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A UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, D.C. 20549

 

FORM 10-Q

  

QUARTERLY REPORT PURSUANT TO SECTION 13l OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

  

For the quarterly period ended April 30, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

  

For the transition period from _______ to ________.

 

Commission File Number: 000-51791

 

INNOVATIVE DESIGNS, INC.

 (Exact Name of Registrant as Specified in its Charter)

 

Delaware 03-0465528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

 

124 Cherry Street

 Pittsburgh, Pennsylvania 15223

(Address of Principal Executive Offices, Zip Code)

 

(412) 799-0350

(Issuer’s Phone Number Including Area Code)

 

N/A

(Former Name or Former Address, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

  

  Yes No ☒ 

  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes No

 

 
 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting Company” in Rule 12b-2 of the Exchange Act.

 

(Check One)

  

Large Accelerated Filer ☐ Accelerated Filer ☐
   
Non-accelerated Filer Smaller reporting company

  

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO

 

As of July 5, 2023, there were 36,177,560 shares of the Registrant’s common stock, par value $.0001 per share, outstanding.

 

Transitional Small Business Disclosure Format: YES NO

  

 
 

 

Innovative Designs, Inc.

 

Index

 

Form 10-Q for the Quarter Ended April 30, 2023

  

  Part I -- Financial Information Page No.
     
Item 1. Condensed Financial Statements (Unaudited)  
     
  Condensed Balance Sheets as of April 30, 2023 (Unaudited) And October 31, 2022 2
     
  Condensed Statements of Operations for the Six-Month Periods Ended April 30, 2023 and 2022 (Unaudited) 4
     
  Condensed Statements of Changes in Stockholders’ Equity as of April 30, 2023 (Unaudited) and October 31, 2022 5
     
  Condensed Statements of Cash Flows for the Six-Month Periods Ended April 30, 2023 and 2022 (Unaudited) 6
     
  Notes to the Condensed Financial Statements 7- 11
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 12 - 14
     
  Part II -- Other Information  
     
Items 1, 2, 3, 4, 4T and 5. 15 - 16
     
Item 6. Exhibits 17

 

1
 

 

INNOVATIVE DESIGNS, INC.
CONDENSED BALANCE SHEETS
APRIL 30, 2023 (UNAUDITED) AND OCTOBER 31, 2022

 

           
   April 30, 2023  October 31, 2022
ASSETS          
CURRENT ASSETS          
Cash  $65,007   $263,293 
Accounts receivable   1,909    11,203 
Inventory - net of obsolete inventory reserve of $75,468   629,980    494,580 
Total current assets   696,896    769,076 
           
PROPERTY AND EQUIPMENT - NET   25,015    5,960 
           
OTHER ASSETS          
Inventory on consignment       1,625 
Deposits on inventory       80,000 
Advance to employees   13,200    13,200 
Deposits on equipment   646,944    607,370 
Total other assets   660,144    702,195 
           
TOTAL ASSETS  $1,382,055   $1,477,231 

 

The accompanying notes are an integral part of these condensed financial statements.

 

2
 

 

INNOVATIVE DESIGNS, INC.
CONDENSED BALANCE SHEETS
APRIL 30, 2023 (UNAUDITED) AND OCTOBER 31, 2022

 

   April 30, 2023  October 31, 2022
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Accounts payable  $210,806   $162,063 
Current portion of notes payable   19,949    20,128 
Accrued interest expense   51,763    46,345 
Due to stockholders   79,668    110,631 
Accrued expenses   17,741    3,778 
Total current liabilities   379,927    342,945 
           
LONG-TERM LIABILITIES          
Long-term portion of due to stockholders       66,667 
Long-term portion of notes payable   54,801    64,547 
Total long-term liabilities   54,801    131,214 
           
TOTAL LIABILITIES   434,728    474,159 
           
STOCKHOLDERS’ EQUITY          
Preferred stock, $0.0001 par value, 25,000,000 shares authorized        
Common stock, $0.0001 par value, 100,800,000 shares authorized, and 35,177,560 and 34,650,560 issued and outstanding   3,520    3,467 
Common stock to be issued        
Additional paid-in capital   11,451,072    11,335,184 
Accumulated deficit   (10,507,265)   (10,335,579)
Total stockholders’ equity   947,327    1,003,072 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $1,382,055   $1,477,231 

 

The accompanying notes are an integral part of these condensed financial statements.

 

3
 

 

INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED APRIL 30, 2023 AND 2022 (UNAUDITED)

 

                     
   Three Months Ended April 30,  Six Months Ended April 30,
   2023  2022  2023  2022
             
REVENUES - NET  $27,249   $37,717   $98,896   $100,116 
                     
OPERATING EXPENSES:                    
Cost of sales   13,349    21,314    30,359    53,659 
Selling, general and administrative expenses   121,859    279,955    236,511    430,574 
Total Operating Expenses   135,208    301,269    266,870    484,233 
                     
LOSS FROM OPERATIONS   (107,959)   (263,552)   (167,974)   (384,117)
                     
OTHER INCOME (EXPENSE)                    
Miscellaneous income (expense)           7,519     
Interest expense   (4,632)   (12,264)   (11,231)   (23,740)
Total other income (expense)   (4,632)   (12,264)   (3,712)   (23,740)
                     
NET LOSS  $(112,591)  $(275,816)  $(171,686)  $(407,857)
                     
PER SHARE INFORMATION - UNDILUTED                    
Net Loss Per Common Share  $(0.003)  $(0.008)  $(0.005)  $(0.012)
                     
Weighted Average Number of Common Shares Outstanding   35,177,560    33,845,560    35,177,560    33,845,560 
                     
PER SHARE INFORMATION - DILUTED                    
Net Loss Per Common Share  $(0.003)  $(0.008)  $(0.005)  $(0.012)
                     
Weighted Average Number of Common Shares Outstanding   35,908,060    34,902,893    35,908,060    34,902,893 

 

The accompanying notes are an integral part of these condensed financial statements.

 

4
 

 

INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
THREE AND SIX MONTHS ENDED APRIL 30, 2023 AND 2022 (UNAUDITED)

 

                               
   Common Stock  Common Stock To be  Additional Paid-in  Accumulated   
   Shares  Amount  Issued  Capital  Deficit  Total
                   
Balance at October 31, 2022   34,650,560   $3,467   $   $11,335,184   $(10,335,579)  $1,003,072 
                               
Sale of stock   500,000    50        109,950        110,000 
                               
Shares issued for services   27,000    3         5,937         5,940 
                               
Net loss                   (59,094)   (59,094)
                               
Balance at January 31, 2023   35,177,560    3,520        11,451,071    (10,394,673)   1,059,918 
                               
Sale of stock                          
                               
Shares issued for services                          
                               
Net loss                   (112,591)   (112,591)
                               
Balance at April 30, 2023   35,177,560   $3,520   $   $11,451,071   $(10,507,264)  $947,327 
                               
Balance at October 31, 2021   33,315,560   $3,333   $   $11,039,118   $(10,110,090)  $932,361 
                               
Sale of stock   340,000.00    34.00        60,966.00        61,000 
                               
Shares issued for services   50,000    5         9,995         10,000 
                               
Net loss                   (132,040)   (132,040)
                               
Balance at January 31, 2022   33,705,560    3,372        11,110,079    (10,242,130)   871,321 
                               
Sale of stock   120,000    12         25,188         25,200 
                               
Shares issued for services   700,000    70         174,930         175,000 
                               
Net loss                   (275,816)   (275,816)
                               
Balance at April 30, 2022   34,525,560   $3,454   $   $11,310,197   $(10,517,946)  $795,705 

 

The accompanying notes are an integral part of these condensed financial statements.

 

5
 

 

INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED APRIL 30, 2023 AND 2022 (UNAUDITED)

 

                 
    Six Months Ended April 30,
    2023   2022
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (171,686 )   $ (407,857 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Allowance for doubtful accounts            
Common stock issued for services     5,940       185,000  
Depreciation     1,537       745  
Amortization of right of use asset           20,200  
Gain on sale of asset     (7,519 )      
(Increase) decrease from changes in:                
Accounts receivable     9,294       (6,774 ) 
Inventory     (133,775 )     (19,745 ) 
Deposits on inventory     80,000       (30,000 ) 
Increase (decrease) from changes in:                
Accounts payable and accrued expenses     62,707       5,672  
Accrued interest expense     5,418       3,923  
Net cash used in operating activities     (148,084 )     (248,836 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchase of equipment     (20,592 )      
Deposits on equipment     (39,574 )      
Gain on sale of equipment     7,519        
Net cash used in investing activities     (52,647 )      
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from sale of stock     110,000       86,200  
Proceeds from shareholder advances            
Payments on shareholder advances     (97,630 )     (79,666 ) 
Payment on lease liability             (20,200
Proceeds on notes payable            1,818  
Payments on notes payable     (9,925 )      
Net cash provided by financing activities     2,445       (11,848
                 
Net change in cash     (198,286 )     (260,684 )
                 
CASH, BEGINNING OF YEAR     263,293       480,451  
                 
CASH, END OF THE PERIOD   $ 65,007     $ 219,767  
                 
Supplemental disclosure of cash flow information:                
Cash paid for interest   $ 5,813     $ 19,817  
                 
Cash paid for taxes   $     $  

 

The accompanying notes are an integral part of these condensed financial statements.

 

6
 

 

INNOVATIVE DESIGNS, INC. 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS 

Three and Six Month Periods Ended April 30, 2023 and 2022 (Unaudited)

 

 

  NOTE 1. BASIS OF PRESENTATION

 

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, 2023, 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, 2023 and 2022.

 

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 Innovative Designs, Inc.’s annual report on Form 10-K for the fiscal year ended October 31, 2022. The results of operations for the three and six month periods ended April 30, 2023 and 2022 are not necessarily indicative of operating results for the full year.

 

  

  NOTE 2. RIGHT OF USE ASSETS AND LEASE LIABILITIES

 

During the quarter ended April 30, 2019, the Company implemented Accounting Standards Update 2016-02, Leases. Under the new guidance, a lessee must be recorded a liability for lease payments (referred to as the lease liability) and an asset for the right to use the leased asset during the lease term (referred to at the right of use asset) for all leases, regardless of whether they are designated as finance or operating leases. This election requires the lessee to recognize lease expense on a straight-line basis over the lease term. The right of use assets and corresponding right of use liabilities have been recorded using the present value of the leases. See Notes 11 and 12 within the financial statement for additional disclosure on leases

 

 

  NOTE 3. GOING CONCERN

  

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company had a net loss of $(171,686) and a negative cash flow of $(198,286) for the six month period ended April 30, 2023. In addition, the Company has an accumulated deficit of $(10,507,265). Management’s plans include cash receipts through sales, sales of Company stock, and borrowings from private parties. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

  NOTE 4. ACCOUNTS RECEIVABLE

  

Management evaluates its receivables on a quarterly basis to assess the validity of remaining receivables. Management has determined that there is significant doubt regarding the receivable balance over 90 days of $-0- and $5,860 as of the April 30, 2023 and October 31, 2022. Management has applied an allowance on all balances in excess of 90 days.

 

7
 

 

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Six Month Periods Ended April 30, 2023 and 2022 (Unaudited)

 

 

 

  NOTE 5.OPENING AND CLOSING BALANCE OF RECEIVABLES

 

The opening balance of accounts receivables was $11,203 which was net of the allowance for doubtful accounts of $5,860. The ending balance of accounts receivable for the six month period ending April 30, 2023 was $1,909. There was not an allowance for doubtful accounts at the end of the period.

 

 

  NOTE 6. INVENTORY

 

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. The Company has decided to discontinue the manufacturing of its Artic Armor, hunting and swimming line of apparel. The Company has booked a reserve against apparel inventory at April 30, 2023 and October 31, 2022 of $75,468. Management has determined that no allowance is currently necessary on their House Wrap Inventory. Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed.

 

 

  NOTE 7. 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. In 2021 the Company issued a convertible debt instrument. In addition, the Company also has stock warrants of 994,000 as of April 30, 2023 and 2022. The Company has calculated diluted earnings per share utilizing the outstanding stock warrants and convertible debt.

 

 

  NOTE 8. INCOME TAXES

 

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.

 

 

  NOTE 9. 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 $19,444 and $13,390 for the six month periods ended April 30, 2023 and 2022, respectively.

 

8
 

 

INNOVATIVE DESIGNS, INC. 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Six Month Periods Ended April 30, 2023 and 2022 (Unaudited)

 

 

  NOTE 10. COMMON STOCK

 

During the six month period ended April 30, 2023, the Company sold 500,000 shares of common stock to one investor for total proceeds of $110,000 and issued 27,000 shares to one investor for services. The stock was issued at $0.22 per share.

 

During the six month period ended April 30, 2022, the Company sold 460,000 shares of common stock to seven investors for total proceeds of $86,200 and issued 750,000 shares to eight individuals for services. The stock was issued between $0.17 and $0.25 per share.

 

  NOTE 11. 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 and to be made in four installments. The first installment of $300,000 is to be made at the execution of the agreement. The second installment of $200,000 is to be made when the machinery and equipment is ready to be shipped to the United States. The third installment of $100,000 is to be made once the machinery and equipment is producing INSULTEX, and the fourth and final installment of $100,000 is to be made after the first commercial production run of INSULTEX is completed. As of October 31, 2018, 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. In February 2023, the Company made an additional prepayment of $10,000 on the equipment and owes an additional $73,000 for the installation of the equipment. In During 2019, the Company determined the shipping costs of $17,000 were impaired and these costs were written down.

 

During the fiscal year ending October 31, 2022 the Company made deposits on a separate piece of equipment of $7,370. During the two quarters ending April 30, 2023, the Company made additional deposits of $29,274 on this piece of equipment. Total deposits for this piece equipment as April 30, 2023 total $36,644.

 

Total deposits made for the two quarters ending April 30, 2023 total $39,274.

 

Total overall deposits on Equipment as of April 30, 2023 and April 30, 2022 were $646,944 and $600,000, respectively.

 

  

  NOTE 12. RIGHT OF USE ASSETS

 

The Company entered lease at the time the Company was formed that is classified as right of use asset and lease liability. The lease for the Company’s office space is estimated to be through June 2022. In accordance with ASU 2016-02, the Company calculated the present value of the leases using the average commercial real estate interest rate of 5.50% at the commencement of the office lease. Effective July 2022, the Company is leasing the property on a month to month basis.

 

9
 

 

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Six Month Periods Ended April 30, 2023 and 2022 (Unaudited)

 

 

  NOTE 13. 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 periods ended April 30, 2023 and 2022:

 

          
   2023  2022
       
Revenues:      
Apparel  $30,403   $52,685 
House Wrap   68,493    47,431 
Total Revenues  $98,896   $100,116 
           
Assets:          
Apparel  $90,746   $109,614 
House Wrap   1,291,309    1,347,753 
Total  $1,382,055   $1,457,367 
           
Depreciation:          
Apparel  $-0-   $-0- 
House Wrap   1,537    745 
Total  $1,537   $745 

 

 

10
 

 

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Six Month Periods Ended April 30, 2023 and 2022 (Unaudited)

 

 

  NOTE 14. LEGAL PROCEEDINGS

 

On November 4, 2016, the FTC filed a complaint against the Company in the U.S. District Court Western District of Pennsylvania, Case number 16-1669. In the complaint, the FTC alleges that, among other matters, the Company did 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 to redress a rescission of revenue the Company received from the sale of House Wrap and a permanent injunction. On September 24, 2020, a judgment was entered in favor of the Company as to all claims set forth in the FTC complaint. It was further ordered that as there were no remaining claims in the action the case shall be marked as closed.

 

On November 23, 2020, the Company was informed that the FTC had filed a notice of appeal in regard to the case. The appeal is from the District Court’s September 24, 2020, Order granting the Company’s Motion for Judgment on Partial Findings Pursuant to Fed. R. Civ. P. 52(c) and subsequent Judgment in favor of the Company and from the District Court’s February 14, 2020, striking Dr. David Yarbrough’s expert testimony made on behalf of the FTC. The FTC filed its appeal and on March 24, 2021, the Company filed its answer.

 

On July 22, 2021, the Registrant was informed that the United States Court of Appeals for the Third District affirmed the District Court’s ruling in favor of the Registrant. The ruling was in connection with the Federal Trade Commission complaint filed against the Registrant in November 2016, alleging, among other matters, that the Registrant did not have substantiation for claims made by the Registrant regarding the R-value and energy efficiency of its INSULTIX House Wrap products.

 

In November 2021, in connection with the FTC litigation, the Company filed an application for attorney fees, expenses and cost in the U.S. District Court for the Western District of Pennsylvania, Case No.2:16-cv-01669-NBF. On June 29, 2022, a settlement order was signed by the Court. Pursuant to the Order, the FTC paid the Company $260,000 to resolve all such claims. The parties agreed to waive all rights to appeal or otherwise challenge or contest the validity of the Order.

 

 

  NOTE 15. SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events in accordance with ASC Topic 855, “Subsequent Events”, through June 28, 2023 which is the date financial statements were available to be issued. The Company identified no material subsequent events that require recognition or additional disclosure in these financial statements.

 

   

11
 

 

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, 2022.

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding future results of operation, made in this Quarterly Report on Form 10-Q are forward-looking statements. We use words such as expects, believes, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons, including, among others, competition in our cold weather markets, our ability to sell out HouseWrap product line, our inability to secure sufficient funding to maintain and/or expand our current level of operations and the seasonality of our cold weather product line. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, are described in greater detail in our Annual Report on Form 10-K for the fiscal year ended October 31, 2022. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise except as required by law.

 

Background

  

Innovative Desings, Inc. (herein after referred to as the “Company”, “we” or “our”) was formed on June 25, 2002. We produce, market and sell products made from Insultex, which is a low-density polyethylene semi-crystalline, closed cell foam in which the cells are totally evacuated with buoyancy and thermal resistant properties. Other than Korea and Japan, we are the sole worldwide supplier/ distributor of the Insultex material. Our main product line is a house wrap, Insultex House Wrap, for the building construction industry. Insultex House Wrap is a multi-ply weatherization membrane that provides a protective layer under a building’s outer covering that resists water and air infiltration, preventing mold and mildew buildup that can cause structural rotting. What differentiates Insultex House Wrap from its competition is the fact that it offers an R-Value of R-6. R-value is a term used to measure thermal resistance and is most commonly used when referring to the insulating qualities of a building structure, thus increasing energy efficiency. We also sell a cold weather line of outdoor apparel and cold weather gear call Artic Armor made using Insultex. We no longer produce this line and are only selling from our remaining inventory. The fact that Insultex is a thermal insulation means it has many other applications such as other clothing apparel, tents and sleeping bags. It can also be used in refrigerated environments where keeping the temperature low is a requirement.

 

12
 

 

Results of Operations

 

Comparison of the Three-Month Period Ended April 30, 2023, with the Three Month Period Ended April 30, 2022.

 

The following table shows a comparison of the results of operations between the three month periods ended April 30, 2023 and April 30, 2022:

 

   Three Month     Three Month         
   Period Ended     Period Ended         
   April 30,  % of  April 30,  % of  Increase   
   2023  Sales  2022  Sales  (Decrease)  % Change
                   
REVENUE - NET  $27,249    100%  $37,717    100%  $(10,468)   -28%
                               
OPERATING EXPENSES                              
Cost of sales   13,349    49%   21,314    57%   (7,965)   -37%
Selling, general and administrative expenses   121,091    444%   279,582    741%   (158,491)   -57%
    134,440    493%   300,896    798%   (166,456)   -55%
                               
(Loss) Income from operations   (107,191)   -393%   (263,179)   -698%   155,988    -59%
                               
Other income (expense)        0%        0%       0%
Other Expense                              
Interest expense   (4,632)   -17%   (12,264)   -33%   7,632    -62%
Depreciation expense   (768)   -3%   (373)   -1%   (395)   106%
                               
Net (Loss) Income  $(112,591)   -413%  $(275,816)   -731%  $163,225    -59%

  

Revenues for the three month period ended April 30, 2022, were $27,249 compared to revenues of $37,717 for the three month period ended April 30, 2022. The decrease in revenue is attributable to fewer sales of our apparel products.

 

Revenues for the first part of the third quarter of 2023 through June 26, 2023, are approximately 437% higher than revenues for the second quarter. We expect revenues to continue to increase primarily from sales of our House Wrap product line as we increase our distribution network, get repeat orders from existing distributors and customers and increase sales to contractors and builders.

 

Our selling, general and administrative expenses (“SG&A”) were $121,091 for the three months ended April 30, 2023, compared to $279,582 for the three month period ended April 30, 2022. Professional fees for the period ended April 30, 2023, were $21,982 compared to $36,595 for the three month period ended April 30, 2022. Travel expenses were $16,422 for the period.

 

13
 

 

INNOVATIVE DESIGNS, INC.

 

Results of Operations

 

Comparison of the Six-Month Period Ended April 30, 2023, with the Six -Month Period Ended April 30, 2022.

 

   Six Month     Six Month         
   Period Ended     Period Ended         
   April 30,  % of  April 30,  % of  Increase   
   2023  Sales  2022  Sales  (Decrease)  % Change
                   
REVENUE - NET  $98,896    100%  $100,116    100%  $(1,220)   -1%
                               
OPERATING EXPENSES                              
Cost of sales   30,359    31%   53,659    54%   (23,300)   -43%
Selling, general and administrative expenses   234,974    238%   429,829    429%   (194,855)   -45%
    265,333    268%   483,488    483%   (218,155)   -45%
                               
Loss from operations   (166,437)   -168%   (383,372)   -383%   216,935    -57%
                               
Other income (expense)   7,519    8%       0%   7,519    0%
Other Expense                              
Interest expense   (11,231)   -11%   (23,740)   -24%   12,509    -53%
Depreciation expense   (1,537)   -2%   (745)   -1%   (792)   106%
                               
Net Loss  $(171,686)   -174%  $(407,857)   -407%  $236,171    -58%

 

Revenues for the six-month period ended April 30, 2023, were $98,896 compared to revenues of $100,116 for the six month period ended April 30, 2022. See Note 13 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment products sales.

 

SG&A expenses were $234,974 for the six month period ended April 30, 2023, compared to $429,829 for the six month period ended April 30, 2022. Professional fees for the six month period ended April 30, 2023, were $40,610 compared to $41,463 for the six month period ended April 30, 2022.

 

14
 

 

INNOVATIVE DESIGNS, INC.

 

Liquidity and Capital Resources

 

During the three month period ended April 30, 2023, we funded our operations from revenues.

 

Subsequent to the period, in May, we sold our common stock and raised $100,000 in proceeds. In June an investor exercised warrants to purchase 40,000 shares of our common stock for total proceeds of $18,000.

 

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. It is the Company intentions to have the equipment operational but cannot currently provide a time estimate. Among the factors affecting the time estimate are the financial resources available to the Company, finding a suitable facility and bringing technical personnel from abroad to install 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. During the period our CEO traveled to Indonesia to inspect the manufacturing facility of the Ketut Group where Insultex is currently produced. He also discussed with Ketut management the plans for the Company to install in the United States the machinery and equipment utilized to produce the Insultex material and for Ketut to arrange for the technical personal needed to assist in the installation. The Company is currently looking for a suitable site for the onshore manufacturing of Insultex. It is also seeking the financing needed to accomplish the installation which is estimated to cost between 1.5 to 2 million dollars.

 

The Company will produce INSULTEX under its own brand name. See Note 11 of the Notes to the Condensed Financial Statements.

 

We must purchase new quality control testing equipment for our products. The vendor is currently working on the project. It is expected that the equipment will be ready for beta testing in approximately the next three to four weeks, although no assurance can be given. After such testing is complete the certification process can begin. We have paid approximately $39,000 as of June 26, 2023, for the equipment.

 

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.

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDING

 

See Note 14 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report.

 

ITEM 1A Risk Factors

 

See Risk factors set forth in Part I Item 1A of the Company’s Annual report on Form 10-K for the fiscal year ended October 31, 2022.

 

15
 

  

INNOVATIVE DESIGNS, INC.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On May 30, 2023, we sold 500,000 Units to one investor. Each Unit consists of one share of common stock and one common stock purchase warrant. The warrants have a term of three years and an exercise price of $.20 per warrant. We received $100,000 in proceeds from the sale. On June 23, 2023, an investor exercised warrants and was issued 40,000 shares of our common stock. We received $18,000 in total proceeds.

 

We relied on Section 4(2) of the Securities Act of 1933, as amended and Regulation D, Rule 506 (c)) promulgated thereunder.

 

ITEM 3. Defaults upon Senior Securities

 

None

 

Item 4 Mine Safety Disclosures

 

Not applicable

 

ITEM 4T. CONTROLS AND PROCEDURES

 

Management has developed and implemented a policy and procedures for reviewing, on a quarterly basis, our disclosure controls and procedures. During the period ended April 30, 2023, our principal executive/financial officer concluded that these controls and procedures were ineffective. At this time, we do not have the financial resources to employ a financial staff with accounting and financial expertise. Once we have the necessary financial resources, we plan to hire and designate an individual responsible for identifying reportable developments and to implement procedures designed to remediate the material weakness by focusing additional attention and resources in our internal accounting functions.

 

Changes in Internal Control Over Financial Reporting

 

During the most recent fiscal quarter, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13(a)-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

Until the Company has the financial resources to employ a financial staff with accounting and financial expertise, to be able to properly account for internal financial reporting, errors that may have a material effect on the financial statements have the potential to occur.

 

ITEM 5. Other Information

 

None

 

16
 

 

INNOVATIVE DESIGNS, INC.

 

ITEM 6. EXHIBITS

  

*3.1 Revised Certificate of Incorporation
   
**3.2 By-Laws
   
31.1 Rule 13a - 14a Certification of Chief Executive Officer
   
31.2 Rule 13a-14a Certification of Chief Financial Officer and Principal Accounting Officer
   
32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
   
32.2 Section 1350 Certification of Chief Financial Officer and Chief Accounting Officer
   
* Incorporated by reference to the Company’s Form 10-K filed February 12, 2015
   
** Incorporated by reference to the Company’s registration statement on Form SB-2, filed March 11, 2003
   
99*** Incorporated by reference to the Company’s Current Report on Form 8-k, filed November 4, 2016

 

17
 

 

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.

  

    Innovative Designs, Inc.
    Registrant
     
Date: July 7, 2023 by: /s/ Joseph Riccelli
    Joseph Riccelli, Chief Executive Officer
    and Chief Financial Officer

 

18

 

 

 

EXHIBIT 31.1

 

INNOVATIVE DESIGNS, INC.

 CERTIFICATIONS

 

I, Joseph Riccelli, certify that:

 

1.        I have reviewed this quarterly report on Form 10-Q of Innovative Designs, Inc.;

 

2.         Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3.         Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4.         I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

  

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared;
   
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  

5.         I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

  

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: July 7, 2023 by: /s/ Joseph Riccelli
  Joseph Riccelli
  Chief Executive Officer

 

 

 

 

 

 

 

EXHIBIT 31.2

 

INNOVATIVE DESIGNS, INC.

CERTIFICATIONS

 

I, Joseph Riccelli, certify that:

 

1.         I have reviewed this quarterly report on Form 10-Q of Innovative Designs, Inc.;

 

2.         Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

 

3.         Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

 

4.         I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

  

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;
   
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  

5.         I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

  

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: July 7, 2023 by: /s/ Joseph Riccelli
    Joseph Riccelli
    Chief Financial Officer, Principal Accounting Officer

 

 

 

 

 

EXHIBIT 32.1

 

SECTION 906 CERTIFICATION

CERTIFICATION REQUIRED BY

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Innovative Designs, Inc. (the “Company”) on Form 10-Q for the quarterly period ended April 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

  

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: July 7, 2023 by: /s/ Joseph Riccelli
    Joseph Riccelli
    Chief Executive Officer

 

 

 

 

EXHIBIT 32.2

 

SECTION 906 CERTIFICATION

 CERTIFICATION REQUIRED BY

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Innovative Designs, Inc. (the “Company”) on Form 10-Q for the quarterly period ended April 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

  

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: July 7, 2023 by: /s/ Joseph Riccelli
    Joseph Riccelli
    Chief Executive Officer, Chief
    Financial Officer, Principal
    Accounting Officer

 

 

 

v3.23.2
Cover - shares
6 Months Ended
Apr. 30, 2023
Jul. 05, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Apr. 30, 2023  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --10-31  
Entity File Number 000-51791  
Entity Registrant Name INNOVATIVE DESIGNS, INC.  
Entity Central Index Key 0001190370  
Entity Tax Identification Number 03-0465528  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 124 Cherry Street  
Entity Address, City or Town Pittsburgh  
Entity Address, State or Province PA  
Entity Address, Postal Zip Code 15223  
City Area Code 412  
Local Phone Number 799-0350  
Entity Current Reporting Status No  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   36,177,560
v3.23.2
CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($)
Apr. 30, 2023
Oct. 31, 2022
CURRENT ASSETS    
Cash $ 65,007 $ 263,293
Accounts receivable 1,909 11,203
Inventory - net of obsolete inventory reserve of $75,468 629,980 494,580
Total current assets 696,896 769,076
PROPERTY AND EQUIPMENT - NET 25,015 5,960
OTHER ASSETS    
Inventory on consignment 0 1,625
Deposits on inventory 0 80,000
Advance to employees 13,200 13,200
Deposits on equipment 646,944 607,370
Total other assets 660,144 702,195
TOTAL ASSETS 1,382,055 1,477,231
CURRENT LIABILITIES    
Accounts payable 210,806 162,063
Current portion of notes payable 19,949 20,128
Accrued interest expense 51,763 46,345
Due to stockholders 79,668 110,631
Accrued expenses 17,741 3,778
Total current liabilities 379,927 342,945
LONG-TERM LIABILITIES    
Long-term portion of due to stockholders 0 66,667
Long-term portion of notes payable 54,801 64,547
Total long-term liabilities 54,801 131,214
TOTAL LIABILITIES 434,728 474,159
STOCKHOLDERS’ EQUITY    
Preferred stock, $0.0001 par value, 25,000,000 shares authorized 0 0
Common stock, $0.0001 par value, 100,800,000 shares authorized, and 35,177,560 and 34,650,560 issued and outstanding 3,520 3,467
Common stock to be issued 0 0
Additional paid-in capital 11,451,072 11,335,184
Accumulated deficit (10,507,265) (10,335,579)
Total stockholders’ equity 947,327 1,003,072
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,382,055 $ 1,477,231
v3.23.2
CONDENSED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)
Apr. 30, 2023
Oct. 31, 2022
Statement of Financial Position [Abstract]    
Inventory obsolete reserve $ 75,468 $ 75,468
Preferred stock par value $ 0.0001 $ 0.0001
Preferred stock authorized 25,000,000 25,000,000
Common stock par value $ 0.0001 $ 0.0001
Common stock authorized 100,800,000 100,800,000
Common stock issued 35,177,560 34,650,560
Common stock outstanding 35,177,560 34,650,560
v3.23.2
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
3 Months Ended 6 Months Ended
Apr. 30, 2023
Apr. 30, 2022
Apr. 30, 2023
Apr. 30, 2022
Income Statement [Abstract]        
REVENUES - NET $ 27,249 $ 37,717 $ 98,896 $ 100,116
OPERATING EXPENSES:        
Cost of sales 13,349 21,314 30,359 53,659
Selling, general and administrative expenses 121,859 279,955 236,511 430,574
Total Operating Expenses 135,208 301,269 266,870 484,233
LOSS FROM OPERATIONS (107,959) (263,552) (167,974) (384,117)
OTHER INCOME (EXPENSE)        
Miscellaneous income (expense) 0 0 7,519 0
Interest expense (4,632) (12,264) (11,231) (23,740)
Total other income (expense) (4,632) (12,264) (3,712) (23,740)
NET LOSS $ (112,591) $ (275,816) $ (171,686) $ (407,857)
PER SHARE INFORMATION - UNDILUTED        
Net Loss Per Common Share $ (0.003) $ (0.008) $ (0.005) $ (0.012)
Weighted Average Number of Common Shares Outstanding 35,177,560 33,845,560 35,177,560 33,845,560
PER SHARE INFORMATION - DILUTED        
Net Loss Per Common Share $ (0.003) $ (0.008) $ (0.005) $ (0.012)
Weighted Average Number of Common Shares Outstanding 35,908,060 34,902,893 35,908,060 34,902,893
v3.23.2
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($)
Common Stock [Member]
Common Stock To Be Issued [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Beginning balance, value at Oct. 31, 2021 $ 3,333 $ 11,039,118 $ (10,110,090) $ 932,361
Beginning balance, shares at Oct. 31, 2021 33,315,560        
Sale of stock $ 34.00 60,966.00 61,000
Sale of stock, shares 340,000.00        
Shares issued for services $ 5   9,995   10,000
Shares issued for services, shares 50,000        
Net loss (132,040) (132,040)
Ending balance, value at Jan. 31, 2022 $ 3,372 11,110,079 (10,242,130) 871,321
Ending balance, shares at Jan. 31, 2022 33,705,560        
Beginning balance, value at Oct. 31, 2021 $ 3,333 11,039,118 (10,110,090) 932,361
Beginning balance, shares at Oct. 31, 2021 33,315,560        
Ending balance, value at Apr. 30, 2022 $ 3,454 11,310,197 (10,517,946) 795,705
Ending balance, shares at Apr. 30, 2022 34,525,560        
Beginning balance, value at Jan. 31, 2022 $ 3,372 11,110,079 (10,242,130) 871,321
Beginning balance, shares at Jan. 31, 2022 33,705,560        
Sale of stock $ 12   25,188   25,200
Sale of stock, shares 120,000        
Shares issued for services $ 70   174,930   175,000
Shares issued for services, shares 700,000        
Net loss (275,816) (275,816)
Ending balance, value at Apr. 30, 2022 $ 3,454 11,310,197 (10,517,946) 795,705
Ending balance, shares at Apr. 30, 2022 34,525,560        
Beginning balance, value at Oct. 31, 2022 $ 3,467 11,335,184 (10,335,579) 1,003,072
Beginning balance, shares at Oct. 31, 2022 34,650,560        
Sale of stock $ 50 109,950 110,000
Sale of stock, shares 500,000        
Shares issued for services $ 3   5,937   5,940
Shares issued for services, shares 27,000        
Net loss (59,094) (59,094)
Ending balance, value at Jan. 31, 2023 $ 3,520 11,451,071 (10,394,673) 1,059,918
Ending balance, shares at Jan. 31, 2023 35,177,560        
Beginning balance, value at Oct. 31, 2022 $ 3,467 11,335,184 (10,335,579) 1,003,072
Beginning balance, shares at Oct. 31, 2022 34,650,560        
Ending balance, value at Apr. 30, 2023 $ 3,520 11,451,071 (10,507,264) 947,327
Ending balance, shares at Apr. 30, 2023 35,177,560        
Beginning balance, value at Jan. 31, 2023 $ 3,520 11,451,071 (10,394,673) 1,059,918
Beginning balance, shares at Jan. 31, 2023 35,177,560        
Sale of stock    
Sale of stock, shares        
Shares issued for services    
Shares issued for services, shares        
Net loss (112,591) (112,591)
Ending balance, value at Apr. 30, 2023 $ 3,520 $ 11,451,071 $ (10,507,264) $ 947,327
Ending balance, shares at Apr. 30, 2023 35,177,560        
v3.23.2
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
6 Months Ended
Apr. 30, 2023
Apr. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (171,686) $ (407,857)
Adjustments to reconcile net loss to net cash used in operating activities:    
Allowance for doubtful accounts 0 0
Common stock issued for services 5,940 185,000
Depreciation 1,537 745
Amortization of right of use asset 0 20,200
Gain on sale of asset (7,519) 0
Increase (decrease) from changes in:    
Accounts receivable 9,294 6,774
Inventory (133,775) 19,745
Deposits on inventory 80,000 30,000
Accounts payable and accrued expenses 62,707 5,672
Accrued interest expense 5,418 3,923
Net cash used in operating activities (148,084) (248,836)
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of equipment (20,592) 0
Deposits on equipment (39,574) 0
Gain on sale of equipment 7,519 0
Net cash used in investing activities (52,647) 0
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from sale of stock 110,000 86,200
Proceeds from shareholder advances 0 0
Payments on shareholder advances (97,630) 79,666
Payment on lease liability 0 (20,200)
Proceeds on notes payable  0 1,818
Payments on notes payable (9,925)
Net cash provided by financing activities 2,445 (11,848)
Net change in cash (198,286) (260,684)
CASH, BEGINNING OF YEAR 263,293 480,451
CASH, END OF THE PERIOD 65,007 219,767
Supplemental disclosure of cash flow information:    
Cash paid for interest 5,813 19,817
Cash paid for taxes $ 0 $ 0
v3.23.2
BASIS OF PRESENTATION
6 Months Ended
Apr. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION

 

  NOTE 1. BASIS OF PRESENTATION

 

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, 2023, 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, 2023 and 2022.

 

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 Innovative Designs, Inc.’s annual report on Form 10-K for the fiscal year ended October 31, 2022. The results of operations for the three and six month periods ended April 30, 2023 and 2022 are not necessarily indicative of operating results for the full year.

 

v3.23.2
RIGHT OF USE ASSETS AND LEASE LIABILITIES
6 Months Ended
Apr. 30, 2023
Right Of Use Assets And Lease Liabilities  
RIGHT OF USE ASSETS AND LEASE LIABILITIES

  

  NOTE 2. RIGHT OF USE ASSETS AND LEASE LIABILITIES

 

During the quarter ended April 30, 2019, the Company implemented Accounting Standards Update 2016-02, Leases. Under the new guidance, a lessee must be recorded a liability for lease payments (referred to as the lease liability) and an asset for the right to use the leased asset during the lease term (referred to at the right of use asset) for all leases, regardless of whether they are designated as finance or operating leases. This election requires the lessee to recognize lease expense on a straight-line basis over the lease term. The right of use assets and corresponding right of use liabilities have been recorded using the present value of the leases. See Notes 11 and 12 within the financial statement for additional disclosure on leases

 

v3.23.2
GOING CONCERN
6 Months Ended
Apr. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
GOING CONCERN

 

  NOTE 3. GOING CONCERN

  

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company had a net loss of $(171,686) and a negative cash flow of $(198,286) for the six month period ended April 30, 2023. In addition, the Company has an accumulated deficit of $(10,507,265). Management’s plans include cash receipts through sales, sales of Company stock, and borrowings from private parties. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

v3.23.2
ACCOUNTS RECEIVABLE
6 Months Ended
Apr. 30, 2023
Receivables [Abstract]  
ACCOUNTS RECEIVABLE

 

  NOTE 4. ACCOUNTS RECEIVABLE

  

Management evaluates its receivables on a quarterly basis to assess the validity of remaining receivables. Management has determined that there is significant doubt regarding the receivable balance over 90 days of $-0- and $5,860 as of the April 30, 2023 and October 31, 2022. Management has applied an allowance on all balances in excess of 90 days.

 

 

v3.23.2
OPENING AND CLOSING BALANCE OF RECEIVABLES
6 Months Ended
Apr. 30, 2023
Opening And Closing Balance Of Receivables  
OPENING AND CLOSING BALANCE OF RECEIVABLES

 

  NOTE 5.OPENING AND CLOSING BALANCE OF RECEIVABLES

 

The opening balance of accounts receivables was $11,203 which was net of the allowance for doubtful accounts of $5,860. The ending balance of accounts receivable for the six month period ending April 30, 2023 was $1,909. There was not an allowance for doubtful accounts at the end of the period.

 

v3.23.2
INVENTORY
6 Months Ended
Apr. 30, 2023
Inventory Disclosure [Abstract]  
INVENTORY

 

  NOTE 6. INVENTORY

 

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. The Company has decided to discontinue the manufacturing of its Artic Armor, hunting and swimming line of apparel. The Company has booked a reserve against apparel inventory at April 30, 2023 and October 31, 2022 of $75,468. Management has determined that no allowance is currently necessary on their House Wrap Inventory. Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed.

 

v3.23.2
EARNINGS PER SHARE
6 Months Ended
Apr. 30, 2023
Earnings Per Share [Abstract]  
EARNINGS PER SHARE

 

  NOTE 7. 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. In 2021 the Company issued a convertible debt instrument. In addition, the Company also has stock warrants of 994,000 as of April 30, 2023 and 2022. The Company has calculated diluted earnings per share utilizing the outstanding stock warrants and convertible debt.

 

v3.23.2
INCOME TAXES
6 Months Ended
Apr. 30, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES

 

  NOTE 8. INCOME TAXES

 

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.

 

v3.23.2
SHIPPING AND HANDLING COSTS
6 Months Ended
Apr. 30, 2023
Shipping And Handling Costs  
SHIPPING AND HANDLING COSTS

 

  NOTE 9. 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 $19,444 and $13,390 for the six month periods ended April 30, 2023 and 2022, respectively.

 

v3.23.2
COMMON STOCK
6 Months Ended
Apr. 30, 2023
Equity [Abstract]  
COMMON STOCK

 

  NOTE 10. COMMON STOCK

 

During the six month period ended April 30, 2023, the Company sold 500,000 shares of common stock to one investor for total proceeds of $110,000 and issued 27,000 shares to one investor for services. The stock was issued at $0.22 per share.

 

During the six month period ended April 30, 2022, the Company sold 460,000 shares of common stock to seven investors for total proceeds of $86,200 and issued 750,000 shares to eight individuals for services. The stock was issued between $0.17 and $0.25 per share.

v3.23.2
DEPOSITS ON EQUIPMENT
6 Months Ended
Apr. 30, 2023
Deposits On Equipment  
DEPOSITS ON EQUIPMENT

 

  NOTE 11. 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 and to be made in four installments. The first installment of $300,000 is to be made at the execution of the agreement. The second installment of $200,000 is to be made when the machinery and equipment is ready to be shipped to the United States. The third installment of $100,000 is to be made once the machinery and equipment is producing INSULTEX, and the fourth and final installment of $100,000 is to be made after the first commercial production run of INSULTEX is completed. As of October 31, 2018, 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. In February 2023, the Company made an additional prepayment of $10,000 on the equipment and owes an additional $73,000 for the installation of the equipment. In During 2019, the Company determined the shipping costs of $17,000 were impaired and these costs were written down.

 

During the fiscal year ending October 31, 2022 the Company made deposits on a separate piece of equipment of $7,370. During the two quarters ending April 30, 2023, the Company made additional deposits of $29,274 on this piece of equipment. Total deposits for this piece equipment as April 30, 2023 total $36,644.

 

Total deposits made for the two quarters ending April 30, 2023 total $39,274.

 

Total overall deposits on Equipment as of April 30, 2023 and April 30, 2022 were $646,944 and $600,000, respectively.

 

v3.23.2
RIGHT OF USE ASSETS
6 Months Ended
Apr. 30, 2023
Right Of Use Assets  
RIGHT OF USE ASSETS

  

  NOTE 12. RIGHT OF USE ASSETS

 

The Company entered lease at the time the Company was formed that is classified as right of use asset and lease liability. The lease for the Company’s office space is estimated to be through June 2022. In accordance with ASU 2016-02, the Company calculated the present value of the leases using the average commercial real estate interest rate of 5.50% at the commencement of the office lease. Effective July 2022, the Company is leasing the property on a month to month basis.

 

v3.23.2
SEGMENT INFORMATION
6 Months Ended
Apr. 30, 2023
Segment Reporting [Abstract]  
SEGMENT INFORMATION

 

  NOTE 13. 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 periods ended April 30, 2023 and 2022:

 

          
   2023  2022
       
Revenues:      
Apparel  $30,403   $52,685 
House Wrap   68,493    47,431 
Total Revenues  $98,896   $100,116 
           
Assets:          
Apparel  $90,746   $109,614 
House Wrap   1,291,309    1,347,753 
Total  $1,382,055   $1,457,367 
           
Depreciation:          
Apparel  $-0-   $-0- 
House Wrap   1,537    745 
Total  $1,537   $745 

 

v3.23.2
LEGAL PROCEEDINGS
6 Months Ended
Apr. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
LEGAL PROCEEDINGS

 

  NOTE 14. LEGAL PROCEEDINGS

 

On November 4, 2016, the FTC filed a complaint a