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, 1999
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to .
Commission file number 33-98682
JD AMERICAN WORKWEAR, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 05-0460102
(State or Other Jurisdiction of (I.R.S.Employer Identification No.)
Incorporation or Organization)
46 Old Flat River Road, Coventry, Rhode Island 02816
(Address of Principal Executive Offices)
(401) 397-6800
(Issuer s Telephone Number, Including Area Code)
N/A
(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, 2,569,427 shares outstanding
at September 27, 1999.
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 August 31, 1999 and
February 28, 1999 3
Statements of Operations for the three months ended
August 31, 1999 and August 31, 1998 5
Statements of Operations for the six months ended
August 31, 1999 and August 31, 1998 6
Statements of Cash Flows for the six months ended
August 31, 1999 and August 31, 1998 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
JD AMERICAN WORKWEAR, INC.
BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
August 31, February 28,
1999 1999
---------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 18,841 $ 174,472
Accounts receivable, net of allowance 641,037 751,397
Inventories 1,148,171 1,267,628
Prepaid expenses, current portion 266,719 181,149
Loans receivable, employees 7,787 20,193
--------------------------
Total current assets 1,971,836 2,394,839
Property and equipment, net 252,530 269,323
Intangible assets, net 61,341 61,341
Prepaid expenses, long-term 110,719 154,540
Other assets, net 0 4,998
--------------------------
TOTAL ASSETS $2,396,426 $2,885,041
==========================
</TABLE>
See notes to Financial Statements
JD AMERICAN WORKWEAR, INC.
BALANCE SHEETS -- CONTINUED
(unaudited)
<TABLE>
<CAPTION>
August 31, February 28,
1999 1999
---------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current liabilities:
Current portion of long-term debt $ 184,674 $ 306,674
Accounts payable and accrued expenses 225,756 284,900
Accrued interest on notes payable 39,011 30,366
Short-term loans 77,000 -
--------------------------
Total current liabilities 526,441 621,940
--------------------------
Long-term debt, net of current portion 188,399 205,756
--------------------------
Stockholders' equity:
Preferred stock, authorized 1,000,000 shares:
Series A, $.001 par value 191 shares issued
and outstanding, (liquidating preference
$447,500); - -
Series B, $.001 par value 2,500 shares issued
and outstanding, (liquidating preference
$2,500,000) 3 3
Common stock, $.002 par value; authorized,
7,500,000 shares; issued and outstanding,
2,473,372 shares at August 31, 1999 and
February 28, 1999, respectively. 4,947 4,496
Additional paid-in capital 5,335,810 5,046,177
Detachable warrant 3,196,000 3,196,000
(150,000)
Accumulated deficit (6,705,174) (6,189,331)
--------------------------
Total Stockholders' equity: 1,681,586 2,057,345
--------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,396,426 $2,885,041
==========================
</TABLE>
See notes to Financial Statements
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three months ended August 31, 1999 August 31, 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
Revenues
Net sales $ 363,398 $ 264,619
Cost of goods sold 262,011 169,188
-------------------------------
Gross profit 101,388 95,431
Operating Expenses:
Payroll and payroll taxes 97,000 137,994
Selling Expenses 2,049 37,071
Consulting Expenses 102,130 80,419
Contract Labor 1,491 250
Depreciation and amortization 14,032 6,176
Employee benefits 14,311 10,401
Freight and delivery 3,588 17,058
Professional fees 60,082 30,961
Rent 2,740 10,805
Supplies 551 9,421
Telephone 5,874 5,072
Travel and Entertainment 9,186 38,314
Other 17,160 34,514
-------------------------------
Total operating expenses 330,194 418,455
-------------------------------
Operating loss (228,806) (323,024)
Interest income (expense) (17,070) 7,170
-------------------------------
NET LOSS $ (245,876) $ (315,854)
===============================
Net loss per common share $ (.10) $ (.16)
===============================
Weighted average number of common
shares outstanding 2,420,019 2,034,800
</TABLE>
See notes to Financial Statements
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Six months ended August 31, 1999 August 31, 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
Revenues
Net sales $ 468,944 $ 406,273
Cost of goods sold 343,327 260,685
-------------------------------
Gross profit 125,617 145,588
Operating Expenses:
Payroll and payroll taxes 248,203 239,925
Selling Expenses 12,137 59,324
Consulting Expenses 146,143 148,574
Contract Labor 8,823 550
Depreciation and amortization 14,032 12,986
Employee benefits 29,116 18,889
Freight and delivery 33,149 29,994
Professional fees 46,249 106,399
Rent 4,795 18,275
Supplies 4,614 12,110
Telephone 10,617 10,113
Travel and Entertainment 23,794 49,184
Other 39,867 61,869
-------------------------------
Total operating expenses 621,539 748,192
-------------------------------
Operating loss (495,922) (622,604)
Interest income (expense) (19,921) (21,178)
-------------------------------
NET LOSS $ (515,843) $ (643,782)
===============================
Net loss per common share $ (.22) $ (.32)
===============================
Weighted average number of common
shares outstanding 2,354,663 2,009,849
</TABLE>
See notes to Financial Statements
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the six months ended August 31, 1999 August 31, 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (515,843) $ (643,782)
Adjustments to reconcile net (loss)
to net cash (used in) operating
activities:
Depreciation and amortization 16,793 12,986
Securities issued for services rendered 40,000 194,500
Securities issued for interest payments -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 110,360 (170,276)
(Increase) in inventories 119,457 (392,193)
(Increase) decrease in other assets (24,345) (58,917)
Increase (decrease) in accounts payable (50,499) (147,073)
--------------------------------
Net cash (used in) operating activities (304,077) (1,204,755)
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures - (61,478)
--------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal advances on notes payable and long-term
debt -
Sale of preferred stock - 2,500,000
Repayments on notes payable and long-term debt (49,857) (151,339)
Costs of raising capital - (166,442)
Exercise of stock options 85,500 -
--------------------------------
Net cash (used in) provided by financing activities 148,446 2,182,219
--------------------------------
NET INCREASE (DECREASE) IN CASH (155,631) 915,986
Cash and cash equivalents - beginning
of period 174,472 16,932
--------------------------------
CASH - END OF PERIOD $ 18,841 $ 932,918
================================
</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, 2000.
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, 1999. 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, 2000.
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, 1999 compared to three months ended
August 31, 1998. Net sales for the three month period ended August 31, 1999
increased approximately 37% to $363,398 from $264,619 for the three month
period ended August 31, 1998. The increase is directly attributable to an
increase in unit volume. Cost of goods sold for the three months ended
August 31, 1999 was $101,388 compared to $95,431 for the three months ended
August 31, 1998. Gross margin for the three month period ended August 31,
1999 was 27.9% compared to 36.0% for the three months ended August 31, 1998.
Operating expenses decreased to $330,194 for the three months ended
August 31, 1999 from $418,455 for the three months ended August 31, 1998.
Cost cutting measures were implemented in many categories including
approximately $40,000 decrease in payroll costs, approximately $35,000 in
advertising costs and approximately $29,000 in travel expense. Interest
expense increased to $17,070 due to increases in short-term borrowings.
The net loss for the three months ended August 31, 1999 was $245,876
($.10 per share) compared to a net loss of $315,854 ($.16 per share) for the
three months ended August 31, 1998.
Six months ended August 31, 1999 compared to six months ended August
31, 1998. Net sales for the six month period ended August 31, 1999
increased approximately 15% to $468,944 from $406,273 for the six month
period ended August 31, 1998. The increase is directly attributable to an
increase in unit volume. Cost of goods sold for the six months ended August
31, 1999 was $343,327 compared to $260,685 for the six months ended August
31, 1998. Gross margin for the six month period ended August 31, 1999 was
26.7% compared to 35.8% for the six months ended August 31, 1998.
Operating expenses decreased to $621,539 for the six months ended
August 31, 1999 from $748,192 for the six months ended August 31, 1998. Cost
cutting measures were implemented in many categories resulting in decreases
of approximately $47,000 in advertising costs, approximately $25,000 in
travel expense and approximately $60,000 in professional fees. Interest
expense decreased slightly to $19,921 for the six months ended August 31,
1999 from $21,178 for the six months ended August 31, 1998
The net loss for the six months ended August 31, 1999 was $515,843
($.22 per share) compared to a net loss of $643,782 ($.32 per share) for the
six months ended August 31, 1998.
Liquidity and Capital Resources
Net cash used in operating activities was $304,077 for the six months
ended August 31, 1999 compared to $1,204,755 for the six months ended August
31, 1998. The Company is working to reduce its levels of inventory and has
steadily decreased its levels of production over the first six months of the
fiscal year. Cash flows used to produce inventory was offset partially by
increases in accounts payable. Accounts receivable decreased approximately
14% to $641,037 from February 28 to August 31, 1999. Inventory decreased to
$1,148,171 during the first half of fiscal 1999.
The Company made no capital expenditures for the six months ended
August 31, 1999, compared to $61,478 for the six months ended August 31,
1998.
The Company may 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.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
N/A
Item 2. Changes in Securities and use of Proceeds.
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
N/A
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: October 20, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-END> AUG-31-1999
<CASH> 18,841
<SECURITIES> 0
<RECEIVABLES> 671,037
<ALLOWANCES> 30,000
<INVENTORY> 1,148,171
<CURRENT-ASSETS> 1,971,836
<PP&E> 423,893
<DEPRECIATION> 171,363
<TOTAL-ASSETS> 2,396,426
<CURRENT-LIABILITIES> 526,441
<BONDS> 0
0
3
<COMMON> 4,947
<OTHER-SE> 1,676,000
<TOTAL-LIABILITY-AND-EQUITY> 2,396,426
<SALES> 468,944
<TOTAL-REVENUES> 468,944
<CGS> 343,327
<TOTAL-COSTS> 343,327
<OTHER-EXPENSES> 621,539
<LOSS-PROVISION> 495,922
<INTEREST-EXPENSE> 19,921
<INCOME-PRETAX> (515,843)
<INCOME-TAX> 0
<INCOME-CONTINUING> (515,843)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (515,843)
<EPS-BASIC> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
