U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended May 31, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
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, 2,984,178 shares outstanding at
October 11, 2000.
Transitional Small Business Disclosure Format (check one)
Yes [ ] No [X]
<PAGE>
JD AMERICAN WORKWEAR, INC.
INDEX TO FORM 10-QSB/A
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of May 31, 2000 3
Statements of Operations for the Three Months
Ended May 31, 2000 and May 31, 1999 5
Statements of Cash Flows for the Three Months
Ended May 31, 2000 and May 31, 1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART 11. 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
2
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JD AMERICAN WORKWEAR, INC.
BALANCE SHEET
(Unaudited)
May 31, 2000
------------
ASSETS
Current assets:
Cash and cash equivalents $ 0
Accounts receivable, net of allowance $10,000 16,638
Inventory 174,466
----------
Total current assets 191,104
Property and equipment, net 202,821
Intangible assets, net 167,466
Inventory, long-term 744,774
Other assets, net 30,642
----------
Total assets $1,336,807
==========
See accompanying notes to financial statements
3
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JD AMERICAN WORKWEAR, INC.
BALANCE SHEET (CONTINUED)
(Unaudited)
May 31, 2000
------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $ 244,228
Accounts payable 329,333
Accrued expenses 243,104
Accrued interest 70,251
Short-term loans 122,500
-----------
Total current liabilities 1,009,416
-----------
Long-term debt, net of current portion 181,047
-----------
Mandatory redeemable preferred stock, Series B,
cumulative and convertible, authorized 3,950 shares,
$.001 par value, 2,993 shares issued and outstanding,
redemption amount $3,209,240 2,050,107
-----------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, Series A, cumulative and convertible,
authorized 1,000,000 shares, $.001 par value, 116 shares
issued and outstanding, liquidating preference $369,750
Common stock, authorized 7,500,000 shares, $.002 par value,
2,977,802 shares issued and outstanding 5,956
Additional paid-in capital 7,170,680
Stock receivable (577,869)
Accumulated deficit (8,502,530)
-----------
Total stockholders' equity (deficit) (1,903,763)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,336,807
===========
See accompanying notes to financial statements
4
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JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
-------------------------------
May 31, 2000 May 31, 1999*
------------ -------------
<S> <C> <C>
Net sales $ 26,873 $ 105,465
Cost of goods sold 7,025 80,422
----------- -----------
Gross profit 19,848 25,043
----------- -----------
Selling, general and administrative expenses:
Payroll and payroll taxes 75,000 151,632
Selling expenses -- 10,666
Consulting expenses 89,359 44,014
Contract labor 30,783 7,317
Depreciation and amortization 12,681 9,351
Employee benefits -- 14,805
Freight and delivery 4,082 29,560
Professional fees 9,272 11,781
Rent 4,820 1,370
Supplies 639 3,717
Telephone 2,763 4,743
Travel and entertainment 7,180 14,755
Other 10,251 18,836
----------- -----------
Total selling, general and administrative expenses 246,830 322,547
----------- -----------
Loss from operations (226,982) (297,504)
Interest expense (12,548) (2,820)
----------- -----------
Net loss (239,530) (300,324)
Accretion of discount and dividends on mandatory
redeemable preferred stock (143,803) (132,483)
----------- -----------
Net loss to common shareholders $ (383,333) $ (432,807)
=========== ===========
Net loss per common share, basic and diluted $ (.14) $ (.19)
=========== ===========
Weighted average number of common shares outstanding 2,815,910 2,254,773
=========== ===========
</TABLE>
* As Restated
See accompanying notes to financial statements
5
<PAGE>
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
-------------------------------
May 31, 2000 May 31, 1999*
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(239,530) $(300,324)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 12,681 9,351
Change in operating assets and liabilities:
Accounts receivable 32,218 283,675
Inventories 6,604 (134,055)
Prepaid expenses 78,879 --
Other assets (25,622) 60,933
Accounts payable and accrued expenses 62,841 (57,148)
--------- ---------
Net cash used in operating activities (71,929) (137,568)
--------- ---------
Cash flows from investing activities:
Capital expenditures -- (4,074)
--------- ---------
Net cash used in investing activities -- (4,074)
--------- ---------
Cash flows from financing activities:
Proceeds from notes payable and long-term debt 38,645 --
Repayments on notes payable and long-term debt (6,239) (13,170)
Exercise of warrants and stock options 28,000 --
--------- ---------
Net cash provided by (used in) financing activities 60,406 (13,170)
--------- ---------
Net decrease in cash (11,523) (154,812)
Cash and cash equivalents, beginning of period 11,523 174,472
--------- ---------
Cash and cash equivalents, end of period $ 0 $ 19,660
========= =========
</TABLE>
* As Restated
See accompanying notes to financial statements
6
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
May 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 business of designing,
manufacturing, marketing and selling commercial and industrial workwear
products.
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
begun expansion 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.
7
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
May 31, 2000
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.
NOTE 4: RESTATEMENT OF PRIOR PERIOD
The income statement presented for the three month period ended May 31,
1999 has been restated to record accretion and dividends in the amount
of $132,483 ($.06 net loss per common share) in accordance with
generally accepted accounting principles and the Securities and Exchange
Commission's guidelines for accounting for mandatory redeemable
preferred stock.
NOTE 5: SUBSEQUENT EVENTS
Acquisitions
The Company completed the acquisition of Rhode Island Truck and
Equipment Corporation on June 10, 2000. The stock purchase agreement
requires JD American Workwear, Inc. to pay one share of common stock for
each dollar of appraised value of the assets. The value of the assets is
estimated at approximately $145,000, pending the results of the
appraisal. Rhode Island Truck and Equipment Corporation sells commercial
trucks, construction equipment and tools, and provides hauling and
paving recycling services.
On June 12, 2000, the Company completed the acquisition of Patina
Corporation and its subsidiary International Machine and Welding. Patina
Corporation is a holding company. International Machine and Welding
operates a large machine shop and sells heavy equipment and parts. In
connection with the acquisition, the Company has authorized and issued
11,300 shares of 6% Series C Convertible Preferred Stock with a par
value of $1,000 per share. These acquisitions will be accounted for
under the purchase method, whereby the purchase price will be allocated
to the underlying assets and liabilities based on their estimated fair
values.
8
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
May 31, 2000
NOTE 5: SUBSEQUENT EVENTS
Acquisitions (Continued)
On June 1, 2000, the Company signed an option agreement with
International Commerce and Finance, Inc. to have the right of first
refusal to acquire any and all projects that are currently under
contract or may be conceived, acquired or partnered for two years for
the sum of 25,000 common shares.
Tax Sale and Foreclosure of Property
On June 29, 2000, the building housing the headquarters of the Company
at 46 Old Flat River Road, Coventry, Rhode Island was sold to the
current mortgage holder in a tax sale. The Company may redeem the
building by paying approximately $4,200 for the taxes and required
interest prior to six months from the date of the sale. In August 2000,
the Company was notified of the intention of the mortgage holder on the
corporate headquarters to begin foreclosure proceedings unless the
arrearage of approximately $26,000 is paid.
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 manufactured by the Company.
9
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The business has been negatively impacted by the lack of marketing capital,
which has severally limited new customer generation and therefore reduced our
sales levels dramatically. To rectify this problem the Company is negotiating
with various companies to license our patents and pay the Company a royalty for
each pair shipped. The Company intends to market its products to catalogs,
wholesalers and to consumers via mailings of promotional material and via the
Company's internet site with the product being shipped from the licensees
manufacturing facilities. The Company has substantial inventory on hand at May
31, 2000 and intends to market this inventory to wholesalers and discount
outlets to reduce the overstock.
For the reasons stated above, the Company believes that its results of
operations for the three months ended May 31, 2000 and 1999 are not necessarily
indicative of the Company's future results of operations.
THREE MONTHS ENDED MAY 31, 2000 COMPARED TO THREE MONTHS ENDED MAY 31, 1999.
Net sales for the three months ended May 31, 2000 decreased approximately
74.3% to $26,873 from $105,465 for the three months ended May 31, 1999. The
decrease is primarily attributable to a decrease in unit volume resulting from
reduced purchases by its major customers. Cost of goods sold for the three
months ended May 31, 2000 was $7,025 compared to $80,422, a decrease of 91.2%,
for the three months ended May 31, 1999. Gross margin for the three months ended
May 31, 2000 was $19,848 compared to $25,043 for the three months ended May 31,
1999. The decrease in gross profit of 20.7% is primarily due to the reduction in
unit sales. The gross profit margin was 68% for the three months ended May 31,
2000 and 23% for the three months ended May 31, 1999.
Operating expenses decreased to $246,830 for the three months ended May 31,
2000 from $322,547 for the three months ended May 31, 1999. Cost cutting
measures were implemented resulting in an approximate decrease of $62,000 in
payroll costs and $10,000 each, in travel and selling related costs.
The net loss to common shareholders for the three months ended May 31, 2000
was $383,333 ($.14 per common share) compared to a net loss to common
shareholders of $432,807 ($.19 per common share), as restated, for the three
months ended May 31, 1999. The decrease is directly attributable to the
reduction of operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $71,929 for the three months
ended May 31, 2000 compared to net cash used in operating activities of $137,568
for the three months ended May 31, 1999. Accounts receivable decreased
approximately 65.9% to $16,638 from February 29, 2000 to May 31, 2000 as a
result of reduced sales. Inventory decreased approximately 1% during the first
three months of fiscal 2001.
The Company made no capital expenditures for the three months ended May 31,
2000, compared to $4,074 for the three months ended May 31, 1999.
Cash flow from operations, short-term loans and cash from the exercise of
warrants and options provided the working capital needs and principal payments
on long-term debt through the three months ended May 31, 2000. The Company's
inability to timely pay vendors and service providers as a result of a cash flow
10
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shortage has adversely affected the Company's operations. The Company requires
additional financing to provide for working capital needs and principle payments
on debt. The Company has experienced substantial losses since inception, and at
May 31, 2000 had an accumulated deficit of $8,502,530. The Company has not been
able to pay all of its obligations as they have become due, and expects to incur
additional losses before it achieves profitable operations. The Company has been
actively seeking debt and equity financing; however, there can be no assurance
that financing will be available to the Company on acceptable terms, 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
The mortgage note on the company offices located at 46 Old Flat River Rd.,
Coventry, RI is in default. The last payment was made in May, 2000 for the
period of February 1, 2000 plus the accrued interest through May, 2000. As of
the date of this report the principal payments are six months in arrears
totaling $15,686.47 with interest accrued and due on this note of $5,704.78
through November 1, 2000.
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
11
<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.
Date: November 7, 2000 By: /s/ David N. DeBaene
------------------------------
David N. DeBaene, President
(Principal Executive Officer)
/s/ Norman J. Birmingham
------------------------------
Norman J. Birmingham
(Chief Financial Officer)
12
