compared to $4,281,000, including approximately $615,000 to be
performed after fiscal 1998, in 1997.

We believe that the reduction in backlog is attributable to numerous
factors. First, during fiscal 1998, we substantially completed one major
migration/renovation project. This project was significantly larger in terms of
dollar value than most of our migration/renovation contracts, and therefore made
our backlog substantially larger than our historical norms. Second, year 2000
contracts are typically of much shorter duration than application migration
projects. The average application migration project takes from six to eighteen

- 17 -
<PAGE>
months to complete, whereas the average year 2000 project can be completed in
eight weeks or less. Therefore, revenue associated with year 2000 projects may
be booked, recognized and completed without appearing in the quarterly or annual
backlog amount. This is significant because year 2000 compliance projects
generated a substantially greater proportion of our revenues in fiscal 1998 than
in prior periods. Third, there were two developments in the marketplace which
we believe negatively affected our backlog:

- the temporary diversion of resources and attention away from valuable
but optional application migrations, into the mandatory resolution of
the year 2000 problem; and

- the decision of some prospective customers to attempt to perform the
year 2000 renovation work internally, or to delay commencing this work
in favor of evaluating other alternatives.

While both of these developments appear to be temporary, they have had the
effect of slowing the rate at which we have been able to obtain contracts for
migrations work, especially during the second half of our 1998 fiscal year.

Gross margin was $2,749,000 and $2,408,000 in 1998 and 1997, respectively.
The gross margin percentage was 38% in 1998 and 42% in 1997. While the revenues
from the year 2000 products and services increased significantly in 1998
compared to 1997 as discussed above, they have not reached the level anticipated
by us and our industry in general. We added substantial resources to address the
year 2000 market, and the lower than anticipated level of revenue adversely
impacted gross margins in 1998. In addition, we did not realize the efficiencies
and cost savings originally anticipated for the off-site work performed
primarily by subcontractors on migration services projects. During the second
quarter of fiscal 1998, we modified our procedures for pricing, performing, and
controlling migration services projects in order to improve the gross margin on
those projects.

Sales and marketing expenses were $1,838,000 in 1998 as compared to
$1,490,000 in 1997. Distributor fees were $1,037,000 in 1998 as compared to
$640,000 in 1997. Increases in commission and trade show expenses in 1998 as
compared to 1997 were offset by reductions in bonuses and consultant expenses in
1998.

Research and development expenses increased to $1,521,000 in 1998 from
$1,007,000 in 1997, or 51%, due to an increase in the number of personnel to
support the development activity associated with the Complete/2000 product and
enhancements to existing software products.

General and administrative expenses were $1,413,000 and $887,000 in 1998
and 1997, respectively, reflecting additional personnel; increased use of legal,
audit, and other professional services in connection with our Form 10
registration statement in 1998; and, increased rent and insurance in 1998 to
support the increased level of business activity.

Net interest expense was $305,000 for the year ended September 30, 1998 as
compared to $69,000 in 1997, reflecting the increased use in 1998 of short-term
receivables financing and loans from our senior officers to meet our working
capital needs.

- 18 -
<PAGE>
The overall net loss for the year ended September 30, 1998 was $2,329,000
or $0.20 per share compared with a loss of $1,046,000 or $0.09 per share for the
year ended September 30, 1997, based on the weighted average number of shares
outstanding during the respective periods.

The provision for income tax expense is the tax payable for the period plus
the change during the period in deferred tax assets and liabilities. Due to the
uncertainty of realization, a valuation allowance has been provided to eliminate
the net deferred tax assets at September 30, 1998 and 1997. See notes 2 and 7 of
the notes to the financial statements.

LIQUIDITY AND CAPITAL RESOURCES

Through June 30, 2000, we have sustained recurring losses from operations
and, at June 30, 2000, 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 1 of the notes to financial
statements. The opinion of our independent certified public accountants on the
audited financial statements for the year ended September 30, 1999 also
contained an explanatory paragraph regarding this doubt about our ability to
continue as a going concern.

For the three months ended June 30, 2000, operations were funded primarily
by cash derived from operating revenues and cash on hand. For the nine months
ended June 30, 2000, operations were funded primarily by the cash derived from
the sale of stock in two private placement transactions, and through deferrals
of senior employee compensation. See note 8 of the notes to the financial
statements. During the quarter ended March 31, 2000, we also converted a
significant amount of our debt to equity. We believe this move strengthens our
balance sheet, reduces interest expense and improves our future ability, as
needed, to obtain additional financing and attract investors.

The need to obtain additional funds through a private placement of stock
was required due to our expected transition period between the end of year 2000
contract business and the resumption of our core migration business. While many
companies completed their year 2000 analysis and renovation work well in advance
of the December 31, 1999 deadline, we believe that most companies postponed
consideration and commencement of new migration projects until the actual
outcome of the year 2000 issue was known. Additionally, we believe that many
companies are re-evaluating the status and direction of their information
systems investments based on the analysis performed for year 2000 and the rapid
paradigm shift towards web-oriented and capable businesses.

We are aggressively pursuing new opportunities for migration services,
including developing products and services specifically marketable to businesses
currently using legacy systems but needing to migrate to more web-friendly
platforms. We expect additional revenue in the third quarter of fiscal 2000 from
some of the migration contracts currently under negotiation. We are closely
monitoring 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.

If we can obtain the anticipated level of new business, and continue the
use of short-term receivables financing, we believe we will have sufficient
funds to meet our needs through the balance of fiscal 2000. Cash from operations
and the other sources described above may not be achieved or may not be
sufficient for our needs.

We are aggressively pursuing new opportunities for migration services,
including developing XML-related products and services specifically marketable
to businesses currently using legacy systems but needing to migrate to more
web-friendly platforms. We expect additional revenue in the fourth quarter of
fiscal 2000 from some of the migration contracts currently under negotiation.
The sales pipeline, work in progress, collections and cash requirements are
being closely monitored to determine whether the existing sources of financing
are adequate to support operations or whether additional means of financing,
including debt or equity financing, may be required to satisfy working capital
and other cash requirements.

- 19 -
<PAGE>

A factoring agreement with a financial organization allows us to obtain
financing by borrowing against our accounts receivable on a recourse basis. At
June 30, 2000, $225,000 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.

In August 2000, we received a loan in the amount of $100,000 from an
employee of the company. The loan is for a term of two years, is secured by the
XML software technology developed and owned by Forecross, and accrues interest
at a rate of 11.5% per year.

We anticipate that our capital expenditures for fiscal 2000 will be between
$50,000 and $100,000.

Cash and cash equivalents on hand at June 30, 2000 were $85,000 as compared
to $19,000 at June 30, 1999.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY

All of our revenues are realized currently in U.S. dollars. In addition,
we do not maintain any assets or cash account balances in currencies other that
U.S. dollars. Therefore, we do not believe that we currently have any
significant direct foreign currency exchange rate risk.

INTEREST

We are exposed to interest rate risk, as we use additional debt financing
to fund capital expenditures. The interest that we may be able to obtain on
debt financings will depend on market conditions at that time and may differ
from the rates we have secured in the past.

INFLATION

We do not believe that inflation has had a material effect on our financial
position or results of operations during the past three years. However, we
cannot predict the future effects of inflation, including interest rate
fluctuations and market fluctuations.

- 20 -
<PAGE>
BUSINESS

OVERVIEW

We develop, market and sell sophisticated software and associated services
to large computer-using organizations for the automated conversion of existing
business software applications to new computing environments. This conversion
process is usually referred to as migration from one software or hardware
platform to another. Our products are designed to automate, after various
individual parameters and options are established, up to 100% of the actual
migration from one database or source language to another. Our automated
processing contracts with slower and more error-prone traditional migration
technologies which rely upon programmers replacing existing code manually on a
line-by-line basis. It has been our experience that 95% or more of the business
application programs commonly found in large computerized organizations can be
migrated with 100% automation. The remaining 5% can usually be processed with
80% or more automation. Migrated applications are functionally equivalent to
their unconverted counterparts, and, in our experience, maintainability and
performance in the new environment are typically unaffected or enhanced. Each
of our products includes a significant number of customization options which can
be selected by the user to achieve specific conversion or renovation objectives.

In response to our customers' requirements, we have established our factory
processing concept. Each factory is distinguished not by bricks and mortar but
as a working environment in which we use our software products to execute
migration projects for our customers. We continue to provide these automated
application migration factory services to our customers, using factories we have
established for this purpose on our premises as well as off-site factories that
we can install at customer locations to meet the specific demands of various
customers.

INDUSTRY BACKGROUND AND TRENDS

In recent years, dramatic and fundamental changes have taken place in the
computer industry. These developments have had a significant impact on the way
in which business applications are developed, have extended the useful life of
existing applications and have presented unique challenges to management
information systems or MIS departments.

SIGNIFICANT INDUSTRY DEVELOPMENTS

First, there has been a dramatic reduction in the cost of computer
processing power. This has led to the "downsizing" from larger "mainframe" and
"super-mini" computers to smaller computers capable of processing the same
amount of work at significantly lower cost.

Second, standard computing environments, referred to as "open systems"
architecture, have increasingly dominated the market. Previously, large scale
MIS organizations were forced to implement business applications using database
software and languages proprietary to particular vendors. Open systems
architecture has, to a significant extent, freed the MIS manager from this
constraint by permitting the components of an overall hardware and software
solution to be acquired from a number of different, and frequently competing,
vendors.

- 21 -
<PAGE>
Examples of these new standards include the UNIX operating system, the
database language called SQL and programming languages including COBOL, C++ and
JAVA.

Third, the network which each business establishes to connect the personal
computers on the desks of each user, sometimes referred to as clients, to the
business' open systems hardware, often referred to as servers, for business
applications has expanded over the past four years to include connections to,
and often web sites on, the internet. The worldwide web enables a business to
connect all of its employees to each other and to the company's vendors and
customers easily and inexpensively. This unprecedented level of connectivity is
driving a rapid evolution in the way businesses interrelate.

Fourth, even though there has been a decrease in the cost of some computer
hardware, there has also been a reduction in many MIS budgets with no
corresponding reduction in the costs of software or technical personnel.

Finally, the broad-based application assessment that has been necessitated
by the year 2000 problem has brought unparalleled awareness to MIS management of
the attributes, costs and risks inherent in their business application
portfolios. What has been discovered is a hodge-podge of environmental and
development software that has resulted in immense, yet unnecessary, complexity;
duplicated and high costs of ownership; and serious risks of future maintenance
failures caused by a lack of personnel knowledgeable in the older installed
software.

BUSINESS IMPACT

Existing systems represent a huge financial investment and are often
functionally rich and mission-critical to the business. Due to this, many
applications which would have been rewritten after three to five years are now
remaining in service for ten years or more. However, due to their underlying
technologies, they may not be meeting all of the needs of the organization. For
example, they:

- may not be fully integrated with newer business applications;

- may have data which is not easily accessible to users; or

- may operate on technology platforms which are no longer
cost-effective.

Furthermore, personnel who understand and can maintain applications
developed using older technologies are becoming more difficult to find and
retain, and, therefore, are more expensive.

The challenge for businesses is to find a cost-effective way to upgrade
these sizable existing systems to take advantage of the new technologies which
are often more flexible, have more features and have a more readily available
pool of personnel familiar with their installation, use and maintenance, while
preserving all of the valuable functionality of the existing systems.

- 22 -
<PAGE>
AVAILABLE SOLUTIONS

Our management believes that there are three options available to an MIS
manager wishing to take advantage of these developments.

One option is to acquire commercially available application software
packages specifically designed to operate on the new technology platforms.
However, a suitable package may not always be available and, even when it is,
the new software package will commonly require adaptation to the distinctive
business policies and practices of the user organization. In addition to the
initial cost of the package, these adaptations are frequently expensive and may
take too long to implement as well as require specialized technical resources.

Another option is to manually rewrite the computer source code of the
existing application to make it usable in the new computing environment. This
option is time consuming to implement, can be error-prone, requires significant
and specialized personnel resources not routinely available, and may, therefore,
be expensive and risky.

Both of these choices also involve the risk that business-specific rules
and functionality currently imbedded in the existing application will not be
accurately or completely incorporated into the adapted software package or the
rewritten application.

Our products represent a third solution. We have developed a proprietary
and innovative technology for the automated migration of existing applications.
This allows businesses to replace existing technologies by re-hosting their
applications to a new technology platform, while leaving them functionally
intact. We believe that this option will ordinarily be the least expensive and
least risky alternative.

MARKET

At its largest, we estimate that the potential worldwide market for our
products includes approximately 30,000 large computer-using organizations,
including the so-called Fortune 2,000 companies and comparable government,
financial services, healthcare, education and other service organizations. Most
of these organizations automated their business and data processing functions
before the advent of current technologies. These organizations
characteristically have a large inventory of crucial information systems based
on rapidly obsolescing technology.

We believe that the portion of the North American enterprise computing
market comprised of users of Computer Associates Integrated Database Management
System, or CA-IDMS, amounts to approximately 275 users, based on information
supplied in March 2000 by Harte-Hanks Market Intelligence, Inc., an industry
research organization. CA-IDMS includes a database management system,
CA-IDMS/DB, user interface language, CA-IDMS/DC, and fourth-generation language,
CA-ADSO, which, together with various other related products, were originally
developed and marketed by Cullinane Corporation, later by Cullinet Corporation,
and now by Computer Associates International. Based on reports in the industry
press, we believe that there is a growing shift of enterprise computing users
away from CA-IDMS and that over the next ten years a substantial number of the
275 users will have decided to move to newer, more cost-effective and flexible
computing environments. We currently estimate that there are approximately 400
CA-IDMS users outside North America

- 23 -
<PAGE>
In addition to the CA-IDMS portion of the enterprise computing market,
there are also additional portions related to other proprietary technology
platforms. They include areas related to computer languages including
CA-Easytrieve from Computer Associates, CSP from IBM Corporation, CA-UFO from
Computer Associates and ADF from IBM Corporation, and databases including IMS
from IBM and Adabas from SoftwareAG. We currently estimate that there are
between 15,000 and 20,000 users for all of those products. These additional
areas create opportunities for us to develop other products and give us added
flexibility in responding to changes and developments in the marketplace.

During 1999, we developed two additional products aimed at extending the
scope of its conversion solution offerings. One tool, called 'TestSentinel,'
is used to test the converted applications to ensure that they are functionally
equivalent to their un-converted counterparts. The second tool, called
'SourceSentinel,' is aimed at ensuring that coding standards and rules which are
implemented when programs are originally developed, remain in force as those
programs go through the normal life cycle of ongoing maintenance and
enhancements. These tools are currently offered as services only, but we intend
to offer end-user licenses in the future.

UNDERLYING PROPRIETARY TECHNOLOGY

Our powerful and flexible technology known as the XCODE architecture, has
been refined over the last thirteen years and forms the foundation for all our
products, tools, and associated services.

Our proprietary XCODE architecture supports all of the functions ordinarily
required to automate the conversion, assessment and renovation of existing
systems. This includes parsing the source code, storing the code in a common
repository, transforming the old technology elements of the source code and
generating revised source code for the operation of the application in the new
environment.

We began developing our technology in 1982. The prototype for the XCODE
architecture was built in 1985 to permit a customer to convert a major
application from a proprietary language to COBOL. The first generation of XCODE
was developed and enhanced between 1985 and 1986, in connection with language
conversion projects undertaken for Price Waterhouse, LLP. This resulted in the
first version of the Convert/ADSO to COBOL product. In response to a requirement
of Chemical Bank of New York, a second generation of XCODE was developed in
1987, resulting in the development of the first version of the Convert/IDMS-DB
to SQL product.

In 1990, we developed the first version of Convert/IDMS-DC to CICS in
connection with a migration project undertaken for American President Lines. In
the same year, under a contract with IBM, the third generation of XCODE was
produced. In 1992-93, in connection with a project for Cincom Systems, Inc. of
Ohio, we developed the Fastforward/VSAM to SUPRA database conversion software.
At that time, all the components of XCODE were redeveloped to operate in a PC
environment.

- 24 -
<PAGE>
The XCODE architecture is modular in design. Modular architecture refers to
the design of a system into separate components that can be connected and
combined together in many different configurations. The strength of modular
architecture is that any one component can be replaced, added or moved without
altering the rest of the system. Our modular XCODE architecture is, therefore,
readily adaptable to the development of new migration products. This lowers the
cost, shortens the time and reduces the risk of new product development.

COMMERCIALLY AVAILABLE PRODUCTS

We have, to date, developed nine migration products. Migration products
are named by reference to the source language or database and the target
language or database:

- Convert/IDMS-DC to CICS (user interface language conversion)

- Convert/ADSO to COBOL (language conversion)

- Convert/IDMS-DB to SQL (database conversion)

- Convert/VSAM to SQL (database conversion)

- Convert/CSP to COBOL (language conversion)

- Redirect II COBOL/VS to COBOL II (language conversion)

- IMSADF II to Cross System Product Migration Facility (language
conversion)

- Convert/IMSADF II to APS/COBOL (language conversion)

- Fastforward/VSAM to SUPRA (database conversion)

We are the sole owner of six of these products. Ownership of the following
products is shared: IMSADF II to Cross System Product Facility, which we
developed, but is owned jointly with IBM; Convert/IMSADF II to APS/COBOL, which
we developed, but is owned jointly with Bank of America; and Fastforward/VSAM to
SUPRA which we developed pursuant to a Development and License Agreement, dated
April 22, 1991, with Cincom Systems, Inc. and is jointly owned by us and Cincom.
We and IBM have joint marketing rights to the first product, we and Bank of
America have joint marketing rights to the second product, and Cincom has
exclusive marketing rights to the third product. None of these jointly owned
products is presently material to our business or our near-term business plans.

We have licensed and delivered our products and ancillary services to
customers throughout North America, and in Taiwan, France, Belguim, Germany, and
South Africa. Companies including Aetna Life Insurance, AT&T, Bank of America NT
& SA, Bank of Montreal, Bear Stearns & Company, International Business Machines
Corporation, Home Savings of America, Kimberly-Clark Corporation, New Brunswick
Telephone, Price Waterhouse, LLP, Royal Bank of Canada, and Union Gas Limited
have used our products and services. Recent and current customers include
Charles Schwab & Company, Inc., Brown Brothers Harriman & International, now
part of TRW Inc.

- 25 -
<PAGE>
PRODUCT DEVELOPMENT

Our strategy in developing new migration software and services for existing
applications is to respond to the particular needs of a specific customer after
research has determined that there is an identifiable potential for further
licensing of the product, and delivery of associated services to other
organizations. Before we undertake the development of a new product, we
generally require that the customer agree to share the development cost. One
example of this strategy is the Convert/CSP to COBOL product that was developed
for Kimberly-Clark Corporation in 1994, under an agreement in which
Kimberly-Clark contributed $300,000 of the total $350,000 in development costs.
Another example is the Convert/IMSADF II to APS/COBOL product which was
developed for and financed by Bank of America in 1994 and 1995 at a cost of
$480,000.

One factor which greatly enhances our ability to employ this strategy is
our proprietary XCODE architecture. The XCODE architecture enables we to develop
a new migration product in an average of approximately six months of elapsed
time, with three persons employed full-time on the project. This is a
considerably shorter and less costly development cycle than traditional industry
experience for products of comparable scope and complexity. It also allows us to
fund most or all of the development cost from the license revenue generated by
the initial development-funding customer.

Research and development expenses were $728,239, $1,520,709, and $1,006,768,
in the years ended September 30, 1999, 1998 and 1997, respectively, and $728,472
and $574,684 in the nine months ended June 30, 2000 and 1999, respectively.

PRODUCT LICENSING

We grant our customers a non-exclusive, non-assignable license to use our
software, including programs, options, documentation, data and information.
While various provisions in the license agreement, including the number of
locations at which the licensed software may be used and the extent of the
customer's right to receive upgrades and enhancements without charge, vary
according to the circumstances, other general terms are common to all of these
agreements. Each agreement contains a warranty by us against defects in design,
operation and usability in the customer's computer environment, and each
agreement contains a covenant by the licensee not to attempt to decipher,
develop source code, copy, modify, duplicate, create or recreate all or any part
of it except to the extent required by its normal operating procedures. The
licensee also agrees to take reasonable steps to prevent access by anyone whose
access is not reasonably necessary and to ensure that authorized persons with
access refrain from duplicating, reproducing or disclosing information with
respect to the licensed software.

The license is granted for the conversion of a specified number of
application programs, and may be terminated on fifteen days' notice for
non-payment of amounts payable under it, on twenty-four hours notice by either
party if the other becomes insolvent or, except in limited circumstances, if
bankruptcy or other similar proceedings are commenced against it, or it makes an
assignment for the benefit of creditors. The agreement is also terminable on
fifteen days' notice in the event of a material breach being committed, unless
the breach is cured before the expiration date of the notice period.

- 26 -
<PAGE>
MARKETING AND SALES STRATEGY

The developments in computer technology described above have converged to
produce the need and create the opportunity to convert existing applications.
After experimentation with different marketing techniques, we decided in 1992 to
develop and implement our own direct marketing and sales strategy. Our strategy
includes having multiple product offerings to include a broad range of service
and license alternatives that better adapt to meet the needs of the marketplace
and serve to differentiate us from our competitors. Conventional techniques
including trade publication notices, direct mail, telemarketing, and, most
recently, our own web-site, www.forecross.com, on the internet are being used to
bring our products and their benefits to the attention of prospective customers.
Additionally, we have focused on building a reference base of satisfied
customers.

Recognizing that aversion to risk is one of the major characteristics of
the decision making process for many MIS organizations, we have created a phased
marketing approach to simplify the process for potential customers to evaluate
and invest in our products. This strategy allows a potential customer to pursue
its interest in automated migration in a series of measured steps, with each
step in the process providing demonstrable value.

Our principal marketing programs involve the Migration Alternatives
Planning Seminar, or MAPS, and either Factory Compile or License-Only sales.

MAPS is an introduction, for a fee, to the conversion process through an
intensive two-day customer-site program for those considering a migration
project. Designed to address conversion issues, MAPS includes formal technical
briefings, expert consulting, an evaluation of the risks, costs and benefits of
various alternatives and a feasibility analysis of the automated migration of a
selection of the customer's application software. MAPS is promoted by
telemarketing and is conducted by two senior members of our staff. Evaluations
of prior MAPS sessions suggest that many of our MAPS customers will decide to
select Factory Compile or License-Only within twelve months of the MAPS session.

We offer our customers the option of hiring us to use our proprietary
software on behalf of the customer to perform the entire conversion process,
thus relieving the customer of the requirements for allocating the personnel and
time necessary to learn to perform the migration. We call this type of
engagement a Factory Compile. By "factory," we mean an array of multiple
server-class computers operated by a small number of computer operators, running
two to three shifts per day, up to seven days per week, depending on work
volume. "Factory services" implies the methodology by which customer code flows
to us, through the factory, to the rules engineers for issue resolution, to
quality assurance for final review, and back to the customer. The customer's
role is limited to testing the converted application in its new environment. The
average Factory Compile project requires one senior and two junior technical
staff members for approximately four months.

License-Only is an offering in which the customer licenses our products
and, with training and additional optional consulting provided by us, performs
the entire conversion process with its own personnel. As in the Factory Compile
option, the customer also tests the converted application in the new
environment. No customer has chosen the License-Only offering in the past few
years, preferring to use our automated factory facilities.

- 27 -
<PAGE>
Although there are no separately chargeable software license fees, Factory
Compile projects require the customer to sign a standard Forecross Product
License Agreement. For both Factory Compile and License-Only offerings, a
customer's use of our products is limited to the conversion of a specified
maximum number of application programs, at which time the license expires.

SALES AND LICENSING REVENUES

From 1994 though 1996, our revenues were generated primarily by migration
projects, with some revenues contributed by MAPS presentations. During that
period, we performed work on between ten and twenty projects per year, of which
four projects typically represented in excess of fifty per cent of total
revenues. In the fiscal years ended September 30, 1999, 1998 and 1997, and the
nine month periods ended June 30, 2000 and 1999, year 2000 assessment projects,
sales of licenses to the Assess/2000 software, and fees associated with
distributorships for Complete/2000 products and services accounted for
approximately 88%, 62%, 51%, 69% and 85%, respectively, of total revenue.

COMPETITION

The marketplace for application migrations is served by both software and
services vendors. We are not aware of any vendor, whether of software or
services, who offers the degree of automated conversion achievable through use
of our products.

SOFTWARE VENDORS

We believe that the principal focus of other software vendors has been on
the development and licensing of software which speeds the rewriting alternative
for migration. Examples of software delivering this type of migration solution
assistance include ViaSoft Inc.'s tools for application re-engineering and
Carleton Corporation's software to support data migration. In both of these
cases, as in all others of which we are aware, the software products do not
provide the near-complete and comprehensive automated conversion of business
applications as those performed by our products after various individual options
and parameters are established.

- 28 -
<PAGE>
SERVICE SUPPLIERS

Service organization, including accounting firms and companies like Perot
Systems, EDS, IBM, Computer Horizons Corporation, Case Consult, GmbH and
Computer Task Group, offer conversion services. Automated conversion facilities
provided by these organizations typically embrace between 25% and 80% of the
source code, with the balance of the conversion being performed manually. We
believe that any manual conversion is subject to inconsistency, high risk of
error, high cost and delays. Since they are service providers, these companies
tend to focus on turnkey projects costing several millions of dollars which can,
therefore, support the high manpower costs involved.

Since our software automates significantly more of the conversion, 95% to
100%, than can be achieved with other products, we believe that we are able to
compete effectively with service suppliers. We typically price our Factory
Compile offering below the prices quoted by the service suppliers who perform
conversions. We believe that the Factory Compile offering can be marketed
successfully, because it can be presented to the marketplace as the solution
which uses a significantly greater degree of automation than is offered by
service suppliers, which reduces the costs, time and risks of the project.

COMPETITIVE EXPERIENCE

Our experience in the competitive bidding process employed by many of our
prospective customers leads us to believe that we have a price advantage over a
majority of the other bidders. Other bidders' costs are typically higher due to
their dependence on skilled people, as compared with our dependence on less
costly automation. However, we have not historically enjoyed the same degree of
market recognition as many of our large competitors, including the national
consulting or accounting firms, against whom we often compete.

Until the emergence of the year 2000 problem, some customers did not
embrace the idea that automation could help them solve their problem. We believe
that this uncertainty would sometimes cause a customer to award a contract to
the more recognizable bidder, in spite of the higher price. This extra cost was
often viewed as an "insurance policy" against any problems in the future. We
have observed a shift in this trend over the past years, and many customers now
will not entertain bids that do not contain the use of automated software tools.
We believe that we have the capability to compete favorably because of these
trends, and because we have steadily built our reputation and name recognition
over the same period of time.

COMPETITIVE POSITION

It is possible that other software or services companies may attempt to
develop new proprietary conversion software or service offerings or to enhance
existing proprietary conversion software, or service offerings, to compete
directly in our chosen market. There are, in addition, various other elements
of risk that bear on our competitive position. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Risk Factors."
Moreover, there are alternatives to migration as a means of adapting to
technological change, and enterprise computing users may prefer one of these
alternatives.

- 29 -
<PAGE>
It is difficult for us to assess how many potential customers have availed
themselves of the other alternatives, including the purchase of a new software
package that operates on new technology platforms or rewriting the computer
source codes, since we do not actively track prospects who fail to meet our
initial sales qualification criteria. Among qualified prospects who ultimately
do not purchase from us, the rewriting option generally prevails.

INTELLECTUAL PROPERTY

We have chosen to protect the intellectual property value of our products
and proprietary XCODE architecture through trade secret and confidentiality
provisions in our product licensing arrangements, confidentiality agreements
with our employees and through copyright protection for system externals,
including display formats and documentation. Additional protection is provided
by the complex nature of both the XCODE architecture, and the products
themselves. This approach is consistent with standard practice in the industry,
and we believe that this provides us reasonable assurance against
misappropriation. Software theft, which can be a serious problem in the
consumer software market, is relatively rare in the large-scale software
products market. Large corporate buyers tend not to engage in product piracy
with regard to products of this type. Our products are also protected against
unauthorized use by imbedded and external access control codes. However, the
protection on which we rely may not be effective. Monitoring and identifying
unauthorized use of our technology may prove difficult, and the cost of
litigation may impair our ability to guard adequately against any infringement.
Our commercial success may also depend on our products not infringing any
intellectual property rights of others and on no claims of infringement being
made against us. Even if any claims are found to be invalid, the dispute
process could have a materially adverse effect on our business, results of
operations and prospects.

CORPORATE HISTORY

We were formed on January 1, 1985 by a merger pursuant to the provisions of
the California Corporations Code of two predecessor corporations, Jonescast,
Inc., and its wholly owned subsidiary, Genasys Software Systems, Inc.,
subsequently renamed Genasys Technologies, Inc., and later changed to Forecross
Corporation, each incorporated under the laws of California in June 1982. As a
result of the merger, we succeeded to the business that had been carried on by
the predecessor corporations since 1982.

EMPLOYEES

As of June 30, 2000, we had 34 employees. Of these, seven work primarily
in our factory or on customer Factory Compile projects, six are engaged
primarily in research and development work, four are in project management,
five are in technical support, five are in sales and marketing and seven
are in finance and administration. All employees are required to enter into
a confidentiality and proprietary rights agreement which requires that they not
disclose any confidential information, restricts their right to engage in or
have an interest in competing businesses, and requires them to promptly disclose
to us the product of all work done by them while employed by and for us, and to
assign to us all rights in their work product.

- 30 -
<PAGE>
PROPERTIES

Our principal executive offices are located at 90 New Montgomery Street,
San Francisco, California 94105, where we occupy approximately 6,200 square feet
of leased space under a lease which expires in February 2002. Annual base rent
under the lease is approximately $152,000. We occupy an additional 4,000 square
feet space in our current location under a lease which expires in December 2001.
Annual base rent for this space is approximately $143,000 per year. We also
maintain a small sales office in San Diego, California, and a small apartment in
San Francisco for use by our out-of-town staff while visiting the executive
offices.

On August 4, 1999, we entered into a sublease agreement, under which we
sublet approximately 2,500 square feet of unused office space at 90 New
Montgomery Street for a period of twenty eight months. This agreement was
entered into with the approval of our landlord. The space currently occupied by
our staff is adequate for our needs.

LEGAL PROCEEDINGS

We are not involved in any pending or, to our knowledge, threatened legal
proceedings. We may from time to time become a party to various legal
proceedings arising in the ordinary course of business.

- 31 -
<PAGE>
MANAGEMENT

Executive Officers and Directors

Our directors, executive officers and key employees, and their ages and
positions, as of June 30, 2000, are as follows:

Name Age Position
-------------------------- --- -----------------------------------------------
Kim O. Jones 55 Chief Executive Officer, President and Director
Bernadette C. Castello (2) 46 Senior Vice President, Chief Financial Officer
and Director
Richard A. Carpenter (2) 57 Member of the Board of Directors
Richard L. Currier 55 Member of the Board of Directors(1)
Donald Estes 51 Director of Product Architecture
Ronald Herbst 57 Director of Customer Care
Carl H. Johnson 54 Director of Project Management
Charles T. Nelson 54 Director of Software Products
Kenneth J. Paris 53 Senior Database Specialist
Peggy A. Payne 50 Director of Migration Services
Robert Theurer 55 Director of Sales

(1) We accepted Mr. Currier's registration from our board of directors
effective January 1, 2000.
(2) Member of the Audit Committee.

Each of our directors is elected at our annual shareholders meeting to
serve for a term of one year or until a successor is chosen and is qualified.

KIM O. JONES founded Forecross together with Bernadette Castello in 1982
and has been in his present position since that time. Mr. Jones is the chief
architect of our products. He has been active as a software industry
entrepreneur and industry participant since 1971. Prior to the establishment of
Forecross, Mr. Jones served from 1980 to 1982 as a director and vice president
of Computer Systems Design, Inc., of San Francisco, California, in charge of
software product development and marketing. In 1970 Mr. Jones co-founded Genasys
Systems, Inc., a software and services firm based in San Francisco, California,
for which he worked initially as chief technology officer and, later, as
president until 1980. From 1967 to 1970, he was a vice president of Liberty
National Bank of San Francisco, California, responsible for data processing. Mr.
Jones was a member of the board of directors of the American Software
Association, a division of the Information Technology Association of America.

- 32 -
<PAGE>
BERNADETTE C. CASTELLO co-founded Forecross with Kim Jones in 1982 and has
been in her present position since that time. Ms. Castello manages our day to
day operations. From 1973 to 1977, Ms. Castello worked for KPMG Peat Marwick in
New York, designing and managing the installation and use of some of the
earliest automated applications in that firm Thereafter, until 1980, she worked
as an analyst in Peat Marwick's computer resources department. From 1980 to
1982, when she left to found Forecross with Mr. Jones, Ms. Castello was a senior
consultant at Computer Systems Design, Inc. in San Francisco, developing
applications for the financial and manufacturing industries.

RICHARD A. CARPENTER has been the president of Carpenter Associates, a
consulting firm which provides strategic planning and product marketing
assistance to early stage software companies, since 1992. Mr. Carpenter also
serves as chairman of the board of two companies which he co-founded, Corex
Technologies and Healthcourt Technologies. Prior to co-founding these
companies, Mr. Carpenter had co-founded Index Systems, now CSC/Index, in 1969,
and Index Technology, now part of Intersolv, in 1983 where he served as chairman
and chief executive officer until its merger with Sage Software in 1991 to form
Intersolv Software. Mr. Carpenter became a director in March 1998. Mr.
Carpenter does not provide consulting services to any of our direct or indirect
competitors.

DONALD ESTES joined us in April 2000 as Director of Product Architecture.
For the last 10 of his 27 years in the industry, he specialized in the design
and implementation of products and projects for the mass modification and
automated testing of large bodies of source code using language-processing
technologies. He has chief responsibility for legacy-to-web products and
projects. Mr. Estes holds degrees from the Massachusetts Institute of Technology
and the University of Texas. From May 1997 through March 2000 Mr. Estes was the
Chief Technical Officer of 2000 Technologies Corp., in Lexington, Massachusetts,
where he built an automated testing system for platform migration and Year 2000
renovation projects. He also served as a year 2000 advisor to the State of
Rhode Island. From September 1995 through April 1997, he was President of Don
Estes and Associates, in Lexington, Massachusetts, where he designed and managed
the implementation of a mainframe/open systems peer-to-peer communications
product family. Mr. Estes is a member of the Cutter Consortium.

RONALD HERBST joined us in December 1995 as Director of Project Management
and currently serves as Director of Customer Care. From November 1993 through
December 1995, Mr. Herbst was an independent software consultant providing
services, including conceptual and detailed system design and implementation
and system programming. From August 1993 through October 1993, Mr. Herbst was
Vice President, Research and Development for Dynamic Bytes, Inc. From July 1989
through July 1993, Mr. Herbst served as vice president, Windsor Technologies,
Inc. Mr. Herbst has over twenty years of senior management experience serving
the information technology industry.

CARL H. JOHNSON joined us in March 1997 as Director of Project Management.
From 1993 to 1997, Mr. Johnson was Director, General Accounts for Affiliated
Computer Services, Inc. From 1988 to 1993, Mr. Johnson was Manager, Corporate
Applications for Amdahl Corporation. Mr. Johnson has over twenty years of
senior management experience serving the information technology industry.

- 33 -
<PAGE>
CHARLES T. NELSON joined us in December 1991 and has served in a variety of
technical and research and development capacities. In June 1996, Mr. Nelson was
named Director of Software Products. Prior to joining us, Mr. Nelson had over
twenty years' experience managing and supervising software and hardware
technical support activities for several large corporations.

KENNETH J. PARIS, Senior Database Specialist, was with us from 1989 through
March 1996, and rejoined us in October 1996. From March 1996 through September
1996, Mr. Paris served as an independent software consultant to various
companies, including us. Prior to joining us in 1989, Mr. Paris spent eleven
years with KPMG Peat Marwick, both as Database Administrator and as director of
database research and development for the consulting department of KPMG Peat
Marwick's National Technology Center. From 1985 to 1986, Mr. Paris served as
Director of Product Development at Pansophic Systems, Inc. of Oak Brook,
Illinois. He was also for six years a member of the database committee of the
American National Standards Institute, ANSI, which developed the SQL standard.
Mr. Paris was the initial conference chairman and then president of the
International DB2 Users Group.

PEGGY A. PAYNE joined us in May 1996 as Director of Migration Services.
From February 1993 through May 1996, Ms. Payne was Director of Information
Management and Technology for Revo Corporation. From July 1988 to February
1993, Ms. Payne was manager, information systems for Westinghouse Security
Electronics. Ms. Payne has over twenty years of technical experience and has
served in various capacities for technical organizations including Association
of Corporate Computing Professionals, Bay Area MAPICS Users Group, and
Information Technology Executives Association.

ROBERT E. THEURER joined us in April 2000 as Director of Sales. He has 35
years of experience in the computer industry in many capacities including
technical, corporate management and sales and marketing. From October 1997
until joining Forecross, Mr. Theurer was Senior Vice President of Sales for 2000
Technologies Corporation, a company that develops and markets automated testing
technology. From 1994 through 1997, he was the Director of Sales for MSS
International, a UK based company that specializes in platform migrations
primarily from Unisys mainframes to UNIX platforms.

COMMITTEES OF THE BOARD OF DIRECTORS

Our audit committee consists of Bernadette Castello and Richard Carpenter.
This committee has responsibility for, among other things, the planning and
review of our annual and periodic reports and accounts and the involvement of
our certified public accountants in that process, focusing particularly on
compliance with legal requirements and accounting standards and the rules of the
SEC, and the establishment of an effective system of internal financial
controls. The audit committee makes recommendations to our board of directors
regarding the independent certified public accountants to be nominated for
ratification by our shareholders and those other matters, but the ultimate
responsibility for those matters remains with our board of directors.

Our board of directors does not currently have and does not currently
intend to establish an executive committee, a compensation committee or a
nominating committee, as those functions are to be performed by our entire board
of directors.

- 34 -
<PAGE>
DIRECTOR COMPENSATION

Directors receive no compensation for service on our board of directors.

Non-employee directors are reimbursed for reasonable out-of-pocket expenses
incurred in connection with the attendance of board meetings. Non-employee
directors are entitled to participate in our 1994 Stock Option Plan. During the
year ended September 30, 1998, Mr. Carpenter received a stock option grant for
7,500 shares at $11.50 per share. During the years ended September 30, 1997 and
1999, no options were granted to non-employee directors. During the nine
month-period ended June 30, 2000, Mr. Carpenter received a stock option grant
of 80,000 shares at an exercise price of $3.25 per share, with a vesting period
of one-fifth immediately and the remainder over four years on a monthly basis.

EXECUTIVE COMPENSATION

The following table sets forth the amount of all compensation we paid
during each of the fiscal years ended September 30, 1999, 1998 and 1997 to the
person serving as our chief executive officer, and to our only other executive
officer, other than the chief executive officer, whose compensation exceeded
$100,000 during any fiscal year. The stock options granted to the named
executive officers are fully vested. There are no other long-term incentive
compensation plans which require disclosure.

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

Long Term
Compensation-
Annual Compensation Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation
--------------------------- -------------- ----------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Kim O. Jones 1999 $ 131,813 None None None
Chief Executive Officer and 1988 185,000 None None None
President 1997 156,511 $ 51,320 None None

Bernadette C. Castello 1999 131,813 None None None
Senior Vice President and 1998 185,000 None None None
Chief Financial Officer 1997 156,511 56,970 None None
</TABLE>

STOCK OPTION GRANTS IN LAST FISCAL YEAR. There were no grants of stock
options to either of our named executive officers during the fiscal year ended
September 30, 1999.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES. The following table sets forth for each named executive officer
information regarding stock option exercises during the fiscal year ended
September 30, 1999 as well as the fiscal year end value of unexercised options
for each person:

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexecised Value of Unexercised In-the-
Options at 1999 Year End Money Options at 1999 Year End
------------------------ --------------------------------
Shares
Acquired
On Value
Name Exercise Received Exercisable Unexercisable Exercisable Unexercisable
---------------------- -------- -------- ----------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Kim O. Jones 0 0 250,000 0 $ 0 $ 0
Bernadette C. Castello 0 0 250,000 0 $ 0 $ 0
</TABLE>

- 35 -
<PAGE>
EMPLOYMENT AGREEMENTS

We have not entered into any employment agreements.

RESTRICTED STOCK PURCHASE PLAN

In June 1993, the board of directors approved the 1993 Restricted Stock
Purchase Plan. The stock purchase plan allows employees and consultants to
purchase shares of our common stock at a price not less than the fair value. The
maximum aggregate number of shares which may be sold under the stock purchase
plan is 1,000,000 shares of common stock. No shares were sold under the stock
purchase plan in 1999, 1998 or 1997 or to date in 2000.

Shares purchased under the stock purchase plan are subject to a right of
repurchase by us at the original purchase price upon the termination of the
purchaser's employment or consulting relationship with us. The right to
repurchase generally lapses at the rate of one-third after one year from the
date of purchase, and one-thirty-sixth of the original number of shares
purchased per month thereafter. At September 30, 1999, 1998 and 1997, no shares
were subject to our repurchase option under this provision. No shares were
repurchased during the years ended September 30, 1999, 1998 or 1997 or to date
in 2000.

EMPLOYEE STOCK OPTION PLAN

In April 1994, the board of directors approved the 1994 Stock Option Plan,
pursuant to which employees and consultants may be granted incentive and
non-statutory stock options. Depending on the employee's stock ownership
percentage, incentive stock options are granted with exercise prices ranging
from 100% to 110% of the fair value of stock at the date of grant. Depending on
the employee's stock ownership percentage, non-statutory stock options are
granted with exercise prices ranging from 85% to 110% of the fair value of stock
at the date of grant. The maximum aggregate number of shares of common stock
which may be subject to options and sold under the plan is 950,500. The term of
each option is that stated in each respective option agreement provided that the
term does not exceed ten years from the date of grant, five years in the case of
an optionee already owning common stock representing 10% or more of the voting
power. As of June 30, 2000, options for the purchase of 868,200 shares of common
stock at a weighted average exercise price of $2.47 per share are outstanding,
and 58,400 shares of common stock are reserved for future grants. In addition,
we have outstanding 248,900 options for the purchase of shares of common stock
at a weighted average exercise price of $3.25, which were issued outside the
stock option plan.

PROFIT SHARING AND RETIREMENT PLANS

401(K) PLAN

We have a 401(k) profit sharing plan covering substantially all employees,
under which employees may defer their eligible compensation up to the
statutorily and 401(k) plan prescribed limits and have the amount of the
deferral contributed to the 401(k) plan. Employees who have completed one year
of service may, at our sole discretion, receive a matching contribution from us
up to a maximum of 4% of the participant's eligible compensation. The 401(k)
plan is intended to qualify under Section 401(k) of the Internal Revenue Code.
Participants in the 401(k) plan direct the investment of their individual
account balances among the various offered investment funds.

- 36 -
<PAGE>
Our cost of the 401(k) profit sharing plan was $71,682, $73,499, $66,670 and
$25,556 in the fiscal years ended September 30, 1999, 1998, 1997 and 1996,
and $44,867 and $65,306 in the nine months ended June 30, 2000 and 1999,
respectively.

MONEY PURCHASE PENSION PLAN

We also have a Money Purchase Pension Plan. We were required to contribute
10% of total participant compensation through December 1992 and 6% of total
participant compensation from January 1, 1993 through December 31, 1994.
Effective January 1, 1995, contributions to the pension plan were discontinued
as we now contribute to the 401(k) plan as described above. There were no
contributions to the pension plan during 1999, 1998 or 1997. Our cost of the
pension plan was $12,736 in the fiscal year ended September 30, 1995.

BOARD ACTION AND POWERS

Our articles of incorporation in effect on completion of this offering
provide that, unless otherwise determined by a resolution of our board of
directors, our board of directors shall consist of not less than three nor more
than five members.

The board of directors may at any time appoint any person to be a director
either to fill a vacancy or as an additional director, provided that the number
of directors does not exceed five. Any person so appointed by the board of
directors shall hold office only until the next annual general meeting of
shareholders and shall then be eligible for election by the shareholders.

Directors shall not be required to hold any of our shares by way of
qualification. A director who is not a shareholder shall nevertheless be
entitled to attend and speak at shareholders' meetings.

Indemnification and Insurance. Every director or other officer of our
company, excluding certified public accountants, shall be indemnified by us out
of our own funds against all costs, charges, losses, expenses and liabilities
incurred by him in the actual or purported execution and/or discharge of his
duties and/or the exercise or purported exercise of his powers and/or otherwise
in relation to or in connection with his duties, powers or office. This
indemnification includes, without prejudice to the generality of the foregoing,
any liability incurred by him in investigating, preparing for and defending any
inquiries or investigation, claim or proceedings, civil or criminal, which
relate to anything done or omitted or alleged to have been done or omitted by
him as an officer, director, or employee of Forecross and in which judgment is
given in his favor, or the proceedings are otherwise disposed of without any
finding or admission of any material breach of duty on his part, or in which he
is acquitted or in connection with any application under any statute for relief
from liability with respect to any act or omission in which relief is granted to
him by a court. In that regard, we shall have the power to advance funds to any
officer, director or employee in payment of all costs, charges, losses,
expenses, and liabilities incurred by him in investigating, preparing for or
defending any inquiries, investigations, claims or proceedings whatsoever. Our
ability to indemnify our officers and directors from liability is limited by the
provisions of the Corporations Code of California. In addition, the board of
directors shall have power to purchase and maintain insurance for or for the
benefit of any person who is or was at any time a director or officer of any
"relevant company", as defined below, or who is or was at any time a trustee of
any pension fund or 401(k) plan in which employees of any relevant company are

- 37 -
<PAGE>
interested including, without prejudice to the generality of the foregoing,
insurance against any liability incurred by that person in respect of any act or
omission in the actual or purported execution and/or discharge of his or her
duties and/or in the exercise or purported exercise of his or her powers and/or
otherwise in relation to his or her duties, power, or offices in relation to any
relevant company, or any pension fund or employees' share scheme. For purposes
of this paragraph, "relevant company" shall mean us, any holding company of ours
or any other body, whether or not incorporated, in which we or any holding
company of ours or any of our predecessors or predecessors of any holding
company has or had any interest whether direct or indirect or which is in any
way allied to or associated with us, or any of our subsidiaries, or of any other
body.

At present, there is no pending litigation or proceeding involving a
director or executive officer of ours where indemnification will be required or
permitted. We are not aware of any threatened litigation or proceeding which
may result in a claim for indemnification.

To the extent indemnification for liabilities arising under the securities
act may be permitted to our directors, officers and controlling persons of our
company under the provisions, described above, or otherwise, we have been
advised that in the opinion of the SEC, this type of indemnification is against
public policy as expressed in the securities act and is, therefore,
unenforceable.

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of our outstanding shares of common stock as of June 30, 2000 by:

- each person we know to beneficially own 5% or more of the outstanding
shares of our common stock;

- each of our directors;

- each of our executive officers named in the summary compensation
table above; and

- all of our directors and officers as a group.

Except as indicated in the table below, the persons named in the table have
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them, subject to community property laws where
applicable. Unless otherwise indicated, the address of each beneficial owner is
c/o Forecross Corporation, 90 New Montgomery Street, San Francisco, California
94105.

<TABLE>
<CAPTION>
Number of Shares Percent of Class
Name of Owner Beneficially Owned Beneficially Owned
------------------------------- ------------------ -------------------
<S> <C> <C>
Kim O. Jones 1,703,434 11.06%
Bernadette C. Castello 1,639,404 10.66%
Richard A. Carpenter 72,956 *
All directors and executive
officers as a group (3 persons) 3,415,794 21.68%

<FN>
*Represents less than 1% of our outstanding shares of common stock.
</TABLE>

- 38 -
<PAGE>
Mr. Jones' holdings as of June 30, 2000 include a fully vested and
exercisable stock option covering 250,000 shares and a warrant to purchase
101,530 shares.

Ms. Castello's holdings as of June 30, 2000 include a fully vested and
exercisable stock option covering 250,000 shares and a warrant to purchase
71,820 shares.

Mr. Carpenter's address is 25 Marion Street, Hingham, Massachusetts 02043.
His holdings include a fully vested and exercisable stock option covering 7,500
shares, an option exercisable for 80,000 shares, 23,333 of which are exercisable
within the next 60 days, and a warrant to purchase 4,041 shares.

The holdings of all directors and executive officers as a group include
fully vested and exercisable stock options covering 507,500 shares, an option
exercisable for 80,000 shares, 23,333 of which are exercisable within the next
60 days, and warrants to purchase 177,391 shares. The percentage of class
beneficially owned for each person or group was calculated on the basis of
15,053,380 shares of our common stock outstanding as of June 30, 2000, plus
shares for each such person or group purchasable within the next 60 days under
options and warrants.

RELATED PARTY TRANSACTIONS

NOTES RECEIVABLE FROM/PAYABLE TO OFFICERS:

As of June 30, 2000, outstanding balances on all of the following notes
receivable from/payable to our officers had been converted to equity in our
March 2000 private placement:

- In December 1997, we borrowed $350,000 from Kim O. Jones, chief
executive officer, under an unsecured promissory note due December 30,
1999 with an interest rate of 24.0% per annum.

- In February 1998, we borrowed $225,000 from Bernadette C. Castello,
senior vice president, under an unsecured promissory note due February
28, 2000 with an interest rate of 24.0% per annum.

- In June 1999, we borrowed $135,000 from Bernadette C. Castello under
an unsecured promissory note due June 30, 2001 with an interest rate
of 24.0% per annum.

- In July 1999, we borrowed $57,000 from Bernadette C. Castello under an
unsecured promissory note due July 31, 2001 with an interest rate of
24.0% per annum.

- 39 -
<PAGE>
- Note receivable from Kim O. Jones, Chief Executive Officer, of
$65,429, with interest at 10%, due December 31, 1997. This represents
the balance due from amounts advanced at various times between 1987
and 1993 principally to assist in the purchase of a principal
residence by Mr. Jones. Accrued interest receivable amounted to
$24,536 at September 30, 1997. The note receivable and accrued
interest receivable were paid in full on December 31, 1997.

OTHER NOTES PAYABLE:

In August 2000, we received a loan in the amount of $100,000 from an
Employee of the company. The loan is for a term of two years, is secured by the
XML software technology developed and owned by Forecross, and accrues interest
at a rate of 11.5% per year.

SOFTWARE LICENSES AND DISTRIBUTORSHIPS:

We entered into agreements with several entities for licenses and
distributorship arrangements for our year 2000 software products, Assess/2000
and Complete/2000, and related services. The distributors are related to each
other through some common ownership and management; a shareholder of ours who
owns less than 1% of our outstanding securities and is not an officer or
director of Forecross, is a founding investor and officer of each of the other
entities.

To our knowledge, at least one other shareholder of Forecross who owns less
than 5% of our securities and is not an officer or director of Forecross, is
also an investor in at least one of our distributors. As of September 30, 1996,
this shareholder pledged 150,000 shares of our common stock as collateral for
$800,000 due under the terms of the first of the contracts; the entire amount
was collected in January 1997.

Under the distributorship agreements, the distributors receive
territorially exclusive rights to market year 2000 renovation projects to be
performed by us using our Complete/2000 software and year 2000 assessment
projects to be performed either by us or by the distributor using the
Assess/2000 software.

PURCHASED SOFTWARE:

During the year ended September 30, 1997, we commissioned and purchased a
$150,000 data analysis module for use with our year 2000 software products. The
software developer is an entity owned in part by our senior vice president,
another employee of ours, and another shareholder.

- 40 -
<PAGE>
DESCRIPTION OF SHARE CAPITAL

GENERAL

Our authorized capital stock consists of 20,000,000 shares of common stock.
There are 15,053,380 shares of common stock outstanding as of June 30, 2000.
There are also warrants to purchase 1,073,268 shares of common stock and options
to purchase 1,117,100 shares of common stock as of June 30, 2000.

The following summary description of our securities it not intended to be
complete and is qualified by reference to the provision of applicable law and to
our articles of incorporation and by-laws.

COMMON STOCK

Our authorized share capital consists of 20,000,000 shares of common stock.
As of June 30, 2000, 15,053,380 of our shares are issued and outstanding. Upon
the completion of this offering, 15,053,380 shares will be issued and
outstanding, assuming that none of the outstanding warrants are exercised.

Holders of our shares of common stock are entitled to receive dividends
ratably, if, as and when declared by the directors, and to participate ratably
in any distribution of property or assets on our liquidation, winding up or
other dissolution. The shares of common stock have no preemptive or conversion
rights. There are no provisions in our articles of incorporation or by-laws, or
any provisions of the laws of the State of California to which we are subject,
that would discourage a business combination or other takeover of us.

Holders of our shares of common stock are entitled to one vote per share at
all meetings of shareholders. The holders of our common stock do not have
cumulative voting rights. Accordingly, holders of more than half of the
outstanding shares of common stock can elect all of the directors to be elected
in any election, if they choose to do so. In this event, the holders of the
remaining shares of common stock would not be able to elect any directors. The
board of directors is empowered to fill any vacancies and the board created by
the resignation, death or removal of directors.

WARRANTS

There are presently outstanding warrants to purchase 35,000 shares of
common stock at an exercise price of $.75 per share. These warrants were issued
as a finder's fee in connection with the private placement in January 1999. They
have a five-year term and expire on January 18, 2004. There are also outstanding
warrants to purchase 1,038,268 shares of common stock at an exercise price of
$2.66 per share. These warrants were issued in connection with a private
placement in March 2000, 200,000 of which were issued as a finder's fee in
connection with the private placement in March 2000. These warrants expire upon
the earlier to occur of March 31, 2003 or when the market price of our common
stock is greater than 3.0 times the exercise price.

- 41 -
<PAGE>
TRANSFER AGENT

The transfer agent and registrar of our common stock is Continental Stock
Transfer and Trust Company, New York, New York.

MARKET INFORMATION

Our common stock is traded on the Nasdaq OTC Bulletin Board under the
symbol "FRXX.OB." From August 1994 to October 28, 1998, our common stock was
listed on the Vancouver Stock Exchange under the symbol "FRX.U." The following
table sets forth, for the periods indicated and as reported by the Nasdaq OTC
Bulletin Board or the Vancouver Stock Exchange, as the case may be, the high and
low bid and asked sales prices for shares of our common stock. The Nasdaq OTC
Bulletin Board quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.

QUARTER ENDED HIGH LOW
------------- -------- --------

December 31, 1997 $20.0000 $10.0000

March 31, 1998 12.7000 6.7000

June 30, 1998 11.8000 5.7500

September 30, 1998 8.0000 2.2500

December 31, 1998 2.9375 1.0000

March 31, 1999 1.5000 0.4531

June 30, 1999 0.9062 0.1875

September 30, 1999 0.7031 0.2656

December 31, 1999 0.7500 0.1094

March 31, 2000 5.8125 0.2656

June 30, 2000 2.6562 0.7500

- 42 -
<PAGE>
SELLING STOCKHOLDERS

The following table sets forth the name of each selling stockholder, the
number of shares owned by the selling stockholder, and the number of shares
which may be offered for resale pursuant to this prospectus. The information
included below is based upon information provided by the selling stockholders.
The actual number of shares owned or offered could be materially less or more
than the estimated amount depending upon factors which cannot be predicted at
this time and, if required, will be reflected in a supplement to this
prospectus. Because each selling stockholder may offer all, some or none of the
shares it holds, and because there are currently no agreements, arrangements, or
understandings with respect to the sale of any of the shares, no definitive
estimate as to the number of shares that will be held by each selling
stockholder after the offering can be provided. The following table has been
prepared on the assumption that all shares offered under this prospectus will be
sold to parties unaffiliated with the selling stockholders. Except as
indicated, none to the selling stockholders has had a material relationship with
us within the past three years, other than as a result of the ownership of our
shares or other securities. Unless otherwise indicated, the selling
stockholders have sole voting and investment power with their respective shares.
Percentages in the table below are based on 15,053,380 shares of our common
stock outstanding as of June 30, 2000.

<TABLE>
<CAPTION>
SHARES SHARES
OWNED PRIOR TO NUMBER OF SHARES OWNED AFTER
THE OFFERING WHICH MAY BE THE OFFERING
------------------ SOLD IN ------------------
NAME NUMBER PERCENT THIS OFFERING NUMBER PERCENT
------------------------------------------ --------- ------- ------------- --------- -------
<S> <C> <C> <C> <C> <C>
Kim O. Jones(1a)(1) 1,703,434 11.06 304,590 1,398,844 9.14
Bernadette C. Castello(1a)(2) 1,639,404 10.66 215,460 1,423,944 9.30
Steven Arnett(1a)(3) 23,858 * 13,650 10,208 -
Ronald D. Herbst(1a)(4) 47,856 * 4,800 43,056 -
Lawrence Hernandez, Jr.(1a)(5) 26,319 * 7,500 18,819 -
Carl Johnson(1a)(6) 50,806 * 3,750 47,056 -
Alice Jue(1a)(7) 15,147 * 1,500 13,647 -
Richard Carpenter(1a)(8) 72,956 * 12,123 60,833 *
Formula 999, LLC(1a)(9) 158,388 * 158,388 - -
Donald R. Gardner(1a)(10) 103,632 * 103,632 - -
Gregory Stock(1a)(11) 421,836 2.77 421,836 - -
Dr. Franz J. & Audrey E. Berlacher(1a)(12) 8,382 * 8,382 - -
Robert A. & Julie T. Berlacher(1a)(13) 16,902 * 16,902 - -
Barry Porter(1a)(14) 12,708 * 12,708 - -
Sonz Partners, L.P.(1a)(15) 16,902 * 16,902 - -
EDJ Limited(1a)(16)(28) 121,093 * 121,093 - -
Porter Partners, L.P.(1a)(17) 135,216 * 135,216 - -
Jeffrey H. Porter(1a)(18) 33,804 * 33,804 - -
Larry Colvin(1a)(19)(28) 75,419 * 75,419 - -
Paul J. Meyer(1a)(20) 90,854 * 76,854 14,000 *
Lancaster Investment Partners, LP(1a)(21) 150,000 * 150,000 - -
Dr. Richard Citrenbaum(1a)(22) 56,388 * 56,388 - -
Schottenfeld Associates, LP(1a)(23) 563,907 3.70 563,907 - -
Martin M. Dittmar, Jr.(1a)(24) 200,000 1.31 200,000 - -
David P. Cohen(25) 75,000 * 75,000 - -
Douglas D. Troxel(1a)(25)(26) 650,000 4.30 650,000 - -
Robert E. Theurer and Janet L. Theurer(25) 50,000 * 50,000 - -
Marc R. Fey(25) 50,000 * 50,000 - -
Lobodos Ventures L.P. (25) 125,000 * 125,000 - -
E. James Emerson(25) 25,000 * 25,000 - -
Christine Cowan and James Thomas(25) 25,000 * 25,000 - -

- 43 -
<PAGE>
Paul Osborn and Annette Osborn(25) 25,000 * 25,000 - -
David J. Goetz & Kay T. Goetz(25) 50,000 * 50,000 - -
Richard Greenblatt(25) 50,000 * 50,000 - -
J. Dorian McKelvy(25) 100,000 * 100,000 - -
Beth Bloom(25) 100,000 * 100,000 - -
Avalon Research Inc. (27) 30,000 * 30,000 - -
Kien Hean Chen and Yung San Chen(28) 26,666 * 26,666 - -
Constance Fretz IRA(28) 10,000 * 10,000 - -
Stanley A. Steiner, Trustee(28) 26,666 * 26,666 - -
Pinetree Capital Corporation(28) 100,000 * 100,000 - -
Lancaster Investment Partners, LP(28) 50,000 * 50,000 - -
William B. Fretz IRA(28) 10,000 * 10,000 - -
The William B. Fretz, Jr. Irrevocable
Deed of Trust FBO Heather Nicole
Fretz(28) 5,000 * 5,000 - -
The William B. Fretz, Jr. Irrevocable
Deed of Trust FBO Christopher Bradley
Fretz(28) 10,000 * 10,000 - -
Keith Fretz(28) 20,000 * 20,000 - -
David S. Callan IRA(28) 10,000 * 10,000 - -
Lynn Dahl-Kundin(29) 4,900 * 4,900 -
Barbara Munro(29) 5,000 * 5,000 -

<FN>
___________________________
* Represents less than 1% of our outstanding shares of common stock.

(1a) Purchased shares and warrants in a March 2000 private placement.

(1) President and chief executive officer of Forecross. Includes an option
to purchase 250,000 shares of common stock and a warrant to purchase
101,530 shares of common stock.

(2) Senior vice president and Chief Financial Officer of Forecross.
Includes an option to purchase 250,000 shares of common stock and a
warrant to purchase 71,820 shares of common stock.

(3) Employee of Forecross. Includes an option to purchase 15,000 shares of
common stock, 10,208 of which is exercisable within the next 60 days,
and warrant to purchase 4,550 shares of common stock.

(4) Employee of Forecross. Includes an option to purchase 60,000 shares of
common stock, 43,056 of which is exercisable within the next 60 days,
and a warrant to purchase 1,600 shares of common stock.

(5) Employee of Forecross. Includes an option to purchase 40,000 shares of
common stock, 18,819 of which is exercisable within 60 days, and a
warrant to purchase 2,500 shares of common stock.

(6) Employee of Forecross. Includes an option to purchase 64,000 shares of
common stock, 47,056 of which is exercisable within 60 days, and a
warrant to purchase 1,250 shares of common stock.

(7) Employee of Forecross. Includes an option to purchase 25,000 shares of
common stock, 13,647 of which is exercisable within 60 days, and a
warrant to purchase 500 shares of common stock.

- 44 -
<PAGE>
(8) Director of Forecross. Includes a fully vested and exercisable stock
option to purchase 7,500 shares of common stock, an option exercisable
for 80,000 shares, 23,333 of which are exercisable within the next 60
days, and a warrant to purchase 4,041 shares of common stock.

(9) Includes a warrant to purchase 52,796 shares of common stock.

(10) Includes a warrant to purchase an aggregate of 34,544 shares of common
stock.

(11) Includes a warrant to purchase 140,612 shares of common stock.

(12) Includes a warrant to purchase 2,794 shares of common stock.

(13) Includes a warrant to purchase 5,634 shares of common stock.

(14) Includes a warrant to purchase 4,236 shares of common stock.

(15) Includes a warrant to purchase 5,634 shares of common stock.

(16) Includes a warrant to purchase an aggregate of 107,031 shares of
common stock.

(17) Includes a warrant to purchase 45,072 shares of common stock.

(18) Includes a warrant to purchase 11,268 shares of common stock.

(19) Includes a warrant to purchase an aggregate of 58,473 shares of common
stock.

(20) Includes a warrant to purchase 25,618 shares of common stock.

(21) Includes a warrant to purchase 50,000 shares of common stock.

(22) Includes a warrant to purchase 18,796 shares of common stock.

(23) Includes a warrant to purchase 187,969 shares of common stock.

(24) Employee of Forecross. Includes a warrant to purchase 200,000 shares
of common stock which was issued as a finder's fee in a January 2000
private placement.

(25) Purchased shares in a January 2000 private placement.

(26) Includes a warrant to purchase 50,000 shares of common stock.

(27) Includes a warrant to purchase 30,000 shares of common stock which was
issued as a finder's fee in a January 1999 private placement.

(28) Purchased shares in a January 1999 private placement.

(29) Employee of Forecross.
</TABLE>

PLAN OF DISTRIBUTION

All or a portion of the shares offered by this prospectus may be sold, from
time to time, by the selling stockholders in or more transactions on the Nasdaq
OTCBB or any other market on which our shares are traded, in transactions
independent of the Nasdaq OTCBB, in separately negotiated transactions, or
otherwise. These sales may be made either at fixed prices which may be changed,
at market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The shares may be sold by the selling
stockholders by one or more of the following methods, without limitation:

- 45 -
<PAGE>
- block trades in which a broker or dealer will attempt to sell the
shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;

- purchases by a broker or dealer as principal and resale by that broker
or dealer for its account pursuant to this prospectus;

- an exchange distribution in accordance with the rules of that
exchange;

- ordinary brokerage transactions and transactions in which a broker may
solicit purchasers;

- privately negotiated transactions;

- short sales; and

- a combination of any of the above methods of sale.

In effecting sales, brokers and dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders or, if a broker-dealer acts as agent for the purchaser
of shares, from the purchaser, in amounts to be negotiated which may be less
than, or in excess of, those customary in the types of transactions involved.
Broker-dealers may agree with the selling stockholders to sell a specified
number of shares at a stipulated price per share, and, to the extent the
broker-dealer is unable to do so acting as agent for a selling stockholder, to
purchase as principal any unsold shares at the price required to fulfill the
broker-dealer commitment to the selling stockholder. Broker-dealers who acquire
the shares as principal may then resell those shares from time to time in
transactions, which may involve block transactions and sales to and through
other broker-dealers, including transactions of the nature described above, on
the Nasdaq OTCBB or any other market on which our shares are traded, in
transactions independent of the Nasdaq OTCBB, in separately negotiated
transactions, or otherwise, at fixed prices which may be changed, at market
prices prevailing at the time of sale, at prices related to prevailing market
prices or at negotiated prices. In connection with these resales, the
broker-dealers may pay to or receive from the purchasers of those shares
compensation as described above.

Any or all of the sales or other transactions involving the common stock
described above, whether effected by a selling stockholder, any broker dealer or
others, may be made pursuant to this prospectus. In addition, any shares of
common stock that qualify for sale pursuant to Rule 144 under the securities act
may be sold under Rule 144 rather than pursuant to this prospectus.

In order to comply with the securities laws of various states, if
applicable, the shares of common stock will be sold in those jurisdictions only
through registered or licensed brokers or dealers.

The selling stockholders and any broker dealers or agents that participate
with the selling stockholders in the distribution of the shares may be deemed to
be underwriters within the meaning of the securities act, and any commissions
received by them and any profit received by them may be deemed to be
underwriting commissions or discounts under the securities act.

- 46 -
<PAGE>
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the common stock may not simultaneously engage in
market-making activities with respect to our common stock for a period of one
business day prior to the commencement of that distribution. In addition and
without limiting the foregoing, each selling stockholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M, which provisions may
limit the timing of purchases and sales of shares of common stock by the selling
stockholders. All of the foregoing may limit the marketability of the shares.

To our knowledge, no underwriting arrangements have been entered into by
the selling stockholders with respect to their shares as of the date hereof.
Upon notification of us by a selling stockholder that any material arrangement
has been entered into with a broker or dealer for the sale of shares through a
block trade, special offering or secondary distribution, or a purchase by a
broker or dealer, a supplement to this prospectus will be filed, if required,
pursuant to Rule 424(b) under the securities act, disclosing:

- the name of each that selling stockholder and of the participating
broker or dealer;

- the number of shares involved;

- the price at which the shares were sold;

- the commissions paid or the discounts or concessions allowed to the
broker or dealer, where applicable;

- that the broker or dealer did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and

- other facts material to the transaction.

We will maintain the effectiveness of the registration statement of which
this prospectus is a part until the earlier of 90 days after the effective date
of the registration statement, or at the time all the shares of common stock
registered under this prospectus have been sold or are no longer subject to
volume or manner of sale restrictions under the securities act.

We and the selling stockholders each have agreed to indemnify each other
and our respective officers and directors and various other persons against
liabilities in connection with any offering of the shares, including liabilities
arising under the securities act.

By agreement with the selling stockholders, we will pay all of the expenses
incurred in connection with the registration of the common stock, estimated to
be approximately $75,000, other than underwriting commissions, discounts and
counsel fees and expenses.

- 47 -
<PAGE>
LEGAL MATTERS

The validity of the shares of common stock and shares of common stock
issuable upon exercise of warrants offered by this prospectus and other legal
matters relating to this offering will be reviewed by Piper Marbury Rudnick &
Wolfe LLP, New York, New York.

EXPERTS

The financial statements and schedule as included in this prospectus and in
the registration statement have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their reports (which contain an explanatory paragraph regarding our ability to
continue as a going concern) appearing elsewhere herein and in the registration
statement, and are included in reliance upon such reports given upon the
authority of that firm as experts in auditing and accounting.

ADDITIONAL INFORMATION MADE AVAILABLE TO YOU

We have filed with the commission a registration statement on Form S-1
under the securities act, with respect to the securities offered by this
prospectus. In this prospectus we generally refer to that registration
statement, together with all amendments, exhibits and schedules to that
registration statement, as the "registration statement."

As is permitted by the rules and regulations of the SEC, this prospectus,
which is part of the registration statement, omits various information,
exhibits, schedules and undertakings set forth in the registration statement.
For further information with respect to us, and the securities offered by this
prospectus, reference is made to the registration statement. Statements
contained in this prospectus as to the contents of any contract or other
document referred to in this prospectus are not necessarily complete and, in
each instance, reference is made to the copy of the contract or other document
filed as an exhibit to the registration statement, each statement being
qualified in all respects by this reference.

We are subject to the reporting requirements of the exchange act. In
accordance with the requirements, we file annual reports on Form 10-K, quarterly
reports on Form 10-Q and other information under cover of Form 8-K with the SEC.
Our reports and other information may be inspected and copied at the following
public reference facilities maintained by the SEC:

- 450 Fifth Street, N.W., Washington, D.C. 20549;

- Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and

- 7 World Trade Center, Room 1300, New York, New York 10048.

Copies of this material may also be obtained from the Public Reference Room
of the SEC at 450 Fifth Street, N.W. Washington, D.C. 20549 at prescribed rates.
Information on the operation of the Public Reference Room may be obtained by
calling the commission at 1 (800) 732-0330. Our filings, including the
registration statement of which this prospectus is a part, will also be
available to you on the commission's internet site (http://www.sec.gov).

- 48 -
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE FORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.

- 49 -
<PAGE>
FORECROSS CORPORATION

INDEX TO FINANCIAL STATEMENTS

Page
----

Report of BDO Seidman, LLP, Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Balance Sheets as of September 30, 1999 and 1998, and June 30,
2000 (Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3

Statements of Operations for Each of the Three Years in the Period
Ended September 30, 1999, and the Nine Month Periods Ended
June 30, 2000 and 1999 (Unaudited) . . . . . . . . . . . . . . . . . . . F-4

Statements of Shareholders' Deficit for Each of the Three Years in
the Period Ended September 30, 1999, and the Nine Month Period
Ended June 30, 2000 (Unaudited) . . . . . . . . . . . . . . . . . . . . . F-5

Statements of Cash Flows for Each of the Three Years in the
Period Ended September 30, 1999, and the Nine Month Periods
Ended June 30, 2000 and 1999 (Unaudited) . . . . . . . . . . . . . . . . F-6

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . F-7
through
F-22

Schedule II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-23

F - 1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of Forecross Corporation

We have audited the accompanying balance sheets of Forecross Corporation as of
September 30, 1999 and 1998, and the related statements of operations,
shareholders' deficit and cash flows for each of the three years in the period
ended September 30, 1999. We have also audited the Schedule listed in the
accompanying index. These financial statements and the Schedule are the
responsibility of Forecross Corporation's management. Our responsibility is to
express an opinion on these financial statements and the Schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements and the
Schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and the Schedule. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Forecross Corporation at
September 30, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 1999 in
conformity with generally accepted accounting principles.

Also, in our opinion, the Schedule presents fairly in all material respects the
information set forth herein.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has sustained recurring losses from operations
and has net capital deficiencies and negative working capital at September 30,
1999. These conditions raise substantial doubt about the ability of the Company
to continue as a going concern. Management's plans as to these matters are also
discussed in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
San Francisco, California

December 14, 1999

F - 2
<PAGE>

<TABLE>
<CAPTION>
FORECROSS CORPORATION

BALANCE SHEETS

September 31,
--------------------------- June 30,
1999 1998 2000
------------- ------------ -------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 2,740 $ 98,249 $ 85,274
Accounts receivable, including unbilled receivables of
77,384, $489,808 and $26,295, net of allowances of $45,000,
136,650 and $20,000 (Note 3) 375,893 1,170,117 522,859
Other current assets 45,070 49,628 29,324
------------- ------------ -------------
Total current assets 423,703 1,317,994 637,457
Equipment and furniture, net (Notes 2, 4 and 5) 277,532 568,235 110,861
Notes receivable from others 68,707 67,131 71,511
Other assets 42,365 42,359 42,365
------------- ------------ -------------
Total assets $ 812,307 $ 1,995,719 $ 862,149
============= ============ =============

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
Accounts payable $ 631,479 $ 224,991 $ 191,517
Accrued compensation and related benefits (Note 11) 682,533 235,135 524,576
Accrued liabilities 158,090 73,301 92,107
Accrued commissions and distributors' fees (Note 4) 1,514,650 1,228,375 41,366
Payable to factor (Note 6) 861,427 467,734 225,098
Accrued warranty costs (Note 2) 184,828 205,975 20,338
Capital lease obligations due within one year 23,215 20,103 23,721
Deferred revenue (Notes 2 and 4) 684,652 598,193 644,490
------------- ------------ -------------
Total current liabilities 4,740,874 3,053,807 1,763,213
Deferred revenue, less current portion (Notes 2 and 4) 980,418 1,545,417 556,668
Notes payable to officers, net (Note 4) 750,176 631,392 -
Capital lease obligations, less current portion 19,716 41,667 3,189
------------- ------------ -------------
Total liabilities 6,491,184 5,272,283 2,323,070
------------- ------------ -------------
Commitments and contingencies (Notes 2, 11 and 12)
Shareholders' deficit (Notes 8, 9 and 10):

Common stock, no par value; authorized 20,000,000 shares;
issued and outstanding 12,191,944, 11,763,612
and 15,053,380 5,044,582 4,715,515 9,677,253
Additional paid in capital - - 981,000
Accumulated deficit (10,723,459) (7,992,079) (12,119,174)
------------- ------------ -------------
Total shareholders' deficit (5,678,877) (3,276,564) (1,460,921)
------------- ------------ -------------
Total liabilities and shareholders' deficit $ 812,307 $ 1,995,719 $ 862,149
============= ============ =============

The accompanying notes are an integral part of these financial statements.
</TABLE>

F - 3
<PAGE>

<TABLE>
<CAPTION>
FORECROSS CORPORATION

STATEMENTS OF OPERATIONS

For the Years Ended For the Nine Months Ended
September 30, June 30,
---------------------------------------- --------------------------
1999 1998 1997 2000 1999
------------ ------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Net revenues (Notes 2, 3 and 4):
Services and maintenance $ 2,915,347 $ 6,623,752 $ 4,930,456 $ 2,514,541 $ 2,214,903
Software licenses and distributorship
fees-related parties 545,004 545,000 844,582 408,747 408,753
------------ ------------ ------------ ------------ ------------
Total net revenues 3,460,351 7,168,752 5,775,038 2,923,288 2,623,656
Cost of services and maintenance,
including fees to related parties of
$166,000, $364,000, $213,000,$ 18,000
and $107,000 (Notes 2 and 4) 2,745,733 4,419,347 3,366,608 971,000 1,899,400
------------ ------------ ------------ ------------ ------------
Gross margin 714,618 2,749,405 2,408,430 1,952,288 724,256
------------ ------------ ------------ ------------ ------------
Operating expenses:
Sales and marketing, including
fees to related parties of $497,000,
$1,037,000, 640,000, $55,000 and
$333,000 (Note 4) 1,047,300 1,838,126 1,490,479 523,800 766,899

Research and development 728,239 1,520,709 1,006,768 728,472 574,684
General and administrative 1,116,528 1,413,312 887,039 1,819,010 863,041
------------ ------------ ------------ ------------ ------------
Total operating expenses 2,892,067 4,772,147 3,384,286 3,071,282 2,204,624
------------ ------------ ------------ ------------ ------------
Loss from operations (2,177,449) (2,022,742) (975,856) (1,118,994) (1,480,368)
Interest and other expense, net (553,131) (305,110) (68,855) (275,921) (397,388)
------------ ------------ ------------ ------------ ------------
Loss before provision for income taxes (2,730,580) (2,327,852) (1,044,711) (1,394,915) (1,877,756)

Provision for income taxes (Note 7) (800) (800) (800) (800) (800)
------------ ------------ ------------ ------------ ------------

Net loss $(2,731,380) $(2,328,652) $(1,045,511) $(1,395,715) $(1,878,556)
============ ============ ============ ============ ============
Net loss per share-basic and diluted $ (0.23) $ (0.20) $ (0.09) $ (0.10) $ (0.16)
============ ============ ============ ============ ============
Weighted Average Shares used in
computing per share data 12,060,919 11,761,920 11,681,035 13,620,528 12,021,611
============ ============ ============ ============ ============

The accompanying notes are an integral part of these financial statements.
</TABLE>

F - 4
<PAGE>

<TABLE>
<CAPTION>
FORECROSS CORPORATION

STATEMENTS OF SHAREHOLDERS' DEFICIT

Notes Additional
Receivable Paid
Common Stock From in Accumulated Total
Shares Amount Shareholders Capital Deficit Deficit
---------- ---------- -------------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances at October 1, 1996 11,455,612 $3,505,240 $ (7,973) $ - $ (4,617,916) $(1,120,649)
Issuance of common stock for
cash, net of stock issuance costs
of $5,275 (Note 8) 282,000 1,122,725 - - - 1,122,725
Issuance of common stock upon-
exercise of options (Note 10) 14,000 39,550 - - - 39,550
Payments received from
shareholders (Note 9) - - 7,973 - - 7,973
Net loss - - - - (1,045,511) (1,045,511)
---------- ---------- -------------- -------- ------------- ------------
Balances at September 30, 1997 11,751,612 4,667,515 - - (5,663,427) (995,912)
Issuance of common stock upon
exercise of warrants (Note 8) 12,000 48,000 - - - 48,000
Net loss - - - - (2,328,652) (2,328,652)
---------- ---------- -------------- -------- ------------- ------------
Balances at September 30, 1998 11,763,612 4,715,515 - - (7,992,079) (3,276,564)
Issuance of common stock to
warrant holders (Note 8) 10,000 11,250 - - - 11,250
Warrants extended (Note 8) - 27,000 - - - 27,000
Issuance of common stock for cash,
net of stock issuance costs of
22,933 (Note 8) 418,332 290,817 - - - 290,817
Net loss - - - - (2,731,380) (2,731,380)
---------- ---------- -------------- -------- ------------- ------------
Balances at September 30, 1999 12,191,944 5,017,582 - 27,000 (10,723,459) (5,678,877)
Issuance of common stock for cash,
net of stock issuance costs of
18,626 (Note 8) (unaudited) 1,175,000 216,374 - - - 216,374
Issuance of common stock for
cash (Note 8) (unaudited) 613,530 1,595,901 - - - 1,595,901
Issuance of common stock for
debt conversion (Note 8) (unaudited) 1,063,006 2,827,596 - - - 2,827,596
Warrants issued (Note 8) (unaudited) - - - 954,000 - 954,000
Exercis of employee stock options 9,900 19,800 - - - 19,800
Net loss (unaudited) - - - - (1,365,950) (1,395,715)
---------- ---------- -------------- -------- ------------- ------------
Balances at June 30, 2000 (uaudited) 15,053,380 $9,677,253 $ - $981,000 $(12,119,174) $(1,460,921)
========== ========== ============== ======== ============= ============

The accompanying notes are an integral part of these financial statements.
</TABLE>

F - 5
<PAGE>

<TABLE>
<CAPTION>
FORECROSS CORPORATION
STATEMENTS OF CASH FLOWS

For the Years Ended For the Nine Months Ended
September 30, June 30,
---------------------------------------- --------------------------
1999 1998 1997 2000 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in cash (Unaudited) (Unaudited)
resulting from:
Cash flows from operating activities:
Net loss $(2,731,380) $(2,328,652) $(1,045,511) $(1,395,715) $(1,878,556)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities -
Provision for uncollectible amounts (65,001) 124,952 300,000 (25,000) (116,650)
Value of common stock issued and value
assigned to extension of warrant term 38,250 - - - 38,250
Non-cash compensation expense related
to Private Placement - - - 954,000 -
Depreciation and amortization 290,703 277,938 115,873 174,048 225,766
Changes in operating assets and
liabilities -
Accounts receivable 859,225 529,611 (2,020,177) (121,966) 803,943
Other assets and accrued interest on notes
receivable from officers 594 175,191 (148,552) 12,942 16,999
Accounts payable and accrued liabilities 907,785 939,270 471,082 (317,374) 543,491
Deferred compensation 416,972 - (156,834) 144,387 -
Deferred revenue (478,540) (723,036) 2,713,193 (463,912) (365,325)
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in)
operating activities (761,392) (1,004,726) 229,074 (1,038,590) (732,082)
------------ ------------ ------------ ------------ ------------
Cash provided by (used in)
investing activities:
Purchase of equipment and furniture - (234,423) (577,076) - -
Loans to officers - - (35,000) - -
Fixed asset acquisition - - - (7,332) -
Payments received on loans to officers - - 35,000 - -
Loans to key employees - - (62,057) - -
Payments received on loans to
key employees 250 700 450 - 250
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities 250 (233,723) (638,683) (7,332) 250
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from factoring of
accounts receivable 3,916,279 4,714,085 785,200 1,152,760 3,070,250
Repayment of borrowings under
factoring arrangement (3,522,586) (4,246,351) (905,200) (1,789,089) (2,672,366)
Borrowings under notes payable
to officers 192,000 575,000 - - 180,000
Repayment of notes payable to officers (192,038) - (6,800) (51,269) (199,713)
Repayment of capitalized leases (18,839) (29,279) - (16,021) (16,164)
Repayment of notes payable - - (458,023) - -
Net proceeds from issuance of
common shares 290,817 48,000 1,162,275 1,832,075 290,817
Payments received from shareholders - - 7,973 - -
------------ ------------ ------------ ------------ ------------
Net cash provided by financing activities 665,633 1,061,455 585,425 1,128,456 652,824
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash (95,509) (176,994) 175,816 82,534 (79,008)
Cash at beginning of period 98,249 275,243 99,427 2,740 98,249
------------ ------------ ------------ ------------ ------------
Cash at end of period $ 2,740 $ 98,249 $ 275,243 $ 85,274 $ 19,241
============ ============ ============ ============ ============

The accompanying notes are an integral part of these financial statements.
</TABLE>

F - 6
<PAGE>
FORECROSS CORPORATION

NOTES TO FINANCIAL STATEMENTS

(INFORMATION AS OF JUNE 30,2000 AND FOR THE NINE MONTH
PERIOD ENEDED JUNE 30, 2000 AND 1999 IS UNAUDITED)

1. OPERATIONS:

Forecross Corporation ("Forecross" or the "Company") is a publicly held
California corporation whose common stock is traded on the
Over-the-Counter/Bulletin Board market. Prior to October 28, 1998, the Company's
common stock had been traded on the Vancouver Stock Exchange. The Company
provides comprehensive automated conversion solutions for migrating existing
software applications to new computing platforms, including downsized and client
server environments. In addition, during fiscal 1996, the Company introduced its
Assess/2000 and Complete/2000 automated conversion software products and related
services and methodologies, which address the year 2000 problem. The year 2000
problem arose because many existing computer programs used only two digits to
identify a year in the date field. These programs were designed and developed
before the impact of the change in the century was fully appreciated by their
developers. If not corrected, many computer applications would have failed or
created erroneous results. Forecross year 2000 software products assisted in
identifying, analyzing and correcting these problems in a highly automated
manner. The Company's migration services and software products have been
designed to meet the specialized requirements of management information systems
departments of medium-sized to large commercial and governmental organizations.
Forecross also licensed its Assess/2000 software product for use by customers
and distributors (Note 4). The Company's customers include banks and other
industrial and commercial corporations in Canada, the United States and Europe.

BASIS OF PRESENTATION AND GOING CONCERN:

Through June 30, 2000, the Company had sustained recurring losses from
operations and, at June 30, 2000, 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, 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.

F - 7
<PAGE>
INTERIM RESULTS:

The interim financial information as of June 30,2000 and for the nine
month periods ended June 30, 2000 and 1999 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 period results are not necessarily indicative of the results for a full
fiscal year.

DEPENDENCE ON YEAR 2000 REVENUES:

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/2000
services and licenses. After January 1, 2000, this source of revenue declined
dramatically. For the three months ended June 30, 2000, Year 2000 services and
related revenue was 14% of the total revenue, as compared to 95% for the three
months ended June 30, 1999. Year 2000 services and related revenue was
51% of total revenue for the nine months ended June 30, 2000 as compared to
85% for the nine months ended June 30, 1999. While we will continue to amortize
approximately $140K per quarter in revenue for product license fees, distributor
fees, and maintenance fees previously paid by our year 2000 distributors, we do
not anticipate receiving any material revenue generated from year 2000 contracts
in the future.

Over the past 2 years, the Company experienced a decline in its core
migration services business which corresponded with the increase of year 2000
business. The Company considers this a temporary development which is expected
to reverse with the resolution of the year 2000 issue. 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.
The Company has observed some early indications of renewed customer interest in
migration projects, however, there can be no assurance that the Company will be
successful in obtaining such projects or that the Company's strategy will be
successful. 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, for either its migration
or year 2000 services, the ongoing 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
materially adverse effect upon the Company's business, operating results and
financial condition.

2. 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

F - 8
<PAGE>
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 estimates of warranty liability. It is at least reasonably possible
that the significant estimates used will change within a year.

CASH:

Forecross maintains its cash balances with one financial institution. At
times, such balances may be in excess of the FDIC insurance limit.

EQUIPMENT AND FURNITURE:

Equipment and furniture are recorded at cost. Depreciation and amortization
is calculated using the straight-line method over the assets' estimated useful
lives, which range from three to five years. Leasehold improvements are
amortized over the shorter of useful life or life of the lease, generally five
years.

CAPITALIZED SOFTWARE COSTS:

Costs incurred internally in creating computer software products to be
sold, leased, or otherwise marketed are charged to expense when incurred as
research as development until technological feasibility has been established for
the product. Thereafter, the Company capitalizes such costs until the product is
available for general release to customers and amortized based on either
estimated current and future revenue for each product or straight-line
amortization over the remaining estimated life of the product, whichever
produces the higher expense for the period. Purchased computer software to be
sold, leased, or otherwise marketed is treated the same if it has no alternative
future use, or, if it has an alternative future use, it is capitalized when
acquired and amortized over its estimated useful life. No costs have been
capitalized for internally developed software products because the amount of
development costs eligible for capitalization was not significant.
Non-capitalizeable development and marketing costs related to the software
licenses are included in research and development expense or sales and marketing
expense, as discussed in "Net Revenues and Cost of Services and Maintenance"
below.

The Company has capitalized certain purchased software technology rights
(see Note 4) which can be used both in connection with its internally developed
software products and in alternative standalone applications. Accordingly, these
rights are included with other purchased software in fixed assets, and are being
amortized over their estimated useful life of three years. Amortization of these
purchased software technology rights was $50,000 in each of the years ended
September 30, 1999, 1998 and 1997.

LONG-LIVED ASSETS:

Long-lived assets are assessed for possible impairment whenever events or
changes in circumstances indicate that the carrying amounts may not be
recoverable, or whenever management has committed to a plan to dispose of the
assets. Such assets are carried at the lower of book value or fair value as
estimated by management based on appraisals, current market value, and
comparable sales value, as appropriate. Assets to be held and used affected by

F - 9
<PAGE>
such impairment loss are depreciated or amortized at their new carrying amount
over the remaining estimated life; assets to be sold or otherwise disposed of
are not subject to further depreciation or amortization. In determining whether
an impairment exists, Forecross uses undiscounted future cash flows compared to
the carrying value of the asset.

NET REVENUES AND COST OF SERVICES AND MAINTENANCE:

The Company's migration projects have ranged from six to eighteen months in
duration. Its year 2000 projects have ranged from two to eighteen months in
duration. Revenues for migration services and year 2000 assessment or renovation
projects are recognized using the percentage of completion method in the ratio
that actual costs incurred to date bear to total estimated costs at completion.
Provisions for estimated losses on uncompleted contracts are recognized in the
period in which the likelihood of such losses is determined. Reserves provided
for estimated adjustments of contract revenues are included as reductions of
gross revenues. Cost of revenues is primarily comprised of subcontractors' fees
and salaries and benefits of employees assigned to the contracts, and
distributors' fees. Subcontractors' fees, salaries and benefits are allocated
based on the amount of time devoted to each contract by the subcontractors and
employees; distributors' fees are accrued based on revenues earned for specific
projects for which the distributors provide services. Billings are issued based
upon specific contractual terms which may or may not relate to the percentage of
completion for the respective contracts. Unbilled receivables represent revenue
recognized in excess of amounts billed. Amounts for billings in excess of
revenue recognized are included in deferred revenue.

Forecross has authorized several exclusive distributor agreements for
specified areas for its Complete/2000 automated conversion software products and
related services and methodologies. Under the agreements, the distributor
retains exclusive rights for the territory for a specified period. Once
collectibility of the distributor and license fees is reasonably assured, and if
there are no significant post-delivery obligations, the Company recognizes the
fees associated with the exclusivity and the software license ratably over the
contractual term (including renewals), generally five years, commencing with the
date of the respective signing of the agreements. Costs associated with the
licenses for Assess/2000 have been included in research and development expense
as such costs did not qualify for capitalization. Costs associated with the
marketing and negotiation of distributor customer proposals and/or sales
contracts have been included in sales and marketing expense. Revenues for
technical and sales training, maintenance and support are recognized ratably
over the term of the support period.

RESEARCH AND DEVELOPMENT EXPENSE:

Research and development costs are expensed as incurred. In prior years,
certain research and development projects have been funded in part by customers.
In such cases, the Company retains ownership of the resulting products, which
are developed for resale to multiple customers; both the initial and subsequent
customers acquire licenses to use the developed products. During the three years
ended September 30, 1999, and during the nine months ended June 30, 2000, there
were no such customer funded research and development projects.

F - 10
<PAGE>
WARRANTY EXPENSE:

Forecross provides a reserve for warranty costs based upon estimates of
such related costs and expenses. The reserve is accrued ratably as revenues are
earned. The accrued warranty reserve is amortized over the related warranty
period for the respective contract, typically a period of three to six months
for application migration and year 2000 projects. Amortization for year 2000
renovation projects commenced as of January 1, 2000.

INCOME TAXES:

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes,
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been recognized in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. The provision for income tax
expense is the tax payable for the period plus the change during the period in
deferred tax assets and liabilities.

NET LOSS PER SHARE:

Basic earnings per share is computed by dividing income or loss available
to common shareholders by the weighted average number of shares outstanding for
the period. Diluted earnings per share reflect the potential dilution of
securities that could share in the earnings of an entity. Due to the losses,
there were no includable equivalents in any period presented.

Securities outstanding at June 30, 2000, the future potential dilutive
effect of which would be dependent upon the exercise price of the securities and
the market price of the Company's common stock at that time, include warrants to
purchase 1,073,268 shares of common stock and options to purchase 1,117,100
shares of common stock. See Note 8 "Common Stock" and Note 10 "Stock Option
Plan" for details on these securities.

STOCK-BASED COMPENSATION:

Effective October 1, 1996, Forecross adopted the disclosure provisions of
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, which requires pro forma disclosure of net income and
earnings per share as if the SFAS No. 123 fair value method had been applied.
The Company continues to apply the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, for the
preparation of our basic financial statements.

F - 11
<PAGE>
FINANCIAL INSTRUMENTS:

At September 30, 1999 and 1998, the Company's financial instruments consist
of cash, and accounts and notes receivable. The carrying value of cash and
accounts receivable approximate fair value based upon the liquidity and
short-term nature of the assets. The carrying value of notes receivable
substantially approximate fair value based upon current market interest rates,
the short-term maturity of certain of the notes and relative amounts owed. The
fair value of the notes payable to officers cannot currently be determined, as
similar borrowing sources and terms are unavailable. The carrying value of
capitalized leases approximates fair value at September 30, 1999, since the
leases were entered into during fiscal 1998 at rates which approximate the rates
at September 30, 1999.

RECLASSIFICATIONS:

Certain prior-period amounts have been reclassified to conform to current
period presentation.

OTHER RECENTLY ISSUED ACCOUNTING STATEMENTS:

During 1997, the Financial Accounting Standards Board (FASB) released SFAS
No. 130, Reporting Comprehensive Income. SFAS No. 130 established standards for
reporting and display of comprehensive income and its components in an entity's
financial statements. The objective of SFAS No. 130 is to report a measure of
all changes in the equity of an enterprise that result from transactions and
other economic events of the period. Comprehensive income is the total of net
income and all other non-owner changes in equity. SFAS No. 130 does not address
issues of recognition or measurement for comprehensive income and its
components. Therefore, it had no impact on the Company's financial condition or
results of operation upon adoption as of October 1, 1998 for the Company's year
ending September 30, 1999.

In 1997, the American Institute of Certified Public Accountants released
Statement of Position (SOP) 97-2, Software Revenue Recognition, which provides
revised guidance for recognizing revenue on certain software transactions. There
was no significant effect upon adoption as of October 1, 1998.

In 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which supersedes SFAS No. 14, Financial
Reporting for Segments of a Business Enterprise. SFAS No. 131 established
standards for the way that public companies report information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial statements to the
public. It also established standards for disclosures regarding products and
services, geographic areas and major customers. SFAS No. 131 defines operating
segments as components of a company about which separate financial information
is available that is evaluated regularly by the chief operating decision maker
in deciding how to allocate resources and in assessing performance. The Company
operates under one business segment and, accordingly, there was no significant
effect upon adoption as of October 1, 1998.

In 1998, the FASB issued SFAS No. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits. SFAS No. 132 revised employers'
disclosures about pensions and other postretirement benefits. It did not change
the measurement of recognition of those plans, and, accordingly, had no effect
on results of operations and financial position upon adoption by the Company as
of October 1, 1998.

F - 12
<PAGE>
In 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 requires companies to
recognize all derivatives contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain conditions are met,
a derivative may be specifically designated as a hedge, the objective of which
is to match the timing of gain or loss recognition on the hedging derivative
with the recognition of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) the earnings effect
of the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of
change. SFAS No. 133 as amended is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000.

Historically, the Company has not entered into derivatives contracts either
to hedge existing risks or for speculative purposes. Accordingly, the Company
does not expect adoption of this new standard for its fiscal year beginning
October 1, 2000 to affect its financial statements.

3. 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
our customers are large, well-established companies. Four customers accounted
for approximately 30%, 18%, 16% and 13% of the accounts receivable balance at
September 30, 1999, and four customers accounted for approximately 30%, 17%, 14%
and 12% at September 30, 1998. Additionally, five customers, including revenues
from the Company's Distributors treated as resulting from one customer (see Note
4), accounted for approximately 16%, 16%, 12%, 11% and 11% of total revenues for
the fiscal year ended September 30, 1999. Three customers, including revenues
from the Company's Distributors treated as resulting from one customer (see Note
4) accounted for 40%, 12% and 10% of total revenues for the fiscal year ended
September 30, 1998. Four customers, including revenues from the Company's
Distributors treated as resulting from one customer (see Note 4), accounted for
17%, 15%, 11% and 10% of total revenues for the fiscal year ended September 30,
1997. Net revenues from Canadian and European customers were as follows:

3. CONCENTRATIONS OF CREDIT RISK AND FOREIGN SALES:

For the Years Ended September 30,
--------------------------------------------------
1999 1998 1997
--------------- ---------------- ---------------
Canada 2% 2% 9%
Europe 0% 1% 1%

4. RELATED PARTY TRANSACTIONS:

Forecross has certain transactions with related parties in the ordinary
course of business as set forth below.

F - 13
<PAGE>
NOTES RECEIVABLE AND PAYABLE:

Notes receivable from and payable to officers consist of the following:

<TABLE>
<CAPTION>
September 30,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
5.7 to 10% Uncollateralized notes receivable from
Senior Vice President, due in varying amounts
through September 30, 1999 $ 37,013 $ 37,013
Accrued interest receivable 4,264 2,132
---------- ----------
Total receivable from officers 41,277 39,145
---------- ----------
24% Uncollateralized notes payable to president,
due December 30, 1999 (262,536) (350,000)
24% Uncollateralized notes payable to senior vice president,
due February 28, 2000 (120,426) (225,000)
24% Uncollateralized notes payable to senior vice president,
due June 30, 2001 (135,000) -
24% Uncollateralized notes payable to senior vice president,
due July 31, 2001 (57,000) -
Accrued interest payable (216,491) (95,537)
---------- ----------
Total payable to officers (1) (791,453) (670,537)
---------- ----------
Notes payable to officers, net $(750,176) $(631,392)
========== ==========

<FN>
(1) All net notes payable to officers were classified as long-term, as the
noteholders have committed to extend them to at least October 1, 2000, and have been
subsequently converted to equity in the Company's March 2000 private placement. (See
Note 8).
</TABLE>

SOFTWARE LICENSES AND DISTRIBUTORSHIPS:

The Company has entered into agreements with several entities (the
"Distributors") for licenses and distribution arrangements for its year 2000
software products, Assess/2000 and Complete/2000 , and related services. The
Distributors are related to each other through some common ownership and
management; a shareholder of the Company who owns less than 1% of its
outstanding securities and is not an officer or director of Forecross, is a
founding investor and officer of each of the other entities.

At least one other shareholder of Forecross, who owns less than 5% of its
outstanding securities and is not an officer or director of Forecross, is also
an investor in at least one of the Distributors. As of September 30, 1996, this
shareholder pledged 150,000 shares of Company stock as collateral for $800,000
due under the terms of the first of the contracts; the entire amount was
collected in January 1997.

F - 14
<PAGE>
Under the distributorship agreements, the Distributors receive
territorially exclusive rights to market year 2000 renovation projects to be
performed by Forecross using the Complete/2000 software, and year 2000
assessment projects to be performed either by Forecross or the Distributor using
the Assess/2000 software. In exchange for sales and marketing services and
support, customer contact, project management services and staffing for a
portion of the on-site work, the Distributor generally receives a fee equal to
25% of collected revenues. Forecross allocates those fees 25% to cost of
services and maintenance, and 75% to sales and marketing expense. The
exclusivity rights under these contracts are generally for an initial one-year
period, but are renewable for up to four additional years based on certain
performance conditions. The Distributors generally have separate agreements for
license rights for unlimited usage of the Assess/2000 product. In the case of
one contract, fees payable are 50% of collected revenues until $1,500,000 has
been received by the Distributor, and 25% of revenue collected thereafter.
During fiscal 1998, the $1,500,000 amount was earned, with all subsequent fees
to be earned at the 25% rate.

The licensing and distributorship fees received from the Distributors,
totaling $3,125,000 and $200,000 in 1997 and 1996, respectively, have generally
been deferred and recognized over a five year period commencing with the signing
of the respective agreements. Of these amounts, approximately $1,002,000,
$1,410,000 and $1,955,000 is deferred at June 30, 2000, September 30, 1999 and
September 30, 1998, respectively. Additional fees of approximately $672,000 for
training programs, annual software maintenance, and customer support were
received in 1997; of this amount, approximately $120,000, $135,000 and $155,000
is deferred at June 30, 2000, September 30, 1999 and September 30, 1998,
respectively. The year 2000 project fee expenses related to the Distributor
contracts, included in cost of revenues in the accompanying statements of
operations, were approximately $18,000, $166,000, $346,000, and $213,000 for the
nine months ended June 30, 2000 and the years ended September 30, 1999, 1998 and
1997, respectively. The year 2000 expenses related to the Distributor
contracts, included in sales and marketing expenses, were approximately $55,000,
$497,000, $1,037,000 and $640,000 for the nine months ended June 30, 2000 and
the years ended September 30, 1999, 1998 and 1997, respectively.

PURCHASED SOFTWARE:

During the year ended September 30, 1997, Forecross commissioned and
purchased a $150,000 data analysis module for use with its year 2000 software
products. The software developer is an entity owned in part by the senior vice
president, another employee of the Company, and another shareholder.

F - 15
<PAGE>
5. EQUIPMENT AND FURNITURE:

Equipment and furniture are comprised of the following:

<TABLE>
<CAPTION>
September 30,
-------------------------
1999 1998
----------- ------------
<S> <C> <C>
Computer equipment and software $ 852,137 $ 852,137
Furniture and equipment 310,890 310,890
Leasehold improvements 77,177 77,177
----------- ------------
1,240,144 1,240,144
Accumulated depreciation and amortization (962,612) (671,909)
----------- ------------
$ 277,532 $ 568,235
=========== ============
</TABLE>

6. PAYABLE TO FACTOR:

In October 1995, Forecross entered into a recourse factoring agreement with
a financial organization in which it is able to obtain financing of up to 80% of
purchased trade accounts receivable, with a maximum available limit of
$1,250,000. In addition to an administrative fee of 1% of each invoice
financed, the Company will incur interest at the rate of 2% per month on the
outstanding gross amount of the receivables financed. The Company's obligations
under this agreement have been personally guaranteed by its president and senior
vice president, who are significant shareholders. At June 30, 2000, September
30, 1999 and September 30, 1998, the Company's outstanding indebtedness under
the agreement was $225,000, $861,000 and $468,000, respectively. The agreement
may be terminated by either the factor or Forecross at any time.

7. INCOME TAXES:

The components of the provision for income taxes are summarized as follows:

For the Years Ended September 30,
---------- --------- ----------
1999 1998 1997
---------- --------- ----------
Current:
State $ 800 $ 800 $ 800
Foreign - - -
---------- --------- ----------
Total provision for income taxes $ 800 $ 800 $ 800
========== ========= ==========

F - 16
<PAGE>
The effective income tax rate differs from the statutory federal income tax rate
primarily due to the full valuation allowance against our deferred tax assets
arising from our net operating losses. Significant components of our net
deferred tax balances are as follows:

<TABLE>
<CAPTION>
September 30,
--------------------------
1999 1998
------------ ------------
<S> <C> <C>
Deferred tax assets (liabilities):
Accrual vs. cash basis adjustment. $ 141,000 $ 189,000
Deferred revenues. . . . . . . . . 713,000 925,000
Deferred compensation. . . . . . . 153,000 -
Net operating loss carryforwards . 2,537,000 1,793,000
State taxes and other. . . . . . . 39,000 (25,000)
Total deferred tax assets. . . . . 3,583,000 2,882,000
Valuation allowance. . . . . . . . (3,583,000) (2,882,000)
------------ ------------
Net deferred tax assets. . . . . . $ - $ -
============ ============
</TABLE>

Effective September 30, 1999, the Company changed from the cash basis
method to the accrual method for income tax purposes. Certain amounts will be
amortized into income over a four year period. Since the Company could not
determine it was more likely than not that the deferred tax assets would be
realized, a 100% valuation allowance has been provided to eliminate the deferred
tax assets at September 30, 1999 and 1998. The increase (decrease) in the
valuation allowance was $701,000, ($778,000) and ($552,000) in the years ended
September 30, 1999, 1998 and 1997, respectively.

At September 30, 1999, the Company has net operating loss carryforwards for
federal and California state income tax purposes of approximately $6,618,000 and
$3,239,000, respectively. These carryforwards expire in varying amounts through
2013. Pursuant to the provisions of the Tax Reform Act of 1986, utilization of
these net operating loss carryforwards may be subject to an annual limitation
due to any greater than 50% change in the ownership of the Company within a
three-year period.

8. COMMON STOCK:

In connection with a May 1995 private placement in which 735,000 shares of
our common stock were sold, the Company issued 735,000 warrants to purchase
additional shares of common stock at $0.40 and $0.60 per share if exercised
prior to August 31, 1995 and November 30, 1995, respectively. In August 1995,
warrants were exercised to purchase 183,750 shares at $0.40 per share. Warrants
to purchase the remaining 551,250 shares of common stock at $0.60 per share were
exercised in November 1995.

In December 1996, Forecross sold 282,000 shares of common stock in a
private placement resulting in proceeds of $1,128,000, and incurred $5,275 of
costs related to this sale. In connection with the sale, the investors received
nontransferable warrants to purchase an additional 282,000 shares of common
stock. The warrants are exercisable for a period of two years, at a price of

F - 17
<PAGE>
$4.00 per share during the first year and at $4.60 per share during the second
year. During the year ended September 30, 1998, warrants to purchase 12,000
shares of common stock were exercised, resulting in proceeds of $48,000. No
warrants were exercised during 1999.

In December 1998, the Company extended the expiration date of 270,000
warrants, scheduled to expire in December 1998, to a new expiration date of
December 31, 1999. The value assigned to the warrant extension was $0.10 per
warrant. Also, in exchange for the surrender of certain demand registration
rights that were held by the same warrant holders, the Company issued 10,000
shares of common stock. The market value of those shares at December 31, 1998
was $1.125 per share.

In January 1999, the Company sold in a private placement 418,322 shares of
common stock at $0.75 per share, resulting in gross proceeds of $313,750. In
connection with the private placement, the Company issued to the placement
agent, in lieu of cash, warrants to purchase 30,000 shares of common stock at
$0.75 per share, which warrants expire in five years.

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.

In March 2000, the Company completed a second private placement of 613,530
shares at $2.66 per share, resulting in gross proceeds of $1,632,000.
Additionally, 1,063,006 shares were issued to the Company's senior officers and
employees, year 2000 distributors and a director, converting Company debt from
loans, deferred payroll, travel expenses and year 2000 distributor revenue
sharing, to equity at a conversion price of $2.66 per share. The total debt
converted into equity was $2,827,596. With each share issued to investors in the
second private placement and to those converting debt, the Company also issued a
warrant to purchase one half share of stock at $2.66 per share at a future date
for a total of 838,268 warrant shares. The warrants expire upon the earlier of
three years, or 30 days after the 10-day trading average closing price of the
Company's common stock equals or exceeds $7.98 per share (if a registration
statement covering the underlying shares has been declared effective). In
connection with the second private placement, the Company also issued to a
finder warrants to purchase 200,000 shares of common stock at $2.66 per share
which expire in three years. A total of $954,000 in non-cash compensation
expense was recorded for the beneficial pricing effect to senior officers,
employees, year 2000 distributors and a director.

On February 7, 2000, the Company's board of directors approved the grant of
options to purchase an aggregate of 151,800 shares of its common stock to
various employees under its 1994 Stock Option Plan. These options are fully
vested upon issuance and are exercisable at a price of $0.58 per share for a
period of five years. In addition, on March 17, 2000, the Company's board of
directors approved the grant of options to purchase 80,000 shares of its common
stock to a member of its board of directors under its 1994 Stock Option Plan and
the grant of options to purchase an aggregate of 258,900 shares of its common
stock to various employees outside the 1994 Stock Option Plan. All of these
options vest over various periods of up to four years, and are exercisable at a
price of $3.25 per share for a period of five years

F - 18
<PAGE>
9. RESTRICTED STOCK PURCHASE PLAN:

In June 1993, the Board of Directors approved the 1993 Restricted Stock
Purchase Plan (the "Plan"). The Plan allows employees and consultants to
purchase shares of the Company's common stock at a price not less than the fair
value. The maximum aggregate number of shares which may be sold under the Plan
is 1,000,000 shares of common stock. No shares were sold under the Plan in
1999, 1998 or 1997.

Shares purchased under the Plan are subject to a right of repurchase by
Forecross at the original purchase price upon the termination of the purchaser's
employment or consulting relationship with the Company. The right to repurchase
generally lapses at the rate of one-third (1/3) after one year from the date of
purchase, and one-thirty-sixth (1/36) of the original number of shares purchased
per month thereafter. At June 30, 2000, September 30, 1999 and 1998, no shares
are subject to repurchase under this provision. No shares were repurchased
during the years ended September 30, 1999, 1998 or 1997.

10. STOCK OPTION PLAN:

In April 1994, the Board of Directors approved the 1994 Stock Option Plan,
in which employees and consultants may be granted incentive and non-statutory
stock options. Depending on the employee's stock ownership percentage,
incentive stock options are granted with exercise prices ranging from 100% to
110% of the fair value of stock at the date of grant. Depending on the
employee's stock ownership percentage, non-statutory stock options are granted
with exercise prices ranging from 85% to 110% of the fair value of stock at the
date of grant. The maximum aggregate number of shares of common stock which may
be optioned and sold under the plan is 950,500. The term of each option is that
stated in each specific option agreement provided that the term does not exceed
ten years from the date of grant (five years in the case of an optionee already
owning common stock representing 10% or more of the voting power).

F - 19
<PAGE>
Stock option activity under the 1994 Stock Option Plan is as follows:

<TABLE>
<CAPTION>
Options Outstanding
-----------------------------------------------
Shares Weighted
Available Number Price Average
For of Per Aggregate Exercise
Grant Shares Share Price Price
----------- --------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Balance, October 1, 1996. . . . 356,500 594,000 $ 1.43-4.75 $ 1,072,125 $ 1.80
Granted during 1997 . . . . . . (131,800) 131,800 9.70-19.00 1,809,010 13.73
Exercised during 1997 . . . . . - (14,000) 2.00-9.70 (39,500) 2.83
Canceled during 1997. . . . . . 8,500 (8,500) 2.00-4.75 (33,500) 3.94
----------- --------- ----------- ------------ ---------
Balance, September 30, 1997 . . 233,200 703,300 1.43-19.00 2,808,085 3.99
Granted or repriced during 1998 (164,800) 164,800 8.02-11.50 1,663,996 10.10
Canceled during 1998. . . . . . 144,300 (144,300) 4.75-19.00 (1,915,710) 13.28
----------- --------- ----------- ------------ ---------
Balance, September 30, 1998 . . 212,700 723,800 1.43-11.50 2,556,371 3.53
Canceled during 1999. . . . . . 53,500 (53,500) 4.75-11.50 (516,180) 9.65
----------- --------- ----------- ------------ ---------

Balance, September 30, 1999 . . 266,200 670,300 $1.43-11.50 $ 2,040,191 $ 3.04
========== ========== =========== =========== ==========
</TABLE>

The following table summarizes information with respect to stock options
outstanding at September 30, 1999:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------------------- -------------------------
Weighted
Number Average Number
Outstanding Remaining Weighted Exercisable Weighted
at Contractual Average at Average
September 30, Life Exercise September 30, Exercise
Range of Exercise Price 1999 (Years) Price 1999 Price
------------------------ ------------- ------------ --------- ------------- ---------
<S> <C> <C> <C> <C> <C>

1.43-2.00. . . . . . . . 517,500 1.40 $ 1.45 517,500 $ 1.45
4.75 . . . . . . . . . . 51,000 2.17 4.75 51,000 4.75
8.02-11.50 . . . . . . . 101,800 3.27 10.29 99,161 10.26
------------------------ ------------- ------------ --------- ------------- ---------
1.43-11.50 . . . . . . . 670,300 1.75 $ 3.04 667,661 $ 3.01
============= ============ ========= ============= =========
</TABLE>

In April 1998, at the request of the Board of Directors, the Vancouver
Stock Exchange approved a repricing of the options then outstanding at $15.35
and $19.00 per share to $11.15 per share, which equaled the market price at the
date of the repricing grant. Other terms of those options remain the same.

In June 1998, at the request of the Board of Directors, the Vancouver Stock
Exchange approved a repricing of the options then outstanding at $9.70 and
$12.70 per share to $8.02 per share, which equaled the market price at the date
of the repricing grant. Other terms of those options remain the same.

F - 20
<PAGE>
Forecross applied APB Opinion No. 25, Accounting for Stock Issued to
Employees, in accounting for the stock option plan. Accordingly, no compensation
cost has been recognized for the stock option plan. Had compensation cost for
the stock option plan been determined consistent with SFAS No. 123, Accounting
for Stock-Based Compensation, the Company's net loss and net loss per share
would have been the pro forma amounts indicated below:

<TABLE>
<CAPTION>
Years Ended September 30,
----------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C> <C>
Net loss. . . . . . . . . . . . . . . As reported $(2,731,380) $(2,328,652) $(1,045,511)
Pro forma $(2,771,871) $(2,893,374) $(2,043,097)

Net loss per share - basic and diluted As reported $ (0.23) $ (0.20) $ (0.09)
Pro forma $ (0.23) $ (0.25) $ (0.18)
</TABLE>

The fair value of the Company's stock option grants is amortized over the
vesting period. The average fair values of options granted during the years
ended September 30, 1998 and 1997 (including repriced options) were $2.35 and
$10.09, respectively. There were no stock options granted in the year ended
September 30, 1999. The fair value was estimated as of the date of grant using
a modified Black-Scholes option pricing method based upon the following weighted
average assumptions for 1998 and 1997:

September 30,
--------------
1998 1997
------ ------

Expected life (years) 2.1 2.5

Expected volatility 116% 125%

Risk free interest rate 5.60% 6.22%

SEE ALSO NOTE 8 "COMMON STOCK" FOR TRANSACTIONS SUBSEQUENT TO SEPTEMBER 30,
1999.

11. PROFIT SHARING AND RETIREMENT PLANS:

The Company has a 401(k) profit sharing plan covering substantially all
employees, and matches employee salary deferrals up to a maximum of 4% of the
participant's eligible compensation. The Company's cost of the 401(k) profit
sharing plan was $71,682, $73,499 and $66,670 in the fiscal years ended
September 30, 1999, 1998 and 1997, respectively.

The Company also has a Money Purchase Pension Plan (the "Pension Plan").
The Company was required to contribute 10% of total participant compensation
through December 1992 and 6% of total participant compensation from January 1,
1993 through December 31, 1994. Effective January 1, 1995, contributions to the
Pension Plan were discontinued as the Company now contributes to the 401(k) Plan
as described above. There were no contributions to the Pension Plan during the
fiscal years 1999, 1998 or 1997.

F - 21
<PAGE>
12. LEASE COMMITMENTS:

The Company leases office space and equipment under operating leases. Rent
expense under operating leases was $302,495, $354,684 and $184,344 in the fiscal
years ended September 30, 1999, 1998 and 1997, respectively. As of September
30, 1999, future minimum lease payments under operating leases are as follows:

Years Ending September 30,
2000 $ 315,000
2001 313,000
2002 95,000
----------
$ 723,000
===========

Minimum payments to be received by the Company for the sublease of office
space are $68,750, $68,750 and $17,190 for the years ended September 30, 2000,
2001 and 2002, respectively.

13. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

<TABLE>
<CAPTION>
Nine Months Ended
Years Ended September 30, June 30,
--------------------------- -------------------
1999 1998 1977 2000 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Interest paid $260,410 $220,053 $290,648 $173,274 $169,892
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

<TABLE>
<CAPTION>
Nine Months
Years Ended September 30, Ended June 30,
--------------------------- -----------------
1999 1998 1997 2000 1999
-------- -------- ------- --------- ------
<S> <C> <C> <C> <C> <C>
Outstanding travel advances converted
to a note receivable from the
Senior Vice President $ - $ - $37,013 $ - $ -

Writeoff of accounts receivable against
accrued distributors' fees related thereto - 288,302 - - -

Acquisition of equipment and furniture
through capital lease. . . . . . . . . . . - 70,946 - - -

Accrued interest on notes payable to
officers . . . . . . . . . . . . . . . . . 120,954 90,405 - [59,333] 86,835

Value of common stock issued and
assigned to extension of warrants in
exchange for surrender of demand
registration rights . . . . . . . . . . . 38,250 - - - 38,250

Conversion of debt to equity . . . . . . . - - - 2,827,596
</TABLE>

14. SUBSEQUENT EVENTS:

F - 22
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II

FORECROSS CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

Allowances Against Receivables:

Additions Deductions
------------- -----------
Balance, Charges to
Beginning Revenues or Write-Offs Balance,
of Costs and Charged to End of
Period Expenses (1) Reserve Period
---------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Year Ended September 30,
1999 . . . . . . . . . . . . . . . . . . $ 136,650 $ (65,001) $ 26,649 $ 45,000
1998 . . . . . . . . . . . . . . . . . . 300,340 124,952 288,642 136,650
1997 . . . . . . . . . . . . . . . . . . 340 300,000 - 300,340

Deferred Tax Asset Valuation Allowances:

Year Ended September 30,
1999 . . . . . . . . . . . . . . . . . . $2,882,000 $ - $ (701,000)* $3,583,000
1998 . . . . . . . . . . . . . . . . . . 2,104,000 - (778,000)* 2,880,000
1997 . . . . . . . . . . . . . . . . . . 1,552,000 - (552,000)* 2,104,000

<FN>
* offset by change in deferred tax asset

(1) Certain allowances related to contract estimations for amounts of revenue recognized
on percentage-of-completion basis are charged directly to revenues. See Summary of
Significant Accounting Policies.
</TABLE>

<PAGE>
================================================================================

NO DEALER, SALESPERSON OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR TO
REPRESENT ANYTHING NOT CONTAINED IN THIS
PROSPECTUS. YOU MUST NOT RELY ON ANY
UNAUTHORIZED INFORMATION OR REPRESENTATIONS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE UNDER THIS PROSPECTUS IMPLIES THAT Common Stock
THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINE THE
DATE OF THIS PROSPECTUS OR THAT THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
THIS PROSPECTUS IS AN OFFER TO SELL ONLY THE
SECURITIES OFFERED HEREBY, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS
LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CURRENT ONLY AS OF THIS DATE.

TABLE OF CONTENTS [INSERT LOGO]

Page

Prospectus Summary. . . . . . . . . .
Risk Factors. . . . . . . . . . . . .
Use of Proceeds. . . . . . . . . . . .
Dividend Policy. . . . . . . . . . . .
Capitalization. . . . . . . . . . . .
Selected Financial Data. . . . . . . ..
Management's Discussion and FORECROSS CORPORATION
Analysis of Financial Condition
and Results of Operations
Business. . . . . . . . . . . . . . .
Management. . . . . . . . . . . . . .
Principal Stockholders. . . . . . . .
Related Party Transactions. . . . . .
Description of Share Capital . . . .
Selling Stockholders. . . . . . . . . ===================
Plan of Distribution
Legal Matters . . . . . . . . . . . . Prospectus
Experts . . . . . . . . . . . . . . . ===================
Additional Information Made
Available to You. . . . . . . . . . .
Index to Financial Statements. . . F-1 September __, 2000

================================================================================

<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------

Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all costs and expenses payable by Forecross
in connection with the sale and distribution of the securities being registered,
other than underwriting discounts and commissions. All amounts shown are
estimates except the SEC registration fee.

SEC registration fee . . . . . . $ 700
Accounting fees and expenses. . . 12,500
Legal fees and expenses . . . . . 55,000
Printing and engraving expenses . 2,500
Transfer agent and registrar fees 500
Blue Sky fees and expenses. . . . 2,500
Miscellaneous expenses. . . . . . 500
Total . . . . . . . . . . . . . . $ 74,200

Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article IV of the articles of incorporation of Forecross eliminates the
personal liability of directors and/or officers to Forecross or its shareholders
for monetary damages for breach of fiduciary duty as a director; provided that
such elimination of the personal liability of a director and/or officer of
Forecross does not apply to (i) any breach of such person's duty of loyalty to
Forecross or its shareholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) actions
prohibited under Section 316 of the California Corporations Code (i.e.,
liabilities imposed upon directors who vote for or assent to the unlawful
payment of dividends, unlawful repurchases or redemption of stock, unlawful
distribution of assets of Forecross to the shareholders without the prior
payment or discharge of Forecross's debts or obligations, or unlawful making or
guaranteeing of loans to directors and/or officers), or (iv) any transaction
from which the director derived an improper personal benefit. In addition,
Forecross, at its discretion, may provide indemnification to persons whom we are
not obligated to indemnify. The by-laws also allow us to enter into indemnity
agreements with individual directors, officers, employees and other agents.
These indemnity agreements have been entered into with all directors and
executive officers and provide the maximum indemnification permitted by law.
These agreements, together with our by-laws and articles of incorporation, may
require us, among other things, to indemnify these directors or executive
officers (other than for liability resulting from willful misconduct of a
culpable nature), to advance expenses to them as they are incurred, provided
that they undertake to repay the amount advanced if it is ultimately determined
by a court that they are not entitled to indemnification, and to obtain
directors' and officers' insurance if available on reasonable terms. Section
317 of the California Corporations Code and our by-laws make provision for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons, under certain circumstances, for
liabilities (including reimbursement of expense incurred) arising under the
securities act. We currently maintain directors' and officers' liability
insurance.

II - 1
<PAGE>
In addition, Article IV of Forecross's articles of incorporation, and
Article VI of Forecross's by-laws, provide that Forecross shall indemnify its
corporate personnel, directors and officers to the fullest extent permitted by
the California Corporations Code, as amended from time to time.

Item 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following table sets forth information regarding issuances of common
stock by Forecross during the three years ended September 30, 1999 and during
the nine months ended June 30, 2000.

<TABLE>
<CAPTION>
Number of Shares Gross Proceeds ($U.S.) Nature of Consideration
---------------- ---------------------- ------------------------
<C> <C> <S>

282,000 1,122,725 Cash(1)

14,000 39,500 Cash(2)

12,000 48,000 Cash(3)

10,000 0 Other(4)

418,333 313,750 Cash(5)

1,175,000 235,000 Cash(6)

1,676,536 4,459,596 Cash and Conversion of
Debt(7)

<FN>
(1) In December 1996, Forecross sold 282,000 shares of its common stock in a
private placement resulting in proceeds of $1,128,000. The Company incurred
$5,275 of costs related to this sale. In connection with the sale, the
Company issued to the investors nontransferable warrants to purchase an
additional 282,000 shares of common stock. The warrants are exercisable for
a period of two years, at a price of $4.00 per share during the first year
and at $4.60 per share during the second year. These warrants expired
without being exercised. See Note 4 below.

(2) These shares were issued during the fiscal year ended September 30, 1997
upon the exercise of stock options for 12,500 shares at $2.00 per share,
and 1,500 shares at $9.70 per share.

II - 2
<PAGE>
(3) These shares were issued in October and November 1997 upon the exercise of
warrants issued in connection with a private placement of 282,000 shares in
December 1996.

(4) These shares were issued in December 1998 in exchange for the surrender of
certain demand registration rights held at the time by existing warrant
holders and certain other consideration. Under FAS 123, the value of the
common stock was determined to be $11,250. In addition, in connection with
this issuance, the Board of Directors approved the extension to December
31, 1999 of the expiration date of warrants to purchase 270,000 shares of
common stock at $4.60 per share, which warrants were originally scheduled
to expire December 31, 1998, and have subsequently expired on December 31,
1999. Under FAS 123 the value attributable to the extension of the term of
the warrants was determined to be $27,000.

(5) In January 1999, Forecross issued 418,333 shares of its common stock for
$0.75 per share in a private placement. As part of the private placement,
Forecross also issued a warrant exercisable for 30,000 shares of common
stock at an exercise price of $0.75 per share as a finder's fee. All of the
purchasers in the private placement were accredited investors. The issuance
of these securities was exempt from the registration requirements of the
securities act under Section 4(2) and Regulation D of the securities act,
as a transaction by an issuer not involving a public offering.

(6) These shares were issued in January 2000 in a private placement. All of the
purchasers in the private placement were accredited investors. The issuance
of these shares was exempt from the registration requirements of the
securities act under Section 4(2) and Regulation D of the securities act,
as a transaction by an issuer not involving a public offering.

(7) These securities were issued in March 2000 in a private placement. Of the
securities, 613,530 were shares of common stock sold for $2.66 per share or
$1,632,000, 1,063,006 were shares of common stock sold to some of our
senior officers and employees, year 2000 distributors and other creditors
in exchange for the conversion of an aggregate amount of debt of $2,827,596
or $2.66 per share, and 1,038,268 are shares of common stock issuable upon
the exercise of warrants at an exercise price of $2.66 per share issued in
the private placement. All of the purchasers in the private placement were
accredited investors. The issuance of these securities was exempt from the
registration requirements of the securities act under Section 4(2) and
Regulation D of the securities act, as a transaction by an issuer not
involving a public offering.
</TABLE>

Forecross has issued shares of its common stock to certain employees
(including officers) pursuant to compensation benefit plans of Forecross. The
transactions described in this paragraph were exempt from the registration
requirements of the securities act based upon Rule 701 promulgated thereunder.
Shares were issued for cash payments as follows:

II - 3
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEE NUMBER OF SHARES GROSS PROCEEDS DATE
---------------- ---------------- --------------- -----------------
<S> <C> <C> <C>
Pearl Saad 5,000 $ 10,000 November 15, 1996

Theresa Rizzo 2,500 5,000 January 10, 1997

Charles Nelson 5,000 10,000 April 24, 1997

Nina Nazimowitz 1,500 1,550 July 18, 1997

Lynn Dahl-Kundin 4,900 9,800 April 24, 2000

Barbara Munro 5,000 10,000 April 26, 2000
</TABLE>

<TABLE>
<CAPTION>
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.
--------

Exhibit No. Description
----------- -----------
<C> <S>

II - 4
<PAGE>
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
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.
23.1** Consent of Piper Marbury Rudnick & Wolfe LLP (included in Exhibit 5.1)
23.2** Consent of BDO Seidman LLP
27.1** Financial Data Schedule, June 30, 2000
-------------------
<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.
** Filed herewith.
</TABLE>

II - 5
<PAGE>
Item 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in this Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) promulgated under
the Securities Act of 1933 if, in the aggregate, the
changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
this Registration Statement;

(iii)To include any material information with respect to
the plan of distribution not previously disclosed in
this registration statement or any material change to
such information in this Registration Statement;

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

II - 6
<PAGE>
(h) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of each issue.

II - 7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of San Francisco, State of California, on the 28th day
of September, 2000.

FORECROSS CORPORATION

By: /s/ Bernadette C. Castello
-----------------------------
Bernadette C. Castello
Senior Vice President and
Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- -----

/s/ Kim O. Jones Chief Executive Officer, September 28, 2000
-------------------------- President and Director
KIM O. JONES (principal executive officer)

/s/ Bernadette C. Castello Senior Vice President, Chief September 28, 2000
-------------------------- Financial Officer and Director
BERNADETTE C. CASTELLO (principal financial and
accounting officer)

/s/ Richard A. Carpenter Director September 28, 2000
--------------------------
RICHARD A. CARPENTER

*By: /s/ Bernadette C. Castillo
--------------------------
Bernadette C. Castillo
Attorney-in-Fact

II - 8
<PAGE>

<TABLE>
<CAPTION>
FORECROSS CORPORATION
FORM S-1
REGISTRATION STATEMENT
EXHIBIT INDEX

Exhibit No. Description
----------- -----------
<C> <S>

3.1+ Restated Articles of Incorporation
3.2+ By-Laws
5.1** Opinion of Piper Marbury Rudnick & Wolfe LLP
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
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

II - 9
<PAGE>
& Lybrand, L.L.P.
23.1** Consent of Piper Marbury Rudnick & Wolfe LLP (included in Exhibit 5.1)
23.2** Consent of BDO Seidman LLP
27.1** Financial Data Schedule, June 30, 2000

<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.
** Filed herewith.
</TABLE>

II - 10
<PAGE>