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, 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
--------------------------------- -------------------
(State or Other Jurisdiction (I.R.S.Employer
of Incorporation or Organization) Identification No.)
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, 1,783,407 shares outstanding
at June 11, 1997
Transitional Small Business Disclosure Format (check one)
Yes No X
----- -----
JD AMERICAN WORKWEAR, INC.
INDEX TO FORM 10-QSB
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of May 31, 1997 and February 28, 1997 3
Statements of Operations for the three months ended May 31, 1997 and
May 31, 1996 5
Statements of Cash Flows for the three months ended May 31, 1997 and
May 31, 1996 6
Notes to 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 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submissions of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
JD AMERICAN WORKWEAR, INC.
BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
May 31, 1997 February 28, 1997
------------ -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,005 $ 7,634
Accounts Receivable 189,273 221,983
Inventories 979,611 828,891
Other current assets 72,746 9,094
-----------------------------
Total Current Assets 1,247,635 1,067,602
Property and equipment at cost, less accumulated
depreciation $113,669 and $106,559 at May 31, 1997 and
February 28, 1997, respectively. 101,155 100,559
Intangible Assets, at cost, less accumulated amortization
of $199,133 and $192,725 at May 31, 1997 and February 28,
1997, respectively. 85,075 91,483
Other assets, net 19,770 9,928
-----------------------------
TOTAL ASSETS $1,453,635 $ 1,269,572
=============================
</TABLE>
See notes to Financial Statements
JD AMERICAN WORKWEAR, INC.
BALANCE SHEETS -- CONTINUED
(unaudited)
<TABLE>
<CAPTION>
May 31, 1997 February 28, 1997
------------ -----------------
<S> <C> <C>
LIABILITIES AND CAPITAL DEFICIT
Liabilities
Current liabilities:
Accounts payable $ 414,036 $ 219,529
Accrued expenses 15,024 15,024
Accrued interest on notes payable 67,012 57,497
Current portion of notes payable and long-term debt 252,934 277,134
------------------------------
Total Current Liabilities 749,006 569,184
Notes payable and long-term debt, less current portion 828,814 840,199
------------------------------
Total Liabilities 1,577,820 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, 1,783,407 shares and
1,708,433 shares at May 31, 1997 and February 28,
1997, respectively. 3,566 3,417
Additional paid-in capital 3,426,198 3,191,229
Accumulated deficit (3,553,949) (3,334,457)
------------------------------
Total Capital Deficit (124,185) (139,811)
------------------------------
TOTAL LIABILITIES AND CAPITAL DEFICIT $ 1,453,635 $ 1,269,572
==============================
</TABLE>
See notes to Financial Statements
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months ended May 31, 1997 May 31, 1996
------------ ------------
<S> <C> <C>
Revenues:
Net sales $ 120,326 $ 83,196
Cost of goods sold 71,019 43,187
---------------------------
Gross profit 49,307 40,009
Operating Expenses:
Payroll and payroll taxes 56,937 76,016
Selling Expenses 21,889 28,231
Consulting Expenses 59,745 41,186
Contract Labor 794 0
Depreciation and amortization 13,101 13,221
Employee benefits 4,356 0
Freight and delivery 9,972 7,630
Professional fees 28,950 21,365
Rent 7,300 6,000
Supplies 2,576 8,610
Telephone 3,785 5,938
Travel and Entertainment 8,920 13,920
Other 22,477 9,378
---------------------------
Total operating expenses 240,802 231,495
---------------------------
Operating loss (191,495) (191,486)
Interest expense (27,997) (36,345)
Interest income 0 7,144
---------------------------
NET LOSS $ (219,492) $ (220,687)
===========================
Net loss per common share $ (.12) $ (.14)
===========================
Weighted average number of common shares 1,759,756 1,607,336
</TABLE>
See notes to Financial Statements
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months ended May 31, 1997 May 31, 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(219,492) $ (220,687)
Adjustments to reconcile net (loss) to net cash (used in)
operating activities:
Depreciation and amortization 13,101 13,221
Securities issued for services rendered 113,805 0
Securities issued for interest payments 21,313 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 32,710 (18,193)
(Increase) in inventories (150,720) (105,905)
(Increase) decrease in other assets (73,494) (11,253)
Increase in accounts payable 204,022 33,519
Increase (decrease) in accrued expenses 0 (166,775)
--------------------------
Net cash (used in) operating activities (58,755) (476,073)
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (7,289) (12,076)
--------------------------
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 (65,585) (476,581)
Costs of raising capital 0 (63,492)
Sale of common stock 100,000 486,050
--------------------------
Net cash (used in) provided by financing activities 64,415 (54,023)
--------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,629) (542,172)
Cash and cash equivalents - beginning of period 7,634 1,220,758
--------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 6,005 $ 678,586
==========================
</TABLE>
See notes to Financial Statements
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
Note 1 - The Company
- --------------------
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 10-QSB. 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 cash flows 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.
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, 1997 Compared to Three Months Ended May 31,
1996. Net sales for the three month period ended May 31, 1997 increased
approximately 44% to $120,326 from $83,196 for the three month period ended
May 31, 1996. The increase is directly attributable to an increase in unit
volume. Cost of goods sold for the three months ended May 31, 1997 was
$71,019 compared to $43,187 for the three months ended May 31, 1996. Gross
margin for the three month period ended May 31, 1997 was 40.1% compared to a
48.1% for the three months ended May 31, 1996.
Selling, general and administrative ( SG&A ) expenses increased
slightly to $240,802 for the three months ended May 31, 1997 from $231,495
for the three months ended May 31, 1996. A significant portion of the
increase was incurred in connection with options and warrants issued to
consultants for services. Interest expense decreased to $27,997 from
$36,345 due to decreases in long-term borrowings.
The net loss for the three months ended May 31, 1997 was $219,492
($.12 per share) compared to a net loss of $220,687 ($.14 per share) for the
three months ended May 31, 1996.
Liquidity and Capital Resources
Net cash used in operating activities was $58,755 for the three
months ended May 31, 1997 compared to $476,073 for the three months ended
May 31, 1996. The Company used resources to continue to build finished
goods inventory in anticipation of its prime selling season. Cash flows
used to produce inventory was offset partially by increases in accounts
payable and reductions in accounts recievable. Accounts receivable
decreased approximately 15% to $189,273 from February 28 to May 31, 1997.
Inventory increased to $979,611 during the first quarter of fiscal 1998.
Capital expenditures for the three months ended May 31, 1997 were
$7,289 compared to $12,076 for the three months ended May 31, 1996.
The Company will be required to seek additional financing to meet its
business stategy 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 necesitated will be
available on acceptable terms to the Company, if at all.
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 27 -- Financial Data Schedule
(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. DeBaene
------------------------------------
David N. DeBaene, President
(Principal Executive Officer)
By: /s/ Anthony P. Santucci
------------------------------------
Anthony P. Santucci, Vice President
(Chief Financial Officer)
Date: July 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> MAY-31-1997
<CASH> 6,005
<SECURITIES> 0
<RECEIVABLES> 189,273
<ALLOWANCES> 0
<INVENTORY> 979,611
<CURRENT-ASSETS> 1,247,635
<PP&E> 214,824
<DEPRECIATION> 113,669
<TOTAL-ASSETS> 1,453,635
<CURRENT-LIABILITIES> 749,006
<BONDS> 0
0
0
<COMMON> 3,566
<OTHER-SE> 3,426,198
<TOTAL-LIABILITY-AND-EQUITY> 1,453,635
<SALES> 120,326
<TOTAL-REVENUES> 120,326
<CGS> 71,019
<TOTAL-COSTS> 71,019
<OTHER-EXPENSES> 240,802
<LOSS-PROVISION> (191,495)
<INTEREST-EXPENSE> 27,997
<INCOME-PRETAX> (219,492)
<INCOME-TAX> (219,492)
<INCOME-CONTINUING> (219,492)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (219,492)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
