ITEM 1. CONDENSED FINANCIAL STATEMENTS
INNOVATIVE DESIGNS, INC.
CONDENSED BALANCE SHEETS
April 30, 2017 (Unaudited) and October 31,
2016
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
342,845
|
|
|
$
|
502,777
|
|
Accounts receivable
|
|
|
32,676
|
|
|
|
72,143
|
|
Inventory - net of obsolete inventory reserve of $40,000
|
|
|
823,809
|
|
|
|
936,587
|
|
Inventory on consignment
|
|
|
1,625
|
|
|
|
1,625
|
|
Prepaid expenses
|
|
|
21,069
|
|
|
|
17,485
|
|
Total current assets
|
|
|
1,222,024
|
|
|
|
1,530,617
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT - NET
|
|
|
171,632
|
|
|
|
176,925
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
Advance to employee
|
|
|
4,000
|
|
|
|
4,000
|
|
Deposits on equipment
|
|
|
617,000
|
|
|
|
617,000
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
621,000
|
|
|
|
621,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
2,014,656
|
|
|
$
|
2,328,542
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
154,330
|
|
|
$
|
116,512
|
|
Current portion of notes payable
|
|
|
15,467
|
|
|
|
15,467
|
|
Accrued interest expense
|
|
|
52,485
|
|
|
|
49,885
|
|
Due to shareholders
|
|
|
92,100
|
|
|
|
119,000
|
|
Accrued expenses
|
|
|
65,543
|
|
|
|
93,333
|
|
Total current liabilities
|
|
|
379,925
|
|
|
|
394,197
|
|
|
|
|
|
|
|
|
|
|
Long-term portion of notes payable
|
|
|
171,768
|
|
|
|
188,891
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
551,693
|
|
|
|
583,088
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 100,000,000 shares authorized, and 25,400,310 and 25,370,310 issued and outstanding as of April 30, 2017 and October 31, 2016
|
|
|
2,540
|
|
|
|
2,537
|
|
Additional paid-in capital
|
|
|
9,463,171
|
|
|
|
9,455,674
|
|
Accumulated deficit
|
|
|
(8,002,748
|
)
|
|
|
(7,712,757
|
)
|
Total stockholders' equity
|
|
|
1,462,963
|
|
|
|
1,745,454
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
2,014,656
|
|
|
$
|
2,328,542
|
|
The accompanying condensed notes are an integral
part of these financial statements.
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF OPERATIONS
Three and Six Month Periods Ended April 30,
2017 and 2016 (Unaudited)
|
|
Three Month Periods Ended April 30,
|
|
|
Six Month Periods Ended April 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES - NET
|
|
$
|
39,162
|
|
|
$
|
110,278
|
|
|
$
|
208,372
|
|
|
$
|
338,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
25,568
|
|
|
|
84,197
|
|
|
|
106,074
|
|
|
|
182,951
|
|
Selling, general and administrative expenses
|
|
|
170,741
|
|
|
|
152,090
|
|
|
|
378,212
|
|
|
|
395,954
|
|
|
|
|
196,309
|
|
|
|
236,287
|
|
|
|
484,286
|
|
|
|
578,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(157,147
|
)
|
|
|
(126,009
|
)
|
|
|
(275,914
|
)
|
|
|
(240,741
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,424
|
)
|
|
|
-
|
|
Interest expense
|
|
|
(3,604
|
)
|
|
|
(19,526
|
)
|
|
|
(10,653
|
)
|
|
|
(38,006
|
)
|
Total other expense
|
|
|
(3,604
|
)
|
|
|
(19,526
|
)
|
|
|
(14,077
|
)
|
|
|
(38,006
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(160,751
|
)
|
|
$
|
(145,535
|
)
|
|
$
|
(289,991
|
)
|
|
$
|
(278,747
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Common Share
|
|
$
|
(0.006
|
)
|
|
$
|
(0.006
|
)
|
|
$
|
(0.011
|
)
|
|
$
|
(0.011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding
|
|
|
25,396,265
|
|
|
|
25,185,643
|
|
|
|
25,383,288
|
|
|
|
24,896,722
|
|
The accompanying condensed notes are an integral
part of these financial statements.
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY
April 30, 2017 (Unaudited) and October 31,
2016
|
|
Common Stock
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Accumulated
|
|
|
|
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Paid-in Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 31, 2015
|
|
|
24,371,310
|
|
|
$
|
2,437
|
|
|
$
|
8,902,744
|
|
|
$
|
(7,080,334
|
)
|
|
$
|
1,824,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
120,000
|
|
|
|
12
|
|
|
|
67,188
|
|
|
|
-
|
|
|
|
67,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for fixed assets
|
|
|
30,000
|
|
|
|
3
|
|
|
|
23,997
|
|
|
|
-
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of stock
|
|
|
849,000
|
|
|
|
85
|
|
|
|
461,745
|
|
|
|
-
|
|
|
|
461,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(632,423
|
)
|
|
|
(632,423
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 31, 2016
|
|
|
25,370,310
|
|
|
|
2,537
|
|
|
|
9,455,674
|
|
|
|
(7,712,757
|
)
|
|
|
1,745,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
30,000
|
|
|
|
3
|
|
|
|
7,497
|
|
|
|
-
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(289,991
|
)
|
|
|
(289,991
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2017
|
|
|
25,400,310
|
|
|
$
|
2,540
|
|
|
$
|
9,463,171
|
|
|
$
|
(8,002,748
|
)
|
|
$
|
1,462,963
|
|
The accompanying condensed notes are an integral
part of these financial statements.
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Six Month Periods Ended April 30, 2017 and
2016 (Unaudited)
|
|
For the Six Month Periods Ended
|
|
|
|
April 30, 2017
|
|
|
April 30, 2016
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(289,991
|
)
|
|
$
|
(278,747
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
|
7,500
|
|
|
|
52,200
|
|
Depreciation
|
|
|
15,293
|
|
|
|
7,605
|
|
Increase (decrease) from changes in:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
39,467
|
|
|
|
(15,930
|
)
|
Inventory
|
|
|
112,778
|
|
|
|
(84,111
|
)
|
Inventory on consignment
|
|
|
-
|
|
|
|
(1,625
|
)
|
Deposits on inventory
|
|
|
-
|
|
|
|
78,320
|
|
Prepaid expenses
|
|
|
(3,584
|
)
|
|
|
(10,185
|
)
|
Accounts payable
|
|
|
37,818
|
|
|
|
(34,449
|
)
|
Accrued interest expense
|
|
|
2,600
|
|
|
|
(29,838
|
)
|
Accrued expenses
|
|
|
(27,790
|
)
|
|
|
58,295
|
|
Net cash used in operating activities
|
|
|
(105,909
|
)
|
|
|
(258,465
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Deposits on equipment
|
|
|
-
|
|
|
|
(167,000
|
)
|
Capital expenditures
|
|
|
(10,000
|
)
|
|
|
(88,299
|
)
|
Net cash used in investing activities
|
|
|
(10,000
|
)
|
|
|
(255,299
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from sale of stock
|
|
|
-
|
|
|
|
461,830
|
|
Payments on shareholder advances
|
|
|
(26,900
|
)
|
|
|
(109,630
|
)
|
Payments on notes payable
|
|
|
(17,123
|
)
|
|
|
(20,925
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(44,023
|
)
|
|
|
331,275
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
(159,932
|
)
|
|
|
(182,489
|
)
|
|
|
|
|
|
|
|
|
|
CASH, BEGINNING OF YEAR
|
|
|
502,777
|
|
|
|
1,151,904
|
|
|
|
|
|
|
|
|
|
|
CASH, END OF THE PERIOD
|
|
$
|
342,845
|
|
|
$
|
969,415
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
8,053
|
|
|
$
|
67,844
|
|
Supplemental schedule of noncash financing activies:
|
|
|
|
|
|
|
|
|
Stock issued for services related to fixed asset additions
|
|
$
|
-
|
|
|
$
|
24,000
|
|
The accompanying condensed notes are an integral
part of these financial statements.
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Six Month Period Ended April 30, 2017 and
2016 (Unaudited)
|
NOTE 1.
|
In the opinion of management, the accompanying unaudited
financial statements contain all adjustments necessary to present fairly Innovative Designs, Inc.’s financial position as
of April 30, 2017, the changes therein for the three and six month periods then ended and the results of operations for the three
and six month periods ended April 30, 2017 and 2016.
|
|
NOTE 2.
|
The financial statements included in the Form 10-Q are
presented in accordance with the requirements of the Form and do not include all of the disclosures required by accounting principles
generally accepted in the United States of America. For additional information, reference is made to the Company’s annual
report on Form 10-K for the fiscal year ended October 31, 2016. The results of operations for the three and six month periods
ended April 30, 2017 and 2016 are not necessarily indicative of operating results for the full year.
|
Inventory consists principally
of purchased apparel inventory and House Wrap which is manufactured by the Company. Inventory is stated at the lower of cost or
net realizable value on a first-in, first-out basis. Innovative Designs, Inc. (the “Company”) has decided to discontinue
the selling of its hunting and swimming line of apparel. The Company has booked a reserve against this inventory at April 30, 2017
and October 31, 2016 of $40,000. Management will continue to evaluate its obsolete inventory reserve throughout the year and make
adjustments as needed.
|
NOTE 4.
|
EARNINGS PER SHARE
|
The Company calculates net income
(loss) per share in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification
(“ASC”) Topic 260
“Earnings per
Share”
. Basic earnings (loss) per share is calculated by
dividing income (loss) by the weighted average number of common shares outstanding for the period. During the periods presented,
the Company only has common stock outstanding. As a result, diluted earnings per share was not calculated.
The Company accounts for income
taxes in accordance with ASC Topic 740
"Income Taxes"
, which requires an asset and liability approach for financial
reporting purposes.
Deferred income taxes are provided
for differences between the tax bases of assets and liabilities and the financial reporting amounts at the end of the period, and
for net operating loss and tax credit carryforwards available to offset future taxable income. Changes in enacted tax rates or
laws result in adjustments to recorded deferred tax assets and liabilities in the periods in which the tax laws are enacted or
tax rates are changed. The Company will continue to evaluate its income tax obligation throughout the year and will record a tax
provision when it is necessary.
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Six Month Period Ended April 30, 2017 and
2016 (Unaudited)
|
NOTE 6.
|
SHIPPING AND HANDLING COSTS
|
The Company pays shipping and handling
costs on behalf of customers for purchased apparel merchandise. These costs are billed back to the customer through the billing
invoice. The shipping and handling costs associated with merchandise ordered by the Company are included as part of inventory as
these costs are allocated across the merchandise received. With House Wrap orders, the customer pays the shipping cost. The shipping
and handling costs associated with customer orders was approximately $11,000 and $17,000 for the six month periods ended April
30, 2017 and 2016, respectively.
During the six month period ended
April 30, 2017, the Company issued stock to one director for services. The stock was issued at a price of $0.25 per share. The
Company issued 30,000 shares for services valued at $7,500. We believe that Section 4(2) of the Securities Act of 1933, as amended,
was available because these transactions did not involve a public offering and there was no general solicitation or general advertising
involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under
the Securities Act and set forth the restrictions on their transferability and sale.
|
NOTE 8.
|
DEPOSITS ON EQUIPMENT
|
On July 12, 2015 the Company reached
an agreement with Ketut Jaya to purchase the machinery and equipment utilized to produce the INSULTEX material. The purchase price
is $700,000 which was to be paid in four installments. The first installment of $300,000 was to be paid at the execution of the
agreement. The second installment of $200,000 was to be paid when the machinery and equipment is ready to be shipped to the United
States. The third installment of $100,000 is to be paid once the machinery and equipment is producing INSULTEX, and the fourth
and final installment of $100,000 is to made after the first commercial production run of INSULTEX is completed. As of April 30,
2017, the Company has made payments of $500,000 in accordance with the agreement, and made a $100,000 pre-payment as the machine
is not yet producing INSULTEX. Additionally, the Company has incurred $17,000 of additional expenses related to shipping, site
improvements and installation of the equipment.
|
NOTE 9.
|
SEGMENT INFORMATION
|
We have organized our operations
into two segments. We rely on an internal management reporting process that provides segment information for purposes of making
financial decisions and allocating resources
.
The following tables present our
business segment information for the six month period ended April 30, 2017 and 2016:
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Six Month Period Ended April 30, 2017 and
2016 (Unaudited)
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Apparel
|
|
$
|
157,861
|
|
|
$
|
193,201
|
|
House Wrap
|
|
|
50,511
|
|
|
|
144,963
|
|
Total Revenues
|
|
$
|
208,372
|
|
|
$
|
338,164
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Apparel
|
|
$
|
776,593
|
|
|
$
|
1,970,346
|
|
House Wrap
|
|
|
1,238,063
|
|
|
|
871,314
|
|
Total
|
|
$
|
2,014,656
|
|
|
$
|
2,841,660
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures:
|
|
|
|
|
|
|
|
|
House Wrap
|
|
$
|
10,000
|
|
|
$
|
112,299
|
|
Total
|
|
$
|
10,000
|
|
|
$
|
112,299
|
|
|
|
|
|
|
|
|
|
|
Depreciation:
|
|
|
|
|
|
|
|
|
Apparel
|
|
$
|
1,640
|
|
|
$
|
921
|
|
House Wrap
|
|
|
13,653
|
|
|
|
6,684
|
|
Total
|
|
$
|
15,293
|
|
|
$
|
7,605
|
|
|
NOTE 10.
|
LEGAL PROCEEDINGS
|
On November 4, 2016, the Federal
Trade Commission (FTC) filed a complaint against the Company in the U.S. District Court Western District of Pennsylvania, number
16-1669. In the complaint, the FTC alleges, that, among other matters, the Company does not have substantiation of claims made
by the Company regarding the R value and energy efficiency of its INSULTEX House Wrap products. The complaint asks as redress of
rescission of revenue the Company received from the sale of House Wrap and a permanent injunction. The parties are currently in
the discovery phase.
The Company strongly denies the
allegation and intends to vigorously defend itself. It is the Company’s belief that the complaint is based on improper testing
of the INSULTEX products using the wrong type of testing equipment.
|
NOTE 11.
|
SUBSEQUENT EVENTS
|
The Company has
evaluated subsequent events in accordance with ASC Topic 855, “
Subsequent Events
”, through June 14, 2017,
which is the date financial statements were available to be issued. The Company identified the below subsequent events.
On April 25, 2017, the
Company issued 100,000 shares of stock for services valued at $30,000.
On May 19, 2017, the
Company issued 30,000 shares of stock for services valued at $10,200.
INNOVATIVE DESIGNS, INC.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
|
General
The following information should
be read in conjunction with the financial statements and the notes thereto and in conjunction with Management’s Discussion
and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended October
31, 2016.
Disclosure Regarding Forward-Looking
Statements
Certain statements made in this
report, and other written or oral statements made by or on behalf of the Company, may constitute “forward-looking statements”
within the meaning of the federal securities laws. When used in this report, the words “believes,” “expects,”
“estimates,” “intends” and similar expressions are intended to identify forward-looking statements. Statements
regarding future events and developments and our future performance, as well as our expectations, beliefs, plans, intentions, estimates
or projections relating to the future, are forward-looking statements within the meaning of these laws. Examples of such statements
in this report include descriptions of our plans and strategies with respect to developing certain market opportunities and our
overall business plan. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events
to differ materially from those projected. We believe that these forward-looking statements are reasonable; however, you should
not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of
such statements. We undertake no obligations to publicly update or revise any forward-looking statement, whether as a result of
future events, new information or otherwise.
Background
Innovative Designs, Inc. (hereinafter
referred to as the “Company”, “we” or “our”) was formed on June 25, 2002. We market and sell
clothing products such as outdoor apparel, and cold weather gear called “Arctic Armor” that are made from INSULTEX,
a material with buoyancy, scent block and thermal resistant properties. We also market our House Wrap product line which is a building
material with thermal qualities. House Wrap is also made from INSULTEX. We obtain INSULTEX through a license agreement with the
owner and manufacturer of the material. Since our formation we have devoted our efforts to:
|
·
|
Completing the development, design and
prototypes of our products,
|
|
·
|
Obtaining retail stores or sales agents
to offer and sell our products,
|
|
·
|
Developing our website to sell more of
our products.
|
In an attempt to increase global
business we recently entered into two separate agreements to market INSULTEX to the military market of India and to enter the apparel
market in the United States.
INNOVATIVE DESIGNS, INC.
Results of Operations
Comparison of the Three Month
Period Ended April 30, 2017 with the Three Month Period Ended April 30, 2016.
|
|
Three Month
|
|
|
|
|
|
Three Month
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
|
|
|
Period Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30,
|
|
|
% of
|
|
|
April 30,
|
|
|
% of
|
|
|
Increase
|
|
|
|
|
|
|
2017
|
|
|
Sales
|
|
|
2016
|
|
|
Sales
|
|
|
(Decrease)
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE - NET
|
|
$
|
39,162
|
|
|
|
100.00
|
%
|
|
$
|
110,278
|
|
|
|
100.00
|
%
|
|
$
|
(71,116
|
)
|
|
|
-64.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
25,568
|
|
|
|
65.29
|
%
|
|
|
84,197
|
|
|
|
76.35
|
%
|
|
|
(58,629
|
)
|
|
|
-69.63
|
%
|
Selling, general and administrative expenses
|
|
|
170,741
|
|
|
|
435.99
|
%
|
|
|
152,090
|
|
|
|
137.92
|
%
|
|
|
18,651
|
|
|
|
12.26
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(157,147
|
)
|
|
|
-401.27
|
%
|
|
|
(126,009
|
)
|
|
|
-114.26
|
%
|
|
|
(31,138
|
)
|
|
|
24.71
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(3,604
|
)
|
|
|
-9.20
|
%
|
|
|
(19,526
|
)
|
|
|
-17.71
|
%
|
|
|
15,922
|
|
|
|
-81.54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(160,751
|
)
|
|
|
-410.48
|
%
|
|
$
|
(145,535
|
)
|
|
|
-131.97
|
%
|
|
$
|
(15,216
|
)
|
|
|
10.46
|
%
|
Revenues for the three month period
ended April 30, 2017 were $39,162 compared to revenues of $110,278 for the three period ended April 30, 2016. The decrease is caused,
by the decrease in our apparel sales and the sales in our House Wrap product line. The apparel sales were adversely affected by
warm weather. In December 2016, we voluntarily ceased advertising our House Wrap products as a result of the legal action brought
by the Federal Trade Commission (“FTC”). See Note 9 of the Notes to the Condensed Financial Statements appearing elsewhere
in this Report for a description of our segment products sales. Our net loss for the three month period ended April 30, 2017 was
($160,751).
Our selling, general and administrative
expenses were $170,741 for the three month period ended April 30, 2017 compared to $152,090 for the three month period ended April
30, 2016. The increase was a result of professional expenses being incurred in the second quarter of 2017, in the amount of approximately
$84,000, a 63% increase from the comparable period.
INNOVATIVE DESIGNS, INC.
|
|
Comparison of the Six Month Period Ended April 30, 2017 with the Six Month Period Ended April
30, 2016.
|
The following table shows a comparison
of the results of operations between the six month periods ended April 30, 2017 and April 30, 2016:
|
|
Six Month
|
|
|
|
|
|
Six Month
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
|
|
|
Period Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30,
|
|
|
% of
|
|
|
April 30,
|
|
|
% of
|
|
|
Increase
|
|
|
|
|
|
|
2017
|
|
|
Sales
|
|
|
2016
|
|
|
Sales
|
|
|
(Decrease)
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE - NET
|
|
$
|
208,372
|
|
|
|
100.00
|
%
|
|
$
|
338,164
|
|
|
|
100.00
|
%
|
|
$
|
(129,792
|
)
|
|
|
-38.38
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
106,074
|
|
|
|
50.91
|
%
|
|
|
182,951
|
|
|
|
54.10
|
%
|
|
|
(76,877
|
)
|
|
|
-42.02
|
%
|
Selling, general and administrative expenses
|
|
|
378,212
|
|
|
|
181.51
|
%
|
|
|
395,954
|
|
|
|
117.09
|
%
|
|
|
(17,742
|
)
|
|
|
-4.48
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(275,914
|
)
|
|
|
-132.41
|
%
|
|
|
(240,741
|
)
|
|
|
-71.19
|
%
|
|
|
(35,173
|
)
|
|
|
14.61
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous expense
|
|
|
3,424
|
|
|
|
1.64
|
%
|
|
|
-
|
|
|
|
0.00
|
%
|
|
|
3,424
|
|
|
|
100.00
|
%
|
Interest expense
|
|
|
10,653
|
|
|
|
5.11
|
%
|
|
|
38,006
|
|
|
|
11.24
|
%
|
|
|
(27,353
|
)
|
|
|
-71.97
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(289,991
|
)
|
|
|
-139.17
|
%
|
|
$
|
(278,747
|
)
|
|
|
-82.43
|
%
|
|
$
|
(11,244
|
)
|
|
|
4.03
|
%
|
Revenues for the six month period
ended April 30, 2017 were $208,372 compared to revenues of $338,164 for the six month period ended April 30, 2016. The decrease
is caused, by the decrease in our apparel sales and the sales in our House Wrap product line. The apparel sales were adversely
affected by warm weather. In December 2016, we voluntarily ceased advertising our House Wrap products as a result of the legal
action brought by the Federal Trade Commission (“FTC”). See Note 9 of the Notes to the Condensed Financial Statements
appearing elsewhere in this Report for a description of our segment products sales. During the six month period ended April 30,
2017 House Wrap sales totaled $50,511 in comparison with $144,963 during the six month period ended April 30, 2016. Our net loss
for the six month period ended April 30, 2017 was ($289,991).
Our selling, general and administrative
expenses were $378,212 for the six months ended April 30, 2017 compared to $395,954 for the six month period ended April 30, 2016.
The decrease was a result, in part, by lower seasonal help expense and less advertising and promotional expense. We do not expect
our seasonal help expense or advertising and promotional expenses to increase in the current fiscal year ending October 31, 2017.
INNOVATIVE DESIGNS, INC.
Liquidity and Capital Resources
During the period ended April
30, 2017, we funded our operations from revenues from sales.
Short Term: We will continue to
fund our operations from sales and the sale of our securities. We continue to pay our creditors when payments are due. We will
require more funds to be able to order the material for our INSULTEX products and to purchase equipment needed for the manufacture
of the INSULTEX product. The Company reached an agreement with the manufacturer of the INSULTEX material to purchase a machine
capable of producing the INSULTEX material. Also included in the proposed agreement will be the propriety formula that creates
INSULTEX. The Company took delivery of the equipment in December 2015. The Company will have to have the machine installed and
ensure that it can be operated in compliance with all environmental rules and regulations. The Company has not made an estimate
of the cost required for bringing the operation of the machine into compliance with the environmental regulations but it is considered
to be a substantial amount. We are in the permitting stage relating to environmental issues necessary to begin the installation
of the equipment. The Company has currently made deposits of $600,000 on the equipment. The Company has incurred $17,000 of additional
expenses related to shipping. The Company will produce INSULTEX under its own brand name. See Note 8 of the Notes to the Condensed
Financial Statements.
Long Term: The Company will continue
to fund its operations from revenues, borrowings from private parties and the possible sale of our securities. Should we not be
able to rely on the private sources for borrowing and /or increased sales, our operations would be severely affected as we would
not be able to fund our purchase orders to our suppliers for finished goods and our efforts to produce our own INSULTEX would be
delayed.
INNOVATIVE
DESIGNS, INC.