UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
8-K/A
Amendment Two
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 13, 2000
JD AMERICAN WORKWEAR, INC.
(Exact name of registrant as specified in its Charter)
DELAWARE 33-98682 05-0460102
(State or other jurisdiction (Commission File No.) (IRS Employer ID Number)
of incorporation)
46 OLD FLAT RIVER RD., COVENTRY, RHODE ISLAND 02816
(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, which included the
lack of attention to the general ledger caused by a delay in replacing the
Chief Financial Officer and the treatment of certain contingent or
consignment sales issues; audit documentation requirements; and the
schedule for completion of the current fiscal year audit. 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 have not been resolved. The accounting policy related to
the presentation of consignment or contingent sales have been resolved with
Bederson and Company LLP. A formal presentation regarding the accounting
errors 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 auditors 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 $1.76 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. The presentation of the debt will be reduced
by netting the debt discount created by the warrant value. This is the
amount that will be accreted until the mandatory redemption. Further, that
a charge of $80,709 for fiscal 1999, should have been taken to amortize the
debt discount created to conform with GAAP. Additionally, an accrual of
$193,151 for the dividend 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 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.
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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.
Date: August 11, 2000 By: /s/ David N. Debaene
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David N. DeBaene
Chief Executive Officer and President
