INNOVO GROUP INC.

5804 East SlausonJOE'S JEANS INC.
5901 South Eastern Avenue

Commerce, California 90040
(323) 837-3700

(323) 725-5516

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON THURSDAY, JUNE 9, 2005NOVEMBER 6, 2008

Time and Date		10:9:00 a.m., local time on Thursday, June 9, 2005 November 6, 2008
Place		The Doubletree Hotel, 5757 Telegraph Road, Commerce, California 90040
Place		Sofitel Hotel, 8555 Beverly Boulevard, Los Angeles, California 90048
Items of Business		(1) To elect eightseven directors to serve on the Board of Directors until the 20062009 annual meeting of stockholders or until their respective successors are elected and qualified;
		(2) To consider and approve an amendment to the Fifth Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock available for issuance by 40 million shares from 40 million to 80 million; (3) To consider and approve an amendment to the 2004 Stock Incentive Plan to increase the number of authorized shares available for issuance under the 2004 Stock Incentive Plan by 3 million shares from 1,265,172 shares to 4,265,172 shares; (4) To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending November 26, 2005;30, 2008; and (5)
		(3) To transact such other business as may properly come before the annual meeting or any adjournmentsadjournment or postponement thereof.
Adjournments and Postponements		Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.
Record Date		You are entitled tocan vote only if, you are an Innovo Group common stockholder as ofat the close of business on April 25, 2005, or the Record Date. September 22, 2008, you were a holder of record of our common stock.
Proxy Voting
Meeting Admission		You All stockholders are entitledcordially invited to attend the annual meeting onlyAnnual Meeting in person. However, to ensure your representation at the Annual Meeting, you are urged to vote promptly by signing and returning the enclosed proxy card, or if you are an Innovo Group common stockholder as ofhold your shares in street name, by accessing the close of businessworldwide website or toll-free number indicated on the Record Date or hold a valid proxy for the annual meeting. You should be prepared to present photo identification for admittance. If you are not a common stockholder of record, but hold shares through a broker, bank or other nominee (i.e., street name), you should provide proof of beneficial ownership as of the Record Date, such asvoting instructions accompanying your most recent account statement prior to April 25, 2005, a copy of the proxy card provided by your broker, bank or nominee, or other similar evidence of ownership. If you do not provide photo identification or comply with the other procedures outlined above upon request, you will not be admitted to the annual meeting.

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List of Common Stockholders Entitled to Vote

A list of our common stockholders entitled to vote atvia the annual meeting will be open for the examination by any common stockholder for any purpose germane to the annual meeting during ordinary business hours for a period of ten days before the annual meeting at our office at 5804 East Slauson Avenue, Commerce, California, 90040.Internet or phone.

The Board of Directors unanimously recommends that you vote to:

•

elect all director nominees; and



•

ratify the appointment of auditors as described in detail in the accompanying proxy statement.

Voting		YOUR VOTE IS VERY IMPORTANT TO US. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE ENCOURAGE YOU TO READ THIS PROXY STATEMENT AND TO SUBMIT YOUR PROXY AS SOON AS POSSIBLE. YOU MAY SUBMIT YOUR PROXY FOR THE ANNUAL MEETING BY COMPLETING, SIGNING, DATING AND RETURNING YOUR PROXY IN THE PRE-ADDRESSED ENVELOPE PROVIDED, OR IN SOME CASES, BY USING THE TELEPHONE OR INTERNET. FOR SPECIFIC INSTRUCTIONS ON HOW TO VOTE YOUR SHARES, PLEASE REFER TO THE SECTION ENTITLED QUESTIONS AND ANSWERS BEGINNING ON PAGE 1 OF THIS PROXY STATEMENT OR THE INFORMATION PROVIDED TO YOU BY YOUR BROKER, BANK OR OTHER NOMINEE.
		EVEN IF YOU HAVE VOTED YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE IN PERSON AT THE MEETING, YOU MUST OBTAIN FROM SUCH BROKER, BANK OR OTHER NOMINEE, A PROXY ISSUED IN YOUR NAME.

	By Order of the Board of Directors,
	Samuel J. Furrow
	Chairman of the Board of Directors Commerce, California September 23, 2008

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TABLE OF CONTENTS

		PAGE
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION		1
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING	Los Angeles, California	2
PROPOSAL 1—ELECTION OF DIRECTORS		8
April 26, 2005PROPOSAL 2—RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		15
EXECUTIVE OFFICERS		17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION		18
COMPENSATION DISCUSSION AND ANALYSIS		18
COMPENSATION COMMITTEE REPORT		29
REPORT OF THE AUDIT COMMITTEE		29
RELATED PARTY TRANSACTIONS		30
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE		33
FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		33
OTHER BUSINESS TO BE TRANSACTED		34

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STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

        This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to the financial condition, results of operations, cash flows, financing plans, business strategies, capital and other expenditures, competitive positions, growth opportunities for existing products, plans and objectives of management and other matters. Statements in this document that are not historical facts are identified as forward-looking statements for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933.

This notice of annual meeting        When we use the words "anticipate," "estimate," "project," "intend," "expect," "plan," "believe," "should," "likely" and similar expressions, we are making forward-looking statements. These forward-looking statements are found at various places throughout this proxy statement and the other documents we incorporate by reference in this proxy are first being mailedstatement. We caution you not to our common

stockholdersplace undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or about May 2, 2005.circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

        These forward-looking statements, including statements relating to future business prospects, revenues, working capital, liquidity, capital needs and income, wherever they occur in this proxy statement, are estimates reflecting our best judgment. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in this proxy statement and those discussed from time to time in our Securities and Exchange Commission, or SEC, reports, including our annual report on Form 10-K, Amendment No. 1 on Form 10-K/A for the year ended November 30, 2007 filed with the SEC on February 28, 2008 and March 28, 2008, respectively. You should read and consider carefully the information about these and other risks set forth under the caption "Risk Factors" in such filings.

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Audit Committee.    The Audit Committee is currently comprised of Messrs. Factor, Rizvi, SanfilippoHoffman, and Savage.O'Riordan. Mr. Rizvi serves as Chairman of the Audit Committee. The Audit Committee met or acted through written consent a total of sevenfive times in fiscal 2004.2007.

The Audit Committee has been established to: (a) assist our Board of Directors in its oversight responsibilities regarding (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) the independent accountant’saccountant's qualifications and independence and (4) the performance of the our internal audit function; (b) prepare the report required by the SEC for inclusion in the our annual proxy statement;(c) retain and terminate our independent accountant; (d) approve audit and non-audit services to be performed by the independent accountant; and (e) perform such other functions as our Board of Directors may from time to time assign to the Audit Committee. The Audit Committee has a charter that details its duties and responsibilities, which was adopted by our Board of Directors on May 22, 2003 and filed with our revised proxy statement for our last annual meeting on April 29, 2004. Currently, all Audit Committee members are “independent”"independent" under NASDAQ listing standards and as such term is defined in the

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rules and regulations of the SEC, and Mr. Rizvi has also been designated to be an “audit"audit committee financial expert”expert" as such term is defined in the rules and regulations of the SEC. A copy of the Audit Committee charter can be found on our website at www.innovogroup.comwww.joesjeans.com under our Investor Relations heading.

Compensation and Stock Option CommitteeCommittee..  The    Currently, the Compensation and Stock Option Committee is currently comprised of Messrs. Factor, RizviSavage, Hoffman, O'Riordan and Sanfilippo.  In early 2005,Rizvi. Mr. Hoffman resigned as a member of the Compensation and Stock Option Committee and was replaced by Mr. Sanfilippo.  Mr. RizviSavage serves as Chairman of the Compensation and Stock Option Committee. The Compensation and Stock Option Committee met or acted through written consent a total of five times in fiscal 2004.

2007.

The principal responsibilities of the Compensation and Stock Option Committee are to (a) assist our Board of Directors in ensuring that a proper system of long-term and short-term compensation is in place to provide performance-oriented incentives to management, and that compensation plans are appropriate and competitive and properly reflect the objectives and performance of management and the company; (b) discharge our Board of Director’sDirector's responsibilities relating to compensation of our executive officers; (c) evaluate our Chief Executive Officer and set his remuneration package; (d) prepare an annual report on executive compensation for inclusion in our annual proxy statement; (e) make recommendations to our Board of Directors with respect to incentive-compensation plans and equity-based plans; and (f) perform such other functions as our Board of Directors may from time to time assign. The Compensation and Stock Option Committee has a charter that details its duties and responsibilities, which was adopted by our Board of Directors on May 22, 2003. Currently, all Compensation and Stock Option Committee members are “independent”"independent" under NASDAQ listing standards. A copy of the Compensation and Stock Option Committee charter can be found on our website at www.innovogroup.comwww.joesjeans.com under our Investor Relations heading.

Nominating and Governance CommitteeCommittee..    The Nominating and Governance Committee is currently comprised of Messrs. Hoffman, SanfilippoO'Riordan, and Savage. Mr. SanfilippoHoffman serves as Chairman of the Nominating and Governance Committee. The Nominating and Governance Committee met a total of two timesone time in fiscal 20042007 and met on April 8, 2005prior to the filing of this proxy statement to propose athe above slate of nominees for election to our Board of Directors by our common stockholders atfor this annual meeting.

The principal responsibilities of the Nominating and Governance Committee are to (a) assist our Board of Directors in determining the desired experience, mix of skills and other qualities to assure appropriate Board of Directors composition, taking into account the current Board members and the specific needs of the company and the Board of Directors; (b) identifyingidentify highly qualified individuals meeting those criteria to serve on our Board of Directors; (c) proposingpropose to our Board of

Directors a slate of nominees for election by our common stockholders at the annual meeting of stockholders and prospective director candidates in the event of the resignation, death, removal or retirement of directors or a change in our Board of Directors composition requirements; (d) developingdevelop plans regarding the size and composition of our Board of Directors and its committees; (e) reviewingreview management succession plans; (f) reviewingreview the Corporate Governance Guidelines of our Boardof Directors at least annually and monitoringmonitor and makingmake recommendations with respect to the corporate governance principles applicable to the company; and (g) perform such other functions as the Board of Directors may from time to time assign to the Nominating and Governance Committee.

The Nominating and Governance Committee has a charter that details its duties and responsibilities, which was adopted by our Board of Directors on May 22, 2003. Currently, all Nominating and Governance Committee members are “independent”"independent" under NASDAQ listing standards. There is no specific procedure outlined in the charter for the Nominating and Governance Committee to consider nominees to our Board of Directors that are recommended by our common stockholders, but such nominees will be considered in accordance with the principal responsibilities of the Nominating and Governance Committee, our bylaws and all applicable rules and regulations relating to such nominations by our common stockholders. Please see our

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“Questions "Questions and Answers”Answers" beginning on page 6two for deadlines to propose actions for consideration at next year’syear's annual meeting of stockholders or to nominate individuals to serve as directors. The Nominating and Governance Committee has the responsibility for developing criteria for the selection of new directors and nominees for vacancies. The members of the Nominating and Governance Committee have the discretion to choose candidates that have the desired experience, mix of skills and other qualities to assure appropriate composition while taking into account the current members and the specific needs of Innovo Groupour company and our Board of Directors. To date, no more specific criteria has been developed than that set forth in the charter. Furthermore, we have not had a common stockholder propose a nominee to our Board of Directors nor have we paid any third party a fee to assist us in the process of identifying or evaluating candidates for our Board of Directors. A copy of the Nominating and Governance Committee charter can be found on our website at www.innovogroup.comwww.joesjeans.com under our Investor Relations heading.

Q:

How are members of the Board of Directors compensated for their service?

A:For fiscal 2004

Historically, our non-employee members of our Board of Directors have been compensated for service through an equity grant. Our Board of Directors are not compensated in any other manner, however, they are reimbursed for travel and pursuant to our 2004 Stock Plan, each non-employee director received annual compensation atbusiness expenses associated with attending our annual meeting if the Board of stockholders following his election as a directorDirector's schedule permits such attendance. Attendance in person is not required, but we try to accommodate schedules in planning the date. Consistent with its past practices, on October 15, 2007 and October 17, 2007, the Compensation Committee of the Board approved grants of restricted stock in the amount of 80,000 shares to each non-employee Director: Sam Furrow, Kent Savage, Tom O'Riordan, and Suhail Rizvi. The restricted stock vests on a monthly basis over the course of 12 months beginning November 15, 2007. In lieu of a restricted stock grant, Kelly Hoffman elected to be compensated through a cash retainer in the amount of $127,200 paid monthly over the twelve month period. This amount was determined based upon the peer group analysis and because the non-employee member of our Board of Directors had served

from May 2006 to October 2007 (a period of 17 months) without any form of a grantcash or other equity compensation.

(1)

Represents the total fair value of options80,000 shares of restricted common stock granted to buyour non-employee directors on October 15, 2007 to be recognized by us as an expense in accordance with SFAS 123R. The restricted common stock.  These options vestedstock vests on a monthly basis over a 12 month period of twelve months fromwith the date of grant and expire ten years from the date of grant.  The exercise price was set at the fair market value of the common stockfirst tranche vesting on the date of grant.  For fiscal 2004, each non-employee director received a grant of options to purchase up to 45,000 shares of our common stock at an exercise price of $1.58 per share.

November 15, 2007.

Prior to fiscal 2004, pursuant to our former 2000 Director Stock Incentive Plan, each non-employee director received an option to buy common stock with an aggregate fair market value of $10,000 with an exercise price is set at 50% of the fair market value of the common stock on the date of grant.  The discount was originally proposed to be in lieu of director fees.  In addition to this stock option compensation, at the annual meeting of stockholders held on May 22, 2003, our Board of Directors voted to compensate all non-employee directors in the form of a cash payment at an annual rate of $12,500 for service as a member of our Board of Directors.  In fiscal 2004, our Board of Directors elected not to compensate all non-employee directors in the form of a cash payment.  Also, as a result of service as members of our Board of Directors for almost a full calendar year prior to receiving any form of compensation, Messrs. Savage and Sanfilippo received an additional grant of options to purchase up to 25,000 shares of our common stock at an exercise price of $1.58 per share.  Members of our Board of Directors who are employees receive no additional compensation for service as members of our Board of Directors. Members of our Board of Directors who also serve on one or more committees of our Board of Directors do not receive any additional compensation for such service.

After this annual meeting of stockholders on June 9, 2005, our Board of Directors will meet to discuss compensation arrangements for members of our Board of Directors for service throughout fiscal 2005.  We expect the compensation arrangements to be similar to those for fiscal 2004.

Q:

Has our Board of Directors adopted a code of ethics?

A:

Our Board of Directors adopted a Code of Business Conduct and Ethics for all of our directors, officers and employees on May 22, 2003. Our Code of Business Conduct and Ethics is available on our website at www.innovogroup.comwww.joesjeans.com or you may request a free copy of our Code of Business Conduct and Ethics from our Chief OperatingCompliance Officer at our corporate headquarters at the following address: 5804 East Slauson5901 South Eastern Avenue, Commerce, California 90040 or by calling (323) 725-5526.

837-3700. You may also find a copy of our Code of Business Conduct and Ethics filed as Exhibit 14 to our Annual Report on Form 10-K for the fiscal year ended November 29, 2003 filed with the SEC on February 28, 2004.

To date, there have been no waivers under our Code of Business Conduct and Ethics. We intend to disclose any amendments to our Code of Business Conduct and Ethics and any waiver granted from a provision of such Code on a Current Report on Form 8-K filed with the SEC within fivefour business days following such amendment or waiver or on our website at www.innovogroup.comwww.joesjeans.com within five business days following such amendment or waiver.the same time frame. The information contained or connected to our website is not incorporated by reference into this proxy statement and should not be considered a part of this or any other report that we file or furnish to the SEC.

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Q:

Does our Board of Directors have a process for our common stockholders to communicate with its members?

A:

At the present time, our Board of Directors has not adopted a formal policy to set forth a process by which our common stockholders may communicate with its members.  However, any communications directed tothe members of ourthe Board of Directors because any correspondence addressed to any member of the Board of Directors will be given due considerationreceived, reviewed and will be handled in accordance withforwarded to whom the principal responsibilities of various committees,correspondence is directed by the duties as a member ofCorporate Secretary, unless the communication is unduly hostile, threatening, illegal, does not reasonably relate to us or our Board of Directors, our bylaws and all applicable rules and regulations relating to communications by our common stockholders.

PROPOSAL 2

APPROVAL OF AMENDMENT TO OUR FIFTH AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES BY 40
MILLION FROM 40 MILLION TO 80 MILLION

Our Board of Directors has approved and recommended the adoption of an amendment to our Fifth Amended and Restated Certificate of Incorporation,business, or Restated Certificate, to increase the number of authorized shares of common stock available for issuance by 40 million from 40 million to 80 million.  We are asking our common stockholders to consider and approve the amendment to our Restated Certificate.  Currently, we have 40 million shares of our common stock and 5 million shares of our preferred stock authorized for issuance.  In the event of approval of this amendment, our authorized shares of common stock would be increased by 40 million to 80 million.  Our authorized shares of preferred stock will remain the same.  If this proposal is approved, the additional shares would be partsimilarly inappropriate. The office of the existing class of common stock and if and when issued, would have the same rights and privileges as the shares of common stock presently issued and outstanding.  As of April 20, 2005, we had 31,837,810 shares of common stock outstanding.

Q:Why is the Board recommending this Proposal?

A:                                   Our Board believes that this amendmentCorporate Secretary has authority to our Restated Certificate is necessary to provide us with a sufficient reserve of shares of common stock to provide us with flexibility to issue more shares of common stock for corporate purposes that may be identified from time to time, such as financings, acquisitions, strategic business relationships, stock dividends, including stock splits in the form of stock dividends,discard any inappropriate communications or issuances under our benefit plans.  Having additional authorized shares of common stock available for issuance in the future would give us greater flexibility and allow shares of common stock to be issued without the expense and delay of a stockholders’ meeting, except as may be required by applicable law or regulations.  We have no present commitment, plan or intent to issue any of the additional shares of common stock provided for in this Proposal 2.  The increase in authorized shares of our common stock also could be used to make a change in control of us more difficult.  Though we have no current plan or intention to issue such shares as a takeover defense, the additional authorized shares of common stock could be used to discourage persons from attempting to gain control of us or make more difficult the removal of management.  Management is not currently aware of any specific effort to obtain control of us by means of a merger, tender offer, solicitation in opposition of management, or otherwise.  If this Proposal 2 is approved, the additional authorized shares of common stock, as well, as the currently authorized but unissued shares of common stock (but for those shares which are reserved for issuance), would be immediately available in the future for such corporate purposes as the Board deems advisable from time to time without further action by our common stockholders, unless such action is required by applicable law or any stock exchange or securities market upon which our shares may be listed.

It should be noted that, subject to the limitations as discussed above, all of the types of Board action described in the preceding paragraph can currently be taken and the power of the Board to take suchother appropriate actions would not be enhanced by the passage of this Proposal 2, although this Proposal 2 would increase the number of shares that are subject to such action.

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Q:How will the Restated Certificate be amended?

A:                                   If this Proposal 2 is approved and the amendment to the Restated Certificate becomes effective, the first paragraph of Article Fourth of the Restated Certificate, which sets forth our presently authorized capital stock, will be amended to read as set forth below.

“FOURTH.  (a) The total number of shares of capital stock that the Corporation shall be authorized to issue is 85 million divided into two classes as follows: (i) 80 million (80,000,000) shares of common stock having a par value of $0.10 per share (“Common Stock”), and (ii) five million (5,000,000) shares of serial preferred stock in series having a par value of $0.10 per share (“Preferred Stock”).”

Q:What is the vote required to approve Proposal 2?

A:                                   The affirmative “FOR” vote of a majority of our shares of common stock issued and outstanding is required to approve the amendment to the Restated Certificate.

Q:When would the amendment become effective?

A:                                   If approved by our common stockholders, the proposed amendment to our Restated Certificate will become effective upon the filing of a Certificate of Amendment with the Secretary of State of the State of Delaware, which will occur as soon as reasonably practicable after approval.

Q:How does the Board of Directors recommend I vote?

A:                                   Our Board of Directors unanimously recommends a vote “FOR” the approval of the amendment to our Restated Certificate.

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PROPOSAL 3

APPROVAL OF AMENDMENT TO 2004 STOCK INCENTIVE PLAN

On April 7, 2004, our Board of Directors adopted the 2004 Stock Incentive Plan, or the 2004 Stock Plan.  Our common stockholders approved the 2004 Stock Plan at the annual meeting of stockholders on June 3, 2004.  We are asking you to consider and approve an increase in the reservation of the total shares available for issuance thereunder by 3 million shares from 1,265,172 shares of common stock to 4,1265,172 shares of common stock.

Our 2004 Stock Plan provides for an award of options, whether nonqualified or incentive, restricted common stock, restricted common stock units, performance shares, performance share units, purchases, share awards, stock appreciation rights or other awards based on the value of our common stock.  The 2004 Stock Plan also permits the Compensation and Stock Option Committee to grant certain awards, such as performance shares, contingent based upon pre-established performance goals to our executives and our subsidiaries.  In order to qualify for deductibility under Section 162(m) of the Internal Revenue Code, or the Code, the 2004 Stock Plan, including, without limitation, the performance goals for determining performance awards set forth in the 2004 Stock Plan must be approved by our common stockholders.

Q:What is the vote required to approve Proposal 3?

A:                                   The affirmative “FOR” vote of a majority of the shares present in person or represented by proxy at the annual meeting is required to approve the amendment to the 2004 Stock Plan.

Q:How does the Board of Directors recommend I vote?

A:                                   Our Board of Directors unanimously recommends a vote “FOR” the approval of the amendment to the 2004 Stock Plan.

Q:Why is the Board recommending this Proposal?

A:Our Board has concluded that the adoption of the amendment to the 2004 Stock Plan is in our best interest and the interest of our common stockholders.  Our Board believes that this amendment is necessary to provide us with a sufficient reserve of common stock for future awards of various types needed to attract, employ and retain employees, directors and consultants of outstanding ability.

Q:How will the 2004 Stock Plan be amended?

A:                                   If approved by our common stockholders, the 2004 Stock Plan would be amended and restated to increase the total shares available for issuance under the 2004 Stock Plan by 3 million shares from 1,265,172 shares of common stock to 4,265,172 shares of common stock.

Q:When would the amendment become effective?

A:                                   If approved by our common stockholders, the proposed amendment to our 2004 Stock Plan will become effective upon approval.  As soon as reasonably practicable thereafter, we intend to file a registration statement covering the offering of the additional shares under the 2004 Stock Plan with the SEC pursuant to the Securities Act of 1933, as amended.

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Q:What is a general description of the principal terms of the 2004 Stock Plan?

A:                                   A general description of the principal terms of the 2004 Stock Plan is set forth below.  However, this summary does not purport to be a complete description of all of the provisions of the 2004 Stock Plan, a copy of which is attached to this proxy statement as Attachment A and has been revised to reflect the proposed amendment to the total shares available for issuance under the 2004 Stock Plan.

General.  The purpose of the 2004 Stock Plan is to enhance our ability to attract and retain officers, directors, employees and consultants of outstanding ability and to provide selected officers, employees, directors and consultants with an interest in us parallel to that of our common stockholders.  The 2004 Stock Plan provides for the award of options, whether nonqualified or incentive, restricted common stock, restricted common stock units, performance shares, performance share units, purchases, share awards, stock appreciation rights or other awards based on the value of our common stock to our officers, employees, directors and consultants, as well as those officers, employees, directors and consultants of our subsidiaries, such as Innovo, Inc., Innovo Azteca Apparel, Inc. and Joe’s Jeans, Inc.

Effective Date.  The 2004 Stock Plan became effective on June 3, 2004.

Number of Shares.  Subject to adjustment for certain corporate events, the total number of shares of common stock which are available for the grant of awards under the 2004 Stock Plan cannot exceed 1,265,172 shares of common stock.  If this Proposal 3 is approved, the total number of shares of common stock which are available for the grant of awards under the 2004 Stock Plan will be increased from 1,265,172 shares of common stock to 4,265,172 shares of common stock; provided, that, for purposes of this limitation, any common stock subject to an option which is canceled or expires without exercise will again become available for award under the 2004 Stock Plan.  Upon forfeiture of awards in accordance with the provisions of the 2004 Stock Plan and the terms and conditions of the award, such shares will again be available for subsequent awards under the 2004 Stock Plan.  Subject to adjustment, no employee will be granted, during any one (1) year period, options to purchase more than 1,250,000 shares of common stock, and the number of shares of common stock subject to any awards other than options or stock appreciation rights will not exceed 1,250,000 shares of common stock.  Common stock available for issue or distribution under the 2004 Stock Plan will be authorized and unissued shares or shares reacquired by us in any manner.

Administration.  The Compensation and Stock Option Committee of our Board of Directors will administer the 2004 Stock Plan.  The Compensation and Stock Option Committee is currently comprised of Messrs. Rizvi, Factor and Sanfilippo.  In early 2005, Mr. Hoffman resigned as a member of the Compensation and Stock Option Committee and was replaced by Mr. Sanfilippo.  Mr. Rizvi is Chairman of the Compensation and Stock Option Committee.  All of Messr. Rizvi, Factor and Sanfilippo are non-employee directors within the meaning of Rule 16b-3 as promulgated under Section 16 of the Securities Exchange Act of 1934, as amended, and are also outside directors within the meaning of Section 162(m) of the Code.  The Compensation and Stock Option Committee will (i) approve the selection of participants, (ii) determine the type of stock awards to be made to participants, (iii) determine the number of shares of common stock subject to awards, (iv) determine the terms and conditions of any awards granted there under (including, but not limited to, any restriction and forfeiture conditions on such awards) and (v) have the authority to interpret the 2004 Stock Plan, to establish, amend, and rescind any rules and regulations relating to the 2004 Stock Plan, to determine the terms and provisions of any agreements entered into there under, and to make all other determinations necessary or advisable for the administration of the 2004 Stock Plan.

Eligibility.  Employees, officers, directors and consultants of us and our subsidiaries selected by the Compensation and Stock Option Committee are eligible to receive grants of awards under the 2004 Stock Plan.

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Awards.  Awards under the 2004 Stock Plan may consist of options, restricted common stock, restricted common stock units, performance shares, performance share units, stock purchases, share awards, stock appreciation rights or other awards based on the value of the common stock.

(1)Options.  Both “nonqualified stock options”, or Nonqualified Stock Options, and “incentive stock options”, or ISOs, may be granted under the 2004 Stock Plan, which we will collectively refer to as Options.  The terms of any such Option will be set forth in an option agreement and will be consistent with the following:

Exercise Price.  The exercise price per share of the shares of our common stock to be purchased pursuant to any Option will be fixed by the Compensation and Stock Option Committee at the time such Option is granted.  In general, in no event will the exercise price for ISOs be less than the fair market value of a share on the day on which the ISO is granted.  The Compensation and Stock Option Committee may also reduce the Option price of any outstanding Option either through a direct amendment to such Option or through a cancellation of such Option and immediate grant of a new Option with a lower Option price or in any other manner it deems appropriate.

Option Term.  Subject to termination, the duration of each Option will be determined by the Compensation and Stock Option Committee, but may not exceed 10 years from the date of grant; provided, however, that in the case of ISOs granted to 10% shareholders, the term of such Option will not exceed 5 years from the date of grant.  In the event of a participant’s death (other than ISOs) Options that would otherwise remain exercisable following such death, will remain exercisable for one year following such death irrespective of the terms of the Option.

Vesting.  An Option will vest and become exercisable at a rate determined by the Compensation and Stock Option Committee on the date of grant.

(2)Restricted Common Stock.  The 2004 Stock Plan permits the Compensation and Stock Option Committee to award restricted common stock under the 2004 Stock Plan to eligible participants.  The Compensation and Stock Option Committee may also award restricted common stock in the form of restricted common stock units having a value equal to an identical number of shares of common stock.  Payment of restricted common stock units will be made in common stock or in cash or in a combination thereof (based upon the Fair Market Value (as defined in the 2004 Stock Plan) of the common stock on the day the restricted period expires).

(3)Performance Shares.  Performance shares may be granted in the form of actual shares of common stock or common stock units having a value equal to an identical number of shares of common stock. The performance conditions and the length of the performance period will be determined by the Compensation and Stock Option Committee, but in no event may a performance period be less than twelve (12) months. The Compensation and Stock Option Committee will determine in its sole discretion whether performance shares granted in the form of common stock units will be paid in cash, common stock, or a combination of cash and common stock.  Awards of performance shares to Covered Employee (as defined in the 2004 Stock Plan) will be subject to performance goals.  Performance goals may be expressed in terms of one or more of the following business criteria:  revenue, earnings before interest, taxes, depreciation and amortization, or EBITDA, funds from operations, funds from operations per share, operating income, pre or after tax income, cash available for distribution, cash available for distribution per share, net earnings, earnings per share, return on equity, return on assets, share price performance, improvements in our attainment of expense levels, and implementing or completion of critical projects, or improvement in cash-flow (before or after tax).  The Compensation and Stock Option Committee will establish the relevant performance conditions

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within ninety (90) days after the commencement of the performance period (or such later date as may be required by Section 162(m) of the Code.  A performance goal may be measured over a performance period on a periodic, annual, cumulative or average basis and may be established on a corporate-wide basis or established with respect to one or more operating units, divisions, subsidiaries, acquired businesses, minority investments, partnerships, or joint ventures.  The maximum number of performance shares subject to any award to a Covered Employee is 1,250,000 for each twelve (12) months during the performance period (or, to the extent the award is paid in cash, the maximum dollar amount of any such award is the equivalent cash value, based on the fair market value of the common stock, of such number of shares of common stock on the last day of the performance period).  An award of performance shares to a participant who is a Covered Employee will (unless the Compensation and Stock Option Committee determines otherwise) provide that in the event termination of continuous service prior to the end of the performance period for any reason, such award will be payable only if the applicable performance objectives are achieved and to the extent, if any, as the Compensation and Stock Option Committee will determine.  The Compensation and Stock Option Committee may reduce or eliminate the amount of payment with respect to any award of performance shares notwithstanding the achievement of specified performance objective however, no adjustments will be made that would adversely impact a participant following a change in control.

No payments will be made with respect to any performance award unless and until the Compensation and Stock Option Committee certifies the achievement of the performance goals.

(4)Share Purchases.  The Compensation and Stock Option Committee may authorize eligible individuals to purchase common stock at price equal to, below or above the fair market value of the common stock at the time of grant.

(5)Share Awards.  Subject to such performance and employment conditions as the Compensation and Stock Option Committee may determine, awards of common stock or awards based on the value of the common stock may be granted either alone or in addition to other awards granted under the 2004 Stock Plan.

(6)Stock Appreciation Rights.The Compensation and Stock Option Committee may, either alone or in connection with the grant of another award grant stock appreciation rights, the terms of which will be set forth in an agreement.

Change in Control.  Unless otherwise provided in an award agreement, upon the occurrence of a “Change in Control” (as defined in the 2004 Stock Plan), all options and stock appreciation rights will automatically become vested and exercisable in full and all restrictions or performance conditions, if any, on any common stock awards, restricted common stock, restricted common stock units, performance shares or performance share units granted will automatically lapse.

Adjustments.  The 2004 Stock Plan provides that in the event of certain corporate events or changes in the common stock, awards and the number of shares under the 2004 Stock Plan may be adjusted to reflect such event.

Deferrals.  The Compensation and Stock Option Committee will be authorized to establish procedures pursuant to which the payment of any award may be deferred.

Amendment and Termination.  The 2004 Stock Plan will expire on June 3, 2014 (except as to awards outstanding on that date).inappropriate communications. The Board may terminate or amend the 2004 Stock Plan in any respect at any time, exceptof Directors believes that no amendment will be made without our common stockholder approval, if such approval is necessarynot having a formal process to complycommunicate with any applicable law, regulation or stock exchange rule and, no amendment will be

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made that would adversely affect the rights of a participant without such participant’s written consent, except as provided under Adjustments.

Q:What are the federal income tax consequences of options granted under the 2004 Stock Plan under the federal tax laws currently in effect?

The following is a summary of the material federal tax consequences of receiving options in the 2004 Stock Plan and is based upon an analysis of the present provisions of the Code and the regulations promulgated thereunder, all of which are subjectthem does not make them less accessible to change.  A participant may also be subject to state and local taxes, the consequences of which are not discussed herein, in the jurisdiction in which he works and/or resides.  This summary is for general information purposes only and is not tax advice.

Section 162(m) Limitation.  Subject to a limited number of exceptions, Section 162(m) of the Code denies a deduction to a publicly held corporation for payments of remuneration to certain employees to the extent the employee’s remuneration for the taxable year exceeds $1,000,000.  For this purpose, remuneration attributable to stock options is included within the $1,000,000 limitation.  However, to the extent that certain procedural requirements are met (e.g., the 2004 Stock Plan is approved by our common stockholders grants are made by the Compensationand

any inquiries to date have been satisfactorily processed and Stock Option Committee, the exercise price is equalcommunicated to the fair market value ofappropriate members. Each communication must contain a clear notation indicating that it is a "Stockholder—Board Communication" or "Stockholder—Director Communication," and each communication must identify the underlying shares upon grant, etc.), gain from the exercise of stock options should not be subject to the $1,000,000 limitation.  We have attempted to structure the 2004 Stock Plan in such a manner that the remuneration attributable to the stock options will not be subject to the $1,000,000 limitation.  We have not, however, requested a ruling from the Internal Revenue Service or an opinion of counsel regarding this issue.

Non-Qualified Stock Options.  An individual receiving non-qualified stock options should not recognize taxable income at the time of grant.  A participant should generally recognize ordinary compensation income in an amount equal to the excess, if any, in the fair market value of the option shares on exercise of the non-qualified stock options over the exercise price thereof.  In general, subject to the limitations set forth in Section 162(m) and discussed above, we are entitled to deduct from our taxable income the amount that the participant is required to include in ordinary income at the time of such inclusion.

Incentive Stock Options.  An individual granted an incentive stock option will not generally recognize taxable income at the time of grant or, subject to certain conditions, at the time of exercise, although he or she may be subject to alternative minimum tax.  In general, if a disqualifying disposition should occur (i.e., the shares acquired upon exercise of the option are disposed of within the later of two years from the date of grant or one year from the date of exercise), a participant will generally recognize ordinary compensation income in the year of disposition in an amount equal to the excess, if any, of the fair market value of the option shares at the time of exercise (or, if less, the amount realized on disposition), over the exercise price thereof.  We are not entitled to any deduction on account of the grant of the incentive stock options or the participant’s exercise of the option to acquire common stock.  However, in the event of a subsequent disqualifying disposition of such shares of common stock acquired pursuant to the exercise of an incentive stock option under circumstances resulting in taxable compensation to the participant, subject to the limitations set forth in Section 162(m) and discussed above, in general, we should be entitled to a tax deduction equal to the amount treated as taxable compensation to the participant.

Q:What would the new 2004 Stock Plan benefits have been if the 2004 Stock Plan had been in effect for the fiscal 2004 year?

A:The amounts payable under the 2004 Stock Plan for 2004 which may be received by each of (a) our executive officers named in the Summary Compensation Table herein; (b) our executive officersauthor as a group; and (c) our employees who are not executive officers as a group, are not currently determinable.stockholder.

PROPOSAL 2

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