UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
8-K
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 the
documentation required, the timing 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 July14, 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.
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 immediately
upon conclusion of the current periods audit.
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 in fact 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. The
Company 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 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 believes that the
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.
(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. immediately.
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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 18, 2000 By: /s/ David N. Debaene
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David N. DeBaene
Chief Executive Officer and President
