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California Software Responds to Filing of Class Action Lawsuit.

IRVINE, Calif., Aug. 29 /PRNewswire/ --

California Software Corporation (OTC Bulletin Board: CAWC, CAWCE), a leader in IBM Midrange migration products and developer of the award-winning BABY product line, today strongly denied allegations contained in a class-action lawsuit suit filed by Milberg Weiss Bershad Hynes & Lerach, LLP.

The lawsuit stems from an announcement earlier this month that California Software would restate its 1999 and Q1 2000 earnings because it had learned that the method it used to book revenue from new product sales was not allowed under SEC SOP 97-2. Milberg Weiss seized on that announcement to file a class-action suit claiming that California Software and its officers acted intentionally to inflate the value of the company's stock to defraud investors.

California Software CEO Bruce Acacio said today, "Contrary to the uninformed claims made in the Milberg Weiss lawsuit, the company has always attempted to accurately inform investors and the financial community of our financial status. When we learned there was a problem with the way we had booked revenue, we moved immediately to correct it and to disclose the information. We could not have responded in a more above-board manner."

Acacio said the accounting problem surfaced as the company was pursuing its announced intention to seek listing on the American Stock Exchange (AMEX). As part of the process, Amex required California Software to change accounting firms, and the new firm, Stark Tinter & Associates, LLC, identified the revenue booking issue. Acacio and company President Carol Conway immediately instructed Stark Tinter to re-audit the company's 1999 performance and to restate the financials. Q1 2000 will also be restated, and the company's Q2 filing will be delayed until the audit is complete.

Prior to retaining Stark Tinter, California Software had followed a long-time practice of allowing customers to work with new products for 30 days before deciding whether to keep or return them. The company booked the revenue for new products and set aside reserves to cover anticipated returns. The company understood this was an acceptable accounting practice.

"California Software has introduced two exciting new products that are quickly playing key roles in our growth strategy," Acacio said. "Our company is built on sound business principles and on products that are in demand, and we pledge to do all we can to get this litigation behind us so we can focus on growing the business and building shareholder equity."

About California Software Corporation

California Software Corporation is the worldwide leader in IBM Midrange migration software solutions. The company's products, marketed under the brand name BABY, support the migration of IBM AS/400 screens and applications into PC-LAN business environments.

This news release contains forward-looking statements relating to future events or future financial performance that involve risks and uncertainties. Such statements can usually, but not always, be identified by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "intends" or the negative of such terms or comparable terms. These statements are only predictions and actual results could differ materially from those anticipated in these statements based upon a number of factors including those identified in the Company's filings with the SEC. Investors are cautioned that all forward-looking statements involve risks and uncertainties of the industry in which the Company operates and/or proposes to operate, including without limitation, uncertainties of product sales and product development, market acceptance of the Company's products, the impact of competitive products and technological innovation, product returns and defects, product obsolescence, availability of qualified personnel, dependence on third party suppliers, success or failure of strategic business alliances, acquisitions or other business combinations, new or amended laws and regulations applicable to the Company, general market conditions, and other risks. These forward-looking statements are made in reliance on the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended.
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Publication:PR Newswire
Date:Aug 29, 2000
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