As filed with the Securities and Exchange Commission on October 3, 2005

Registration No. 333-      

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Form S-4

REGISTRATION STATEMENT

Under The Securities Act of 1933


CREATIVE COMPUTER APPLICATIONS, INC.

(Exact name of registrant as specified in its charter)

California

7373

95-3353465

(State or other jurisdiction of
incorporation or organization)

(Standard Industrial
Classification Code No.)

(I.R.S. Employer
Identification No.)

 

26115-A Mureau Road

Calabasas, California 91302

(818) 880-6700

(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)

Steven M. Besbeck

President and Chief Executive Officer

Creative Computer Applications, Inc.

26115-A Mureau Road

Calabasas, California 91302

(818) 880-6700

(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies to:

Joseph E. Nida, Esq.

Anahita Villafane

Samuel G. Elliott

Sheppard, Mullin, Richter & Hampton, LLP

Chief Financial Officer

Chief Executive Officer

800 Anacapa Street

Creative Computer Applications, Inc.

StorCOMM, Inc.

Santa Barbara, CA 93101

26115-A Mureau Road

7 Corporate Plaza, 8649 Baypine Rd.

(805) 568-1151

Calabasas, California 91302

Jacksonville, Florida 32256

 

(818) 880-6700

(888) 731-0731

 


Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions set forth in the Agreement and Plan of Reorganization, dated as of August 16, 2005, described in the enclosed joint proxy statement/prospectus have been satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o


CALCULATION OF REGISTRATION FEE

Title of Each Class of 
Securities to be Registered

 

 

Amount to
be Registered(1)

 

 

Proposed Maximum
Offering
Price Per Unit(2)

 

 

Proposed Maximum
Aggregate
Offering Price(3)

 

 

Amount of
Registration Fee

 

Common Stock, no par value per share

 

 

3,703,900

 

 

$0.00034

 

 

$51,461.24

 

 

$6.06

 

(1)    Represents the maximum number of shares of Creative Computer Applications, Inc. common stock, no par value per share, that may be issued in connection with the merger described herein, equal to the product obtained by multiplying (i) 151,356,583, which represents the maximum number of shares of StorCOMM, Inc. common stock to be canceled in connection with the merger described herein assuming the exercise of all vested StorCOMM, Inc. options and warrants expected to be assumed by Creative Computer Applications, Inc. by (ii) the exchange ratio of 2.447 shares of Creative Computer Applications, Inc. common stock for every 100 shares of StorCOMM, Inc. common stock.

(2)    Inasmuch as there is no market for the share of StorCOMM, Inc. common stock to be canceled in the merger and StorCOMM has an accumulated capital deficit, the maximum offering price per share and the maximum aggregate offering price are calculated using one-third of the par value of StorCOMM, Inc. common stock in accordance with Rule 457(f) .  The par value of StorCOMM, Inc.'s common stock is $0.001 and one-third of which is equal to approximately $0.00034 per share.

(3)    Estimated solely for the purpose of computing the amount of the registration fee required by the Securities Act of 1933, as amended, and pursuant to Rule 457(f) of the Securities Act, equal to the product obtained by multiplying (i) $0.00034, one-third of the par value of StorCOMM, Inc. common stock by (ii) 151,356,583, the maximum number of shares of common stock of StorCOMM, Inc. to be canceled in connection with the merger described herein.


The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 




SUBJECT TO COMPLETION, DATED OCTOBER 3, 2005

The information in this prospectus is not complete and may be changed. Creative Computer Applications, Inc. may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

GRAPHIC

 

GRAPHIC

 

Dear Creative Computer Applications, Inc. and StorCOMM, Inc.shareholders:

We are pleased to report that the boards of directors of Creative Computer Applications (“CCA”) and StorCOMM, Inc. (“StorCOMM”) have each unanimously approved the Agreement and Plan of Reorganization (referred to in this joint proxy statement/prospectus as the merger agreement) providing for a merger involving our two companies. Before we can complete the merger, we must obtain the approval of each of our company’s shareholders. We are sending you this joint proxy statement/prospectus to ask you to vote in favor of the merger agreement, and various related matters.

Pursuant to the merger, CCA will acquire StorCOMM. StorCOMM shareholders will be entitled to receive 2.447 shares of CCA common stock for every 100 shares of StorCOMM common stock they own at the effective time of the merger (referred to in this joint proxy statement/prospectus as the exchange rate). As a result of this exchange, StorCOMM shareholders will become CCA shareholders and StorCOMM will become a wholly owned subsidiary of CCA. StorCOMM shareholders will receive cash instead of fractional shares of CCA common stock. Each outstanding share of CCA common stock will remain unchanged in the merger.

Prior to the merger, StorCOMM option holders will be given the opportunity to cancel their existing StorCOMM options. Those StorCOMM option holders that elect to cancel their options will receive the same number of CCA options that they would have received had they exchanged their options in the merger, except that the CCA options they will receive will have an exercise price equal to the fair market value of CCA common stock on the date of grant and a two-year vesting schedule. At the effective time of the merger, each outstanding option that is not voluntarily cancelled prior to the merger (referred to in this joint proxy statement/prospectus as assumed options) and all warrants to purchase shares of StorCOMM common stock will be assumed by CCA and converted into options or warrants to purchase shares of CCA common stock. The number of shares of CCA common stock subject to each assumed option and warrant will be determined on the same basis as the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole number (with no cash payable for any fractional share eliminated by such rounding). The exercise price of the assumed options or warrants will be equal to the exercise price per share under the original option or warrant divided by the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole cent. After adjusting the assumed options and warrants to reflect the application of the exchange rate and the assumptions by CCA, all other terms of the assumed options and warrants will remain unchanged.

Simultaneously with the closing of the merger, CCA will sell in a private placement up to 1,500,000 shares of its common stock and warrants to purchase up to 300,000 shares of its common stock. The shares of common stock and warrants will be sold in units, with each unit consisting of a single share of CCA common stock and 1/5 of a warrant to purchase one share of CCA common stock. The price per unit will be $2.00 for an aggregate purchase price of $3 million.

Assuming the merger had been completed as of September 15, 2005, CCA would have issued approximately 3,703,900 shares of common stock to the StorCOMM shareholders in the merger, on a fully diluted basis. Assuming further, the simultaneous sale of 1,500,000 units in the private placement immediately following the merger, StorCOMM shareholders would have owned approximately 40.4% of the outstanding shares of common stock of the combined company and CCA shareholders would have owned approximately 40.4% of the outstanding shares of common stock of the combined company, in both cases on a fully diluted basis, with the remainder owned by the investors in the private placement.

CCA common stock trades on the American Stock Exchange under the symbol “CAP.” Following the merger, CCA expects to change its trading symbol to “APY” following approval of the corporate name




change to Aspyra, Inc., as described herein. On            , 2005, the closing price of CCA common stock, as reported by the American Stock Exchange, was $      . StorCOMM is a private company and there is currently no public market for its securities.

CCA is taking this opportunity to call and hold its 2005 annual meeting of shareholders. At the CCA annual meeting, CCA is submitting the merger-related proposals as well as several additional proposals for the consideration and approval of its shareholders. At the CCA annual meeting, shareholders will vote on the following issues: FIRST, the merger agreement and the issuance and reservation for issuance of shares of CCA common stock pursuant to the merger agreement, SECOND, the issuance and reservation for issuance of shares of CCA common stock and warrants to purchase shares of CCA common stock in a private placement pursuant to the Common Stock and Warrant Purchase Agreement, THIRD, the amendment to CCA’s Articles of Incorporation to change the name of the company from Creative Computer Applications, Inc. to Aspyra, Inc., FOURTH, the adoption of the 2005 Equity Incentive Plan, FIFTH, the election of the director nominees named in this joint proxy statement/prospectus, SIXTH, the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005, and SEVENTH, the adjournment of the annual meeting, if necessary, if a quorum is present, to solicit additional proxies in favor of the proposals.

StorCOMM has also scheduled a special meeting for its shareholders to vote on the merger-related proposals. At the StorCOMM special meeting, the shareholders will vote on the following issues: FIRST, the merger agreement and SECOND, the adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies in favor of Proposal No. 1.

YOUR VOTE IS VERY IMPORTANT.   Whether or not you plan to attend your meeting, please take the time to vote by completing, signing, dating and returning the enclosed proxy card to us.

This document provides you with detailed information about the merger, the private placement, the non merger-related proposals of CCA and the meetings of CCA and StorCOMM. As described in the next few pages, you can also find more information about CCA from publicly available documents on file with the Securities and Exchange Commission.

We encourage you to read this entire joint proxy statement/prospectus carefully and we especially encourage you to read the section entitled “Risk Factors” beginning on page 15.

We enthusiastically support this combination, and we join with the members of our boards of directors in recommending that you vote FOR the merger agreement and the other proposals.

GRAPHIC

GRAPHIC

Bruce M. Miller
Chairman of the Board
Creative Computer Applications, Inc.

Samuel G. Elliott
Chief Executive Officer
StorCOMM, Inc.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the Creative Computer Applications, Inc. common stock to be issued pursuant to the terms set forth in this joint proxy statement/prospectus or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated           , 2005 and is first being mailed to shareholders on or about             , 2005.




CREATIVE COMPUTER APPLICATIONS, INC.
26115-A Mureau Road
Calabasas, CA 91302


NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 11, 2005


To the Shareholders of
Creative Computer Applications, Inc.:

Notice is hereby given that the 2005 Annual Meeting of Shareholders of Creative Computer Applications, Inc. (“CCA”) will be held at CCA’s offices at 26115-A Mureau Road, Calabasas, California 91302, on Friday, November 11, 2005, at 10:00 AM Pacific Time, for the following purposes:

1.                Merger.   To approve the Agreement and Plan of Reorganization (referred to in this joint proxy statement/prospectus as the merger agreement), dated as of August 16, 2005, by and among StorCOMM, Inc. (“StorCOMM”), CCA and Xymed.com, Inc., a Delaware corporation and wholly owned subsidiary of CCA, and the issuance and reservation for issuance of shares of CCA common stock to StorCOMM shareholders pursuant to the merger agreement.

2.                Private Placement.   To approve the issuance and reservation for issuance of up to 1,500,000 shares of CCA common stock and warrants to purchase up to 300,000 shares of CCA common stock in a private placement pursuant to the Common Stock and Warrant Purchase Agreement.

3.                Amendment to the Articles of Incorporation.   To approve the amendment to the Articles of Incorporation to change the name of the company from Creative Computer Applications, Inc. to Aspyra, Inc.

4.                2005 Equity Incentive Plan.   To approve the 2005 Equity Incentive Plan.

5.                Election of Directors.   To elect six members of CCA’s board of directors to serve until the next annual meeting of shareholders and until their successors are elected and qualified.

6.                Ratification of Appointment of Independent Registered Public Accounting Firm.   To ratify the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005.

7.                Adjournment.   To adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the proposals.

In addition, the shareholders may transact any other business that properly may come before the annual meeting or any continuation, adjournment or postponement thereof.

While these proposals are being voted upon separately, each of the first two proposals must be approved in order for either of them to be implemented.

These proposals are more fully described in the accompanying joint proxy statement/prospectus, which we urge you to read very carefully. A copy of the merger agreement, the Common Stock and Warrant Purchase Agreement, the form of warrant, Registration Rights Agreement, the Amendment to the Articles of Incorporation and the 2005 Equity Incentive Plan are attached as Annex A, Annex B, Annex C, Annex D, Annex E and Annex G, respectively, to the joint proxy statement/prospectus.

Only CCA shareholders of record at the close of business on October 3, 2005, the record date, are entitled to notice of and to vote at the annual meeting or any adjournment or postponement of the annual meeting. A list of shareholders eligible to vote at the meeting will be available for your review during CCA’s regular business hours at its headquarters in Calabasas, California for at least ten days prior to the annual meeting for any purpose related to the annual meeting.




The board of directors of CCA unanimously recommends that you vote FOR Proposal No. 1 for the merger agreement and the issuance and reservation for issuance of shares of CCA common stock pursuant to the merger agreement, FOR Proposal No. 2 for the issuance and reservation for issuance of shares of CCA common stock and warrants to purchase shares of CCA common stock in a private placement pursuant to the Common Stock and Warrant Purchase Agreement, FOR Proposal No. 3 for the amendment to the Articles of Incorporation to change the name of the company from Creative Computer Applications, Inc. to Aspyra, Inc., FOR Proposal No. 4 for the 2005 Equity Incentive Plan, FOR Proposal No. 5 for the election of the director nominees named in this joint proxy statement/prospectus, FOR Proposal No. 6 for the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005, and FOR Proposal No. 7 to adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the proposals.

Whether or not you plan to attend the annual meeting in person, to ensure that your shares are represented at the annual meeting, we encourage you to submit your proxy by mail in the enclosed postage-paid envelope. Returning your proxy does not deprive you of your right to attend the annual meeting and to vote your shares in person. You may revoke your proxy in the manner described in this joint proxy statement/prospectus at any time before it has been voted at the annual meeting.

By Order of the Board of Directors,

 

GRAPHIC

 

James R. Helms
Secretary

 




STORCOMM, INC.
7 Corporate Plaza
8649 Baypine Road
Jacksonville, Florida 32256


NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held November 9, 2005


To the Shareholders of StorCOMM, Inc.:

Notice is hereby given that the Special Meeting of StorCOMM, Inc. (“StorCOMM”) will be held at StorCOMM’s offices at 7 Corporate Plaza, 8649 Baypine Road, Jacksonville, Florida on Wednesday, November 9, 2005, at 10:00 AM Eastern Time, for the following purposes:

1.                Merger.   To approve the Agreement and Plan of Reorganization (referred to in this joint proxy statement/prospectus as the merger agreement), dated as of August 16, 2005, by and among StorCOMM, Creative Computer Applications, Inc. (“CCA”) and Xymed.com (“Xymed”), a Delaware corporation and wholly owned subsidiary of CCA, pursuant to which StorCOMM will merge with Xymed and become a wholly owned subsidiary of CCA.

2.                Adjournment.   To adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1.

These proposals are more fully described in the accompanying joint proxy statement/prospectus, which we urge you to read very carefully. A copy of the merger agreement is attached as Annex A to the joint proxy statement/prospectus.

Only StorCOMM shareholders of record at the close of business on October 3, 2005, the record date, are entitled to notice of and to vote at the special meeting or any adjournment or postponement of the special meeting. A list of shareholders eligible to vote at the meeting will be available for your review during StorCOMM’s regular business hours at its headquarters in Jacksonville, Florida for at least ten days prior to the special meeting for any purpose related to the special meeting.

The board of directors of StorCOMM unanimously recommends that you vote FOR Proposal No. 1 for the merger agreement pursuant to which StorCOMM will merge with Xymed and become a wholly owned subsidiary of CCA, and FOR Proposal No. 2 to adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1.

Whether or not you plan to attend the special meeting in person, to ensure that your shares are represented at the special meeting, we encourage you to submit your proxy by mail in the enclosed postage-paid envelope. Returning your proxy does not deprive you of your right to attend the special meeting and to vote your shares in person. You may revoke your proxy in the manner described in this joint proxy statement/prospectus at any time before it has been voted at the special meeting.

By Order of the Board of Directors,

 

GRAPHIC

 

Samuel G. Elliott

 

Chief Executive Officer

 




Additional Information

This joint proxy statement/prospectus:

·       Incorporates by reference important business and financial information about CCA that is not included in or delivered with this joint proxy statement/prospectus.

·       Does not include some information included in the registration statement on Form S-4 filed with the Securities and Exchange Commission by CCA, of which this joint proxy statement/prospectus is a part, or information included in the exhibits to the registration statement.

This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference in this joint proxy statement/prospectus or filed as exhibits to the registration statement by requesting them in writing or by telephone from CCA at the following address and telephone number:

Creative Computer Applications, Inc.

26115-A Mureau Road
Calabasas, California 91302
Attention: Investor Relations
(818) 880-6700

In order for you to receive timely delivery of the documents in advance of the meetings, CCA should receive your request no later than November 4, 2005, which is five business days before the date of CCA’s annual meeting.

See “Where You Can Find More Information” on page 165.

If you have any questions about the merger, the private placement, the non merger-related proposals of CCA or the meetings of CCA and StorCOMM, including the procedures for voting your shares, or if you need additional copies of the joint proxy statement/prospectus or the enclosed proxy, please contact:

For CCA shareholders:

Creative Computer Applications, Inc.

26115-A Mureau Road
Calabasas, CA 91302
Attention: Investor Relations
(818) 880-6700

For StorCOMM shareholders:

StorCOMM, Inc.

7 Corporate Plaza
8649 Baypine Road
Jacksonville, Florida 32256
Attention: Investor Relations
(888) 731-0731




TABLE OF CONTENTS

 

Page

 

QUESTIONS AND ANSWERS ABOUT THE MERGER, THE PRIVATE PLACEMENT, THE CCA ANNUAL MEETING AND THE STORCOMM SPECIAL MEETING

 

vi

 

SUMMARY

 

1

 

The Merger

 

1

 

Reasons for the Merger

 

2

 

Other Factors Considered by the CCA Board

 

2

 

Other Factors Considered by the StorCOMM Board

 

3

 

Opinion of Financial Advisor to the Board of Directors of CCA

 

3

 

CCA Shareholder Approval Required

 

3

 

StorCOMM Shareholder Approval Required

 

4

 

Voting CCA Shares Held by Your Broker in Street Name

 

4

 

Changing Your Vote

 

4

 

Expected Timing of the Merger

 

5

 

Exchanging your StorCOMM Stock Certificates, Options and Warrants

 

5

 

Interests of Certain StorCOMM Persons in the Merger

 

5

 

Conditions to Completion of the Merger

 

5

 

Termination of the Merger Agreement; Fees Payable

 

6

 

Fees and Expenses

 

7

 

No Solicitation

 

7

 

Material United States Federal Income Tax Considerations

 

7

 

Anticipated Accounting Treatment

 

7

 

Appraisal and Dissenters’ Rights

 

7

 

Governmental and Regulatory Matters

 

8

 

Forward-Looking Statements May Prove Inaccurate

 

8

 

Where You Can Find More Information

 

8

 

Summary Selected Historical Consolidated Financial Data of CCA

 

9

 

Summary Selected Historical Consolidated Financial Data of StorCOMM

 

11

 

Summary Selected Unaudited Pro Forma Condensed Combined Financial Information

 

12

 

Comparative Per Share Data

 

13

 

Dividend Information (CCA and StorCOMM)

 

14

 

Number of Shareholders (CCA and StorCOMM)

 

14

 

RISK FACTORS

 

15

 

Risks Related to the Merger

 

15

 

Risks Related to CCA After the Merger

 

17

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

25

 

ANNUAL MEETING OF CCA SHAREHOLDERS

 

27

 

Date, Time and Place of the Annual Meeting

 

27

 

Matters to be Considered at the Annual Meeting

 

27

 

Record Date; Shareholders Entitled to Vote

 

27

 

Shareholder Support Agreements

 

28

 

Voting and Revocation of Proxies

 

28

 

Required Shareholder Vote

 

29

 

Cumulative Voting

 

30

 

Unanimous Recommendations by the Board of Directors

 

30

 

Solicitation of Proxies

 

31

 

Security Ownership of Principal Shareholders, Directors and Executive Officers

 

31

 

i




 

SPECIAL MEETING OF STORCOMM SHAREHOLDERS

 

32

 

Date, Time and Place of the Special Meeting

 

32

 

Matters to be Considered at the Special Meeting

 

32

 

Record Date; Shareholders Entitled to Vote

 

32

 

Shareholder Support Agreements

 

32

 

Voting and Revocation of Proxies

 

33

 

Required Shareholder Vote

 

33

 

Unanimous Recommendations by the Board of Directors

 

34

 

Solicitation of Proxies

 

34

 

Security Ownership of Principal Shareholders, Directors and Executive Officers

 

34

 

Interest of Certain Persons in Matters to be Acted Upon

 

34

 

CCA PROPOSAL NO. 1 AND STORCOMM PROPOSAL NO. 1—THE MERGER

 

35

 

Background of the Merger

 

35

 

Our Reasons for the Merger

 

38

 

Other Factors Considered by the CCA Board

 

39

 

Other Factors Considered by the StorCOMM Board

 

40

 

Opinion of Financial Advisor to the Board of Directors of CCA

 

42

 

Interests of Certain StorCOMM Persons in the Merger

 

46

 

Anticipated Accounting Treatment

 

51

 

Appraisal and Dissenters’ Rights

 

51

 

Governmental and Regulatory Matters

 

52

 

Listing of CCA Common Stock to be Issued in the Merger

 

52

 

Restriction on Resales of CCA Common Stock

 

52

 

THE MERGER AGREEMENT

 

53

 

The Merger

 

53

 

Completion and Effectiveness of the Merger

 

53

 

Conversion of StorCOMM Common Stock

 

53

 

Fractional Shares

 

54

 

StorCOMM Options and Warrants

 

54

 

Exchange of Stock Certificates

 

55

 

Representations and Warranties

 

55

 

Conduct of Business Before Completion of the Transaction

 

56

 

CCA and StorCOMM Prohibited from Soliciting Other Proposals

 

59

 

Superior Proposals

 

59

 

Change of Recommendation

 

60

 

Employee Benefits Matters

 

61

 

Required Approvals and Cooperation of the Parties

 

61

 

CCA Corporate Governance

 

62

 

Conditions to Completion of the Merger

 

62

 

Termination of the Merger Agreement

 

64

 

Termination Fee

 

64

 

Fees and Expenses

 

65

 

Amendment, Extension and Waiver of the Merger Agreement

 

65

 

CCA PROPOSAL NO. 2—PRIVATE PLACEMENT

 

66

 

Summary of Private Placement

 

66

 

Why We Need Shareholder Approval

 

66

 

Reasons for the Private Placement

 

66

 

Listing of CCA Common Stock to be Issued in the Private Placement

 

66

 

Restriction on Resale of CCA Common Stock and Registration Rights Agreement

 

67

 

Impact of the Issuance on Existing Shareholders

 

67

 

ii




 

Dissenters’ Rights

 

67

 

Vote Required

 

67

 

THE COMMON STOCK AND WARRANT PURCHASE AGREEMENT, THE WARRANTS AND THE REGISTRATION RIGHTS AGREEMENT

 

68

 

Summary of the Terms of the Agreements

 

68

 

CCA PROPOSAL NO. 3—AMENDMENT TO ARTICLES OF INCORPORATION

 

74

 

CCA PROPOSAL NO. 4—2005 EQUITY INCENTIVE PLAN

 

75

 

Summary of the 2005 Equity Incentive Plan

 

75

 

Award Types

 

76

 

Certain Federal Income Tax Information

 

78

 

Amendment and Termination

 

80

 

CCA PROPOSAL NO. 5—ELECTION OF DIRECTORS

 

81

 

Nominees

 

81

 

CCA PROPOSAL NO. 6—RATIFICATION OF APPOINTMENT OF BDO SEIDMAN, LLP

 

83

 

Audit Fees

 

83

 

Audit Committee Pre-Approval Policy

 

83

 

All Other Fees

 

84

 

CCA PROPOSAL NO. 7—POSSIBLE ADJOURNMENT OF THE ANNUAL MEETING

 

85

 

STORCOMM PROPOSAL NO. 2—POSSIBLE ADJOURNMENT OF THE SPECIAL MEETING

 

86

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

87

 

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET OF CCA AND STORCOMM

 

89

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS OF CCA AND STORCOMM

 

90

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS OF CCA AND STORCOMM

 

91

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

92

 

DESCRIPTION OF CCA CAPITAL STOCK

 

96

 

COMPARISON OF RIGHTS OF HOLDERS OF CCA COMMON STOCK AND STORCOMM COMMON STOCK

 

98

 

INFORMATION REGARDING CCA’S BUSINESS

 

108

 

Business Description

 

108

 

History and Business Development

 

108

 

Clinical Information Systems

 

109

 

Data Acquisition Products

 

111

 

Service

 

111

 

Significant Contracts and Programs

 

112

 

Product Development

 

112

 

Distribution and Marketing

 

113

 

Competition

 

114

 

Manufacturing and Suppliers

 

114

 

Warranties and Product Liability

 

115

 

Copyrights, Patents and Trade Secrets

 

115

 

Governmental Regulation

 

115

 

Backlog

 

116

 

Employees

 

116

 

Properties

 

116

 

Legal Proceedings

 

116

 

iii




 

Dividend Policy

 

116

 

Price Range of CCA Common Stock

 

117

 

SELECTED FINANCIAL DATA

 

118

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CCA

 

120

 

INFORMATION REGARDING CCA’S DIRECTORS AND EXECUTIVE OFFICERS

 

133

 

EXECUTIVE COMPENSATION

 

135

 

Employment Agreements

 

135

 

Compensation of Directors

 

136

 

Options/SAR Grants in Last Fiscal Year

 

138

 

Aggregated Option/SAR Exercises in Last Fiscal Year

 

138

 

Equity Compensation Plan Information

 

138

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF CCA

 

139

 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

139

 

AUDIT COMMITTEE REPORT

 

140

 

INFORMATION REGARDING STORCOMM’S BUSINESS

 

141

 

Business Description

 

141

 

History and Business Development

 

141

 

Access.NET™ PACS and Clinical Image Management System

 

141

 

Service

 

141

 

Significant Contracts and Programs

 

142

 

Product Development

 

142

 

Distribution and Marketing

 

142

 

Competition

 

142

 

Manufacturing and Suppliers

 

143

 

Warranties and Product Liability

 

143

 

Copyrights, Patents and Trade Secrets

 

144

 

Governmental Regulation

 

144

 

Backlog

 

145

 

Employees

 

145

 

Properties

 

145

 

Legal Proceedings

 

146

 

Dividend Policy

 

146

 

SELECTED FINANCIAL DATA OF STORCOMM

 

147

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF STORCOMM

 

149

 

Seasonality, Inflation and Industry Trends

 

155

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK OF STORCOMM

 

157

 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS OF STORCOMM

 

157

 

INFORMATION REGARDING CERTAIN DIRECTORS AND EXECUTIVE OFFICERS OF STORCOMM

 

158

 

EXECUTIVE COMPENSATION

 

159

 

Employment Agreements

 

159

 

Compensation of Directors

 

159

 

Options/SAR Grants in Last Fiscal Year

 

159

 

Aggregated Option/SAR Exercises in Last Fiscal Year

 

160

 

Equity Compensation Plan Information

 

160

 

OWNERSHIP OF STORCOMM CAPITAL STOCK

 

161

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF STORCOMM

 

162

 

LEGAL MATTERS

 

163

 

EXPERTS

 

163

 

SHAREHOLDER PROPOSALS

 

163

 

DOCUMENTS INCORPORATED BY REFERENCE

 

164

 

WHERE YOU CAN FIND MORE INFORMATION

 

165

 

INDEX TO FINANCIAL STATEMENTS

 

F-1

 

StorCOMM. Inc., Consolidated Balance Sheets dated June 30, 2005

 

F-2

 

StorCOMM, Inc., Consolidated Statements of Operations for the 6 Months Ended June 30, 2005 and 2004

 

F-3

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

F-5

 

Report of Independent Registered Public Accounting Firm

 

F-9

 

StorCOMM. Inc., Consolidated Balance Sheets dated December 31, 2004 and 2003

 

F-10

 

StorCOMM, Inc., Consolidated Statements of Operations for the Years Ended December 31, 2004 and 2003

 

F-11

 

StorCOMM, Inc., Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2004 and 2003

 

F-12

 

StorCOMM, Inc., Consolidated Statements of Cash Flows for the Years Ended December 31, 2004 and 2003

 

F-13

 

StorCOMM, Inc., and Subsidiary Notes to Consolidated Financial Statements for the Years Ended December 31, 2004 and 2003

 

F-14

 

ANNEX A—Agreement and Plan of Reorganization

 

 

 

ANNEX B—Common Stock and Warrant Purchase Agreement

 

 

 

ANNEX C—Form of Warrant

 

 

 

ANNEX D—Registration Rights Agreement

 

 

 

ANNEX E—Amendment to Articles of Incorporation

 

 

 

ANNEX G—2005 Equity Incentive Plan

 

 

 

ANNEX H—Opinion of Simon Financial, Inc.

 

 

 

ANNEX I—Selected Provisions of the Delaware General Corporation Law Regarding Appraisal Rights

 

 

 

ANNEX J—Selected Provisions of the California General Corporation Law Regarding Dissenters’ Rights

 

 

 

 


The “Creative Computer Applications” and “Aspyra” family of related marks, images and symbols are the properties, trademarks and service marks of CCA.

The “StorCOMM” family of related marks, images and symbols are the properties, trademarks and service marks of StorCOMM.

Additional company and product names may be trademarks of their respective owners.


This joint proxy statement/prospectus is based on information provided by CCA, StorCOMM and other sources that CCA and StorCOMM believe to be reliable. This joint proxy statement/prospectus summarizes certain documents filed as exhibits hereto. For more information on how you can obtain copies of these documents, see “Where You Can Find More Information” on page 165.

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QUESTIONS AND ANSWERS
ABOUT THE MERGER, THE PRIVATE PLACEMENT,
THE CCA ANNUAL MEETING AND THE STORCOMM SPECIAL MEETING

The following questions and answers are intended to address briefly some commonly asked questions regarding the CCA annual meeting and the StorCOMM special meeting, the merger and the private placement. These questions and answers may not address all of the information that may be important to you. Please refer to the more detailed information contained elsewhere in this joint proxy statement/prospectus and in the documents referred to or incorporated by reference in this joint proxy statement/prospectus.

Q:             What is the merger?

A:             CCA, Xymed.com (“Xymed”), a Delaware corporation and wholly owned subsidiary of CCA, and StorCOMM have entered into an Agreement and Plan of Reorganization, dated August 16, 2005, as the same may be amended from time to time (referred to in this joint proxy statement/prospectus as the merger agreement), that contains the terms and conditions of the proposed business combination of CCA and StorCOMM. Under the merger agreement, StorCOMM and Xymed will merge (referred to in this joint proxy statement/prospectus as the merger). StorCOMM will survive the merger as a wholly owned subsidiary of CCA. StorCOMM shareholders will be entitled to receive 2.447 shares of CCA common stock for every 100 shares of StorCOMM common stock they own at the completion of the merger (referred to in this joint proxy statement/prospectus as the exchange rate). StorCOMM shareholders will receive cash instead of fractional shares of CCA common stock. Each outstanding share of CCA common stock will remain unchanged in the merger.

Prior to the merger, StorCOMM option holders will be given the opportunity to cancel their existing StorCOMM options. Those StorCOMM option holders that elect to cancel their options will receive the same number of CCA options that they would have received had they exchanged their options in the merger, except that the CCA options they will receive will have an exercise price equal to the fair market value of CCA common stock on the date of grant and a two-year vesting schedule. At the effective time of the merger, each outstanding option that is not voluntarily cancelled prior to the merger (referred to in this joint proxy statement/prospectus as assumed options) and all warrants to purchase shares of StorCOMM common stock will be assumed by CCA and converted into options or warrants to purchase shares of CCA common stock. The number of shares of CCA common stock subject to each assumed option and warrant will be determined on the same basis as the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole number (with no cash payable for any fractional share eliminated by such rounding). The exercise price of the assumed options or warrants will be equal to the exercise price per share under the original option or warrant divided by the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole cent. After adjusting the assumed options and warrants to reflect the application of the exchange rate and the assumptions by CCA, all other terms of the assumed options and warrants will remain unchanged.

Assuming the merger had been completed as of September 15, 2005, CCA would have issued approximately 3,703,900 shares of common stock, on a fully diluted basis, to the StorCOMM shareholders in the merger. Assuming further, the simultaneous sale of 1,500,000 units in the private placement immediately following the merger, StorCOMM shareholders would have owned approximately 40.4% of the outstanding shares of common stock of the combined company and CCA shareholders would have owned approximately 40.4% of the outstanding shares of common stock of the combined company, in both cases on a fully diluted basis, with the remainder owned by the investors in the private placement. For a more complete description of the merger, see the section entitled “The Merger” on page 53.

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Q:             What is the private placement?

CCA has also entered into a Common Stock and Warrant Purchase Agreement, dated August 18, 2005, as the same may be amended from time to time (referred to in this joint proxy statement/prospectus as the Purchase Agreement and the transaction contemplated by the Purchase Agreement being referred to as the private placement), that contains the terms and conditions of the proposed sale of shares CCA common stock and warrants to the purchasers listed in the Purchase Agreement. Pursuant to the Purchase Agreement, simultaneously with the closing of the merger, CCA will sell up to 1,500,000 shares of its common stock and warrants to purchase up to 300,000 shares of its common stock. The shares of common stock and warrants will be sold in units, with each unit consisting of a single share of CCA common stock and 1/5 of a warrant to purchase one share of CCA common stock. The price per unit will be $2.00 for a maximum aggregate purchase price of $3 million. For a more complete description of the private placement, see the section entitled “The Private Placement” on page 66.

Q:             Why are CCA and StorCOMM combining?

A:             Both CCA and StorCOMM believe that combining the two companies will expand and better serve the addressable market and result in greater long-term growth opportunities than either company has operating alone. CCA and StorCOMM expect that completion of the merger will enable the combined company to:

·       offer integrated applications and services to a broader sector of the healthcare provider market;

·       have a broader sales and channel coverage than either company independently;

·       take advantage of financial synergies;

·       have the scale to better compete in the marketplace; and

·       be led by an experienced management team.

Q:             Why is CCA selling common stock and warrants in the private placement?

A:             CCA anticipates that the private placement will provide working capital for the integration of the two companies and the implementation of the combined company’s business plan. The simultaneous closing of the merger is a condition to the closing of the private placement.

Q:             Why am I receiving this joint proxy statement/prospectus?

A:             You are receiving this joint proxy statement/prospectus because you have been identified as a shareholder of either CCA or StorCOMM, and thus you may be entitled to vote at such company’s annual or special meeting, as the case may be. This document serves as both a joint proxy statement of CCA and StorCOMM, used to solicit proxies for the meetings, and as a prospectus of CCA, used to offer shares of CCA common stock in exchange for shares of StorCOMM common stock pursuant to the terms of the merger agreement. This document contains important information about the merger, the private placement, the non merger-related proposals of CCA and the meetings of CCA and StorCOMM, and you should read it carefully.

Q:             What is required to complete the merger?

A.              To complete the merger, CCA shareholders must approve the issuance and reservation for issuance of shares of CCA common stock in connection with the merger and the issuance and reservation for issuance of up to 1,500,000 shares of CCA common stock and warrants to purchase up to 300,000 shares of CCA common stock in the private placement. In addition, StorCOMM shareholders must adopt the

vii




merger agreement. In addition to obtaining shareholder approval, CCA and StorCOMM must satisfy or waive all other closing conditions set forth in the merger agreement.

Q:             What is required to complete the private placement?

A.              The closing of the private placement is conditioned on the closing of the merger. Accordingly, all of the items required to complete the merger, as discussed above, are also required to complete the private placement. In addition, CCA and the investors in the private placement must satisfy or waive all other closing conditions set forth in the Purchase Agreement.

Q:             What will StorCOMM shareholders receive in the merger?

A:             If the merger is completed, StorCOMM shareholders will be entitled to receive 2.447 shares of CCA common stock for every 100 shares of StorCOMM common stock they own at the completion of the merger (referred to in this joint proxy statement/prospectus as the exchange rate). The StorCOMM shareholders will receive cash instead of fractional shares of CCA common stock. Prior to the merger, StorCOMM option holders will be given the opportunity to cancel their existing StorCOMM options. Those StorCOMM option holders that elect to cancel their options will receive the same number of CCA options that they would have received had they exchanged their options in the merger, except that the CCA options they will receive will have an exercise price equal to the fair market value of CCA common stock on the date of grant and a two-year vesting schedule. At the effective time of the merger, each outstanding option that is not voluntarily cancelled prior to the merger and all warrants to purchase shares of StorCOMM common stock will be assumed by CCA and converted into options or warrants to purchase shares of CCA common stock. The number of shares of CCA common stock subject to each assumed option and warrant will be determined on the same basis as the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole number (with no cash payable for any fractional share eliminated by such rounding). The exercise price of the assumed options or warrants will be equal to the exercise price per share under the original option or warrant divided by the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole cent. After adjusting the assumed options and warrants to reflect the application of the exchange rate and the assumptions by CCA, all other terms of the assumed options and warrants will remain unchanged. Assuming the merger had been completed as of September 15, 2005, CCA would have issued approximately 3,703,900 shares of common stock, on a fully diluted basis, to the StorCOMM shareholders in the merger. Assuming further, the simultaneous sale of 1,500,000 units in the private placement immediately following the merger, StorCOMM shareholders would have owned approximately 40.4% of the outstanding shares of common stock of the combined company and CCA shareholders would have owned approximately 40.4% of the outstanding shares of common stock of the combined company, in both cases on a fully diluted basis, with the remainder owned by the investors in the private placement.

Q:             Will all of the CCA directors elected at the annual meeting continue to serve if the merger is not completed?

A:             No. If all of the nominees for CCA’s board of directors are elected but the merger is not completed, Bradford G. Peters and C. Ian Sym-Smith will resign (leaving four CCA directors on the board of directors). The remaining CCA directors will select individuals to fill the resulting vacancies on the CCA board of directors, who will serve until the next annual meeting of CCA’s shareholders or until such director’s successor has been elected and qualified.

viii




Q:             How does CCA’s board of directors recommend that CCA shareholders vote?

A:             After careful consideration, CCA’s board of directors unanimously recommends that CCA shareholders vote FOR Proposal No. 1 for the merger agreement and the issuance and reservation for issuance of shares of CCA common stock pursuant to the merger agreement, FOR Proposal No. 2 for the issuance and reservation for issuance of shares of CCA common stock and warrants to purchase shares of CCA common stock in a private placement pursuant to the Purchase Agreement, FOR Proposal No. 3 for the amendment to the Articles of Incorporation to change the name of the company from Creative Computer Applications, Inc. to Aspyra, Inc., FOR Proposal No. 4 for the 2005 Equity Incentive Plan, FOR Proposal No. 5 for the election of the director nominees named in this joint proxy statement/prospectus, FOR Proposal No. 6 for the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005, and FOR Proposal No. 7 to adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the proposals. For a description of the reasons underlying the recommendations of CCA’s board, see the sections entitled “The Merger—Our Reasons for the Merger,” and “—Other Factors Considered by the CCA Board” on pages 38 and 39, the section entitled “CCA Proposal No. 1” on page 35 and the section entitled “CCA Proposal No. 2” on page 66.

Q:             How does StorCOMM’s board of directors recommend that StorCOMM shareholders vote?

A.              After careful consideration, StorCOMM’s board of directors unanimously recommends that the StorCOMM shareholders vote FOR Proposal No. 1 for the merger agreement pursuant to which StorCOMM will merge with Xymed and become a wholly owned subsidiary of CCA, and FOR Proposal No. 2 to adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1. For a description of the reasons underlying the recommendation of StorCOMM’s board, see the sections entitled “The Merger—Our Reasons for the Merger” and “—Other Factors Considered by the StorCOMM Board” on pages 38 and 40.

Q:             What shareholder approvals are required for CCA?

A:             The affirmative vote of holders of a majority in voting power of the outstanding shares of CCA common stock, is required to approve Proposal No. 1 regarding the merger agreement and the issuance and reservation for issuance of shares of CCA common stock pursuant to the merger agreement, and Proposal No. 3 regarding the amendment to the Articles of Incorporation to change the name of the company from Creative Computer Applications, Inc. to Aspyra, Inc. The affirmative vote of holders of a majority of the shares of CCA common stock, present in person or represented by proxy at the annual meeting and entitled to vote (assuming that a quorum is present), is required to approve Proposal No. 2 regarding the issuance and reservation for issuance of shares of CCA common stock and warrants to purchase shares of CCA common stock in a private placement pursuant to the Purchase Agreement, Proposal No. 4 regarding the 2005 Equity Incentive Plan, Proposal No. 6 regarding the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005, and Proposal No. 7 regarding the adjournment of the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the proposals. With respect to Proposal No. 5 regarding the election of the director nominees named in this joint proxy statement/prospectus, the candidates receiving the highest number of votes, up to the number of directors to be elected, will be elected.

ix




Q:             How many votes do CCA shareholders have?

A:             Each holder of record of CCA common stock as of October 3, 2005 will be entitled to one vote for each share of common stock held on that date.

Q:             Are there any CCA officers, directors or shareholders already committed to voting in favor of the merger?

A:             Yes. Steven M. Besbeck, Bruce M. Miller and James R. Helms, the president and chief executive officer, chairman of the board and chief technology officer, and vice president operations and secretary of CCA, respectively, who hold an aggregate of approximately 21% of the voting power of CCA as of September 15, 2005, have entered into a shareholder support agreement with StorCOMM in which they have agreed to vote in favor of the merger agreement. This does not represent a sufficient number of shares of CCA capital stock to approve the merger agreement on behalf of the CCA shareholders. As of the record date, the directors and executive officers of CCA and their affiliates held 742,500  shares of CCA common stock representing 21.3% of the outstanding shares of CCA common stock.

Q:             What shareholder approvals are required for StorCOMM?

A:             The affirmative vote of holders of 90% of the voting power of StorCOMM’s capital stock outstanding is required to approve Proposal No. 1 regarding the adoption of the merger agreement. The affirmative vote of holders of a majority of the shares of StorCOMM common stock present in person or represented by proxy at the special meeting and entitled to vote, is required to approve Proposal No. 2 regarding the adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1.

Q:             How many votes do StorCOMM shareholders have?

A:             Each holder of record of StorCOMM common stock as of October 3, 2005 will be entitled to one vote for each share of common stock held on that date.

Q:             Are there any StorCOMM officers, directors or shareholders already committed to voting in favor of the merger?

A:             Yes. C. Ian Sym-Smith, the chairman of StorCOMM’s board of directors, and Bradford G. Peters, a member of StorCOMM’s board of directors and StorCOMM’s largest shareholder, who hold an aggregate of approximately 90.7% of the voting power of StorCOMM as of September 15, 2005, have entered into a shareholder support agreement with CCA in which they have agreed to vote in favor of the merger agreement. Therefore, there are a sufficient number of shares of StorCOMM capital stock committed to approve the merger agreement on behalf of the StorCOMM shareholders. As of the record date, the directors and executive officers of StorCOMM and their affiliates held 137,245,118 shares of StorCOMM common stock representing 90.7% of the outstanding shares of StorCOMM common stock.

Q:             Are there risks involved in undertaking the merger and the private placement?

A:             Yes. The merger (including the possibility that the merger may not be consummated) and the private placement pose a number of risks. In addition, both CCA and StorCOMM are subject to various risks associated with their respective businesses and industries, certain of which may be heightened by the merger. These risks are discussed in greater detail under the caption “Risk Factors” beginning on page 17 below. We encourage you to read and consider all of these risks carefully.

x




Q:             What do I need to do now?

A:             We urge you to read this joint proxy statement/prospectus carefully and then vote your proxy for the relevant proposals. If you are a CCA shareholder, you may vote in person at the CCA annual meeting or vote by proxy using the enclosed proxy card.

·       To vote in person, come to the annual meeting, and you will be given a ballot when you arrive.

·       To vote by proxy, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card before the meeting, your shares will be voted as you direct.

If you are a StorCOMM shareholder, you may vote in person at the StorCOMM special meeting or vote by proxy using the enclosed proxy card.

·       To vote in person, come to the special meeting, and you will be given a ballot when you arrive.

·       To vote by proxy, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card before the meeting, your shares will be voted as you direct.

Please also see the instructions included with the enclosed proxy card. Regardless of whether you return your proxy card, you may attend the applicable meeting and vote your shares in person.

Q:             What happens if I do not vote?

A:             The failure of a CCA shareholder to vote in person or by proxy will have the effect of voting AGAINST CCA Proposal No. 1 and Proposal No. 3. The failure of a CCA shareholder to vote in person or by proxy will not affect the outcome of any of the other CCA Proposals but will reduce the number of votes required to approve these proposals. While Proposals No. 1 and No. 2 are being voted upon separately, each of Proposals No. 1 and 2 must be approved in order for either of them to be implemented.

The failure of a StorCOMM shareholder to vote in person or by proxy will have the effect of voting AGAINST StorCOMM Proposal No. 1. The failure of a StorCOMM shareholder to vote in person or by proxy will not affect the outcome of StorCOMM Proposal No. 2 but will reduce the number of votes required to approve this proposal.

Q:             May I change my vote after I have submitted my proxy?

A:             Yes. You may revoke your proxy at any time before your proxy is voted at the applicable meeting. You can do this in any of three ways:

·       First, you can send a written, dated notice to the Secretary of CCA or StorCOMM, as applicable, stating that you would like to revoke your proxy.

·       Second, you can complete, date and submit a new, later-dated proxy card.

·       Third, you can attend the meeting and vote in person. Your attendance alone will not revoke your proxy.

If you have instructed a broker to vote your shares, you must follow directions received from your broker to change those instructions.

xi




Q:             If my shares of CCA common stock are held in “street name” by my broker, will my broker vote my shares for me?

A:             Your broker will not be able to vote your shares of CCA common stock unless you provide your broker with instructions on how to vote your shares. You should follow the procedure provided by your broker and instruct your broker to vote your shares for your shares to be voted.

Q:             What are the material federal income tax consequences of the merger to me?

A:             The merger has been structured to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. Assuming the merger qualifies as a reorganization, StorCOMM shareholders will not recognize gain or loss for United States federal income tax purposes upon the exchange of shares of StorCOMM common stock for shares of CCA common stock, except with respect to cash received in lieu of fractional shares of CCA common stock. Tax matters are very complicated, and the tax consequences of the merger to a particular shareholder will depend in part on such shareholder’s circumstances. Accordingly, we urge you to consult your own tax advisor for a full understanding of the tax consequences of the merger to you, including the applicability and effect of federal, state, local and foreign income and other tax laws. For more information, see the section entitled “The Merger—Material United States Federal Income Tax Considerations” on page 7 and. 49.

Q:             Should I send in my StorCOMM stock certificates now?

A:             No. After the merger is completed, you will receive written instructions from CCA or the exchange agent explaining how to exchange your shares of StorCOMM common stock for the merger consideration.

Q:             When do you expect the merger to be completed?

A:             CCA and StorCOMM are working toward consummating the merger as quickly as possible. We hope to consummate the merger during the fourth quarter of 2005 promptly following the approval of the merger by the shareholders of CCA and StorCOMM. However, the merger is subject to several conditions that could affect the timing of its consummation.

Q:             Am I entitled to appraisal or dissenters’ rights?

A:             In connection with the merger, holders of StorCOMM common stock are entitled to appraisal rights under the Delaware General Corporation Law. However, holders of CCA common stock may only be entitled to dissenters’ rights under California General Corporation Law if demands are made for payment with respect to five percent or more of the shares of CCA common stock. For more information, see the section entitled “The Merger—Appraisal and Dissenters’ Rights” on page 51.

Q:             How will the merger affect my stock options and warrants to acquire StorCOMM common stock?

A:             Prior to the merger, StorCOMM option holders will be given the opportunity to cancel their existing StorCOMM options. Those StorCOMM option holders that elect to cancel their options will receive the same number of CCA options that they would have received had they exchanged their options in the merger, except that the CCA options they will receive will have an exercise price equal to the fair market value of CCA common stock on the date of grant and a two-year vesting schedule. At the effective time of the merger, each outstanding option that is not voluntarily cancelled prior to the merger and all warrants to purchase shares of StorCOMM common stock will be assumed by CCA and converted into options or warrants to purchase shares of CCA common stock. The number of shares of CCA common stock subject to each assumed option and warrant will be determined on the same basis as the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole number (with no cash payable for any fractional share eliminated by such rounding). The exercise price of the assumed

xii




options or warrants will be equal to the exercise price per share under the original option or warrant divided by the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole cent. After adjusting the assumed options and warrants to reflect the application of the exchange rate and the assumptions by CCA, all other terms of the assumed options and warrants will remain unchanged.

Q:             Who is paying for this proxy solicitation?

A:             CCA and StorCOMM are conducting this proxy solicitation and will bear the cost of soliciting proxies, including the preparation, assembly, printing and mailing of this joint proxy statement/prospectus, the proxy card and any additional information furnished to shareholders.

Q:             Who can help answer my questions?

A:             If you have any questions about the merger, the private placement, the non merger-related proposals of CCA or the meetings of CCA and StorCOMM, including the procedures for voting your shares, or if you need additional copies of the joint proxy statement/prospectus or the enclosed proxy, please contact:

If you are a CCA shareholder:

If you are a StorCOMM shareholder:

Creative Computer Applications, Inc.
26115-A Mureau Road
Calabasas, CA 91302
Attention: Investor Relations
(818) 880-6700

StorCOMM, Inc.
7 Corporate Plaza
8649 Baypine Road
Jacksonville, Florida 32256
Attention: Investor Relations
(888) 731-0731

 

You may also obtain additional information about CCA from the documents it files with the Securities and Exchange Commission or by following the instructions in the section entitled “Where You Can Find More Information” on page 165.

xiii




SUMMARY

The following summary highlights selected information from this joint proxy statement/prospectus and may not contain all of the information that is important to you. You should carefully read this joint proxy statement/prospectus and the other documents we refer to or incorporate by reference for a more complete understanding of the merger, the private placement and other proposals described in this summary. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” that begins on page 165 of this joint proxy statement/prospectus.

Creative Computer Applications, Inc.
26115-A Mureau Road
Calabasas, CA 91302
(818) 880-6700

CCA is a healthcare information technology and service provider that provides software and browser-based solutions, specializing in Clinical Information Systems for hospital and clinic-based laboratories, pharmacies, and radiology departments. Its primary products, CyberLAB®, CyberMED® and CyberRAD® are highly functional, scalable, and can be deployed in a variety of healthcare settings. CCA’s systems are deployed at more than 500 sites.

The common stock of CCA is traded on the American Stock Exchange under the symbol “CAP.” Following the merger and shareholder approval of the change of the company name to Aspyra, Inc., CCA expects to change its trading symbol to “APY.” Its website can be accessed at http://www.ccainc.com. The information on CCA’s website is not a part of this joint proxy statement/prospectus.

StorCOMM, Inc.
7 Corporate Plaza
8649 Baypine Road
Jacksonville, Florida 32256
(888) 731-0731

StorCOMM is a leader in the design, development, implementation and support of highly scalable Picture Archive Communication Systems, or PACS, and Clinical Image Management Systems tailored to meet the needs of healthcare organizations in the United States and abroad. StorCOMM’s Access.NET™ family of systems provides enterprise wide system solutions for imaging centers, orthopedic environments and hospitals. Access.NET™ systems are deployed at more than 180 sites in the United States and Europe.

StorCOMM is a private company and there is currently no public market for its securities. Its website can be accessed at http://www.storcomm.com. The information on StorCOMM’s website is not a part of this joint proxy statement/prospectus.

The Merger (page 35)

In the merger, Xymed will merge with and into StorCOMM, and StorCOMM will become a wholly owned subsidiary of CCA. Holders of StorCOMM common stock, options and warrants will become holders of CCA common stock, options and warrants following the merger. The shares of CCA common stock issued to StorCOMM shareholders in connection with the merger are expected to represent approximately 40.4% of the outstanding shares of CCA common stock immediately following the closing of the merger and the private placement, based on the number of shares of CCA and StorCOMM common stock outstanding on September 15, 2005, in each case on a fully-diluted basis.

Merger Consideration.   Upon completion of the merger, StorCOMM shareholders will be entitled to receive 2.447 shares of CCA common stock for every 100 shares of StorCOMM common stock they own at

1




the completion of the merger (referred to in this joint proxy statement/prospectus as the exchange rate). StorCOMM shareholders will receive cash instead of fractional shares of CCA common stock. Each outstanding share of CCA common stock will remain unchanged in the merger. Assuming the merger had been completed as of September 15, 2005, CCA would have issued approximately 3,703,900 shares of common stock, on a fully diluted basis, to the StorCOMM shareholders in the merger. Assuming further, the simultaneous sale of 1,500,000 units in the private placement immediately following the merger, StorCOMM shareholders would have owned approximately 40.4% of the outstanding shares of common stock of the combined company and CCA shareholders would have owned approximately 40.4% of the outstanding shares of common stock of the combined company, in both cases on a fully diluted basis, with the remainder owned by investors in the private placement.

Treatment of Stock Options and Warrants.   Prior to the merger, StorCOMM option holders will be given the opportunity to cancel their existing StorCOMM options. Those StorCOMM option holders that elect to cancel their options will receive the same number of CCA options that they would have received had they exchanged their options in the merger, except that the CCA options they will receive will have an exercise price equal to the fair market value of CCA common stock on the date of grant and a two-year vesting schedule. At the effective time of the merger, each outstanding option that is not voluntarily cancelled prior to the merger and all warrants to purchase shares of StorCOMM common stock will be assumed by CCA and converted into options or warrants to purchase shares of CCA common stock. The number of shares of CCA common stock subject to each assumed option and warrant will be determined on the same basis as the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole number (with no cash payable for any fractional share eliminated by such rounding). The exercise price of the assumed options or warrants will be equal to the exercise price per share under the original option or warrant divided by the exchange rate applicable to all outstanding shares of StorCOMM common stock, and rounded to the nearest whole cent. After adjusting the assumed options and warrants to reflect the application of the exchange rate and the assumptions by CCA, all other terms of the assumed options and warrants will remain unchanged.

A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A. We urge you to read it carefully.

Our Reasons for the Merger (page 38)

CCA and StorCOMM believe that combining the two companies will expand and better serve the addressable market and result in greater long-term growth opportunities than either company has operating alone. In evaluating the reasons for the merger, the boards of directors of CCA and StorCOMM considered:

·       the ability of the combined company to providing integrated applications and services to a broader sector of the healthcare provider market;

·       the broader sales and channel coverage of the combined company;

·       the expected financial synergies for the combined company;

·       the scale of the combined company to better compete in the marketplace; and

·       the experience of the combined company’s management team.

Other Factors Considered by the CCA Board (page 39)

In the course of its deliberations, the CCA board, together with CCA’s management and financial and legal advisors, considered other positive factors and considered a number of potentially negative factors regarding the merger. The CCA board considered a variety of factors such as its strategic plan; general and

2




financial market conditions; the potential benefits to shareholders as a result of growth opportunities; historical and current information about CCA and StorCOMM; the risks inherent in integrating the companies and that anticipated cost and product synergies will not be realized; the terms and conditions of the merger agreement; the possible loss of key management; and other possible adverse consequences in reaching its decision to support the merger.

Other Factors Considered by the StorCOMM Board (page 40)

In the course of its deliberations, the StorCOMM board, after consultation with StorCOMM’s management and financial and legal advisors, considered other positive factors regarding the merger and considered a number of potentially negative factors regarding the merger. The StorCOMM board considered a variety of factors such as the consistency of CCA’s long-term operating strategy with StorCOMM’s long-term operating strategy to grow its business; general and financial market conditions; the historical and current information about CCA and StorCOMM; conditions in the healthcare industry; the nature of its competition; the terms and conditions of the merger agreement; the risks inherent in integrating the companies and the risk that anticipated cost and product synergies will not be realized; the possible loss of key management; the potential conflicts of interest of StorCOMM directors and officers in connection with the merger; and other possible adverse consequences in reaching its decision to support the merger.

Opinion of Financial Advisor to the Board of Directors of CCA (page 42 and Annex H)

Simon Financial, Inc. rendered its oral opinion on June 3, 2005, subsequently confirmed in writing on the same day, to the CCA board of directors that, as of such date, and based upon and subject to certain matters stated in its opinion, from a financial point of view, the exchange rate to be paid by CCA in the merger was fair to CCA. The full text of Simon Financial’s written opinion, dated June 3, 2005, is attached as Annex H to this joint proxy statement/prospectus. Simon Financial provided its opinion for the use and benefit of the CCA board of directors in connection with its consideration of the merger. Simon Financial’s opinion was not intended to be and did not constitute a recommendation to any shareholder of CCA or StorCOMM as to how such shareholder should vote with respect to the merger.

CCA Required Shareholder Vote (page 29)

Proposal No. 1:   Approval of the merger agreement and the proposal to issue and reserve for issuance shares of CCA common stock in connection with the merger requires the affirmative vote of holders of a majority in voting power of the outstanding shares of CCA common stock.

Proposal No. 2:   Approval of the proposal to issue and reserve for issuance shares of CCA common stock and warrants to purchase shares of CCA common stock in the private placement pursuant to the Purchase Agreement requires the affirmative vote of holders of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote, so long as a quorum is present.

Proposal No. 3:   Approval of the amendment to the Articles of Incorporation to change the name of the company to Aspyra, Inc., requires the affirmative vote of holders of a majority in voting power of the outstanding shares of CCA common stock.

Proposal No. 4:   Approval of the 2005 Equity Incentive Plan requires the affirmative vote of holders of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote, so long as a quorum is present.

Proposal No. 5:   Election of the director nominees named in this joint proxy statement/prospectus, requires that the candidates receiving the highest number of votes, up to the number of directors to be elected, be elected.

3




Proposal No. 6:   Approval of the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005 requires the affirmative vote of holders of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote, so long as a quorum is present.

Proposal No. 7:   Approval of the proposal to adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies in favor of the proposals requires the affirmative vote of holders of a majority of the shares of CCA common stock present in person or represented by proxy at the annual meeting and entitled to vote.

While Proposals No. 1 and No. 2 are being voted upon separately, each of the first two proposals must be approved in order for either of them to be implemented. In addition, if all of the nominees for CCA’s board of directors are elected but the merger is not completed, Bradford G. Peters and C. Ian Sym-Smith will resign (leaving four CCA directors on the board of directors). The remaining CCA directors will select individuals to fill the resulting vacancies on the CCA board of directors, who will serve until the next annual meeting of CCA’s shareholders or until such director’s successor has been elected and qualified.

StorCOMM Required Shareholder Vote (page 33)

Proposal No. 1:   Approval of the merger agreement requires the affirmative vote of holders of 90% of the voting power of StorCOMM’s capital stock outstanding.

Proposal No. 2:   If a quorum is present, the vote upon an adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1 requires the affirmative vote of holders of a majority of the shares of StorCOMM common stock present in person or represented by proxy at the special meeting and entitled to vote.

Voting CCA Shares Held by Your Broker in Street Name (page 29)

If your CCA shares are held in street name, your broker will vote your shares for you only if you provide instructions to your broker on how to vote your shares. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Your broker cannot vote your shares without specific instructions from you. Failure to instruct your broker on how to vote your shares on Proposal No. 1 will have the effect of voting AGAINST CCA Proposal No. 1 and Proposal No. 3. Failure to instruct your broker on how to vote your shares on any other proposal will have no effect on the outcome of such proposals, assuming that a quorum is present at the annual meeting, but will reduce the number of votes required to approve those proposals.

Changing Your Vote (pages 29 and 33)

If you submit a proxy, you may revoke it at any time before it is voted, by:

·       delivering to the Secretary of your company a written notice, dated later than the proxy you wish to revoke, stating that the proxy is revoked;

·       submitting to the Secretary of your company a new, signed proxy with a later date than the proxy you wish to revoke; or

·       attending your annual or special meeting and voting in person (your attendance alone will not revoke your proxy).

Notices to the Secretary of CCA should be sent to 26115-A Mureau Road, Calabasas, CA 91302. Notices to the Secretary of StorCOMM should be sent to 7 Corporate Plaza, 8649 Baypine Road, Jacksonville, Florida 32256.

4




If you are a CCA shareholder and have instructed your broker to vote your shares, you must follow directions received from your broker to change those instructions.

Expected Timing of the Merger (page 53)

CCA and StorCOMM are working toward consummating the merger as quickly as possible. We hope to consummate the merger during the fourth quarter of 2005 promptly following the approval of the merger by the shareholders of CCA and StorCOMM. However, the merger is subject to several conditions that could affect the timing of its consummation.

Exchanging your StorCOMM Stock Certificates (page 55)

Promptly after the effective time of the merger, you will be directed to surrender your StorCOMM stock certificates to the exchange agent so that they may be canceled and exchanged for CCA common stock certificates and/or cash in lieu of fractional CCA shares. Please do not surrender your StorCOMM stock certificates until you receive the letter of transmittal from the exchange agent.

Interests of Certain StorCOMM Persons in the Merger (page 46)

In considering the StorCOMM board of directors’ recommendation that you vote to adopt the merger agreement, you should be aware that some StorCOMM officers and directors may have interests in the merger that are different from, or in addition to, your interests. Among other things, these interests include:

·       following the closing of the merger, Bradford G. Peters and C. Ian Sym-Smith, who are currently members of the StorCOMM board, will become members of CCA’s board;

·       following the closing of the merger, Samuel G. Elliott and William W. Peterson , who are currently members of the StorCOMM management, will become the chief international officer and the chief sales, marketing and product management officer, respectively, of CCA;

·       CCA will enter into employment agreements with Samuel G. Elliott and William W. Peterson that will be effective upon the closing of the merger; and

·       directors and officers of StorCOMM have rights to indemnification against specified liabilities that must be maintained by CCA and CCA is required to maintain directors’ and officers’ liability insurance for them. CCA has also agreed to indemnify the directors and officers of StorCOMM against liabilities arising from their service as directors or officers of StorCOMM including liabilities in connection with the merger and the merger agreement.

Conditions to Completion of the Merger (page 62)

The completion of the merger depends on a number of conditions being satisfied, including but not limited to the following:

·       the issuance and reservation for issuance of shares of CCA common stock in connection with the merger;

·       the merger agreement shall have been adopted by the shareholders of StorCOMM and CCA;

·       the shares of CCA common stock to be issued in the merger and to be reserved for issuance in connection with the merger shall have been approved for listing on the American Stock Exchange;

·       the Form S-4, of which this joint proxy statement/prospectus is a part, shall have been declared effective by the Securities and Exchange Commission, or the SEC, under the Securities Act;

5




·       CCA shall have simultaneously closed the private placement;

·       the parties’ respective representations and warranties contained in the merger agreement must be true and correct, subject in certain cases to exceptions that would not have a material adverse effect;

·       the parties must each be in compliance in all material respects with their respective covenants contained in the merger agreement;

·       Messrs. Besbeck, Miller and Helms, holders of an aggregate of approximately 21% of the voting power of CCA as of September 15, 2005 shall have executed a shareholder support agreement in which they have agreed to vote in favor of the merger and Messrs. Sym-Smith and Peters, holders of an aggregate of approximately 90.7% of the voting power of StorCOMM as of September 15, 2005, shall have executed a shareholder support agreement in which they have agreed to vote in favor of the merger.

·       except for no more than $1 million of unsecured debt, all debt held by StorCOMM shareholders and all preferred stock held by StorCOMM shareholders shall be converted to common stock of StorCOMM on terms approved by CCA; and

·       no more than $1 million of unsecured debt will remain on StorCOMM’s books.

This is not a complete list of all conditions to the closing of the merger. Each of the conditions to the merger may be waived by the company entitled to assert the condition except to the extent that the condition must be satisfied in order to comply with applicable law or regulatory requirements.

Termination of the Merger Agreement; Fees Payable (page 64)

CCA and StorCOMM may jointly agree to terminate the merger agreement without completing the merger. In addition, either CCA or StorCOMM may terminate the merger agreement if any of the following events occur:

·       the merger shall not have occurred on or before January 31, 2006, but this termination right is not available to a party whose failure to comply with the merger agreement resulted in the failure to complete the merger by that date;

·       any governmental entity shall have issued a final and nonappealable order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the merger, or shall have failed to issue an order, decree or ruling, or to take any other action, necessary to fulfill any conditions to the merger; but this termination right is not available to a party whose failure to comply with the merger agreement has been the cause of, or resulted in, the action or inaction;

·       the shareholders do not adopt the merger agreement (in the case of StorCOMM), or do not adopt the merger agreement and approve the issuance of common stock in connection with the merger (in the case of CCA);

·       the other party’s board of directors has withdrawn or adversely modified its recommendation in favor of the matters to be voted upon by such party’s shareholders;

·       the other party breaches its obligation to hold its shareholder meeting to vote on the adoption of the merger agreement (in the case of StorCOMM), or on the approval of the merger and the issuance of common stock in connection with the merger (in the case of CCA); or

·       the other party has breached any of its representations, warranties or covenants so that the conditions set forth in the merger agreement cannot be satisfied.

6




A termination fee not to exceed $250,000 may be payable by either CCA or StorCOMM to the other party upon the termination of the merger agreement under several circumstances. For more information regarding termination of the merger agreement see the section entitled “The Merger Agreement—Completion and Effectiveness of the Merger” on page 53.

Fees and Expenses (page 65)

All fees and expenses incurred in connection with the merger agreement and the merger will be paid by the party incurring such expenses. All fees and expenses associated with the filing and printing of the registration statement and this joint proxy statement/prospectus will be borne equally by CCA and StorCOMM. CCA will also pay Dominick & Dominick LLP a fee equal to three percent of the value of the shares of CCA common stock being issued to StorCOMM shareholders in the merger based on the closing price of such shares as listed on the American Stock Exchange on the closing date of the merger as consideration for the financial advisory services provided to CCA in connection with the merger.

No Solicitation (page 59)

CCA and StorCOMM have agreed that they will not solicit, encourage or facilitate any alternative transaction proposal. They have also agreed to notify each other of inquiries, proposals or offers that constitute alternative transaction proposals. CCA and StorCOMM have agreed to prohibit their officers, directors, employees, agents, advisors and other representatives from soliciting, encouraging or facilitating any alternative transaction proposal. However, if either party receives an unsolicited alternative transaction proposal that is superior, so long as certain conditions are satisfied, that party may engage in negotiations with respect to the superior alternative transaction proposal.

Material United States Federal Income Tax Considerations (page 49)

The merger has been structured to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. Assuming the merger qualifies as a reorganization, StorCOMM shareholders will not recognize gain or loss for United States federal income tax purposes upon the exchange of shares of StorCOMM common stock for shares of CCA common stock, except with respect to cash received in lieu of fractional shares of CCA common stock. None of CCA, Xymed or StorCOMM will recognize gain or loss as a result of the merger.

Anticipated Accounting Treatment (page 51)

The merger will be accounted for as a purchase transaction by CCA for financial reporting and accounting purposes under United States generally accepted accounting principles. After the merger, the results of operations of StorCOMM will be included in the consolidated financial statements of CCA. The purchase price, which is equal to the aggregate merger consideration, will be allocated based on the fair values of the StorCOMM assets acquired and the StorCOMM liabilities assumed. These allocations will be made based upon valuations and other studies that have not yet been finalized.

Appraisal and Dissenters’ Rights (page 51)

In connection with the merger, holders of StorCOMM common stock are entitled to appraisal rights under the Delaware General Corporation Law. However, holders of CCA common stock may only be entitled to dissenters’ rights under California General Corporation Law if demands are made for payment with respect to five percent or more of the shares of CCA common stock. For more information, see the section entitled “The Merger—Appraisal and Dissenters’ Rights” on page 51.

7




Governmental and Regulatory Matters (page 52)

To complete the merger, CCA must comply with applicable federal and state securities laws and the rules and regulations of the American Stock Exchange in connection with the issuance of the CCA common stock pursuant to the merger and the filing of this joint proxy statement/prospectus with the SEC.

Forward-Looking Statements May Prove Inaccurate (page 25)

Each of CCA and StorCOMM has made forward-looking statements in this document (and in documents that are incorporated herein by reference) that are subject to risks and uncertainties. Forward-looking statements include expectations concerning matters that are not historical facts. Also, when CCA or StorCOMM uses words such as “believes,” “expects,” “anticipates” or similar expressions, CCA or StorCOMM is making a forward-looking statement. For more information regarding factors that could cause actual results to differ from these expectations, you should refer to the specific risks described under “Risk Factors” beginning on page 15 and to the documents referred to under “Documents Incorporated by Reference” on page 164.

Where You Can Find More Information (page 165)

If you have any questions about the merger, the private placement, the non merger-related proposals of CCA or the meetings of CCA and StorCOMM, including the procedures for voting your shares, or if you need additional copies of the joint proxy statement/prospectus or the enclosed proxy, please contact:

For CCA shareholders:

Creative Computer Applications, Inc.
26115-A Mureau Road
Calabasas, CA 91302
Attention: Investor Relations
(818) 880-6700

For StorCOMM shareholders:

StorCOMM, Inc.
7 Corporate Plaza
8649 Baypine Road
Jacksonville, Florida 32256
Attention: Investor Relations
(888) 731-0731

8




Summary Selected Historical Consolidated Financial Data of CCA

The following information is provided to aid you in your analysis of the financial aspects of the merger. This information has been derived from CCA’s audited consolidated financial statements for the years ended August 31, 2002, 2003 and 2004, unaudited transition period beginning on September 1, 2004 and ending on December 31, 2004, and unaudited consolidated financial statements for the six months ended June 30, 2005 and 2004.

This information is only a summary. You should read it along with CCA’s historical financial statements and related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of CCA” contained in this joint proxy statement/prospectus and in CCA’s annual reports on Form 10-KSB, quarterly reports on Form 10-QSB and other information on file with the Securities and Exchange Commission and incorporated by reference into this document. Please refer to the section of the joint proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 165.

 

 

Six Months
Ended June 30,

 

Transition
Period
Four Months
Ended
December 31,

 

Year Ended August 31,

 

Statement of Operations Data:

 

 

 

2005

 

2004

 

2004

 

2004

 

2003

 

2002

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

NET SYSTEM SALES AND SERVICE REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System sales

 

$

883,707

 

$

1,617,851

 

 

$

844,069

 

 

$

3,295,708

 

$

3,144,293

 

$

3,723,551

 

Service revenue

 

2,497,588

 

2,135,843

 

 

1,547,173

 

 

4,360,264

 

4,236,828

 

4,107,466

 

 

 

3,381,295

 

3,753,694

 

 

2,391,242

 

 

7,655,972

 

7,381,121

 

7,831,017

 

COSTS OF PRODUCTS AND SERVICES SOLD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System sales

 

824,568

 

976,539

 

 

610,294

 

 

1,913,745

 

2,099,738

 

2,118,221

 

Service revenue

 

824,693

 

806,563

 

 

542,151

 

 

1,592,801

 

1,470,861

 

1,467,940

 

Total costs of products and services sold

 

1,649,261

 

1,783,102

 

 

1,152,445

 

 

3,506,546

 

3,570,599

 

3,586,161

 

Gross profit

 

1,732,034

 

1,970,592

 

 

1,238,797

 

 

4,149,426

 

3,810,522

 

4,244,856

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

1,599,977

 

1,319,074

 

 

1,099,279

 

 

1,014,235

 

901,564

 

790,609

 

Research and development

 

558,940

 

514,880

 

 

406,214

 

 

2,855,703

 

2,780,214

 

2,730,107

 

Total operating expenses

 

2,158,917

 

1,833,954

 

 

1,505,493

 

 

3,869,938

 

3,681,778

 

3,520,716

 

Operating income (loss)

 

(426,883

)

136,638

 

 

(266,696

)

 

279,488

 

128,744

 

724,140

 

INTEREST AND OTHER INCOME

 

9,142

 

1,858

 

 

4,589

 

 

4,603

 

19,776

 

12,490

 

INTEREST EXPENSE

 

(7,761

)

(1,685

)

 

(2,020

)

 

(3,704

)

(8,863

)

(15,471

)

Income (Loss) before provision for income taxes

 

(425,502

)

136,811

 

 

(264,127

)

 

280,387

 

139,657

 

721,159

 

PROVISION FOR INCOME TAXES

 

 

 

 

 

 

117,763

 

45,556

 

289,500

 

NET INCOME (LOSS)

 

$

(425,502

)

$

136,811

 

 

$

(264,127

)

 

$

162,624

 

$

94,101

 

$

431,659

 

EARNINGS (LOSS) PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(.13

)

$

.04

 

 

$

(.08

)

 

$

.05

 

$

.03

 

$

.13

 

Diluted

 

(.13

)

.04

 

 

(.08

)

 

.05

 

.03

 

.13

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

3,368,567

 

3,318,900

 

 

3,319,650

 

 

3,318,900

 

3,294,108

 

3,243,317

 

Diluted

 

3,368,567

 

3,423,240

 

 

3,319,650

 

 

3,467,939

 

3,526,681

 

3,310,286

 

 

9




 

 

 

 

 

Transition
Period
Ended
December 31,

 

Year Ended August 31,

 

Balance Sheet Data:

 

 

 

June 30, 2005

 

2004

 

2004

 

2003

 

2002

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

Cash

 

 

$

1,354,505

 

 

 

$

1,655,063

 

 

$

1,574,377

 

$

1,075,323

 

$

1,027,810

 

Receivables, net

 

 

710,560

 

 

 

1,736,768

 

 

1,722,340

 

2,063,311

 

2,089,274

 

Capitalized software costs, net

 

 

1,693,358

 

 

 

1,531,573

 

 

1,492,661

 

1,360,374

 

1,365,763

 

Total assets

 

 

5,827,635

 

 

 

6,591,471

 

 

6,351,465

 

6,281,343

 

6,292,376

 

Notes payable to bank

 

 

200,000

 

 

 

300,000

 

 

 

 

 

Accounts payable

 

 

309,419

 

 

 

377,768

 

 

185,869

 

207,624

 

224,418

 

Deferred service contract income

 

 

838,747

 

 

 

1,235,032

 

 

1,175,509

 

1,115,366

 

973,931

 

Deferred revenue on system sales

 

 

369,896

 

 

 

226,111

 

 

244,882

 

501,507

 

561,385

 

Total liabilities

 

 

2,253,672

 

 

 

2,684,006

 

 

2,182,873

 

2,275,375

 

2,429,159

 

Shareholders’ equity

 

 

3,573,963

 

 

 

3,907,465

 

 

4,168,592

 

4,005,968

 

3,863,217

 

 

10




Summary Selected Historical Consolidated Financial Data of StorCOMM

The following information is provided to aid you in your analysis of the financial aspects of the merger. This information has been derived from StorCOMM’s audited consolidated financial statements for the years ended December 31, 2004 and 2003 and from StorCOMM’s unaudited consolidated financial statements for the six months ended June 30, 2005 and 2004.

This information is only a summary. You should read it along with StorCOMM’s historical financial statements and related notes included elsewhere in this document.

 

 

Six Months Ended June 30,

 

Year Ended December 31,

 

Statement of Operations Data:

 

 

 

2005

 

2004

 

2004

 

2003

 

 

 

(Unaudited)

 

 

 

 

 

REVENUES

 

$

3,447,587

 

$

4,334,034

 

$

7,364,930

 

$

4,542,993

 

COSTS OF REVENUE:

 

 

 

 

 

 

 

 

 

Cost of sales—equipment

 

651,356

 

1,238,758

 

1,725,662

 

511,229

 

Cost of sales—support, training

 

952,897

 

800,980

 

1,767,533

 

1,828,583

 

Cost of sales—amortization of cap software

 

111,366

 

111,367

 

222,735

 

18,561

 

Total costs of goods sold

 

1,715,619

 

2,151,105

 

3,715,930

 

2,358,373

 

Gross profit

 

1,731,968

 

2,182,929

 

3,649,000

 

2,184,620

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Sales and marketing

 

611,029

 

617,749

 

1,186,148

 

1,103,114

 

Research and product development

 

509,544

 

546,506

 

1,123,357

 

902,013

 

General and administrative

 

760,926

 

650,917

 

1,256,803

 

1,091,239

 

Total operating costs

 

1,881,499

 

1,815,172

 

3,566,308

 

3,096,366

 

Operating income (loss)

 

(149,531

)

367,757

 

82,692

 

(911,746

)

INTEREST EXPENSE

 

(591,274

)

(603,710

)

(1,141,162

)

(1,467,963

)

NET LOSS

 

$

(740,805

)

$

(235,953

)

$

(1,058,470

)

$

(2,379,709

)

 

 

 

 

 

Year Ended December 31,

 

Balance Sheet Data:

 

 

 

June 30, 2005

 

2004

 

2003

 

 

 

(Unaudited)

 

 

 

 

 

Cash and cash equivalents

 

$

381,923

 

$

68,325

 

$

142,991

 

Accounts receivable

 

596,204

 

607,562

 

592,654

 

Capitalized software costs, net

 

761,013

 

872,379

 

1,095,114

 

Total assets

 

1,907,645

 

1,763,308

 

2,071,704

 

Accrued interest

 

1,787,585

 

1,228,998

 

4,126,588

 

Unearned revenues

 

1,665,326

 

1,018,470

 

1,769,336

 

Notes payable

 

649,754

 

774,291

 

991,808

 

Notes payable—(related parties)

 

2,256,116

 

2,191,116

 

3,282,078

 

Convertible notes payable

 

850,594

 

850,594

 

850,594

 

Convertible notes payable—(related parties)

 

9,368,085

 

9,368,085

 

8,226,092

 

Total liabilities

 

17,644,830

 

16,754,641

 

20,900,439

 

Convertible Series D Preferred Stock(1)

 

5,644,564

 

5,411,779

 

 

Shareholders’ deficit

 

(21,381,749

)

(20,403,112

)

(18,828,735

)


(1)          All of the outstanding shares of convertible Series D Preferred Stock were converted into 42,030,238 shares of common stock of StorCOMM on September 27, 2005.

11




Summary Selected Unaudited Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined financial information gives effect to the merger between Xymed, a wholly owned subsidiary of CCA, and StorCOMM (using the purchase method of accounting), the private placement, the conversion of certain StorCOMM debt to shares of StorCOMM common stock, and CCA’s change in fiscal year end to December 31st. The pro forma combined statement of operations data gives effect to the merger as if it had occurred as of January 1, 2004. The pro forma combined balance sheet data gives effect to the merger as if it had occurred on the last day of the period presented. The information is based upon the historical financial statements of CCA and StorCOMM. The information should be read in conjunction with such historical financial statements, the related notes and other information contained elsewhere or incorporated by reference in this document. Certain items derived from CCA’s and StorCOMM’s historical financial statements have been reclassified to conform to the pro forma combined presentation.

The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of what the actual combined financial position or results of operations would have been had the foregoing transactions been completed on the dates set forth therein, nor does it give effect to (1) any transaction other than the merger, the private placement, the conversion of certain StorCOMM debt to shares of StorCOMM common stock, and CCA’s change in the fiscal year end to December 31st, (2) CCA’s or StorCOMM’s results of operations since June 30, 2005, (3) certain synergies, cost savings and one-time charges expected to result from the merger or (4) the results of final valuations of the assets and liabilities of StorCOMM, including property, equipment and intangible assets. We are currently developing plans to integrate the operations of CCA and StorCOMM, which may involve various costs, including severance and other charges, which may be material. The allocation of the purchase price is preliminary. We will also revise the allocation of the purchase price when the final appraisal and valuation is completed. Accordingly, the pro forma combined financial information does not purport to be indicative of the financial position or results of operations as of the date of this document, as of the effective date of the merger, any period ending at the effective date of the merger or as of any other future date or period. The foregoing matters could cause both CCA’s pro forma financial position and results of operations, and CCA’s actual future financial position and results of operations, to differ materially from those presented in the following unaudited pro forma combined financial information.

 

 

Six Months Ended

 

Year Ended

 

Statement of Operations Data:

 

 

 

June 30, 2005

 

December 31, 2004

 

Total revenues

 

 

$

6,826,399

 

 

 

$

14,852,890

 

 

Total costs of products and services sold

 

 

3,340,752

 

 

 

7,222,674

 

 

Operating loss

 

 

(837,111

)

 

 

(540,788

)

 

Net loss

 

 

$

(861,194

)

 

 

$

(594,676

)

 

Basic and diluted loss

 

 

$

(.10

)

 

 

$

(.07

)

 

Weighted average shares—basic and diluted

 

 

8,368,786

 

 

 

8,319,369

 

 

 

Balance Sheet Data:

 

 

 

June 30, 2005

 

 

 

Cash and cash equivalents

 

 

$

3,681,428

 

 

 

 

 

 

Receivables, net

 

 

1,306,764

 

 

 

 

 

 

Capitalized software costs, net

 

 

2,454,371

 

 

 

 

 

 

Goodwill

 

 

8,327,912

 

 

 

 

 

 

Intangible assets

 

 

2,823,422

 

 

 

 

 

 

Total assets

 

 

19,837,947

 

 

 

 

 

 

Accounts payable

 

 

653,201

 

 

 

 

 

 

Deferred service contract income

 

 

838,747

 

 

 

 

 

 

Deferred revenue on system sales

 

 

1,255,470

 

 

 

 

 

 

Notes payable

 

 

849,754

 

 

 

 

 

 

Total liabilities

 

 

5,110,209

 

 

 

 

 

 

Shareholders’ equity

 

 

14,727,738

 

 

 

 

 

 

 

12




Comparative Per Share Data

The following table presents: (1) historical per share data for CCA; (2) unaudited pro forma per share data of the combined company after giving effect to the merger; and (3) historical and unaudited equivalent pro forma per share data for StorCOMM.

The combined company unaudited pro forma per share data was derived by combining information from the historical consolidated financial statements of CCA and StorCOMM using the purchase method of accounting for the merger after giving effect to the private placement and the conversion of certain StorCOMM debt to shares of StorCOMM common stock. The following data assumes 2.447 shares of CCA common stock will be issued in exchange for every 100 shares of StorCOMM common stock in connection with the merger after conversion of a majority of StorCOMM debt to equity. The StorCOMM unaudited equivalent pro forma per share data was derived by multiplying the CCA and StorCOMM combined pro forma amounts by the exchange ratio of .02447 shares of CCA common stock for each share of StorCOMM common stock.

Historical book value per share has been calculated by dividing shareholders’ equity by the number of shares of common stock outstanding at June 30, 2005.

You should read this table together with the historical consolidated financial statements of StorCOMM and CCA contained elsewhere or that are filed by CCA with the Securities and Exchange Commission and incorporated by reference into this document. Please refer to the section of the joint proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 165. You should not rely on the pro forma per share data as being necessarily indicative of actual results had the merger occurred prior to the dates indicated below.

 

 

Historical

 

Pro Forma

 

 

 

 

 

CCA and

 

 

 

 

 

 

 

StorCOMM

 

StorCOMM

 

 

 

CCA

 

StorCOMM

 

Combined

 

 Equivalent 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended August 31, 2004 for CCA and December 31, 2004 for StorCOMM and pro forma:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

.05

 

 

(.14

)

 

 

$

(.07

)

 

 

 

 

Diluted

 

$

.05

 

 

(.14

)

 

 

$

(.07

)

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(.13

)

 

(.10

)

 

 

$

(.10

)

 

 

 

 

Diluted

 

$

(.13

)

 

(.10

)

 

 

$

(.10

)

 

 

 

 

Book value per share as of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2005

 

$

1.05

 

 

 

 

 

$

1.75

 

 

 

$

.04

 

 

Cash dividends

 

 

 

 

 

 

 

 

 

 

 

 

13




Comparative Per Share Market Price Data

CCA common stock is traded on the American Stock Exchange under the symbol “CAP.” StorCOMM is a private company and there is currently no public market for its securities.

The table below sets forth the high and low sales prices per share of CCA common stock as reported on the American Stock Exchange on January 7, 2005, the last completed trading day prior to the announcement of the merger, and on           , 2005, the last full trading day for which high and low sales prices were available as of the date of this joint proxy statement/ prospectus. These equivalent high and low sales prices per share of StorCOMM reflect the fluctuating value of CCA common stock that StorCOMM shareholders would receive in exchange for each share of StorCOMM common stock if the merger had been completed on either of those dates, applying the exchange ratio of 2.447 shares of CCA common stock for every 100 shares of StorCOMM common stock.

 

 

 

 

 

 

StorCOMM

 

 

 

CCA

 

Equivalent Price

 

 

 

Common Stock

 

Per Share

 

 

 

High

 

Low

 

High

 

Low

 

January 7, 2005

 

$

3.76

 

$

3.60

 

$

0.092

 

$

0.088

 

                , 2005

 

$

     

 

$

     

 

$

    

 

$

     

 

 

The above table shows only historical comparisons. These comparisons may not provide meaningful information to CCA and StorCOMM shareholders in determining whether to approve the proposals described within this joint proxy statement/ prospectus. CCA and StorCOMM shareholders are urged to obtain current market quotations for CCA common stock and to review carefully the other information contained in this joint proxy statement/ prospectus or incorporated by reference into this joint proxy statement/ prospectus. See the section entitled “Where You Can Find More Information” beginning on page 165 of this joint proxy statement/ prospectus.

Dividend Information (CCA and StorCOMM)

CCA has never declared or paid any cash dividends on its capital stock. CCA currently intends to retain any earnings for use in its business and does not anticipate paying any cash dividends in the foreseeable future.

StorCOMM has never declared or paid any cash dividends on its capital stock. StorCOMM currently intends to retain any earnings for use in its business and does not anticipate paying any cash dividends in the foreseeable future.

Number of Shareholders (CCA and StorCOMM)

As of the record date of October 3, 2005, there were approximately 275 shareholders of record of CCA common stock and approximately 1,200 shareholders of beneficial ownership in street name.

As of the record date of October 3, 2005, there were approximately 175 shareholders of record of StorCOMM common stock.

14




RISK FACTORS

The merger involves a high degree of risk. By voting in favor of the merger, StorCOMM shareholders will be choosing to invest in CCA common stock. In addition to the risks described in CCA’s reports on Forms 10-KSB and 10-QSB filed with the Securities and Exchange Commission, you should carefully consider the risks described below relating to the merger and the risks to the combined company’s business after the merger. You should also consider the other information contained in, or incorporated by reference into, this joint proxy statement/prospectus. Please refer to the section of the joint proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 165. If any of these risks actually occur, the business, financial condition or results of operations of CCA may be seriously harmed. In such case, the market price of CCA common stock may decline, and you may lose all or part of your investment.

Risks Related to the Merger

If CCA and StorCOMM fail to effectively integrate their operations, the combined company may not realize the potential benefits of the merger.

The integration of CCA and StorCOMM will be a time consuming and expensive process and may disrupt the combined company’s operations if it is not completed in a timely and efficient manner. If this integration effort is not successful, the combined company’s results of operations could be harmed, employee morale could decline, key employees could leave, customers could cancel existing orders or choose not to place new ones and the combined company could have difficulty complying with regulatory requirements. In addition, the combined company may not achieve anticipated synergies or other benefits of the merger. Following the merger, CCA and StorCOMM must operate as a combined organization utilizing common information and communication systems, operating procedures, financial controls and human resources practices. The combined company may encounter the following difficulties, costs and delays involved in integrating their operations:

·       failure to successfully manage relationships with customers and other important relationships;

·       failure of customers to accept new services or to continue using the products and services of the combined company;

·       difficulties in successfully integrating the management teams and employees of CCA and StorCOMM;

·       challenges encountered in managing larger, more geographically dispersed operations;

·       the loss of key employees;

·       diversion of the attention of management from other ongoing business concerns;

·       potential incompatibilities of technologies and systems;

·       potential difficulties integrating and harmonizing financial reporting systems; and

·       potential incompatibility of business cultures.

If the combined company’s operations after the merger do not meet the expectations of existing customers of CCA or StorCOMM, then these customers may cease doing business with the combined company altogether, which would harm the results of operations and financial condition of the combined company.

15




If the anticipated benefits of the merger are not realized or do not meet the expectations of financial or industry analysts, the market price of CCA common stock may decline after the merger. The market price of CCA common stock may decline as a result of the merger if:

·       the integration of CCA and StorCOMM is unsuccessful;

·       the combined company does not achieve the expected benefits of the merger as quickly as anticipated or the costs of or operational difficulties arising from the merger are greater than anticipated;

·       the combined company’s financial results after the merger are not consistent with the expectations of financial or industry analysts;

·       the anticipated operating and product synergies of the merger are not realized; or

·       the combined company experiences the loss of significant customers or employees as a result of the merger.

CCA common stock is subject to price volatility that may reduce the value StorCOMM shareholders will receive upon the closing of the merger.

In the merger, StorCOMM shareholders will be entitled to receive 2.447 shares of CCA common stock for every 100 shares of StorCOMM common stock they own at the completion of the merger (referred to in this joint proxy statement/prospectus as the exchange rate). This exchange rate will not be adjusted based on the price of CCA common stock at the time of the merger and neither CCA nor StorCOMM has the ability to terminate the merger agreement solely because of changes in the market price of CCA common stock. Accordingly, the value of CCA common stock that StorCOMM shareholders will receive in connection with the merger will depend on the trading price of CCA common stock on the closing date of the merger. The trading price of CCA common stock on the closing date of the merger may be lower than it was on the date of this joint proxy statement/prospectus or the date on which CCA and StorCOMM shareholders vote on the merger. The share price of CCA common stock is subject to price fluctuations and has experienced significant volatility in the recent past. Stock price changes may result from a variety of factors that are beyond the control of CCA and StorCOMM, including changes in their businesses, operations and prospects, regulatory considerations and general and industry specific market and economic conditions. Neither CCA nor StorCOMM can predict the market prices of CCA common stock at any time before the completion of the merger or the market price of CCA common stock after the merger. We encourage you to obtain current market quotations of CCA common stock.

Failure to complete the merger could adversely affect CCA’s and StorCOMM’s future business and operation as well as the market price of CCA common stock.

The merger is subject to the satisfaction of closing conditions, including the approval by both CCA and StorCOMM shareholders, and neither CCA nor StorCOMM can assure you that the merger will be successfully completed. In the event that the merger is not completed, CCA and StorCOMM may be subject to many risks, including the costs related to the merger, such as legal, accounting and advisory fees, which must be paid even if the merger is not completed, or the payment of a termination fee under specified circumstances. If the merger is not completed, the market price of CCA common stock could decline.

Completion of the merger may result in dilution of future earnings per share to the shareholders of CCA.

The completion of the merger may not result in improved earnings per share of CCA or a financial condition superior to that which would have been achieved by either CCA or StorCOMM on a stand-alone basis. The merger could fail to produce the benefits that the companies anticipate, or could have other

16




adverse effects that the companies currently do not foresee. In addition, some of the assumptions that either company has made, such as the achievement of operating synergies, may not be realized. In this event, the merger could result in a reduction of earnings per share of CCA as compared to the earnings per share that would have been achieved by CCA or StorCOMM if the merger had not occurred.

The costs associated with the merger are difficult to estimate, may be higher than expected and may harm the financial results of the combined company.

CCA and StorCOMM estimate that they will incur aggregate direct transaction costs of approximately $700,000 associated with the merger, and additional costs associated with consolidation and integration of operations, which cannot be estimated accurately at this time. If the total costs of the merger exceed estimates or the benefits of the merger do not exceed the total costs of the merger, the financial results of the combined company could be adversely affected.

The businesses of CCA and StorCOMM could suffer due to the announcement and closing of the merger.

The announcement and closing of the merger may have a negative impact on CCA’s or StorCOMM’s ability to sell their respective products and services, attract and retain key management, technical, sales or other personnel, maintain and attract new customers and maintain strategic relationships with third parties. For example, CCA and StorCOMM may experience deferral, cancellations or a decline in the size or rate of orders for their respective products or services or a deterioration in their respective customer or business partner relationships. Any such events could harm the operating results and financial condition of the combined company following the merger.

StorCOMM executive officers and directors have interests that are different from, or in addition to, those of StorCOMM shareholders generally.

The executive officers and directors of StorCOMM in some cases have interests in the merger that are different from, or are in addition to, those of StorCOMM shareholders generally. The receipt of compensation or other benefits in the merger, including employment agreements, and/or the provision and continuation of indemnification and insurance arrangements for current directors of StorCOMM following completion of the merger may influence these directors in making their recommendation that you vote in favor of the adoption of the merger agreement. You should be aware of these interests when you consider the StorCOMM board’s recommendation that you vote in favor of adoption of the merger agreement. See the section entitled “The Merger—Interests of Certain StorCOMM Persons in the Merger” below starting on page 46.

Risks Related to CCA After the Merger

To facilitate a reading of the risks that we believe will apply to CCA and StorCOMM as a combined company following completion of the merger, in referring to “we”, “us” and other first person declarations in these risk factors, we are referring to the combined company as it would exist following the merger.

We face intense competition from both established entities and new entries in the market that may adversely affect our revenues and profitability

Our markets are competitive. There are many companies with active research and development programs both in and outside of the healthcare information technology industry. Many of these companies have considerable experience in areas of competing interest to us. Additionally, we cannot determine if other firms are conducting potentially competitive research, which could result in the development and introduction of products that are either comparable or superior to the products we sell. Further, new product introductions, product enhancements and the use of other technologies by our competitors could lead to a loss of market acceptance and cause a decline in sales or gross margins.

17




If we are unable to anticipate or react to competition or if existing or new competitors gain market share, our sales may decline or be impaired and we may experience a decline in the prices we can charge for our products, which could adversely affect our operating results. Our competitive position depends on several factors, including:

·       our ability to adapt effectively to the continued development, acquisition or licensing of technology or product rights by our competitors;

·       our ability to enhance our products or develop new products;

·       our ability to adapt to changing technological demands; and

·       our strategic decisions regarding the best allocation of our limited resources.

Several of our current and potential competitors have greater financial, technical, sales, marketing and other resources than we do and consequentially may have an ability to influence customers to purchase their products that compete with ours. Our future and existing competitors could introduce products with superior features, scalability and functionality at lower prices than our products, and could also bundle existing or new products with other more established products in order to compete with us. Our competitors could also gain market share by acquiring or forming strategic alliances with our other competitors. If we do not adapt our business in the face of this competition, our business and operating results may be harmed.

Any failure to successfully introduce future products into the market could adversely affect our business.

The commercial success of future products depends upon their acceptance by the medical community. Our future product plans include capital-intensive clinical information systems. We believe that these products can significantly reduce labor costs, improve patient care and offer other distinctive benefits to the medical community. However, there is often market resistance to products that require significant capital expenditures or which eliminate jobs through automation. We can make no assurance that the market will accept our future products and systems, or that sales of our future products and systems will grow at the rates expected by our management.

If we fail to meet changing demands of technology, we may not continue to be able to compete successfully with competitors.

The market for our products is characterized by rapid technological advances, changes in customer requirements and frequent new product introductions and enhancements. Our future success depends upon our ability to introduce new products that keep pace with technological developments, enhance current product lines and respond to evolving client requirements. CCA and StorCOMM have incurred, and we will need to continue to incur, significant research and development expenditures in future periods as we strive to remain competitive. Our failure to meet these demands could result in a loss of our market share and competitiveness and could harm our revenues and results of operations.

Our success depends on our ability to attract, retain and motivate management and other skilled employees.

Our future success and growth depend on the continued services of our key management and employees, including Steven M. Besbeck, Bruce M. Miller, James R. Helms, Samuel G. Elliott, and William W. Peterson. The loss of the services of any of these individuals or any other key employee could materially affect our business. Our future success also depends on our ability to identify, attract and retain additional qualified personnel. Competition for employees in our industry is intense and we may not be successful in attracting or retaining them. There are a limited number of people with knowledge of, and experience in, our industry. We do not have employment agreements with most of our key employees. However, we generally enter into agreements with our employees regarding patents, confidentiality and

18




related matters. We do not maintain life insurance polices on our employees. Our loss of key personnel, especially without advance notice, or our inability to hire or retain qualified personnel, could have a material adverse effect on sales and our ability to maintain our technological edge. We cannot guarantee that we will continue to retain our key management and skilled personnel, or that we will be able to attract, assimilate and retain other highly qualified personnel in the future.

If we do not protect our proprietary information and prevent third parties from making unauthorized use of our products and technology, our financial results could be harmed.

We rely on a combination of confidentiality agreements and procedures and copyright, patent, trademark and trade secret laws to protect our proprietary information. However, all of these measures afford only limited protection and may be challenged, invalidated, or circumvented by third parties. Third parties may copy aspects of our products or otherwise obtain and use our proprietary information without authorization. Third parties may also develop similar or superior technology independently, including by designing around our patents. Furthermore, the laws of some foreign countries do not offer the same level of protection of our proprietary rights as the laws of the United States, and we may be subject to unauthorized use of our products in those countries. Any legal action that we may bring to protect proprietary information could be expensive and may distract management from day-to-day operations. Unauthorized copying or use of our products or proprietary information could result in reduced sales of our products.

Third parties claiming that we infringe their proprietary rights could cause us to incur significant legal expenses and prevent us from selling our products.

We may receive claims that we have infringed the intellectual property rights of others. Any such claim, with or without merit, could:

·       be time consuming to defend;

·       result in costly litigation;

·       divert management’s time and attention from our business;

·       require us to stop selling, to delay shipping or to redesign our products; or

·       require us to pay monetary amounts as damages to our customers.

In addition, we license and use software from third parties in our business. These third party software licenses may not continue to be available to us on acceptable terms. Also, these third parties may from time to time receive claims that they have infringed the intellectual property rights of others, including patent and copyright infringement claims, which may affect our ability to continue licensing their software. Our inability to use any of this third party software could result in disruptions in our business, which could materially and adversely affect our operating results.

CCA operates in a consolidating industry which creates barriers to market penetration.

The healthcare information technology industry in recent years has been characterized by consolidation by both healthcare providers who are our clients and by those companies that we compete against. Large hospital chains and groups of affiliated hospitals prefer to negotiate comprehensive contracts for all of their system needs with larger vendors who offer broader product lines and services. The convenience offered by these large vendors are administrative and financial incentives that we cannot offer our clients.

19




Our products may be subject to government regulation in the future that could impair our operations.

Our products could be subject to stringent government regulation in the United States and other countries in the future. Furthermore, we expect that the integration of our product and service offering will require us to comply with regulatory requirements and that we will devote significant time and resources to this effort. These regulatory processes can be lengthy, expensive and uncertain. Additionally, securing necessary clearances or approvals may require the submission of extensive data and other supporting information. Failure to comply with applicable requirements could result in fines, recall, total or partial suspension of distribution, withdrawal of existing product or our inability to integrate our service and product offerings. If any of these things occur, it could have a material adverse impact on our business.

Changes in government regulation of the healthcare industry could adversely affect our business.

Federal and state legislative proposals are periodically introduced or proposed that would effect major changes in the healthcare system, nationally, at the state level or both. Future legislation, regulation or payment policies of Medicare, Medicaid, private health insurance plans, health maintenance organizations or other third-party payors could adversely affect the demand for our current or future products and our ability to sell our products on a profitable basis. Moreover, healthcare legislation is an area of extensive and dynamic change, and we cannot predict future legislative changes in the healthcare field or their impact on our industry or our business.

We are subject to the Health Insurance Portability and Accountability Act (HIPAA) and the cost of complying with HIPAA may negatively impact our net income.

Our business is substantially impacted by the requirements of HIPAA and our products must maintain the confidentiality of a patient’s medical records and information. These requirements also apply to most of our clients. We believe our products meet the standards of HIPAA and may require our clients to upgrade their systems, but our clients’ preoccupation with HIPAA may adversely impact sales of our products, and the costs of compliance with HIPAA could have an impact on our product margins and sales, the general and administrative expenses incurred by us and could negatively impact our net income.

Defective products or product failure may subject us to liability and could substantially increase our costs.

Our products are used to gather information for professionals to make medical decisions, diagnosis, and treatment. Accordingly, the manufacture and sale of our products entails an inherent risk of product liability arising from an inaccurate, or allegedly inaccurate, test or procedure result. CCA and StorCOMM may discover errors and failures in certain of their product offerings, which could result in delays or lost revenue during the period required to correct these errors. Errors and failures in products released by us could result in negative publicity, product returns, loss of or delay in market acceptance of our products, loss of competitive position or claims by customers or others. Alleviating any of these problems could require significant expenditures of our capital and resources and could cause interruptions, delays or cessation of our sales, which could cause us to lose existing or potential customers and would adversely affect our operating results. We may be subject to product liability claims as a result of any failure or errors in our products. If a customer is successful in proving its damages, it could prove expensive and time-consuming to defend against these claims, and we could be liable for the damages suffered by our customers and other related expenses, which could adversely affect our operating results. We currently maintain product liability insurance coverage for up to $2 million per incident and up to an aggregate of $4 million per year. Although management believes this liability coverage is sufficient protection against future claims, there can be no assurance of the sufficiency of these policies. We have not received any indication that our insurance carrier will not renew our product liability insurance at or near current premiums; however, we cannot guarantee that this will continue to be the case.

20




System or network failures could reduce our sales, increase costs or result in a loss of customers.

We rely on our management information systems to operate our business and to track our operating results. Our management information systems will require modification and refinement as we grow and our business needs change. If we experience a significant system failure or if we are unable to modify our management information systems to respond to changes in our business needs, then our ability to properly run our business could be adversely affected and could lead to a reduction in our sales, increased costs and a loss of customers.

Our evaluation of internal controls and remediation of potential problems will be costly and time consuming and could expose weakness in our financial reporting.

While we believe that we currently have adequate internal control procedures in place, we are still exposed to potential risks from recent legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002. We are evaluating our internal controls system in order to allow management to report on, and our Independent Registered Public Accounting Firm to attest to, our internal controls over financial reporting, as required in Section 404 of the Sarbanes-Oxley Act of 2002.

StorCOMM has a history of losses and has never been profitable.

For the year ended December 31, 2004, StorCOMM had a net loss of approximately $1.06 million and an accumulated deficit of approximately $20.4 million. For the six months ended June 30, 2005, StorCOMM had a net loss of approximately $740,805, as compared to a net loss of approximately $235,953 for the six months ended June 30, 2004. The report of StorCOMM’s independent certified public accounting firm on their financial statements for the year ended December 31, 2004 indicated that there is substantial doubt about StorCOMM’s ability to continue as a going concern. We cannot be certain that, following the merger, StorCOMM will become profitable as a subsidiary of CCA. If StorCOMM does not become profitable and sustain profitability, the market price of our common stock will likely decline.

StorCOMM may have taxable income from debt cancellation.

In connection with the merger, the holders of secured debt of StorCOMM have agreed to convert the debt into StorCOMM common stock and, as a result, StorCOMM may have incurred taxable debt cancellation income.  See "Material United States Federal Income Tax Consequences – Conversion of StorCOMM Secured Debt" on page ___.

Future sales of our common stock could adversely affect our stock price.

Future sales of substantial amounts of shares of our common stock in the public market, or the perception that these sales could occur, may cause the market price of our common stock to decline. In addition, we may be required to issue additional shares upon exercise of previously granted options or warrants, such as the warrants to purchase up to 300,000 shares of CCA common stock that CCA is issuing in the private placement and the CCA options and warrants to be issued in exchange for StorCOMM’s options and warrants in the merger. Increased sales of our common stock in the market after exercise of stock options or warrants could exert significant downward pressure on our stock price. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price we deem appropriate.

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Our stock price may be volatile in the future, and you could lose the value of your investment.

The market prices of the common stock for CCA has experienced significant fluctuations and our stock price may continue to fluctuate significantly, and you could lose the value of your investment. The market price of our common stock may be affected by a number of factors, including:

·       announcements of quarterly operating results and revenue and earnings forecasts by us, our competitors or our customers;

·       failure to achieve financial forecasts, either because expected sales do not occur or because they occur at lower prices or on terms that are less favorable to us;

·       rumors, announcements or press articles regarding changes in our management, organization, operations or prior financial statements;

·       changes in revenue and earnings estimates by securities analysts;

·       announcements of planned acquisitions by us or by our competitors;

·       announcements of new or planned products by us, our competitors or our customers;

·       gain or loss of a significant customer;

·       inquiries by the SEC, American Stock Exchange, law enforcement or other regulatory bodies; and

·       acts of terrorism, the threat of war and economic slowdowns in general.

The stock market has experienced extreme price volatility, which has adversely affected and may continue to adversely affect the market price of our common stock for reasons unrelated to our business or operating results.

Fluctuations in our quarterly financial results have affected the stock prices of CCA in the past and could affect our stock price in the future.

The quarterly financial results of CCA have fluctuated in the past, and the quarterly financial results of the combined company are likely to vary significantly in the future. A number of factors associated with the operation of our business may cause our quarterly financial results to fluctuate, including our ability to:

·       effectively align sales resources to meet customer needs and address market opportunities;

·       effectively respond to competitive pressures; and

·       effectively manage our operating expense levels.

A number of factors associated with our industry and the markets for our products, many of which are outside our control, may cause our quarterly financial results to fluctuate, including:

·       reduced demand for any of our products;

·       timing and amount of orders by customers and seasonality in the buying patterns of customers;

·       cancellation, deferral or limitation of orders by customers;

·       fluctuations in foreign currency exchange rates; and

·       weakness or uncertainty in general economic or industry conditions.

Quarterly changes in our financial results could cause the trading price of our common stock to fluctuate significantly after the merger. If our quarterly financial results or our predictions of future financial results fail to meet the expectations of securities analysts and investors, our stock price could be

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negatively affected. Any volatility in our quarterly financial results may make it more difficult for us to raise capital in the future or pursue acquisitions that involve issuances of our stock or securities convertible into or exercisable for our stock. You should not rely on the results of prior periods as predictors of our future performance.

Factors outside of our control may adversely affect our operations and operating results.

Our operations and operating results may be adversely affected by many different factors which are outside of our control, including:

·       deterioration in economic conditions in any of the healthcare information technology industry, which could reduce customer demand and ability to pay for our products and services;

·       political and military instability, which could slow spending within our target markets, delay sales cycles and otherwise adversely affect our ability to generate revenues and operate effectively;

·       budgetary constraints of customers, which are influenced by corporate earnings and spending objectives;

·       earthquakes, floods, hurricanes or other natural disasters affecting our headquarters located in Calabasas, California, an area known for seismic activity, or our other locations worldwide;

·       acts of war or terrorism; and

·       inadvertent errors.

Any of these factors could result in a loss of revenues and/or higher expenses, which could adversely affect our financial results.

Our international operations involve special risks that could increase our expenses, adversely affect our operating results and require increased time and attention of our management.

We expect to generate approximately 10% of our revenues from customers located outside of the United States in the fiscal year ending December 31, 2005 and StorCOMM has significant operations outside of the United States. We expect to expand our international operations and such expansion is contingent upon the successful growth of our international revenues. Our international operations are subject to risks in addition to those faced by our domestic operations, including:

·       potential loss of proprietary information due to piracy, misappropriation or laws that may be less protective of our intellectual property rights;

·       imposition of foreign laws and other governmental controls, including trade and employment restrictions;

·       enactment of additional regulations or restrictions on imports and exports;

·       fluctuations in currency exchange rates and economic instability such as higher interest rates and inflation, which could make our products more expensive in those countries;

·       limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in our international operations;

·       longer payment cycles for sales in foreign countries and difficulties in collecting accounts receivable;

·       difficulties in staffing, managing and operating our international operations;

·       difficulties in coordinating the activities of our geographically dispersed and culturally diverse operations; and

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·       political unrest, war or terrorism, particularly in areas in which we have facilities.

A portion of StorCOMM’s transactions outside of the United States are denominated in foreign currencies. Our functional currency is the U.S. dollar. Accordingly, our future operating results will continue to be subject to fluctuations in foreign currency rates. Hedging foreign currency transaction exposures is complex and subject to uncertainty. We may be negatively affected by fluctuations in foreign currency rates in the future, especially if international sales continue to grow as a percentage of our total sales.

Changes to financial accounting standards and new exchange rules could make it more expensive to issue stock options to employees, which would increase compensation costs and may cause us to change our business practices.

We prepare our financial statements to conform with generally accepted accounting principles, or GAAP, in the United States. These accounting principles are subject to interpretation by the Public Company Accounting Oversight Board, the Securities and Exchange Commission and various other regulatory bodies. A change in those policies could have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced.

For example, we have used stock options and other long-term equity incentives as a fundamental component of our employee compensation packages. We believe that stock options and other long-term equity incentives directly motivate our employees to maximize long-term shareholder value and, through the use of vesting, encourage employees to remain with our company. Several regulatory agencies and entities are considering regulatory changes that could make it more difficult or expensive for us to grant stock options to employees. For example, the Financial Accounting Standards Board has issued SFAS 123R that will require us to record a charge to earnings for employee stock option grants. In addition, regulations implemented by the American Stock Exchange generally require shareholder approval for all stock option plans, which could make it more difficult or expensive for us to grant stock options to employees. We may, as a result of these changes, incur increased compensation costs, change our equity compensation strategy or find it difficult to attract, retain and motivate employees, each of which could materially and adversely affect our business, operating results and financial condition.

StorCOMM currently relies on third party distribution arrangements to distribute its products. The loss of any of these relationships, or a material change in any of them, could materially harm our business.

For the six months ended June 30, 2005 and the year ended December 31, 2004, StorCOMM received approximately 90% and 80% of its revenues, respectively, through third party distribution arrangements. Following the merger, we expect that we will continue to generate a significant portion of our revenues through a limited number of distribution arrangements for the foreseeable future. A significant portion of StorCOMM’s outstanding accounts receivable are with such third party distributors, which will result in a concentration of our credit risk. If any of these third party distributors decides not to market or distribute our products or decides to terminate or not to renew its agreement with us, we may be unable to replace the affected agreements with acceptable alternatives, which could materially harm our business, operating results and financial condition.

We depend on channel partners such as Source One and Swiss Ray for a significant portion of our revenues.

In each of fiscal year 2004 and for the six months ended June 30, 2005, CCA and StorCOMM generated approximately 10% and 100%, respectively, of their revenues from medical imaging related products. We expect to continue to derive a substantial portion of our revenues from this single product category. If this product category is not successful in the future or we are unable to develop new applications that are as successful, our future revenues could be limited and our business may suffer.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This joint proxy statement/prospectus contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “will” and words and terms of similar substance used in connection with any discussion of future operating or financial performance, or expected strategic benefits, advantages and other effects of the merger or any statements about StorCOMM’s business or operating results identify forward-looking statements. In particular, statements that involve risks and uncertainties regarding the expected strategic benefits, objectives, advantages, expectations and intentions and other effects of the merger described in sections such as “The Merger—Our Reasons for the Merger,” “—Other Factors Considered by the CCA Board” and “—Other Factors Considered by the StorCOMM Board” and elsewhere in this document are forward-looking statements. In addition, some statements about StorCOMM’s business, revenues, revenue mix, gross margin, operating expense levels, financial outlook, commitments under existing leases, research and development initiatives, sales and marketing initiatives and competition in sections such as “Information Regarding StorCOMM’s Business,” “Management’s Discussion and Analysis of Financial Conditions and Results of Operations of StorCOMM,” and “Quantitative and Qualitative Disclosures About Market Risk of StorCOMM” and elsewhere in this document are forward-looking statements. These forward-looking statements include:

·       projections of revenues, synergies and other financial items;

·       statements of strategies and objectives for future operations;

·       expectations regarding the completion of the merger;

·       statements regarding integration plans;

·       statements concerning proposed applications or services;

·       statements regarding future economic conditions, performance or business prospects;

·       statements regarding competitors or competitive actions; and

·       statements of assumptions underlying any of the foregoing.

All forward-looking statements are present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks related to the merger and to CCA’s business after the merger discussed under “Risk Factors” of this joint proxy statement/prospectus, among others, could cause actual results to differ materially from those described in the forward-looking statements. Such risks include, among others: the competitive environment and competitive responses to the merger; whether the combined company can successfully develop new products and the degree to which these products will gain market acceptance; whether anticipated cost and product synergies can be achieved; whether the integration of CCA and StorCOMM will be more difficult and costly than expected; uncertainties as to the timing of the merger; approval of the proposals described herein by the respective shareholders of CCA and StorCOMM; and the satisfaction of closing conditions to the merger. Neither CCA nor StorCOMM makes any representation as to whether any projected or estimated information or results contained in any forward-looking statements will be obtained or achieved. Shareholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or the date of the documents incorporated by reference in this joint proxy

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statement/prospectus. Neither CCA nor StorCOMM is under any obligation, and each expressly disclaims any obligation, to update or alter any forward-looking statements after the date of this joint proxy statement/prospectus, whether as a result of new information, future events or otherwise.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the section entitled “Risk Factors”, beginning on page 17 of this joint proxy statement/prospectus, and the annual reports on Form 10-KSB and the quarterly reports on Form 10-QSB that CCA has filed with the Securities and Exchange Commission.

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ANNUAL MEETING OF CCA SHAREHOLDERS

CCA is furnishing this joint proxy statement/prospectus to you in order to provide you with important information regarding the matters to be considered at the annual meeting of CCA shareholders and at any adjournment or postponement of the annual meeting. CCA first mailed this joint proxy statement/prospectus and the accompanying form of proxy to its shareholders on or about              , 2005.

Date, Time and Place of the Annual Meeting

CCA will hold its annual meeting of its shareholders at CCA’s offices at 26115-A Mureau Road, Calabasas, California 91302, on Friday, November 11, 2005, at 10:00 A.M. Pacific Time.

Matters to be Considered at the Annual Meeting

At the annual meeting, shareholders of CCA will be asked to consider and vote upon the following proposals:

1.                Proposal No. 1:   To approve the Agreement and Plan of Reorganization (referred to in this joint proxy statement/prospectus as the merger agreement), dated as of August 16, 2005, by and among StorCOMM, CCA and Xymed.com, Inc., a Delaware corporation and wholly owned subsidiary of CCA, and the issuance and reservation for issuance of shares of CCA common stock to StorCOMM shareholders pursuant to the merger agreement.

2.                Proposal No. 2:   To approve the issuance and reservation for issuance of up to 1,500,000 shares of CCA common stock and warrants to purchase up to 300,000 shares of CCA common stock in a private placement pursuant to the Common Stock and Warrant Purchase Agreement (referred to in this joint proxy statement/prospectus as the purchase agreement).

3.                Proposal No. 3:   To approve the amendment to the Articles of Incorporation to change the name of the company from Creative Computer Applications, Inc. to Aspyra, Inc.

4.                Proposal No. 4:   To approve the 2005 Equity Incentive Plan.

5.                Proposal No. 5:   To elect six members of CCA’s board of directors to serve until the next annual meeting of shareholders and until their successors are elected and qualified.

6.                Proposal No. 6:   To ratify the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005.

7.                Proposal No. 7:   To adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the proposals.

In addition, the shareholders may transact any other business that properly may come before the annual meeting or any continuation, adjournment or postponement thereof.

Record Date; Shareholders Entitled to Vote

The record date for determining the CCA shareholders entitled to vote at the annual meeting is October 3, 2005. Only holders of record of CCA common stock at the close of business on that date are entitled to vote at the annual meeting. On the record date, there were issued and outstanding 3,483,900 shares of CCA common stock.

As of the record date, the directors and executive officers of CCA and their affiliates held 769,000 shares of CCA common stock representing 22% of the outstanding shares of CCA common stock.

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A list of shareholders eligible to vote at the meeting will be available for your review during CCA’s regular business hours at its headquarters in Calabasas, California for at least ten days prior to the annual meeting for any purpose related to the annual meeting.

Shareholder Support Agreements

Steven M. Besbeck, Bruce M. Miller, and James R. Helms, the president and chief executive officer, the chairman of the board and chief technology officer, the vice president of operations and secretary of CCA, who hold an aggregate of approximately 21.3%  of the voting power of CCA as of September 15, 2005, have entered into a shareholder support agreement with StorCOMM in which they have agreed to vote in favor of the merger agreement. This does not represent a sufficient number of shares of CCA capital stock to approve the merger agreement on behalf of the CCA shareholders. As of the record date, the directors and executive officers of CCA and their affiliates held 769,000 shares of CCA common stock representing 22% of the outstanding shares of CCA common stock.

Voting and Revocation of Proxies

The proxy accompanying this joint proxy statement/prospectus is solicited on behalf of the board of directors of CCA for use at the annual meeting.

General.   Shares represented by a properly signed and dated proxy will be voted at the annual meeting in accordance with the instructions indicated on the proxy. Proxies that are properly signed and dated but that do not contain voting instructions will be voted FOR Proposal No. 1 for the merger agreement and the issuance and reservation for issuance of shares of CCA common stock pursuant to the merger agreement, FOR Proposal No. 2 for the issuance and reservation for issuance of shares of CCA common stock and warrants to purchase shares of CCA common stock in a private placement pursuant to the Purchase Agreement, FOR Proposal No. 3 for the amendment to the Articles of Incorporation to change the name of the company from Creative Computer Applications, Inc. to Aspyra, Inc., FOR Proposal No. 4 for the 2005 Equity Incentive Plan, FOR Proposal No. 5 for the election of the director nominees named in this joint proxy statement/prospectus, FOR Proposal No. 6 for the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005, and FOR Proposal No. 7 to adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the proposals.

Abstentions.   CCA will count a properly executed proxy marked ABSTAIN with respect to a particular proposal as present for purposes of determining whether a quorum is present, but the shares represented by that proxy will not be voted at the annual meeting with respect to such proposal. Because approval of Proposal No. 1 and Proposal No. 3 require the affirmative vote of a majority of the voting power of the shares outstanding, abstentions on these proposals will have the same effect as a vote AGAINST Proposal No 1 and Proposal No. 3. However, abstentions will have no effect on the outcome of any other proposal, but will reduce the number of votes required to approve those proposals.

Broker Non-Votes.   If your shares are held by your broker, your broker will vote your shares for you if you provide instructions to your broker on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. “Broker non-votes” are shares held by a broker or other nominee that are represented at the annual meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of the shares to vote on the particular proposal and the broker does not have discretionary voting power on the proposal. Broker non-votes will be counted for purposes of determining the presence or absence of a quorum but will not be counted for purposes of determining the number of shares represented and voting with respect to a proposal. Failure to instruct your broker on how to vote your shares on Proposal No. 1 will have the effect of voting AGAINST CCA

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Proposal No. 1 and Proposal No. 3. Failure to instruct your broker on how to vote your shares on any other proposal will have no effect on the outcome of such proposals, assuming that a quorum is present at the annual meeting, but will reduce the number of votes required to approve those proposals.

Voting Shares in Person that are Held Through Brokers.   If your shares are held of record by your broker, bank or another nominee and you wish to vote those shares in person at the annual meeting, you must obtain from the nominee holding your shares a properly executed legal proxy identifying you as a CCA shareholder, authorizing you to act on behalf of the nominee at the CCA annual meeting and identifying the number of shares with respect to which the authorization is granted.

Revocation of Proxies.   If you submit a proxy, you may revoke it at any time before it is voted by:

·       delivering to the Secretary of CCA a written notice, dated later than the proxy you wish to revoke, stating that the proxy is revoked;

·       submitting to the Secretary of CCA a new, signed proxy with a later date than the proxy you wish to revoke; or

·       attending the annual meeting and voting in person.

Notices to the Secretary of CCA should be sent to 26115-A Mureau Road, Calabasas, CA  91302.

If you have instructed your broker to vote your shares, you must follow directions received from your broker to change those instructions.

Required Shareholder Vote

In order to conduct business at the CCA annual meeting, a quorum must be present. The holders of a majority of the votes entitled to be cast by holders of common stock at the annual meeting, present in person or represented by proxy, constitutes a quorum under CCA’s Bylaws. CCA will treat shares of CCA common stock represented by a properly signed and returned proxy, including abstentions and broker non-votes, as present at the CCA annual meeting for the purposes of determining the existence of a quorum.

With respect to any matter submitted to a vote of the CCA shareholders, each holder of CCA common stock will be entitled to one vote, in person or by proxy, for each share of CCA common stock held in his, her or its name on the books of CCA on the record date subject, in the case of election of directors, to the cumulative voting provisions described below.

Proposal No. 1:   Approval of the merger agreement and the proposal to issue and reserve for issuance shares of CCA common stock in connection with the merger requires the affirmative vote of holders of a majority in voting power of the outstanding shares of CCA common stock.

Proposal No. 2:   Approval of the proposal to issue and reserve for issuance shares of CCA common stock and warrants to purchase shares of CCA common stock in the private placement pursuant to the purchase agreement requires the affirmative vote of holders of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote, so long as a quorum is present.

Proposal No. 3:   Approval of the amendment to the Articles of Incorporation to change the name of the company to Aspyra, Inc. requires the affirmative vote of holders of a majority in voting power of the outstanding shares of CCA common stock.

Proposal No. 4:   Approval of the 2005 Equity Incentive Plan requires the affirmative vote of holders of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote, so long as a quorum is present.

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Proposal No. 5:   Election of the director nominees named in this joint proxy statement/prospectus, requires that the candidates receiving the highest number of votes, up to the number of directors to be elected, be elected. See also “Cumulative Voting” below.

Proposal No. 6:   Approval of the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005 requires the affirmative vote of holders of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote, so long as a quorum is present.

Proposal No. 7:   Approval of the proposal to adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies in favor of the proposals requires the affirmative vote of holders of a majority of the shares of CCA common stock present in person or represented by proxy at the annual meeting and entitled to vote.

While Proposals No. 1 and No. 2 are being voted upon separately, each of the first two proposals must be approved in order for either of them to be implemented.

The inspector of elections for the CCA annual meeting will tabulate the votes.

Cumulative Voting

Pursuant to the requirements of the California Corporations Code and CCA’s Bylaws, the holders of CCA common stock may cumulate their votes for the election of directors if any shareholder gives notice, at the annual 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 stock multiplied by the number of directors being elected. Since six directors are being elected at the annual meeting, each shareholder may cast a total of six votes per share of common stock 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.

Unanimous Recommendations by the Board of Directors

After careful consideration, the board of directors of CCA has determined that the merger is advisable and in the best interests of CCA and its shareholders. The CCA board of directors unanimously recommends that CCA shareholders vote FOR Proposal No. 1 for the merger agreement and the issuance and reservation for issuance of shares of CCA common stock pursuant to the merger agreement.

The CCA board of directors has also determined that the private placement is in the best interests of CCA and its shareholders. The CCA board of directors unanimously recommends that CCA shareholders vote FOR Proposal No. 2 for the issuance and reservation for issuance of shares of CCA common stock and warrants to purchase shares of CCA common stock in a private placement pursuant to the purchase agreement.

The CCA board of directors has also determined that the adoption of the amendment to the Articles of Incorporation to change the name of the company from Creative Computer Applications, Inc. to Aspyra, Inc. is in the best interests of CCA and its shareholders. The CCA board of directors unanimously recommends that CCA shareholders vote FOR Proposal No. 3 for the amendment to the Articles of Incorporation.

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The CCA board of directors has also determined that the adoption of the 2005 Equity Incentive Plan is in the best interests of CCA and its shareholders. The CCA board of directors unanimously recommends that CCA shareholders vote FOR Proposal No. 4 for the 2005 Equity Incentive Plan.

The CCA board of directors has also determined that the election of the director nominees named in this joint proxy statement/prospectus is in the best interests of CCA and its shareholders. The CCA board of directors unanimously recommends that CCA shareholders vote FOR Proposal No. 5 for the election of the director nominees named in this joint proxy statement/prospectus.

The CCA board of directors has also determined that the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005 is in the best interests of CCA and its shareholders. The CCA board of directors unanimously recommends that CCA shareholders vote FOR Proposal No. 6 for the ratification of the appointment of BDO Seidman, LLP as CCA’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005.

The CCA board of directors has further determined that approving a proposal to adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies is in the best interests of CCA and its shareholders. The CCA board of directors unanimously recommends that CCA’s shareholders vote FOR Proposal No. 7 to adjourn the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the proposal.

Solicitation of Proxies

CCA and StorCOMM are conducting this proxy solicitation and will bear the cost of soliciting proxies, including the preparation, assembly, printing and mailing of this joint proxy statement/prospectus, the proxy card and any additional information furnished to shareholders. CCA 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 CCA annual meeting, officers and regular employees of CCA may solicit the return of proxies from CCA shareholders 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. The total estimated cost of the solicitation of CCA proxies is $20,000.

Security Ownership of Principal Shareholders, Directors and Executive Officers

For information regarding the security ownership of CCA common stock by principal shareholders, directors and executive officers of CCA, see “Information Concerning CCA - Ownership of CCA Common Stock.”

The matters to be considered at the annual meeting are of great importance to the shareholders of CCA. Accordingly, you are urged to read and carefully consider the information presented in this joint proxy statement/prospectus, and to submit your proxy by mail in the enclosed postage-paid envelope.

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SPECIAL MEETING OF STORCOMM SHAREHOLDERS

StorCOMM is furnishing this joint proxy statement/prospectus to you in order to provide you with important information regarding the matters to be considered at the special meeting of the StorCOMM shareholders and at any adjournment or postponement of the special meeting. StorCOMM first mailed this joint proxy statement/prospectus and the accompanying form of proxy to its shareholders on or about                  , 2005.

Date, Time and Place of the Special Meeting

StorCOMM will hold its special meeting of its shareholders at StorCOMM’s offices at 7 Corporate Plaza, 8649 Baypine Road, Jacksonville, Florida on Wednesday, November 9, 2005, at 10:00 AM Eastern Time.

Matters to be Considered at the Special Meeting

At the special meeting, shareholders of StorCOMM will be asked to consider and vote upon the following two proposals:

1.                Proposal No. 1:   To approve the Agreement and Plan of Reorganization (referred to in this joint proxy statement/prospectus as the merger agreement), dated as of August 16, 2005, by and among StorCOMM, CCA and Xymed.com, Inc. (“Xymed”), a Delaware corporation and wholly owned subsidiary of CCA, pursuant to which StorCOMM will merge with Xymed and become a wholly owned subsidiary of CCA.

2.                Proposal No. 2:   To adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1.

StorCOMM’s Bylaws authorize the Chairman of the meeting to adjourn the special meeting if a quorum is not then in attendance.

Record Date; Shareholders Entitled to Vote

The record date for determining the StorCOMM shareholders entitled to vote at the special meeting is October 3, 2005. Only holders of record of StorCOMM common stock at the close of business on that date are entitled to vote at the special meeting. On the record date, there were issued and outstanding 144,573,510 shares of StorCOMM common stock.

As of the record date, the directors and executive officers of StorCOMM and their affiliates held 137,245,110 shares of StorCOMM common stock representing approximately 90.7%  of the outstanding shares of StorCOMM common stock.

A list of shareholders eligible to vote at the meeting will be available for your review during StorCOMM’s regular business hours at its headquarters in Jacksonville, Florida for at least ten days prior to the special meeting for any purpose related to the special meeting.

Shareholder Support Agreements

C. Ian Sym-Smith, the chairman of StorCOMM’s board of directors, and Bradford G. Peters, a member of StorCOMM’s board of directors and StorCOMM’s largest shareholder, have entered into a shareholder support agreement with CCA in which they have agreed to vote in favor of the merger agreement. Mr. Sym-Smith and Mr. Peters together hold an aggregate of approximately 90.7% of the voting power of StorCOMM as of September 15, 2005. Therefore, there is a sufficient number of shares of StorCOMM capital stock committed to approve the merger agreement on behalf of the StorCOMM shareholders. As of the record date, the directors and executive officers of StorCOMM and their affiliates

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held 137,245,110 shares of StorCOMM common stock representing, 90.7% of the outstanding shares of StorCOMM common stock.

Voting and Revocation of Proxies

The proxy accompanying this joint proxy statement/prospectus is solicited on behalf of the board of directors of StorCOMM for use at the special meeting.

General.   Shares represented by a properly signed and dated proxy will be voted at the special meeting in accordance with the instructions indicated on the proxy. Proxies that are properly signed and dated but that do not contain voting instructions will be voted FOR Proposal No. 1 to adopt the merger agreement and FOR Proposal No. 2 to adjourn the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1.

Abstentions.   StorCOMM will count a properly executed proxy marked ABSTAIN with respect to a particular proposal as present for purposes of determining whether a quorum is present, but the shares represented by that proxy will not be voted at the special meeting with respect to such proposal. Because approval of Proposal No. 1 requires the affirmative vote of holders of 90% of the voting power of StorCOMM’s capital stock outstanding, abstentions on this proposal will have the same effect as a vote AGAINST Proposal No 1. However, abstentions will have no effect on the outcome of Proposal No. 2.

Revocation of Proxies.   If you submit a proxy, you may revoke it at any time before it is voted by:

·       delivering to the Secretary of StorCOMM a written notice, dated later than the proxy you wish to revoke, stating that the proxy is revoked;

·       submitting to the Secretary of StorCOMM a new, signed proxy with a later date than the proxy you wish to revoke; or

·       attending the special meeting and voting in person (your attendance alone will not revoke your proxy).

Notices to the Secretary of StorCOMM should be sent to 7 Corporate Plaza, 8649 Baypine Road, Jacksonville, Florida, 32256.

Required Shareholder Vote

In order to conduct business at the StorCOMM special meeting, a quorum must be present. The holders of a majority of the votes entitled to be cast by holders of common stock at the special meeting, present in person or represented by proxy, constitutes a quorum under StorCOMM’s Bylaws. StorCOMM will treat shares of common stock represented by a properly signed and returned proxy, including abstentions and broker non-votes, as present at the StorCOMM special meeting for the purposes of determining the existence of a quorum. If a quorum is not present, it is expected that the special meeting will be adjourned to solicit additional proxies.

With respect to any matter submitted to a vote of the StorCOMM shareholders each holder of StorCOMM common stock will be entitled to one vote, in person or by proxy, for each share of StorCOMM common stock held in his, her or its name on the books of StorCOMM on the record date.

Approval of Proposal No. 1 requires the affirmative vote of holders of 90% of the voting power of StorCOMM’s capital stock outstanding.

Approval of Proposal No. 2 requires the affirmative vote of holders of a majority of the shares of StorCOMM common stock present in person or represented by proxy at the special meeting and entitled to vote.

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The inspector of elections for the StorCOMM special meeting will tabulate the votes.

Unanimous Recommendations by the Board of Directors

After careful consideration, the board of directors of StorCOMM has determined that the merger agreement is advisable and in the best interests of StorCOMM and its shareholders. The StorCOMM board of directors unanimously recommends that StorCOMM shareholders vote FOR Proposal No. 1 to adopt the merger agreement and FOR Proposal No. 2 to adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1.

Solicitation of Proxies

CCA and StorCOMM are conducting this proxy solicitation and will bear the cost of soliciting proxies, including the preparation, assembly, printing and mailing of this joint proxy statement/prospectus, the proxy card and any additional information furnished to shareholders. To the extent necessary in order to assure sufficient representation at the StorCOMM special meeting, officers and regular employees of StorCOMM may solicit the return of proxies from StorCOMM shareholders 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. The total estimated cost of the solicitation of StorCOMM proxies is $5,000.

Security Ownership of Principal Shareholders, Directors and Executive Officers

For information regarding the security ownership of StorCOMM common stock by principal shareholders, directors and executive officers of StorCOMM, see “Information Concerning StorCOMM—Ownership of StorCOMM Common Stock.”

Interest of Certain Persons in Matters to be Acted Upon

The executive officers and directors of StorCOMM may have interests in the merger that are different from, or are in addition to, those of StorCOMM shareholders generally. For information regarding the interests of StorCOMM’s executive officers and directors in the merger see “The Merger—Interests of Certain StorCOMM Persons in the Merger” below starting on page 46.

The matters to be considered at the special meeting are of great importance to the shareholders of StorCOMM. Accordingly, you are urged to read and carefully consider the information presented in this joint proxy statement/prospectus, and to properly complete and submit your proxy.

You should not submit any stock certificates with your proxy. A transmittal form with instructions for the surrender of stock certificates for StorCOMM stock will be mailed to you as soon as practicable after completion of the merger.

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CCA PROPOSAL NO. 1 AND STORCOMM PROPOSAL NO. 1—
THE MERGER

This section of this joint proxy statement/prospectus describes the principal aspects of CCA Proposal No. 1 and StorCOMM Proposal No. 1, including the merger and the merger agreement. While CCA and StorCOMM believe that this description covers the material terms of the merger and the related transactions, this summary may not contain all of the information that is important to CCA and StorCOMM shareholders. You can obtain a more complete understanding of the merger by reading the merger agreement, a copy of which is attached to this joint proxy statement/prospectus as Annex A. You are encouraged to read the merger agreement and the other annexes to this joint proxy statement/prospectus carefully and in their entirety.

Background of the Merger

The CCA board of directors has regularly evaluated the long-term strategy and potential strategic options for CCA in light of CCA’s operating performance and trends in the healthcare information technology industry. The strategic options that the CCA board and management have considered in the context of its operating performance include pursuing organic growth, tactical acquisitions, or a sale or the merger of CCA with another company.

From time to time, CCA’s board of directors determined that the healthcare information technology industry was undergoing a trend towards consolidation, and began to investigate business combinations and other strategic transactions that would allow CCA to expand beyond its existing market.

In late 2002, CCA’s board of directors determined that the convergence of CCA’s medical imaging product technology with a business offering Picture Archive Communication Systems, or PACS, would present significant opportunities for growth given the changes that were occurring in the market place. CCA’s board of directors believed that the integration of clinical information systems that manage operational activities in healthcare with diagnostic systems such as PACS systems, was becoming more important in the healthcare information systems market.

In August 2002, CCA entered into a joint product development venture to integrate its radiology information system product with a PACS product. However, the PACS partner was acquired before the technology was brought to market and the joint product development venture was terminated.

During 2003 through the summer of 2004, CCA considered other potential business combinations and strategic relationships with a variety of PACS companies.

The board of directors of StorCOMM has regularly monitored the marketplace for opportunities to strengthen and grow its business. StorCOMM’s board and management have considered various options, including pursuing organic growth, and a sale or the merger of StorCOMM with another company.

In late 2003 and early 2004, StorCOMM was approached by several third parties interested in exploring various business combination transactions with StorCOMM. During this period, StorCOMM was experiencing cash flow problems and was having difficulty raising capital from outside investors. During this time, in furtherance of its effort to raise investment capital, StorCOMM’s management and board of directors developed a Private Placement Memorandum, or PPM.

In mid 2004, the board of directors and management of StorCOMM agreed to enter into discussions with three of the interested third parties to explore possible business combinations. These discussions ultimately resulted in three independent proposals being presented to StorCOMM’s board of directors. After carefully considering each proposal, StorCOMM’s board of directors determined that it would not proceed with any of the individual offers at that time. It was generally felt by the board of directors that other more advantageous opportunities would materialize if StorCOMM kept on track with its recently revised business plan and strategy. StorCOMM’s board of directors authorized management to continue to monitor and evaluate other business combination opportunities. CCA had no prior relationship with StorCOMM.

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In March, 2004, CCA engaged Dominick & Dominick LLC, or D&D, a financial advisor, to assist CCA in identifying appropriate business opportunities including companies specializing in PACS technologies. Pursuant to CCA’s agreement with D&D, CCA agreed to pay D&D a fee equal to three percent of the value of the shares issued to the StorCOMM shareholders in the merger as consideration for the financial advisory services provided to CCA in connection with the merger.

In early October 2004, D&D contacted StorCOMM and obtained a copy of its PPM, which D&D shared with CCA’s management. During this time, D&D reviewed the operating history and certain financial information of StorCOMM and prepared an analysis of the medical imaging industry. D&D presented its preliminary findings to CCA’s management to help them understand StorCOMM’s business and identify opportunities that a possible business combination might offer.

On October 8, 2004, D&D held a telephonic meeting for the purposes of introducing CCA’s management to StorCOMM’s management. At this meeting, the parties agreed to exchange additional information and discussed the possibility of exploring a business combination.

On October 12, 2004, after receiving additional information on StorCOMM, Steven M. Besbeck, CCA’s president and chief executive officer, visited StorCOMM’s headquarters in Jacksonville, Florida and met with Samuel G. Elliott and William W. Peterson, StorCOMM’s chief executive officer and chief operating officer respectively. During the visit, StorCOMM provided CCA with an overview of its business, technology, and facilities. At this meeting, the parties did not agree to explore any particular relationship or transaction, but did agree to have further discussions. CCA’s management invited StorCOMM’s management to visit its facilities in Calabasas, California.

On October 15, 2004, a regular meeting of CCA’s board of directors was held. During the meeting Mr. Besbeck reported on his visit to StorCOMM. Mr. Besbeck also distributed to each member of CCA’s board of directors, information that had been prepared by D&D regarding StorCOMM and briefed the board of directors on the possible synergies between CCA and StorCOMM. The board reviewed the information and directed Mr. Besbeck to proceed with furthering the discussions with StorCOMM.

In mid October, Mr. Elliott and Mr. Peterson briefed StorCOMM’s board of directors on the initial meeting with Mr. Besbeck and StorCOMM’s board of directors authorized them to continue discussions with CCA.

On the 18th and 19th of October 2004, Mr. Elliott and Mr. Peterson visited CCA’s headquarters in Calabasas, California and the parties discussed the possibility of a business combination involving the two companies. During the two-day meeting the parties explored a variety of topics and specifically discussed the markets and customers served by each of StorCOMM and CCA, and the extent to which the two companies’ products and services would be complimentary. All agreed that customers would benefit from a single supplier of the products and services of each company. The parties also discussed the potential for market synergies and cost synergies from a business combination. At the end of the two-day meeting the management teams of both companies felt positively about the potential synergies of a combination but did not agree to explore any particular relationship or transaction. At this point the companies also entered into a mutual Confidential Non-Disclosure Agreement to cover all communications related to the possible business combination. The management teams agreed that the next step would be to exchange additional due diligence information and to schedule a meeting between Mr. Besbeck and Bradford G. Peters, a member of StorCOMM’s board of directors and StorCOMM’s largest shareholder.

In late October 2004, after returning from their meetings with CCA, Mr. Elliott and Mr. Peterson reported on their visit to CCA at a meeting of the board of directors of StorCOMM. The board considered the information and directed Mr. Elliot and Mr. Peterson to proceed with furthering the discussions with CCA’s management.

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On November 4, 2004, Mr. Besbeck, Mr. Peters and representatives of D&D met in New York City, New York to discuss the potential business combination. The parties engaged in a discussion regarding the strategic rationale of a possible business combination that did not include specific terms. During the meeting, Mr. Besbeck presented the group with CCA’s view on the potential synergies created by a business combination.

During the remainder of November 2004, the parties continued to discuss the potential business combination. These discussions included discussions regarding the business strategy and prospects of their respective companies, the manner in which the two businesses could potentially be combined, including the strategic rationale for the potential transaction, and how the combined company would be operated. The management teams also discussed a process to further evaluate such a transaction, including due diligence matters. During this time, Mr. Besbeck kept CCA’s board of directors informed of the discussions between the parties and received their guidance. Mr. Besbeck kept CCA’s board informed of the negotiations between the parties by both written and verbal communications and received guidance from CCA’s board during November 2004.

On November 28, 2004, Mr. Besbeck, Mr. Elliott, Mr. Peterson, Mr. Peters and C. Ian Sym-Smith, the chairman of StorCOMM’s board of directors, met in Chicago during the annual Radiological Society of North America conference. At this meeting, the parties discussed the potential for combining the two companies, a possible structure for the transaction and potential of integrating the radiology information system of CCA with StorCOMM’s PACS system.

On November 29, 2004, Mr. Besbeck met with Mr. Peters. During the meeting they discussed the possible structures for the business combination, including a merger. It was decided at that time that Mr. Peters would visit CCA’s offices in Calabasas, California to further the discussions and learn more about CCA’s business operations.

On December 7, 2004, CCA’s board of directors had a special board meeting to discuss the status of the discussions with StorCOMM ‘s management and board of directors. At this meeting, Mr. Besbeck advised the board of the conversations between the officers of the two companies that had occurred since the last meeting of CCA’s board of directors. The board further explored with management the strategic rationale for such a combination, potential valuation ranges for a transaction and a plan for moving forward with mutual due diligence and negotiations. After detailed discussions, CCA’s board of directors gave Mr. Besbeck the authority to engage in negotiations with StorCOMM to enter into a letter of intent to merge with StorCOMM as equals subject to board and shareholder approval.

On the 8th and 9th of December 2004, Mr. Peters and a financial advisor to StorCOMM, visited CCA’s headquarters in Calabasas, California. Mr. Peters conducted preliminary due diligence related to CCA and the potential business combination. During this meeting, the parties discussed a possible valuation analysis, the possible deal structures, the possible process and timing for a potential transaction and the management of the combined entity.

During the remainder of December, the parties entered into formal negotiations regarding the specific terms of the business combination and engaged in due diligence reviews of each other. During this period, Mr. Besbeck kept CCA’s board of directors apprised on the progress of the negotiations and received their guidance.

In late December, Mr. Besbeck conferred with members of CCA’s board of directors regarding the status of negotiations with StorCOMM and the specific terms of the combination of the businesses.

On December 22, 2004, Mr. Besbeck distributed the letter of intent to CCA’s board of directors and the board subsequently reviewed and approved the final letter of intent.

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On January 10, 2005, CCA and StorCOMM entered into a letter of intent regarding the merger of the entities as equals. On the same day, CCA filed a Current Report on Form 8-K announcing the potential merger and made a press release as well.

Beginning in January 2005 and continuing through June 2005 the parties conducted extensive due diligence on each other’s businesses and developed an integration plan to integrate the businesses following the merger. The merger necessitated a two year audit of StorCOMM, and CCA’s Independent Registered Public Accounting Firm was selected by StorCOMM to perform the audit. Also during this time the parties negotiated the definitive merger agreement and set a timeline to complete the merger subject to shareholder approval of both companies.

On March 22, 2005, CCA’s board of directors retained a financial advisory firm, Simon Financial, Inc., or Simon Financial, to perform a fairness opinion in relation to the proposed merger and the resulting valuation to the CCA shareholders. The fairness opinion was presented by Simon Financial at a special meeting of CCA’s board of directors on June 3, 2005.

On April 2, 2005, following further review and discussion, the board of directors of CCA voted unanimously to approve the merger agreement and the transactions contemplated by the merger agreement and resolved to recommend that its shareholders vote to approve the issuance and reservation for issuance of shares of CCA common stock pursuant to the merger agreement.

On August 15, 2005, following further review and discussion, the board of directors of StorCOMM voted unanimously to approve the merger agreement and the transactions contemplated by the merger agreement and resolved to recommend that its shareholders vote to approve the merger agreement.

On August 16, 2005, the parties signed the merger agreement. The signing of the merger agreement was publicly announced on August 19, 2005, prior to the opening of the American Stock Exchange.

Our Reasons for the Merger

CCA and StorCOMM believe that combining the two companies will expand and better serve the addressable market and result in greater long-term growth opportunities than either company has operating alone.

In particular, in concluding to approve the merger, the boards of directors of CCA and StorCOMM considered the following:

Integration of Applications and Services.   The combined company will be able to provide integrated applications and services to a broader sector of the healthcare provider market. This will better serve CCA’s existing customers and reach new customers in new specialties, including in the orthopedic, cardiology and anatomic pathology specialties.

Complementary Sales and Channel Coverage.   By combining the sales and service organizations of CCA and StorCOMM, the combined company will have a broader reach that will provide greater access to a larger and more diverse range of customers.

Financial Synergies.   CCA and StorCOMM expect the merger will create financial synergies for the combined company, primarily as a result of combining the purchasing power of the two companies and other economies of scale and, to a lesser extent, as a result of the reduction in overlapping functions of the combining companies.

Scale to Better Compete.   We believe that our industry is in a period of consolidation. We believe that the combined company will have the scale to better compete in this environment.

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Experienced Management Team.   The combined company will be led by a combination of experienced senior management from both CCA and StorCOMM, which will provide management continuity to support the integration of the two companies.

Other Factors Considered by the CCA Board

The CCA board of directors consulted with CCA’s management and its financial and legal advisors and considered the advice of consultants that it had retained in the past to provide advice for the formulation of a long-term strategy. In addition to considering the strategic factors outlined above, the CCA board of directors considered the following additional factors in reaching its conclusion to approve the merger and to recommend that the CCA shareholders approve the merger and the issuance and reservation for issuance of shares of common stock pursuant to the merger agreement, all of which it viewed as generally supporting its decision to approve the business combination with StorCOMM:

·       the importance of the merger for pursuing the board’s strategic plan;

·       general market conditions for CCA’s products and services;

·       opportunities and competitive factors within the healthcare information technology industry;

·       the potential benefits to CCA’s shareholders as a result of growth opportunities following the merger;

·       historical and current information about each of the combining companies and their businesses, prospects, financial performance and condition, operations, management and competitive position, including market data and management’s knowledge of the healthcare information technology industry;

·       financial market conditions, historical market prices, volatility and trading information with respect to CCA common stock;

·       the opinion of Simon Financial, rendered orally on June 3, 2005, subsequently confirmed in writing on the same day, to the CCA board of directors that, as of such date, and based upon and subject to certain matters stated in its opinion, from a financial point of view, the consideration to be paid by CCA in the merger was fair to CCA;

·       the results of the due diligence review of StorCOMM’s businesses and operations;

·       the terms and conditions of the merger agreement, including:

·        the provisions designed to restrict the ability of the parties to entertain third party acquisition proposals;

·        the consideration to be paid by CCA to StorCOMM’s shareholders in the merger;

·        the conditions to each party’s obligation to effect the merger;

·        the definition of “material adverse effect;”

·        the limited ability of the parties to terminate the merger agreement;

·       the likelihood of retaining key StorCOMM employees to help manage the combined entity; and

·       the likelihood that the companies will be able to complete the merger.

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CCA’s board of directors also considered the following potentially negative factors in its deliberations regarding the merger:

·       the risks inherent in integrating the two companies and the possibility that delays or difficulties in completing the integration could adversely affect CCA’s operating results and preclude the achievement of some benefits anticipated from the merger, including the risk of diverting management’s attention from other strategic priorities to implement merger integration efforts;

·       the possible loss of key management or other personnel of either of the combining companies as a result of the management and other changes that will be implemented in integrating the businesses;

·       the possible adverse consequences, at least in the short term, of the merger announcement on the trading price of CCA common stock;

·       the potential loss of customers of either company as a result of any such customers’ unwillingness to do business with the combined company or response to potential service disruptions as a result of the integration process;

·       the possibility that the reactions of existing and potential competitors to the combination of the two businesses could adversely impact the competitive environment in which the companies operate;

·       the potential disruption to third party business relationships important to either company as a result of the merger;

·       the expenses to be incurred in connection with the merger, including costs of integrating the businesses and transaction expenses arising from the merger;

·       the necessity of raising additional financing for purposes of funding the merger;

·       the risk that anticipated product synergies and cost savings will not be realized; and

·       the possibility that the merger might not close or the closing might be delayed.

The above discussion of the material factors is not intended to be exhaustive, but does set forth the principal factors considered by the CCA board of directors. After due consideration, the CCA board of directors unanimously concluded that the potential benefits of the merger outweighed the risks associated with the merger.

In view of the wide variety of factors considered by the CCA board of directors in connection with the evaluation of the merger and the complexity of these matters, the board did not consider it practical to quantify, rank or otherwise assign relative weights to the foregoing factors, and it did not attempt to do so. Rather, the board made its recommendation based on the totality of the information presented to it, and the investigation conducted by it. The CCA board of directors considered all these factors and determined that these factors, as a whole, supported the conclusions and recommendations described above.

Other Factors Considered by the StorCOMM Board

In addition to considering the strategic factors outlined above, the StorCOMM board of directors considered the following factors in reaching its conclusion to approve the merger and to recommend that the StorCOMM shareholders adopt the merger agreement, all of which it viewed as generally supporting its decision to approve the business combination with CCA:

·       historical and current information concerning StorCOMM’s and CCA’s respective businesses, financial performance and condition, operations, management, competitive positions and prospects;

·       the results of the due diligence review of CCA’s businesses and operations;

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·       the board’s and management’s assessment that the merger and CCA’s operating strategy are consistent with StorCOMM’s long-term operating strategy;

·       the competitive and market environments in which StorCOMM and CCA operate;

·       the terms and conditions of the merger agreement, including:

·        the fact that the merger agreement is not subject to termination solely as a result of any change in the trading prices of CCA’s stock between signing of the merger agreement and closing;

·        the limited number and nature of the conditions to CCA’s obligation to close the merger and the limited risk of non-satisfaction of such conditions;

·        the provisions designed to restrict the ability of the parties to entertain third party acquisition proposals; and

·        the reciprocal requirement that the merger agreement be submitted to a vote of the respective shareholders of StorCOMM and CCA.

·       the expectation that the merger will be treated as a tax-free reorganization for U.S. federal income tax purposes, with the result that the StorCOMM shareholders will generally not recognize taxable gain or loss for U.S. federal income tax purposes, except for cash received in lieu of fractional shares;

·       the determination that the consideration to be received by StorCOMM’s shareholders in the merger is appropriate to reflect the strategic purpose of the merger and consistent with market practice for a merger of this type; and

·       the likelihood that the merger will be completed on a timely basis.

StorCOMM’s board of directors also considered the potential risks of the merger and potential conflicts of interest, including the following:

·       the challenges and costs of combining the operations of two companies and the substantial expenses to be incurred in connection with the merger, including the risks that delays or difficulties in completing the integration could adversely affect the combined company’s operating results and preclude the achievement of some benefits anticipated from the merger;

·       the potential loss of customers of either company as a result of any such customers’ unwillingness to do business with the combined company or response to potential service disruptions as a result of the integration process;

·       the potential disruption to third party business relationships important to either company as a result of the merger;

·       the possibility that the reactions of existing and potential competitors to the combination of the two businesses could adversely impact the competitive environment in which the companies operate;

·       the possible loss of key management or other personnel of either of the combining companies as a result of the management and other changes that will be implemented in integrating the businesses;

·       the price volatility of CCA common stock;

·       the potential conflicts of interest of StorCOMM directors and officers in connection with the merger;

·       the risk of diverting management’s attention from other strategic priorities to implement merger integration efforts; and

·       the risk that anticipated product synergies and cost savings will not be realized.

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In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the StorCOMM board of directors did not find it useful, and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of the StorCOMM board of directors may have given different weight to different factors. The StorCOMM board of directors conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, StorCOMM’s management and StorCOMM’s legal and financial advisors, and considered the factors overall to be favorable to, and to support, its determination.

Opinion of Financial Advisor to the Board of Directors of CCA

Simon Financial delivered its opinion dated June 3, 2005 to the board of directors of CCA to the effect that, as of such date and based upon and subject to certain matters stated in such opinion, the exchange rate is fair to CCA from a financial point of view. The full text of Simon Financial’s written opinion, which sets forth the assumptions made, matters considered and limitations on the review undertaken by Simon Financial, has been attached to this document as Annex H. Simon Financial’s opinion is directed only to the fairness to CCA, from a financial point of view, of the exchange rate, and is not intended to constitute, and does not constitute, a recommendation as to how a shareholder should vote with respect to the approval of the adoption of the merger agreement. Furthermore, Simon Financial’s opinion does not address the fairness of the Closing Financing to CCA or its shareholders. You are urged to read this opinion carefully in its entirety. The summary of Simon Financial’s opinion in this document is qualified in its entirety by reference to the full text of Simon Financial’s opinion.

Pursuant to an engagement letter dated March 18, 2005, the CCA board of directors retained Simon Financial to render an opinion as to the fairness to CCA, from a financial point of view, of the exchange rate. Simon Financial is a financial advisory company and was selected by the CCA board of directors based on Simon Financial’s reputation and experience in the valuation of assets and business entities and its industry experience. Simon Financial does not beneficially own nor has it ever beneficially owned any interest in CCA or StorCOMM. On June 3, 2005, at a meeting of the CCA board of directors, Simon Financial made an oral presentation and delivered to the CCA board of directors its written opinion, that the exchange rate is fair to CCA, from a financial point of view.

The opinion of Simon Financial does not address CCA’s underlying business decision to effect the merger. Simon Financial has not been requested to, and did not, advise the board of directors with respect to alternatives to the merger. Furthermore, at the request of the CCA board of directors, Simon Financial has not negotiated the terms of the merger on CCA’s behalf.

In connection with its fairness opinion, Simon Financial made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. Among other things, Simon Financial:

·       Held discussions with certain members of the management team of CCA to discuss both the Transaction and the financial condition, future prospects and projected operations and performance of CCA on both a stand alone and pro-forma basis;

·       Held discussions with certain members of the management team of StorCOMM;

·       Visited CCA’s headquarters in Calabasas, California;

·       Received a demonstration of CCA’s CyberRAD® and CyberLAB® software products;

·       Reviewed certain publicly available financial statements and other information of CCA as filed with the Securities and Exchange Commission;

·       Reviewed CCA’s pro-forma projected balance sheet and statement of operations for 2005 through 2007;

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·       Reviewed CCA’s financial projections for 2005 through 2007;

·       Reviewed StorCOMM’s Historical Financial summary for the years 1998 through 2003;

·       Reviewed the StorCOMM’s audited financial statements for the years ended December 31, 2001 and December 31, 2002, which are the latest available per management;

·       Reviewed the StorCOMM unaudited financial statements for the 3 months ended March 31, 2005;

·       Reviewed the StorCOMM 2004 Operational Plan;

·       Reviewed the StorCOMM Private Placement Memorandum, dated April 2004, regarding a capital raise of $7 million to $10 million;

·       Reviewed a schedule of StorCOMM Capitalization structure as of January 15, 2004 and December 31, 2004, prepared by StorCOMM management;

·       Reviewed a copy of the CCA—StorCOMM Merger Benefits Analysis, dated November 4, 2004 and prepared by Dominick & Dominick LLC;

·       Reviewed drafts of the merger agreement and certain documents to be delivered at the closing of the Transaction;

·       Reviewed a copy of the Term Sheet for Potential Investment in Creative Computer Applications, dated April 8, 2005;

·       Reviewed the reported prices and trading activity of CCA’s common stock;

·       Reviewed certain other publicly available financial data for certain companies that we deem comparable to CCA; and

·       Conducted such other studies, analyses and inquiries as deemed appropriate.

Simon Financial did not independently verify the accuracy and completeness of the information supplied to it with respect to CCA’s business and its assets and did not assume any responsibility with respect to such information. Simon Financial did not make any independent appraisal of any of the properties or assets involved in the merger. Simon Financial recognizes that, as with any potential merger or acquisition, there are inherent risks that could prevent the transaction from being consummated.

Simon Financial’s opinion is necessarily based on business, economic, market and other conditions as they existed and could be evaluated by Simon Financial at the date of the opinion and CCA’s management does not believe there has been a material change in these conditions since that date. Furthermore, among other things, Simon Financial has relied upon and assumed, without independent verification, that (a) CCA-prepared financial forecasts and projections used in its analysis have been reasonably prepared and reflect the best currently available estimates of the future financial results and condition of CCA (b) CCA-prepared financial forecasts and projections for CCA pro-forma for the merger which Simon Financial used in its analysis have been reasonably prepared and reflect the best currently available estimates of the future financial results and condition of CCA on a pro-forma basis; and (c) there has been no material change in the assets, financial condition, business or prospects of CCA since the date of the most recent financial statements made available to it. In rendering the opinion, Simon Financial also assumed that the merger will be consummated in accordance with the terms of the merger agreement presented to it and that all governmental or other approvals or consents necessary for the consummation of the merger and related transactions will be obtained without any adverse effect on CCA or StorCOMM or on the expected benefits of the merger in any way material to its analysis.

The Simon Financial opinion was prepared for the information of the CCA board of directors in connection with its evaluation of the merger and did not constitute a recommendation to CCA, the CCA

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board of directors, or any holder of shares of the common stock of CCA as to whether to enter into the merger or to take any other action. Simon Financial’s opinion and the presentation to the board of directors of CCA was one of the many factors taken into consideration by the board of directors of CCA in making its determination to engage in the merger. Consequently, the analyses described below should not be viewed as determinative of the opinion of the board of directors or the management of CCA with respect to the value of CCA or StorCOMM or whether CCA or StorCOMM would have been willing to agree to a different exchange rate.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. The analyses described below do not purport to be appraisals or to reflect the prices at which the businesses or securities of CCA or StorCOMM might actually be sold. In arriving at its opinion, Simon Financial considered the results of all of its analysis as a whole and did not attribute any particular weight to any particular analysis or factor considered by it. Further, Simon Financial believes that the summary provided below must be considered as a whole and that selecting any portion of Simon Financial’s analyses, without considering all of its analysis, would create an incomplete view of the process underlying Simon Financial’s opinion. In addition, Simon Financial may have deemed various assumptions more or less probable than other assumptions, so that the range of valuations resulting from any particular analysis described herein should not be taken to be Simon Financial’s view of the actual value of CCA or StorCOMM.

CCA has paid Simon Financial fees of $50,000 for its services in connection with the engagement letter and has agreed to reimburse Simon Financial for reasonable out-of-pocket expenses incurred in connection therewith not to exceed $1,000. No portion of the fee is contingent upon the consummation of the merger or the conclusions reached in the opinion. The engagement letter pursuant to which CCA engaged Simon Financial contains provisions requiring CCA to indemnify, defend and hold harmless Simon Financial, its employees, agents, officers, directors, attorneys, shareholders and other affiliates from certain costs, expenses and damages incurred in connection with any claims arising out of the engagement of Simon Financial or the rendering of the opinions contemplated thereby.

Company-Specific Valuation Considerations

In assessing the financial fairness of the exchange rate to CCA, from a financial point of view, Simon Financial (i) analyzed the trading value implied by CCA’s publicly traded equity securities, (ii) independently valued the common stock of CCA using widely accepted valuation methodologies, and (iii) independently valued the common stock of CCA on a pro-forma basis for the merger using widely accepted valuation methodologies.

Analysis of CCA’s Publicly Traded Stock Price.   As part of its analysis, Simon Financial analyzed the trading value of the common stock of CCA. Simon Financial calculated CCA’s 30 day average stock price, 60 day average stock price, and 30 day average unaffected stock price. Simon Financial also analyzed the common stock’s average daily trading volume to its float and total shares outstanding. Simon Financial then compared CCA’s trading volume and float levels to similar comparable publicly traded companies. Finally, Simon Financial considered the lack of analyst coverage for the common stock. Based on these analyses, Simon Financial observed that CCA’s common stock trades less actively than the comparable public companies and the common stock has a significantly smaller public float than the comparable public companies.

Fundamental Valuation of CCA.   Simon Financial completed an independent, fundamental valuation of CCA, on both a stand alone basis and pro-forma for the Transaction, using three widely accepted valuation approaches: the market multiple approach, the discounted cash flow approach, and the comparable transaction approach.

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Market Multiple Approach.   The market multiple approach involved the multiplication of various revenues, earnings and cash flow measures by appropriate risk-adjusted multiples. Multiples were determined through an analysis of certain publicly traded companies, selected on the basis of operational and economic similarity with the principal business operations of CCA. Revenue, earnings and cash flow multiples were calculated for the comparable companies based upon daily trading prices. A comparative risk analysis between CCA, on both a stand alone and pro-forma basis, and the public companies formed the basis for the selection of appropriate risk adjusted multiples for CCA. The risk analysis incorporates both quantitative and qualitative risk factors which relate to, among other things, the nature of the industry in which CCA and the comparable companies are engaged.

For purposes of this analysis, Simon Financial selected six publicly traded, healthcare information software companies for comparison to CCA on a stand-alone basis. The companies included:

·       Cerner Corporation

·       Eclipsys Corporation

·       IDX Systems

·       IMPAC Medical Systems

·       McKesson

·       Quality Systems

For purposes of comparing CCA on a pro-forma basis, Simon Financial selected five publicly traded, medical imaging software companies. The companies included:

·       Cedara Software Corporation

·       IDX Systems

·       Emageon, Inc.

·       Merge Technologies

·       Vital Images, Inc.

In order to determine the enterprise value of CCA on both a stand alone and pro-forma basis, a control premium of 15% was added. Because the market multiple approach is based upon publicly traded prices of equity securities and represents a minority position, a control premium was deemed appropriate, based on a review of control premiums in relevant transactions. The market multiple approach produced indications of an enterprise value for CCA, on a stand alone basis, in the range of $7.5 million to $8 million. The market multiple approach produced indications of an enterprise value for CCA, on a pro-forma basis, in the range of $25 million to $27 million.

No company included in the market multiple analysis is identical to CCA or StorCOMM. In calculating the comparable companies, Simon Financial made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Many of these matters are beyond the control of CCA or StorCOMM. Mathematical analysis, such as determining the average or median, or the high or low, is not itself a meaningful method of using precedent transaction data.

Comparable Transaction Approach.   The comparable transaction approach, also involved multiples of revenues and cash flow. Multiples utilized in this approach were determined through an analysis of acquisitions of controlling interests in companies with operations deemed to be reasonably comparable to CCA’s principal business operations, on both a stand alone and pro-forma basis. For purposes of this

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analysis, Simon Financial analyzed eight transactions completed between May 2002 and April 2005 and one transaction announced in January 2005. Of these, four were involving target companies involved in the provision of healthcare information systems and five targets were involved in medical imaging software. The comparable transaction approach produced indications of an enterprise value for CCA, on a stand alone basis, in the range of $7.5 million to $8 million; and produced indications of an enterprise value for CCA, on a pro-forma basis, in the range of $22 million to $24 million.

No transaction included in the comparable transaction analysis is identical to the merger. In evaluating the precedent transactions, Simon Financial made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Many of these matters are beyond the control of CCA or StorCOMM. Mathematical analysis, such as determining the average or median, or the high or low, is not itself a meaningful method of using precedent transaction data.

Discounted Cash Flow Approach.   The discounted cash flow approach utilized CCA’s stand alone and pro forma projections prepared by CCA’s management. The projected cash flows were analyzed on a “debt-free” basis (before cash payments to equity and interest-bearing debt investors) in order to develop an enterprise value indication for CCA. A provision for the value of CCA at the end of the forecast period, or terminal value, was also made. The present value of the interim cash flows and the terminal value was determined using a risk-adjusted rate of return or “discount rate.” The discount rate, in turn, was developed through an analysis of rates of return on alternative investment opportunities on investments in companies with similar risk characteristics to CCA. The discounted cash flow approach produced indications of an enterprise value for CCA, on a stand alone basis, in the range of $5.9 million to $6.3 million. The discounted cash flow approach produced indications of an enterprise value for CCA, on a pro-forma basis, in the range of $18 million to $20 million.

Asset Approach.   Simon Financial determined that the asset approach was not appropriate for the purposes of determining the fair market value of CCA as CCA is worth more as a going concern than in liquidation.

Conclusion

Based on the foregoing analyses, Simon Financial concluded that the enterprise value of CCA, on a stand alone basis was $7 million. After adding CCA’s cash and subtracting its debt, the equity value of CCA, on a stand alone basis, was determined to be in the range of $8.1 million to $8.2 million.

Simon Financial further concluded that the enterprise value of CCA, on a pro-forma basis after giving effect to the merger was $23 million. After adding CCA’s cash and subtracting its debt, pro-forma for the merger and the Closing Financing, the equity value of CCA, on a pro-forma basis was determined to be in the range of $23 million to $25 million.

In accordance with the merger agreement, CCA’s existing shareholders will own 50 percent of the total number of shares of CCA’s common stock issued and outstanding on a fully diluted basis upon consummation of the Transaction, excluding the shares issued in the Closing Financing. Based on this exchange rate, existing CCA shareholders will own 40.4% of CCA, pro-forma for the merger and Closing Financing. Thus, Simon Financial concluded that the fair market value of the equity for CCA’s existing shareholders, on a pro-forma basis, is in the range of $9.5 million to $9.8 million. On this basis, Simon Financial concluded that the exchange rate, is fair from a financial point of view.

Interests of Certain StorCOMM Persons in the Merger

In considering the recommendation of the StorCOMM board of directors regarding the merger agreement, StorCOMM shareholders should be aware that some of StorCOMM’s directors and executive

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officers may have interests in the merger that are different from, or in addition to, their interests as StorCOMM shareholders. These interests may create an appearance of a conflict of interest. The StorCOMM board of directors was aware of these potential conflicts of interest during its deliberations on the merits of the merger and in making its decision to recommend to the StorCOMM shareholders that they vote to adopt the merger agreement. In addition, pursuant to the terms of the merger agreement, the board of directors of CCA after the merger will have six members, including Bradford G. Peters and C. Ian Sym-Smith of the StorCOMM board. For more information see “Information Regarding Certain Directors and Executive Officers of StorCOMM” beginning on page 158.

Appointment of Officers and New Employment Agreements with CCA.   Following the closing of the merger, Samuel G. Elliott and William W. Peterson who are currently members of the StorCOMM management, will become the chief international officer and the chief sales, marketing and product management officer, respectively, of CCA. In connection with their appointment, Messrs. Elliott and Peterson have entered into new employment agreements with CCA that are contingent upon the closing of the merger. The employment agreements will take effect upon the closing of the merger and will continue for 24 months. Either CCA or the executives may terminate the employment agreements at any time for any reason. A summary of the material terms of the new employment agreements with CCA follows:

Title and Salary.   Upon the closing of the merger, Mr. Elliott will have the title of chief international officer and will receive an annual base salary of $180,000 per year and Mr. Peterson will have the title of chief sales, marketing and product management officer and will receive an annual base salary of $150,000 per year.

Annual Bonus.   The compensation committee of CCA is responsible for administering a management incentive bonus plan that is predicated on the pre-tax profitability of the overall company. Bonus pool funds will be allocated according to two criteria. 50% of the pool should be awarded to the participants according to salary percentage. The remaining 50% will be allocated according to the accomplishment of individual goals set for each plan participant.

Benefits.   Messrs. Elliott and Peterson will participate in CCA’s employee benefits plans and programs.

Option Grant.   The Compensation Committee of CCA is responsible for administering the company’s Equity Incentive Plan upon approval of the shareholders. No grants have been made under the plan and the committee intends to review such grants upon the approval of the shareholders.

Severance Benefits.   If Messrs. Elliott or Peterson are terminated for death or disability, for “cause,” or if the executive terminates his employment other than for “good reason,” CCA will pay all accrued and unpaid salary and bonus to the executive (or his beneficiaries in the case of death), as well as provide any accrued benefits and any benefits required to be provided by law. The executive (or his beneficiaries in the case of death) will also be allowed to exercise all vested unexercised stock options and warrants outstanding at the termination date in accordance with terms of the instruments governing the options or warrants. If Mr. Elliott or Mr. Peterson is terminated without cause or terminates his employment for good reason, the executive will receive the same benefits as he would have received for any other type of termination as described above. In addition, he will be entitled to severance pay for a period of 6 months, commencing on the 30th day following the termination date, equal to his monthly base salary in effect immediately prior to the termination. For purposes of the employment agreements, “cause” means any willful breach of duty by the executive in the course of his employment, continued violation of CCA’s policies after notice, violation of CCA’s insider trading policies, conviction of a felony or any crime involving fraud, theft, embezzlement, dishonesty or moral turpitude, engaging in activities which mate