1Notes to Selling Shareholders: None of the above are named individuals or entities are affiliates of the issuer.

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The selling stockholders may offer their shares at various times in one or more of the following transactions:

• in the over-the-counter market;
• on any exchange on which the shares may hereafter be listed;
• in negotiated transactions other than on such exchanges;
• by pledge to secure debts and other obligations;
• in connection with the writing of non-traded and exchange-traded call options, in hedge transactions, in covering previously established short positions and in settlement of other transactions in standardized or over-the-counter options; or
• in a combination of any of the above transactions.

The selling stockholders may sell their shares at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices. The selling stockholders may use broker-dealers to sell their shares. The broker-dealers will either receive discounts or commissions from the selling stockholders, or they will receive commissions from purchasers of shares. In addition, some of the Selling Shareholders may be eligible and may elect to sell some or all of their shares pursuant to additional exemptions to the registration requirements of the Securities Act, including but not limited to Rule 144 promulgated under the Securities Act, rather than pursuant to this Registration Statement.

Under certain circumstances the selling stockholders and any broker-dealers that participate in the distribution may be deemed to be "underwriters" within the meaning of the Securities Act. Any commissions received by such broker-dealers and any profits realized on the resale of shares by them may be considered underwriting discounts and commissions under the Securities Act. The selling stockholders may agree to indemnify such broker-dealers against certain liabilities, including liabilities under the Securities Act. In addition, California Software Corporation has agreed to indemnify the selling stockholders with respect to the shares offered hereby against certain liabilities, including certain liabilities under the Securities Act.

Under the rules and regulations of the Exchange Act, any person engaged in the distribution of the resale of shares may not simultaneously engage in market making activities with respect to California Software Corporation's common stock for a period of two business days prior to the commencement of such distribution. The selling stockholders will also be subject to applicable provisions of the Exchange Act and regulations under the Exchange Act which may limit the timing of purchases and sales of shares of California Software Corporation's common stock by the selling stockholders.

The selling stockholders will pay all commissions, transfer fees, and other expenses associated with the sale of securities by them. The shares offered hereby are being registered pursuant to contractual obligations of California Software Corporation, and California Software Corporation has paid the expenses of the preparation of this prospectus. The Company has not made any underwriting arrangements with respect to the sale of shares offered hereby.

In January of 1997, California Software Products, Inc. ("CSPI"), a California Company, of which Bruce Acacio and Carol Conway were CEO and CFO, respectively, filed for Chapter 11 bankruptcy under the laws of the State of California due to a dispute with a creditor. In October of 1997, that dispute was resolved, and the Company emerged from bankruptcy.

No director, officer, significant employee, or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.

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No director, officer, significant employee, or consultant has been permanently or temporarily enjoined, barred, suspended, or otherwise limited from involvement in any type of business, securities or banking activities.

No director, officer, or significant employee has been convicted of violating a federal or state securities or commodities law.

Certain aspects of the Company's business involve risks of liability. For example, there can be no assurance that third parties will not claim that the Company has misappropriated their creative ideas or formats or otherwise infringed upon their proprietary rights. Any claims of infringement, with or without merit, could be time consuming to defend, result in costly litigation, divert management attention, require the Company to enter into costly royalty or licensing arrangements to prevent the Company from using important technologies or methods, any of which could have a material adverse effect on the Company's business, financial condition or operating results. (See "Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements, or Labor Contracts" above.)

The following table sets forth certain information regarding California Software Corporation's executive officers and directors as of June 9, 2000.

Bruce Acacio (Chairman of the Board, President, and Chief Executive Officer) is the former President and CEO of California Software Products, Inc. ("CSPI") of Santa Ana, California. Mr. Acacio took the reigns of CSPI in 1996. At CSPI, he was responsible for the release of new versions of CSPI's trademarked BABY/36 and BABY/AS2000 products. During his career, Mr. Acacio held sales and middle management positions of increasing responsibility with the UK-based conglomerate Lex Service, PLC, and was an agent manager for IBM. In those positions, he was responsible for turning around troubled operations and expanding business units.

Carol Conway (Secretary, Treasurer, Vice President, and CFO) is the former CFO of CSPI of Santa Ana, California. She has background in marketing of technical and consumer products. At CSPI, Ms. Conway assisted in the strategic and financial turnaround of the company. She was directly involved in the planning and execution of new product releases and supervised support and documentation for new versions of BABY/36 and BABY/AS2000. Prior to her involvement with CSPI and CSC, Ms. Conway held various positions of increasing responsibility with Ketchum in San Francisco.

R. Dean Moore (Director of Development) was one of the founding members of CSPI of Santa Ana. At CSPI, Dean led a programming team that developed the compilers for the initial BABY offerings and expanded these products into the suites of programs that currently comprise BABY/36 and BABY/AS2000. At California Software Corporation, Dean designed the new BABY/GUI product and continues to plan new functionality and adjunctive products to the current family.

Thomas Hoyt (Director of Worldwide Sales) held the same position with CSPI and moved over to California Software Corporation at acquisition. Tom has an impressive track record in marketing of software products in Europe and the Pacific Rim. His extensive language skills give him the ability to understand varying marketing cultures in different parts of the world. Previous posts include software and hardware marketing positions, including a Kodak subsidiary based in Hamburg, successfully building international channel partners and expanding existing operations.

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Katherine Tague (Marketing & Communications) has 15 plus years of success in diversified marketing assignments with consumer products and financial services companies. At Reebok International she was responsible for supporting Western Division retail operations and handled Waste Management, Inc.'s major national accounts located in the Western Region. Kate then joined the turnaround management specialist, Crossroads, LLC where she managed communications for their clients' market and financial communities. At CSC, Kate manages advertising, promotion and investor relations.

The following table sets forth certain information as of the date of this offering with respect to the beneficial ownership of the Company's Common Stock by all persons known by the Company to be beneficial owners of more than 5% of any such outstanding classes, and by each director and executive officer, and by all officers and directors as a group. Unless otherwise specified, the named beneficial owner has, to the Company's knowledge, either sole or majority voting and investment power.

• The address of each executive officer and director is c/o California Software Corporation, 2485 McCabe Way, Irvine, CA 92614

The aggregate number of shares the Company has the authority to issue consists of 20,000,000 shares of Common Stock having a $.001 par value, and 5,000,000 shares of Preferred Stock having a $.001 par value. The Common and/or Preferred Stock of the Company may be issued from time to time without prior approval by the stockholders. The Common and/or Preferred Stock may be issued for such consideration as may be fixed from time to time by the Board of Directors. The Board of Directors may issue such shares of Common and/or Preferred Stock in one or more series, with such voting powers, designations, preferences and rights or qualifications, limitations or restrictions thereof as shall be determined by future corporate resolutions.

We are registering the shares to be sold by the selling stockholders pursuant to contractual obligations to the selling stockholders. Other than the shares being offered hereby, California Software Corporation is under no obligation to register any of its shares.

None. Not Applicable

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Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to any provisions contained in its Certificate of Incorporation, or by-laws, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The Company retained National Financial Communication Corp. (NFCC) to perform Investor Relations and Public Relations services. NFCC received 210,000 shares as compensation for services rendered. The shares are restricted pursuant to Rule 144 and are not subject to registration with this statement.

It is important for any potential investor to note that while the Company anticipates effectuating a business plan based upon the factors explained below, and an assessment by management that such a business plan may likely succeed, there may be present variables and/or future conditions or events that preclude the Company from realizing its goals and capacity to serve clients in a manner which benefits the Company as expected. As such any potential investor should carefully consider the information contained herein and likewise consult with legal counsel and other advisors so as to determine the merit of the present offering.

The IBM AS/400 and its predecessors, System/32, System/34, System/36, and System/38 - collectively called IBM Midrange systems - are a class of machines substantially different from widely familiar personal computers (PCs). The System/36, superceded by the AS/400, served as a popular computing solution for business applications for many years after IBM's introduction of these two systems in 1983 and 1988, respectively. Midrange systems were popular because, at the time of their introduction, they were far more powerful than individual PCs and were capable of supporting environments with hundreds of users. While AS/400 made the System/36 obsolete, industry sources estimate that approximately 250,000 System/36 systems remained in use worldwide at the end of 1995. Industry publications estimate that over 360,000 AS/400 systems were in use worldwide at the end of 1995.

The wide acceptance of IBM Midrange Systems fed off a large number of available software applications, both custom and pre-packaged, that ran on them. Over 28,000 business programs were written for those systems - more than for any other platform. Thus, in adopting IBM's Midrange computing platforms, businesses and the independent software vendors (ISVs) that supported them invested substantial resources developing application software. That software could perform a wide variety of manufacturing, accounting, and other information-management functions. According to industry sources, by 1995, estimated 25,000 software applications had been developed for use on AS/400 systems. Indeed, the development of applications software intended for use on IBM's Midrange computing platforms continues assisted by approximately 8,000 ISVs. In 1995, those ISVs generated estimated $2.5 billion in revenues from AS/400 applications software sales.

Despite the platform's multiple advantages, IBM Midrange users and developers have historically been constrained by the non-graphical and proprietary nature of IBM's operating systems. Software applications written for the System/36 and AS/400 platforms would not run on other computing platforms, including those using open operating systems such as UNIX or NT^TM. This factor became increasingly important in recent years as PC networks became far more powerful and the number of PC users grew to the point where virtually all business people use them daily. Today, Midrange systems appear old-fashioned to many information management professionals. Since the late 1980s, decreasing prices and increasing functionality in information technology products led to increased market acceptance of open systems and customer demand for information technology products based on such systems. According to some estimates, sales of server/host systems based on the UNIX and NT^TM operating systems will increase to $40 billion annually in the year 2000, up from an estimated $22 billion in 1996. Industry sources estimate that the UNIX applications software market is currently smaller, but growing faster, than the AS/400 applications software market.

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The shift in position of the AS/400 from the operating platform to a passive server on a network raises the issue of integrating a huge bank of reliable, but proprietary text screen applications into a network environment. The four major approaches to integrating System/36 and AS/400 systems into LAN environments may be summarized as follows:

• Re-engineering - Re-engineering requires rewriting existing applications software to enable it to operate on a new computing platform. Since this entails completely rewriting applications software to meet customer requirements, it often results in increased cost, risk of failure, disruption and delay.
• Packaged Solutions - Migrating to a new computing platform can sometimes be accomplished by installing an applications software package that has been independently developed to run on open or portable platforms. While a substantial number of packaged software applications are available, businesses implementing this approach will often have to abandon their investment in existing databases and software and may incur substantial retraining costs.
• Rehosting - Rehosting involves migration of applications software to a new computing platform with minimal change to the source code. Rehosting is achieved by rebuilding applications software to run efficiently on the new computing platform. This solution often enables businesses to enjoy the continued use of their existing programs and databases, reduces retraining costs and takes full advantage of a new computing platform.
• Refacing - Refacing involves replacing the "green-screen" interface with a graphical user interface (GUI). The source code must still be run on the original computing platform or in a replicated environment. This is frequently the next step after rehosting an application to provide appearance and operation virtually identical to other Windows applications running in the environment.

Re-engineering custom applications or moving to a new packaged solution poses a significant financial risk to a business. Rewriting an application is not a line-for-line process because programming languages have different characteristics. Thus one can expect new applications to have errors that must be corrected. A packaged solution usually requires extensive modifications in order to meet particular business requirements. During the implementation period users need retraining and the incidence of user errors increases. Typically, order processing is slowed during such shakeout period and average days' receivables expand. Many businesses also have to deal with the risk of loss of customer, sales, financial, and/or operations data during the conversion.

CSC is expert in rehosting and refacing - the two approaches that require minimal retraining costs and offer continued use of existing programs and databases. The Company's products replicate the IBM Midrange operating environments under Windows^TM. What this means is that the applications developer can take older IBM Midrange programs that meet current business requirements and run them on an NT^TM network. Moreover, the developer can utilize another CSC product to add a graphical user interface that does for Midrange applications what Windows 3x did for DOS applications. Importantly, CSC also provided a Y2K compliant platform for System/3x programs. This makeover dramatically extends the life of an application at a relatively low cost to the developer.

ISVs must also adapt to customer demands associated with increased popularity of new computing platforms. ISVs that have developed successful AS/400 applications software are faced with the challenge of migrating their products to new platforms to meet customer demands while maintaining their existing customer base for applications software running on the AS/400 platform. CSC's products are an excellent choice for such ISVs because BABY development tools do not modify the RPG source code. Moreover, screens developed with BABY/GUI can be used for both the AS/400 and NT offerings. Thus one set of code and screens can be maintained for both the Midrange and PC platforms.

California Software Corporation, hereinafter referred to as the "Company" or "CSC," markets a family of software products under the brand name BABY that support the migration of Midrange applications in the IBM AS/400 and PC-LAN business environment. The products provide (a) software solutions that allow business customers to migrate IBM Midrange RPG applications to the PC environment and execute such applications in native mode on a PC network without a complete rewrite; (b) software designed to create a distributed processing environment including a true AS/400 client-server environment, remote site operations, deployment of specific applications to PC workstations separate from an AS/400, various high availability applications, or delegation of AS/400 batch processing to NT; (c) graphical user interface (GUI) software that allows a developer of an AS/400 text-based application to present screens with Windows point-and-click functionality. The Company's goal is to maintain market leadership in the management of Midrange migration within the IBM AS/400 and PC-LAN business environment and to leverage that position to build strategic presence through acquisitions.

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Headquartered in Irvine, CA, California Software Corporation was organized by the filing of articles of incorporation with the Secretary of State of the State of Nevada on October 28, 1998.

In the early eighties, the Company's founders used their extensive programming expertise to pioneer the first PC-based Report Generation Language (RPG) compilers which are a core functionality of the BABY product line. As the development environment expanded, the products have evolved to allow a company to execute Midrange applications on a PC network in "native" mode without the need for complete redevelopment. Over the past decade, the BABY brand has gained a significant franchise in the worldwide marketplace with more than 100,000 users in 56 countries.

On January 12, 1999, the Company completed an acquisition of approximately $1,628,068 worth of assets and $702,742 of liabilities from California Software Products, Inc. - a California company in a similar line of business as the Company - in exchange for a convertible note as amended in the principal sum of $2,250,000 - convertible into the Common Shares of the Company once the Company is trading on the OTCBB^® or a similar market and based upon the Company's trading price sixty (60) days following the first day of trading of the Company's Shares with a minimum conversion rate of $1.50 per share on that date.

California Software Products, Inc. (CSPI) was founded in 1975 and incorporated in California for the purpose of writing programs for mainframe manufacturers. In 1980, the company was approached by the PC Division of IBM to write a program that would compile System/32 software to run on a personal computer. The development continued throughout the eighties adding new features and updating current programs as IBM introduced newer computer systems. When the PC Division was disbanded and the AS/400 Division chose not to continue the relationship, CSPI continued to improve its products on its own. The company had excellent technical resources, but management did not understand the marketplace, which led to a gradual decline in revenues and profits.

In late 1996, a new management team headed by Bruce Acacio and Carol Conway took over CSPI, bringing their extensive knowledge of turnaround strategies and marketing. The first order of business for the new team was to restructure the company through immediate cost-cutting measures to make it profitable. Due to an unresolved conflict with a major creditor, the team filed for Chapter 11 protection under Federal Bankruptcy law in January of 1997. The plan put forward by management was approved in October of 1997 and California Software Products, Inc., finished 1997 profitably - for the first time since 1988. 1998 revenues grew by nearly 60% over 1997 and gross profits were also higher.

CSC markets a family of software products under the brand name BABY. The products provide (a) software solutions that allow business customers to migrate IBM Midrange RPG applications to the PC environment and to execute such applications in native mode on a PC network without a complete rewrite; (b) software designed to create a distributed processing environment including a true AS/400 client-server environment, remote site operations, deployment of specific applications to PC workstations separate from an AS/400, various high availability applications, or delegation of AS/400 batch processing to NT; (c) graphical user interface (GUI) software that allows a developer of an AS/400 text-based application to present screens with Windows point-and-click functionality. Once the application runs on a BABY system, the developer deploys his application by purchasing a BABY Runtime License for every user of his software.

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As a result, businesses and companies worldwide use the Company's family of BABY products for off-loading their program development by moving their source code to the PC, where it can be modified, recompiled, and debugged using BABY products. These programs can then be run on the PC or the Midrange system.

• BABY/AS2000 - The BABY/AS2000 is a powerful PC based RPG/400 development, execution, and operating environment that combines all the benefits of PC and PC network technology with the power and versatility of an IBM AS/400 Midrange computer. Existing source code is downloaded to the PC, recompiled and executed without the need for redevelopment. New programs can be developed, compiled and debugged on the PC platform. New applications can be executed on the PC or uploaded to the AS/400. BABY/AS2000 allows users to preserve their existing application software investment, improve system performance and end-user response time, avoid the high cost of Midrange system upgrades, lower maintenance and system operations cost, integrate RPG/400 application data with existing PC applications, increase end user productivity and performance and shorten new user training time.
• BABY/AS2000 Client Server - The BABY/AS2000 Client-Server rapidly converts AS/400 legacy applications into client-server solutions without the need for any redevelopment of PC functionality. With BABY/AS2000 Client Server, portions of the legacy application targeted to become PC Clients can be downloaded to the PC and recompiled creating PC-based object code. The PC-based RPG application is able to execute for the Client and continue to use the data files residing on the AS/400 (true client-server). This makes it possible to rapidly turn a legacy application into a client-server application, eliminating the need for reprogramming or leaning new PC based languages. Benefits of the BABY/AS2000 Client-Server are no redevelopment of application functionality, rapid implementation cycle with low project completion risk, minimal project and staff investment, no learning curve for new PC based programming languages, ease of project backlog of the MIS department, the original source code always remaining on the AS/400, increased end user productivity and performance and shortened application training time for new users.
• BABY/36 - BABY/36 is a powerful PC based RPG II development, execution and operating environment for the migration of System/36 applications to a PC stand-alone or network environment without the need for any redevelopment. Many users have replaced their System/36 with PC networks and were able to easily migrate their S/36 applications in a matter of days. Benefits of BABY/36 include the ability to preserve existing application software investments, improved system performance and end user response time, avoiding high cost of upgrading to an AS/400, lower maintenance and system operations cost, integration of RPG II application data with existing PC applications, increased end user productivity and performance, avoiding the cost of adding third party GUI products, shortened new user training time and the ability to execute S/36 applications on portable PCs and across remote locations.
• BABY/GUI - BABY/GUI is a powerful PC-based program that allows a software developer to transform System/36 and AS/400 text-based applications into icon-driven Windows screens with point-and-click functionality. On-the-fly conversion gives an application an appearance somewhat better than most 5250 emulation products. The Visual Editor provides the tools to customize the application by moving or deleting objects from the screen, adding logos and graphics, turning function keys into menus or buttons, changing the color and font of labels and fields, displaying subfiles as list boxes, creating multi-level task bars, adding sophisticated metaphors like tabs and notebooks, and other standard and custom Windows features. BABY/GUI facilitates the conversion through a powerful recognition engine that identifies application features for automatic transformation. Prepared and user-defined scripts provide additional auto-conversion functionality. Screens modified with BABY/GUI can be displayed using either the AS/400 or BABY/AS2000 platforms. Thus, a developer offering his application on both platforms has only one set of screens to maintain.

An add-on module planned for late 2000, BABY.COM, will be sold separately to users of BABY/GUI that will allow a developer to Internet-enable his product. This product will create a synergistic marketing environment for BABY/AS2000, BABY/GUI, and BABY.COM.

The Company currently supports its products with a team of technical experts that can assist clients in a smooth migration to the PC environment. Management believes its technical support team and implementation consultants are well equipped to support IBM Midrange, PC, connectivity hardware, and operating system environments. The Company also offers services such as:

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• Pre-Migration Analysis - Analysis and preparation of the software and hardware environment for the migration to the Company's products.
• Client-Server Consulting - Assistance in planning for and converting legacy application environments to Client/Server environments.
• Application Migration Services - Migration of RPG applications to the Company's PC-based operating environment.
• Implementation Service - On-Site installation of migrated applications, technical training and configuration of the PC environment for program execution.

CSC sells its products and services in North America directly to end users and through a network of over 150 value added resellers (VARs), who bundle their own Midrange applications with the BABY products into a single PC offering. The Company also markets its products overseas through an international distributor network of 40 IBM Business Partners and software houses. The Company is an IBM AS/400 Partner in Development and a Microsoft Solution Provider.

In support of its sales efforts, the Company employs direct mail, advertising, seminars, trade shows, telemarketing, and on-going customer and third-party communications programs. The Company also stimulates interest in and educates potential customers about computer and network software solutions through speaking engagements, contributed articles, interviews, and documentaries.

The Company organized its information technology services business such that each service technician maintains a direct relationship with several of the Company's customers. Specific marketing programs vary by target customer. The Company believes that its direct sales approach, including having Company service technicians serve as client-relationship managers, leads to better account penetration and management, better communications and long-term relationships with its clients and greater opportunities for follow-on sales of products and services to its client base.

CSC has extensive expertise and core competency in rehosting and refacing solutions for IBM Midrange computers. Only a few other companies compete in this particular niche. However, platform migration issues involve other platforms, thus providing business for many software and consulting companies. Those companies represent potential competition for CSC. The following is a brief description of several CSC's actual and potential competitors:

• NetManage, Inc. (NASDAQ: NETM) develops, markets, and supports software tools for connecting personal computers to corporate mainframe, Midrange, and UNIX computers. NetManage's NS/Router for AS/400 Access allows a PC running the Windows 95 operating system to connect to a host AS/400 machine through SNA or 5250 emulation.
• Unicomp, Inc. (NASDAQ: UCMP) develops, markets, and supports platform-migration, vertical market applications, and e-commerce payment processing systems for Windows NT and UNIX-based computer systems and point of transaction processors worldwide. Additionally, Unicomp provides installation, training, and systems integration, serving a worldwide network of end-user customers, dealers and distributors.
• Transformation Processing, Inc. (OTC-BB: TPII) develops and markets software and services that enable companies to migrate their application programs and data from older computer codes designed up to thirty or more years ago to modern languages that are compatible with today's more powerful and faster computers.
• Forecross Corporation (OTC-BB: FRXX) develops and markets software and associated services to large organizations for the automated conversion ("migration") of existing business software applications to new computing environments.

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Additionally, a number of small, non-trading companies offer software and services for AS/400 platform migration. They include, for example, Minnesota Midrange Solutions, ENPRO India Limited, Inware Technologies, Inc. , Integrated Data Concepts, Inc., Applied Conversion Technologies, Inc., and Active Technologies Software Development.

Currently, the platform migration business does not have a single dominant player: a large number of smaller focused firms compete for small shares of the market. However, this situation is not likely to last. As the intense competition is forcing smaller players out of the market and as bigger players (IBM, Oracle) are becoming more active, the industry is ripe for consolidation.

A relatively solid financial standing of CSC puts it in a favorable position in the current wave of mergers and acquisitions. The Company's strong balance sheet would allow it to pursue alliances with and acquisitions of other firms in the business. Needless to say, as it grows, CSC has to continue offering reliable product performance, short time to market for new products, competitive pricing, and effective marketing and distribution resources in order to maintain its currently strong competitive position.

The Company owns a United States trademark for its family of BABY software technology. Management is currently planning for additional copyrights and/or trademarks to fully protect its software. In addition, new proprietary technological advancements are being protected as trade secrets until alternative measures can be taken for protection.

The Company believes that its success and ability to compete is dependent in part on the protection of its potential trademarks, trade names, service marks and other proprietary rights. The Company intends to rely on trade secret and copyright laws to protect the intellectual property that it plans to develop, but there can be no assurance that such laws will provide sufficient protection to the Company, that others will not develop products and services that are similar or superior to those of the Company's, or that third parties will not copy or otherwise obtain and use the Company's proprietary information without authorization. In addition, the Company plans to rely on certain property licensed from third parties, and may be required to license additional products or services in the future, for use in general operations. There can be no assurance that these third party licenses will be available or will continue to be available to the Company on acceptable terms or at all. The inability to enter into and maintain any of these licenses could have a material adverse effect on the Company's business, financial condition or operating results.

While the Company uses sophisticated software and hardware devices to preclude unauthorized use of the Company's proprietary and other intellectual property, policing these rights in the future could entail significant expense and could be difficult or impossible to control completely. In addition, there can be no assurance that third parties will not bring claims of copyright or trademark infringement against the Company or claim that certain of the Company's products, processes or features violates a patent. There can be no assurance that third parties will not claim that the Company has misappropriated their creative ideas or formats or otherwise infringed upon their proprietary rights. Any claims of infringement, with or without merit, could be time consuming to defend, result in costly litigation, divert management attention, require the Company to enter into costly royalty or licensing arrangements to prevent the Company from using important technologies or methods, any of which could have a material adverse effect on the Company's business, financial condition or operating results.

The market for business computing products has historically been characterized by frequent technological advances, evolving industry standards, and escalating customer expectations. As a result, management believes that the Company's future growth and success will be largely dependent on its ability to develop or acquire products to meet the evolving needs of its prospective clients. The Company anticipates that the long-term success of its product offerings will require further product development. The Company expects to continually evaluate its products to determine what additional products or enhancements are required by the marketplace. The Company plans to develop and enhance its products internally to meet clients' needs, but if the Company can purchase or license proven products at reasonable costs it will do so in order to avoid the time and expense involved in developing products. CSC plans to add new features to BABY/36, BABY/AS2000, and BABY/GUI to allow Internet access through its soon-to-be released BABY.COM product.

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Since inception to September 30,1999, the Company incurred $23,200 in research and development (R&D) costs. During the fiscal and calendar year ending December 31, 2000, the Company plans to incur research and development expenses of approximately $100,000 with respect to its current and future products. The costs of such activities are not expected to be borne by the Company's customers.

The Company presently has forty-three (43) full time employees. The Company's employees are currently not represented by a collective bargaining agreement, and the Company believes that its relations with its employees are good.

Sales grew to record levels of $12.0 million for fiscal 1999. Income before taxes rose to $3.35 million. California Software reported $0.87 basic earnings per share and $0.66 per share on a fully diluted basis for fiscal 1999. The Company attributed its improvement in sales and income to the widespread market acceptance of its new product releases, including a record order of 4,000 licenses for BABY products.

As of December 31, 1999, cash and receivables rose to $4.78 million and total assets increased to $6.07 million.

In the period beginning January 1, 1999 and ending December 31, 1999, the Company generated pre-tax net income of $2,829,996.00. The corresponding period ending December 31, 1999 resulted in pre-tax loss of $19,977.00, primarily the result of its business combination with CSPI. Management believes the need for additional capital going forward will be met from ongoing revenues and earnings generated from the assets and contracts the Company purchased via an asset purchase agreement with California Software Products, Inc. (CSPI) - a California company in a similar line of business as the Company, and from cash flow and earnings from present and future operations. On January 12, 1999, the Company completed an acquisition of approximately $1,628,068 worth of assets and $702,742 of liabilities CSPI in exchange for a convertible note in the principal sum of $2,250,000, convertible into common shares of the Company once the Company is trading on the OTCBB. The Company intends on pursuing an aggressive growth strategy based in substance on the acquisition of public or private companies with synergistic products or services. The Company anticipates financing these acquisitions via additional funding through private placement(s) as well as via issuance of common shares of the Company in exchange for equity positions in potential target companies.

The Company's predecessor, California Software Products, Inc. (CSPI) was founded in 1975 and incorporated in California for the purpose of writing programs for mainframe manufacturers. In 1980, the company was approached by the PC Division of IBM to write a program that would compile System/32 software to run on a personal computer. Development continued throughout the eighties adding new features and updating current programs as IBM introduced newer computer systems. When the PC Division was disbanded and the AS/400 Division chose not to continue the relationship, CSPI continued to improve these products on its own. The company had excellent technical resources, but management did not understand the marketplace and thus began a gradual decline in revenues and profits. In late 1996 a new management team headed by Bruce Acacio and Carol Conway took over the company bringing their extensive knowledge of turnaround strategies and marketing. The first order of business for the new team was to restructure the company through immediate cost-cutting measures to make it profitable. Due to an unresolved conflict with a major creditor, the team filed for Chapter 11 protection under Federal Bankruptcy law in January of 1997. The Plan put forward by management was approved in October of 1997 and California Software Products, Inc. finished 1997 profitably, its first profitable year since 1988. 1998 revenues have grown by nearly 60% over 1997 and gross profits are higher.

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The Company's continued revenue generation is primarily dependent upon its effective ability to provide software and programming products and services to businesses. The Company's main priorities are the expansion of sales of the BABY family of products. The Company's primary interest is the design of PC-based software solutions to enable users to preserve their investment in existing legacy applications, reduce hardware and operating costs, and, in most cases, significantly improve system response times.

The management team of CSC has extensive experience in incorporating and restructuring organizations and divisions turning them into profitable and growth-enabled business units. Following an anticipated aggressive acquisition plan, CSC is seeking to incorporate into its product and marketing mix strategic businesses with the potential for profitable growth. The Company's growth-through-acquisition and core business expansion plan is designed to create a $100M entity by the end of 2001. The considerable expansion will not come at the expense of short- or long-term profitability: the management is carefully planning the selection of acquisition targets paying particular attention to their ability to integrate and complement current core competencies of the organization.

The Company currently does not expect to purchase or sell any of its facilities or equipment.

Management does not anticipate any significant changes in the number of employees.

The Company's Headquarters are located at 2485 McCabe Way, Irvine, CA 92614. The facility is approximately 10,000 square feet, and has the capacity to hold up to 70 employees. The cost of the Lease is $22,000 per month, with a 5 year duration.

The articles of the Company authorized the issuance of twenty million (20,000,000) shares of Common Stock at a par value of $0.001 per share. On October 31, 1998, founding shareholders purchased 2,700,000 shares of the Company's authorized stock for cash. An original stock offering was made pursuant to Nevada revised statues Chapter 90.490. Additionally, on December 7, 1998, the Company completed an offering of five-hundred-seventy thousand and nine-hundred (570,900) shares of the common stock of the Company to approximately forty-five (45) unaffiliated shareholders. That offering was made in reliance upon an exemption from the registration provisions of section 4(2) of the Securities Act of 1993, as amended, pursuant to regulation D, rule 504 of the Act. At the completion of that offering, the Company had three million two-hundred-seventy thousand nine-hundred (3,270,900) shares of its $0.001 par value common voting stock issued and outstanding held by approximately forty-seven (47) shareholders of record. (On November 29, 1999, the Company's Common Stock began trading on OTCBB^® under the symbol "CAWC." As a result of trades, the number of shareholders of record as of February 14, 2000 was thirty-two (32).)

On January 12, 1999, the Company completed the acquisition of Approximately $1,628,068 worth of assets and $702,742 of liabilities from California Software Products, Inc. - a California company - in exchange for a convertible note in the principal sum of $2,250,000. The note is convertible into common shares of the Company once the Company is trading on the OTCBB^® or a similar market and based upon the Company's trading price sixty (60) days following the first day of trading of the Company's shares on a recognized public exchange with a minimum exchange rate of $1.50 per share.

Management valued California Software Products, Inc. primarily by considering the sum of net book value for the Company on January 12, 1999, and the expected earnings for the years 1999 and 2000 ($2,961,159.92). Expected earnings were determined as a function of prior earnings and a projected growth rate of 20 percent. Management then discounted this value to $2,250,000.00 so as to account for likely differences between industry averages and the Company itself. This valuation is based on projections which may or may not be realized given various factors which may effect actual results including but not limited to changing macroeconomic conditions, unforeseen events and unaccounted for variables.

While management made every effort to accurately assess the value of CSPI from an objective arms length view consistent with a third-party market transaction, the two entities were in fact related. Furthermore, there are no readily identifiable, comparable, third party examples sufficient to determine the degree, to which that transaction and underlying valuation compare to a market transaction. Finally, management may not have the specific financial expertise or accounting sophistication or experience sufficient to arrive at a precise valuation. As such, management does not know exactly how this transaction and related valuation would compare to a third party transaction. In management's view, however, the valuation as determined is an accurate reflection of the likely actual market value of California Software Products, Inc. ("CSPI").

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The Company engaged NevWest Securities Corporation ("NevWest") as Agent, Finder, and Underwriter in it's recent Private Placement Offering to facilitate the sale of the securities described in the Memorandum. Pursuant to the Private Placement Agreement between the Company and NevWest, NevWest agreed to prepare the requisite documentation consisting primarily of the Private Placement Memorandum or similar documents as required by applicable securities rules and regulations, conduct the requisite due diligence, and directly, or indirectly, sell or cause to be sold securities of the Company offered for sale pursuant to the Private Offering to qualifying investors or individuals or entities, hereinafter referred to collectively as ("Investors"), on a best efforts basis.

The Company agreed to compensate NevWest for its services as Agent, Finder, or Underwriter. This compensation included an option to purchase three hundred thousand (300,000) shares of common stock in the Company, which principal terms include an exercise price equal to one hundred ten percent (110%) of the average daily OTCBB^® trading price of the Company (trading symbol: CAWC) calculated as of each day's closing bid over the course of the Company's first thirty (30) days of available and/or active trading on OTCBB^® which option shall be exercisable within a period to commence thirty (30) days after the first day of available and/or active trading of the Company on OTCBB^® ("commencement date") and which expires two (2) years from the commencement date. On March 6, 2000, NevWest exercised it's option to purchase the shares at a strike price of $0.91 per share or a total of $274,332.14, of which $200,000.00 was paid in cash and a Note was signed for the remaining balance of $74,332.14. The shares issued in this transaction are restricted shares pursuant to Rule 144 and are not subject to registration with this statement.

On March 15, 2000, the Company paid a stock dividend at a rate of one share per share held, effectively doubling the number of shares issued and outstanding. The Company has not paid cash dividends on its common stock and does not intend to pay any cash dividends in the foreseeable future.

The following table sets forth all cash compensation to be paid by the Company to its officers, directors, and other significant employees:

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1. No executive officer of the Company prior to January 12, 1999 drew a salary from the Company.
2. There were no arrangements, pursuant to which any director of the Company was compensated for the period from inception to the date of this Memorandum for any service provided as a director. In addition, no such arrangement is contemplated for the foreseeable future, as the Company's only directors are its current executive officers who are already drawing a salary for the management of the Company.
3. The history of compensation of the top management team as it relates to their compensation at CSPI, is as follows: During the period from January 1997 through January 1999, the compensation for Bruce Acacio and Carol Conway by California Software Products, Inc. (CSPI) increased. Those increases were substantially due to a determination by the Board of Directors that the additional efforts of both individuals in facilitating the asset purchase and restructuring of operations as well as the additional work efforts required of each, warranted a commensurate increase in wages. In January 1997 Bruce Acacio and Carol Conway were each compensated at an annual rate of $100,000. This increased to $120,000 in October 1997 pursuant to the Chapter 11 reorganization plan. In January 1999 remuneration levels increased to $180,000 for Bruce Acacio and $150,000 for Carol Conway. On January 15, 1999, California Software Corporation ("CSC") replaced CSPI as the employer of record and began compensating both employees.

The following documents listed as exhibits to this document and are hereby incorporated by reference to the Company's periodic filings with the Securities and Exchange Commission:

• Form 10KSB Annual Audited Report for the fiscal year ended December 31, 1999
• Form 10QSB Quarterly Report for the period from January 1, 2000 to March 31, 2000.
• Form 8-K Current Report, as amended, dated May 31, 2000.

The registrant engaged Squar-Milner, (4150 Newport Place 3^rd floor, Newport Beach, CA 92660, 949-222-2999) as its principal accountant to replace its former principal accountant, James E. Slayton, CPA. The decision to change accountants was approved by the Board of Directors of the registrant. Neither of the reports of the former principal accountants or the financial statements for the period ending December 31, 1999 contained an adverse opinion or disclaimer of opinion, nor was either qualified or modified as to uncertainty, audit scope, or accounting principles. During the audited period ending December 31, 1999, there were no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused him to make reference to the subject matter of the disagreements in connection with his report. During the audited period ending December 31, 1999, the registrant has not consulted Squar-Milner regarding any matter requiring disclosure under Regulation S-K, Item 304(a)(2).

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Except as hereinafter set forth, there is no charter provision, bylaw, contract, arrangement or statute under which any officer or director of the Registrant is insured or indemnified in any manner against any liability which he may incur in his capacity as such.

Pursuant to the provisions of Nevada Revised Statutes 78.751, the Corporation shall indemnify its directors, officers and employees as follows:

Every director, officer, or employee of the Corporation shall be indemnified by the Corporation against all expenses and liabilities, including counsel fees, reasonably incurred by or imposed upon him/her in connection with any proceeding to which he/she may be made a party, or in which he/she may become involved, by reason of being or having been a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of the Corporation, partnership, joint venture, trust or enterprise, or any settlement thereof, whether or not he/she is a director, officer, employee or agent at the time such expenses are incurred, except in such cases wherein the director, officer, employee or agent is adjudged guilty of willful misfeasance or malfeasance in the performance of his/her duties; provided that in the event of a settlement the indemnification herein shall apply only when the Board of Directors approves such settlement and reimbursement as being for the best interests of the Corporation.

The Corporation shall provide to any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of the corporation, partnership, joint venture, trust or enterprise, the indemnity against expenses of a suit, litigation or other proceedings which is specifically permissible under applicable law.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to any provisions contained in its Certificate of Incorporation, or by-laws, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by the registrant in connection with the sale of the common stock being registered. All amounts are estimated except the SEC Registration Fee..

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During the past three years, the registrant has issued the securities set forth below which were not registered under the Securities Act of 1933.

In May 2000 the Company concluded a private placement of 2,724,971 shares of the Company's common stock for a total price of $9,019,870.40. The common shares are being registered pursuant to this registration statement.

The Company agreed to compensate NevWest for its services as Agent, Finder, or Underwriter in its recent Private Placement. This compensation includes an option to purchase three hundred thousand (300,000) shares of common stock in the Company, which principal terms include an exercise price equal to one hundred ten percent (110%) of the average daily OTCBB^® trading price of the Company (trading symbol: CAWC) calculated as of each day's closing bid over the course of the Company's first thirty (30) days of available and/or active trading on OTCBB^® which option shall be exercisable within a period to commence thirty (30) days after the first day of available and/or active trading of the Company on OTCBB^® ("commencement date") and which expires two (2) years from the commencement date. On March 6, 2000, NevWest exercised it's option to purchase the shares at a strike price of $0.91 per share or a total of $274,332.14, of which $200,000.00 was paid in cash and a Note was signed for the remaining balance of $74,332.14. The shares issued in this transaction are restricted shares pursuant to Rule 144 and are not subject to registration with this statement.

The Company retained National Financial Communication Corp. (NFCC) to perform Investor Relations and Public Relations services. NFCC received 210,000 shares as compensation for services rendered. The shares are restricted pursuant to Rule 144 and are not subject to registration with this statement.

An original stock offering was made pursuant to Nevada revised statues Chapter 90.490. Additionally, on December 7, 1998, the Company completed an offering of five-hundred-seventy thousand and nine-hundred (570,900) shares of the common stock of the Company to approximately forty-five (45) unaffiliated shareholders. That offering was made in reliance upon an exemption from the registration provisions of section 4(2) of the Securities Act of 1993, as amended, pursuant to regulation D, rule 504 of the Act. At the completion of that offering, the Company had three million two-hundred-seventy thousand nine-hundred (3,270,900) shares of its $0.001 par value common voting stock issued and outstanding held by approximately forty-seven (47) shareholders of record. The shares involved in this transaction have since been registered via a 10SB12G registration statement which is currently effective before the SEC.

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END