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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 1998
INNOVO GROUP INC.
(Exact name of registrant as specified in charter)
Delaware 0-18926 11-2928178
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
27 North Main Street, Springfield, Tennessee 37172
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (615) 384-0100
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ITEM 5. OTHER EVENTS.
On August 31, 1998, the Board of Directors of Innovo Group Inc.
("Registrant") approved a 1-for-10 reverse stock split of Registrant's common
stock (Nasdaq SmallCap Market: INNO) effective September 11, 1998. Registrant's
shareholders had previously authorized the Board of Directors to effect one or
more reverse stock splits when and in such proportions as determined appropriate
by the Board of Directors. The reverse split is intended to allow Registrant to
satisfy the Nasdaq SmallCap Market listing requirement that traded shares
maintain a minimum bid price of $1.00. Reference is made to the press release of
Registrant, issued on September 1, 1998, with respect to this matter and which
press release is incorporated in this Form 8-K by this reference. A copy of the
press release is attached to this Form 8-K as Exhibit 99.1.
Also on August 31, 1998, Registrant's Board of Directors approved a
letter of intent with Furrow-Holrob Development II, LLC ("FHD") pursuant to
which, among other things and subject to the negotiation of a definitive
agreement and the satisfaction of certain conditions, FHD would purchase up to
9,000,000 pre-split shares of Registrant's common stock valued at $.20 per share
payable in cash or through alternative property exchange arrangements. Resales
of the purchased shares would be limited to 375,000 (pre-split) during any
calendar month. FHD is owned by Samuel J. Furrow and Robert S. Talbott, who are
Registrant directors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following Exhibits are filed with or incorporated by reference
in this Report as indicated below:
99.1 Press Release dated September 1, 1998.
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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 hereunto duly authorized.
INNOVO GROUP INC.
(Registrant)
By: /s/ L.E. Smith
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L.E. Smith, Chairman and
Chief Executive Officer
Date: September 11, 1998
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EXHIBIT 99.1
Press Release dated September 1, 1998
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NEWS RELEASE
FOR IMMEDIATE DISTRIBUTION
CONTACT: L.E. SMITH, INNOVO GROUP, INC., 615-384-0100
INVESTOR GROUP SIGNS LETTER OF INTENT
FOR CAPITAL INFUSION OF $1,800,000
SPRINGFIELD, TENNESSEE, September 1, 1998 - INNOVO GROUP, INC. (NASDAQ
Symbol: INNO), a manufacturer and supplier to national and international
retailers, including Wal-Mart, K-Mart, Michael's, Hobby Lobby, Dollar General,
Goodys, and Fabri Center, announced today that FHD Development II, LLC has
signed a letter of intent to inject $1,800,000 of capital into the Company.
L.E. Smith, Chairman and CEO of Innovo Group, Inc., stated that "We
continue to make great strides as we remain focused on increasing shareholder
value in our Company. In addition to an infusion of $1,800,000 in capital, we
have been able to further strengthen the expertise of our management group by
the addition of Samuel J. Furrow to our Board of Directors in April, 1998 and
now the addition of Robert S. Talbott as a Board member." Furrow and Talbott are
representatives of the new investor group.
Smith continued "This additional capital is being raised to position
our Company to immediately eliminate all non-income producing and non-essential
assets which have negatively effected cash flow and financial performance. The
resulting cash flow should improve by an estimated $700,000 on an annualized
basis. Our Company has been carefully and strategically poised over the last
year to take this major step." Smith further stated "Our initial focus was to
stabilize our Company. Now it is time to completely eliminate the areas within
the Company that do not contribute profits to the bottom line. This new capital
infusion will allow us to do that."
While there can be no assurance that these transactions will be
completed, no regulatory approval or other consent is required for the
completion of these transactions. The transactions are contingent upon the
completion of definitive documentation between the parties and will be subject
to the terms and conditions of such documentation. The new investor group and
Innovo have committed to completing negotiation of the definitive agreement no
later than September 30, 1998. This press release may contain forward-looking
statements made pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements involve risks and uncertainties, including, without
limitation, continued acceptance of the Company's products, product demand,
competition, and other risks and uncertainties detailed from time to time in the
Company's periodic reports including Quarterly Reports on form 10-Q and Annual
Reports on form 10-K.
INNOVO GROUP designs, markets, manufactures and distributes
fashion and sports licensed nylon and canvas products for the multi-billion
dollar crafts industry and retail sector in the United States and Europe. Under
licensing agreements, the Company's sports lines feature the designs of the NBA,
NFL, Major League Baseball, NHL, and numerous college teams. INNOVO is also a
licensee for Walt Disney and Warner Brothers. INNOVO's Thimble Square subsidiary
manufactures and distributes a ladies ready to wear at home, sleep and lounge
wear from their plant in Georgia.
LISTED: NASDAQ SmallCap Exchange
TRADING SYMBOL: INNO
