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 Rule 14a-11(c) or Rule 14a-12
Information Analysis Incorporated
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 0-1 (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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[ ] 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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Page 1 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
INFORMATION ANALYSIS INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1998
The Annual Meeting of Stockholders of Information Analysis Incorporated
will be held Wednesday, May 27, 1998, at 10:00 a.m. at the Holiday Inn - Fair
Oaks, 11787 Lee-Jackson Memorial Highway, Fairfax, VA., 22030, for the following
purposes:
1. To elect five directors for the ensuing year;
2. To ratify the selection of independent auditors for fiscal 1998; and
3. To act upon such other matters as may properly come before the
meeting, or any adjournment thereof.
STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON APRIL 27, 1998 ARE
ENTITLED TO NOTICE OF AND TO VOTE AT THE ANNUAL MEETING AND AT ANY ADJOURNMENT
THEREOF. ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. HOWEVER, TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO
COMPLETE, SIGN AND DATE THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED. STOCKHOLDERS ATTENDING THE MEETING MAY REVOKE THEIR PROXY AND
VOTE IN PERSON.
By Order of the Board of Directors,
Richard S. DeRose
Secretary
11240 Waples Mill Road, Suite 400
Fairfax, Virginia 22030
April 27, 1998
Page 2 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
INFORMATION ANALYSIS INCORPORATED
PROXY STATEMENT
This Proxy Statement is being mailed on or about May 1, 1998, to
holders of shares of Common Stock of Information Analysis Incorporated ("IAI" or
"the Company") in connection with the solicitation of proxies by the Board of
Directors for the Annual Meeting of Stockholders of the Company to be held on
May 27, 1998. Proxies are solicited to give all stockholders of record at the
close of business on April 27, 1998, an opportunity to vote on matters that come
before the meeting. Shares can be voted only if the stockholder is present in
person or is represented by proxy.
When your proxy card is returned properly signed, the shares
represented will be voted in accordance with your directions. You can specify
your choices by marking the appropriate boxes on the enclosed proxy card. If
your proxy card is signed and returned without specifying choices, the shares
will be voted as recommended by the Board of Directors. You may revoke your
proxy at any time before it is voted at the meeting by delivering to the
Secretary of the Company a written notice stating that the proxy is revoked, by
executing a proxy bearing a later date or by attending the meeting and voting in
person.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN
AND RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. If you do attend, you may vote by ballot at the meeting, thereby
canceling any proxy previously given.
On April 10, 1998, there were 6,613,044 shares of common stock
outstanding. Each share of common stock is entitled to one vote on each matter
properly brought before the meeting. Only holders of the Company's Common Stock
of record at the close of business on April 27, 1998 will be entitled to vote at
the meeting.
Directors will be elected by a plurality of all the votes cast at the
meeting, so long as a majority of the shares outstanding is present at the
meeting. A stockholder who abstains from a vote by registering an abstention
vote will be deemed present at the meeting for quorum purposes but will not be
deemed to have voted on the particular matter. Similarly, in the event a nominee
holding shares for beneficial owners votes on certain matters pursuant to
discretionary authority or instructions from beneficial owners, but with respect
to one or more other matters does not receive instructions from beneficial
owners and does not exercise discretionary authority (a so-called "non-vote"),
the shares held by the nominee will be deemed present at the meeting for quorum
purposes but will not be deemed to have voted on such other matters.
Page 3 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
ELECTION OF DIRECTORS
(ITEM 1. ON THE PROXY CARD)
The Board of Directors of the Company currently consists of one
member who is the Chief Executive Officer of the Company (Sandor Rosenberg),
and four non-employee members (Brendan J. Dawson, Charles A. May, Jr., Bonnie
K. Wachtel, and James D. Wester).
During the period commencing January 1, 1997 and ending December 31,
1997 ("fiscal 1997"), there were three meetings of the Board of Directors of the
Company. During such period, each of the incumbent Directors attended all of the
Board meetings held while he or she was a Director, and all Committee meetings
held while he or she served on such Committees.
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 one meeting during fiscal 1997. 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.
Messrs. Dawson (Chairman), Rosenberg and May and Ms. Wachtel
served as members of the Compensation Committee of the Company. The
Compensation Committee held two meetings during fiscal 1997. The
Compensation Committee is responsible for considering compensation of officers
of the Company.
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.
The terms of all current directors of the Company will expire at the
time of the 1998 Annual Meeting. The Company proposes for re-election as
directors of the Company each of Messrs. Rosenberg, Dawson, May, and Wester, and
Ms. Wachtel for a term ending at the 1999 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.
Directors elected at the meeting will hold office until the next annual
meeting or until their successors have been elected and qualified.
The following table sets forth, for each nominee, the nominee's age,
position held with the Company, 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.
NOMINEE DIRECTOR SINCE OFFICE HELD WITH COMPANY
- ------- -------------- ------------------------
Sandor Rosenberg 1979 Chairman of the Board, Chief Executive Officer, Director
Brendan J. Dawson 1997 Director
Charles A. May, Jr. 1997 Director
Bonnie K. Wachtel 1992 Director
James D. Wester 1985 Director
SANDOR ROSENBERG, 51, is the founder of the Company and has been Chairman of the
Board and Chief Executive Officer of the Company since 1979. Mr. Rosenberg holds
a BS degree in Aerospace Engineering from
Page 4 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
Rensselaer Polytechnic Institute, and has done graduate studies in Operations
Research at George Washington University.
BRENDAN J. DAWSON, 57, is an executive management consultant. From July 1997 to
March 1998, he was President and Chief Operating Officer of the Company. From
1996 to 1997, he was CEO and President of MAXM Systems Corporation, a provider
of integrated operations management solutions. From 1992 to 1995, he served as
Executive Vice President and Chief Operating Officer at Legent Corporation. From
1964 to 1994, Mr. Dawson held various positions with IBM, the last of which was
Director of Consulting Services. He holds a BA degree in History from New York
University.
CHARLES A. MAY, Jr., 60, 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 US 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.
BONNIE WACHTEL, 42, has served as vice president and general counsel of Wachtel
& Co., Inc., a Washington, D.C.-based brokerage and investment banking firm,
since 1984. 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.
JAMES WESTER, 59, has been a computer services marketing consultant for more
than 15 years. Since 1984, he has been president of Results, Inc., a computer
services marketing firm. Mr. Wester holds a BME degree from Auburn University
and an MBA from George Washington University.
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 granting of options to
Directors is not currently executed according to a formal Directors Stock Option
Plan or agreement. The following table provides information on options granted
to Directors in the fiscal year ended December 31, 1997:
Director Number of Options Granted Exercise Price
-------- ------------------------- --------------
Brendan Dawson 3,000 $19.16
Charles A. May, Jr. 11,000 $15.25 to $25.75
Bonnie K. Wachtel 8,000 $15.25 to $19.16
James Wester 5,000 $15.25
* Mr. Dawson also received options as an executive officer of the Company.
These options are reported separately.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ALL NOMINEES TO THE BOARD.
EXECUTIVE OFFICERS
The current executive officers of the Company are Sandor Rosenberg,
Chairman and Chief Executive Officer; and Richard S. DeRose, Executive Vice
President, Chief Financial Officer, Treasurer, and Secretary. Brendan Dawson
served as President and Chief Operating Officer through the end of 1997, but has
since resigned as an executive officer of the Company.
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.
Page 5 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
The previous identification of directors sets forth the age,
business experience, and certain other information regarding Mr. Rosenberg
and Mr. Dawson.
RICHARD S. DEROSE, 59, 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. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of April 10, 1998, 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.
NAME AND ADDRESS OF SHARES BENEFICIALLY
BENEFICIAL OWNER (1) OWNED (2) % OF CLASS
- -----------------------------------------------------------------------------------------------------
Sandor Rosenberg, Chairman, CEO, and Director 1,902,800 28.8%
Richard S. DeRose, Executive Vice President 161,900 (3) 2.4%
James D. Wester, Director 378,500 (4) 5.5%
Bonnie K. Wachtel, Director 112,800 (5) 1.7%
Brendan J. Dawson, Director 58,000 (6) *
Charles A. May, Jr., Director 8,000 (7) *
Kenneth Parsons 533,500 (8) 7.5%
White Rock Capital, Inc. 379,500 5.7%
All directors and executive officers as a group 2,622,000 37.1%
* less than 1%
(1) The address of all beneficial holders is care of the Company, except Ms.
Wachtel, whose address of record is 1101 14th St. NW, Washington, DC 20001;
and White Rock Capital, whose address of record is 3131 Turtle Creek Blvd.,
Suite 800, Dallas, TX 75219.
(2) Shares are held outright by the beneficial owner named, except for White
Rock Capital, Inc., which includes shares held by White Rock, Inc. and
shares which White Rock Capital Management, L.P., of which White Rock, Inc.
is the general partner, has purchased for the benefit of institutional
clients and White Rock Capital Partners, L.P.
(3) Includes options on 92,900 shares which are exercisable within 60 days of
April 10, 1998.
(4) Includes warrants exercisable for 108,000 shares, and options on 185,000
shares, all of which are exercisable within 60 days of April 10, 1998.
(5) Includes options on 8,000 shares which are exercisable within 60 days of
April 10, 1998.
(6) Represents options for 58,000 shares which are exercisable within 60 days
of April 10, 1998.
(7) Represents options for 8,000 shares which are exercisable within 60 days of
April 10, 1998.
(8) Includes options on 532,000 shares which are exercisable within 60 days of
April 10, 1998.
SUMMARY COMPENSATION TABLE
Page 6 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
The Summary Compensation Table below sets forth individual compensation
information for the Chief Executive Officer and the other executive officers
(collectively, "the Named Executive Officers") at December 31, 1997, 1996 and
1995.
Name and Principal Annual Compensation
------------------- Securities Underlying
Position Year Salary Bonus Options (#)
- -------- ---- ------ ----- -------
Sandor Rosenberg 1997 $100,375 -- --
Chairman of the Board and 1996 $100,000 $15,000 --
Chief Executive Officer 1995 $100,007 $25,900 --
- ------------------------------------------------------------------------------------------------------------------------
Richard S. DeRose 1997 $110,835 -- 5,000
Executive Vice President 1996 $110,730 $27,500 90,000
Chief Financial Officer 1995 $109,730 $30,900 --
- ------------------------------------------------------------------------------------------------------------------------
Brendan Dawson 1997 $95,202 -- 105,000
President and 1996 -- -- --
Chief Operating Officer* 1995 -- --
- ------------------------------------------------------------------------------------------------------------------------
* Mr. Dawson was employed July 1, 1997 and resigned in February, 1998
No executive officer has received any perquisite or benefit, securities, or
property that exceeded the lesser of $50,000 or 10% of the total annual salary
and bonus reported for such executive officer.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning each grant of
options to purchase the Company's common stock during fiscal year 1997 to the
Named Executive Officers. These options were later repriced (see "Repriced
Options Granted in the Fiscal Year Ended December 31, 1997"). There were no
stock appreciation rights granted.
% of total options
Number of options granted to employees in Exercise price
Name granted fiscal year ($/share) Expiration date
- ---- ------- ----------- --------- ---------------
Richard S. DeRose 5,000 1% $16.00 8/4/2007
Brendan Dawson 100,000 18% $25.75 8/4/2007
Brendan Dawson 5,000 1% $15.25 12/24/2007
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, 1997 equals the market value of the underlying common stock at December 31,
1997 minus the option exercise price. The fair market value of the Company's
common stock at December 31, 1997 was $14.00.
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED DECEMBER 31, 1997 AND
DECEMBER 31, 1997 OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at 12/31/97 12/31/97
Acquired on ---------------------------- --------
Name Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------------- ----------- ------------- ------------- ---------------
Richard S. DeRose 118,600 $1,875,518 92,900 5,000 $1,259,190 --
Brendan Dawson -- -- 55,000 50,000 -- --
REPRICED OPTIONS GRANTED IN THE FISCAL YEAR ENDED DECEMBER 31, 1997
The Board of Directors recognizes that options are a key to providing
appropriate incentives to employees. The Board further recognizes that the
employees needed by the Company to be successful are relatively scarce and in
high demand. As such, option grants are made to many employees at the time they
accept employment by the Company. Said grants are made at the fair market price
of the Company's stock at the time of employment. Many of the options granted in
1997 were made during periods when the value of a share of the Company's Common
Stock, along with the value of shares of companies in the Company's industry
segment, were at unprecedented high levels. When it appeared to the Board of
Directors that, in all probability, the Company, along with its industry
segment, would not recover the higher value in the short term, the Board deemed
it prudent to reduce ption exercise prices for those options having exercise
prices at higher levels. This was undertaken to maintain employees' incentives
to remain with the Company and to avoid adversely impacting employees who were
granted options during the periods when the Company's stock value was at the
higher levels. By proceeding in this manner, the Board sought to re-establish
the degree of incentive it contemplated when the options were initially granted.
On October 29, 1997, the Board of Directors re-priced all options
granted to employees having exercise prices in excess of $14.50 per share to
$14.50 per share. At the same time the 100,000 options granted to Mr. Dawson
in his capacity as an employee, and the 5,000 options granted to Mr. DeRose in
1997 were re-priced by the Board of Directors from $25.75 per share to $16.00
per share.
Page 7 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
RELATED TRANSACTIONS
In September 1996, in order to provide the Company with additional
working capital to develop UNICAST/2000, James C. Wester, a director, agreed to
advance to the Company a sum of up to $300,000, of which $163,887 has been
received. In exchange for these advances, the Company agreed to pay Mr. Wester
20% of all UNICAST/2000 license revenues received by the Company up to 150% of
the total advances made. As of December 31, 1997, Mr. Wester had received no
payments pursuant to this agreement.
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
On June 30, 1997, the Company and Brendan Dawson entered into an
employment agreement under which the Company agreed to pay Mr. Dawson a salary
of $200,000 per year. In addition, Mr. Dawson received 100,000 stock options
initially exercisable at $25.75 which were subsequently re-priced to $16.00 (See
"Re-priced Options Granted in the Fiscal year Ended December 31, 1997").
One-fourth of the options granted to Mr. Dawson were to vest on each quarterly
anniversary of the commencement of his employment.
Under his employment agreement, Mr. Dawson also received the right to
obtain an additional $300,000 of compensation for his one year of service in
lieu of exercising his stock options and deriving gains upon such exercise. Mr.
Dawson was given 15 months from the commencement of his employment to elect to
receive the additional compensation and forego the right to exercise any
outstanding options. Any prior gains realized upon option exercises would reduce
the amount of the additional compensation Mr. Dawson would be entitled to
receive.
Mr. Dawson resigned from the Company on February 28, 1998 for
personal reasons. Consistent with his agreement, Mr. Dawson became vested
in 50,000 options and is entitled to receive $200,000 of additional
compensation in lieu of maintaining his right to exercise his options. Mr.
Dawson has not yet elected whether to forego his options and receive the
additional compensation.
The Company does not maintain an employment agreement with any other
employee.
PERFORMANCE GRAPH
The graph below compares the performance over a five-year period of the
Company's common stock to that of the Nasdaq Stock Market Total Return Index
(Nasdaq SMTRI), a broad market index, and the Nasdaq Computer & Data Processing
Services Stocks Index (Nasdaq CDPSSI). It assumes that $100 is invested in the
Company's common stock, the Nasdaq SMTRI, and the Nasdaq CDPSSI on December 31,
1992, and that all dividends were reinvested. In aggregate, the Company's stock
has increased 3,082% since December 31, 1992. The Nasdaq SMTRI, compiled by the
Center for Research in Security Prices at the University of Chicago, shows the
total return (share price plus reinvested dividends) of all companies listed on
the Nasdaq Stock Market. The Nasdaq SMTRI has increased 140% over the five-year
period ended December 31, 1997. The Nasdaq CDPSSI, also compiled by the Center
for Research in Security Prices at the University of Chicago, is a subset of
Nasdaq listed companies within SIC code 737, and is also a total return index.
From December 31, 1992 to December 31,
Page 8 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
1997, the Nasdaq CDPSSI increased 197%. (This graph is not part of the Company's
required filing; it is presented for informational purposes only.)
The following table sets forth, for December 31 of each year indicated, the
values of the Nasdaq Stock Market Total Return Index and the Nasdaq Computer &
Data Processing Services Stocks Index, together with the relative value of the
index at each anniversary following December 31, 1992; with the index value at
December 31, 1992 established as 100.
[GRAPH APPEARS HERE -- PLOT POINTS BELOW]
Nasdaq Computer & Information Analysis
Nasdaq Stock Market Data Processing Services Incorporated
Total Return Index Stocks Index Common Stock
- -------------------------------------------------------------------------------------------
1992 218.0 (100.0) 384.3 (100.0) $0.44 (100.0)
- -------------------------------------------------------------------------------------------
1993 250.2 (114.8) 406.7 (105.8) $0.44 (100.0)
- -------------------------------------------------------------------------------------------
1994 244.6 (112.2) 493.9 (128.5) $0.44 (100.0)
- -------------------------------------------------------------------------------------------
1995 345.9 (158.7) 752.1 (196.2) $0.44 (100.0)
- -------------------------------------------------------------------------------------------
1996 425.4 (195.2) 928.1 (242.2) $6.78 (1540.9)
- -------------------------------------------------------------------------------------------
1997 522.1 (239.5) 1140.2 (296.7) $14.00 (3181.8)
- -------------------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's executive officers and directors and persons who own more than ten
percent of the Company's common stock file initial reports of ownership of
common stock and reports of changes of ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Executive officers, directors, and stockholders are required to furnish the
Company with copies of all Section 16(a) forms they file. Based on a review of
such copies and other records available to the Company, all such required
filings were made in a timely manner, with the exception of Form 3's which were
due within ten days following the Company's becoming subject to Section 16(a) of
the Exchange Act. Such forms were filed approximately ten days following the due
date for such filings.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 2. ON THE PROXY CARD)
The Board of Directors, on the recommendation of its Audit Committee,
has selected the firm of Ernst & Young LLP, independent auditors, as auditors of
the Company for the fiscal year ending December 31, 1998. Although stockholder
approval of the Board of Directors' selection of Ernst & Young LLP is not
required by law, the Board of Directors believes that it is advisable to give
stockholders an opportunity to ratify this selection. If
Page 9 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
this proposal is not approved at the Meeting, the Board of Directors will
reconsider its selection of Ernst & Young LLP.
Representatives of Ernst & Young LLP are expected to be present at the
Meeting. They will have the opportunity to make a statement if they desire to do
so and will also be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ERNST & YOUNG, LLP.
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 December 31, 1998.
OTHER INFORMATION
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. The Company also has
retained Beacon Hill Partners. to aid in the solicitation of proxies, at an
estimated cost of $3,000 plus reimbursement of reasonable out-of-pocket
expenses.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
Richard S. DeRose
Secretary
April 30, 1998
Page 10 of 11
INFORMATION ANALYSIS INCORPORATED 1998 PROXY
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 April 27, 1998, at the annual
meeting of the stockholders to be held on May 27, 1998 or any adjournment
thereof.
1. Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to
below (except as marked to the vote for all nominees listed below
contrary below
Sandor Rosenberg, Brendan J. Dawson, Charles A. May, Jr., Bonnie K. Wachtel, James D. Wester
INSTRUCTION: To withhold authority for any individual nominee, write that
nominee's name in the space provided below:
- --------------------------------------------------------------------------------
(Continued on the reverse side)
================================================================================
(CONTINUED FROM THE OTHER SIDE)
2. Ratification of Ernst & Young LLP to serve as independent auditors for the
fiscal year ending December 31, 1998.
[ ] FOR the proposal [ ] AGAINST the proposal
3. In their discretion, the Proxies are authorized to vote upon such other
business matters 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 ERNST & YOUNG 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.
DATED:_________________________, 1998
Signature ___________________________
Signature if held jointly ____________________________
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
INFORMATION ANALYSIS INCORPORATED
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