##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(X) Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2003

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes  (   )     No  (X)

As of August 11, 2003 there were 3,208,470 shares of common stock outstanding.

1



---

TABLE OF CONTENTS



|                              |                                                                                               |                                         |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. 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  
|                              | Item 1 Legal Proceedings                                                                     
|                              | Item 2 Changes in Securities                                                                 
|                              | Item 3 Defaults upon Senior Securities                                                       
|                              | Item 4 Submission of Matters to a Vote of Security Holders                                   
|                              | Item 5 Other Information                                                                     
|                              | Item 6 Exhibits and Reports on Form 8-K                                                      
|SIGNATURES                   
|EXHIBIT INDEX                
|EXHIBIT 31.1                 
|EXHIBIT 31.2                 
|EXHIBIT 32                   



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

INDEX

|                              |  |           |    |                                                                                       |  |                                                                                                       |       |  |      |  |  | 
|----------------------------- |  | --------- | -- | ------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------- | ----- |  | ---- |  |  | 
|PART I  Financial Information |  |           |    |                                                                                      
|                              |  | Item 1    |    | Financial Statements:                                                                 |  | Page Number                                                                                          
|                              |  |           |    |                                                                                       |  | a)   Condensed Balance Sheets at
June 30, 2003 (unaudited) and September 30, 2002                     |       |  | 3    | 
|                              |  |           |    |                                                                                       |  | b)   Condensed Statements of
Operations for the three
months ended June 30, 2003 and 2002 (unaudited) |       |  | 4    | 
|                              |  |           |    |                                                                                       |  | c)   Condensed Statements of
Operations for the nine
months ended June 30, 2003 and 2002 (unaudited)  |       |  | 5    | 
|                              |  |           |    |                                                                                       |  | d)   Condensed Statements of Cash Flows
for the nine months ended June 30, 2003 and 2002 (unaudited)  |       |  | 6    | 
|                              |  |           |    |                                                                                       |  | e)   Notes to Condensed Financial
Statements (unaudited)                                              |       |  | 7-10 | 
|                              |  | Item 2    |    | Management's Discussion and
Analysis of Financial Condition and Results of Operations |  |                                                                                                       | 11-15 | 
|                              |  | Item 3    |    | Not Applicable                                                                        |  |                                                                                                       |       | 
|                              |  | Item 4    |    | Controls and Procedures                                                               |  |                                                                                                       | 16    | 
|PART II  Other Information    |  |           |    |                                                                                      
|                              |  | Items 1-3 |    | Not Applicable                                                                        |  |                                                                                                       | 17    | 
|                              |  | Item 4    |    | Submission of Matters to a Vote of Security Holders                                   |  |                                                                                                       | 17    | 
|                              |  | Item 5    |    | Not Applicable                                                                        |  |                                                                                                       | 17    | 
|                              |  | Item 6    |    | Exhibits and Reports on Form 8-K                                                      |  |                                                                                                       | 17    | 
|Signature Page                |  |           | 18 |                                                                                      

2



---



##### Table of Contents









PART I. FINANCIAL INFORMATION
Item 1. Financial Statements




CAM COMMERCE SOLUTIONS, INC.

CONDENSED BALANCE SHEETS

|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |              |           |            |  | 
|------------------------------------ | ------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ---------- | --------- | ----------- | - | ------------ | --------- | ---------- |  | 
|                                     |                                            |                                                                                                                                                           |                           |            |           | JUNE 30     |   | SEPTEMBER 30
|                                     |                                            |                                                                                                                                                           |                           |            |           | 2003        |   | 2002        
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     |                                            |                                                                                                                                                           |                           |            |           | (Unaudited) |   |              |           |           
|ASSETS                               |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     | Current assets:                            |                                                                                                                                                           |                           |            |           |             |   |              |          
|                                     |                                            | Cash and cash equivalents                                                                                                                                 |                           | $          | 9,553,000 |             |   | $            | 9,093,000 |           
|                                     |                                            | Marketable available-for-sale securities                                                                                                                  |                           |            | 1,543,000 |             |   |              | 1,519,000 |           
|                                     |                                            | Accounts receivable, net                                                                                                                                  |                           |            | 1,657,000 |             |   |              | 1,842,000 |           
|                                     |                                            | Inventories                                                                                                                                               |                           |            | 315,000   |             |   |              | 324,000   |           
|                                     |                                            | Other current assets                                                                                                                                      |                           |            | 116,000   |             |   |              | 146,000   |           
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     |                                            |                                                                                                                                                           | Total current assets      |            |           | 13,184,000  |   |              |           | 12,924,000 | 
|                                     | Property and equipment, net                |                                                                                                                                                           |                           | 774,000    |           |             |   | 972,000      |          
|                                     | Intangible assets, net                     |                                                                                                                                                           |                           | 939,000    |           |             |   | 1,177,000    |          
|                                     | Other assets                               |                                                                                                                                                           |                           | 321,000    |           |             |   | 338,000      |          
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     | Total assets                               |                                                                                                                                                           | $                         | 15,218,000 |           |             | $ | 15,411,000   |          
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|LIABILITIES AND STOCKHOLDERS EQUITY |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     | Current liabilities:                       |                                                                                                                                                           |                           |            |           |             |   |              |          
|                                     |                                            | Accounts payable                                                                                                                                          |                           | $          | 431,000   |             |   | $            | 563,000   |           
|                                     |                                            | Accrued compensation and related expenses                                                                                                                 |                           |            | 669,000   |             |   |              | 547,000   |           
|                                     |                                            | Deferred service revenue and customer
deposits                                                                                                            |                           |            | 1,403,000 |             |   |              | 1,295,000 |           
|                                     |                                            | Other accrued liabilities                                                                                                                                 |                           |            | 185,000   |             |   |              | 235,000   |           
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     |                                            |                                                                                                                                                           | Total current liabilities |            |           | 2,688,000   |   |              |           | 2,640,000  | 
|                                     | Long-term liabilities:                     |                                                                                                                                                           |                           |            |           |             |   |              |          
|                                     |                                            | Note payable                                                                                                                                              |                           |            | 9,000     |             |   |              | 13,000    |           
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     | Total liabilities                          |                                                                                                                                                           |                           | 2,697,000  |           |             |   | 2,653,000    |          
|                                     | Stockholders equity:                      |                                                                                                                                                           |                           |            |           |             |   |              |          
|                                     |                                            | Common stock, $.001 par value,
12,000,000 shares authorized, 3,186,000
shares issued and outstanding at June
30, 2003 and
3,109,000 at September 30, 2002 |                           |            | 3,000     |             |   |              | 3,000     |           
|                                     | Paid-in capital                            |                                                                                                                                                           |                           | 14,041,000 |           |             |   | 13,886,000   |          
|                                     | Accumulated other comprehensive income     |                                                                                                                                                           |                           | 32,000     |           |             |   | 14,000       |          
|                                     | Accumulated deficit                        |                                                                                                                                                           |                           | (1,555,000 | )         |             |   | (1,145,000   | )        
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     | Total stockholders equity                 |                                                                                                                                                           |                           | 12,521,000 |           |             |   | 12,758,000   |          
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             
|                                     | Total liabilities and stockholders equity |                                                                                                                                                           | $                         | 15,218,000 |           |             | $ | 15,411,000   |          
|                                     |                                            |                                                                                                                                                           |                           |            |           |             |   |             

See accompanying notes.

3



---



##### Table of Contents






CAM COMMERCE SOLUTIONS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

|                                           |         |                                                      |                                    |           |           |                    |         |           |           |           |  | 
|------------------------------------------ | ------- | ---------------------------------------------------- | ---------------------------------- | --------- | --------- | ------------------ | ------- | --------- | --------- | --------- |  | 
|                                           |         |                                                      |                                    |           |           | THREE MONTHS ENDED
|                                           |         |                                                      |                                    |           |           |                   
|                                           |         |                                                      |                                    |           |           | JUNE 30            |         | JUNE 30  
|                                           |         |                                                      |                                    |           |           | 2003               |         | 2002     
|                                           |         |                                                      |                                    |           |           |                    |         |          
|REVENUES                                   |         |                                                      |                                    |           |           |                    |         |          
|                                           |         | Net hardware, software and installation
revenues     |                                    | $         | 3,413,000 |                    |         | $         | 3,724,000 |          
|                                           |         | Net service revenues                                 |                                    |           | 1,751,000 |                    |         |           | 1,659,000 |          
|                                           |         |                                                      |                                    |           |           |                    |         |          
|                                           |         |                                                      | Total net revenues                 |           |           | 5,164,000          |         |           |           | 5,383,000 | 
|COSTS AND EXPENSES                         |         |                                                      |                                    |           |           |                    |         |          
|                                           |         | Cost of hardware, software and installation
revenues |                                    |           | 1,610,000 |                    |         |           | 1,792,000 |          
|                                           |         | Cost of service revenues                             |                                    |           | 556,000   |                    |         |           | 663,000   |          
|                                           |         |                                                      |                                    |           |           |                    |         |          
|                                           |         |                                                      | Total cost of revenues             |           |           | 2,166,000          |         |           |           | 2,455,000 | 
|                                           |         | Selling, general and administrative expenses         |                                    |           | 2,494,000 |                    |         |           | 2,586,000 |          
|                                           |         | Research and development expenses                    |                                    |           | 485,000   |                    |         |           | 365,000   |          
|                                           |         |                                                      |                                    |           |           |                    |         |          
|                                           |         |                                                      | Total costs and operating expenses |           |           | 5,145,000          |         |           |           | 5,406,000 | 
|                                           |         |                                                      |                                    |           |           |                    |         |          
|                                           |         | Operating income (loss)                              |                                    |           | 19,000    |                    |         |           | (23,000   | )        
|                                           |         | Gain on disposal of assets                           |                                    |           |          |                    |         |           | 715,000   |          
|                                           |         | Interest income                                      |                                    |           | 72,000    |                    |         |           | 60,000    |          
|                                           |         |                                                      |                                    |           |           |                    |         |          
|Income before provision for income taxes   |         |                                                      | 91,000                             |           |           |                    | 752,000 |          
|Provision for income taxes                 |         |                                                      | 5,000                              |           |           |                    |        |          
|                                           |         |                                                      |                                    |           |           |                    |         |          
|Net income                                 |         | $                                                    | 86,000                             |           |           | $                  | 752,000 |          
|                                           |         |                                                      |                                    |           |           |                    |         |          
|Basic net income per share                 |         | $                                                    | 0.03                               |           |           | $                  | 0.25    |          
|                                           |         |                                                      |                                    |           |           |                    |         |          
|Diluted net income per share               |         | $                                                    | 0.03                               |           |           | $                  | 0.23    |          
|                                           |         |                                                      |                                    |           |           |                    |         |          
|Weighted average common shares outstanding |         |                                                      |                                    |           |           |                    |         |          
|                                           | Basic   |                                                      |                                    | 3,134,000 |           |                    |         | 3,062,000 |          
|Weighted average common shares outstanding |         |                                                      |                                    |           |           |                    |         |          
|                                           | Diluted |                                                      |                                    | 3,257,000 |           |                    |         | 3,221,000 |          

See accompanying notes.

4



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

|                                                 |         |                                                      |                                    |           |           |                   |          |           |            |            |  | 
|------------------------------------------------ | ------- | ---------------------------------------------------- | ---------------------------------- | --------- | --------- | ----------------- | -------- | --------- | ---------- | ---------- |  | 
|                                                 |         |                                                      |                                    |           |           | NINE MONTHS ENDED
|                                                 |         |                                                      |                                    |           |           |                  
|                                                 |         |                                                      |                                    |           |           | JUNE 30           |          | JUNE 30  
|                                                 |         |                                                      |                                    |           |           | 2003              |          | 2002     
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|REVENUES                                         |         |                                                      |                                    |           |           |                   |          |          
|                                                 |         | Net hardware, software and installation
revenues     |                                    | $         | 9,803,000 |                   |          | $         | 10,137,000 |           
|                                                 |         | Net service revenues                                 |                                    |           | 5,160,000 |                   |          |           | 4,860,000  |           
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|                                                 |         |                                                      | Total net revenues                 |           |           | 14,963,000        |          |           |            | 14,997,000 | 
|COSTS AND EXPENSES                               |         |                                                      |                                    |           |           |                   |          |          
|                                                 |         | Cost of hardware, software and installation
revenues |                                    |           | 4,838,000 |                   |          |           | 5,178,000  |           
|                                                 |         | Cost of service revenues                             |                                    |           | 1,629,000 |                   |          |           | 2,109,000  |           
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|                                                 |         |                                                      | Total cost of revenues             |           |           | 6,467,000         |          |           |            | 7,287,000  | 
|                                                 |         | Selling, general and administrative expenses         |                                    |           | 7,760,000 |                   |          |           | 7,525,000  |           
|                                                 |         | Research and development expenses                    |                                    |           | 1,350,000 |                   |          |           | 1,227,000  |           
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|                                                 |         |                                                      | Total costs and operating expenses |           |           | 15,577,000        |          |           |            | 16,039,000 | 
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|                                                 |         | Operating loss                                       |                                    |           | (614,000  | )                 |          |           | (1,042,000 | )         
|                                                 |         | Gain on disposal of assets                           |                                    |           |          |                   |          |           | 715,000    |           
|                                                 |         | Interest income                                      |                                    |           | 209,000   |                   |          |           | 185,000    |           
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|Loss before provision (benefit) for income taxes |         |                                                      | (405,000                           | )         |           |                   | (142,000 | )        
|Provision (benefit) for income taxes             |         |                                                      | 5,000                              |           |           |                   | (375,000 | )        
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|Net income (loss)                                |         | $                                                    | (410,000                           | )         |           | $                 | 233,000  |          
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|Basic net income (loss) per share                |         | $                                                    | (0.13                              | )         |           | $                 | 0.08     |          
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|Diluted net income (loss) per share              |         | $                                                    | (0.13                              | )         |           | $                 | 0.07     |          
|                                                 |         |                                                      |                                    |           |           |                   |          |          
|Weighted average common shares outstanding       |         |                                                      |                                    |           |           |                   |          |          
|                                                 | Basic   |                                                      |                                    | 3,117,000 |           |                   |          | 3,049,000 |           
|Weighted average common shares outstanding       |         |                                                      |                                    |           |           |                   |          |          
|                                                 | Diluted |                                                      |                                    | 3,117,000 |           |                   |          | 3,204,000 |           

See accompanying notes.

5



---



##### Table of Contents






CAM COMMERCE SOLUTIONS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

|                                                                               |                                                   |   |                   |          |         |   |            |            |  
|------------------------------------------------------------------------------ | ------------------------------------------------- | - | ----------------- | -------- | ------- | - | ---------- | ---------- | -
|                                                                               |                                                   |   | NINE MONTHS ENDED
|                                                                               |                                                   |   |                  
|                                                                               |                                                   |   | JUNE 30           |          | JUNE 30
|                                                                               |                                                   |   | 2003              |          | 2002   
|                                                                               |                                                   |   |                   |          |        
|Operating activities:                                                          |                                                   |   |                   |          |         |   |            |           
|Net income (loss)                                                              |                                                   | $ | (410,000          | )        |         | $ | 233,000    |           
|Adjustments to reconcile net income (loss) to net
cash provided by operations: |                                                   |   |                   |          |         |   |            |           
|                                                                               | Depreciation and amortization                     |   |                   | 790,000  |         |   |            | 799,000    |  
|                                                                               | Gain on disposal of assets                        |   |                   |         |         |   |            | (715,000   | )
|                                                                               | Loss on disposal of property, plant and equipment |   |                   | 1,000    |         |   |            | 9,000      |  
|                                                                               | Provision for doubtful accounts                   |   |                   | 25,000   |         |   |            | (100,000   | )
|                                                                               | Net changes in operating assets and liabilities   |   |                   | 254,000  |         |   |            | 707,000    |  
|                                                                               |                                                   |   |                   |          |         |   |            |           
|Net cash provided by operations                                                |                                                   |   | 660,000           |          |         |   | 933,000    |           
|Investing activities:                                                          |                                                   |   |                   |          |         |   |            |           
|                                                                               | Purchase of property, plant and equipment         |   |                   | (160,000 | )       |   |            | (616,000   | )
|                                                                               | Capitalized software                              |   |                   | (195,000 | )       |   |            | (286,000   | )
|                                                                               | Net proceeds from disposal of assets              |   |                   |         |         |   |            | 720,000    |  
|                                                                               | Purchase of marketable securities                 |   |                   |         |         |   |            | (1,507,000 | )
|                                                                               | Business acquisition                              |   |                   |         |         |   |            | (156,000   | )
|                                                                               |                                                   |   |                   |          |         |   |            |           
|Cash used in investing activities                                              |                                                   |   | (355,000          | )        |         |   | (1,845,000 | )         
|Financing activities:                                                          |                                                   |   |                   |          |         |   |            |           
|                                                                               | Proceeds from exercise of stock options           |   |                   | 155,000  |         |   |            | 156,000    |  
|                                                                               |                                                   |   |                   |          |         |   |            |           
|Cash provided by financing activities                                          |                                                   |   | 155,000           |          |         |   | 156,000    |           
|                                                                               |                                                   |   |                   |          |         |   |            |           
|Net increase (decrease) in cash and cash equivalents                           |                                                   |   | 460,000           |          |         |   | (756,000   | )         
|Cash and cash equivalents at beginning of period                               |                                                   |   | 9,093,000         |          |         |   | 9,451,000  |           
|                                                                               |                                                   |   |                   |          |         |   |            |           
|Cash and cash equivalents at end of period                                     |                                                   | $ | 9,553,000         |          |         | $ | 8,695,000  |           
|                                                                               |                                                   |   |                   |          |         |   |            |           

See accompanying notes.

6



---



##### Table of Contents






CAM COMMERCE SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2003

(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 and nine
months ended June 30, 2003 and 2002 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 the classification at the time of
purchase and re-evaluates its appropriateness at each balance sheet date. The
Companys marketable securities at June 30, 2003 and September 30, 2002 consist
of debt instruments that bear interest at various rates. The gross unrealized
gains on securities available-for-sale at June 30, 2003 and September 30, 2002
were $32,000 and $14,000, respectively. There were no realized gains (losses)
for the nine months ended June 30, 2003 and June 30, 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
finished goods, which include electronic point of sale hardware and computer equipment used in the sale and
service of the Companys products.

Comprehensive Income (Loss)

The Comprehensive income (loss) for the three and nine month periods ended June
30, 2003 and June 30, 2002, were $93,000, ($378,000), $741,000,
and $222,000,
respectively. Unrealized gains and losses on securities available-for-sale represented the
difference between net income (loss) and comprehensive income (loss).

7



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2003

(Unaudited)

Statements of Cash Flows

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

|                                                |                                           |   |                   |          |         |   |         |          |  
|----------------------------------------------- | ----------------------------------------- | - | ----------------- | -------- | ------- | - | ------- | -------- | -
|                                                |                                           |   | NINE MONTHS ENDED
|                                                |                                           |   |                  
|                                                |                                           |   | JUNE 30           |          | JUNE 30
|                                                |                                           |   | 2003              |          | 2002   
|                                                |                                           |   |                   |          |        
|(Increase) decrease in:                         |                                           |   |                   |          |         |   |         |         
|                                                | Accounts receivable                       |   | $                 | 160,000  |         |   | $       | 886,000  |  
|                                                | Inventories                               |   |                   | 9,000    |         |   |         | 87,000   |  
|                                                | Other current assets                      |   |                   | 41,000   |         |   |         | 72,000   |  
|Increase (decrease) in:                         |                                           |   |                   |          |         |   |         |         
|                                                | Accounts payable                          |   |                   | (132,000 | )       |   |         | (310,000 | )
|                                                | Accrued compensation and related expenses |   |                   | 122,000  |         |   |         | (72,000  | )
|                                                | Customer deposits and deferred revenue    |   |                   | 108,000  |         |   |         | 93,000   |  
|                                                | Other accrued liabilities                 |   |                   | (54,000  | )       |   |         | (49,000  | )
|                                                |                                           |   |                   |          |         |   |         |         
|Net changes in operating assets and liabilities |                                           | $ | 254,000           |          |         | $ | 707,000 |         
|                                                |                                           |   |                   |          |         |   |         |         

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.

Reclassifications

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

Recently Issued Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities.
FIN 46 requires that if an entity has a controlling financial interest in a
variable interest entity, the assets, liabilities and results of activities of
the variable interest entity should be included in the consolidated financial
statements of the entity. FIN 46 is effective immediately for all new variable
interest entities created or acquired after January 31, 2003. For variable
interest entities created or acquired prior to February 1, 2003, the provisions
of FIN 46 must be applied for the first interim or annual period beginning
after June 15, 2003. The Company does not believe that the adoption of FIN 46
will have a material impact on its results of operations or financial position.

8



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2003

(Unaudited)

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 Income (Loss) Per Share

Basic net income (loss) per share is based upon the weighted average number of
common shares outstanding for each period presented. Diluted net income (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
income (loss) per share if their effect is anti-dilutive. There are 390,000
options and 350,000 warrants outstanding at June 30, 2003 that were excluded
from the computation because their effect is anti-dilutive. The computations
of basic and diluted net income (loss) per share for the three and nine month
periods ended June 30, 2003 and 2002 is as follows:

|                                                      |                                                 |   |                    |           |         |   |           |           | 
|----------------------------------------------------- | ----------------------------------------------- | - | ------------------ | --------- | ------- | - | --------- | --------- | 
|                                                      |                                                 |   | THREE MONTHS ENDED
|                                                      |                                                 |   |                   
|                                                      |                                                 |   | JUNE 30            |           | JUNE 30
|                                                      |                                                 |   | 2003               |           | 2002   
|                                                      |                                                 |   |                    |           |        
|Numerator:                                            |                                                 |   |                    |           |         |   |           |          
|Net income for basic and diluted net income per
share |                                                 | $ | 86,000             |           |         | $ | 752,000   |          
|                                                      |                                                 |   |                    |           |         |   |           |          
|Denominator:                                          |                                                 |   |                    |           |         |   |           |          
|Weighted-average shares outstanding                   |                                                 |   | 3,134,000          |           |         |   | 3,062,000 |          
|                                                      |                                                 |   |                    |           |         |   |           |          
|Denominator for basic net income per share:           |                                                 |   |                    |           |         |   |           |          
|                                                      | Weighted-average shares                         |   |                    | 3,134,000 |         |   |           | 3,062,000 | 
|Effect of dilutive securities:                        |                                                 |   |                    |           |         |   |           |          
|Stock options                                         |                                                 |   | 123,000            |           |         |   | 159,000   |          
|                                                      |                                                 |   |                    |           |         |   |           |          
|Denominator for diluted net income per share:         |                                                 |   |                    |           |         |   |           |          
|                                                      | Weighted average shares and assumed conversions |   |                    | 3,257,000 |         |   |           | 3,221,000 | 
|                                                      |                                                 |   |                    |           |         |   |           |          
|Basic net income per share                            |                                                 | $ | 0.03               |           |         | $ | 0.25      |          
|                                                      |                                                 |   |                    |           |         |   |           |          
|Diluted net income per share                          |                                                 | $ | 0.03               |           |         | $ | 0.23      |          
|                                                      |                                                 |   |                    |           |         |   |           |          

9



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2003

(Unaudited)

Net Income (Loss) Per Share (continued)

|                                                                    |                                                 |   |                   |           |         |   |           |           | 
|------------------------------------------------------------------- | ----------------------------------------------- | - | ----------------- | --------- | ------- | - | --------- | --------- | 
|                                                                    |                                                 |   | NINE MONTHS ENDED
|                                                                    |                                                 |   |                  
|                                                                    |                                                 |   | JUNE 30           |           | JUNE 30
|                                                                    |                                                 |   | 2003              |           | 2002   
|                                                                    |                                                 |   |                   |           |        
|Numerator:                                                          |                                                 |   |                   |           |         |   |           |          
|Net income (loss) for basic and diluted net income
(loss) per share |                                                 | $ | (410,000          | )         |         | $ | 233,000   |          
|                                                                    |                                                 |   |                   |           |         |   |           |          
|Denominator:                                                        |                                                 |   |                   |           |         |   |           |          
|Weighted-average shares outstanding                                 |                                                 |   | 3,117,000         |           |         |   | 3,049,000 |          
|                                                                    |                                                 |   |                   |           |         |   |           |          
|Denominator for basic net income (loss) per share:                  |                                                 |   |                   |           |         |   |           |          
|                                                                    | Weighted-average shares                         |   |                   | 3,117,000 |         |   |           | 3,049,000 | 
|Effect of dilutive securities:                                      |                                                 |   |                   |           |         |   |           |          
|Stock options                                                       |                                                 |   |                  |           |         |   | 155,000   |          
|                                                                    |                                                 |   |                   |           |         |   |           |          
|Denominator for diluted net income (loss) per share:                |                                                 |   |                   |           |         |   |           |          
|                                                                    | Weighted average shares and assumed conversions |   |                   | 3,117,000 |         |   |           | 3,204,000 | 
|                                                                    |                                                 |   |                   |           |         |   |           |          
|Basic net income (loss) per share                                   |                                                 | $ | (0.13             | )         |         | $ | 0.08      |          
|                                                                    |                                                 |   |                   |           |         |   |           |          
|Diluted net income (loss) per share                                 |                                                 | $ | (0.13             | )         |         | $ | 0.07      |          
|                                                                    |                                                 |   |                   |           |         |   |           |          

Stock Option Plans

The Company follows the disclosure-only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation
(SFAS No. 123), as amended by SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, and, accordingly, accounts for its
stock-based compensation plans using the intrinsic value method under
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations. The following table illustrates the
effect on net income (loss) and income (loss) per share had compensation
expense for the employee stock-based plans been recorded based on the fair
value method under SFAS No. 123:

|                                                                                                                             |  |                    |         |                   |  |              |          |              |  |   |          |   |  |   |          |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ------------ | -------- | ------------ |  | - | -------- | - |  | - | -------- | -
|                                                                                                                             |  | THREE MONTHS ENDED |         | NINE MONTHS ENDED
|                                                                                                                             |  |                    |         |                  
|                                                                                                                             |  | JUNE 30 2003       |         | JUNE 30 2002      |  | JUNE 30 2003 |          | JUNE 30 2002
|                                                                                                                             |  |                    |         |                   |  |              |          |             
|Net income (loss), as reported                                                                                               |  | $                  | 86,000  |                   |  | $            | 752,000  |              |  | $ | (410,000 | ) |  | $ | 233,000  |  
|Deduct: total stock-based
employee compensation
expense determined under
fair value based method, net of
related tax effects |  |                    | (96,000 | )                 |  |              | (102,000 | )            |  |   | (216,000 | ) |  |   | (212,000 | )
|                                                                                                                             |  |                    |         |                   |  |              |          |              |  |   |          |   |  |   |          |  
|Net income (loss), as adjusted                                                                                               |  | $                  | (10,000 | )                 |  | $            | 650,000  |              |  | $ | (626,000 | ) |  | $ | 21,000   |  
|                                                                                                                             |  |                    |         |                   |  |              |          |              |  |   |          |   |  |   |          |  
|Basic income (loss) per share:                                                                                               |  |                    |         |                   |  |              |          |              |  |   |          |   |  |   |          |  
|As reported                                                                                                                  |  | $                  | 0.03    |                   |  | $            | 0.25     |              |  | $ | (0.13    | ) |  | $ | 0.08     |  
|As adjusted                                                                                                                  |  | $                  |        |                   |  | $            | 0.21     |              |  | $ | (0.20    | ) |  | $ | 0.01     |  
|Diluted income (loss) per share:                                                                                             |  |                    |         |                   |  |              |          |              |  |   |          |   |  |   |          |  
|As reported                                                                                                                  |  | $                  | 0.03    |                   |  | $            | 0.23     |              |  | $ | (0.13    | ) |  | $ | 0.07     |  
|As adjusted                                                                                                                  |  | $                  |        |                   |  | $            | 0.20     |              |  | $ | (0.20    | ) |  | $ | 0.01     |  

10



---



##### Table of Contents






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 June 30, 2003 as Compared to Three Months Ended June 30, 2002

Nine Months Ended June 30, 2003 as Compared to Nine Months Ended June 30, 2002

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 June 30, 2003 decreased 4% to $5.2
million, consisting of an 8% decrease in system revenues and a 6% increase in
service revenues, compared to the three months ended June 30, 2002. The
decrease in system revenues was due to a decrease in both new system sales and
system upgrade sales. Net revenue for the nine months ended June 30, 2003
remained flat at $15 million, consisting of a 3% decrease in system revenues
and a 6% increase in service revenues, compared to the same period in 2002.
The decrease in system revenues compared to the nine months ended June 30, 2002
was due to a decline in both new system sales and system upgrade sales. Poor
economic conditions continue to have an effect on retailers willingness to
invest in capital equipment. The increase in service revenues in the three and
nine months ended June 30, 2003 was related to an increase in X-Charge credit
card processing revenue.

Gross marginfor the three and nine months ended June 30, 2003 was 58% and 57%,
respectively, compared to 54% for the three months and 51% for the nine months
ended June 30, 2002. Gross margin on system revenues increased to 53% for the
three months ended June 30, 2003 compared to 52% for the three months ended
June 30, 2002, and increased to 51% for the nine months ended June 30, 2003
compared to 49% for the nine months ended June 30, 2002. The increase in margin
on system sales for the three months ended June 30, 2003 was a result of higher
margin on equipment sales and lower discounts given on sales, compared to the
three months ended June 30, 2002. The increase in margin on system sales for
the nine months ended June 30, 2003 was a result of less price discounting and
lower installation labor costs compared to the nine months ended June 30, 2002.
Gross margin for service revenue was 68% for the three and nine months ended
June 30, 2003, compared to 60% and 57%, respectively, for the corresponding
periods in 2002. 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 required to produce this revenue, and a decrease in
payroll expense for the support department.

Selling, general and administrative expensesexpressed as a percentage of net
revenues was 48% and 52% for the three and nine months ended June 30, 2003,
respectively, compared to 48% and 50%, for the three and nine months ended June
30, 2002. Selling, general and administrative expenses decreased 4% for the
three months and increased 3% for the nine months ended June 30, 2003, compared
to the three and nine months ended June 30, 2002. The decrease in selling,
general and administrative expenses for the

11



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

three months ended June 30, 2003 resulted from the decrease in advertising
expense. The increase in selling, general and administrative expenses for the
nine months ended June 30, 2003 was related to the increases in commission
expense and payroll expense.

Research and development expensesexpressed as a percentage of revenues was 9%
for the three and nine months ended June 30, 2003, compared to 7% and 8% for
the same periods in 2002. The increase was due to lower capitalization of
costs to develop new marketable software and to enhance existing systems
software in 2003. The Company continues to invest in the enhancements of new
features for the existing software products of Retail Star and CAM32.

Income taxes,provision for income taxes for the three and nine months ended
June 30, 2003 was $5,000, related to minimum tax payment, compared to a tax
benefit of $375,000 recorded in the nine months ended June 30, 2002, related to
a tax law revision on the treatment of net loss carrybacks. There was no
provision for income taxes recorded in the three month ended June 30, 2002.

LIQUIDITY AND CAPITAL RESOURCES

The Companys cash and cash equivalents plus marketable securities totaled
$11.1 million on June 30, 2003, compared to $10.6 million on September 30,
2002. The Company generated $660,000 from operations, expended $355,000 for
fixed assets and capitalized software development, and received $155,000 from
the proceeds of stock options exercised during the nine months ended June 30,
2003, compared to $933,000 generated from operations, $902,000 expended for
fixed assets and capitalized software development, $156,000 expended for a
business acquisition and $1.5 million expended for purchase of marketable
securities, and received $156,000 from the proceeds of stock options exercised
and $720,000 from the sale of Access retail management consulting business
during the nine months ended June 30, 2002.

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:

12



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

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. 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

13



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

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 the Company at this
time. Such information is subject to change. These statements are not
guarantees of future performance and are subject to risks, uncertainties and
assumptions that are difficult to predict. 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. The Company undertakes no obligation to revise or update publicly any
forward-looking statement for any reason.

RISK FACTORS

Before deciding to buy, hold or sell the Companys common stock, you should
carefully consider the risks described below, in addition to the other
information contained in this Report and in the Companys other filings with
the SEC, including the Companys reports on Forms 10-K, 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, its business, financial condition and results of
operations could be seriously harmed. In that event, the market price for the
Companys 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 its 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.

14



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

Slower economic activity, decreased consumer confidence, reduced corporate
profits and capital spending, adverse business conditions in the retail and
related industries have resulted in a continuing downturn in the economic
conditions of the United States. As a result of these unfavorable economic
conditions, the Company has experienced a slowdown in customer orders. If such
economic conditions continue or worsen, this slowdown in orders will likely
continue.



| |  |  | 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 you
paid for them.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

The Companys common stock has historically maintained a low trading volume of
shares per day. This trend is likely to continue.



| |  |  | The Companys operating results have fluctuated significantly from
quarter to quarter in the past and are likely to continue to do so due
to a number of factors which are not within the Companys control,
including the intense competitive pressure on our target customers.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company operates in the retail industry. Our target customers are
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. Other factors which may affect
quarterly results include:



| |  |  | 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 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; and                                 
| |  |  | the level of orders received that can be shipped in a fiscal
quarter.                                                                                      

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.

15



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.




ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of its management,
including its Chief Executive Officer and its Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commissions rules and
forms. There have been no changes in the Companys internal controls or in
other factors that could significantly affect these controls subsequent to the
date of the evaluation.

16



---



##### Table of Contents



CAM COMMERCE SOLUTIONS, INC.




PART II  OTHER INFORMATION




Item 1     Legal Proceedings. None




Item 2     Changes in Securities. None




Item 3     Defaults upon Senior Securities. None




Item 4     Submission of Matters to a Vote of Security Holders

On April 10, 2003, the Company held its annual meeting of shareholders. The
percentage of shares voted totaled 91% of the total outstanding shares. The
following items were voted upon at the annual meeting with the results of the
voting:

1.     The election of five persons to serve on the Companys Board of Directors.
The term shall be until the next meeting of shareholders in 2004.

|                  |  |     |           |         |  |  |         |  |  |  |   | 
|----------------- |  | --- | --------- | ------- |  |  | ------- |  |  |  | - | 
|VOTES            
|                 
|                  |  | For |           | Against |  |  | Abstain | 
|Geoffrey D. Knapp |  |     | 2,815,130 |         |  |  | 25,270  |  |  |  |  | 
|Walter Straub     |  |     | 2,815,130 |         |  |  | 25,270  |  |  |  |  | 
|David Frosh       |  |     | 2,815,130 |         |  |  | 25,270  |  |  |  |  | 
|Scott Broomfield  |  |     | 2,815,130 |         |  |  | 41,270  |  |  |  |  | 
|Donald Clark      |  |     | 2,815,130 |         |  |  | 41,270  |  |  |  |  | 

2.     The ratification of the appointment of Ernst & Young LLP as the independent
auditors of the Company.

|          |         |        
|--------- | ------- | -------
|VOTES    
|         
|For       | Against | Abstain
|2,837,355 | 2,970   | 75     




Item 5     Other Information. None




Item 6     Exhibits and Reports on Form 8-K

(A)  Exhibits:

|                         |  |                                                                                           
|------------------------ |  | ------------------------------------------------------------------------------------------
|Exhibit 31.1             |  | Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act
|                         |  |                                                                                           
|Exhibit 31.2             |  | Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act
|                        
|Exhibit 32               |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act                           
|                        
|(B)  Reports on Form 8-K |  | Press Release filed on July 29, 2003 (furnished
pursuant to Item 12 of Form 8-K).         

17



---



##### Table of Contents






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:                                    |  | August 13, 2003 |  |  |  | By                                                      |  | /S/ Geoffrey D. Knapp
|                                         |  |                 |  |  |  |                                                         |  |                      
|                                         |  |                 |  |  |  | Geoffrey D. Knapp
Chief Executive Officer              
|                                        
|Date:                                    |  | August 13, 2003 |  |  |  | By                                                      |  | /S/ Paul Caceres Jr. 
|                                         |  |                 |  |  |  |                                                         |  |                      
|                                         |  |                 |  |  |  | Paul Caceres Jr.
Chief Financial and Accounting Officer

18



---



##### Table of Contents






EXHIBIT INDEX

Exhibits:

|             |  |                                                                                           
|------------ |  | ------------------------------------------------------------------------------------------
|Exhibit 31.1 |  | Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act
|             |  |                                                                                           
|Exhibit 31.2 |  | Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act
|             |  |                                                                                           
|Exhibit 32   |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act