SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DIGITAL FUSION, INC.
(Name of Registrant as Specified in Its Charter)
----------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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A-1
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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April 22, 2003
Dear Stockholder:
It is my pleasure to invite you to the 2003 Annual Meeting of
Stockholders of Digital Fusion, Inc. The 2003 Annual Meeting will be held on
June 3, 2003 at 10:00 a.m., local time, at the law offices of Holland & Knight
LLP, 400 North Ashley Drive, Suite 2300, Tampa, Florida.
The notice of the meeting and proxy statement on the following pages
contains information on the formal business of the meeting. Whether or not you
expect to attend the meeting, please sign, date, and return your proxy promptly
in the enclosed envelope to assure your stock will be represented at the
meeting.
The continuing interest of the stockholders in the business of the
Company is gratefully acknowledged and appreciated.
Sincerely,
ROY E. CRIPPEN, III,
Chief Executive Officer and President
DIGITAL FUSION, INC.
4940-A Corporate Drive
Huntsville, Alabama 35805
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 2003
----------------------
To our Shareholders:
The Annual Meeting of Stockholders of Digital Fusion, Inc. ("Digital
Fusion" or the "Company") will be held on June 3, 2003 at the law offices of
Holland & Knight LLP, 400 North Ashley Drive, Suite 2300, Tampa, Florida at
10:00 a.m., local time, to consider and act upon the following matters:
1. To elect four directors to serve, subject to the provisions of the By-laws,
until the next Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified;
2. To ratify the appointment of Pender Newkirk & Company as the independent
auditors for Digital Fusion for the fiscal year ending December 31, 2003;
and
3. To transact such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 16, 2003
are entitled to notice of and to vote at this Meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the shareholders
entitled to vote at the Meeting will be available for examination by any
shareholder for any purpose relating to the Meeting during ordinary business
hours at the executive offices of the Company in Huntsville, Alabama.
By Order of the Board of Directors,
Elena I. Crosby,
Secretary
Huntsville, Alabama
April 22, 2003
IMPORTANT
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND
PROMPTLY RETURN IT IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE, WHETHER OR NOT YOU
INTEND TO ATTEND THE MEETING. PROXIES ARE REVOCABLE, AND ANY SHAREHOLDER MAY
WITHDRAW THEIR PROXY AND VOTE IN PERSON AT THE MEETING.
DIGITAL FUSION, INC.
4940-A Corporate Drive
Huntsville, Alabama 35805
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, JUNE 3, 2003
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of the Company for use at the Annual
Meeting of Stockholders of Digital Fusion, Inc. ("Digital Fusion" or the
"Company") to be held on June 3, 2003 at 10:00 a.m., local time, at the law
offices of Holland & Knight LLP, 400 North Ashley Drive, Suite 2300, Tampa,
Florida, and any adjournment or adjournments thereof, for the purposes set forth
in the accompanying Notice of Meeting. Unless instructed to the contrary on the
proxy, it is the intention of the persons named in the proxy to vote the proxies
in favor of (i) the election of the four director nominees listed below to serve
until the next Annual Meeting of Stockholders, and (ii) ratification of the
appointment of Pender Newkirk & Company as independent auditors for Digital
Fusion for the fiscal year ending December 31, 2003. The record date with
respect to this solicitation is the close of business on April 16, 2003, and
only stockholders of record at that time will be entitled to notice of and to
vote at the meeting.
Our principal executive office is located at 4940-A Corporate Drive,
Huntsville, Alabama 35805 and our telephone number is (256) 837-2620. The shares
represented by all validly executed proxies received in time to be taken to the
meeting, and not previously revoked, will be voted at the meeting. Each proxy
may be revoked by the stockholder at any time prior to its being voted by filing
with us a revoking instrument or a duly executed proxy bearing a later date. The
powers of the proxy holder will be suspended if the person executing the proxy
attends the Annual Meeting in person and so requests. Attendance at the Annual
Meeting will not, in itself, constitute a revocation of a previously granted
proxy. The approximate date on which this proxy statement and accompanying proxy
has first been mailed to stockholders is April 30, 2003.
As of March 31, 2003, 7,167,671 shares of our common stock, par value
$.01 per share, were outstanding. Each stockholder will be entitled to one vote
for each share of common stock registered in his or her own name on the books of
the Company as of the close of business on April 16, 2003, on all matters that
come before the meeting. The presence in person or by proxy at the Annual
Meeting of the holders of a majority of such shares shall constitute a quorum.
There is no cumulative voting.
Directors will be elected by a plurality of votes cast at the Annual
Meeting. All other matters that properly come before the Annual Meeting must be
approved by a majority of the votes present at the Annual Meeting. Votes shall
be counted by one or more employees of StockTrans, Inc. (our "Transfer Agent")
who shall serve as the inspectors of election. The inspectors of election will
canvas the stockholders present in person at the meeting, count their votes and
count the votes represented by proxies presented. With respect to approval of
any particular proposal, abstentions are considered present at the meeting, but
since they are not affirmative votes for the proposal, they will have the same
effect as votes against the proposal. Broker non-votes, on the other hand, are
only considered present at the meeting for the particular proposals voted by
brokers but not for particular proposals for which the broker withheld authority
to vote. Broker non-votes occur when a broker nominee (that has voted on one or
more matters at the meeting) does not vote on one or more other matters at the
meeting because it has not received instructions to so vote from the beneficial
owner and does not have discretionary authority to so vote.
PROPOSAL 1- ELECTION OF DIRECTORS
The four persons named below, who are currently members of our Board of
Directors, have been nominated for reelection to serve until the next Annual
Meeting of Stockholders and until their respective successors have been elected
and qualified.
Unless stated to be voted otherwise, each proxy will be voted for the
election of the nominees named below. All of the nominees have consented to
serve as directors if elected. If at the time of the Annual Meeting any nominee
is unable or declines to serve, the proxies may be voted for any other person
who shall be nominated by the present Board of Directors to fill the vacancy.
The Board of Directors recommends a vote "FOR" the slate of nominees
named below.
Nicholas R. Loglisci, Jr., 41. Mr. Loglisci has served as our Chairman
of the Board since the Company's inception in February 1995. In July 2001, Mr.
Loglisci became the President and COO of Time Link International Corporation (a
privately-held company) a leading provider of workforce management and data
collection solutions. From February 1995 to July 2001, Mr. Loglisci served with
Digital Fusion as its Chief Executive Officer. Prior to founding the Company,
Mr. Loglisci gained corporate experience in a variety of sales, marketing and
management positions while working for Motorola Inc. and the Allen Telecom
Group. Prior to his corporate experience, Mr. Loglisci served as an officer in
the U.S. Army from May 1985 to July 1990. Mr. Loglisci is a graduate of both the
U.S. Army's Airborne and Ranger schools. Mr. Loglisci holds a BS degree in
Engineering from the United States Military Academy and an MBA degree from New
York University's Stern School of Business.
Roy E. Crippen, III, 44. Mr. Crippen has served as a director of the
Company since March 2000. Mr. Crippen became our Chief Executive Officer in July
2001 and has served as President since October 2000. Prior to joining the
Company, he was Chief Executive Officer of digital fusion, inc., a company that
Digital Fusion acquired in March 2000. Before digital fusion, Mr. Crippen was
one of the original founders of PowerCerv Technologies Corporation
("PowerCerv"), an Enterprise Resource Planning ("ERP") software company he
helped take public in 1996. During his time with PowerCerv, Mr. Crippen held
several key positions including Executive Vice President, Chief Technology
Officer, and Vice Chairman. In 1996, Mr. Crippen was co-recipient of the Florida
Entrepreneur of the Year award in the technology division. Mr. Crippen was
Florida Regional Manager for Spectrum Associates, an application development and
consulting company before joining PowerCerv. Mr. Crippen holds a degree in
computer engineering from the University of South Florida.
Ahmad AlKhaled, 36. Mr. AlKhaled has served as a director since April
2000. Mr. AlKhaled has been the Chief Operating Officer of TBV Holdings Limited
since March 2000. Mr. AlKhaled is also the Assistant Deputy Director and head of
the Direct Investment Funds Division at the Kuwait Fund for Arab Economic
Development's Investment Department, which he joined in September 1995. He also
serves on the board of directors of VennWorks LLC, a New York based creator and
operator of leading-edge technology companies, Brask & Co, a U.K.-based
Investment Bank, and Crosby Asia, a Hong Kong-based Investment Bank. Mr.
AlKhaled holds a BA degree from California State University.
O. G. Greene, 61. Mr. Greene has served as a director of the Company
since January 2001 and chairs the audit committee. Mr. Greene currently is
Chairman and Chief Executive Officer of Skylight Corporation, a company
providing on-line banking services to the unbanked. Mr. Greene has also served
as Chief Executive of Enhanced Telecom Services since 1999. Enhanced Telecom is
a company providing consulting services to the telecommunications industry. Mr.
Greene served as Chief Executive Officer of Speer Communications, a Nashville,
Tennessee provider of information and media services to the broadcast and
network industries from October 1997 to February 1999. From June 1995 to July
1997, Mr. Greene served as Chief Executive Officer of Gridnet International, an
enhanced service provider in the telecommunications industry located in Atlanta,
Georgia. From May 1992 to June 1995, Mr. Greene served as the Senior Executive
Vice President and Chief Operating Officer of First Financial Management
Corporation, a firm providing payment system services to the credit card, check
and healthcare industries. From February 1990 to May 1992, Mr. Greene served as
the Chief Executive Officer of National Data Corporation, a firm providing
payment system services to the credit card and health care industries. Mr.
Greene also serves on the board of directors of Princeton eCom Corporation and
PreSolutions Corporation.
DIRECTOR ATTENDANCE
Our Board of Directors met six times and acted two times by unanimous
written consent during the fiscal 2002. Each Director attended more than 75% of
the total number of meetings of the Board and Committees of the Board of
Directors on which he served.
The Board of Directors has standing Compensation and Audit Committees.
Board Committee Membership
Name Compensation Committee Audit Committee
Nicholas R. Loglisci, Jr. *
Roy E. Crippen, III *
Ahmad S. AlKhaled *
O.G. Greene **
Bruce E. Fike (1) ** *
* Member
** Chair
Audit Committee. The functions of the Audit Committee and its activities during
fiscal year 2002 are described below under the heading Report of the Audit
Committee. During the year, the Board examined the composition of the Audit
Committee in light of the adoption by the Nasdaq Stock Market of new rules
governing audit committees. Based upon this examination, the Board confirmed
that two of the three members of the Audit Committee are "independent" within
the meaning of the Nasdaq's new rules. The Audit Committee met five times during
fiscal 2002.
During fiscal 2000, the Audit Committee of the Board of Directors developed a
charter for the Audit Committee, which was approved by the full Board on August
2, 2000. The new charter, which reflects standards set forth and which was filed
with a previous proxy statement, remains effective.
In January 2003, Mr. Crippen resigned from the Audit Committee and was
replaced by Mr. Fike. Until Mr. Fike's resignation, the Audit committee
consisted of Messrs. Greene, Fike and Al-Khaled. Mr. Fike, who resigned as
Director of the Company effective February 28, 2003, was an independent member
of the Audit Committee. Messrs. Greene and Al-Khaled are both independent
directors of the Company.
Compensation Committee. The Compensation Committee, subject to existing
contractual obligations, is responsible for setting and administering the
policies that govern executive compensation and the granting of employee stock
options. The Compensation Committee met five times and acted five times by
unanimous written consent during fiscal 2002.
We do not have a nominating committee. This function is performed by
the Board of Directors.
(1) Bruce E. Fike resigned from the Board of Directors during February 2003.
OTHER EXECUTIVE OFFICERS OF DIGITAL FUSION
Karen L. Surplus, 43. Ms. Surplus has served as our Chief Financial
Officer and Treasurer since January 2001 and previously was our Vice President
of Administration since March 2000. Prior to joining us, she was the Vice
President of Finance of digital fusion, inc. Prior to her position with digital
fusion, Ms. Surplus was Chief Accounting Officer of PowerCerv Corporation, which
she helped take public in 1996. Before her time at PowerCerv, she spent ten
years at Florida Progress Corporation and its subsidiaries, the last position
held being Controller and Assistant Treasurer with the Financial Services
subsidiary. Ms. Surplus spent four years with Arthur Andersen public accounting
firm where she received her Certified Public Accounting license. Ms. Surplus
holds a BA degree in Business from Kansas State University and an MBA degree
from the University of Tampa.
Elena I. Crosby, 37. Ms. Crosby has served as our Director of Legal
Affairs and Secretary since December 2000. Prior to joining us, she served as
Corporate Paralegal for PowerCerv Corporation, handling corporate, SEC, and
intellectual properties as that company was taken public in 1996. Before her
time at PowerCerv, she spent five years at a prominent litigation firm in Miami.
Ms. Crosby previously spent six years as Compliance Manager for two major
brokerage firms where she was responsible for NASD and SEC compliance as well as
trading for institutional accounts.
Certain Relationships and Related Transactions
During March 2000, the Company purchased digital fusion, inc. ("DFI"),
an information technology consulting services company. Roy E. Crippen, III
received 399,396 shares of the Company's common stock for his ownership
interests in DFI and a promissory note in the original principal amount of
$215,891. On November 12, 2002, the Company renegotiated the terms of this note;
which extended the maturity date from March 1, 2003 to March 1, 2005 and
increased the interest rate from 6% to 8 % per annum. All accrued interest was
converted into principal at March 2, 2003 which increased the principal of the
note to $258,123. Roy E. Crippen, III joined the Board of Directors of the
Company in March 2000 and is the Company's current Chief Executive Officer and
President.
During April 2001, the Company sold its web hosting and non-dial-up
business to Veraciti, Inc. for $200,000 cash and $60,000 worth of services to
complete certain customer projects. In addition, Veraciti assumed certain leases
obligations of the Company related to the web hosting and non-dial-up business
and subleased 4,000 square feet of the Company's office space located in Cedar
Knolls, New Jersey. The Company recorded a $211,000 loss related to this sale.
Veraciti is owned by Frank Altieri, a former member of the Board of Directors of
Digital Fusion.
During 2000, the Company entered into a consulting services agreement
with PowerCerv. During 2001, the Company offset its note owed to PowerCerv by
$150,000 for certain consulting services PowerCerv had engaged DFI to perform
relating to this agreement. Roy E. Crippen, III, the Company's Chief Executive
Officer and President, is a member of the Board of Directors of PowerCerv.
Report of the Audit Committee
The following Report of the Audit Committee does not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this Report by reference therein.
The Audit Committee reviewed and discussed the Company's December 31,
2002 audited financial statements with the Company's management and have
discussed with Pender Newkirk & Company ("PNC"), our independent auditors for
our 2002 financial statements, the matters required to be discussed by the
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The audit committee has received written disclosures and a letter from
PNC as required by the Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and the committee has discussed the issue of
auditor independence with PNC.
Based on this review and these discussions, we recommended to the board
of directors that these audited financial statements be included in our Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2002.
PNC did not provide any services other than annual audits and quarterly
reviews.
Members of the Audit Committee
O.G. Greene /s/ O.G. Greene
-----------------------------------
Ahmad AlKhaled /s/ Ahmad AlKhaled
-----------------------------------
Roy E Crippen, III /s/ Roy E. Crippen, III
-----------------------------------
Audit and Non-Audit Fees
Audit Fees
The aggregate fees billed for professional services rendered by our
principal accountants for the audit of the Company's annual financial
statements, its 401(k) plan, the quarterly reviews for the year ended December
31, 2002 and the review of the S-3 filing was $53,000.
Financial Information Systems Design and Implementation Fees
There were no fees billed by PNC for professional services rendered for
information technology services relating to financial information systems design
and implementation for the fiscal year ended December 31, 2002.
All Other Fees
There were no fees billed by PNC for non-audit services other than
services covered above.
Executive Compensation Summary Table
The following table sets forth information concerning total
compensation earned or paid to the Chief Executive Officer and its other most
highly compensated executive officers for the three years ended December 31,
2002.
EXECUTIVE COMPENSATION SUMMARY TABLE
Long-Term
Name and Principal Position Annual Compensation Compensation
(4) Year
Other Restricted Securities
Annual Stock Awards Underlying All
- ------------ ---
Salary Bonus Compensation (1) Options Other
------ ----- ------------- ------- -----
Compensation
Roy E. Crippen, III 2002 $154,583 $0 $8,985 $0 0 $0
Chief Executive 2001 $125,000 $2,500 $8,831 $0 125,000 $0
Officer and President 2000 $83,333 $0 $0 $0 150,000 $0
(2).....................
Karen L. Surplus 2002 $116,406 $0 $1,294 $0 0 $0
Chief Financial Officer 2001 $125,000 $13,125 $2,150 $0 105,000 $0
(3).................... 2000 $91,667 $0 $0 $0 65,000 $0
(1) All other annual compensation was below the minimum threshold required to
be reported.
(2) Mr. Crippen's employment with Digital Fusion commenced on March 1, 2000
when a private company named digital fusion, inc. was acquired.
(3) Ms. Surplus's employment with Digital Fusion commenced on March 1, 2000
when a private company named digital fusion, inc. was acquired.
(4) All other officers made below the minimum threshold required to be
reported.
The following table summarizes options granted during the year ended
December 31, 2002, to the executive officers named in the Summary Compensation
Table above.
OPTION GRANTS DURING FISCAL 2002
- ------------------------------ ----------------------
Number of Securities
Underlying Options
Granted
Name
- ------------------------------ ----------------------
Roy E. Crippen III ....... 0
Karen L. Surplus........... 0
- ------------------------------ ----------------------
AGGREGATED OPTION EXERCISES DURING FISCAL 2002
AND
FISCAL 2002 YEAR-END OPTION VALUES
The following table shows the number of shares underlying both exercisable
and unexercisable stock options held by the executive officers named in the
Summary Compensation Table as of the year ended December 31, 2002, and the
values for exercisable and unexercisable options.
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options In-The-Money Options
Acquired on Value at December 31, 2002 at December 31, 2002
------ --------------------- --------- --------------------
Exercise ($) Realized ($) . (1)
------------ ------------ -- -----
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Roy E. Crippen, III...... 0 0 223,958 51,042 $0 $0
Karen L. Surplus......... 0 0 110,000 60,000 $3,200 $3,200
(1) Options are in-the-money if the market value per share of the shares
underlying the options is greater than the option exercise price. This
calculation is based on the fair market value at December 31, 2002 of $0.37
per share, less the exercise price.
COMPENSATION OF DIRECTORS
Directors are reimbursed for their reasonable expenses in connection
with attendance at meetings of the Board of Directors. All directors who are not
employees (the "Eligible Directors") may participate (as directors) in our Stock
Option Plans. Upon the initial election of an Eligible Director, such director
is granted an option to purchase 25,000 shares of common stock (the "Initial
Options"). The Initial Options become exercisable in full on the date of grant.
In addition, immediately after each Annual Meeting of Stockholders, each
Eligible Director reelected will receive an option to purchase 5,000 additional
shares of common stock (the "Annual Options") per quarter. Each Committee
Chairperson will receive an additional option to purchase 1,000 additional
shares of common stock (the "Annual Options") per quarter. The Initial Options
and Annual Options have a term of ten years and an exercise price payable in
cash or shares of common stock. The exercise price of Initial Options and Annual
Options will be equal to the fair market value of our common stock on the date
of grant. Eligible Directors will receive such additional compensation for their
service as the Board of Directors may determine from time to time. Eligible
directors receive $1,000 per scheduled Board of Director's meeting attended in
person; $500 per scheduled Board of Director's meeting attended via
teleconference; $1,000 per Board of Director's meeting attended via
teleconference if travel costs would exceed $500 and no compensation for
teleconference-only Board of Director's meetings.
In May 2002, we purchased an aggregate of $3,000,000 of directors and
officers liability insurance for indemnification of all of our directors and
officers at a cost of approximately $85,000.
CHANGE-OF-CONTROL ARRANGEMENTS
1998 and 1999 and 2000 Stock Option Plans
Effective as of March 10, 1998, we adopted the 1998 Digital Fusion,
Inc. Stock Option Plan (the "1998 Stock Option Plan") and effective as of May 7,
1999 we adopted the 1999 Digital Fusion, Inc. Stock Option Plan (the "1999 Stock
Option Plan"). Effective as of June 9, 2000, we adopted the 2000 Digital Fusion,
Inc. Stock Option Plan (the "2000 Stock Option Plan"). Stock options granted
under the 1998 Stock Option Plan, the 1999 Stock Option Plan and the 2000 Stock
Option Plan become exercisable in certain situations, including termination of
employment without cause, after a change of control as defined in each of the
1998 Stock Option Plan, 1999 Stock Option Plan and 2000 Stock Option Plan (a
"Stock Option Change of Control").
A Stock Option Change of Control is deemed to occur if any of the
following events occur:
(i) Any "person" or "group" within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (a) becomes the "beneficial owner," as defined in
Rule 13d-3 under the Exchange Act, of 50% or more of the combined
voting power of Digital Fusion's then outstanding securities, otherwise
than through a transaction or series of related transactions arranged
by, or consummated with the prior approval of, the Board of Directors
of Digital Fusion; or (b) acquires by proxy or otherwise the right to
vote 50% or more of the then outstanding voting securities of Digital
Fusion, otherwise than through an arrangement or arrangements
consummated with the prior approval of the Board for the election of
directors, for any merger or consolidation of Digital Fusion or for any
other matter or question.
(ii) During any period of 24 consecutive months, Present
Directors and/or New Directors (each as defined in the 1998, 1999 or
2000 Stock Option Plan) cease for any reason to constitute a majority
of the Board.
(iii) Consummation of (a) any consolidation or merger of
Digital Fusion occurs in which Digital Fusion is not the continuing or
surviving corporation or pursuant to which shares of our stock would be
converted into cash, securities or other property, other than a merger
of Digital Fusion in which the holders of Digital Fusion's stock
immediately prior to the merger have the same proportion and ownership
of common stock of the surviving corporation immediately after the
merger; or (b) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of Digital Fusion occurs.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of March 31, 2003 by: (i) each
person or entity who is known by Digital Fusion to own beneficially 5% or more
of the outstanding shares of common stock, (ii) each of the executive officers
named in the Summary Compensation Table above, (iii) each director, and (iv) all
of our executive officers and directors as a group.
Amount and Nature
of Beneficial Percentage of
Name and Address of Beneficial Owner(12) Ownership (1) Class (2)
---------------------------------------- ------------- ---------
Nicholas R. Loglisci, Jr.(3) ......................................... 530,024 7.2%
Roy Crippen III (4).................................................... 985,314 13.3%
Karen L. Surplus (5)................................................... 189,708 2.6%
Ahmad Al-Khaled (6).................................................... 80,000 1.1%
O. G. Greene. (7)...................................................... 94,000 1.3%
Tekbanc Limited (8).................................................... 643,170 8.7%
Clark and Carla Frederick (9),(10)..................................... 366,411 5.1%
Sean Mann (11)......................................................... 403,376 5.5%
All executive officers and directors as a group (7 persons)............ 2,006,763 25.0%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options and warrants held by that person
that are currently exercisable or are exercisable within 60 days of March
31, 2003 are deemed outstanding. Such shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person. Except as indicated in the footnotes to this table, the
stockholder named in the table has sole voting and investment power with
respect to the shares set forth opposite such stockholder's name.
(2) 7,167,671 shares of common stock are outstanding as of March 31, 2003.
(3) Includes 145,933 shares of common stock Mr. Loglisci has the right to
acquire through the exercise of stock options.
(4) Includes 268,056 shares of common stock Mr. Crippen has the right to
acquire through the exercise of stock options.
(5) Includes 152,708 shares of common stock Ms. Surplus
has the right to acquire through the exercise of stock options.
(6) Includes 80,000 shares of common stock Mr. Al-Khaled has the right to
acquire through the exercise of options.
(7) Includes 94,000 shares of
common stock Mr. Greene has the right to acquire through the exercise of
stock options.
(8) Includes 188,625 shares of common stock that Tekbanc Limited has the right
to acquire through the exercise of warrants.
(9) Mr. Frederick and Carla Frederick own these shares as joint tenants.
(10) Includes 15,000 shares of common stock that Mr. Frederick has the right to
acquire through the exercise of stock options.
(11) Includes 105,000 shares of common stock that Mr. Mann has the right to
acquire through the exercise of stock options.
(12) Unless otherwise indicated, the address of each beneficial owner is 4940-A
Corporate Drive, Huntsville, AL 35805.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company has appointed Pender Newkirk & Company as the Company's
independent auditors for the fiscal year ending December 31, 2003. Pender
Newkirk & Company has served as the Company's independent auditors since
September 27, 2001. Services provided to the Company in fiscal 2002 included
audit of the consolidated financial statements of the Company for the year ended
December 31, 2002, the examination of the Company's consolidated financials
statements and the Company's 401(k) plan, limited review of quarterly reports,
services related to filings with the Securities and Exchange Commission and
consultations on various accounting matters.
Representatives of Pender Newkirk & Company will be present at the
annual meeting to respond to appropriate questions and to make such statements
as they may desire.
The Board of Directors recommends a vote "FOR" the proposal to ratify
the appointment of Pender Newkirk & Company as the independent auditors for
fiscal 2003.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any matters other than those described above to be presented at the
meeting. If any other matters do come before the meeting, the persons named in
the proxy will exercise their discretion in voting thereon.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers, directors and persons owning more than 10% of our common
stock to file reports of ownership and reports of changes of ownership with the
Securities and Exchange Commission. These reporting persons are required to
furnish us with copies of all Section 16(a) forms that they file. Based solely
upon a review of copies of these filings received, we believe that all filing
requirements were complied with during the fiscal year ended December 31, 2002.
STOCKHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at our 2004
Annual Meeting of Stockholders, and to be included in our proxy statement
relating to the 2004 Annual Meeting, must be received at our principal executive
offices by December 31, 2003. In accordance with the advance notice provisions
contained in our By-laws, our Secretary must receive notice of a stockholder's
intent to propose any business at the 2004 Annual Meeting by December 31, 2003.
EXPENSES
We will bear all expenses in connection with the solicitation of
proxies. Our officers and regular employees may, without compensation other than
their regular compensation, solicit proxies by personal interview, telephone or
facsimile. Brokerage houses, banks and other custodians, nominees and
fiduciaries will be reimbursed for their reasonable out-of-pocket expenses
incurred in forwarding proxies and proxy statements to the beneficial owners of
our common stock.
ANNUAL REPORT
A copy of our Annual Report to Stockholders (which includes our annual
report on Form 10-KSB) is being mailed with this Proxy Statement to each
stockholder entitled to vote at the Annual Meeting. Stockholders not receiving a
copy of the Annual Report may obtain one, without charge, by writing, calling or
e-mailing Karen L. Surplus, Chief Financial Officer, Digital Fusion, Inc.,
4940-A Corporate Drive, Huntsville, AL 35805, telephone (256) 837-2620, e-mail
address ksurplus@digitalfusion.com.
By Order of the Board of Directors,
Elena I. Crosby
Secretary
DIGITAL FUSION, INC.
4940-A Corporate Drive
Huntsville, Alabama 35805
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON JUNE 3, 2003
The undersigned hereby appoints Roy E. Crippen, III and Nicholas R.
Loglisci, Jr., or either of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them or their substitutes to represent and to
vote, as designated below, all the shares of stock of Digital Fusion, Inc. held
of record by the undersigned on April 16, 2003, at the annual meeting of
shareholders to be held on June 3, 2003 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)
Nicholas R. Loglisci, Jr., Roy E. Crippen, III, O.G. Greene, Ahmad AlKhaled
2. PROPOSAL TO RATIFY THE SELECTION OF PENDER NEWKIRK & COMPANY AS DIGITAL
FUSION, INC.'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER
31, 2003.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
|_| FOR |_| AGAINST |_| ABSTAIN
The shares represented by this proxy will be voted as directed. If no
direction is given, they will be voted for the election of directors
and for proposals in items 2 and 3.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
DATED: , 2003
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PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
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Signature if held jointly