SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CREATIVE COMPUTER APPLICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Steven M. Besbeck, President
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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CREATIVE COMPUTER APPLICATIONS, INC.
26115-A MUREAU ROAD
CALABASAS, CA 91302
January 12, 2001
Dear Shareholder:
The Company's 2001 Annual Meeting of Shareholders will be held at 10:00
a.m., Pacific Time, on Monday, February 26, 2001, at the Company's offices at
26115-A Mureau Road, Calabasas, California 91302.
The formal Notice of Annual Meeting of Shareholders and the Proxy Statement
for the Meeting are on the following pages.
In order to assure that a quorum is present at the Meeting, you are urged
to sign and mail the enclosed proxy card at once, even though you may plan to
attend in person. You may revoke the proxy at any time prior to its being voted
by filing with the Secretary of the Company either an instrument of revocation
or a duly executed proxy card bearing a later date. If you attend the Meeting,
you may elect to revoke the proxy and vote your shares in person.
The prompt return of your proxy card will help us avoid the expense of
further requests for proxies.
For your convenience in returning your proxy card, we enclose a return
envelope, which requires no postage.
Financial and other information concerning the Company is contained in the
enclosed Annual Report on Form 10KSB for the fiscal year ended August 31, 2000.
Very truly yours,
/s/ BRUCE M. MILLER
Bruce M. Miller
CHAIRMAN OF THE BOARD
CREATIVE COMPUTER APPLICATIONS, INC.
26115-A MUREAU ROAD
CALABASAS, CA 91302
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 26, 2001
----------
To the Shareholders of
Creative Computer Applications, Inc.
Notice is hereby given that the 2001 Annual Meeting of Shareholders of
Creative Computer Applications, Inc. (the "Company") will be held at the
Company's offices at 26115-A Mureau Road, Calabasas, California 91302, on Monday
February 26, 2001 at 10:00 a.m. Pacific Time, for the following purposes:
1. To elect five members of the Board of Directors to serve until the
next Annual Meeting of Shareholders and until their successors are
elected and qualified.
2. To ratify the appointment of BDO Seidman, LLP as the Company's
independent accountants for the current fiscal year.
3. To consider and transact such other business as may properly be
brought before the Meeting or any adjournment thereof.
Only shareholders of record at the close of business on January 5, 2001
will be entitled to vote at the Meeting. The stock transfer books will not be
closed.
Financial and other information concerning the Company is contained in the
enclosed Annual Report on Form 10KSB for the fiscal year ended August 31, 2000.
By Order of the Board of Directors,
/s/ JAMES R. HELMS
James R. Helms
SECRETARY
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
CREATIVE COMPUTER APPLICATIONS, INC.
26115-A MUREAU ROAD
CALABASAS, CALIFORNIA 91302
PROXY STATEMENT
2001 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement and the enclosed form of proxy card are being sent or
given to shareholders of Creative Computer Applications, Inc., a California
corporation (the "Company"), in connection with the solicitation of proxies by
Management on behalf of the Board of Directors of the Company for use at the
2001 Annual Meeting of Shareholders (the "Meeting") to be held on Monday,
February 26, 2001 at 10:00 a.m. Pacific Time at the Company's offices at 26115-A
Mureau Road, Calabasas, California 91302. The Annual Report on Form 10KSB to the
shareholders of the Company for the fiscal year ended August 31, 2000, including
its financial statements and information concerning the Company, is enclosed
with this mailing. The Company anticipates that this Proxy Statement and
accompanying form of proxy will first be mailed or given to its shareholders on
or about January 12, 2001.
If the enclosed proxy card is properly signed and returned, the shares
represented by the proxy card will be voted and, if the shareholder indicates a
voting choice in the proxy card, the shares will be voted in accordance with
such choice. If the proxy card is signed but no specification is made, the
shares designated in the proxy card will be voted FOR the election of the
nominees for Directors listed below; and FOR the ratification of the appointment
of BDO Seidman, LLP as the Company's independent certified public accountants
for the current fiscal year. Management knows of no business that will be
presented at the Meeting other than that which is set forth in this Proxy
Statement. If any other matter properly comes before the Meeting, the proxy
holders will vote the proxies in accordance with their best judgment, subject to
contrary shareholder instructions on any specific proxy card.
Any proxy may be revoked by the shareholder giving the Company, at any time
prior to its being voted, by filing with the Secretary of the Company, an
instrument of revocation or a duly executed proxy card bearing a later date. Any
proxy may also be revoked by the shareholder's attendance at the Meeting and
election, by filing an instrument of revocation, to vote in person.
RECORD DATE AND VOTING AT THE MEETING
The Board of Directors has fixed the close of business on January 5, 2001
as the record date for the determination of the shareholders of the Company
entitled to notice of, and to vote at, the Meeting. At that date, there were
issued and outstanding 3,173,575 of the Company's common shares (the "Common
Shares"). The holders of record of Common Shares are entitled to one vote per
Common Share on each matter submitted to the Meeting subject, in the case of
election of Directors, to the cumulative voting provisions described below.
There are no outstanding securities of the Company other than the Common Shares
entitled to vote at the Meeting.
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the votes attributable to Common Shares entitled to vote shall
constitute a quorum for the transaction of business at the Meeting. Assuming a
quorum is present, the vote of a plurality of the votes cast at the Meeting by
the holders of Common Shares is required for the election of Directors. Approval
of such other matters as may properly come before the Meeting or any adjournment
of the Meeting requires the affirmative vote of holders of a majority of the
votes attributable to Common Shares entitled to vote at the Meeting. Abstentions
will be counted towards the tabulation of votes cast on proposals presented to
the shareholders and will have the same effect as negative votes. Broker
non-votes are not counted for any purpose in determining whether a matter has
been approved.
Pursuant to the requirements of the California Corporations Code and the
Company's By-laws, the holders of the Company's Common Shares may cumulate their
votes for the election of Directors of the Company if any shareholder gives
notice, at the Meeting prior to voting, of his or her intention to cumulate his
or her votes. Cumulative voting means that each shareholder entitled to vote may
cast that number of votes equal to the product of the number of his or her
1
Common Shares multiplied by the number of Directors being elected. Since five
Directors are being elected at the Meeting, each shareholder may cast a total of
five votes per Common Share for all nominees for Director. A shareholder may
cast all of his or her votes for a single nominee or may allocate them among two
or more nominees. Instructions for allocation may be marked on the proxy card in
the space provided opposite each nominee's name and, if the proxy card is
properly marked, the persons acting under the proxy will give notice of the
shareholder's intent to vote cumulatively. Unless a contrary instruction is
properly marked on the proxy card, the persons acting under the proxy will
cumulatively vote so as to maximize the probability that each nominee will be
elected.
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the Company's Board of Directors
shall consist of not less than three nor more than nine Directors, as determined
by the Company's Board of Directors, each to hold office for a term of one year
and until a successor shall be duly elected and qualified. The present number of
Directors constituting the entire Board is five.
A board of five Directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's five nominees named below, all of whom are presently Directors
of the Company. In the event that any nominee of the Company is unable or
declines to serve as a Director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as Directors, the proxy holders intend to vote all
proxies received by them in such a manner in accordance with cumulative voting
as will assure the election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will be determined by
the proxy holders. The Company is not aware of any nominee who will be unable or
will decline to serve as a Director. The term of office of each person elected
as a Director will continue until the next Annual Meeting of Shareholders or
until a successor has been elected and qualified.
During the fiscal year ended August 31, 2000, the Board of Directors held a
total of four (4) meetings. Each of the current Directors participated in all
such meetings.
The Board of Directors of the Company has established a Compensation
Committee for the purpose of reviewing and making recommendations concerning
compensation plans and salaries of officers and other key personnel. The
Compensation Committee, as an ongoing responsibility, periodically reviews
industry related surveys of other companies similar in size and complexity to
the Company to determine reasonable salary ranges and incentive compensation for
its managers and key employees. The members of the Compensation Committee are
Lawrence S. Schmid and Robert S. Fogerson, Jr. The Compensation Committee met
once during the fiscal year ended August 31, 2000.
The Board of Directors of the Company has also established an Audit
Committee for the purpose of meeting with the Company's independent accountants
and to review the scope of the audit, internal accounting controls, any change
in accounting principles, significant audit adjustments, audit disclosures and
related matters. The members of the Audit Committee are Robert S. Fogerson, Jr.,
Lawrence S. Schmid, and Bruce M. Miller. The Audit Committee and the remaining
members of the Board of Directors met once during the fiscal year ended August
31, 2000. The Audit Committee recommends engagement of BDO Seidman, LLP as the
Company's independent certified public accountants.
The Board initially adopted a charter for the Audit Committee in March
2000, and later amended the charter in August 2000. A copy of the final approved
charter is attached hereto as Appendix A. The Board has determined that at least
two of the members of the Audit Committee are "independent" as that term is
defined by the listing standards of the American Stock Exchange for small
business filers under the Securities and Exchange Commission Regulation S-B.
See "Principal Securities Holders" for a summary of beneficial ownership of
the Company's Common Shares by the officers, Directors and certain beneficial
owners.
2
Background information concerning each present Director, executive officer
and each nominee for the office of Director of the Company is as follows:
Office with Company; Year First
Name, Age Background Information Elected Director
- --------- ---------------------- ----------------
Bruce M. Miller, 54 Chairman of the Board and Chief
Technology Officer 1978
since its inception in 1978.
Steven M. Besbeck, 52 President, Chief Executive Officer of 1980
the Company since August 1983 and
a Director of the Company since November
1980 and Chief Financial Officer. Director
of International Remote Imaging Systems.
James R. Helms, 56 Vice President/Operations since 1982 1987
and Secretary.
Lawrence S. Schmid, 59 President and Chief Executive Officer, 1991
Strategic Directions International, Inc.,
a management consulting firm specializing
in technology companies.
Robert S. Fogerson, Jr., 47 Chief Operating Officer, of 1992
ViroMED Laboratories, Inc., a leading
independent laboratory providing clinical
testing services since 1998. Mr. Fogerson
had previously served in various capacities
at PharmChem Laboratories since 1975.
3
EXECUTIVE COMPENSATION
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER
NAME ANNUAL RESTRICTED SECURITIES ALL OTHER
AND COMPEN- STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL SATION AWARD(S) OPTIONS/ PAYOUTS SATION
POSITION YEAR SALARY($) BONUS($) ($) ($) SAR'S(#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------
Steven M. Besbeck 2000 173,335 0 0 0 40,000 0 1,808
President, CEO, 1999 177,047 21,710 0 0 0 0 1,588
CFO 1998 152,935 0 0 0 10,000 0 1,528
Bruce M. Miller 2000 183,834 0 0 0 40,000 0 5,334
Chairman 1999 167,433 21,535 0 0 0 0 5,006
1998 161,363 0 0 0 10,000 0 4,575
James R. Helms 2000 125,010 0 0 0 40,000 0 6,961
Vice President 1999 117,171 16,139 0 0 0 0 4,351
Operations 1998 110,983 0 0 0 10,000 0 2,537
EMPLOYMENT AGREEMENTS
Messrs Bruce Miller and Steven Besbeck are employed by the Company on a
month-to-month basis pursuant to the terms of their employment agreements. Each
agreement provides for a base salary at an annual rate of $172,289 for Mr.
Miller and $176,911 for Mr. Besbeck and authorizes the payment of other fringe
benefits and bonuses made available by the Company to its senior executives. The
persons referred to above also received insurance benefits which were paid for
by the Company and employer contributions to their 401(k) plan accounts as
provided for in the Company's 401(k) profit sharing plan. These amounts,
including amounts accrued and unconditionally vested under the 401(k) plan, are
reflected in the table above.
The Company has adopted a profit sharing plan pursuant to which income tax
is deferred on amounts contributed by employees under Section 401(k) of the
Internal Revenue Code. All employees, over the age of 21, are eligible to
participate in the plan after the completion of six months of service. The
company contributes, on a matching basis, 25% of the employee's contribution up
to 4%. The Company's contribution becomes vested at the rate of 20% for each
full year of employment. Both the employee and Company contributions are subject
to aggregate annual limits under the Internal Revenue Code.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Company are paid
Directors' fees of $2,000 per meeting and are reimbursed for their reasonable
expenses for attending meetings. At present, there are two directors, Lawrence
S. Schmid and Robert S. Fogerson, Jr., who are not officers and/or employees of
the Company.
4
STOCK OPTION PLANS
1997 STOCK OPTION PLAN
The Company's 1997 Stock Option Plan is administered by the Board of
Directors of the Company or a Committee of not less than two members thereof,
which has the authority to determine the persons to whom the options may be
granted, the number of shares to be covered by each option, the time or times at
which the options may be granted or exercised and, for the most part, the terms
and provisions of the options. The 1997 Plan permits the grant of both incentive
stock options ("ISOs") qualifying under section 422 of the Internal Revenue Code
("Code") and non-qualified stock options ("NSOs"), which do not so qualify.
Under the 1997 Plan, the option exercise price of ISOs may not be less than 100%
(or 110% if the optionee owns 10% or more of the outstanding voting securities
of the Company) of the fair market value of the Common Shares on the date of
grant. The option exercise price of NSOs may not be less than 85% of the fair
market value of the Common Shares on the date of grant. No option under the 1997
Plan may be exercised more than ten years from the date of grant except that
options granted to optionees owning 10% or more of the outstanding voting
securities of the Company may not be exercised more than five years from the
date of grant.
The 1997 Plan is intended to offer a proprietary interest in the Company to
"Key Employees" and "Key Contractors" contributing to the Company's success and,
by increasing their proprietary interest, to encourage them to remain in the
employ and service of the Company, to assist the Company in competing
effectively for the services of new employees and to attract and retain the best
available persons as directors of the Company. "Key Employees" are defined as
persons, including officers and directors, employed by the Company, or any
parent or subsidiary of the Company, on a compensable basis who hold positions
of responsibility with the Company or a parent or subsidiary. "Key Contractors"
are defined as persons (including officers whether or not they are also
directors) employed by the Company or any parent or subsidiary of the Company to
render services (including services solely as a member of the Board of
Directors) to or on behalf of the Company or any parent or subsidiary of the
Company.
No options may be exercised within 12 months after the date of grant and
must be exercisable at the rate of at least 20% per year over 5 years from the
date of grant; options granted to directors will be exercisable at the rate of
25% per year in each of the second, third, fourth and fifth years from the date
of grant on a cumulative basis.
The 1997 Plan provides for the granting of ISOs to purchase a maximum of
500,000 Common Shares and for the granting of NSOs to purchase a maximum of
300,000 Common Shares.
The aggregate number of shares subject to options, the maximum number of
shares which may be purchased, and the number of shares and the exercise price
for shares covered by outstanding options will be adjusted appropriately upon a
stock split or reverse split of the issued Common Shares, the payment of a stock
dividend, or the re-capitalization, combination or reclassification, or other
increase or decrease in Common Shares.
Stock options granted under the 1997 Plan may not be transferred except by
will or according to the laws of descent and distribution. During the lifetime
of the optionee, stock options may be exercised only by the optionee or by his
or her guardian or legal representative.
The 1997 Plan provides that if an optionee's employment with the Company is
terminated because of disability or death, no ISOs held by the optionee shall be
exercisable later than 12 months after the date of termination. Upon the death
of an optionee, all options held or the unexercised portion thereof exercisable
on the date of death are exercisable by the optionee's personal representative,
heirs or legatees at any time prior to the expiration of 12 months from the date
of death. An optionee holding ISOs, whose employment with the Company terminates
other than by disability or death must exercise the ISOs within 90 days after
such termination.
The 1997 Plan provides that if an optionee terminates employment with the
Company because of retirement with the consent of the Company, all NSOs held by
the optionee, or unexercised portions thereof, expire on the date of retirement
except for NSOs or unexercised portions thereof which were otherwise exercisable
on the date of retirement, which expire unless exercised within 90 days after
the date of retirement. An optionee whose employment with the Company or service
as a director of the Company is terminated for any reason other than those
described above must exercise NSOs within 210 days after such termination of
employment or service, as the case may be.
5
The 1997 Plan provides that no options shall be granted thereunder after
April 25, 2007. If options granted under the 1997 Plan expire for any reason or
are canceled or terminated prior to April 25, 2007, the Common Shares allocable
to any unexercised portion of such option may again be subject to an option.
Because the 1997 Plan will provide optionees the opportunity to acquire
Common Shares through the exercise of stock options, the exercise of any stock
option may have a proportionate dilutive effect on the holders of then
outstanding Common Shares from both a financial standpoint (effect on earnings
per share, etc.) and voting standpoint.
The Board of Directors may amend, suspend or discontinue the 1997 Plan at
any time. However, no such amendment may, without shareholder approval,
materially increase the number of Common Shares which may be issued under the
Plan, change the class of eligible participants or materially increase benefits
accruing to participants under the Plan.
As of December 15, 2000, there were outstanding ISO's to purchase 242,000
Common Shares at an average per share exercise price of $.98 and NSO's to
purchase 125,000 Common Shares at an average per share exercise price of $.94.
1992 STOCK OPTION PLANS
The Company's 1992 Non-Qualified Stock Option Plan ("1992 Non-Qualified
Plan") and the 1992 Incentive Stock Option Plan ("1992 Incentive Plan") were
discontinued in September 1996. The 1992 Incentive Plan reserved 400,000 Common
Shares for issuance pursuant to granted options, and the 1992 Non-Qualified Plan
reserved 200,000 Common Shares for issuance pursuant to granted options.
Both of the 1992 Plans were administered by the Board of Directors of the
Company, which, except with respect to the directors themselves, had the
authority to determine the persons to whom the options may be granted, the
number of shares to be covered by each option, the time or times at which the
options may be granted or exercised and, for the most part, the terms and
provisions of the options. Under the 1992 Non-Qualified Plan, the exercise price
could not have been less than 85% (100% for officers and directors or 110% if
the optionee owned 10% or more of the outstanding voting securities of the
Company) of the fair market value of the Common Shares as determined by the
Board on the date of grant. Under the 1992 Incentive Plan, the option exercise
price could not have been less than 100% (or 110% if the optionee owned 10% or
more of the outstanding voting securities of the Company) of the fair market
value of the Common Shares, as determined by the Board on the date of grant.
No option under either plan could be exercised within twelve months of the
date of grant or more than five years from the date of grant and must have been
exercisable at the rate of at least 20% per year; options granted to directors
are exercisable at the rate of 25% in each of the second, third, fourth and
fifth years, on a cumulative basis. Each plan limited the percentage of the
total number of Common Shares subject to the plan for which options could have
been granted to officers and directors to 50%.
Under the 1992 Non-Qualified Plan, all directors, upon their election and
on September 30 of each subsequent year, automatically received options to
purchase 5,000 shares (or a prorated amount if they have served less than a full
year). Under the 1992 Incentive Plan, each eligible director automatically
received options to purchase 5,000 shares on September 30th of each year (or a
prorated amount if they have served less than a full year). These automatic
grants were the only options directors were entitled to receive under the plans.
As of December 15, 2000, there were outstanding options to purchase 35,815
Common Shares under the 1992 Incentive Plan at an average per share exercise
price of $.91 and options to purchase 25,000 Common Shares under the 1992
Non-Qualified Plan at an average per share exercise price of $.92.
The following table sets forth information as to stock options granted
under the 1997 Stock Option Plan for the fiscal year ended August 31, 2000 to
each executive officer whose aggregate remuneration is set forth above.
6
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE
- ----------------- ----------- ------------ ---------------- ----------
Bruce M. Miller 40,000 20 1.10 8/7/05
Steven M. Besbeck 40,000 20 1.00 8/7/05
James R. Helms 40,000 20 1.00 8/7/05
The following table sets forth information as to stock options granted
under the 1992 Incentive Plan, the 1992 Non-Qualified Plan and the 1997 Stock
Option Plan, and the net value received from the exercise of options (market
value of stock on the date of exercise, less the exercise price) by each
executive officer whose aggregate remuneration is set forth above.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
(a) (b) (c) (d) (e)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------
Bruce M. Miller 10,000 10,000 122,500 / 47,500 0 / 0
Steven M. Besbeck 0 0 122,500 / 47,500 0 / 0
James R. Helms 10,000 14,750 122,500 / 47,500 0 / 0
OTHER NON-QUALIFIED STOCK OPTIONS
On March 5, 1992, the Board of Directors of the Company granted special
one-time grants of stock options to the Chairman and senior officers of the
Company, all of whom are also directors of the Company, to purchase up to
300,000 shares of the Company's Common Shares, for a period of five years from
the date of grants, at an exercise price of $1.375 per share, the market price
of the Common Shares on March 5, 1992. On February 6, 1997, the expiration date
of the options was extended to December 31, 2000. On December 14,1998 the
options were repriced to $.90 per share. On December 13, 2000, the expiration
date of the options was extended to December 31, 2003. The market price of the
Common Shares on December 13, 2000 was $.44 per share. The options are fully
vested and are exercisable at $.90 per share. Special stock options were granted
to Mr. Miller to purchase up to 100,000 Common Shares, to Mr. Besbeck to
purchase up to 100,000 Common Shares, and to Mr. Helms to purchase up to 100,000
Common Shares.
7
PRINCIPAL SECURITY HOLDERS
SECURITY OWNERSHIP
The following table sets forth certain information known to the Company
regarding beneficial ownership of the Company's Common Shares at December 15,
2000 of (i) each present Director or nominee for Director, (ii) all officers and
Directors as a group, and (iii) each beneficial owner of more than five percent
of the Company's Common Shares.
COMMON SHARES
BENEFICIALLY OWNED
AT DECEMBER 1, 2000
-------------------
NUMBER OF PERCENT OF
SHARES(1) CLASS(2)
--------- ----------
Steven M. Besbeck (3)(8)............................................................ 311,000 9.4%
James R. Helms (4)(8)............................................................... 179,300 5.4%
Bruce M. Miller (5)(8).............................................................. 407,500 12.3%
Lawrence S. Schmid (6)(10).......................................................... 20,000 .6%
Robert S. Fogerson, Jr. (7)(11)..................................................... 19,000 .6%
All officers and Directors as a
Group (3)(4)(5)(6)(7)(8)(9)(10)................................................... 936,800 26.2%
The Wall Street Group, Inc. (11).................................................... 160,000 5%
* Less than 1%
FOOTNOTES:
(1) Sole voting and investment control unless otherwise noted.
(2) Unless otherwise indicated, does not include Common Shares issuable under:
(a) employee stock option plans.
(3) Includes 122,500 Common Shares issuable under currently exercisable stock
options held by Mr. Besbeck but excludes 47,500 Common Shares issuable
under currently non-exercisable stock options held by Mr. Besbeck.
(4) Includes 122,500 Common Shares issuable under currently exercisable stock
options held by Mr. Helms but excludes 47,500 Common Shares issuable under
currently non-exercisable stock options held by Mr. Helms.
(5) Includes 122,500 Common Shares issuable under currently exercisable stock
options held by Mr. Miller but excludes 47,500 Common Shares issuable under
currently non-exercisable stock options held by Mr. Miller.
(6) Includes 17,500 Common Shares issuable under currently exercisable stock
options held by Mr. Schmid, but excludes 27,500 Common Shares issuable
under currently non-exercisable stock options held by Mr. Schmid.
(7) Includes 17,500 Common Shares issuable under currently exercisable stock
options held by Mr. Fogerson but excludes 27,500 Common Shares issuable
under currently non-exercisable stock options held by Mr. Fogerson.
(8) Mr. Bruce Miller's, Mr. Steven Besbeck's, and Mr. James Helms' address is
26115-A Mureau Road, Calabasas, CA 91302. (9) Mr. Lawrence Schmid's address
is c/o Strategic Directions International, Inc., 6242 Westchester Parkway,
Suite 100, Los Angeles, CA 90045.
(10) Mr. Robert Fogerson's address is 13100 Brenwood Circle, Minnetonka, MN
55343.
(11) The Wall Street Group, Inc.'s address is 32 E. 57th Street, New York, NY
10022.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the American Stock Exchange (AMEX) reports of
ownership and changes in ownership of
8
common stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely upon review of Forms 4 and 5 and amendments thereto furnished
to the Company, during and with respect to the Company's most recent fiscal year
ended August 31,2000, the Company believes that during the 2000 fiscal year all
filing requirements applicable to its officers and directors and greater than
10% beneficial owners complied except that Messrs Miller, Besbeck, Helms,
Fogerson, and Schmid were late in filing one Form 4 each, which reported the
grant to each of them Stock Options pursuant to the Company's 1997 Stock Option
Plan.
AUDIT COMMITTEE REPORT
The following is the report of the audit committee with respect to the
Company's audited financial statements for the fiscal year ended August 31,2000.
Such financial statements include the consolidated balance sheets of the Company
as of August 31, 2000 and 1999, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended August 31, 2000, and the notes thereto. The information
contained in this report shall not be deemed to be "soliciting material" or to
be "filed" with the Securities and Exchange Commission, nor shall such
information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the 1934 Securities Exchange Act, as
amended, except to the extent that the Company specifically incorporates it by
reference in such filing.
REVIEW WITH MANAGEMENT
The audit committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended August 31, 2000 with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The audit committee has discussed with BDO Seidman, LLP, the Company's
independent certified public accountants, the matters required to be discussed
by SAS 61 (Codification of Statements on Accounting Standards), which includes,
among other items, matters related to the conduct of the audit of the Company's
financial statements.
The audit committee has also received written disclosures and the letter
from BDO Seidman, LLP required by Independence Standards Board Standard No. 1
(which relates to the accountant's independence from the Company and its related
entities) and has discussed with BDO Seidman, LLP its independence from the
Company.
CONCLUSION
Based on the review and discussions referred to above, the committee recommended
to the Company's Board that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2000.
SUBMITTED BY THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Robert S. Fogerson, Jr.
Lawrence S. Schmid
Bruce M. Miller
RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected BDO Seidman, LLP, independent certified
public accountants, to serve as the Company's auditors for the fiscal year
ending August 31, 2001. BDO Seidman, LLP has served as the Company's independent
certified public accountants for its last ten fiscal years.
9
A representative of BDO Seidman, LLP is expected to be available at the
meeting of shareholders to respond to appropriate questions and will be given
the opportunity to make a statement if he or she desires to do so. The Board of
Directors recommends the ratification of its selection of BDO Seidman, LLP to
serve as the Company's independent certified public accountants for the fiscal
year ending August 31, 2001.
Approval of the proposal requires the affirmative vote of a majority of the
outstanding shares of the Company's Common Stock represented and voting at the
Annual Meeting. The Board of Directors recommends that shareholders vote FOR the
proposal.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission. Should a shareholder intend to present a proposal at next year's
annual meeting, it must be received by the Secretary of the Company (at 26115-A
Mureau Road, Calabasas, California 91302) no later than September 16, 2001 in
order to be included in the Company's proxy statement and form of proxy relating
to that meeting. Shareholder proposals that are not intended to be included in
the Company's proxy materials for the annual meeting must be received by the
Company no later than December 2, 2001.
AVAILABILITY OF REPORT ON FORM 10-KSB
The Company has filed with the Securities and Exchange Commission and with
the American Stock Exchange, Inc., an Annual Report on Form 10-KSB under the
Securities Exchange Act of 1934 for the fiscal year ended August 31, 2000. Upon
written request, the Company will furnish any shareholder a copy of the Annual
Report on Form 10-KSB including the financial statements and schedules, without
charge. Any such written request may be addressed to: Corporate Secretary of the
Company at 26115-A Mureau Road, Calabasas, California, 91302.
MISCELLANEOUS
This solicitation is made on behalf of the Board of Directors of the
Company, and its cost (including preparing and mailing of the notice, this Proxy
Statement and the form of proxy) will be paid by the Company. The Company will
also make arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send the proxy materials to their principals and will reimburse
them for their reasonable expenses in so doing. To the extent necessary in order
to assure sufficient representation at the Meeting, officers and regular
employees of the Company may solicit the return of proxies by mail, telephone,
telegram and personal interview. No compensation in addition to regular salary
and benefits will be paid to any such officer or regular employee for such
solicitation.
Where information contained in this Proxy Statement rests peculiarly within
the knowledge of a person other than the Company, the Company has relied upon
information furnished by such person.
By Order of the Board of Directors,
/s/ JAMES R. HELMS
James R. Helms
SECRETARY
10
APPENDIX A
CREATIVE COMPUTER APPLICATIONS, INC.
AUDIT COMMITTEE CHARTER AND FUNCTIONS
MISSION STATEMENT
The audit committee will assist the board of directors in fulfilling its
oversight responsibilities. The audit committee will review the financial
reporting process, the system of internal control, the audit process, and the
company's process for monitoring compliance with laws and regulations and with
the code of conduct. In performing its duties, the committee will maintain
effective working relationships with the board of directors, management, and the
external auditors. To effectively perform his or her role, each committee member
will obtain an understanding of the detailed responsibilities of committee
membership as well as the company's business, operations, and risks.
ORGANIZATION
The Audit Committee shall be comprised of at least three directors at least
two of whom shall be independent directors, and free from any relationship that,
in the opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. All members of the Committee
shall have a working familiarity with basic finance and accounting practices,
and at least one member of the Committee shall have accounting or related
financial management expertise. Committee members may enhance their familiarity
with finance and accounting by participating in educational programs conducted
by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. The Board shall elect a chairman to preside over the
audit committee.
MEETINGS
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed. If circumstances
arise that require the attention of the Committee, the Chair should meet with
the independent accountants and management quarterly to review the Corporations
financials.
ROLES AND RESPONSIBILITIES
INTERNAL CONTROL
- - Evaluate the capability of financial and accounting management
- - Focus on the extent to which external auditors review computer systems and
applications, the security of such systems and applications, and the
contingency plan for processing financial information in the event of a
systems breakdown
- - Review independent and internal auditors' recommendations for improving
internal control, and determine if the recommendations made by external
auditors have been implemented by management
- - Ensure that the external auditors keep the audit committee informed about
fraud, illegal acts, deficiencies in internal control, and certain other
matters
FINANCIAL REPORTING
GENERAL
- - Review significant accounting and reporting issues, including recent
professional and regulatory pronouncements, and understand their impact on
the financial statements
- - Ask management and the external auditors about significant risks and
exposures and the plans to minimize such risks
11
ANNUAL FINANCIAL STATEMENTS
- - Review the annual financial statements and determine whether they are
complete and consistent with the information known to committee members;
assess whether the financial statements reflect appropriate accounting
principles
- - Pay particular attention to complex and/or unusual transactions such as
restructuring charges and derivative disclosures
- - Focus on judgmental areas such as those involving valuation of assets and
liabilities, including, for example, the accounting for and disclosure of
obsolete or slow-moving inventory; loan losses; warranty, product, and
environmental liability; litigation reserves; and other commitments and
contingencies
- - Meet with management and the external auditors to review the financial
statements and the results of the audit
- - Consider management's handling of proposed audit adjustments identified by
the external auditors
- - Review the MD&A and other sections of the annual report before its release
and consider whether the information is adequate and consistent with
members' knowledge about the company and its operations
- - Ensure that the external auditors communicate certain required matters to
the committee
INTERIM FINANCIAL STATEMENTS
- - Be briefed on how management develops and summarizes quarterly financial
information, the extent to which the external auditors review quarterly
financial information, and whether that review is performed on a pre- or
post-issuance basis
- - Meet with management and, if a pre-issuance review was completed, with the
external auditors, either telephonically or in person, to review the
interim financial statements and the results of the review (this may be
done by the committee chairperson or the entire committee)
- - To gain insight into the fairness of the interim statements and
disclosures, obtain explanations from management and from the external
auditors on whether:
- Actual financial results for the quarter or interim period varied
significantly from budgeted or projected results
- Changes in financial ratios and relationships in the interim financial
statements are consistent with changes in the company's operations and
financing practices
- Generally accepted accounting principles have been consistently
applied
- There are any actual or proposed changes in accounting or financial
reporting practices
- There are any significant or unusual events or transactions
- The company's financial and operating controls are functioning
effectively
- The company has complied with the terms of loan agreements or security
indentures
- The interim financial statements contain adequate and appropriate
disclosures
- - Ensure that the external auditors communicate certain required matters to
the committee
COMPLIANCE WITH LAWS AND REGULATIONS
- - Review the effectiveness of the system for monitoring compliance with laws
and regulations, and the results of management's investigation and
follow-up (including disciplinary action) on any fraudulent acts or
accounting irregularities
- - Periodically obtain updates from management, general counsel, and tax
advisor regarding compliance
- - Review the findings of any examinations by regulatory agencies, such as the
Securities and Exchange Commission
EXTERNAL AUDIT
- - Review the external auditors' proposed audit scope and approach
- - Review the performance of the external auditors and recommend to the board
of directors the appointment or discharge of the external auditors
- - Review and confirm the independence of the external auditors by reviewing
the non-audit services provided and the auditors' assertion of their
independence in accordance with professional standards
OTHER RESPONSIBILITIES
- - Meet with the external auditors, and management in separate executive
sessions to discuss any matters that the committee or these groups believe
should be discussed privately
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- - Ensure that significant findings and recommendations made by the external
auditors are received and discussed on a timely basis
- - Review, with the company's counsel, any legal matters that could have a
significant impact on the company's financial statements
- - Review the policies and procedures in effect for considering officers'
expenses and perquisites o Perform other oversight functions as requested
by the full board
- - Review and update the charter; receive approval of changes from the board
REPORTING RESPONSIBILITIES
- - Regularly update the board of directors about committee activities and make
appropriate recommendations.
- - Keep minutes and issue reports documenting its conclusions and
recommendations.
13
PROXY
CREATIVE COMPUTER APPLICATIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a shareholder of Creative Computer Applications, Inc.,
a California corporation, hereby appoints BRUCE M. MILLER and STEVEN M.
BESBECK, or either of them, the proxies of the undersigned, each with the
power to appoint his substitute, and hereby authorizes them to represent and
to vote for the undersigned all the Creative Computer Applications, Inc.
Common Shares held of record on January 5, 2001, by the undersigned at the
Annual Meeting of Shareholders to be held on February 26, 2001 or any
adjournment or postponement thereof as follows on the reverse side of this
proxy card:
(CONTINUED ON REVERSE SIDE)
Please date, sign and mail
your Proxy card back as soon
as possible!
Annual Meeting of Shareholders
CREATIVE COMPUTER APPLICATIONS, INC.
February 26, 2001
FOR all nominees WITHHOLD
Listed at right AUTHORITY
(except as marked to to vote for all
the contrary below) nominees listed at right
1. ELECTION / / / / NOMINEES:
OF
DIRECTORS
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE(S) WRITE / / Steven M. Besbeck
THAT NOMINEE'S NAME ON THE LINE BELOW. / / James R. Helms
To vote cumulatively, set forth the allocated / / Bruce M. Miller
number of votes in the space provided opposite / / Lawrence S. Schmid
each nominee's name. See Proxy Statement / / Robert S. Fogerson, Jr.
FOR AGAINST ABSTAIN
2. RATIFICATION of the appointment of
BDO Seidman, LLP as the Company's / / / / / /
independent Accountants for the fiscal year.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
THE PROXY REPRESENTD BY THIS PROXY CARD, WHEN PROPERLY EXECUTED WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR EACH OF THE NOMINEES LISTED
AND FOR EACH OF THE PROPOSALS.
IF BOTH THE PROXIES SHALL BE PRESENT IN PERSON OR BY SUBSTITUE, EITHER OF
THE PROXIES SO PRESENT AND VOTING SHALL AND MAY EXERCISE ALL THE POWERS
HEREBY GRANTED.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY.
I will attend / / I will not attend the / /
Annual Meeting of
Shareholders.
SIGNATURE_________ Date ________, 2000 ________ Date________, 2000
SIGNATURE IF HELD JOINTLY
NOTE: Please sign exactly as your name appears above. When shares are held by
joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.