UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                           FORM 10-QSB

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended JUNE 30, 2000

Or

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

For the transition period from ____________ to _____________

Commission File Number: 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, Irvine, California     92614
        (Address of principal executive offices)     (Zip Code)



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

Check whether the issuer (1) has 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 registrant's common stock as of September 21,
2000:

12,597,771

         TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:

Yes [ ] No [X]



                 California Software Corporation
                        Quarterly Report
                   Period Ending June 30, 2000

                        Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheet                                              1

Statements of Operations                                   2

Notes to Financial Statements                              3

Item 2. Management's Discussion and Analysis               4

PART II - OTHER INFORMATION                                9

SIGNATURES                                                10









                               -i-


PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

                 California Software Corporation
                          BALANCE SHEET


                                                  June 30, 2000
                                                   (Unaudited)
                                                  -------------
ASSETS

Current assets:

Cash and cash equivalents                            $7,340,914

Accounts receivable, net of allowance for doubtful      538,047
accounts of $512,826

Prepaids and other current assets                       846,403

Total current assets                                  8,725,364

Property and equipment, net                             118,491

Acquired technology, net                              1,084,412

TOTAL ASSETS                                          9,928,267

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses                  $411,088

Accrued payroll and related expenses                    123,546

Deferred revenue                                         98,958

Total current liabilities                               633,592

Total liabilities                                       633,592

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 shares        12,576
authorized; 12,575,771 shares issued and
outstanding

Additional paid-in capital                           11,952,275

Accumulated deficit                                  (2,670,176)

Total stockholders' equity                            9,294,675

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $9,928,267


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


                               -1-


                 California Software Corporation
                    STATEMENTS OF OPERATIONS
                           (Unaudited)

                                 Three months ended June 30,

                                       2000          1999
                                 ----------    ----------
Revenues:

Software sales                     $433,759    $1,301,116

Maintenance and other revenue        41,371        31,101

Total revenues                      475,130     1,332,217

Costs and expenses:

Research and development            122,190       103,748

Selling, general, and             1,584,806       704,619
administrative

Depreciation and amortization        85,971        80,004

Total costs and expenses          1,792,967       888,371

Income (loss) from operations    (1,317,837)      443,846

Other income (expense), net          61,626        (3,782)

Income (loss) from operations    (1,256,211)      440,064
before provision for income taxes

Provision for income taxes                -       (96,026)

Net income (loss)               $(1,256,211)     $344,038


Basic and diluted income
(loss) per share                     $(0.12)        $0.05

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


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

                               -2-


                 California Software Corporation
                  NOTES TO FINANCIAL STATEMENTS
                          June 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"),  except  that   our   independent
accountants  have informed us that their review of our  financial
statements  is  incomplete.   Accordingly,  in  conformity   with
Regulation S-X, these financial statements do not include all  of
the   information  and  notes  required  by  generally   accepted
accounting   principles   for  complete   financial   statements.
However,  the Company believes that the disclosures are  adequate
to   make  the  information  presented  not  misleading.    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 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 June 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 for
software  revenue  recognition transactions.  Based  in  part  on
guidance   provided   by   the  Company's   original   certifying
accountant,  Mr. James Slayton, CPA, the Company was  recognizing
revenue  on  shipments of new product that  failed  to  meet  the
criteria   specified  in  SOP  97-2.   Mr.  Slayton   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 Mr. Slayton did not  meet
the  peer review standards mandated by the American Institute  of
Certified  Public  Accountants ("AICPA").  On May  2,  2000,  the
Company filed a Form 8-K with the SEC dismissing Mr. Slayton  and
engaged  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 filed a Form 8-K with
the  SEC dismissing Squar and named Stark, Tinter and Associates,
LLP  ("Stark"), as the certifying independent accountants.   Upon
examination of the Company's financial statements, Stark notified
the  Company  that the method in which it used to record  revenue
was  not in compliance with the provisions of SOP No. 97-2.   The
Company  is  currently in the process of restating its  operating
results  to  conform to SOP No. 97-2 for the year ended  December
31,  1999  and the three month period ended March 31,  2000,  and
will amend its SEC filings upon completion of these restatements.
The  results for the three month periods ended June 30, 2000  and
1999 are prepared in accordance with the provisions of SOP No. 97-
2.

3. STOCK TRANSACTIONS

Effective  March  15,  2000, the Company effected  a  two-for-one
stock  split.   Accordingly, the number of shares outstanding  at
June  30, 1999 used in the calculation of earnings per share have
been adjusted to account for the effects of this split.

During  the  three  months  ended  June  30,  2000,  the  Company
completed  a  private  offering of its  common  stock  under  the
provisions  of Rule 506 of Regulation D under the Securities  Act
of  1933, as amended (the "Act").  The Company issued a total  of
2,654,971 shares of its common stock in exchange for proceeds  of
$8,258,239, net of offering costs of $521,659.

During  the three months ended June 30, 2000, the Company  issued
to  unrelated  non-employees 155,000 shares of common  stock  for
various  services.  Certain of these services are to be performed
in  future  periods.  As such, the Company has recorded  deferred
expense in the amount of $382,500 related to these services.

4. CONTINGENCIES

Litigation

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

                               -3-


Item 2. Management's Discussion and Analysis

FORWARD-LOOKING STATEMENTS

  In addition to historical information, this Quarterly Report on
Form  10-QSB  contains forward-looking statements.  The  forward-
looking statements are subject to certain risks and uncertainties
that  could cause actual results to differ materially from  those
reflected  in  such  forward-looking  statements.   Readers   are
cautioned  not  to place undue reliance on these  forward-looking
statements, which reflect management's opinions only  as  of  the
date  hereof. The Company undertakes no obligation to  revise  or
publicly  release the results of any revision to  these  forward-
looking  statements.  Readers should carefully  review  the  risk
factors described herein and in other documents the Company files
from  time  to time with the SEC, including its Annual Report  on
Form  10-KSB for the fiscal year ended December 31, 1999 and  the
Quarterly  Reports on Form 10-QSB 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 RPG applications
to  the  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; and (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.  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.

RESULTS OF OPERATIONS

Software Sales.  Software sales consist of sales of the Company's
BABY  software  products.  Software sales for  the  three  months
ended  June  30,  2000  and  1999 were $433,759  and  $1,301,116,
respectively,  a 66.7% decrease.  The decrease in software  sales
during  2000  represents  a planned change  in  emphasis  in  the
Company's  business  plan.   In  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 rollout of these new  products  is  planned for
the fourth  quarter of 2000.  The Company anticipates  that these
new products  will account for a majority of the Company's  sales
in the future.

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 June 30, 2000 and 1999 was  $41,371  and
$31,101,  respectively,  a  33.0% increase  consistent  with  the
continued expansion of the Company's customer base.

                              -4-

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  June
30,  2000  and June 30, 1999 were charged to expense as incurred.
For  the three months ended June 30, 2000 and 1999, research  and
development  costs  were $122,190 and $103,748,  respectively,  a
17.8% 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 June 30,  2000  were
25.7%  as  compared to 7.8% for the three months ended  June  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 June
30,  2000  and 1999, selling, general and administrative expenses
were  $1,584,806  and $704,619, respectively, a  124.9%  increase
primarily  due   to  one-time  investor  relations  expenses   of
approximately $550,000, of which $470,000 was paid  in shares  of
the Company's  common stock, relating  to  the Company's  private
offering of its common stock completed during the second  quarter
of 2000.   To  a lesser extent, the increase was due to increases
in  headcount  and  corporate overhead necessary  to  support the
Company's expanding customer base.   As a percentage  of revenue,
selling  general and administrative expenses for the  three month
period ended June 30, 2000  were  333.6% as compared to 52.9% for
the three month period ended  June 30, 1999.  The Company expects
that selling,  general and administrative costs, exclusive of the
one-time investor relations 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, as well  as  amortization  of
technology  acquired  by  the  Company  in  connection  with  its
acquisition   of   CSPI  in  January  1999.    Depreciation   and
amortization  for the three months ended June 30, 2000  and  1999
was  $85,971 and $80,004, respectively, a 7.5% 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 June 30,  2000  was
18.1% compared to 6.0% for the three month period ended June  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.

Interest,  Net.   Net  interest  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 interest  income  for  the
three  months ended June 30, 2000 was $61,626 as compared to  net
interest  expense of $3,782 for the three months ended  June  30,
1999,  a  1,729.5% increase as the result of higher cash balances
arising  from the proceeds of the Company's private  offering  of
its common stock completed during the second quarter of 2000.

Income  Taxes.   For the three months ended June  30,  2000,  the
Company  did not record an income tax benefit as compared  to  an
income  tax provision of $96,026 for the three months ended  June
30, 1999.

Net Income / Loss.  For the three months ended June 30, 2000, the
Company  recorded  a net loss of $1,256,211 or $0.12  per  common
share  as compared to net income of $344,038 or $0.05 per  common
share for the three months ended June 30, 1999, a 465.1% decrease
as a result of the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's  operations  have  resulted  in  a  net  loss   of
$1,256,211  for the three months ended June 30, 2000  versus  net
income  of  $344,038 for the three months ended  June  30,  1999.
Since  the  Company's inception in October 1998, the Company  has
financed its operations primarily through the sale of its  common
stock.

                              -5-

At  June  30, 2000, cash and cash equivalents totaled $7,340,914.
In addition, at June 30, 2000, the Company had working capital of
$8,091,772 and an accumulated deficit of $2,670,176.

In  June  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 (on a post-split basis) 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 $521,659 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  Act
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.

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.


580/099999-0071
118488.01 a09/22/00 -1-

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 its Chief Executive Officer  and
President.   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 state 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 Company,  its
Chief  Executive  Officer and President with  the  Orange  County
Superior Court based on the same allegations and seeking the same
damages  as in the class action suit described above. The Company
expects  that  this  suit  will be consolidated  with  the  class
action.  The Company believes that it has meritorious defenses to
these  actions and intends to vigorously defend them. The pending
securities   action  is  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 three  months  ended
June 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.

                            -6-

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.

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 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  the  companies'  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.

                              -7-

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

Possible  Necessity  for Additional Capital.   Depending  on  the
outcome  of the currently filed class action lawsuit, 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
common  stock of the Company 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.

                             -8-

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 its  Chief  Executive
Officer and President.  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 state securities laws.  The plaintiffs seek damages,
interest, costs and such other equitable or injunctive relief  as
the Court may deem just and proper.

On  August 24, 2000, a shareholder filed a complaint against  the
Company,  its  Chief  Executive Officer and  President  with  the
Orange  County  Superior Court based on the same allegations  and
seeking  the  same damages as in the class action suit  described
above.  The  Company expects that this suit will be  consolidated
with  the  class  action.   The  Company  believes  that  it  has
meritorious  defenses to these actions and intends to  vigorously
defend them.

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 legal matters  will  have  a
material adverse effect on the Company's results of operations or
financial position.

Item 2. Changes in Securities

During  the  three month period 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  (on  a
post-split  basis)  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 $521,659  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 Act and the shares were offered  solely  to
accredited investors as that term is defined in Rule 501 of  such
regulation.

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 -

   	          27  - Financial Data Schedule

  (b) Reports on Form 8-K -

                  Filed on May 2, 2000 for Item  4.
                  Change in Registrant's Certifying Accountant.

                  Filed  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  May 31, 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.

                                 -9-


                           SIGNATURES

Pursuant  to 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
                          (Registrant)

Date: September 22, 2000

By:/s/Lawrence J. Jagiello

Lawrence J. Jagiello,
Chief Financial Officer and Principal Accounting Officer






                                -10-
                                END