UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 420.14a-12
JLM Couture, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
JLM COUTURE, INC.
(a Delaware Corporation)
Notice of 2002 Annual Meeting
of Shareholders to be held
at 11:00 A.M. on April [ ], 2002
To the Shareholders of
JLM COUTURE, INC.:
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of
Shareholders (the "Meeting") of JLM COUTURE, INC. (the "Company")
will be held on April[ ], 2002 at 11:00 A.M. at the offices of
Kalin & Associates, P.C., located at 494 Eighth Avenue, Suite 800,
New York, NY, to consider and vote on the following matters
described under the corresponding numbers in the attached Proxy
Statement:
Proposal 1. To elect one Class I Director to hold office
for three years and until the 2005 annual meeting of the
shareholders at which his term expires or until his successor has
been duly elected.
Proposal 2. To transact such other business as may properly
come before the Meeting.
The Board of Directors has fixed March 27, 2002, at the close
of business, as the record date for the determination of
shareholders entitled to vote at the Meeting, and only holders of
shares of Common Stock of the Company of record at the close of
business on that day will be entitled to vote. The stock transfer
books of the Company will not be closed.
A complete list of shareholders entitled to vote at the
Meeting shall be available for examination by any shareholder, for
any purpose germane to the Meeting, during ordinary business hours
from April [ ], 2002 until the Meeting at the offices of the
Company. The list will also be available at the Meeting.
Whether or not you expect to be present at the Meeting, please
fill in, date, sign, and return the enclosed Proxy, which is
solicited by management. The Proxy is revocable and will not
affect your vote in person in the event you attend the Meeting.
By Order of the Board of Directors
Joseph E. O'Grady, Secretary
Date: March [ ], 2002
Requests for additional copies of proxy material and the
Company's Annual Report for its fiscal year ended October 31, 2000
should be addressed to Shareholder Relations, JLM Couture, Inc.,
225 West 37th Street, New York, NY 10018. This material will be
furnished without charge to any shareholder requesting it.
JLM COUTURE, INC.
225 West 37th Street
New York, NY 10018
Proxy Statement
The enclosed proxy is solicited by the management of JLM
Couture, Inc. (the "Company") in connection with the 2002 Annual
Meeting of Shareholders (the "Meeting") to be held on April [ ],
2002 at 11:00 A.M. at the offices of Kalin & Associates, P.C., 494
Eighth Avenue, Suite 800, New York, NY, and any adjournment
thereof. The Board of Directors (the Board") has set March 27,
2002 as the record date for the determination of shareholders
entitled to vote at the Meeting. A shareholder executing and
returning a proxy has the power to revoke it at any time before it
is exercised by filing a later proxy with, or other communication
to, the Secretary of the Company or by attending the Meeting and
voting in person.
The entire cost of soliciting proxies will be borne by the
Company. The costs of solicitation, which represent an amount
believed to be normally expended for a solicitation relating to an
uncontested election of directors, will include the costs of
supplying necessary additional copies of the solicitation materials
and the Company's Annual Report to Shareholders for its fiscal year
ended October 31, 2001 ("Fiscal 2001")(the "Annual Report") to
beneficial owners of shares held of record by brokers, dealers,
banks, trustees, and their nominees, including the reasonable
expenses of such recordholders for completing the mailing of such
materials and Annual Reports to such beneficial owners.
Only shareholders of record of the Company's 2,330,530 shares
of Common Stock (the "Common Stock") outstanding at the close of
business on March 27, 2002 will be entitled to vote. Each share of
Common Stock is entitled to one vote. Holders of a majority of the
outstanding shares of Common Stock must be represented in person or
by proxy in order to achieve a quorum. The proxy statement, the
attached notice of meeting, the enclosed form of proxy and the
Annual Report are being mailed to shareholders on or about March
144: [ ], 2002. The mailing address of the Company's principal executive
offices is 225 West 37th Street, New York, NY 10018.
PROPOSAL ONE. ELECTION OF CLASS I DIRECTOR
The Company's By-laws require the Company to have five or less
directors. The number of directors is set by the Board and is
currently three. The Board is divided into three classes of
directors. Each class currently consists of one director. Class
I, whose term expires at the Meeting, consists of Joseph E.
O'Grady; Class II, whose term expires in 2003, consists of Daniel
M. Sullivan; and Class III, whose term expires in 2004, consists of
Joseph L. Murphy. At the Meeting, one director will be elected to
fill Class I. Mr. O'Grady is the nominee for election at the
Meeting. If elected, Mr. O'Grady will serve for a term expiring at
the 2005 annual meeting of shareholders.
The persons named in the accompanying proxy have advised
management that it is their intention to vote for the election of
Joseph E. O'Grady as a Class I Director unless authority is
withheld.
The following table sets forth certain information as to the
person nominated for election as a director of the Company and for
those directors whose terms of office will continue after the
Meeting:
Position with Director
Name Age the Company Since
Joseph L. Murphy 47 Chief Executive April 1986
and Financial Officer,
Director
Daniel M. Sullivan 77 Chairman of the September 1986
Board of Directors
Joseph E. O'Grady 80 Secretary and Director February 1991
Joseph L. Murphy, a founder of the Company, has been a
director of the Company since its inception. During Fiscal 1992,
Mr. Murphy was appointed President. In February 1993, Mr. Murphy
was appointed Chief Executive Officer. Mr. Murphy is the brother
of Mark Murphy, the Company's Vice President - Operations.
Daniel M. Sullivan became a director in September 1986 and was
elected Chairman of the Board in 1989. In 1989, Mr. Sullivan
retired as President and Chief Executive Officer of Frost &
Sullivan, Inc., a publicly-traded publisher of market research
studies, a position he had held for more than five years prior to
his retirement.
Joseph E. O'Grady was appointed to the Board of Directors in
February 1991. In December 1992, Mr. O'Grady was appointed
Secretary of the Company. For more than the past five years, Mr.
O'Grady has been the President of JOG Associates, Inc., a
privately-held financial consulting firm based in Hicksville, NY.
JOG Associates, Inc. arranges business financing and provides
financial consulting services for closely-held companies.
During Fiscal 2001, the Board met informally. It acted five
times by unanimous written consent.
OTHER EXECUTIVE OFFICERS
Position with Position
Name Age the Company Held Since
Mark Murphy 37 Secretary and May 1993
Vice President-
Operations
Mark Murphy was appointed Vice President - Operations in May
1993. Mr. Mark Murphy joined the Company in January 1993. Prior
to his joining the Company, Mr. Mark Murphy was employed as a
manager by Accurate Testing Co., a metals testing company based in
California, a position he had held since 1988. Mr. Mark Murphy is
the brother of Joseph L. Murphy, the Company's President.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934.
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Based solely on its
review of the copies of such forms received by it, the Company
believes that during Fiscal 2001 all executive officers and
directors of the Company complied with all applicable filing
requirements.
AUDIT AND COMPENSATION COMMITTEE
During Fiscal 2001, the Audit and Compensation Committee (the
"Audit Committee") consisting of Messrs. O'Grady and Sullivan met
one time.
AUDIT COMMITTEE REPORT
The Audit Committee consists of a majority of independent
directors all of whom meet the independence and experience
requirements of Nasdaq Marketplace Rule 4200(a)(14). The Audit
Committee's responsibilities are as described in a written charter
adopted by the Board, which is attached as Appendix A to this Proxy
Statement.
The Audit Committee has reviewed and discussed the Company's
audited financial statements for Fiscal 2001 with management and
with the Company's independent auditors, Goldstein Golub Kessler
LLP. The Audit Committee has discussed with Goldstein Golub
Kessler LLP the matters required to be discussed by the Statement
on Auditing Standards No. 61 relating to the conduct of the audit.
The Audit Committee has received the written disclosures and the
letter from Goldstein Golub Kessler LLP required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committees, and has discussed with Goldstein Golub Kessler LLP its
independence. Based on the Audit Committee's review of the audited
financial statements and the review and discussions described in
the foregoing paragraph, the Audit Committee recommended to the
Board that the audited financial statements for Fiscal 2001 be
included in the Company's Annual Report on Form 10-KSB for Fiscal
2001 for filing with the Securities and Exchange Commission.
Submitted by the members of the Audit Committee:
Joseph E. O'Grady
Daniel M. Sullivan
AUDIT FEES; FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
FEES; ALL OTHER FEES
Audit fees billed to the Company by Goldstein Golub Kessler
LLP during Fiscal 2001 for review of the Company's annual financial
statements and those financial statements included in the Company's
quarterly reports on Form 10-QSB totaled $50,000. The Company did
not engage Goldstein Golub Kessler LLP to provide advice to the
Company regarding financial information systems design and
implementation during Fiscal 2001. The Company did not engage
Goldstein Golub Kessler LLP during Fiscal 2001 for any other non-audit services.
EXECUTIVE COMPENSATION
The following table sets forth information relating to the
cash compensation received during the Company's last three fiscal
years by the Company's President. None of the Company's other
officers had cash compensation in Fiscal 2001 of more than $100,000
per year:
SUMMARY COMPENSATION TABLE
Name and Annual Com- Other Long Term Other
Principal Fiscal pensation Annual Com- Compensation Compen-
Position Year Salary ($) pensation ($) Options sation($)
Joseph L. 2001 325,000 57,640 - 9,526
Murphy, 2000 302,083 65,430 - 8,616
President 1999 208,667 77,437 - 8,654
EMPLOYMENT AGREEMENT
Mr. Joseph L. Murphy has an employment agreement (the
"Agreement") with the Company. His current base salary is $325,000
per year. As additional compensation, Mr. Murphy receives five
percent (5%) of the Company's annual pre-tax profits. As
additional compensation, Mr. Murphy was also granted a five year
option to purchase 200,000 shares of Common Stock of the Company
(the Common Stock") exercisable at a rate of 50,000 shares
immediately and 50,000 shares on each yearly anniversary date
thereof at an exercise price of $2.5625 per share, that being the
fair market value of a share of Common Stock on the date of grant.
On August 14, 2001, the Board of Directors amended the Agreement to
extend the term of Mr. Murphy's employment until May 19, 2006 and
to award Mr. Murphy 200,000 restricted shares of Common Stock as
additional compensation for services rendered and to be rendered
pursuant to the Agreement.
STOCK OPTION PLAN
On August 26, 1996, the Company adopted a stock option plan
(the "1996 Plan"). The 1996 Plan provides for the issuance of
incentive and non-statutory stock options to employees, consultants
advisors and/or directors for a total of up to 100,000 shares of
Common Stock. The 1996 Plan was amended by the Board of Directors
(subject to stockholder approval) in September 1998 to increase the
authorized number of shares thereunder from 100,000 to 250,000
shares. A majority of the Company's shareholders approved the
amendment to the 1996 Plan in October 1998, at the Company's 1998
Annual Meeting of Shareholders. The exercise price of options
granted may not be less than the fair market of the shares on the
date of grant (110% of such fair market value for a holder of more
than 10% of the Company's Common Stock). The 1996 Plan will
terminate on August 26, 2006.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END (FYE) OPTION VALUES
Value of
Unexercised
Number In-the-Money
Of Unexercised Options
Options At FYE
Shares At FYE Acquired ($)
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized(1) Unexercisable Unexercisable (1)
Joseph L.
Murphy - - 300,000/0 0/0
Mark
Murphy - - 35,000/0 0/0
Joseph E.
O'Grady - - 10,000/15,000 0/4,050
Daniel M.
Sullivan - - 20,000/15,000 200/0
______________
(1) Represents fair market value of Common Stock at October 31,
2001 of $2.02 as reported by Nasdaq, less the exercise price.
COMPENSATION OF DIRECTORS
Directors not employed by the Company are compensated as
consultants for the time spent on Company matters, including
attendance at directors' and other meetings. During Fiscal 2001,
Mr. Sullivan received $30,000 and Mr. O'Grady received $51,812 as
consultant fees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 22, 2002, the
number of shares of Common Stock held of record or beneficially (i)
by each person who held of record, or was known by the Company to
own beneficially, more than five percent of the outstanding shares
of Common Stock, (ii) by each director and (iii) by all officers
and directors as a group:
Number of Percent of
Names and Address Shares Owned (1) Outstanding Shares
Joseph L. Murphy 1,033,598(2)(3)(6) 39.29%
225 West 37th Street
New York, NY 10123
Daniel M. Sullivan 171,339(2)(6) 7.29%
225 West 37th Street
New York, NY 10123
Harvest Capital 68,740 2.95%
Corporation
225 West 37th Street
New York, NY 10123
Joseph E. O'Grady 14,666(2) 1.05%
FMR Corp. 197,100(4) 8.46%
82 Devonshire Street
Boston, MA 02109
Carl Seaman 281,666(5) 12.08%
12 The Poplars
Roslyn, NY 11576
All Directors and
officers as a
group (4 persons) 1,195,863(2)(6) 43.26%
________________
(1) Unless otherwise indicated, all shares of Common Stock are
owned directly.
(2) Includes 300,000, 20,000, 10,000 and 65,000 shares for Messrs.
J. L. Murphy, Sullivan, O'Grady and all officers and directors
as a group, respectively, that are issuable upon exercise of
presently exercisable options at an average exercise price of
approximately $2.90 per share.
(3) 118,331 of these shares are pledged to a bank to secure a
personal loan.
(4) Based on information furnished to the Company on Schedule
13G/A dated February 14, 2002.
(5) Based on information furnished to the Company on Schedule 13D
dated June 1, 1995 filed with the Company on behalf of Mr.
Seaman.
(6) Pursuant to the Securities Exchange Act of 1934, in addition
to the ownership of Common Stock set forth above, Mr. Joseph
L. Murphy, by virtue of his position with (President and a
director) and ownership of 21% of the outstanding Common Stock
of Harvest Capital Corporation ("Harvest") and Mr. Sullivan,
by virtue of his position with Harvest (Secretary and a
director), are considered to be the beneficial owners of the
shares of Common Stock owned by Harvest. Messrs. Murphy and
Sullivan disclaim beneficial ownership of these shares.
The Company is unaware of any arrangement, the operation of
which, at a subsequent date, may result in a change of control of
the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 22, 1998, Mr. Joseph L. Murphy purchased from the
Company 200,000 shares of Common Stock at a price of $2.25 per
share, the market value of such shares on such date. The purchase
was financed by Mr. Murphy executing a ten year promissory note due
to the Company in the principal amount of $450,000. The promissory
note bears interest at 5% per annum and requires annual principal
payments of $45,000 with accrued interest. The purchase was
approved by the unanimous consent of the Board. The Company sold
these shares to Mr. Murphy because it was deemed to be in the best
interests of the Company for him to increase his equity ownership
in the Company to better align his interest with that of the other
shareholders of the Company. $360,000 currently remains unpaid.
Interest is current through January 22, 2001 and the annual
principal payment of $45,000 due on December 22, 2001 remains
unpaid.
On June 5, 2000, pursuant to an employment agreement the
Company issued 50,000 unregistered shares of the Common Stock to an
employee of the Company. This employment agreement expires on
October 31, 2008.
On October 16, 2000, the Company lent $29,000 to Mr. Joseph L.
Murphy for personal reasons. Interest on this loan is payable
monthly at a rate of 7% per annum and principal payments are to be
made in accordance with the terms of a promissory note between Mr.
Murphy and the Company. No payments have been made to date.
On August 14, 2001, the Company issued 200,000 shares of
Common Stock to Mr. Joseph L. Murphy pursuant to an amendment to
the employment agreement between the Company and Mr. Murphy dated
as of August 14, 2001.
PROPOSAL 10. OTHER MATTERS
The Board of Directors has no knowledge of any other matters
which may come before the Meeting and does not intend to present
any other matters. However, if any other matters shall properly
come before the Meeting or any adjournment thereof, the persons
named as proxies will have discretionary authority to vote the
shares of Common Stock represented by the accompanying proxy in
accordance with their best judgment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Goldstein Golub & Kessler
LLP ("GGK"), independent certified public accountants, auditors of
the Company's financial statements for FY2001, as the auditors of
the financial statements of the Company for its current fiscal year
ending October 31, 2002. A representative of GGK has been invited
to attend the Meeting, but it is uncertain whether he will attend.
If he does, he will be given the opportunity to make a statement
and to answer questions any shareholder may have.
SHAREHOLDERS' PROPOSALS
Any shareholder of the Company who wishes to present a
proposal to be considered at the next annual meeting of
shareholders of the Company and who wishes to have such proposal
presented in the Company's Proxy Statement for such meeting must
deliver such proposal in writing to the Company at 225 West 37th
Street, Fifth Floor, New York, New York 10018 on or before
November 25, 2002.
By Order of the Board of Directors
Joseph E. O'Grady
Secretary
Dated: March [ ], 2002
APPENDIX A
JLM COUTURE, INC.
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the board of directors to be known as
the audit committee. The audit committee shall be composed of a
majority of directors who are independent of the management of JLM
Couture, Inc. (the "Corporation") and are free of any relationship
that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy
The audit committee shall provide assistance to the corporate
directors in fulfilling their responsibility to the shareholders,
potential shareholders, and investment community relating to
corporate accounting, reporting practices of the Corporation, and
the quality and integrity of the financial reports of the
Corporation. In so doing, it is the responsibility of the audit
committee to maintain free and open means of communication between
the directors, the independent auditors, the internal auditors, and
the financial management of the Corporation.
Responsibilities
In carrying out its responsibilities, the audit committee believes
its policies and procedures should remain flexible, in order to
best react to changing conditions and to ensure to the directors
and shareholders that the corporate accounting and reporting
practices of the Corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
Review and recommend to the directors the independent
auditors to be selected to audit the financial statements
of the Corporation and its divisions and subsidiaries.
Meet with the independent auditors and financial
management of the Corporation to review the scope of the
proposed audit for the current year and the audit
procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or
recommendations of the independent auditors.
Review with the independent auditors, the company's
internal auditor; and financial and accounting personnel,
the adequacy and effectiveness of the accounting and
financial controls of the Corporation, and elicit any
recommendations for the improvement of such internal
control procedures or particular areas where new or more
detailed controls or procedures are desirable.
Particular emphasis should be given to the adequacy of
such internal controls to expose any payments,
transactions, or procedures that might be deemed illegal
or otherwise improper. Further, the committee
periodically should review company policy statements to
determine their adherence to the code of conduct.
Review the internal audit function of the Corporation
including the independence and authority of its reporting
obligations, the proposed audit plans for the coming
year; and the coordination of such plans with the
independent auditors.
Receive prior to each meeting, a summary of findings from
completed internal audits and a progress report on the
proposed internal audit plan with explanations for any
deviations from the original plan.
Review the financial statements contained in the annual
report to shareholders with management and the
independent auditors to determine that the independent
auditors are satisfied with the disclosure and content of
the financial statements to be presented to the
shareholders. Any changes in accounting principles
should be reviewed.
Provide sufficient opportunity for the internal and
independent auditors to meet with the members of the
audit committee without the members of management
present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the
Corporation's financial, accounting and auditing
personnel, and the cooperation that the independent
auditors received during the course of the audit.
Review accounting and financial human resources and
succession planning within the company.
Submit the minutes of all meetings of the audit committee
to, or discuss the matters discussed at each committee
meeting with, the board of directors.
Investigate any matter brought to its attention within
the scope of its duties, with the power to retain outside
counsel for this purpose if, in its judgment, that is
appropriate.
PROXY
This proxy is Solicited by the Board of Directors of JLM
Couture, Inc.
Proxy for 2002 Annual Meeting of Shareholders.
The undersigned hereby appoints Joseph L. Murphy and Daniel M.
Sullivan proxies of the undersigned, with full power of
substitution, to vote shares of Common Stock of the Company which
the undersigned is entitled to vote at the 2002 Annual Meeting of
the Shareholders to be held on April, [ ], 2002 at 11:00 A.M. and
any adjournments thereof as follows:
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEE IN PROPOSAL 1.
(1) ELECTION OF DIRECTOR:
Instruction: To vote for the Class I Director nominee, place
an X in Box Number 1.
To withhold authority to vote for Class I Director nominee,
place an X in Box Number 2.
1. ____ Class I Director nominee - Joseph E. O'Grady
2. ____ Withhold authority to vote for Class I Director
nominee Joseph E. O'Grady
In their discretion, the proxies are authorized to vote upon
other matters properly coming before the meeting or any adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and
when properly executed will be voted as directed herein. If no
direction is given, this Proxy will be voted FOR the nominee listed
in proposal 1.
DATED: , 2002
(Signature)
(Signature, if held jointly)
Where stock is registered in the
names of two or more persons ALL
should sign. Signature(s) should
correspond exactly with the name(s)
as shown above. Please sign, date
and return promptly in the enclosed
envelope. No postage need be affixed
if mailed in the United States.
Requests for copies of proxy statements, the Company's Annual
Report for Fiscal 2001, or the Company's Annual Report for Fiscal
2001 on Form 10-KSB should be addressed to Shareholder Relations, JLM
Couture, Inc., 225 West 37th Street, New York, NY 10018. This
material will be furnished without charge to any shareholder
requesting it.