U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended May 31, 1996
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[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
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Commission file number 33-98682
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JD AMERICAN WORKWEAR, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 05-0460102
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(State or Other Jurisdiction of (I.R.S.Employer Identification No.)
Incorporation or Organization)
46 Old Flat River Road, Coventry, Rhode Island 02816
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(Address of Principal Executive Offices)
(401) 397-6800
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 that 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
Common Stock, $.002 par value per share, 1,641,993 shares outstanding at
June 15, 1996.
Transitional Small Business Disclosure Format (check one)
Yes [X] No [ ]
JD AMERICAN WORKWEAR, INC.
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of May 31, 1996, and February 29, 1996 3
Condensed Statements of Operations for the three months ended
May 31, 1996 and May 31, 1995 5
Condensed Statement of Cash Flows for the three months ended
May 31, 1996 and May 31, 1995 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 9
(a) Exhibit 11 - Computation of earnings per share for the
three months ended May 31, 1996 and May 31, 1995 11
(b) Reports on Form 8-K 9
</TABLE>
JD AMERICAN WORKWEAR, INC.
CONDENSED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
May 31, 1996 February 29, 1996
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 678,586 $ 1,220,758
Accounts Receivable 26,624 8,431
Inventories 733,385 627,480
Other current assets 11,574 320
------------------------------
Total Current Assets 1,450,169 1,856,989
Furniture, fixtures, equipment and leasehold Improvements at cost
less accumulated depreciation and amortization of $77,257 at
February 29, 1996 and $83,614 at May 31, 1996 107,624 101,505
Intangible Assets, net of accumulated amortization of $172,941 at
February 29, 1996 and $179,806 at May 31, 1996 97,401 104,667
------------------------------
TOTAL ASSETS $ 1,655,194 $ 2,063,161
==============================
</TABLE>
See notes to Condensed Financial Statements
JD AMERICAN WORKWEAR, INC.
CONDENSED BALANCE SHEETS -- CONTINUED
(unaudited)
<TABLE>
<CAPTION>
May 31, 1996 February 29, 1996
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Liabilities
Current liabilities:
Accounts payable $ 206,590 $ 173,071
Accrued expenses 66,421 171,348
Accrued interest on notes payable 74,809 136,657
Current portion of notes payable and long-term debt 191,106 655,941
------------------------------
Total Current Liabilities 538,926 1,137,017
Notes payable and long-term debt, less current portion 990,819 1,002,565
------------------------------
Total Liabilities 1,529,745 2,139,582
------------------------------
Stockholders' Equity (Deficiency)
Preferred stock, $.001 par value; 1,000,000 shares authorized;
no shares issued and outstanding 0 0
Common stock, $.002 par value; 4,500,000 shares authorized;
1,564,225 shares issued and outstanding at February 29, 1996;
and 1,641,993 shares issued and outstanding at May 31, 1996 3,284 3,128
Additional paid-in capital 2,873,101 2,450,700
Accumulated deficit (2,750,936) (2,530,249)
------------------------------
Total Stockholders' Equity (Deficiency) 125,449 (76,421)
------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 1,655,194 $ 2,063,161
==============================
</TABLE>
See notes to Condensed Financial Statements
JD AMERICAN WORKWEAR, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months ended
May 31,
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1996 1995
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<S> <C> <C>
Revenues
Net sales $ 83,196 $ 12,241
Cost of goods sold 43,187 13,541
--------------------------
Gross profit 40,009 (1,300)
--------------------------
Operating Expenses
Payroll and payroll taxes 76,016 47,773
Selling Expenses 28,231 3,427
Consulting Expenses 41,186 5,025
Contract Labor 0 4,112
Depreciation and amortization 13,221 13,860
Freight and delivery 7,630 5,106
Professional fees 21,365 14,970
Rent 6,000 6,000
Supplies 8,610 3,086
Telephone 5,938 2,074
Travel and Entertainment 13,920 12,566
Other 9,378 17,177
--------------------------
Total operating expenses 231,495 135,176
--------------------------
Operating loss (191,486) (136,476)
Interest expense (36,345) (76,302)
Interest income 7,144
--------------------------
NET LOSS $ (220,687) $ (212,778)
==========================
Net loss per common share $ (.14) $ (.17)
==========================
Weighted average number of common shares 1,607,336 1,220,587
==========================
</TABLE>
See notes to Condensed Financial Statements
JD AMERICAN WORKWEAR, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months ended
May 31,
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1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (220,687) $ (212,778)
Adjustments to reconcile net (loss) to net cash (used in)
operating activities:
Depreciation and amortization 13,221 13,860
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (18,193) 17,825
(Increase) in inventories (105,905) (125,840)
(Increase) decrease in other assets (11,253) 1,982
Increase in accounts payable 33,519 (18,190)
Increase (decrease) in accrued expenses (166,775) 11,083
---------------------------
Net cash (used in) operating activities (476,073) (312,058)
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (12,076) (5,579)
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal advances on notes payable and long-term debt 0 357,617
Repayments on notes payable and long-term debt (476,581) 0
Costs of raising capital (63,492) 0
Sale of common stock 486,050 0
---------------------------
Net cash (used in) provided by financing activities (54,023) 357,617
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (542,172) 39,980
Cash and cash equivalents - beginning of year 1,220,758 6,816
---------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 678,586 $ 46,796
===========================
</TABLE>
See notes to Condensed Financial Statements
Notes to Condensed Financial Statements
Note 1 - The Company
JD American Workwear, Inc. (the "Company") was incorporated in May of
1991. The Company designs, markets and distributes commercial and industrial
workwear.
Substantial losses have been incurred since inception and additional
future losses are anticipated as the Company continues to expand operations and
establish itself in the market. The Company has partially funded operations by
borrowings. The Company also conducted an initial public offering ("IPO") of
common stock and warrants and received gross proceeds of approximately
$2,050,000. The Company is using the proceeds of the IPO to provide working
capital and to repay certain accrued expenses and noteholders of the Company.
Note 2 - Basis of Presentation
The results of operations for the interim periods shown in this report
are not necessarily indicative of results to be expected for the fiscal year.
In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature.
The accompanying financial statements do not contain all of the
disclosures required by generally accepted accounting principles and should be
read in conjunction with the financial statements and related notes included in
the Company's Annual Report on Form 10-KSB for the fiscal year ended February
29, 1996.
Note 3 - Loss Per Share
Loss per share is calculated based on the weighted average number of
shares of common stock outstanding during the period. For the three months
ended May 31, 1995, pursuant to the requirements of the Securities and Exchange
Commission, common shares, or other potentially dilutive instruments issued by
the Company during the twelve months immediately preceding the initial filing
of the registration statement for the Company's initial public offering at
prices below the expected public offering price have been included in the
calculation as if they were outstanding for all periods presented.
Note 4 - Subsequent Event
On July 1, 1996, the holders of the Company's 15% Purchase Order
Financing Note agreed to convert the principal of $195,511 and all accrued
interest thereon of $58,250 into Common Stock at a conversion price of $4.00
per share, or an aggregate of 63,440 shares of Common Stock.
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
---------------------------------------------------------------
Results of Operations
Three Months Ended May 31, 1996 Compared to Three Months Ended May 31,
1995. Net sales for the three month period ended May 31, 1996 increased 579.7%
to $83, 196 from $12,241 for the three month period ended May 31, 1995. The
increase is directly attributable to an increase in unit volume. The Company
had lost manufacturing capability in the Fall of 1994 and was not able to
solicit orders for the Spring of 1995. Manufacturing was restored in the Fall
of 1995 and the Company began to solicit orders for the Spring and Fall of
1996. Cost of goods sold for the three months ended May 31, 1996 was $43,187
compared to $13,541 for the three months ended May 31, 1995. Gross margin for
the three month period ended May 31, 1996 was 48.1% compared to a negative
gross margin of (10.6)% for the three months ended May 31, 1995.
Selling, general and administrative ("SG&A") expenses increased 71.3% to
$231,495 for the three months ended May 31, 1996 from $135,176 for the three
months ended May 31, 1995. The increase is attributable to increases in the
following areas: consulting fees - $36,161, payroll - $28,243 and selling
expenses - $24,804. Interest expense decreased 52.4% to $36,345 from $76,302
due to a reduction in notes payable.
The net loss for the three months ended May 31, 1996 was $220,687
compared to a net loss of $212,778 for the three months ended May 31, 1995. The
increased loss is attributable to the increase in SG&A expenses as discussed
above, partially offset by the increase in gross profit.
Liquidity and Capital Resources
Net cash used in operating activities was $476,073 for the three months
ended May 31, 1996 compared to $312,058 for the three months ended May 31,
1995. The increase was primarily attributable to a decrease in accrued expenses
of ($166,775).
Capital expenditures for the three months ended May 31, 1996 were $12,076
compared to $5,579 for the three months ended May 31, 1995.
During the quarter ended May 31, 1996, the Company received net proceeds
of $422,558 from the second and final closing of its IPO. Since the Company
sold less than the maximum number of units in the IPO, in order to meet future
capital needs, the Company may seek additional financing through the exercise
of the warrants issued in the IPO, a private placement, purchase order
financing or other financing alternatives.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
N/A
Item 2. Changes in Securities
N/A
Item 3. Defaults Upon Senior Securities
N/A
Item 4. Submissions of Matters to a Vote of Security Holders
N/A
Item 5. Other Information
N/A
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11. Statement re computation of earnings per share
for the three months ended May 31, 1996 and
May 31, 1995.
(b) Reports on Form 8-K
None.
SIGNATURES
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.
JD AMERICAN WORKWEAR, INC.
By: /s/ DAVID N. BEBAENE
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David N. DeBaene, President
(Principal Executive Officer)
By: /s/ THOMAS L. ZAMBELLI
--------------------------------------
Thomas L. Zambelli, Vice President
(Chief Financial Officer)
Date: July 31, 1996
EXHIBIT 11
JD American Workwear, Inc.
Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended
May 31,
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1996 1995
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<S> <C> <C>
Net Loss $ (220,687) $ (212,778)
Weighted average common shares outstanding 1,607,336 875,000(1)
"Cheap" stock issued December 1994 to May 1995 345,587
--------------------------
1,607,336 1,220,587
==========================
Loss per share $(.14) $ (.17)
==========================
<FN>
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<F1> Excludes "cheap" stock issued from September of 1994 through May of 1995
which is viewed as outstanding for all periods presented.
<F2> There is no difference between primary and fully diluted loss per share.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> MAY-31-1996
<CASH> 678,586
<SECURITIES> 0
<RECEIVABLES> 26,624
<ALLOWANCES> 0
<INVENTORY> 733,385
<CURRENT-ASSETS> 1,450,169
<PP&E> 191,238
<DEPRECIATION> 83,614
<TOTAL-ASSETS> 1,655,194
<CURRENT-LIABILITIES> 538,926
<BONDS> 0
0
0
<COMMON> 3,284
<OTHER-SE> 2,873,101
<TOTAL-LIABILITY-AND-EQUITY> 1,655,194
<SALES> 83,196
<TOTAL-REVENUES> 83,196
<CGS> 43,187
<TOTAL-COSTS> 43,187
<OTHER-EXPENSES> 231,495
<LOSS-PROVISION> (220,687)
<INTEREST-EXPENSE> 36,345
<INCOME-PRETAX> (220,687)
<INCOME-TAX> (220,687)
<INCOME-CONTINUING> (220,687)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (220,687)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
