UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
June 23, 2004 (June 15, 2004)
INNOVO GROUP INC.
(Exact name of registrant as specified in charter)
Delaware 0-18926 11-2928178
(State or other (Commission File No.) (IRS Employer
jurisdiction Identification No.)
of incorporation)
5804 East Slauson Avenue, Commerce, California 90040
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(323) 725-5516
No Change
(Former name or former address, if changed since last filing)
Item 5. Other Events and Required FD Disclosure
Financing Transactions
On June 15, 2004, June 18, 2004 and June 22, 2004, we
executed agreements for the sale of convertible promissory
notes and common stock purchase warrants which resulted in
aggregate gross proceeds to us of $2.5 million immediately
and an additional $451,875 in aggregate gross proceeds to us
upon exercise of the warrants. The convertible promissory
notes in the aggregate principal amount of $2.5 million,
together with common stock purchase warrants to purchase an
aggregate of 312,500 shares of our common stock were sold to
three "accredited investors," as defined in Regulation D
promulgated under the Securities Act of 1933, as amended, or
the Securities Act. The transaction documents executed with
each purchaser were substantially similar and are attached
hereto and incorporated herein as Exhibits 4.1, 4.2 and 4.3,
respectively.
The convertible promissory note issued to each
purchaser bears interest at a rate of 7.5% per annum and has
a maturity date twelve months from the date of issuance.
The convertible note is convertible at any time from the
date of issuance into shares of our common stock at a price
per share equal to 110% of the average of the closing price
of our common stock for the five trading days immediately
prior to the date of issuance, which for each purchaser
results in a conversion price of $1.53, $1.41 and $1.35,
respectively. We will pay interest only payments until the
maturity date of the convertible note, unless it is
converted or prepaid. We have an option to make one
prepayment of the note, in whole or in part, without penalty
at any time after three months. However, in the event that
we elect to prepay the convertible note, the purchaser may
elect within 3 days to convert the note in accordance with
its terms.
Each purchaser was also issued corresponding warrants
to purchase shares of common stock. The number of shares
that the purchaser will be eligible to purchase is equal to
12.5% of the aggregate amount of the convertible promissory
note and the exercise price of the warrants on a per share
basis is equal to 110% of the average of the closing price
of our common stock for the five trading days immediately
prior to the date of issuance of the warrant, which for each
purchaser results in an exercise price of $1.53, $1.41 and
$1.35, respectively. The warrants expire five years from
the date of issuance and are exercisable immediately. In
connection with both the convertible notes and the warrants,
we entered into a registration rights agreement with each of
the purchasers.
Each purchaser represented to Innovo Group that they
are an "Accredited Investor," as that term is defined in
Rule 501(a) of Regulation D under the Securities Act. The
convertible notes and warrants were offered and sold to each
purchaser in reliance upon an exemption from registration
under Rule 506 of Regulation D the Securities Act.
Item 7. Exhibits
(c) Exhibits
Exhibit
Number Description
Exhibit 4.1 Form of Convertible Promissory Note
Exhibit 4.2 Form of Common Stock Purchase Warrant
Exhibit 4.3 Form of Registration Rights Agreement
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.
INNOVO GROUP INC.
(Registrant)
Date: June 23, 2004 By: /s/ Samuel J. Furrow, Jr.
--------------------------
Samuel J. Furrow, Jr.
Chief Executive Officer and Director
(Principal Executive Officer