United States
Securities and Exchange Commission
Washington, D.C. 20549
------------------------------
Form 10 QSB
( X ) Quarterly Report pursuant to Section 13 or 15 ( d )
of the Securities Exchange Act of 1934
For the Quarterly Period Ended July 31st, 2001
( ) Transition Report pursuant to Section 13 or 15 ( d )
of the Securities Exchange Act of 1934
--------------------------------
Commission File Number 0-9848
Initio, Inc.
(Exact name of small business registrant as specified in its charter)
Nevada 22-1906744
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
No. )
10 Henry Street, Teterboro, NJ 07608
(Address of principal executive office) (Zip Code)
Registrants telephone number, including area code: (201) 462 9000
Indicate by check mark whether the registrant ( 1 ) has filed all
reports required to be filed by Section 13 or 15 ( d ) of the
Securities Exchange Act of 1934 during the preceding 12 months ( or
for such shorter period the registrant was required to file such
reports), and ( 2 ) has been subject to such filing requirements for
the past 90 days. Yes X No
The number of shares outstanding of the registrants common stock as
of
September 10th, 2001 was 4,646,004
Transitional Small Business Disclosure Format Yes No X
Initio, Inc.
Form 10-QSB
For the Quarter Ended July 31, 2001
Contents
Part I. Financial Information Page
Item 1. Financial Statements
a) Consolidated Statements of Operations and Comprehensive Income
(Loss) for the Three
Months Ended July 31st, 2001 and 2000 1.
b) Consolidated Balance Sheets as of July 31st, 2001 and
April 30th, 2001 2.
c) Consolidated Statements of Stockholders Equity for the
Three months Ended July 31st, 2001. 3.
d) Consolidated Statements of Cash Flows for the Three
Months Ended July 31st, 2001 and 2000 4.
e) Notes to Financial Statements 6.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8K
a) Exhibit 27 8.
Signatures 10.
Initio, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
For the three months ended
(Unaudited)
July 31, 2001 July 31, 2000
Revenues:
Interest and dividends $46,326 $88,263
Gain (loss) on the sale of marketable
securities (66,669) 58,194
Rental income - 38,000
Other 12,823 -
(7,520) 184,457
Expenses:
General and administrative 107,878 116,163
Interest 45,637 50,617
153,515 166,780
Income (loss) before income taxes (161,035) 17,677
Income tax expense:
Current - 620
Deferred - 5,580
Net income (loss) (161,035) 11,477
Other Comprehensive Income (loss):
Unrealized Gains ( Losses ) on
Marketable Securities:
Arising during the period (500,612) (106,652)
Reclassification of Gains (Losses) Realized in
Other Income 1,837 (11,390)
(498,775) (118,042)
Comprehensive Income (loss)
Income (loss) per Common Share:
Basic ($0.04) $0.00
Diluted ($0.04) $0.00
Weighted Average Shares:
Basic 4,646,004 4,645,004
Diluted 4,646,004 4,976,103
The accompanying notes are an integral part of these financial statements.
1.
Initio, Inc.
Consolidated Balance Sheets
As at
July 31, 2001 April 30, 2001
(Unaudited) (Audited)
Assets
Cash $100,298 $358,616
Marketable securities 1,814,462 2,326,145
Deferred tax asset 1,236,596 1,236,596
Vehicles and equipment, net 82,987
Building held for sale 1,493,120 1,493,120
Convertible debenture 1,000,000 1,000,000
Notes receivable 478,544 482,561
Other assets 64,228 42,744
Total assets $6,270,235 $6,960,313
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses 160,392 171,737
Mortgage payable 759,235 778,158
Subordinated convertible debenture 1,500,000 1,500,000
Total liabilities 2,419,627 2,449,895
Commitments
Stockholders' Equity:
Common Stock, $ .01 par value, Authorized
10,000,000 shares, 5,053,575 issued and
4,646,004 outstanding shares 50,536 50,536
Additional paid in capital 8,653,660 8,653,660
Accumulated deficit (3,278,609) (3,117,574)
Accumulated other comprehensive income (997,242) (498,467)
4,428,345 5,088,155
Less: Treasury stock, 407,571
common shares (577,737) (577,737)
Total stockholders' equity 3,850,608 4,510,418
Total liabilities and stockholders'$6,270,235 $6,960,313
equity
The accompanying notes are an integral part of these financial statements.
2.
Initio, Inc.
Consolidated Statements of Stockholders' Equity
For the three months ended July 31, 2001
(Unaudited)
Accumulated
Additional Other
Issued Common Paid in Accumlated Treasury Comprehensive
Shares Stock Capital Deficit Stock Income Total
Balance 5,053,575 $50,536 $8,653,660($3,117,574) ($577,737) (498,467)$4,510,418
May 1
2001
Other comprehensive loss
Net loss (161,035) (161,035)
Balance 5,053,575 $50,536 $8,653,660($3,278,609) ($577,737)($997,242)$3,850,608
Jul 31
2001
The accompanying notes are an integral part of these financial statements.
3.
Initio, Inc.
Consolidated Statements of Cash Flows
For three months ended
(Unaudited)
July 31, 2001 July 31, 2000
Cash Flows from Operating Activities
Net income (loss) $(161,035) $11,477
Adjustments to reconcile net income to net
cash used in operating activities:
(Gain) loss on sale of marketable securities 66,669 (58,194)
Depreciation and amortization 4,525 1,681
Stock option compensation - 5,580
Net increase in other assets (21,484) (61,793)
Net decrease in other liabilities (11,345) (84,680)
Net cash used in operating activities (122,670) (185,929)
Cash flows from Investing Activities
Purchases of property and equipment (66,981) (2,817)
Net proceeds from sales/(purchases) of
marketable securities (53,761) 279,537
Increase in notes receivable 4,017 2,089
Net cash provided by (used in) investing activities (116,725) 278,809
Cash Flows from Financing Activities
Mortgage repayment (18,923) (11,643)
Net cash used in financing activities (18,923) (11,643)
Net decrease in Cash (258,318) 81,237
Cash at beginning of period 358,616 550,025
Cash at end of period $100,298 $631,262
The accompanying notes are an integral part of these financial statements.
4.
Initio, Inc.
Consolidated Statements of Cash Flows (continued):
For three months ended
(Unaudited)
July 31, 2001 July 31, 2000
Supplemental disclosures:
Cash paid during the period for interest $49,281 $49,479
Cash paid during the period for income taxes - $40,500
Non-Cash Investing and Financing Activities:
Increase (decrease) in fair value of
available-for-sale sec $(500,612) $(106,652)
The accompanying notes are an integral part of these financial statements.
5.
Initio, Inc.
Notes to Financial Statements
Basis of Consolidation:
The consolidated financial statements include the accounts of Initio,
Inc. and its wholly owned subsidiary Initio Acquisition Corp.
(formerly named Deerskin Trading Post, Inc.), hereinafter collectively
referred to as the Company. All material intercompany transactions
and balances have been eliminated. Certain prior period amounts have
been reclassified to conform with current period presentation.
Use of Estimates:
Preparing financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and consequently stockholders
equity. Examples include estimates of future revenues and expenses.
Actual results may differ from these estimates.
BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information in response to the requirements of
Article 10 of Regulation S-X. Accordingly they do not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position as of July 31st,
2001; results of operations for the three months ended July 31st,
2001, and 2000; cash flows for the three months ended July 31st, 2001
and 2000; for further information, refer to the Companys financial
statements and notes thereto included in the Companys Form 10-KSB for
the year ended April 30th, 2001. The Balance sheet at April 30th,
2001 was derived from the audited financial statements as of that
date. Results of Operations for interim periods are not necessarily
indicative of annual results of operations.
Income per Share:
Basic Income per Common Share has been computed based upon the
weighted average number of actually outstanding shares of the
Companys common stock. Diluted Income per Common Share includes
common shares associated with certain outstanding employee stock
options and a portion of the Companys subordinated convertible
debenture.
6.
RECENT EVENTS
Item 2. Managements Discussion and Analysis of Financial Condition
and the Results of Operations.
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of
the Companys results of operations and financial condition. The
discussion should be read in conjunction with the Companys Financial
Statements and Notes thereto.
Managements discussion and analysis contains forward-looking
statements about the Companys future prospects. These statements
are subject to risks and uncertainties, which could cause actual
results to differ materially from those expected by Management.
Readers are therefore cautioned not to rely upon any such forward-
looking beliefs or judgements in making investment decisions.
Results of Operations:
As of April 30, 1999 the Company sold substantially all of the
operating assets of its catalog business. In May 1999 the Company sold
its facility in Peabody, Massachusetts to an unrelated party.
The Companys revenues, excluding gains on the sale of marketable
securities, which are transactional in nature and vary from period to
period, decreased from approximately $126,000 to $59,000 during the
quarter. The decrease was primarily attributable to a decrease in
interest income. The Companys general, administrative and interest
expenses decreased by approximately $ 8,000.
Liquidity and Capital Resources:
In May, 1999, when the sale of its catalog operations was consummated,
the Company received approximately $ 552,000 in cash, a $ 3,400,000
convertible debenture of the purchaser and discharged $ 2,000,000 of
its subordinated debentures. Additionally, in connection with the
sale of its Peabody, Massachusetts facility in May, 1999, the Company
received approximately $ 253,000 in cash and a $ 275,000 mortgage note
from the purchaser. In April 2001 this debenture, in the amount of
$3,000,000 was in default on the payment of interest, which default
has not been cured as of the present time. The Company is pursuing a
variety of actions to attempt to realize on the debenture and has
recorded as of April 30, 2001 a $2,000,000 reserve against the
collectability of this debenture.
As of July 31st, 2001 the Company had approximately $ 1,900,000 in
cash and marketable securities.
As of July 31st, 2001 the Company's liabilities, excluding the
subordinated debenture and the mortgage payable, was approximately $
160,000.
7.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
27. Financial Data Schedule
(B ) Reports on Form 8-K
Initio, Inc. filed no reports on Form 8-K during the quarter ended
July 31st, 2001.
Items 1,2,3,4 and 5 are not applicable and have been omitted.
8.
Exhibit 27
This schedule contains summary information extracted from the Company's
accompanying audited financial statements and is qualified in its entirety
by reference to such financial statements.
PeriodT Three Months 12 Months
Period End July 31, 2001 April 30, 2001
Cash $ 100,298 $ 358,616
Securities 1,814,462 2,326,145
Receivables - -
Allowances - -
Inventory - -
Current assets n/a n/a
Property and Equipment 114,704 59,222
Accumulated Depreciation 31,717 38,691
Total Assets 6,270,235 6,960,313
Current Liabilities n/a n/a
Bonds 1,500,000 1,500,000
Preferred 0 0
Common 50,536 50,536
Other Stockholders Equity 3,800,072 4,459,882
Total Liabilities & Stockholders Equity 6,270,235 6,960,313
Income (7,520) 652,163
Cost of Goods Sold - -
Other Expenses 107,878 544,025
Interest Expense 45,637 193,598
Net Loss (161,035) (2,105,626)
Basic Loss Per Share (.04) (.11)
Diluted Loss Per Share (.04) (.34)
9.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Initio, Inc.
Date: September 13th, 2001 By: /s/ Martin Fox
Martin Fox
President and Office of the
Chief Executive
By: /s/ Daniel DeStefano
Daniel DeStefano
Chairman of the Board and
Office of the Chief Executive
By: /s/ Martin Fox
Martin Fox
President and Office of the
Chief Executive, Secretary, Treasurer
and Chief Financial Officer
10.