SPOTLIGHT ON SMALL CAPS:
CALIFORNIA SOFTWARE CORPORATION (OTC BB: CAWC)
Since mid-April this year, the broader market has been undergoing a deprogramming of the mind set that anything "dot com" is a sure thing. The valuations put
upon many of these dot com start-ups are no longer pulling any weight, and clearly, there has been a call for
change. The average investor, as well as the Wall Street
professional, is now evaluating companies based on value, growth, and earnings. Many of these terms seemed to have gotten lost on the tech-blitzed generation, but are slowly and surely being reintroduced through studying exemplary companies such as California Software Corporation (OTC BB: CAWC).
History
California Software Corporation was founded to provide high-level programming languages to leading computer
manufacturers, including IBM(r) and Compaq(r). In the early 1980s, the Company used its extensive programming expertise to pioneer the first PC-based RPG systems with the introduction of the BABY(tm) product line. These
products allow a company to execute applications developed on Midrange systems in network environments without modification to the RPG source.
Over the past decade, BABY has become a familiar name in the worldwide marketplace and enjoys more than 100,000 installations in 56 countries. The BABY series was designed to maximize the investment and features in RPG-based programs by making them more open, portable, and marketable and all without the need for
redevelopment.
Solid Reputation
California Software is well-positioned - financially, creatively, and technologically - to solidify its leadership position in the management of Midrange migration within IBM AS/400 and PC-LAN business environments. The Company's latest innovation, BABY/GUI is rapidly capturing market share in the graphical user interface sector.
California Software will further leverage its solid reputation in platform-migration software to penetrate the multi-billion dollar e-commerce industry, with the planned release of BABY.COM due out in September of 2000. This Internet-based solution will broaden its customer base, while keeping the Company at the forefront of the latest technological advancements.
Financial Strength
California Software posted an extraordinary performance last year. Fiscal 1999 sales grew to record levels, earning the Company $0.87 per share on $12 million in revenue, while achieving $1.00 per share in cash and eliminating all debt. The Company quickly proceeded to secure a $10 million preferred private placement at $4 per share, attracting major institutional investors including Lehman Brothers.
Fiscal year 2000 continued momentum through the issuance of a 2-for-1 stock split, and the firm's filing for an American Stock Exchange listing.
(Fiscal year-end 1999 financial tables follow.)
California Software Corporation
Condensed Consolidated Balance Sheet (Audited)
December 31, 1999; December 31, 1998
Cash: $402,782; $15,395
Accounts Receivable: $4,381,742; $0
Total current assets: $5,171,395; $0
Other assets: $847,785; $3,480
Total assets: $6,070,652; $0
Total current liabilities: $939,193; $0
Notes payable1: $2,250,000; $0
Total liabilities|: $3,189,193; $0
Total shareholders' equity: $2,881,459; $15,743
Total liabilities & shareholders' equity: $6,070,652; $15,743
California Software Corporation
Condensed Consolidated Statement of Operations
(Audited)
Fiscal year ended December 31, 1999; Fiscal year ended December 31,1998
Gross Sales: $12,009,377; $0
Less Sales Discounts: ($1,763,144); $0
Net Sales: $10,246,193; $0
Cost and Expenses
Wages and Salaries: $1,262,959; $0
Selling, General, and Administrative: $1,587,214; $19,955
Returned Product Reserve: $3,906,214; $0
Amortization of intangible assets: $211,956; $12
Depreciation Expense: $54,117; $0
Total Costs and Expenses: $7,022,460; $19,977
Net Operating Income (Loss) Before Income Taxes: $3,223,733; $(19,977)
Other Income
Deferred Taxes: $112,539; NA
Interest Income: $14,221; $0
Net Income (Loss) Before Income Taxes: $3,350,493; $(19,977)
Provision for Income Tax: $520,497; $0
Net Income (Loss): $2,829,996; $(19,977)
Net income (loss) per common share
- primary: $0.87; $(0.01)
Equivalents for convertible debt1: 1,000,000; NA
Net income (loss) per share
- diluted1: 0.66; NA
Weighted average number of common: 3,270,900; 3,270,900
Notes to Consolidated Financial Statements: The $2,250,000 note payable was eliminated in the first quarter of 2000 through the issuance of 1,000,000 shares of common stock, which effected a fully diluted earnings per share of $0.66.
Future Growth and Success
The software industry is an explosive market driven by the ability to respond to an ever-changing environment characterized by frequent technological advances, evolving industry standards, and escalating customer expectations. California Software continues to prove itself as a dynamic player in the software industry. The Company expects to drive its growth trend through evaluating and developing additional products for widespread market acceptance. California Software will also pursue licensing and acquiring proven products at reasonable costs that will decrease corporate development expenses and time-to-market. In addition, the Company is undertaking an aggressive growth-through-acquisition strategy. With $10 million in the bank and a team of seasoned management professionals, California Software has targeted several
highly qualified acquisition candidates that will help accelerate its near-term top- and bottom-line growth.
Undervalued and Outperforming
As the investment world recovers from "dot com fever," more analysts and brokers will be focusing on those companies with solid fundamentals, demonstrated growth, and continued earnings, such as California Software.
California Software continues to outperform its peers, yet its stock sells at a fraction of the price of competitors such as Jacada, Inc. (NASDAQ: JCDA). Backed by such investment heavyweights as Lehman Brothers, California Software represents a groundfloor opportunity for savvy investors to maximize returns. As the Company rapidly
approaches its listing on AMEX, California Software represents an exciting buying opportunity, before major analysts begin recommending the stock.
tekinvestor2k
For additional information, see www.californiasoftware.com
CONTACT:
California Software, Irvine
Kate Tague, (800) 841-1532 ext. 206
ktague@calsw.com
www.californiasoftware.com
or
National Financial Communications Corporation
Robert Weiss, (Investor Relations), (877) 385-0971 ext. 11
rick@otcfn.com |
