UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                           FORM 10-QSB

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

For the quarterly period ended March 31, 2001


[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ____________ to _____________

Commission File Number: 001-15769
                        ---------


                 CALIFORNIA SOFTWARE CORPORATION
                 -------------------------------
(Exact name of small business issuer as specified in its charter)


              Nevada                         88-0408446
              ------                         ----------
 (State or other jurisdiction of    (IRS Employer Identification No.)
  incorporation or organization)


              2485 McCabe Way, Irvine, California  92614
              ------------------------------------------
                (Address of principal executive offices)

                          (949) 553-8900
                          --------------
                    (Issuer's telephone number)

    ____________________________________________________________
   (Former name, former address and former fiscal year, if changed
                         since last report)


  APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                 DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court.
Yes [ ] No [ ]

              APPLICABLE ONLY TO CORPORATE ISSUERS

State  the  number of shares outstanding of each of the  issuer's
classes  of  common  equity, as of the latest  practicable  date:
12,567,771 as of March 31, 2001.
--------------------------------

          TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT

Yes [ ] No [X]

<PAGE>

                 California Software Corporation
                        Quarterly Report
                  Period Ending March 31, 2001


                        Table of Contents


PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Consolidated Balance Sheet-------------------------------------  1

Consolidated Statements of Operations and Comprehensive Income-  2

Consolidated Statements of Cash Flows--------------------------  3

Notes to Consolidated Financial Statements---------------------  4

Item 2. Management's Discussion and Analysis-------------------  6

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings------------------------------------- 13

Item 2.  Changes in Securities--------------------------------- 14

Item 3.  Defaults Upon Senior Securities----------------------- 14

Item  4.  Submission of Matters to a Vote of Security Holders-- 14

Item 5.  Other Information------------------------------------- 14

Item 6.  Exhibits and Reports on Form 8-K---------------------- 15

SIGNATURES----------------------------------------------------- 16

-i-
<PAGE>

PART I - FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements

                        California Software Corporation
                          CONSOLIDATED BALANCE SHEET
                                  (unaudited)

                                                          March 31, 2001
                                                          ---------------
ASSETS

Current assets:
  Cash and cash equivalents                                 $    589,115
  Accounts receivable, net of allowance for
    doubtful accounts of $1,250,289                              985,755
  Prepaids and other current assets                              352,074
                                                          ---------------
      Total current assets                                     1,926,944

Property and equipment, net                                      463,922
Goodwill, net                                                  5,917,758
Other assets                                                      41,715
                                                          ---------------
TOTAL ASSETS                                              $    8,350,339
                                                          ===============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                   $    3,608,009
  Accrued payroll and related taxes                            1,382,531
  Deferred revenue                                               733,336
                                                          ---------------

      Total current liabilities                                5,723,876


Long-term liabilities                                          1,491,482
                                                          ---------------
Total liabilities                                              7,215,358

Commitments and contingencies

Stockholders' Equity

Preferred stock, $0.001 par value;
  5,000,000 shares authorized;
  no shares issued and outstanding                                     -

Common stock, $0.001 par value;
  20,000,000 shares authorized;
  12,567,771 shares issued and outstanding                        12,568

Additional paid-in capital                                     8,964,895
Foreign currency translation adjustments                         (26,813)
Accumulated deficit                                           (7,815,669)
                                                          ---------------
Total stockholders' equity                                     1,134,981
                                                          ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $    8,350,339
                                                          ===============


 The accompanying notes are an integral part of the financial statements.

-1-
<PAGE>

                      California Software Corporation
       CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                (unaudited)

                                                  Three months ended
                                                         March 31,
                                            -------------------------------
                                                 2001               2000
                                            ------------       ------------
Revenues:
  Software sales                            $   706,200        $   404,411
  Maintenance and other revenue                 544,296             40,429
                                            ------------       ------------
    Total revenues                            1,250,496            444,840

Costs and expenses:
Research and development                        422,422            117,035
Selling, general, and administrative          1,582,261            905,872
Depreciation and amortization                   327,078              6,707
                                            ------------       ------------
    Total costs and expenses                  2,331,761          1,029,614
                                            ------------       ------------
Loss from operations                         (1,081,265)          (584,774)

Other expense, net                               (1,822)            (1,306)
Foreign currency exchange loss                   (3,159)                 -
                                            ------------       ------------
Loss before provision for income
 taxes and extraordinary item                (1,086,246)          (586,080)

Provision for income taxes                            -                  -
                                            ------------       ------------
Loss before extraordinary item               (1,086,246)          (586,080)

Extraordinary item - gain on recovery
  of investment                               1,000,000                  -
                                            ------------       ------------
Net loss                                    $   (86,246)       $  (586,080)

Other comprehensive loss:
  Foreign currency translation                  (26,813)                 -
                                            ------------       ------------
Comprehensive loss                          $  (113,059)       $  (586,080)
                                            ============       ============
Loss per common share, basic and fully diluted:

  Loss before extraordinary item            $     (0.09)       $     (0.07)
  Extraordinary item                               0.08                  -
                                            ------------       ------------
  Net loss                                  $     (0.01)       $     (0.07)
                                            ============       ============
Weighted-average shares outstanding          12,436,697          8,736,284
                                            ============       ============

 The accompanying notes are an integral part of the financial statements.

-2-
<PAGE>

                          California Software Corporation
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (unaudited)

                                                 Three months ended March 31,
                                              ---------------------------------
                                                    2001                2000
                                              ------------        -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                       $  (86,246)         $  (586,080)
Adjustments to reconcile net loss with
 net cash flows used in operating activities:

Depreciation and amortization                     327,078                6,707
Allowance for bad debt                                  -                    -
Loss on disposal of assets                              -                5,542
Issuance of common stock for services               2,000              185,083
Extraordinary gain from recovery of investment (1,000,000)                   -
Changes in operating assets / liabilities:
Accounts receivable                               432,236               25,472
Prepaids and other current assets                 239,590              (20,944)
Accounts payable and accrued expenses          (1,204,676)             (72,949)
Accrued payroll and related taxes                  15,739               20,065
Deferred revenue                                  (35,306)              21,292
                                              ------------        -------------
Net cash used in operating activities          (1,309,585)            (415,812)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Unibol, net of cash acquired        30,967                    -
Net purchase price adjustments to Unibol
 acquisition                                      (67,622)                   -
PP&E additions                                    (21,759)             (24,071)
Other assets                                      (43,469)                (534)
                                              ------------        -------------
Net cash used in investing activities            (101,883)             (24,605)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds paid to shareholders                    (792,962)                   -
Proceeds from long-term borrowing                 450,000                    -
Repayment of long-term debt                       (41,146)                   -
Repurchases of common stock                       (14,595)                   -
Repayments under capital leases                    (8,480)                   -
Issuance of common stock                                -              200,000
Issuance of common stock subscription                   -            2,000,000
                                              ------------        -------------
Net cash provided by (used in) financing
 activities                                      (407,183)           2,200,000
                                              ------------        -------------
Effect of exchange rate changes on cash
 and cash equivalents                             (26,813)                   -
                                              ------------        -------------
Net change in cash and cash equivalents        (1,845,464)           1,759,583

Cash at beginning of period                     2,434,579              402,782
                                              ------------        -------------
Cash at end of period                          $  589,115          $ 2,162,365
                                              ============        =============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
                                              ============        =============
Forgiveness of note receivable                 $   71,311          $         -
                                              ============        =============
Conversion of common stock subscription
 into common stock                             $        -          $   700,840
                                              ============        =============
Issuance of stock in exchange for note
 receivable                                    $        -          $    64,018
                                              ============        =============

  The accompanying notes are an integral part of the financial statements.

-3-
<PAGE>

                 California Software Corporation
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         March 31, 2001

1. BASIS OF PRESENTATION

The  consolidated financial statements included herein have  been
prepared  by  California  Software Corporation  (the  "Company"),
without  audit,  pursuant to the rules  and  regulations  of  the
Securities  and Exchange Commission ("SEC").  These  consolidated
financial  statements  should be read  in  conjunction  with  the
financial  statements  and  the notes  thereto  included  in  the
Company's Annual Report on Form 10-KSB for the fiscal year  ended
December 31, 2000.

In   the   opinion  of  management,  the  unaudited  consolidated
financial statements contain all adjustments (consisting only  of
normal  recurring adjustments) necessary for a fair  presentation
of  the  Company's financial position and results of  operations.
The  results for the three month period ended March 31, 2001  are
not  necessarily indicative of the results expected for the  full
fiscal year.

The Company calculates net income (loss) per share as required by
Statement of Financial Accounting Standards No. 128, Earnings Per
Share.  Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares
outstanding for the period.  Diluted earnings (loss) per share is
calculated by dividing net income (loss) by the weighted average
number of common shares and dilutive common stock equivalents
outstanding.During the periods presented, common stock equivalents
were not considered as their effect would be antidilutive.

2. ACQUISITION OF UNIBOL

On  November  8, 2000, the Company signed a letter of  intent  to
merge with Unicomp, Inc. ("Unicomp"), a Georgia corporation.   On
that same date, and two days thereafter, the Company entered into
various   agreements  with  Unicomp  through  which  the  Company
acquired, Unibol, Ltd., a United Kingdom corporation, and through
which  the  Company  contends it also acquired  Unibol,  Inc.,  a
Georgia corporation ("Unibol U.S.") (collectively, "Unibol").  In
the Stock Purchase Agreement ("Purchase Agreement"), Amendment to
the   Stock   Purchase  Agreement  ("Amendment"),   and   related
documents,  the  Company  agreed to pay cash  of  $1,000,000,  an
additional  $500,000 due in four monthly installments  commencing
on  the first of the month beginning with the second month  after
the  Closing  Date, and $1,500,000 of the Company's Common  Stock
due  and valued on the six month anniversary of the Closing Date.
On November 13, 2000, the Company paid the $1,000,000 in cash due
under the Purchase Agreement.  Subsequent to the cash payment,  a
dispute  arose  between the Company and Unicomp  about  Unicomp's
providing of financial information, the identity of the companies
included  under the acquisition documents, as well as the  intent
of  certain  provisions contained in the Amendment purporting  to
grant  sole  operational  and  voting  control  over  the  Unibol
entities  to  the Chief Executive Officer of Unicomp  for  a  six
month  period.  As a result, the Company did not make any of  the
installment payments due under the Purchase Agreement, and merger
discussions  were  terminated.  The Company  thereafter  filed  a
lawsuit  in  California against Unicomp, several of its  officers
and   directors,   and   a   third  party   alleging   fraudulent
misrepresentation  and various other charges in  connection  with
the  acquisition of Unibol, Ltd. and Unibol, Inc.   Unicomp  also
filed  a  lawsuit  in  Georgia against  the  Company  seeking  to
preserve  Unicomp's  interest in one  of  the  Unibol  companies,
Unibol,  Inc.,  as  well  as to uphold  the  original  terms  and
conditions of the Purchase Agreement and Amendment, although that
lawsuit  subsequently was dismissed by the  Georgia  court.   The
claims  previously asserted by Unicomp in the Georgia action  are
asserted  by  Unicomp  in  a cross-complaint  to  the  action  in
California  filed  by the Company.  On January  22,  2001,  at  a
meeting of Unibol UK's sole shareholders, the Company elected  to
revoke  certain  terms in the Amendment giving control  over  the
Unibol entities to the Chief Executive Officer of Unicomp and the
Company asserted its physical and operational control over Unibol
UK  on or about January 29, 2001.  At December 31, 2000, however,
due  to  legal  obstacles, the Company was not able to  ascertain
what  assets and liabilities it purchased in connection with this
acquisition,   nor  could  the  outcome  of  the  litigation   be
predicted.   As  a  result, the Company established  a  valuation
reserve  at  December  31,  2000  against  its  $1,000,000   cash
investment in Unibol.

On  May  1,  2001,  the Company and Unicomp signed  a  Settlement
Agreement  (the  "Settlement Agreement") to  resolve  the  issues
pertaining   to   the  litigation  between  the  two   companies.
According  to  the terms of the Settlement Agreement,  the  Chief
Executive Officer of Unicomp has agreed to relinquish his  voting
and  operating  control  of Unibol, Ltd. to  the  Company,  while
granting  the  Company  the  rights  to  market  Unibol  products
worldwide.   In  addition,  Unicomp has  agreed  to  forgive  the
remaining   cash  and  stock  amounts  due  under  the   Purchase
Agreement.  The Settlement Agreement shall be effective as of May
15,  2001  or  at  such other time as agreed to  by  Unicomp  and
California  Software,  but not later  than  June  1,  2001.   The
Company  and  Unicomp also have agreed to suspend  all  currently
filed litigation between the two companies until July 1, 2001  or
the closing of the Settlement Agreement, whichever occurs first.

-4-
<PAGE>

After  reviewing  the  facts  and circumstances  surrounding  the
acquisition as well as the terms of the aforementioned Settlement
Agreement, the Company has determined that the effective date  of
the  Unibol acquisition is January 29, 2001, the date over  which
the  Company obtained voting and operational control  of  Unibol.
Assets  and  liabilities  of Unibol assumed  by  the  Company  at
January   29,  2001  were  valued  at  $420,627  and  $1,809,274,
respectively.   In addition, the Company recorded purchase  price
adjustments subsequent to the acquisition totaling $67,622.   The
Company accounted for the acquisition as a purchase as of January
29,  2001 and, accordingly, the operating results of Unibol  have
been  included  in the consolidated financial statements  of  the
Company  since  that date.  The excess of the aggregate  purchase
price  over  the  fair  market value of net  assets  acquired  at
January  29,  2001  is  being  amortized  over  five  years.   In
addition, the Company reversed the $1,000,000 reserve established
at   December  31,  2000  and  has  presented  this  item  as  an
extraordinary  gain in the consolidated financial statements  for
the three months ended March 31, 2001.

3. SETTLEMENT WITH SHAREHOLDERS

On February 13, 2001, the Company entered into a Settlement and
Release Agreement (the "Settlement and Release Agreement") with
certain shareholders that participated in the Company's private
placement of Common Stock in the year 2000 (the "Participating
Subscribers").  Under the terms of the Settlement and Release
Agreement, the Participating Subscribers have released the
Company, two of its officers and directors and an unrelated party
(the "Released Parties") from any and all claims against the
Released Parties in connection with the Company's private
placement of Common Stock in the year 2000 in exchange for a cash
payment of $0.565 per share purchased, a note payable over 36
months bearing no interest equal to $0.365 per share purchased,
and one warrant exercisable into one share of the Company's
Common Stock for each share purchased.  The warrants have an
exercise price of $2.00 and must be exercised within 24 months.
In addition, the two officers and directors of the Company and
the unrelated party agreed to give up a portion of their
individual Common Stock holdings to the Participating
Subscribers.

A summary of the amounts payable by the Company under the
Settlement and Release Agreement are as follows:

     Cash                                $     821,212
     Notes payable                             530,517
                                         -------------
     Total cash and notes payable        $   1,351,729
                                         =============
     Number of common stock warrants         1,453,472
                                         =============

On March 30, 2001, the Company entered into an agreement with
NevWest Securities Corporation ("NevWest") and one of its
officers to borrow cash of $450,000 to assist it in paying the
cash amounts due under the Settlement and Release Agreement.
Under the terms of the notes, the Company agreed to repay the
notes beginning April 10, 2001 over a 36-month period at an
interest rate of prime plus 2% (10% as of March 30, 2001).  The
notes are secured by all of the tangible and intangible assets of
the Company; furthermore, the Company's Chief Executive Officer
agreed to personally guarantee one-half of the loan amount.  In
addition, the Company agreed to forgive a promissory note of
$74,032 owed to it by NevWest.  After receiving the loan
proceeds, on or about March 30, 2001, the Company delivered
initial cash proceeds of $792,962 along with the notes payable,
Common Stock warrants, and the shares of Common Stock to the
Participating Subscribers.  One shareholder voluntarily agreed to
indefinitely defer a cash payment of $28,250 owed to him until a
later date.

4. STOCK TRANSACTIONS

During the three months ended March 31, 2001, the Company issued
to unrelated non-employees 2,000 shares of common stock valued at
$0.25 per share for investor relations services.

During the three months ended March 31, 2001, the Company repurchased
20,000 shares of its Common Stock at prices ranging from $0.625 to
$0.75 per share.

5. CONTINGENCIES

Litigation

Refer to Part II, Item 1 for a description of legal proceedings.

-5-
<PAGE>


6. SUBSEQUENT EVENTS

Settlement with Unicomp
-----------------------
See Note 2.

Item 2. Management's Discussion and Analysis

FORWARD-LOOKING STATEMENTS

In  addition to historical information, this Quarterly Report  on
Form  10-QSB  contains forward-looking statements.  The  forward-
looking statements are subject to certain risks and uncertainties
that  could cause actual results to differ materially from  those
reflected  in  such  forward-looking  statements.   Readers   are
cautioned  not  to place undue reliance on these  forward-looking
statements, which reflect management's opinions only  as  of  the
date  hereof.  The Company undertakes no obligation to revise  or
publicly  release the results of any revision to  these  forward-
looking  statements.  Readers should carefully  review  the  risk
factors described herein and in other documents the Company files
from  time  to time with the SEC, including its Annual Report  on
Form  10-KSB for the fiscal year ended December 31, 2000 and  the
Quarterly  Reports  on  Form 10-QSB, as  amended,  filed  by  the
Company in fiscal 2000.

GENERAL

The Company markets a family of software products under the brand
names BABY and Unibol.  The products provide (a) software
solutions that allow business customers to migrate IBM Midrange
applications to the PC environment and to execute such
applications on a PC network without a complete rewrite of the
application's source code; (b) GUI software that allows a
developer of an AS/400 or iSeries/400 text-based application to
present screens with WindowsTM point-and-click functionality; and
(c) software that internet-enables AS/400 and iSeries/400
applications.  Once the application runs on a BABY or Unibol
system, the developer deploys his application by purchasing a
BABY or Unibol runtime license for every user of the software.
In addition, the Company markets a software product under the
brand name MLPS that supports the processing of mortgage loans in
the banking and financial industries.

RESULTS OF OPERATIONS

Three  Months Ended March 31, 2001 Compared to Three Months Ended
March 31, 2000

Software Sales.  Software sales consist of sales of the Company's
BABY, Unibol, and MLPS software products.  Software sales for the
three  months  ended March 31, 2001 and 2000  were  $706,200  and
$404,411,  respectively,  a  74.6%  increase.   The  increase  in
software  sales during the three months ended March 31, 2001  was
primarily  due  to  the inclusion of revenues  derived  from  the
Company's  ALE and Unibol subsidiaries during that  period.   The
Company  anticipates  that the continuing  integration  of  these
subsidiaries  will  result  in  increased  revenues  over  future
periods.

Maintenance  and  Other Revenue.  Maintenance and  other  revenue
consists  of  annual maintenance contracts sold to the  Company's
customers for technical support on its products, business partner
agreements  which  entitle the Company's customers  to  unlimited
annual  technical  support  as well  as  increased  discounts  on
software  purchases, shipping revenue billed  to  customers,  and
other  miscellaneous  revenue.  Revenue from  annual  maintenance
contracts  and  business  partner  agreements  are  deferred  and
recognized  over the term of the related contract  or  agreement.
Maintenance  and other revenue for the three months  ended  March
31,  2001  and  2000  was $544,296 and $40,429,  respectively,  a
1,246.3%  increase primarily due to the Company's acquisition  of
the  ALE  and  Unibol customer base and accompanying  maintenance
revenue  stream.   It  is  anticipated that  revenue  from  these
sources will continue to increase over the next twelve months  as
the Company continues to expand its customer base.

Research  and  Development Costs.  The Company  has  adopted  the
provisions of Statement of Financial Accounting Standards No. 86,
"Accounting  for  the  Costs of Computer  Software  to  be  Sold,
Leased, or Otherwise Marketed", which requires capitalization  of
certain   software   development   costs   subsequent   to    the
establishment  of  technological  feasibility.   Based   on   the
Company's  product development process, technological feasibility
is  established  upon completion of a working model.   Since  the
Company  does not incur any costs between the completion  of  the
working  model and the point at which the product  is  ready  for

-6-
<PAGE>

general  release, all research and development costs are  charged
to  expense  as incurred.  For the three months ended  March  31,
2001  and  2000,  the Company incurred research  and  development
costs  of  $422,422 and $117,035, respectively, a 260.9% increase
that was primarily the result of the Company's acquisition of ALE
in  October  2000  as  well  as  from  the  Company's  continuing
investment  in  its  development  of  future  products.    As   a
percentage  of  revenue, research and development costs  for  the
three  months ended March 31, 2001 and 2000 were 33.8% and 26.3%,
respectively.  The Company believes that research and development
expenditures are essential to maintaining a competitive  position
due  to  rapid  changes  in technology and customer  demands  and
expects  that  these costs will be maintained at or near  current
levels in the future.

Selling,  General  and Administrative Expense.  Selling,  general
and administrative expenses include sales and marketing expenses,
employee  compensation, corporate overhead, legal and  accounting
expenses,  and  bad  debt expenses.  For the three  months  ended
March  31,  2001  and  2000, selling, general and  administrative
expenses  were  $1,582,261 and $905,872,  respectively,  a  74.7%
increase.   As  a  percentage  of revenue,  selling  general  and
administrative expenses for the three months ended March 31, 2001
and  2000 were 126.5% and 203.6%, respectively.  The increase  in
selling,  general and administrative expenses were primarily  due
to  the  inclusion  of  additional expenses  resulting  from  the
operations  of  ALE and Unibol during the quarter.   The  Company
continues  to take steps to reduce its general and administrative
costs,  but anticipates that reductions in these expenses may  be
somewhat  offset  by  increases relating to sales  and  marketing
efforts in the short-term future.

Depreciation  and  Amortization.  Depreciation  and  amortization
consists  of recurring depreciation charges recorded against  the
Company's  property and equipment.  Depreciation and amortization
for  the  three months ended March 31, 2001 and 2000 was $327,078
and  $6,707, respectively, a 4,776.7% increase primarily  due  to
the amortization of goodwill resulting from the Company's ALE and
Unibol  acquisitions.   As a percentage of revenue,  depreciation
and  amortization for the three month period ended March 31, 2001
was 26.2% compared to 1.5% for the three month period ended March
31, 2000.  The Company expects that depreciation and amortization
will  continue to increase in the future as the Company increases
its  property and equipment base in connection with its continued
expansion  efforts  or  as  a  result  of  any  possible   future
acquisitions made by the Company.

Other  Expense,  Net.   Net other expense primarily  consists  of
interest  expense  on  the  Company's debt  balances,  offset  by
interest income received from investments of the Company's excess
cash  balances.   Net  other expense for the three  months  ended
March  31,  2001 was $1,822 as compared to net other  expense  of
$1,306  for  the  three  months ended March  31,  2000,  a  39.5%
increase.

Income  Taxes.  As a result of incurring losses from  operations,
the  Company did not record any income tax provision  or  benefit
for the three months ended March 31, 2001 and 2000.

Extraordinary  Item.   As a result of the Company's  successfully
obtaining  voting and operational control over Unibol on  January
29,  2001, as well as later reaching a settlement agreement  with
Unicomp  relating  to the acquisition, the Company  reversed  the
$1,000,000  reserve that it had booked against its investment  in
Unibol at December 31, 2000.

Net Loss.  For the three months ended March 31, 2001, the Company
recorded  a  net  loss of $86,246 or $0.01 per  common  share  as
compared to a net loss of $586,080 or $0.07 per common share  for
the three months ended March 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's operations have resulted in net losses of  $86,246
and  $586,080 for the three months ended March 31, 2001 and 2000,
respectively.  Since the Company's inception in October 1998, the
Company has financed its operations primarily through the sale of
its Common Stock.

Net  cash used in operations for the three months ended March 31,
2001  was $1,309,585, while net cash used in operations  for  the
three  months  ended March 31, 2000 was $415,812.   The  negative
cash  flows generated from operations for the three months  ended
March  31,  2001 and 2000 were primarily due to operating  losses
incurred  during the respective periods (excluding the $1,000,000
extraordinary gain recorded for the three months ended March  31,
2001).   The  Company believes that it may continue to experience
negative cash flows from operations in the future as it continues
its restructuring and consolidation of its recent acquisitions of
ALE Systems and Unibol.

Net  cash used in investing activities for the three months ended
March  31,  2001  was $101,883, primarily as the  result  of  the

-7-
<PAGE>

Company's acquisition of Unibol Ltd. on January 29, 2001, as well
as  due to purchases of property and equipment during the period.

Net  cash used in investing activities for the three months ended
March  31, 2000 was $24,605, due almost entirely to purchases  of
property  and  equipment.  The Company  expects  to  continue  to
invest in capital and other assets as well as utilize mergers and
acquisitions as a means to expand and support its growth.

Net  cash used in financing activities for the three months ended
March  31,  2001  was  $407,183, due  primarily  to  proceeds  of
$792,962  paid to certain of the Company's shareholders  pursuant
to a settlement agreement, offset by proceeds received from long-
term  borrowings  of  $450,000.  Net cash provided  by  financing
activities  for  the  three  months  ended  March  31,  2000  was
$2,200,000, due primarily to proceeds received from the Company's
private  placement of its Common Stock.  The Company  anticipates
that it may seek additional capital in the future to support  its
operating and business plans.

At  March  31, 2001, cash and cash equivalents totaled  $589,115.
In  addition,  at  March  31, 2001, the  Company  had  a  working
deficiency   of   $3,796,932  and  an  accumulated   deficit   of
$7,815,669.

Depending  on the outcome of the securities litigation  currently
filed  against the Company (see Part II, Item 1 hereof), as  well
as the Company's ability to meet its operating goals, the Company
may  be  required to raise additional funds to meet the Company's
working  capital and capital expenditure needs at  least  through
the next twelve months.

RISK FACTORS

The  Company  does not provide forecasts of its future  financial
performance.  However, from time to time, information provided by
the  Company  or  statements made by its  employees  may  contain
"forward-looking"   information   that   involves    risks    and
uncertainties.   In  particular,  statements  contained  in  this
Report  on  Form 10-QSB that are not historical facts (including,
but not limited to statements contained in "Item 2 - Management's
Discussion and Analysis" of Part I of this Report on Form  10-QSB
relating  to  liquidity  and  capital resources)  may  constitute
forward-looking  statements and are made under  the  safe  harbor
provisions  of  The Private Securities Litigation Reform  Act  of
1995.   The  Company's actual results of operations and financial
condition  have  varied and may in the future vary  significantly
from  those  stated  in any forward looking statements.   Factors
that may cause such differences include, without limitation,  the
risks,  uncertainties and other information discussed  below  and
within  this  Quarterly Report on Form 10-QSB,  as  well  as  the
accuracy  of  the  Company's internal estimates  of  revenue  and
operating  expense  levels.   The  following  discussion  of  the
Company's  risk  factors should be read in conjunction  with  the
financial statements contained herein and related notes  thereto.
Such  factors,  among others, may have a material adverse  effect
upon  the Company's business, results of operations and financial
condition.

Financial Condition and Going Concern Qualification.  In early
2001, the Company implemented a new operating plan designed to
accelerate the Company's ability to achieve positive operating
cash flow.  As part of the new operating plan, the Company
reduced the size of its workforce and made further expense
reductions in the areas of technical support, product development
and general and administrative expenses.  To successfully execute
this plan, the Company must adhere to its expense reductions and
work to achieve the revenue targets incorporated as underlying
assumptions to its operating plan.  If the Company is unable to
manage its operating expenses and increase revenues, the Company
will be unable to achieve positive operating cash flow.  The
Company's ability to achieve its annual and quarterly revenue
goals could also be negatively impacted by the softening consumer
demand for technology products, as well as the weakening general
economic conditions and decreasing consumer confidence.

The Company's new operating plan reflects management's
expectations as of the date of this quarterly report, and is
based on currently available information as well as significant
assumptions made by management regarding various revenue and
operating expense items.  The Company cannot guarantee that the
assumptions that it relied upon in developing its operating plan
will be accurate, or that future events or results will conform
to the Company's expectations or assumptions.  The Company's
independent accountants have issued a "going concern"
qualification to their audit opinion for the year ended December
31, 2000 that calls into question the Company's ability to
continue operations through December 31, 2001.  Furthermore, due
to potential concerns regarding the Company's going concern
qualification, financial condition and its perceived ability to
fulfill its financial and other obligations, the Company's
customers, vendors, and other corporate partners may decide not

-8-
<PAGE>

to conduct business with it, or may conduct business with the
Company on terms that are less favorable than those customarily
extended by them.  As a result, if the Company's assumptions are
inaccurate, or its expectations prove to be erroneous in light of
future events, or if it is unable to maintain the support of its
customers, vendors, and other key corporate relationships
regardless of the success of its new operating plan, it will need
to raise additional working capital before it achieves positive
operating cash flow.  In order to obtain this capital, the
Company may seek to sell additional equity securities, obtain a
line of credit or seek other ways to fund its operations in the
event it requires additional working capital to operate its
business.  The Company currently does not have any commitments
for additional financing and it cannot be certain that additional
financing, in light of the Company's current financial condition
and going concern qualification, will be available when and to
the extent required, or that, if available, it will be on
acceptable terms.  If adequate funds are not available on
acceptable terms, the Company may not be able to fund its
operations, and its business will fail.  Further, if the Company
raises additional funds by issuing equity or convertible debt
securities, the percentage ownership of its stockholders will be
diluted.  Also, any new securities could have rights, preferences
and privileges senior to that of the Company's Common Stock.

The Company has not achieved profitability since its inception,
and may continue to incur losses for the foreseeable future.
Although the Company recently initiated a restructuring of its
business designed, in part, to significantly reduce costs in a
number of areas, the Company expects to continue to incur
substantial costs and expenses related to legal fees incurred in
connection with various litigation against the Company.  The
Company's ability to become profitable and continue its
operations depends on its ability to generate and sustain higher
revenue levels, maintain reasonable operating expense levels
consistent with the assumptions underlying the Company's new
operating plan, and successfully defend itself against the
litigation filed against it.  If the Company is unable to
increase its revenues or manage and reduce its operating expenses
and costs compared to the year ended December 31, 2000, it will
be unable to achieve positive operating cash flow.  If the
Company does not achieve positive operating cash flow in a timely
manner that is consistent with its operating plan, the Company
could fail.

Exposure to Damages as a Result of Litigation.  On August 17,
2000, a shareholder class action was commenced in the United
States District Court for the Central District of California
against the Company as well as two of its officers and directors,
Bruce Acacio and Carol Conway DeWees.  The class action was
brought on behalf of purchasers of the stock of the Company
during the period February 9, 2000 through August 6, 2000.  In
October 2000, the shareholder class action was consolidated with
three other nearly identical lawsuits filed in the same court
against the Company, Mr. Acacio, and Ms. DeWees.  The plaintiffs
in the consolidated class action allege that the defendants made
false and misleading statements about the Company's actual and
expected financial performance to inflate the value of the
Company's stock to defraud investors, in violation of federal
securities laws.  The plaintiffs seek damages, interest, costs
and such other equitable or injunctive relief as the Court may
deem just and proper.

On December 4, 2000, an action was commenced in the United States
District Court for the District of Nevada against the Company and
two of its officers and directors, Bruce Acacio and Carol Conway
DeWees by three shareholders of the Company who acquired their
stock through a Private Placement conducted by the Company.  The
plaintiffs in the action contend that the defendants made false
and misleading statements about the Company's actual and expected
financial performance to defraud investors, in violation of
federal securities laws.  The plaintiffs seek damages, interest,
costs and other equitable and injunctive relief.

The Company believes that it has meritorious defenses to the
above actions and intends to vigorously defend them.  The actions
are in the early stages.  Consequently, at this time it is not
reasonably possible to estimate the damage, or the range of
damages, if any, that the Company might incur in connection with
such actions.

On December 5, 2000, the Company filed a lawsuit in Orange
County, California against Unicomp, Inc. and others, claiming
fraudulent misrepresentation and other causes of action.  The
complaint concerns the extent and scope of various agreements
entered into between the Company, on the one hand, and Unicomp,
Inc., and other related entities, on the other hand, through
which the Company acquired Unibol, Ltd., a United Kingdom
corporation, and through which the Company contends it also
acquired Unibol, Inc., a Georgia corporation ("Unibol U.S.").
The complaint includes causes of action for fraud, breach of oral
and written contract, promissory estoppel, reformation, specific
performance, and unjust enrichment, among others.  The complaint
demands, among other things, that title to Unibol U.S. be
conveyed to the Company and that damages be paid in an
unspecified amount for defendants' fraudulent misrepresentations
to the Company in entering into the Acquisition Documents.

-9-
<PAGE>

In response to the above-described complaint, on or about January
3, 2001, the defendants filed an answer to the complaint and a
cross-complaint for declaratory relief, breach of contract, and
interference with contract against the Company.  The thrust of
the cross-complaint is defendants' assertion that the Company
acquired Unibol, Ltd., but not Unibol U.S.  Defendants also
assert that the Company has breached its contractual obligations
to defendants by failing to make installments required for the
Company to acquire Unibol, Ltd., by unilaterally issuing press
releases not approved by Unicomp, and by other action alleged to
be inconsistent with defendants' rights under the Acquisition
Documents.  A separate lawsuit was brought in Georgia by Unicomp,
Inc. and related parties against the Company, asserting many of
the same claims asserted in the above-described cross-complaint.
On or about March 23, 2001, the court dismissed the Georgia
action based on a forum selection clause in the agreements
between the Company and Unicomp, Inc.

On May 1, 2001, the Company and Unicomp signed a Settlement
Agreement (the "Settlement Agreement") to resolve the issues
pertaining to the litigation between the two companies.
According to the terms of the Settlement Agreement, the Chief
Executive Officer of Unicomp has agreed to relinquish his voting
and operating control of Unibol, Ltd. to the Company, while
granting the Company the rights to market Unibol products
worldwide.  In addition, Unicomp has agreed to forgive the
remaining cash and stock amounts due under the Purchase
Agreement.  The Settlement Agreement shall be effective as of May
15, 2001 or at such other time as agreed to by Unicomp and
California Software, but not later than June 1, 2001.  The
Company and Unicomp also have agreed to suspend all currently
filed litigation between the two companies until July 1, 2001 or
the closing of the Settlement Agreement, whichever occurs first.

On or about April 12, 2001, a lawsuit was filed against the
Company and its officers and directors in the Circuit Court of
the City of Richmond, Virginia.  The lawsuit, filed by the Chief
Executive Officer of Software Connections (the former parent
company of ALE Systems ("ALE"), which was acquired by the Company
in October, 2000) and his wife, the sole shareholder of Software
Connections, alleges breach of contract, fraud, and tortuous
interference against the Company and its officers and directors
in connection with actions taken by the Company subsequent to its
acquisition of ALE.  The lawsuit seeks compensatory damages of
$2,500,000, punitive damages of $350,000, and other equitable and
injunctive relief.

The Company has not yet responded to the complaint and no
discovery has been conducted.  However, the Company believes that
it has meritorious defenses to the above action and intends to
vigorously defend it.  The action is in the early stages.
Consequently, at this time it is not reasonably possible to
estimate the damage, or the range of damages, if any, that the
Company might incur in connection with this action.

The uncertainty associated with substantial unresolved litigation
may be expected to have an adverse impact on the Company's
business.  In particular, such litigation could impair the
Company's relationships with existing customers and its ability
to obtain new customers.  Defending such litigation will likely
result in a diversion of management's time and attention away
from business operations, which could have a material adverse
effect on the Company's business, results of operations and
financial condition.  Such litigation may also have the effect of
discouraging potential acquirors from bidding for the Company or
reducing the consideration such acquirors would otherwise be
willing to pay in connection with an acquisition.

Dependence on Principal Products.  For the three months ended
March 31, 2001, the Company's core of BABY, Unibol, and MLPS
products accounted for substantially all of the Company's net
sales.  The Company is wholly dependent on these products.  As a
result, any factor adversely affecting sales of any of these
products could have a material adverse effect on the Company.
The Company's future financial performance will depend in part on
the successful introduction of enhanced versions of these
products and development of new versions of these and other
products and subsequent acceptance of such new and enhanced
products.  There can be no assurance that the Company's new and
enhanced products will achieve significant market acceptance or
will generate significant revenue.  In addition, competitive
pressures or other factors may result in significant price
erosion that could have a material adverse effect on the
Company's business, financial condition and results of
operations.

Product Concentration.  As previously noted, the Company derives
most of its revenues from products that run on or replicate the
AS/400 and iSeries 400 environment on a personal computer

-10-
<PAGE>

platform and provides a GUI for those text-screen applications.
As a result, the Company's future operating results are dependent
upon the continued widespread use of the AS/400 and iSeries 400.
Because there can be no assurance that the AS/400 and iSeries 400
platforms will continue to be used in the foreseeable future, a
decline in demand for AS/400 and iSeries 400 products and hence
the Company's software products could have a material adverse
effect on the Company's business, financial condition and results
of operations.

Potential for Software Defects.  Software products as complex as
the BABY, Unibol, and MLPS products offered by the Company may
contain undetected errors or failures when first introduced or as
new versions are released.  Despite testing by the Company and by
current and potential customers, any of the Company's products
may contain errors after their commercial shipment.  Such errors
may cause loss of or delay in market acceptance of the Company's
products, damage to the Company's reputation, and increased
service and warranty costs.  The possibility of the Company being
unable to correct such errors in a timely manner could have a
material adverse effect on the Company's results of operations
and its cash flows.  In addition, technical problems with the
current release of the platforms on which the Company's products
operate could impact sales of these products, which could have a
material adverse effect on the Company's business, financial
condition and results of operations.

Uneven Patterns of Quarterly Operating Results.  The Company's
revenues in general are relatively difficult to forecast and vary
from quarter to quarter due to various factors, including the (i)
relatively long sales cycles for the Company's products, (ii)
size and timing of individual transactions, the closing of which
tend to be delayed by customers until the end of a fiscal quarter
as a negotiating tactic, (iii) introduction of new products or
product enhancements by the Company or its competitors, (iv)
potential for delay or deferral of customer implementations of
the Company's software, (v) changes in customer budgets, (vi)
seasonality of technology purchases and other general economic
conditions, and (vii) changes in the pricing policies of the
Company or its competitors. Accordingly, the Company's quarterly
results are difficult to predict until the end of the quarter,
and delays in product delivery or closing of sales near the end
of a quarter have historically caused and could, in the future,
cause quarterly revenues and net income to fall significantly
short of anticipated levels.

The Company's revenues in any quarter are substantially dependent
on orders booked and shipped in that quarter. Because the
Company's operating expenses are based on anticipated revenue
levels and because a high percentage of the Company's expenses
are relatively fixed, a delay in the recognition of revenue from
even a limited number of sales transactions could cause
significant variations in operating results from quarter to
quarter and could cause net income to fall significantly short of
anticipated levels.

Effects of Electronic Commerce.  There can be no assurance that
the Company will be able to provide a product offering that will
satisfy new customer demands in the Internet, online services, e-
business applications, and electronic commerce areas.  In
addition, standards for web-enabled and e-business applications,
as well as other industry adopted and de facto standards for the
Internet are evolving rapidly.  There can be no assurance that
standards chosen by the Company will position its products to
compete effectively for business opportunities as they arise on
the Internet and other emerging areas.  The success of the
Company's product offerings depends, in part, on its ability to
continue developing products which are compatible with the
Internet.  The increased commercial use of the Internet may
require substantial modification and customization of the
Company's products and the introduction of new products.  The
Company may not be able to effectively compete in the Internet-
related products and services market.

Competition.  The Company encounters intense competition in some
aspects of its business and competes directly with other software
firms, many of which have greater financial resources than the
Company.  There can be no assurance that the Company will be able
to compete successfully in the future or that competition will
not have a material adverse affect on the Company's business,
financial condition and results of operations.

Acquisition Strategy.  Although the Company has no current
acquisition plans, it has addressed and may continue to address
the need to develop new products, in part through the acquisition
of other companies.  Acquisitions involve numerous risks
including difficulties in the assimilation of the operations,
technologies and products of the acquired companies, the
diversion of management's attention from other business concerns,
risks of entering markets in which the Company has no or limited
direct prior experience and where competitors in such markets
have stronger market positions, and the potential loss of key
employees of the acquired company.  Achieving and maintaining the
anticipated benefits of an acquisition will depend in part upon
whether the integration of a target company's business is
accomplished in an efficient and effective manner, and there can
be no assurance that this will occur.  The successful combination

-11-
<PAGE>

of companies in the high technology industry may be more
difficult to accomplish than in other industries.

Hiring and Retention of Employees.  The Company's continued
growth and success depend to a significant extent on the
continued service of its senior management and other key
employees and the hiring of new qualified employees.  Competition
for highly-skilled business, product development, technical and
other personnel is becoming more intense due to lower overall
unemployment rates as well as the boom in information technology
spending.  Accordingly, the Company expects to experience
increased compensation costs that may not be offset through
either improved productivity or higher prices.  There can be no
assurances that the Company will be successful in continuously
recruiting new personnel and in retaining existing personnel. In
general, the Company does not have long-term employment or non-
competition agreements with its employees. The loss of one or
more key employees, or the Company's inability to attract
additional qualified employees or retain other employees, could
have a material adverse effect on the continued growth of the
Company.

Sales Force Restructuring.  The Company historically has relied
heavily on its direct sales force.  In the past, the Company has
restructured or made other periodic adjustments to its sales
force.  These changes have generally resulted in a temporarily
lack of focus and reduced productivity by the Company's sales
force that may have affected revenues in a quarter. There can be
no assurances that the Company will not continue to restructure
its sales force or that the related transition issues associated
with restructuring the sales force will not recur.

Possible Necessity for Additional Capital.  Depending on the
outcome of the currently filed class action lawsuits, the Company
may require additional capital to fund its capital expenditures,
product development and working capital requirements through
2001.  In addition, any significant change in the Company's
product development plans or marketing and distribution methods
may require additional capital.  If the Company is required in
the future to seek additional capital through a new line of
credit, asset-based lending or the sale of equity, no assurance
can be given that such capital will be available on terms
favorable to the Company, or at all.  The sale of equity
interests would dilute the ownership of current shareholders.

Enforcement of the Company's Intellectual Property Rights.  The
Company relies on a combination of copyright, patent, trademark,
trade secrets, confidentiality procedures and contractual
procedures to protect its intellectual property rights.  Despite
the Company's efforts to protect its intellectual property
rights, it may be possible for unauthorized third parties to copy
certain portions of the Company's products or to reverse engineer
or obtain and use technology or other information that the
Company regards as proprietary.  There can also be no assurances
that the Company's intellectual property rights would survive a
legal challenge to their validity or provide significant
protection for the Company.  In addition, the laws of certain
countries do not protect the Company's proprietary rights to the
same extent as do the laws of the United States.  Accordingly,
there can be no assurance that the Company will be able to
protect its proprietary technology against unauthorized third
party copying or use, which could adversely affect the Company's
competitive position.

Possibility of Infringement Claims.  The Company may, in the
future, receive notices from third parties claiming infringement
by the Company's products of third party patent and other
intellectual property rights.  The Company expects that software
products will increasingly be subject to such claims as the
number of products and competitors in the Company's industry
segment grow and the functionality of products overlaps.
Regardless of its merit, responding to any such claim could be
time-consuming, result in costly litigation and require the
Company to enter into royalty and licensing agreements which may
not be offered or available on terms acceptable to the Company.
If a successful claim is made against the Company and the Company
fails to develop or license a substitute technology, the
Company's business, results of operations or financial position
could be materially adversely affected.

Possible Volatility of Stock Price.  The market price of the
Company's Common Stock has experienced significant fluctuations
and may continue to fluctuate significantly.  The market price of
the Common Stock may be significantly affected by factors such as
the announcement of new products or product enhancements by the
Company or its competitors, technological innovation by the
Company or its competitors, quarterly variations in the Company's
or its competitors' results of operations, changes in prices of
the Company's or its competitors' products and services, changes
in revenue and revenue growth rates for the Company as a whole or
for specific geographic areas, business units, products or
product categories, changes in earnings estimates by market

-12-
<PAGE>

analysts, speculation in the press or analyst community and
general market conditions or market conditions specific to
particular industries.  The stock prices for many companies in
the technology sector have experienced wide fluctuations which
often have been unrelated to their operating performance.  Such
fluctuations may adversely affect the market price of the
Company's Common Stock.

Limited Market for Common Stock; Absence of Dividends.  The
Common Stock of the Company is currently quoted on the Over-the-
Counter Bulletin Board ("OTCBB") under the symbol "CAWC".  As a
result, the market for the Company's stock is limited.  There can
be no assurance that a meaningful trading market will develop.

Year 2000.  As of the date of this filing, the Company currently
knows of no significant Year 2000-related failures that have
occurred in either its products or its internal systems as a
result of the date change from December 31, 1999 to January 1,
2000.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On August 17, 2000, a shareholder class action was commenced in
the United States District Court for the Central District of
California against the Company and two of its officers and
directors, Bruce Acacio and Carol Conway DeWees.  The class
action was brought on behalf of purchasers of the stock of the
Company during the period February 9, 2000 through August 6,
2000.  In October 2000, the shareholder class action was
consolidated with three other nearly identical lawsuits filed in
the same court against the Company, Mr. Acacio, and Ms. DeWees.
The plaintiffs in the consolidated class action allege that the
defendants made false and misleading statements about the
Company's actual and expected financial performance to inflate
the value of the Company's stock to defraud investors, in
violation of federal securities laws.  The plaintiffs seek
damages, interest, costs and such other equitable or injunctive
relief as the Court may deem just and proper.

On December 4, 2000, an action was commenced in the United States
District Court for the District of Nevada against the Company and
two of its officers and directors, Bruce Acacio and Carol Conway
DeWees by three shareholders of the Company who acquired their
stock through a Private Placement conducted by the Company.  The
plaintiffs in the action contend that the defendants made false
and misleading statements about the Company's actual and expected
financial performance to defraud investors, in violation of
federal securities laws.  The plaintiffs seek damages, interest,
costs and other equitable and injunctive relief.

The Company believes that it has meritorious defenses to above
actions and intends to vigorously defend them.  The actions are
in the early stages.  Consequently, at this time it is not
reasonably possible to estimate the damage, or the range of
damages, if any, that the Company might incur in connection with
such actions.

On December 5, 2000, the Company filed a lawsuit in Orange
County, California against Unicomp, Inc. and others, claiming
fraudulent misrepresentation and other causes of action.  The
complaint concerns the extent and scope of various agreements
entered into between the Company, on the one hand, and Unicomp,
Inc. and other related entities, on the other hand, through which
the Company acquired Unibol, Ltd., a United Kingdom corporation,
and through which the Company contends it also acquired Unibol,
Inc., a Georgia corporation ("Unibol U.S.").  The complaint
includes causes of action for fraud, breach of oral and written
contract, promissory estoppel, reformation, specific performance,
and unjust enrichment, among others.  The complaint demands,
among other things, that title to Unibol U.S. be conveyed to the
Company and that damages be paid in an unspecified amount for
defendants' fraudulent misrepresentations to the Company in
entering into the Acquisition Documents.

In response to the above-described complaint, on or about January
3, 2001, the defendants filed an answer to the complaint and a
cross-complaint for declaratory relief, breach of contract, and
interference with contract against the Company.  The thrust of
the cross-complaint is defendants' assertion that the Company
acquired Unibol, Ltd., but not Unibol U.S.  Defendants also
assert that the Company has breached its contractual obligations
to defendants by failing to make installments required for the
Company to acquire Unibol, Ltd., by unilaterally issuing press
releases not approved by Unicomp, and by other action alleged to
be inconsistent with defendants' rights under the Acquisition
Documents.  A separate lawsuit was brought in Georgia by Unicomp,
Inc. and related parties against the Company, asserting many of
the same claims asserted in the above-described cross-complaint.

-13-
<PAGE>

On or about March 23, 2001, the court dismissed the Georgia
action based on a forum selection clause in the agreements
between the Company and Unicomp, Inc.

On May 1, 2001, the Company and Unicomp signed a Settlement
Agreement (the "Settlement Agreement") to resolve the issues
pertaining to the litigation between the two companies.
According to the terms of the Settlement Agreement, the Chief
Executive Officer of Unicomp agreed to relinquish his voting and
operating control of Unibol, Ltd. to the Company, while granting
the Company the rights to market Unibol products worldwide.  In
addition, Unicomp agreed to forgive the remaining cash and stock
amounts due under the Purchase Agreement.  The Settlement
Agreement shall be effective as of May 15, 2001 or at such other
time as agreed to by Unicomp and California Software, but not
later than June 1, 2001.  The Company and Unicomp also agreed to
suspend all currently filed litigation between the two companies
until July 1, 2001 or the closing of the Settlement Agreement,
whichever occurs first.

On or about April 12, 2001, a lawsuit was filed against the
Company and its officers and directors in the Circuit Court of
the City of Richmond, Virginia.  The lawsuit, filed by the Chief
Executive Officer of Software Connections (the former parent
company of ALE Systems ("ALE"), which was acquired by the Company
in October, 2000) and his wife, the sole shareholder of Software
Connections, alleges breach of contract, fraud, and tortuous
interference against the Company and its officers and directors
in connection with actions taken by the Company subsequent to its
acquisition of ALE.  The lawsuit seeks compensatory damages of
$2,500,000, punitive damages of $350,000, and other equitable and
injunctive relief.

The Company has not yet responded to the complaint and no
discovery has been conducted.  However, the Company believes that
it has meritorious defenses to the above action and intends to
vigorously defend it.  The action is in the early stages.
Consequently, at this time it is not reasonably possible to
estimate the damage, or the range of damages, if any, that the
Company might incur in connection with this action.

The uncertainty associated with substantial unresolved litigation
may be expected to have an adverse impact on the Company's
business.  In particular, such litigation could impair the
Company's relationships with existing customers and its ability
to obtain new customers.  Defending such litigation will likely
result in a diversion of management's time and attention away
from business operations, which could have a material adverse
effect on the Company's business, results of operations and
financial condition.  Such litigation may also have the effect of
discouraging potential acquirors from bidding for the Company or
reducing the consideration such acquirors would otherwise be
willing to pay in connection with an acquisition.

Item 2. Changes in Securities

None.

Item 3. Defaults Upon Senior Securities

None.

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

On or about March 28, 2001, the Company, by an action taken by
written consent of a majority of the Company's shareholders, set
forth a proposal to amend the Company's Articles of Incorporation
to increase the number of shares of Common Stock authorized to be
issued by the Company from 20,000,000 shares to 40,000,000
shares.  The proposal was also unanimously approved by the
Company's Board of Directors at a meeting held on March 28, 2001.
The Company is in the process of preparing an Information
Statement to be filed with the Securities and Exchange
Commission, and is also in the process of amending its articles
of incorporation to be filed with the Nevada Secretary of State.
As of May 4, 2001, there were no commitments to issue any shares
of the newly authorized Common Stock of the Company.  Any future
issuances of the newly authorized Common Stock may dilute the
holdings of the Company's current shareholders.

Item 5. Other Information

None.

-14-
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

  (a)  Exhibits

     10.1 Settlement and Release Agreement, dated February 13, 2001,
        between the Company and Participating Subscribers to the
        Company's private placement of its Common Stock during the year
        ended December 31, 2000.

     10.2 Modification to Settlement and Release Agreement between the
        Company and Participating Subscribers to the Company's private
        placement of its Common Stock during the year ended December 31,
        2000.

     10.3 Promissory Note, dated March 30, 2001 between the Company
         and NevWest Securities Corporation

     10.4 Promissory Note, dated March 30, 2001 between the Company
        and Anthony M. Mello III.

     10.5 Settlement Agreement, dated May 1, 2001, between the Company
        and Unicomp, Inc.

  (b)  Reports on Form 8-K

       None.

-15-
<PAGE>

                           SIGNATURES

In  accordance  with the requirements of the  Exchange  Act,  the
registrant caused this report to be signed on its behalf  by  the
undersigned, thereunto duly authorized.


                                  CALIFORNIA SOFTWARE CORPORATION


Date: May 4, 2001                By:/s/ R. Bruce Acacio
      -----------                   -------------------------------------
                                 R. Bruce Acacio, Chief Executive Officer



Date: May 4, 2001               By:/s/ Lawrence J. Jagiello
      -----------                  --------------------------------------
                                 Lawrence J. Jagiello
                                 Chief Financial Officer and Principal
                                   Accounting Officer

-16-
<PAGE>