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. )
/X/ Filed by the registrant
/ / Filed by a party other than the registrant
Check the appropriate box:
/ / Preliminary proxy statement
/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)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange per Exchange Act
Rules 14a-6(i) (4) and 0-11.
(1) Title of each class of securities to which transactions
applies:
(2) Aggregate number of securities to which transactions
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-1?. (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:
/ / 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) Filing party:
(3) Date filed:
CREATIVE COMPUTER APPLICATIONS, INC.
26115-A Mureau Road
Calabasas, CA 91302
January 15, 1999
Dear Shareholder:
The Company's 1999 Annual Meeting of Shareholders will be
held at 10:00 a.m., Pacific Time, on Friday, March 5, 1999, 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 for the fiscal year ended
August 31, 1998.
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 March 5, 1999
To the Shareholders of
Creative Computer Applications, Inc.
Notice is hereby given that the 1999 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 Friday, March 5, 1999 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 8, 1999 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 for the fiscal year ended
August 31, 1998.
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
1999 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement and the enclosed form of proxy card are
intended to be 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 1999 Annual
Meeting of Shareholders (the "Meeting") to be held on Friday, March
5, 1999 at 10:00 a.m. Pacific Time at the Company's offices at
26115-A Mureau Road, Calabasas, California 91302. The Annual Report
to the shareholders of the Company for the fiscal year ended August
31, 1998, 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 15, 1999.
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 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 it, 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 8, 1999 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
2,920,740 of the Company's common shares (the "Common Shares"). The
holders of record of Common Shares will be 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 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, 1998, 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 have established a
Compensation Committee for the purpose of reviewing and making
recommendations concerning compensation plans and salaries of
officers and other key personnel and 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, audit
disclosures and related matters. The members of the Compensation
Committee are Mr. Lawrence S. Schmid and Mr. Robert S. Fogerson, Jr.
The Compensation Committee met twice during the fiscal year ended
August 31, 1998. The members of the Audit Committee are Steven M.
Besbeck and Lawrence S. Schmid.
See "Principal Securities Holders" for a summary of
beneficial ownership of the Company's Common Shares by the officers,
Directors and certain beneficial owners.
Background information concerning each present Director,
executive officer and each nominee for the office of Director of the
Company is as follows:
<TABLE>
<CAPTION>
<S> <S> <C>
Office with Company; Year First
Name, Age Background Information Elected
Director
Bruce M. Miller, 52 Chairman of the Board and Chief 1978
Technology Officer since its
inception in 1978.
Steven M. Besbeck, 50 President, Chief Executive Officer 1980
of 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, 54 Vice President/Operations since 1982 1987
and Secretary.
Lawrence S. Schmid, 57 President and Chief Executive Officer, 1991
Strategic Directions International,
Inc., a management consulting firm
specializing in technology companies.
Robert S. Fogerson, Jr., 45 Chief Operating Officer, of ViroMED 1992
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.
John R. Murray, 56 Vice President, Sales and Business
Development since February 1996.
Mr. Murray served as an Independent
Marketing Consultant since 1993 and
a Manager of International Business
Development, Healthvision Corporation
since 1991.
</TABLE>
EXECUTIVE COMPENSATION
The following table shows all cash compensation for services
rendered during the last three fiscal years ended August 31, 1998
paid by the Company to each of the Company's executive officers
whose cash compensation exceeded $100,000.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(A) (B) (C) (D) (E) (F) (G) (H) (I)
Restri- Secur- All
Name Other cted ities Other
and Annual Stock Under- LTIP Comp-
Compen- Award lying Pay- ensat-
Principal Salary Bonus sation (s) Options/ outs tion
Position Year ($) ($) ($) ($) SAR's(#) ($) ($)
S.M. Besbeck 1998 152,935 0 0 0 10,000 0 1,528
President, CEO, 1997 151,269 0 0 0 20,000 0 1,442
CFO 1996 148,498 10,000 0 0 10,000 0 1,530
B.M. Miller 1998 161,363 0 0 0 10,000 0 4,575
Chairman 1997 150,816 0 0 0 20,000 0 4,563
1996 130,181 5,000 0 0 10,000 0 5,551
J.R. Helms 1998 110,983 0 0 0 10,000 0 2,537
Vice President 1997 107,017 0 0 0 20,000 0 2,688
Operations 1996 103,501 7,000 0 0 10,000 0 2,693
J.R. Murray 1998 93,464 8,500 0 0 0 0 4,280
Vice President 1997 87,515 3,000 0 0 10,000 0 3,221
Sales & Business 1996 49,692 0 0 0 20,000 0 1,228
Development
</TABLE>
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 $151,430 for Mr. Miller and $155,882 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
are eligible to participate in the plan after the completion of one
year 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 $1,500 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.
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.
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, 1998, there were outstanding ISO's to
purchase 87,000 Common Shares at an average per share exercise price
of $.91 and NSO's to purchase 85,000 Common Shares at an average per
share exercise price of $.91.
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, 1998, there were outstanding options to
purchase 75,000 Common Shares under the 1992 Non-Qualified Plan at an
average per share exercise price of $1.04 and options to purchase
172,000 Common Shares under the 1992 Incentive Plan at an average per
share exercise price of $.94.
The following table sets forth information as to stock
options granted under the 1997 Stock Option Plan for the fiscal year
ended August 31, 1998 to each executive officer whose aggregate
remuneration is set forth above.
<TABLE>
<CAPTION>
Options/SAR Grants In Last Fiscal Year
Individual Grants
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date
Bruce M. Miller 10,000 17 % $ .99 Feb. 20, 2008
Steven M. Besbeck 10,000 17 % $ .90 Feb. 20, 2008
James R. Helms 10,000 17 % $ .90 Feb. 20, 2008
</TABLE>
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, 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.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End (#) at FY-End ($)
Acquired Value
on Exer- Real- Exercisable/ Exercisable/
Name cise (#) ized ($) Unexercisable Unexercisable
Bruce M. Miller 0 0 118,750 / 31,250 0
Steven M. Besbeck 0 0 118,750 / 31,250 0
James R. Helms 0 0 118,750 / 31,250 0
John R. Murray 0 0 13,332 / 16,668 0
</TABLE>
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
those options was extended to December 31, 2000. The market price of
the Common Shares on February 6, 1997 was $1.375 per share. These
special options can only be exercised at the rate of 20% per year, on
a cumulative basis, except that in the event the Company is merged or
consolidated with another corporation, in case of the sale of all of
substantially all of the assets of the Company or in case of the
reorganization, dissolution or liquidation of the Company, the options
will vest immediately. 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.
Re-pricing of Stock Options
On December 14, 1998 the Board of Directors resolved to offer all
holders of stock options having an exercise price above $1.25 per
share, or above $1.38 per share in the case of owners of 10% or more
of the Company's common shares, the opportunity to exchange their
options for new options having an exercise price of $.90 per share
($.99 in the case of 10% owners), which was a 10% premium over the
closing price of the common stock on the American Stock Exchange on
December 14, 1998. As a result of the decline in the market price of
the Company's common stock price, all of the stock options that were
outstanding had exercise prices that were much higher than the market
value. Stock options are awarded to "Key employees" and "Key
Contractors" that contribute to the Company's success and by
increasing their proprietary interest, are encouraged to remain in the
employ and service of the Company. Since virtually all of the
outstanding options were out of the money the Board viewed them as a
disincentive to the retention of key employees and the hiring of new
employees.
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, 1998 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.
<TABLE>
<CAPTION>
Common Shares
Beneficially Owned
at December 15, 1998
Number of Percent of
Shares(1) Class(2)
<S> <C> <C>
Steven M. Besbeck(3)(8) 302,250 9.9%
James R. Helms(4)(8) 148,550 4.9%
Bruce M. Miller(5)(8) 393,750 12.6%
Lawrence S. Schmid(6)(10) 37,000 *
Robert S. Fogerson, Jr.(7)(11) 27,316 *
John R. Murray(8) 20,332 *
All officers and Directors as a
group(3)(4)(5)(6)(7)(8)(9)(10)(11) 929,198 27.7%
The Wall Street Group, Inc.(12) 160,000 5.7%
</TABLE>
* 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 118,750 Common Shares issuable under currently
exercisable stock options held by Mr. Besbeck but excludes
31,250 Common Shares issuable under currently non-
exercisable stock options held by Mr. Besbeck.
(4) Includes 118,750 Common Shares issuable under currently
exercisable stock options held by Mr. Helms but excludes
31,250 Common Shares issuable under currently non-
exercisable stock options held by Mr. Helms.
(5) Includes 118,750 Common Shares issuable under currently
exercisable stock options held by Mr. Miller but excludes
31,250 Common Shares issuable under currently non-
exercisable stock options held by Mr. Miller.
(6) Includes 35,000 Common Shares issuable under currently
exercisable stock options held by Mr. Schmid, but excludes
28,834 Common Shares issuable under currently non-
exercisable stock options held by Mr. Schmid.
(7) Includes 27,316 Common Shares issuable under currently
exercisable stock options held by Mr. Fogerson but excludes
29,105 Common Shares issuable under currently non-
exercisable stock options held by Mr. Fogerson.
(8) Mr. Bruce Miller's, Mr. Steven Besbeck's, Mr. James Helms'
and Mr. John Murray's address is 26115-A Mureau Road,
Calabasas, CA 91302.
(9) Includes 13,332 Common Shares issuable under currently
exercisable stock options held by Mr. Murray but excludes
16,668 Common Shares issuable under currently non-
exercisable stock options held by Mr. Murray.
(10) Mr. Lawrence Schmid's address is c/o Strategic Directions
International, Inc., 6242 Westchester Parkway, Suite 100,
Los Angeles, CA 90045.
(11) Mr. Robert Fogerson's address is 13100 Brenwood Circle,
Minnetonka, MN 55343.
(12) 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 and 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
security, to file with the Securities and Exchange Commission and
the American Stock Exchange reports of ownership and changes in
ownership of 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 on review of the copies of such reports
furnished to the Company or written representations that no other
reports were required, the Company believes that, during the 1996
fiscal year, all filing requirements applicable to its first
officers, directors and greater than 10% beneficial owners were
complied with except that each director failed to file Form 5's on a
timely basis, covering the grant of 10,000 options each during the
fiscal year.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected BDO Seidman, LLP,
independent public accountants, to serve as the Company's auditors
for the fiscal year ending August 31, 1999. BDO Seidman, LLP has
served as the Company's independent public accountants for its last
eight fiscal years.
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
independent auditors for the fiscal year ending August 31, 1999.
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) not later than September 11, 1999 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 such
meetings, must be received by the Company no later than December 2,
1999.
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, 1998. 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
