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 August 31, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
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, 1,853,407 shares outstanding at
October 10, 1997
Transitional Small Business Disclosure Format (check one)
Yes [X] No [ ]
<PAGE> 1
JD AMERICAN WORKWEAR, INC.
INDEX TO FORM 10-QSB
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<CAPTION>
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of August 31, 1997 and February 28, 1997 3
Statements of Operations for the three months and six months ended
August 31, 1997 and August 31, 1996 5-6
Statements of Cash Flows for the six months ended August 31, 1997
and August 31, 1996 7
Notes to Financial Statements 8
Item 2. Management s Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submissions of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
<PAGE> 2
JD AMERICAN WORKWEAR, INC.
BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
August 31, 1997 February 28, 1997
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 9,200 $ 7,634
Accounts Receivable 324,357 221,983
Inventories 852,912 828,891
Other current assets 50,195 9,094
-------------------------------
Total Current Assets 1,236,664 1,067,602
Property and equipment at cost, less accumulated depreciation of
$115,635 and $106,559 at August 31, 1997 and February 28, 1997,
respectively. 91,483 100,559
Intangible Assets, at cost, less accumulated amortization of
$202,561 and $192,725 at August 31, 1997 and February 28, 1997,
respectively. 81,647 91,483
Other assets, net 26,095 9,928
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TOTAL ASSETS $ 1,435,889 $ 1,269,572
-------------------------------
</TABLE>
See notes to Financial Statements
<PAGE> 3
JD AMERICAN WORKWEAR, INC.
BALANCE SHEETS -- CONTINUED
(unaudited)
<TABLE>
<CAPTION>
August 31, 1997 February 28, 1997
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<S> <C> <C>
LIABILITIES AND CAPITAL DEFICIT
Liabilities
Current liabilities:
Accounts payable $ 349,944 $ 219,529
Accrued expenses 15,024 15,024
Accrued interest on notes payable 97,076 57,497
Current portion of notes payable and long-term debt 277,134 277,134
-------------------------------
Total Current Liabilities 739,178 569,184
Notes payable and long-term debt, less current portion 800,153 840,199
-------------------------------
Total Liabilities 1,539,331 1,409,383
Capital Deficit
Preferred stock, $.001 par value; 1,000,000 shares authorized;
issued and outstanding, 0 shares 0 0
Common stock, $.002 par value; authorized , 4,500,000 shares;
issued and outstanding, 1,853,407 shares and 1,708,433 shares
at August 31, 1997 and February 28, 1997, respectively. 3,706 3,417
Additional paid-in capital 3,639,458 3,191,229
Accumulated deficit (3,746,606) (3,334,457)
-------------------------------
Total Capital Deficit (103,442) (139,811)
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TOTAL LIABILITIES AND CAPITAL DEFICIT $ 1,435,889 $ 1,269,572
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</TABLE>
See notes to Financial Statements
<PAGE> 4
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months ended August 31, 1997 1996
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Revenues
Net sales $ 191,834 $ 142,063
Cost of goods sold 106,276 75,438
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Gross profit 85,558 66,625
Operating Expenses:
Payroll and payroll taxes 58,938 68,433
Selling Expenses 12,133 4,100
Consulting Expenses 60,965 7,271
Contract Labor 655 163
Depreciation and amortization 292 27,302
Employee benefits 6,534 0
Freight and delivery 3,243 4,084
Professional fees 39,245 24,575
Rent 7,950 8,235
Supplies 3,001 4,219
Telephone 3,967 4,309
Travel and Entertainment 11,216 7,594
Other 18,658 24,364
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Total operating expenses 226,796 184,650
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Operating loss (141,238) (118,025)
Interest expense (50,128) (28,658)
Interest income 109 3,395
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NET LOSS $ (191,257) $ (143,288)
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Net loss per common share $ (.11) $ (.09)
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Weighted average number of common shares 1,815,473 1,684,056
</TABLE>
See notes to Financial Statements
<PAGE> 5
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Six Months ended August 31, 1997 1996
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<S> <C> <C>
Revenues
Net sales $ 312,160 $ 225,259
Cost of goods sold 177,295 118,625
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Gross profit 134,865 106,634
Operating Expenses:
Payroll and payroll taxes 115,875 144,449
Selling Expenses 34,022 32,331
Consulting Expenses 120,710 48,457
Contract Labor 1,449 163
Depreciation and amortization 13,393 40,523
Employee benefits 10,890 0
Freight and delivery 13,215 11,714
Professional fees 68,195 45,940
Rent 15,250 14,235
Supplies 5,577 12,829
Telephone 7,752 10,247
Travel and Entertainment 20,136 21,514
Other 41,135 33,742
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Total operating expenses 467,598 416,145
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Operating loss (332,733) (309,511)
Interest expense (78,125) (65,003)
Interest income 109 10,539
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NET LOSS $ (410,749) $ (363,975)
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Net loss per common share $ (.23) $ (.22)
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Weighted average number of common shares 1,779,354 1,645,696
</TABLE>
See notes to Financial Statements
<PAGE> 6
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Six Months ended August 31, 1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (410,749) $ (363,975)
Adjustments to reconcile net (loss) to net cash (used in)
operating activities:
Depreciation and amortization 18,912 40,523
Securities issued for services rendered 144,000 0
Securities issued for interest payments 21,313 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (102,374) (120,786)
(Increase) in inventories (24,021) (154,743)
(Increase) decrease in other assets (54,268) (18,064)
Increase in accounts payable 169,994 (27,430)
Increase (decrease) in accrued expenses 0 (234,742)
---------------------------
Net cash (used in) operating activities (120,507) (879,217)
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (7,289) (24,521)
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal advances on notes payable and long-term debt 30,000 0
Repayments on notes payable and long-term debt (70,046) (734,528)
Costs of raising capital (3,195) (63,402)
Sale of common stock 285,000 739,720
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Net cash (used in) provided by financing activities 241,759 (58,210)
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NET INCREASE (DECREASE) IN CASH 1,566 (961,948)
Cash - beginning of year 7,634 1,220,758
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CASH - END OF PERIOD $ 9,200 $ 258,810
---------------------------
</TABLE>
See notes to Financial Statements
<PAGE> 7
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
Note 1 - The Company
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The Company was incorporated in Rhode Island in 1991 under the name Jaque
Dubois, Inc. and was re-incorporated in Delaware in 1994. In July 1995, the
Company's name was changed to JD American Workwear, Inc. The Company is
primarily engaged in the business of designing, manufacturing, marketing and
selling commercial and industrial workwear products
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. Management believes that additional capital
will be required to sustain operations through February 28, 1998. The Company
anticipates meeting its future cash requirements through the sale of products
and obtaining additional financing. There can be no assurance that sufficient
cash can be generated from operations or financing activities or that the
Company will be able to operate profitably in the future.
Note 2 - Basis of Presentation
- ------------------------------
The interim financial statements are prepared pursuant to the
requirements for reporting on Form 10-QSB. The February 28, 1997 balance sheet
data was derived from audited financial statements but does not include
disclosures required by generally accepted accounting principles. The interim
financial information included herein is unaudited; however, such information
reflects all adjustments (consisting solely of normal recurring adjustments)
that are, in the opinion of management, necessary to a fair presentation of the
Company's financial position, results of operations, and changes in financial
position for the interim periods.
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
28, 1997. 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 ending February 28, 1998.
<PAGE> 8
PART I. FINANCIAL INFORMATION
Item 2. Management s Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months Ended August 31, 1997 Compared to Three Months Ended August
31, 1996. Net sales for the three month period ended August 31, 1997 increased
approximately 31% to $191,834 from $142,063 for the three months ended August
31, 1996. The increase is directly attributable to an increase in unit volume.
Cost of goods sold for the three months ended August 31, 1997 was $106,276
compared to $75,438 for the three months ended August 31, 1996. Gross margin
for the three months ended August 31, 1997 was 43.1% compared to a 46.9% for
the three months ended August 31, 1996.
Selling, general and administrative ( SG&A ) expenses increased 22.8% to
$226,796 for the three months ended August 31, 1997 from $184,650 for three
months ended August 31, 1996. A significant portion of the increase was
incurred in connection with options and warrants issued to consultants for
services. Interest expense increased to $50,128 from $ 28,658 due to an
increase in short term borrowings.
The net loss for the three months ended August 31, 1997 was $191,257 or
$0.11 per share compared to a net loss of $143,288or $0.09 per share for the
three months ended August 31, 1996.
Six Months Ended August 31, 1997 Compared to Six Months Ended August 31,
1996. Net sales for the six month period ended August 31, 1997 increased
approximately 38% to $312,160 from $225,259 for the six months ended August 31,
1996. The increase is directly attributable to an increase in unit volume. Cost
of goods sold for the six months ended August 31, 1997 was $177,295 compared to
$118,625 for the six months ended August 31, 1996. Gross margin for the six
months ended August 31, 1997 was 43.5% compared to a 47.3% for the six months
ended August 31, 1996.
Selling, general and administrative ( SG&A ) expenses increased
approximately 10% to $467,598 for the six months ended August 31, 1997 from
$416,144 for six months ended August 31, 1996. A significant portion of the
increase was incurred in connection with options and warrants issued to
consultants for services. Interest expense increased to $77,434 from $ 65,003
due to an increase in short term borrowings.
The net loss for the six months ended August 31, 1997 was $410,749 or
$0.23 per share compared to a net loss of $363,975 or $0.22 per share for the
six months ended August 31, 1996.
<PAGE> 9
Liquidity and Capital Resources
Net cash used in operating activities was $(240,194) for the six months
ended August 31, 1997 compared to $(879,217) for the six months ended August
31, 1996. The Company used resources to continue to build finished
goods inventory in anticipation of its prime selling season. Cash flow from the
exercise of stock options and short term borrowings were used to produce
inventory and was offset partially by increases in accounts payable. Accounts
receivable increased approximately 43% to $318,120 from February 28 to August
31, 1997. Inventory increased to $914,824 during the first half of fiscal 1998.
Capital expenditures for the six months ended August 31, 1997 were
$(7,289) compared to $(24,521) for the six months ended August 31, 1996.
The Company will be required to seek additional financing to meet its
business strategy of achieving significant market penetration of its JD Uniform
Safety Pants. Also, additional capital may be required if adequate levels of
revenue are not realized, if higher than anticipated costs are incurred in the
expansion of the Company's manufacturing and marketing activities, or if
product demand exceeds expected levels. There can be no assurance that any
additional financing thereby necessitated will be available on acceptable terms
to the Company, if at all.
<PAGE> 10
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
None.
(b) Reports on Form 8-K
None.
<PAGE> 11
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. DeBaene
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David N. DeBaene, President
(Principal Executive Officer)
By: /s/ Anthony P. Santucci
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Anthony P. Santucci, Vice President
(Chief Financial Officer)
Date: October 20, 1997
<PAGE> 12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> AUG-31-1998
<CASH> 9,200
<SECURITIES> 0
<RECEIVABLES> 324,357
<ALLOWANCES> 0
<INVENTORY> 852,912
<CURRENT-ASSETS> 1,236,664
<PP&E> 207,118
<DEPRECIATION> 115,635
<TOTAL-ASSETS> 1,435,889
<CURRENT-LIABILITIES> 739,178
<BONDS> 0
0
0
<COMMON> 3,706
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,435,889
<SALES> 312,160
<TOTAL-REVENUES> 312,160
<CGS> 177,295
<TOTAL-COSTS> 177,295
<OTHER-EXPENSES> 467,598
<LOSS-PROVISION> 332,733
<INTEREST-EXPENSE> 78,125
<INCOME-PRETAX> (410,749)
<INCOME-TAX> 0
<INCOME-CONTINUING> (410,749)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (410,749)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
