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, 2002

[ ]  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)


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 [ ]

Number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 16,824,863 shares of Common Stock as of May
07, 2002.


                  TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT


Yes [ ] No [X]

<PAGE>


                         California Software Corporation


                                Quarterly Report
                           Period Ended March 31, 2002

                                Table of Contents


PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements (Unaudited)

         Consolidated Balance Sheet (Unaudited)                                1

         Consolidated Statements of Operations and Comprehensive Loss
         (Unaudited)                                                           2

         Consolidated Statements of Cash Flows (Unaudited)                     3

         Notes to Consolidated Financial Statements (Unaudited)                4

Item 2.  Management's Discussion and Analysis                                  4

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                    10

Item 2.  Changes in Securities and Use of Proceeds                            11

Item 3.  Defaults Upon Senior Securities                                      11

Item 4.  Submission of Matters to a Vote of Security Holders                  11

Item 5.  Other Information                                                    11

Item 6.  Exhibits and Reports on Form 8-K                                     11

SIGNATURES                                                                    12


<PAGE>


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


                         California Software Corporation
                           CONSOLIDATED BALANCE SHEET
                                   (unaudited)

                                                                  March 31, 2002
                                                                  --------------
ASSETS

Current assets:
     Cash and cash equivalents                                     $     64,769
     Accounts receivable, net of allowance
        for doubtful accounts of $293,752                               696,241
     Prepaids and other current assets                                   55,709
                                                                   ------------

         Total current assets                                           816,719

Property and equipment, net                                             231,633
Other assets                                                             25,215
                                                                   ------------

TOTAL ASSETS                                                       $  1,073,567
                                                                   ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Accounts payable and accrued expenses                         $    864,189
     Accrued payroll and related taxes                                  528,781
     Accrued Expenses                                                   258,812
     Current portion long-term debt                                     444,550
     Deferred revenue                                                   490,569
                                                                   ------------

         Total current liabilities                                    2,586,901

Long-term liabilities, including amounts due related
        party of $63,595, net of unamortized discount
        on notes payable of $238,753                                  1,265,049
                                                                   ------------

Total liabilities                                                     3,851,950

Stockholders' Deficit
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; 16,824,863 shares issued and outstanding             16,825
Treasury stock, 20,000 shares                                           (14,595)
Additional paid-in capital                                           10,394,791
Foreign currency translation adjustments                                (50,432)
Accumulated deficit                                                 (13,124,972)
                                                                   ------------

Total stockholders' deficit                                          (2,778,383)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $  1,073,567
                                                                   ============


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

                                       1
<PAGE>
<TABLE>
<CAPTION>


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


                                                          Three months ended
                                                                March 31,
                                                      ----------------------------
                                                          2002            2001
                                                      ------------    ------------
<S>                                                   <C>             <C>
Revenues:
     Software sales                                   $    244,296    $    706,200
     Maintenance and other revenue                         797,413         544,296
                                                      ------------    ------------
         Total revenues                                  1,041,709       1,250,496

Costs and expenses:
Research and development                                   263,166         422,422
Selling, general, and administrative                     1,849,443       1,582,261
Depreciation and amortization                               31,920         327,078
                                                      ------------    ------------
         Total costs and expenses                        2,144,529       2,331,761
                                                      ------------    ------------

Loss from operations                                    (1,102,820)     (1,081,265)

Other expense, net                                         (15,919)         (1,822)
Foreign currency exchange loss                              (1,244)         (3,159)
                                                      ------------    ------------

Loss before provision for income taxes and
        extraordinary item                              (1,119,983)     (1,086,246)

Provision for income taxes                                    --              --
                                                      ------------    ------------

Loss before extraordinary item                          (1,119,983)     (1,086,246)

Extraordinary item - gain on recovery of investment           --         1,000,000
                                                      ------------    ------------

Net loss                                              $ (1,119,983)   $    (86,246)

Other comprehensive loss:
     Foreign currency translation                          (23,365)        (26,813)
                                                      ------------    ------------

Comprehensive loss                                    $ (1,143,348   $   (113,059)
                                                      ============    ============

Loss per common share, basic and fully diluted:
     Loss before extraordinary item                   $        .01    $      (0.09)
     Extraordinary item                                       --              0.08
                                                      ------------    ------------
     Net loss                                         $        .01    $      (0.01)
                                                      ============    ============

Weighted-average shares outstanding                     14,312,637      12,436,697
                                                      ============    ============


               The accompanying notes are an integral part of the
                       consolidated 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                              (174,650)    (1,309,585)


CASH FLOWS FROM INVESTING ACTIVITIES                                (3,011)      (101,883)


CASH FLOWS FROM FINANCING ACTIVITIES                               (43,667)      (407,183)


Effect of exchange rate changes on cash and cash equivalents       (23,365)       (26,813)
                                                               -----------    -----------


Net change in cash and cash equivalents                           (244,693)    (1,845,464)


                                                               -----------    -----------
Cash at beginning of period                                        309,462      2,434,579
                                                               -----------    -----------


                                                               ===========    ===========
Cash at end of period                                          $    64,769    $   589,115
                                                               ===========    ===========

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
   ACTIVITIES

                                                               ===========    ===========
Forgiveness of note receivable                                 $      --      $    71,311
                                                               ===========    ===========
Cash paid for interest                                         $      --      $      --
                                                               ===========    ===========


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

                                           3
</TABLE>
<PAGE>

                         California Software Corporation
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 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, 2001.

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,
2002 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. STOCK TRANSACTIONS

On January 7, 2002, the Company issued 30,000 restricted shares to a consultant
for services rendered. Also on January 7, 2002, the Company issued 850
restricted shares to employees as incentives. The shares were valued at $8,946.

On March 28, 2002, the Company issued 454,188 restricted shares to two of its
officers in lieu of cash compensation earned but not paid during the fourth
quarter of 2001. Also on March 28, 2002, the Company issued 10,000 restricted
shares to a vendor as part of a settlement agreement. The shares were valued at
$74,270.

The Company issued 2,650,000 shares of common stock and 3,800,000 stock purchase
warrants related to a settlement agreement with shareholders. The total value of
common stock and stock purchase warrants was $942,550.

All shares of common stock were valued at their fair market value on the date
the Company agreed to issue the shares.


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, 2001 and the Quarterly Reports on Form 10-QSB filed by the Company
in fiscal 2001.

GENERAL

California Software Corporation, hereinafter referred to as the "Company" or
"CSC", was incorporated in the State of Nevada on October 28, 1998 and markets
several families of software products that are targeted to users of the
International Business Machines ("IBM*") iSeries, formerly known as the AS/400*
and mainframe computers. These products include software marketed under the
brand names BABY, Unibol, MLPS, DLCS, ALPS and CLPS. (*A trademark of
International Business Machines.)

                                       4
<PAGE>

RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Software Sales. Software sales consist of sales of the Company's BABY, Unibol,
MLPS, DLCS, ALPS and CLPS software products. Software sales for the three months
ended March 31, 2002 and 2001 were $244,296 and $706,200, respectively, a 65.4%
decrease. The decrease in software sales during the three months ended March 31,
2002 was primarily due to the fact that the Company closed fewer large software
deals in the first quarter of 2002 compared to the deals closed in the first
quarter of 2001 at one of the Company's subsidiaries. As the products sold by
this subsidiary typically operate on a longer sales cycle compared to the
Company's other products, the closing of certain sales can shift between
quarters.

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,
2002 and 2001 was $797,413 and $544,296, respectively, a 46.5% 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
general release, all research and development costs are charged to expense as
incurred. For the three months ended March 31, 2002 and 2001, the Company
incurred research and development costs of $263,166 and $422,422, respectively,
a 37.7% decrease that was primarily the result of the Company's continuing cost
containment efforts. As a percentage of revenue, research and development costs
for the three months ended March 31, 2002 and 2001 were 26.1% and 33.8%,
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, stock compensation, and bad debt
expenses. For the three months ended March 31, 2002 and 2001, selling, general
and administrative expenses were $1,849,443 and $1,582,261, respectively. The
increase from 2002 to 2001 was 17%.

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,
2002 and 2001 was $31,920 and $327,078, respectively, a 90.2% decrease. This
decrease is primarily due to the fact that the Company no longer records
goodwill amortization. The Company recorded an impairment charge during the
fiscal year ended December 31, 2001 that reduced the carrying amount of goodwill
to zero.

Other Expense, Net. Net other expense primarily consists of interest expense on
the Company's debt balances, partially offset by interest income received from
investments of the Company's excess cash balances. Net other expense for the
three months ended March 31, 2002 was $15,919 as compared to net other expense
of $1,822 for the three months ended March 31, 2001, a 774% 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, 2002 and 2001.

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. There were no extraordinary items for
the three months ended March 31, 2002.

                                       5
<PAGE>

Net Loss. For the three months ended March 31, 2002, the Company recorded a net
loss of $1,119,983 or $0.08 per common share as compared to a net loss of
$86,246 or $0.01 per common share for the three months ended March 31, 2001.


LIQUIDITY AND CAPITAL RESOURCES

The Company's operations have resulted in net losses of $1,119,983 and $86,246
for the three months ended March 31, 2002 and 2001, 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, 2002 was
$174,650, while net cash used in operations for the three months ended March 31,
2001 was $1,309,585. The negative cash flows generated from operations for the
three months ended March 31, 2002 and 2001 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).

Net cash used in investing activities for the three months ended March 31, 2002
and 2001 was $3,011 and $101,883, due to the purchase of property and equipment
for 2002 and the Company's acquisition of Unibol Ltd. on January 29, 2001 for
2001.

Net cash used in financing activities for the three months ended March 31, 2002
was $43,667, due entirely to repayments on the Company's long-term obligations.
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.

At March 31, 2002, cash and cash equivalents totaled $64,769. In addition, at
March 31, 2002, the Company had an accumulated deficit of $13,124,972.

Management plans to increase revenues by expanding its customer base, enhancing
existing products, and developing new and upgraded products. The Company may be
required to raise additional funds to meet the Company's working capital and
capital expenditure needs. 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. If the Company decides to raise additional funds by
issuing equity or convertible debt securities, the percentage ownership of its
stockholders will be significantly diluted. Also, any new securities could have
rights, preferences and privileges senior to that of the Company's Common Stock.
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 may be unable to achieve and maintain 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.


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 6 - Management's Discussion and Analysis or Plan
of Operations" 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.

                                       6
<PAGE>

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 may
be unable to achieve and maintain 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 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, 2001 that calls into
question the Company's ability to continue operations through December 31, 2002.

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 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 operating plan, it
may 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. If the Company decides to raise additional funds by
issuing equity or convertible debt securities, the percentage ownership of its
stockholders will be significantly 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 it incurred
net operating losses of $177,433 and $86,246 for the three months ended March
31, 2002 and 2001, respectively, 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 has not yet obtained profitability. The Company's ability to
become profitable and continue its operations depends on its ability to generate
and sustain higher revenue levels, and maintain reasonable operating expense
levels consistent with the assumptions underlying the Company's new operating
plan. 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, 2001, it
may 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 consolidated suit has been
settled, the court approved the settlement on March 11, 2002, and the case will
be dismissed upon full performance by the parties of their respective
obligations under the terms of the settlement.

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. In
response to the above-described complaint, on or about January 3, 2001, the
defendants filed an answer to complaint and a cross-complaint for declaratory
relief, breach of contract, and interference with contract against the Company.
On January 11, 2002, both parties agreed to binding mediation which included
release of all claims against the other party. Pursuant to the terms of the
mediated settlement, no monetary consideration was exchanged. The settlement
recognizes the Company as the sole owners of the intellectual property that was
the subject of the litigation, and pursuant to the settlement, Unicomp, Inc. was
granted nonexclusive rights to sublicense the intellectual property in the
Western Hemisphere.

                                       7
<PAGE>

Dependence on Principal Products. The Company is wholly dependent on its BABY,
Unibol, MLPS, DLCS, ALCS and CLPS software products for its product sales. 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.

Potential for Software Defects. Software products as complex as the BABY,
Unibol, MLPS, DLPS, ALPS and CLPS 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. The Company 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.

                                       8
<PAGE>

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. The Company may require additional
capital to fund its capital expenditures, product development and working
capital requirements through 2002. In addition, any significant change in the
Company's product development plans or marketing and distribution methods might
require additional capital. The sale of equity interests would significantly
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 overlap. 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 and financial
condition 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 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.

                                        9
<PAGE>

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
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 consolidated suit has been settled. The stipulation of
settlement provides for a release of all claims in exchange for (1) the issuance
of 2,000,000 shares of California Software common stock to the Open Market
Purchasers; (2) the issuance of 650,000 shares to the subscribers; (3) the
issuance of 2.8 million warrants to the Open Market Purchasers; (4) the issuance
of 650,000 warrants to the subscribers; and (5) payment of the costs of
administration, not to exceed $12,000. The court approved the settlement on,
March 11, 2002, and the case will be dismissed upon full performance by the
parties of their respective obligations under the terms of the settlement.

Following the Company's August 7, 2000 announcement of its intent to restate its
financials for the Restatement Period some of the subscribers to its recently
completed private placement began to assert, either directly or through counsel,
that financial information contained in the Private Placement Memorandum ("PPM")
was inaccurate. The Company engaged in communications with, and ultimately
entered into a settlement agreement with some of the subscribers or their
representatives. The collective settlement agreements provide for payment by the
Company of $821,211.68 in cash, $530,517.28 in non-interest bearing promissory
notes, and 1,453,472 warrants for the stock of the Company. The promissory notes
call for a balloon payment within thirty-six (36) months of the date of the
notes. The settlement agreements also provide for the transfer of 930,667 shares
of stock to the settling PPM subscribers from certain individuals and/or
entities. On or about March 30, 2001, the Company delivered initial cash
payments totaling $792,961.68, the promissory notes, the stock warrants, and the
shares of stock to the settling Subscribers. Subscribers who participated in
this settlement were precluded from participating in the Class Action Litigation
settlement.

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. In
response to the above-described complaint, on or about January 3, 2001, the
defendants filed an answer to complaint and a cross-complaint for declaratory
relief, breach of contract, and interference with contract against the Company.
Subsequent to December 31, 2001, the parties agreed to binding mediation, which
resulted in a settlement that includes release of all claims between parties.
Pursuant to the terms of the mediated settlement, no monetary consideration was
exchanged. The settlement recognizes the Company as the sole owners of the
intellectual property that was the subject of the litigation, and pursuant to
the settlement, Unicomp, Inc. was granted nonexclusive rights to sublicense the
intellectual property in the Western Hemisphere.

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 Company responded by filing a fraud
action against Software Connection's previous sole shareholder, Gayle Goodrich
and her husband, the former President of Software Connections C. Wesley Lucas in
Superior Court in Orange County, California. Both suits were settled pursuant to
the settlement agreement in October of 2001. Under the terms of the settlement,
the initial purchase price was adjusted downward by $966,555 and is evidenced by
a non-interest bearing note in the amount of $535,000 payable over 36 months. In
addition, the Company granted 400,000 options with an exercise price of $0.18
and no expiration date.

In January of 2001 a suit was filed against the Company in the United States
District Court for the Western District of Pennsylvania by a former vendor of
ALE. The suit alleged violations of the Copyright Act and claims for breach of
contract. In November of 2001, the case was settled and dismissed. Under the
terms of the settlement, the settlement amount of $360,000 is being paid over a
period of fifty-two months.

The Company is subject to various other legal proceedings and claims, either
asserted or unasserted, which arise in the ordinary course of business. While
the outcome of these claims cannot be predicted with certainty, management does
not believe that the outcome of any of these other legal matters will have a
material adverse effect on the Company's results of operations or financial
position.

                                       10
<PAGE>

Item 2. Changes in Securities and Use of Proceeds

On January 7, 2002, the Company issued 30,000 restricted shares to a consultant
for services rendered. Also on January 7, 2002, the Company issued 850
restricted shares to employees as incentives. The shares were valued at
$8946.50. The shares were issued in reliance upon the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended

On March 28, 2002, the Company issued 454,188 restricted shares to two of its
officers in lieu of cash compensation earned but not paid during the fourth
quarter of 2001. Also on March 28, 2002, the Company issued 10,000 restricted
shares to a vendor as part of a settlement agreement. The shares were valued at
$74,270.08. The shares were issued in reliance upon the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended

On May 2, 2002, the Company issued 1,800,000 restricted shares valued at
$463,750 and warrants valued at $478,800 and warrants as a settlement agreement
with shareholders.

The Company has filed an amendment subsequent to March 31, 2002 to its Articles
of Incorporation to increase the number of authorized shares from 20,000,000 to
40,000,000.


Item 3. Defaults Upon Senior Securities

None.


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

None


Item 5. Other Information

None.


Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

          None

     (b)  Reports on Form 8-K

          None.



                                       11
<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 6, 2002                      By:/s/ R. Bruce Acacio
-----------------                      ----------------------
                                       R. Bruce Acacio, Chief Executive Officer,
                                       Chief Accounting Officer





Date: May 6, 2002                      By: /s/ Carol Conway
-----------------                      --------------------
                                       Carol Conway
                                       President and Secretary



                                       12