##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ  December 31, 2007
  o
   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
   þ o
  o o þ o
   o þ




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##### 



CAM COMMERCE SOLUTIONS, INC.
 INDEX
 Page NumberPART I  Financial InformationItem 1
    
    Financial Statements:a) Condensed Balance Sheets at December 31, 2007 (Unaudited) and
September 30, 2007
    
    
    3b) Unaudited Condensed Statements of Income for the three
months ended December 31, 2007 and 2006
    
    
    4c) Unaudited Condensed Statements of Cash Flows for the
three months ended December 31, 2007 and 2006
    
    
    5d) Notes to Unaudited Condensed Financial Statements
    
    
    6-12Item 2
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    13-20Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4T
    
    Controls and Procedures
    
    
    21PART II  Other InformationItem 1
    
    Legal Proceedings
    
    
    22Item 1A
    
    Risk Factors
    
    
    22Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3
    
    Defaults Upon Senior Securities
    
    
    22Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    22Item 5
    
    Other Information
    
    
    22Item 6
    
    Exhibits
    
    
    22-23Signatures
    
    
    24EXHIBIT 31.(A)EXHIBIT 31.(B)EXHIBIT 32
  2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CAM COMMERCE SOLUTIONS, INC.
 
 CONDENSED BALANCE SHEETS
 (In thousands, except share and per share data)
 DECEMBER 31, 2007
    
    
    SEPTEMBER 30, 2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    23,110
    
    
    $
    22,047Marketable available-for-sale securities
    
    
    5,515
    
    
    
    6,388Accounts receivable, net
    
    
    2,884
    
    
    
    2,688Inventories
    
    
    419
    
    
    
    295Deferred income taxes
    
    
    404
    
    
    
    625Other current assets
    
    
    265
    
    
    
    182Total current assets
    
    
    32,597
    
    
    
    32,225Property and equipment, net
    
    
    791
    
    
    
    748Intangible assets, net
    
    
    517
    
    
    
    544Other assets
    
    
    60
    
    
    
    72Total assets
    
    $
    33,965
    
    
    $
    33,589LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    669
    
    
    $
    713Accrued compensation and related expenses
    
    
    1,668
    
    
    
    1,877Deferred service revenue and customer deposits
    
    
    1,631
    
    
    
    1,622Cash dividends payable
    
    
    1,235
    
    
    
    986Other accrued liabilities
    
    
    77
    
    
    
    372Total current liabilities
    
    
    5,280
    
    
    
    5,570Long term liabilities:Liability for uncertain tax positions
    
    
    414
    
    
    
    Total liabilities
    
    
    5,694
    
    
    
    5,570CommitmentsStockholders equity:Common stock, $0.001 par value; 12,000,000 shares authorized, 4,114,000 shares
issued
and outstanding at December 31, 2007
and 4,105,000 at September 30, 2007
    
    
    4
    
    
    
    4Capital in excess of par value
    
    
    23,910
    
    
    
    23,702Accumulated other comprehensive loss
    
    
    (3
    )
    
    
    (2
    )Retained earnings
    
    
    4,360
    
    
    
    4,315Total stockholders equity
    
    
    28,271
    
    
    
    28,019Total liabilities and stockholders equity
    
    $
    33,965
    
    
    $
    33,589
  3




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CAM COMMERCE SOLUTIONS, INC.
 
 UNAUDITED CONDENSED STATEMENTS OF INCOME
 (In thousands, except per share data)
 THREE MONTHS ENDEDDECEMBER 31, 2007
    
    
    DECEMBER 31, 2006REVENUESNet payment processing revenues
    
    $
    5,785
    
    
    $
    3,465Net hardware, software and installation revenues
    
    
    2,581
    
    
    
    2,285Net service revenues
    
    
    1,479
    
    
    
    1,422Total net revenues
    
    
    9,845
    
    
    
    7,172COSTS AND EXPENSESCost of payment processing revenues
    
    
    239
    
    
    
    130Cost of hardware, software and installation revenues (1)
    
    
    1,331
    
    
    
    1,184Cost of service revenues (1)
    
    
    671
    
    
    
    637Total cost of revenues
    
    
    2,241
    
    
    
    1,951Selling, general and administrative expenses (1) (2)
    
    
    4,767
    
    
    
    3,663Research and development expenses (1)
    
    
    464
    
    
    
    383Interest income
    
    
    (361
    )
    
    
    (305
    )Total costs and expenses
    
    
    7,111
    
    
    
    5,692Income before provision for income taxes
    
    
    2,734
    
    
    
    1,480Provision for income taxes
    
    
    1,040
    
    
    
    512Net income
    
    $
    1,694
    
    
    $
    968Basic net income per share
    
    $
    0.41
    
    
    $
    0.24Diluted net income per share
    
    $
    0.39
    
    
    $
    0.23Shares used in computing basic net income per share
    
    
    4,111
    
    
    
    3,980Shares used in computing diluted net income per share
    
    
    4,290
    
    
    
    4,191Cash dividends declared per common share
    
    $
    0.30
    
    
    $
    0.16(1) Includes share-based employee
compensation expense as follows:Cost of hardware, software and
installation revenues
    
    $
    3
    
    
    $
    3Cost of service revenues
    
    
    4
    
    
    
    5Selling, general and administrative expenses
    
    
    18
    
    
    
    23Research and development expenses
    
    
    4
    
    
    
    7
 (2)
  4




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CAM COMMERCE SOLUTIONS, INC.
 
 UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
 (In thousands)
 THREE MONTHS ENDEDDECEMBER 31, 2007
    
    
    DECEMBER 31, 2006Operating activities:Net income
    
    $
    1,694
    
    
    $
    968Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    162

    
    
    
    162Provision for doubtful accounts
    
    
    (4
    )
    
    
    Change in deferred income taxes
    
    
    1,040
    
    
    
    512Share-based compensation
    
    
    29
    
    
    
    38Excess tax benefits from share-based payment arrangements
    
    
    (111
    )
    
    
    (374
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (192
    )
    
    
    (247
    )Inventories
    
    
    (124
    )
    
    
    40Other assets
    
    
    (77
    )
    
    
    (68
    )Accounts payable
    
    
    (44
    )
    
    
    (94
    )Accrued compensation and related expenses
    
    
    (209
    )
    
    
    (247
    )Deferred service revenue and customer deposits
    
    
    9
    
    
    
    367Income taxes paid
    
    
    (1,017
    )
    
    
    (108
    )Other accrued liabilities
    
    
    20
    
    
    
    (52
    )Cash provided by operating activities
    
    
    1,176
    
    
    
    897Cash flows from investing activities:Purchase of property and equipment
    
    
    (127
    )
    
    
    (35
    )Capitalized software development costs
    
    
    (51
    )
    
    
    (75
    )Purchase of marketable securities
    
    
    (1,656
    )
    
    
    (1,008
    )Proceeds from maturity of marketable securities
    
    
    2,528
    
    
    
    1,370Cash provided by investing activities
    
    
    694
    
    
    
    252Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    68
    
    
    
    244Excess tax benefits from share-based payment arrangements
    
    
    111
    
    
    
    374Dividends paid on common stock
    
    
    (986
    )
    
    
    (594
    )Cash provided by (used in) financing activities
    
    
    (807
    )
    
    
    24Net increase in cash and cash equivalents
    
    
    1,063
    
    
    
    1,173Cash and cash equivalents at beginning of period
    
    
    22,047
    
    
    
    15,196Cash and cash equivalents at end of period
    
    $
    23,110
    
    
    $
    16,369
 See accompanying notes.
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CAM COMMERCE SOLUTIONS, INC.
 
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 DECEMBER 31, 2007
 (In thousands, except per share data)
 ORGANIZATION AND BUSINESS
  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Presentation of Condensed Financial Statements
  Cash Equivalents
  Marketable Securities
  Accounts Receivable and Allowance For Doubtful Accounts
   6




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CAM COMMERCE SOLUTIONS, INC.
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 DECEMBER 31, 2007
 (In thousands, except per share data)
 Concentrations of Credit Risk
  Inventories
  Comprehensive Income
  THREE MONTHS ENDEDDECEMBER 31, 2007
    
    
    DECEMBER 31, 2006Net income
    
    $
    1,694
    
    
    $
    968Unrealized
gain on marketable available-for- sale securities,
net of tax
    
    
    
    
    
    
    6Comprehensive income
    
    $
    1,694
    
    
    $
    974
 Revenue Recognition Policy
    7




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CAM COMMERCE SOLUTIONS, INC.
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 DECEMBER 31, 2007
 (In thousands, except per share data)
  Segments
  Recently Issued Accounting Announcements
    Intangible Assets
  8




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CAM COMMERCE SOLUTIONS, INC.
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 DECEMBER 31, 2007
 (In thousands, except per share data)
    Use of Estimates
  Advertising
  Shipping and Handling
  Net Income Per Share
  9




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CAM COMMERCE SOLUTIONS, INC.
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 DECEMBER 31, 2007
 (In thousands, except per share data)
  THREE MONTHS ENDEDDECEMBER 31, 2007
    
    
    DECEMBER 31, 2006Numerator:Net income for basic and diluted
net income per share
    
    $
    1,694
    
    
    $
    968Denominator:Weighted-average shares outstanding
    
    
    4,111
    
    
    
    3,980Denominator for basic net income
per share:Weighted-average shares
    
    
    4,111

    
    
    
    3,980Effect of dilutive securities:Stock options
    
    
    179
    
    
    
    211Denominator for diluted net income
per share:Weighted average shares and
assumed conversions
    
    
    4,290
    
    
    
    4,191Basic net income per share
    
    $
    0.41
    
    
    $
    0.24Diluted net income per share
    
    $
    0.39
    
    
    $
    0.23
 Dividends Declared
  Share-Based Compensation
   10




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CAM COMMERCE SOLUTIONS, INC.
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 DECEMBER 31, 2007
 (In thousands, except per share data)
 (
    WEIGHTEDWEIGHTED
    
    AVERAGENUMBER
    
    AVERAGE
    
    REMAINING
    
    AGGREGATEOF
    
    EXERCISE
    
    CONTRACTUAL
    
    INTRINSICOPTIONS
    
    PRICE
    
    TERM (IN YEARS)
    
    VALUEOptions outstanding
at December 31,
2007
    
    
    351
    
    
    $
    7.11
    
    
    
    4.2
    
    
    $
    12,148Options expected to
vest at December
31, 2007
    
    
    348
    
    
    $
    7.06
    
    
    
    4.2
    
    
    $
    12,068Options exercisable
at December 31,
2007
    
    
    342
    
    
    $
    6.96
    
    
    
    4.1
    
    
    $
    11,905
 Income Taxes
     11




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CAM COMMERCE SOLUTIONS, INC.
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 DECEMBER 31, 2007
 (In thousands, except per share data)
    12




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 (All dollar amounts in thousands)
 CAUTIONARY STATEMENT
   OVERVIEW
   OFF BALANCE SHEET ARRANGEMENTS
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  13




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CAM COMMERCE SOLUTIONS, INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (All dollar amounts in thousands)
   Revenue Recognition
   Receivables
   14




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CAM COMMERCE SOLUTIONS, INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (All dollar amounts in thousands)
 Capitalized Software
   Deferred Taxes
  Liability for Uncertain Tax Positions  FIN 48
  15




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CAM COMMERCE SOLUTIONS, INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (All dollar amounts in thousands)
 RESULTS OF OPERATIONS
  Three months ended December 31,
    
    
    
    
    
    Variance2007
    
    2006
    
    Amount
    
    %Net payment processing revenues
    
    $
    5,785
    
    
    $
    3,465
    
    
    $
    2,320
    
    
    
    67
    %Net hardware, software and installation revenues
    
    
    2,581
    
    
    
    2,285
    
    
    
    296
    
    
    
    13
    %Net service revenues
    
    
    1,479
    
    
    
    1,422
    
    
    
    57
    
    
    
    4
    %Total net revenues
    
    
    9,845
    
    
    
    7,172
    
    
    
    2,673
    
    
    
    37
    %Cost of payment processing revenues
    
    
    239
    
    
    
    130
    
    
    
    109
    
    
    
    84
    %Cost of hardware, software and installation revenues
    
    
    1,331
    
    
    
    1,184
    
    
    
    147
    
    
    
    12
    %Cost of service revenues
    
    
    671
    
    
    
    637
    
    
    
    34
    
    
    
    5
    %Total cost of revenues
    
    
    2,241
    
    
    
    1,951
    
    
    
    290
    
    
    
    15
    %Selling, general and administrative expenses
    
    
    4,767
    
    
    
    3,663
    
    
    
    1,104
    
    
    
    30
    %Research and development expenses
    
    
    464
    
    
    
    383
    
    
    
    81
    
    
    
    21
    %Interest income
    
    
    (361
    )
    
    
    (305
    )
    
    
    56
    
    
    
    18
    %Total costs and expenses
    
    
    7,111
    
    
    
    5,692
    
    
    
    1,419
    
    
    
    25
    %Income before provision for income taxes
    
    
    2,734
    
    
    
    1,480
    
    
    
    1,254
    
    
    
    85
    %Provision for income taxes
    
    
    1,040
    
    
    
    512
    
    
    
    528
    
    
    
    103
    %Net income
    
    $
    1,694
    
    
    $
    968
    
    
    $
    726
    
    
    
    75
    %Gross profit on net payment processing revenues
    
    $
    5,546
    
    
    $
    3,335
    
    
    $
    2,211
    
    
    
    66
    %Gross profit on net hardware, software and installation revenues
    
    
    1,250
    
    
    
    1,101
    
    
    
    149
    
    
    
    14
    %Gross profit on net service revenues
    
    
    808
    
    
    
    785
    
    
    
    23
    
    
    
    3
    %Total gross profit
    
    $
    7,604
    
    
    $
    5,221
    
    
    $
    2,383
    
    
    
    46
    %Gross margin on net payment processing revenues
    
    
    96
    %
    
    
    96
    %Gross margin on net hardware, software and installation revenues
    
    
    48
    %
    
    
    48
    %Gross margin on net service revenues
    
    
    55
    %
    
    
    55
    %Gross margin on total net revenues
    
    
    77
    %
    
    
    73
    %
 16




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CAM COMMERCE SOLUTIONS, INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (All dollar amounts in thousands, except in reference to the number of X-Charge accounts)
 Significant Trends
     Revenues
     Gross Margin
   17




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CAM COMMERCE SOLUTIONS, INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (All dollar amounts in thousands)
 Selling, General and Administrative Expenses
  Research and Development Expenses
  Income Taxes
  Net Income
  LIQUIDITY AND CAPITAL RESOURCES
   18




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CAM COMMERCE SOLUTIONS, INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (All dollar amounts in thousands)
   Inflation
  Contracts and Commitments
   PAYMENTS DUE BY PERIODTOTAL
    
    LESS THAN 1YEAR
    
    1-3 YEARS
    
    3-5YEARS
    
    MORE THAN 5YEARSLong-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital
lease obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    $
    4,218
    
    
    $
    572
    
    
    $
    1,687
    
    
    $
    1,043
    
    
    $
    916Purchase obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other
long-term obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 19




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CAM COMMERCE SOLUTIONS, INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (All dollar amounts in thousands)
 FORWARD LOOKING STATEMENTS
   20




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CAM COMMERCE SOLUTIONS, INC.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 (All dollar amounts in thousands)
  Interest Rate Risk
  Credit Risk
  Foreign Exchange Rate Risk
  
 ITEM 4T. CONTROLS AND PROCEDURES
  21




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PART II . OTHER INFORMATION
 
 Item 1
    
    Legal ProceedingsNone
 
 Item 1A
    
    Risk Factors
  
 Item 2
    
    Unregistered Sales of Equity Securities and Use of ProceedsNone
 
 Item 3
    
    Defaults upon Senior SecuritiesNone
 
 Item 4
    
    Submission of Matters to a Vote of Security HoldersNone
 
 Item 5
    
    Other InformationNone
 
 Item 6
    
    Exhibits
        22




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23




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SIGNATURES
  CAM COMMERCE SOLUTIONS, INC.
 Date: February 14, 2008
    By:
    /s/ Geoffrey D. KnappGeoffrey D. KnappChief Executive OfficerDate: February 14, 2008
    By:
    /s/ Paul Caceres Jr.Paul Caceres Jr.Chief Financial and
Accounting Officer 24




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EXHIBIT INDEX
 Exhibit No.
    
    Description3(a)
    
    Certification of Incorporation of the Company, as amended (incorporated by reference to
Exhibit 3(a) to the 1988 Annual Report on Form 10-K filed on January 12, 1989).3(b)
    
    Bylaws of the Company, as amended (incorporated by reference to Exhibit 3(b) to the Form 10-Q
for the period ended March 31, 2004, filed on May 13, 2004).10(a)
    
    1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8 Registration
Statement filed on June 21, 1993).10(b)
    
    Employment Agreement and Change in Control Agreement for Geoffrey D. Knapp, amended on
December 20, 2006, (incorporated by reference to the Form 8-K, filed on December 20, 2006).10(c)
    
    Employment Agreement and Change in Control Agreement for Paul Caceres, amended on December
20, 2006, (incorporated by reference to the Form 8-K, filed on December 20, 2006).10(d)
    
    Amendment to 1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8
Registration Statement filed on June 26, 1998, File No. 333-57907).10(e)
    
    2000 Stock Option Plan (incorporated by reference to Exhibit 10(i) to the 2000 Annual Report
on Form 10-K filed on December 21, 2000).10(f)
    
    Fountain Valley Office Lease Agreement (incorporated by reference to Exhibit 10(j) to the
2001 Annual Report on Form 10-K filed on December 20, 2001)10(g)
    
    Indemnification Agreements (incorporated by reference to Form 8-K, filed on November 18,
2004)10(h)
    
    Form of the Stock Option Agreement for the 2000 Plan (incorporated by reference to Exhibit
10(h) to the 2004 Annual Report on Form 10-K filed on December 21, 2004)10(i)
    
    Fountain Valley Office Lease Extension Agreement Letter, dated May 26, 2005 (incorporated by
reference to Exhibit 10(i) to the Form 10-Q filed on August 12, 2005)10(j)
    
    Henderson, Nevada Office Lease Agreement (incorporated by reference to the Form 8-K filed on
December 20, 2006)31(a)
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act31(b)
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act32
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
  25