UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ofFor the ~~Securities~~quarterly ~~Exchange~~period ~~Act~~ended ofMarch 31, ~~1934~~2007

For the quarterly period ended December 31, 2004


o		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.)
(State or other jurisdiction		(IRS Employer
17075 Newhope Street		92708
of incorporation or organization)		Identification No.)
Fountain Valley, California
17075 Newhope Street
(Address of principal Executive offices)		(Zip code)
Fountain Valley, California		92708
(Address of principal		(Zip code)
Executive offices)

(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 þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or ~~(as~~a ~~defined~~non-accelerated infiler. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act~~). Yes~~ o(Check ~~No þ~~one):

AsLarge ofAccelerated ~~January 24,~~Filer ~~2005~~o Accelerated ~~there~~Filer ~~were~~o Non-accelerated ~~3,810,000~~Filer ~~shares of common stock outstanding.~~ þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of May 2, 2007, there were 4,047,000 shares of common stock outstanding.

CAM COMMERCE SOLUTIONS, INC.

INDEX

	~~Page Number~~			Page Number
PART I Financial Information
PART I — Financial Information
Item 1 Financial Statements:
Item 1	Financial Statements:
a) Unaudited Condensed Balance Sheets at December 31, 2004 and September 30, 2004		3
	a)		Condensed Balance Sheets at March 31, 2007 (Unaudited) and September 30, 2006		3
b) Unaudited Condensed Statements of Income for the three months ended December 31, 2004 and 2003		4
	b)		Unaudited Condensed Statements of Income for the three months ended March 31, 2007 and 2006		4
c) Unaudited Condensed Statements of Cash Flows for the three months ended December 31, 2004 and 2003		5
	c)		Unaudited Condensed Statements of Income for the six months ended March 31, 2007 and 2006		5
e) Notes to Unaudited Condensed Financial Statements		6-10
	d)		Unaudited Condensed Statements of Cash Flows for the six months ended March 31, 2007 and 2006		6
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		11-18
	e)		Notes to Unaudited Condensed Financial Statements		7-13
Item 3 Quantitative and Qualitative Disclosures About Market Risk		19
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations				14-22
Item 4 Controls and Procedures		19
Item 3	Quantitative and Qualitative Disclosures About Market Risk				23
PART II Other Information
Item 4	Controls and Procedures				23
Item 1 Legal Proceedings		20
PART II — Other Information
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		20
Item 1	Legal Proceedings				24
Item 3 Defaults Upon Senior Securities		20
Item 1A	Risk Factors				24
Item 4 Submission of Matters to a Vote of Security Holders		20
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds				24
Item 5 Other Information		20
Item 3	Defaults Upon Senior Securities				24
Item 6 Exhibits		20-21
Item 4	Submission of Matters to a Vote of Security Holders				24
Signatures		22
Item 5	Other Information				24
EXHIBIT 31(A)
Item 6	Exhibits				24-25
EXHIBIT 31(B)
Signatures					26
EXHIBIT 31.(A)
EXHIBIT 31.(B)
EXHIBIT 32

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CAM COMMERCE SOLUTIONS, INC.

~~UNAUDITED~~ CONDENSED BALANCE SHEETS

(In thousands, except share and per share data)

	DECEMBER 31, 2004					SEPTEMBER 30, 2004
	MARCH 31, 2007				SEPTEMBER 30, 2006
ASSETS
	(Unaudited)
Current assets:
ASSETS
Cash and cash equivalents		$	16,245				$	16,591
Current assets:
Marketable available-for-sale securities			1,800					1,109
Cash and cash equivalents	$	17,167			$	15,196
Accounts receivable, net			2,247					1,919
Marketable available-for-sale securities		8,181				8,457
Inventories			257					361
Accounts receivable, net		2,198				1,936
Deferred income taxes			1,629					1,629
Inventories		308				391
Other current assets			109					137
Deferred income taxes		887				991
Total current assets			22,287					21,746
Other current assets		233				138
Deferred income taxes			780					780
Total current assets		28,974				27,109
Property and equipment, net			621					639
Deferred income taxes		37				56
Intangible assets, net			625					679
Property and equipment, net		408				484
Other assets			66					80
Intangible assets, net		463				445
Total assets		$	24,379				$	23,924
Other assets		128				51
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total assets	$	30,010			$	28,145
Current liabilities:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		$	481				$	550
Current liabilities:
Accrued compensation and related expenses			886					1,093
Accounts payable	$	370			$	301
Deferred service revenue and customer deposits			1,664					1,628
Accrued compensation and related expenses		1,250				1,255
Other accrued liabilities			239					357
Deferred service revenue and customer deposits		1,736				1,499
Total current liabilities			3,270					3,628
Cash dividends payable		726				594
Stockholders’ equity:
Other accrued liabilities		110				103
Common stock, $0.001 par value; 12,000 shares authorized, 3,798 shares issued and outstanding at December 31, 2004 and 3,754 at September 30, 2004			4					4
Total current liabilities		4,192				3,752
Capital in excess of par value			19,748					19,328
Commitments
Accumulated other comprehensive income (loss)			(7	)				2
Stockholders’ equity:
Retained earnings			1,364					962
Common stock, $0.001 par value; 12,000,000 shares authorized, 4,033,000 shares issued and outstanding at March 31, 2007 and 3,961,000 at September 30, 2006		4				4
Total stockholders’ equity			21,109					20,296
Capital in excess of par value		22,594				21,634
Total liabilities and stockholders’ equity		$	24,379				$	23,924
Accumulated other comprehensive income (loss)		6				(6	)
Retained earnings		3,214				2,761
Total stockholders’ equity		25,818				24,393
Total liabilities and stockholders’ equity	$	30,010			$	28,145

See accompanying notes.

CAM COMMERCE SOLUTIONS, INC.

UNAUDITED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data)

	THREE MONTHS ENDED	~~THREE MONTHS ENDED~~
	DECEMBER 31, 2004					DECEMBER 31, 2003
	MARCH 31, 2007				MARCH 31, 2006
REVENUES
Net hardware, software and installation revenues		$	3,348				$	3,237
Net payment processing revenues	$	3,342			$	2,324
Net service revenues			1,405					1,379
Net hardware, software and installation revenues		2,576				2,848
Net payment processing revenues			1,397					684
Net service revenues		1,429				1,311
Total net revenues		7,347	~~6,150~~			6,483		~~5,300~~
COSTS AND EXPENSES
Cost of hardware, software and installation revenues			1,684					1,641
Cost of payment processing revenues		181				126
Cost of service revenues			512					508
Cost of hardware, software and installation revenues (1)		1,234				1,508
Cost of payment processing revenues			142					38
Cost of service revenues (1)		639				607
Total cost of revenues		2,054	~~2,338~~			2,241		~~2,187~~
Selling, general and administrative expenses			2,881					2,421
Selling, general and administrative expenses (1) (2)		3,840				3,387
Research and development expenses			367					369
Research and development expenses (1)		397				400
Interest income		(310	~~(109~~)	)		(223	)	~~(81~~	)
Total costs and expenses		5,981	~~5,477~~			5,805		~~4,896~~
Income before provisions for income taxes			673					404
Income before provision for income taxes		1,366				678
Provisions for income taxes			271					29
Provision for income taxes		512				261
Net income	$	$854	~~402~~		$	417	$	~~375~~
Basic net income per share	$	$0.21	~~0.11~~		$	0.11	$	~~0.11~~
Diluted net income per share	$	$0.20	~~0.10~~		$	0.10	$	~~0.10~~
Shares used in computing basic net income per share		4,022	~~3,787~~			3,890		~~3,284~~
Shares used in computing diluted net income per share		4,220	~~4,065~~			4,169		~~3,615~~
Cash dividends declared per common share	$	0.18			$	0.14
(1) Includes share-based employee compensation expense as follows:
Cost of hardware, software and installation revenues	$	3			$	4
Cost of service revenues		5				5
Selling, general and administrative expenses		21				21
Research and development expenses		7				8

~~See~~(2) ~~accompanying~~Includes ~~notes~~$42 and $40 for the three months ended March 31, 2007 and 2006, respectively, for building rent to a related party, Geoff Knapp, officer and director of CAM Commerce.

4See accompanying notes.

~~Table of Contents~~4

CAMTable COMMERCEof SOLUTIONS, INC. Contents

~~UNAUDITED~~CAM ~~CONDENSED~~COMMERCE ~~STATEMENTS~~SOLUTIONS, ~~OF CASH FLOWS~~INC.

~~(In~~UNAUDITED ~~thousands)~~CONDENSED STATEMENTS OF INCOME

		THREE MONTHS ENDED
	DECEMBER 31, 2004				DECEMBER 31, 2003
Operating activities:
Net income		$	402			$	375
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization			215				221
Provision for doubtful accounts			9				11
Income tax deduction from exercise of stock options			247				—
Changes in operating assets and liabilities:
Accounts receivable			(337	)			(178	)
Inventories			104				65
Other assets			42				(16	)
Accounts payable			(69	)			33
Accrued compensation and related expenses			(207	)			96
Deferred service revenue and customer deposits			36				181
Other accrued liabilities			(118	)			(39	)
Cash provided by operating activities			324				749
Investing activities:
Purchase of property and equipment			(68	)			(37	)
Capitalized software development costs			(75	)			(82	)
Purchase of marketable securities			(694	)			—
Change in marketable securities			(6	)			6
Cash used in investing activities			(843	)			(113	)
Financing activities:
Proceeds from exercise of stock options			173				284
Cash provided by financing activities			173				284
Net increase (decrease) in cash and cash equivalents			(346	)			920
Cash and cash equivalents at beginning of period			16,591				10,889
Cash and cash equivalents at end of period		$	16,245			$	11,809

(In thousands, except per share data)

See accompanying notes.


	SIX MONTHS ENDED
	MARCH 31, 2007			MARCH 31, 2006
REVENUES
Net payment processing revenues	$	6,807		$	4,902
Net hardware, software and installation revenues		4,861			5,912
Net service revenues		2,851			2,655

Total net revenues		14,519			13,469
COSTS AND EXPENSES
Cost of payment processing revenues		311			244
Cost of hardware, software and installation revenues ⁽¹⁾		2,418			3,173
Cost of service revenues ⁽¹⁾		1,276			1,201

Total cost of revenues		4,005			4,618
Selling, general and administrative expenses ^{(1) (2)}		7,503			6,659
Research and development expenses ⁽¹⁾		780			763
Interest income		(615	)		(429	)

Total costs and expenses		11,673			11,611

Income before provision for income taxes		2,846			1,858
Provision for income taxes		1,024			699

Net income	$	1,822		$	1,159


Basic net income per share	$	0.46		$	0.30


Diluted net income per share	$	0.43		$	0.28


Shares used in computing basic net income per share		4,001			3,869

Shares used in computing diluted net income per share		4,206			4,133

Cash dividends declared per common share	$	0.34		$	0.28

⁽¹⁾ Includes share-based employee compensation expense as follows:

Cost of hardware, software and installation revenues	$	6		$	8
Cost of service revenues		10			10
Selling, general and administrative expenses		44			46
Research and development expenses		14			16

5 (2) Includes $84 and $81 for the six months ended March 31, 2007 and 2006, respectively, for building rent to a related party, Geoff Knapp, officer and director of CAM Commerce.

~~Table~~See ofaccompanying ~~Contents~~notes.

~~CAM COMMERCE SOLUTIONS, INC.~~5

NOTESTable TOof UNAUDITED CONDENSED FINANCIAL STATEMENTS Contents

~~DECEMBER~~CAM 31COMMERCE SOLUTIONS, ~~2004~~INC.

~~(In~~UNAUDITED ~~thousands,~~CONDENSED ~~except~~STATEMENTS ~~per~~OF ~~share~~CASH ~~data)~~FLOWS

~~ORGANIZATION~~(In ~~AND BUSINESS~~thousands)

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, accounting, and payment processing. 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.


	SIX MONTHS ENDED
	MARCH 31, 2007			MARCH 31, 2006
Operating activities:
Net income	$	1,822		$	1,159
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		325			342
Provision for doubtful accounts		9			(31	)
Change in deferred income taxes		120			135
Share-based compensation		74			80
Excess tax benefits from share-based payment arrangements		(496	)		(457	)
Changes in operating assets and liabilities:
Accounts receivable		(271	)		(86	)
Inventories		83			13
Other assets		(172	)		(3	)
Accounts payable		69			(33	)
Accrued compensation and related expenses		(5	)		(43	)
Deferred service revenue and customer deposits		237			103
Other accrued liabilities		503			342

Cash provided by operating activities		2,298			1,521

Cash flows from investing activities:
Purchase of property and equipment		(108	)		(119	)
Capitalized software development costs		(159	)		(141	)
Purchase of marketable securities		(1,744	)		(2,269	)
Proceeds from maturity of marketable securities		2,035			750

Cash provided by (used in) investing activities		24			(1,779	)

Cash flows from financing activities:
Proceeds from exercise of stock options		390			402
Excess tax benefits from share-based payment arrangements		496			457
Dividends paid on common stock		(1,237	)		(926	)

Cash used in financing activities		(351	)		(67	)

Net increase (decrease) in cash and cash equivalents		1,971			(325	)
Cash and cash equivalents at beginning of period		15,196			15,763

Cash and cash equivalents at end of period	$	17,167		$	15,438

~~SUMMARY~~See OFaccompanying ~~SIGNIFICANT ACCOUNTING POLICIES~~notes.

~~Presentation of Condensed Financial Statements~~6

TheTable accompanying financial statements of the Company as of and for the three months ended December 31, 2004 and 2003 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, 2004. Contents

~~Cash~~CAM ~~Equivalents~~COMMERCE SOLUTIONS, INC.

~~Cash~~NOTES ~~equivalents~~TO ~~represent~~UNAUDITED ~~highly~~CONDENSED ~~liquid~~FINANCIAL ~~investments with original maturities of three months or~~STATEMENTS ~~less.~~

~~Marketable~~MARCH ~~Securities~~31, 2007

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 December 31, 2004 and September 30, 2004 consisted of debt instruments that bear interest at various rates and mature in two years or less. The gross unrealized gains (~~losses) on~~In ~~securities available-for-sale at December 31~~thousands, ~~2004~~except ~~and~~per ~~September 30,~~share ~~2004 were $(7~~data) ~~and $2, respectively. There were no realized~~ ~~gains (losses) for the three months ended December 31, 2004 and 2003.~~

~~Accounts~~ORGANIZATION ~~Receivable~~AND ~~and Allowance For Doubtful Accounts~~BUSINESS

CAM Commerce Solutions, Inc. (the “Company”) was incorporated in California in 1983, and reincorporated in Delaware in 1987. The Company ~~has~~designs, ~~accounts~~develops, ~~receivable~~markets, ~~from~~installs ~~customers~~and ~~who~~services highly ~~were~~integrated ~~given~~retailing ~~extended~~and payment ~~terms~~processing solutions for ~~goods~~small-to-medium size traditional and ~~services~~eCommerce ~~rendered.~~businesses ~~Extended~~based ~~payment~~on ~~terms~~its ~~are~~open ~~generally~~architecture ~~provided~~software. ~~only~~These tointegrated ~~established~~solutions ~~relationship~~include ~~customers~~credit inand ~~good~~debit ~~credit~~card ~~standing~~processing, ~~and~~inventory ~~generally~~management, ~~represent~~point ~~net~~of ~~30 day~~sale, ~~terms.~~accounting, ~~Payment~~Internet ~~for~~sales, ~~goods~~gift card and ~~services~~customer ~~are~~loyalty ~~typically~~programs, ~~due~~and ~~with~~extensive anmanagement ~~initial~~reporting. ~~deposit~~Payment processing ~~payment~~services ~~upon~~are ~~signing~~provided ~~the~~on ~~purchase agreement,~~a ~~with~~transaction ~~the~~based ~~balance~~business ~~due upon the delivery~~model.

~~Management~~SUMMARY ~~evaluates~~OF ~~accounts~~SIGNIFICANT ~~receivable~~ACCOUNTING ~~on a regular basis to charge off any accounts deemed~~POLICIES ~~uncollectible at the time. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments.~~

~~Concentrations~~Presentation of ~~Credit~~Condensed ~~Risk~~Financial Statements

The accompanying financial statements of the Company ~~sells~~as ~~its~~of ~~products~~and ~~primarily~~for tothe ~~small-to-medium~~three ~~size~~and ~~retailers~~six months ended March 31, 2007 and 2006 are unaudited. ~~Credit~~They ishave ~~extended based~~been onprepared anpursuant ~~evaluation~~to the rules and regulations of the ~~customer’s~~United ~~financial~~States ~~condition~~Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and ~~collateral~~footnotes isrequired by generally ~~not~~accepted accounting ~~required~~principles (“GAAP”) for complete financial statements. ~~Credit~~In ~~losses~~the ~~have~~opinion ~~traditionally~~of ~~been~~management, ~~minimal~~all adjustments ~~and~~necessary for a fair presentation of such ~~losses~~financial statements have been ~~within~~included. Such ~~management’s~~adjustments ~~expectations~~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, 2006.

6Cash Equivalents

~~Table~~Cash equivalents represent highly liquid investments with original maturities of ~~Contents~~three months or less.

~~CAM~~Marketable ~~COMMERCE SOLUTIONS, INC.~~Securities

~~NOTES~~All TOinvestment ~~UNAUDITED~~securities ~~CONDENSED~~are ~~FINANCIAL~~considered ~~STATEMENTS~~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 available-for-sale securities at March 31, 2007 and September 30, 2006 consisted of debt instruments and certificates of deposit that bear interest at various rates and mature in two years or less. The gross unrealized gains (losses) on marketable available-for-sale securities at March 31, 2007 and September 30, 2006 were $9 and ($10), respectively. There were no realized gains (losses) for the three and six months ended March 31, 2007 and 2006. Amortized cost of the Company’s marketable available-for-sale securities at March 31, 2007 and September 2006 were $8,027 and $8,350, respectively.

~~DECEMBER~~Accounts ~~31,~~Receivable ~~2004~~and Allowance For Doubtful Accounts

~~(In~~The ~~thousands,~~Company ~~except~~has ~~per~~accounts ~~share~~receivable ~~data)~~from customers who were given extended payment terms for goods and services rendered. Extended payment terms are generally provided only to established relationship customers in good credit standing, and generally represent net 30 day terms. Payment for goods and services are typically due with an initial deposit payment upon signing the purchase agreement, with the balance due upon the delivery.

~~Inventories~~Management evaluates accounts receivables that are 30 days past due the payment terms on a regular basis to charge off any accounts deemed uncollectible at the time. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments.

~~Inventories are stated at the lower of cost or market determined on a first-in, first-out basis, or~~7 ~~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.~~

ComprehensiveTable Income of Contents

~~The~~CAM ~~following~~COMMERCE ~~table~~SOLUTIONS, ~~presents the calculation of comprehensive income:~~INC.

	THREE MONTHS ENDED
	DECEMBER 31, 2004				DECEMBER 31, 2003
Net income		$	402			$	375
Unrealized loss on marketable securities available for sale, net of tax			(9	)			(6	)
Comprehensive income		$	393			$	369

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

~~Revenue~~MARCH ~~Recognition~~31, ~~Policy~~2007

~~The Company’s revenue recognition policy is significant because revenue is a key component of results of operations.~~ (In ~~addition~~thousands, ~~revenue~~except ~~recognition~~per ~~determines~~share the timing of certain expenses such as commissions. Specific guidelines are followed to measure revenue, although certain judgments affect the application of our revenue policy. The Company recognizes revenue in accordance with Statement of Position 97-2 (SOP 97-2data)~~, “Software Revenue Recognition,” as amended~~ ~~and interpreted by Statement of Position 98-9, “Modification of SOP 97-2, Software Revenue~~ Recognition, With Respect to Certain Transactions,” and Staff Accounting Bulletin No. 104 (SAB 104), “Revenue Recognition.” SAB 104 provides further interpretive guidance for public companies on the recognition, presentation, and disclosure of revenue in financial statements.

~~The~~Concentrations ~~Company derives revenue from the sale~~ of ~~computer~~Credit ~~hardware, licensing of computer software,~~Risk post contract support (PCS), installation and training services, and payment processing services. System revenue from hardware sales and software licensing is recognized when a system purchase agreement has been signed, the hardware and software has been shipped, there are no uncertainties surrounding product acceptance, the pricing is fixed and determinable, and collection is considered probable. If a sales transaction contains an undelivered element, the vendor-specific objective evidence (VSOE) of fair value of the undelivered element is deferred and the revenue recognized once the element is delivered. The undelivered elements are primarily installation and training services. Revenue related to these services are deferred and recognized when the services have been provided. VSOE of fair value for installation and training services are based upon standard rates charged since those services are always sold as a separate option and priced independently. Installation and training services are separately priced, are generally available from other suppliers and not essential to the functionality of the software products. Payments for the Company’s hardware and software are typically due with an initial deposit payment upon signing the system purchase agreement, with the balance due upon delivery, although established relationship customers in good credit standing receive thirty day payment terms. VSOE of fair value for PCS is the price the customer is required to pay since it is sold as a separate option and priced independently.

~~PCS~~The ~~services~~Company ~~are~~sells ~~billed~~its onproducts aprimarily ~~monthly~~to ~~basis~~small-to-medium ~~and~~size ~~recorded~~retailers. asCredit ~~revenue~~is inextended based ~~the applicable month, or~~ on an ~~annual~~evaluation ~~basis~~of ~~with~~ the ~~revenue~~customer’s ~~being~~financial ~~deferred~~condition, and ~~recognized~~collateral ~~ratably~~is ~~over~~generally ~~the support period~~not required. ~~If an~~Credit ~~arrangement~~losses ~~includes~~have ~~multiple~~traditionally ~~elements,~~been ~~the~~minimal ~~fees~~and ~~are~~such ~~allocated~~losses tohave ~~the~~been ~~various elements based~~within ~~upon~~management’s ~~VSOE of fair value, as described above~~expectations.

7Inventories

~~Table~~Inventories are stated at the lower of ~~Contents~~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.

~~CAM~~Comprehensive ~~COMMERCE SOLUTIONS, INC.~~Income

~~NOTES~~The TOfollowing ~~UNAUDITED~~tables ~~CONDENSED~~present ~~FINANCIAL~~the ~~STATEMENTS~~calculations of comprehensive income:

DECEMBER 31, 2004


	THREE MONTHS ENDED
	MARCH 31, 2007		MARCH 31, 2006
Net income	$	854	$	417
Unrealized gain on marketable available-for- sale securities, net of tax		6		4

Comprehensive income	$	860	$	421

(In thousands, except per share data)


	SIX MONTHS ENDED
	MARCH 31, 2007		MARCH 31, 2006
Net income	$	1,822	$	1,159
Unrealized gain on marketable available-for-sale securities, net of tax		12		5

Comprehensive income	$	1,834	$	1,164

~~The~~Revenue ~~Company~~Recognition ~~recognizes payment processing revenues in the period the service is performed.~~Policy Revenues are estimated based on the accumulation of sufficient historical information required to analyze trends and formulate a reasonable estimate. The significant historical information required to formulate a reliable estimate are the total dollar volume of credit card transactions processed and the related revenue for these credit card transactions.

~~Segments~~The Company’s revenue recognition policy is significant because revenue is a key component of results of operations. In addition, revenue recognition determines the timing of certain expenses such as commissions. Specific guidelines are followed to measure revenue, although certain judgments affect the application of our revenue policy. The Company recognizes revenue in accordance with Statement of Position 97-2 (SOP 97-2), “Software Revenue Recognition,” as amended and interpreted by Statement of Position 98-9, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions,” and Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”). SAB 104 provides further interpretive guidance for public companies on the recognition, presentation, and disclosure of revenue in financial statements.

~~Statement~~The Company derives revenue from the sale of ~~Financial~~computer ~~Accounting~~hardware, ~~Standards~~licensing of computer software, post-contract support (~~SFAS~~“PCS”) ~~No. 131~~, ~~“Disclosures~~installation ~~about~~and ~~Segments~~training ofservices, anand payment processing services. ~~Enterprise~~The ~~and~~Company ~~Related~~recognizes ~~Information”~~payment ~~(SFAS~~processing ~~131),~~revenues ~~established~~in ~~standards~~the ~~for~~period the ~~way~~service ~~that~~is ~~public~~performed. ~~business~~Revenues ~~enterprises~~are ~~report~~estimated ~~selected~~based ~~financial~~on ~~information~~the ~~about~~accumulation ~~operating~~of ~~segments~~sufficient inhistorical ~~annual~~information ~~and~~required to ~~interim~~analyze ~~financial~~trends ~~statements~~ and ~~significant~~formulate ~~foreign~~a ~~operations~~reasonable estimate. ~~Because~~The ~~the~~significant ~~Company~~historical ~~operates in~~information ~~one~~required ~~business~~to ~~segment~~formulate ~~and~~a ~~has~~reliable noestimate ~~significant~~are ~~foreign~~the ~~operations,~~total nodollar ~~additional~~volume ~~reporting~~of iscredit ~~required~~card transactions ~~under~~processed ~~SFAS~~and ~~131~~the related revenue for these credit card transactions.

~~Recently Issued Accounting Announcements~~8

OnTable December 16, 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R) which replaces SFAS No. 123, “Accounting for Stock-Based Compensation”, supersedes Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees” and amends SFAS No. 95, “Statement of Cash Flows”. Generally, the approach in SFAS 123R is similar to the approach described in SFAS 123. However, SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values (i.e., pro forma disclosure is no longer an alternative to financial statement recognition). SFAS 123R is effective for the Company beginning on July 1, 2005. The Company is currently assessing the impact of SFAS 123R. As of the date of this filing, no decisions have been made as to whether the Company will apply the modified prospective or retrospective transition method of application. Contents

~~Intangible~~CAM ~~Assets~~COMMERCE SOLUTIONS, INC.

~~The~~NOTES ~~Company~~TO ~~capitalizes~~UNAUDITED ~~costs~~CONDENSED ~~incurred~~FINANCIAL ~~to develop new marketable software and enhance the Company’s~~STATEMENTS ~~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.

~~License~~MARCH ~~agreements~~31, ~~and capitalized software costs are amortized on the straight-line method over~~2007 ~~estimated useful lives ranging from three to five years. Amortization of capitalized software~~ ~~costs commences when the products are available for general release to customers.~~

~~Reclassifications~~(In thousands, except per share data)

~~Certain~~System ~~reclassifications~~revenue ~~have~~from hardware sales and software licensing is recognized when a system purchase agreement has been ~~made~~signed, tothe hardware and software has been shipped, there are no uncertainties surrounding product acceptance, the ~~fiscal~~pricing ~~2004~~is ~~financial~~fixed ~~statements~~and determinable, and collection is considered probable. If a sales transaction contains an undelivered element, the vendor-specific objective evidence (“VSOE”) of fair value of the undelivered element is deferred and the revenue recognized once the element is delivered. The undelivered elements are primarily installation and training services. Revenue related to ~~conform~~these services are deferred and recognized when the services have been provided. VSOE of fair value for installation and training services are based upon standard rates charged since those services are always sold as a separate option and priced independently. Installation and training services are separately priced, are generally available from other suppliers and are not essential to the functionality of the software products. Payments for the ~~fiscal~~Company’s ~~2005~~hardware ~~presentation~~and software are typically due with an initial deposit payment upon signing the system purchase agreement, with the balance due upon delivery, although established relationship customers in good credit standing receive thirty day payment terms. VSOE of fair value for PCS is the price the customer is required to pay since it is sold as a separate option and priced independently. PCS services are billed on a monthly basis and recorded as revenue in the applicable month, or on an annual basis with the revenue being deferred and recognized ratably over the support period.

~~Use of Estimates~~Segments

The ~~preparation~~Company ofseparately ~~financial~~discloses ~~statements~~its principal operations in accordance with ~~United~~Statement ~~States~~of ~~generally accepted~~Financial ~~accounting~~Accounting ~~principles~~Standards ~~requires~~(“SFAS”) ~~the~~No. 131, ~~Company~~“Disclosure toabout ~~make~~Segments ~~estimates~~of ~~and~~an ~~assumptions~~Enterprise ~~that~~and ~~affect the~~Related ~~reported~~Information.” ~~amounts~~The ofCompany ~~assets~~classifies ~~and~~its ~~liabilities~~business atoperations ~~the~~into ~~date~~three ofsegments: ~~the~~1) ~~financial statements and reported~~Payment ~~amounts~~processing; of2) ~~net~~Hardware, ~~revenue~~software and ~~expenses~~installation; ~~during~~and ~~the~~3) ~~reporting period~~Service. ~~The~~Net ~~Company~~revenues ~~regularly evaluates estimates~~ and ~~assumptions~~the related cost toof ~~revenue~~revenues ~~recognition,~~by ~~receivables~~segment ~~and~~are ~~inventory,~~as ~~capitalized~~disclosed on the ~~software,~~accompanying ~~allowances~~Unaudited ~~for~~Condensed ~~doubtful~~Statements ~~accounts,~~of ~~intangible~~Income. ~~asset~~The ~~valuations,~~Company ~~deferred~~does ~~income~~not ~~tax~~allocate ~~asset~~selling, ~~valuation~~general ~~allowances,~~ and ~~other~~administrative ~~contingencies.~~or ~~The~~research ~~estimates~~ and ~~assumptions~~development ~~are~~expenses, ~~based~~including ~~on historical~~depreciation ~~experience~~ and amortization, onto ~~various~~segments ~~other~~nor ~~factors that~~ are ~~believed~~there toany besegment ~~reasonable~~reconciling ~~under~~items ~~the circumstances,~~between the ~~results~~amounts ofreported on ~~which form~~ the ~~basis~~Unaudited ~~for~~Condensed ~~making~~Statements ~~judgments~~of ~~about~~Income ~~the~~and ~~carrying~~income ~~values of~~before ~~assets~~taxes. ~~and~~In ~~liabilities~~addition, ~~that~~the ~~are~~Company does not ~~readily~~separately ~~apparent~~account ~~from~~for ~~other~~segment ~~sources.~~assets Toor ~~the extent~~liabilities.

8Recently Issued Accounting Announcements

~~Table~~In June 2006, the Financial Accounting Standards Board (the “FASB”) issued FASB Interpretation No. 48, “Accounting for Income Tax Uncertainties, an interpretation of ~~Contents~~FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for income tax uncertainties and defines the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also prescribes a two-step approach for evaluating tax positions and requires expanded disclosures at each interim and annual reporting period. FIN 48 is effective for fiscal years beginning after December 15, 2006 and will require that differences between the amounts recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts reported after adoption are to be accounted for as cumulative-effect adjustments to beginning retained earnings. The Company plans to adopt FIN 48 in the first quarter of fiscal 2008 and management is currently evaluating the impact on the financial statements.

~~CAM~~In ~~COMMERCE~~September 2006, ~~SOLUTIONS~~the SEC staff issued Staff Accounting Bulletin No. 108, ~~INC~~“Considering the Effects of Prior Year Misstatement when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides interpretative guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The SEC staff has stated that registrants should quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 became effective for fiscal years ending on or after November 15, 2006. The Company adopted SAB 108 in the first quarter of fiscal 2007 and it did not have a material impact on its financial condition, results of operations, or cash flows.

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~9

DECEMBERTable 31,of 2004 Contents

~~(In~~CAM ~~thousands~~COMMERCE SOLUTIONS, ~~except per share data)~~INC.

~~there~~NOTES ~~are~~TO ~~material~~UNAUDITED ~~differences~~CONDENSED ~~between~~FINANCIAL ~~the Company’s estimates and the actual results, the~~STATEMENTS ~~Company’s future results of operations will be affected.~~

~~Shipping~~MARCH ~~and~~31, ~~Handling~~2007

~~Shipping~~(In ~~and handling fees and costs are included in the statement of operations under the line items titled “Net hardware~~thousands, ~~software~~except ~~and~~per ~~installation~~share ~~revenues” and “Cost of hardware, software and~~data) ~~installation revenues.”~~

~~Net~~In ~~Income~~September 2006, ~~Per~~the ~~Share~~FASB issued SFAS No. 157, “Fair Value Measurement” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. The Company will be required to adopt SFAS 157 in the first quarter of fiscal 2009. Management is currently evaluating the requirements of SFAS 157 and has not yet determined the impact on the financial statements.

~~Basic~~In ~~net~~February 2007, ~~income~~the ~~per~~FASB ~~share~~issued isSFAS ~~based~~No. 159, ~~upon~~“The ~~the~~Fair ~~weighted~~Value ~~average~~Option ~~number~~for ofFinancial ~~common~~Assets ~~shares outstanding~~and ~~for~~Financial ~~each~~Liabilities ~~period~~— ~~presented.~~Including ~~Diluted~~an ~~net~~Amendment ~~income~~of ~~per~~FASB ~~share~~Statement isNo. 115” ~~based~~(“SFAS ~~upon~~159”). ~~the~~SFAS ~~weighted~~159 permits ~~average~~entities ~~number of~~to ~~common~~choose ~~shares~~to ~~and~~measure ~~common~~many ~~equivalent~~financial ~~shares~~instruments ~~outstanding~~and ~~for~~certain ~~each~~other ~~period~~items ~~presented.~~at ~~Common~~fair ~~equivalent~~value. ~~shares~~Unrealized ~~include~~gains ~~stock options~~ and ~~warrants~~losses ~~assuming~~on ~~conversion~~items ~~under~~for which the ~~treasury~~fair ~~stock method.~~value ~~Common~~option ~~equivalent~~has ~~shares~~been ~~are~~elected ~~excluded~~will be ~~from~~recognized ~~diluted~~in ~~net~~earnings ~~income~~at ~~per~~each ~~share~~subsequent ifreporting ~~their~~date. ~~effect~~SFAS 159 is ~~anti-dilutive.~~ ~~Options~~effective ~~and~~for ~~warrants~~financial statements ~~outstanding~~issued for ~~the~~fiscal ~~three~~years ~~months~~beginning ~~ended~~after ~~December~~November 3115, ~~2004~~2007. ~~and 2003,~~The ~~which~~Company ~~were~~is ~~excluded~~evaluating the ~~from~~impact that the ~~diluted~~adoption ~~net~~of ~~income~~SFAS ~~per~~159 ~~share~~will ~~computation~~have ~~because~~on ~~their~~its ~~effect~~results ~~is anti-dilutive,~~of ~~were~~operations asand ~~follows:~~financial condition.

	THREE MONTHS ENDED
	DECEMBER 31, 2004		DECEMBER 31, 2003
Options		—		6
Warrants		175		350

In June 2006, the FASB ratified the consensus reached in EITF Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation).” EITF 06-3 is effective in interim and annual periods beginning after December 15, 2006. The scope of this issue includes any tax assessed by a governmental authority that is imposed concurrently on a specific revenue-producing transaction between seller and a customer. The FASB requires the amount of those taxes that is recognized on a gross basis (included in revenues and cost) in interim and annual financial statements for each period for which an income statement is presented to be disclosed if those amounts are significant. The Company currently presents and will continue to present sales taxes on a net basis (excluded from revenues) in its Statement of Income.

~~The~~Other ~~computations~~recent ofaccounting ~~basic~~pronouncements ~~and~~issued ~~diluted~~by ~~net~~the ~~income~~FASB ~~per~~(including ~~share~~its ~~for~~Emerging Issues Task Force), the ~~quarter~~American ~~ended~~Institute ~~December 31,~~of ~~2004~~ Certified Public Accountants and ~~2003~~the SEC did not or are asnot believed ~~follows:~~by management to have a material impact on the Company’s present or future financial statements.

	THREE MONTHS ENDED
	DECEMBER 31, 2004			DECEMBER 31, 2003
Numerator:
Net income for basic and diluted net income per share		$	402		$	375
Denominator:
Weighted-average shares outstanding			3,787			3,284
Denominator for basic net income per share:
Weighted-average shares			3,787			3,284
Effect of dilutive securities:
Stock options & warrants			278			331
Denominator for diluted net income per share:
Weighted average shares and assumed conversions			4,065			3,615
Basic net income per share		$	0.11		$	0.11
Diluted net income per share		$	0.10		$	0.10

Intangible Assets

~~Stock~~The ~~Option~~Company ~~Plans~~capitalizes costs incurred to develop new marketable software and enhance its 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.

~~The~~License ~~Company~~agreements ~~follows~~and ~~the~~capitalized ~~disclosure-only~~software ~~provisions~~costs ofare ~~SFAS~~amortized ~~No. 123,~~on asthe ~~amended~~straight-line bymethod ~~SFAS No. 148,~~over ~~“Accounting~~estimated ~~for~~useful ~~Stock-Based~~lives ~~Compensation~~ranging —from ~~Transition~~three ~~and~~to ~~Disclosure,”~~five ~~and,~~years. ~~accordingly,~~Amortization ~~accounts for~~of ~~its~~capitalized ~~employee~~software costs ~~stock-based~~commences ~~compensation~~when ~~plans using~~ the ~~intrinsic~~products ~~value~~are ~~method~~available ~~under Accounting Principles Board Opinion No. 25, “Accounting~~ for ~~Stock~~general ~~Issued~~release to ~~Employees,” and related interpretations~~customers. ~~The~~

9Unamortized capitalized software costs at March 31, 2007 and at September 30, 2006 were $463 and $445, respectively.

~~Table~~Amortization of ~~Contents~~capitalized software costs, charged to cost of hardware, software and installation, for the three months ended March 31, 2007 and 2006 were $74 and $71, respectively, and for the six months ended March 31, 2007 and 2006 were $142 and $152, respectively.

~~CAM~~Use ~~COMMERCE~~of ~~SOLUTIONS, INC.~~Estimates

~~NOTES~~The TOpreparation ~~UNAUDITED~~of ~~CONDENSED~~financial ~~FINANCIAL~~statements ~~STATEMENTS~~in accordance with United States GAAP 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 revenue recognition, receivables and

~~DECEMBER 31, 2004~~10

(InTable thousands,of except per share data) Contents

~~following~~CAM ~~tables~~COMMERCE ~~illustrate~~SOLUTIONS, ~~the effect on net income and income per share had compensation expense for the employee stock-based plans been recorded based on the fair value method under SFAS No~~INC. ~~123:~~

	THREE MONTHS ENDED
	DECEMBER 31, 2004				DECEMBER 31, 2003
Net income, as reported		$	402			$	375
Deduct: total stock-based employee compensation expense determined under fair value based method, net of related tax effects			(48	)			(60	)
Net income, as adjusted		$	354			$	315
Basic income per share:
As reported		$	0.11			$	0.11
Pro forma		$	0.09			$	0.10
Diluted income per share:
As reported		$	0.10			$	0.10
Pro forma		$	0.09			$	0.09

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

10MARCH 31, 2007

~~Table~~(In ofthousands, ~~Contents~~except per share data)

~~Item~~inventory, 2capitalized software, allowances for doubtful accounts, intangible asset valuations, deferred income tax asset valuation allowances, accounting for share-based compensation, and other contingencies. ~~Management’s~~The ~~Discussion~~estimates and ~~Analysis~~assumptions are based on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of ~~Financial~~which ~~Condition~~form the basis for making judgments about the carrying values of assets and ~~Results~~liabilities that are not readily apparent from other sources. To the extent there are material differences between the Company’s estimates and the actual results, the Company’s future results of ~~Operations~~operations will be affected.

~~CAM COMMERCE SOLUTIONS, INC.~~Advertising

~~MANAGEMENT’S~~The ~~DISCUSSION~~Company ~~AND~~expenses ~~ANALYSIS~~the OFcosts of advertising as incurred. Advertising expenses for the three months ended March 31, 2007 and 2006 were $148 and $154, respectively, and for the six months ended March 31, 2007 and 2006 were $298 and $250, respectively.

~~FINANCIAL~~Shipping ~~CONDITION~~and ~~AND RESULTS OF OPERATIONS~~Handling

~~Three~~Shipping ~~Months~~and ~~Ended~~handling ~~December 31,~~fees ~~2004~~and ascosts ~~Compared~~are toincluded ~~Three~~in ~~Months~~the ~~Ended~~Unaudited ~~December 31~~Condensed Statements of Income under the line items titled “Net hardware, ~~2003~~software and installation revenues” and “Cost of hardware, software and installation revenues.”

~~(All~~Net ~~dollar~~Income ~~amounts~~Per ~~in thousands)~~Share

~~CAUTIONARY~~Basic ~~STATEMENT~~net income per share is based upon the weighted average number of common shares outstanding for each period presented. Diluted net income 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 assuming conversion under the treasury stock method. Common equivalent shares are excluded from diluted net income per share if their effect is anti-dilutive. There were no anti-dilutive options excluded from the diluted net income per share computation for the three and six months ended March 31, 2007 and for the three months ended March 31, 2006. Options outstanding of 31 shares were excluded from the diluted net income per share computation for the six months ended March 31, 2006 because their effect was anti-dilutive.

~~You~~The ~~should~~computations ~~read~~of ~~the~~basic ~~following discussion~~ and ~~analysis~~diluted ~~with~~net ~~our~~income ~~Unaudited~~per ~~Condensed~~share ~~Financial Statements~~for ~~and related Notes thereto contained elsewhere in this report. We urge you to carefully review and consider~~ the ~~various~~three ~~disclosures made in this report~~ and insix ~~our~~months ~~other~~ended ~~reports filed with~~March ~~the~~31, ~~Securities~~2007 and ~~Exchange~~2006 ~~Commission~~are ~~(SEC).~~as follows:

The section entitled “Risk Factors” set forth below, and similar discussions in our other SEC filings, discuss some of the important risk factors that may affect our 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.


	THREE MONTHS ENDED
	MARCH 31, 2007		MARCH 31, 2006
Numerator:
Net income for basic and diluted net income per share	$	854	$	417

Denominator:
Weighted-average shares outstanding		4,022		3,890

Denominator for basic net income per share:
Weighted-average shares		4,022		3,890
Effect of dilutive securities:
Stock options		198		279

Denominator for diluted net income per share:
Weighted average shares and assumed conversions		4,220		4,169

Basic net income per share	$	0.21	$	0.11

Diluted net income per share	$	0.20	$	0.10

~~OVERVIEW~~11

WeTable offer several turn-key retailing systems that consist of software, hardware, installation, training, technical support services and web hosting services. Our systems, known as CAM32, Profit$, RetailSTAR, RetailICE and Microbiz offer the ability to obtain: (i) automated pricing of each item; (ii) billing for charge account customers; (iii) printing of a customer invoice; (iv) tracking of inventory count on an item by item basis; (v) computation of gross profit, dollars and/or percentage of each item; and (vi) tracking of sales by clerk and department by day and/or month. In addition, our systems provide full management reporting including zero sales reports, inventory ranking, overstock and understock, sales analysis, inventory valuation (last cost, average cost and retail) and other reports. The systems can also provide integrated or interfaced accounting functions including accounts receivable, accounts payable, and general ledger. Contents

WeCAM ~~also~~COMMERCE provide payment processing services through our X-Charge software and a third party credit card payment processor. X-Charge is a payment processing software program that is integrated with our point of sale software. X-Charge generates revenues for us based on sales transaction payment processing services provided to our customers. TypicallySOLUTIONS, ~~the payments being processed are credit card transactions~~INC.

~~CRITICAL~~NOTES ~~ACCOUNTING~~TO ~~POLICIES~~UNAUDITED ~~AND~~CONDENSED ~~ESTIMATES~~FINANCIAL STATEMENTS

~~The~~MARCH preparation of financial statements in accordance with United States generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of our financial statements and reported amounts of net revenue and expenses during the reporting period. We regularly evaluate estimates and assumptions related to revenue recognition31, ~~receivables and inventory, capitalized software,~~2007 ~~allowances for doubtful accounts, 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 we believe are 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(In ~~believe~~thousands, ~~the~~except ~~following~~per ~~critical~~share ~~accounting policies require us to make significant judgments and~~data) ~~estimates in the preparation of our financial statements:~~


	SIX MONTHS ENDED
	MARCH 31, 2007		MARCH 31, 2006
Numerator:
Net income for basic and diluted net income per share	$	1,822	$	1,159

Denominator:
Weighted-average shares outstanding		4,001		3,869

Denominator for basic net income per share:
Weighted-average shares		4,001		3,869
Effect of dilutive securities:
Stock options		205		264

Denominator for diluted net income per share:
Weighted average shares and assumed conversions		4,206		4,133

Basic net income per share	$	0.46	$	0.30

Diluted net income per share	$	0.43	$	0.28

~~Table~~Dividends ~~of Contents~~Declared

~~CAM~~The ~~COMMERCE~~Company ~~SOLUTIONS~~has a cash dividend policy, ~~INC~~which pays stockholders a variable dividend quarterly based on the quarterly results. During the six months ended March 31, 2007, the Board of Directors declared the following dividends:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF


Declaration Date	Per Share Dividend		Record Date	Total Amount		Payment Date
November 15, 2006	$	0.16	January 5, 2007	$	643	January 16, 2007
February 7, 2007	$	0.18	April 4, 2007	$	726	April 16, 2007

~~FINANCIAL~~Share-Based ~~CONDITION AND RESULTS OF OPERATIONS~~Compensation

~~(All~~In ~~dollar~~1993, ~~amounts~~the instockholders ~~thousands~~of the Company approved the Company’s 1993 Stock Option Plan (the “1993 Plan”) under which nonstatutory options may be granted to key employees and individuals who provide services to the Company, at an exercise price not less than the fair market value of the stock at the date of grant, and expire ten years from the date of grant. The options are exercisable based on vesting periods as determined by the Board of Directors. The 1993 Plan allowed for the issuance of an aggregate of 1,200 shares of the Company’s common stock. The 1993 Plan had a term of ten years. There have been 1,200 options granted under the 1993 Plan as of March 31, 2007. As of March 31, 2007, the Company had 166 shares reserved for issuance related to the options that remain outstanding under the 1993 Plan.

~~Revenue~~In ~~Recognition~~April 2000, the Company’s Board of Directors approved the Company’s 2000 Stock Option Plan (the “2000 Plan”) under which nonstatutory options may be granted to key employees and individuals who provide services to the Company, at an exercise price not less than the fair market value of the stock at the date of grant, and expire ten years from the date of grant. The options are exercisable based on vesting periods as determined by the Board of Directors. The plan allows for the issuance of an aggregate of 750 shares of the Company’s common stock. The term of the plan is unlimited in duration. There have been 538 options granted under the plan as of March 31, 2007. As of March 31, 2007, the Company had 479 shares reserved for issuance related to the options that remain outstanding under the 2000 Plan.

WeStatement ~~derive revenue from the sale~~ of ~~computer~~Financial ~~hardware,~~Accounting ~~licensing~~Standards ~~of computer software, post contract customer support, installation and training services, and payment processing services~~No. 123 ~~System revenue~~(revised ~~from hardware sales and software licensing is recognized when a system purchase agreement has been signed~~2004), ~~the~~“Share ~~hardware~~Based ~~and~~Payment” ~~software has been shipped, there are no uncertainties surrounding~~(“SFAS ~~product~~123R”) ~~acceptance,~~requires ~~the~~share-based ~~pricing is fixed and determinable~~payments, ~~and~~including ~~collection~~grants isof ~~considered~~employee ~~probable. If~~stock ~~a sales transaction contains an undelivered element~~options, ~~the~~to ~~vendor-specific~~be ~~objective evidence (VSOE) of fair value of the undelivered element is deferred and the revenue~~ recognized ~~once the~~ ~~element~~in ~~is delivered. The undelivered elements are primarily installation and training services. Revenue related to these services is deferred and recognized when~~ the ~~services~~Statement ~~have been provided. VSOE~~ of ~~fair~~Income ~~value for installation and training services are based upon standard rates charged since those services are always sold~~ as a separate option and priced independently. Installation and training services are separately priced, are generally available from other suppliers and not essential to the functionality of the software products. Payments for our hardware and software are typically due with an ~~initial deposit payment upon signing the system purchase agreement~~expense, ~~with the~~based ~~balance~~on ~~due~~their ~~upon~~grant ~~delivery,~~date ~~although established relationship customers in good credit standing receive thirty day payment terms. VSOE of~~ fair ~~value~~values for post-contract support (PCS) is the price the customer is required to pay since it is sold as a separate option and priced independently. PCS services are billed on a monthly basis and recorded as revenue in the applicable month, or on an annual basis with ~~the~~such ~~revenue being deferred and recognized ratably over the support period. If~~fair anvalues ~~arrangement includes multiple elements, the fees are allocated to the various elements based~~amortized ~~upon VSOE of fair value, as described above.~~

~~We recognize payment processing revenues in the period the service is performed. Revenues are~~12 estimated based on the accumulation of sufficient historical information required to analyze trends and formulate a reasonable estimate. The significant historical information required to formulate a reliable estimate are the total dollar volume of credit card transactions processed and the related revenue for these credit card transactions.

ReceivablesTable andof Inventory Contents

WeCAM ~~have~~COMMERCE accounts receivable from customers who were given extended payment terms for goods and services rendered. Extended payment terms are generally provided only to established relationship customers in good credit standingSOLUTIONS, ~~and generally represent net 30 day terms~~INC. ~~Payment for goods and~~ ~~services are typically due with an initial deposit payment upon signing the purchase agreement,~~ ~~with the balance due upon delivery.~~

AnNOTES ~~allowance~~TO ~~for~~UNAUDITED ~~doubtful~~CONDENSED ~~accounts~~FINANCIAL ~~is maintained for estimated losses resulting from the inability~~STATEMENTS ~~of customers to make required payments. If the financial condition of our customers was to~~ ~~deteriorate, resulting in an impairment of their ability to make payments, additional allowances could be required. Actual losses have traditionally been minimal and within our expectations.~~

WeMARCH write 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 us31, ~~additional~~2007 ~~inventory write-downs could be required. Historically inventory write-downs have been minimal and~~ ~~within our expectations.~~

12(In thousands, except per share data)

~~Table~~over the estimated service period. The Company elected to utilize the modified prospective method for the transition to SFAS 123R upon adoption in fiscal 2006. Under the modified prospective method, compensation expense will be recognized for all share-based compensation awards granted prior to, but not yet vested as of ~~Contents~~the adoption of SFAS 123R, based on grant-date fair values estimated in accordance with the original provision of SFAS 123. The Company uses a 0% forfeiture rate for calculating its compensation expense.

~~CAM~~At ~~COMMERCE~~March 31, ~~SOLUTIONS~~2007, ~~INC~~there was $148 of total unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of approximately 1.0 year.

~~MANAGEMENT’S~~For ~~DISCUSSION~~options ~~AND~~exercised ~~ANALYSIS~~during OFthe three and six months ended March 31, 2007, newly issued shares were issued.

~~FINANCIAL~~A ~~CONDITION~~summary ~~AND~~of ~~RESULTS~~the OFstock ~~OPERATIONS~~option plans at March 31, 2007 is as follows:

(All dollar amounts in thousands)


					WEIGHTED
			WEIGHTED		AVERAGE
			AVERAGE		REMAINING		AGGREGATE
	NUMBER		EXERCISE		CONTRACTUAL		INTRINSIC
	OF OPTIONS		PRICE		TERM (IN YEARS)		VALUE
Options outstanding at March 31, 2007		432	$	6.68		4.5	$	8,649
Options expected to vest at March 31, 2007		423	$	6.58		4.5	$	8,513
Options exercisable at March 31, 2007		405	$	6.36		4.3	$	8,239

~~Capitalized Software~~13

WeTable capitalize costs incurred to develop new marketable software and enhance our existing systems software. Costs incurred in creating the software are expensed when incurred as research and development expense until technological feasibility has been established through the development of a detailed program design. Once technological feasibility has been established, software development costs are capitalized and reported at the lower of amortized cost or net realizable value. Contents

~~Impairment~~Item 2. Management’s Discussion and Analysis of ~~Intangible~~Financial ~~Assets~~Condition and Results of Operations (All dollar amounts in thousands)

~~The~~CAUTIONARY ~~value of our intangible assets could be impacted by future adverse changes such as (i) any~~STATEMENT future declines in our operating results, and (ii) any failure to meet our future performance projections. An annual impairment review will be performed during the fourth quarter of each fiscal year or more frequently if indicators of impairment exist. In the process of the annual impairment review, we use the income approach methodology of valuation that includes the discounted cash flow method 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 we use to manage our 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 cost forecasts would not be achieved, and we could incur additional impairment charges.

~~Deferred~~You ~~Taxes~~should read the following discussion and analysis with our Unaudited Condensed Financial Statements and related Notes thereto contained elsewhere in this report. We urge 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 (“SEC”).

WeThe ~~utilize~~section ~~the~~entitled ~~liability~~“Forward ~~method~~Looking ofStatements” ~~accounting~~set ~~for~~forth ~~income~~below, ~~taxes~~the assection ~~set~~entitled ~~forth~~“Risk Factors” in ~~SFAS~~our ~~No. 109, “Accounting~~report ~~for~~on ~~Income~~Form ~~Taxes”.~~10-K ~~Prior~~for tothe fiscal ~~2004,~~year weended ~~recorded~~September 30, a2006, ~~valuation~~and ~~allowance~~similar discussions toin ~~reduce~~ our ~~deferred~~other ~~tax~~SEC ~~assets~~filings, todiscuss ~~the~~some ~~amount~~of ~~that~~the weimportant ~~believed~~risk ~~was~~factors ~~more~~that ~~likely~~may ~~than not to be realized.~~affect ~~During~~our ~~fiscal 2004~~business, ~~the~~results ~~valuation~~of ~~allowance~~operations ~~was~~and ~~reversed~~financial ~~based~~condition. onYou ~~our~~should ~~belief~~carefully ~~that~~consider ~~sufficient future~~those ~~income~~risks, ~~from~~in ~~operations~~addition ~~is expected~~ to ~~be able to recognize~~ the ~~net~~other ~~deferred~~information ~~tax~~in ~~assets.~~this ~~In assessing~~report, ~~the~~our ~~need~~10-K ~~for a valuation allowance~~report, weand ~~consider~~in ~~all~~our ~~positive~~other filings ~~and~~with ~~negative~~the ~~evidence~~SEC, ~~including~~ ~~projected~~before ~~future~~deciding ~~taxable~~to ~~income~~purchase, ~~and~~hold ~~recent~~or ~~financial~~sell ~~performance~~our common stock.

13OVERVIEW

~~Table~~We design, develop, market, install and service highly integrated retailing and payment processing solutions for small-to-medium size traditional and eCommerce businesses based on our open architecture software. These integrated solutions include credit and debit card processing, inventory management, point of ~~Contents~~sale, accounting, Internet sales, gift card and customer loyalty programs, and extensive management reporting. Payment processing services are provided on a transaction based business model.

~~CAM~~We ~~COMMERCE~~provide ~~SOLUTIONS~~integrated retailing and payment processing solutions to small-to-medium retailers both on direct basis and through a growing network of resellers. We offer payment processing software program, ~~INC~~called X-Charge, which can be integrated with our point-of-sale systems and our resellers’ systems. This allows our customers to process a sale and credit card payment in one transaction using just the point-of-sale system, eliminating the need to separately process the credit card on a stand-alone credit card terminal. X-Charge is integrated with our five turn-key retailing systems, consisting of: CAM32, which is designed for hard goods retailers whose inventory is re-orderable in nature; Profit$, which is designed for apparel and shoe retailers whose inventory is seasonal in nature, and color and size oriented; Retail STAR, which is designed to incorporate multiple functions of both the CAM32 and Profit$ systems; Retail ICE, which is a single-user derivative of Retail STAR; and Microbiz, which is designed for single-store, hard goods retailers that are generally smaller in size than customers that utilize the CAM32 system. Our systems offer the ability to obtain: (i) automated pricing of each item; (ii) billing for charge account customers; (iii) printing of a customer invoice; (iv) tracking of inventory count on an item by item basis; (v) computation of gross profit, dollars and/or percentage of each item; and (vi) tracking of sales by clerk and department by day and/or month. In addition, our systems provide full management reporting including zero sales reports, inventory ranking, overstock and understock, sales analysis, inventory valuation (last cost, average cost and retail) and other reports. The systems can also provide integrated or interfaced accounting functions including accounts receivable, accounts payable, and general ledger.

~~MANAGEMENT’S~~OFF ~~DISCUSSION~~BALANCE ~~AND~~SHEET ~~ANALYSIS OF~~ARRANGEMENTS

~~FINANCIAL~~There ~~CONDITION~~are ~~AND~~no ~~RESULTS~~off OFbalance ~~OPERATIONS~~sheet items as of March 31, 2007.

~~(All~~CRITICAL ~~dollar~~ACCOUNTING ~~amounts~~POLICIES inAND ~~thousands)~~ESTIMATES

~~RESULTS~~The OFpreparation ~~OPERATIONS~~of financial statements in accordance with United States generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of our financial statements and reported amounts of net revenue and expenses during the reporting period. We regularly evaluate estimates and assumptions related to revenue recognition, receivables and inventory, capitalized software, allowances for doubtful accounts, intangible asset valuations, deferred income tax asset valuation allowances, accounting for share-based compensation related to SFAS 123R, and other contingencies. The estimates and assumptions are based on historical

~~Three Months Ended December 31, 2004 Compared to Three Months Ended December 31, 2003~~14

	Three months ended December 31,						Variance
	2004			2003			Amount			%
Net hardware, software and installation revenues	$	3,348		$	3,237		$	111			3	%
Net service revenues		1,405			1,379			26			2	%
Net payment processing revenues		1,397			684			713			104	%
Total net revenues		6,150			5,300			850			16	%
Cost of hardware, software and installation revenues		1,684			1,641			43			3	%
Cost of service revenues		512			508			4			1	%
Cost of payment processing revenues		142			38			104			274	%
Total cost of revenues		2,338			2,187			151			7	%
Selling, general and administrative expenses		2,881			2,421			460			19	%
Research and development expenses		367			369			(2	)		(1	%)
Interest income		(109	)		(81	)		28			35	%
Total costs and expenses		5,477			4,896			581			12	%
Income before provision for income taxes		673			404			269			67	%
Provision for income taxes		271			29			242			834	%
Net income	$	402		$	375			27			7	%
Gross profit on hardware, software and installation revenues	$	1,664		$	1,596			68			4	%
Gross profit on service revenues		893			871			22			3	%
Gross profit on payment processing revenues		1,255			646			609			94	%
Total gross profit	$	3,812		$	3,113			699			22	%
Gross margin on hardware, software and installation revenues		50	%		49	%
Gross margin on service revenues		64	%		63	%
Gross margin on payment processing revenues		90	%		94	%
Gross margin on total net revenues		62	%		59	%

~~Significant~~CAM ~~Trends~~COMMERCE SOLUTIONS, INC.

~~System~~MANAGEMENT’S ~~sales~~DISCUSSION ~~for~~AND ~~the~~ANALYSIS ~~quarter ended December 31, 2004 increased slightly, while our payment~~OF ~~processing revenues from our X-Charge business increased 104%, in comparison to the same quarter of~~ prior year. We continued to have an increase in our X-Charge revenues as a result of continued addition of new processing accounts. Because of the higher margins on our X-Charge revenues, our pre-tax income for the three months ended December 31, 2004 increased 67% on a 16% overall revenue increase. Gross profit margin for the quarter ended December 31, 2004 increased over the same quarter of last year as a result of recurring revenues from X-Charge business.

14FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Table~~(All ofdollar ~~Contents~~amounts in thousands)

~~CAM~~experience ~~COMMERCE~~and ~~SOLUTIONS~~on various other factors that we believe are reasonable under the circumstances, ~~INC.~~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.

~~MANAGEMENT’S~~We ~~DISCUSSION~~believe ~~AND~~the ~~ANALYSIS~~following OFcritical accounting policies require us to make significant judgments and estimates in the preparation of our financial statements:

~~FINANCIAL~~Revenue ~~CONDITION AND RESULTS OF OPERATIONS~~Recognition

~~(All~~We ~~dollar~~derive ~~amounts~~revenue from the sale of computer hardware, licensing of computer software, post-contract customer support, installation and training services, and payment processing services. We recognize payment processing revenues in ~~thousands)~~the period the service is performed. Payment processing revenues are estimated based on the accumulation of sufficient historical information required to analyze trends and formulate a reasonable estimate. The significant historical information required to formulate a reliable estimate are the total dollar volume of credit card transactions processed and the related revenue for these credit card transactions.

~~Revenues~~System revenue from hardware sales and software licensing is recognized when a system purchase agreement has been signed, the hardware and software has been shipped, there are no uncertainties surrounding product acceptance, the pricing is fixed and determinable, and collection is considered probable. If a sales transaction contains an undelivered element, the vendor-specific objective evidence (“VSOE”) of fair value of the undelivered element is deferred and the revenue recognized once the element is delivered. The undelivered elements are primarily installation and training services. Revenue related to these services is deferred and recognized when the services have been provided. VSOE of fair value for installation and training services are based upon standard rates charged since those services are always sold as a separate option and priced independently. Installation and training services are separately priced, are generally available from other suppliers and are not essential to the functionality of the software products. Payments for our hardware and software are typically due with an initial deposit payment upon signing the system purchase agreement, with the balance due upon delivery, although established relationship customers in good credit standing receive thirty day payment terms. VSOE of fair value for post-contract support (“PCS”) is the price the customer is required to pay since it is sold as a separate option and priced independently. PCS services are billed on a monthly basis and recorded as revenue in the applicable month, or on an annual basis with the revenue being deferred and recognized ratably over the support period.

~~We derive revenues from system sales, consisting of computer hardware, licensing of computer~~Receivables software, installation and training, post contract customer support service, and payment processing service (X-Charge). Net revenues for the three months ended December 31, 2004 increased 16% to $6,150, consisting of a 3% increase in system revenues, a 2% increase in service revenues, and a 104% increase in payment processing revenues, compared to the three months ended December 31, 2003. System revenues for the quarter ended December 31, 2004 increased slightly over the same quarter of last year due to higher hardware sales to existing customers. Service revenues for the three months ended December 31, 2004 was relatively flat, as compared to the three months ended December 31, 2003, as a result of no significant changes in the number of new contracts sold and contract cancellations. Payment processing revenues for the three months ended December 31, 2004 increased significantly due to a higher number of X-Charge processing accounts added over the prior year, which generate recurring revenues.

~~Gross~~We ~~Margin~~have accounts receivable from customers who were given extended payment terms for goods and services rendered. Extended payment terms are generally provided only to established relationship customers in good credit standing, and generally represent net 30 day terms. Payment for goods and services are typically due with an initial deposit payment upon signing the purchase agreement, with the balance due upon delivery.

~~Gross~~An ~~margin~~allowance for ~~the~~doubtful ~~three~~accounts ~~months~~is ~~ended~~maintained ~~December 31, 2004 was 62%, compared to 59%~~ for ~~the~~estimated ~~three months~~losses ~~ended~~resulting ~~December 31,~~from ~~2003. Gross margin on system revenues and service revenues was relatively flat at 50% and 64%, respectively, for~~ the ~~three months ended December 31, 2004,~~inability ~~compared~~of customers to ~~49%~~make ~~and~~required ~~63%~~payments. ~~for~~If the ~~same~~financial ~~quarter~~condition of ~~last~~our ~~year.~~customers ~~Gross margin for payment processing revenues~~ was ~~90% for the quarter ended December 31~~to deteriorate, ~~2004,~~resulting ~~compared~~in toan ~~94%~~impairment ~~for the same quarter~~ of ~~prior~~ ~~year.~~their ~~Gross~~ability ~~margin~~to ~~for~~make ~~payment~~payments, ~~processing~~additional ~~revenues decreased as a result of higher payroll~~allowances ~~costs,~~could ~~related~~be torequired. ~~the~~Actual ~~increase~~losses inhave ~~personnel~~traditionally ~~needed~~been tominimal ~~support~~and ~~the~~within ~~growth~~our ~~in customer base processing with X-Charge~~expectations.

~~Selling, General and Administrative Expenses~~Inventory

~~Salaries,~~We ~~sales~~write ~~commissions,~~down ~~marketing~~inventory expenses, and rent expenses represent the largest expenses of selling, general and administrative expenses. Selling, general and administrative expenses expressed as a percentage of net revenues was 47% for ~~the~~estimated ~~three~~obsolescence ~~months~~equal ~~ended December 31, 2004, compared~~ to ~~46% for~~ the ~~same~~difference ~~period~~between ~~of fiscal 2004. Selling, general and administrative expenses increased 19% for~~ the ~~three~~cost ~~months ended December 31, 2004, compared to the same period ended~~of ~~December 31,~~inventory ~~2003.~~and ~~This increase was primarily due to~~ the ~~increase~~estimated inrealizable ~~sales~~value ~~commissions~~based ~~expense related~~upon toassumptions ~~higher~~about ~~payment~~future ~~processing~~demand ~~revenues, higher payroll costs related to an increase in administrative~~ and ~~sales personnel needed for X-Charge business growth, and higher~~market ~~expenses related to Sarbanes Oxley compliance work~~conditions. If

~~Research and Development Expenses~~15

ResearchTable and development expenses expressed as a percentage of revenues was 6% for the three months ended December 31, 2004, compared to 7% for the three months ended December 31, 2003. Research and development expenses for the three months ended December 31, 2004 was flat, as compared to the three months ended December 31, 2003. We continue to invest in the enhancements of new features for the existing software products of Retail Star and CAM32. Contents

~~Income~~CAM ~~Taxes~~COMMERCE SOLUTIONS, INC.

~~Provision~~MANAGEMENT’S ~~for~~DISCUSSION ~~income~~AND ~~taxes~~ANALYSIS ~~for the three months ended December 31, 2004 was $271, compared to $29~~OF ~~for the three months ended December 31, 2003. Provision for income taxes for the quarter ended~~ December 31, 2003 was related to estimated tax expense for various states. There was no provision made for federal income taxes for the three months ended December 31, 2003 due to the utilization of net operating loss

15FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Table~~(All ofdollar ~~Contents~~amounts in thousands)

~~CAM~~actual ~~COMMERCE~~market ~~SOLUTIONS~~conditions are less favorable than those projected by us, ~~INC~~additional inventory write-downs could be required. Historically inventory write-downs have been minimal and within our expectations.

~~MANAGEMENT’S~~Capitalized ~~DISCUSSION AND ANALYSIS OF~~Software

~~FINANCIAL~~We ~~CONDITION~~capitalize ~~AND~~costs ~~RESULTS~~incurred OFto ~~OPERATIONS~~develop new marketable software and enhance our existing systems software. Costs incurred in creating the software are expensed when incurred as research and development expense until technological feasibility has been established through the development of a detailed program design. Once technological feasibility has been established, software development costs are capitalized and reported at the lower of amortized cost or net realizable value.

~~(All~~Impairment ~~dollar~~of ~~amounts~~Intangible ~~in thousands)~~Assets

~~carryforwards~~The value of our intangible assets could be impacted by future adverse changes such as (i) any future declines in our operating results, and ~~the~~(ii) any ~~reversal~~failure ofto meet our ~~valuation~~future ~~allowance~~performance projections. onAn ~~deferred~~annual ~~taxes~~impairment review will be performed if indicators of impairment exist. In the ~~fiscal~~process ~~2005~~of an annual impairment review, ~~provision~~ ~~was~~we ~~made~~use ~~for~~the income approach methodology of valuation that includes both ~~state~~the undiscounted and ~~federal~~discounted ~~income~~cash ~~taxes~~flow ~~for~~methods as well as other generally accepted valuation methodologies to determine the ~~three~~fair ~~months~~value ~~ended~~of ~~December 31,~~our assets. Significant management ~~2004~~judgment is required in the forecast of future operating results that are used in the discounted cash flow method of valuation. WeThe ~~expect~~estimates toused ~~continue~~are consistent with the plans and estimates that we use to ~~incur~~manage ~~provision~~our ~~for~~business. ~~federal~~It ~~and~~is ~~state~~reasonably ~~income~~possible, ~~taxes~~however, ~~for~~that ~~the~~certain of our products ~~foreseeable~~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 cost forecasts would not be achieved, and we could incur additional impairment charges.

~~LIQUIDITY~~Deferred ~~AND CAPITAL RESOURCES~~Taxes

~~Our~~We ~~cash~~utilize ~~and~~the ~~cash~~liability ~~equivalents~~method ~~plus~~of ~~marketable~~accounting ~~securities~~for ~~totaled~~income ~~$16,245~~taxes onas ~~December 31,~~set ~~2004 compared~~forth toin ~~$16,591~~SFAS ~~on September~~No. 30109, “Accounting ~~2004. The decrease resulted from cash used~~ for ~~investing activities~~Income Taxes.” We ~~generated~~do ~~$324~~not ~~from~~carry ~~operations,~~a ~~expended~~valuation ~~$143~~allowance for ~~fixed~~our ~~assets~~deferred ~~and~~tax capitalized software development, used $694 for marketable securities investment, and received $173 from the proceeds of stock options exercised during the three months ended December 31, 2004, compared to $749 generated from operations, $119 used for fixed assets ~~and capitalized software development,~~. ~~and~~In ~~$284~~assessing ~~received from~~ the ~~exercise~~need ~~of stock options~~ for ~~the~~a ~~three~~valuation ~~months ended December 31~~allowance, ~~2003. Cash~~we ~~flow~~consider ~~generated~~all ~~from~~positive ~~operations~~and ~~decreased~~negative ~~for the three months ended December 31~~evidence, ~~2004,~~ ~~compared~~including toprojected ~~the~~future ~~same~~taxable ~~period of last year~~income, ~~primarily due to slower turnover of accounts receivable~~ and arecent ~~higher~~financial ~~pay out of accrued compensation and related expense~~performance. ~~This trend of declining cash~~ ~~flows from operations is not expected to continue for the remainder of fiscal 2005.~~

~~At December 31, 2004 cash and cash equivalents plus marketable securities made up 81% of our total~~16 current assets. Our current ratio at December 31, 2004 was 6.8. Management believes our existing working capital, coupled with funds generated from our operations will be sufficient to fund our presently anticipated working capital requirements for the foreseeable future.

InflationTable hasof had no significant impact on our operations. Contents

~~Contracts~~CAM ~~and~~COMMERCE ~~Commitments~~SOLUTIONS, INC.

~~During~~MANAGEMENT’S ~~the~~DISCUSSION ~~three~~AND ~~month~~ANALYSIS ~~period ended December 31, 2004, there were no material changes outside of~~OF ~~our ordinary business in our long term debt, capital leases, operating leases, purchase~~ ~~obligations, or other long term obligations reflected on our balance sheet at December 31, 2004.~~

~~The~~FINANCIAL ~~following~~CONDITION ~~table~~AND ~~summarizes~~RESULTS ~~payment~~OF ~~obligations for long-term debt, capital leases, operating~~OPERATIONS ~~leases and purchase obligations at December 31, 2004.~~

			PAYMENTS DUE BY PERIOD
			LESS THAN 1				MORE THAN 4
	TOTAL		YEAR		1-3 YEARS		YEARS
Long-term debt	$	—	$	—	$	—	$	—
Capital lease obligations		—		—		—		—
Operating leases		1,409		481		928		—
Purchase obligations		—		—		—		—

(All dollar amounts in thousands)

16RESULTS OF OPERATIONS

~~Table~~The following tables summarize the results of ~~Contents~~our operations for the three and six months ended March 31, 2007 compared to the three and six months ended March 31, 2006.

CAM COMMERCE SOLUTIONS, INC.


	Three months ended March 31,						Variance
	2007			2006			Amount			%
Net payment processing revenues	$	3,342		$	2,324		$	1,018			44	%
Net hardware, software and installation revenues		2,576			2,848			(272	)		(10	%)
Net service revenues		1,429			1,311			118			9	%

Total net revenues		7,347			6,483			864			13	%
Cost of payment processing revenues		181			126			55			44	%
Cost of hardware, software and installation revenues		1,234			1,508			(274	)		(18	%)
Cost of service revenues		639			607			32			5	%

Total cost of revenues		2,054			2,241			(187	)		(8	%)
Selling, general and administrative expenses		3,840			3,387			453			13	%
Research and development expenses		397			400			(3	)		(1	%)
Interest income		(310	)		(223	)		87			39	%

Total costs and expenses		5,981			5,805			176			3	%

Income before provision for income taxes		1,366			678			688			101	%
Provision for income taxes		512			261			251			96	%

Net income	$	854		$	417		$	437			105	%


Gross profit on net payment processing revenues	$	3,161		$	2,198		$	963			44	%
Gross profit on net hardware, software and installation revenues		1,342			1,340			2			0	%
Gross profit on net service revenues		790			704			86			12	%

Total gross profit	$	5,293		$	4,242		$	1,051			25	%


Gross margin on net payment processing revenues		95	%		95	%
Gross margin on net hardware, software and installation revenues		52	%		47	%
Gross margin on net service revenues		55	%		54	%
Gross margin on total net revenues		72	%		65	%

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~17

FINANCIALTable CONDITIONof AND RESULTS OF OPERATIONS Contents

~~(All~~CAM ~~dollar~~COMMERCE ~~amounts~~SOLUTIONS, ~~in thousands)~~INC.

~~FORWARD~~MANAGEMENT’S ~~LOOKING~~DISCUSSION ~~STATEMENTS~~AND ANALYSIS OF

~~All~~FINANCIAL ~~statements~~CONDITION ~~included~~AND ~~or incorporated~~RESULTS byOF ~~reference in this report, other than statements of~~OPERATIONS ~~historical fact or explanatory statements, 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 trends, 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, and our future capital requirements. These forward-looking statements are based on our current 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,” “optimistic,” and other similar expressions, including variations or negatives of these words.

In(All ~~addition,~~dollar ~~any~~amounts 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 us 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~~thousands) ~~forth below. We undertake no obligation to revise or update publicly any forward-looking statement~~ ~~for any reason.~~

RISK FACTORS


	Six months ended March 31,						Variance
	2007			2006			Amount			%
Net payment processing revenues	$	6,807		$	4,902		$	1,905			39	%
Net hardware, software and installation revenues		4,861			5,912			(1,051	)		(18	%)
Net service revenues		2,851			2,655			196			7	%

Total net revenues		14,519			13,469			1,050			8	%
Cost of payment processing revenues		311			244			67			27	%
Cost of hardware, software and installation revenues		2,418			3,173			(755	)		(24	%)
Cost of service revenues		1,276			1,201			75			6	%

Total cost of revenues		4,005			4,618			(613	)		(13	%)
Selling, general and administrative expenses		7,503			6,659			844			13	%
Research and development expenses		780			763			17			2	%
Interest income		(615	)		(429	)		186			43	%

Total costs and expenses		11,673			11,611			62			1	%

Income before provision for income taxes		2,846			1,858			988			53	%
Provision for income taxes		1,024			699			325			46	%

Net income	$	1,822		$	1,159		$	663			57	%


Gross profit on net payment processing revenues	$	6,496		$	4,658		$	1,838			39	%
Gross profit on net hardware, software and installation revenues		2,443			2,739			(296	)		(11	%)
Gross profit on net service revenues		1,575			1,454			121			8	%

Total gross profit	$	10,514		$	8,851		$	1,663			19	%


Gross margin on net payment processing revenues		95	%		95	%
Gross margin on net hardware, software and installation revenues		50	%		46	%
Gross margin on net service revenues		55	%		55	%
Gross margin on total net revenues		72	%		66	%

~~The risks and uncertainties described below are not the only ones we face. Additional risks and~~18 uncertainties not presently known or that are currently deemed immaterial may also affect our business. If any of these known or unknown risks or uncertainties actually occurs, they could have a material adverse effect on our business, financial condition and results of operations. In that event, the market price for our common stock could decline and you may lose all or part of your investment.

WeTable face intense competition in the retail point of sale industry, which could reduce our market share. Contents

~~Intuit~~CAM ~~and~~COMMERCE Microsoft both offer competing point of sale software products. These products were either acquired or licensed from our competitors. Although we have successfully competed against these products in the pastSOLUTIONS, ~~both Intuit and Microsoft have significant financial resources to market and modify their products, and, therefore, we may not be able to continue to successfully compete against them in the future~~INC.

~~Our~~MANAGEMENT’S ~~stock~~DISCUSSION isAND ~~thinly~~ANALYSIS ~~traded. Accordingly, you may not be able to resell your shares of common stock~~OF ~~at or above the price you paid for them.~~

~~Our~~FINANCIAL ~~common~~CONDITION ~~stock~~AND ~~has~~RESULTS ~~historically~~OF ~~maintained a low trading volume of shares per day. This trend is~~OPERATIONS ~~likely to continue.~~

~~The~~(All ~~population~~dollar ofamounts ~~our~~in ~~target~~thousands, ~~customers~~except isin ~~declining.~~reference to the number of X-Charge accounts)

~~Our~~Significant ~~target customers are small-to-medium size retailers. These target customers are under intense~~Trends 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

17We continued our growth trend with our X-Charge payment processing revenues. X-Charge payment processing revenues for the three and six months ended March 31, 2007 increased 44% and 39%, respectively, from the corresponding periods of last fiscal year. X-Charge payment processing revenues represent our largest revenue source for the last three quarters. We continued to achieve new records with the number of new installed payment processing accounts. During the quarter ended March 31, 2007, we installed a record of 1,631 new X-Charge payment processing accounts, which is a 72% increase over the 950 accounts installed during the corresponding quarter of the prior fiscal year. As of March 31, 2007, we had over 10,000 merchant accounts generating X-Charge revenues. Net income for the three months ended March 31, 2007 increased 105% over net income from the corresponding quarter of last fiscal year, primarily due to the high margin, recurring X-Charge payment processing revenues.

~~Table~~Systems business showed some signs of ~~Contents~~improvement with system revenues for the three months ended March 31, 2007 increasing 13% from the prior quarter ended December 31, 2006. The quarter ended March 31, 2007 is typically our slowest quarter of the year for our systems business. However, in comparison to the three and six months ended March 31, 2006, system revenues were still coming in lower than expected, primarily as the result of lower hardware sales, which carry our lowest gross profit margins.

~~CAM~~Service ~~COMMERCE~~revenues ~~SOLUTIONS~~for the three and six months ended March 31, ~~INC.~~2007 increased 9% and 7%, respectively, from the corresponding periods of the prior fiscal year, resulting from an increase in i.Star web hosting service revenue and an increase in support contract pricing.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~Revenues

~~FINANCIAL~~Our ~~CONDITION~~revenues ~~AND~~consist ~~RESULTS~~of OFX-Charge ~~OPERATIONS~~payment processing revenues, system revenues (consisting of computer hardware, licensing of computer software, and installation and training), and post contract customer support service revenues. Total revenues for the quarter ended March 31, 2007 increased 13% to $7,347 from $6,483 for the three months ended March 31, 2006. Total revenues for the six months ended March 31, 2007 increased by 8% to $14,519 from $13,469 for the corresponding period of the prior fiscal year.

~~(All~~Payment ~~dollar~~processing ~~amounts~~revenues infor ~~thousands)~~the quarter ended March 31, 2007 increased 44% to $3,342 from $2,324 for the corresponding period of last fiscal year. For the six months ended March 31, 2007, payment processing revenues increased 39% to $6,807 from $4,902 for the six months ended March 31, 2006. The increase in payment processing revenues was due to an increase in the number of new payment processing accounts.

~~our~~System revenues ~~and~~for inthe ~~our~~quarter ~~results~~ended ofMarch 31, ~~operations.~~2007 ~~This~~decreased ~~current~~10% ~~trend~~to in$2,576 from $2,848 for the corresponding ~~retail~~period ~~industry~~of ~~may~~last ~~exist indefinitely~~fiscal ~~and~~year. ~~could~~System ~~seriously~~revenues ~~impact~~for ~~our~~the ~~revenue~~six ~~and~~months ~~harm~~ended ~~our~~March 31, ~~business~~2007 decreased 18% to $4,861 ~~financial~~from ~~condition~~$5,912 ~~and results~~for the corresponding period of ~~operations~~last fiscal year. The decrease in system revenues was primarily due to a decline in hardware sales to both new and existing customers.

~~Other~~Service ~~factors~~revenues ~~which~~for ~~may~~the ~~affect~~quarter ~~quarterly~~ended ~~results~~March 31, ~~include:~~2007 increased 9% to $1,429 from $1,311 for the quarter ended March 31, 2006. Service revenues for the six months ended March 31, 2007 increased 7% to $2,851 from $2,655 for the six months ended March 31, 2006. The increase in service revenues was primarily due to an increase in i.Star web hosting service revenue and an increase in support contract pricing.

-Gross 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 our 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 level of orders received that can be shipped in a fiscal quarter.Margin

~~Due~~Gross tomargin ~~all~~on oftotal ~~the~~net ~~foregoing~~revenues ~~factors,~~for ~~and~~both the ~~other~~three ~~risks~~and ~~discussed~~six inmonths ~~this~~ended ~~report~~March 31, ~~and~~2007 ~~our other~~increased ~~filings~~to ~~with~~72%, ~~the~~compared ~~Securities~~to 65% and ~~Exchange~~66% ~~Commission,~~for ~~including~~the ~~our~~three ~~reports~~and onsix ~~Forms~~months ~~10-K~~ended ~~and~~March 31, ~~8-K~~2006, respectively. ~~you~~The ~~should~~increase ~~not~~in ~~rely~~gross onmargin ~~quarter~~was toprimarily ~~quarter~~due ~~comparisons~~to ofan ~~our~~increase ~~operating~~in ~~results~~high asmargin, anrecurring ~~indication of~~X-Charge ~~future~~payment ~~performance~~processing revenues.

1819

CAM COMMERCE SOLUTIONS, INC.

~~ITEM~~MANAGEMENT’S 3.DISCUSSION ~~QUANTITATIVE~~ AND ~~QUALITATIVE~~ANALYSIS ~~DISCOLSURES ABOUT MARKET RISK~~OF

~~Market~~FINANCIAL ~~risk~~CONDITION ~~refers~~AND toRESULTS ~~the~~OF ~~risk that a change in the level of one or more market factors such as~~OPERATIONS ~~interest rates, foreign currency exchange rates, or equity prices will result in losses for a~~ certain financial instrument or group of instruments. We are principally exposed to interest rate and credit risks. We are not exposed to foreign currency exchange rate risk. We do not use derivative instruments.

~~Interest~~(All ~~Rate~~dollar ~~Risk~~amounts in thousands)

WeGross ~~maintain~~margin aon ~~portfolio~~payment ofprocessing ~~cash~~revenues ~~equivalents~~for ~~with~~the ~~original~~three ~~maturities~~and ofsix ~~three~~ months orended ~~less.~~March 31, ~~Our~~2007 ~~investment~~remained ~~securities~~flat ~~portfolio~~at ~~consists~~95%, ~~solely~~compared ofto ~~debt~~the ~~instruments~~corresponding ~~all~~periods ~~with~~ended ~~current~~March 31, ~~maturities~~2006. ofGross margin on ~~two~~system ~~years~~revenues orfor ~~less.~~the ~~Both~~three ~~portfolios~~and ~~are~~six ~~for~~months ~~investment~~ended March 31, ~~not~~2007 ~~trading~~increased ~~purposes.~~to ~~Fluctuations~~52% inand 50%, ~~interest~~respectively, ~~rates~~from ~~will~~47% ~~have~~and an46% ~~impact~~for on the ~~market~~three ~~value~~and ofsix ~~these~~months ~~investments~~ended March 31, 2006, respectively. The ~~This~~increase ~~risk~~was isdue ~~managed by~~to ~~investing~~a change in ~~short~~revenue ~~term~~mix ~~instruments~~with ofhigher ~~high~~software ~~quality~~sales ~~credit~~at ~~issuers~~higher margins and lower ~~limiting~~hardware sales at lower margins. Gross margin on service revenues for the ~~amount~~three ofand six ~~investment~~months inended ~~any~~March 31, ~~one~~2007 ~~issuer.~~remained Weconsistent ~~have~~at no55%, ~~current~~compared orto ~~long~~54% ~~term~~and ~~debt~~55% orfor ~~outstanding~~the ~~lines~~three months ofand ~~credit~~six months ended March 31, 2006, respectively.

~~Credit~~Selling, ~~Risk~~General and Administrative Expenses

WeSalaries, ~~are~~sales ~~currently~~commissions, ~~exposed~~marketing toexpenses, ~~credit~~and ~~risk~~rent onexpenses ~~credit~~represent ~~extended~~the tolargest ~~customers~~components of ~~which~~selling, ~~are~~general ~~mostly small-to-medium-size~~and ~~retailers~~administrative expenses. WeSelling, ~~actively~~general ~~monitor~~and ~~this~~administrative ~~risk~~expenses ~~through~~for the aquarter ~~variety~~ended March 31, 2007 increased $453 to $3,840, or 52% of ~~control~~net revenues, from $3,387, or ~~procedures~~52% ~~involving~~of ~~senior~~net ~~management~~revenues, for the three months ended March 31, 2006. ~~Historically~~Selling, ~~credit~~general ~~losses~~and administrative ~~have~~expenses ~~been~~for ~~small~~the ~~and~~six ~~within~~months ~~our~~ended March 31, 2007 increased $844 to $7,503, or 52% of ~~expectations~~net revenues, from $6,659, or 49% of net revenues, for the corresponding period of the prior fiscal year. The increase in selling, general and administrative expenses for the three and six-month periods ended March 31, 2007 was primarily due to the increase in commissions expense related to higher payment processing revenues and higher payroll costs related to an increase in administrative and sales personnel required for X-Charge revenue growth.

~~ITEM~~Research 4.and ~~CONTROLS~~Development ~~AND PROCEDURES~~Expenses

AsResearch ofand ~~the~~development ~~end~~expenses ofexpressed ~~the~~as ~~period~~a ~~covered~~percentage byof ~~this~~net ~~report,~~revenues wefor ~~carried~~the ~~out~~three anand ~~evaluation, under the~~six ~~supervision~~months ~~and~~ended ~~with the participation of our management~~March 31, ~~including~~2007 ~~our~~decreased ~~Chief~~slightly ~~Executive~~to ~~Officer~~5% ~~and our~~in ~~Chief~~each ~~Financial~~period ~~Officer,~~from of6% ~~the~~for ~~effectiveness~~both of the ~~design~~three and ~~operation of our disclosure~~ ~~controls~~six ~~and~~months ~~procedures.~~ended ~~Based upon that evaluation~~March 31, ~~the~~2006. ~~Chief~~Research ~~Executive Officer~~ and ~~Chief Financial~~development ~~Officer~~expenses ~~concluded~~were ~~that~~$397 ~~our~~for ~~disclosure~~the ~~controls~~three-month period ~~and~~ended ~~procedures~~March 31, ~~are~~2007, ~~effective~~compared to ~~ensure that~~$400 ~~information~~for ~~required~~the tothree bemonths ~~disclosed~~ended byMarch 31, us2006. inResearch and ~~the~~development ~~reports~~expenses ~~that~~increased weslightly ~~file~~to or$780 ~~submit~~for ~~under~~ the ~~Securities~~ ~~Exchange~~six-month ~~Act~~period ofended ~~1934 is recorded~~March 31, ~~processed,~~2007 from ~~summarized~~$763 ~~and~~for ~~reported within~~ the ~~time periods~~corresponding ~~specified~~period inof the ~~Securities~~prior ~~and~~fiscal ~~Exchange~~year. ~~Commission’s~~The ~~rules~~increase ~~and~~in ~~forms.~~expenses ~~There~~for ~~were no~~the ~~changes~~six inmonths ~~our~~ended ~~internal~~March 31, ~~control~~2007 ~~over~~was ~~financial~~due ~~reporting~~to ~~that~~an ~~occurred~~increase ~~during~~in ~~our~~salaries. ~~most~~We ~~recently completed~~continue ~~fiscal~~to ~~quarter~~invest ~~that~~in ~~have~~the enhancements ~~materially~~of ~~affected,~~new orfeatures ~~are~~for ~~reasonably~~the ~~likely~~existing tosoftware ~~materially affect,~~products ~~our~~of ~~internal~~Retail ~~control~~Star ~~over~~and ~~financial reporting~~CAM32.

19Income Taxes

~~Table~~Provision for income taxes for the three and six months ended March 31, 2007 were $512 and $1,024, respectively, compared to $261 and $699 for the three and six months ended March 31, 2006, respectively. The effective tax rate for the three months ended March 31, 2007 was 37%, compared to 38% for the three months ended March 31, 2006. The effective rate for the six months ended March 31, 2007 was 36%, compared to 38% for the same period of ~~Contents~~last fiscal year. The lower effective tax rate for the six months ended March 31, 2007 included the benefit from the retroactive renewal of the R&D credit by Congress in December of 2006.

~~CAM~~Net ~~COMMERCE SOLUTIONS, INC.~~Income

~~PART~~Net IIincome for the quarter ended March 31, 2007 increased 105% to $854 from $417 for the quarter ended March 31, 2006. ~~OTHER~~Net ~~INFORMATION~~income for the six months ended March 31, 2007 increased 57% to $1,822 from $1,159 for the corresponding period of the prior fiscal year. The increase in net income was primarily due to the increase in high margin, recurring X-Charge payment processing revenues.

~~Item 1 Legal~~LIQUIDITY ~~Proceedings~~AND CAPITAL RESOURCES

~~None~~In the last several years, we have financed our operations almost entirely from the cash flow generated from operations. Net income was the primary source of our increase in cash provided from operations. Our cash

~~Item 2 Unregistered Sales of Equity Securities and Use of Proceeds~~20

None Table of Contents

~~Item 3 Defaults~~CAM ~~upon~~COMMERCE ~~Senior~~SOLUTIONS, ~~Securities~~INC.

~~None~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF

~~Item 4 Submission~~FINANCIAL ofCONDITION ~~Matters~~AND toRESULTS aOF ~~Vote of Security Holders~~OPERATIONS

~~None~~(All dollar amounts in thousands)

~~Item~~and cash equivalents plus marketable securities totaled $25,348 on March ~~5 Other~~31, ~~Information~~2007, compared to $23,653 on September 30, 2006. The increase resulted primarily from cash provided from operating activities. During the six months ended March 31, 2007, we generated $2,298 from operations, expended $267 for fixed assets and capitalized software development, used $1,744 for marketable securities investments and $1,237 for dividend payments, and received $2,035 from maturity of investments and $390 from stock options exercised. During the six months ended March 31, 2006, $1,521 was generated from operations, $260 was used for fixed assets and capitalized software development, $2,269 was used for marketable securities investments, $926 was used for dividend payments, $750 was received from maturity of investments, and $402 was received from stock options exercised.

~~None~~The company has a cash dividend policy, which pays stockholders a variable dividend quarterly based on the quarterly results. During the six months ended March 31, 2007, the Board of Directors declared the following dividends:

Item 6 Exhibits


Declaration Date	Per Share Dividend		Record Date	Total Amount		Payment Date
November 15, 2006	$	0.16	January 5, 2007	$	643	January 16, 2007

February 7, 2007	$	0.18	April 4, 2007	$	726	April 16, 2007

3(The decision to pay a) ~~Certification~~dividend ofis ~~Incorporation~~re-evaluated ofquarterly ~~the~~based ~~Company~~on our earnings performance, regulatory aslimitations ~~amended~~and ~~(incorporated~~other byconditions ~~reference~~which may affect our desire to pay dividends in the ~~Exhibit 3(a)~~future and is subject to approval by the ~~1988~~Board ~~Annual~~of ~~Report~~Directors. onOther ~~Form 10-K~~than ~~filed~~performance, onthere ~~January 12~~are no restrictions that currently materially limit, ~~1989~~or –that ~~SEC~~we ~~File~~reasonably ~~No.~~believe are likely to limit ~~000-16569)~~materially the future payment of dividends.

~~3(b)~~At ~~Bylaws~~March 31, of2007 ~~the~~cash ~~Company,~~and ascash ~~amended~~equivalents ~~(incorporated~~plus bymarketable ~~reference~~securities tomade ~~Exhibit 3(b)~~up to87% ~~Form 10-Q~~of ~~for~~our total ~~the~~current ~~period~~assets. ~~ended~~Our current ratio at March 31, ~~2004,~~2007 ~~filed~~was on6.9. ~~May 13~~Management believes our existing working capital, ~~2004).~~coupled with funds generated from our operations will be sufficient to fund our presently anticipated working capital requirements for the foreseeable future.

~~10(a) 1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8 Registration~~Inflation ~~Statement filed on June 21, 1993).~~

~~10(b)~~Inflation ~~Employment~~had ~~Agreement,~~no ~~and~~material ~~Change~~impact inon ~~Control~~our ~~Agreements~~operations ~~for~~in ~~Geoffrey D. Knapp, dated January 1, 1996, (incorporated by reference to Exhibits 10 (h) and (i) to~~ the ~~Form 10-Q for the period ended March 31, 1996, filed on May 7, 1996 – SEC File No~~past. ~~000-16569).~~

~~10(c)~~Contracts ~~Employment Agreement,~~ and ~~Change in Control Agreements for Paul Caceres, dated January 1,~~Commitments ~~1996, (incorporated by reference to Exhibits 10 (j) and (k) to the Form 10-Q for the period ended March 31, 1996, filed on May 7, 1996 – SEC File No. 000-16569).~~

~~10(d)~~On ~~Amendment~~December 19, to2006, ~~1993~~we ~~Stock~~signed ~~Option~~a ~~Plan~~lease ~~(incorporated~~agreement bywith ~~reference~~our toChief Executive Officer, Geoffrey D. Knapp, for approximately 20,500 square feet of office space in Henderson, Nevada. The building houses our research and development, marketing, inside sales and support employees. The lease is for a ten-year term that commences upon the ~~exhibits~~completion of the building expansion space, which occurred on ~~Form~~April ~~S-8~~13, 2007. The initial rent of $25,949 per month is subject to annual percentage ~~Registration~~increases ~~Statement~~equal ~~filed~~to onthe ~~June 26~~increases, ~~1998~~if any, in the Consumer Price Index. No rent adjustment, however, shall be less than two percent (2%) nor greater than four percent (4%).

~~10(e) 2000 Stock Option Plan (incorporated by reference to Exhibit 10(i) to the 2000 Annual Report on Form 10-K filed on December~~ 21~~, 2000 – SEC File No. 000-16569).~~

10(f)Table Fountainof Valley New Office Lease Agreement (incorporated by reference to Exhibit 10(j) to the 2001 Annual Report on Form 10-K filed on December 20, 2001 – SEC File No. 000-16569). Contents

20CAM COMMERCE SOLUTIONS, INC.

~~Table~~MANAGEMENT’S ofDISCUSSION ~~Contents~~AND ANALYSIS OF

~~CAM~~FINANCIAL ~~COMMERCE~~CONDITION ~~SOLUTIONS,~~AND ~~INC.~~RESULTS OF OPERATIONS

~~PART~~(All IIdollar —amounts ~~OTHER~~in ~~INFORMATION~~thousands)

~~10(g)~~The ~~Indemnity~~following ~~Agreements~~table ~~(incorporated~~summarizes bypayment ~~reference~~obligations tofor ~~Form 8~~long-Kterm debt, ~~filed~~capital onleases, ~~November 18~~operating leases, ~~2004~~purchase –obligations, and other long-term obligations for the remaining periods of the ~~SEC~~current ~~File~~fiscal Noyear and future fiscal years. ~~000-16569)~~

10(h) Form of the Stock Option Agreement for the 2000 Plan (incorporated by reference to Exhibit 10(h) to the 2004 Annual Report on Form 10-K filed on December 21, 2004 – SEC File No. 000-16569)


	PAYMENTS DUE BY PERIOD
			LESS THAN 1				3-5		MORE THAN 5
	TOTAL		YEAR		1-3 YEARS		YEARS		YEARS
Long-term debt	$	—	$	—	$	—	$	—	$	—
Capital lease obligations	$	—	$	—	$	—	$	—	$	—
Operating leases	$	4,668	$	380	$	1,987	$	1,030	$	1,271
Purchase obligations	$	—	$	—	$	—	$	—	$	—
Other long-term obligations	$	—	$	—	$	—	$	—	$	—

~~31(a)~~FORWARD ~~Certification~~LOOKING ~~of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act~~STATEMENTS

~~31(b)~~All ~~Certification~~statements included or incorporated by reference in this Report, other than statements of historical ~~Chief~~fact ~~Financial~~or ~~Officer~~explanatory ~~pursuant~~statements, toare ~~Section 302~~forward-looking statements within the meaning of the Private ~~Sarbanes-Oxley~~Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to, statements concerning trends, 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, and our future capital requirements. These forward-looking statements are based on our current 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,” “optimistic,” and other similar expressions, including variations or negatives of these words.

32In ~~Certification~~addition, ~~Pursuant~~any statements that refer to ~~Section 906~~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 ~~Sarbanes~~date of this report and are based upon the information available to us 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-~~Oxley~~looking ~~Act~~statements as a result of various factors, including, but not limited to the following: our recent growth has been due primarily to the addition of new customers for our X-Charge payment processing services and not increases in revenues from existing customers of those services; our original core business of computer system sales is in decline; the population of our target customers is declining; our stock is thinly traded; we face intense competition in the retail point of sale industry; the availability and pricing of competing products; the effectiveness of our expense and cost control efforts; our ability to develop and deliver software products in a timely manner; the rate at which customers adopt our new products and services; the effect of new and emerging technologies; the ability to retain and hire key personnel needed to implement business and product plans; the level or orders received that can be shipped in any quarter; and other risks and factors detailed in our Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this report. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

2122

~~SIGNATURES~~CAM COMMERCE SOLUTIONS, INC.

~~Pursuant~~ITEM to3. ~~the~~QUANTITATIVE ~~requirements~~AND ofQUALITATIVE ~~the~~DISCLOSURES ~~Securities~~ABOUT ~~Exchange~~MARKET ~~Act of 1934, the registrant has duly caused~~RISK ~~this report to be signed on its behalf by the undersigned thereunto duly authorized.~~

~~CAM~~Market ~~COMMERCE~~risk ~~SOLUTIONS~~refers to the risk that a change in the level of one or more market factors such as interest rates, ~~INC~~foreign currency exchange rates, or equity prices will result in losses for a certain financial instrument or group of instruments. ~~(Registrant)~~We are principally exposed to interest rate and credit risks. We are not exposed to foreign currency exchange rate risk. We do not use derivative instruments.

Date: February 11, 2005		By /s/ Geoffrey D. Knapp
		Geoffrey D. Knapp
		Chief Executive Officer
Date: February 11, 2005		By /s/ Paul Caceres Jr.
		Paul Caceres Jr.
		Chief Financial and
		Accounting Officer

Interest Rate Risk

22We maintain a portfolio of cash equivalents with original maturities of three months or less. Our investment securities portfolio consists of debt instruments and certificates of deposits all with current maturities of two years or less. Both portfolios are for investment, not trading purposes. Fluctuations in interest rates will have an impact on the market value of these investments. If interest rates were to decrease by 10%, interest income would have decreased by $62 for the six months ended March 31, 2007. This risk is managed by investing in short term instruments of investment grade quality credit issuers and limiting the amount of investment in any one issuer. We have no current or long term debt or outstanding lines of credit.

~~Table~~Credit ~~of Contents~~Risk

~~EXHIBIT~~We ~~INDEX~~are currently exposed to credit risk on credit extended to customers, which are mostly small-to-medium-size retailers. We actively monitor this risk through a variety of control procedures involving senior management. Historically, credit losses have been small and within our expectations.

Exhibit No.		Description
3(a)		Certification of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3(a) to the 1988 Annual Report on Form 10-K filed on January 12, 1989 — SEC File No.000-16569).
3(b)		Bylaws of the Company, as amended (incorporated by reference to Exhibit 3(b) to Form 10-Q for the period ended March 31, 2004, filed on May 13, 2004).
10(a)		1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8 Registration Statement filed on June 21, 1993).
10(b)		Employment Agreement, and Change in Control Agreements for Geoffrey D. Knapp, dated January 1, 1996, (incorporated by reference to Exhibits 10 (h) and (i) to the Form 10-Q for the period ended March 31, 1996, filed on May 7, 1996 — SEC File No. 000-16569).
10(c)		Employment Agreement, and Change in Control Agreements for Paul Caceres, dated January 1, 1996, (incorporated by reference to Exhibits 10 (j) and (k) to the Form 10-Q for the period ended March 31, 1996, filed on May 7, 1996 — SEC File No. 000-16569).
10(d)		Amendment to 1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8 Registration Statement filed on June 26, 1998).
10(e)		2000 Stock Option Plan (incorporated by reference to Exhibit 10(i) to the 2000 Annual Report on Form 10-K filed on December 21, 2000 — SEC File No. 000-16569).
10(f)		Fountain Valley New Office Lease Agreement (incorporated by reference to Exhibit 10(j) to the 2001 Annual Report on Form 10-K filed on December 20, 2001 — SEC File No. 000-16569).
10(g)		Indemnity Agreements (incorporated by reference to Form 8-K, filed on November 18, 2004 — SEC File No. 000-16569)
10(h)		Form of the Stock Option Agreement for the 2000 Plan (incorporated by reference to Exhibit 10(h) to the 2004 Annual Report on Form 10-K filed on December 21, 2004 — SEC File No. 000-16569)
31(a)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31(b)		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

Foreign Exchange Rate Risk

We do no operate internationally and, therefore, are not subject to market risk from changes in foreign exchange rates.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II . OTHER INFORMATION

Item 1 Legal Proceedings

None

Item 1A Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in our Annual Report on Form 10-K for the year ended September 30, 2006, which could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those disclosed in our 2006 Annual Report on Form 10-K.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3 Defaults upon Senior Securities

None

Item 4 Submission of Matters to a Vote of Security Holders

None

Item 5 Other Information

None

Item 6 Exhibits

3(a) Certification of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3(a) to the 1988 Annual Report on Form 10-K filed on January 12, 1989).

3(b) Bylaws of the Company, as amended (incorporated by reference to Exhibit 3(b) to Form 10-Q for the period ended March 31, 2004, filed on May 13, 2004).

10(a) 1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8 Registration Statement filed on June 21, 1993).

10(b) Employment Agreement and Change in Control Agreement for Geoffrey D. Knapp, amended on December 20, 2006, (incorporated by reference to the Form 8-K, filed on December 20, 2006).

10(c) Employment Agreement and Change in Control Agreement for Paul Caceres, amended on December 20, 2006, (incorporated by reference to the Form 8-K, filed on December 20, 2006).

10(d) Amendment to 1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8 Registration Statement filed on June 26, 1998).

10(e) 2000 Stock Option Plan (incorporated by reference to Exhibit 10(i) to the 2000 Annual Report on Form 10-K filed on December 21, 2000).

10(f) Fountain Valley Office Lease Agreement (incorporated by reference to Exhibit 10(j) to the 2001 Annual Report on Form 10-K filed on December 20, 2001)

10(g) Indemnity Agreements (incorporated by reference to Form 8-K, filed on November 18, 2004)

10(h) Form of the Stock Option Agreement for the 2000 Plan (incorporated by reference to Exhibit 10(h) to the 2004 Annual Report on Form 10-K filed on December 21, 2004)

10(i) Fountain Valley Office Lease Extension Agreement Letter, dated May 26, 2005 (incorporated by reference to Exhibit 10(i) to Form 10-Q filed on August 12, 2005)

10(j) Henderson, Nevada Office Lease Agreement (incorporated by reference to Form 8-K filed on December 19, 2006)

31(a) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

31(b) Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

The Company’s SEC File No. for all SEC filings referenced, other than the S-8 filings, is 000-16569.

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: May 9, 2007	By	/s/ Geoffrey D. Knapp

	Geoffrey D. Knapp
	Chief Executive Officer

Date: May 9, 2007	By	/s/ Paul Caceres Jr.

	Paul Caceres Jr.
	Chief Financial and
	Accounting Officer

EXHIBIT INDEX


Exhibit		Description

3(a)		Certification of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3(a) to the 1988 Annual Report on Form 10-K filed on January 12, 1989).

3(b)		Bylaws of the Company, as amended (incorporated by reference to Exhibit 3(b) to Form 10-Q for the period ended March 31, 2004, filed on May 13, 2004).

10(a)		1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8 Registration Statement filed on June 21, 1993).

10(b)		Employment Agreement and Change in Control Agreement for Geoffrey D. Knapp, amended on December 20, 2006, (incorporated by reference to the Form 8-K, filed on December 20, 2006).

10(c)		Employment Agreement and Change in Control Agreement for Paul Caceres, amended on December 20, 2006, (incorporated by reference to the Form 8-K, filed on December 20, 2006).

10(d)		Amendment to 1993 Stock Option Plan (incorporated by reference to the exhibits on Form S-8 Registration Statement filed on June 26, 1998).

10(e)		2000 Stock Option Plan (incorporated by reference to Exhibit 10(i) to the 2000 Annual Report on Form 10-K filed on December 21, 2000).

10(f)		Fountain Valley Office Lease Agreement (incorporated by reference to Exhibit 10(j) to the 2001 Annual Report on Form 10-K filed on December 20, 2001)

10(g)		Indemnity Agreements (incorporated by reference to Form 8-K, filed on November 18, 2004)

10(h)		Form of the Stock Option Agreement for the 2000 Plan (incorporated by reference to Exhibit 10(h) to the 2004 Annual Report on Form 10-K filed on December 21, 2004)

10(i)		Fountain Valley Office Lease Extension Agreement Letter, dated May 26, 2005 (incorporated by reference to Exhibit 10(i) to Form 10-Q filed on August 12, 2005)

10(j)		Henderson, Nevada Office Lease Agreement (incorporated by reference to Form 8-K filed on December 19, 2006)

31(a)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

31(b)		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

32		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

The Company’s SEC File No. for all SEC filings referenced, other than the S-8 filings, is 000-16569.

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