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OTC BB Symbol: CAWC -moving to AMEX within the near futue. Common Shares outstanding: 9 million Estimated Public Float: 1,040,000 California Software Corp./Who they are... California Software Corp. (OTC BB: CAWC) is an important pioneer in the computer industry. In the 1980s, California Software Products, Inc. used their extensive programming knowledge to develop the first PC-based RPG compiler. RPG is the proprietary programming language of the IBM AS/400 and its predecessor systems. This development formed the core of today’s top-selling BABYTM product line that supports the migration of Midrange applications in the IBM AS/400 and PC-LAN environments used by thousands of businesses worldwide. In January 1999, California Software Corp. acquired its predecessor company California Software Products, Inc. Driven by a powerful combination of technical resources and a seasoned management team, California Software is on the cusp of its explosive growth potential. The Company expects FY00 revenues to skyrocket to $20 million through the release of new innovative products to an established, loyal customer base. Software Magazine recently ranked California Software as one of its “Top 500 Software Companies”. The Company will leverage its solid reputation in platform-migration software to penetrate the multi-billion dollar e-commerce industry during 2000, with the planned release of BABY.COM, an Internet-based solution. With a stream of consistent earnings and significant top-line growth, California Software stands above its peers. Despite its strong fundamentals and recent achievements, CAWC stock trades at significantly undervalued levels, representing a unique opportunity for shareholders to maximize returns. This year's Software 500 list Last year, In 1999, Cal Soft was listed as number 432 out of 500 based on 1998s numbers. This year they have broken through the next level, and are positioned nicely at 386 out of 500. What will the year 2000 numbers mean for next year’s rankings? I think you get the picture, but more importantly, the Industry will soon catch on as well. Rapid yet steady growth, quality products, and a seasoned management team are moving Cal Soft up the ladder of software success. 2001 - ??? California Software Corp. 2000 - 386 California Software Corp. 1999 - 432 California Software Corp. If you would like to view the Software 500 yourself, please go to the link provided below... softwaremag.com CORPORATE SUMMARY California Software Corp. (CSC) (OTC BB: CAWC) is the international leading provider of IBM Midrange migration software solutions marketed under the brand name BABYTM. This awarding-winning software product line services the world’s most popular multi-user business computer system, IBM AS/400. BABY converts IBM AS/400 screens and applications into PC-LAN business environments and enjoys over 100,000 installations in 56 countries. The Company achieved dramatic sales growth in Q4FY99, up 200% year-over-year, due to broad market acceptance of its latest product release BABY/GUI and a record order for 4,000 licenses. California Software plans to continue its rapid growth momentum through strategic acquisitions and building its infrastructure by doubling the number of employees and relocating to new headquarters during calendar 2000. With a strong balance sheet and a pending $5 million equity private placement, CSC is well funded to launch an aggressive growth-through-acquisition strategy that will lead to year-end revenues of $20 million and position the firm for an American Stock Exchange listing. STOCK INFORMATION... Business: Software OTC BB Symbol: CAWC Common Shares outstanding: 6.4 million (adjusted for split) Estimated Public Float: 1,040,000 (adjusted for split) TIMING THE MARKET... The AS/400, one of IBM’s greatest success stories, is widely installed in a cross-section of industry sectors, including manufacturing, distribution, transportation, financing, and government. The AS/400 sold more than 720,000 units in 120 countries and is installed in 98% of Fortune 500 companies. California Software develops, markets, and supports platform-migration software that services the huge market of businesses that operate with AS/400 computers. Market Shift The IBM AS/400 and its predecessors, System/32, System/34, System/36, and System/38 – collectively called IBM Midrange systems – gained popularity throughout the 1980s, as they were far more powerful than individual PCs and could support an environment of hundreds of users. Despite the platform’s advantages, IBM Midrange users and developers have historically been constrained by the non-graphical and proprietary nature of IBM’s operating systems (i.e. IBM applications could not run on leading operating systems such as UNIX or Microsoft’s NTTM). This incompatibility factor has escalated in recent years as PC networks quickly saturated the business market to the point where nearly every business today operates via a personal computer. CSC’s BABY software off-loads the Company’s program development to the PC, where the computer’s source code can be modified, reconfigured, and debugged using the family of BABY products. These programs can then be run on a PC or the Midrange system. Rising Demand Many corporations now face the need to convert huge banks of reliable, but proprietary text screen applications, into PC network environments. The products of CSC meet this burgeoning demand by replicating the IBM Midrange machine environment on a PC platform. California Software is an expert in two approaches (rehosting and refacing) that require minimal retraining costs and offer businesses continued use of their existing programs and databases, thus preserving the customers’ initial investment, improving system performance and end-user productivity. During the past two decades, over 28,000 business programs were written for IBM systems-more than any other platform. California Software products appeal to the Independent Software Vendors (ISVs), who invested hefty resources in IBM applications over the years. ISVs are now challenged with migrating their products to new platforms, while maintaining their existing customer base for applications software running on IBM AS/400s. The Company’s BABY development tools are an excellent choice for ISVs because BABY does not modify the Report Generation Language (RPG) source code. One set of codes and screens can be maintained for both Midrange and PC platforms. LUCRATIVE FRANCHISE... BABY is rapidly becoming the platform of choice for re-hosting software solutions from the IBM Midrange computers. As an increasing number of businesses shift toward PC-network computing, the users of Midrange systems are seeking maximum efficiency in converting their applications to the PC platform. BABY offers the optimal solution, a less costly and time-consuming redevelopment. Principal Products CSC’s main products are BABY/400, BABY/36, and BABY/GUI software packages. BABY/400 and BABY/36 replicate IBM Midrange operating environments under WindowsTM. All BABY products provide a Y2K compliant platform for System/3x programs. Providing this makeover dramatically extends the life of an application because it can take older IBM Midrange programs and run them on an NTTM network. Moreover, businesses can simultaneously use CSC’s graphical user interface (GUI) product BABY/GUI to changes text screens (what you see when you turn on the computer) into Window’s point-and- click functionality. This product has experienced widespread market acceptance, posting an order of 6,100 units before its release in August 1999. Three new releases are planned by year-end 2000 and include BABY/AS2001 and BABY.COM, an add-on module that allows developers to Internet-enable a product. This module will be sold separately to users of BABY/GUI. BABY.COM is poised to capitalize upon the increasing need for businesses to integrate on- and off-line operations. Services and Support CSC supports its products with a team of technical experts. Service technicians serve as client-relationship managers and maintain direct relationships with the Company's customers. Product support services include: 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 converting legacy application environments to Client/Server environments. Application Migration Services – migration of Report Generation Language (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. MANAGEMENT EXPERTISE... The recent success of CSC – a near doubling of revenues and earnings in less than twelve months – and its bright prospects for the future rest with the Company’s expert management team. Bruce Acacio, Chairman of the Board, President, and Chief Executive Officer, is the former President and CEO of California Software Products, Inc. (CSPI), which was acquired by CSC in January 1999. At CSPI, he was responsible for the release of new versions of BABY/36TM and BABY/400TM products. Prior to CSPI, Acacio was the president of a INC 500 company, which enjoyed 2,000% growth under his leadership. During his career, Acacio held sales and management positions with the UK-based conglomerate Lex Service, PLC, and was an agent manager for IBM. In those positions, he was responsible for turning operations profitable and expanding business units. Carol Conway, Vice President and Chief Financial Officer, is the former CFO of CSPI. At CSPI, Conway assisted in the strategic and financial turnaround of the company. Conway also directly supervised the planning and execution of new BABY product releases. R. Dean Moore, Director of Development, co-founded CSPI. At CSPI, Moore 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/400. Thomas Hoyt, Director of Worldwide Sales, held the same position with CSPI. Hoyt has an impressive track record in marketing 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. Katherine Tague, Marketing & Communications, has 15 plus years of success in diversified marketing assignments with consumer products and financial services companies, including Reebok International and Waste Management, Inc. Tague’s recent experience includes employment at Crossroads, LLC, a turnaround management specialist, where she managed communications for their clients’ market and financial communities FINANCIAL ANALYSIS AND OUTLOOK... The Company has achieved consistent top- and bottom-line growth since 1997. In the first nine months of 1999, the Company increased its revenues 115% over the same period in 1998. California Software experienced a dramatic turnaround to profitability in the first quarter of 1999. Net income grew from a loss of $67,520 in the first nine months of 1998, to a gain of $2,825,491 in the same period in 1999. Management expects annual revenue to continue its upward growth trend and projects year-end revenues to increase again by 200% year-over-year. EXPANSIVE DISTRIBUTION... CSC sells its products and services in North America directly to end-users and through a network of over 150 value-added resellers bundling their own Midrange applications with the BABY products. Overseas, the Company markets its products through a distributor network of 40 IBM Business Partners and software houses. CSC is an IBM AS/400 Partner in Development and a Microsoft Solution Provider. The Company markets its products through direct mail, advertising, seminars, trade shows, telemarketing, and ongoing customer and third-party communications programs. The Company also educates potential customers about computer and network software solutions through speaking engagements, contributed articles, interviews and documentaries. California Software 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. This direct sales approach, including having CSC service technicians serve as client-relationship managers, leads to enhanced communications, better account management, and long-lasting client relationships with greater potential to sell follow-on products and services. NICHE MARKET... 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 driving overall sales for many software and consulting companies. 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. GROWTH STRATEGY... California Software is well positioned, financially, culturally, and technologically, to solidify its market leadership position in the management of Midrange migration within IBM AS/400 and PC-LAN business environments. In addition, the Company’s latest release, BABY/GUI, is capturing shares of the graphical user interface sector. California Software will further build its position in this front-end software segment, while leveraging its dominance in the Midrange migration market to build strategic presence through acquisition. The Company's future growth and success will be driven upon its innate ability to evaluate and develop additional products to meet the evolving needs of its existing and prospective clients. CSC will also pursue licensing and acquisition of proven products at reasonable costs that will decrease its development expenses. The Company’s stellar leadership team is implementing an aggressive growth strategy and recently retained Nev West Securities for investment banking, private placement and acquisition planning. INVESTMENT HIGHLIGHTS...in summation: 1) Analysts Bullish on CAWC. A buy recommendation on CAWC calls for a sevenfold increase in its price over the next 12-months. 2) Market Leadership. The Company has carved a significant portion of the platform-migration software industry, with an installed base of 100,000 spanning 56 countries. In the high-technology sector, CAWC’s BABYTM product line continues to enjoy phenomenal market acceptance and the release of new products, including an e-commerce solution, will solidify the Company’s leadership position. 3) Dramatic Growth. California Software continues to steadily increase its revenue and profitability. Year-end 2000 revenues are projected to increase by 200% annually for the second year in a row. 4) Filing for AMEX listing. A recent 2-for-1 stock split and a pending $5 million private placement will position the firm to file for an AMEX listing in March 2000. A listing on AMEX will further its presence on Wall Street and broaden its access to capital markets. 5) Undervalued and outperforming. CAWC outperforms its peers, yet its stock sells at half the price of leading competitors, such as Jacada, Ltd. (NASDAQ: JCDA). Significantly undervalued, CAWC stock has the potential for considerable upside in the near future. MAXIMIZING SHAREHOLDER RETURNS... 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 outperform the competition, in both sales and earnings. Where most software firms have sales per share ratio of 20x sales volume, CSC is significantly under valued at 4x. The Company plans to release three new products this year that will fuel its phenomenal success on the market. To accommodate its continued growth, California Software plans to move to new headquarters in early Q2FY00 and will double the number of its employees. These additional sales and support staff will build infrastructure for the planned achievement of $20 million in top-line sales at year-end 2000. The Company recently underwent a 2-for-1 stock split of its common stock. The split meets the share requirements to apply for listing on the American Stock Exchange (AMEXTM). An AMEX listing will further enhance the Company’s national exposure, which has gained momentum through recent investor relation’s activity and the significant success of its BABY products. California Software recently had completion of a private placement, which provides the assets necessary for a listing on AMEX. With the additional capital raised, the Company will accelerate its aggressive acquisition strategy. California Software’s market capitalization is poised to increase substantially in the near future, which will position the Company more in line with its peers. With considerable room for appreciation, CAWC stock offers potential investors a dynamic opportunity for significant gains. | ||||||||||||||
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