FORM 10-Q
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 June 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 August 3, 1999, there were 4,003,279 shares of registrant's Common Stock,
par value $.01 per share, outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Page of
ITEM 1. FINANCIAL STATEMENTS. Form 10-Q
Consolidated Balance Sheets as of June 30, 1999 (Unaudited)
and March 31, 1999 3
Consolidated Statements of Operations for the three months ended
June 30, 1999 and 1998 (Unaudited) 4
Consolidated Statements of Cash Flows for the three months ended
June 30, 1999 and 1999 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. 8-9
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
<PAGE>
JENNA LANE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
ASSETS 1999 1999
----------------- ------------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $ 33,603 $ 41,465
Receivables 326,276 282,942
Advances to suppliers and others 627,441 664,704
Inventories 11,197,933 10,464,842
Prepaid expenses and other 500,711 445,713
Prepaid and refundable income taxes 134,191 -
Deferred income taxes 77,000 70,000
----------------- ------------------
Total Current Assets 12,897,155 11,969,666
Property and Equipment, net 1,581,206 1,310,337
Other Assets 771,678 784,772
----------------- ------------------
$ 15,250,039 $ 14,064,775
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,260,194 $ 4,008,341
Payable to factors 2,044,022 -
Accrued liabilities 356,683 329,281
Income taxes payable - 112,153
Current maturities of long-term debt 223,401 184,276
----------------- ------------------
Total Current Liabilities 5,884,300 4,634,051
----------------- ------------------
Long-Term Debt 851,485 690,463
----------------- ------------------
Deferred Income Taxes 91,000 76,000
----------------- ------------------
Shareholders' Equity:
Common stock, $.01 par value; 18,000,000 shares
authorized; issued 4,100,421 and 4,414,707 shares,
outstanding 3,995,421 and 4,339,707 shares, respectively 41,004 44,147
Capital in excess of par value 7,980,635 7,980,635
Retained earnings 613,602 786,197
Treasury stock, at cost; 105,000 and 75,000 shares, respectively (211,987) (146,718)
----------------- ------------------
Total Shareholders' Equity 8,423,254 8,664,261
----------------- ------------------
$ 15,250,039 $ 14,064,775
================= ==================
</TABLE>
See notes to unaudited consolidated financial statements.
- 3 -
<PAGE>
JENNA LANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------------------------
1999 1998
------------------- ------------------
<S> <C> <C>
Net Sales $19,489,980 $13,826,800
Cost of Sales 15,847,510 11,098,673
------------------- ------------------
Gross Profit 3,642,470 2,728,127
Operating Expenses 3,599,760 2,014,623
------------------- ------------------
Operating Income 42,710 713,504
Interest Expense 327,905 82,695
------------------- ------------------
(Loss) Income Before Income Taxes (285,195) 630,809
(Credit) Provision for Income Taxes (112,600) 262,000
------------------- ------------------
Net (Loss) Income $ (172,595) $ 368,809
=================== ==================
Net (Loss) Income Per Share:
Basic $ (0.04) $ 0.08
=================== ==================
Diluted $ (0.04) $ 0.08
=================== ==================
</TABLE>
See notes to unaudited consolidated financial statements.
- 4 -
<PAGE>
JENNA LANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
Operating Activities:
Net (loss) income $ (172,595) $ 368,809
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization 94,939 26,000
Deferred income taxes 8,000 (5,000)
Other 5,876 36,350
Increase (decrease) in cash attributable to changes in assets
and liabilities:
Receivables (38,497) (851,007)
Payable to factor 2,044,022 -
Inventories (733,091) (750,255)
Advances to suppliers and others 46,301 10,890
Prepaid expenses and other (54,998) (191,380)
Income taxes (246,344) (53,274)
Accounts payable and accrued liabilities (720,745) 2,166,988
---------------- ----------------
Net Cash Provided By Operating Activities 232,868 758,121
---------------- ----------------
Investing Activities:
Acquisition of business - (630,209)
Capital expenditures (111,733) (54,363)
Security deposits 7,491 (804)
Issuance of notes receivable (50,926) (23,336)
Repayment of notes receivable 37,676 14,643
---------------- ----------------
Net Cash Used In Investing Activities (117,492) (694,069)
---------------- ----------------
Financing Activities:
Principal payments on capital lease obligations (54,826) (3,988)
Repurchase of stock (65,269) -
Repurchase of performance shares (3,143) (3,143)
---------------- ----------------
Net Cash Used In Financing Activities (123,238) (7,131)
---------------- ----------------
Net (Decrease) Increase In Cash (7,862) 56,921
Cash at beginning 41,465 6,595
---------------- ----------------
Cash at end $ 33,603 $ 63,516
================ ================
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 327,905 $ 82,695
================ ================
Income taxes paid $ 120,344 317,974
================ ================
Noncash Transactions:
Capital lease obligations for the acquisition of equipment $ 254,973 $ -
================ ================
See notes to unaudited consolidated financial statements.
</TABLE>
- 5 -
<PAGE>
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 three
months ended June 30, 1999 are not necessarily indicative of the
operating results for the full year.
2. INVENTORIES
June 30, March 31,
1999 1999
----------------- ------------------
(Unaudited)
Raw materials $ 3,447,969 $ 2,921,489
Work-in-process 1,631,966 1,612,193
Finished goods 6,117,998 5,931,160
----------------- ------------------
$ 11,197,933 $ 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 -
<PAGE>
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:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------------------------
1999 1998
----------------- -----------------
<S> <C> <C>
Basic:
Common shares outstanding 3,995,421 4,414,707
Effect of using weighted average 327,363 209,087
----------------- -----------------
Weighted average number of shares outstanding 4,322,784 4,623,794
Diluted:
Effect of assuming exercise of outstanding stock options
based on the treasury stock method - 76,047
----------------- -----------------
Shares used in computing diluted earnings per share 4,322,784 4,699,841
================= =================
</TABLE>
Computation of diluted earnings per share is not
reflected for the three months ended June 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 months
ended June 30, 1998.
4. SHAREHOLDERS' EQUITY
During the three months ended June 30, 1999 and 1998, 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 share of the Company's stock. As of June 30,
1999, the Company has repurchased 105,000 shares at an aggregate cost
of $211,987.
5. 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.
- 7 -
<PAGE>
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 months ended June 30, 1999 and 1998.
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.
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Net sales 100.0 % 100.0 %
Cost of sales 81.3 80.3
------------- ------------
Gross profit 18.7 19.7
Operating expenses 18.5 14.6
------------- ------------
Operating income 0.2 5.1
Interest expense 1.7 0.6
------------- ------------
(Loss) income before income taxes (1.5) 4.5
(Credit) provision for income taxes (0.6) 1.9
------------- ------------
Net (Loss) Income (0.9)% 2.6 %
============= ============
</TABLE>
Three Months Ended June 30, 1999 Compared with Three Months Ended June 30, 1998
Net sales of $19.5 million in the three months ended June 30, 1999 represented
an increase of $5.7 million, or 41.3% over net sales of $13.8 million in the
three months ended June 30, 1998. The increase in net sales was primarily
attributable to the addition of the Company's children's sales group (TLC) with
sales of approximately $2.0 million and its dress sales group (Impatiens) with
sales of approximately $1.9 million.
The Company's gross profit increased $914,000, or 33.5% to $3.6 million for the
three months ended June 30, 1999, from $2.7 million for the three months ended
June 30, 1998. However, gross profit margin decreased to 18.7% in the three
months ended June 30, 1999 from 19.7% in the three months ended June 30, 1998.
The Company's gross profit margins had been steadily increasing. For the year
ended March 31, 1999, the gross profit margin was 21.4%. This decrease was
primarily due to an increase in customers' discounts, claims and allowances
during the quarter. The Company is seeking to reduce this gross profit erosion
during the remainder of the year. The Company is also implementing certain
overhead reductions in response to this reduction in gross profit margin.
- 8 -
<PAGE>
Operating expenses increased $1.6 million, or 80%, to $3.6 million in the three
months ended June 30, 1999 from $2.0 million in the three months ended June 30,
1998. The increase was primarily due to an increase of $822,000 in payroll and
related costs, including $198,000 in increased selling salaries, as well as
$137,000 in selling related expenses which resulted from the expanded sales
force for its new sales groups. Factoring costs increased $29,000 as a result of
higher sales volume. Certain inefficiencies and cost overlaps were incurred in
the current quarter in connection with the Company's move to its new warehouse
and distribution center in Secaucus, New Jersey and the consolidation of its
showrooms. The move also entailed the relocation of design and other personnel
previously located in New York City.
Operating income was $43,000 for the three months ended June 30, 1999 compared
to $714,000 for the three months ended June 30, 1998.
Interest expense increased from $83,000 in 1998 to $328,000 in 1999. This is
primarily the result of additional borrowings for working capital needed for
higher than planned inventories and capital lease obligations.
As a result of the above factors, pre-tax income decreased from $631,000 in the
three months ended June 30, 1998 to a pre-tax loss of $285,000 in the three
months ended June 30, 1999.
Liquidity and Capital Resources
Operating activities provided net cash of $233,000 for the three months ended
June 30, 1999. Inventory levels increased as a result of the corresponding
increased production to support the growth in sales, although such levels were
above plan.
The Company's capital expenditures totalled $367,000 for the three months ended
June 30, 1999, of which $255,000 were financed through a leasing company. These
capital expenditures were for computer and office equipment. 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. As of June 30, 1999, the Company has
repurchased 105,000 shares at an average price of $2.02 a share.
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.
- 9 -
<PAGE>
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. The complaint demands $5 million in
monetary damages, plus punitive damages. In lieu of answering the complaint,
Quade and certain other entities moved to compel arbitration, and Jordache and
certain other entities moved to stay the case until after the arbitration. The
Company is opposing these motions, which are pending. The arbitration demand
asserts $1,000,000 in damages, a portion of which arises from unpaid minimum
guaranteed royalties, plus dilution of the trademarks. The Company hopes to
reach an out-of-court settlement of all claims, but there can be no assurance
thereof. It is premature to estimate the likelihood of an unfavorable outcome.
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. One of the defendants, The Feldman Co.,
concurrently filed its own lawsuit against the Company alleging improper charge
backs totaling $115,000. The Company settled its dispute with The Feldman Co.
for $100,000 in payment to that company for goods delivered. Defendant Bromberg
has filed a motion to dismiss the action as to him for improper service of
process. The Company intends to reserve Mr. Bromberg in order to eliminate any
question as to service of process. Defendant Iwai has moved to compel
arbitration of the matter, and alleges approximately $40,000 in damages for
goods delivered and not paid for. The Company intends to oppose this motion.
Defendant North Pole has answered the complaint and asserted counterclaims for
goods allegedly delivered and unpaid for. It is premature to estimate the
likelihood of an unfavorable outcome.
Item 2. CHANGES IN SECURITIES: None.
10
<PAGE>
Item 3. DEFAULTS UPON SENIOR SECURITIES: None.
Item 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS: None
Item 5. OTHER INFORMATION:
CHANGE IN STATUS OF MITCHELL DOBIES; SOBEL ELECTION TO PRESIDENT
On August 9, 1999, Mitchell Dobies, President and Co-Chief Executive
Officer of the Company and a member of the Board of Directors, signed a
Consulting Agreement with the Company (the "Consulting Agreement"). The
Consulting Agreement provides that Mr. Dobies has resigned as President and
Treasurer of the Company, and that Mr. Dobies' Employment Agreement with the
Company is terminated as of September 3, 1999 (except for certain provisions
concerning non-compete arrangements), upon which a new consulting arrangement
would take effect. Pursuant to the consulting arrangement, Mr. Dobies would
continue to participate in and assist the Company with those matters which he
was previously overseeing. During the consultancy, he will be paid at an annual
rate of $150,000 through January 30, 2000, provided, that the Company can
terminate the arrangement at any time upon 30 days' notice to Mr. Dobies. If not
terminated, the consulting arrangement automatically renews for successive
six-month periods. Mr. Dobies will be permitted to retain all stock options
previously granted to him. Mr. Dobies also will remain as a member of the Board
of Directors and has been elected Vice-Chairman of the Company.
On August 9, 1999, the Board of Directors elected Charles Sobel,
previously Vice-Chairman, Executive Vice President and Co-Chief Executive
Officer, to be President and Chief Executive Officer, and elected Kathleen
Dressel, currently Secretary of the Company, to be Treasurer as well.
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.
11
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits:
10.24 Consulting Agreement with Mitchell Dobies dated August 9, 1999.
27.1 Financial Data Schedule
(b) Reports on Form 8-K: None.
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: August 13, 1999 JENNA LANE, INC.
By: /s/ Charles Sobel
-------------------------------------
Charles Sobel
President and Chief Executive Officer
12
<PAGE>
EXHIBIT INDEX
10.24 Consulting Agreement with Mitchell Dobies dated August 9, 1999.
27.1 Financial Data Schedule
EXHIBIT 10.24
CONSULTING AGREEMENT
AGREEMENT, dated as of the 9th day of August, 1999, by and between
JENNA LANE, INC., a Delaware corporation with an office at 1407 Broadway, Suite
2400, New York, NY 10018 (the "Corporation") and MITCHELL DOBIES, with an
address at 5 Whistler Way, Marlboro, NJ 07094 (the "Consultant").
W I T N E S S E T H :
WHEREAS, the Corporation and the Consultant are parties to that certain
Employment Agreement, dated as of January 30, 1997 (the "Employment Agreement");
and
WHEREAS, the Corporation and the Consultant desire to terminate the
Employment Agreement and replace it in its entirety by the terms and conditions
hereof, except as expressly provided otherwise herein; and
WHEREAS, the Corporation desires to retain Consultant to provide the
advisory services to the Corporation described herein, and Consultant is willing
to be retained by the Corporation to provide such services to the Corporation,
all in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter contained, the parties hereto hereby agree as follows:
1. RETENTION OF CONSULTANT; DUTIES. The Corporation hereby retains
Consultant to furnish, and Consultant hereby agrees to furnish,
consulting services to the Corporation to assist the Corporation
in completing an orderly transition to oversight by third parties
of the responsibilities of Consultant under the Employment
Agreement, and such other services as the Corporation shall
reasonably require. Consultant shall furnish such services in
such manner as shall reasonably be requested by the Corporation,
shall be reasonably available to Corporation representatives, and
shall at all times act in accordance with all applicable laws,
rules and regulations.
2. TERM. The retention of Consultant by the Corporation hereunder
shall commence on and as of September 3, 1999 (the "Commencement
Date") and shall terminate on January 30, 2000, provided, that
the Corporation may terminate this Agreement on thirty (30) days'
prior written notice to Consultant. This Agreement shall be
automatically renewed for additional six (6) month year periods
unless one party has provided at least thirty (30) days' written
notice of nonrenewal prior to the expiration of the then
applicable term.
<PAGE>
3. INDEPENDENT CONTRACTOR. Consultant at all times shall act and be
an independent contractor, and in no event shall Consultant nor
any of his employees or agents be deemed to be an officer,
employee, agent or representative of the Corporation by virtue of
Consultant's retention hereunder except as expressly provided
herein.
4. REMUNERATION. During the term of this Agreement, the Corporation
agrees to pay Consultant an amount equal to $2,884.62 per week,
payable at the same time as the Corporation shall pay its senior
executives their regular base salary.
5. TERMINATION OF EMPLOYMENT AGREEMENT. The parties agree that the
Employment Agreement be, and it hereby is, terminated in all
respects effective as of the Commencement Date, including without
limitation all right or interest in the Bonus Pool or any
payments or other consideration to be received upon termination
of Consultant's employment pursuant to the Employment Agreement.
Notwithstanding the foregoing, (i) the Company agrees to continue
full health insurance coverage for Consultant and his dependents,
or if such coverage is unavailable, to reimburse him for his
COBRA payments during the term hereof pursuant to such coverage,
(ii) all the provisions of Section 5 of the Employment Agreement
(entitled "Non-competition, Confidentiality and Inventions")
shall remain in effect, and it shall be presumed that
Consultant's termination of employment shall have occurred on the
Commencement Date; and (iii) the Corporation shall continue to
reimburse Consultant for reasonable business expenses incurred on
behalf of the Corporation against invoices therefor. Consultant
agrees that, during the term hereof, he shall not accept any
employment or engagement whatsoever, paid or unpaid, other than
his engagement hereunder, and that it shall be considered a
material breach of the terms hereof for Consultant not to honor
the provisions of this sentence. The parties agree that any
breach of the terms of the previous sentence shall permit the
Corporation to have all rights that it may have upon a breach of
the provisions of Section 5 of the Employment Agreement.
6. CHANGE IN OFFICER TITLE. Consultant hereby resigns as President
and Treasurer of the Corporation, and agrees to accept the office
of Vice-Chairman of the Corporation if so elected by the Board of
Directors during the term hereof.
7. RETENTION OF OPTIONS. The Corporation agrees that all options to
purchase Corporation common stock, whether incentive or
non-incentive, vested or not, shall be retained by Consultant,
and shall vest in accordance with their terms, provided, that no
condition relating to Consultant's employment with the
Corporation shall apply with respect to termination of such
options.
<PAGE>
8. SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither party
hereto may assign this Agreement without the prior written
consent of the other party.
9. MISCELLANEOUS. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York,
without giving effect to the conflicts of laws rules thereunder.
This Agreement represents the entire understanding and agreement
between the parties hereto with respect to the subject matter
hereof and thereof, and supersede any and all prior agreements
and understandings of the parties with respect thereto. This
Agreement may be amended, modified, or supplemented only by a
written instrument signed by both of the parties hereto. The
provisions hereof shall be severable, so that the
unenforceability or illegality of any one provision shall not
affect the enforceability or legality of any other provision
hereof. This Agreement may be executed in multiple counterparts,
each of which shall constitute an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
JENNA LANE, INC.
By: /s/ Charles Sobel
------------------------
Charles Sobel,
Executive Vice President
/s/ Mitchell Dobies
-------------------------
MITCHELL DOBIES
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Jenna Lane, Inc. and subsidiaries, included in the
Company's Form 10-Q for the period ended June 30, 1999, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> MAR-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 33,603
<SECURITIES> 0
<RECEIVABLES> 326,276
<ALLOWANCES> 0
<INVENTORY> 11,197,933
<CURRENT-ASSETS> 12,897,155
<PP&E> 2,086,242
<DEPRECIATION> 505,036
<TOTAL-ASSETS> 15,250,039
<CURRENT-LIABILITIES> 5,884,300
<BONDS> 0
0
0
<COMMON> 41,004
<OTHER-SE> 8,382,250
<TOTAL-LIABILITY-AND-EQUITY> 15,250,039
<SALES> 19,489,980
<TOTAL-REVENUES> 19,489,890
<CGS> 15,847,510
<TOTAL-COSTS> 3,599,760
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 327,905
<INCOME-PRETAX> (285,195)
<INCOME-TAX> (112,600)
<INCOME-CONTINUING> (172,595)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (172,595)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
