SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Information Analysis Incorporated
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(Name of Registrant as Specified In Its Charter)
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INFORMATION ANALYSIS INCORPORATED
11240 Waples Mill Road, Suite 400
Fairfax, Virginia 22030
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Notice of Annual Meeting of Stockholders
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TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Information
Analysis Incorporated, a Virginia corporation (the "Company"), will be held on
Thursday, August 8, 2002, at 10:00 a.m., local time, at the offices of
Information Analysis Incorporated, 11240 Waples Mill Road, Suite 400, Fairfax,
Virginia 22030, for the following purposes:
1. To elect four (4) directors to serve for the ensuing year;
2. To ratify the selection of independent auditors for fiscal 2002,
3. To consider and act upon any matter incidental to the foregoing and any
other matters which may properly come before the meeting or any
adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.
The Board of Directors has fixed the close of business on July 8, 2002 as the
record date for determination of stockholders entitled to notice of and vote at
the and at any adjournment thereof.
All stockholders are cordially invited to attend the meeting. However, to assure
that a quorum is present at the meeting on August 8, 2002, please mark, sign,
date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose whether or not you expect to
attend the meeting. Any stockholder attending the meeting may vote in person
even if such stockholder has returned a proxy.
By Order of the Board of Directors,
Richard S. DeRose
Secretary
11240 Waples Mill Road, Suite 400
Fairfax, Virginia 22030
July 10, 2002
INFORMATION ANALYSIS INCORPORATED
11240 Waples Mill Road, Suite 400
Fairfax, Virginia 22030
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PROXY STATEMENT
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July 10, 2002
The enclosed Proxy is solicited by the Board of Directors of INFORMATION
ANALYSIS INCORPORATED, a Virginia corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held at the offices of the Company, 11240
Waples Mill Road, Suite 400, Fairfax, Virginia 22030 at 10:00 a.m. on Thursday,
August 8, 2002 and at any adjournment or adjournments thereof.
On July 8, 2002 there were 10,283,515 shares of Common Stock (the "Common
Stock") outstanding. Stockholders of record at the close of business on July 8,
2002 will be entitled to vote at the meeting or any adjournment thereof. The
Company has no other voting securities.
Each share of Common Stock entitles the holder to one vote with respect to all
matters submitted to stockholders at the meeting. A quorum for the meeting is a
majority of the shares outstanding. The proposals to be voted upon by the
stockholders of the Company require the votes of a majority of the voting
securities present at the meeting for approval. Abstentions and broker non-votes
(which result when a broker holding shares for a beneficial holder in "street
name" has not received timely voting instructions on certain matters from such
beneficial holder and the broker does not have discretionary voting power on
such matters) are counted for purposes of determining the presence or absence of
a quorum at the meeting. Abstentions are counted in tabulation of the votes cast
on proposals presented to stockholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved.
The Directors and officers of the Company as a group own approximately 21.4% of
the outstanding voting securities of the Company. Each of the Directors and
officers has indicated his intent to vote all shares of Common Stock owned or
controlled by him in favor of each item set forth herein.
Execution of a Proxy will not in any way affect a stockholder's right to attend
the meeting and vote in person. The Proxy may be revoked at any time before it
is exercised by written notice to the Secretary prior to the Annual Meeting or
by giving to the Secretary a duly executed Proxy bearing a later date than the
Proxy being revoked at any time before such Proxy is voted, or by appearing at
the Annual Meeting and voting in person. The shares represented by all properly
executed Proxies received in time for the meeting will be voted as specified
therein. In the absence of a special choice, shares will be voted in favor all
items set forth herein.
The Board of Directors knows of no other matter to be presented at the meeting.
If any other matter should be presented at the meeting upon which a vote may be
taken, such shares represented by all Proxies received by the Board of Directors
will be voted with respect thereto in accordance with the judgment of the person
named in the Proxies. The Board of Directors knows of no matter to be acted upon
at the meeting that would give rise to appraisal rights for dissenting
stockholders.
This Proxy Statement and the accompanying Proxy were first mailed to
stockholders on or about July 10, 2002.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Directors of the Company are elected annually and hold office until the next
annual meeting of stockholders and until their successors have been elected and
qualified. A board of four (4) directors is to be elected at the meeting. Shares
represented by all proxies received and not so marked as to withhold authority
to vote for any individual Director or for all Directors will be voted (unless
one or more nominees are unable or unwilling to serve) for the election of the
nominees named below.
The Board of Directors of the Company currently consists of one member who is
the Chief Executive Officer of the Company (Sandor Rosenberg), and three
non-employee members (Charles A. May, Jr., Bonnie K. Wachtel, and James D.
Wester).
During the period commencing January 1, 2001 and ending December 31, 2001
("fiscal 2001"), there were three (3) meetings of the Board of Directors of the
Company. During 2001 each director of the Company attended 75% or more of the
aggregate meetings of the board and the committees of the board of which he or
she served, except for Mr. May and Mr. Wester who attended 67% of the meetings.
Messrs. Wester (Chairman) and May and Ms. Wachtel served as members of the Audit
Committee of the Board of Directors of the Company. The Audit Committee held
three (3) meetings during fiscal 2001. The Audit Committee is responsible for
recommending and selecting the appointment of outside auditors, reviewing
financial reports of the Company and performing such other functions as directed
from time to time by the Board. The Board of Directors has not adopted a written
charter for the Audit Committee.
Audit Committee Report
The Audit Committee has reviewed and discussed the audited financial statements
with management and with the Company's independent public accountants. The audit
committee has received from the independent accountants all required written
disclosures regarding the auditors' independence and has discussed the matter of
independence with the independent public accountants in accordance with
Independence Standards Board Standard No. 1. The Audit Committee has discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61, which includes, among other items, matters related
to the audit of the Company's financial statements. Based on the reviews and
discussions with management and the independent accountants, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-KSB for 2001 for filing with
the Securities and Exchange Commission.
Respectfully Submitted,
Charles A. May, Jr.
Bonnie K. Wachtel
James D. Wester
Ms. Wachtel (Chairman) and Messrs. May and Rosenberg served as members of the
Compensation Committee of the Board of Directors of the Company. There were no
committee meetings during 2001.
The Board of Directors currently does not have a standing nominating committee
or a committee performing similar functions. The Board will, as a matter of
policy, give consideration to nominees recommended by stockholders. A
stockholder who wishes to recommend a future nominee should direct his or her
recommendation in writing to the Company's Board of Directors.
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The terms of all current directors of the Company will expire at the time of the
2002 Annual Meeting. The Company proposes for re-election as directors of the
Company each of Messrs. Rosenberg, May, and Wester, and Ms. Wachtel for a term
ending at the 2003 Annual Meeting. If you do not wish your shares to be voted
for any particular nominee, please identify the exceptions in the appropriate
space provided on the proxy card.
If at the time of the meeting, one or more of the nominees have become
unavailable to serve, shares represented by proxies will be voted for the
remaining nominees and for any substitute nominee or nominees designated by the
Board of Directors or, if none, the size of the Board will be reduced. The Board
of Directors knows of no reason why any of the nominees will be unavailable or
unable to serve.
All nominees are currently Directors of the Company and have served continuously
since the date of their election shown below. The following table sets forth,
for each nominee, the nominee's age and the date such nominee became a director
of the Company. Following the table is a brief description of each nominee's
principal occupation for at least the past five years.
Name of Nominee Age Director Since
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Sandor Rosenberg 55 1979
James C. Wester 63 1985
Bonnie K. Wachtel 46 1992
Charles A. May, Jr. 64 1997
Sandor Rosenberg, 55, has been President and Chairman of the Board since
1979. Mr. Rosenberg holds a B.S. degree in Aerospace Engineering from Rensselear
Polytechnic Institute, and has done graduate studies in Operations Research at
George Washington University.
James D. Wester, 63, has been a Director since 1985. He has been a computer
services marketing consultant for more than 15 years. Since 1984, he has been
president of Results, Inc. Mr. Wester obtained a B.M.E. degree from Auburn
University and an M.B.A. from George Washington University.
Bonnie K. Wachtel, 46, has been a Director since 1992. Since 1984, she has
served as vice president and general counsel of Wachtel & Co., Inc., investment
bankers in Washington, D.C. Ms. Wachtel holds BA and MBA degrees from the
University of Chicago and a JD from the University of Virginia. She is a
director of Integral Systems, Inc., a provider of computer systems and software
for the satellite communications market; and VSE Corporation, a provider of
technical services to the federal government.
Charles A. May, Jr., 64, is a consultant focusing on national security and
defense conversion issues. In 1992, he retired as a Lt. General from the Air
Force where he last served as Assistant Vice Chief of Staff, Headquarters US Air
Force, Washington, D.C. He is a graduate of the U.S. Air Force Academy, where he
once served as an Associate Professor of Political Science. General May has also
graduated from the NATO Defense College and has completed the University of
Pittsburgh's Management Program for Executives.
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Director Compensation
Directors of the Company who are not executive officers of the Company receive a
stipend of $500 per quarter plus reimbursement of reasonable expenses incurred
in attending meetings. In addition to the foregoing, all Directors except Mr.
Rosenberg receive stock option grants. The Company has not paid the stipend
since first quarter 2000. The granting of options to Directors is not currently
executed according to a formal Directors Stock Option Plan or agreement. No
Option grants were made to any Director in the fiscal year ended December 31,
2001.
Vote Required and Recommendation of the Board of Directors
Each stockholder of the Company will have one vote for each share of Common
Stock such stockholder holds in the Company. Votes withheld will be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business at the meeting, but have no other legal effect upon election of
directors under Virginia law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
Executive Officers
The current executive officers of the Company are Sandor Rosenberg, Chairman and
Chief Executive Officer; Richard S. DeRose, Executive Vice President, Chief
Financial Officer, Treasurer, and Secretary and Stanley A. Reese, Senior Vice
President and Chief Operating Officer. There are no family relationships among
any of the executive officers, directors, or persons nominated to become
directors of the Company. The executive officers are chosen annually at the
first meeting of the Board of Directors following the annual meeting of
stockholders and serve for one year and until their successors are chosen and
qualify. The previous identification of directors sets forth the age, business
experience, and certain other information regarding Mr. Rosenberg.
Richard S. DeRose, 63, joined the Company in 1991 upon the acquisition of
DHD, Inc., a company founded by Mr. DeRose and of which he was President and
Chief Executive Officer. Prior to DHD, Mr. DeRose held several management
positions in the information technology and telecommunication industries at RCA,
Burroughs, and MCI. Mr. DeRose holds a BS degree in Science from the US Naval
Academy and an MS degree in Computer Systems Management from the US Naval Post
Graduate School.
Stanley A. Reese, 45, joined the Company in 1993. Mr. Reese has been Senior
Vice President since 1997 and Chief Operating Officer since March 1999. From
1992 to 1993, he served as Vice President, Technical Services at Tomco Systems,
Inc. Prior to Tomco Systems, he served as Senior Program manager at ICF
Information Technology, Inc. Mr. Reese has over 19 years experience managing and
marketing large scale mainframes.
Security Ownership of Certain Beneficial Owners & Management
The following table sets forth, as of July 8, 2002 the number of shares and
percentage of the Company's Common Stock owned by all persons known by the
Company to own beneficially more than 5% of the Company's Common Stock, by each
director, by each executive officer named in the Summary Compensation Table, and
by all directors and executive officers as a group. This information has been
obtained in part from such persons and in part from the Company's records. Each
person has sole voting and investment power with respect to the shares indicated
except for shares which may be acquired upon exercise of options and as
otherwise noted.
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NAME AND ADDRESS OF SHARES BENEFICIALLY
BENEFICIAL OWNER (1) OWNED (2) % OF CLASS
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Sandor Rosenberg, Chairman, CEO, and Director 1,752,800 17.0%
Richard S. DeRose, Executive Vice President 365,900 (3) 3.5%
Stanley A. Reese, Senior Vice President 200,750 (4) 1.9%
Charles A. May, Jr., Director 16,000 (5) *
Bonnie K. Wachtel, Director 112,800 (6) 1.1%
James D. Wester, Director 427,355 (7) 4.0%
Kenneth Parsons 712,500 (8) 6.5%
Traditions LP 1,500,000 (9) 13.9%
All directors and executive officers as a group 2,875,605 (10) 26.4%
*less than 1%
(1) The address of all beneficial holders is in care of the Company, except
Ms. Wachtel, whose address of record is 1101 14/th/ St. NW, Washington,
DC 20001, Kenneth Parsons, whose address of record is 4318 Pennbrooke
Court, West River, MD 20764, and Traditions LP, whose address of record
is 1717 Main Street, Suite 2500, Dallas, TX 75201.
(2) All shares are held outright by the individuals listed. References to
options and warrants include all options and warrants exercisable within
60 days of July 8, 2002.
(3) Includes options on 167,900 shares.
(4) Includes options on 178,750 shares
(5) Includes options on 16,000 shares.
(6) Includes options on 13,000 shares.
(7) Includes warrants for 108,000 shares, and options on 190,000 shares.
(8) Includes options on 712,500 shares.
(9) Includes warrants on 500,000 shares.
(10) Includes options on 565,650 shares and warrants for 108,000 shares.
Executive Compensation
The Summary Compensation Table below sets forth individual compensation
information for the Chief Executive Officer and the other executive officers
serving as executive officers as of December 31, 2001 (collectively "Named
Executive Officers"):
Summary Compensation Table
Name and Principal Annual Compensation Securities
------------------- Underlying
Position Year Salary Bonus Options (#)
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Sandor Rosenberg 2001 $85,165 -- --
Chairman of the Board and 2000 $76,904 -- --
Chief Executive Officer 1999 $76,457 -- --
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Richard S. DeRose 2001 $87,017 -- --
Executive Vice President 2000 $75,000 -- 50,000
Chief Financial Officer 1999 $97,617 -- 20,000
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Stanley A. Reese 2001 $82,742 50,000
Senior Vice President and 2000 $75,000 -- --
Chief Operating Officer 1999 $97,867 -- 20,000
No Named Executive Officer has received any perquisite or benefit, securities,
or property that exceeded the lesser of $50,000 or 10% of the total annual
salary and bonus reported for such executive officer.
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Option Grants in Last Fiscal Year
The following table sets forth all option grants during 2001 to all
executive officers:
Option Grants in Last Fiscal Year
% of Total Options Granted Exercise
Name Granted To Employees in Fiscal Price Expiration Date
- ---- ------- ---------------------- ----- ---------------
Year
----
Stanley A. Reese 50,000 37.5% $0.20 09/07/11
The following table depicts option exercise activity in the last fiscal year and
fiscal year-end option values with respect to each of the Named Executive
Officers. The value of unexercised in-the-money options at December 31, 2001
equals the market value of the underlying common stock at December 31, 2001
minus the option exercise price. The fair market value of the Company's common
stock at December 31, 2001 was $0.55.
Aggregated Option Exercises in Last Fiscal Year and FY End Option Values
Shares Number of Securities Value of Unexercised In-
Acquired Underlying Unexercised the-Money Options at
on Value Options at 12/31/01 12/31/01
----- ------------------- --------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
Richard S. DeRose -- 167,900 $15,285 --
Stanley A. Reese -- 178,750 $18,428 --
Compliance With Section 16(a) of The Exchange Act
Section 16(a) ("Section 16(a)") of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires executive officers and Directors and
persons who beneficially own more than ten percent (10%) of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission (the "Commission") and any national
securities exchange on which the Company's securities are registered. Executive
officers, Directors and greater than ten percent (10%) beneficial owners are
required by the Commission's regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the Company
and written representations from the executive officers and Directors, the
Company believes that all Section 16(a) filing requirements applicable to its
executive officers, Directors and greater than ten percent (10%) beneficial
owners were satisfied in 2001.
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PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of its Audit Committee, has
selected the firm of Rubino & McGeehin, Chtd. ("Rubino & McGeehin"), independent
auditors, as auditors of the Company for the fiscal year ending December 31,
2002.
A representative of Rubino & McGeehin will not be present at the Annual Meeting
and will not make a statement or be available to answer questions from
stockholders.
Although stockholder approval of the Board of Directors' selection of Rubino &
McGeehin is not required by law, the Board of Directors believes that it is
advisable to give stockholders an opportunity to ratify this selection.
If this proposal is not approved at the Meeting, the Board of Directors will
reconsider its selection of Rubino & McGeehin.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" SO AS TO RATIFY THE SELECTION OF
RUBINO & MCGEEHIN AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
OTHER MATTERS TO COME BEFORE THE MEETING
In addition to the matters described above, there will be an address by the
Chief Executive Officer and a general discussion period during which
stockholders will have an opportunity to ask questions about the business of the
Company.
If any matter not described in this proxy statement should come before the
meeting, it is the intention of the persons named in the enclosed proxy to vote
the shares they represent as the Board of Directors may recommend. At the time
this proxy statement went to press, the Board of Directors knew of no other
matters which might be presented for stockholder action at the meeting.
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals intended for inclusion in next year's proxy statement should be sent
to the Corporate Secretary of the Company at 11240 Waples Mill Rd. - Suite 400,
Fairfax, VA 22030, and must be received by April 10, 2003.
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SOLICITATION OF PROXIES
The cost of soliciting proxies in the accompanying form will be borne by the
Company. In addition to solicitations by mail, directors, officers, and regular
employees of the Company may solicit proxies in person or by telephone. No
additional compensation will be paid to directors, officers, or regular
employees for such services. Arrangements will be made with banks, brokerage
houses, and other custodians, nominees, and fiduciaries to forward solicitation
material to the beneficial owners of stock held of record by such persons or
firms, and the Company will reimburse such persons of firms for reasonable
out-of-pocket expenses incurred by them in so doing.
REVOCATION OF PROXY
Subject to the terms and conditions set forth herein, all Proxies received by
the Company will be effective, notwithstanding any transfer of the shares to
which such Proxies relate, unless prior to the meeting the Company receives a
written notice of revocation signed by the person who, as of the record date,
was the registered holder of such shares. The Notice of Revocation must indicate
the certificate number or numbers of the shares to which such revocation relates
and the aggregate number of shares represented by such certificate(s).
ANNUAL REPORT
Stockholders may obtain a copy of the Company's annual report (10-KSB), which
includes the financial statements for the Company's most recent fiscal year
ended December 31, 2001 on the Company's web site, www.infoa.com.
MISCELLANEOUS
The management does not know of any other matters which may come before the
meeting. However, if any other matters are properly presented to the meeting, it
is the intention of the person named in the accompanying Proxy to vote, or
otherwise act, in accordance with his judgment on such matters.
By Order of the Board of Directors
Richard S. DeRose, Secretary
Dated: July 10, 2002
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INFORMATION ANALYSIS INCORPORATED
PROXY
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INFORMATION
ANALYSIS INCORPORATED
The undersigned hereby appoints Richard S. DeRose with the power to appoint
his substitute, and hereby authorizes him to represent and to vote, as
designated below, all the shares of common stock of Information Analysis
Incorporated held on record by the undersigned on July 8, 2002, at the annual
meeting of the stockholders to be held on August 8, 2002 or any adjournment
thereof.
1. ELECTION OF DIRECTORS
[_] FOR all nominees listed below (except as marked to the contrary
below).
[_] WITHHOLD AUTHORITY to vote for all nominees listed below.
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.
Sandor Rosenberg
Charles A. May, Jr
Bonnie K. Wachtel
James D. Wester
2. RATIFICATION OF INDEPENDENT AUDITORS
[_] FOR the ratification of Rubino & McGeehin as the independent
auditors.
[_] AGAINST the ratification of Rubino & McGeehin as the independent
auditors.
[_] ABSTAIN from voting in the ratification of Rubino & McGeehin as
the independent auditors.
3. In his discretion, the proxy is authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR AND FOR THE
SELECTION OF Rubino & McGeehin AS INDEPENDENT AUDITORS.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by the President or other authorized officer. If a
partnership, please sign in partnership name by authorized person. PLEASE MARK,
SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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Signature
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Signature, if held jointly
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Title (If Applicable)
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