SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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)
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(Name of Person(s) Filing Information Statement)
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INITIO, INC.
2500 Arrowhead Drive
Carson City, Nevada 89706
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 20, 2000
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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 10 Henry Street, Teterboro, New Jersey 07608, on Thursday,
January 20, 2000, 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, 2000; 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
November 29, 1999 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.
/s/ Martin Fox
Martin Fox
President
Teterboro, New Jersey
December 16, 1999
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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
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<PAGE>
INITIO, INC.
2500 Arrowhead Drive
Carson City, Nevada 89706
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P R O X Y S T A T E M E N T
for
ANNUAL MEETING OF SHAREHOLDERS
to be held January 20, 2000
-------------------------------
December 16, 1999
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 10 Henry Street,
Teterboro, New Jersey 07608 on Thursday, January 20, 2000, 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, 2000.
The record date with respect to this solicitation is the close of business on
November 29, 1999 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 December 16, 1999.
OUTSTANDING SHARES
The number of outstanding shares entitled to vote at the meeting is
4,640,541 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,
<PAGE>
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 2000. 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>
<CAPTION>
Number of Shares
Beneficially Owned Current
Positions with the Director as of Term Percent
Name and Age Company Since November 29, 1999 Expires of Class
------------ -------------------- ------- ------------------ ------- --------
<S> <C> <C> <C> <C> <C>
Daniel A. DeStefano, 67 Chairman and Director 1969 950,010 4/30/99 20%
Martin Fox, 64 CEO and Director 1978 1,373,588 4/30/99 29%
</TABLE>
Meetings and Committees of the Board of Directors.
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The Board of Directors of the Company met 2 times during the fiscal
year which ended on April 30, 1999. 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 consists of Mr. Robert Lerman
and Mr. James Holzinger. 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
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1999, Mr. Lerman and Mr. Holzinger 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 1999. 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
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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:
Current
Positions with Term Served As
Name and Age the Company Expires Director Since
- ------------ -------------- ------- --------------
Daniel A. DeStefano, 67 Chairman of the 1999 1969
Board, Director
Martin Fox, 64 President, Secretary, 1999 1978
Director
James J. Holzinger, 60 Director 2001 1998
Dr. Paul Lerman, 58 Director 2001 1999
Robert A. Lerman, 64 Director 2000 1998
Paul Lerman and Robert Lerman are cousins.
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. Holzinger is, since 1996, retired. From 1993 - 1996 he was an
Executive Vice President in the commercial lending department of Summit Bank.
Dr. Lerman became a Director in April, 1999. Dr. Lerman has been the
Dean of the Samuel J. Silberman College of Business Administration at Fairleigh
Dickinson University since 1990 and a Professor of Business Administration since
1970. Dr. Lerman is
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also a Director of NeuroCorp., Ltd. a provider of contract medical research and
data analysis, and non-medical manager of facilities treating memory disorders.
Mr. Lerman has been President and a Director of Pioneer Ventures Corp.,
the manager of the general partner of Pioneer Ventures Associates Limited
Partnership, since 1997. Mr. Lerman is also the President and a Director of
Pioneer Partners Corp., the general partner of Bridge Investors I Limited
Partnership, an investment partnership, and of Pioneer Capital 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. None of the executive officer's aggregate remuneration exceeded
$100,000 for the three fiscal years ended April 30, 1999:
SUMMARY COMPENSATION TABLE
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Name and Annual
Principal Position Year Compensation
------------------ ---- ------------
Martin Fox, 1999 $ 1,500
President 1998 1,500
1997 1,500
Daniel DeStefano, 1999 $ 1,500
Chairman of the Board 1998 1,500
1997 1,500
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. DeStefano. 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
1999.
The Company does not have employment agreements with any of its
executive officers.
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PRINCIPAL SHAREHOLDERS
The following table sets forth, as of December 1, 1999, 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.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
- ------------------ ----------------------- --------
<S> <C> <C>
Martin Fox 1,373,588 (1) 29.0%
2500 Arrowhead Drive
Carson City, Nevada 89706
Daniel A. DeStefano 950,010 (2) 20.0%
2500 Arrowhead Drive
Carson City, Nevada 89706
DeStefano Children Trust 530,546 (3) 11.4%
c/o John McConeghy
42 Sterling Lane
Wayne, New Jersey 07470
Melvyn I. Weiss 283,650 (4) 6.1%
One Pennsylvania Plaza
New York, New York 10119
Pioneer Ventures Associates 724,675 (5) 13.5%
Limited Partnership
651 Day Hill Road
Windsor, Connecticut 06095
Robert A. Lerman 740,130 (6) 13.8%
651 Day Hill Road
Windsor, Connecticut 06095
James J. Holzinger 10,000 *
7 Canterbury Way
Wayne, New Jersey 07470
Dr. Paul Lerman -- --
1000 River Road
Teaneck, New Jersey 07666
All Executive Officers and Directors as 3,073,728 (7) 55.2%
a Group (5 persons)
</TABLE>
* Less than 1%.
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(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 108,578 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 100,000 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 100,000
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 (i) a $1,000,000 convertible subordinated debenture which
is convertible into a maximum of 400,000 shares of the
Company's common stock and (ii) a $500,000 convertible
subordinated debenture which is convertible into a maximum of
324,675 shares of the Company's common stock.
(6) This amount includes (i) 400,000 shares which may be acquired
by Pioneer Ventures Associates Limited Partnership upon
conversion of the Convertible Subordinated Debenture due May
1, 2003, (ii) 324,675 shares which may be acquired by Pioneer
Ventures Associates Limited Partnership upon conversion of the
Convertible Subordinated Debenture due December 23, 2003,
(iii) 4,400 shares held by Robert and Ellen Lerman, (iv) 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, (v) 5,495
shares held by the Robert A. Lerman Money Pension Plan &
Trust, and (vi) 100 shares held by Ellen Lerman, his wife. See
"Certain Relationships and Related Transactions."
(7) See footnotes (1), (2) and (6) above.
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Certain Relationships and Related Transactions
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On February 25, 1998, the Company entered into the Debenture Commitment
Agreement (the "Debenture Commitment Agreement") with Pioneer Ventures
Associates Limited Partnership ("PVALP") pursuant to which PVALP 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 initially
loaned $3,000,000 to the Company and the Company issued the First Subordinated
Debenture due May 1, 2003 (the "First Debenture").
In December 1998, pursuant to the terms of the Debenture Commitment
Agreement, PVALP loaned an additional $500,000 to the Company and the Company
issued to PVALP the Second Subordinated Debenture due December 23, 2003 (the
"Second Debenture").
The terms of the Debenture Commitment Agreement include the condition
that the principal stockholders of the Company (the "Principal Stockholders"),
which include Messrs. DeStefano and Fox, 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.
In May 1999, the Company completed the sale of certain operating assets
of Deerskin Trading Post, Inc. to Advanced Medical Sciences, Inc. ("AMDS"). The
purchase price included the issuance of a $2,000,000 debenture by AMDS to PVALP
and the concurrent cancellation of $2,000,000 principal amount of the First
Subordinated Debenture. Additionally, as a result of this transaction, the
conversion price on the remaining principal amount of the First Subordinated
Debenture was adjusted to $2.50 per share.
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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, 2000.
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 2000
Annual Meeting of Shareholders must be received by the Corporation for inclusion
in material relating to such meeting not later than May 15, 2000.
By Order of the Board of Directors,
/s/ Martin Fox
Martin Fox
President
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INITIO, INC.
PROXY
Annual Meeting of Shareholders - Thursday, January 20, 2000
The undersigned shareholder of Initio, Inc. (the "Company") hereby
appoints Martin Fox and Daniel DeStefano, and each of them, the attorneys and
proxies 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 November 29, 1999 at the Annual
Meeting of Shareholders of the Company to be held at the office of Initio, Inc.,
10 Henry Street, Teterboro, New Jersey 07608, at 10:00 a.m., local time, on
Thursday, January 20, 2000, 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 /x/ 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 / /
Nominees for Director are: Daniel A. DeStefano and Martin Fox.
2. Proposal to approve the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending April 30, 2000.
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 PROPOSAL UNLESS OTHERWISE INDICATED.
SIGNATURE(S) should be exactly
as name or names appear on this
[Sign, Date and Return proxy. If stock is held jointly,
the Proxy Card Promptly each holder should sign. If
Using the Enclosed signing is by attorney, executor,
Envelope.] administrator, trustee or guardian,
please give full title.
Dated
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Signature
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Signature
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