UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
July 13, 2000
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Date of Report
JD AMERICAN WORKWEAR, INC.
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(Exact name of registrant as specified in its Charter)
Delaware 33-98682 05-0460102
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(State or Other Jurisdiction (Commission File No.) (IRS Employer ID
of Incorporation) Number)
46 Old Flat River Rd., Coventry, Rhode Island 02816
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (401) 397-6800
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Item 4. Changes in Registrant's Certifying Accountant.
(a) The auditing firm of Bederson and Company LLP was informed by the
management of JD American Workwear, Inc. on July 13, 2000 that they
were dismissed effective immediately. This action was taken by the
Board of Directors after disagreements over internal control issues
plus audit documentation requirements, the schedule for completion of
the current fiscal year audit and the current lack of independence of
the auditors that was raised by Bederson and Company LLP. On July 14,
2000 Bederson and Company LLP informed the Company that it was
withdrawing its report dated June 7, 1999 on the Company's February
28, 1999 financial statements because of the accounting errors for
fiscal 1999 and the current lack of independence. Subsequently
Bederson and Company LLP clarified the statement to say that they were
not currently in a position to reaudit and reissue its prior year
opinion because of the lack of independence.
The treatment of the accounting errors related to the presentation of
the Series B Preferred Stock and its detached warrant and accrued
interest, the lack of any presentation of a beneficial conversion
feature of the Series A Preferred Stock and the accounting policy and
accounting related to the presentation of consignment or contingent
sales for the period ending February 28, 1999 have not been resolved
with Bederson and Company LLP. A formal presentation will be made to
Bederson and Company LLP for their approval and the reissuance of
their opinion for the period upon conclusion of the fiscal 2000 audit
and resolution of the independence issue.
It is unknown at this time what the effects of the presentation of
Series B Preferred Stock should have been as no agreement between the
Company and the auditor has been reached. The Company raised the issue
on the presentation of the Series A and B Preferred with the auditors
after an exhaustive internal review of the rules regarding such
presentation and a pre-filing conference with Securities and Exchange
Commission staff prior to the issuance of the unaudited Form 10-KSB
filed June 13, 2000. The Company's current management believes that
the prior period should be adjusted to indicate a value of the
detached warrants to be $.75 per warrant not $4.00 as previously
reported and that this amount should be presented as additional paid
in capital not as a line item unto itself. The $2,500,000 received in
the transaction should be carried as debt and placed between the
liability and equity section of the balance sheet and presented with a
proper description because of the mandatory redemption provision
included in the transaction. Further, that a charge of $91,552 for
fiscal 1999, should have been taken to amortize the debt discount
created to conform with GAAP. Additionally, an accrual of $193,151 for
interest due should have been recorded in fiscal 1999. The beneficial
conversion feature of the Series A stock should have required a
one-time expense entry of $223,560 for fiscal 1999.
Bederson and Company LLP in response to a comment raised by the
Securities and Exchange Commission and based upon additional
information received during their fiscal 2000 audit, suggested that
the presentation of certain sales in fiscal 1999 should not have been
recorded as current period sales because of their consignment or
contingent nature. The Company's current management believes that the
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sales for fiscal 1999 should have been reduced by $272,697 and the
associated cost of goods reduced by $171,584 causing the reduction of
gross profit of $101,115 and increasing the loss for the year by the
same amount. The assets would have been increased by the cost of goods
sold amount being presented as consignment inventory. No other
disagreements are known at this time.
The Company is addressing the independence issue and will have a
resolution before filing the fiscal 2000 audited financial statements.
(b) the auditing firm of Bella, Hermida, Gilman, Hancock and Mueller, P.A.
has been engaged effective July 14, 2000 to audit the Fiscal 2000
accounting. They have not expressed any opinion to date on the
accuracy of the Company's positions as stated above. These items have
been discussed at length and will be the focus of attention between
Bederson and Company LLP and Bella, Hermida, Gilman, Hancock and
Mueller, P.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.
Date: July 28, 2000 By: /s/ David N. Debaene
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David N. DeBaene
Chief Executive Officer and President
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