**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

**FORM10-KSB/A**

**(Amendment No. 1)**

 
| **ý** | **ANNUAL REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 for the fiscal  year ended August 31, 2004.**                                                                                                                                                                                       |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                            |
| ** ** | **OR**                                                                                                                                                                                                                                                                                                                          |
| **o**      | **TRANSITION REPORT UNDER SECTION  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.**                                                                                                                                                                                                                                        |
| ** ** | **For the transition period  from                       to                        ** |

 

**Commissionfile number 0-12551**

 

**CREATIVE COMPUTER APPLICATIONS, INC.**

(Name of SmallBusiness Issuer in its charter)

 
| **California**                                                   | ** ** | **95-3353465**                        |
|------------------------------------------------------------------|------------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |       | (I.R.S. Employer  Identification No.) |
|                                                             |       |                                  |
| **26115-A  Mureau Road  Calabasas, California**                  | ** ** | **91302**                             |
| (Address of principal  executive offices)                        |       | (Zip Code)                            |
|                                                             |       |                                  |
| Issuer’s telephone number:                                  |       | **(818)  880-6700**                   |

 

Securities registered under Section 12(b) of the Exchange Act:  **None**

Securities registered under Section 12(g) of the Exchange Act:

 

Common Stock, nopar value

(Title of class)

 

Checkwhether the Issuer (1) filed all reports required to be filed by Section 13 or15(d) of the Exchange Act during the past 12 months (or for such shorter periodthat the Issuer was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

Yes  ý      No  o

 

Check if there is no disclosure of delinquent filers in response toItem 405 of Regulation S-B is not contained in this form, and no disclosurewill be contained, to the best of Issuer’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form10-KSB or any amendment to this Form 10-KSB.

ý

 

Issuer’s revenues for its most recent fiscal year ended August 31, 2004were $7,655,972

 

As of November 19, 2004, the aggregate market value of the voting stockheld by non-affiliates of the Company was approximately $3,178,000.

 

As of November 19, 2004 the Company had 3,318,900 shares of its commonstock outstanding.

 

DOCUMENTS INCORPORATED BYREFERENCE

 

 

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#### **STATEMENT REGARDING AMENDMENT 1**

 

Pursuant to thisForm 10-KSB/A, Amendment 1, the registrant amends Items 10, 11, 12, and 14 toinclude disclosure of the information required by such Items.  This amendment has no impact on the financialstatements of the registrant for the fiscal year ended August 31, 2004. Besidesthe inclusion of the following disclosures, no other changes have been made tothe Form 10-KSB for the fiscal year ended August 31, 2004.

 

**Item 10.Executive Compensation.**

 

The following table shows the compensation paid overthe past three fiscal years with respect to: (i) the Company’s Chief ExecutiveOfficer during the 2004 fiscal year and (ii) the three other most highlycompensated executive officers (in terms of salary and bonus) serving at theend of the 2004 fiscal year whose annual salary and bonus exceeded $100,000.

 
| ** **                       | ** ** | ** **              | ** ** | ** **    | ** ** | ** **   | ** ** | ** **                         | ** ** | **Long Term Compensation**            | ** ** | ** **                                            | ** ** |
|----------------------------------|------------|-------------------------|------------|---------------|------------|--------------|------------|------------------------------------|------------|---------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                       | ** ** | **Annual Compensation** | ** ** | **Awards**    | ** ** | **Payouts**  | ** ** | ** **                         | ** ** |
| ** **                       | ** ** | ** **              | ** ** | ** **    | ** ** | ** **   | ** ** | ** **                         | ** ** | ** **                            | ** ** | ** **                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| **(A)**                          | ** ** | **(B)**                 | ** ** | **(C)**       | ** ** | **(D)**      | ** ** | **(E)**                            | ** ** | **(F)**                               | ** ** | **(G)**                                               | ** ** | **(H)** | ** ** | **(I)** | ** ** |
| ** **                       | ** ** | ** **              | ** ** | ** **    | ** ** | ** **   | ** ** | ** **                         | ** ** | ** **                            | ** ** | ** **                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Name and  Principal Position** | ** ** | **Year**                | ** ** | **Salary($)** | ** ** | **Bonus($)** | ** ** | **Other  Annual  Compen-  sation** | ** ** | **Restricted   Stock  Award(s)  ($)** | ** ** | **Securitied  Underlying  Options/  SAR’s  (#)** | ** ** | **LTIP  Payouts  ($)** | ** ** | **All Other  Compen-  sation** | ** ** |
| ** **                       | ** ** | ** **              | ** ** | ** **    | ** ** | ** **   | ** ** | ** **                         | ** ** | ** **                            | ** ** | ** **                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| Steven M.  Besbeck               |       | 2004                    |       | 192,886       |       | 0            |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 5,156 |   |
| President, CEO                   |       | 2003                    |       | 198,159       |       | 0            |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 5,288 |   |
| CFO                              |       | 2002                    |       | 192,738       |       | 31,238       |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 5,208 |   |
|                             |       |                    |       |          |       |         |       |                               |       |                                  |       |                                                  |       |   |   |   |   |
| Bruce M. Miller                  |       | 2004                    |       | 187,847       |       | 0            |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 9,000 |   |
| Chairman                         |       | 2003                    |       | 191,107       |       | 0            |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 8,994 |   |
|                             |       | 2002                    |       | 183,061       |       | 30,421       |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 9,319 |   |
| ** **                       | ** ** | ** **              | ** ** | ** **    | ** ** | ** **   | ** ** | ** **                         | ** ** | ** **                            | ** ** | ** **                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| James R. Helms                   |       | 2004                    |       | 141,972       |       | 0            |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 11,465 |   |
| Vice President                   |       | 2003                    |       | 136,661       |       | 0            |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 11,418 |   |
| Operations                       |       | 2002                    |       | 146,436       |       | 22,548       |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 11,436 |   |
| ** **                       | ** ** | ** **              | ** ** | ** **    | ** ** | ** **   | ** ** | ** **                         | ** ** | ** **                            | ** ** | ** **                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| Christopher S.  Coleman          |       | 2004                    |       | 139,031       |       | 0            |       | 0                                  |       | 0                                     |       | 0                                                     |       | 0 |   | 10,710 |   |
| Vice President                   |       | 2003                    |       | 141,865       |       | 0            |       | 0                                  |       | 0                                     |       | 0                                                     |       | 0 |   | 10,436 |   |
| Sales                            |       | 2002                    |       | 161,369       |       | 10,000       |       | 0                                  |       | 0                                     |       | 10,000                                                |       | 0 |   | 2,282 |   |
|                                  |            |                         |            |               |            |              |            |                                    |            |                                       |            |                                                       |            |  |  |  |  |  |

 

**EmploymentAgreements**

 

Messrs Bruce Miller and Steven Besbeck are employed bythe Company on a month-to-month basis pursuant to the terms of their employmentagreements.  Each agreement provides fora base salary at an annual rate of $191,757 for Mr. Miller and $196,902 for Mr.Besbeck and authorizes the payment of other fringe benefits and bonuses madeavailable by the Company to its senior executives.  The persons referred to above also receivedinsurance benefits which were paid for by the Company and employercontributions to their 401(k) plan accounts as provided for in the Company’s401(k) profit sharing plan.  Theseamounts, including amounts accrued and unconditionally vested under the 401(k)plan, are reflected in the table above.

 

The Company has adopted a profit sharing plan pursuantto which income tax is deferred on amounts contributed by employees underSection 401(k) of the Internal Revenue Code. All employees, over the age of 21, are eligible to

 

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participate in the plan after the completion of six months ofservice.  The company contributes, on amatching basis, 25% of the employee’s contribution up to 4%.  The Company’s contribution becomes vested atthe rate of 20% for each full year of employment.  Both the employee and Company contributionsare subject to aggregate annual limits under the Internal Revenue Code.

 

**Compensationof Directors**

 

Directors who are not officers or employees of theCompany are paid Directors’ fees of $2,000 per meeting and are reimbursed fortheir reasonable expenses for attending meetings.  At present, there are three independentdirectors, Lawrence S. Schmid, Robert S. Fogerson, Jr., and Norman R. Cohen,who are not officers and/or employees of the Company.  In addition, Messrs. Schmid, Fogerson, andCohen are paid an annual retainer of $3,000 each.

 

**STOCK OPTION PLANS**

 

## **1997 Stock Option Plan**

 

The Company’s 1997 Stock Option Plan is administered by the Board ofDirectors of the Company or a Committee of not less than two members thereof,which has the authority to determine the persons to whom the options may begranted, the number of shares to be covered by each option, the time or timesat which the options may be granted or exercised and, for the most part, theterms and provisions of the options.  The1997 Plan permits the grant of both incentive stock options (“ISOs”) qualifyingunder section 422 of the Internal Revenue Code (“Code”) and non-qualified stockoptions (“NSOs”), which do not so qualify. Under the 1997 Plan, the option exercise price of ISOs may not be lessthan 100% (or 110% if the optionee owns 10% or more of the outstanding votingsecurities of the Company) of the fair market value of the Common Shares on thedate of grant.  The option exercise priceof NSOs may not be less than 85% of the fair market value of the Common Shareson the date of grant.  No option underthe 1997 Plan may be exercised more than ten years from the date of grantexcept that options granted to optionees owning 10% or more of the outstandingvoting securities of the Company may not be exercised more than five years fromthe date of grant.

 

The1997 Plan is intended to offer a proprietary interest in the Company to “KeyEmployees” and “Key Contractors” contributing to the Company’s success and, byincreasing their proprietary interest, to encourage them to remain in theemploy and service of the Company, to assist the Company in competingeffectively for the services of new employees and to attract and retain thebest available persons as directors of the Company.  “Key Employees” are defined as persons,including officers and directors, employed by the Company, or any parent orsubsidiary of the Company, on a compensable basis who hold positions ofresponsibility with the Company or a parent or subsidiary.  “Key Contractors” are defined as persons(including officers whether or not they are also directors) employed by theCompany or any parent or subsidiary of the Company to render services (includingservices solely as a member of the Board of Directors) to or on behalf of theCompany or any parent or subsidiary of the Company.

 

Nooptions may be exercised within 12 months after the date of grant and must beexercisable at the rate of at least 20% per year over 5 years from the date ofgrant; however, options granted to directors will be exercisable at the rate of25% per year in each of the second, third, fourth and fifth years from the dateof grant on a cumulative basis.

 

The1997 Plan provides for the granting of ISOs to purchase a maximum of 500,000Common Shares and for the granting of NSOs to purchase a maximum of 300,000Common Shares.

 

Theaggregate number of shares subject to options, the maximum number of shareswhich may be purchased, and the number of shares and the exercise price forshares covered by outstanding options will be adjusted appropriately upon astock split or reverse split of the issued Common Shares, the payment of astock dividend, or the re-capitalization, combination or reclassification, orother increase or decrease in Common Shares.

 

Stockoptions granted under the 1997 Plan may not be transferred except by will oraccording to the laws of descent and distribution.  During the lifetime of the optionee, stockoptions may be exercised only by the optionee or by his or her guardian orlegal representative.

The1997 Plan provides that if an optionee’s employment with the Company isterminated because of disability or death, no ISOs held by the optionee shallbe exercisable later than 12 months after the date of termination.  Upon the death of

 

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an optionee, all options held orthe unexercised portion thereof exercisable on the date of death areexercisable by the optionee’s personal representative, heirs or legatees at anytime prior to the expiration of 12 months from the date of death.

 

Anoptionee holding ISOs, whose employment with the Company terminates other thanby disability or death must exercise the ISOs within 90 days after suchtermination.

 

The1997 Plan provides that if an optionee terminates employment with the Companybecause of retirement with the consent of the Company, all NSOs held by theoptionee, or unexercised portions thereof, expire on the date of retirementexcept for NSOs or unexercised portions thereof which were otherwiseexercisable on the date of retirement, which expire unless exercised within 90days after the date of retirement.  Anoptionee whose employment with the Company or service as a director of theCompany is terminated for any reason other than those described above mustexercise NSOs within 210 days after such termination of employment or service,as the case may be.

 

The1997 Plan provides that no options shall be granted thereunder after April 25,2007.  If options granted under the 1997Plan expire for any reason or are canceled or terminated prior to April 25,2007, the Common Shares allocable to any unexercised portion of such option mayagain be subject to an option.

 

Becausethe 1997 Plan will provide optionees the opportunity to acquire Common Sharesthrough the exercise of stock options, the exercise of any stock option mayhave a proportionate dilutive effect on the holders of then outstanding CommonShares from both a financial standpoint (effect on earnings per share, etc.)and voting standpoint.

 

TheBoard of Directors may amend, suspend or discontinue the 1997 Plan at anytime.  However, no such amendment may,without shareholder approval, materially increase the number of Common Shareswhich may be issued under the Plan, change the class of eligible participantsor materially increase benefits accruing to participants under the Plan.

 

As of December 15, 2004, there were outstanding ISO’sto purchase 295,000 Common Shares at an average per share exercise price of$1.18 and NSO’s to purchase 110,000 Common Shares at an average per shareexercise price of $1.20.

 

Thefollowing table sets forth information as to stock options granted under the1997 Stock Option Plan for the fiscal year ended August 31, 2004 to eachexecutive officer whose aggregate remuneration is set forth above.

 

### **Options/SAR Grants In Last Fiscal Year**

 

### **Individual Grants**

 
| **(a)**                 | ** ** | **(b)**                                                          | ** ** | **(c)**                                                             | ** ** | **(d)**                             | ** ** | **(e)**             | ** ** |
|-------------------------|------------|------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|-------------------------------------|------------|---------------------|------------|
| **Name**                | ** ** | **Number of  Securities  Underlying  Options/SARs  Granted (#)** | ** ** | **% of Total  Options/SARs  Granted to  Employees in  Fiscal Year** | ** ** | **Exercise or  Base Price  ($/Sh)** | ** ** | **Expiration Date** | ** ** |
|                    |       |                                                             |       |                                                                |       |                                |       |                |       |
| Bruce M. Miller         |       | 10,000                                                           |       | 33.3                                                                | %          | 1.66                                |       | 2/09                |       |
| Steven M.  Besbeck      |       | 10,000                                                           |       | 33.3                                                                | %          | 1.51                                |       | 2/09                |       |
| James R. Helms          |       | 10,000                                                           |       | 33.3                                                                | %          | 1.51                                |       | 2/09                |       |
| Christopher S.  Coleman |       | 0                                                                |       | 0                                                                   | %          |                                |       |                |       |

 

Thefollowing table sets forth information as to stock options granted under the1997 Stock Option Plan, and the net value received from the exercise of options(market value of stock on the date of exercise, less the exercise price) byeach executive officer whose aggregate remuneration is set forth above.

 

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**Aggregated Option/SAR Exercises in Last Fiscal Year**

 
| **(a)**                 | ** ** | **(b)**                                | ** ** | **(c)**                 | ** ** | **(d)**                                                                                                  | ** **    | **(e)**                                                                                        | ** **  |
|-------------------------|------------|----------------------------------------|------------|-------------------------|------------|----------------------------------------------------------------------------------------------------------|---------------|------------------------------------------------------------------------------------------------|-------------|
| **Name**                | ** ** | **Shares  Acquired  on Exercise  (#)** | ** ** | **Value Realized  ($)** | ** ** | **Number of Securities  Underlying Unexercised  Options/SARs at FY-End  (#)  Exercisable/Unexercisable** | ** **    | **Value of Unexercised In-  the-Money Options/SARs at  FY-End ($)  Exercisable/Unexercisable** | ** **  |
|                    |       |                                   |       |                    |       |                                                                                                     |          |                                                                                           |        |
| Bruce M. Miller         |       | 0                                      |       | $                       | 0          |                                                                                                     | 47,500/22,500 |                                                                                           | 3,800/1,800 |   |
| Steven M.  Besbeck      |       | 0                                      |       | $                       | 0          |                                                                                                     | 47,500/22,500 |                                                                                           | 7,800/1,800 |   |
| James R. Helms          |       | 0                                      |       | $                       | 0          |                                                                                                     | 47,500/22,500 |                                                                                           | 8,150/2,150 |   |
| Christopher S.  Coleman |       | 0                                      |       | $                       | 0          |                                                                                                     | 10,000/5,000  |                                                                                           | 2,900/2,150 |   |

 

**Other Non-QualifiedStock Options**

 

On March 5, 1992,the Board of Directors of the Company granted special one-time grants of stockoptions to the Chairman and senior officers of the Company, all of whom arealso directors of the Company, to purchase up to 300,000 shares of the Company’sCommon Shares, for a period of five years from the date of grants, at anexercise price of $1.375 per share, the market price of the Common Shares onMarch 5, 1992.  On February 6, 1997, theexpiration date of the options was extended to December 31, 2000.  On December 14,1998 the options were repricedto $.90 per share.  On December 13, 2000,the expiration date of the options was extended to December 31, 2003.  The market price of the Common Shares onDecember 13, 2000 was $.44 per share. The options are fully vested and are exercisable at $.90 per share.  Special stock options were granted to Mr.Miller to purchase up to 100,000 Common Shares, to Mr. Besbeck to purchase upto 100,000 Common Shares, and to Mr. Helms to purchase up to 100,000 Common Shares.  These options expired on December 31, 2003.

 

**EquityCompensation Plan Information**

 
| **Plan category**                                       | ** ** | **Number of securities to be  issued upon exercise of  outstanding options,  warrants and rights(a)** | ** ** | **Weighted-average exercise  price of outstanding options,  warrants and other rights(b)** | ** ** | **Number of securities  remaining available for  future issuance under equity  compensation plans  (excluding securities  reflected in column (a))(c)** | ** ** |
|---------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity  compensation plans approved by security holders |       | 800,000                                                                                               |       | $                                                                                          | 1.19       |                                                                                                                                                    | 290,875    |   |
| Total                                                   |       | 800,000                                                                                               |       | $                                                                                          | 1.19       |                                                                                                                                                    | 290,875    |   |

 

**Item 11. Security Ownership of Certain BeneficialOwners and Management.**

 

Thefollowing table sets forth certain information known to the Company regardingbeneficial ownership of the Company’s Common Shares at December 15, 2004 of (i)each present Director or nominee for Director, (ii) all officers and Directorsas a group, and (iii) each beneficial owner of more than five percent of theCompany’s Common Shares.  Information asto beneficial owners who are not officers or directors of the Company is basedon publicly available information as of the record date.

 

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| ** **                                                                | ** ** | **Common Shares  Beneficially Owned at  December 15, 2004** | ** ** |
|---------------------------------------------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                                                                | ** ** | **Number of  Shares (1)**                                   | ** ** | **Percent of  Class (2)** | ** ** |
| Steven M.  Besbeck (3) (10)                                               |       | 282,700                                                     |       | 8.4 | % |
| James R. Helms  (4)(10)                                                   |       | 119,300                                                     |       | 3.5 | % |
| Bruce M. Miller  (5)(10)                                                  |       | 357,500                                                     |       | 10.6 | % |
| Christopher S.  Coleman (6)(10)                                           |       | 15,000                                                      |       |   | * |
| Lawrence S.  Schmid (7)(11)                                               |       | 32,500                                                      |       | 1.0 | % |
| Robert S.  Fogerson, Jr. (8)(12)                                          |       | 39,000                                                      |       | 1.2 | % |
| Norman R. Cohen  (9)(10)                                                  |       | 0                                                           |       |   | * |
|                                                                      |       |                                                        |       |   |   |
| All officers and  Directors as a Group (3)(4)(5)(6)(7)(8)(9)(10)(11) (12) |       | 846,000                                                     |       | 24.0 | % |
|                                                                      |       |                                                        |       |   |   |
| The Wall Street  Group, Inc. (13)                                         |       | 204,000                                                     |       | 6.2 | % |

 

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*  Less than 1%

 

**Footnotes:**

(1)           Solevoting and investment control unless otherwise noted.

(2)           Unlessotherwise indicated, does not include Common Shares issuable under: (a)employee stock option plans.

(3)           Includes47,500 Common Shares issuable under currently exercisable stock options held byMr. Besbeck but excludes 22,500 Common Shares issuable under currentlynon-exercisable stock options held by Mr. Besbeck.

(4)           Includes47,500 Common Shares issuable under currently exercisable stock options held byMr. Helms but excludes 22,500 Common Shares issuable under currentlynon-exercisable stock options held by Mr. Helms.

(5)           Includes47,500 Common Shares issuable under currently exercisable stock options held byMr. Miller but excludes 22,500 Common Shares issuable under currentlynon-exercisable stock options held by Mr. Miller.

(6)           Includes10,000 Common Shares issuable under currently exercisable stock options held byMr. Coleman but excludes 5,000 Common Shares issuable under currentlynon-exercisable stock options held by Mr. Coleman.

(7)           Includes27,500 Common Shares issuable under currently exercisable stock options held byMr. Schmid, but excludes 22,500 Common Shares issuable under currentlynon-exercisable stock options held by Mr. Schmid.

(8)           Includes27,500 Common Shares issuable under currently exercisable stock options held byMr. Fogerson but excludes 22,500 Common Shares issuable under currentlynon-exercisable stock options held by Mr. Fogerson.

(9)           Excludes10,000 Common Shares issuable under currently non-exercisable stock optionsheld by Mr. Cohen.

(10)         Mr.Miller’s, Mr. Besbeck’s, Mr. Helms’, Mr. Cohen’s and Mr. Coleman’s address is26115-A Mureau Road, Calabasas, CA 91302.

(11)         Mr.Lawrence Schmid’s address is c/o Strategic Directions International, Inc., 6242Westchester Parkway, Suite 100, Los Angeles, CA 90045.

(12)         Mr.Robert Fogerson’s address is 13100 Brenwood Circle, Minnetonka, MN 55343.

(13)         TheWall Street Group, Inc.’s address is 32 E. 57th Street, New York, NY 10022.

 

**SECTION16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**

 

Section 16(a) of the Securities Exchange Act of 1934requires the Company’s directors and executive officers, and persons who ownmore than 10% of a registered class of the Company’s equity securities, to filewith the Securities and Exchange Commission and the American Stock Exchange(AMEX) reports of ownership and changes in ownership of common stock and otherequity securities of the Company. Officers, directors and greater than 10% shareholders are required by SECregulation to furnish the Company with copies of all Section 16(a) forms theyfile.

 

Tothe Company’s knowledge, based solely on a review of the copies of such reportsfurnished to the Company and written representations that no other reports wererequired, during the fiscal year ended August 31, 2004, all Section 16(a)filing requirements applicable to its officers, directors and greater than tenpercent beneficial owners were complied with.

 

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**CODE OF ETHICS**

 

The Board of Directors has adopted a Code of Business Conduct and Ethics, a copy of which is filed as an exhibit to this 10KSB/A.

 

**AUDIT COMMITTEE REPORT**

 

Thefollowing is the report of the Audit Committee with respect to the Company’saudited financial statements for the fiscal year ended August 31, 2004.  Such financial statements include theconsolidated balance sheets of the Company as of August 31, 2004 and 2003, andthe related consolidated statements of operations, shareholders’ equity andcash flows for each of the three years in the period ended August 31, 2004, andthe notes thereto.  The informationcontained in this report shall not be deemed to be “soliciting material” or tobe “filed” with the Securities and Exchange Commission, nor shall suchinformation be incorporated by reference into any future filing under theSecurities Act of 1933, as amended, or the 1934 Securities Exchange Act, asamended, except to the extent that the Company specifically incorporates it byreference in such filing.

 

REVIEW WITH MANAGEMENT

 

The audit committee has reviewed and discussed the Company’s audited financial statements for the fiscal year ended August 31, 2004 with management.

 

REVIEW AND DISCUSSIONS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee has discussed with BDO Seidman, LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by SAS 61 “Communications with Audit Committees”, as amended by SAS 90 “Audit Committee Communications”, which includes, among other items, matters related to the conduct of the audit of the Company’s financial statements.

 

The Audit Committee has also received written disclosures and the letter from BDO Seidman, LLP required by Independence Standards Board Standard No. 1 (which relates to the accountant’s independence from the Company and its related entities) and has discussed with BDO Seidman, LLP its independence from the Company.

 

 

CONCLUSION

 

Based on the review anddiscussions referred to above, the committee recommended to the Company’s Boardthat the Company’s audited financial statements be included in the Company’sAnnual Report on Form 10-KSB for the fiscal year ended August 31, 2004.

 

SUBMITTED BY THE AUDIT COMMITTEE OF

THE BOARD OF DIRECTORS

 

Robert S.Fogerson, Jr.

Lawrence S. Schmid

Norman R. Cohen

 

**Item 12. Certain Relationships and RelatedTransactions.**

 

There are no relationshipsor related party transactions, which the Company, its officers or directors area party to.

 

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**Item 13.  Exhibits and Reports on Form 8-KSB/A**

(a)            Exhibits

 

14.1         Code ofBusiness Conduct and Ethics.

 

**Item14.  Principal Accountant Fees andServices.**

 

The followingtable sets forth fees for services paid to our independent registered publicaccounting firm:

 
| ** **              | ** ** | **2004** | ** ** | **2003** | ** ** |
|-------------------------|------------|----------|------------|----------|------------|
| Audit fees (1)          |       | 92,656   |       | 73,867   |       |
| Audit-related  fees (2) |       | 2,786    |       | 3,341    |       |
| Tax fees (3)            |       | —   |       | —   |       |
| All other fees  (4)     |       | —   |       | —   |       |
|                    |       |     |       |     |       |
| Total                   |       | $        | 95,442     |     | $          | 77,208 |   |
|                         |            |          |            |          |            |  |  |

 

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(1)           Representsfees for professional services provided in connection with the audit of ourannual financial statements and review of our quarterly financial statements,for the fiscal years ended August 31, 2004 and 2003.

(2)           Representsfees for assurance and related services that are reasonably related to theperformance of the auditor review of our financial statements and are notreported in footnote (1) above.  Forfiscal years 2004 and 2003, the fees are for the review of the proxy statementand the annual meeting.

(3)           Representsfees in connection with preparation of our federal and state tax returns.

(4)           During 2004and 2003, the Company did not incur any other fees related to other servicesprovided including no fees related to financial information systems design andimplementation services.

 

Our Audit Committee has determined thatthe provision of non-audit services by BDO Seidman, LLP is compatible withmaintaining BDO Seidman’s independence, and none of such services werepre-approved pursuant to the *de minimis*exception provided in Section 10A (i)(1)(B) of the Securities Exchange Act of1934.

 

Generally, the Audit Committee approvesin advance audit and non-audit services to be provided by BDO Seidman.  In other cases, in accordance with Rule2-01(c)(7) of Securities and Exchange Commission Regulation S-X, the AuditCommittee has delegated pre-approval authority to the Chairman of the AuditCommittee for matters which arise or otherwise require approval betweenregularly scheduled meetings of the Audit Committee, provided that the Chairmanreport such approvals to the Audit Committee at the next regularly scheduledmeeting of the Audit Committee.

 

**SIGNATURES**

 

In accordance with Section 13 or 15(d) of the ExchangeAct, the Company has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 

CREATIVE COMPUTERAPPLICATIONS, INC.

 
| Dated: December 21, 2004 |   | By:    |   |
|--------------------------|--------|--------|--------|
|                     |   |   |   | /S/ Steven M. Besbeck |   |
|                     |   |   |   | Steven M. Besbeck, President, |
|                     |   |   |   | Chief Executive Officer, and Chief  Financial Officer |

 

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