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SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549




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FORM 10-KSB


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| | [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] | 
| | --- | ---------------------------------------------------------------------------------------------------- | 

For the fiscal year ended September 30, 2001
or




| | [   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________________ to _________________ | 
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

Commission file number 1-12312

CAMINOSOFT CORP(Name of small business issuer in its charter)

|                         |  |                                     
|------------------------ |  | ------------------------------------
|California               |  | 95-3880130                          
|(State of incorporation) |  | (I.R.S. Employer Identification No.)

600 Hampshire Road, Suite 105, Westlake Village, California 91361
(Address of principal executive offices)

Issuers telephone number: (805) 370-3100

|Securities registered under Section 12(b) of the Exchange Act: |  | None                      
|-------------------------------------------------------------- |  | --------------------------
|Securities registered under Section 12(8) of the Exchange Act: |  | Common Stock no par value.

Check mark indicates whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 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   [   ]

Check mark indicates that the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after
distribution of securities under a plan confirmed by a court.

YES   [X]          NO   [   ]

Check mark indicates that the disclosure of delinquent filers pursuant to
Item 405 of Regulation
S-B is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

Issuers revenues for its most recent fiscal year were $374,141.

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of December 21, 2001 was approximately $8,135,290.

Number of shares outstanding of each of the issuers classes of common
stock, as of December 21, 2001: 9,584,556 shares of common stock, no par value.

The following documents are incorporated by reference into this report:
None.



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TABLE OF CONTENTS



|                             |                                                                         |                                                                                              |  |  |  |  |  | 
|---------------------------- | ----------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I                      
|                             | Item 1. DESCRIPTION OF BUSINESS.                                       
|                             | Item 2. DESCRIPTION OF PROPERTY                                        
|                             | Item 3. LEGAL PROCEEDINGS                                              
|                             | Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            
|PART II                     
|                             | Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS       
|                             | Item 6. MANAGEMENTS DISCUSSION AND ANALYSIS AND PLAN OF OPERATION     
|                             | Item 7. FINANCIAL STATEMENTS                                           
|                             |                                                                         | Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|PART III                    
|                             | Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT             
|                             | Item 10. EXECUTIVE COMPENSATION                                        
|                             | Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|                             | Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                
|                             | Item 13. EXHIBITS AND REPORTS ON FORM 8-K                              
|SIGNATURES                  
|CAMINOSOFT CORP EXHIBIT 10.1



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FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report contains
forward-looking statements. The forward-looking statements contained herein
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those reflected in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in the section entitled Managements Discussion and Analysis
and Plan of Operation. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect managements analysis only as
of the date hereof. CaminoSoft Corp undertakes no obligation to publicly
revise these forward-looking statements to reflect events or circumstances that
arise after the date hereof. Readers should carefully review the risks
described in other documents the Company files from time to time with the
Securities and Exchange Commission, including the Quarterly Reports on Form
10-QSB and any Current Reports on Form 8-K.




PART I




Item 1. DESCRIPTION OF BUSINESS.

OVERVIEW

CaminoSoft Corp. (the Company or CaminoSoft) was organized in 1983 as
Interscience Computer Services, Inc. to be a third-party provider of
maintenance services for computer hardware and related peripheral equipment.
On April 17, 2000, the Company changed its name to CaminoSoft Corp. The
Companys principal executive offices are located at 600 Hampshire Road, #105,
Westlake Village, California 91361.

On March 6, 1997, the Company filed for protection under Chapter 11 of the
U.S. Bankruptcy Code. The Companys First Amended Plan of Reorganization (the
Plan) was confirmed on April 20, 1998. On December 16, 1998, the Bankruptcy
Court issued a final decree closing the bankruptcy proceedings.

The Companys principal product prior to fiscal year 2000 was a liquid
fusing agent used by the Model 2200 Siemens Printer. In January 2000, the
fusing agent business was sold to The Bradshaw Group for $550,000.

Prior to January 1, 2000, the Company was involved with several disputes
with OCE Printing Systems, USA Inc. and OCE GmbH (OCE) and Siemens Corp.,
including (a) a patent interference proceeding relating to the Companys
fusing agent patent, (b) a lawsuit brought by OCE and a former employee of the
Company contesting the Companys ownership of the fusing agent patent, and ( c)
certain antitrust claims by the Company against OCE. On December 29, 1999, the
Company entered into a settlement agreement with OCE. The settlement included
(a) a payment by OCE to the Company of $950,000, (b) an agreement by OCE not to
challenge the fusing agent patent, and ( c) a mutual release of all claims
which either party has against the other. This settlement did not resolve the
Companys claims against Siemens Corp. These were resolved with a separate
settlement in February 2001 and the Company received an additional $462,000.

On September 17, 1999, the Company acquired certain assets (the Camino
Assets) from Camino Software Systems, Inc. (Camino) for 468,000 shares of
the Companys common stock and the assumption of $315,172 of certain Camino
liabilities. The Company had reviewed over 65 companies as possible
acquisition candidates prior to the acquisition of the Camino Assets. The
Camino Assets consisted of the name, Camino Software Systems, Inc., the Highway
Server data storage management software, certain business contracts and
intangible personal property. Camino had developed the powerful Highway
Server hierarchical storage management (HSM) software. In November 2000, the
Company introduced



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T-Rex, a data management appliance that provides an
integrated storage management solution that will hold from 500GB to 12
terabytes of data in RAID storage. T-Rex utilizes smart data migration
technology to create unlimited virtual storage by combining a RAID 5 fast cache
file system with integrated removable storage devices, data mirroring and
redundancy for transparent, high availability data access.

As of November 2, 2001, the Company entered into a licensing and
distribution agreement with Novell, Inc., which appoints Novell and its
distribution channel to sell CaminoSofts suite of Intelligent Capacity
Management software solutions. This will allow the Company to take advantage
of the seasoned sales and distribution channel of Novell that includes
approximately 3,000 solution sales personnel.

The Companys present business is the development and sale of storage
migration software and hardware based on the Camino Assets as described below.

CAMINO  VISION

CaminoSoft markets products that enable multi-tiered hierarchical storage
management, (HSM) on PC server based computer networks. By using CaminoSofts
products, network administrators can increase efficiency on production servers
(Tier 1), by moving infrequently used data to networked storage devices (Tier
2) near-line storage devices (Tier 3), and data archive systems (Tier 4).
CaminoSofts products bring Intelligent Capacity Management to customers
networked storage environment by establishing:



| | Intelligent Data Storage
Intelligent Data Retrieval
Intelligent Data Protection
Intelligent Performance Measurement
| | -------------------------------------------------------------------------------------------------------------------

The Companys products provide increased efficiencies in the customers
data storage and network infrastructure. The use of CaminoSofts products
reduces customer costs by extending the life span of existing storage systems
and by bringing added efficiency to new systems.

CaminoSofts products are developed in an environment that allows for
rapid enhancement to meet the challenges of the changing storage infrastructure
landscape. CaminoSofts products leverage both established and emerging
operating environments, providing a broad opportunity for increased revenues.

PRODUCTS

CaminoSofts Managed Server software provides a unique solution for
addressing the increasing need for sophisticated management of data. Designed
to meet the data storage management requirements for local area networks (LAN),
wide area networks (WAN), and intranet environments, the Managed Server offers
its users the ability to more efficiently manage available storage within a
multi-server environment where mass storage devices are used to increase
storage capacity. As more and more companies move away from mid and main frame
computer to networked systems to meet their computing requirements, the need
for more sophisticated software to emulate the flexibility and power of mid and
main frames has become more acute. This sophisticated hierarchical storage
management (HSM) is the domain of the Managed Server. With the exponential
growth of information, data storage requirements have also grown exponentially.
The result has been that network managers have to deal with the reoccurring
out of disk space problem on their companys network. Though hardware cost
for storage continues to come down, the cost of managing the data being stored
has not. Human intervention is still required on the part of network managers
to determine which data files on the system need to be on-line, near-line,
or are used sufficiently infrequently to be relegated to off-line storage.



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Developed in conjunction with Novells NetWare 4.X, the Managed Server is
able to work in a multi-server and multi-platform environment, enabling the
user to better utilize the storage capacity available throughout the network.
Based upon user defined parameters, the software will automatically migrate
minimally used files to designated storage devices, hard drives, RAID, magnetic
optical, tape, or any other type of mass storage device. This migration is
seamless and transparent to the user. As the servers file system begins to
fill up, the Managed Server automatically transfers or migrates old, seldom
accessed files. The directory entry is modified which enables the system to
quickly locate and retrieve the file when needed. The user is unaware that the
file has been migrated and is no longer resident at the original site.
Generally, this migration is desired to free up space in the more expensive
storage medium, moving the data to less expensive medium, such as removable
optical drives. The uniqueness of the program is that it enables the user to
designate under what conditions the files should be migrated and where the
files should be migrated, i.e., all financial files to one location,
correspondence files to another, etc. In the case of mass storage devices
using removable optical medium, this is particularly important. Whereas other
HSM programs manage multi-disk hardware as one large repository, scattering
data throughout the system, the Managed Server enables the user to designate
what data goes to which disk. This allows related data to be organized and
stored on a specific disk rather than be scattered throughout the storage
device. A disk can then be removed to off-line storage and more easily
indexed, making retrieval considerably more efficient.

The Managed Server can accommodate virtually unlimited volumes of
information. Efficient management of data has and will continue to be one of
the foremost problems associated with the information age. The Company
believes the CaminoSoft Managed Server represents the most efficient solution
to data management in the networked environment.

MARKET

It has been predicted that worldwide data storage sales could reach $38
billion this year and grow 38% by 2004. Storage revenues are currently growing
faster than revenues for either servers or microprocessors. In a few years, it
is expected that people will be spending three times as much for storage as
they do for computers.

Seventy percent (70%) of the cost of storage is spent on labor to manage
the files to be stored. The CaminoSoft product provides automated management
based on individualized preset definitions and will help to control and reduce
management cost.

In 2001, worldwide spending for disk storage systems operating in Windows
NT/2000, NetWare, and Linux, (all PC server operating systems), will be over
$15 billion. Management believes that CaminoSoft is solidly positioned to
exploit this segment of the storage market. The current offerings based on
Novell and Windows 2000 provide ample opportunity in widely used PC server
operating environments.

CaminoSofts products are targeted primarily to the middle and large
business companies with optimum configurations using 10 to 15 managed servers.
This configuration allows both organization-wide and department level
deployments in the target segment. With nearly 20,000 companies and many
government entities matching this business size profile among selected vertical
industries, CaminoSoft has a broad array of potential customers to direct
marketing efforts.

CaminoSoft has sold its software into the public sector at the state,
county, and municipal level, as well as to the higher education market. Both
the government and education sectors provide opportunities that are consistent
with the Companys product positioning. Government and education customers
tend to operate systems longer than private sector companies. With the
exception of fixes associated with Year 2000, government and education IT
spending grows at or near the rate of inflation. CaminoSoft has a great appeal
in this regard since the products extend the useful life of existing network
infrastructure.



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While not specifically positioned as a disaster recovery system, current
global events dictate an increased focus on disaster recovery where
CaminoSofts products can increase efficiencies. Planned enhancements to
CaminoSoft software in copying data, and the addition of a broader set of
available export media devices will give the products increased disaster
recovery capabilities. The potential to integrate remote storage capabilities,
likely done through a Storage Service Provider, (SSP) partner can further
enhance the appeal of CaminoSoft products in a disaster recovery system.

BACKLOG AND EMPLOYEES

The Companys total backlog for software products was approximately
$50,000. Backlog consists of the total amount of orders for products to be
filled by December 31, 2001. The Company currently employs fourteen people
full time and three full time consultants.

COMPETITION

The competitive landscape in the storage systems market consists of a vast
array of hardware and software companies. CaminoSofts products compete in the
data management software segment. The large number of manufacturers in the
storage infrastructure market provides fertile ground for cultivating alliances
and partnerships.

Among CaminoSofts direct competitors, only one offers a stand-alone HSM
application. CaminoSofts products have feature related advantages relative to
this competitor in ad-hoc migration and de-migration, that allows the
administrator to perform ad-hoc migration or de-migration (selecting specific
files or directories to be moved off, or returned to, a server hard drive).
Additionally, CaminoSoft offers re-migration rules, through which migrated
files that are accessed (returned to primary server from secondary or tertiary
storage) can therefore follow the normal migration rules or administrator
defined retention times that override normal migration rules. CaminoSoft also
offers include and exclude rules at the file and directory level, as well as
the ability to filter by file extension.

Relative to the other competitors CaminoSoft has select feature advantages
over each competitor. Moreover, CaminoSoft, as a specialized HSM tool
maintains an advantage compared to these other competitors, all of whom imbed
HSM functions into broader enterprise network management applications.
CaminoSofts positioning will allow it to more effectively address the mid-size
business market where management believes enterprise systems may be too
cumbersome or too expensive. CaminoSoft retains the ability to participate in
the large company and enterprise markets as a department level application.
Because CaminoSoft can be used alongside the enterprise solution from its
closest competitors, it allows the enterprise IT manager to use of the full
features of the Companys HSM tools while using competitive products for such
mundane applications as backup systems. Despite what management believes to be
its technological advantages many competitors have greater resources than the
Company and may be in a position to obtain a market advantage because of these
resources.

STRATEGY

The mandate of the CaminoSoft sales and marketing teams is to increase
awareness and interest within select industries to deliver qualified prospects
and close sales of the Companys products. The first step and a key element of
the sales and marketing strategy is the recently signed license agreement with
Novell. This agreement makes available to the Company the marketing and sales
resources of Novell. Recent corporate developments at Novell, including its
acquisition of Cambridge Technology Partners provide a technology, sales, and
marketing path that is consistent with the Companys O.E.M. strategy as a
software development company integrating our products with other hardware and
software products for sale through their distribution channels. Whereas in the
past the Companys growth has been impeded by lack of a large sales staff, the
partner relationships in place and planned by the Company will add significant
distribution capabilities, such as Novell with 600 sales representatives and
3,000 solution consultants from Cambridge Technology and a large number of
Value-Added Resellers (VARs). The



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Company is currently pursuing additional
partners who can leverage the Companys data storage and management solutions
as part of the current and future storage infrastructure for their clients.

The Company recently added to its executive ranks, hiring Sam Hassabo as
President. Mr. Hassabo brings over 30 years of technology industry experience
to the Company. The Company has also added Jack Lamey as Vice President of
Marketing. Mr. Lamey has over 17 years of marketing experience in computer
hardware, software and marketing information industries. With an experienced
management team, innovative products, and significant sales and marketing
resources resulting from the Novell partnership management believes that the
Company is positioned to take advantage of the need for Intelligent Capacity
Management in the networked storage environments of today and the future.




Item 2. DESCRIPTION OF PROPERTY

As of December 1, 2000, the Company leases one office facility in Westlake
Village, California for the Companys executive offices pursuant to a lease
extension expiring January 31, 2003, at a rental rate of $8,476 per month. As
of September 1 2001, the Company leased temporary housing for its President
pursuant to a one year lease ending August 31, 2002.




Item 3. LEGAL PROCEEDINGS

The Company has settled all disputes with OCE Printing Systems, USA Inc.
and OCE Gmbh. Under the settlement, the Company retains all rights to its
Fusing Agent patent, and all lawsuits pending between the Company and OCE have
been dismissed. The Company has received $950,000 from OCE and both sides
have released all claims against each other, including the antitrust claims
referenced to in the next paragraph.

The Company was a plaintiff in a class action suit against Siemens Nixdorf
Printing Systems, OCE Printing Systems and NCR Corporation. While the Company
withdrew as a named plaintiff in 1997, the Company retained the right to
participate alleging anti-trust violations as a class member. Since that time
the Company has settled with NCR Corporation and, as indicated, OCE Printing
Systems, USA Inc. and OCE GmbH. The Company retained all rights against
Siemens Corporation for any acts of Siemens prior to April 1, 1996, which
affected the Company. The Company filed suit against Siemens in May 2000.
During the current year, the Company received $462,000 in settlement of its
claim. This amount net of the associated legal fees is included in
discontinued operations for the current year.




Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of the security holders.




PART II




Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock is currently traded in the OTC Electronic Bulletin Board
under the symbol CMSF. The following table sets forth the high and low sales
prices for the Common Stock during the two most recent fiscal years. During
the period October 1, 1999 through March 31, 2000 the ticker symbol was IEIC,
and in April 2000 the symbol was changed to CMSF. The prices reflect
inter-dealer prices without retail mark-ups, mark-downs or commission and may
not represent actual transactions.



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|                                    |  |                           |      |     |  |   |      | 
|----------------------------------- |  | ------------------------- | ---- | --- |  | - | ---- | 
|                                    |  | Common Stock Sales Prices
|                                    |  |                          
|Symbol "IEIC"                       |  | High                      |      | Low
|                                    |  |                           |      |    
|Year Ended September 30, 2000       |  |                           |      |     |  |   |      | 
|October 1, 1999 - December 31, 1999 |  | $                         | 1.25 |     |  | $ | 0.56 | 
|                                   
|January 1, 2000 - March 31, 2000    |  |                           |      |     |  |   |      | 
|END Symbol IEIC                   |  | $                         | 9.31 |     |  | $ | 1.25 | 
|                                   
|Symbol CMSF                       |  |                           |      |     |  |   |      | 
|April 1, 2000 - June 30, 2000       |  | $                         | 7.63 |     |  | $ | 2.88 | 
|                                   
|July 1, 2000 - September 30, 2000   |  | $                         | 4.25 |     |  | $ | 2.81 | 
|                                   
|October 1, 2000 - December 31, 2000 |  | $                         | 4.25 |     |  | $ | 3.00 | 
|                                   
|January 2, 2001 - March 31, 2001    |  | $                         | 3.50 |     |  | $ | 1.44 | 
|                                   
|April 1, 2001 - June 30, 2001       |  | $                         | 1.80 |     |  | $ | 1.10 | 
|                                   
|July 1, 2001 - September 30, 2001   |  | $                         | 1.90 |     |  | $ | 0.85 | 
|                                   
|October 1, 2001 - November 30, 2001 |  | $                         | 1.75 |     |  | $ | 1.25 | 

To date, the Company has not declared or paid any cash dividends with
respect to its Common Stock, and the current policy of the Board of Directors
is to retain earnings, if any, to provide for the growth of the Company.
Consequently, no cash dividends are expected to be paid on the Common Stock in
the foreseeable future.

Recent Sales of Unregistered Securities

During the fiscal year ended September 30, 2000, Renaissance US Growth and
Income Trust PLC purchased 500,000 shares of common stock for $1,500,000. The
Company received the full $1,500,000 on November 30, 2000.

During fiscal year ended September 30, 2001, the Company issued 567,000
options to purchase the Companys common stock at prices ranging from $1.55 to
$3.63 to employees and directors under the employee stock option plan.

During the fiscal year ended September 30, 2001, the Company issued
warrants to purchase an aggregate of 42,000 shares of common stock in
consideration for marketing consulting services. The exercise price is $2.00
per share of common stock. These warrants expire on April 15, 2005.

During the fiscal year ended September 30, 2001, 150,000 warrants were
exercised and the Company received $150,000 during October and November 2001.




Item 6. MANAGEMENTS DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in this Annual
Report.



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OVERVIEW

On September 17, 1999, the Company acquired the assets of Camino Software
Systems, Inc. The Camino Assets consisted of the name, the data storage
management software, certain business contracts and intangible personal
property. The Companys products currently provide a systematic managed
solution to the ever increasing data storage problem at a substantially reduced
management cost. Managed servers are available for Novell and Windows 2000
operating systems. During the current year the Company changed its approach to
focus on software development while utilizing the Companys OEM partners and
their distribution channels for the selling of the software developed. During
the current year the Companys efforts focused on expansion of the product line
and adding features and enhancements to the software suite of products. At the
same time the sales and marketing departments now prepare to support the
efforts of our partners distribution channels with marketing, training and
sales support for the sales forces and Value Added Resellers of the products.
The Company has also added experienced executives to the team with hiring of
Mr. Sam Hassabo as President in August of 2001 and Jack Lamey as Vice President
of Marketing in October of 2001.

RISK FACTORS

We have a limited operating history.

Our Company has been in business since 1983 and has been a publicly traded
company since September 1993. In September 1999, we acquired the assets of
Camino Software Systems, Inc., which resulted in our entering into a new line
of business. All of our prior business divisions (high speed printer sales and
service and consumable sales) have been sold or discontinued. Although we
currently have some revenues from the acquired assets, we are starting a new
business in a highly technical and competitive market, with new risks for
investors and shareholders. Our products have not yet been accepted in the
marketplace.

Our future operating results are unpredictable.

With the acquisition of the software products of Camino Software Systems,
Inc. and the sale and discontinuance of the historical business of the Company,
our operating results will depend on the enhancement of the Companys existing
products and the ability to market and sell the products. Any future success
that the Company may achieve will depend upon many factors including factors
which may be beyond the control of CaminoSoft or which cannot be predicted at
this time. Uncertainties and factors which could cause actual results or
events to differ materially from those set forth or implied include:



| |  | Inability to acquire new customers                                                                       
|- |  | ---------------------------------------------------------------------------------------------------------
| 
| |  | Inability to complete successful implementation of our software
applications in a manner that is scalable
| 
| |  | Inability to offer new services that complement our existing offerings                                   
| 
| |  | Inability to increase awareness of our brand                                                             

To address these risks, we must, among other things, implement and
successfully execute our business strategy, continue to develop and upgrade our
technology, provide superior customer service, respond to competitive
developments, and attract, retain and motivate qualified personnel. There can
be no assurance that we will be successful in addressing such risks or that our
business strategy will be successful , and the failure to do so could have a
material adverse effect on our business, prospects, financial condition and
results of operations.

Need for additional financing.

Our Company will require additional financing in order to expand our
business. Our working capital requirements in the foreseeable future will
depend on a variety of factors including our ability to



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implement our sales and
marketing plan. There can be no assurance that we will be able to successfully
negotiate or obtain additional financing. Our ability to obtain additional
capital will be dependent on market conditions, the national economy and other
factors outside our control. If adequate funds are not available or are not
available at acceptable terms, our ability to finance our expansion, develop or
enhance services or products or respond to competitive pressures would be
significantly limited. The failure to secure necessary financing will have a
material adverse effect on our business, prospects, financial condition and
results of operations.

If we are unable to adapt our products to rapidly changing technology, our
reputation and our ability to grow our revenues could be harmed.

The markets we serve are characterized by rapidly changing technology,
evolving industry standards, emerging competition and the frequent introduction
of new software. There is no assurance that we will be able to enhance
existing or develop new products that meet changing customer needs in a timely
and cost-effective manner. Prolonged delays resulting from our efforts to
adapt to rapid technological change, even if ultimately successful, could harm
our reputation within our industry and our ability to grow our revenues.

We face significant competition from other providers of computer software.
The Novell agreement may not work to increase sales.

The markets for our computer software are characterized by intense
competition and an increasing number of new market entrants who have developed
or are developing potentially competitive products. Further, the cost barriers
to these markets are relatively low, which means our competitors range from
small companies with limited resources to large, more established companies.
Some competitors, regardless of size, have substantially greater financial,
technical, marketing, distribution, personnel and other resources. For
example, current and future competitors with greater financial resources than
us may be able to undertake more extensive marketing campaigns and adopt more
aggressive pricing policies. It is possible that we may not have the resources
to withstand these and other competitive forces.

Our earnings growth is dependent upon acceptance of our products and our
ability to increase demand for data storage and management software products.

Our ability to generate profits depends primarily upon market acceptance
of our data storage and management software products. Our products may not be
able to be successfully marketed or achieve customer acceptance, and we may be
unable to increase demand for our product. Our strategy to increase our
customer base includes investment in programs designed to heighten consumer
awareness of our product and services.

If we do not successfully develop new products that keep pace with
technology, our competitive position will be weakened.

The market for our products is new and emerging, and is characterized by
rapid technological advances, changing customer needs and evolving industry
standards. Accordingly, our ability to realize our expectations will depend on
our:



| |  |  | Ability to timely develop new software products that keep
pace with developments in technology;                            
| | - |  | ---------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Ability to meet evolving customer requirements which are
often difficult to predict; and                                   
|
| |  |  | Success at enhancing our current product offerings and
delivering those products through appropriate distribution channels.

We may not be successful in developing and marketing, on a timely and
cost-effective basis, enhancements to our software products or new products
which respond to technological advances and



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satisfy increasingly sophisticated
customer needs. If we fail to introduce new products, or if new industry
standards emerge that we do not anticipate or adapt to, our software products
could be rendered obsolete and our competitive position will be weakened.

Our business will suffer if our software development is delayed.

Any failure to release new products and upgrades on time may result in:



| |  |  | customer dissatisfaction;
| | - |  | -------------------------
|
| |  |  | cancellation of orders;  
|
| |  |  | negative publicity;      
|
| |  |  | loss of revenue; or      
|
| |  |  | slower market acceptance.

We operate in a developing market with increasing participants.

The market for computer software is rapidly evolving and is characterized
by an increasing number of market entrants who have introduced or developed
products and services. It is possible that a single supplier may dominate one
or more market segments. Additionally, there may be insufficient market
acceptance of our products because the market for computer software changes
rapidly.

We rely on key management personnel.

Our performance is substantially dependent on the continued services and
the performance of our senior management and other key personnel. Our
performance also depends on our ability to retain and motivate our other
officers and key employees. The loss of the services of any of our executive
officers or other key employees could have a material adverse effect on our
business, prospects, financial condition and results of operations. Our future
success also depends on our ability to identify, attract, hire, train, retain
and motivate other highly skilled technical, managerial and marketing
personnel. Competition for such personnel is intense, and there can be no
assurance that we can attract and retain the necessary technical, managerial
and marketing personnel could have a material adverse effect on our business,
prospects, financial condition and results of operations.

Our business substantially depends upon the continued growth of the data
storage and management software market.

Our future revenue and profits, if any, substantially depend upon the
continued growth and development of the data storage and management software
market.

We could incur substantial costs defending our intellectual property from
claims of infringement.

The software industry is characterized by frequent litigation regarding
copyright, patent, trademark and other intellectual property rights. We may be
subject to future litigation based on claims that our own intellectual property
rights are invalid. We expect that software product developers will
increasingly be subject to infringement claims as the number of products and
competitors in our industry segment grows and the functionality of products
overlaps. Claims of infringement could require us to re-engineer or rename our
products or seek to obtain licenses from third parties in order to continue
offering our products. These claims could also result in significant expense
to us and the diversion of our management and technical resources, even if we
ultimately prevail. Licensing or royalty agreements, if required, may not be
available on terms acceptable to us or at all.



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##### Table of Contents



We may face interruption of production and services due to increased
security measures in response to terrorism.

Our business depends on the free flow of products and services through the
channels of commerce. Recently, in response to terrorists activities and
threats aimed at the United States, transportation, mail, financial and other
services have been slowed or stopped altogether. Further delays or stoppages
in transportation, mail, financial or other services could have a material
adverse effect on our business, results of operations and financial condition.
Furthermore, we may experience an increase in operating costs, such as costs
for transportation, insurance and security as a result of the activities and
potential activities. We may also experience delays in receiving payments from
payers that have been affected by the terrorist activities and potential
activities. The U.S. economy in general is being adversely affected by the
terrorist activities and potential activities and any economic downturn could
adversely impact our results of operations, impair our ability to raise capital
or other wise adversely affect our ability to grow our business.

RESULTS OF OPERATIONS

FISCAL YEARS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000

During the fiscal year, the Company continued to focus on development of
features and upgrades on products, while expanding its functionalities to other
operating platforms. The Company has changed its sales and marketing strategy
to focus on development and support for its data storage and management
solutions, to utilize its partners sales, marketing and distribution channel.
Revenues for the current fiscal year increased by approximately 9% from
approximately $343,000 in fiscal year 2000 to approximately $374,000 for the
current fiscal year. Cost of sales decreased from approximately $85,000 to
$64,000 or approximately 24% as compared to last year, due to reductions in
hardware expense related to sales for the current year. Gross profit increased
by approximately 20% or $51,000 from $258,758 in year 2000 to $310,004 in
fiscal year 2001 resulting from the Companys focus on software only sales
during the current fiscal year.

Selling and administrative expenses for the current year were $2,903,939
an increase of approximately $814,000 or 39% over fiscal year 2000. The
increase was a result of the continued expansion of the Companys technical
department to achieve a broader product line, which now includes the Companys
new Windows 2000 version of the software. The Company continued its
advertising and marketing program expansion throughout the year which added to
the increase in overall selling and administrative expense for the year. The
change from a direct sales approach to one of a support role for the Companys
OEM partners sales forces occurred during the last quarter of the fiscal year
which reduced wage expense related to direct selling, while increasing in the
expense related to marketing and sales support for our OEM partners
distribution channels. The Company will continue to expand the sales and
marketing support areas to train both technical and sales forces for the
Companys distribution partners into the future.

Depreciation and amortization expense for the fiscal year of $28,491
increased $23,000 over fiscal year 2000. The Company has added equipment to
its testing lab and support personnel to accommodate the expanded product line
and increase in customer service requirements.

Research and development expense for the current year was approximately
$474,000 as compared to approximately $190,000 for fiscal year 2000. This
increase is part of the ongoing plan to expand the product line, while adding
features and upgrades to the original software products. During the current
fiscal year, the Company completed its Windows 2000 software and is continuing
development of added features and functionalities for the NetWare and Windows
products. The Company plans to continue the research and development program
at an increased rate during the coming year.



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##### Table of Contents



Other income during the year decreased by approximately 56% as compared to
fiscal year 2000. The decrease consisted of proceeds from a legal settlement
with the Companys insurance carriers of approximately $132,000 in fiscal year
2000. Interest income for the current year of approximately $104,000 as
compared to $87,000 for fiscal year 2000 increased approximately 20%, due to
increased balances in interest bearing accounts during the year.

Fiscal year 2001 included a gain from discontinued operations of $300,490
as compared to a gain of approximately $322,003 in fiscal year 2000. The
current year gain was due to the proceeds from a legal settlement less the
associated legal expenses. The gain from discontinued operations in fiscal
year 2000 included revenue and expenses related to the sales of consumables and
the sale of the fusing agent business, costs incurred for liquidation of parts
and equipment and closure of the Los Angeles warehouse, proceeds from the OCE
settlement and associated legal and other expenses. The sale of the fusing
agent business included exclusive rights to the fusing agent patent. The
chemical the patent is based on has a limited life as a result of the small
ozone depleting potential of the product, therefore manufacturing of the
chemical will be prohibited as of December 31, 2002. As a result of the
limited life of the product and the sale of the business including exclusive
rights to the patent, the remaining asset of $414,951 was written off, also
included was the write off of the deferred tax assets of $250,000, all included
in discontinued operations for fiscal year 2000.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal year 2001, the Companys cash position decreased by
approximately $936,000, from $2,219,000 on September 30, 2000 to $1,284,000 on
September 30, 2001. The decrease in cash is a result of expanding the
Companys research, development and technical staff, and an increase in
advertising and marketing expenditures during the current year. During the
fiscal year, the Company had expenditures for software of $54,726 which has
been added to the capitalization of software and in October and November of
2001 the Company received $150,000 in cash for the exercise of warrants. In
November 2000, the Company received $1,500,000 for the sale of 500,000 shares
of common stock. The Company is actively pursuing additional capital infusion.
The Company will require additional financing in order to expand our business.
Our working capital requirements in the foreseeable future will depend on a
variety of factors including our ability to implement our sales and marketing
plan. There can be no assurance that we will be able to successfully negotiate
or obtain additional financing. Our ability to obtain additional capital will
be dependent on market conditions, the national economy and other factors
outside of our control. If adequate funds are not available or are not
available at acceptable terms, our ability to finance our expansion, develop or
enhance services and products or respond to competitive pressures would be
significantly limited.

During November 2001, the Company completed a private placement of
1,250,000 shares of common stock for $1,500,000. The funds will be used to
accelerate the Companys business plan, including enhancement of current
products, development of new products, expanded sales and marketing efforts in
conjunction with our training and support of the Novell sales and technical
staff and the technical and sales training for value added resellers in the
distribution channel. The funds will also be used to help fund operations over
the next twelve months. The payment of $1,500,000 was received by the Company
on December 11, 2001.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and
Other Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase
method of accounting and prohibits the use of the pooling-of-interests method
of accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon



---



##### Table of Contents



adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within
the first interim quarter after adoption of SFAS 142.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires the fair value of a liability for an asset
retirement obligation to be recognized in the period in which it is incurred if
a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. The Company believes the adoption of this Statement will have
no material impact on its financial statements.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFASB 144 requires that those long-lived assets
be measured at the lower of carrying amount or fair value less cost to sell,
whether reported in continuing operations or in discontinued operations.
Therefore, discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet occurred.
SFASB 144 is effective for financial statements issued for fiscal years
beginning after December 15, 2001 and, generally, are to be applied
prospectively. The Company believes the adoption of this Statement will have no
material impact on its financial statements.




Item 7. FINANCIAL STATEMENTS

The following is a list of financial statements filed herewith:

Balance Sheets as of September 30, 2001 and September 30, 2000

Statements of Operations for the years ended September 30, 2001 and 2000

Statements of Shareholders Equity for the years ended September 30, 2001 and 2000

Statements of Cash Flows for the years ended September 30, 2001 and 2000

Notes to Financial Statements






|Item 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

There were no changes in accountants or disagreements during the fiscal
year covered by this report.



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##### Table of Contents






PART III




Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

As of December 15, 2001, the directors and executive officers of the Company are as follows:

|                |  |     |    |          |  |                                                  
|--------------- |  | --- | -- | -------- |  | -------------------------------------------------
|Name            |  | Age |    | Position
|                |  |     |    |         
|Norman Baker    |  |     | 60 |          |  | Director                                         
|               
|Robert Pearson  |  |     | 66 |          |  | Director                                         
|               
|Steven Spector  |  |     | 55 |          |  | Director                                         
|               
|Robert Degan    |  |     | 62 |          |  | Director                                         
|               
|Walter Kornbluh |  |     | 70 |          |  | Chief Executive Officer
and Chairman of the Board
|               
|Sam Hassabo     |  |     | 57 |          |  | President                                        
|               
|Stephen Crosson |  |     | 42 |          |  | Chief Operating Officer,
Secretary and Treasurer 

Norman Baker, Mr. Baker a U.K. national, joined the Company in January
1994 as Managing Director of Interscience Computer Corporation-PLC. Mr. Baker
was elected to the Companys board in March 1995. In 1998 Mr. Baker purchased
Interscience PLC from the Company and continues to distribute high speed
printing consumables throughout Europe. Mr. Baker has been a director and
associate of N.B. Direct Mail Ltd., a U.K. domiciled direct marketing and
research firm for the last 15 years.

Robert Pearson, Mr. Pearson who became a director in 1997, has been
associated with Renaissance Capital Group (RCG) since April 1994. RCG is the
Investment advisor of the largest shareholders of the Company. Presently, Mr.
Pearson serves as a Senior Vice President and Director of Corporate Finance of
RCG. He served as Executive Vice President of the Thomas Group from May 1990
to March 1994. For 25 years, Mr. Pearson held various senior management
positions at Texas Instruments, including Vice President of Finance from
October 1983 to June 1985. Mr. Pearson holds directorships in the following
companies: Poore Brothers, which manufacture and distribute snack food
products, Advanced Power Technology, Inc., a power semiconductor manufacturer
and eOriginal, Inc., a developer of technology and software for creation of
electronic contracts.

Steven Spector, Mr. Spector became a director in February 2000. Since
1971, Mr. Spector has practiced finance, banking and corporate reorganization
law, most recently as a partner in the Los Angeles Office of McDermott, Will &
Emery. In addition to practicing law, Mr. Spector is a partner in the
investment group of LBS Investments, LLC, and a trustee of The Joseph B. Gould
Charitable Foundation. Mr. Spector has lectured and taught extensively in his
legal specialties of finance, banking and corporate reorganization.

Robert Degan became a director in January 2001. From 1989 to 1996, Mr.
Degan was President and Chief Executive Officer of Tylink Corporation, a
private company, which designs, manufactures and markets digital access
products. From 1997 to 1998, Mr. Degan was Chairman, President and Chief
Executive Officer of Summa Four Inc., a public company, which is a leading
provider of switching platforms. Since the acquisition of Summa Four Inc. by
Cisco Systems Inc., Mr. Degan has been the General Manager of the Enhanced
Services and Migration unit of Cisco Systems, Inc.



---



##### Table of Contents



Walter Kornbluh, Mr. Kornbluh joined the Company in May 1997 and became a
director in April 1998. Mr. Kornbluh is a licensed Certified Public Accountant
in the States of California and New York. For the past 10 years he has been
the President and majority owner of Workout Specialist Inc., a firm that
specializes in assisting companies with financial problems. He spent 17 years
as President of Marathon Office Supply, Inc., a public company whose stock was
listed on the American Stock Exchange.

Sam Hassabo has 25 years experience in Sales and Marketing nationwide and
internationally, mostly in the multimedia, computer hardware and software
industries. Previous firms he has worked with include Talaris Systems, Inc.,
Integrated Software Systems Corp., Computer Sciences Corp., and G.E.
Information Services. Also from 1996 to 1997, Mr. Hassabo was President of
International Solutions Group, a company dedicated to consultative selling for
companies. He provided the capabilities and methodologies needed for
corporate-wide, state-of-the art solutions, system planning, design, utilizing
multi-platform, multi-network, client/server enterprise computing, including
Internet and Intranet. Mr. Hassabo was the founder of Genesis Intermedia,
Inc., an internet content provider in the Business to Consumer channel from
1997 to 1998. Most recently from 1998 to 2000, Mr. Hassabo served as a
Managing Director of Cambridge Technology Inc. where he led consulting projects
in the area of strategic procurement for a number of Fortune 500 companies.

Stephen Crosson joined the Company in March 1985 and was manager of
accounting and government contracts and logistics. In September 1989, Mr.
Crosson became a financial analysis officer with First Interstate Banks
Controllers office. In March 1992, Mr. Crosson returned to the Company as
Director of Operations. In April 1995, he became Vice President of Operations.
In January of 1997, Mr. Crosson became Corporate Secretary and in April 1998
he became Chief Operating Officer and Treasurer.

DIRECTOR COMPENSATION

Directors do not receive any annual compensation. Outside directors
receive $1,000 each for each meeting attended and reimbursement for
out-of-pocket expenses for attending meetings. Mr. Pearson has waived the
meeting fees.

COMPLIANCE WITH SECTION 16(a) -

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Companys executive officers and directors and persons who own more than
10% of a registered class of the Companys equity securities to file with the
Securities and Exchange Commission initial statements of beneficial ownership,
reports of changes in ownership and annual reports concerning their ownership
of common stock and other equity securities of the Company, on Forms 3, 4 and 5
respectively. Executive officers, directors and greater than 10% shareholders
are required by Commission regulations to furnish the Company with copies of
all Section 16(a) reports they file. To the best of the Companys knowledge
(based solely upon a review of the Form 3, 4 and 5 filed), no officer, director
or 10% beneficial shareholder failed to file on a timely basis any reports
required by Section 16(a) of the Securities Exchange Act of 1934, as amended.




Item 10. EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by the Company for
its fiscal years ended September 30, 2001, 2000 and 1999 to its Chief Executive
Officer and Chief Financial Officer (the Named Executive Officers). No other
executive officer received compensation which exceeded $100,000 for the fiscal
year ended September 30, 2001.



---



##### Table of Contents



ANNUAL COMPENSATION (1)

|                          |  |               |      |        |  |       |         |              |  |  |   |       |  |   |        |    
|------------------------- |  | ------------- | ---- | ------ |  | ----- | ------- | ------------ |  |  | - | ----- |  | - | ------ | ---
|                          |  | FISCAL YEAR   |      |        |  |       |         |              |  |  |   | ALL  
|NAME AND                  |  | ENDED         |      |        |  |       |         |              |  |  |   | OTHER
|PRINCIPAL POSITION        |  | SEPTEMBER 30, |      | SALARY |  | BONUS |         | COMPENSATION
|                          |  |               |      |        |  |       |         |             
|Walter Kornbluh,          |  |               | 2001 |        |  | $     | 150,000 |              |  |  |  |       |  |   |       |    
|Chief Executive           |  |               | 2000 |        |  | $     | 150,000 |              |  |  |  |       |  | $ | 90,000 | (1)
|Officer and Chairman      |  |               | 1999 |        |  | $     | 150,000 |              |  |  |  |       |  |   |       |    
|of the Board              |  |               |      |        |  |       |         |              |  |  |   |       |  |   |        |    
|Stephen Crosson,          |  |               | 2001 |        |  | $     | 120,000 |              |  |  |  |       |  |   |       |    
|Vice President, Secretary |  |               | 2000 |        |  | $     | 120,000 |              |  |  |  |       |  | $ | 60,000 | (1)
|and Treasurer             |  |               | 1999 |        |  | $     | 120,000 |              |  |  |  |       |  |   |       |    



---

|(1) |  | Dollar value for 45,000 shares of common stock issued to Mr.
Kornbluh and 30,000 shares of common stock issued to Mr. Crosson, as
part of the March 2000, private placement.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

OPTION GRANTS IN 2001

The following table sets forth certain information regarding option grants
to the Named Executive Officers during the fiscal year ended September 30,
2001.

|                |  |             |         |               |  |           |       |            |  |   |      |  |  |  |            | 
|--------------- |  | ----------- | ------- | ------------- |  | --------- | ----- | ---------- |  | - | ---- |  |  |  | ---------- | 
|                |  | Number of   |         | Percentage of |  |           |       |            |  |   |      | 
|                |  | Securities  |         | Total Options |  | Average   |       |            |  |  
|                |  | Underlying  |         | Granted to    |  | Exercise  |       |            |  |  
|                |  | Options     |         | Employees     |  | Price     |       | Expiration
|NAME            |  | Granted (1) |         | In 2000       |  | Per Share |       | Date      
|                |  |             |         |               |  |           |       |           
|Walter Kornbluh |  |             | 92,000  |               |  |           | 6.68  | %          |  | $ | 0.56 |  |  |  | 12/08/2009 | 
|Walter Kornbluh |  |             | 180,000 |               |  |           | 13.08 | %          |  | $ | 3.87 |  |  |  | 12/08/2009 | 
|Walter Kornbluh |  |             | 90,000  |               |  |           | 6.54  | %          |  | $ | 5.00 |  |  |  | 12/08/2009 | 
|Walter Kornbluh |  |             | 90,000  |               |  |           | 6.54  | %          |  | $ | 6.50 |  |  |  | 12/08/2009 | 
|Walter Kornbluh |  |             | 90,000  |               |  |           | 6.54  | %          |  | $ | 7.50 |  |  |  | 12/08/2009 | 
|Walter Kornbluh |  |             | 180,000 |               |  |           | 31.52 | %          |  | $ | 1.55 |  |  |  | 12/08/2009 | 
|Stephen Crosson |  |             | 120,000 |               |  |           | 21.01 | %          |  | $ | 1.55 |  |  |  | 12/08/2009 | 



---

|(1) |  | Options were granted under the year 2000 Employee Stock
Option Plan and are exercisable for common stock of CaminoSoft Corp.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------

OPTION EXERCISES AND FISCAL YEAR-END VALUES

|                |  |             |   |          |  |             |   |                     |  |                        |        |                          |  |  |   |  |  |   |         |  |  |  |   | 
|--------------- |  | ----------- | - | -------- |  | ----------- | - | ------------------- |  | ---------------------- | ------ | ------------------------ |  |  | - |  |  | - | ------- |  |  |  | - | 
|                |  |             |   |          |  |             |   |                     |  | Number of Securities   |        | Value of                
|                |  |             |   |          |  |             |   |                     |  | Underlying Unexercised |        | Unexercised in the Money
|                |  | Shares      |   |          |  |             |   | Options at Year-End |  | Options at Year-End   
|                |  | Acquired    |   | Value    |  |             |   |                    
|Name            |  | On Exercise |   | Realized |  | Exercisable |   | Unexercisable       |  | Exercisable            |        | Unexercisable           
|                |  |             |   |          |  |             |   |                     |  |                        |        |                         
|Walter Kornbluh |  |             |  |          |  |             |  |                     |  |                        | 92,000 |                          |  |  |  |  |  | $ | 156,400 |  |  |  |  | 
|Stephen Crosson |  |             |  |          |  |             |  |                     |  |                        | 48,000 |                          |  |  |  |  |  | $ | 81,600  |  |  |  |  | 

There were no options exercised by the named executive officer during
fiscal year 2000.



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##### Table of Contents








|Item 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- | --------------------------------------------------------------

The following table sets forth certain information regarding the
beneficial ownership of the Companys Common Stock as of December 15, 2001 by
(I) each person who is known by the Company to own beneficially more than 5% of
the Companys outstanding Common Stock; (ii) each of the Companys directors;
(iii) the named Executive Officers; and (iv) executive officers and directors
of the Company as a group:

|                                                            |                                                          |  |  |  |  |        |                 |                |               |  |       |  | 
|----------------------------------------------------------- | -------------------------------------------------------- |  |  |  |  | ------ | --------------- | -------------- | ------------- |  | ----- |  | 
|                                                            |                                                          |  |  |  |  |        | COMMON STOCK(1)
|                                                            |                                                          |  |  |  |  |        |                
|                                                            |                                                          |  |  |  |  |        | NUMBER OF       |                | PERCENTAGE OF
|NAME AND ADDRESS(2)                                         |                                                          |  |  |  |  | SHARES |                 | OUTSTANDING(3)
|                                                            |                                                          |  |  |  |  |        |                 |               
|Frank J. LaChapelle(4)                                      |                                                          |  |  |  |  |        | 835,000         |                |               |  | 10.02 | 
|                                                           
|Sam Hassabo                                                 |                                                          |  |  |  |  |        | 200,000         | (11)           |               |  |      | 
|                                                           
|Robert Pearson(5)                                           |                                                          |  |  |  |  |        |                |                |               |  |      | 
|                                                           
|Robert Degan                                                |                                                          |  |  |  |  |        | 78,000          | (13)           |               |  |      | 
|                                                           
|Norman Baker                                                |                                                          |  |  |  |  |        | 102,500         | (6)            |               |  |      | 
|                                                           
|Steven Spector                                              |                                                          |  |  |  |  |        | 122,000         | (10)           |               |  |      | 
|                                                           
|Walter Kornbluh                                             |                                                          |  |  |  |  |        | 1,309,200       | (8)            |               |  | 13.81 | 
|                                                           
|Stephen Crosson                                             |                                                          |  |  |  |  |        | 924,400         | (9)            |               |  | 10.12 | 
|                                                           
|Renaissance Capital Growth &
Income Fund III, Inc.          |                                                          |  |  |  |  |        | 2,815,000       | (7)            |               |  | 37.52 | 
|                                                            | 8080 N. Central Expressway
Suite 210
Dallas, Texas 75206 |  |  |  |  |        |                 |                |               |  |       |  | 
|                                                           
|Renaissance US Growth &
Income Trust PLC                    |                                                          |  |  |  |  |        | 1,000,000       | (12)           |               |  | 12.00 | 
|                                                            | 8080 N. Central Expressway
Suite 210
Dallas, Texas 75206 |  |  |  |  |        |                 |                |               |  |       |  | 
|                                                           
|All executive officers and
directors as a group
(6 persons) |                                                          |  |  |  |  |        | 2,736,100       |                |               |  | 25.65 | 



---

|(1) |  | As used herein, the term beneficial ownership is defined by Rule 13d-3
under the Securities Exchange Act of 1934 as consisting of sole or shared
voting power and/or sole or shared investment power subject to community
property laws where applicable.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The address of each person is c/o the Company at 600 Hampshire Road,
#105, Westlake Village, California 91361.                                                                                                                                           
|   
|   
|   
|   
|(3) |  | Based on 8,334,556 shares of Common Stock outstanding, as of December 15,
2001, represents to Companys estimate of shares outstanding on the date
of filing this report.                                                                                
|   
|   
|   
|   
|(4) |  | All shares are held in the LaChapelle Family Trust with respect to which
Mr. LaChapelle exercises voting and investment power.                                                                                                                           



---



##### Table of Contents



|(5)  |  | Does not include any shares owned by the Renaissance funds. Mr. Pearson
is an executive officer of RCG and the Renaissance funds.                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|(6)  |  | Includes four year non-qualified options from the Company to purchase
65,000 shares at $3.63 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|    
|    
|    
|(7)  |  | According to Schedule 13D, dated September 13, 1994, filed with the
Commission, RCG is the investment advisor of Renaissance Capital Growth &
Income Fund III, Inc. (the Fund). The Fund owns 2,250,000 shares of the
Companys Common Stock and has three year warrants to purchase 500,000
shares of Common Stock at $1.00 per share and four year options to
purchase 65,000 shares at $3.63 per share.                                                                                                                                         
|    
|    
|    
|    
|(8)  |  | Includes currently exercisable options to purchase 300,000 shares from
RCG at $2.00 per share and 120,000 shares from Frank LaChapelle at $3.00
per share and 82,200 shares from LaJolla Cove Investors for $1.80 per
share and 12,000 shares from the Company at $.56 per share, 180,000 shares
from the Company at $3.87 per share, 90,000 shares from the Company at
$5.00 per share, 90,000 shares from the Company at $6.50 per share, 90,000
shares from the Company at $7.50 per share and 180,000 shares from the
Company at $1.55 per share.
|    
|    
|    
|    
|(9)  |  | Includes currently exercisable options to purchase 200,000 shares from
RCG at $2.00 per share and 80,000 shares from Frank LaChapelle at $3.00
per share and 54,800 shares from LaJolla Cove Investors at $1.80 per share
and 48,000 shares from the Company at $.56 per share, 120,000 shares from
the Company at $3.87 per share, 60,000 shares from the Company at $5.00
per share, 60,000 shares from the Company at $6.50 per share, 60,000
shares from the Company at $7.50 per share and 120,000 shares from the
Company at $1.55 per share.  
|    
|    
|    
|    
|(10) |  | Includes four year non-qualified stock options from the Company for
65,000 shares at $3.63 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|    
|    
|    
|(11) |  | Consists of options from the Company at $1.55 per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|    
|    
|    
|(12) |  | The fund owns 1,000,000 shares of the Companys Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|    
|    
|    
|(13) |  | Includes four year non-qualified options from the Company to purchase
65,000 shares at $3.63 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                              




Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During fiscal 2000 the Company paid $32,000, in consulting fees to a firm
owned by the Companys Chairman of the Board.




Item 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

10.1        Novell Licensing Agreement

(b)  Reports on
Form 8-K.     None



Table of Contents




SIGNATURES

In accordance with Section 13 or 15 (d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

| |                                                                     |                       
| | ------------------------------------------------------------------- | ----------------------
| | CAMINOSOFT CORP                                                    
|
| | By                                                                  | /s/    WALTER KORNBLUH
| |                                                                    
| | Walter Kornbluh, Chairman of the Board,
and Chief Executive Officer

In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

|                                       |  |                                                                                                 |  |                  
|-------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | -----------------
|Signature                              |  | Capacity                                                                                        |  | Date             
|                                       |  |                                                                                                 |  |                  
|/s/ WALTER KORNBLUH

Walter Kornbluh   |  | Chairman of the Board
and Chief Executive
Officer                                               |  | December 28, 2001
|                                      
|/s/ STEPHEN CROSSON

Stephen Crosson   |  | Chief Operating Officer,
Secretary and Treasurer
and Principal Financial and
Accounting Officer |  | December 28, 2001
|                                      
|/s/ NORMAN BAKER
        
Norman Baker |  | Director                                                                                        |  | December 28, 2001
|                                      
|/s/ ROBERT PEARSON

Robert Pearson     |  | Director                                                                                        |  | December 28, 2001
|                                      
|/s/ STEVEN SPECTOR

Steven Spector     |  | Director                                                                                        |  | December 28, 2001
|                                      
|/s/ ROBERT DEGAN

Robert Degan         |  | Director                                                                                        |  | December 28, 2001



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##### Table of Contents



CAMINOSOFT CORP.
 CONTENTS

|                                                 |  |    
|------------------------------------------------ |  | ---
|Independent Certified Public Accountants Report |  | F-2
|                                                
|Financial Statements                             |  |    
|                                                
|Balance Sheets                                   |  | F-3
|                                                
|Statements of Operations                         |  | F-4
|                                                
|Statements of Shareholders Equity               |  | F-5
|                                                
|Statements of Cash Flows                         |  | F-6
|                                                
|Notes to Financial Statements                    |  | F-7



F-1



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##### Table of Contents



INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS REPORT

To the Board of Directors and Shareholders
CaminoSoft Corp.

We have audited the accompanying balance sheets of CaminoSoft Corp. as of
September 30, 2001 and 2000 and the related statements of operations,
shareholders equity and cash flows for the years then ended. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Caminosoft Corp. as of
September 30, 2001 and 2000 and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

/s/BDO Seidman, LLP

Los Angeles, California
November 28, 2001,
except for Note 12
which is as of December 11, 2001



F-2



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##### Table of Contents



CAMINOSOFT CORP.
 
BALANCE SHEETS

|                                                                                       |                                                                                                                  |      |               |             |   |   |           |            |  
|-------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ---- | ------------- | ----------- | - | - | --------- | ---------- | -
|                                                                                       |                                                                                                                  |      | September 30,
|                                                                                       |                                                                                                                  |      |              
|ASSETS                                                                                 |                                                                                                                  | 2001 |               | 2000       
|                                                                                       |                                                                                                                  |      |               |            
|Current assets:                                                                        |                                                                                                                  |      |               |             |   |   |           |           
|                                                                                       | Cash and cash equivalents                                                                                        |      | $             | 1,283,678   |   |   | $         | 2,219,323  |  
|                                                                                       | Accounts receivable, net of allowance of $5,687 and $5,687                                                       |      |               | 33,657      |   |   |           | 67,955     |  
|                                                                                       | Other receivables (Notes 3 and 4)                                                                                |      |               | 150,000     |   |   |           | 1,585,000  |  
|                                                                                       |                                                                                                                  |      |               |             |   |   |           |           
|Total current assets                                                                   |                                                                                                                  |      | 1,467,335     |             |   |   | 3,872,278 |           
|                                                                                       |                                                                                                                  |      |               |             |   |   |           |           
|Property and Equipment, net of accumulated depreciation of
$15,616 and $5,068 (Note 2) |                                                                                                                  |      | 16,016        |             |   |   | 26,564    |           
|                                                                                      
|Software, net of accumulated amortization of,
$143,539 and $71,767 (Note 10)           |                                                                                                                  |      | 413,559       |             |   |   | 430,605   |           
|                                                                                      
|Deposits                                                                               |                                                                                                                  |      | 14,781        |             |   |   | 9,581     |           
|                                                                                       |                                                                                                                  |      |               |             |   |   |           |           
|Total assets                                                                           |                                                                                                                  | $    | 1,911,691     |             |   | $ | 4,339,028 |           
|                                                                                       |                                                                                                                  |      |               |             |   |   |           |           
|                                                                                      
|LIABILITIES AND SHAREHOLDERS EQUITY                                                   |                                                                                                                  |      |               |             |   |   |           |           
|                                                                                      
|Current Liabilities:                                                                   |                                                                                                                  |      |               |             |   |   |           |           
|                                                                                       | Trade accounts payable                                                                                           |      | $             | 117,552     |   |   | $         | 111,587    |  
|                                                                                       | Accrued Liabilities                                                                                              |      |               | 99,621      |   |   |           | 123,263    |  
|                                                                                       | Deferred revenues                                                                                                |      |               | 24,532      |   |   |           |           |  
|                                                                                       |                                                                                                                  |      |               |             |   |   |           |           
|Total current liabilities                                                              |                                                                                                                  |      | 241,705       |             |   |   | 234,850   |           
|Total liabilities                                                                      |                                                                                                                  |      | 241,705       |             |   |   | 234,850   |           
|                                                                                      
|Commitments and contingencies (Note 6)                                                 |                                                                                                                  |      |               |             |   |   |           |           
|                                                                                      
|Shareholders equity (Note 4)                                                          |                                                                                                                  |      |               |             |   |   |           |           
|                                                                                      
|                                                                                       | Common stock, no par value; authorized 100,000,000 shares;
issued and outstanding 8,334,556 and 8,184,556 shares |      |               | 13,900,381  |   |   |           | 13,642,539 |  
|                                                                                      
|                                                                                       | Accumulated deficit                                                                                              |      |               | (12,230,395 | ) |   |           | (9,538,361 | )
|                                                                                       |                                                                                                                  |      |               |             |   |   |           |           
|Total shareholders equity                                                             |                                                                                                                  |      | 1,669,986     |             |   |   | 4,104,178 |           
|                                                                                       |                                                                                                                  |      |               |             |   |   |           |           
|Total liabilities and shareholders equity                                             |                                                                                                                  | $    | 1,911,691     |             |   | $ | 4,339,028 |           
|                                                                                       |                                                                                                                  |      |               |             |   |   |           |           

See accompanying notes to financial statements.



F-3



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##### Table of Contents



CAMINOSOFT CORP.
STATEMENTS OF OPERATIONS

|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |         |           |  
|------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------- | ----------- | ------------- | --------- | ---- | ----------- | ------- | --------- | -
|                                                        |                                                                                                                                                                                            |                                                    |             | YEARS ENDED  
|                                                        |                                                                                                                                                                                            |                                                    |             | SEPTEMBER 30,
|                                                        |                                                                                                                                                                                            |                                                    |             |              
|                                                        |                                                                                                                                                                                            |                                                    |             | 2001          |           | 2000
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |     
|SALES                                                   |                                                                                                                                                                                            | $                                                  | 374,141     |               |           | $    | 343,421     |        
|                                                       
|COST OF SALES                                           |                                                                                                                                                                                            |                                                    | 64,137      |               |           |      | 84,665      |        
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|GROSS PROFIT                                            |                                                                                                                                                                                            |                                                    | 310,004     |               |           |      | 258,756     |        
|                                                       
|OPERATING EXPENSES                                      |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|                                                        |                                                                                                                                                                                            | Sales and administrative                           |             |               | 2,903,939 |      |             |         | 2,090,384 |  
|                                                        |                                                                                                                                                                                            | Depreciation and amortization                      |             |               | 28,491    |      |             |         | 5,158     |  
|                                                        |                                                                                                                                                                                            | Research & Development                             |             |               | 474,207   |      |             |         | 189,797   |  
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|Total operating expenses                                |                                                                                                                                                                                            |                                                    | 3,406,637   |               |           |      | 2,285,339   |        
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|Loss from operations                                    |                                                                                                                                                                                            |                                                    | (3,096,633  | )             |           |      | (2,026,583  | )      
|                                                       
|OTHER INCOME                                           
|                                                        |                                                                                                                                                                                            | Interest income                                    |             |               | 104,109   |      |             |         | 87,200    |  
|                                                        |                                                                                                                                                                                            | Miscellaneous income (Note 12)                     |             |               |          |      |             |         | 149,748   |  
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|Total other income                                      |                                                                                                                                                                                            |                                                    | 104,109     |               |           |      | 236,948     |        
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|Net loss before discontinued operations                 |                                                                                                                                                                                            |                                                    | (2,992,524  | )             |           |      | (1,789,635  | )      
|                                                       
|DISCONTINUED OPERATIONS (Note 9)                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|                                                        | Income from operations of discontinued Fusing Agent business
(includes $0 and $1,189,421 of sales in 2001 and 2000 respectively
and $950,000 from obligation settlement in 2000 (Note 11)) |                                                    |             |              |           |      |             | 646,350 |          
|                                                        |                                                                                                                                                                                            | Loss on disposal of Fusing Agent business          |             |               |          |      |             |         | (324,347  | )
|                                                        |                                                                                                                                                                                            | Gain on legal settlement less legal fees (Note 11) |             |               | 300,490   |      |             |         |          |  
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|Income from discontinued operations                     |                                                                                                                                                                                            |                                                    | 300,490     |               |           |      | 322,003     |        
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|Net loss applicable to common stock                     |                                                                                                                                                                                            |                                                    | ($2,692,034 | )             |           |      | ($1,467,632 | )      
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|Weighted average number of common shares outstanding:   |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|                                                        |                                                                                                                                                                                            | (basic and diluted):                               |             |               | 8,186,611 |      |             |         | 6,777,008 |  
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|                                                       
|Net income (loss) per common share (basic and diluted): |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|                                                        |                                                                                                                                                                                            | From continuing operations                         |             |               | ($0.37    | )    |             |         | ($0.26    | )
|                                                        |                                                                                                                                                                                            | From discontinued operations                       |             |               | 0.04      |      |             |         | 0.05      |  
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        
|Net loss per common share                               |                                                                                                                                                                                            |                                                    | ($0.33      | )             |           |      | ($0.21      | )      
|                                                        |                                                                                                                                                                                            |                                                    |             |               |           |      |             |        

See accompanying notes to Financial Statements



F-4



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##### Table of Contents



CAMNOSOFT CORP
STATEMENTS OF SHAREHOLDERS EQUITY

|                                                               |  |              |           |             |  |         |            |       |  |  |              |   |  |   |            |  
|-------------------------------------------------------------- |  | ------------ | --------- | ----------- |  | ------- | ---------- | ----- |  |  | ------------ | - |  | - | ---------- | -
|                                                               |  | Common
Stock |           | Accumulated |  |        
|                                                               |  | Shares       |           | Amount      |  | Deficit |            | Total
|                                                               |  |              |           |             |  |         |            |      
|Balance, at October 1, 1999                                    |  |              | 5,704,556 |             |  | $       | 8,626,430  |       |  |  | ($8,070,729  | ) |  | $ | 555,701    |  
|Common stock issued for exercise of options/warrants           |  |              | 305,000   |             |  |         | 177,800    |       |  |  |              |   |  |   | 177,800    |  
|Common stock as partial payment of legal expenses              |  |              | 40,000    |             |  |         | 45,200     |       |  |  |              |   |  |   | 45,200     |  
|Common stock issued for private placement                      |  |              | 2,060,000 |             |  |         | 4,620,000  |       |  |  |              |   |  |   | 4,620,000  |  
|Common stock issued to employees                               |  |              | 75,000    |             |  |         | 150,000    |       |  |  |              |   |  |   | 150,000    |  
|Options issued for loan origination fees                       |  |              |           |             |  |         | 23,109     |       |  |  |              |   |  |   | 23,109     |  
|Net loss                                                       |  |              |           |             |  |         |            |       |  |  | (1,467,632   | ) |  |   | (1,467,632 | )
|                                                               |  |              |           |             |  |         |            |       |  |  |              |   |  |   |            |  
|Balance, at September 30, 2000                                 |  |              | 8,184,556 |             |  |         | 13,642,539 |       |  |  | (9,538,361   | ) |  |   | 4,104,178  |  
|Warrants to purchase common stock issued for services (Note 4) |  |              |           |             |  |         | 65,842     |       |  |  |              |   |  |   | 65,842     |  
|Common stock issued for exercise of options/warrants           |  |              | 150,000   |             |  |         | 150,000    |       |  |  |              |   |  |   | 150,000    |  
|Warrants to purchase common stock issued for services          |  |              |           |             |  |         | 42,000     |       |  |  |              |   |  |   | 42,000     |  
|Net loss                                                       |  |              |           |             |  |         |            |       |  |  | (2,692,034   | ) |  |   | (2,692,034 | )
|                                                               |  |              |           |             |  |         |            |       |  |  |              |   |  |   |            |  
|BALANCE, at September 30, 2001                                 |  |              | 8,334,556 |             |  | $       | 13,900,381 |       |  |  | ($12,230,395 | ) |  | $ | 1,669,986  |  
|                                                               |  |              |           |             |  |         |            |       |  |  |              |   |  |   |            |  



F-5



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##### Table of Contents



CAMINOSOFT CORP
STATEMENT OF CASH FLOWS

|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |             |           |         |  
|-------------------------------------------------------- | ----------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------- | ----------- | ------------- | ------- | --------- | ----------- | --------- | ------- | -
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             | YEARS ENDED  
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             | SEPTEMBER 30,
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         |                                     |                                                                                                                                                                                                                   
|                                                         |                                     | 2001                                                                                                                                                                                                               |                                           | 2000       
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |          
|CASH FLOWS FROM OPERATING ACTIVITIES                     |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|                                                         | Net loss from continuing operations |                                                                                                                                                                                                                    |                                           | ($2,992,524 | )             |         |           | ($1,789,635 | )        
|                                                         |                                     | Adjustments to reconcile net loss from continuing operations
to net cash used in operating activities:                                                                                                             |                                           |             |               |         |           |             |           |        
|                                                         |                                     |                                                                                                                                                                                                                    | Cash from discontinued operations         |             |               | 300,490 |           |             |           | 556,532 |  
|                                                         |                                     |                                                                                                                                                                                                                    | Depreciation and amortization             |             |               | 82,320  |           |             |           | 76,835  |  
|                                                         |                                     |                                                                                                                                                                                                                    | Change in allowance for doubtful accounts |             |               |        |           |             |           | 5,687   |  
|                                                         |                                     |                                                                                                                                                                                                                    | Options issued for financing fees         |             |               |        |           |             |           | 23,109  |  
|                                                         |                                     |                                                                                                                                                                                                                    | Common stock issued to employees          |             |               |        |           |             |           | 150,000 |  
|                                                         |                                     |                                                                                                                                                                                                                    | Common stock warrants issued for services |             |               | 107,842 |           |             |           |        |  
|                                                         |                                     | Changes in operating assets and liabilities:                                                                                                                                                                       |                                           |             |               |         |           |             |           |        
|                                                         |                                     |                                                                                                                                                                                                                    | Accounts receivable                       |             |               | 34,298  |           |             |           | (73,642 | )
|                                                         |                                     |                                                                                                                                                                                                                    | Other receivables                         |             |               | 85,000  |           |             |           | (85,000 | )
|                                                         |                                     |                                                                                                                                                                                                                    | Deposits and other                        |             |               | (5,200  | )         |             |           | (9,255  | )
|                                                         |                                     |                                                                                                                                                                                                                    | Accounts payable and accrued expenses     |             |               | (17,677 | )         |             |           | 234,850 |  
|                                                         |                                     |                                                                                                                                                                                                                    | Deferred revenue                          |             |               | 24,532  |           |             |           |        |  
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|Net cash used in operating activities                    |                                     |                                                                                                                                                                                                                    | (2,380,919                                | )           |               |         | (910,519  | )          
|                                                        
|CASH FLOWS FROM INVESTING ACTIVITIES                     |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|                                                         |                                     | Investment in equipment                                                                                                                                                                                            |                                           |             |              |         |           |             | (17,662   | )      
|                                                         |                                     | Investment in software technology                                                                                                                                                                                  |                                           |             | (54,726       | )       |           |             |          |        
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|Net cash used in investing activities                    |                                     |                                                                                                                                                                                                                    | (54,726                                   | )           |               |         | (17,662   | )          
|                                                        
|CASH FLOWS FROM FINANCING ACTIVITIES                     |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|                                                         |                                     | Principal reductions of short-term and long-term
obligations                                                                                                                                                       |                                           |             |              |         |           |             | (614,607  | )      
|                                                         |                                     | Issuance of common stock                                                                                                                                                                                           |                                           |             | 1,500,000     |         |           |             | 3,297,800 |        
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|Net cash provided by financing activities                |                                     |                                                                                                                                                                                                                    | 1,500,000                                 |             |               |         | 2,683,193 |            
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     |                                     |                                                                                                                                                                                                                    | (935,645                                  | )           |               |         | 1,755,012 |            
|CASH AND CASH EQUIVALENTS, beginning of year             |                                     |                                                                                                                                                                                                                    | 2,219,323                                 |             |               |         | 464,311   |            
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|CASH AND CASH EQUIVALENTS, end of year                   |                                     | $                                                                                                                                                                                                                  | 1,283,678                                 |             |               | $       | 2,219,323 |            
|                                                         |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|Supplemental non-cash financing and investing activities |                                     |                                                                                                                                                                                                                    |                                           |             |               |         |           |            
|                                                         |                                     | During September 2000, the Company issued 500,000 shares in
conjunction with
the private placement for $1,500,000 of subscriptions
receivable. The Company
received the full amount of $1,500,000 in November 2000 |                                           |             |               |         |           |             |           |        
|                                                         |                                     | During August 2001, 150,000 warrants to purchase shares of
common stock were
exercised for notes receivable. The Company received
the full amount of $150,000
in October and November 2001                         |                                           |             |               |         |           |             |           |        

See accompanying notes to Condensed Financial Statements



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##### Table of Contents



CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

Note 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

CaminoSoft Corp. (the Company) previously known as Interscience Computer
Corporation, was incorporated under the laws of the State of California on
October 14, 1983, to be a third party provider of maintenance services for
computer hardware and related peripheral equipment. The Company previously
provided spare parts for the Siemens, Xerox, and Delphax families of printing
equipment, as well as technical support for Siemens. In 1992, the Company
introduced a non-chloroflurocarbon fusing agent, developed by the Company and
patented on July 26, 1994, for use with certain high speed laser printers.
Soon thereafter, the Company initiated a toner development program. As a
result of the Companys development of the Fusing Agent and toner, gross
revenues from these items constituted approximately 80% of the Company sales
for the year ended in 1999. During the year ended September 30, 2000, the
Company sold the Fusing Agent and toner business (see Note 9).

On September 17, 1999, the Company acquired the assets (the Camino Assets) of
Camino Software Systems, Inc. (Camino), a data storage company, for 468,000
shares of the Companys common stock and assumed $315,172 of certain Camino
liabilities. The Camino assets consisted of the name, Camino Software Systems,
Inc., the data storage management software, certain business contracts and
intangible personal property. The Company allocated all amounts paid and
assumed in the amount of $502,372 to the cost of software.

During the year ended September 30, 2000, the Company changed its name to
CaminoSoft Corp. to reflect the focus on the data management software business.
The Company is now distributing and developing data management software
purchased from Camino, which will work with Windows 2000 and Novell systems.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity
of three months or less when purchased to be cash equivalents. Such cash
equivalents, at times, may exceed federally insured limits. The Company
maintains its accounts with financial institutions with high credit ratings.



F-7



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##### Table of Contents



CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

NOTE 1  (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107 Disclosures About Fair
Value of Financial Instruments, requires disclosure of the fair value of
certain financial instruments. Accounts receivable, other receivables,
accounts payable, accrued liabilities and deferred revenues as reflected in the
financial statements approximate fair value because of the short-term maturity
of these instruments.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation is computed on the
straight-line and accelerated methods based upon the estimated useful life of
the asset, primarily five years.

SOFTWARE

Software capitalization is stated at cost. Amortization is computed on the
straight-line and accelerated methods based upon the estimated useful life of
the asset, primarily seven years.

REVENUE RECOGNITION

Revenue is recognized when earned. The Companys revenue recognition policies
are in compliance with all applicable accounting regulations, including Staff
Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements. American Institute of Certified Public Accountants (AICPA),
Statement of Position (SOP) 97-2, Software Revenue Recognition, and SOP 98-9,
Modification of SOP 97-2, with Respect to Certain Transactions. Revenue from
sale of product is recognized upon shipment or installation to the customer.
Maintenance revenue is recognized ratably over the contract period.

RESEARCH AND DEVELOPMENT

Research and development costs, which consist primarily of software development
costs, are expensed as incurred. Statement of Financial Accounting Standards
No. 86, Accounting for the Cost of Computer Software to be Sold, Leased, or
Otherwise Marketed (SFAS 86), provides for the capitalization of certain
software development costs incurred after technological feasibility of the
software is established. To date, the Company has capitalized approximately
$55,000 of such software development costs in the current year ended September
30, 2001.



F-8



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##### Table of Contents



CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

ADVERTISING

Advertising costs are charged to expense as incurred and such costs were
$217,534 and $161,555 for the years ended September 30, 2001 and 2000,
respectively.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically assesses the recoverability of the carrying amounts of
long-lived assets, including intangible assets. A loss is recognized when
expected undiscounted future cash flows are less than the carrying amount of
the asset. The impairment loss is the difference by which the carrying amount
of the asset exceeds its fair value.

STOCK-BASED COMPENSATION

The Company accounts for employee stock options or similar equity instruments
in accordance with Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation (SFAS No. 123) and Interpretation No.
44, Accounting for Certain Transactions Involving Stock Compensation, in
Interpretation of APB 25 (FIN 44). SFAS No. 123 defines a fair-value-based
method of accounting for employee stock options or similar equity instruments.
This statement gives entities a choice to recognize related compensation
expense by adopting the new fair-value method or to measure compensation using
the intrinsic value method under Accounting Principles Board (APB) Opinion No.
25 Accounting for Stock Issued to Employees, the former standard. If the
former standard for measurement is elected, SFAS No. 123 requires supplemental
disclosure to show the effect of using the new measurement criteria. The
Company currently uses the disclosure standards of SFAS 123 but accounts for
stock based compensation using APB 25.

EARNINGS (LOSS) PER SHARE

The Company computes earnings (loss) per common share under Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS No. 128),
which requires presentation of Basic and Diluted earnings (loss) per share.
Basic earnings (loss) per share includes no dilution and is computed by
dividing income (loss) available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted earnings (loss)
per share reflects the potential dilution of securities that could share in the
earnings of an entity, such as stock options, warrants or convertible
debentures, unless antidilutive (see Note 4). At September 30, 2001 and 2000,
options and warrants to purchase 2,677,000 and 2,499,000 shares, respectively
were outstanding, but were not included in the computation of diluted (loss)
per common share as the effect would be antidilutive.



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##### Table of Contents



CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

INCOME TAXES

The Company uses the asset and liability method of accounting for income taxes.
Deferred income taxes are recognized based on the differences between
financial statement and income tax valuations of assets and liabilities using
applicable tax rates for the year in which the differences are expected to
reverse. Valuation allowances are established, when necessary, to reduce
deferred tax asset amounts to the amount expected to be realized. The
provision for income taxes represents the tax payable (or benefit) for the
period and the change in deferred tax assets and liabilities during the year.

RECLASSIFICATIONS

Certain year 2000 amounts have been reclassified to conform with the 2001
presentation.

NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards (FASB) No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS No. 133) issued by the
FASB is effective for all fiscal quarters of fiscal years beginning after June
15, 2000. SFAS 133 requires companies to recognize all derivatives contracts
as either assets or liabilities in the balance sheet and to measure them at
fair value. If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of gain or
loss recognition on the hedging derivative with the recognition of (i) the
changes in the fair value of the hedged asset or liability that are
attributable to the hedged risk or (ii) the earnings effect of the hedged
forecasted transaction. For a derivative not designated as a hedging
instrument, the gain or loss is recognized in income in the period of change.
Historically, the Company has not entered into derivatives contracts either to
hedge existing risks or for speculative purposes. The adoption of the new
standard on October 1, 2000 did not have an effect on the Companys financial
statements.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements. SAB 101 provides guidance for revenue recognition under various
circumstances. The accounting and disclosures prescribed by SAB 101 will be
effective in the fourth quarter of the Companys current fiscal year ended
September 30, 2001, and retroactive to the beginning of this fiscal year. The
adoption of the new standard did not have a material effect to the Companys
financial position or results of operations.

In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44 (FIN 44) Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25. FIN 44 clarifies the
application of APB No. 25 for (a) the definition of employee for purposes of
applying APB No. 25, (b) the criteria for determining whether a plan qualifies
as a non-compensatory plan, (c) the accounting consequences of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a


F-10Table of Contents

CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

business combination. FIN 44 is effective July 2, 2000, but certain
conclusions cover specific events that occur after either December 15, 1998, or
January 12, 2000. The Company adopted FIN 44 in accounting for the stock
options granted during the year ended September 30, 2000, and it had no impact
on the Companys financial position or results of operations and cash flows.

In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and
Other Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase
method of accounting and prohibits the use of the pooling-of-interests method
of accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within
the first interim quarter after adoption of SFAS 142. The Company believes the
adoption of this Statement will have no material impact on its financial
statements.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires the fair value of a liability for an asset
retirement obligation to be recognized in the period in which it is incurred if
a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. The Company believes the adoption of this Statement will have
no material impact on its financial statements.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFASB 144 requires that those long-lived assets
be measured at the lower of carrying amount or fair value less cost to sell,
whether reported in continuing operations or in discontinued operations.
Therefore, discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet occurred.
SFASB 144 is effective for financial


F-11Table of Contents

CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

statements issued for fiscal years beginning after December 15, 2001 and,
generally, are to be applied prospectively. The Company believes the adoption
of this Statement will have no material impact on its financial statements.

NOTE 2  PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

|                              |  |               |        |      |  |   |        | 
|----------------------------- |  | ------------- | ------ | ---- |  | - | ------ | 
|                              |  | September 30,
|                              |  |              
|                              |  | 2001          |        | 2000
|                              |  |               |        |     
|Furniture and fixtures        |  | $             | 5,745  |      |  | $ | 5,745  | 
|Test and training equipment   |  |               | 25,887 |      |  |   | 25,887 | 
|                              |  |               |        |      |  |   |        | 
|                              |  |               | 31,632 |      |  |   | 31,632 | 
|Less accumulated depreciation |  |               | 15,616 |      |  |   | 5,068  | 
|                              |  |               |        |      |  |   |        | 
|                              |  | $             | 16,016 |      |  | $ | 26,564 | 
|                              |  |               |        |      |  |   |        | 

Property and equipment are depreciated on a straight-line basis with an average
useful life of five years.

NOTE 3  OTHER RECEIVABLES

At September 30, 2001, the Company had receivables totaling $150,000, related
to exercise of warrants for the purchase of the Companys common stock. The
Company received the full amount of $150,000 in October and November 2001.

NOTE 4  SHAREHOLDERS EQUITY

During the year ended September 30, 2000, the Company issued 2,135,000 shares
of common stock in two private placements for a total of $4,770,000. Prior to
September 30, 2000, the Company had completed a private placement for 1,560,000
shares and received proceeds of $3,120,000. In September 2000, the Company
sold an additional 500,000 shares for a $1,500,000 subscription receivable,
which was paid in full during November 2000.

During the year ended September 30, 2000, the Company issued a total 75,000
shares of common stock to the employees of the Company. These shares were
valued at $150,000.

During the year ended September 30, 2000, the Company issued 40,000 shares of
common stock valued at $45,200 to an attorney for services performed in
conjunction with the settlement of a lawsuit.



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CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

In September 2000, the Company issued 150,000 warrants to purchase the
Companys common stock to three individuals for consulting services as Company
advisory board members to be provided during the period of September 30, 2000
to September 2001. No value was recorded for the issuance of the warrants as
their value is de minimis.

In September 2000, the Company issued 50,000 warrants to purchase the Companys
common stock to a company for investor public relations services to be provided
during the period of September 2000 to September 2001. No value was recorded
for the issuance of the warrants as value is de minimis.

During the year ended September 30, 2000, the Companys Board of Directors
approved a qualified incentive stock option plan (the Plan). The maximum
number of shares that may be purchased pursuant to the Plan is 2,100,000.
Options granted under the Plan have a vesting period of four years from the
date of grant with a life of ten years at a price to approximate the fair
market value of the common stock at the date of grant.

During the year ended September 30, 2000, the Company issued 1,571,500 options
to purchase the Companys common stock at prices ranging from $0.56 to $7.50 to
employees and directors under the Plan. During the year ended September 30,
2001, the Company issued 567,000 options to purchase the Companys common stock
at prices ranging from $1.55 to $3.63 to employees and directors under the
plan.

During the year ended September 30, 2000, 55,000 warrants and options were
exercised and the Company received $52,800. During the year ended September
30, 2001, 150,000 warrants were exercised and the Company received $150,000.

During the fiscal year ended September 30, 2001 the Company issued warrants
with a value of $107,842 for services rendered during the year, this amount was
booked as an expense on the Company financial statements.

The warrant and stock option summary and changes during the year are presented
below:

|                                                       |  |           |           |          |  |          |      | 
|------------------------------------------------------ |  | --------- | --------- | -------- |  | -------- | ---- | 
|                                                       |  |           |           |          |  | Weighted
|                                                       |  |           |           |          |  | Average 
|                                                       |  | Number of |           | Exercise
|                                                       |  | Shares    |           | Price   
|                                                       |  |           |           |         
|Warrants outstanding at September 30, 1999             |  |           | 987,500   |          |  | $        | 0.71 | 
|Warrants granted                                       |  |           | 245,000   |          |  |          | 3.56 | 
|Options granted                                        |  |           | 1,571,500 |          |  |          | 4.23 | 
|Warrants exercised                                     |  |           | (300,000  | )        |  |          | 0.58 | 
|Options exercised                                      |  |           | (5,000    | )        |  |          | 0.56 | 
|                                                       |  |           |           |          |  |          |      | 
|                                                      
|Warrants
and options outstanding
At September 30, 2000 |  |           | 2,499,000 |          |  |          | 3.23 | 
|                                                      
|Warrants granted                                       |  |           | 42,000    |          |  |          | 2.00 | 
|Options granted                                        |  |           | 567,000   |          |  |          | 1.79 | 
|Warrants exercised                                     |  |           | (150,000  | )        |  |          | 1.00 | 



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##### Table of Contents



CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

|                                                       |  |           |           |          |  |          |      | 
|------------------------------------------------------ |  | --------- | --------- | -------- |  | -------- | ---- | 
|                                                       |  |           |           |          |  | Weighted
|                                                       |  |           |           |          |  | Average 
|                                                       |  | Number of |           | Exercise
|                                                       |  | Shares    |           | Price   
|                                                       |  |           |           |         
|Warrants options expired                               |  |           | (281,000  | )        |  |          | 4.15 | 
|                                                       |  |           |           |          |  |          |      | 
|Warrants
and options outstanding
At September 30, 2001 |  |           | 2,677,000 |          |  | $        | 2.94 | 
|                                                       |  |           |           |          |  |          |      | 
|Warrants
and options exercisable
At September 30, 2001 |  |           | 2,320,750 |          |  | $        | 3.10 | 
|                                                       |  |           |           |          |  |          |      | 

The following table summarizes information about warrants and employees stock
options outstanding at September 30, 2001.

|         |            |         |             |           |             |                  |  |                  |  |       |   |      |  |          |  |           |  |  |   |      | 
|-------- | ---------- | ------- | ----------- | --------- | ----------- | ---------------- |  | ---------------- |  | ----- | - | ---- |  | -------- |  | --------- |  |  | - | ---- | 
|         |            |         | Outstanding |           | Exercisable |                  |  |                  | 
|         |            |         |             |           |             |                  |  |                  | 
|         |            |         |             |           |             | Weighted Average |  | Weighted Average |  |       |   |      |  |         
|Exercise |            |         |             |           |             | Life             |  | Exercise         |  |       |   |      |  | Exercise
|Price    |            | Options |             | (Months)  |             | Price            |  | Options          |  | Price
|         |            |         |             |           |             |                  |  |                  |  |      
|$        | 0.50       |         |             | 25,000    |             |                  |  | 12               |  |       | $ | 0.50 |  |          |  | 25,000    |  |  | $ | 0.50 | 
|         | 0.56       |         |             | 161,500   |             |                  |  | 98               |  |       |   | 0.56 |  |          |  | 154,875   |  |  |   | 0.56 | 
|         | 1.00       |         |             | 500,000   |             |                  |  | 1                |  |       |   | 1.00 |  |          |  | 500,000   |  |  |   | 1.00 | 
|         | 1.55       |         |             | 500,000   |             |                  |  | 98               |  |       |   | 1.55 |  |          |  | 300,000   |  |  |   | 1.55 | 
|         | 2.00       |         |             | 42,000    |             |                  |  | 59               |  |       |   | 2.00 |  |          |  |          |  |  |   |     | 
|         | 3.00       |         |             | 2,000     |             |                  |  | 105              |  |       |   | 3.00 |  |          |  | 500       |  |  |   | 3.00 | 
|         | 3.38       |         |             | 2,000     |             |                  |  | 98               |  |       |   | 3.38 |  |          |  |          |  |  |   |     | 
|         | 3.56       |         |             | 385,000   |             |                  |  | 107              |  |       |   | 3.56 |  |          |  | 358,750   |  |  |   | 3.56 | 
|         | 3.63       |         |             | 260,000   |             |                  |  | 51               |  |       |   | 3.63 |  |          |  | 195,000   |  |  |   | 3.63 | 
|         | 3.87       |         |             | 347,500   |             |                  |  | 101              |  |       |   | 3.87 |  |          |  | 336,125   |  |  |   | 3.87 | 
|         | 4.13       |         |             | 2,000     |             |                  |  | 106              |  |       |   | 4.13 |  |          |  | 500       |  |  |   | 4.13 | 
|         | 5.00       |         |             | 150,000   |             |                  |  | 101              |  |       |   | 5.00 |  |          |  | 150,000   |  |  |   | 5.00 | 
|         | 6.50       |         |             | 150,000   |             |                  |  | 101              |  |       |   | 6.50 |  |          |  | 150,000   |  |  |   | 6.50 | 
|         | 7.50       |         |             | 150,000   |             |                  |  | 101              |  |       |   | 7.50 |  |          |  | 150,000   |  |  |   | 7.50 | 
|         |            |         |             |           |             |                  |  |                  |  |       |   |      |  |          |  |           |  |  |   |     
|$        | 0.50-$7.50 |         |             | 2,677,000 |             |                  |  | 76               |  |       | $ | 2.94 |  |          |  | 2,320,750 |  |  | $ | 3.10 | 
|         |            |         |             |           |             |                  |  |                  |  |       |   |      |  |          |  |           |  |  |   |     

All stock options issued to employees have an exercise price not less than the
fair market value of the Companys common stock on the date of the grant, and
in accordance with accounting for such options utilizing the intrinsic value
method there is no related compensation expense recorded in the Companys
financial statements. Had compensation cost for stock-based compensation been
determined based on the fair value of the grant dates consistent with the
method of SFAS 123, the Companys net loss and loss per share for the years
ended September 30, 2001 and 2000 would have been increased to the pro forma
amounts presented:

|                                                         |  |      |            |      |  |   |            |  
|-------------------------------------------------------- |  | ---- | ---------- | ---- |  | - | ---------- | -
|                                                         |  | 2001 |            | 2000
|                                                         |  |      |            |     
|Net loss, as reported                                    |  | $    | (2,692,034 | )    |  | $ | (1,467,632 | )
|Net loss, pro forma                                      |  | $    | (2,730,967 | )    |  | $ | (1,710,723 | )
|                                                        
|Basic and diluted net
loss per common share,
as reported |  | $    | (.33       | )    |  | $ | (.21       | )
|pro forma                                                |  | $    | (.33       | )    |  | $ | (.25       | )



F-14



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##### Table of Contents



CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

The fair value of option grants is estimated on the date of grant utilizing the
Black-Scholes option-pricing model with the following weighted average
assumptions for grants in 2001 and 2000, expected life of options were 2.7
years and 1 year, expected volatility of 15% and 10%, respectively, risk-free
interest rate of 3.4% to 6.24%, respectively, and a 0% dividend yield. The
weighted average fair value on the date of grants for options and warrants
granted during 2001 was $0.21 per unit. The fair value of the options and
warrants granted in 2000 were $0.15 per unit.

NOTE 5  RELATED PARTY TRANSACTION

During fiscal year 2000, the Company paid $32,000, in consulting fees to a firm
owned by the Companys Chairman of the Board.

NOTE 6  COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases its facilities under noncancelable operating leases expiring
at various dates through 2003. The Company also leases temporary housing for
the Companys President under a one year noncancelable lease ending August 31,
2002. Future minimum rental payments required under noncancelable operating
leases at September 30, 2001 are as follows:

|                          |  |        |         | 
|------------------------- |  | ------ | ------- | 
|Year Ending September 30, |  | Amount
|                          |  |       
|2002                      |  | $      | 132,512 | 
|2003                      |  |        | 33,904  | 
|                          |  |        |         | 
|                          |  | $      | 166,416 | 
|                          |  |        |         | 

Total rent expense for the years ended September 30, 2001 and 2000 amounted to
$121,333 and $78,345.

NOTE 7  LONG TERM DEBT

All of the following loans were paid in full during the year ending September
30, 2000. The Company had no loans during the year ending September 30, 2001.

The Company had a $62,897 loan from a bank at prime plus one percent (9.25% at
September 30, 1999). The loan had a term of two years requiring monthly
payments of principal and interest of approximately $2,518 with an irregular
last payment estimated at $9,816. The loan was secured by certain receivables
and inventory of the Company. The loan had a non-penalty prepayment option.

The Company had a $12,034 loan from a bank at 10.5%. The loan had a term of
two years requiring monthly payments of principal and interest of approximately
$2,047. The



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##### Table of Contents



CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

loan was secured by certain receivables and inventory of the Company. The loan
had a non-penalty prepayment option.

On July 30, 1996, the Company obtained a $2,230,234 loan from a bank at the
banks reference rate plus 3% (9.00% at October 1, 2000). The loan required
monthly payments for three years of principal and interest of approximately
$28,620 and a portion of the proceeds of the sale of the Companys Xerox
maintenance business which was discontinued and sold in 1997. The loan was
secured by certain receivables and inventory of the Company and was subject to
certain covenants which the Company was in compliance with at October 1, 2000.
The loan had a non-penalty prepayment option.

In September 1999 the Company obtained an unsecured $500,000 loan from a
business development company at 8% and was due on October 31, 2000. The
Company was required to make monthly payments of interest only of $3,333
beginning on October 1, 1999.

NOTE 8  INCOME TAXES

The effective tax rate on loss before income taxes differed from the federal
statutory tax rate. The following summary reconciles income taxes at the
federal statutory tax rate with the actual taxes and the effective tax rate:

|                              |  |               |     |      |  |  |     |   
|----------------------------- |  | ------------- | --- | ---- |  |  | --- | --
|                              |  | September 30,
|                              |  |              
|                              |  | 2001          |     | 2000
|                              |  |               |     |     
|Federal statutory tax rate    |  |               | (34 | %)   |  |  | (34 | %)
|Permanent differences         |  |               | (1  | )    |  |  | (14 | ) 
|Change in valuation allowance |  |               | 35  |      |  |  | 48  |   
|                              |  |               |     |      |  |  |     |   
|Effective tax rate            |  |               |    | %    |  |  |    | % 
|                              |  |               |     |      |  |  |     |   

At September 30, 2001, the Company has available net operating loss
carry-forwards of approximately $10,000,000 for federal income tax purposes and
$5,700,000 for state income tax purposes which expire in varying amounts
through 2021.

Deferred tax assets as of September 30, 2001 were $3,972,808. A valuation
allowance of $3,972,808 was provided because it is more likely than not that
the deferred taxes will not be realized.

NOTE 9  DISCONTINUED OPERATIONS AND SALE OF FUSING AGENT AND TONER BUSINESS

On January 14, 2000, the Companys Board of Directors adopted a plan to sell
the Fusing Agent business and liquidate and discontinue the high speed printer
parts and equipment sales business. In January 2000, the Company sold its
fusing agent business including inventory and work in process on hand at the
suppliers plant in Chino, California and exclusive right to the Companys
fusing agent patent number 5,333,042 to the Bradshaw Group. Upon closing the
Company received $550,000 in cash for the sale. Accordingly,


F-16Table of Contents

CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

the Company wrote off the balance of the fusing agent patent in the amount of
$414,951. Profits and losses from the sale of the fusing agent business
including the write-offs of the patent and the deferred tax asset and
operations were included in discontinued operations in the year ended September
30, 2000.

In June 2000, the Company sold the parts and equipment inventory from its Los
Angeles warehouse. The Company closed the warehouse and all expense and profit
from the liquidation have been included in discontinued operations. The amount
paid to the Company for the assets was less than $10,000.

NOTE 10  SOFTWARE

On September 17 1999, the Company acquired the assets (the Camino Assets) of
Camino Software Systems, Inc. (Camino) for 468,000 shares of the Companys
common stock valued at $187,200 and assumed $315,172 of certain Camino
liabilities. The Camino Assets consisted of the name, Camino Software Systems,
Inc., the data storage management software, certain business contracts and
intangible personal property. The Company has allocated all amounts paid and
assumed in the amount of $502,372 to the cost of software. The software is
being amortized over seven years. Net book value of software at September 30,
2001 and 2000 is $358,833 and $430,605, respectively.

During the year ended September 30, 2001 an additional $54,726 has been
allocated to the software capital account relating to the Windows 2000 version
of the product. The software will be amortized over seven years. The net book
value for software at September 30, 2001 is $413,559 which includes the
original software purchase of the Camino Assets plus the additional
capitalization during the current year.

|                              |  |               |         |      |  |   |         | 
|----------------------------- |  | ------------- | ------- | ---- |  | - | ------- | 
|                              |  | September 30,
|                              |  |              
|                              |  | 2002          |         | 2000
|                              |  |               |         |     
|Software                      |  | $             | 557,098 |      |  | $ | 502,372 | 
|Less accumulated amortization |  |               | 143,539 |      |  |   | 71,767  | 
|                              |  |               |         |      |  |   |         | 
|                              |  | $             | 413,559 |      |  | $ | 430,605 | 
|                              |  |               |         |      |  |   |         | 

Software is amortized on a straight-line basis with an average useful life of 7
years.

NOTE 11  GAINS ON LEGAL AND INSURANCE SETTLEMENTS

During the year ended September 30, 2000, the Company received $950,000 in
settlement of its claim against defendants in an anti-trust action. This
amount is included in discontinued operations for the year ended September 30,
2000.
During the year ended September 30, 2000, the Company received $132,500 as an
insurance claim, which is included in miscellaneous income.



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##### Table of Contents



CAMINOSOFT CORP.
NOTES TO FINANCIAL STATEMENTS

During the year ended September 30, 2001, the Company received $462,000 in
settlement of its claim against a defendant in an anti-trust action. This
amount net of the associated legal fees of $161,510, are included in
discontinued operations for the year ended September 30, 2001.

NOTE 12  SUBSEQUENT EVENT

During November 2001, the Company completed a private placement of 1,250,000
shares of common stock for $1,500,000. As of the December 11, 2001, the
Company received the proceeds of $1,500,000. As part of the agreement for the
private placement of these common shares the Company has agreed to file a
registration statement covering the resale of all shares issued as part of
private placement within 120 days after the closing date.



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