-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KWbOwfMRBey9aZnOgj3/qyILS9+f1J0QZlu11lHmWpxz6Etw4rnR6uWaZSDJXe7i IbexjqV0Vz79JLvwkoXENw== 0000950147-02-000876.txt : 20020719 0000950147-02-000876.hdr.sgml : 20020719 20020719170319 ACCESSION NUMBER: 0000950147-02-000876 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020816 FILED AS OF DATE: 20020719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDT LEARNING INC CENTRAL INDEX KEY: 0001042291 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-OFFICES & CLINICS OF DOCTORS OF MEDICINE [8011] IRS NUMBER: 760545043 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-13725 FILM NUMBER: 02706957 BUSINESS ADDRESS: STREET 1: 2999 NORTH 44TH STREET STREET 2: SUITE 650 CITY: PHOENIX STATE: AZ ZIP: 85018 BUSINESS PHONE: 6029521200 MAIL ADDRESS: STREET 1: 2999 N 44TH STREET STREET 2: SUITE 650 CITY: PHOENIX STATE: AZ ZIP: 85018 FORMER COMPANY: FORMER CONFORMED NAME: PENTEGRA DENTAL GROUP INC DATE OF NAME CHANGE: 19970822 FORMER COMPANY: FORMER CONFORMED NAME: E-DENTIST COM INC DATE OF NAME CHANGE: 20001114 DEF 14A 1 e-8709.txt DEFINITIVE 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 [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 EDT LEARNING, 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) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- (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): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- [ ] 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: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing Party: - -------------------------------------------------------------------------------- (4) Date Filed: - -------------------------------------------------------------------------------- EDT LEARNING, INC. 2999 NORTH 44TH STREET, SUITE, 650 PHOENIX, ARIZONA July 25, 2002 TO THE STOCKHOLDERS OF EDT LEARNING, INC. You are cordially invited to attend the 2002 Annual Meeting of Stockholders (the "Meeting") of EDT Learning, Inc. (the "Company"), to be held on August 16, 2002, at 9:00 a.m., local time, at the Company's offices, 2999 North 44th Street, Suite 650, Phoenix, Arizona 85018. Please read the enclosed 2002 Annual Report to Stockholders and Proxy Statement for the Meeting. Whether or not you plan to attend the Meeting, please sign, date and return the proxy card in the enclosed envelope to Continental Stock Transfer & Trust Company as soon as possible so that your vote will be recorded. If you attend the Meeting having already returned the proxy card, you may withdraw your proxy and vote your shares in person. Since we are a small public company, we urge you to take the time to return your proxy card. Very truly yours, By: /s/ James M. Powers, Jr. ---------------------------------- Name: James M. Powers Jr. Title: Chairman of the Board and Chief Executive Officer EDT LEARNING, INC. 2999 NORTH 44TH STREET, SUITE 650 PHOENIX, ARIZONA NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 16, 2002 TO OUR STOCKHOLDERS: The 2002 Annual Meeting of Stockholders (the "Meeting") of EDT Learning, Inc., a Delaware corporation ("EDT" or the "Company"), will be held on August 16, 2002 at 9:00 a.m., local time, at the Company's offices, 2999 North 44th Street, Suite 650, Phoenix, Arizona 85018, for the following purposes: (1) to elect two Class A directors to serve for a term of three years or until their successors are duly elected and qualified; (2) to consider and vote for a proposal to approve and ratify the appointment of PricewaterhouseCoopers LLP, as the Company's independent accountants for the fiscal year ending March 31, 2003; and, (3) to consider such other matters as may properly come before the Meeting and at any and all adjournments thereof. Only stockholders of record at the close of business on July 1, 2002 are entitled to notice of and to vote at the Meeting. BY ORDER OF THE BOARD OF DIRECTORS s/ James M. Powers, Jr. ---------------------------------- Name: James M. Powers Jr. Title: Chairman of the Board and Chief Executive Officer Phoenix, Arizona July 25, 2002 A PROXY CARD IS ENCLOSED. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE PREPAID, ADDRESSED ENVELOPE TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. RETURNING YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING. EDT LEARNING, INC. 2999 NORTH 44TH STREET, SUITE 650 PHOENIX, ARIZONA PROXY STATEMENT GENERAL INFORMATION The enclosed proxy is solicited by and on behalf of the Board of Directors of EDT Learning, Inc., ("EDT" or the "Company"), for use at the Company's 2002 Annual Meeting of Stockholders (the "Meeting" or the "Annual Meeting") to be held at 9:00 a.m., local time, on August 16, 2002, at 2999 North 44th Street, Suite 650, Phoenix, Arizona 85018, and at any and all adjournments thereof. This Proxy Statement and the accompanying form of proxy are first being mailed or given to the stockholders of the Company on or about July 25, 2002. The Company is mailing its 2002 Annual Report to Stockholders, including consolidated financial statements, simultaneously with this Proxy Statement to all stockholders of record as of the close of business on July 1, 2002. That report does not constitute a part of this proxy solicitation material. INFORMATION CONCERNING SOLICITATION AND VOTING All voting rights are vested exclusively in the holders of the Company's common stock, par value $0.001 per share. Each share of the Company's common stock is entitled to one vote. Cumulative voting in the election of directors is not permitted. Holders of a majority of shares entitled to vote at the Meeting, when present in person or by proxy constitute a quorum. On July 1, 2002, the record date for stockholders entitled to vote at the Meeting, 16,634,096 shares of the Company's common stock were issued and outstanding. Proxies in the enclosed form will be effective if properly executed and returned prior to the Meeting in the enclosed envelope either to Continental Stock Transfer & Trust Company, Proxy Department, 2 Broadway, New York, New York 10275-0491 or the Company at 2999 N. 44th Street, Suite 650, Phoenix, AZ 85018. The Company's common stock represented by each effective proxy will be voted at the Meeting in accordance with the instruction on the proxy. If no instructions are indicated on a proxy, all common stock represented by such proxy will be voted (a) FOR election of the two nominees named in the proxy as Class A directors; (b) FOR approval and ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent accountants for the fiscal year 2003; and (c) as to any other matters of business which properly come before the Meeting, by the named proxies at their discretion. Any stockholder signing and mailing the enclosed proxy may revoke it at any time before it is voted by giving written notice of the revocation to the Company, by voting in person at the Meeting or by filing at the Meeting a later executed proxy. When a quorum is present, in the election of directors, the nominees having the highest number of votes cast in favor of their election will be elected to the Company's Board of Directors. With respect to the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent accountants for the fiscal year 2003, the affirmative vote of a majority of the shares present or represented by proxy at the meeting is required. With respect to any other matter which may properly come before the Meeting, unless a greater number of votes is required by law or by the Company's restated certificate of incorporation, a matter will be approved by the stockholders if the votes cast in favor of the matter exceed the votes cast in opposition. Abstentions, broker non-votes (i.e., shares held by brokers or nominees as to which the broker or nominee indicates on a proxy that it does not have discretionary authority to vote) and any other shares not voted will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum. Broker non-votes and abstentions which may be specified on the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent accountants for the fiscal year 2003, will have the same effect as a vote against that proposal. For purposes of determining the outcome of the election of the directors, or of any other matter which properly may come before the Meeting, abstentions, broker non-votes will not be considered as votes cast for the matter. Thus, abstentions and broker non-votes will have no impact in the election of the two Class A directors, or any other matter which properly may come before the Meeting so long as a quorum is present. The Company will pay the cost of soliciting proxies in the accompanying form. The Company has retained the services of Continental Stock Transfer & Trust Company to assist in distributing proxy materials to brokerage houses, banks, custodians and other nominee holders. The estimated cost of such services is approximately $1,000 plus out-of-pocket expenses. Although there are no formal agreements to do so, proxies may be solicited by officers and other regular employees of the Company by telephone, telegraph or by personal interview for which employees will not receive additional compensation. Arrangements also may be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to beneficial owners of the shares held of record by such persons, and the Company may reimburse such persons for reasonable out-of-pocket expenses incurred by them in so doing. PROPOSAL ONE: ELECTION OF DIRECTORS GENERAL The Company's restated certificate of incorporation provides for the classification of the Company's Board of Directors into three classes. The term of office of the Class A directors expires at this Annual Meeting; the term of office of the Class B directors expires at the Company's 2003 Annual Meeting of Stockholders and the term of office of the Class C directors expires at the Company's 2004 Annual Meeting of Stockholders. Two Class A nominees are proposed to be elected at this Annual Meeting to serve for a three-year term to last until the 2005 Annual Meeting of Stockholders or until their successors are duly elected and have been qualified. The directors whose term will expire at this Annual Meeting have been nominated for re-election as Class A directors. Nominees for Class A directors will be elected by a plurality of the votes cast, assuming a quorum is present at the Annual Meeting. Accordingly, abstentions and broker non-votes will have no effect on the election of directors. Proxies cannot be voted for a greater number of persons than the number of nominees named therein. Unless authority to vote is withheld, the persons named in the enclosed form of proxy will vote the shares represented by such proxy for the election of the nominees for director named below. If, at the time of the Meeting, any of the nominees shall have become unavailable for any reason for election as a director, the persons entitled to vote the proxy will vote for such substitute nominee, if any, as they determine in their discretion. Management is currently unaware of any circumstances likely to render any of the nominees unavailable for election or unable to serve. NOMINEES FOR ELECTION AT THE ANNUAL MEETING The Board of Directors unanimously recommends that the stockholders vote FOR election of the following nominees as Class A directors of the Company. DIRECTOR NAME AGE POSITION SINCE ---- --- -------- ----- James M. Powers, Jr. 46 Chairman of the Board, 1998 President and Chief Executive Officer Preston A. Zuckerman 56 Director 2001 CONTINUING DIRECTORS The persons named below will continue to serve as directors of the Company until the annual meeting of stockholders in the year indicated below and until their successors are elected and take office. Stockholders are not voting on the election of the Class B and Class C directors. The following table shows the names, ages and positions of each continuing director.
DIRECTOR NAME AGE POSITION CLASS - TERM SINCE ---- --- -------- ------------ ----- James H. Collins 55 Director Class B - Expires 2003 2000 David A. Little, D.D.S. 44 Director Class B - Expires 2003 1999 Daniel T. Robinson, Jr. 41 Director Class B - Expires 2003 2000 George M. Siegel 64 Director Class C - Expires 2004 1998
-2- The following table sets forth certain information concerning EDT's directors and nominees to become a director (ages are as of March 31, 2002): NAME AGE POSITION ---- --- -------- James M. Powers, Jr. 46 Chairman of the Board, President and Chief Executive Officer and Director Nominee James H. Collins 55 Director David A. Little, D.D.S. 44 Director Daniel T. Robinson, Jr. 41 Director George M. Siegel 64 Director Preston A. Zuckerman 56 Current Director and Director Nominee JAMES M. POWERS, JR. has served as Chairman, President and CEO of the Company since December 1998. Dr. Powers guided the Company through its initial growth and acquisition phase and subsequent transformation from a dental practice management company to a leading provider of e-Learning solutions. Dr. Powers joined the Company through the merger with Liberty Dental Alliance, Inc., a Nashville based company where he was the founder, Chairman and President from 1997 to 1998. Dr. Powers was a founder and Chairman of Clearidge, Inc., a privately held bottled water company in Nashville, Tennessee from 1993 to 1999. Dr. Powers led Clearidge through 13 acquisitions over three years to become one of the largest, independent bottlers in the Southeast. Dr. Powers also is a founder and Director of Barnhill's Country Buffet, Inc., a chain of 43 restaurants in the Southeast. He received a Doctor of Dental Surgery Degree from The University of Tennessee and received his MBA from Vanderbilt University's Owen Graduate School of Management. JAMES H. COLLINS has served as a corporate executive in financial/operational management for over fifteen years completing seven corporate turnarounds/restructurings and five start-ups, and as an investment banker for ten years in the public/private capital markets and five years with an international accounting firm. Mr. Collins is Chairman and CEO of Vindrauga Corporation, a private equity and financial services firm. From 1998 until 2000, Mr. Collins served as President, COO, CFO and Director of Scripps Clinic, La Jolla, California. Additionally, since 1997, Mr. Collins has served as Chairman and CEO of All Post, Inc., a postproduction company and Cinetech, Inc., a film restoration and preservation company. Industry experience includes technology, consumer electronics, financial services, healthcare, food products, real estate, construction, entertainment and gaming. He serves as a Director of The John Tracy Clinic, a non-profit organization serving hearing-impaired children worldwide. Mr. Collins is a Certified Public Accountant and a NASD General Securities Principal. He received his B.S. and M.B.A. degrees from the University of Southern California. DAVID A. LITTLE, D.D.S. has been engaged in the private practice of dentistry in San Antonio, Texas since 1984 and is president of David A. Little, D.D.S., P.C., one of the Company's affiliated practices. Dr. Little is a member of the American Dental Association, the Texas Dental Association, the Academy of General Dentistry, and the American Academy of Cosmetic Dentistry. Dr. Little is a Fellow in both the American College of Dentists and the International College of Dentists. He frequently lectures to dentists and their staffs on various aspects of dental practice management as well as cosmetic, restorative and implant dentistry. Dr. Little received his B.A. degree from St. Mary's University and his Doctor of Dental Surgery from the University of Texas Health Science Center Dental School in 1984. DANIEL T. ROBINSON, JR. has served as an attorney with The Bogatin Law Firm, PLC in Memphis, Tennessee from 2000 to the present, and has been engaged as an investor and principal advisor in private ventures since 1995. He currently is an owner, officer and director in several closely held businesses. Mr. Robinson also serves as the Chief Manager of several limited liability companies that are principal investors and advisors in private equity projects. In addition to his work as an attorney focusing on mergers and acquisitions, Mr. Robinson has been engaged in merchant banking, software development and the foodservice industries. Mr. Robinson holds a B.B.A. in finance, and an M.B.A. and J.D. from the University of Memphis. He is a member of the Tennessee Bar Association. GEORGE M. SIEGEL is the founder and President of RideAmerica Transportation Group, Inc. Until recently, he served as Chairman of the Board of Directors of BrightStar Information Technology Group, Inc. since its inception. BrightStar is a public company (NASDAQ:BTSR.OB) of which he is a co-founder. He also served as Chairman of the Board of BrightStar's Singapore Joint Venture. Mr. Siegel is a co-founder and Director of EDT Learning, Inc. In 1995 Mr. Siegel co-founded MindWorks Professional Education Group, Inc. In 1990 he founded Parcelway -3- Courier Systems, Inc., publicly traded under Dynamex (AMEX:DDN) and served as its President and Chief Executive Officer until 1995. Mr. Siegel received his B.S. in Business Administration and Marketing from Roosevelt University, Chicago, Illinois. PRESTON A. ZUCKERMAN assumed the role of Senior Vice President and Chief e-Learning Architect for the Company in September, 2001 when EDT acquired Learning-Edge, Inc. Mr. Zuckerman founded Learning-Edge in 1988 as one of the first custom e-Learning development companies in the U.S. He served as its CEO and Chief e-Learning Architect from that time. He has been a leader in the training and communication fields for many years, and Learning-Edge received numerous awards for its work. Prior to founding Learning-Edge, he spent 16 years directing the training and publications departments for Four-Phase Systems (currently Motorola Computer Group) and ITT Corporation. During that period, he successfully introduced criterion-referenced, self-paced, and media-based instruction within both organizations. Mr. Zuckerman started his career as a Computer Specialist and Instructor in the U.S. Navy where he served for seven years. PROPOSAL TWO: APPROVAL AND RATIFICATION OF INDEPENDENT ACCOUNTANTS The Audit Committee of the Board of Directors has selected the firm of PricewaterhouseCoopers LLP as independent accountants of the Company for the fiscal year ended March 31, 2003, subject to the approval and ratification of the Company's stockholders. The Board of Directors unanimously recommends that stockholders vote to approve and ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent accountants for the fiscal year 2003. PricewaterhouseCoopers LLP has served as the independent accountants of the Company since the Company's formation in February of 1997. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Meeting, will have an opportunity to make a statement if they desire, and will be available to respond to appropriate questions. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES PRESENT OR REPRESENTED AT THE MEETING AND ENTITLED TO VOTE IS NEEDED TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR 2003. IF THE APPOINTMENT IS NOT APPROVED, THE MATTER WILL BE REFERRED TO THE AUDIT COMMITTEE FOR FURTHER REVIEW. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR 2003. PricewaterhouseCoopers LLP are the principal accountants of the Company. PricewaterhouseCoopers LLP also provides tax advice to the Company. The Audit Committee of the Board of Directors has considered whether the provision of non-audit services is compatible with maintaining PricewaterhouseCoopers LLP's independence. AUDIT FEES PricewaterhouseCoopers LLP billed the Company and its subsidiaries approximately $162,000 for the following professional services: audit of the annual financial statements of the Company for the fiscal year ended March 31, 2002, and review of the interim financial statements included in quarterly reports on Form 10-Q for the periods ended June 30, September 30, and December 31, 2001. Subsequent to the filing of the 2001 Proxy Statement, Pricewaterhouse Coopers, LLP billed the Company and its subsidiaries $30,000 for professional services related to the audit of the annual financial statements of the Company for the fiscal year ended March 31, 2001. FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES The Company did not engage PricewaterhouseCoopers LLP to provide services to the Company regarding financial information systems design and implementation during the fiscal year ended March 31, 2002. ALL OTHER FEES PricewaterhouseCoopers LLP billed the Company and its subsidiaries approximately $124,000 for other services for the fiscal year ended March 31, 2002 primarily for work on the Company's acquisitions of Learning-Edge, Inc. and ThoughtWare Technologies, Inc. and the related required filing with the Securities and Exchange Commission (the "SEC"). -4- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table shows, as of May 31, 2002, the "beneficial ownership" of the EDT common stock of (i) each director and nominee to become a director, (ii) each executive officer, (iii) all executive officers and directors of EDT as a group and (iv) each person who owns more than 5% of the outstanding common stock. Except as otherwise indicated, the address of each person in the table is c/o EDT Learning, Inc., 2999 N. 44th Street, Suite 650, Phoenix, Arizona 85018.
PERCENT(1) NUMBER ---------- ------ James M. Powers, Jr. 10.3% 1,542,152 (2) Preston A. Zuckerman 10.5% 1,477,536 (3) Charles Sanders 2.1% 303,958 (4) James L. Dunn, Jr. 1.0% 147,983 (5) George M. Siegel * 129,180 (6) David A. Little * 102,307 (7) James H. Collins * 65,000 (8) Daniel T. Robinson, Jr. * 49,215 (9) Barry Blank 13.9% 2,262,400 (10) Renaissance Capital Growth & Income Fund III, Inc. 6.8% 1,031,600 (11), (12), (13) Renaissance US Growth and Income Trust PLC 6.6% 1,000,000 (11), (12), (13) BFS US Special Opportunities Trust PLC 7.9% 1,200,000 (11), (12), (13) ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (EIGHT PERSONS) 24.9% 3,817,331
- ---------- * LESS THAN 1% (1) CALCULATIONS ARE MADE IN ACCORDANCE WITH SECURITIES EXCHANGE ACT RULE 13D-3. (2) INCLUDES 280,573 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK OPTIONS AND 10,857 SHARES THAT MAY BE ACQUIRED UPON THE CONVERSION OF A CONVERTIBLE PROMISSORY NOTE. INCLUDES A RESTRICTED STOCK AWARD FOR 450,000 SHARES ACQUIRED AS A PART OF A STOCK GRANT UNDER THE 1997 STOCK COMPENSATION PLAN. THE AWARD HAS A TERM OF TEN YEARS AND PROVIDES FOR VESTING OF 150,000 OF THOSE SHARES IF THE COMPANY'S STOCK PRICE EXCEEDS $4.50 PER SHARE, 150,000 IF THE COMPANY'S STOCK PRICE EXCEEDS $8.50 PER SHARE, AND THE REMAINING 150,000 IF THE COMPANY'S STOCK PRICE EXCEEDS $12.50 PER SHARE. ALSO INCLUDES A TOTAL OF 100,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS OR CONVERSION OF CONVERTIBLE NOTES HELD BY DR. POWERS AND AN IRA FOR THE BENEFIT OF DR. POWERS' WIFE. (3) INCLUDES 6,250 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2002. (4) INCLUDES 103,658 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2002. (5) INCLUDES 94,958 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2002. (6) INCLUDES 7,500 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2002. (7) INCLUDES 2,500 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2002 AND A TOTAL OF 50,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND CONVERSION OF A CONVERTIBLE NOTE. (8) INCLUDES 5,000 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2002 AND A TOTAL OF 50,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND CONVERSION OF A CONVERTIBLE NOTE HELD FOR THE BENEFIT OF HIS DAUGHTER. (9) INCLUDES 5,000 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2002 AND A TOTAL OF 25,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND CONVERSION OF A CONVERTIBLE NOTE. (10) MR. BLANK'S ADDRESS IS C/O MURPHY & DURIEU, 1661 EAST CAMELBACK ROAD, SUITE 201, PHOENIX, ARIZONA 86016. INCLUDES 1,000,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND 1,000,000 SHARES THAT MAY BE ISSUED UPON CONVERSION OF CONVERTIBLE NOTES. ALSO INCLUDES 190,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS RECEIVED AS COMMISSION IN HIS CAPACITY AS AN AFFILIATE OF THE PLACEMENT AGENT, MURPHY & DURIEU. DOES NOT INCLUDE AN AGGREGATE 200,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND CONVERSION OF CONVERTIBLE NOTES HELD BY HIS MOTHER AND DAUGHTER, WITH RESPECT TO WHICH MR. BLANK DISCLAIMS BENEFICIAL OWNERSHIP. (11) THE ADDRESS OF EACH OF THESE ENTITIES IS 8080 NORTH CENTRAL EXPRESSWAY, SUITE 210-LB 59, DALLAS, TX 75206-1857. (12) INCLUDES 500,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND 500,000 SHARES THAT MAY BE ISSUED UPON CONVERSION OF CONVERTIBLE NOTES. (13) NUMBERS ARE BASED ON A SCHEDULE 13D DATED MARCH 29, 2002 FILED JOINTLY BY THESE ENTITIES. -5- There has been no change in control of the Company since the beginning of its last fiscal year, and there are no arrangements known to the Company, including any pledge of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company. BOARD ORGANIZATION AND MEETINGS During the fiscal year 2002, the Board of Directors of the Company (the "Board") held four (4) regular meetings and two (2) special called meetings and acted by unanimous written consent on three (3) occasions. The Board has an Audit Committee, a Compensation Committee and a Nominating Committee each of which was initially constituted on March 30, 1998. During the fiscal year 2002, each director attended at least seventy-five percent (75%) of the aggregate of the total number of Board meetings and of meetings of committees of the Board on which he served. The members of the Audit and Compensation Committees are not employees of the Company. AUDIT COMMITTEE The Audit Committee recommends the independent public accountants to be selected by the Board for stockholder approval each year and acts on behalf of the Board in reviewing with the independent public accountants, the chief financial officer and other corporate officers, various matters relating to the adequacy of the Company's accounting policies and procedures and financial controls and the scope of the annual audits by the independent public accountants. The Audit Committee consists of Mr. Collins (Chairman), Mr. Siegel and Mr. Robinson. During the fiscal year 2002, the Audit Committee held four (4) meetings. The Audit Committee operates under a written charter adopted by the Board of Directors. The members of the Audit Committee are independent within the meaning of Section 121(A) of the American Stock Exchange's listing standards. COMPENSATION COMMITTEE The Compensation Committee is authorized to establish the general compensation policy for the officers and directors of the Company and annually reviews and establishes or makes recommendations to the entire Board regarding officers' salaries and participation in benefit plans, prepares reports required by the SEC and approves the directors' compensation. The Compensation Committee consists of Mr. Siegel (Chairman), and Mr. Collins. During the fiscal year 2002, the Compensation Committee held six (6) meetings. NOMINATING COMMITTEE The Nominating Committee is authorized to develop policies on the size and composition of the Board and criteria relating to candidate selection, propose to the Board a slate of director nominees for election at annual meetings of stockholders, propose candidates to fill vacancies on the Board; and, recommend board members to serve on the various committees of the Board. The members of the Nominating Committee are Dr. Powers (Chairman), Mr. Robinson and Dr. Little. During the fiscal year 2002, the Nominating Committee held one (1) meeting. DIRECTOR COMPENSATION Directors who are employees of EDT do not receive additional compensation for serving as directors. Each director who is not an employee of EDT receives a fee of $1,500 for attendance at each Board meeting and $750 for each committee meeting (unless held on the same day as a Board meeting). All directors of EDT are reimbursed for out-of-pocket expenses incurred in attending meetings of the Board or committees thereof, and for other expenses incurred in their capacity as directors of EDT. In addition, under the Company's 1997 Stock Compensation Plan (the "Stock Plan"), each such director has been granted nonqualified options to purchase 10,000 shares of EDT common stock. In addition, each newly elected nonemployee director automatically will be granted nonqualified options to purchase 10,000 shares of EDT common stock on the date that the person first becomes a nonemployee director of the Company. Thereafter, each nonemployee director automatically will be granted nonqualified options to purchase 15,000 shares of EDT common stock on the date of the Company's annual meeting of stockholders. Each option will have an exercise price per share equal to the fair market value of the Company's common stock on the date of grant. All the options granted to the nonemployee directors have a term of ten years, and become exercisable as to follows: one half on the first anniversary of the date of grant and one half on the second anniversary of the date of grant. -6- EXECUTIVE COMPENSATION The following table sets forth each component of compensation paid or awarded to, or earned by, each person who served as Chief Executive Officer of EDT during the fiscal year ended March 31, 2002, the two other most highly compensated executive officers serving as of March 31, 2002 whose aggregate cash compensation exceeded $100,000 during the fiscal year 2002 and one former executive officer of the Company who would have been one of the four most highly compensated executive officers had such officer been serving as such at the end of the Company's last fiscal year (collectively, the "Named Executive Officers") for the fiscal years indicated. There were no other highly compensated executive officers whose aggregate cash compensation exceeded $100,000 during the fiscal year 2002.
RESTRICTED SECURITIES OTHER STOCK UNDERLYING ALL OTHER NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION POSITION YEAR $ $ $ ($) (#) ($)* - ------------------ ------ ------ ----- ------------ ---------- ---------- ------------ James M. Powers, Jr. (1) 2002 225,372 39,375 179,000 405,000(2) 30,000 9,000 Chairman of the Board 2001 205,776 -- 23,742 180,156 9,000 President and Chief 2000 199,999 -- 52,773 105,000 6,000 Executive Officer Charles Sanders 2002 175,314 21,875 -- 20,000 -- Sr. Vice President, 2001 175,000 -- -- 45,000 -- Chief Financial Officer and Chief Operating Officer James L. Dunn, Jr. 2002 150,257 21,094 -- 20,000 -- Sr. Vice President, 2001 147,780 -- -- 85,000 -- General Counsel and 2000 125,624 -- 1,557 35,000 -- Chief Development Officer Glenn J. Bonagura 2002 106,607 -- -- 2,400 Former Sr. Vice 2001 145,032 -- -- 120,000 5,100 President of Marketing
- ---------- (1) THE AMOUNT SET FORTH AS OTHER COMPENSATION IN FISCAL YEARS 2001 AND 2000 REPRESENTS THE EXPENSES PAID BY EDT IN CONNECTION WITH THE NAMED EXECUTIVE OFFICER'S RELOCATION TO PHOENIX, ARIZONA AND THE PAYMENT OF TAXES ASSOCIATED WITH A LOAN BY THE COMPANY. THE AMOUNT SET FORTH AS OTHER COMPENSATION IN FISCAL YEAR 2000 REPRESENTS A LOAN TO THEEXECUTIVE OFFICER RELATED TO THE FEDERAL INCOME TAX CONSEQUENCES OF A RESTRICTED SHARES GRANT. (2) IN DECEMBER 2001 THE BOARD, BASED ON THE RECOMMENDATION OF THE COMPENSATION COMMITTEE, APPROVED THE GRANT TO THE COMPANY'S CHIEF EXECUTIVE OFFICER OF 450,000 RESTRICTED SHARES OF COMMON STOCK. THE SHARES VEST IN FULL ON THE TENTH ANNIVERSARY OF THE DATE OF GRANT. VESTING ACCELERATES BASED ON THE TRADING PRICE FOR THE COMPANY'S COMMON STOCK AS FOLLOWS:
PERFORMANCE CRITERIA SHARES VESTED -------------------- ------------- SHARE PRICE TRADES FOR $5.50 PER SHARE FOR 20 CONSECUTIVE DAYS 150,000 SHARES SHARE PRICE TRADES FOR $8.50 PER SHARE FOR 20 CONSECUTIVE DAYS 150,000 SHARES SHARE PRICE TRADES FOR $12.50 PER SHARE FOR 20 CONSECUTIVE DAYS 150,000 SHARES
THE $405,000 REFLECTS THE MARKET PRICE OF THE COMMON STOCK AT THE DATE OF GRANT. AT MARCH 31, 2002, 450,000 UNVESTED RESTRICTED SHARES REMAINED OUTSTANDING. BASED ON THE MARKET PRICE OF $1.00 PER COMMON SHARE ON MARCH 31, 2002, THE RESTRICTED SHARES HAD A VALUE OF $450,000. THE COMPANY'S CHIEF EXECUTIVE OFFICER HAS THE RIGHT TO VOTE THE RESTRICTED SHARES. THE RESTRICTED SHARES SHARE IN DIVIDENDS ON THE COMPANY'S COMMON STOCK TO THE EXTENT ANY DIVIDENDS ARE DECLARED BY THE BOARD. * THE RULES CALL FOR A FOOTNOTE EXPLAINING WHAT "ALL OTHER COMPENSATION" IS COMPRISED OF. (SEE ITEM 402 OF REGULATION S-K.) -7- OPTION GRANTS The following table provides information on stock option grants to the Named Executive Officers in the fiscal year ended March 31, 2002 under the Stock Plan. OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
NUMBER OF SECURITIES UNDERLYING OPTIONS % OF TOTAL GRANTED OPTIONS GRANTED GRANT PRESENT DURING TO EMPLOYEES IN EXERCISE PRICE EXPIRATION VALUE FISCAL YEAR FISCAL YEAR ($/SH.) DATE ($)(3) ----------- ----------- ------- ---- ------ James M. Powers, Jr. 7,500(1) 1.5% .50 8/2/11 2,558 22,500(2) 4.4% .50 8/2/11 7,673 Charles Sanders 5,000(1) 1.0% .50 8/2/11 1,705 15,000(2) 2.9% .50 8/2/11 5,115 James L. Dunn, Jr. 5,000(1) 1.0% .50 8/2/11 1,705 15,000(2) 2.9% .50 8/2/11 5,115 Glenn J. Bonagura -- -- -- --
- ---------- (1) VESTED 100% ON APRIL 1, 2002. (2) VEST MONTHLY OVER THREE (3) YEARS IN 1/36 INCREMENTS BEGINNING MAY 1, 2002. (3) CALCULATED USING THE FOLLOWING WEIGHTED-AVERAGE ASSUMPTIONS: DIVIDEND YIELD OF 0%, EXPECTED VOLATILITY OF 75%, RISK-FREE INTEREST RATE OF 3.87% AND EXPECTED LIFE OF SIX (6) YEARS. -8- The following table sets forth certain information with respect to unexercised options to purchase EDT common stock held by the Named Executive Officers at March 31, 2002. (None of the Named Executive Officers exercised options in the fiscal year 2002.) YEAR-END 2002 OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN THE MONEY OPTIONS HELD AT OPTIONS HELD AT MARCH 31, 2002 MARCH 31, 2002 EXERCISABLE UNEXERCISABLE EXERCISABLE (1) UNEXERCISABLE (1) ----------- ------------- --------------- ----------------- James M. Powers, Jr. 236,198 229,375 $35,391 $69,688 Charles Sanders 68,958 121,042 $ 9,479 $23,021 James L. Dunn, Jr. 74,625 98,708 $16,979 $35,521 Glenn J. Bonagura -- -- -- --
- ---------- (1) VALUE OF UNEXERCISED IN-THE-MONEY OPTIONS IS CALCULATED BASED UPON THE DIFFERENCE, IF ANY, BETWEEN THE OPTION EXERCISE PRICE AND THE CLOSING PRICE OF THE COMMON STOCK AT YEAR-END, MULTIPLIED BY THE NUMBER OF SHARES UNDERLYING THE OPTIONS. THE CLOSING PRICE PER SHARE OF EDT COMMON STOCK AS REPORTED ON THE AMEX ON MARCH 31, 2002 WAS $1.00. THE EXERCISE PRICES FOR THE OPTIONS PREVIOUSLY GRANTED TO THE NAMED EXECUTIVE OFFICERS RANGE FROM $0.50 TO $8.50 PER SHARE. EMPLOYMENT AGREEMENTS The Company has entered into employment agreements with Dr. Powers, Mr. Sanders, Mr. Dunn and Mr. Zuckerman. Each of these agreements provides for an annual base salary in an amount not less than the initial specified amount and entitles the employee to participate in all EDT's compensation plans in which other executive officers of EDT participate. Dr. Powers' original employment agreement provided that he serve as the Chairman, President and Chief Executive Officer of EDT for a term of two years commencing on November 13, 1998. Dr. Powers' subsequent employment agreement, effective on November 12, 2000, provides an annual base salary of $225,000 per annum, has a continuous two-year term and is subject to the right of EDT to terminate his employment at any time. Mr. Sanders' current agreement, executed on February 15, 2001, has a continuous two-year term with an annual base salary of $175,000 and is subject to the right of EDT to terminate his employment at any time. Mr. Dunn's current agreement, executed on February 15, 2001, has a continuous two-year term with an annual base salary of $150,000 and is subject to the right of EDT to terminate his employment at any time. Mr. Zuckerman's current agreement, effective on September 12, 2001, has a continuous three-year term with an annual base salary of $150,000 and is subject to the right of EDT to terminate his employment at any time. Dr. Powers, Mr. Sanders, Mr. Dunn and Mr. Zuckerman are eligible to receive an annual cash bonus in accordance with the Company's bonus plan, which provides for a bonus of up to 35%, 25% and 25% respectively of base salary. For purposes of determining the applicable year's earnings per share change, the cash bonuses payable under all other employment agreements between EDT and its officers will be taken into account. Under each of the referenced employment agreements, if EDT terminates the employee's employment without cause (as therein defined), Dr. Powers, Mr. Sanders, Mr. Dunn and Mr. Zuckerman will be entitled to a payment equal to 12 months' salary. Additionally, Dr. Powers, Mr. Sanders, Mr. Dunn, and Mr. Zuckerman's employment agreements provide for a severance payment equal to one (1) year's compensation in the event of termination of employment following a change in control of the Company (as defined therein). Each of the foregoing agreements also contains a covenant limiting competition with EDT for one year following termination of employment. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No executive officer of the Company currently serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Board of directors or as an executive officer of the Company. See "Director and Executive Compensation" and "Certain Transactions" for a description of any transactions between the Company and members of the Board of directors. -9- COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION OVERVIEW The Compensation Committee is responsible for establishing a general compensation policy for officers and employees of the Company, preparing any reports that may be required relating to officer compensation and approving any increases in director's fees. The Compensation Committee consists of Mr. Siegel, and Mr. Collins. In the fiscal year 2002, the Compensation Committee approved, or in some cases recommended to the Board for the Board's approval, remuneration arrangements and compensation plans involving the Company's directors, executive officers and certain other employees whose compensation exceeds specified levels. The Compensation Committee also acts on the granting of stock options to executive officers under the Stock Plan. The Company's executive compensation program has been designed to assist the Company in attracting, motivating and retaining the executive talent necessary for the Company to maximize its return to stockholders. To this end, this program provides competitive compensation levels and incentive pay levels that vary based on corporate and individual performance. The Company's compensation program for executives consists of three key elements: a base salary; a performance-based annual bonus; and periodic grants of stock options. The Compensation Committee believes that this three-part approach best serves the interests of the Company and its stockholders. It enables the Company to meet the requirements of the highly competitive environment in which the Company operates while ensuring that executive officers are compensated in a way that advances both the short-term and long-term interests of its stockholders. Under this approach, compensation for these officers involves a high proportion of pay that is dependent on maximizing long-term returns to stockholders. The annual bonus payable for the fiscal year 2003 will depend on the Company's operational performance in the fiscal year 2003. BASE SALARY Base pay is designed to be competitive with salary levels for comparable executive positions at other companies and the Compensation Committee reviews such comparable salary information as one factor to be considered in determining the base pay for the Company's executive officers. Other factors the Compensation Committee considers in determining base pay for each of the executive officers are that officer's responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The Company has employment agreements with its Chief Executive Officer, the other Named Executive Officers in the Summary Compensation Table and certain of its other officers. These agreements provide for minimum base annual salaries the Company may increase, but cannot decrease. Any increases in these base salaries, the base salaries of the Company's other executive officers and any changes in those salaries will be based on recommendations by the Company's Chief Executive Officer, taking into account such factors as competitive industry salaries, a subjective assessment of the nature of the position and the contribution and experience of the officer. Performance for base salary purposes will be assessed on a qualitative, rather than a quantitative, basis. No specific performance formula or weighting of factors will be used in determining base salary levels. ANNUAL BONUS For the fiscal year 2002, the Company determined that it was their preference to compensate the executive officers both with cash bonuses and in the form of long-term, equity-based compensation through the award of stock options. The Compensation Committee expects to base future annual bonuses on the Company's financial performance and the individual performance of the awardees, and intends to use qualitative, rather than quantitative, factors for this purpose. STOCK PLAN The objectives of the Stock Plan are to (i) attract and retain superior personnel for positions of substantial responsibility and (ii) provide employees, nonemployee directors and advisors with an additional incentive to contribute to the success of the Company. Stock options align the interests of employees and stockholders by providing value to option holders through stock price appreciation only. The Compensation Committee expects that it will make future stock option or other long-term equity-based incentive awards periodically at its discretion based on recommendations of the Chief Executive Officer. Stock option grant sizes, in general, will be evaluated by regularly assessing competitive market practices, the overall performance of the Company the, size of previous grants and the -10- number of options held. In addition, the Compensation Committee may consider factors including that executive's current ownership stake in the Company, the degree to which increasing that ownership stake would provide the executive with additional incentives for future performance, the likelihood that the grant of those options would encourage the executive to remain with the Company and the value of the executive's service to the Company. This posture with regard to stock options is intended to focus management's efforts on maximizing stockholder returns. The number of options granted to a particular participant will also be based on the Company's historical financial success, its future business plans and the individual's position and level of responsibility within the Company, but these factors will be assessed subjectively and not weighted. FISCAL YEAR 2002 CHIEF EXECUTIVE OFFICER PAY As described above, the Compensation Committee considers several factors in developing an executive compensation package. For the Chief Executive Officer, these factors will include competitive market pay practices, performance level, experience, contributions toward achievement of strategic goals and the overall financial and operations success of the Company. The Company entered into an initial employment agreement with Dr. Powers, the Company's Chief Executive Officer, in November 1998. The Company entered into a subsequent employment with Dr. Powers in November 2000 upon expiration of the initial agreement. That agreement has a continuous two-year term at an initial base compensation rate of $225,000 per annum. Dr. Powers is eligible to receive an annual cash bonus in an amount up to 35% of his base salary upon achievement of certain performance targets. In August 2001, the Compensation Committee approved the grant to Dr. Powers of options to purchase a total of 30,000 shares of common stock at a price of $0.50 per share. Options to purchase 7,500 shares vested April 1, 2002. Options to purchase the remaining 22,500 shares vest in 36 equal monthly increments beginning May 1, 2002. In December 2001, the Board, based on the recommendation of the Compensation Committee, approved the grant to Dr. Powers of 450,000 restricted shares of common stock. The shares vest in their entirety on the tenth anniversary of the date of grant. Vesting accelerates based on the trading price of the Company's common stock as follows:
PERFORMANCE CRITERIA SHARES VESTED -------------------- ------------- SHARE PRICE TRADES FOR $5.50 PER SHARE FOR 20 CONSECUTIVE DAYS 150,000 SHARES SHARE PRICE TRADES FOR $8.50 PER SHARE FOR 20 CONSECUTIVE DAYS 150,000 SHARES SHARE PRICE TRADES FOR $12.50 PER SHARE FOR 20 CONSECUTIVE DAYS 150,000 SHARES
The purpose of the foregoing grants was to align Dr. Powers' interest with those of the Company's stockholders. The Compensation Committee believes the terms of this agreement and the foregoing option award and restricted share grant were appropriate. Executive compensation is an evolving field. The Compensation Committee monitors trends in this area, as well as changes in law, regulation and accounting practices, that may affect either its compensation practices or its philosophy. Accordingly, the Committee reserves the right to alter its approach in response to changing conditions. This report will not be deemed incorporated by reference by any general statement incorporating this Proxy Statement by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or under the Exchange Act of 1934, as amended (the "Exchange Act") and will not be deemed filed under either of such statutes except to the extent that the Company specifically incorporates this information by reference. The Compensation Committee: George M. Siegel, Chairman James H. Collins CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In March 2002 in connection with a private placement conducted by the Company, Dr. Powers, an IRA for the benefit of Dr. Powers' wife and Dr. Powers' father purchased for a total purchase price of $100,000, $100,000 in aggregate principal amount of the Company's convertible subordinated notes and warrants to purchase an aggregate of 100,000 shares of the Company's common stock. These purchases were made on the same basis available to other investors in the private placement. In December 2001 in connection with the grant of restricted shares of common stock to Dr. Powers, the Company loaned to Dr. Powers $179,000 related to federal income tax liability incurred by Dr. Powers in connection with the restricted shares grant. The entire principal balance of the loan remains outstanding. The loan bears interest at the rate of 5.62% per annum. All principal and accrued, but unpaid interest shall be due and payable on April 12, 2012. No interim payments on principal or interest are required. The loan and -11- the obligations arising thereunder are secured by a first lien security interest in and to the 450,000 shares of EDT's common stock granted to Dr. Powers in his Restricted Stock Award Agreement dated December 3, 2001. PERFORMANCE GRAPH The following line graph compares the percentage change from date of public offering (March 30, 1998) through March 31, 2002 for (i) the EDT common stock, (ii) a peer group (the "Peer Group") of companies selected by the Company that are e-Learning companies located in the United States, (iii) the AMEX Composite Index and (iv) a peer group of companies engaged in EDT's former business, dental practice management (the "Old Peer Group"). The companies in the Peer Group are Click2Learn, Digital Think, Docent, Learn2, Mentergy, Saba Software, Skillsoft, and Smart Force. The companies in the Old Peer Group are predominately dental management companies located in the United States. The companies in the Old Peer Group are Interdent, Inc., Castle Dental Centers, Inc., Coast Dental Services Inc. and Monarch Dental Corp. THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL Comparison of Total Returns*
March 30, March 31, March 31, March 31, March 31, March 31, Description 1998 1998 1999 2000 2001 2002 - ----------- --------- --------- --------- --------- --------- --------- EDT, Inc. $100 $103 $ 20 $ 18 $ 5 $ 12 AMEX Composite Index $100 $101 $ 96 $136 $119 $127 Peer Group $100 $100 $ 48 $213 $117 $ 77 Old Peer Group $100 $ 97 $ 38 $ 23 $ 3 $ 10
* Total return based on $100 initial investment. The graph is presented in accordance with SEC requirements. Stockholders are cautioned against drawing any conclusions from the data contained therein, as past results are not necessarily indicative of future financial performance. The total return on investment for the period shown for the Company, the AMEX Composite Index and the Peer Group is based on the stock price or composite index at March 30, 1998. The performance graph appearing above will not be deemed incorporated by reference by any general statement incorporating this Proxy Statement by reference into any filing under the Securities Act, or under the Exchange Act and will not be deemed filed under either of those Acts except to the extent that the Company specifically incorporates this information by reference. -12- REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee hereby reports as follows: 1. The Audit Committee has reviewed and discussed the audited financial statements with the Company's management. 2. The Audit Committee has discussed with PricewaterhouseCoopers LLP, the Company's independent accountants, the matters required to be discussed by SAS 61 (Communication with Audit Committees). 3. The Audit Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and has discussed with PricewaterhouseCoopers LLP their independence. 4. Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2002, for filing with the SEC. James H. Collins, Chairman Daniel T. Robinson, Jr. George Seigel SECTION 16 REPORTS Section 16(a) of the Exchange Act requires directors, executive officers and beneficial owners of more than 10% of the outstanding shares of the Company to file with the SEC reports regarding changes in their beneficial ownership of shares in the Company. There were no beneficial owners of EDT, Inc. at March 31, 2002 with more than 10% ownership. Based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that all its directors and executive officers during the fiscal year 2002 complied on a timely basis with all applicable filing requirements under Section 16(a) of the Exchange Act. STOCKHOLDER PROPOSALS Under the rules of the SEC, Stockholder proposals for inclusion in the Company's proxy materials relating to the next annual meeting of stockholders must be received by the Company on or before March 18, 2003. In addition, a stockholder may bring business before the 2003 annual meting or may submit nominations for election as a director at that meeting if the stockholder complies with the requirements specified in EDT's bylaws. The requirements include: (i) providing written notice to EDT's principal executive offices at least 90 and not more than 180 days prior to the annual meeting or the corresponding date for the 2002 Annual Meeting; and (ii) supplying the additional information listed in Article II, Section 11 of EDT's bylaws (in the case of stockholder proposes) and Article II, Section 12 of EDT's Bylaws in the case of director nominations). 2002 ANNUAL REPORT ON FORM 10-K THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2002 WAS FILED ELECTRONICALLY WITH THE SEC. STOCKHOLDERS WHO WISH TO OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT (WITHOUT EXHIBITS) ON FORM 10-K SHOULD ADDRESS A WRITTEN REQUEST TO CHARLES SANDERS, SENIOR VICE PRESIDENT - CHIEF FINANCIAL OFFICER, EDT LEARNING, INC., 2999 N. 44TH STREET, SUITE 650, PHOENIX, ARIZONA, 85018. THE COMPANY WILL PROVIDE COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A REASONABLE FEE. -13- OTHER BUSINESS As of the date of this Proxy Statement, management was not aware of any business not described above would be presented for consideration at the Meeting. If any other business properly comes before the Meeting, it is intended that the shares represented by proxies will be voted in respect thereto in accordance with the judgment of the persons voting them. The above Notice and Proxy Statement are sent by order of the Board. /s/ Charles Sanders - -------------------------------------------- Charles Sanders Sr. Vice President - Chief Financial Officer Phoenix, Arizona -14- EDT LEARNING, INC. 2999 NORTH 44TH STREET, SUITE 650 PHOENIX, ARIZONA PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 16, 2002 The undersigned hereby appoints James M. Powers, Jr. and James L. Dunn, Jr., or either of them, proxies for the undersigned, each with full power of substitution, to vote all shares of Common Stock of EDT Learning, Inc. which the undersigned is entitled to vote, at the Annual Meeting of Stockholders (the "Meeting") to be held on August 16, 2002, at 9:00 a.m., local time, at the Company's offices, 2999 N. 44th Street, Suite 650, Phoenix, Arizona 85018 and at any and all adjournments thereof for the following purposes: (1) Election of Class A Directors: [ ] FOR the nominees listed below (except as marked to the contrary below) [ ] WITHHOLD AUTHORITY to vote for the nominees listed below Nominees: James M. Powers, Jr. and Preston A. Zuckerman (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S NAME ON THE LINE IMMEDIATELY BELOW.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (2) Approval and Ratification of the Appointment of PricewaterhouseCoopers LLP as the Company's Independent Accountants for Fiscal 2003. [ ] FOR [ ] AGAINST [ ] ABSTAIN (3) In their discretion, the proxies are authorized to vote upon such other business as properly may come before the Meeting. [ ] FOR [ ] AGAINST [ ] ABSTAIN -15- PLEASE DATE AND SIGN ON REVERSE SIDE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE NOMINEES FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS AND "FOR" APPROVAL AND RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, AS THE COMPANY'S INDEPENDENT ACCOUNTANTS. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and the Proxy Statement furnished therewith. The undersigned hereby revokes any proxies given prior to the date reflected below. ----------------------- Date --------------------------------------- Signature(s) of stockholders(s) Please complete, date and sign exactly as your name appears herein. If shares are held jointly, each holder should sign. When signing as attorney, executor, administrator, trustee, guardian or corporate official, please add your title. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY AS AGENT FOR THE COMPANY. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING. -16- -----END PRIVACY-ENHANCED MESSAGE-----