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 September 30, 2000

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

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          (I.R.S. Employer
  incorporation or organization)        Identification No.)

   2485 McCabe Way, 2nd Floor,                 92614
        Irvine, California                   (Zip Code)
 (Address of principal executive
             offices)

                         (949) 553-8900
        (Issuer's telephone number, including area code)


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

Yes [X] No [  ]

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:
Number  of  shares of registrants' common stock as  of  10/31/00:

12,577,771

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:

Yes [  ] No [X]



                 California Software Corporation
                        Quarterly Report
                Period Ending September 30, 2000

                        Table of Contents


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheet                                                   1

Statements of Operations                                        2

Statements of Cash Flows                                        3

Notes to Financial Statements                                   4

Item 2. Management's Discussion and Analysis                    5

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                     13

Item 2.  Changes in Securities                                 13

Item 3.  Defaults Upon Senior Securities                       13

Item  4.  Submission of Matters to a Vote of Security          13
Holders

Item 5.  Other Information                                     13

Item 6.  Exhibits and Reports on Form 8-K                      14

SIGNATURES                                                     15



                               -i-



PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements

                 California Software Corporation
                          BALANCE SHEET
                           (unaudited)
                                             September 30, 2000
ASSETS

Current assets:

Cash and cash equivalents                            $5,787,093

Accounts receivable, net of allowance for               327,448
doubtful accounts of $295,330

Prepaids and other current assets                       798,750

Total current assets                                  6,913,291

Property and equipment, net                             143,482

Other assets                                             67,847

TOTAL ASSETS                                         $7,124,620

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses                  $639,388

Accrued payroll and related expenses                    156,947

Deferred revenue                                         96,344

Total current liabilities                               892,679

Long-term liabilities                                    24,643

Total liabilities                                       917,322

Contingencies (Note 4)

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               12,578
shares authorized; 12,577,771 shares issued
and outstanding at September 30, 2000

Additional paid-in capital                           10,397,520

Accumulated deficit                                 (4,202,800)

Total stockholders' equity                            6,207,298

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $7,124,620


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

<PAGE>1

                      California Software Corporation
                         STATEMENTS OF OPERATIONS
                                (Unaudited)

                                Three months ended        Nine months ended
                                     September 30,            September 30,
                                  2000        1999           2000      1999

Revenues:

Software sales                $207,322    $347,691     $972,459  $2,412,047

Maintenance and other           44,925      37,261      126,725     102,494
revenue

Total revenues                 252,247     384,952    1,099,184   2,514,541


Costs and expenses:

Research and development       121,779     103,748      361,004     311,244

Selling, general, and        2,145,746     827,215    4,636,424   1,959,983
administrative

Depreciation and                 8,838       3,192       24,059       8,249
amortization

Total costs and expenses     2,276,363     934,155    5,021,487   2,279,476

Income (loss) from         (2,024,116)   (549,203)  (3,922,303)     235,065
operations

Other income (expense),         94,618     (3,728)      156,565    (11,025)
net

Income (loss) from         (1,929,498)   (552,931)  (3,765,738)     224,040
operations before
provision for income taxes

Benefit for income taxes             -     168,306            -           -

Net income (loss)         $(1,929,498)  $(384,625) $(3,765,738)    $224,040

Basic and diluted income        $(.18)      $(.06)       $(.35)        $.03
(loss) per share

Weighted-average shares     10,814,252   6,541,800   10,716,254   6,541,800
outstanding

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


<PAGE>2



                 California Software Corporation
                    STATEMENTS OF CASH FLOWS
                           (unaudited)

                                        Nine months ended September 30,
                                             2000           1999

Net income (loss)                         (3,765,738)       224,040

Adjustments to reconcile net income
(loss) with net cash
flows provided by (used in) operations:

Depreciation and amortization                  24,059         8,249
Allowance for bad debt                        194,217       488,937
Loss on disposal of assets                      5,542             -
Issuance of stock for services                685,867             -

Changes in operating assets /
liabilities:
Accounts receivable                          (80,446)     (451,472)
Prepaids and other current assets           (241,454)        86,037
Accounts payable and accrued expenses         144,978     (147,684)
Accrued payroll and related expenses           39,700      (26,112)
Deferred revenue                               44,511      (14,000)

Net cash provided by (used in)            (2,948,764)       167,995
operations

Cash flows from investing activities

Acquisition of CSPI, net of cash                    -       349,950
acquired
Increase in other assets                      (3,829)             -
PP&E additions                               (90,582)      (45,279)

Net cash provided by (used in)               (94,411)       304,671
investing activities

Cash flows from financing activities

Issuance of common stock                    8,427,486             -

Net cash provided by financing              8,427,486             -
activities

Net change in cash and cash                 5,384,311       472,666
equivalents

Cash at beginning of period                   402,782        15,395

Cash at end of period                      $5,787,093      $488,061

SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES

Purchase of CSPI in exchange for common             $-      $700,840
stock
subscription
Conversion of common stock subscription       $700,840            $-
into common
stock
Issuance of stock in exchange for note         $64,018            $-
receivable


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


<PAGE>3


                 California Software Corporation
                  NOTES TO FINANCIAL STATEMENTS
                       September 30, 2000


1. BASIS OF PRESENTATION

The  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 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, as amended, for the fiscal year ended December 31, 1999.
In  the opinion of management, the unaudited 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  September  30,  2000  are  not
necessarily  indicative  of the results  expected  for  the  full
fiscal year.

2. CHANGE IN ACCOUNTANTS / CHANGE IN ACCOUNTING PRINCIPLES

In  October  1997,  the American Institute  of  Certified  Public
Accountants ("AICPA") issued Statement of Position ("SOP") No. 97-
2,  "Software Revenue Recognition" which superseded SOP No. 91-1.
SOP  No.  97-2 was effective for fiscal years after December  15,
1997,  as  amended by SOP No. 98-4 and SOP No. 98-9, and provides
guidance  on  applying  generally accepted accounting  principles
("GAAP")  for  software  revenue recognition  transactions.   The
Company  had been improperly recognizing revenue on shipments  of
new  products that failed to meet the criteria specified  in  SOP
No.  97-2.   The  Company's  independent  accountant  issued   an
unqualified opinion on the Company's financial statements for the
year ended December 31, 1999, a copy of which was included in the
Company's  Annual Report on Form 10-KSB filed for the  year  then
ended.   In  addition, the Company filed a Form  10-QSB  for  the
three month period ended March 31, 2000 which contained financial
statements  that  were also not prepared in accordance  with  the
provisions  of SOP No. 97-2.  During the first quarter  of  2000,
the  Company was seeking to list its Common Stock on the American
Stock  Exchange  ("AMEX") and, during the  listing  process,  was
notified   that  the  Company  would  need  to  submit  reaudited
financial  statements for the year ended December 31,  1999  from
another independent accountant because the Company was unable  to
provide  evidence that its independent accountant  met  the  peer
review  standards mandated by the American Institute of Certified
Public  Accountants  ("AICPA").  On May 2,  2000,  the  Company's
Board   of  Directors  approved  a  resolution  engaging  a   new
certifying  independent  accountant,  Squar,  Milner,   Reehl   &
Williamson, LLP ("Squar"), who was initially engaged to perform a
SAS 71 review of the Company's financial statements for the three
months  ended  March  31,  2000.  After  appointing  Squar,  AMEX
notified  the  Company  that it would  accept  audited  financial
statements  for the three month period ended March  31,  2000  in
lieu  of  having  the year ended December 31, 1999  reaudited  by
Squar.  Squar subsequently notified the Company that it would not
be  able to perform this audit within the timeframe requested  by
the  Company.   On  July  24, 2000, the  Company  engaged  a  new
certifying  independent accountant, Stark, Tinter and Associates,
LLP ("Stark") in order to complete the audit within the Company's
timeframe.    Upon   examination  of  the   Company's   financial
statements, Stark notified the Company that the method  in  which
the Company used to record revenue was not in compliance with the
provisions of SOP No. 97-2.  The restated results for  the  three
and nine month periods ended September 30, 2000 and 1999 included
in  this  report  on Form 10-QSB are prepared in accordance  with
GAAP, including the provisions of SOP No. 97-2.

3. STOCK TRANSACTIONS

During  the  three months ended September 30, 2000,  the  Company
issued to unrelated non-employees 2,000 shares of common stock at
$3.86 per share for investor services.


<PAGE>4


4. CONTINGENCIES

Litigation

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

Leases

During  the  three months ended September 30, 2000,  the  Company
entered   into   several  leases  for  computer  equipment.    In
accordance   with  the  provisions  of  Statement  of   Financial
Accounting  Standards  No.  13, "Accounting  for  Leases,"  these
leases  have  been capitalized and the Company has recorded  long
term   liabilities  of  $24,643  at  September  30,  2000,  which
represents the long-term unpaid principal on those leases.

5. SUBSEQUENT EVENTS

On  October  20,  2000, the Company acquired the  net  assets  of
Software  Connections, Inc. d/b/a ALE Systems ("ALE"), a Virginia
corporation  in  exchange for $750,000 in cash  and  an  earn-out
agreement  valued  between $625,000 and  $2.5  million  which  is
dependent on the operating results of ALE in future periods.

On  November  7, 2000, the Company signed a letter of  intent  to
merge   with  UniComp  Inc.,  a  provider  of  retail  e-business
solutions  and business software solutions for small and  medium-
sized companies, retailers and system integrators.  The merger is
subject   to   the   customary  closing   conditions,   including
shareholder  and  regulatory approval.  At  the  closing  of  the
merger, California Software shareholders will receive a number of
shares equivalent to one for one.

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, as amended, for the fiscal year ended December  31,
1999  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
name  BABY  that support the migration of International  Business
Machines  ("IBM")  Midrange applications to the  PC-LAN  business
environment.   The products provide (a) software  solutions  that
allow   business   customers  to  migrate  IBM  Midrange   Report
Generation Language ("RPG") applications to the personal computer
("PC")  environment and execute such applications in native  mode
on a PC network without a complete rewrite; (b) software designed
to  create a distributed processing environment including a  true
AS/400   client-server  environment,  remote   site   operations,
deployment  of specific applications to PC workstations  separate
from  an  AS/400,  various  high  availability  applications,  or
delegation  of AS/400 batch processing to NT; (c) graphical  user
interface  ("GUI") software that allows a developer of an  AS/400
text-based application to present screens with Windows point-and-
click   functionality;  and  (d)  web-enablement  software  which
provides  internet  access  to  AS/400-based  applications.   The
Company's  goal is to sustain market leadership in the management
of  midrange migration within the IBM AS/400 and PC-LAN  business
environment, and to build market share in the graphical and  web-
enablement products markets.


<PAGE>5


RESULTS OF OPERATIONS

Three  Months  Ended September 30, 2000 Compared to Three  Months
Ended September 30, 1999

Software Sales.  Software sales consist of sales of the Company's
BABY  software  products.  Software sales for  the  three  months
ended  September  30, 2000 and 1999 were $207,322  and  $347,691,
respectively,  a 59.6% decrease.  The decrease in software  sales
during  the  three months ended September 30, 2000 is  due  to  a
restructuring  of the Company's sales activities  resulting  from
the  Company's change in revenue recognition under SOP No.  97-2.
In  addition, the decrease was due to distractions of  management
relating  to the class action lawsuits filed against the  Company
during the quarter (see Part II, Item 1 of this Form 10-QSB) that
reduced  management's  involvement  in  sales  activities.    The
Company  anticipates that the results of the  restructuring  will
allow the Company to increase its revenues from software sales in
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,  and shipping revenue billed  to  customers.
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 September 30, 2000 and 1999 was  $44,925
and $37,261, respectively, a 20.6% increase.  The Company expects
that revenue from this source will continue to increase in future
periods as the Company expands its customer base.

Research  and Development Costs.  Research and development  costs
consist  primarily  of  salaries paid  to  employees  engaged  in
research and development activities.  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".  Since the Company did not  meet
the  standards  for  capitalization  under  this  Statement,  all
research  and  development  costs  for  the  three  months  ended
September  30, 2000 and 1999 were charged to expense as incurred.
For  the three months ended September 30, 2000 and 1999, research
and development costs were $121,779 and $103,748, respectively, a
17.4% increase as the Company continues its planned increases  in
research  and  development activities relating to  potential  new
product releases.  As a percentage of total revenue, research and
development costs for the three months ended September  30,  2000
were  48.3%  as  compared  to 27.0% for the  three  months  ended
September  30,  1999.   The Company believes  that  research  and
development   expenditures  are  essential   to   maintaining   a
competitive  position and expects that these costs will  continue
to increase 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
September  30, 2000 and 1999, selling, general and administrative
expenses  were  $2,145,746 and $827,215, respectively,  a  159.4%
increase  due to the amortization of investor relations  expenses
and  financial  services expenses of approximately $503,000  that
were  paid in shares of the Company's Common Stock.  The increase
was  also  due  to  increases in headcount from approximately  25
employees  during  the  quarter  ended  September  30,  1999   to
approximately 37 employees at September 30, 2000.  The  headcount
increase,  coupled  with  an increase in  salaries  paid  to  the
Company's  employees during the quarter, resulted in an  increase
in   wages   and  related  benefits  of  approximately  $273,000.
Finally,  the increase was due to legal expenses of approximately
$166,000   and  accounting  expenses  of  approximately   $87,000
relating  to the Company's restatement of its December  31,  1999
and  March 31, 2000 financial statements and tax returns, and the
related  class action lawsuits (see Part II, Item 1 of this  Form
10-QSB).   As  a  percentage  of  revenue,  selling  general  and
administrative  expenses  for  the  three  month   period   ended
September  30,  2000 were 850.7% as compared to  214.9%  for  the
three month period ended September 30, 1999.  The Company expects
that selling, general and administrative costs, exclusive of  the
investor  relations expenses and lawsuit-related  expenses,  will
continue  to  increase in the future as the Company continues  to
ramp up its sales and marketing efforts.

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 September 30, 2000 and 1999 was $8,838
and  $3,192, respectively, a 176.9% increase primarily due to  an
increase in property and equipment acquired by the Company.  As a
percentage  of  revenue, depreciation and  amortization  for  the
three month period ended September 30, 2000 was 3.5% compared  to
0.8%  for  the three month period ended September 30, 1999.   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.


<PAGE>6


Other   Income/Expense,  Net.   Other  income/expense   primarily
consists   of   imputed  interest  expense  calculated   on   the
liabilities  assumed  by  the  Company  in  connection  with  its
acquisition  of  CSPI in January 1999, offset by interest  income
received  from investments of the Company's excess cash balances.
Net  other income for the three months ended September  30,  2000
was  $94,618 as compared to net other expense of $3,728  for  the
three  months ended September 30, 1999, a 2,638% increase as  the
result  of higher cash balances maintained by the Company  during
the third quarter of 2000.

Income Taxes.  For the three months ended September 30, 2000, the
Company  did not record any income tax benefit as compared  to  a
benefit  of  $168,306  for the three months ended  September  30,
1999.

Net  Income  /  Loss.  For the three months ended  September  30,
2000,  the Company recorded a net loss of $1,929,498 or $.18  per
common  share as compared to a net loss of $384,625 or  $.06  per
common  share for the three months ended September  30,  1999,  a
401.7% decrease as a result of the factors described above.

Nine  Months  Ended September 30, 2000 Compared  to  Nine  Months
Ended September 30, 1999

Software Sales.  Software sales consist of sales of the Company's
BABY software products.  Software sales for the nine months ended
September  30,  2000  and  1999  were  $972,459  and  $2,412,047,
respectively,  a 59.7% decrease.  The decrease in software  sales
during the first two quarters of 2000 represents a planned change
in  emphasis  in the Company's business plan.  In the  first  two
quarters  of  1999,  emphasis  was placed  on  upgrading  current
customers on the Company's rehosting products to prepare them for
the  launch of the Company's new BABY/GUI and BABY.COM  products,
which  also allowed the Company to expand its potential  customer
base to a much broader target of installed IBM AS/400 users.  The
Company  introduced BABY/GUI in the third quarter  of  1999,  and
launched  BABY.COM  in September 2000.  The  Company  anticipates
that  these products will account for a majority of the Company's
sales  in  the  future.  In addition, sales for the three  months
ended  September 30, 2000 were adversely affected  by  the  class
action  lawsuits filed against the Company during that  timeframe
which   resulted   in  significant  reductions  of   managements'
involvement in sales activities.

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,  and shipping revenue billed  to  customers.
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  nine  months ended September 30, 2000 and 1999 was  $126,725
and  $102,494,  respectively,  a  23.6%  increase.   The  Company
expects  that  revenue from this source will increase  in  future
periods as the Company expands its customer base.

Research  and Development Costs.  Research and development  costs
consist  primarily  of  salaries paid  to  employees  engaged  in
research and development activities.  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".  Since the Company did not  meet
the  standards  for  capitalization  under  this  Statement,  all
research  and  development  costs  for  the  nine  months   ended
September  30, 2000 and 1999 were charged to expense as incurred.
For  the  nine months ended September 30, 2000 and 1999, research
and development costs were $361,004 and $311,244, respectively, a
16.0% increase as the Company continues its planned increases  in
research  and  development activities relating to  potential  new
product releases.  As a percentage of total revenue, research and
development  costs for the nine months ended September  30,  2000
were  32.8%  as  compared  to 12.4% for  the  nine  months  ended
September  30,  1999.   The Company believes  that  research  and
development   expenditures  are  essential   to   maintaining   a
competitive  position and expects that these costs will  continue
to increase in the future.


<PAGE>7


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  nine  months  ended
September  30, 2000 and 1999, selling, general and administrative
expenses  were $4,636,424 and $1,959,983, respectively, a  136.6%
increase   due  to  investor  relations  expenses  and  financial
services expenses of approximately $1,162,000 that were  paid  in
shares of the Company's Common Stock.  In addition, increases  in
headcount  totaling  approximately  $635,000  coupled  with   the
increased  legal  and accounting fees of approximately  $205,000,
both of which are discussed above, accounted for the majority  of
the  remainder  of the increase during 2000.  As a percentage  of
revenue, selling general and administrative expenses for the nine
month period ended September 30, 2000 were 421.8% as compared  to
77.9%  for  the nine month period ended September 30, 1999.   The
Company  expects that selling, general and administrative  costs,
exclusive  of the investor relations expenses and lawsuit-related
expenses, will continue to increase in the future as the  Company
continues to ramp up its sales and marketing efforts.

Depreciation  and  Amortization.  Depreciation  and  amortization
consists  of recurring depreciation charges recorded against  the
Company's  property and equipment.  Depreciation and amortization
for the nine months ended September 30, 2000 and 1999 was $24,059
and  $8,249, respectively, a 191.7% increase primarily due to  an
increase in property and equipment acquired by the Company.  As a
percentage of revenue, depreciation and amortization for the nine
month  period ended September 30, 2000 was 2.2% compared to  0.3%
for  the nine month period ended September 30, 1999.  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   Income/Expense,  Net.   Other  income/expense   primarily
consists   of   imputed  interest  expense  calculated   on   the
liabilities  assumed  by  the  Company  in  connection  with  its
acquisition  of  CSPI in January 1999, offset by interest  income
received  from investments of the Company's excess cash balances.
Net other income for the nine months ended September 30, 2000 was
$156,565 as compared to net other expense of $11,025 for the nine
months  ended September 30, 1999, a 1,520% increase as the result
of higher cash balances maintained by the Company during 2000.

Income  Taxes.  For the nine months ended September 30, 2000  and
1999,  the  Company did not record any income  tax  provision  or
benefit.

Net Income / Loss.  For the nine months ended September 30, 2000,
the  Company recorded a net loss of $3,765,738 or $.35 per common
share  as compared to a net profit of $224,040 or $.03 per common
share  for  the  nine months ended September 30, 1999,  a  1,780%
decrease as a result of the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's  operations  have  resulted  in  a  net  loss   of
$3,765,738  for the nine months ended September 30,  2000  versus
net  income  of $224,040 for the nine months ended September  30,
1999.  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 nine months ended September
30,  2000  was $2,948,764, while net cash provided by  operations
for  the nine months ended September 30, 1999 was $167,995.   The
negative cash flows generated from operations for the nine months
ended  September  30,  2000  were primarily  due  to  the  losses
incurred from operations, while the positive cash flows generated
from operations for the nine months ended September 30, 1999 were
primarily due to decreases in cash collections resulting  from  a
lack of internal resources within  the  Company.     The  Company
believes that it may continue to  experience  negative cash flows
from operations in  the  short-term future as it restructures its
sales efforts to  prepare  for  supporting its new graphical  and
Internet-related products.

Net  cash used in investing activities for the nine months  ended
September  30, 2000 was $94,411, due almost entirely to purchases
of  property  and  equipment.   Net cash  provided  by  investing
activities  for  the  nine months ended September  30,  1999  was
$304,671,  due  primarily  to cash received  from  the  Company's
acquisition  of  CSPI in January 1999.  The  Company  expects  to
continue to invest in capital and other assets as well as utilize
mergers and acquisitions to expand and support its growth.


<PAGE>8


Net  cash  provided by financing activities for the  nine  months
ended  September  30,  2000  was  $8,427,486,  due  primarily  to
proceeds  received from the Company's private placement completed
during the second quarter of 2000.  There was no cash provided by
or  used  in  financing  activities for  the  nine  months  ended
September  30, 1999.  The Company anticipates that  it  may  seek
additional capital in the future to support its business plan.

At   September  30,  2000,  cash  and  cash  equivalents  totaled
$5,787,093.  In addition, at September 30, 2000, the Company  had
working  capital  of  $6,020,612 and an  accumulated  deficit  of
$4,202,800.

During  the quarter ended June 30, 2000, the Company completed  a
private  placement of 2,654,971 shares of its common stock.   The
offering  price  per share was $4.00 per share  and  the  Company
received  an  aggregate  of  $8,779,898  in  proceeds  from   the
offering.   The  Company paid commissions  and  expenses  in  the
aggregate  amount  of $547,259 in connection with  the  offering.
The  offering  was  made  by  the  Company  in  reliance  on  the
provisions  of  Rule  506 of Regulation D promulgated  under  the
Securities  Act of 1933, as amended, and the shares were  offered
solely  to accredited investors as that term is defined  in  Rule
501  of such regulation.  The Company intends to use the proceeds
of  this  offering  for working capital, acquisitions  and  other
corporate purposes.

During  the  nine  months ended September 30, 2000,  the  Company
issued to unrelated non-employees 781,000 shares of common  stock
at prices from $0.05 to $7.35 per share for various services.

Depending  on the outcome of the securities litigation  currently
filed  against  the  Company (see Part II, Item  1  hereof),  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.

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.  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.  The  plaintiffs
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.

Additionally, on August 24, 2000, a shareholder filed a complaint
against  the same defendants in the United States District  Court
for  the  Central  District  of California,  based  on  the  same
allegations  and seeking the same damages as in the class  action
suit described above.


<PAGE>9


On  or about September 11, 2000, a third shareholder class action
was commenced in the United States District Court for the Central
District  of  California,  against  the  same  defendants.   This
complaint is based upon the same allegations and seeks  the  same
relief as in the class action suits described above.

On or about September 21, 2000, a fourth shareholder class action
was  commenced  in  the same court against the  same  defendants.
This  class  action suit is based upon the same  allegations  and
seeks the same relief as described above.

The  Company  expects that the above suits will  be  consolidated
into a single class action.

The  Company believes that it has meritorious defenses  to  these
actions  and  intends  to vigorously defend  them.   The  pending
securities   actions  are  in  the  early  states  of  procedure.
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.   However,
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  nine  months  ended
September 30, 2000, the Company's core of BABY 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 or results of operations.

Product  Concentration.  As previously noted, the Company derives
most  of  its  revenues from products that replicate  the  AS/400
environment  on  a  personal computer  platform  and  provides  a
graphical   user   interface  ("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.   Because  there  can  be no assurance  that  the  AS/400
platform  will continue to be used in the foreseeable  future,  a
decline  in  demand for AS/400 products and hence  the  Company's
software  products could have a material adverse  effect  on  the
Company's business, operating results, and financial condition.

Potential for Software Defects.  Software products as complex  as
the  BABY  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 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 cause quarterly
revenues   and  net  income  to  fall  significantly   short   of
anticipated levels.


<PAGE>10


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  the  Company's
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 platform migration 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 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
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 temporary 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.

<PAGE>11


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
2000.   In  addition,  any significant change  in  the  Company's
product  development plans or marketing and distribution  methods
might 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
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
Company's  Common  Stock  is currently quoted  on  the  Over-the-
Counter   Bulletin  Board  ("OTCBB")  under  the  symbol  "CAWC".
However,  as is the case for many other stocks on the OTCBB,  the
trading  volume  in  the Company's stock  is  insignificant.   In
addition,  most of the Company's stock is privately held.   As  a
result,   the   market  for  the  Company's  stock  is   limited.
Management of the Company anticipates that the expansion  of  the
shareholder base and continuing improvements in operating results
would  enhance  the  liquidity of the  Company's  shares  in  the
future.   However,  there can be no assurance that  a  meaningful
trading market will develop.

Since the Company's inception, the Company has not paid dividends
on its Common Stock, and does not anticipate paying any dividends
in the foreseeable future.

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.


<PAGE>12


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 as well as two of its officers and
directors,  Bruce Acacio and Carol Conway.  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.   The
plaintiffs  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 or about August 21, 2000, another shareholder class action was
commenced  against the Company, Mr. Acacio and Ms.  Conway.   The
complaint  is  based on the same allegations and is  seeking  the
same relief as in the class action suit described above.

On  or about September 11, 2000, a third shareholder class action
was commenced in the United States District Court for the Central
District of California against the Company and Mr. Acacio and Ms.
Conway.   This  complaint is based on the  same  allegations  and
seeks  the  same  relief as in the class action  suits  described
above.

On  or about September 21, 2000, another shareholder class action
was commenced in the United States District Court for the Central
District  of California against the Company, Mr. Acacio  and  Ms.
Conway.   This  complaint is based on the  same  allegations  and
seeks  the  same  relief as in the class action  suits  described
above.

The  Company  expects that the above suits will  be  consolidated
into a single class action.

The  Company believes that it has meritorious defenses  to  these
actions and intends to vigorously defend them.

Item 2. Changes in Securities

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

On  October  20,  2000, the Company acquired the  net  assets  of
Software  Connections, Inc. d/b/a ALE Systems ("ALE"), a Virginia
corporation  in  exchange for $750,000 in cash  and  an  earn-out
agreement  valued  between $625,000 and  $2.5  million  which  is
dependent on the operating results of ALE in future periods.

On  November  7, 2000, the Company signed a letter of  intent  to
merge   with  UniComp  Inc.,  a  provider  of  retail  e-business
solutions  and business software solutions for small and  medium-
sized companies, retailers and system integrators.  The merger is
subject   to   the   customary  closing   conditions,   including
shareholder  and  regulatory approval.  At  the  closing  of  the
merger, California Software shareholders will receive a number of
shares equivalent to one for one.


<PAGE>13


Item 6. Exhibits and Reports on Form 8-K

  (a)  Exhibits -

       27. Financial Data Schedule

  (b)  Reports on Form  8-K  -


       Filed on July 3, 2000 amending the filing  on  May  16,  2000 for  Item
       5,  Other Events  and  Item 7, Financial  Statements  and Exhibits
       relating  to  the  Company's  private placement of its Common Stock.

       Filed on August 3,  2000 amending the filing on May 2, 2000 for
       Item   4,  Change  in  Registrant's  Certifying Accountant.

       Filed on August 8,  2000  for  Item 4, Change  in  Registrant's
       Certifying Accountant.

       Filed on August 14,  2000 for Item 5, Other Events and Item  7,
       Financial  Statements and  Exhibits  announcing the  Company's
       restatement of  its  financials for the  year ended December 31, 1999 and
       the quarter ended March 31, 2000.

       Filed on September  27,  2000 amending the filing on August  8,
       2000   for   Item  4,  Change  in  Registrant's
       Certifying Accountant.


<PAGE>14





                           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.

Date: November 13, 2000

CALIFORNIA SOFTWARE CORPORATION

By:/s/Lawrence J. Jagiello
Lawrence J. Jagiello
Chief Financial Officer and Principal Accounting Officer





<PAGE>15
END