FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from..............to...................
Commission File Number: 0-29126
JENNA LANE, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3351399
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1407 Broadway, Suite 2400
New York, New York 10018
(Address of principal executive offices)
(Zip Code)
(212) 704-0002
(Registrant's telephone number, including area code)
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 [ ]
As of November 15, 1999, there were 3,985,420 shares of registrant's Common
Stock, par value $.01 per share, outstanding.
PART I - FINANCIAL INFORMATION
Page of
ITEM 1. FINANCIAL STATEMENTS. Form 10-Q
Consolidated Balance Sheets as of September 30, 1999 (Unaudited)
and March 31, 1999 3
Consolidated Statements of Operations for the three and six months
ended September 30, 1999 and 1998 (Unaudited) 4
Consolidated Statements of Cash Flows for the three and six months
ended September 30, 1999 and 1999 (Unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. 9-11
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
JENNA LANE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, March 31,
ASSETS 1999 1999
------------- --------------
(Unaudited)
Current Assets:
Cash $ 59,824 $ 41,465
Receivables 97,975 282,942
Advances to suppliers and others 635,935 664,704
Inventories 8,506,692 10,464,842
Prepaid expenses and other 514,733 445,713
Prepaid and refundable income taxes 752,058 -
Deferred income taxes 58,000 70,000
----------- -----------
Total Current Assets 10,625,217 11,969,666
Property and Equipment, net 1,806,184 1,310,337
Other Assets 765,114 784,772
----------- -----------
$13,196,515 $14,064,775
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,010,751 $ 4,008,341
Payable to factors 564,044 -
Accrued liabilities 487,959 329,281
Income taxes payable - 112,153
Current maturities of long-term debt 291,574 184,276
----------- -----------
Total Current Liabilities 4,354,328 4,634,051
----------- -----------
Long-Term Debt 1,073,259 690,463
----------- -----------
Deferred Income Taxes 100,000 76,000
----------- -----------
Shareholders' Equity:
Common stock, $.01 par value; 18,000,000 shares
authorized; issued, 4,100,421 and 4,414,707 shares
respectively; outstanding 3,985,421 and 4,339,707
shares respectively 41,004 44,147
Capital in excess of par value 7,980,635 7,980,635
(Accumulated deficit) Retained earnings (119,430) 786,197
Treasury stock, at cost (233,281) (146,718)
----------- -----------
Total Shareholders' Equity 7,668,928 8,664,261
----------- -----------
$13,196,515 $14,064,775
=========== ===========
See notes to unaudited consolidated financial statements.
- 3 -
JENNA LANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
--------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Net Sales $18,658,254 $17,120,399 $38,148,234 $30,947,199
Cost of Sales 15,999,159 13,503,375 31,846,669 24,602,048
----------- ----------- ----------- -----------
Gross Profit 2,659,095 3,617,024 6,301,565 6,345,151
Operating Expenses 3,325,234 2,810,986 6,924,994 4,825,609
----------- ----------- ----------- -----------
Operating (Loss) Income (666,139) 806,038 (623,429) 1,519,542
Interest Expense 352,893 205,570 680,798 288,265
----------- ----------- ----------- -----------
(1,019,032) 600,468 (1,304,227) 1,231,277
Litigation Settlement 165,000 - 165,000 -
----------- ----------- ----------- -----------
(Loss) Income Before Income Taxes (1,184,032) 600,468 (1,469,227) 1,231,277
(Credit) Provision for Income Taxes (451,000) 252,000 (563,600) 514,000
----------- ----------- ----------- -----------
Net (Loss) Income $ (733,032) $ 348,468 $ (905,627) $ 717,277
=========== =========== =========== ===========
Net (Loss) Income Per Share:
Basic $ (0.18) $ 0.08 $ (0.22) $ 0.16
=========== =========== =========== ===========
Diluted $ (0.18) $ 0.08 $ (0.22) $ 0.16
=========== =========== =========== ===========
See notes to unaudited consolidated financial statements.
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JENNA LANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
--------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Operating Activities:
Net (loss) income $ (733,032) $ 348,468 $ (905,627) $ 717,277
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization 94,239 30,400 189,178 56,400
Deferred income taxes 28,000 14,000 36,000 9,000
Write-off of notes receivable - - - 35,760
Other - - 5,876 -
Changes in assets and liabilities:
Receivables 228,301 1,696,955 189,804 856,838
Payable to factors (1,479,978) - 564,044 -
Inventories 2,691,241 1,360,233 1,958,150 609,978
Advances to suppliers and others (771) (54,625) 43,866 (43,735)
Prepaid expenses and other 6,903 (336,107) (48,095) (530,083)
Income taxes (617,867) (12,051) (864,211) (65,325)
Accounts payable and accrued liabilities (118,167) (2,998,986) (838,912) (831,998)
----------- ----------- ---------- ---------
Net Cash Provided By Operating
Activities 98,869 48,287 330,073 814,112
----------- ----------- ---------- ---------
Investing Activities:
Acquisition of business - - - (630,209)
Capital expenditures 18,718 (15,562) (93,015) (69,925)
Security deposits 2,625 (20,768) 11,780 (21,572)
Issuance of notes receivable (20,100) (55,000) (70,876) (94,627)
Repayment of notes receivable 12,377 30,292 49,903 53,522
----------- ----------- ---------- ---------
Net Cash Provided By (Used In)
Investing Activities 13,620 (61,038) (102,208) (762,811)
----------- ----------- ---------- ---------
Financing Activities:
Principal payments on capital lease obligations (64,974) (3,595) (119,800) (7,583)
Repurchase of stock (21,294) - (86,563) -
Repurchase of performance shares - - (3,143) (3,143)
----------- ----------- ---------- ---------
Net Cash Used In Financing Activities (86,268) (3,595) (209,506) (10,726)
----------- ----------- ---------- ---------
Net Increase (Decrease) In Cash 26,221 (16,346) 18,359 40,575
Cash at beginning 33,603 63,516 41,465 6,595
----------- ----------- ---------- ---------
Cash at end $ 59,824 $ 47,170 $ 59,824 $ 47,170
=========== =========== ========== =========
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 352,893 $ 205,570 $ 680,798 $ 288,265
=========== =========== ========== =========
Income taxes paid $ 133,857 $ 222,000 $ 254,201 $ 565,945
=========== =========== ========== =========
Noncash Transactions:
Capital lease obligations incurred for the
acquisition of equipment $ 354,921 $ - $ 609,894 $ -
=========== =========== ========== =========
- 5 -
JENNA LANE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Jenna
Lane, Inc. and its wholly-owned subsidiaries (collectively, the
"Company"). The financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and the instructions for Form 10-Q. Accordingly, certain
information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These
consolidated financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended March 31, 1999. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) considered necessary for a fair presentation of interim
results have been included. The results of operations for the six
months ended September 30, 1999 are not necessarily indicative of the
operating results for the full year.
2. INVENTORIES
September 30, March 31,
1999 1999
------------- -----------
(Unaudited)
Raw materials $3,006,188 $ 2,921,489
Work-in-process 987,189 1,612,193
Finished goods 4,513,305 5,931,160
----------- -----------
$8,506,692 $10,464,842
=========== ===========
3. EARNINGS PER SHARE
Earnings per share are calculated using the weighted average number of
shares outstanding of common stock and dilutive common stock
equivalents during each period presented. The Company has adopted
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share," which requires the presentation of: (1) "Basic Earnings per
Share," computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding during the
period and (2) "Diluted Earnings per Share," which gives effect to all
dilutive potential common shares that were outstanding during the
period, by increasing the denominator to include the number of
additional common shares that would have been outstanding if dilutive
potential common shares had been issued
- 6 -
JENNA LANE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. EARNINGS PER SHARE (CONTINUED)
The following table reconciles the number of common shares outstanding
with the number of common and common equivalent shares used in
computing earnings per share:
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ------------------------
1999 1998 1999 1998
--------- ---------- ---------- -----------
Basic:
Common shares outstanding 3,985,421 4,414,707 3,985,421 4,414,707
Effect of using weighted average 3,132 - 170,247 103,972
--------- --------- --------- ---------
Weighted average number of
shares outstanding 3,988,553 4,414,707 4,155,668 4,518,679
Diluted:
Effect of assuming exercise of
outstanding stock options
based on the treasury stock
method - 8,522 - 80,026
--------- --------- --------- ---------
Shares used in computing
diluted earnings per share 3,988,553 4,423,229 4,155,668 4,598,705
========= ========= ========= =========
Computation of diluted earnings per share is not reflected for the
three months and six months ended September 30, 1999 because including
potential common shares will result in an anti dilutive per-share
amount due to the net loss in the period. Additional shares issuable
assuming conversion of warrants is antidilutive for the three and six
months ended September 30, 1998.
4. SHAREHOLDERS' EQUITY
During the six months ended September 30, 1999, the Company repurchased
314,286 performance shares for $3,143 ($.01 per share).
In September 1998, the Company adopted a share repurchase program to
buy back up to 500,000 shares of the Company's stock. As of September
30, 1999, the Company has repurchased 115,000 shares at an aggregate
cost of $233,281, including 40,000 shares repurchased during the six
months ended September 30, 1999.
5. LITIGATION SETTLEMENT
In September 1999, the Company settled litigation arising from a
dispute with one of its licensors. The Company paid $165,000 to settle
the matter and terminate the licensing agreement.
- 7 -
6. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued the
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities", which
will be effective for the Company's fiscal year 2000. This statement
establishes accounting and reporting standards requiring that every
derivative instrument be recorded in the balance sheet as either an
asset or liability measured at its fair value. The statement also
requires that changes in the derivative's fair value be recognized in
earnings unless specific hedge accounting criteria are met. The Company
is not currently affected by SFAS 133.
- 8 -
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company for the three and six months ended September 30, 1999
and 1998, respectively.
Results of Operations
The following table sets forth, for the periods indicated, the Company's
statements of operation data as a percentage of net sales.
Three Months Ended Six Months Ended
September 30, September 30,
------------------ --------------------
1999 1998 1999 1998
------- ------- -------- --------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 85.7 78.9 83.5 79.5
------ ------ ------ ------
Gross profit 14.3 21.1 16.5 20.5
Operating expenses 17.8 16.4 18.2 15.6
------ ------ ------ ------
Operating (loss) income (3.5) 4.7 (1.7) 4.9
Interest expense 1.9 1.2 1.8 0.9
------ ------ ------ ------
(5.4) 3.5 (3.5) 4.0
Litigation settlement 0.9 - 0.4 -
------ ------ ------ ------
(Loss) income before
income taxes (6.3) 3.5 (3.9) 4.0
(Credit) provision for
income taxes (2.4) 1.5 (1.5) 1.7
------ ------ ------ ------
Net (Loss) Income (3.9)% 2.0% (2.4)% 2.3%
====== ====== ====== ======
Three Months Ended September 30, 1999 Compared with Three Months Ended September
30, 1998
Net sales of $18.7 million in the three months ended September 30, 1999
represented an increase of $1.6 million, or 9.0% over net sales of $17.1 million
in the three months ended September 30, 1998. The increase in net sales was
primarily attributable to the JLNY sales group, catalog sales group, and the
children's sales group (TLC for Kidz).
The Company's gross profit decreased $960,000, or 26.2%, to $2.7 million for the
three months ended September 30, 1999 from $3.6 million for the three months
ended September 30, 1998. Gross profit margin decreased to 14.3% in the three
months ended September 30, 1999 from 21.1% in the three months ended September
30, 1998. This decrease was primarily due to liquidation of certain excess
import inventories as well as production and distribution difficulties which
affected scheduled shipments and resulted in an increase in customers'
discounts, claims and allowances during this quarter.
- 9 -
Operating expenses increased $515,000, or 18.3%, to $3.3 million in the three
months ended September 30, 1999 from $2.8 million in the three months ended
September 30, 1998. The increase was primarily due to costs incurred for
additional personnel and related expenses associated with the projected sales
volume for its new sales groups, which did not fully materialize. In response to
this situation, during September 1999 the Company implemented certain overhead
reductions, which include the closing of certain under-performing sales groups.
This also led to the reduction of personnel, reduction of certain salaries and
the streamlining of internal
operations and processes.
As a result of the foregoing factors, operating loss was $666,000 for the three
months ended September 30, 1999 compared to operating income of $806,000 for the
three months ended September 30, 1998.
Interest expense increased from $206,000 in the three months ended September 30,
1998 to $353,000 in the three months ended September 30 1999. This is primarily
the result of additional borrowings for working capital needs and capital lease
obligations. These capital improvements included distribution and warehouse
equipment, the implementation of a new core business system, and costs
associated with Year 2000 readiness.
The Company incurred a nonrecurring charge of $165,000 in the three months ended
September 30, 1999 to settle litigation in connection with a dispute with one of
its licensors.
As a result of the above factors, pre-tax income decreased from $600,000 in the
three months ended September 30, 1998 to a pre-tax loss of $1,184,000 in the
three months ended September 30, 1999.
Six Months Ended September 30, 1999 Compared with Six Months Ended September 30,
1998
Net sales of $38.1 million in the six months ended September 30, 1999
represented an increase of $7.2 million, or 23.3% over net sales of $30.9
million in the six months ended September 30, 1998. The increase in net sales
was primarily attributable to the catalog sales group, JLNY sales group, and the
children's sales group (TLC for Kidz).
The Company's gross profit was virtually unchanged at $6.3 million for the six
months ended September 30, 1999 and 1998. Gross profit margin decreased to 16.5%
in the six months ended September 30, 1999 from 20.5% in the six months ended
September 30, 1998. This decrease was primarily due to liquidation of certain
excess import inventories as well as production and distribution difficulties
which affected scheduled shipments and resulted in an increase in customers'
discounts, claims and allowances during the six months.
Operating expenses increased $2.1 million or 43.5% to $6.9 million in the six
months ended September 30, 1999 from $4.8 million in the six months ended
September 30, 1998. The increase was primarily due to costs incurred for
additional personnel and related expenses associated with the projected sales
volume for its new sales groups, which did not fully materialize. Additionally,
the Company incurred certain cost overlaps related to its move to its new
distribution center and executive offices in Secaucus, New Jersey and the
consolidation of its showrooms. These cost overlaps were partially attributed to
multiple lease agreements that could not be immediately terminated. The move
also entailed the relocation of design and other personnel previously located in
New York City. Long term benefits are expected to be realized as a result of
this consolidation.
Interest expense increased from $288,000 in 1998 to $681,000 in 1999. This is
primarily the result of additional borrowings for working capital needs and
capital lease obligations. These capital improvements included distribution and
warehouse equipment, the implementation of a new core business system, and costs
associated with Year 2000 readiness.
As a result of the above factors, pre-tax income decreased from $1.2 million in
the six months ended September 30, 1998 to a pre-tax loss of $1.5 million in the
six months ended September 30, 1999.
- 10 -
Liquidity and Capital Resources
Operating activities provided net cash of $99,000 and $330,000 for the three and
six months ended September 30, 1999, respectively.
The Company's capital expenditures totalled $411,000 and $777,000 for the three
and six months ended September 30, 1999, respectively, of which $355,000 and
$610,000 respectively was financed through a leasing company. The Company does
not have any material commitments for capital expenditures at this time.
In September 1998, the Company adopted a share repurchase program to buy back up
to 500,000 shares of the Company's stock over an eighteen-month period. As of
September 30, 1999, the Company has repurchased 115,000 shares at an average
price of $2.03.
The Company believes that existing cash, anticipated cash flows from operations
and availability of advances under its factoring arrangement will be sufficient
to support the Company's operations for at least the next 12 months.
- 11 -
PART II - OTHER INFORMATION
Item 1. Legal Proceedings: Except as described below there are no
material pending legal proceedings to which the Company is a
party or to which any of its property is subject. The Company
is subject to normal litigations in the ordinary course of
business.
Jenna Lane, Inc. v. Jordache Enterprises et al. The Company and
its wholly owned subsidiary Jenna Lane Polo Association, Ltd. initiated this
action in Supreme Court, New York County, New York State, alleging breach of a
license agreement entered into with Quade, Inc. (involving the U.S. Polo
Association trademarks), and related tort claims. This case was settled
effective September 30, 1999 with the payment of $165,000 by the Company to the
plaintiffs.
Jenna Lane, Inc. v. S.M.B. Textiles, Howard Bromberg, The Feldman
Co., Nissho Iwai Textile Inc. and North Pole LLC. The Company filed this suit in
Supreme Court, New York County, New York State, alleging late delivery of goods,
resulting in over $125,000 in damages. The dispute with Nissho Iwai Textiles is
now the subject of a separate arbitration proceeding. Remaining defendants are
North Pole LLC and Howard Bromberg. Defendant North Pole has answered the
complaint and asserted counterclaims for goods allegedly delivered and unpaid
for. Defendant Bromberg has answered the complaint without asserting any
counterclaims. It is premature to estimate the likelihood of an unfavorable
outcome.
Estate of Cheng Gen Zhang v. Jenna Lane, Inc. et al. This case
was commenced in October 1999 and alleges that the Company's employee, while
driving within the scope of his employment, struck and killed Mr. Zhang. The
complaint alleges $10 million in damages. This amount is significantly greater
than the Company's current limits on its relevant insurance coverage. The
Company is currently consulting with its insurance representatives to determine
what steps it will take in response to this litigation.
Item 2. Changes in Securities: None.
Item 3. Defaults Upon Senior Securities: None.
Item 4. Submissions of Matters to a Vote of Security Holders:
On September 22, 1999, the Annual Stockholders Meeting of the Company
was held. The following directors were elected or their term of office as a
director continued after the meeting by majority vote of those present in person
or by proxy: Mitchell Dobies, Charles Sobel, Gerald Cohen, Mitchell Herman and
Gerald Kanter. In addition, a majority vote of those present in person or by
proxy ratified the appointment of Edward Isaacs & Company LLP as the Company's
auditors for the fiscal year ended March 31, 2000. In addition, a majority vote
of those present in person or by proxy approved the Company's 1999 Stock Option
Plan.
- 12 -
Item 5. Other Information:
Possible Nasdaq De-Listing
On September 15, 1999, the Company received a letter from the
Nasdaq Stock Market to bring to the Company's attention its concern regarding
the continued listing of the Company's shares of Common Stock and Warrants on
the Nasdaq National Market, since the Company's Common Stock has failed to
maintain a market value of public float greater than or equal to $5,000,000 over
the preceding thirty consecutive trading days as required by certain Nasdaq
Marketplace Rules.
On November 12, 1999, the Company received an additional letter
from the Nasdaq Stock Market raising concern about the Company's stock price
being below $1.00 over the preceding thirty consecutive days as required by
certain Nasdaq Marketplace Rules.
The Company, on or before December 14, 1999, must either
demonstrate compliance with the minimum public float requirements or seek to
move to the Nasdaq Smallcap Market. The Company is concerned that, if its stock
price remains below $1.00, the Company would not even qualify for inclusion on
the Nasdaq Smallcap Market, and would thereupon seek to list its securities on
the Nasdaq Bulletin Board. The Company has not yet determined whether to seek a
hearing on the matter, apply for listing on the Nasdaq Smallcap Market or not
challenge the de-listing effort. There can be no assurance that the Company can
maintain its listing on the Nasdaq National Market, obtain or maintain a listing
on the Nasdaq Smallcap Market or obtain or maintain a listing on the Nasdaq
Bulletin Board. The de-listing of the Company's securities on the Nasdaq
National Market may have a negative effect on trading in and the trading price
of the Company's securities.
New Chief Operating Officer
On September 8, 1999, the Company announced the appointment of
Mr. Gary A. Coffey as Vice President and Chief Operating Officer. Mr. Coffey had
previously been Senior Vice President of Finance and Operations for Telebrands
Corporation, a telemarketing company. Prior affiliations include senior
financial and operational positions with Performance Team Logistics Corporation,
Michael Stevens Ltd., Mutterperl Ltd., Audre Inc., Cue Industries and Touche
Ross & Co.
Layoffs and Salary Reductions; Consolidation of Showrooms
Effective September 1, 1999, the Company laid off approximately
35 employees and reduced the salaries of approximately 28 other employees by
10-30%. The Company also has consolidated all its Manhattan operations at its
1407 Broadway location, vacating all other showroom and other space in
Manhattan. The Company will seek to sublease or assign its leases at other
locations. The purpose of the layoffs and salary reductions was to improve the
Company's profitability and reduce expenses which were in part incurred in
anticipation of revenues which were not achieved.
Settlement with Warehouse Landlord
In August 1999, the Company entered into a settlement agreement
with the landlord in its former warehouse in Cranbury, New Jersey. The Company
had moved out of this facility in late 1998, and alleged that the landlord had
improperly refused consent to a proposed sublease. The settlement requires the
Company to pay a lump sum of $249,509, but the Company retained the right to
utilize the warehouse space for sales and other activities through December 31,
1999, provided, that certain extra rent is required if the Company utilizes the
space during December 1999. The lump sum payment was offset against $51,551 in
security deposit funds which were delivered to the landlord. The Company
believes this settlement was fair, since it involved payment of rent only
through December 1999, whereas the lease in question would have continued until
May 2001.
Extension of Agreement with President
On November 19, 1999, the Board of Directors approved extending
the Employment Agreement of its President and Chief Executive Officer, Charles
Sobel, for a period ending May 31, 2000. On or before that date, either the
Company or Mr. Sobel could choose not to renew the Agreement. The Company has
commenced discussions with Mr. Sobel with respect to a longer-term agreement.
- 13 -
Year 2000 Computer Issue
What is commonly known as the "Year 2000 Issue" arises because
many computer hardware and software systems use only two digits to represent the
year. As a result, these systems and programs may not calculate dates beyond
1999, which may cause errors in information or system failures.
With respect to its internal systems, the Company is taking
appropriate steps to remedy the Year 2000 issues and does not expect the costs
of these efforts to be material. However, the Year 2000 readiness of the
Company's suppliers may vary. While the Company does not believe the Year 2000
matters disclosed above will have a material impact on its business, financial
condition or results of its operations, it is uncertain whether or to what
extent the Company may be effected by such matters.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
27.1 Financial Data Schedule
(b) Reports on Form 8-K: None.
- 14 -
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.
Dated: November 18, 1999
JENNA LANE, INC.
By: /s/ Charles Sobel
Charles Sobel
President and Chief Executive Officer
By: /s/ Gary Coffey
Gary Coffey
Vice President and
Chief Financial Officer
- 15 -
EXHIBIT INDEX
27.1 Financial Data Schedule
- 16 -