SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential; for use
[X] Definitive Proxy Statement of the Commission Only
[ ] Definitive Additional Materials (as permitted by Rule
[ ] Soliciting Material Pursuant to 14a-6(e)(2))
Rule 14a-11 or Rule 14a-12
INITIO, INC.
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(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------
(Name of Person(s) Filing Information Statement)
<PAGE>
INITIO, INC.
2500 Arrowhead Drive
Carson City, Nevada 89706
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 1998
To the Shareholders of
INITIO, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of INITIO, INC. (the "Company"), a Nevada
corporation, will be held at the Company's office at 2001
Tonnelle Avenue, North Bergen, New Jersey 07047, on Friday, June
5, 1998, at 10:00 a.m., local time, for the following purposes:
1. To elect two directors to serve a term of three
years subject to the provisions of the By-laws,
and until their respective successors have been
duly elected and qualified;
2. To consider and act upon a proposal to approve the
selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending
April 30, 1999; and
3. To transact such other business as may properly
come before the meeting or any adjournment or
adjournments thereof.
The Board of Directors has fixed the close of business
on April 30, 1998 as the record date for the meeting and only
holders of shares of record at that time will be entitled to
notice of and to vote at the Annual Meeting of Shareholders or
any adjournment or adjournments thereof.
By order of the Board of Directors.
MARTIN FOX
President
New York, New York
May 14, 1998
IMPORTANT
IF YOU CANNOT PERSONALLY ATTEND THE MEETING, IT IS
REQUESTED THAT YOU INDICATE YOUR VOTE ON THE ISSUES
INCLUDED ON THE ENCLOSED PROXY AND DATE, SIGN AND MAIL
IT IN THE ENCLOSED SELF-ADDRESSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES
<PAGE>
INITIO, INC.
2500 Arrowhead Drive
Carson City, Nevada 89706
P R O X Y S T A T E M E N T
for
ANNUAL MEETING OF SHAREHOLDERS
to be held June 5, 1998
May 14, 1998
The enclosed proxy is solicited by the Board of
Directors of Initio, Inc., a Nevada corporation (the "Company")
in connection with the Annual Meeting of Shareholders to be held
at the Company's office at 2001 Tonnelle Avenue, North Bergen,
New Jersey 07047 on Monday, June 5, 1998, at 10:00 a.m., local
time, and any adjournments thereof, for the purposes set forth in
the accompanying Notice of Meeting. Unless instructed to the
contrary on the proxy, it is the intention of the persons named
in the proxy to vote the proxies in favor of (i) the election as
directors of the nominees listed below to serve for a term of
three years, and (ii) approval of the selection of Arthur
Andersen LLP as the Company's independent auditors for the fiscal
year ending April 30, 1999. The record date with respect to this
solicitation is the close of business on April 30, 1998 and only
shareholders of record at that time will be entitled to vote at
the meeting. The principal executive office of the Company is
2500 Arrowhead Drive, Carson City, Nevada 89706, and its
telephone number is (702) 883 - 2711. The shares represented by
all validly executed proxies received in time to be taken to the
meeting and not previously revoked will be voted at the meeting.
This proxy may be revoked by the shareholder at any time prior to
its being voted. This proxy statement and the accompanying proxy
were mailed to you on or about May 14, 1998.
OUTSTANDING SHARES
The number of outstanding shares entitled to vote at
the meeting is 4,831,447 common shares, par value $.01 per share,
not including 391,871 common shares held in treasury. Each
common share is entitled to one vote. The presence in person or
by proxy at the Annual Meeting of the holders of a majority of
such shares shall constitute a quorum. There is no cumulative
voting. Assuming the presence of a quorum at the Annual Meeting,
the affirmative vote of a majority of the common shares present
at the meeting and entitled to vote on each matter is required
for the approval of the election as directors of the nominees
listed below and the approval of the Company's auditors, Arthur
Andersen LLP, as the Company's auditors for fiscal 1999. Votes
shall be counted by one or more persons who shall serve as the
inspectors of election. The inspectors of election will canvas
the shareholders present in person at the meeting, count their
votes and count the votes represented by proxies presented.
Abstentions and broker nonvotes are counted for purposes of
determining the number of shares represented at the meeting, but
are deemed not to have voted on the proposal. Broker nonvotes
occur when a broker nominee (which has voted on one or more
matters at the meeting) does not vote on one or more other
matters at the meeting because it has not received instructions
to so vote from the beneficial owner and does not have
discretionary authority to so vote.
ELECTION OF DIRECTORS
The two persons named below, who are currently members
of the Board of Directors, have been nominated for election to
serve for a term of three years and until their respective
successors have been elected and qualified. Unless specified to
be voted otherwise, each proxy will be voted for the nominees
named below. Both nominees have consented to serve as directors
if elected.
If at the time of the Annual Meeting, any nominee is
unable or declines to serve, the present Board of Directors shall
nominate another person to fill the vacancy and the proxies may
be voted for any other person nominated.
<TABLE>
Positions with Director Number of Shares Current Percent
Name and Age the Company Since Beneficially Owned Term of
as of March 16,1998 Expires Class
- ------------------ -------------- ------ ------------------- ------- -------
<S> <C> <C> <C> <C> <C>
Michael Bandler,48 Chief Financial
Officer and
Director 1998 -0- 4/30/98 -
Phillip Langsdorf, 50 Director 1992 8,000 4/30/98 .15%
</TABLE>
Meetings and Committees of the Board of Directors.
The Board of Directors of the Company met 2 times
during the fiscal year which ended on April 30, 1997. All of the
directors attended more than 75% of the total number of meetings
of the Board of Directors.
The Company has an Audit Committee which consisted of
Messrs. Brodell and Fox until Mr. Brodell's resignation from the
Board on March 3, 1998 and now consists of Messrs. Langsdorf and
Lerman. The Audit Committee reviews the financial reporting and
internal controls of the Company and meets with appropriate
financial personnel of the Company, as well as its independent
auditors, in connection with these reviews. The Audit Committee
also recommends to the Board the firm which is to be presented to
the shareholders for designation as independent auditors to
examine the corporate accounts of the Company for the current
fiscal year. Although the Audit Committee did not formally meet
during fiscal 1997, Messrs. Brodell and Fox informally discussed
these matters during the course of the fiscal year. The Company
also has a Compensation Committee, the current members of which
are Messrs. DeStefano and Fox. Subject to existing contractual
obligations, the Compensation Committee is responsible for
setting and administering the policies which govern annual and
long-term compensation for the Company's executives. The
Compensation Committee is also empowered to grant Stock Options
pursuant to the Company's Stock Option Plans and to administer
such Plans. Although the Compensation Committee did not formally
meet during fiscal 1997. Messrs. DeStefano and Fox informally
discussed these matters during the course of the fiscal year.
The Company does not have a nominating committee.
Directors and Executive Officers of the Company
The Company's Board of Directors is a classified board,
with one-third of the directors being elected each year for a
term of three years. The following table sets forth certain
information with respect to each director and executive officer
of the Company:
Name and Age Positions with Current Term Served As
the Company Expires Director Since
- ---------------------- ----------------- ------------ ---------------
Daniel A. DeStefano,65 Chairman of the
Board, Director 1999 1969
Martin Fox, 62 President,
Secretary, Director 1999 1978
Phillip Langsdorf,50 Director 1998 1992
Michael Bandler, 48 Chief Financial
Officer, Director 1998 1998
Robert A. Lerman, 63 Director 2000 1998
There is no family relationship among any of the directors or
executive officers of the Company.
Mr. DeStefano is a founder of the Company and has been
Chairman of the Board of the Company since 1969.
Mr. Fox joined the Company in 1972 and has been
President of the Company for more than five years.
Mr. Langsdorf has been Director of Mailorder for
Wolferman's, a producer and mailorder distributor of specialty
foods since August, 1996. From 1991 to July, 1996, he was a Vice
President of White Flower Farm, a direct mail specialty catalog
company concentrating on the marketing of horticultural
materials. Prior to such time, he served as Vice President-
Operations of Deerskin for more than five years.
Mr. Bandler became a Director of the Company in
October, 1997. He was appointed Chief Financial Officer in
March, 1998. He is a Certified Public Accountant and for more
than five years has been President of Michael Bandler & Company
Incorporated and Daily Planet Company. In 1997, Mr. Bandler
received a discharge of debt under Chapter 7 of the Bankruptcy
Code of 1978, as amended (the "Bankruptcy Code"). Daily Planet
Company currently has petitions pending under Chapters 11 and 7
of the Bankruptcy Code.
Mr. Lerman became a Director in February, 1998. Since
1997, he has been President and a Director of Pioneer Ventures
Corp. which is the manager of the general partner of Pioneer
Ventures Associates Limited Partnership. Mr. Lerman is also the
President and a Director of Pioneer Partners Corp., the general
partner of an investment partnership, Pioneer Capital Consulting
Corp., an investment banking company for more than five years.
Each officer's term expires at each annual meeting of
the Board of Directors of the Company, or when their successors
are elected and qualified to serve in their stead.
The Company pays directors, other than full time
employees, an annual retainer of $3,000 plus $500 and out-of-
pocket expenses for each Board meeting attended.
COMPENSATION OF DIRECTORS AND OFFICERS
The following table sets forth cash compensation
(consisting entirely of salary) paid (or accrued for) by the
Company to its President and Chairman of the Board, the only two
executive officers whose aggregate remuneration exceeded $100,000
for the three fiscal years ended April 30, 1997:
SUMMARY COMPENSATION TABLE
Name and Principal Position Year Annual Compensation
- --------------------------- ---- --------------------
Martin Fox,
President, Secretary 1997 $ 1,500
1996 $ 114,500
1995 $ 153,000
Daniel DeStefano,
Chairman of the Board 1997 $ 1,500
1996 $ 100,800
1995 $ 153,000
The Company granted 125,000 stock options to each of
Mr. Fox and Mr. DeStefano during the fiscal year ended April 30,
1996 which were terminated and cancelled as of March 25, 1998,
and on that date the Company granted 250,000 stock options to
each of Mr. Fox and Mr. De Stefano. Such options are immediately
exercisable to the extent of 20%, with an additional 20%
exercisable on March 25 of each subsequent year. Neither of them
received awards under long-term incentive plans that are stock
based during the three fiscal years referred to above. Neither
of them exercised their options to acquire shares during fiscal
1998.
The Company does not have employment agreements with
any of its executive officers.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 1, 1998,
certain information concerning stock ownership of the Company by
(i) each person who is known by the Company to own beneficially
more than 5% of the outstanding common shares of the Company,
(ii) each of the Company's directors and (iii) all current
directors and officers of the Company as a group. Except as
otherwise indicated, all such persons have both sole voting and
investment power over the shares shown as being beneficially
owned by them.
Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
- -------------------- ----------------------- ----------
Martin Fox
2500 Arrowhead Drive
Carson City, Nevada 89706 1,459,588 (1) 29.9%
Daniel A. DeStefano
2500 Arrowhead Drive
Carson City, Nevada 89706 920,010 (2) 18.8%
DeStefano Children Trust
c/o John McConeghy
42 Sterling Lane
Wayne, New Jersey 07470 530,546 (3) 10.9%
Melvyn I. Weiss
One Pennsylvania Plaza
New York, New York 10119 283,650 (4) 5.9%
Pioneer Ventures Associates
Limited Partnership
651 Day Hill Road
Windsor, Connecticut 06095 1,000,000 (5) 20.7%
Robert A. Lerman
651 Day Hill Road
Windsor, Connecticut 06095 1,019,895 (6) 21.1%
All Executive Officers and
Directors as a Group
(5persons) 3,407,493 (7) 70.5%
(1) This amount includes 136,984 Shares owned by trusts for
the benefit of Mr. Fox's children of which Mr. Fox is a
trustee and of which Mr. Fox disclaims beneficial
ownership. Mr. Fox has shared voting and investment
power over the Shares owned by such trusts. This
amount also includes 101,796 Shares owned by the Martin
Fox Retirement Trust. This amount does not include
53,433 Shares owned by a trust for the benefit of
unrelated persons of which Mr. Fox is a trustee and of
which Mr. Fox disclaims beneficial ownership. This
amount also includes 50,000 shares which Mr. Fox has
the right to acquire pursuant to a currently
exercisable stock option.
(2) This amount includes 172,638 Shares owned by the Daniel
DeStefano Retirement Trust. This amount also includes
50,000 shares which Mr. DeStefano has the right to
acquire pursuant to a currently exercisable stock
option.
(3) Owned by the DeStefano Children Trust for the benefit
of Mr. DeStefano's adult children, of which the
trustees are Messrs. John McConeghy and Fred DeStefano
(Mr. Daniel A. DeStefano's brother).
(4) This amount also includes 136,984 Shares owned by
trusts for the benefit of Mr. Fox's adult children of
which Mr. Weiss is a trustee and of which Mr. Weiss
disclaims beneficial ownership. Mr. Weiss has shared
voting and investment power over the Shares owned by
such trusts.
(5) Pioneer Ventures Associates Limited Partnership is the
owner of a $3,000,000 convertible subordinated
debenture which is convertible into a maximum of
1,000,000 shares of the Company's common stock.
(6) This amount includes 1,000,000 shares which may be
acquired by Pioneer Ventures Associates Limited
Partnership upon conversion of the convertible
Subordinated Debenture due May 1, 2003, (ii) 4,400
shares held by Robert and Ellen Lerman, (iii) 1,960 and
3,500 shares held by Texas Enterprises, Inc. and
Pioneer Capital Corp., respectively, of which Mr.
Lerman is the owner of 50% of the issued shares of such
corporations, (iv) 9,935 shares held by the Robert A.
Lerman Money Pension Plan & Trust, and (v) 100 shares
held by Ellen Lerman, his wife. See "Certain
Relationships and Related Transactions."
(7) See footnotes (1), (2) and (6) above.
Certain Relationships and Related Transactions
On February 25, 1998, the Company entered into the
Debenture Commitment Agreement with Pioneer Ventures Associates
Limited Partnership ("PVALP") pursuant to which PVALP has agreed
to make certain loans to the Company to be repaid by the Company
in accordance with the terms of convertible subordinated
debentures (the "Debentures"). PVALP has initially loaned
$3,000,000 to the Company and the Company has issued the First
Subordinated Debenture due May 1, 2003 (the "First Debenture").
The terms of the First Debenture include the condition
that the principal stockholders of the Company (the "Principal
Stockholders"), which include Mr. DeStefano, enter into the
Voting Agreement.
The Voting Agreement provides that so long as there is
any unpaid principal amount or interest outstanding under the
Debentures or so long as the conversion shares are held by PVALP,
the Principal Stockholders will vote all of their Common Stock
for the election of PVALP's designee as a director of the
Company. Mr. Robert Lerman, a director of the Company is PVALP's
nominee, and the President of Pioneer Ventures Corp., the
managing member of the general partner of PVALP. In addition, in
the event of a default under the Debenture Commitment Agreement,
the Principal Shareholders agree to elect that number of nominees
to the Board of Directors designated by PVALP such that the Board
of Directors becomes comprised of a majority of nominees of
PVALP. The Principal Shareholders also agree to vote in favor of
the PVALP nominees so long as any interest or principal remains
unpaid.
The Voting Agreement also provides that the Principal
Shareholders may not transfer any Common Stock to any affiliate
without PVALP's prior written consent. "Affiliate" is defined in
the Voting Agreement as (a) any spouse, parent, parent-in-law,
grandparent, grandchild, sibling, uncle, aunt, niece, nephew or
first cousin of the transferor or (b) any person which the
transferor directly or indirectly controls or (c) any transfer to
a person if the transferor remains a beneficial owner, as that
term is used in Section 13(d) of the Securities Exchange Act of
1934, as amended, of the transferred shares.
SELECTION OF AUDITORS
The Company's financial statements for the past two
fiscal years were examined by Arthur Andersen LLP, independent
certified public accountants. The Board of Directors recommends
the selection of Arthur Andersen LLP as independent auditors to
examine its financial statements for the fiscal year ending
April 30, 1999.
Representatives of Arthur Andersen LLP are expected to
be present at the annual meeting of shareholders with the
opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any matters
other than those mentioned above to be presented to the meeting.
SHAREHOLDER PROPOSALS
Proposals by any shareholders intended to be presented
at the 1999 Annual Meeting of Shareholders must be received by
the Corporation for inclusion in material relating to such
meeting not later than December 15, 1998.
By Order of the Board of Directors,
-------------------------------
Martin Fox, President<PAGE>
INITIO, INC.
PROXY
Annual Meeting of Shareholders - Friday, June 5, 1998.
The undersigned shareholder of Initio, Inc. (the
"Company") hereby appoints Martin Fox the attorney and proxy of
the undersigned, with full power of substitution, to vote, as
indicated herein, all the common shares of the Company standing
in the name of the undersigned at the close of business on April
30, 1998 at the Annual Meeting of Shareholders of the Company to
be held at the offices of the Company at 2001 Tonnelle Avenue,
North Bergen, New Jersey 07047 at 10:00 a.m., local time, on
Friday, June 5, 1998, and at any and all adjournments thereof,
with all the powers the undersigned would possess if then and
there personally present and especially (but without limiting the
general authorization and power hereby given) to vote as
indicated on the proposals, as more fully described in the Proxy
Statement for the meeting.
(Please fill in the reverse side and return promptly in the
enclosed envelope.)<PAGE>
Please mark boxes or in blue or black ink.
1. Election of Directors.
FOR all nominees / /
WITHHOLD authority only for those nominees whose name(s) I
have written below / /
WITHHOLD authority for ALL nominees / /
Nominee for Director is: Michael Bandler
2. Proposal to approve the selection of Arthur Andersen LLP as
the Company's independent auditors for the fiscal year ending
April 30, 1999.
For / / Against / / Abstain / /
3. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE
VOTED FOR THE ELECTION OF THE PROPOSED DIRECTORS AND FOR THE
ABOVE PROPOSALS UNLESS OTHERWISE INDICATED.
[Sign, Date and Return the
Proxy Card Promptly Using the
Enclosed Envelope.] SIGNATURE(S) should be exactly
as name or names appear on
this proxy. If stock is held
jointly, each holder should
sign. If signing is by
attorney, executor, admin-
istrator, trustee or guardian,
please give full title.
Dated , 1998
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Signature
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Print Name
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