844143--2/9/2006--INNOVO_GROUP

related topics

{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{stock, price, share}

{operation, natural, condition}

{stock, price, operating}

{operation, international, foreign}

{personnel, key, retain}

{property, intellectual, protect}

{provision, law, control}

{condition, economic, financial}

Risk Factors Relating to our Common Stock Our common stock price is extremely volatile and may decrease rapidly. If we cannot meet the Nasdaq Capital Market maintenance requirements and Nasdaq rules, Nasdaq may delist our common stock, which could negatively affect the price of the common stock and your ability to sell the common stock. We are controlled by our management and other related parties. Risk Factors Relating to our Operations Our operations could be dependent on our ability to execute on our exploration of strategic initiatives for our business. Due to our negative cash flows, we could be required to cut back or stop operations if we are unable to raise or obtain needed funding. The seasonal nature of our business makes management more difficult, severely reduces cash flow and liquidity during parts of the year and could force us to curtail our operations. We face risks associated with constantly changing fashion trends, including consumer s response to our Joe s Jeans branded apparel. Our business could be negatively impacted by a change in consumer demand for denim in the marketplace. A portion of our net sales and gross profit is derived from a small number of large customers. We rely on our Joe s Jean License Agreement to generate a portion of our revenues. Our business could be negatively impacted by the financial health of our retail customers. We are currently dependent on supply and distribution arrangements with Azteca, Commerce, certain stockholders and their related entities to generate a substantial portion of our revenues. The loss of the services of key personnel could have a material adverse effect on our business. Our business could suffer as a result of manufacturer s inability to produce our goods on time and to our specifications or if we need to replace manufacturers. If an independent manufacturer or license partner of ours fails to use acceptable labor practices, our business could suffer. Our trademark and other intellectual property rights may not be adequately protected outside the United States and some of our products are targets of counterfeiting. Our ability to conduct business in international markets may be affected by legal, regulatory, political and economic risks. We face intense competition in the denim industry.

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844143--2/9/2006--INNOVO_GROUP_INC