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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2002

OR

(  ) Transition Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to


Commission file number 0-16569

CAM COMMERCE SOLUTIONS, INC.

(Exact name of registrant as specified in its Charter)

|                                                                                          |  |                                             
|----------------------------------------------------------------------------------------- |  | --------------------------------------------
|Delaware
(State or other jurisdiction
of incorporation or organization)                   |  | 95-3866450
(IRS Employer
Identification No.)
|                                                                                          |  |                                             
|17075 Newhope Street
Fountain Valley, California
(Address of principal
Executive offices) |  | 92708
(Zip code)                            

(714) 241-9241

(Registrants telephone number including area code)

Indicate by check mark whether the registrant (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  
  No  o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange
Act).Yes  o  No

As of December 31, 2002 there were 3,108,990 shares of common stock
outstanding.



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TABLE OF CONTENTS



|                              |                                                                                               |                                         |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Condensed Financial Statements                                                       
|                              |                                                                                               | CONDENSED BALANCE SHEETS               
|                              |                                                                                               | CONDENSED STATEMENTS OF OPERATIONS     
|                              |                                                                                               | CONDENSED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | NOTES TO CONDENSED FINANCIAL STATEMENTS
|                              | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|                              | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II  OTHER INFORMATION  
|SIGNATURES                   
|CERTIFICATION                
|CERTIFICATION                
|EXHIBIT INDEX                
|EXHIBIT 99.1                 



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CAM COMMERCE SOLUTIONS, INC.

INDEX

|                                                                                             |  |                                                                                            |  |     | 
|-------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | --- | 
|                                                                                             |  | Page Number                                                                               
|PART I Financial Information                                                                 |  |                                                                                            | 
|Item 1 Condensed Financial Statements:                                                       |  |                                                                                           
|                                                                                            |  | Condensed Balance Sheets at December 31, 2002 and September 30, 2002                       |  | 3   | 
|                                                                                            |  | Condensed Statements of Operations for the three months ended December 31, 2002 and 2001   |  | 4   | 
|                                                                                            |  | Condensed Statements of Cash Flows for the three months ended December 31, 2002 and 2001   |  | 5   | 
|                                                                                            |  | Notes to Condensed Financial Statements                                                    |  | 6-8 | 
|Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 9-14                                                                                       | 
|Item 4 Controls and Procedures                                                               |  | 15                                                                                         | 
|PART II Other Information                                                                    |  | 16                                                                                         | 
|                                                                                            |  | Signature Page                                                                             |  | 17  | 
|                                                                                            |  | Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act |  | 18  | 
|                                                                                            |  | Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act |  | 19  | 
|                                                                                            |  | Exhibit 99.1 (Certification Pursuant to the Sarbanes-Oxley Act of 2002)                    |  |     | 

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PART I. FINANCIAL INFORMATION




Item 1. Condensed Financial Statements


CAM COMMERCE SOLUTIONS, INC.




CONDENSED BALANCE SHEETS

|                                     |                                            |                                                                                                                                                  |                           |            |             | (Unaudited) |              |            |           |            | 
|------------------------------------ | ------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------- | ---------- | ----------- | ----------- | ------------ | ---------- | --------- | ---------- | 
|                                     |                                            |                                                                                                                                                  |                           |            | DECEMBER 31 |             | SEPTEMBER 30
|                                     |                                            |                                                                                                                                                  |                           |            | 2002        |             | 2002        
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |             
|ASSETS                               |                                            |                                                                                                                                                  |                           |            |             |             |              |           
|                                     | Current assets:                            |                                                                                                                                                  |                           |            |             |             |              |            |          
|                                     |                                            | Cash and cash equivalents                                                                                                                        |                           | $          | 9,414,000   |             |              | $          | 9,093,000 |           
|                                     |                                            | Marketable available-for-sale securities                                                                                                         |                           |            | 1,529,000   |             |              |            | 1,519,000 |           
|                                     |                                            | Accounts receivable, net                                                                                                                         |                           |            | 1,609,000   |             |              |            | 1,842,000 |           
|                                     |                                            | Inventories                                                                                                                                      |                           |            | 298,000     |             |              |            | 324,000   |           
|                                     |                                            | Other current assets                                                                                                                             |                           |            | 193,000     |             |              |            | 146,000   |           
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |              |            |           |           
|                                     |                                            |                                                                                                                                                  | Total current assets      |            |             | 13,043,000  |              |            |           | 12,924,000 | 
|                                     | Property and equipment, net                |                                                                                                                                                  |                           | 922,000    |             |             |              | 972,000    |          
|                                     | Intangible assets, net                     |                                                                                                                                                  |                           | 1,103,000  |             |             |              | 1,177,000  |          
|                                     | Other assets                               |                                                                                                                                                  |                           | 348,000    |             |             |              | 338,000    |          
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |              |            |           |           
|                                     | Total assets                               |                                                                                                                                                  | $                         | 15,416,000 |             |             | $            | 15,411,000 |          
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |              |            |           |           
|LIABILITIES AND STOCKHOLDERS EQUITY |                                            |                                                                                                                                                  |                           |            |             |             |              |           
|                                     | Current liabilities:                       |                                                                                                                                                  |                           |            |             |             |              |            |          
|                                     |                                            | Accounts payable                                                                                                                                 |                           | $          | 568,000     |             |              | $          | 563,000   |           
|                                     |                                            | Accrued compensation and related expenses                                                                                                        |                           |            | 606,000     |             |              |            | 547,000   |           
|                                     |                                            | Customer deposits and deferred revenue                                                                                                           |                           |            | 1,476,000   |             |              |            | 1,295,000 |           
|                                     |                                            | Other accrued liabilities                                                                                                                        |                           |            | 173,000     |             |              |            | 235,000   |           
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |              |            |           |           
|                                     |                                            |                                                                                                                                                  | Total current liabilities |            |             | 2,823,000   |              |            |           | 2,640,000  | 
|                                     | Long-term liabilities:                     |                                                                                                                                                  |                           |            |             |             |              |            |          
|                                     |                                            | Notes payables                                                                                                                                   |                           |            | 12,000      |             |              |            | 13,000    |           
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |              |            |           |           
|                                     |                                            | Total liabilities                                                                                                                                |                           |            | 2,835,000   |             |              |            | 2,653,000 |           
|                                     | Stockholders equity:                      |                                                                                                                                                  |                           |            |             |             |              |            |          
|                                     |                                            | Common stock, $.001 par value,
12,000,000 shares authorized, 3,109,000
shares issued and outstanding at
December 31, 2002 and September 30, 2002 |                           |            | 3,000       |             |              |            | 3,000     |           
|                                     | Paid-in capital                            |                                                                                                                                                  |                           | 13,886,000 |             |             |              | 13,886,000 |          
|                                     | Accumulated other comprehensive income     |                                                                                                                                                  |                           | 21,000     |             |             |              | 14,000     |          
|                                     | Retained deficit                           |                                                                                                                                                  |                           | (1,329,000 | )           |             |              | (1,145,000 | )        
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |              |            |           |           
|                                     | Total stockholders equity                 |                                                                                                                                                  |                           | 12,581,000 |             |             |              | 12,758,000 |          
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |              |            |           |           
|                                     | Total liabilities and stockholders equity |                                                                                                                                                  | $                         | 15,416,000 |             |             | $            | 15,411,000 |          
|                                     |                                            |                                                                                                                                                  |                           |            |             |             |              |            |           |           

See accompanying notes.

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CAM COMMERCE SOLUTIONS, INC.




CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

|                                                    |                                                      |                          |           |           |                    |   |             |           |           |  | 
|--------------------------------------------------- | ---------------------------------------------------- | ------------------------ | --------- | --------- | ------------------ | - | ----------- | --------- | --------- |  | 
|                                                    |                                                      |                          |           |           | THREE MONTHS ENDED
|                                                    |                                                      |                          |           |           |                   
|                                                    |                                                      |                          |           |           | DECEMBER 31        |   | DECEMBER 31
|                                                    |                                                      |                          |           |           | 2002               |   | 2001       
|                                                    |                                                      |                          |           |           |                    |   |            
|REVENUES                                            |                                                      |                          |           |           |                    |  
|                                                    | Net hardware, software and
 installation revenues    |                          | $         | 3,220,000 |                    |   | $           | 3,344,000 |          
|                                                    | Net service revenues                                 |                          |           | 1,660,000 |                    |   |             | 1,524,000 |          
|                                                    |                                                      |                          |           |           |                    |   |             |          
|                                                    |                                                      | Total net revenues       |           |           | 4,880,000          |   |             |           | 4,868,000 | 
|COSTS AND EXPENSES                                  |                                                      |                          |           |           |                    |  
|                                                    | Cost of hardware, software and
installation revenues |                          |           | 1,589,000 |                    |   |             | 1,849,000 |          
|                                                    | Cost of service revenues                             |                          |           | 521,000   |                    |   |             | 716,000   |          
|                                                    |                                                      |                          |           |           |                    |   |             |          
|                                                    |                                                      | Total cost of revenues   |           |           | 2,110,000          |   |             |           | 2,565,000 | 
|                                                    | Selling, general and administrative
expenses         |                          |           | 2,558,000 |                    |   |             | 2,387,000 |          
|                                                    | Research and development expenses                    |                          |           | 470,000   |                    |   |             | 492,000   |          
|                                                    | Interest income                                      |                          |           | (74,000   | )                  |   |             | (70,000   | )        
|                                                    |                                                      |                          |           |           |                    |   |             |          
|                                                    |                                                      | Total costs and expenses |           |           | 5,064,000          |   |             |           | 5,374,000 | 
|                                                    |                                                      |                          |           |           |                    |   |             |          
|Loss before income taxes                            |                                                      |                          | (184,000  | )         |                    |   | (506,000    | )        
|Income taxes                                        |                                                      |                          |          |           |                    |   |            |          
|                                                    |                                                      |                          |           |           |                    |   |             |          
|Net loss                                            |                                                      | $                        | (184,000  | )         |                    | $ | (506,000    | )        
|                                                    |                                                      |                          |           |           |                    |   |             |          
|Basic net loss per share                            |                                                      | $                        | (0.06     | )         |                    | $ | (0.17       | )        
|                                                    |                                                      |                          |           |           |                    |   |             |          
|Diluted net loss per share                          |                                                      | $                        | (0.06     | )         |                    | $ | (0.17       | )        
|                                                    |                                                      |                          |           |           |                    |   |             |          
|Shares used in computing basic
net loss per share   |                                                      |                          | 3,109,000 |           |                    |   | 3,025,000   |          
|Shares used in computing diluted
net loss per share |                                                      |                          | 3,109,000 |           |                    |   | 3,025,000   |          

See accompanying notes.

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CAM COMMERCE SOLUTIONS, INC.




CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

|                                                                                |                                                 |   |                    |         |             |   |           |          |  
|------------------------------------------------------------------------------- | ----------------------------------------------- | - | ------------------ | ------- | ----------- | - | --------- | -------- | -
|                                                                                |                                                 |   | THREE MONTHS ENDED
|                                                                                |                                                 |   |                   
|                                                                                |                                                 |   | DECEMBER 31        |         | DECEMBER 31
|                                                                                |                                                 |   | 2002               |         | 2001       
|                                                                                |                                                 |   |                    |         |            
|Operating activities:                                                           |                                                 |   |                    |         |             |   |           |         
|Net loss                                                                        |                                                 | $ | (184,000           | )       |             | $ | (506,000  | )       
|Adjustments to reconcile net loss to net
cash provided by (used in) operations: |                                                 |   |                    |         |             |   |           |         
|                                                                                | Depreciation and amortization                   |   |                    | 273,000 |             |   |           | 264,000  |  
|                                                                                | Provision for doubtful accounts                 |   |                    | 50,000  |             |   |           |         |  
|                                                                                | Net changes in operating assets and liabilities |   |                    | 331,000 |             |   |           | 566,000  |  
|                                                                                |                                                 |   |                    |         |             |   |           |         
|Net cash provided by operations                                                 |                                                 |   | 470,000            |         |             |   | 324,000   |         
|Investing activities:                                                           |                                                 |   |                    |         |             |   |           |         
|                                                                                | Purchase of property, plant and equipment       |   |                    | (77,000 | )           |   |           | (46,000  | )
|                                                                                | Business acquisition                            |   |                    |        |             |   |           | (156,000 | )
|                                                                                | Capitalized software                            |   |                    | (72,000 | )           |   |           | (93,000  | )
|                                                                                |                                                 |   |                    |         |             |   |           |         
|Cash used in investing activities                                               |                                                 |   | (149,000           | )       |             |   | (295,000  | )       
|Financing activities:                                                           |                                                 |   |                    |         |             |   |           |         
|                                                                                | Proceeds from exercise of stock options         |   |                    |        |             |   |           | 101,000  |  
|                                                                                |                                                 |   |                    |         |             |   |           |         
|Cash provided by financing activities                                           |                                                 |   |                   |         |             |   | 101,000   |         
|                                                                                |                                                 |   |                    |         |             |   |           |         
|Net increase in cash and cash
equivalents                                       |                                                 |   | 321,000            |         |             |   | 130,000   |         
|Cash and cash equivalents at beginning of period                                |                                                 |   | 9,093,000          |         |             |   | 9,451,000 |         
|                                                                                |                                                 |   |                    |         |             |   |           |         
|Cash and cash equivalents at end of period                                      |                                                 | $ | 9,414,000          |         |             | $ | 9,581,000 |         
|                                                                                |                                                 |   |                    |         |             |   |           |         

See accompanying notes.

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CAM COMMERCE SOLUTIONS, INC.




NOTES TO CONDENSED FINANCIAL STATEMENTS

DECEMBER 31, 2002

(Unaudited)

ORGANIZATION AND BUSINESS

CAM Commerce Solutions Inc., (the Company), was incorporated in California in
1983, and reincorporated in Delaware in 1987. The Companys principal business
is to provide total commerce solutions for small-to-medium size, traditional
and Web retailers. These solutions are based on the Companys open
architecture software products for managing inventory, point of sale, sales
transaction processing and accounting. In addition to software, these
solutions often include hardware, installation, training, service and credit
card processing services provided by the Company. Sales, service, research,
and development are located in California and Nevada, while the Companys
customers are located throughout the United States.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of Condensed Financial Statements

The accompanying financial statements of the Company for the three months ended
December 31, 2002 and 2001 are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such financial statements have
been included. Such adjustments consisted only of normal recurring items.
Interim results are not necessarily indicative of results for a full year. The
condensed financial statements and notes are presented as permitted by Form
10-Q and, therefore, should be read in conjunction with the Companys annual
report on Form 10-K for the year ended September 30, 2002.

Cash Equivalents

Cash equivalents represent highly liquid investments with original maturities
of three months or less.

Marketable Securities

All investment securities are considered to be available-for-sale and are
carried at fair value. Management determines classification at the time of
purchase and reevaluates its appropriateness at each balance sheet date. The
Companys marketable securities at December 31, 2002 consist of debt
instruments that bear interest at various rates. The Company had no marketable
securities in the three month period ended December 31, 2001. The gross
unrealized gains on securities available-for-sale at December 31, 2002 were
$21,000. There were no realized gains (losses) for the three month period
ended December 31, 2002.

Concentrations of Credit Risk

The Company sells its products primarily to small-to-medium size retailers.
Credit is extended based on an evaluation of the customers financial
condition, and collateral is generally not required. Credit losses have
traditionally been minimal and such losses have been within managements
expectations.

Inventories

Inventories are stated at the lower of cost or market determined on a first-in,
first-out basis, or net realizable value. Inventories are composed of
electronic point of sale hardware and computer equipment used in the sale and
service of the Companys products.

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CAM COMMERCE SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

DECEMBER 31, 2002

(Unaudited)

Statements of Cash Flows

Net changes in operating assets and liabilities as shown in the condensed
statements of cash flows are as follows:

|                                                |                                           |   |                    |         |             |   |         |          |  
|----------------------------------------------- | ----------------------------------------- | - | ------------------ | ------- | ----------- | - | ------- | -------- | -
|                                                |                                           |   | THREE MONTHS ENDED
|                                                |                                           |   |                   
|                                                |                                           |   | DECEMBER 31        |         | DECEMBER 31
|                                                |                                           |   | 2002               |         | 2001       
|                                                |                                           |   |                    |         |            
|(Increase) decrease in:                         |                                           |   |                    |         |             |   |         |         
|                                                | Accounts receivable                       |   | $                  | 183,000 |             |   | $       | 707,000  |  
|                                                | Inventories                               |   |                    | 26,000  |             |   |         | 74,000   |  
|                                                | Other current assets                      |   |                    | (60,000 | )           |   |         | (99,000  | )
|Increase (decrease) in:                         |                                           |   |                    |         |             |   |         |         
|                                                | Accounts payable                          |   |                    | 5,000   |             |   |         | (187,000 | )
|                                                | Accrued compensation and related expenses |   |                    | 59,000  |             |   |         | (18,000  | )
|                                                | Customer deposits and deferred revenue    |   |                    | 181,000 |             |   |         | 153,000  |  
|                                                | Other accrued liabilities                 |   |                    | (63,000 | )           |   |         | (64,000  | )
|                                                |                                           |   |                    |         |             |   |         |          |  
|Net changes in operating assets and liabilities |                                           | $ | 331,000            |         |             | $ | 566,000 |         
|                                                |                                           |   |                    |         |             |   |         |          |  

Income taxes paid during the three months ended December 31, 2002 and 2001 were
$11,000 and $5,000, respectively. There was no interest expense paid in the
first three months of fiscal 2003 or 2002.

Revenue Recognition Policy

The Company derives revenue from the sale of computer hardware, computer
software, post contract customer support (PCS), installation and credit card
processing services. System revenue from hardware and software sales is
recognized at the time of shipment. Service revenue allocable to PCS is
recognized ratably on a monthly basis over the period of the service contract.
Credit card processing revenue is recognized in the period the service is
performed. The Company defers and recognizes installation revenue upon
completion of the installation process.

Intangible Assets

The Company capitalizes costs incurred to develop new marketable software and
enhance the Companys existing systems software. Costs incurred in creating
the software are charged to expense when incurred as research and development
until technological feasibility has been established through the development of
a detailed program design. Once technological feasibility has been
established, software production costs are capitalized and reported at the
lower of amortized cost or net realizable value.

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CAM COMMERCE SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

DECEMBER 31, 2002

(Unaudited)

Reclassifications

Certain reclassifications have been made to the 2002 financial statements to
conform to the fiscal 2003 presentation.

Use of Estimates

The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and reported amounts of net
revenue and expenses during the reporting period. The Company regularly
evaluates estimates and assumptions related to allowances for doubtful
accounts, goodwill and intangible asset valuations, deferred income tax asset
valuation allowances, and other contingencies. The estimates and assumptions
are based on historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. To the extent
there are material differences between our estimates and the actual results,
our future results of operations will be affected.

Net Loss Per Share

Basic net loss per share is based upon the weighted average number of common
shares outstanding for each period presented. Diluted net loss per share is
based upon the weighted average number of common shares and common equivalent
shares outstanding for each period presented. Common equivalent shares include
stock options and warrants assuming conversion under the treasury stock method.
Common equivalent shares are excluded from diluted loss per share if their
effect is anti-dilutive. There are 1,069,000 options and 350,000 warrants
outstanding at December 31, 2002 that were excluded from the computation
because their effect is anti-dilutive. The computation of basic and diluted
net loss per share for the three month periods ended December 31, 2002 and 2001
is as follows:

|                                                  |                                                 |   |                    |           |             |   |           |           | 
|------------------------------------------------- | ----------------------------------------------- | - | ------------------ | --------- | ----------- | - | --------- | --------- | 
|                                                  |                                                 |   | THREE MONTHS ENDED
|                                                  |                                                 |   |                   
|                                                  |                                                 |   | DECEMBER 31        |           | DECEMBER 31
|                                                  |                                                 |   | 2002               |           | 2001       
|                                                  |                                                 |   |                    |           |             |   |           |          
|Numerator:                                        |                                                 |   |                    |           |             |   |           |          
|Net loss for basic and diluted net loss per share |                                                 | $ | (184,000           | )         |             | $ | (506,000  | )        
|                                                  |                                                 |   |                    |           |             |   |           |          
|Denominator:                                      |                                                 |   |                    |           |             |   |           |          
|Weighted-average shares outstanding               |                                                 |   | 3,109,000          |           |             |   | 3,025,000 |          
|                                                  |                                                 |   |                    |           |             |   |           |          
|Denominator for basic net loss per share:         |                                                 |   |                    |           |             |   |           |          
|                                                  | Weighted-average shares                         |   |                    | 3,109,000 |             |   |           | 3,025,000 | 
|Effect of dilutive securities:                    |                                                 |   |                    |           |             |   |           |          
|Stock options                                     |                                                 |   |                   |           |             |   |          |          
|                                                  |                                                 |   |                    |           |             |   |           |          
|Denominator for diluted net loss per share:       |                                                 |   |                    |           |             |   |           |          
|                                                  | Weighted average shares and assumed conversions |   |                    | 3,109,000 |             |   |           | 3,025,000 | 
|                                                  |                                                 |   |                    |           |             |   |           |          
|Basic net loss per share                          |                                                 | $ | (0.06              | )         |             | $ | (0.17     | )        
|                                                  |                                                 |   |                    |           |             |   |           |          
|Diluted net loss per share                        |                                                 | $ | (0.06              | )         |             | $ | (0.17     | )        
|                                                  |                                                 |   |                    |           |             |   |           |          

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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations

CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Three Months Ended December 31, 2002, as Compared to

Three Months Ended December 31, 2001

CAUTIONARY STATEMENT

You should read the following discussion and analysis with our Unaudited
Condensed Financial Statements and related Notes thereto contained elsewhere in
this Report. The Company urges you to carefully review and consider the various
disclosures made in this report and in our other reports filed with the
Securities and Exchange Commission.

The section entitled Risk Factors set forth below, and similar discussions in
the Companys other SEC filings, discuss some of the important risk factors
that may affect the business, results of operations and financial condition.
You should carefully consider those risks, in addition to the other information
in this Report and in our other filings with the SEC, before deciding to
purchase, hold or sell our common stock.

RESULTS OF OPERATIONS

Net revenuesfor the three months ended December 31, 2002 was flat at $4.9
million, consisting of a 4% decrease in system revenues and a 9% increase in
service revenues compared to the same period for fiscal 2002. The decrease in
system revenues compared to the three months ended December 31, 2001 was due to
a decrease in new system sales. The increase in service revenues in the three
months ended December 31, 2002 was related to an increase in X-Charge credit
card processing revenue.

Gross marginfor the three months ended December 31, 2002 was 57% compared to
47% for the three months ended December 31, 2001. Gross margin on system
revenues increased to 51% for the three months ended December 31, 2002 compared
to 45% for the three months ended December 31, 2001. The increase in margin on
system sales was a result of less price discounting and lower installation
costs for the three months ended December 31, 2002. Gross margin for service
revenue was 69% for the three months ended December 31, 2002 compared to 53%
for the three months ended December 31, 2001. The increase in gross margin for
service revenue was related to the X-Charge recurring credit card processing
revenue, which yielded higher margins due to lower costs to produce this
revenue.

Selling, general and administrative expensesexpressed as a percentage of net
revenues increased for the three month period ended December 31, 2002 to 52%,
compared to 49% for the three month period ended December 31, 2001. Selling,
general and administrative expenses for the three months ended December 31,
2002, increased 7% to $2.6 million as compared to $2.4 million for the three
months ended December 31, 2001. The increase in selling, general and
administrative expenses resulted from the increases in commission expense, rent
expense, medical insurance costs and legal expense.

Research and development expensesfor the three month period ended December 31,
2002 decreased 4% to $470,000 compared to $492,000 for the same period ended
December 31, 2001. The decrease was related to lower payroll expense.

Income taxes,there was no provision for income taxes based on the loss for the
three months ended December 31, 2002.

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CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

LIQUIDITY AND CAPITAL RESOURCES

The Companys cash and cash equivalents plus marketable securities totaled
$10.9 million on December 31, 2002, compared to $10.6 million on September 30,
2002. The Company generated $470,000 from operations and expended $149,000 for
fixed assets and capitalized software development during the three months ended
December 31, 2002, compared to $324,000 generated from operations, $139,000
expended for fixed assets and capitalized software development, $156,000 used
for a business acquisition, and $101,000 received from the exercise of stock
options during the three months ended December 31, 2001.

The Company has no significant commitments for expenditures. Management
believes the Companys existing working capital, coupled with funds generated
from the Companys operations will be sufficient to fund its presently
anticipated working capital requirements for the foreseeable
future.
Inflation has had no significant impact on the Companys operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and reported amounts of net
revenue and expenses during the reporting period. The Company regularly
evaluates estimates and assumptions related to allowances for doubtful
accounts, goodwill and intangible asset valuations, deferred income tax asset
valuation allowances, and other contingencies. The estimates and assumptions
are based on historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. To the extent
there are material differences between our estimates and the actual results,
our future results of operations will be affected.

We believe the following critical accounting policies require the Company to
make significant judgments and estimates in the preparation of the financial
statements:

Revenue, Receivables and Inventory

The Company derives revenue from the sale of computer hardware, computer
software, post contract customer support, and installation services. System
revenue from hardware and software sales is recognized at the time of shipment.
Service revenue related to post contract customer support is recognized on a
monthly basis over the period of the service contract. Revenue from
installation services is recognized in the period installation services are
performed. An allowance for doubtful accounts is maintained for estimated
losses resulting from the inability of customers to make required payments. If
the financial condition of the Companys customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances could be required. The Company writes down inventory for estimated
obsolescence equal to the difference between the cost of inventory and the
estimated realizable value based upon assumptions about future demand and
market conditions. If actual market conditions are less favorable than those
projected by management, additional inventory write-downs could be required.

Goodwill and Purchased Intangible Assets

The purchase method of accounting for acquisitions requires extensive use of
accounting estimates and judgments to allocate the purchase price to the fair
value of the net tangible and intangible assets acquired.

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CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Goodwill and intangible assets deemed to have indefinite lives are no longer
amortized but are subject to annual impairment tests. The amounts and useful
lives assigned to intangible assets impact future
amortization. If the assumption and estimates used to allocate the purchase
price are not correct, purchase price adjustments or future asset impairment
charges could be required.

Impairment of Goodwill and Other intangible Assets

The value of our intangible assets could be impacted by future adverse changes
such as (i) any future declines in our operating results, (ii) any failure to
meet our future performance projections (iii) an increase in severity of the
recent economic slowdown. The Company evaluates these assets used in operations
on an annual basis or more frequently if indicators of impairment exist. An
annual impairment review will be performed during the fourth quarter of each
year or more frequently if indicators of impairment exist. In the process of
the annual impairment review, the Company will use the income approach
methodology of valuation that includes the discounted cash flow method as well
as other generally accepted valuation methodologies to determine the fair value
of our assets. Significant management judgment is required in the forecast of
future operating results that are used in the discounted cash flow method of
valuation. The estimates used are consistent with the plans and estimates that
the Company uses to manage the business. It is reasonably possible, however,
that certain of our products will not gain or maintain market acceptance, which
could result in estimates of anticipated future net revenue differing
materially from those used to assess the recoverability of these assets. In
that event, revenue and costs forecasts would not be achieved, and the Company
could incur additional impairment charges.

FORWARD LOOKING STATEMENTS

All statements included or incorporated by reference in this Report, other than
statements of historical fact, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Examples of
forward-looking statements include, but are not limited to, statements
concerning projected revenue, expenses, gross profit, gross margin and income,
our accounting estimates, assumptions and judgments, the impact of our adoption
of new rules on accounting for goodwill and other intangible assets, the
effectiveness of our expense and cost control and reduction efforts, the market
acceptance and performance of our products, implications of our lengthy sales
cycle, the competitive nature in our markets, and our future capital
requirements. These forward-looking statements are based on our current
expectation, estimates and projections about our industry, managements
beliefs, and certain assumptions made by us. Forward looking statements can
often be identified by words such as anticipates, expects, intends,
plans, predicts, believes, seeks, estimates, may, will, should,
would, potential, continue, feels, outlook, forecast, similar
expressions, and variations or negatives of these words. In addition, any
statements that refer to expectations, projections or other characterizations
of future events or circumstances, including any underlying assumptions, are
forward-looking statements. These statements speak only as of the date of this
Report and are based upon the information available to us at this time. Such
information is subject to change, and we will not necessarily inform you of
such changes. These statements are not guarantees of future performance and
are subject to risks, uncertainties and assumptions that are difficult to
predict. Therefore, our actual results could differ materially and adversely
from those expressed in any forward looking statements as a result of various
factors, some of which are set forth in Risk Factors, below. We undertake no
obligation to revise or update publicly any forward-looking statement for any
reason.

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CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

RISK FACTORS

Before deciding to buy, hold or sell our common stock, you should carefully
consider the risks described below, in addition to the other information
contained in its Report and in our other filings with the SEC, including the
Companys subsequent reports on Forms 10-Q and 8-K. The risks and uncertainties
described below are not the only ones facing the Company. Additional risks and
uncertainties not presently known or that are currently deemed immaterial may
also affect the business. If any of these known or unknown risks or
uncertainties actually occur with material adverse effects on CAM Commerce
Solutions, our business,
financial condition and results of operations could be seriously harmed. In
that event, the market price for our common stock could decline and you may
lose all or part of your investment.



| |  |  | The Company faces intense competition in the retail point of sale
industry, which could reduce our market share.
| | - |  | ----------------------------------------------------------------------------------------------------------------

In 2002, Intuit and Microsoft entered the point of sale market with competing
products. These products were either acquired or licensed from existing
competitors in the Companys marketplace. The Company has successfully competed
against these products in the past. The Company believes their software
products with their rich feature set will allow them to compete successfully
against the Intuit and Microsoft products, but there is no assurance of this
based on the significant financial resources available to Intuit and Microsoft
and their strong ability to market and modify their products.



| |  |  | The Companys future success of X-Charge depends significantly on a
strategic relationship with one credit card processor. If we cannot
maintain this relationship, our operating results will be adversely
affected.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

X-Charge is a payment processing software that is integrated with the Companys
point of sale software. X-Charge generates revenues for the Company based on
sales transaction payment processing services provided to our customers.
X-Charge is currently dedicated to work with only one payment processor. The
Company intends to continue this strategic relationship in the future, but
cannot assure such continuance. If this strategic relationship were
discontinued, the Company would be required to find another strategic
relationship with an alternate payment processor. This would require the
Company to develop payment processing software similar to X-Charge to interface
with another payment processor. Delays in development of this software could
result in a decrease in revenues related to payment processing services. If
that happens, the Companys financial condition and results of operations could
be materially and adversely affected.



| |  |  | The Company is exposed to the continuing United States economic
slowdown and related uncertainties that may adversely impact revenues
and profitability.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

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CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Slower economic activity, decreased consumer confidence, reduced corporate
profits and capital spending, adverse business conditions in the retail and
related industries, and terrorist activity from the September 11, 2001 incident
have resulted in a continuing downturn in the economic conditions of the United
States. As a result of these unfavorable economic conditions, beginning in the
first half of fiscal year 2002 the Company experienced a slowdown in customer
orders. The Company cannot predict the timing, strength and duration of any
economic recovery that would impact the retail industry. If such economic
conditions continue or worsen, our business, financial condition and results of
operations will likely be materially and adversely affected.



| |  |  | The Companys operating results may fluctuate significantly due to
the intense competitive pressures on our target customers. Any such
variations could adversely affect the market price of the Companys
common stock.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company operates in the retail industry. Our target customers are the
small to medium size retailers. These target customers are under intense
competitive pressure from large retail chains such as Wal-Mart and others.
These large retailers are gaining market share at the expense of our target
customers and each other. This intense competition causes some small retailers
to go out of business, and others to consolidate with other small regional
retail chains. This results in a shrinking population of our target customers.
This also causes our target customers to be more cautious about capital
spending for their retail business. These factors can cause substantial
fluctuations in our revenues and in our results of operations. This current
trend in the retail industry may exist indefinitely and could seriously impact
our revenue and harm our business, financial condition and results of
operations. Our quarterly results may vary significantly as a result of the
general conditions in the retail industry, which could cause our stock price to
decline.

Due to all of the foregoing factors, and the other risks discussed in this
Report, you should not rely on quarter to quarter comparisons of the Companys
operating results as an indication of future performance.



| |  |  | The Companys stock is thinly traded. Accordingly, you may not be
able to resell your shares of common stock at or above the price your
paid for them.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

The Companys common stock is thinly traded with a low trading volume of shares
per day over the past year. This thin trading volume may continue to occur in
response to various factors, many of which cannot be controlled by the Company,
including:

- quarter to quarter variations in operating results;
- general economic conditions;
- changes in investor perceptions;
- changes in accounting rules;
- changes in competitors products and market share



| |  |  | The Companys California facility which houses the customer support
center, is located in the region that is subject to earthquakes and
other natural disasters.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

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CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

The Companys California facility, including principal executive offices,
system integration and customer support center is located near major earthquake
fault lines. If there is a major earthquake or any other natural disaster in
the region, it could significantly disrupt our operations. This disruption
could result in reduced revenues. If that happens, the Companys financial
condition and results of operations could be materially and adversely affected.



| |  |  | The Companys quarterly operating results may fluctuate
significantly. As a result, the expectations of the investor community
may not be met, which could cause our stock price to decline.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Companys quarterly net revenue and operating results have fluctuated
significantly in the past and are likely to continue to vary from quarter to
quarter due to a number of factors, many of which are not within control of the
Company. If operating results do not meet the expectations of the investment
community, our stock price may decline. Fluctuations in operating results may
be due to a number of factors, including the following, as well as the impact
of the other factors identified in this Risk Factors section:



| |  | - | economic and market conditions in the retail industry, including
the effects of the current significant economic slowdown;                                 
| |  | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | - | acts of terrorism in the United States;                                                                                                                    
| |  | - | the volume of our system sales and price discounting;                                                                                                      
| |  | - | the availability and pricing of competing products and the resulting effects on sales;                                                                     
| |  | - | the effectiveness of expense and cost control efforts;                                                                                                     
| |  | - | the ability to develop and deliver software products to market in a timely manner;                                                                         
| |  | - | the rate at which present and future customers adopt the Companys
new products and services in our target markets;                                        
| |  | - | the effects of new and emerging technologies;                                                                                                              
| |  | - | the various risks inherent in our acquisitions of technologies and businesses;                                                                             
| |  | - | the ability to retain and hire key executives, management,
technical personnel and other employees that are needed to implement
business and product plans;
| |  | - | the ability to compete against much larger competitors with
significantly larger financial resources than the Company;                                     
| |  | - | the level of orders received that can be shipped in a fiscal
quarter;                                                                                      

A large portion of the Companys operating expenses including salaries, rent
and operating expenditures are fixed and difficult to reduce or change.
Accordingly, if our revenue does not meet our expectations, we probably would
not be able to adjust our expenses quickly enough to compensate for the
shortfall in revenue. In that event, the business, financial condition and
results of operations would be materially and adversely affected.

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ITEM 4.  CONTROLS AND PROCEDURES

As of a date within 90 days of the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934,
as amended. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that, our disclosure controls and procedures are
effective in timely alerting them to material information relating to us that
is required to be included in our SEC filings. There have been no significant
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date we carried out our evaluation.

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CAM COMMERCE SOLUTIONS, INC.




PART II  OTHER INFORMATION

|                        |  |                                                                        
|----------------------- |  | -----------------------------------------------------------------------
|Items 1 - 5             |  | Not Applicable                                                         
|                        |  |                                                                        
|Item 6                  |  | Exhibits and Reports on Form 8-K                                       
|                        |  |                                                                        
|(A) Exhibits:           |  | Exhibit 99.1 (Certification Pursuant to
the Sarbanes-Oxley Act of 2002)
|                        |  |                                                                        
|(B) Reports on Form 8-K |  | None                                                                   

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SIGNATURES

Pursuant to the requirements 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.

CAM COMMERCE SOLUTIONS, INC.(Registrant)

| |       |                   |  |                                                         |                      
| | ----- | ----------------- |  | ------------------------------------------------------- | ---------------------
| | Date: | February 12, 2003 |  | By                                                      | /s/ Geoffrey D.
Knapp
| |       |                   |  |                                                         |                      
| |       |                   |  | Geoffrey D. Knapp
Chief Executive Officer              
| |       |                   |  |                                                         |                      
| |       |                   |  |                                                         |                      
| | Date: | February 12, 2003 |  | By                                                      | /s/ Paul Caceres Jr. 
| |       |                   |  |                                                         |                      
| |       |                   |  | Paul
Caceres Jr.
Chief Financial and Accounting Officer

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CERTIFICATION

I, Geoffrey D. Knapp, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of CAM Commerce
Solutions, Inc;

2.     Based on my knowledge, this Quarterly Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this Quarterly
Report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this Quarterly Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Quarterly Report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this Quarterly Report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
Quarterly Report (the Evaluation Date); and

c) presented in this Quarterly Report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officer and I have indicated in this
Quarterly Report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: February 12, 2003

| |     |                                          
| | --- | -----------------------------------------
| | By: | /s/Geoffrey D. Knapp                     
| |     |                                          
| |     | Geoffrey D. Knapp
Chief Executive Officer

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CERTIFICATION

I, Paul Caceres, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of CAM Commerce
Solutions, Inc;

2.     Based on my knowledge, this Quarterly Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this Quarterly
Report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this Quarterly Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Quarterly Report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this Quarterly Report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
Quarterly Report (the Evaluation Date); and

c) presented in this Quarterly Report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officer and I have indicated in this
Quarterly Report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: February 12, 2003

| |     |                                                                  
| | --- | -----------------------------------------------------------------
| | By: | /s/Paul Caceres                                                  
| |     |                                                                  
| |     | Paul Caceres
Chief Financial Officer and
Chief Accounting Officer

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EXHIBIT INDEX

|        |  |                                                          
|------- |  | ---------------------------------------------------------
|Exhibit |  | Description                                              
|        |  |                                                          
|99.1    |  | Certification Pursuant to the Sarbanes-Oxley Act of 2002.