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, 2000
[ ] 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
Incorporation or Organization) Identification No.)
46 Old Flat River Road, Coventry, Rhode Island 02816
(Address of Principal Executive Offices)
(401) 397-6800
(Issuers 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, 2,984,178 shares outstanding at
November 1, 2000.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
<PAGE>
JD AMERICAN WORKWEAR, INC.
INDEX TO FORM 10-QSB
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of August 31, 2000 3
Consolidated Statements of Operations for the
three months ended August 31, 2000 and August 31, 1999 5
Consolidated Statements of Operations for the
six months ended August 31, 2000 and August 31, 1999 6
Consolidated Statements of Cash Flows for the
six months ended August 31, 2000 and August 31, 1999 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submissions of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JD AMERICAN WORKWEAR, INC.
BALANCE SHEET
(Unaudited)
AUGUST 31, 2000
---------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,833
Accounts receivable, net of allowance $10,000 388,380
Inventory 535,324
Real property for resale 240,000
Equipment for resale 428,000
Short term loans receivable 89,406
Other current assets 78,404
----------
Total current assets 1,770,347
Property and equipment, net 4,929,312
Intangible assets, net 161,113
Inventory, long-term 740,675
----------
TOTAL ASSETS $7,601,447
==========
The accompanying notes are an integral part of these
Consolidated Financial Statements.
3
<PAGE>
JD AMERICAN WORKWEAR, INC.
BALANCE SHEET -- CONTINUED
(Unaudited)
<TABLE>
<CAPTION>
AUGUST 31, 2000
---------------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt $ 381,821
Accounts payable 504,195
Accrued expenses 89,704
Accrued payroll 227,212
Accrued interest 81,411
Short-term loans 147,218
------------
Total current liabilities 1,431,561
Long-term debt, net of current portion 2,014,386
Mandatory redeemable preferred stock, Series B, cumulative and
convertible, authorized 3,950 shares, $.001 par value, 2,993 shares
issued and outstanding, redemption amount $3,255,194 2,149,879
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, total authorized 1,000,000 shares:
Series A, cumulative and convertible, $.001 par value,
112 shares issued and outstanding, liquidating preference $361,400 --
Series C, cumulative and convertible, $.001 par value,
11,300 shares issued and outstanding, liquidating preference $9,800,000 11
Common stock, $.002 par value, authorized 7,500,000 shares,
2,984,178 issued and outstanding 5,957
Additional paid-in capital 11,005,899
Stock receivable (336,450)
Accumulated deficit (8,669,796)
------------
Total Stockholders' equity (deficit) 2,005,621
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 7,601,447
============
</TABLE>
The accompanying notes are an integral part of these
Consolidated Financial Statements.
4
<PAGE>
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
-------------------------------------
AUGUST 31, 2000 AUGUST 31, 1999
--------------- ---------------
<S> <C> <C>
Net sales $ 645,662 $ 385,105
Cost of goods sold 240,783 264,691
----------- -----------
Gross profit 404,879 120,414
Selling, general and administrative expenses:
Payroll and payroll taxes 150,085 107,405
Consulting expenses 104,654 102,130
Professional fees 45,218 60,082
Other 149,774 68,795
----------- -----------
Total selling, general and administrative expenses 449,731 338,412
----------- -----------
Loss from operations (44,852) (217,998)
Depreciation and amortization (66,755) (14,032)
Interest expense (55,265) (17,070)
----------- -----------
(166,872) (249,100)
Less: profit (loss) on purchased segment prior to date of acquisition (3,223)
----------- -----------
Net loss (166,872) (245,877)
Accretion of discount and dividends on mandatory
redeemable preferred stock (99,772) (132,014)
----------- -----------
Net loss to common stockholders $ (266,644) $ (377,891)
=========== ===========
Net loss per common shareholders, basic and diluted $ (.09) $ (.16)
=========== ===========
Weighted average number of common shares outstanding 2,899,000 2,420,019
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
Consolidated Financial Statements.
5
<PAGE>
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
-------------------------------------
AUGUST 31, 2000 AUGUST 31, 1999
--------------- ---------------
<S> <C> <C>
Net sales $ 736,707 $ 562,820
Cost of goods sold 264,086 369,549
----------- -----------
Gross profit 472,621 193,271
Selling, general and administrative expenses:
Payroll and payroll taxes 296,572 304,504
Consulting expenses 162,259 146,143
Professional fees 57,826 46,349
Other 207,421 167,505
----------- -----------
Total selling, general and administrative expenses 724,078 664,501
Loss from operations (251,457) (471,230)
Depreciation and amortization expense (89,296) (14,032)
Interest expense (68,687) (19,921)
----------- -----------
(409,440) (505,183)
Less: Profit (loss) on purchased segment prior to date of acquisition (3,038) 10,660
----------- -----------
Net loss (406,402) (515,843)
Accretion of discount and dividends on mandatory
redeemable preferred shares (243,575) (261,495)
----------- -----------
Net loss per common shareholder $ (649,977) $ (777,338)
=========== ===========
Net loss per common share, basic and diluted $ (.22) $ (.33)
=========== ===========
Weighted average number of common shares outstanding 2,899,000 2,354,663
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
Consolidated Financial Statements.
6
<PAGE>
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
-----------------------------------
AUGUST 31, 2000 AUGUST 31, 1999
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net loss $(409,440) $(505,183)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 89,296 14,032
Securities issued for services rendered 165,698 40,000
Changes in operating assets and liabilities:
Accounts receivable (55,152) 36,498
Notes receivable, stockholder 2,635 (4,006)
Inventory (41,067) 119,457
Other assets (78,254) (24,345)
Accounts payable 77,165 (11,559)
Accrued expenses 9,840
Accrued payroll 150,000
Accrued interest 16,301
--------- ---------
Net cash used in operating activities (72,978) (335,106)
--------- ---------
Cash flows from investing activities
Capital expenditures -- --
--------- ---------
Net cash provided by investing activities -- --
--------- ---------
Cash flows from financing activities
Advances on notes payable and long-term debt 65,603 139,627
Repayments on notes payable and long-term debt (21,315) (49,857)
Exercise of stock options and warrants 28,000 85,500
--------- ---------
Net cash provided by financing activities 72,288 175,270
--------- ---------
Net increase decrease in cash (690) (159,836)
Cash and cash equivalents - beginning of period 11,523 225,437
--------- ---------
Cash and cash equivalents - end of period $ 10,833 $ 65,601
========= =========
</TABLE>
The accompanying notes are an integral part of these
Consolidated Financial Statements.
7
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
August 31, 2000
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 marketing industrial workwear
products, providing machining and fabrication of parts used in industry,
parts sales and service for heavy construction equipment, and paving and
concrete installation.
NOTE 2: GOING CONCERN
The Company has incurred substantial operating losses since inception.
During the year ended February 29, 2000, the Company experienced a
significant loss of sales and major customers, in part, due to its
failure to meet obligations related to the marketing of its products.
Additionally, the Company has been unable to meet obligations to its
creditors as they have become due. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. The
ability of the Company to continue as a going concern is dependent on
its ability to reverse negative operating trends, raise additional
capital and obtain debt financing.
Management has revised its approach to marketing its patented workwear
products to include an emphasis on sales using the Internet, the
liquidation of overstocked inventory and future sales of product
licenses. Management believes that its new approach will reduce costs
and improve profitability in its workwear sales. The Company has also
expanded into other lines of business through acquisitions of, and
contracts with, other companies in exchange for the Company's stock.
Management believes that these acquisitions and agreements will provide
an increase in revenues that will attract additional equity investment
and assets that will serve as collateral for debt financing. However,
there can be no assurance that the Company will be able to raise
capital, obtain debt financing or improve operating results sufficiently
to continue as a going concern.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. These financial statements
do not include any adjustments relating to the recoverability and
classification of recorded assets or the amounts and classification of
liabilities that might be necessary if the Company is unable to continue
as a going concern.
NOTE 3: BASIS OF PRESENTATION
The interim financial statements are prepared in pursuant to the rules
and regulations of the Securities and Exchange Commission. 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 29, 2000. 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, 2001.
8
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
August 31, 2000
NOTE 4: ACQUISITIONS
In June 2000, the Company completed the acquisition of Patina Corp. and
its subsidiary, International Machine and Welding, by acquiring all the
outstanding capital stock of Patina Corp. for approximately $4,500,000.
The acquisition was funded by 9,800 shares of Series C 6% Convertible
Preferred Stock.
In June 2000, the Company also acquired Rhode Island Truck and Equipment
Corp. for 200,000 shares of the Company's common stock, in a transaction
valued at approximately $200,000.
The foregoing acquisitions have been recorded under the purchase method
of accounting and, accordingly, the results of the acquired businesses
are included in the consolidated financial statements since the date of
acquisition. The allocations of the purchase prices are subject to
adjustment when the final valuation information is determined.
The following unaudited pro forma summary presents the consolidated
results of operation as if the acquisition of Patina Corp. and Rhode
Island Truck and Equipment Corp. had occurred on March 1, 1999 after
giving effect to certain adjustments. The pro forma financial
information does not purport to be indicative of the results of
operations that would have occurred had the transaction taken place at
the beginning of the periods presented or of future results of
operations.
SIX MONTHS ENDED AUGUST 31,
----------------------------
2000 1999
---------- ----------
Revenue $ 736,707 $ 562,820
Loss from continuing operations (653,015) (724,706)
Net loss (653,015) (724,706)
Basic loss per share $ (.23) $ (.31)
NOTE 5: SEGMENT AND RELATED INFORMATION
The Company's reportable segments are product marketing, manufacturing
and construction management.
PRODUCT MARKETING offers the sale of all JD American Workwear, Inc.
manufactured and distributed products including JD Safety Work Pants, JD
Safety Work Jeans and its five pocket blue jean line.
MANUFACTURING offers the production, maintenance and repair of certain
heavy industrial parts and equipment, and the repair and sale of parts
and the service for their installation. International Machine and
Welding, Inc. began operations on June 1, 2000.
CONSTRUCTION MANAGEMENT offers installation and repair of concrete
structures and commercial and residential paving. On a limited basis
this sector also sells commercial vehicles and heavy equipment and
supplies. The operating company in this segment is Rhode Island Truck
and Equipment Corp.
9
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
August 31, 2000
NOTE 5: SEGMENT AND RELATED INFORMATION (Continued)
The accounting policies of the reportable segments are the same as those
described in Note 1 to the Company's financial statements and related
notes contained in the Company's Annual Report on Form 10-KSB. The
Company evaluates the performance of its operating segments based upon
income before taxes and non-recurring charges such as beneficial
conversion features and extraordinary items.
Segment information for the six months ended August 31, 2000 and 1999
was as follows:
For six months ended August 31, 2000:
PRODUCT CONSTRUCTION
MARKETING MANUFACTURING MANAGEMENT
--------- ------------- ----------
Revenue $ 45,748 $ 543,581 $147,378
Income (loss) from operations (272,863) 103,991 1,796
Depreciation and amortization 25,360 44,213 19,723
Total assets 1,281,186 6,005,818 314,443
For six months ended August 31, 1999:
PRODUCT CONSTRUCTION
MARKETING MANUFACTURING MANAGEMENT
--------- ------------- ----------
Revenue $ 468,944 $ $ 93,876
Income (loss) from operations (481,890) 10,660
Depreciation and amortization 14,032 0
Total assets 2,396,426 280,903
Reconciliation of consolidated amounts:
FOR THE SIX MONTHS
ENDED AUGUST 31,
--------------------------
2000 1999
---------- ----------
Revenues
Total revenues reportable segments $ 736,707 $ 562,820
Other revenues
Total revenues from operations $ 736,707 $ 562,820
Income (loss) from continuing operations
Segments $ (162,172) $ (292,870)
Unallocated amounts (463,660) (453,987)
Interest expense (28,075) (19,921)
Interest income 892
Net loss per common shareholder $ (653,015) $ (766,678)
10
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
August 31, 2000
NOTE 5: SEGMENT AND RELATED INFORMATION (Continued)
Reconciliation of consolidated amounts:
FOR THE SIX MONTHS
ENDED AUGUST 31,
--------------------------
2000 1999
---------- ----------
Assets
Total assets for reportable segments $7,523,007 $2,402,823
Other assets 78,440 274,506
Total assets $7,601,447 $2,677,329
NOTE 6: SUBSEQUENT EVENTS
On October 23, 2000, the Company and Union Labor Life Insurance Company,
"ULLICO', reached an agreement to amend the Stock Purchase Agreement and
the Certificate of Designation for the Series B 12% Cumulative Preferred
Stock. This agreement will allow the Company to reduce the dividend from
12% to 6% annually and to extend the payment in kind dividend payment
method through the payment due May 31, 2004. The payment in kind method
is at the Company's option if less than 50% of the Series C 6% Preferred
Stock is outstanding. ULLICO has agreed
ULLICO further agreed to relinquish its mandatory conversion rights and
certain other restrictive covenants related to financing and
acquisitions as well as its rights to warrants if dividends were paid in
kind.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of
section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors set
forth in this report, the Company's Annual Report on Form 10-KSB and other
reports and documents that the Company files with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS
Since its inception, the Company has been involved in the design and
development of its products, the development of its relationships with its
suppliers and manufacturing contractors and the marketing of its products
through various distribution channels. First commercial shipments of JD Safety
Work Jeans were made in September 1992. First commercial shipments of an early
version of JD Safety Uniform Pants were made during 1994. Following the
Company's initial public offering in January 1995, the Company significantly
increased its expenditures for inventory, salaries, advertising and marketing
expenditures and other costs to increase its level of production. In March 1995,
relatively small quantities of a later version of JD Safety Uniform Pants were
sold, and this version became the working prototype for the JD Safety Uniform
Pants currently distributed by the Company.
The acquisition of Patina Corp. and its subsidiary International Machine
and Welding, Inc. provides a full service welding and machine shop with
expertise in metal fabrication, various types of welding, machining and boring
operations. The subsidiary is particularly strong in the re-manufacturing of
large, complex shaped heavy components, pumps, valves, bearings, shafts etc. The
company's boring mill is one of the largest in the Southeast allowing the
company to machine items up to 20 feet in diameter and 55 feet in length.
Other operations housed at International Machine and Welding include an
independent full service repair facility capable of repairing most heavy
construction equipment, including rebuilding engines, transmissions, torque
converters, undercarriage and tracks for crawler tractors. The Company has a
fleet of field service trucks capable of doing most repairs in the field.
Coupled with these operations is a direct to the consumer parts sales operation
for heavy construction equipment.
Rhode Island Truck and Equipment Corp. has historically provided
commercial truck, heavy equipment and supply sales in Rhode Island. In January
2000, the operations were expanded to include paving and concrete work that had
been done individually by family members associated with the Company. The
current expansion, in the Northeast of building trades, road construction and
repair, and a booming economy that allows individuals to make repairs or
improvements to their properties made this expansion feasible.
12
<PAGE>
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 31,
2000 AND 1999.
Net sales for the three months ended August 31, 2000 increased 67.7% to
$645,662 from $385,105 for the three months ended August 31, 1999. The increase
is directly attributable to the addition of the manufacturing segment's revenues
of $543,581 that began operations June 1, 2000. Cost of goods sold for the three
months ended August 31, 2000 was $240,783 compared to $264,691 for the three
months ended August 31, 1999. Gross margin for the three months ended August 31,
2000 was $404,879 compared to $120,414 for the three months ended August 31,
1999. The gross profit margin percentage increased to 62.7% for the three months
ending August 31, 2000 from a 31.3% gross profit margin percentage for the three
months ended August 31, 1999. The increase is due to the higher gross profit
margins of the manufacturing segment.
Operating expenses increased to $449,731 for the three months ended
August 31, 2000 from $338,412 for the three months ended August 31, 1999 as a
result of the addition of the manufacturing segment.
The net loss for the three months ended August 31, 2000 was $266,644
($.09 per common share) compared to a net loss of $377,891 ($.16 per common
share) for the three months ended August 31, 1999. The increase is directly
attributable to a low sales activity in the product marketing segment for the
three months ended August 31, 2000 as compared to the three months ended August
31, 1999.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED AUGUST 31, 2000
AND 1999.
Net sales for the six months ended August 31, 2000 increased 30.9% to
$736,707 from $562,820 for the six months ended August 31, 1999. The increase is
directly attributable to the inclusion of manufacturing division revenues of
$543,581 that did not exist in the six months ending August 31, 1999. Cost of
goods sold for the six months ended August 31, 2000 was $264,086 compared to
$369,549 for the six months ended August 31, 1999. Gross margin for the six
months ended August 31, 2000 was $472,621 compared to $193,271 for the six
months ended August 31, 1999. The gross profit margin increased to 64.2% for the
six months ending August 31, 2000 an increase of 87.2% over the 34.3% gross
profit margin for the six months ended August 31, 1999. The increase in the
gross profit margin is primarily due to the increase in the gross profit margin
of paving over truck and supply sales gross profit margin and the 62.4% gross
profit margin in the newly included manufacturing sector.
Operating expenses increased to $724,078 for the six months ended August
31, 2000 from $664,501 for the six months ended August 31, 1999. The increase is
due to the addition of the manufacturing segment for the six months ended August
31, 2000 as compared to the six months ended August 31, 1999.
The net loss for the six months ended August 31, 2000 was $649,977 ($.22
per common share) compared to a net loss of $777,338 ($.33 per common share) for
the six months ended August 31, 1999. The decrease is directly attributable to
the inclusion of the profits from the new segments for the six months ended
August 31, 2000 as compared to the six months ended August 31, 1999.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $72,978 for the six months
ended August 31, 2000 compared to $335,106 for the six months ended August 31,
1999. Accounts receivable increased $55,152 from February 29, 2000 to August 31,
2000 as a result of increases in the construction management segment and the
addition of the manufacturing segment. Inventory increased with the addition of
the manufacturing segment during the first six months of fiscal 2001.
Cash flow from operations and short-term loans provided the working
capital needs and principal payments on long-term debt through the six months
ended August 31, 2000. However, the Company requires additional financing to
provide for working capital needs and principal payments on long-term debt
during the year ended February 28, 2001 and to meet its business strategy of
achieving significant expansion in revenue for all divisions and to expand
through strategic acquisitions and alliances. The Company has been actively
seeking additional debt and/or equity financing; however, there can be no
assurance that financing will be available to the Company on acceptable terms,
if at all.
Through August 31, 2000, the Company has experienced substantial losses,
and at August 31, 2000 had an accumulated deficit of approximately $8,669,796.
The Company has not been able to pay all of its obligations as they have become
due, and expects to incur much smaller additional losses before it achieves
profitable operations. The receipt of funding from any current commitments will
allow the Company to continue its restructuring plan.
RESULTS OF OPERATIONS - PRODUCT MARKETING
Product marketing revenue decreased by 90.2%, or $423,196 to $45,748 for
the six months ended August 31, 2000 from $468,944 due to the lack of capital to
adequately market the product line and the intention to change its direction.
Cost of goods sold decreased by 95.4%, or $328,361 to $14,966 for the six months
ended August 31, 2000 due to the decreased sales of our merchandise. General and
administrative expenses declined by 33.0%, or $136,830 to $278,285 for the six
months ended August 31, 2000. This decrease is directly related to the reduction
of salaries and benefits, travel, freight and delivery, and miscellaneous
expenses that comprise $108,651 of the reduction in the six months ended August
31, 2000 compared to the six month period ending August 31, 1999.
RESULTS OF OPERATIONS - MANUFACTURING
Manufacturing revenues were $173,217 from machining operations, $261,152
from the parts sales operation, and $109,212 from the heavy equipment service
operations for the six months ended August 31, 2000. Cost of goods sold were
$204,595 from the division for the six months ended August 31, 2000. General and
administrative expenses were $150,729 for the six months ended August 31, 2000.
There are no comparable periods in 1999 as the operation did not exist.
RESULTS OF OPERATIONS - CONSTRUCTION MANAGEMENT
Construction management revenue increased by 57%, or $53,502 to $147,378
for the six months ended August 31, 2000 from $93,876 due to the reduced sales
of commercial vehicles and the closure of the truck lot in Rhode Island. The
division changed its focus to providing paving and concrete services that
produced revenues of $142,267 during this period. Cost of goods sold increased
by 69.8%, or $18,303 to $44,525 for the six months ended August 31, 2000 due to
the change in direction of the operations and the differential in profit margins
between the construction activities and the sale of used commercial vehicles.
General and administrative expenses increased by 40.2%, or $22,889 to $79,883
for the six months ended August 31, 2000. The increase is directly related to
the addition of payroll, the reduction of overhead and staff needed to operate
the truck lot in Rhode Island, and the increase in insurance related to
workmen's compensation, liability and bonding.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
N/A
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In September 2000, 25,000 common shares were issued to International
Commerce and Finance, Inc, to secure the option agreement signed in June 2000.
These shares were issued with reliance on an exemption from the registration
requirements provided for in Section 4(2) of the Securities Act of 1933.
In June 2000, 9,800 shares of Series C 6% convertible Preferred Stock
were issued in conjunction with the acquisition of Patina Corporation. These
shares were issued with reliance on an exemption from the registration
requirements provided for in Section 4(2) of the Securities Act of 1933. These
shares were issued ratably to the holders of record of Patina Corporation on
June 1, 2000.
The Series C 6% Convertible Preferred Shares give the holder the right
to vote 363.52 common shares, on as converted basis. Further, the shares will
pay a semi annual dividend of 6% in cash or in kind and shall have a stated and
liquidation value of $1,000 per share. Each share of this class of preferred
shares shall convert at the rate of 1,000 common shares for each preferred share
at the election of the holder, when available.
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
27 Financial Data Schedule
On July 19, 2000, the Company notified the Securities and
Exchange Commission of the termination of Bederson and Company L.L.C. as
its auditors and the hiring Bella, Hermida, Gilman, Hancock and Mueller.
as the new auditing firm. On July 28, 2000 and August 14, 2000, the
Company amended the Form 8-K as originally filed to change the verbiage
at Bederson's request and to include the required letter from Bederson
as required by the Securities and Exchange Commission. The disagreements
that led to the dismissal are more fully disclosed in Form 10-KSB for
the period ended February 29, 2000, as filed with the Securities and
Exchange Commission.
15
<PAGE>
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)
/s/ Norman J. Birmingham
----------------------------
Norman J. Birmingham, Chief Financial Officer
Date: November 21, 2000 (Principal Accounting Officer)
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