CALIBER LEARNING NETWORK INC, S-1/A, 1998-05-04

CALIBER LEARNING NETWORK INC
S-1/A, 1998-05-04
EDUCATIONAL SERVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 1998
REGISTRATION NO. 333-47565
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------

AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------
CALIBER LEARNING NETWORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND 8200 52-2001020
(STATE OF
INCORPORATION)
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
3600 CLIPPER MILL ROAD
SUITE 300
BALTIMORE, MARYLAND 21211
(410) 843-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
CHRIS L. NGUYEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CALIBER LEARNING NETWORK, INC.
3600 CLIPPER MILL ROAD
SUITE 300
BALTIMORE, MARYLAND 21211
410-843-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

---------------
COPIES OF ALL COMMUNICATIONS,
INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR SERVICE, SHOULD BE SENT TO:
RICHARD C. TILGHMAN, JR. WALTER G. LOHR, JR.
PIPER & MARBURY L.L.P. HOGAN & HARTSON, L.L.P.
36 SOUTH CHARLES STREET 111 SOUTH CALVERT STREET
BALTIMORE, MARYLAND 21201 BALTIMORE, MARYLAND 21202
410-539-2530 410-659-2700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

CALCULATION OF REGISTRATION FEE

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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE OFFERING OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER UNIT PRICE(1) FEE(2)
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<S> <C> <C> <C> <C>
Common Stock $.01 par
value................. 6,210,000 $14.00 $86,940,000 $25,647
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</TABLE>
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- -------
(1) Includes amount to be sold pursuant to an over-allotment option to be
granted to the Underwriters.
(2) Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION

5,400,000 Shares APRIL 29, 1998

[LOGO OF CALIBER LEARNING NETWORK, INC. APPEARS HERE]

Common Stock

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Of the 5,400,000 shares of Common Stock offered hereby, 4,200,000 are being
sold by Caliber Learning Network, Inc. ("Caliber" or the "Company") and
1,200,000 by a stockholder of the Company (the "Selling Stockholder"). See
"Principal and Selling Stockholders." The Company will not receive any proceeds
from the sale of shares by the Selling Stockholder. Prior to this offering,
there has been no public market for the Common Stock of the Company. It is
currently anticipated that the initial public offering price will be between
$12.00 and $14.00 per share. See "Underwriting" for a discussion of the factors
to be considered in determining the initial public offering price. Application
has been made to list the Common Stock on the Nasdaq National Market under the
symbol "CLBR."

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THE COMMON STOCK OFFERED HEREBY IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 7 HEREOF.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO DISCOUNTS AND TO SELLING
PUBLIC COMMISSIONS COMPANY(1) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share......................... $ $ $ $
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Total(2).......................... $ $ $ $
</TABLE>
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(1) Before deducting expenses payable by the Company estimated at $700,000.
(2) The Company and Selling Stockholder have granted the Underwriters a 30-day
option to purchase up to 810,000 additional shares of Common Stock solely
to cover over-allotments, if any. To the extent that the option is
exercised, the Underwriters will offer the additional shares at the Price
to Public as shown above. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, Proceeds to
Company and Proceeds to Selling Stockholder will be $ , $ , $ and
$ respectively. See "Underwriting."

-----------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject
to the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the
offices of BT Alex. Brown Incorporated, Baltimore, Maryland, on or about ,
1998.

BT Alex. Brown NationsBanc Montgomery
Securities LLC

THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE>

[PHOTOGRAPH OF INTERIOR OF CALIBER CAMPUS]

Trademarks or service marks appearing in this Prospectus are trademarks or
service marks of the companies that utilize them.

The Company intends to furnish to its stockholders annual reports containing
audited financial statements and quarterly reports containing unaudited
financial information for the first three quarters of each year.

----------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THIS OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and the
Financial Statements and related Notes thereto appearing elsewhere in this
Prospectus. Unless otherwise indicated, all information contained in this
Prospectus assumes (i) the Preferred Stock Conversions, the exercise by Sylvan
Learning Systems, Inc. ("Sylvan") of the Hill Option and the Recapitalization
have been effected, (ii) Sylvan's payment of the balance due on the Sylvan
Subscription, (iii) the 1.2274-for-1 split of the outstanding capital stock and
(iv) no exercise of the Warrant held by MCI Communications Corporation ("MCI")
or the Underwriters' over-allotment option. See "--Initial Capitalization and
Recapitalization of the Company" and "Underwriting."

The Company is establishing a state-of-the-art, graduate level learning and
professional training distribution network throughout the United States
designed to meet the needs of prominent universities, major corporations and
working adults. Caliber intends to distribute courses developed by prominent
universities and to distribute professional development and training programs
to Fortune 1000 corporations. Caliber has entered into a five-year contract
with The Johns Hopkins University ("Johns Hopkins") and a five-year contract
with The Wharton School of the University of Pennsylvania ("Wharton") to begin
programs for working adults in 1998. In addition, the Company has signed joint
development agreements with the University of California at Berkeley Extension
School, the Massachusetts Institute of Technology ("MIT") and Georgetown
University. The Company has entered into contracts with Compaq Corporation
("Compaq"), Macmillan Computer Publishing ("Macmillan") and MCI Systemhouse
Corp. ("MCI Systemhouse") to begin programs in 1998. As of April 1, 1998, the
Company had 34 Caliber Campuses open in 34 markets and expects to have 41
Caliber Campuses open in 40 markets by September 1998. Sylvan and MCI organized
Caliber in November 1996, bringing together the educational services expertise
of Sylvan and the technology and telecommunications expertise of MCI.

Caliber's goal is to become the standard for distributed learning and
professional training by maintaining high quality course content, advanced
technology, a professional learning environment and a national presence.
Initially, the Company intends to focus on educational and training programs in
the fields of health care, management development, information
technology/engineering and education. These fields are characterized by (i)
large, dispersed and changing professional populations; (ii) rapid changes in
subject matter; and (iii) required continuing education or professional
development. Caliber is establishing alliances with prominent universities and
major corporations to provide solutions for their lifelong learning and
professional training needs. Caliber believes that it will be able to use these
alliances to facilitate collaboration between universities and corporations for
the development of customized professional development, training and corporate
communications programs. Caliber will distribute these programs to dispersed
corporate constituencies through the Caliber network. Caliber will also provide
other services to increase Campus utilization, including video conferencing
services and hourly classroom rental.

Increasing numbers of working adults have concluded that graduate level
education is necessary for career advancement. Many would prefer to obtain this
education from prominent universities because the prestige of these
universities increases the value of the credentials earned. However, most
universities use a teaching method and provide course content targeted toward
traditional, full-time students that do not meet the practical needs of either
working adults or the corporations that are funding their employees' education.
To date, the alternatives for working adults have been conventional distance
learning and local two-year and four-year colleges. Conventional distance
learning addresses the problems of time and location for working adults but
fails to provide the benefits of traditional classroom learning or the value of
the credential from a prominent university.

3
<PAGE>

Corporations have been spending increasing amounts on communicating with and
training their employees, dealers, and customers. Transporting corporate
trainers to remote offices or employees, dealers and customers to central
training facilities is costly and often difficult to coordinate. The corporate
trainer is typically an intermediary between the expert and the employees,
which may lower the quality of the training.

Caliber combines the best elements of the traditional classroom with the
convenience of distance learning. Caliber Campuses feature professional
classrooms, educational facilitators, state-of-the-art satellite transmission,
video conferencing, wide-area network computing and Internet technologies.
These features give working adults access to live expert instruction, real-time
two-way interactivity with the instructor and the ability to collaborate with
the other course participants. In addition, Caliber integrates personal
computing and the Internet to enhance student-teacher interactivity and to
extend the learning experience beyond the classroom. The Caliber network
addresses the practical constraints of working adults by providing local access
across the nation to prominent university content and professional development
and training programs. The Caliber network enables prominent universities to
extend the market for their educational products without sacrificing high-
quality instruction. Caliber accomplishes this by distributing live,
interactive instruction developed by the university through satellite
broadcast, video conferencing and Internet technologies to Caliber Campuses,
which enables one instructor to teach students across the country. The Caliber
network enables corporations to have an expert address a corporation's
workforce, customers or dealers in geographically diverse locations at the same
time. The efficiency of the Caliber network allows corporations to rapidly
disseminate time sensitive subject matter. In addition, Caliber plans to use
its relationships with prominent universities to manage collaborations between
corporations and universities to develop high quality, effective professional
development programs with content specifically tailored to the corporations'
needs.

The Company was incorporated in Maryland in March 1996. The Company's
executive offices are located at 3600 Clipper Mill Road, Suite 300, Baltimore,
Maryland 21211, and its telephone number is 410-843-1000.

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by the Company................ 4,200,000 shares
Common Stock offered by the Selling Stockholder.... 1,200,000 shares
Common Stock to be outstanding after the offering.. 11,718,642 shares(1)
Use of Proceeds.................................... To finance leasehold
improvements and equip
Caliber Campuses, to repay
outstanding indebtedness
and management fees, to
pay accrued Preferred
Stock dividends and to
provide working capital to
support the Company's
planned growth.
Nasdaq National Market Symbol...................... CLBR
</TABLE>
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(1) After giving effect to the automatic conversion of all of the 2,442,513
currently outstanding shares of the 8% Series A Redeemable Convertible
Preferred Stock (all of which are held by MCI) and the 1,227,393 currently
outstanding shares of the Series B Redeemable Junior Convertible Preferred
Stock (all of which are held by Sylvan) into an aggregate of 3,669,906
shares of Common Stock at the closing of this offering. Excludes (i)
5,167,328 shares of Common Stock issuable upon future conversion of the
5,167,328 shares of Non-Voting Convertible Preferred Stock (all of which
will be held by Sylvan) to be outstanding upon closing of this offering,
(ii) 1,193,573 shares of Common Stock issuable to MCI upon exercise of a
warrant (the "MCI Warrant") at an aggregate exercise price of $3.78
million, and (iii) 1,156,349 shares of Common Stock issuable upon exercise
of management stock options outstanding as of the date of this Prospectus,
at a weighted average exercise price of $1.46 per share. See
"Capitalization," "Management--Employee Benefit Plans" and "Certain
Relationships and Related Transactions."

4
<PAGE>

INITIAL CAPITALIZATION AND RECAPITALIZATION OF THE COMPANY

Upon completion of this offering, 11,718,642 shares of Common Stock and
5,167,328 shares of 6% Non-Voting Convertible Preferred Stock will be
outstanding.

Prior to completion of this offering, the authorized capital of the Company
included two classes of Common Stock, equivalent in all respects except that
each share of Class A Common Stock was entitled to one vote and each share of
Class B Common Stock was entitled to ten votes. The authorized capital also
included two classes of preferred stock, the 8% Series A Convertible Preferred
Stock and Series B Junior Convertible Preferred Stock, each of which will
automatically convert into Class A Common Stock, on a share for share basis,
simultaneously with completion of this offering, subject to payment of accrued
dividends on the Series A Preferred Stock. The Company was capitalized pursuant
to a Stock Purchase Agreement, dated October 23, 1996, under which MCI
purchased 2,442,513 shares of 8% Series A Convertible Preferred Stock for $10.0
million in cash; Sylvan purchased 1,227,393 shares of Series B Junior Preferred
Stock for $1.3 million in cash; each of R. Christopher Hoehn-Saric and Douglas
L. Becker, Sylvan's co-Chief Executive Officers, purchased 1,718,351 shares of
Class A Common Stock for $350,000 each in cash; and John P. Hill, an
independent investor, purchased 5,167,328 shares of Class B Common Stock for
$1.0 million in cash. Messrs. Hoehn-Saric and Becker subsequently transferred
their shares to Sterling Caliber Investment, L.L.C. ("Sterling Caliber"), which
is owned by Messrs. Hoehn-Saric and Becker, two other investors and trusts for
the benefit of their respective families.

In connection with the Company's capitalization: (i) Mr. Hill granted Sylvan
the option to purchase his shares of Class B Common Stock for the lesser of
$5.0 million or the fair market value of the shares on the date of purchase
(the "Hill Option"); (ii) the Company issued MCI a warrant to purchase the
number of shares of Class A Common Stock that would equal 7% of the capital
stock of the Company to be outstanding after the exercise of the warrant at an
aggregate exercise price of $3.78 million (the "MCI Warrant"); (iii) Sylvan
agreed to provide a line of credit to, or guarantee debt for, the Company of up
to $3.0 million (the "Sylvan Loan"); (iv) Sylvan agreed to contribute an
additional $8.0 million of capital to Caliber (the "Sylvan Subscription") to
the extent needed by Caliber for working capital; and (v) MCI agreed to provide
up to $20.0 million in equipment lease financing to the Company, on a "last
look" basis (the "MCI Lease and Guarantee Commitment"). Sylvan, MCI and Messrs.
Becker, Hill and Hoehn-Saric (collectively, the "Stockholders") also entered
into a Stockholders' Agreement in November 1996 which restricted the
transferability of their shares of Caliber stock, required the Stockholders to
elect the other Stockholders or their representatives to the Company's Board of
Directors and prohibited the Company from taking certain actions without the
approval of MCI's Board representative. The Stockholders' Agreement will
terminate upon completion of this offering. Under a Registration Rights
Agreement executed in November 1996, the Company granted Sylvan, MCI and
Messrs. Hoehn-Saric and Becker the right to have their shares of Class A Common
Stock registered under the Securities Act of 1933, as amended (the "Securities
Act"), at various times during the four years following completion of this
offering. Messrs. Hoehn-Saric and Becker have transferred their rights under
the Registration Rights Agreement to Sterling Caliber.

Immediately prior to completion of this offering, (i) the Company's Charter
will be amended so that there will be authorized a single class of Common
Stock, for which all shares of Class A Common Stock will be exchanged on a
share for share basis, and a series of 6% Non-Voting Convertible Preferred
Stock, for which all shares of Class B Common Stock will be exchanged on a
share for share basis (the "Recapitalization"); (ii) MCI's 2,442,513 shares of
8% Series A Convertible Preferred Stock and Sylvan's 1,227,393 shares of Series
B Junior Convertible Preferred Stock will be converted into an aggregate of
3,669,906 shares of Common Stock (the "Preferred Stock Conversion"); (iii)
Sylvan will exercise the Hill Option and purchase Mr. Hill's stock, which will
have been converted to 5,167,328 shares of 6% Non-Voting Convertible Preferred
Stock, for $5.0 million in cash; and (iv) Sylvan will contribute the balance
due on the Sylvan Subscription. MCI will not exercise the MCI Warrant in
connection with this offering, but the MCI Warrant will become exercisable for
1,193,573 shares of Common Stock and no longer will be subject to adjustment
(except for stock splits and similar changes in the capitalization of the
Company). See "Capitalization," "Certain Relationships and Related
Transactions" and "Description of Capital Stock."

5
<PAGE>

SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 22,
1996
(INCEPTION) TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
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<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue......................................... $ -- $ 1,199,293
Expenses:
Campus operating expenses..................... -- 7,133,744
Management fees to Sylvan..................... 480,000 2,400,500
Other selling, general and administrative
expenses..................................... 1,155,171 5,380,972
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Total expenses................................ 1,635,171 14,915,216
Other income (expense):
Interest income............................... -- 536,100
Interest expense.............................. -- (391,312)
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Net loss........................................ $(1,635,171) $(13,571,135)
=========== ============
Net loss per common share attributable to common
stockholders................................... $ (0.21) $ (1.62)
=========== ============
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
----------- ------------ --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............ $ 3,850,440 $8,219,798 $40,115,514
Working capital...................... (1,290,891) 4,073,440 39,270,967
Total assets......................... 14,510,389 18,879,747 62,775,463
Total debt........................... 7,033,076 7,033,076 4,033,076
Redeemable preferred stock........... 11,300,000 -- --
Stockholders' equity (deficit)....... (11,500,356) 5,164,002 55,242,002
</TABLE>
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(1) Pro forma to reflect the (i) Preferred Stock Conversion, (ii)
Recapitalization and (iii) Sylvan's payment of the $5.4 million balance due
on the Sylvan Subscription. See Note 15 of Notes to Financial Statements.
(2) Pro forma as adjusted for the sale of the 4,200,000 shares of Common Stock
offered by the Company hereby (at an assumed initial public offering price
of $13.00 per share), after deduction of underwriting discounts and
commissions and offering expenses, and application of the net proceeds
therefrom, as described in "Use of Proceeds."

6
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby is speculative
and involves a high degree of risk. In addition to the other information in
this Prospectus, the following factors should be considered carefully in
evaluating an investment in the shares of Common Stock offered hereby.

Development Stage Company; History of Operating Losses; and Negative Cash
Flow. Sylvan and MCI organized Caliber in November 1996. To date, Caliber has
been engaged principally in development activities. The Company generated
minimal revenues during 1997 and, therefore, has incurred operating losses and
negative cash flow since inception. As of December 31, 1997, Caliber had
accumulated losses of approximately $15.2 million, and the Company expects to
continue to incur significant losses for at least the next two years. There
can be no assurance that the Company will ever generate sufficient revenues to
achieve or sustain profitability or generate positive cash flow. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Significant Cash Requirements. The Company's continued development,
construction, expansion and operation of its learning network will require
substantial capital. The Company's ability to fund its planned expenditures
and operations depends upon its ability to obtain sufficient equity and debt
financing. The Company's initial capitalization consisted of $13.0 million in
equity from Sylvan, MCI and the other initial stockholders. MCI agreed to
provide $20.0 million, as needed, in lease financing or lease guarantees for
the purchase of furniture and equipment, and Sylvan agreed to guarantee up to
$3.0 million of the Company's debt or to provide up to a $3.0 million line of
credit, at an interest rate of 1% above the NationsBank prime rate. As of
December 31, 1997, $4.0 million of MCI's Lease and Guarantee Commitment had
been used and all of the Sylvan Loan had been drawn. During 1997, the Company
received $2.6 million in partial payment of the Sylvan Subscription. The
Company expects to receive approximately $50.1 million in net proceeds from
this offering and approximately $5.4 million from Sylvan's payment of the
balance due on the Sylvan Subscription. Of these amounts, $3.3 million will be
used to repay the outstanding principal balance and accrued interest on the
Sylvan Loan, $2.9 million to repay deferred management fees to Sylvan and $1.2
million to pay accrued dividends on the Series A Preferred Stock. This will
leave Caliber with approximately $48.1 million of net proceeds from this
offering and payment of the balance of the Sylvan Subscription, $16.0 million
of unused lease commitments from MCI, $3.0 million of available borrowings
under the Sylvan Loan and $3.9 million of existing cash and cash equivalents
as of December 31, 1997. There can be no assurance that these cash resources
following this offering will be sufficient to fund the Company's expected
negative cash flow and its capital expenditures. The Company, therefore, may
need to obtain additional equity or debt financing. There can be no assurance
that the Company will be able to obtain the additional financing necessary to
satisfy its cash requirements or to implement its growth strategy
successfully, in which event the Company will be forced to curtail its planned
business expansion and may be unable to fund its ongoing operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Technology and Technology Implementation Risks. The successful operation of
the Caliber network requires the development of sophisticated software and the
integration of a number of diverse communications technologies. To date,
Caliber has only tested the software and the network under simulated operating
conditions and operated the network under actual operating conditions on a
limited basis. The ability of the network to function as intended at multiple
sites simultaneously cannot be confirmed until a significant volume of actual
programs are regularly delivered over the Caliber network. Technical
difficulties may prevent or delay the Company's offering of educational
programs, which is likely to have a material adverse effect on market
acceptance of the network for distance learning. See "Business--Caliber
Technology."

Risk of Non-Acceptance of Caliber Learning Concept. Use of the Caliber
Campuses will require a significant change in the way universities,
corporations and working adults experience graduate level learning and
professional training. Prominent universities may be unwilling to accept the
Caliber network as an appropriate way to provide quality education, and
faculty members may be unwilling to use the Caliber network

7
<PAGE>

to teach. Corporations and students may not accept the Caliber network as an
alternative to traditional classroom instruction. If the Caliber network fails
to gain this acceptance, it is unlikely that Caliber will ever become a viable
business. See "Business--The Caliber Network."

Rapid Expansion of Operations. The Company plans to expand its business
rapidly. The Company currently has 34 Caliber Campuses open and expects to
have 41 Caliber Campuses open in 40 markets by September 1998. There can be no
assurance that all 41 Caliber Campuses will be opened on schedule. The
Company's ability to manage its rapid expansion effectively will require it to
develop effective operating, financial and accounting systems and to add and
retain qualified personnel at each Caliber Campus and at the corporate level.
Failure to develop financial controls and accounting and reporting systems or
add and retain personnel that adequately support the Company's growth will
materially adversely affect its business, results of operations and financial
condition. See "Business--Employees" and "Management."

Reliance on Sylvan Management and Systems. Currently, the Company relies
extensively on Sylvan's resources, systems and personnel for management,
administrative, legal, accounting and financial functions. The Company also
uses office space leased by Sylvan. Sylvan has agreed to provide payroll,
legal, accounting and other services and lease space only through 1999 for a
fee of $2.0 million in each of 1998 and 1999 and is not obligated to continue
to do so thereafter. During the next two years, the Company will be required
to develop its own systems to replace those currently provided by Sylvan and
to add and integrate a substantial number of new managerial, finance,
accounting and support personnel. Failure to develop these systems or add and
retain personnel to manage the Company's business effectively would have a
material adverse effect on the Company's business and growth. See "Business--
Employees," "Management" and "Certain Relationships and Related Transactions--
Sylvan Management Agreement."

Dependence on Skilled Personnel. The ability to provide distance learning
services as contemplated by the Company will require the services of skilled
technicians and educational facilitators. In addition, the Company will need
additional marketing and sales personnel to support planned growth. There can
be no assurance that the Company will be successful in adding or retaining the
necessary personnel. Failure to do so is likely to have a material adverse
effect on the Company's business and growth. See "Business--Marketing and
Sales" and--"Employees."

Dependence on Strategic Partners. The Company's success will depend upon
establishing and maintaining strategic alliances with prominent universities
and corporations to provide high quality educational and training programs.
However, to date, only Johns Hopkins, Wharton, Compaq, Macmillan and MCI
Systemhouse have agreed to provide programs through the Caliber network, with
Johns Hopkins and Wharton each agreeing to deliver only a single program. Many
of these contracts are terminable if Caliber fails to achieve stated
performance objectives contained in these contracts. There can be no assurance
that the Company will be successful in maintaining and expanding these
existing relationships or that it will be able to establish and maintain new
strategic relationships with other prominent universities or corporations. If
the initial programs are unsuccessful, if these universities and corporations
do not expand their offerings through the Caliber network or if Caliber is
unable to enter into other strategic relationships, it is unlikely that
Caliber will become a viable business. See "Business--Strategy."

Untested Business Plan. The Company made numerous assumptions in developing
its business plan, such as the number of students expected to enroll in a
given program, the prices the Company will be able to charge for programs, the
rate at which additional programs will be added to the Caliber network and the
cost of operating Caliber Campuses. The assumptions underlying Caliber's
business plan may prove to be too optimistic, and the Company may encounter
delays in achieving the objectives in its business plan. This is likely to
result in lower than planned revenues, higher than expected expenses and
sustained unprofitability. The Company can give no assurance that it will be
able to adjust its operations and business plan. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

8
<PAGE>

Significant Regulation. Many of the states in which Caliber intends to
operate Caliber Campuses require that any entity providing educational
programs obtain a license to operate. Since Caliber's distance learning
concept is novel and state authorities may not have substantial experience
with arrangements of this type, the Company cannot predict with certainty
whether states will grant the licenses necessary to offer educational programs
at all Caliber Campuses. Certain states accept accreditation as evidence of
meeting minimum state standards for a license, and other states apply separate
standards. Accreditation organizations may require prior approval and periodic
monitoring of distance learning programs. Caliber expects that each university
offering courses through the Caliber network will be required to obtain the
necessary license, possibly one for each program offered, in each state where
a Caliber Campus is located. If the Company or the universities are unable to
obtain the necessary licenses or accreditations or if the licenses or
accreditations are delayed or revoked, Caliber's business and growth may be
materially adversely affected.

Congress is expected to consider reauthorization of the Higher Education Act
of 1965, as amended ("HEA"), in 1998. Treatment of distance learning is
expected to be a major topic in the reauthorization process. There can be no
assurance that the HEA will not be amended to impose stricter or additional
requirements which would affect the Company. In addition, state and federal
regulation of distance learning programs, as well as private accreditation of
such programs, are undergoing significant review by the U.S. Department of
Education, state regulators and accreditation organizations. Caliber cannot
predict the scope or the outcome of this review, but additional regulation of
distance learning may result from this review. This additional regulation may
adversely affect the way Caliber intends to deliver educational content over
its network. See "Business--Government Regulation."

Rapid Technological Change. The telecommunications industry is characterized
by rapid technological change, and the Company's future success will depend on
its ability to implement technological advances. Caliber anticipates that if
interactive distance learning becomes accepted as an effective means of
providing educational and training programs, the industry will evolve rapidly.
To remain competitive, Caliber must be able to respond quickly to evolving
industry trends, technological advances and changes in client needs. There can
be no assurance that the Company will be successful in adapting to these
trends, advances or changes. In addition, technologies developed by
competitors may significantly reduce demand for the Company's services or
render the Company's services obsolete. See "Business--Caliber Technology."

Competition. Competition among providers of lifelong learning and
professional training is intense. Management believes that its principal
potential competitors will be prominent universities located in the markets
served by Caliber Campuses. In each of Caliber's markets, there are also other
two-year and four-year colleges which have their own continuing education and
graduate level programs. Each of these competitors offers live classroom
instruction and has an established reputation in the educational field and,
therefore, may enjoy a competitive advantage. In addition, two-year and four-
year higher education institutions, particularly public institutions, are
offering distance education courses, and several distance education
initiatives are currently underway among public higher education institutions.
Other competitors include for-profit educational organizations, such as the
Apollo Group's University of Phoenix, Strayer University and DeVry's Keller
School of Management, that provide lifelong learning programs targeted to
working adults and feature live classroom instruction. Caliber may also
compete with distance learning companies that offer self-paced correspondence
courses, videos, audiocassettes and other distance learning products. More
recent distance learning products include CD-rom and Internet-based
instruction. If the Caliber distance learning concept proves successful,
Caliber expects competitors to enter the market. For example, businesses that
have facilities in multiple markets that could be linked by satellite, such as
major hotel and movie theater chains, could decide to establish networks of
distance learning facilities to compete with Caliber. Westcott Communications,
Inc., which has established a one-way satellite-based network currently used
by a number of larger corporations to distribute their training programs,
could decide to make its network interactive. The Company also competes
against a significant number of third party training companies that provide
various training programs to corporations. In addition, corporations may
continue to use internal resources to satisfy their training needs. See
"Business--Competition."

9
<PAGE>

Limited Protection of Proprietary Expertise and Methodologies. The Company's
success will be highly dependent upon its specialized and proprietary
expertise, methodologies and software. The Company must rely on a combination
of trade secret laws, employee nondisclosure policies and third-party
confidentiality agreements. There can be no assurance that the steps taken by
the Company to protect its proprietary rights will be adequate to prevent
misappropriation of such rights or that third parties will not independently
develop functionally equivalent or superior methodologies or software. There
also can be no assurance that third parties will not assert infringement
claims against the Company relative to the Company's methodologies, which
could result in costly litigation or the need to establish license
arrangements. The Company intends to seek a patent on certain design features
of its network. However, there can be no assurance this patent will be granted
or, if granted, that it will cover all the proprietary features of the
network. See "Business--Proprietary Rights."

Dependence on Management. The Company is highly dependent on the members of
its senior management, particularly Messrs. Nguyen, Frier, Dobkin, Polivka,
Locher and Peterson, the loss of any of whose services may significantly delay
or prevent the achievement of critical development, marketing and other
business objectives. If the Company's business expands, attracting and
retaining additional qualified management personnel will be critical to the
Company's success. There can be no assurance that the Company will be able to
attract and retain such individuals on acceptable terms, and the failure to do
so could have a material adverse effect on the Company's ability to expand its
business. The Company does not have employment contracts with senior
management. The Company is in the process of obtaining a $3 million "key man"
insurance policy on Mr. Nguyen's life. See "Management."

Control by Existing Stockholders. Upon completion of this offering, MCI,
Sylvan, Mr. Hoehn-Saric and Mr. Becker will beneficially own 1,242,513,
1,227,393, 1,718,351 and 1,718,351 shares of Common Stock, respectively, and
Sylvan will own 5,167,328 shares of 6% Non-Voting Convertible Preferred Stock,
which is convertible at any time after the second anniversary of this offering
into an equivalent number of shares of Common Stock. Accordingly, MCI, Sylvan
and Messrs. Hoehn-Saric and Becker together will control approximately 50.4%
of the Common Stock (or 67.9% if Sylvan were to convert all of its shares of
6% Non-Voting Preferred Stock to Common Stock and MCI were to exercise the MCI
warrant). This is likely to be sufficient to enable them to effectively
control the outcome of any matter submitted to the stockholders, assuming they
choose to vote their shares together. See "Principal and Selling Stockholders"
and "Description of Capital Stock."

Substantial Proceeds of Offering Payable to Sylvan and MCI. Of the net
proceeds of this offering, the Company will use $3.3 million to pay accrued
interest and principal on the Sylvan Loan, $1.2 million to pay MCI accrued
dividends on the Series A Preferred Stock and $2.9 million to pay accrued
management fees due to Sylvan. As a result, a significant portion of the net
proceeds of this offering will not be available to the Company to fund its
operations and planned growth. See "Use of Proceeds."

Potential Conflicts of Interest. Conflicts of interest may arise between the
Company, Sylvan and MCI in a number of areas relating to their ongoing or
future relationships. There are no non-competition agreements between Caliber
and either Sylvan or MCI. Sylvan currently provides substantial management and
administrative services to Caliber but is not obligated to continue to do so
after 1999. MCI has agreed to provide $20.0 million of lease financing to
Caliber, as needed, and provides various ongoing telecommunications services
to Caliber. Caliber may enter into additional material transactions and
agreements with Sylvan and MCI in the future. MCI, Sylvan and Sterling Caliber
have the right to require that their shares of Caliber Common Stock be
registered for sale under the Securities Act at various times over the next
four years and may decide to sell their shares in the public market at any
time. Directors of the Company who are also directors or employees of Sylvan
or MCI may have conflicts of interest with respect to matters affecting the
Company, such as financing, acquisitions and other corporate opportunities.
There can be no assurance that these or any other conflicts of interest will
be resolved in favor of the Company. See "Certain Relationships and Related
Transactions."

j Shares Eligible for Future Sale. Upon completion of this offering, the
Company will have outstanding 11,718,642 shares of Common Stock, plus
1,156,349 shares issuable upon exercise of currently outstanding options,
1,193,573 shares issuable upon exercise of the MCI Warrant and 5,167,328
shares issuable upon

10
<PAGE>

conversion by Sylvan of the 6% Non-Voting Convertible Preferred Stock. The
5,400,000 shares offered hereby will be freely transferable unless acquired by
affiliates of the Company. All of the remaining outstanding shares, upon
expiration of the Underwriters' lock-up described below, will be saleable
under Rule 144 of the Securities Act, unless then held by affiliates of the
Company. The 1,156,349 shares reserved for issuance upon exercise of
outstanding options and the 1,043,290 shares reserved for future grants under
the Company's 1998 Plan will be registered under the Securities Act upon
completion of this offering. Those shares will be freely transferable upon
issuance unless held by affiliates of the Company. The Company has granted
MCI, Sylvan and Sterling Caliber, who hold an aggregate of 7,100,181 shares of
Common Stock (assuming exercise of the MCI Warrant) shares of Common Stock and
5,167,328 shares of 6% Non-Voting Convertible Preferred Stock, the right to
have their shares of Common Stock registered under the Securities Act on one
or more occasions over the next four years. See "Shares Eligible for Future
Sale."

Sales of substantial amounts of Common Stock following this offering, or the
perception that such sales could occur, could adversely affect prevailing
market prices of the Common Stock and could impair the Company's ability to
raise capital through an offering of its equity securities.

All of the Company's officers and employees who own Common Stock, or hold
options to purchase 7,500 shares or more, have agreed not to sell or otherwise
dispose of any of their shares for a period of two years after the date of
this Prospectus without the prior written consent of both BT Alex. Brown
Incorporated and the Company. Sylvan, MCI and Sterling Caliber, who will hold
in the aggregate 7,100,181 shares of Common Stock and 5,167,328 shares of 6%
Non-Voting Convertible Preferred Stock upon completion of this offering, have
agreed not to sell or dispose of any of their shares for a period of one year
after the date of this Prospectus without the prior written consent of BT
Alex. Brown Incorporated. See "Underwriting."

No Prior Market for Common Stock; Possible Volatility of Stock Price. Prior
to this offering, there has been no public market for the Common Stock, and
there can be no assurance that an active public market for the Common Stock
will develop or be sustained after the offering. The initial public offering
price will be determined by negotiations among the Company and the
Representatives of the Underwriters and may not be indicative of market prices
of the Common Stock after this offering. See "Underwriting." The market price
of the Common Stock may be subject to significant fluctuations in response to
variations in Caliber's quarterly operating results and other events or
factors, such as Caliber's announcement of new strategic alliances with
prominent universities or corporations, changes in financial estimates by
securities analysts and announcements by other companies in the lifelong
learning industry. Moreover, the stock market and the market prices of the
shares of many emerging growth companies in recent years have experienced
significant price and volume fluctuations. These fluctuations often have been
unrelated to the operating performance of any specific company. Broad stock
market fluctuations, as well as economic conditions generally, may adversely
affect the market price of the Common Stock. There can be no assurance that
the market price of the Common Stock will not decline below the initial public
offering price.

Certain Anti-takeover Provisions. Certain provisions of the Company's
Amended and Restated Articles of Incorporation (the "Charter") and Maryland
law may have the effect of discouraging a change of control of the Company or
deterring tender offers for the Common Stock. The Charter grants to the Board
of Directors authority to issue shares of preferred stock with terms and
conditions which could have the effect of discouraging a takeover or other
transaction in which the holders of some of the shares of Common Stock might
receive a premium over the then-prevailing market price of the Common Stock.
The Charter also divides the Board of Directors into three classes of
Directors who will serve for staggered terms, which may have the effect of
inhibiting or delaying a change of control of the Company. A Director may be
removed only for cause and only by the affirmative vote of a majority of the
outstanding shares of Common Stock. See "Description of Capital Stock--Anti-
takeover Provisions of Charter and By-Laws."

The Maryland General Corporation Law (the "MGCL") prohibits certain business
combinations between a Maryland corporation and any person who owns 10% or
more of the voting power of the corporation's capital stock (an "Interested
Stockholder") or an affiliate thereof for a period of five years after the
most recent date on which the Interested Stockholder became an Interested
Stockholder and imposes additional requirements on the approval and terms of
the transaction. The MGCL also provides that shares acquired by a stockholder
which

11
<PAGE>

would cause the stockholder to hold certain percentages of the Company's stock
will have no voting rights unless the share acquisition was approved by a
super majority vote of the stockholders. See "Description of Capital Stock--
Business Combinations" and "--Control Share Acquisition."

Dilution. The initial public offering price will be substantially higher
than the net tangible book value per share of the Common Stock. Investors
purchasing shares of Common Stock in this offering will, therefore, incur
immediate and substantial dilution. See "Dilution."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 4,200,000 shares of
Common Stock offered by it hereby are estimated to be $50.1 million ($52.9
million if the Underwriters' over-allotment option is exercised in full),
assuming an initial public offering price of $13.00 per share, after deducting
underwriting discounts and commissions and estimated offering expenses. The
Company will also receive $5.4 million upon consummation of the offering from
Sylvan's payment of the balance due on the Sylvan Subscription. The Company
intends to use the net proceeds from the offering and Sylvan's payment of the
balance due on the Sylvan Subscription to (i) purchase approximately $12.0
million of leasehold improvements and equipment for Caliber Campuses to be
constructed during 1998 and 1999; (ii) repay approximately $3.3 million of
principal and interest outstanding under the Sylvan Loan and $2.9 million of
deferred management fees due to Sylvan; and (iii) pay MCI approximately $1.2
million of accrued dividends on the 8% Series A Convertible Preferred Stock.
The Company intends to use the $36.1 million balance to support anticipated
operating losses through the end of 1999. The principal amount outstanding
under the Sylvan Loan was incurred to finance leasehold improvements and
purchases of furniture and fixtures at existing Caliber Campuses and bears
interest at 1% above the NationsBank prime rate. As of December 31, 1997,
principal outstanding under the Sylvan Loan bore interest at 9.5%. The Company
intends to invest the net proceeds in interest-bearing, investment-grade
obligations pending application thereof in the manner described above.

DIVIDEND POLICY

Concurrently with consummation of this offering, the Company will pay MCI
approximately $1.2 million of accrued dividends on the 8% Series A Convertible
Preferred Stock, which must be paid upon the automatic conversion of the
Series A Preferred Stock to Common Stock. The 6% Non-Voting Convertible
Preferred Stock (which will be held by Sylvan after this offering) will be
entitled to a 6% annual cumulative dividend ($60,000), and all accrued
dividends will become payable upon conversion of the 6% Non-Voting Preferred
Stock. The 6% Non-Voting Preferred Stock will be convertible into an equal
number of shares of Common Stock at the option of the holder at any time on or
after the second anniversary of this offering (or earlier under certain
circumstances). See "Description of Capital Stock--6% Non-Voting Convertible
Preferred Stock."

The Company has never paid any cash dividends on its Common Stock, and the
Board of Directors intends to retain any future earnings to finance Caliber's
business rather than to pay dividends on the Common Stock. Any future
dividends on the Common Stock will depend upon the Company's results of
operations, financial condition, cash requirements and other factors deemed
relevant by the Board of Directors.

12
<PAGE>

CAPITALIZATION

The following table sets forth at December 31, 1997: (i) the total
capitalization of the Company; (ii) the pro forma capitalization of the
Company after giving effect to the Preferred Stock Conversion (including
payment of accrued dividends), the Recapitalization and Sylvan's payment of
the balance due on the Sylvan Subscription; and (iii) the pro forma
capitalization of the Company as adjusted to give effect to the sale by the
Company of the 4,200,000 shares of Common Stock offered by it hereby and
application of the net proceeds therefrom (other than payment of accrued
dividends), after deducting underwriting discounts and commissions and
estimated offering expenses. This table should be read in conjunction with the
Company's Financial Statements and related Notes thereto and other financial
information appearing elsewhere in this Prospectus. See "Use of Proceeds,"
"Dividend Policy" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."

<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------------ ------------ ------------
<S> <C> <C> <C>
8% Series A Redeemable Convertible
Preferred Stock, $.01 par value;
2,442,513 shares authorized, issued
and outstanding actual; and no
shares outstanding pro forma and pro
forma as adjusted................... $ 10,000,000 $ -- $ --
Series B Redeemable Junior
Convertible Preferred Stock, $.01
par value; 1,227,393 shares
authorized, issued and outstanding
actual; and no shares outstanding
pro forma and pro forma as
adjusted............................ 1,300,000 -- --
Stockholders' equity (deficit):
6% Non-Voting Convertible Preferred
Stock, $0.01 par value, no shares
authorized, issued and outstanding
actual; 5,167,328 shares
authorized, issued and outstanding
pro forma and pro forma as
adjusted.......................... -- 51,674 51,674
Class A Common Stock, $0.01 par
value; 42,800,000 shares
authorized; 3,829,986 shares
issued and outstanding actual; no
shares authorized, issued and
outstanding pro forma and pro
forma as adjusted................. 38,300 -- --
Class B Common Stock, $0.01 par
value; 5,167,328 shares
authorized, 5,167,328 shares
issued and outstanding actual; no
shares authorized, issued and
outstanding pro forma and pro
forma as adjusted................. 51,674 -- --
Common Stock, $0.01 par value,
50,000,000 shares authorized; no
shares issued and outstanding
actual; 7,499,892 shares issued
and outstanding pro forma;
11,699,892 shares issued and
outstanding pro forma as
adjusted(1)....................... -- 74,999 116,999
Additional paid-in capital........... 9,975,334 21,238,635 71,274,635
Subscription receivable(2)........... (5,364,358) -- --
Accumulated deficit.................. (16,201,306) (16,201,306) (16,201,306)
------------ ------------ ------------
Total stockholders' equity
(deficit)......................... (11,500,356) 5,164,002 55,242,002
------------ ------------ ------------
Total capitalization............. $ (200,356) $ 5,164,002 $ 55,242,002
============ ============ ============
</TABLE>
- --------
(1) Excludes (1) 5,167,328 shares of Common Stock issuable upon conversion of
the 5,167,328 shares of 6% Non-Voting Convertible Preferred Stock (all of
which will be held by Sylvan) to be outstanding upon the closing of this
offering, (ii) 1,193,573 shares of Common Stock issuable upon exercise of
the MCI Warrant

13
<PAGE>

at an aggregate exercise price of $3.78 million; and (iii) 1,070,047 shares
of Common Stock issuable upon exercise of management stock options
outstanding as of December 31, 1997 at a weighted average exercise price of
$1.07 per share. See "Management--Employee Benefit Plans" and "Certain
Relationships and Related Transactions."
(2) Represents the balance due on the Sylvan Subscription.

14
<PAGE>

DILUTION

At December 31, 1997, the pro forma net tangible book value of the Company
was $5,164,002, or $0.41 per share of Common Stock after giving effect to (i)
the Preferred Stock Conversion (including payment of accrued dividends), (ii)
the Recapitalization (assuming conversion of the 6% Non-Voting Convertible
Preferred Stock), and (iii) Sylvan's payment of the balance due on the Sylvan
Subscription. Pro forma net tangible book value per share is determined by
dividing the pro forma tangible book value of the Company (total tangible
assets less total liabilities) by the pro forma number of outstanding shares
of Common Stock as of that date. After (i) giving effect to the sale by the
Company of the 4,200,000 shares of Common Stock offered by it, assuming an
initial public offering price of $13.00 per share, and (ii) deducting
underwriting discounts and commissions and estimated offering expenses, the
Company's pro forma net tangible book value as of December 31, 1997 would have
been $55,242,002, or $3.28 per share. This represents an immediate increase in
pro forma net tangible book value to existing stockholders of $2.87 per share
and an immediate dilution to new investors of $9.72 per share. The following
table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price.......................... $13.00
Pro forma tangible book value per share at December 31,
1997........................................................ $0.41
Increase per share attributable to new investors............. 2.87
-----
Pro forma net tangible book value after the offering........... 3.28
------
Net tangible book value dilution per share to new investors.... $ 9.72
======
</TABLE>

The following table summarizes, as of December 31, 1997, on a pro forma
basis after giving effect to (i) the Preferred Stock Conversion (including the
payment of accrued dividends) (ii) the Recapitalization, and (iii) Sylvan's
payment of the balance due on the Sylvan Subscription, the differences between
existing stockholders and new investors with respect to the number of shares
of Common Stock purchased from the Company, the total consideration paid and
the average price paid per share, assuming an initial public offering price of
$13.00 per share but before deducting underwriting discounts and commissions
and estimated offering expenses:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).. 12,667,220 75.1% $21,250,308 28.0% $ 1.68
New investors............. 4,200,000 24.9 54,600,000 72.0 $13.00
---------- ----- ----------- -----
Total................... 16,867,220 100.0% $75,850,308 100.0%
========== ===== =========== =====
</TABLE>
- --------
(1) Includes 7,499,892 shares of Common Stock and 5,167,328 million shares of
6% Non-Voting Convertible Preferred Stock (which are convertible into an
equivalent number of shares of Common Stock). Excludes shares of Common
Stock issuable upon exercise of the MCI Warrant.

At December 31, 1997, there were also outstanding options to purchase an
additional 1,070,047 shares of Common Stock at a weighted average exercise
price of $1.07 per share. To the extent these options are exercised, there
will be further dilution to new investors in the net tangible book value of
their shares. See "Capitalization," "Management--Employee Benefit Plans" and
"Description of Capital Stock."

15
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data for the period from November 22, 1996
(inception) to December 31, 1996, for the year ended December 31, 1997 and for
the period from inception to December 31, 1997 have been derived from the
financial statements of the Company included elsewhere in this Prospectus
which have been audited by Ernst & Young LLP, independent public accountants.
The data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements and the Notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
PERIOD FROM
PERIOD FROM NOVEMBER NOVEMBER 22, 1996
22, 1996 (INCEPTION) YEAR ENDED (INCEPTION) TO
TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1997
-------------------- ------------- -----------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue..................... $ -- $ 1,199,293 $ 1,199,293
Expenses:
Campus operating ex-
penses................... -- 7,133,744 7,133,744
Management fees due to
Sylvan................... 480,000 2,400,500 2,880,500
Other selling, general and
administrative........... 1,155,171 5,380,972 6,536,143
------------ ------------- -------------
Total expenses........ 1,635,171 14,915,216 16,550,387
Other income (expense):
Interest income........... -- 536,100 536,100
Interest expense.......... -- (391,312) (391,312)
------------ ------------- -------------
Net loss.................... $ (1,635,171) $ (13,571,135) $ (15,206,306)
============ ============= =============
Net loss per common share
attributable to common
stockholders............... $ (0.21) $ (1.62) $ (1.82)
============ ============= =============
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
-------------------- -------------
BALANCE SHEET DATA (AT END OF
PERIOD):
<S> <C> <C>
Cash and cash equivalents... $ 13,000,000 $ 3,850,400
Working capital............. 11,616,200 (1,290,891)
Total assets................ 13,057,629 14,510,389
Total debt.................. 1,212,800 7,033,076
Redeemable preferred stock.. 11,300,000 11,300,000
Stockholders' equity
(deficit).................. (134,171) (11,500,356)
</TABLE>

16
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Since its organization in November 1996, the Company has devoted
substantially all of its efforts to raising capital, developing the Caliber
network, recruiting and training personnel and establishing initial
relationships with universities, corporations and suppliers. The Company has
incurred cumulative net losses since inception and expects to incur additional
losses for at least the next two years, due primarily to additional start-up
costs related to the expansion of the Caliber network and costs associated
with the development and marketing of products and services. The Company
expects that losses will fluctuate from quarter to quarter and that the
fluctuations may be substantial. As of December 31, 1997, the Company had
accumulated net losses of $15.2 million.

Revenue. It is expected that future revenue will be generated primarily from
the distribution of graduate level learning and professional development and
training programs, as well as video conferencing, hourly classroom rental and
related services. Revenue from university programs will be recognized ratably
over the period that the courses are delivered. Some university contracts will
provide for the university to recover its course development costs prior to
allocation of any tuition revenue to the Company. See "Business--Lifelong
Learning Products and Services."

Contracts with commercial enterprises signed in the fourth quarter of 1997
and in the first quarter of 1998 for professional development and training
programs provide for Caliber to receive specific program fees, based on the
length of the program and the Caliber facilities utilized. The Company will
recognize revenue from the distribution of courses and programs when the
related tuition or fees are earned, which generally will be on a straight-line
basis over the course or program distribution period. The Company also
anticipates that it will generate revenue from video teleconferencing services
and hourly classroom rental, which will be recognized when the service is
provided.

Costs and expenses. The Company incurs operating costs and expenses related
to campus operating expenses, management fees payable to Sylvan and selling,
general and administrative expenses. Campus operating expenses consist
primarily of payroll, lease expense, depreciation and telecommunications costs
associated with the Caliber campuses.

Since its organization in November 1996, Caliber has relied on Sylvan for
certain resources, systems and personnel for management, administrative,
legal, accounting and financial functions. Additionally, Sylvan provides
office space for the Company's operations. Under the Sylvan Management
Agreement, the Company agreed to pay Sylvan $2.9 million of management fees
incurred from November 22, 1996 through December 31, 1997. The Company has
agreed to pay Sylvan $2.0 million annually for these services in 1998 and
1999. During the next two years, the Company intends to develop its own
systems to replace those currently provided by Sylvan and to add and integrate
a substantial number of new managerial, finance, accounting and support
personnel.

Since Caliber's inception, selling, general and administrative expenses have
consisted primarily of payroll and employee benefits, travel, marketing costs
and consulting fees. The Company expenses all start-up costs related to
program development and campus development when incurred. Course production
costs related to the creation of various media and course materials will be
capitalized and amortized over the expected useful lives of the media and
materials. Advertising and marketing costs are expensed when incurred, except
direct-response advertising costs related to a specific course offering, which
will be capitalized and amortized over the course distribution period.

RESULTS OF OPERATIONS

In 1997, the Company generated $1,199,293 of revenue. All of this revenue
resulted from the CBT Services Agreement with Sylvan. Under this agreement,
Caliber manages 32 Sylvan Testing Centers ("STCs") that may

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be converted to Caliber Campuses in the future. The Company receives a fixed
fee per month to manage these centers, a fee per test delivered above a
specified number of tests and 50% of any profits to Sylvan from Sylvan's
digital fingerprinting joint venture with Identix Corporation. Caliber pays
all operating expenses for these 32 centers. During 1997, operating expenses
exceeded the revenue received from Sylvan for Caliber's management of the 32
centers. See "Business--Sylvan Testing Centers" and "Certain Relationships and
Related Transactions--CBT Services Agreement."

During 1997, Caliber incurred $7,133,744 of campus operating expenses.
Campus operating expenses include costs associated with the following: the
opening of 19 Caliber Campuses in 1997, 13 Caliber Campuses that were in
various stages of development and 32 STCs managed by Caliber.

The Company incurred $1,155,171 and $5,380,972 of selling, general and
administrative expenses in 1996 and 1997, respectively. As of December 31,
1997, the Company employed 46 management, sales and administrative personnel,
compared to 14 at December 31, 1996. During 1997, the Company incurred
approximately $600,000 of non-recurring expenses related to executive
recruiting and relocation as well as start-up costs related to the
implementation of distance learning technologies.

During 1997, net interest expense was $144,788. The Company generated
$536,100 of interest income from the temporary investment of cash received
from Caliber's initial capitalization. Interest expense of $391,312 resulted
from borrowings on the $3.0 million Sylvan Loan and interest on capital lease
obligations.

The Company recorded a net deferred tax asset of $5.9 million as of December
31, 1997. This deferred tax asset consisted principally of start-up costs
capitalized for income tax purposes and net operating loss carryforwards.
Income tax regulations contain provisions which may limit the use of net
operating loss carryforwards in any given year if certain events occur,
including changes in ownership of the Company. The Company has established a
valuation allowance for the entire amount of its net deferred tax asset due to
uncertainties regarding future taxable income.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has used $10.5 million of cash in operating
activities and $4.5 million for investing activities, consisting principally
of the acquisition of property and equipment. These cash needs have been
primarily financed through the initial capitalization of $13.0 million, the
Sylvan Loan of $3.0 million and a portion of the Sylvan Subscription of $2.6
million. See "Prospectus Summary--Initial Capitalization and Recapitalization
of the Company." As of December 31, 1997, the Company had cash and cash
equivalents of $3.9 million, $5.4 million unpaid under the $8.0 million Sylvan
Subscription and $16.0 million available under the $20.0 million MCI Lease and
Guarantee Commitment. The Company believes that these resources, together with
the estimated net proceeds from this offering and $3.0 million of available
borrowings under the Sylvan Loan will be sufficient capital for implementation
of the Caliber network and to fund negative cash flow through at least 1999.
However, there can be no assurance that the Company's cash resources following
this offering will be sufficient to fund the Company's negative cash flow and
expected capital expenditures through 1999. The Company, therefore, may need
to obtain additional equity or debt financing during this period. There can be
no assurance that the Company will be able to obtain the additional financing
to satisfy its cash requirements or to implement its growth strategy
successfully, in which event the Company will be forced to curtail its planned
business expansion and may be unable to fund its ongoing operations.

YEAR 2000

The Company has initiated discussions with its significant suppliers, large
customers and financial institutions to ensure that those parties have
appropriate plans to remediate Year 2000 issues where their systems interface
with the Company's systems or otherwise impact its operations. The Company is
assessing the extent to which its operations are vulnerable should those
organizations fail to remediate properly their computer systems.

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The Company's comprehensive Year 2000 initiative is being managed by a team
of internal staff and outside consultants. The team's activities are designed
to ensure that there is no adverse effect on the Company's core business
operations and that transactions with customers, suppliers, and financial
institutions are fully supported. The Company is well under way with these
efforts, which are scheduled to be completed in early 1999. While the Company
believes its planning efforts are adequate to address its Year 2000 concerns,
there can be no guarantee that the systems of other companies on which the
Company's systems and operations rely will be converted on a timely basis and
will not have a material effect on the Company. The cost of the Year 2000
initiatives is not expected to be material to the Company's results of
operation or financial position.

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BUSINESS

The Company is establishing a state-of-the-art, graduate level learning and
professional training distribution network throughout the United States
designed to meet the needs of prominent universities, major corporations and
working adults. Caliber intends to distribute courses developed by prominent
universities and to distribute professional development and training programs
to Fortune 1000 corporations. Caliber has entered into a five-year contract
with Johns Hopkins and a five-year contract with Wharton to begin programs for
working adults in 1998. In addition, the Company has signed joint development
agreements with the University of California at Berkeley Extension School, MIT
and Georgetown University. The Company has entered into contracts with Compaq,
Macmillan and MCI Systemhouse to begin programs in 1998. As of April 1, 1998,
the Company had 34 Campuses open in 34 markets and expects to have 41 Caliber
Campuses open in 40 markets by September 1998. Sylvan and MCI organized
Caliber in November 1996, bringing together the educational services expertise
of Sylvan and the telecommunications and technology expertise of MCI.

INDUSTRY OVERVIEW

Expenditures in the post-secondary education market were approximately $220
billion in 1996-97, compared to approximately $135 billion in 1989-90. In
1996-97, approximately 45% of the students enrolled in post-secondary
education were adults age 25 and older. Corporations budgeted approximately
$60 billion in 1997 to provide training for their employees, compared to $46
billion in 1990. The Company believes that an increasing need for technical
skills in the workforce is the primary reason for growth in the training
market. Corporations also spend significant amounts each year on corporate
communications programs, such as product introductions and customer training.
The U.S. Department of Education predicts that, by the year 2000,
approximately 85% of all U.S. jobs will require post-secondary education or
equivalent skills training.

Lifelong Learning Programs. "Lifelong learning" refers to programs directed
primarily toward working adults. Increasing numbers of working adults have
concluded that graduate level education is necessary for career advancement.
Many would prefer to obtain this education from prominent universities because
the prestige of these universities increases the value of the credentials
earned. Practical constraints, however, often force working adults to choose
local universities or conventional distance learning rather than attend
prominent institutions farther from home.

Most universities use a traditional learning method characterized by (i) on-
campus classroom instruction, (ii) semester long courses and (iii) weekday
course offerings. Universities prefer the classroom environment because of its
live, interactive nature. Universities also believe this traditional learning
method is needed to maintain consistent, high quality instruction and
admissions standards. Additionally, most universities are unable or unwilling
to expand existing campuses to accommodate more students or build satellite
campuses to serve remote students. According to the National Center for
Education Statistics, universities that are interested in providing distance
learning have not offered these programs because of program development and
equipment costs and limited technological infrastructure. Universities
generally target their course content toward traditional, full-time students
and, therefore, do not meet the career-oriented learning needs of working
adults or the corporations who pay for their employees' education. To date,
the alternatives for working adults have been conventional distance learning
and local two-year and four-year colleges. Conventional distance learning
allows working adults to learn through printed course materials or videotaped
presentations, the Internet or one-way broadcast instruction. These methods
address the problems of time and location, but they do not provide the
benefits of traditional classroom learning.

For-profit educational organizations, such as Apollo Group's University of
Phoenix, Strayer University and DeVry's Keller School of Management, have
succeeded by focusing on the practical needs of working adults. These
organizations offer job-related courses at convenient times and locations;
however, credentials obtained from these institutions may have less perceived
value than those obtained from prominent universities. These organizations
also rely on part-time, adjunct faculty rather than full-time university
professors. Some prominent

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universities want to serve working adults, but the capacity of their campuses
and faculty limits their ability to teach more students. These universities
have not adopted conventional distance learning because they believe it would
compromise the quality of their instruction and the integrity of their
credentials.

Many corporations pay for their employees' lifelong learning through tuition
reimbursement plans. Typically, these plans reimburse employees for courses at
any accredited academic institution as long as the course has some relevance
to the employee's job and the employee achieves a passing grade. Corporations
may derive greater benefits from their tuition reimbursement programs by
gaining control over the content and quality of their employees' education.

Corporate Communications and Training. Corporations have been spending
increasing amounts on communicating with and training their employees, dealers
and customers. Transporting corporate trainers to remote offices or
transporting employees, dealers or customers to central training facilities is
costly and difficult to coordinate. The corporate trainer is typically an
intermediary between the expert and the employees, which may lower the quality
of the training. In addition, the shortage of qualified training personnel
causes many businesses to be unable to produce effective training programs.

Communications technology can increase the quality and reduce the cost of
corporate training programs. However, many businesses do not have the in-house
expertise to establish their own technology-based distance learning programs.
Internal training programs could be made more effective by outsourcing content
preparation to a leading university or specialized training organization.

THE CALIBER LEARNING NETWORK SOLUTION

Caliber addresses the practical constraints of working adults by providing
prominent university content and professional development and training
programs at convenient times and locations. Caliber will provide working
adults with a portfolio of graduate level courses from prominent universities.
Caliber enables prominent universities to extend the market for their
educational products without sacrificing high-quality instruction. Caliber
accomplishes this by distributing live, interactive instruction developed by
the university through satellite broadcast, video conferencing and Internet
technologies to Caliber Campuses, which enables universities to have an
outstanding instructor teach students simultaneously at different locations
across the country. The Caliber network enables corporations to have an expert
address its workforce, customers or dealers across the country at the same
time. The Caliber network allows corporations to disseminate time sensitive
subject matter rapidly. Caliber believes it is well positioned to deliver
high-quality educational content produced by prominent universities as well as
to manage collaboration between universities and corporations to produce
customized professional development and training programs. Gaining control of
the content and quality of their professional development and training
programs will improve corporations' return on their tuition reimbursement
plans and training expenditures.

STRATEGY

To achieve its goal of becoming the leading provider of distance learning to
working adults, Caliber has developed the following six-part strategy:

Rapidly create the foremost distributed learning network. Caliber is
establishing the first nationwide learning and professional training
distribution network designed to meet the requirements of prominent
universities, corporations and working adults. The Company's goal is to become
the standard for distributed

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learning by maintaining high quality course content, advanced technology, a
professional learning environment and a national presence. Caliber Campuses
combine the best elements of the traditional classroom with the convenience of
distance learning.

Establish long-term strategic alliances with prominent universities. Caliber
is forming strategic alliances with universities that have outstanding course
content and national reputations. The Company intends to assemble a portfolio
of high-quality, graduate level courses. Caliber plans to use its success in
establishing these alliances to develop strategic alliances with other
prominent universities and thereby broaden the scope of its offerings.

Form consultative relationships with major corporations. Caliber is
establishing working relationships with major corporations to provide cost-
effective solutions for their communications, professional development and
training needs. By establishing these alliances, Caliber intends to become the
leading communication, professional development and training resource for
Fortune 1000 companies. Caliber will assist major corporations in analyzing
their communications, professional development and training needs and in
producing effective distance learning solutions.

Target professional development and training programs to specific
industries. Caliber intends to focus initially on educational and training
programs in the fields of health care, management development, information
technology/engineering and education. These fields are characterized by (i)
large, dispersed and changing professional populations; (ii) rapid changes in
subject matter; and (iii) requirements for continuing education or
professional development.

Manage collaboration among prominent universities and corporations. Caliber
plans to use its alliances with prominent universities to facilitate
collaboration between these universities and Caliber's corporate clients to
develop customized professional development and training programs. Caliber
will distribute these programs to dispersed corporate constituencies through
the Caliber network.

Optimize utilization of the Caliber network. Caliber intends to optimize
utilization of the network by providing other services to increase Campus
utilization, including video conferencing services and hourly classroom
rental. Caliber expects that corporations will use the Campuses on weekdays
for professional training and corporate communications programs and that
working adults will use the Campuses in the evenings and on weekends for
lifelong learning.

THE CALIBER NETWORK

By September 1998, Caliber expects to have 41 Campuses linked to studios
located near content providers and to each other by satellite transmission,
video conferencing, wide-area network computing and Internet technologies. The
Caliber network is designed to give working adults nationwide access to live
expert instruction, real-time two-way interactivity with the instructor and
the ability to collaborate with other students. The Caliber network integrates
the capabilities of personal computing and the Internet to enhance instructor-
student interactivity and to extend the learning experience beyond the
classroom.

The Caliber Learning Experience. A Caliber-trained educational facilitator
will greet students entering a Caliber Campus and direct the students to their
appropriate classrooms. In each classroom, the facilitator will distribute
course materials to the students and familiarize them with the facilities,
including the PCs embedded in their workstations, before instruction begins.
The class instructor will be located at a remote production studio, together
with one or more teaching assistants and a Caliber studio technician. The
technician will coordinate transmission of the instruction and presentation
materials and manage the communications technologies so that students in all
Caliber Campuses can interact with the instructor and teaching assistants
throughout the presentation. When the instructor begins, the studio technician
transmits the broadcast to the Caliber Campus classrooms. Students will view
the instructor on a large projection screen located at the front of each
classroom. The instructor can transmit any graphics or text being shown on
projection screens directly to the students' PCs.

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The instructor can also use visual aids, such as PowerPoint(TM) slides, and
direct the Caliber technician to display them either on the projection screen
or the PCs, or both.

At any time during the broadcast, the instructor can connect one or more
classrooms directly to the studio using video conferencing so that the
instructor can see and talk directly to students in any classroom while
students in other classrooms view the exchange. Students can also interact
with the instructor or teaching assistants by sending questions to the studio
through their PCs. Teaching assistants can send responses immediately to the
students' PCs, or they may choose to forward frequently asked questions to the
instructor so the instructor can address those questions to all locations
simultaneously. Students can communicate with others in their classroom and
those in other classrooms through their PCs during or after the instructor's
presentation. Between classes, students can access the course's own web page
to review course materials and a log of frequently asked questions.

Caliber Campuses. The Company expects to have opened 41 Caliber Campuses in
40 markets by September 1998. Campuses will be in upscale commercial
properties or upscale suburban malls. These locations will provide students
with secure evening and weekend access and ample parking. The design and
management of every Caliber Campus will be uniform, allowing the Company to
achieve educational consistency and cost-savings. Most Caliber Campuses will
have three classrooms which can be configured into one large room by
retracting the soundproof walls. This gives Caliber the flexibility to serve
large or small groups and the ability to designate a space which is physically
and economically appropriate for the size of the group. The average classroom
can seat 24 students and will have 12 multi-media computers embedded into the
work stations. Each Caliber Campus also has a multi-purpose office and video
conferencing room. At the front of each classroom is a large projection
screen, which enables each student to have an unobstructed view of the
presentation.

PROTOTYPICAL CALIBER LEARNING CENTER FLOORPLAN

[PICTURE OF FLOORPLAN APPEARS HERE]

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LIFELONG LEARNING PRODUCTS AND SERVICES

Caliber intends to distribute lifelong learning programs to working adults
through alliances with prominent universities. Caliber will focus initially on
establishing alliances with universities having national reputations in the
fields of health care, management development, information
technology/engineering or education. Caliber offers these universities the
facilities and marketing expertise to distribute their course content to a
large number of working adults without lowering educational or admissions
standards. Caliber will assist faculty members in adapting their course
content into effective presentations which take full advantage of Caliber's
interactive delivery capabilities. Caliber has a five-year agreement with
Johns Hopkins to begin a graduate program in April 1998. Universities often
issue graduate certificates to students who complete a non-degree program. In
some instances, students who obtain several certificates may also obtain a
masters degree. Caliber has a five-year contract with Wharton to begin a
series of middle management programs in September 1998. The University of
California at Berkeley Extension School, MIT and Georgetown University have
signed joint development agreements to explore developing distance learning
programs with Caliber.

The Johns Hopkins University. Johns Hopkins offers a four-course program
entitled the "Hopkins Business of Medicine" to physicians. This program
teaches doctors the fundamental business skills needed to manage their
practices effectively in the current managed care environment. Johns Hopkins
currently offers the Hopkins Business of Medicine program on the Johns Hopkins
medical school campus. Approximately 80 doctors complete the program every
year, and there is a long waiting list. Johns Hopkins believes that many other
physicians throughout the country would like to attend the program but are
unable to take time away from their practices to travel to Baltimore. The
program consists of four, ten-week courses. Doctors who complete the program
receive 12 graduate level credits and a graduate certificate from Johns
Hopkins. Physicians who complete the program as well as an additional 36
credit hours receive a Masters of Science in Business with a Concentration in
Medical Management.

Johns Hopkins has agreed to deliver the Hopkins Business of Medicine program
through the Caliber network for a five-year period beginning in April 1998.
Johns Hopkins will deliver the first course beginning in April 1998 at
approximately 20 Caliber Campuses and expects to broadcast the Hopkins
Business of Medicine program to approximately 30 campuses beginning in
September 1998. Doctors can complete the entire Hopkins Business of Medicine
program in 12 months, at a total cost to the student of $6,000. Caliber and
Johns Hopkins will share profits once they have recovered their direct costs
of developing, marketing and delivering the Program.

Caliber is marketing the Hopkins Business of Medicine program to individual
doctors, physicians' groups and other health care providers under the Johns
Hopkins name. Doctors may respond by return mail, toll-free telephone or the
Internet. Caliber also holds open houses at its Campuses.

The Wharton School. In addition to its traditional degree programs, Wharton
has offered non-degree courses targeted toward business executives. Through
Wharton's Executive Education program, Wharton and Caliber will deliver the
Wharton "Working Knowledge Series" through the Caliber network over the next
five years to working adults who meet Wharton's admission standards. The
Working Knowledge Series will consist of multiple non-credit programs, each
focusing on a different business process. Each program will take approximately
six weeks to complete and will cost students approximately $2,500. Caliber and
Wharton will deliver the first program in September 1998. Wharton has agreed
to introduce new programs beginning in January 1999. Caliber does not expect
that revenues from its agreement with Wharton will be material in 1998 or
1999.

Future University Programs. Caliber is in discussions with other prominent
universities that have expressed interest in forming alliances to deliver
courses in such disciplines as education, engineering, telecommunications,
international relations and health sciences. The Company believes there is
significant demand for courses in these disciplines among working adults
interested in advancing their careers and

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<PAGE>

maintaining their certifications or licenses. To date, these discussions have
led to joint development agreements with the University of California at
Berkeley Extension School, MIT and Georgetown University. The University of
California at Berkeley Extension School is exploring developing and delivering
a telecommunications graduate certificate program specifically designed for
employees of MCI. Georgetown University is exploring developing an
international relations graduate certificate program.

CORPORATE PRODUCTS AND SERVICES

The Company intends to market the Caliber network to Fortune 1000
corporations as a solution to their corporate communications, professional
development and training needs. Caliber will make its network available to
corporations to provide nationwide distribution of corporate communications,
professional development and training programs. Caliber will assist
corporations in redesigning programs to take advantage of Caliber's
telecommunications and computing technologies. In addition, Caliber plans to
use its relationships with prominent universities to manage collaboration
between corporations and universities to develop high quality, effective
professional development programs with content specifically tailored to the
corporations' needs. Corporations also can utilize the Caliber network to
communicate with and educate their dealers and customers.

Compaq Dealer Training. In January 1998, Caliber entered into a three-year
agreement with Compaq to deliver communications and training to its dealers
through the Caliber network. Compaq will invite dealers to convenient Caliber
Campuses to receive information and training on newly introduced Compaq
products. Compaq has agreed to produce 15 to 20 programs a year, each to be
delivered to approximately 50 Caliber classrooms at a fixed cost per program.
A program is defined as up to four hours of broadcast time delivered in up to
50 classrooms. In February 1998, the first Compaq program was delivered to
approximately 700 dealers at 29 Caliber Campuses. The Company subsequently has
delivered three additional programs, with the most recent program delivered to
dealers at 34 Caliber Campuses.

Caliber trains Compaq's instructors to use the Caliber network and converts
Compaq's training content to a format appropriate for broadcast. Caliber also
facilitates training programs by checking in dealers, distributing class
materials and supporting the dealers during the program as well as testing
dealers and returning raw test data to Compaq. Compaq has the right to
terminate the agreement after two years if its distance learning requirements
change so that Caliber cannot meet those requirements.

MCI Systemhouse Training. MCI Systemhouse, a systems integrator with 1997
revenues of approximately $1.7 billion, has agreed to spend a minimum of $1.0
million through February 1999 to use the Caliber network to deliver internal
professional development classes, new employee orientation classes and a
series of topical seminars open to employees and the public. Traditionally,
MCI Systemhouse has delivered its training programs live at a single location
and has not offered topical seminars to the public.

Macmillan Computer Publishing. Caliber and Macmillan have entered into a
three-year contract to distribute, through the Caliber network, training
courses on widely-used software application programs. The courses are designed
to expand the expertise of corporate technology professionals and to train
non-professionals to become qualified as information technology ("IT")
professionals. Macmillan will develop courses consisting of both instructor-
led training modules and Internet-based modules to support the instructor.
Each instructor-led training module will consist of two sessions offered over
two days. Macmillan will supply the instructors and all written course
materials. Caliber will assist Macmillan with conversion of the courses to the
Caliber environment, development and execution of a marketing plan and
coordination of student registration. The courses will be jointly marketed by
Macmillan and Caliber. The Company anticipates that Macmillan will offer at
least 15 IT professional training courses during the course of the contract.
Macmillan is obligated to deliver at least eight courses during the first year
of the contract.

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Wave Technologies. Caliber has entered into an agreement with Wave
Technologies, Inc. ("Wave"), under which Wave, an IT training company, will
offer technology training seminars, workshops and other informational programs
on timely IT topics to working adults through the Caliber network. Wave will
introduce three pilot programs in the third and fourth quarters of 1998, with
each pilot program lasting approximately six hours. Caliber has committed at
least 30 classrooms to each of these programs. Caliber and Wave have agreed to
negotiate to extend the duration and scope of their relationship, subject to
the success of the pilot programs.

IT Insight. Caliber is developing, in conjunction with several specialized
IT training companies, a series of monthly technical seminars on new Microsoft
products and other leading software products. This program will be called "IT
Insight" and will be aimed toward IT development officers responsible for
establishing technology strategies for their employers. Seminars will consist
of in-depth technical briefings based on research, case studies and analysis
by technical experts. Seminar instructors will discuss the features and
functions of new products as well as the current technology framework and
implementation issues. Seminars will initially focus primarily on new
Microsoft offerings. Microsoft has agreed to include the IT Insight seminars
on the Microsoft Developers' home page and to provide guest speakers to
discuss Microsoft programs. Caliber will be responsible for registration and
will collect evaluations at the end of each seminar. Caliber expects to begin
broadcasting this series by the end of June 1998.

Other Programs. The Company has distributed pilot programs through the
Caliber network for Microsoft and Salomon Smith Barney. In March 1998,
Microsoft delivered a marketing program to approximately 1,300 school
principals and district technical coordinators across the country. In March
1998, Salomon Smith Barney delivered a training program to its internal
brokers. Intel Corporation ("Intel") and Life Underwriters Training Council
("LUTC") have agreed to distribute pilot programs through the Caliber network
during 1998. Intel will conduct a training program for its value-added
resellers, and LUTC will conduct two communication and training programs for
its professionals and clients.

OTHER PRODUCTS AND SERVICES

Caliber's strategy is to maximize the revenue generating capabilities of the
Caliber network. To take advantage of available network capacity, Caliber
intends to develop a range of programs on topics where there is an unmet need
for large scale understanding. Caliber will develop programs that have proven
marketability on a local basis and which the Company can efficiently configure
for delivery through the Caliber network. The Company also plans to offer
other services to increase Campus utilization, including video conferencing
services and classroom rental on a per hour basis.

Year 2000 Training. Caliber hired several former IBM employees to develop a
COBOL training program designed to teach Year 2000 remediation skills. COBOL
has not been widely taught as a computer programming language since the early
1980s, which has resulted in a severe shortage of programmers available to
remediate the Year 2000 problem. The Year 2000 program will consist of six
courses lasting between one day and five weeks and will cover topics ranging
from COBOL training to executive briefings on Year 2000 issues. The cost per
course is expected to be between $800 to $4,000. Caliber has an agreement with
the University System of Maryland to conduct Year 2000 courses for their
students. The University System of Maryland has committed to running 11
classes during April, May and June of 1998 through Caliber, of which three are
currently underway. Thirty-one students are enrolled in these first three
classes. Caliber receives $4,000 for each student enrolled. Caliber also
intends to market the program to Fortune 1000 companies, large systems
integrators and federal and state governments.

Classroom Rental and Related Services. Caliber will rent individual Caliber
Campus classrooms and video conferencing services on a per hour or per day
basis, with additional services available at additional fees. Classrooms can
be used for meetings, training sessions and video conferencing. By using
Caliber facilities, clients will not have to rent a local conference room or
similar space and will not have to equip the space with personal computers and
audio visual equipment. Clients provide their own course content and
materials. Clients can load their software through Caliber's intranet to all
of the PCs in the rented classroom or through the Internet to the PCs of
remote attendees.

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SYLVAN TESTING CENTERS

Under the Testing Center Management and CBT Services Agreement (the "CBT
Services Agreement"), Caliber agreed to assume management and responsibility
for all obligations and operations of 32 Sylvan Testing Centers ("STCs") and
to deliver computer-based testing ("CBT") services on behalf of Sylvan at
those STCs through December 31, 2000. The Company receives a fixed amount per
month to manage these centers, an additional fee per test delivered above a
specified number of tests and 50% of any profits to Sylvan from Sylvan's
digital fingerprint joint venture with Identix Corporation. See "Certain
Relationships and Related Transactions--CBT Services Agreement."

CALIBER TECHNOLOGY

The Caliber Learning Network features select telecommunication and computing
technologies, such as digital satellite broadcasting, PCs with Pentium(R)
processors, Internet and intranet technologies and room-based video
conferencing. The Caliber network is a PC-based, open architecture network,
comprised of state-of-the-art components which can be replaced or upgraded
without redesigning the network.

MCI Network Management Agreement. At its inception, Caliber decided to seek
a strategic partner to whom it could outsource the design, supply and support
of the infrastructure of the Caliber network. Accordingly, in July 1997,
Caliber entered into a four-year Enterprise Management Agreement with MCI
Systemhouse. Under this agreement, MCI Systemhouse agreed to design the
network's infrastructure and supply and support the infrastructure's
components (other than the satellite system), including the Caliber Data
Center, and Caliber agreed to purchase all of these components through MCI
Systemhouse. Support services include individual component maintenance,
network fault and performance monitoring and help desk services. See "--
Equipment and Telecommunications Services."

Studio Technology. University professors and training instructors will
broadcast from production studios that Caliber has leased and upgraded with
the Company-designed Broadcast Origination Support System ("BOSS") as well as
other telecommunications technology. The broadcast team consists of the
Caliber technical coordinator, the instructor and one or more teaching
assistants. The team uses the BOSS system to coordinate the broadcast of the
presentation by satellite to Caliber Campuses and to facilitate interaction
with students in all locations during and after the presentation through two-
way video conferencing and Internet interfaces. The Caliber network uses
digital satellite technology to deliver broadcast quality video and audio. The
BOSS system consists of advanced PCs and video conferencing units configured
in a local area network ("LAN"). A wide area network ("WAN") connection links
the BOSS system to the Caliber Data Center. The video conferencing units use
two-way video and audio signals, enabling an instructor to see and talk with
students at any Caliber Campus while broadcasting the conversation to all
other Campuses. The BOSS PC interfaces enable the instructor to present visual
aids, such as PowerPoint(TM) slides or videotaped segments, simultaneously on
all classroom PCs or the large classroom screens. Through BOSS, the instructor
can ask students written questions through their PCs, students can answer
through their PCs and answers can be immediately tabulated and presented both
to the instructor and the students. The BOSS system's PC interface also allows
the instructor to track all questions that have been asked during the course.
The BOSS system's Internet interface enables the instructor and students to
communicate asynchronously beyond the classroom, by asking questions,
reviewing notes, distributing assignments and reprinting the text of
presentations for students who have missed a class.

Caliber designed the BOSS system to interface with standard production
studio equipment so that Caliber can rapidly establish a network of broadcast
studios by equipping existing studios. The BOSS system costs approximately
$100,000 per studio. In addition to the cost of the BOSS system, Caliber
anticipates that the average rent for a studio will be approximately $5,000
per day, depending on studio location.

Data Center. The Caliber Data Center consists of multiple PC file servers,
WAN equipment and high-speed data communications lines. Caliber uses a high-
end PC file server as the production control server for the intranet
application that controls all interactions during a course. The Data Center
hosts PC web servers to provide participants access to course materials and
learning activities from outside Campuses.

27
<PAGE>

Campus Technology. Each Caliber Campus is equipped with approximately
$200,000 of telecommunications equipment and computing technology. Principal
components include satellite dishes, control PCs linked to the Caliber
intranet, video conferencing units, a computer-controlled audio/video
projection and lighting system, desktop PCs configured to the Internet and
Caliber's proprietary classroom instruction software system. Each classroom
contains PCs with Pentium(R) processors and a local web server connected to a
Microsoft NT LAN and linked to the Caliber Data Center via a dedicated 56
kilobit frame relay line. Each classroom has a video conferencing unit linked
to each Caliber studio and a large screen projector unit attached to the
ceiling, through which the course is delivered. Since large screens are best
viewed in dim lighting, the overhead lighting system automatically dims
whenever the instructor is lecturing. When the instructor is talking to
students within a classroom via videoconferencing, the lighting system
automatically raises so that the students' images do not appear darkened when
captured by the video conferencing unit. Caliber's classroom instruction
software system allows students, through their PCs, to review course
materials, chat with students at other sites, ask and respond to questions
from the instructor, take notes, review frequently asked questions, receive
individualized instruction from teaching assistants and run other software
applications.

Proprietary Software. Caliber developed its own Internet software
application to control and deliver its distance learning courses. In addition
to the normal "pull" functionality of Internet applications, Caliber has added
a series of "push" functions that allow instructors to control the activities
of participants. Caliber has designed its system to allow instructors to
deliver an activity to the students' workstations within five seconds. Caliber
has tested its application and believes that this level of performance can be
achieved with up to 5,000 workstations in over 100 Campuses within the Caliber
intranet.

Caliber's software system has a subset of the major functions used for
asynchronous distance learning. Caliber will extend the Internet functions of
its software to include the major functions of most asynchronous distance
learning tools to be able to fully support participants both when they are in
the Campuses and when they are between sessions. Caliber's intent is to extend
and maintain its software internally.

MARKETING AND SALES

Caliber's principal marketing strategy is to establish long-term strategic
alliances with prominent universities and with major corporations.

Alliances with Prominent Universities. Caliber seeks to establish
relationships with the provosts and deans of prominent universities who have
responsibility for the distance learning initiatives of their universities.
Senior management currently has primary responsibility for contact with the
provosts and deans. Caliber anticipates hiring a Vice President of Academic
Services during 1998 to assume primary responsibility for these activities.

The first step to a university alliance is a joint development agreement
which calls for Caliber and the university to work together to develop a
program. A joint development agreement places Caliber in a preferred position
if the university decides to engage in distance learning. A joint development
agreement obligates Caliber to establish a broadcast studio and an affiliate
learning center on the university's campus and obligates the university to
provide Caliber the space for the studio and affiliate center. Caliber will
identify and determine potential market demand for specific course offerings.
Once a joint development agreement has been signed, Caliber will work with the
provost and deans to identify courses appropriate for a pilot distance
learning program.

Alliances with Corporations. Caliber's initial marketing focus is on Fortune
1000 companies in the IT/engineering and professional services industries
because these companies tend to have (i) geographically dispersed employees,
dealers and customers, (ii) significant training requirements and (iii) the
need for rapid dissemination of information. Caliber targets senior management
and others with responsibility for professional development and training or
employee benefits, such as tuition reimbursement. Caliber uses a consultative
marketing approach, believing that the Caliber network can be a solution to a
corporation's training and communications needs only after Caliber has
assessed those needs.

28
<PAGE>

Marketing and Sales to Working Adults. Caliber will assume primary
responsibility for marketing the university programs to corporations and to
individual working adults. Caliber plans to build program awareness through
targeted direct mail, direct response advertising and outbound telemarketing.
Caliber expects to use affinity marketing to members of professional
associations within its target industries. Caliber intends to enlist the
endorsement of corporations' senior management and human resource departments
in marketing its university programs to the corporations' employees.

Marketing and Sales Personnel. Caliber has 21 people dedicated to sales and
marketing and expects to have approximately 35 people by the end of 1998. In
March 1998, Caliber established a telemarketing operation. Telemarketing
representatives are responsible for outbound telemarketing and for the
enrollment of individuals who respond to Caliber's direct marketing campaigns.

EMPLOYEES

The Company's staff includes technical integration personnel responsible for
maintaining and extending the Company's network; instructional design and
video production staff who produce courses; sales and marketing staff; and
Campus facilitators who assist in the delivery of courses on Caliber Campuses.
Each Caliber Campus will have up to two facilitators. Caliber has a regional
management staff that will recruit and train these facilitators. As of January
31, 1998, Caliber had 133 full-time employees and 111 part-time facilitators.
The Company considers its relationship with its employees to be good. None of
the Company's employees is subject to a collective bargaining agreement.

COMPETITION

Management believes that its principal potential competitors will be
prominent universities located in the markets served by Caliber Campuses. In
each of Caliber's markets, there are also other two-year and four-year
colleges which have their own continuing education and graduate level
programs. Each of these competitors offers live classroom instruction and,
therefore, may enjoy a competitive advantage. Other competitors include for-
profit educational organizations, such as the Apollo Group's University of
Phoenix, Strayer University and DeVry's Keller School of Management, that
provide lifelong learning programs targeted to working adults and feature live
classroom instruction. Caliber may also compete with distance learning
companies that offer self-paced correspondence courses, videos, audiocassettes
and other distance learning products. More recent distance learning products
include CD-rom and Internet-based instruction. If the Caliber distance
learning concept proves successful, Caliber expects competitors to enter the
market. For example, businesses that have facilities in multiple markets that
could be linked by satellite, such as major hotel and movie theater chains,
could decide to establish networks of distance learning facilities to compete
with Caliber. Westcott Communications, Inc., which has established a one-way
satellite-based network currently used by a number of larger corporations to
distribute their training programs, could decide to make its network
interactive. The Company also competes against a significant number of third
party training companies that provide various training programs to
corporations. In addition, corporations may continue to use internal resources
to satisfy their training needs.

GOVERNMENT REGULATION

State Licensure. Many of the states in which Caliber intends to open Caliber
Campuses require that any entity providing educational programs obtain a
license to operate. Some states accept accreditation as evidence of meeting
minimum state standards for licensing. Other states impose their own
standards, including, in some instances, standards for distance learning. The
state in which a university is primarily located may require the university to
obtain approval to offer distance education programs, even if delivered to
another state. Moreover, the state receiving the university's distance
education program may require that the university obtain a license to deliver
distance education programs in that state. Some of these standards may limit
the number of courses that may be offered through distance education, require
specified levels of student support services, set minimum graduation
requirements and otherwise restrict distance education programs. Since most of
the prominent universities with which Caliber will establish alliances
typically have campuses in only one state, they may not

29
<PAGE>

have considered whether delivering their course content in other states will
subject them to the educational licensing requirements of those states.

Some jurisdictions may require Caliber to obtain one or more educational
licenses depending on the number of Caliber Campuses in that jurisdiction in
addition to, or instead of, the licensing requirements for the university
content providers even though Caliber only provides the delivery system for a
licensed university's course content. State regulators may be reluctant to
grant licenses to Caliber because it is not a traditional educational
provider. Corporate content providers are not required to obtain educational
licensing to deliver training and similar courses to their own employers;
however, delivering this content through the Caliber network to the public
generally may subject them to licensing requirements.

State requirements for distance education are rapidly evolving, and Caliber
cannot predict whether new requirements could adversely affect the way Caliber
intends to deliver courses over its network. The Company believes that state
and local universities and colleges, who may view the Company as competition,
may be successful in persuading state legislatures to enact new laws making it
more difficult for Caliber to operate as planned. Caliber or its content
providers may be unable to obtain licenses to deliver courses as planned or
required licensing may be unduly delayed or revoked.

Accreditation. The Company intends to contract with universities accredited
by recognized accreditation organizations. In some instances, specific
programs offered by those universities may be accredited by specialized
accreditation organizations. Some accreditation organizations have developed
guidelines for distance education programs, which address such aspects of
distance education as curriculum and instruction, evaluation and assessment,
library and learning resources, student services and facilities and finances.
As required by federal law, the institutional accreditation organization may
view the offering of distance education as a substantive change to the
university's operations, requiring prior written approval by the accreditation
organization. There can be no assurance that accreditation requirements will
not become more detailed or onerous in the future. If universities are
required to seek approval for, and undergo monitoring of, distance education
by accreditation organization, the Company may be unable to deliver courses
when or as planned.

Federal Student Financial Aid. The Higher Education Act of 1965, as amended
("HEA"), authorizes various federal student financial aid programs. Most
universities with which Caliber intends to contract participate in those
programs. Programs that do not result in the granting of a degree, such as
those to be offered initially by Johns Hopkins and Wharton, are not eligible
for federal student financial aid. If degree programs are offered in the
future through the Caliber network, students may become eligible for federal
student financial aid. HEA imposes numerous restrictions on institutions
participating in federal student financial aid programs, including limitations
on the number of courses that an institution of higher education may offer
through telecommunications and on the number of students that may be enrolled
in these courses. If the universities with which the Company contracts exceed
those limitations, the institutions could lose their eligibility to
participate in federal student financial aid programs.

Failure of an otherwise eligible institution to comply with state licensing
requirements could render that institution ineligible to participate in
federal financial aid programs. If a university fails to obtain necessary
state approval for distance education, it could be liable to the United States
Department of Education ("ED") for student financial aid to students in the
program or other penalties. Furthermore, the HEA restricts the ability of
institutions to contract with third parties for educational programs. Because
the Company will be providing only a delivery system for university courses
rather than its own educational programming, the Company believes that these
restrictions will not apply to its arrangements with universities, but there
can be no assurance that ED will not reach a different conclusion.

Student Affairs. Individuals enrolled in university programs offered through
the Caliber network will be students of the university offering the program.
As such, the students will generally have the same rights and responsibilities
as other students enrolled at that university. Among other legal obligations
to students, the universities with which the Company intends to contract are
subject to federal and state laws protecting the privacy of student records
and are likely to require the Company also to abide by those laws. These laws
will limit the Company's ability to obtain and/or use student information or
images for marketing or other purposes.

30
<PAGE>

If the Company were found to have misused student records, it could be barred
under federal law from access to such records for five years. In addition, a
university may be required, and may require the Company, to make reasonable
accommodations for otherwise qualified disabled students to take courses
through the Caliber network.

HEA Reauthorization and Regulation Review. Congress is expected to consider
reauthorization of the HEA in 1998. Treatment of distance education is
expected to be a major topic in the reauthorization process. There can be no
assurance that the HEA will not be amended to impose stricter or additional
requirements which would affect the Company. In addition, state and federal
regulation of distance education programs, as well as private accreditation of
such programs, are undergoing significant review by ED, state regulators and
accreditation organizations. Caliber cannot predict the scope or the outcome
of this review with regard to state and federal regulation of distance
education, neither the scope nor the outcome of any analysis, review or
development can be confidently predicted. Government and private regulation of
distance education may impose requirements that could delay, limit, impair or
impede operations of the Caliber network. This additional regulation may
delay, limit or impair the way Caliber intends to deliver educational content
over its network.

FACILITIES AND EQUIPMENT

The Company currently utilizes approximately 18,000 square feet of space in
Baltimore for its corporate and administrative offices. Sylvan leases this
space and charges the Company for its use as part of the Sylvan Management
Agreement.

Caliber Campuses. The Company expects to have opened 41 Caliber Campuses in
40 markets by September 1998, all of which will be on leased premises. The
average size of a Caliber Campus is between 4,000 and 5,000 square feet.
Campus leases have terms ranging from five to ten years. The Company expects
its aggregate lease expense for all 41 Caliber Campuses to be approximately
$3.5 million annually.

The following shows the location of the Caliber Campuses open and under
construction or planned as of April 1, 1998. Caliber Campuses under
construction or planned are expected to be open by September 1998.

<TABLE>
<CAPTION>
OPENED UNDER CONSTRUCTION OR PLANNED
----------------------------------- -----------------------------
<S> <C> <C>
Atlanta, GA Nashville, TN Indianapolis, IN
Austin, TX New Orleans, LA Long Island, NY
Baltimore, MD New York, NY Memphis, TN
Boston, MA Oklahoma City, OK Miami, FL
Charlotte, NC Orlando, FL Phoenix, AZ
Chicago,IL Paramus, NJ San Jose, CA
Cincinnati, OH Philadelphia, PA St. Louis, MO
Cleveland, OH Pittsburgh, PA
Dallas, TX Portland, OR
Denver, CO Raleigh, NC
Detroit, MI Rochester, NY
Houston, TX Salt Lake City, UT
Jacksonville, FL San Diego, CA
Kansas City, KS San Francisco, CA
Los Angeles, CA Seattle, WA
Milwaukee, WI Tampa, FL
Minneapolis, MN Washington, DC

</TABLE>

Affiliate Centers. The Company also expects to open affiliate centers on
university campuses and at corporate training centers. Affiliate centers will
be equipped with the same technology as Caliber Campuses and will be able to
deliver the same Caliber learning experience, but most will have only one
classroom. A university-based affiliate center will enable the university to
test the Caliber network on a real time basis and may be available as an
additional site for offering Caliber programs. Corporations can use an
affiliate center located on their campus exclusively for their training
programs. As of April 1, 1998, the Company had opened four affiliate

31
<PAGE>

centers and had agreements with two corporations to open additional affiliate
centers during 1998. The Company expects that by the end of 1998, it will have
opened approximately eight affiliate centers, at a cost to the Company of
approximately $75,000 per center.

Production Studios. As of April 1, 1998, Caliber had established BOSS-
enabled studios at Maryland Public Television's facilities near Baltimore and
The Production Company's Houston facilities. The Company also intends to
establish one Company-owned studio in downtown Baltimore during 1998. Caliber
intends to establish BOSS-enabled studios located near or on the premises of
universities and corporations as it enters into strategic alliances with them.

Equipment and Telecommunications Services. Caliber has entered into a four-
year Enterprise Management Agreement with MCI Systemhouse, under which MCI
Systemhouse will provide the computer hardware, WAN system components and
other infrastructure components (other than the satellite system) necessary to
operate the Caliber network, as well as telecommunication services. MCI
Systemhouse also will support and maintain these components. Under the
Enterprise Management Agreement, although Caliber is not required to purchase
exclusively from MCI Systemhouse, it must notify MCI Systemhouse of
competitors' bids to provide equipment or services and give MCI Systemhouse
the opportunity to furnish Caliber with the last bid. The Company's
infrastructure components are standard design products bought unmodified from
the manufacturer. The Company believes that alternative network components are
available from a number of manufacturers.

PROPRIETARY RIGHTS

The Company relies upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright and trademark laws to protect its
proprietary rights.

The Company has filed a comprehensive patent application with the U.S.
Patent and Trademark Office ("PTO") covering certain features of the Caliber
network which Caliber believes to be proprietary. The application describes
the Caliber network as a distance learning system which emulates a classroom
setting using satellite links, two-way video-conferencing, a PC-based network
for directly linking each student to the instructor, BOSS technology and
hardware, particular design features of the Caliber classrooms and furniture
and certain unique control and switching mechanisms. Caliber is unable to
predict whether it will be able to obtain this patent or if it does whether
the patent will be effective to protect any portion of the Caliber network
from infringement.

The Caliber network employs a combination of proprietary and non-proprietary
software. The Company considers proprietary certain applications software used
to create the user-interface of the PC network. The Company may include the
proprietary software in the patent application or, in the alternative, seek
separate copyright protection for the software.

Applications by the Company to register "Caliber," "Caliber Learning
Campus," "Caliber Learning Network," and the Caliber logo as service marks are
currently pending before the PTO. While the Company considers these marks to
be proprietary and entitled to registration, there can be no assurance that
these applications will be approved.

RISK MANAGEMENT

The Company may be subject to claims that the Caliber network did not meet
promised standards or that errors or omissions by the Company's employees
contributed to disruptions in the network's operation. The Company carries
insurance for public liability, property damage and workers' compensation, in
amounts management believes to be adequate to cover these types of potential
losses. The Company endeavors to include provisions in its contracts that
limit the Company's liability for network failures and exclude liability for
consequential damages. From time to time, the Company may become involved in
routine legal proceedings incidental to the conduct of its business.

32
<PAGE>

MANAGEMENT

The following table sets forth information regarding the executive officers,
directors and key employees of the Company, effective as of completion of this
offering:

<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS (1) AGE POSITION
- ------------------------------------ --- ------------------------------------------------------------
<S> <C> <C>
R. Christopher Hoehn-
Saric.................. 35 Chairman of the Board of Directors
Douglas L. Becker....... 31 Vice Chairman of the Board of Directors, Secretary, Director
Chris L. Nguyen......... 36 President, Chief Executive Officer
Rick P. Frier........... 36 Vice President; Chief Financial Officer
Janeen M. Armstrong..... 34 Director
John P. Hill............ 63 Director
Susan Mayer............. 48 Director

KEY EMPLOYEES
- -------------
David R. Dobkin......... 45 Senior Vice President, Corporate Services
G. Bryan Polivka........ 40 Senior Vice President, Programming & Production
William G. Durden....... 48 Vice President, Academic Affairs
R. Brady Locher, Jr..... 43 Vice President, Marketing Services
Richard Peterson........ 43 Vice President, Operations
</TABLE>
- --------
(1) The Company intends to add a director who is not affiliated with the
Company, Sylvan or MCI to its Board of Directors and the Audit and
Compensation Committees within 90 days after this offering.

Each director holds office until his successor is duly elected and
qualified, or until his earlier death, resignation or removal. Upon completion
of this offering, the Board of Directors will be classified into three
classes. The new director and Ms. Armstrong will serve in the class whose term
will expire at the 1999 annual meeting of stockholders; Messrs. Hill and
Hoehn-Saric will serve in the class whose term will expire at the 2000 annual
meeting of stockholders; and Mr. Becker and Ms. Mayer will serve in the class
whose term will expire at the 2001 annual meeting of stockholders. Upon
expiration of the initial term of each class of directors, directors
comprising that class will be elected to a three-year term at the next
succeeding annual meeting of stockholders.

The directors of the Company were elected pursuant to the Stockholders'
Agreement. See "Certain Relationships and Related Transactions."

R. Christopher Hoehn-Saric. Mr. Hoehn-Saric has served as Caliber's Chairman
of the Board of Directors since November 1996. From November 1996 until
February 1998, Mr. Hoehn-Saric also served as Caliber's Co-Chief Executive
Officer. Mr. Hoehn-Saric has served as Chairman of the Board of Directors of
Sylvan since April 1993 and as its Co-Chief Executive Officer since December
1995. From 1988 to 1993, he served as Sylvan's President. He also is a
principal in Sterling Capital, Ltd., an investment partnership ("Sterling").

Douglas L. Becker. Mr. Becker has served as Caliber's Vice Chairman of the
Board of Directors and Secretary since February 1998. From November 1996 until
February 1998, Mr. Becker served as President, Co-Chief Executive Officer and
a director of Caliber. Mr. Becker has served as President of Sylvan since
April 1993 and as its Co-Chief Executive Officer since December 1995. Mr.
Becker served as Chief Executive Officer of Sylvan's Learning Center Division
from February 1991 until April 1993. Mr. Becker was a co-founder of Health
Management Corporation and Sterling.

Chris L. Nguyen. Mr. Nguyen has served as Caliber's President and Chief
Executive Officer since February 1998. From November 1996 until February 1998,
Mr. Nguyen served as Caliber's Chief Operating Officer. Mr. Nguyen was Vice
President, Operations of Sylvan Prometric, Sylvan's computer-based testing
division, from 1993 to November 1996, when he joined Caliber. He joined
Sylvan's predecessor in 1987.

33
<PAGE>

Rick P. Frier. Mr. Frier has served as Vice President and Chief Financial
Officer of Caliber since March 1998. From 1991 through 1997, he served as Vice
President-Finance and Treasurer of Treasure Chest Advertising Company, Inc., a
company that provides advertising and marketing services to the retail
industry. From 1988 to 1991, Mr. Frier was a corporate banking officer at
Wells Fargo Bank.

Janeen M. Armstrong. Ms. Armstrong has served as a director of Caliber since
November, 1996. Ms. Armstrong has been self-employed as a certified public
accountant and consultant since 1993. Ms. Armstrong is Mr. Hill's daughter.

John P. Hill. Mr. Hill has served as a director of Caliber since November
1996. Mr. Hill has been self-employed as a financial consultant since 1975.
Prior to 1975, Mr. Hill held various staff and supervisory positions with
public accounting firms, the Board of Governors of the Federal Reserve System
and the Securities and Exchange Commission.

Susan Mayer. Ms. Mayer has served as a director of Caliber since November
1996. Ms. Mayer has been Senior Vice President of MCI Communications
Corporation since 1994. From 1993 to 1994, Ms. Mayer served as Vice President
of MCI Communications Corporation. From 1996 to 1997, Ms. Mayer was also
President and Chief Operating Officer of Sky MCI.

David R. Dobkin. Mr. Dobkin has served as Caliber's Senior Vice President,
Corporate Services since April 1997. Mr. Dobkin was a principal with the
Connected Enterprise Solutions group of Ernst & Young LLP from 1996 to 1997.
From 1995 to 1996, Mr. Dobkin served as Vice President, Sales and Marketing
for The Times Mirror Company, and from 1979 to 1995, he held various
management level sales and marketing positions with R. R. Donnelley & Sons.

G. Bryan Polivka. Mr. Polivka has served as Caliber's Senior Vice President,
Programming and Production since November 1996. Mr. Polivka served as Vice
President, Programming of Westcott Communications Inc. from 1991 through
September 1996. Prior to joining Westcott, Mr. Polivka was a producer with the
National Broadcasting Corporation and ProServ Television.

William G. Durden. Mr. Durden has served as Caliber's Vice President,
Academic Affairs since January 1, 1998. Mr. Durden serves concurrently as
President of the Sylvan Academy. Prior to joining Caliber and Sylvan, he
served as a Senior Fellow of the Wisconsin Policy Research Institute, the
Executive Director of the Institute of the Academic Advancement of Youth and a
member of the German Department of Johns Hopkins.

R. Brady Locher, Jr. Mr. Locher has served as Caliber's Vice President,
Marketing Services since July 1997. Mr. Locher served as Vice President of the
Marketing Services Group of Automatic Data Processing, Inc. from 1992 until
July 1997, and prior thereto, he held various positions in consumer products
marketing and advertising.

Richard F. Peterson. Mr. Peterson has served as Caliber's Vice President,
Operations since July 1997. Mr. Peterson served as Vice President of
Operations and Administration of Service Merchandise Co., Inc. from 1982 to
July 1997.

Other than Mr. Hill and Ms. Armstrong, there are no family relationships
among any of the executive officers or directors of the Company.

DIRECTOR COMPENSATION

Directors do not currently receive any compensation for their service on the
Board of Directors.

34
<PAGE>

BOARD COMMITTEES

The Board of Directors has established a Compensation Committee and will
establish an Audit Committee following completion of this offering. At least
two directors not affiliated with Sylvan or MCI will serve as the members of
the Audit Committee. The Audit Committee's principal functions will include
making recommendations to the Board regarding the annual selection of
independent public accountants, reviewing the proposed scope of each annual
audit and reviewing the recommendations of the independent public accountants
as a result of their audit of the Company's financial statements. The
Compensation Committee's principal function is to establish the compensation
of officers of the Company and to establish and administer the Company's
compensation programs, including the Company's 1998 Stock Incentive Plan. The
Board of Directors may from time to time establish other committees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

In 1997, the Board of Directors or senior management determined compensation
matters. Messrs. Hoehn-Saric and Becker, as Co-Chief Executive Officers,
participated in these decisions and are employees and directors of Sylvan.
None of the directors on the Compensation Committee is an employee of the
Company, and neither the Chief Executive Officer nor any other executive
officers will serve on the Compensation Committee. See "Certain Relationships
and Related Transactions."

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth information with
respect to the annual and long-term compensation earned in 1997 by the then
Co-Chief Executive Officers and the other four highest paid officers
(collectively, the "Named Officers") for services rendered in all capacities
to the Company during 1997:

<TABLE>
<CAPTION>
LONG-TERM
COMPEN-
SATION
ANNUAL COMPENSATION AWARDS
-------------------------- ----------
SHARES OF
OTHER COMMON
ANNUAL STOCK ALL OTHER
COMPENSA- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION SALARY BONUS TION(1) OPTIONS ($)(2)
- --------------------------- -------- ------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
R. Christopher Hoehn-
Saric(3)................... -- -- -- -- --
Co-Chief Executive Officer
Douglas L. Becker(3)........ -- -- -- -- --
Co-Chief Executive Officer
Chris L. Nguyen(4).......... $140,833 $16,625 $6,600 306,846 --
Chief Operating Officer
David R. Dobkin(5).......... 124,846 41,500 4,675 49,157 $58,935
Senior Vice President, Cor-
porate Services
G. Bryan Polivka............ 140,000 13,745 6,600 49,157 47,206
Senior Vice President,
Programming and Production
R. Brady Locher, Jr......... 74,462 25,000 3,025 49,157 56,909
Vice President, Marketing
Services(6)
</TABLE>
- --------
(1) Amounts consist of car allowances.
(2) Amounts consist of reimbursed relocation expenses.
(3) Messrs. Hoehn-Saric and Becker served as Co-Chief Executive Officers of
the Company during 1997 and also as Co-Chief Executive Officers of Sylvan.
During 1997, neither Mr. Hoehn-Saric nor Mr. Becker received any
compensation from Caliber and are not expected to receive compensation for
their services to Caliber in the future.
(4) Mr. Nguyen served as the Company's Chief Operating Officer during 1997. In
February 1998, he became President and Chief Executive Officer.
(5) Mr. Dobkin joined Caliber in April 1997 and currently is entitled to an
annual salary of $180,000 and an annual bonus based upon performance, not
to exceed $90,000.
(6) Mr. Locher joined Caliber in July 1997 and currently is entitled to an
annual salary of $165,000 and an annual bonus based upon performance, not
to exceed $41,250.

35
<PAGE>

NON-COMPETITION AGREEMENTS

Since November 1996, Messrs. Hoehn-Saric and Becker have been subject to
customary confidentiality and non-competition provisions in favor of the
Company. The non-competition provisions do not restrict Messrs. Hoehn-Saric
and Becker from working for Sylvan. All Caliber stock option grant agreements
contain non-competition provisions.

OPTION GRANTS

Option Grants. The following table sets forth information regarding options
to purchase shares of the Common Stock granted during 1997 to each of the
Named Officers:

<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT
ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM(3)
--------------------------------------------- ---------------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO PRICE PER EXPIRATION
NAME GRANTED EMPLOYEES SHARE(1) DATE(2) 5% 10%
- ---- ---------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. Christopher Hoehn-
Saric.................. -- -- -- -- -- --
Douglas L. Becker....... -- -- -- -- -- --
Chris L. Nguyen......... 98,314 9.2% $1.02 4/30/03 $1,612,472 $2,163,920
208,532 19.5 1.02 11/20/03 3,420,184 4,589,850
David Dobkin............ 49,157 4.6 1.02 4/30/03 806,236 1,081,960
G. Bryan Polivka........ 49,157 4.6 1.02 4/30/03 806,236 1,081,960
R. Brady Locher, Jr..... 49,157 4.6 1.02 6/19/03 806,236 1,081,960
</TABLE>
- --------
(1) The exercise price equaled the fair market value of the Common Stock as
determined by the Board of Directors on the date of grant. The exercise
price is payable in cash or by delivery of shares of Common Stock having a
fair value equal to the exercise price of options exercised.
(2) With certain exceptions, these options become vested, at the rate of 20%
per year, beginning one year from the date of grant. Each optionee has
generally agreed not to sell or otherwise transfer any shares acquired
upon exercise of these options for two years after the date of this
Prospectus.
(3) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Common Stock increasing to $17.42 and $23.03, respectively,
from an assumed initial public offering price of $13.00 per share during
the six-year term of the options. The 5% and 10% assumed annual rates of
price appreciation used to calculate potential gains to optionees are
mandated by the rules of the Securities and Exchange Commission. The
potential realizable value does not represent the Company's prediction of
its stock price performance. There can be no assurance that the stock
price will actually appreciate over the six-year option term at the
assumed 5% and 10% rates, if at all.

36
<PAGE>

OPTION HOLDINGS

The following table sets forth information concerning the number and value
of unexercised options to purchase Common Stock held as of December 31, 1997
by the Named Officers. None of the Named Officers exercised any options to
purchase Common Stock during 1997.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
EXERCISABLE/UNEXERCISABLE IN-THE-MONEY OPTIONS AT
NAME OPTIONS AT YEAR-END(1) YEAR-END(2)
- ---- ------------------------------- -----------------------
<S> <C> <C>
R. Christopher Hoehn-
Saric.................. --(E) --(E)
--(U) --(U)
Douglas L. Becker....... --(E) --(E)
--(U) --(U)
Chris L. Nguyen......... --(E) --(E)
306,846(U) $3,676,015(U)
David Dobkin............ --(E) --(E)
49,157(U) 588,901(U)
G. Bryan Polivka........ --(E) --(E)
49,157(U) 588,901(U)
R. Brady Locher, Jr..... --(E) --(E)
49,157(U) 588,901(U)
</TABLE>
- --------
(1) (E) = Exercisable; (U) = Unexercisable.
(2) Value equals an assumed initial public offering price of $13.00 per share,
less the per share exercise price.

EMPLOYEE BENEFIT PLANS

1997 Stock Option Plan. The Company's 1997 Stock Option Plan (the "1997
Plan") was adopted by the Company's Board of Directors and approved by the
stockholders as of April 30, 1997. Under the 1997 Plan, a committee of the
Board of Directors is authorized to grant stock appreciation rights and non-
qualified or incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), to purchase shares of
Common Stock to any consultant, employee, officer or director of the Company
as compensation for services rendered or contributions made to the Company.
There are an aggregate of 1,227,400 shares reserved for issuance upon exercise
of options granted under the 1997 Plan. With certain exceptions, employee
options vest ratably over a five-year period commencing with the date of grant
and expire six years after the date of grant, unless terminated earlier as a
result of termination of employment. Options granted under the 1997 Plan are
intended to qualify as incentive stock options to the maximum extent allowed
by the Code. As of December 31, 1997, there were outstanding under the 1997
Plan options to purchase an aggregate of 974,310 and 95,737 shares of Common
Stock at exercise prices of $1.02 and $1.63 per share, respectively, held by
61 employees. With certain exceptions, the options outstanding as of the date
of this Prospectus will begin to be exercisable on April 30, 1998, assuming
those currently holding options remain as employees of the Company. In
connection with the Company's adoption of the 1998 Stock Incentive Plan, the
1997 Plan was terminated as to new grants.

1998 Stock Incentive Plan. The Company's 1998 Stock Incentive Plan (the
"1998 Plan") was adopted by the Company's Board of Directors and approved by
the stockholders as of February 17, 1998. The purpose of the 1998 Plan is to
promote the long-term growth and profitability of the Company by providing
individuals with incentives to improve stockholder value and to contribute to
the growth and financial success of the Company and by enabling the Company to
attract, retain and reward the best-available persons. The 1998 Plan provides
for the grant of non-qualified stock options, incentive stock options within
the meaning of Section 422 of the Code, stock appreciation rights, restricted
and non-restricted stock awards, phantom stock awards, convertible debentures
and performance awards, each of which may be granted separately or in tandem
with other awards. The Compensation Committee has authority to select the
persons (including directors) to whom

37
<PAGE>

awards will be granted and to determine the terms of each award. In addition,
the Compensation Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, awards in recognition of unusual
or nonrecurring events affecting the Company or the financial statements of
the Company or any subsidiary, changes in applicable laws, regulations, or
accounting principles, whenever the Compensation Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
1998 Plan. The Company has reserved an aggregate of 1,043,290 shares of Common
Stock for issuance under the 1998 Plan. Participation in the 1998 Plan is open
to all employees, officers, directors and consultants of the Company or its
affiliated entities, although only employees of the Company or any subsidiary
may receive grants of incentive stock options.

Options under the 1998 Plan intended to qualify as incentive stock options
under Section 422 of the Code must have an exercise price at least equal to
the fair market value of the underlying shares on the date of grant, but non-
qualified stock options may be granted with an exercise price less than fair
market value. Incentive stock options may not be exercisable more than ten
years from the date the option is granted. If any employee of the Company or
any subsidiary owns or is deemed to own at the date of grant shares of stock
representing in excess of 10% of the combined voting power of all classes of
stock of the Company, the exercise price for the incentive stock options
granted to such employee may not be less than 110% of the fair market value of
the underlying shares on that date, and the option may not be exercisable more
than five years from the date the option is granted. The option exercise price
may be paid in cash, in shares of Common Stock, by a combination of cash and
shares or by any other means the Compensation Committee approves. Awards of
stock appreciation rights, stock and phantom stock awards and performance
awards may be settled in cash, shares of Common Stock or a combination of
each, in the discretion of the Compensation Committee.

The Board of Directors may terminate, amend or modify the 1998 Plan or any
portion thereof at any time, except that all awards made prior to termination
of the 1998 Plan will remain in effect until satisfied or terminated in
accordance with the terms of the 1998 Plan and such awards.

401(k) Savings Plan. The Company participates in the Sylvan 401(k)
Retirement Savings Plan, a defined contribution pension plan with a cash or
deferred arrangement as described in Section 401(k) of the Code (the "401(k)
Plan"). The 401(k) Plan is intended to qualify under Section 401(a) of the
Code, so that contributions, and income earned thereon, are not taxable to
employees until withdrawn. Generally, all employees of the Company who have
completed at least three months of service are eligible to participate in the
401(k) Plan. The 401(k) Plan provides that each participant may make elective
pre-tax and/or after-tax salary deferral contributions up to 15% of his or her
annual compensation, subject to statutory limits. The Company also may make
annual discretionary matching contributions and discretionary profit sharing
contributions in amounts determined by the Board of Directors, subject to
statutory limits. As of December 31, 1997, the Company had not made any
contributions. An employee must have performed one year of service before he
or she is eligible to receive an allocation of such matching or profit sharing
contributions. The Trustee of the 401(k) Plan invests each employee's account
at the direction of the employee, who may choose among several investment
alternatives, which do not currently include shares of Common Stock.

38
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Stock Purchase Agreement. The Company was capitalized pursuant to a Stock
Purchase Agreement, dated October 23, 1996, under which MCI purchased
2,442,513 shares of 8% Series A Convertible Preferred Stock for $10.0 million
in cash; Sylvan purchased 1,227,393 shares of Series B Junior Preferred Stock
for $1.3 million in cash; each of R. Christopher Hoehn-Saric and Douglas L.
Becker, Sylvan's Co-Chief Executive Officers, purchased 1,718,351 shares of
Class A Common Stock for $350,000 each in cash; and John P. Hill, an
independent investor, purchased 5,167,328 shares of Class B Common Stock for
$1.0 million in cash. Messrs. Hoehn-Saric and Becker subsequently transferred
their shares to Sterling Caliber Investment, L.L.C., which is owned by Messrs.
Hoehn-Saric and Becker, two other investors and trusts for the benefit of
their respective families.

MCI Lease and Guarantee Commitment. Under the MCI Lease and Guarantee
Commitment contained in the Stock Purchase Agreement, MCI committed to provide
directly, or through a subsidiary, an aggregate of $20.0 million of (i) five
year capital leases for computer hardware and software, video equipment,
satellite equipment and other telecommunications equipment as well as
furniture required for the business of Caliber (collectively, the "Required
Equipment") or the procurement, installation and deployment, maintenance,
financing, technology upgrades and appropriate support service for the
Required Equipment, including, but not limited to, help desk services
(collectively, the "Required Services"); (ii) guarantees by MCI of Caliber's
obligations under other leases for Required Equipment or Required Services; or
(iii) a combination thereof. The MCI Lease and Guarantee Commitment requires
Caliber to notify MCI Systemhouse of the terms of other companies' bids to
provide Required Equipment or Required Services leases and to give MCI
Systemhouse the opportunity to furnish Caliber with the last bid for such
leases but does not require Caliber to accept MCI Systemhouse's bid if, in
Caliber's good faith judgment, a competitive bid is more advantageous to
Caliber. In connection with the MCI Lease and Guarantee Commitment, MCI
Systemhouse and Caliber entered into the Enterprise Management Agreement
described in "Business--Caliber Technology."

Under the MCI Lease and Guarantee Commitment, SHL Financial Services
Telecommunications Corporation, an affiliate of MCI, ("SHL") has a first
security interest in all furniture and equipment provided by MCI Systemhouse
under the Enterprise Management Agreement and SHL has a first security
interest in any furniture and equipment provided in any subsequent MCI
Systemhouse lease. Under the Enterprise Management Agreement, upon certain
events of default, MCI and MCI Systemhouse have the right to terminate the MCI
Lease and Guarantee Commitment, the Enterprise Management Agreement and any
other MCI Systemhouse leases.

Stockholders' Agreement. In connection with the Company's capitalization,
the Stockholders and the Company entered into the Stockholders' Agreement,
pursuant to which: (i) Sylvan agreed to make the Sylvan Loan; (ii) Sylvan
agreed to contribute an additional $8.0 million of capital to Caliber to the
extent needed by Caliber for working capital; (iii) Mr. Hill granted Sylvan
the Hill Option; (iv) the Stockholders' ability to transfer their shares of
Caliber stock was restricted; (v) the Stockholders agreed to elect the other
Stockholders or their representatives to the Company's Board of Directors; and
(vi) the Company was prohibited from taking certain actions without the
approval of MCI's Board representative. Pursuant to the Stockholders'
Agreement, Mr. Hill, Ms. Armstrong, Mr. Hoehn-Saric, Mr. Becker and Ms. Mayer
were elected and currently serve as directors of the Company. The
Stockholders' Agreement will terminate upon completion of this offering.

Registration Rights Agreement. Under the Registration Rights Agreement, the
Company has agreed to register under the Securities Act all or any portion of
the shares of Common Stock owned by Sylvan, MCI and Sterling Caliber at any
time upon their request during the four years after completion of this
offering. Caliber is only required to register shares held by these
Stockholders an aggregate of four times on an S-1 registration statement and
an aggregate of six times on an S-3 registration statement. Caliber is
required to register these shares on an S-1 registration statement only if the
shares to be registered have a fair market value of at least $3.0 million and
on an S-3 registration statement only if the shares to be registered have a
fair market value of at least $1.0 million. Caliber can require any offering
of the registered shares to be underwritten by one or more investment banking
firms of national reputation selected by the Company if the fair market value
of the shares being registered exceeds $3.0 million.

39
<PAGE>

MCI Warrant. The Company issued the MCI Warrant to MCI in connection with
MCI's purchase of 2,442,513 shares of 8% Series A Convertible Preferred Stock.
The MCI Warrant has been generally exercisable for that number of shares of
Common Stock that would equal 7% of the total number of shares outstanding
after exercise of the MCI Warrant. As a result of this offering, the MCI
Warrant will become exercisable for 1,193,573 shares and will be subject for
adjustment only (i) if the Company sells shares of Common Stock for less than
$3.17 or issues rights, options (other than management stock options) or
warrants to purchase shares of Common Stock for less than $3.17, or (ii) for
stock splits and similar changes in the capitalization of the Company. The
aggregate exercise price of the MCI Warrant is $3.78 million.

Sylvan Loan. As of December 31, 1997, the Company owed $3.0 million to
Sylvan under the Sylvan Loan. Amounts outstanding bear interest at 1% above
the NationsBank prime rate. As of December 31, 1997, principal outstanding
under the Sylvan Loan bore interest at 9.5%. Accrued interest payable under
the Sylvan Loan was $301,784 at December 31, 1997. The Company intends to use
a portion of the net proceeds from this offering to repay the Sylvan Loan with
accrued interest. The Sylvan Loan will continue to be available to Caliber
after completion of this offering.

Hill Option. Mr. Hill granted Sylvan the right to purchase his 5,167,328
shares of Class B Common Stock. Immediately prior to closing of this offering,
Mr. Hill's shares will automatically be exchanged for 5,167,328 shares of 6%
Non-Voting Convertible Preferred Stock, and Sylvan will exercise the Hill
Option and purchase all of Mr. Hill's shares of 6% Non-Voting Convertible
Preferred Stock for $5.0 million.

Sale of Shares to Management. Since November 1996, Caliber has sold shares
of Common Stock for $1.02 per share as follows: B. Lee McGee--98,314 shares;
Chris L. Nguyen--49,155 shares; David Dobkin--73,735 shares; Brian Polivka--
49,157 shares; and Brady Locher--73,766. All of Mr. Polivka's shares as well
as 49,157 of the shares issued to each of Messrs. Dobkin and Locher were in
exchange for services rendered or as an employment bonus. On March 16, 1998,
Caliber sold Rick Frier 18,750 shares of Common Stock for $8.00 per share.

Sylvan Management Agreement. Since Caliber's formation in 1996, Caliber has
occupied a portion of Sylvan's facilities and currently occupies a facility
leased by Sylvan at 3600 Clipper Mill Road, Baltimore, Maryland 21211 the rent
for which is included in the management fee payable to Sylvan. In addition,
Sylvan has provided to Caliber certain administrative support and executive
management services, including financial management; tax and accounting
services; legal services; management information services; and human resources
administration. Sylvan and Caliber entered into an Intercompany Management and
Facility Use Agreement, dated January 1, 1998, which expires on December 31,
1999. Under this agreement, Sylvan will continue to provide facilities and
services to Caliber on an as- needed basis and in accordance with past
practice, subject to Caliber's payment of a $2.0 million annual facility use
and management fee. Caliber has accrued approximately $2.9 million of facility
use and management fees through December 31, 1997, which will be paid to
Sylvan upon consummation of the offering.

CBT Services Agreement. Under the Testing Center Management and CBT Services
Agreement, as amended (the "CBT Services Agreement"), Caliber agreed to assume
management and responsibility for operation of 32 Sylvan Testing Centers and
to deliver computer-based testing ("CBT") services on behalf of Sylvan at
those STCs through December 31, 2000. Caliber is responsible for utilities,
salaries, data communications and, in the case of STCs leased from the NASD by
Sylvan, all operating costs billed to Sylvan by the NASD under a management
agreement between those parties. In return, Sylvan pays Caliber a fixed amount
per month, a fee per test above a specified number of tests and 50% of any
profits Sylvan receives from its digital fingerprinting joint venture with
Identix Corporation. Mr. Nguyen and Mr. Hoehn-Saric are directors of the
Sylvan Identix joint venture.

40
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information as of the date of this Prospectus
(after giving effect to the Preferred Stock Conversion, the Recapitalization
and Sylvan's exercise of the Hill Option), as to the beneficial ownership of
the Common Stock by (i) each person who owns beneficially more than 5% of the
Common Stock, (ii) each of the directors of the Company, (iii) each of the
Named Officers, and (vi) all directors and executive officers as a group and
(vii) the Selling Stockholder. Unless otherwise indicated, each named person
exercises sole voting and investment power.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO SHARES OWNED AFTER
OFFERING OFFERED OFFERING
----------------------- --------- -----------------------
NAME OF BENEFICIAL OWNER(1) NUMBER PERCENT NUMBER PERCENT
- --------------------------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Sylvan Learning Systems,
Inc.(2)................ 1,227,393 16.3% -- 1,227,393 10.5%
MCI Communications
Corporation(3)......... 3,636,086 41.7 1,200,000 2,436,086 18.9
R. Christopher Hoehn-
Saric(4)(5)............ 1,718,351 22.8 -- 1,718,351 14.7
Douglas L.
Becker(4)(5)........... 1,718,351 22.8 -- 1,718,351 14.7
Chris L. Nguyen(6)(8)... 68,817 * -- 68,817 *
Rick P. Frier(8)........ 18,750 * -- 18,750 *
David R. Dobkin(7)(8)... 83,566 * -- 83,566 *
G. Bryan Polivka(7)(8).. 58,988 * -- 58,988 *
R. Brady Locher,
Jr.(8)................. 73,766 * -- 73,766 *
Janeen M. Armstrong..... -- -- --
John P. Hill............ -- -- --
Susan Mayer(9).......... -- -- --
All directors and
executive officers as a
group (7 persons)...... 3,740,599 49.8 -- 3,740,599 31.9
</TABLE>
- --------
* Less than 1%.

(1) The address of each stockholder listed in the table is c/o Caliber
Learning Network, Inc., 3600 Clipper Mall Road, Baltimore, Maryland 21211,
except MCI Communications Corporation and Ms. Mayer, whose addresses are
1801 Pennsylvania Avenue, NW, Washington, DC 20006.

(2) Excludes 5,167,328 shares of 6% Non-Voting Convertible Preferred Stock,
convertible into Common Stock, on a share for share basis, beginning two
years from the date of this Prospectus.

(3) Includes 1,193,573 million shares of Common Stock issuable upon exercise
of the MCI Warrant.

(4) In November 1996, Messrs. Hoehn-Saric and Becker each transferred
1,718,351 shares of Common Stock to Sterling Caliber but retained voting
power over all of the transferred shares. The shares held by Sterling
Caliber are owned equally by Douglas L. Becker, R. Christopher Hoehn-
Saric, Eric Becker (Douglas L. Becker's brother) and Steven Taslitz, or
trusts for the benefit of their respective families.

(5) Excludes the 1,227,393 shares of Common Stock and 5,167,328 shares of 6%
Non-Voting Convertible Preferred Stock owned by Sylvan.

(6) Includes 49,094 shares held in two irrevocable educational trusts for the
benefit of Mr. Nguyen's children and 19,662 shares underlying options
which will be exercisable within 60 days of the date of this Prospectus.

(7) Includes 9,831 shares underlying options which will be exercisable within
60 days of the date of this Prospectus held by each of Messrs. Dobkin and
Polivka.

(8) Excludes outstanding options to purchase 287,184, 49,157, 39,326, 39,326
and 49,157 shares of Common Stock held by Messrs. Nguyen, Frier, Dobkin,
Polivka and Locher, respectively, none of which is exercisable within 60
days of the date of this Prospectus.

(9) Excludes the 3,636,086 million shares of Common Stock owned beneficially
by MCI.

41
<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue up to 50 million shares of Common Stock,
par value $.01 per share, and up to 5,167,328 shares of 6% Non-Voting
Convertible Preferred Stock, par value $0.01 per share. Upon completion of
this offering, 11,718,642 shares of Common Stock (including the 5,400,000
shares offered hereby) and 5,167,328 shares of 6% Non-Voting Convertible
Preferred Stock will be issued and outstanding.

COMMON STOCK

Holders of the Common Stock are entitled to one vote per share on all
matters submitted to the stockholders for a vote. There are no cumulative
voting rights in the election of directors. Subject to the prior rights of any
outstanding preferred stock, the shares of Common Stock are entitled to
receive such dividends as may be declared and paid by the Board of Directors
out of funds legally available therefor and to share, ratably, in the net
assets, if any, of the Company upon liquidation. The stockholders have no
preemptive rights to purchase any shares of the Company's capital stock. All
outstanding shares of Common Stock are, and the shares of Common Stock offered
hereby will be, when issued and paid for, duly authorized, validly issued,
fully paid and nonassessable.

The Board of Directors, without further action by the holders of the Common
Stock, is authorized to classify any shares of its authorized but unissued
Common Stock as preferred stock in one or more series, from time to time. With
respect to each series, the Board of Directors determines the number of shares
constituting such series, the dividend rate on the shares of each series,
whether such dividends shall be cumulative and the relation of such dividends
to any dividends payable on any other class of stock, whether the shares of
each series shall be redeemable and the terms thereof, whether the shares
shall be convertible into Common Stock and the terms thereof, the amount per
share payable on each series or other rights of holders of such shares on
liquidation or dissolution of the Company, the voting rights, if any, of
shares of each series and any other rights and privileges not in conflict with
the Company's charter and any qualifications, limitations or restrictions
thereof. The Board of Directors has no present intention to issue any
additional series of preferred stock. The availability of preferred stock,
while providing desirable flexibility in connection with possible acquisitions
and other corporate purposes, could have the effect of discouraging takeover
proposals, and the issuance of preferred stock could have the effect of
delaying or preventing a change in control of the Company not approved by the
Board of Directors.

6% NON-VOTING CONVERTIBLE PREFERRED STOCK

Dividends. Holders of 6% Non-Voting Convertible Preferred Stock are entitled
to receive pro rata for each share held, when and as declared by the Board of
Directors of the Company, out of funds of the Company legally available for
payment, cumulative annual cash dividends aggregating $60,000, payable
beginning May 31, 1999. Accumulated dividends will not bear interest.

Until all accumulated dividends are paid in full, the Company may not,
without first obtaining the consent of the holders of all of the outstanding
shares of 6% Non-Voting Convertible Preferred Stock, declare or pay dividends
on or make any other distributions on, or redeem or purchase or otherwise
acquire for consideration, any shares of the Company's capital stock ranking
junior to the 6% Non-Voting Convertible Preferred Stock (other than shares
acquired in exchange for other shares of the Company's capital stock ranking
junior to the 6% Non-Voting Convertible Preferred Stock).

Conversion. Shares of 6% Non-Voting Convertible Preferred Stock will be
convertible to Common Stock on a one-for-one basis, subject to adjustment for
stock dividends, stock splits and similar changes in the capitalization of the
Company. Generally, holders of the 6% Non-Voting Convertible Preferred Stock
may not exchange their shares for shares of Common Stock until two years from
the date of this offering. However, in the event of a Qualified Public
Offering, holders of the 6% Non-Voting Convertible Preferred Stock may elect
to convert their shares of 6% Non-Voting Convertible Preferred Stock to Common
Stock immediately prior to the

42
<PAGE>

closing thereof but only to the extent of shares of Common Stock issued upon
such conversion that are included by such holders in the Qualified Public
Offering. For these purposes, a "Qualified Public Offering" means an
underwritten public offering pursuant to a registration statement filed by the
Company under the Securities Act which includes shares of Common Stock to be
sold by one or more holders. Holders of 6% Non-Voting Convertible Preferred
Stock also may convert their shares to Common Stock immediately prior to a
Change of Control of the Company. For these purposes, a "Change of Control"
means (i) any person, other than the Company, becomes the beneficial owner,
directly or indirectly, through a purchase or other acquisition transaction or
series of transactions (other than a merger or consolidation with the
Company), of shares of capital stock of the Company entitling such person to
exercise in excess of 50% of the total voting power of all share of capital
stock of the Company entitled to vote generally in the election of directors;
(ii) there occurs any consolidation of the Company with, or merger of the
Company into, any other person, any merger of another person into the Company,
or any sale or transfer of the assets of the Company, as an entirety or
substantially as an entirety, to another person; or (iii) a change in the
Board of Directors of the Company in which the individuals who constituted the
Board of Directors of the Company at the beginning of the one-year period
immediately preceding such change cease for any reason to constitute a
majority of the directors then in office.

Redemption. The 6% Non-Voting Convertible Preferred Stock is not subject to
redemption.

Liquidation. The holders of the 6% Non-Voting Convertible Preferred Stock
are entitled to receive in the event of any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, a liquidation
preference for each share of the 6% Non-Voting Convertible Preferred Stock
equal to $0.194 plus all accrued and unpaid dividends on such share to the
date of payment, subject to adjustment for stock splits, combinations and
dividends on the Common Stock. Until the holders of the Junior Preferred Stock
have been paid their aggregate liquidation preference in full, no payment will
be made to (i) any holder of the Company's capital stock ranking on a parity
with the 6% Non-Voting Convertible Preferred Stock, except distributions made
ratably on the 6% Non-Voting Convertible Preferred Stock and any stock ranking
on parity therewith or (ii) any holder of the Company's capital stock ranking
junior to the 6% Non-Voting Convertible Preferred Stock.

Voting Rights. Except as otherwise from time to time required by applicable
law, the holders of shares of 6% Non-Voting Convertible Preferred Stock have
no voting rights.

ANTI-TAKEOVER PROVISIONS OF CHARTER AND BY-LAWS

Upon completion of this offering, the Company's Charter will provide for a
Board of Directors of three classes, with the initial classes having one, two
and three year terms, respectively, and thereafter staggered three year terms.
Under the Charter, directors may be removed for cause only upon the
affirmative vote of at least 80% of the shares of capital stock entitled to
vote in the election of directors. Under the By-Laws, the number of directors
will be fixed at eight, which number may be changed only upon the vote of two-
thirds of the directors then in office.

The Company's Charter and By-Laws will require that any stockholder proposal
relating to the nomination of a director must be delivered to the Company's
Secretary no more than 90 days nor less than 60 days prior to the Annual
Meeting of Stockholders at which such nominee will be voted upon.

The foregoing provisions of the Charter and all provisions of the By-Laws
may be amended or repealed by the stockholders only upon the affirmative vote
of at least 80% of the shares of capital stock entitled to vote thereon. The
By-Laws also may be amended or repealed by the Board of Directors, but only
upon the vote of at least two-thirds of the directors then in office. These
provisions of the Charter and By-Laws could have the effect of discouraging
takeover proposals and delaying or preventing a change in control of the
Company not approved by the Board of Directors.

43
<PAGE>

BUSINESS COMBINATIONS

Under Section 3-601, et seq. of the Maryland General Corporation Law (the
"Business Combination Statute"), certain "business combinations" (including
mergers or similar transactions subject to a statutory stockholder vote and
additional transactions involving transfers of assets or securities in
specific amounts) between a Maryland corporation subject to the Business
Combination Statute and any person who beneficially owns 10% or more of the
voting power of the corporation's shares or any affiliate of the corporation
who, at any time within the preceding two years, was the beneficial owner of
10% or more of the voting power of the then-outstanding voting stock of the
corporation (an "Interested Stockholder"), or an affiliate thereof, are
prohibited for five years after the most recent date on which the Interested
Stockholder became an Interested Stockholder unless an exemption is available.
Thereafter, any such business combination must be recommended by the board of
directors of the corporation and approved by the affirmative vote of at least:
(i) 80% of the votes entitled to be cast by all holders of outstanding voting
shares of the corporation; and (ii) two-thirds of the votes entitled to be
cast by holders of outstanding voting shares of the corporation other than
shares held by the Interested Stockholder with whom the business combination
is to be effected, unless the corporation's stockholders receive a minimum
price (as described in the Business Combination Statute) for their shares and
the consideration is received in cash or in the same form as previously paid
by the Interested Stockholder for its shares. The Business Combination Statute
does not apply, however, to business combinations that are (a) exempted in the
corporation's charter prior to the time the corporation became subject to the
Business Combination Statute or (b) approved or exempted by the board of
directors prior to the time that the Interested Stockholder becomes an
Interested Stockholder. After a corporation becomes subject to the Business
Combination Statute, in order to amend the corporation's charter to elect not
to be subject to the foregoing requirements with respect to one or more
Interested Stockholders, the affirmative vote of at least 80% of the votes
entitled to be cast by all holders of outstanding shares of voting stock and
two-thirds of the votes entitled to be cast by holders of outstanding shares
of voting stock who are not Interested Stockholders is required.

CONTROL SHARE ACQUISITION

Section 3-701 et seq. of the Maryland General Corporation Law (the "Control
Share Acquisition Statute") provides that "control shares" of a Maryland
Corporation acquired in a "control share acquisition" have no voting rights
except to the extent approved by a vote of two-thirds of the votes entitled to
be cast on the matter, excluding shares of stock owned by the acquiror or by
officers or directors who are employees of the corporation. "Control shares"
are voting shares of stock which, if aggregated with all other such shares of
stock previously acquired by the acquiror, or in respect of which the acquiror
is able to exercise or direct the exercise of voting power except solely by
virtue of a revocable proxy, would entitle the acquiror to exercise voting
power in electing directors within one of the following ranges of voting
power: (i) one-fifth or more but less than one-third; (ii) one-third or more
but less than a majority; or (iii) a majority of all voting power. Control
shares do not include shares the acquiring person is then entitled to vote as
a result of having previously obtained stockholder approval. A "control share
acquisition" means the acquisition of control shares, subject to certain
exceptions.

A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses
and delivery of an "acquiring person statement"), may compel the corporation's
board of directors to call a special meeting of stockholders to be held within
50 days of demand to consider the voting rights of the shares. If no request
for a meeting is made, the corporation may itself present the question at any
stockholders meeting.

If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement within 10 days following a
control share acquisition then, subject to certain conditions and limitations,
the corporation may redeem any or all of the control shares (except those for
which voting rights have previously been approved) for fair value determined,
without regard to the absence of voting rights for the control shares, as of
the date of the last control share acquisition or of any meeting of
stockholders at which the voting rights of such shares are considered and not
approved. Moreover, if voting rights for control shares are approved at a
stockholders' meeting and the acquiror becomes entitled to exercise or direct
the exercise of a

44
<PAGE>

majority or more of all voting power, other stockholders may exercise
appraisal rights. The fair value of the shares as determined for purposes of
such appraisal rights may not be less than the highest price per share paid by
the acquiror in the control share acquisition. The Control Share Acquisition
Statute does not apply to shares acquired in a merger, consolidation or share
exchange to which the corporation is a party.

The Business Combination Statute and the Control Share Acquisition Statute
could have the effect of discouraging takeover proposals and delaying or
preventing a change of control of the Company not approved by its Board of
Directors.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is State Street Bank
and Trust Company, Boston, Massachusetts.

45
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding
11,718,642 shares of Common Stock, plus 1,156,349 shares issuable upon
exercise of currently outstanding options, 1,193,573 shares issuable upon
exercise of the MCI Warrant and 5,167,328 shares issuable upon conversion by
Sylvan of the 6% Non-Voting Convertible Preferred Stock. The shares offered
hereby will be freely transferable unless acquired by affiliates of the
Company. All of the remaining outstanding shares, upon expiration of the
Underwriters' lock-up described below, will be saleable under Rule 144 of the
Securities Act, unless then held by affiliates of the Company. The 1,156,349
shares reserved for issuance upon exercise of outstanding options and the
1,043,290 shares reserved for future grants under the Company's 1998 Plan will
be registered under the Securities Act upon completion of this offering. Those
shares will be freely transferable upon issuance unless held by affiliates of
the Company. The Company has granted MCI, Sylvan and Sterling Caliber, who
hold 7,100,181 shares of Common Stock (assuming exercise of the MCI Warrant)
and 5,167,328 shares of 6% Non-Voting Convertible Preferred Stock, the right
to have their shares of Common Stock registered under the Securities Act on
one or more occasions over the next four years.

All of the Company's officers who own Common Stock or hold options to
purchase 7,500 shares or more, have agreed not to sell or otherwise dispose of
any of their shares for a period of two years after the date of this
Prospectus without the prior written consent of both BT Alex. Brown
Incorporated and the Company. Sylvan, MCI and Sterling Caliber, who hold, in
the aggregate, 7,100,181 shares of Common Stock (assuming exercise of the MCI
Warrant) and 5,167,328 shares of 6% Non-Voting Convertible Preferred Stock at
the completion of this offering, have agreed not to sell or dispose of any of
their shares for a period of one year after the date of this Prospectus
without the prior written consent of BT Alex. Brown Incorporated and Caliber.

In general, under Rule 144 as currently in effect, a stockholder (or
stockholders whose securities are aggregated) who (together with predecessor
holders who are not affiliates of the Company) has beneficially owned shares
of Common Stock which were not acquired in an offering registered under the
Securities Act ("restricted shares") for at least one year is entitled to
sell, within any three-month period, a number of shares that does not exceed
the greater of (i) 1% of the then outstanding shares of the Common Stock
(approximately 117,280 shares immediately following this offering) or (ii) the
average weekly trading volume in the Common Stock during the four calendar
weeks immediately preceding the date on which notice of the sale is filed with
the Commission. Sales under Rule 144 are also subject to certain manner-of-
sale provisions and notice requirements and to the availability of current
public information about the Company. Restricted shares held by non-affiliates
of the Company for more than two years can be sold without limitation under
Rule 144. Affiliates of the Company must comply with the restrictions and
requirements of Rule 144 when transferring restricted shares even after the
two year holding period has expired and must comply with the restrictions and
requirements of Rule 144 (other than the one-year holding period) in order to
sell unrestricted shares (such as shares acquired by affiliates in the public
market or registered shares acquired upon exercise of options.

46
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), through their representatives,
BT Alex. Brown Incorporated and NationsBanc Montgomery Securities LLC
(together, the "Representatives"), have severally agreed to purchase from the
Company and the Selling Stockholder the following respective number of shares
of Common Stock at the initial public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
BT Alex. Brown Incorporated........................................
NationsBanc Montgomery Securities LLC..............................

---------
Total............................................................ 5,400,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all of the shares of Common Stock offered hereby, if any of such
shares are purchased.

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the initial
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may re-allow, a concession
not in excess of $ per share to certain other dealers. After commencement
of the initial public offering, the public offering price and other selling
terms may be changed by the Representatives.

The Company and the Selling Stockholder have granted the Underwriters an
option, exercisable not later than 30 days after the date of this Prospectus,
to purchase up to 230,000 and 580,000 additional shares of Common Stock,
respectively, at the initial public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus. To
the extent that the Underwriters exercise such option, each of the
Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased
by it in the above table bears to 5,400,000, and the Company and the Selling
Stockholder will be obligated, pursuant to the option, to sell such shares to
the Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on
the same terms as those on which the 5,400,000 shares are being offered.

The Underwriting Agreement contains covenants of indemnity and contribution
between the Underwriters and the Company and the Selling Stockholder regarding
certain liabilities, including liabilities under the Securities Act.

To facilitate the offering of the Common Stock, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price
of the Common Stock. Specifically, the Underwriters may over-allot shares of
Common Stock in connection with this offering, thereby creating a short
position in the Underwriters' syndicate account. Additionally, to cover such
over- allotments or to stabilize the market price of the Common Stock, the
Underwriters may bid for, and purchase, shares of the Common Stock in the open
market. Any of these activities may maintain the market price of the Common
Stock at a level above that which

47
<PAGE>

might otherwise prevail in the open market. The Underwriters are not required
to engage in these activities, and, if commenced, any such activities may be
discontinued at any time. The Representatives, on behalf of the Underwriters,
also may reclaim selling concessions allowed to an Underwriter or dealer, if
the syndicate repurchases shares distributed by that Underwriter or dealer.

The Underwriters have reserved for sale, at the initial public offering
price, shares of Common Stock for certain employees and associates of the
Company who have expressed an interest in purchasing shares of Common Stock in
the offering. These employees and associates will purchase, in the aggregate,
less than 10% of the shares of Common Stock offered in the Offering. Family
members of Donald Berlanti, a Sylvan director, have expressed an interest in
purchasing up to an aggregate of 250,000 of the shares of Common Stock
reserved for employees and associates of the Company. Mr. Berlanti has agreed
not to sell the shares purchased in the offering for a period of 120 days from
the date of this prospectus. There can be no assurance that any of the
reserved shares will be so purchased. Any reserved shares not so purchased
will be offered to the general public on the same basis as the other shares
offered hereby.

All of the Company's officers, together with all other employees who own
Common Stock or hold options to purchase 7,500 or more, have agreed not to
sell or otherwise dispose of any of their shares for a period of two years
after the date of this Prospectus without the prior written consent of BT
Alex. Brown Incorporated and the Company. Sylvan, MCI and Sterling Caliber,
who will hold, in the aggregate, 7,100,181 shares of Common Stock (assuming
exercise of the MCI Warrant) and 5,167,328 shares of Non-Voting Convertible
Preferred Stock at the completion of this offering, have agreed not to sell or
dispose of any of their shares for a period of one year after the date of this
Prospectus without the prior written consent of BT Alex. Brown Incorporated.

The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock
will be determined by negotiations among the Company and the Representatives.
Among the factors which will be considered in such negotiations will be the
prevailing market conditions, the results of operations of the Company in
recent periods, the market capitalizations and stages of development of other
companies which the Company and the Representatives believe to be comparable
to the Company, estimates of the business potential of the Company, the
present state of the Company's development and other factors which may be
deemed relevant by the Company and the Representatives.

LEGAL MATTERS

The legality of the Common Stock offered hereby has been passed upon for the
Company by Piper & Marbury L.L.P., Baltimore, Maryland. A lawyer with Piper &
Marbury L.L.P. serves as trustee for two trusts established for the benefit of
Mr. Nguyen's children, which hold an aggregate of 49,094 shares of Common
Stock. Certain legal matters relating to the offering will be passed upon for
the underwriters by Hogan & Hartson L.L.P., Baltimore, Maryland.

EXPERTS

The financial statements of Caliber Learning Network, Inc. at December 31,
1997 and 1996, and for year ended December 31, 1997 and the period from
November 22, 1996 (date of inception) to December 31, 1996, appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement on Form S-1 under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the shares of
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the

48
<PAGE>

Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement and the exhibits and schedules
filed therewith. The Company has applied for listing on the Nasdaq National
Market. Reports and other information concerning the Company can be inspected
at the offices of the Nasdaq National Market. A copy of the Registration
Statement, and the exhibits and schedules thereto, may be inspected without
charge at the public reference facilities maintained by the Securities and
Exchange Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies of all or any part of
the Registration Statement may be obtained from the Commission upon payment of
a prescribed fee. This information is also available from the Commission's
Internet web site at http: www.sec.gov.

49
<PAGE>

INDEX TO FINANCIAL STATEMENTS

CONTENTS

<TABLE>
<S> <C>
Report of Independent Auditors.............................................. F-2
Balance Sheets.............................................................. F-3
Statements of Operations.................................................... F-4
Statements of Stockholders' Equity (Deficit)................................ F-5
Statements of Cash Flows.................................................... F-6
Notes to Financial Statements............................................... F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Caliber Learning Network, Inc.

We have audited the accompanying balance sheets of Caliber Learning Network,
Inc. ("the Company"), a development stage company, as of December 31, 1997 and
1996, and the related statements of operations, stockholders' equity (deficit)
and cash flows for the year ended December 31, 1997 and for the period
November 22, 1996 (date of inception) through December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Caliber Learning Network,
Inc., a development stage company, as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the year ended December 31,
1997 and for the period November 22, 1996 (date of inception) through December
31, 1996, in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Baltimore, Maryland

March 5, 1998,

except for Note 16, as to which the date is

April 10, 1998

F-2
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
------------------------- DECEMBER 31,
1996 1997 1997
----------- ------------ ------------
(UNAUDITED
--NOTE 15)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........... $13,000,000 $ 3,850,440 $ 8,219,798
Accounts receivable................. -- 17,400 17,400
Due from landlords for tenant
allowances......................... -- 1,427,525 1,427,525
Other receivables................... 28,000 574,807 574,807
Prepaid expenses..................... -- 25,066 25,066
----------- ------------ ------------
Total current assets................. 13,028,000 5,895,238 10,264,596
Property and equipment:
Furniture and fixtures.............. 29,629 1,271,930 1,271,930
Computer equipment and software..... -- 2,723,993 2,723,993
Leasehold improvements.............. -- 4,727,830 4,727,830
----------- ------------ ------------
29,629 8,723,753 8,723,753
Accumulated depreciation and
amortization....................... -- (388,483) (388,483)
----------- ------------ ------------
29,629 8,335,270 8,335,270
Other assets........................ -- 279,881 279,881
----------- ------------ ------------
Total assets........................ $13,057,629 $ 14,510,389 $ 18,879,747
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable and accrued ex-
penses............................. $ -- $ 2,065,436 $ 2,065,436
Borrowings from Sylvan.............. 1,212,800 3,000,000 3,000,000
Interest payable to Sylvan.......... -- 301,784 301,784
Accrued dividends payable........... 199,000 995,000 --
Current portion of deferred tenant
allowances......................... -- 208,014 208,014
Current portion of capital lease ob-
ligations due to related party..... -- 615,895 615,895
----------- ------------ ------------
Total current liabilities........... 1,411,800 7,186,129 6,191,129
Management fee payable to Sylvan..... 480,000 2,880,500 2,880,500
Deferred tenant allowances, less
current portion..................... -- 1,226,935 1,226,935
Capital lease obligations due to
related party, less current
portion............................. -- 3,417,181 3,417,181
8% Series A Redeemable Convertible
Preferred Stock, $.01 par value;
2,442,513 shares authorized, issued
and outstanding in 1996 and 1997, 0
pro forma; $9,999,750 aggregate
liquidation preference.............. 10,000,000 10,000,000 --
Series B Redeemable Junior
Convertible Preferred Stock, $.01
par value; 1,227,393 shares
authorized, issued and outstanding
in 1996 and 1997, 0 pro forma;
$1,000,000 aggregate liquidation
preference.......................... 1,300,000 1,300,000 --
Commitments and contingencies........ -- -- --
Stockholders' equity (deficit):
6% Non-Voting Convertible Preferred
Stock, $0.01 par value; 5,167,328
shares authorized, issued and
outstanding in pro forma........... -- -- 51,674
Class A Common Stock, $.01 par
value:
Authorized shares -- 42,800,000;
issued and outstanding shares of
3,436,702 in 1996, 3,829,986 in
1997 and 0 in pro forma ........... 34,367 38,300 --
Convertible Class B Common Stock,
$.01 par value:
Authorized, issued and outstanding
shares -- 5,167,328 in 1996 and
1997, 0 in pro forma............... 51,674 51,674 --
Common Stock, $.01 par value:
Authorized shares--50,000,000; pro
forma issued and outstanding shares
of 7,499,892....................... -- -- 74,999
Additional paid-in capital.......... 9,613,959 9,975,334 21,238,635
Subscription receivable............. (8,000,000) (5,364,358) --
Deficit accumulated during the
development stage.................. (1,834,171) (16,201,306) (16,201,306)
----------- ------------ ------------
Total stockholders' equity
(deficit)......................... (134,171) (11,500,356) 5,164,002
----------- ------------ ------------
Total liabilities and stockholders'
equity (deficit).................. $13,057,629 $ 14,510,389 $ 18,879,747
=========== ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 22, 1996 NOVEMBER 22, 1996
(INCEPTION) THROUGH YEAR ENDED (INCEPTION) THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1997
------------------- ------------ -------------------
<S> <C> <C> <C>
Management fees from Syl-
van..................... $ -- $ 1,199,293 $ 1,199,293
Costs and expenses:
Campus operating ex-
penses................ -- 7,133,744 7,133,744
Management fees to Syl-
van................... 480,000 2,400,500 2,880,500
Other selling, general
and administrative
expenses.............. 1,155,171 5,380,972 6,536,143
----------- ------------ ------------
1,635,171 14,915,216 16,550,387
Other income (expense):
Interest income........ -- 536,100 536,100
Interest expense....... -- (391,312) (391,312)
----------- ------------ ------------
-- 144,788 144,788
----------- ------------ ------------
Net loss................. (1,635,171) (13,571,135) (15,206,306)
Dividends accrued on re-
deemable preferred
stock................... (199,000) (796,000) (995,000)
----------- ------------ ------------
Net loss attributable to
common stockholders..... $(1,834,171) $(14,367,135) $(16,201,306)
=========== ============ ============
Basic and diluted loss
per common share
attributable to common
stockholders............ $ (0.21) $ (1.62) $ (1.82)
=========== ============ ============
Pro forma basic and
diluted loss per common
share attributable to
common stockholders..... $ (1.08)
============
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
CLASS A CLASS B ADDITIONAL
COMMON COMMON PAID-IN SUBSCRIPTION ACCUMULATED
STOCK STOCK CAPITAL RECEIVABLE DEFICIT TOTAL
------- ------- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Initial issuance of
3,436,702 shares of
Class A Common Stock
and 5,167,328 shares of
Convertible Class B
Common Stock........... $34,367 $51,674 $9,613,959 $(8,000,000) $ -- $ 1,700,000
Loss for the period
November 22, 1996 (date
of inception) through
December 31, 1996...... -- -- -- -- (1,635,171) (1,635,171)
Dividends accrued on 8%
Series A Convertible
Preferred Stock........ -- -- -- -- (199,000) (199,000)
------- ------- ---------- ----------- ------------ -------------
Balance at December 31,
1996................... 34,367 51,674 9,613,959 (8,000,000) (1,834,171) (134,171)
Issuance of 245,813
shares of Class A
Common Stock for cash.. 2,457 -- 247,851 -- -- 250,308
Issuance of 147,471
shares of Class A
Common Stock to
employees as
compensation........... 1,476 -- 98,524 -- -- 100,000
Stock options to
purchase 36,820 shares
of Class A Common Stock
granted to non-
employees.............. -- -- 15,000 -- -- 15,000
Payment of stock
subscription........... -- -- -- 2,635,642 -- 2,635,642
Loss for the year ended
December 31, 1997...... -- -- -- -- (13,571,135) (13,571,135)
Dividends accrued on 8%
Series A Convertible
Preferred Stock........ -- -- -- -- (796,000) (796,000)
------- ------- ---------- ----------- ------------ -------------
Balance at December 31,
1997................... $38,300 $51,674 $9,975,334 $(5,364,358) $(16,201,306) $ (11,500,356)
======= ======= ========== =========== ============ =============
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 22, 1996 NOVEMBER 22, 1996
(INCEPTION) THROUGH YEAR ENDED (INCEPTION) THROUGH
DECEMBER 31 DECEMBER 31, DECEMBER 31
1996 1997 1997
------------------- ------------ -------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................ $(1,635,171) $(13,571,135) $(15,206,306)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and
amortization........... -- 388,483 388,483
Non-cash compensation... -- 115,000 115,000
Negative amortization of
capital lease
obligations charged to
interest expense....... -- 87,057 87,057
Changes in operating
assets and liabilities:
Accounts receivable..... -- 10,600 10,600
Other receivables....... (28,000) (26,512) (54,512)
Prepaid expenses........ -- (25,066) (25,066)
Accounts payable and
accrued expenses
related to operating
expenses............... -- 991,533 991,533
Management fee payable
to Sylvan.............. 480,000 2,400,500 2,880,500
Interest payable to
Sylvan................. -- 301,784 301,784
----------- ------------ ------------
Net cash used in
operating activities... (1,183,171) (9,327,756) (10,510,927)
INVESTING ACTIVITIES
Purchases of property
and equipment.......... (29,629) (4,215,073) (4,244,702)
Increase in other
assets................. -- (279,881) (279,881)
----------- ------------ ------------
Net cash used in
investing activities... (29,629) (4,494,954) (4,524,583)
FINANCING ACTIVITIES
Initial issuance of
stock for cash......... 13,000,000 -- 13,000,000
Borrowings from Sylvan.. 1,212,800 1,787,200 3,000,000
Issuance of Class A
common stock........... -- 250,308 250,308
Payment of subscription
receivable............. -- 2,635,642 2,635,642
----------- ------------ ------------
Net cash provided by
financing activities... 14,212,800 4,673,150 18,885,950
----------- ------------ ------------
Net increase (decrease)
in cash and cash
equivalents............ 13,000,000 (9,149,560) 3,850,440
Cash and cash
equivalents at
beginning of period.... -- 13,000,000 --
----------- ------------ ------------
Cash and cash
equivalents at end of
period................. $13,000,000 $ 3,850,440 $ 3,850,440
=========== ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Caliber Learning Network, Inc. (the "Company") was incorporated on March 28,
1996 under the laws of the state of Maryland for the purpose of providing
adults with university-quality continuing education using multimedia
technology. The Company was organized by Sylvan Learning Systems, Inc.
("Sylvan") and MCI Communications Corporation ("MCI") to bring together the
educational services expertise of Sylvan and the technology and
telecommunications expertise of MCI. The Company contracts with nationally
recognized universities and corporations to provide high-quality courses
through a multi-site, satellite-linked network of campuses throughout the
nation. The Company, commencing November 1996, has devoted most of its efforts
to raising capital, developing markets and recruiting and training personnel.
Accordingly, minimal revenue has been generated from planned principal
operations, and the Company is considered a development stage company at
December 31, 1997.

Effective May 1, 1997, the Company entered into an agreement with Sylvan to
manage the operations of certain certification centers located throughout the
United States which administer computer-based tests for major corporations,
professional associations and government agencies. These centers may be
converted into centers capable of delivering Caliber programs. Sylvan owns all
of the outstanding shares of Series B Redeemable Junior Convertible Preferred
Stock, and Sylvan's co-CEO's own, through Sterling Caliber, 3,436,702 shares
of the outstanding Class A Common Stock.

Basis of Presentation

The Company incurred an operating loss of $13,571,135 for the year ended
December 31, 1997 and $1,635,171 for the period November 22, 1996 (date of
inception) through December 31, 1996. Operating deficiencies since inception
have been funded by the stockholders. Management believes that additional
financing will be obtained from its current investors and from other sources.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and related disclosures. Actual
results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed for owned
assets using the straight-line method over the useful lives of the assets.
Assets capitalized under capital leases are amortized using the straight-line
method over the lesser of the lease term or the useful life of the assets. No
depreciation expense was recognized during the period from November 22, 1996
through December 31, 1996 as the assets were not placed in service until the
end of that period.

F-7
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Deferred Tenant Allowances

Payments made by landlords to the Company as incentives under operating
leases are recorded as liabilities and recognized as reductions of rental
expense ratably over the terms of the leases.

Revenue Recognition

Management fees under an agreement with Sylvan to manage certain computer-
based certification centers are calculated based on a fixed amount per month,
plus an additional fee per test delivered above a specified number of tests
examination. These fees are recognized as revenue upon the delivery of the
examination.

Stock Options Granted to Employees

The Company records compensation expense for all stock-based compensation
plans using the intrinsic value method prescribed by APB Opinion 25,
"Accounting for Stock Issued to Employees". The Financial Accounting Standards
Board Statement No. 123, "Accounting for Stock-Based Compensation" encourages
companies to recognize expense for stock-based awards based on their estimated
value on the date of grant. Statement 123 requires the disclosure of pro forma
income and earnings per share data in the notes to the financial statements if
the fair value method is not elected. The Company accounts for its stock-based
compensation plans using the intrinsic value method, and supplementally
discloses in these financial statements the required pro forma information as
if the fair value method had been elected.

Pending Adoption of New Accounting Pronouncements

In December 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income
("Statement No. 130"), that establishes standards for the reporting and
display of comprehensive income and its components in a full set of general-
purpose financial statements. Statement No. 130 only impacts display as
opposed to actual amounts recorded. Other comprehensive income includes all
non-owner changes in equity that are excluded from net income. This Statement
does not apply to an enterprise that has no items of other comprehensive
income in any period presented. During all years presented, the Company had no
items of other comprehensive income.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("Statement No. 131"). Statement No. 131
supercedes Financial Accounting Standards Board Statement No. 14, Financial
Reporting for Segments of a Business Enterprise ("Statement No. 14"), and
establishes new standards for the way that public business enterprises report
selected information about operating segments in annual and interim financial
statements. It also established standards for related disclosures about
products and services, geographical areas, and major customers. Statement No.
131 is effective for financial statements for fiscal years beginning after
December 15, 1997.

The Company has not completed its review of Statement No. 131 to determine
the required disclosures, and intends to adopt the new requirements
retroactively in 1998. Under Statement No. 14, which is effective until the
Company adopts Statements No. 131 in 1998, the Company operates predominately
in a single segment.

F-8
<PAGE>

CALIBER LEARNING NETWORK, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per
common share:

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 22, 1996 NOVEMBER 22, 1996
(INCEPTION) THROUGH YEAR ENDED (INCEPTION) THROUGH
DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1997
------------------- ----------------- -------------------
<S> <C> <C> <C>
Numerator:
Net loss.............. $(1,635,171) $(13,571,135) $(15,206,306)
Preferred stock
dividends............ (199,000) (796,000) (995,000)
----------- ------------ ------------
$(1,834,171) $(14,367,135) $(16,201,306)
=========== ============ ============
Denominator:
Weighted average
number of shares of
common stock
outstanding during
the period........... 8,604,074 8,747,300 8,733,473
Shares of common stock
issued for a nominal
value................ 147,471 147,471 147,471
----------- ------------ ------------
8,751,545 8,894,771 8,880,944
=========== ============ ============
Basic and diluted loss
per common share....... $ (0.21) $ (1.62) $ (1.82)
=========== ============ ============
</TABLE>

Basic loss per share is based upon the average number of shares of Common
Stock outstanding during each period. As required by the Securities and
Exchange Commission in Staff Accounting Bulletin No. 98, all securities issued
by the Company for a nominal value have been included in the computations as
if they were outstanding for all periods presented.

Dilutive loss per common share is equal to basic loss per common share
because if potentially dilutive securities were included in the computation,
the result would be anti-dilutive. These potentially dilutive securities
consist of convertible preferred stock and stock options and warrants, as
described in Notes 7 and 10.
Pro forma basic and diluted loss per common share attributable to common
stockholders is presented to disclose the effect on loss per share of the
assumed conversion of convertible securities which will convert into Common
Stock upon the closing of the proposed initial public offering. For purposes
of the pro forma computation, the convertible securities are assumed to have
been converted on January 1, 1997 or the issuance date, whichever date is
later.

The following table summarizes the computations of pro forma basic and
diluted loss per share presented in the accompanying statements of operations:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
Numerator:
Net loss................................................ $(13,571,135)
============
Denominator:
Shares used in historical calculation................... 8,894,771
Add:
Pro forma conversion of Series A Preferred Stock....... 2,442,513
Pro forma conversion of Series B Preferred Stock....... 1,227,393
------------
Denominator for pro forma loss per share............... 12,564,677
============
Pro forma basic and diluted loss per common share......... $ (1.08)
============
</TABLE>

F-9
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 22, 1996
(INCEPTION) THROUGH YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997
------------------- -----------------
<S> <C> <C>
Non-cash investing and financing
activities:
Equipment acquired under capital
lease................................. $ -- $3,946,019
Dividends accrued on Series A
Redeemable Convertible Preferred
Stock................................. 199,000 796,000
</TABLE>

4. MANAGEMENT FEE PAYABLE TO SYLVAN

During all periods presented, the Company relied almost entirely on Sylvan's
resources, systems and personnel for administrative, management, accounting
and financial functions. As consideration for these services, Sylvan charged
the Company $2,880,500, which was unpaid at December 31, 1997. This amount
will begin to accrue interest effective January 1, 1999 at the prime rate plus
1%, and is payable in 48 equal monthly installments of principal and interest
also beginning January 1, 1999. Notwithstanding, the management fee payable
and all accrued but unpaid interest is due on demand by Sylvan upon the
closing of an underwritten public offering of the Company's Class A Common
Stock providing at least $15.0 million of net proceeds to the Company at a per
share price of at least $8.19.

The Company has agreed to pay an annual management fee of $2.0 million in
1998 and 1999, due in equal quarterly installments.

5. BORROWINGS FROM SYLVAN

At December 31, 1997, Sylvan had loaned $3.0 million to the Company under a
line of credit that bears interest at 1% above the prime rate as published by
a defined commercial bank.

During the year ended December 31, 1997, the Company recorded interest
expense of $301,784 related to the borrowings from Sylvan.

6. CAPITAL LEASES

MCI, the holder of the 8% Series A Redeemable Convertible Preferred Stock
has agreed to provide an aggregate of $20.0 million in lease financing or
lease guarantees for the purchase of furniture and equipment.

Property and equipment includes the following amounts for leases that have
been capitalized at December 31, 1997:

<TABLE>
<S> <C>
Furniture and fixtures........................................... $ 167,773
Computer equipment and software.................................. 2,133,606
Leasehold improvements........................................... 1,644,640
----------
3,946,019
Less: accumulated amortization................................... (190,866)
----------
$3,755,153
==========
</TABLE>

Amortization of leased assets is included in depreciation and amortization
expense.

F-10
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Future minimum payments under capital lease obligations consist of the
following at December 31, 1997:

<TABLE>
<S> <C>
1998.......................................................... $ 905,603
1999.......................................................... 1,196,046
2000.......................................................... 1,196,046
2001.......................................................... 950,606
2002.......................................................... 428,515
Thereafter.................................................... 366,374
-----------
Total minimum lease payments.................................. 5,043,190
Amounts representing interest................................. (1,010,114)
-----------
Present value of net minimum lease payments (including current
portion of $615,895)......................................... $ 4,033,076
===========
</TABLE>

7. PREFERRED STOCKS AND WARRANT

The Company has authorized the issuance of 2,442,513 shares of 8% Series A
Redeemable Convertible Preferred Stock ("Series A Preferred Stock") and
1,227,393 shares of Series B Redeemable Junior Convertible Preferred Stock
("Series B Preferred Stock"). During the initial development stage period, all
authorized shares of Series A Preferred Stock were purchased by MCI for $10.0
million, and all authorized shares of Series B Preferred Stock were purchased
by Sylvan for $1.3 million. In addition, Sylvan, the purchaser of the Series B
Preferred Stock is required to contribute an additional $8.0 million of cash
as needed by the Company as additional consideration for the Series B
Preferred Stock issued upon formation.

In connection with the issuance of 2,442,513 shares of Series A Preferred
Stock to MCI for $10.0 million, the Company issued to MCI a warrant to
purchase 923,850 shares of Class A Common Stock at an exercise price of $4.094
per share ("the Warrant"), subject to certain antidilution provisions.

Conversion Rights

Each share of Series A Preferred Stock and Series B Preferred Stock will
convert automatically into one share of Class A Common Stock upon the closing
of an underwritten public offering of at least $15.0 million of net proceeds
to the Company with a minimum per share price of $8.19. The conversion ratio
is subject to increase in the event that additional shares of Common Stock are
issued upon the exercise of stock options or the occurrence of other specified
dilutive transactions.

Redemption Rights

The holders of the Series A and B Preferred Stock have the option to require
the Company to redeem at a specified liquidation value all shares of such
stock upon a change of control of the Company or upon sale of the Company, as
defined by the Charter.

In addition, in the event that the Company has not completed an underwritten
public offering of its Class A Common Stock providing at least $15.0 million
of net proceeds to the Company at a per share price of at least $8.19 by May
15, 2001, any holder or holders of the Series A Preferred Stock may elect to
require the Company within 30 days to redeem all of its shares of Series A
Preferred Stock at their liquidation value (as defined by the Company's
Charter) and require the Company to purchase the Warrant (or, if already
exercised, the shares of Class A Common Stock issued upon exercise of the
Warrant) at the then fair market value. In the event that the Company
subsequently completes an initial public offering within twelve months after
it is required to redeem the Series A Preferred Stock, the holders of the
Series A Preferred Stock are entitled to additional consideration for each
redeemed share of Series A Preferred Stock and Class A Common Stock underlying
the Warrant, equal to the difference between 95% of the initial public
offering price and the per share redemption amount.

F-11
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In the event that the Company has not completed an underwritten public
offering of at least $15.0 million at a per share price of at least $8.19
within 12 months of the liquidation or redemption of the Series A Preferred
Stock, any holder or holders of the Series B Preferred Stock or Class A Common
Stock may request an appraisal of the Company by a nationally recognized
investment bank. Upon receiving such appraisal, the holders of the Series B
Preferred Stock have 90 days to elect to purchase all outstanding shares of
Class A Common Stock or to sell all of its Series B Preferred Stock to the
holders of the Class A Common Stock at the appraised fair market value.

Dividend, Liquidation and Voting Rights

The holders of the Series A Convertible Preferred Stock are entitled to
receive, when declared by the Board of Directors, cumulative quarterly
dividends at the annual rate of $0.33 per share. All accrued but unpaid
dividends are payable upon the closing of an underwritten initial public
offering of the Company's Class A Common Stock, providing at least $15.0
million of net proceeds to the Company at a per share price of at least $8.19
by May 15, 2001. At December 31, 1997, cumulative unpaid dividends were
$995,000, or $0.41 per share.

Each share of Series A Preferred Stock has a preference on liquidation equal
to the greater of $4.094 per share or the amount per share the holders are
entitled upon conversion to Class A Common Stock. Each share of Series B
Preferred Stock ranks junior to the Series A Preferred Stock upon liquidation.

The holders of Series A and B Preferred Stock have substantially the same
voting rights as the holders of Class A Common Stock. As long as the shares of
the Series A Preferred Stock represent at least 10% of the total number of
shares of outstanding stock of the Company and until consummation of an
initial public offering, the holders of the Series A Preferred Stock, voting
as a separate class, may elect one member of a seven or fewer member Board of
Directors, or that percentage of the total number of directors of the Company
that equals the percentage of the total number of shares of outstanding stock
then held by the holders of the Series A Preferred Stock of a more than seven
member Board of Directors. Until the consummation of an initial public
offering, the holders of the Series B Preferred Stock along with the holders
of the Class A Common Stock, voting together as a separate class, are entitled
to elect two directors.

8. COMMON STOCK

The Company is authorized to issue 42,800,000 shares of $.01 par value Class
A Common Stock and 5,167,328 million shares of $.01 par value Class B Common
Stock. Each share of Class B Common Stock can be converted at any time, in
whole or in part, into a share of Class A Common Stock, at the option of the
holder. The holders of the Class A and B Common Stock have certain rights as
described below.

Rights of Holders of Class A and B Stock

The holders of the Class A and B Common Stock are entitled to receive
dividends when declared by the Board of Directors.

In the event of liquidation, the holders of the Class A and B Common Stock
are entitled to the remaining net assets of the Company after payment and
provision for payment of the debts and other liabilities of the Company and
the amount to which the holders of the Series A and B Preferred Stock are
entitled.

The holders of Class A Common Stock are entitled to one vote per share and
the holders of Class B Common Stock are entitled to ten votes per share on all
matters upon which stockholders of the Company are entitled to vote. Until the
consummation of an initial public offering, the holders of the Class B Common
Stock, voting as a separate class, are entitled to elect two members of the
Board of Directors. Each share of Class B Common Stock is convertible at any
time into one share of Class A Common Stock.

F-12
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

9. SHARES RESERVED FOR FUTURE ISSUANCE

The Company as of December 31, 1997 had reserved 5,693,405 shares of Class A
Common Stock for future issuance upon the conversion of the Series A
Redeemable Convertible Preferred Stock, Series B Redeemable Junior Convertible
Preferred Stock, the exercise of all outstanding stock purchase warrants and
the exercise of all outstanding stock options.

10. STOCK COMPENSATION PLAN

Effective April 30, 1997, the Company adopted the Caliber Learning Network,
Inc. 1997 Stock Option Plan which is administered by the Board of Directors.
The Plan provides for the granting of either qualified or non-qualified
options to purchase an aggregate of up to 1,227,400 shares of common stock to
eligible employees, officers, and consultants of the Company.

A summary of the Company's stock option activity, and related information
for the year ended December 31, 1997 follows:

<TABLE>
<CAPTION>
NUMBER WEIGHTED-
OF AVERAGE
OPTIONS EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding, beginning of year...................... -- $ --
Granted............................................. 1,127,735 1.07
Exercised........................................... -- --
Forfeited........................................... (57,688) 1.02
--------- -----
Outstanding, end of year............................ 1,070,047 1.07
========= =====
Exercisable at end of year.......................... --
=========
Weighted-average grant-date fair value of options
granted during the year............................ $ 0.26
=========
</TABLE>

Exercise prices for options outstanding as of December 31, 1997 ranged from
$1.02 to $1.63. The weighted-average remaining contractual life of those
options is 5.7 years. Options granted through December 31, 1997 generally vest
over a five year period.

For the year ended December 31, 1997, pro forma net loss and loss per share
information required by Statement 123 has been determined using the minimum
value method. The minimum value method calculates the fair value of options as
the excess of the estimated fair value of the underlying stock at the date of
grant over the present value of both the exercise price and the expected
dividend payments, each discounted at the risk-free rate, over the expected
life of the option. In determining the estimated fair value of granted stock
options under the minimum value method, the risk-free interest rate was
assumed to be 5.50%, the dividend yield was estimated to be 0% and the
expected life of granted options was assumed to be five years.

Because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the minimum value method and
other methods prescribed by Statement 123 do not necessarily provide a single
measure of the fair value of its employee stock options.

The weighted-average grant-date fair value of options granted during 1997
using the minimum value method was $0.26. For purposes of pro forma
disclosures, the estimated fair value of the options is amortized to expense
over the options' vesting periods. The Company's pro forma net loss
attributable to common stockholders and basic and diluted loss per share
attributable to common stockholders is $14.4 million and $(1.62),
respectively, for the year ended December 31, 1997.

F-13
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Series A Redeemable Convertible Preferred Stock and Series B Redeemable
Junior Convertible Preferred Stock will automatically convert into Common
Stock upon the closing of an initial public offering, expected by June 30,
1998. Upon conversion, the securities will not be considered financial
instruments.

12. INCOME TAXES

At December 31, 1997, the Company had net operating loss carryforwards for
income tax purposes of approximately $14,775,459. The net operating loss
carryforwards will expire in 2011 and 2012. Income tax regulations contain
provisions which may limit the net operating loss carryforwards available to
be used in any given year if certain events occur, including changes in
ownership interests.

Significant components of the Company's deferred tax assets and liabilities
are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
--------- -----------
<S> <C> <C>
Net operating loss carryforwards........................ $ 356,556 $ 5,706,282
Start-up costs capitalized for tax purposes............. 267,585 236,367
Other................................................... 4,729 193
--------- -----------
Total deferred tax assets............................. 628,870 5,942,842
Tax over book depreciation.............................. 1,045 73,947
Other................................................... -- 11,075
--------- -----------
Total deferred tax liabilities........................ 1,045 85,022
--------- -----------
Net future income tax benefit........................... 627,825 5,857,820
Valuation allowance for deferred tax assets............. (627,825) (5,857,820)
--------- -----------
Net deferred tax assets................................. $ -- $ --
========= ===========
</TABLE>

The reconciliation of the reported income tax expense to the amount that
would be result by applying the U.S. federal statutory tax rates to income
before income taxes is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
--------- -----------
<S> <C> <C>
Tax expense at U.S. statutory rate..................... $(555,958) $(4,614,186)
Effect of permanent differences........................ 3,678 11,177
State income taxes, net of federal benefit............. (75,545) (626,986)
Increase in valuation allowance........................ 627,825 5,229,995
--------- -----------
Total................................................ $ -- $ --
========= ===========
</TABLE>

13. OPERATING LEASES

The Company conducts all of its operations from leased facilities under
operating leases that have terms of up to seven years and generally contain
renewal options and rental escalation clauses. The rental payments under
certain leases are based on minimum fixed rentals plus a percentage of
revenues earned at the location.

F-14
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Future minimum payments under noncancelable operating leases with initial
terms of one year or more consisted of the following at December 31, 1997:

<TABLE>
<S> <C>
1998............................................................. $ 3,760,610
1999............................................................. 3,432,316
2000............................................................. 3,328,779
2001............................................................. 3,280,319
2002............................................................. 2,700,013
Thereafter....................................................... 3,333,018
-----------
Total.......................................................... $19,835,055
===========
</TABLE>

The Company incurred rent expense of $1,132,320 in 1997.

14. DEFINED CONTRIBUTION RETIREMENT PLAN

Effective December 1, 1996, employees of the Company are eligible to
participate in a defined contribution retirement plan sponsored by Sylvan. The
provisions of the plan allow for voluntary employee contributions, subject to
certain annual limitations, and discretionary contributions by the employer
which are allocated to eligible participants based upon compensation. All
employees are eligible after meeting certain age and service requirements. The
Company made no contributions during the periods ended December 31, 1996 and
1997.

15. PRO FORMA BALANCE SHEET AND RECAPITALIZATION

In March 1998, the Board of Directors approved the filing of a registration
statement for the initial public offering of Common Stock with the Securities
and Exchange Commission that, upon closing of the sale, would meet the
criteria for the automatic conversion of the outstanding Series A Redeemable
Convertible Preferred Stock and Series B Redeemable Junior Convertible
Preferred Stock into Common Stock and the repayment of all accrued and unpaid
dividends on the Series A Redeemable Convertible Preferred Stock and the
payment by Sylvan of the balance of its subscription receivable.

Also in March 1998, the Board of Directors approved a recapitalization of
the Company, effective upon closing of the initial public offering referred to
above. The Company's Charter will be amended so that there will be authorized
a single class of Common Stock, $0.01 par value, for which all shares of Class
A Common Stock will be exchanged on a share for share basis, and a series of
6% Non-Voting Convertible Preferred Stock, for which all shares of Class B
Common Stock will be exchanged on a share-for-share basis.

Each share of the 6% Non-Voting Convertible Preferred Stock is convertible
into one share of Common Stock at the option of the holder at any time after
the second anniversary of its issuance, subject to earlier rights of
conversion under certain circumstances. Dividends of $60,000 per year are
cumulative and first payable in May 1999.

F-15
<PAGE>

CALIBER LEARNING NETWORK, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The following table summarizes the components of the pro forma balance sheet
after giving effect to (1) the conversion of 2,442,513 shares of 8% Series A
Redeemable Convertible Preferred Stock into 2,442,513 shares of Common Stock;
(2) the conversion of 1,227,393 shares of Series B Redeemable Junior
Convertible Preferred Stock into 1,227,393 shares of Common Stock; (3) the
payment by Sylvan of the $5,364,358 balance due on the subscription
receivable; and, (4) the payment by the Company of $995,000 of accrued
dividends (unaudited, in thousands):

<TABLE>
<CAPTION>
HISTORICAL ASSUMED PRO FORMA
DECEMBER 31, CONVERSION AND DECEMBER 31,
1997 RECAPITALIZATION 1997
------------ ---------------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........ $ 3,850 $ 4,369 $ 8,219
Other current assets............. 2,045 -- 2,045
-------- -------- --------
Total current assets............... 5,895 4,369 10,264
Property and equipment, net........ 8,335 -- 8,335
Other assets....................... 280 -- 280
-------- -------- --------
Total assets....................... $ 14,510 $ 4,369 $ 18,879
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued
expenses........................ $ 2,065 $ -- $ 2,065
Dividends payable................ 995 (995) --
Other current liabilities........ 4,126 -- 4,126
-------- -------- --------
Total current liabilities.......... 7,186 (995) 6,191
Non-current liabilities............ 7,524 -- 7,524
Series A Preferred Stock........... 10,000 (10,000) --
Series B Preferred Stock........... 1,300 (1,300) --
Stockholders' equity (deficit):
Non-Voting Preferred Stock....... -- 52 52
Class A Common Stock............. 38 (38) --
Class B Common Stock............. 52 ( 52) --
Common stock..................... -- 75 75
Additional paid-in capital....... 9,975 11,263 21,238
Subscription receivable.......... (5,364) 5,364 --
Deficit accumulated during
development stage............... (16,201) -- (16,201)
-------- -------- --------
Total stockholders' equity
(deficit)......................... (11,500) 16,664 5,164
-------- -------- --------
Total liabilities and stockholders'
equity (deficit).................. $ 14,510 $ 4,369 $ 18,879
======== ======== ========
</TABLE>

16. SUBSEQUENT EVENT

In April 1998, the Company declared a 1.2274 for 1 stock split of all
classes of common and preferred stock for stockholders of record on April 10,
1998. Accordingly, all share and per share data including stock option,
warrant and earnings per share information have been restated in the financial
statements to retroactively reflect the stock split.

F-16
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

No person has been authorized in connection with the offering made hereby to
give any information or to make any representations not contained in this Pro-
spectus and, if given or made, such information or representations must not be
relied upon as having been authorized by the Company or the Underwriters. This
Prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any of the securities offered hereby to any person or by anyone in any
jurisdiction in which it is unlawful to make such offer or solicitation. Nei-
ther the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that the information contained
herein is correct as of any date subsequent to the date hereof.

----------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 7
Use of Proceeds............................................................. 12
Dividend Policy............................................................. 12
Capitalization.............................................................. 13
Dilution.................................................................... 15
Selected Financial and Operating Data....................................... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................................................. 17
Business.................................................................... 20
Management.................................................................. 33
Certain Relationships and Related Transactions.............................. 39
Principal and Selling Stockholders.......................................... 41
Description of Capital Stock................................................ 42
Shares Eligible for Future Sale............................................. 46
Underwriting................................................................ 47
Legal Matters............................................................... 48
Experts..................................................................... 48
Additional Information...................................................... 48
Index to Financial Statements............................................... F-1
</TABLE>
----------------

UNTIL , 1998 (25 DAYS AFTER COMMENCEMENT OF THIS OFFERING) ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

5,400,000 Shares

[LOGO OF CALIBER LEARNING NETWORK APPEARS HERE]

COMMON STOCK

----------------

P R O S P E C T U S

----------------

BT Alex. Brown

NationsBanc Montgomery Securities LLC

, 1998

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II:

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses in connection with this
Registration Statement. The Company will pay all expenses of the offering. All
of such expenses are estimates, other than the filing fees payable to the
Securities and Exchange Commission, NASD and Nasdaq.

<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee......................... $25,647
NASD Filing Fee....................................................... 9,194
Nasdaq Listing Fee.................................................... 95,000
Printing Fees and Expenses............................................ 100,000
Legal Fees and Expenses............................................... 250,000
Accounting Fees and Expenses.......................................... 200,000
Miscellaneous......................................................... 20,159
--------
Total............................................................. $700,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Charter provides that, to the fullest extent that limitations
on the liability of directors and officers are permitted by the Maryland
General Corporation Law, no director or officer of the Company shall have any
liability to the Company or its stockholders for monetary damages. The
Maryland General Corporation Law provides that a corporation's charter may
include a provision which restricts or limits the liability of its directors
or officers to the corporation or its stockholders for money damages except:
(1) to the extent that it is provided that the person actually received an
improper benefit or profit in money, property or services, for the amount of
the benefit or profit in money, property or services actually received, or (2)
to the extent that a judgment or other final adjudication adverse to the
person is entered in a proceeding based on a finding in the proceeding that
the person's action, or failure to act, was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated in
the proceeding. The Company's Charter and By-Laws provide that the Company
[shall] indemnify and advance expenses to its currently acting and its former
directors to the fullest extent permitted by the Maryland General Corporation
Law and that the Company shall indemnify and advance expenses to its officers
to the same extent as its directors and to such further extent as is
consistent with law.

The Charter and By-Laws provides that the Company will indemnify its
directors and officers and may indemnify employees or agents of the Company to
the fullest extent permitted by law against liabilities and expenses incurred
in connection with litigation in which they may be involved because of their
offices with the Company. In addition, the Company's Charter provides that its
directors and officers will not be liable to stockholders for money damages,
except in limited instances. However, nothing in the Charter or By-Laws of the
Company protects or indemnifies a director, officer, employee or agent against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. To the extent that a director has been
successful in defense of any proceeding, the Maryland General Corporation Law
provides that he shall be indemnified against reasonable expenses incurred in
connection therewith.

The form of underwriting agreement, filed as Exhibit 1.1 hereto, contains
provisions by which the Underwriters agree to indemnify the Registrant and
each officer, director and controlling person of the Registrant against
certain liabilities.

II-1
<PAGE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During 1997 and 1998, the Company granted options to purchase a total of
1,156,349 shares of Common Stock in four tranches. The first tranche consisted
of 974,310 options issued at an exercise price of $1.02. The second tranche
consisted of 95,737 options issued at an exercise price of $1.63. The third
tranche consisted of 74,012 options issued at an exercise price of $2.44. The
fourth tranche consisted of 89,484 options issued at an exercise price of
$8.00. The Company believes that these stock option grants were exempt from
registration under the Securities Act by virtue of the exemption provided by
Section 4(2) thereof for transactions not involving a public offering, since
these options were granted to a limited number of executive officers of the
Company who, in each case, has access to financial and other relevant data
concerning the Company, its financial condition, business and assets. In
addition, the Company believes that these stock option grants were exempt from
registration under the Securities Act by virtue of the exemption provided by
Rule 701 under said Act.

On November 11, 1996, the Company issued (i) 2,442,513 shares of 8% Series A
Convertible Preferred Stock and a warrant exercisable for the number of shares
of Class A Common Stock that will equal 7% of the total number of shares to be
outstanding after exercise for $10.0 million in cash and the MCI Lease and
Guarantee Commitment; (ii) Sylvan Learning Systems, Inc. 1,227,393 shares of
Series B Junior Preferred Stock for $1.3 million in cash; (iii) Douglas L.
Becker 1,718,351 shares of Class A Common Stock for $350,000 in cash; (iv) R.
Christopher Hoehn-Saric 1,718,351 shares of Class A Common Stock for $350,000
in cash; and (v) John P. Hill 5,167,328 shares of Class B Common Stock for $1
million in cash. During 1996 and 1997, the Company issued shares of Class A
Common Stock to certain officers of the Company in consideration for cash and
past services rendered. Each of these issuances was exempt from registration
pursuant to Section 4(2) of the Securities Act. Each of these issuances was
exempt from registration pursuant to Section 4(2) of the Securities Act.

On April 30, 1997, the Company issued Chris L. Nguyen 49,155 shares of Class
A Common Stock for $50,062.50 in cash.

On April 30, 1997, the Company issued B. Lee McGee 98,314 shares of Class A
Common Stock for $100,125 in cash.

On April 30, 1997, the Company issued David Dobkin 49,157 shares of Class A
Common Stock in connection with services rendered and 24,578 shares of Class A
Common Stock for $25,031.25 in cash.

On July 24, 1997, the Company issued Bryan Polivka 49,157 shares of Class A
Common Stock in connection with services rendered.

On April 30, 1997, the Company issued J.M. Schapiro 49,157 shares of Class A
Common Stock for $50,062.50 in cash.

On June 19, 1997, the Company issued Brady Locher 49,157 shares of Class A
Common Stock in connection with services rendered and 24,609 shares of Class A
Common Stock for $25,062.50 in cash.

On March 16, 1998, the Company issued Rick Frier 18,750 shares of Class A
Common Stock for $150,000.00 in cash.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
(A) EXHIBIT NO. DESCRIPTION
--------------- -----------
<S> <C>
1.01* Form of Underwriting Agreement
3.01* Articles of Amendment and Restatement of the
Charter, to be effective upon completion of the
offering
3.02* Bylaws
4.01* Specimen Common Stock Certificate
5.01* Opinion of Piper & Marbury L.L.P.
10.01(a)* 1997 Stock Option Plan
10.01(b)* 1998 Stock Incentive Plan
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
(A) EXHIBIT NO. DESCRIPTION
--------------- -----------
<S> <C>
10.02* Registration Rights Agreement, dated as of November 22,
1996, among Caliber Learning Network, Inc., Sylvan
Learning Systems, Inc., MCI Telecommunications
Corporation, Douglas L. Becker and R. Christopher Hoehn-
Saric
10.03* Warrant issued to MCI Communications Corporation, dated
as of November 22, 1996 and, as amended.
10.04+* Agreement between Caliber Learning Network, Inc. and The
Johns Hopkins University, dated as of January 29, 1998
10.05+* Agreement between Caliber Learning Network, Inc. and MCI
Systemhouse Corp. dated March 2, 1998
10.06+* Agreement between Caliber Learning Network, Inc. and
Macmillan Computer Publishing USA, dated February 2,
1998
10.07+* Agreement between Caliber Learning Network, Inc. and
Compaq Computer Corporation, dated December 22, 1997
10.08* Letter Agreement and Line of Credit Promissory Note,
dated as of December 1, 1996, between Caliber Learning
Network, Inc. and Sylvan Learning Systems, Inc.
10.09+* Agreement between Caliber Learning Network, Inc. and MCI
Systemhouse Corp., dated July 1, 1997
10.10* Management Agreement between Caliber Learning Network,
Inc. and Sylvan Learning Systems, Inc., dated as of
January 1, 1998
10.11+* Testing Center Management and CBT Services Agreement, as
amended, dated May 1, 1997
10.12* Form of Lock-Up Letter
10.13+ Agreement between Caliber Learning Network, Inc. and the
Trustees of the University of Pennsylvania acting
through the Arresty Institute of Executive Education at
the Wharton School, dated March 26, 1998
23.01* Consent of Ernst & Young LLP
23.02 Consent of Piper & Marbury L.L.P. (included in Exhibit
5.01)
24.01 Power of Attorney of Directors and Executive Officers
(included on signature pages hereto)
27.01* Financial Data Schedule
</TABLE>
- --------
* Previously filed.
+ Filed under confidential treatment request.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in this Registration Statement
or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
persons of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.

II-3
<PAGE>

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN BALTIMORE, MARYLAND
ON THIS 1ST DAY OF MAY, 1998.

CALIBER LEARNING NETWORK, INC.

*
By: _________________________________
CHRIS L. NGUYEN,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER

Know all men by these presents, that each person whose signature appears
below constitutes and appoints Chris L. Nguyen and Matthew C. Brenneman (with
full power to each of them to act alone) as his or her true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in
his name, place and stead in any and all capacities to sign any or all
amendments or post-effective amendments to this Registration Statement,
including amendments made pursuant to Rule 462 under the Securities Act of
1933, as amended, and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, to sign any and all applications, registration statements, notices
or other document necessary or advisable to comply with the applicable state
securities laws, and to file the same, together with all other documents in
connection therewith, with the appropriate state securities authorities,
granting unto said attorneys-in-fact and agents or any of them, or their or
his substitute or substitutes, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, thereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

* Chairman of the
- ------------------------------------- Board of Directors May 1, 1998
R. CHRISTOPHER HOEHN-SARIC

* Vice Chairman of the
- ------------------------------------- Board of Directors May 1, 1998
DOUGLAS L. BECKER

President and Chief
* Executive Officer May 1, 1998
- ------------------------------------- (Principal
CHRIS L. NGUYEN Executive Officer)

II-5
<PAGE>

SIGNATURE TITLE DATE

Chief Financial
* Officer (Principal May 1, 1998
- ------------------------------------- Financial and
RICK P. FRIER Accounting Officer)

* Director
- ------------------------------------- May 1, 1998
SUSAN MAYER

* Director
- ------------------------------------- May 1, 1998
JOHN P. HILL

* Director
- ------------------------------------- May 1, 1998
JANEEN M. ARMSTRONG

* Signed by Attorney-in-Fact

/s/ Matthew C. Brenneman
- -------------------------------------
MATTHEW C. BRENNEMAN

II-6
<PAGE>

EXHIBIT INDEX

(a)

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO DESCRIPTION PAGE
---------- ----------- ------------
<S> <C> <C>
1.01* Form of Underwriting Agreement
3.01* Articles of Amendment and Restatement of the
Charter, to be effective upon completion of the
Offering
3.02* Bylaws
4.01* Specimen Common Stock Certificate
5.01* Opinion of Piper & Marbury L.L.P.
10.01(a)* 1997 Stock Option Plan
10.01(b)* 1998 Stock Incentive Plan
10.02* Registration Rights Agreement dated as of November
22, 1996 among Caliber Learning Network, Inc.,
Sylvan Learning Systems, Inc., MCI Communications
Corporation, Douglas L. Becker and R. Christopher
Hoehn-Saric
10.03* Warrant issued to MCI Communications Corporation,
dated as of November 22, 1996
10.04+* Agreement between Caliber Learning Network, Inc. and
The Johns Hopkins University, dated as of January
29, 1998
10.05+* Agreement between Caliber Learning Network and MCI
Systemhouse Corp. dated March 2, 1998
10.06+* Agreement between Caliber Learning Network, Inc. and
Macmillan Computer Publishing USA, dated February
2, 1998
10.07+* Agreement between Caliber Learning Network, Inc. and
Compaq Computer Corporation, dated December 22,
1997
10.08* Letter Agreement and Line of Credit Promissory Note
dated as of December 1, 1996 between Caliber
Learning Network, Inc. and Sylvan Learning Systems,
Inc.
10.09+* Agreement between Caliber Learning Network, Inc. and
MCI Systemhouse Corp., dated July 1, 1997
10.10* Management Agreement between Caliber Learning
Network, Inc. and Sylvan Learning Systems, Inc.
dated January 1, 1998
10.11+* Testing Center Management and CBT Services
Agreement, as amended, dated May 1, 1997
10.12* Form of Lock-Up Letter
10.13+* Agreement between Caliber Learning Network, Inc. and
the Trustees of The University of Pennsylvania
acting through the Arresty Institute of Executive
Education at the Wharton School, dated March 26,
1998
23.01* Consent of Ernst & Young LLP
Consent of Piper & Marbury L.L.P. (included in
23.02 Exhibit 5.01)
24.01 Power of Attorney of Directors and Executive
Officers (included on signature pages hereto)
27.01* Financial Data Schedule
</TABLE>
- --------
*Previously filed.
+Filed under confidential treatment request.