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 November 30, 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 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, 7,854,178 shares outstanding at
January 10, 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 November 30, 2000 3
Consolidated Statements of Operations for the Three Months
ended November 30, 2000 and November 30, 1999 4
Consolidated Statements of Operations for the Nine Months
ended November 30, 2000 and November 30, 1999 5
Consolidated Statements of Cash Flows for the Nine Months
ended November 30, 2000 and November 30, 1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submissions of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JD AMERICAN WORKWEAR, INC.
BALANCE SHEET
(Unaudited)
November 30, 2000
-----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,106
Accounts receivable, net of allowance $10,000 478,216
Inventory 530,582
Real property for resale 240,000
Equipment for resale 385,500
Short term loans receivable 147,282
Other current assets 72,296
-----------
Total current assets $ 1,858,982
Property and equipment, net $ 4,916,845
Intangible assets, net 153,831
Inventory, long-term 740,675
-----------
TOTAL ASSETS $ 7,670,333
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt $ 378,921
Accounts payable 506,260
Accrued expenses 131,761
Accrued payroll 302,212
Accrued interest 109,295
Short-term loans 153,072
-----------
Total current liabilities 1,581,521
Long-term debt, net of current portion 1,996,177
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, total authorized 1,000,000 shares:
Series A, cumulative and convertible, $.001 par value,
114 shares issued and outstanding, liquidating
preference $367,850 --
Series B, cumulative and convertible, authorized 3,950 shares,
$.001 par value, 3,303 shares issued and outstanding,
liquidating preference $3,303,301 3
Series C, cumulative and convertible, $.001 par value,
4,800 shares issued and outstanding, liquidating
preference $4,800,000 5
Common stock, $.002 par value, authorized 30,000,000 shares,
7,854,178 issued and outstanding 15,708
Additional paid-in capital 11,415,556
Stock receivable (256,795)
Accumulated deficit (7,081,842)
-----------
Total Stockholders' equity (deficit) 4,092,635
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 7,670,333
===========
The accompanying notes are an integral part of these
Consolidated Financial Statements.
3
<PAGE>
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
---------------------------------------
November 30, 2000 November 30, 1999
----------------- -----------------
<S> <C> <C>
Net sales 794,455 99,959
Cost of goods sold 383,411 155,569
----------- -----------
Gross profit 411,044 (55,610)
Selling, general and administrative expenses:
Payroll and payroll taxes 192,638 71,441
Consulting expenses 90,179 82,731
Professional fees 260 23,419
Depreciation and amortization 66,755 14,326
Other 170,230 93,530
----------- -----------
Total selling, general and administrative expenses 520,062 285,447
----------- -----------
Loss from operations (109,018) (341,057)
Interest expense (52,031) (28,586)
----------- -----------
(161,049) (369,643)
Less: profit (loss) on purchased segment prior to
date of acquisition (1,819)
----------- -----------
Net loss (161,049) (367,824)
Accretion of discount and dividends on mandatory
redeemable preferred shares (66,515) (132,014)
Gain on extinguishment of mandatory redeemable
preferred stock 1,815,519
----------- -----------
Net gain (loss) to common stockholders $ 1,587,955 $ (499,838)
=========== ===========
Net gain (loss) per common shareholders, basic and diluted $ .54 $ (.19)
=========== ===========
Weighted average number of common shares outstanding 2,945,393 2,569,427
=========== ===========
</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
---------------------------------------
November 30, 2000 November 30, 1999
----------------- -----------------
<S> <C> <C>
Net sales $ 1,531,162 $ 662,779
Cost of goods sold 671,118 525,118
----------- -----------
Gross profit 860,044 137,661
Selling, general and administrative expenses:
Payroll and payroll taxes 468,836 344,235
Consulting expenses 252,438 228,874
Professional fees 58,087 69,768
Depreciation and amortization 156,051 28,358
Other 398,022 292,745
----------- -----------
Total selling, general and administrative expenses 1,333,434 963,980
Loss from operations (473,390) (826,319)
Interest expense (120,719) (28,586)
----------- -----------
(594,109) (854,905)
Less: Profit (loss) on purchased segment prior to
date of acquisition (3,038) 8,841
----------- -----------
Net loss (591,071) (863,746)
Accretion of discount and dividends on mandatory
redeemable preferred shares (310,090) (393,509)
Gain on extinguishment of mandatory redeemable
preferred stock 1,815,519
----------- -----------
Net gain (loss) per common shareholder $ 914,358 $(1,257,255)
Net gain (loss) per common share, basic and diluted $ .31 $ (.53)
=========== ===========
Weighted average number of common shares outstanding 2,945,393 2,354,663
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
Consolidated Financial Statements.
5
<PAGE>
JD AMERICAN WORKWEAR, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
--------------------------------------
November 30, 2000 November 30, 1999
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(591,071) $(863,746)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 156,051 28,358
Securities issued for services rendered 255,877 40,000
Changes in operating assets and liabilities:
Accounts receivable (144,988) 399,898
Notes receivable, stockholder (55,152) (4,006)
Inventory (36,325) (229,015)
Other assets (76,652) 139,295
Accounts payable 116,536 98,679
Accrued expenses 51,897
Accrued payroll 225,000
Accrued interest 44,185 8,536
--------- ---------
Net cash used in operating activities (54,642) (382,001)
--------- ---------
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 (45,378) (70,238)
Exercise of stock options and warrants 28,000 148,000
--------- ---------
Net cash provided by financing activities 48,225 217,389
--------- ---------
Net increase decrease in cash (6,417) (164,612)
Cash and cash equivalents - beginning of period 11,523 225,436
--------- ---------
Cash and cash equivalents - end of period $ 5,106 $ 60,824
========= =========
</TABLE>
The accompanying notes are an integral part of these
Consolidated Financial Statements.
6
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
November 30, 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.
7
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
November 30, 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.
NINE MONTHS ENDED NOVEMBER 30,
------------------------------
2000 1999
---------- -----------
Revenue $1,531,162 $ 662,779
Operating gain (loss) 917,396 (1,248,414)
Net gain (loss) to common shareholder 914,358 (1,257,255)
Basic gain (loss) per share $ .31 $ (.53)
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.
8
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
November 30, 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 Nine months ended November 30, 2000 and 1999
was as follows:
For Nine months ended November 30, 2000:
PRODUCT CONSTRUCTION
MARKETING MANUFACTURING MANAGEMENT
--------- ------------- ----------
Revenue $ 132,111 $ 1,126,538 $272,513
Operating gain (loss) (317,687) 278,676 27,032
Depreciation and amortization (38,040) (88,426) (29,585)
Total assets 1,134,693 6,089,001 325,305
For Nine months ended November 30, 1999:
PRODUCT CONSTRUCTION
MARKETING MANUFACTURING MANAGEMENT
--------- ------------- ----------
Revenue $ 545,304 $ $117,475
Operating gain (loss) (514,160) 8,841
Depreciation and amortization (28,358) 0
Total assets 1,990,013 279,891
Reconciliation of consolidated amounts:
FOR THE NINE MONTHS
ENDED NOVEMBER 30,
----------------------------
2000 1999
---------- -----------
Revenues
Total revenues reportable segments $1,531,162 $ 662,779
Other revenues
Total revenues from operations $1,531,162 $ 662,779
Profit (loss) from operations
Segments $ (11,979) $ (505,319)
Depreciation and amortization (156,051) (28,358)
Unallocated amounts 1,203,107 (694,992)
Interest expense (120,719) (28,586)
Net gain (loss) per common shareholder $ 914,358 $(1,257,255)
9
<PAGE>
JD AMERICAN WORKWEAR, INC.
Notes to Financial Statements
(Unaudited)
November 30, 2000
NOTE 5: SEGMENT AND RELATED INFORMATION (Continued)
Reconciliation of consolidated amounts:
FOR THE NINE MONTHS
ENDED NOVEMBER 30,
----------------------------
2000 1999
---------- -----------
Assets
Total assets for reportable segments $7,548,999 $2,269,904
Other assets 121,334 242,490
Total assets $7,670,333 $2,512,394
NOTE 6: CAPITALIZATION
On November 28, 2000 the Board of Directors received a letter from
certain shareholders consenting to an action without a shareholder's
meeting, which required the Board of Directors to take immediate action
to increase the authorized number of common shares to 30,000,000 from
7,500,000. On December 15, 2000 at the annual shareholder's meeting
these items were affirmed.
NOTE 7: GAIN ON EXTINGUISHMENT OF MANDATORY REDEEMABLE PREFERRED STOCK
On October 23, 2000 an agreement was completed with the holder of the
Series B 12% Mandatory Redeemable Preferred Stock in which the holder
relinquished all mandatory conversion rights. This amendment allows the
Company to classify all the value of the preferred stock as equity. The
gain of $1,815,519 recorded is a direct correlation of the carrying
value subtracted from the fair market value of the underlying shares at
the date of the transaction.
NOTE 8: SUBSEQUENT EVENTS
On December 15, 2000 a meeting of the shareholders' was held that
included the election of a board of directors, the ratification of a
name change to American Commerce Solutions, Inc. and the affirmation of
the increase in the number of authorized common shares to 30,000,000 and
the increase the total authorized shares from 8,500,000 to 31,000,000.
Additionally, the increase in the number of authorized shares to
2,500,000 for utilization in the 1995 Employee Stock Option Plan was
approved. The acquisition of Patina Corporation and Rhode Island Truck
and Equipment Corp and the renegotiated terms of the Series B stock were
affirmed.
10
<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.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30,
2000 AND 1999.
Net sales for the three months ended November 30, 2000 increased 694.8% to
$794,455 from $99,959 for the three months ended November 30, 1999. The increase
is directly attributable to the addition of the manufacturing segment's revenues
of $582,957 and marginal increases in all other segments. Cost of goods sold for
the three months ended November 30, 2000 was $383,411 compared to $155,569 for
the three months ended November 30, 1999. Gross margin for the three months
ended November 30, 2000 was $411,044 compared to $(55,610) for the three months
ended November 30, 1999. The gross profit margin percentage increased to 51.7%
for the three months ending November 30, 2000 from a (55.6%) gross profit margin
percentage for the three months ended November 30, 1999. The increase is due to
the higher gross profit margins of the manufacturing and product marketing
segments.
11
<PAGE>
Operating expenses increased to $520,062 for the three months ended
November 30, 2000 from $285,447 for the three months ended November 30, 1999 as
a result of the addition of the manufacturing segment.
The net gain for the three months ended November 30, 2000 was $1,587,955
($.54 per common share) compared to a net loss of $499,838 ($.19 per common
share) for the three months ended November 30, 1999. The increase to
profitability is a result of increased sales from the manufacturing segment and
the gain of $1,815,519 realized on the extinguishment of the Series B 12%
Mandatory Convertible Preferred Stock and the issuance of Series B 6% Preferred
Stock in the three months ended November 30, 2000 as compared to the three
months ended November 30, 1999.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED NOVEMBER 30,
2000 AND 1999.
Net sales for the nine months ended November 30, 2000 increased 131% to
$1,531,162 from $662,779 for the nine months ended November 30, 1999. The
increase is directly attributable to the inclusion of manufacturing division
revenues of $1,126,538 that did not exist in the nine months ending November 30,
1999. Cost of goods sold for the nine months ended November 30, 2000 was
$671,118 compared to $525,118 for the nine months ended November 30, 1999. Gross
margin for the nine months ended November 30, 2000 was $860,044 compared to
$137,661 for the nine months ended November 30, 1999. The gross profit margin
increased to 56.1% for the nine months ending November 30, 2000 an increase of
169.7% over the 20.8% gross profit margin for the Nine months ended November 30,
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 55.9% gross profit margin in the manufacturing sector.
Operating expenses increased to $1,333,434 for the nine months ended
November 30, 2000 from $963,980 for the nine months ended November 30, 1999. The
increase is due to the addition of the manufacturing segment for the nine months
ended November 30, 2000 as compared to the nine months ended November 30, 1999.
The net gain for the nine months ended November 30, 2000 was $914,358 ($.31
per common share) compared to a net loss of $1,257,255 ($.53 per common share)
for the nine months ended November 30, 1999. The decrease is directly
attributable to the inclusion of the profits from the new segments and a net
gain of $1,815,519 realized on the extinguishment of Series B 12% Preferred
Stock and the issuance of Series B 6% Preferred Stock for the nine months ended
November 30, 2000 as compared to the nine months ended November 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $54,642 for the Nine months ended
November 30, 2000 compared to $382,001 for the nine months ended November 30,
1999. Accounts receivable increased $466,493 from February 29, 2000 to November
30, 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 nine 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 Nine months ended
November 30, 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.
12
<PAGE>
Through November 30, 2000, the Company has experienced substantial losses,
and at November 30, 2000 had an accumulated deficit of approximately $7,081,842.
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 75.9%, or $413,193 to $132,111 for
the nine months ended November 30, 2000 from $545,304 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 87.9%, or $428,146 to $58,694 for the nine
months ended November 30, 2000 due to the decreased sales of our merchandise.
General and administrative expenses declined by 31.7%, or $181,520 to $391,104
for the nine months ended November 30, 2000. This decrease is directly related
to the reduction of salaries and benefits, travel, freight and delivery, and
miscellaneous expenses that comprise $121,215 of the reduction in the nine
months ended November 30, 2000 compared to the Nine month period ending November
30, 1999.
RESULTS OF OPERATIONS - MANUFACTURING
Manufacturing revenues were $425,150 from machining and equipment sales,
$475,680 from the parts sales operation, and $200,522 from the heavy equipment
service operations for the nine months ended November 30, 2000. Cost of goods
sold were $496,445 from the division for the nine months ended November 30,
2000. General and administrative expenses were $351,417 for the nine months
ended November 30, 2000. There are no comparable periods in 1999 as the
operation did not exist.
RESULTS OF OPERATIONS - CONSTRUCTION MANAGEMENT
Construction management revenue increased by 132%, or $155,038 to $272,513
for the nine months ended November 30, 2000 from $117,475 the segment changed
its focus to providing paving and concrete services that produced revenues of
$261,755 during this period as compared to all revenue from used commercial
vehicle sales in the same period in 1999. Cost of goods sold increased by 203%,
or $77,701 to $115,979 for the nine months ended November 30, 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 84.1%, or $59,146 to $129,502
for the nine months ended November 30, 2000. The increase is directly related to
the addition of payroll and the increase in insurance related to workmen's
compensation, liability and bonding. These increases were partially offset by
the reduction of overhead and staff needed to operate the truck lot in Rhode
Island.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
N/A
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In November 2000, 5,000,000 shares of common stock were issued for the
conversion of 5,000 Series C 6% Convertible Preferred Stock.
In October 2000, 3,207 shares of Series B 12% Mandatory Redeemable
Preferred Stock were extinguished. In its place 3,207 shares of Series B 6%
Preferred Stock were issued. An amendment to the articles of incorporation for
this series of securities was prepared and included certain notable changes from
the prior designation. The amendment includes such items as the reduction of the
dividend from 12% to 6% annually, the extension of the payment in kind
provisions for an additional four years, the termination of the mandatory
redemption rights of the holder, the removal of financing restrictions provided
no securities are issued below $1.00, the removal of any additional warrants to
be issued during the payment in kind dividend period, and the termination of any
anti-dilution protection.
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.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
N/A
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 28, 2000 an action was taken by consent of shareholders without
a meeting, to increase the number of authorized common shares from 7,500,000 to
30,000,000 and the total authorized shares from 8,500,000 to 31,000,000, and to
change the name of the company to American Commerce Solutions, Inc. Of the
7,202,442 votes available, four shareholders' controlling 4,137,496 created this
action.
ITEM 5. OTHER INFORMATION
N/A
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.1 Amended Stock Purchase Agreement
10.2 Amendment to the Articles of Incorporation
(B) REPORTS ON FORM 8-K
None
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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.
JD AMERICAN WORKWEAR, INC.
Date: January 10, 2001 By: /s/ Steven Smith
---------------------------------------------
Steven Smith, President
(Principal Executive Officer)
/s/ Norman J. Birmingham
---------------------------------------------
Norman J. Birmingham, Chief Financial Officer
(Principal Accounting Officer)
15
