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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 July 31, 2024

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 December 22, 2024, there were 37,924,003 shares of the Registrant’s common stock, par value $.0001 per share, outstanding. Transitional Small Business Disclosure Format: YES ☐ NO ☒

 

1 

 

 

Innovative Designs, Inc.

 

Index

 

Form 10-Q for the Quarter Ended July 31, 2024

  

 Page No.
   
Part I -- Financial Information 3
 
Item 1. Condensed Financial Statements (Unaudited)  3
   
Condensed Balance Sheets as of April 30, 2024 (Unaudited) And October 31, 2023 3
   
Condensed Statements of Operations for the Six-Month Periods Ended April 30, 2024 and 2023 (Unaudited) 4
   
Condensed Statements of Changes in Stockholders’ Equity as of April 30, 2024 (Unaudited) and October 31, 2023 5
   
Condensed Statements of Cash Flows for the Six-Month Periods Ended April 30, 2024 and 2023 (Unaudited) 6
   
Notes to the Condensed Financial Statements 7
   
Item 2. Management’s Discussion and Analy sis of Financial Condition and Results of Operations 12
   
Part II -- Other Information 15
   
Items 1, 2, 3, 4, 4T and 5. 15-16
   
Item 6. Exhibits 16

  

2 

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

 

INNOVATIVE DESIGNS, INC.

Condensed Balance Sheets

As of July 31, 2024 (Unaudited) and October 31, 2023 (Audited)

 

           
   July 31,
2024		  October 31,
2023
Assets          
Current assets          
Cash and Cash Equivalents  $284,342   $238,677 
Accounts Receivable, Net   57,272    31,050 
Inventory, Net   471,078    549,276 
Other current assets   34,000    8,200 
Total current assets   846,692    827,203 
Long-Term Assets          
Property, Plant, and Equipment, Net   29,384    23,479 
Deposits on Equipment   652,944    652,944 
Total Long-Term Assets   682,328    676,423 
Total assets  $1,529,020   $1,503,626 
           
Liabilities and Stockholders’ Deficit          
Current liabilities          
Credit Cards  $67,634   $71,659 
Accounts Payable   79,694    144,967 
Other current Liabilities   98,748    121,938 
Total current liabilities   246,076    338,564 
Long-Term Liabilities          
Notes Payable   37,239    56,429 
Total Long-Term Liabilities   37,239    56,429 
Total liabilities   283,315    394,993 
           
Stockholders’ deficit          
Common stock, $0.0001 par value; 100,000,000 shares authorized; 37,839,560 and 36,532,560 shares issued and outstanding as of July 31, 2024 and October 31, 2023, respectively   3,784    3,653 
Additional paid-in capital   11,979,124    11,741,935 
Accumulated deficit   (10,737,203)   (10,335,578)
Total stockholders’ deficit   1,245,705    1,108,633 
Total liabilities and stockholders’ deficit  $1,529,020   $1,503,626 

  

See accompanying notes to financial statements.

 

3 

 

 

INNOVATIVE DESIGNS, INC.

Condensed Statements of Operations

For the Three and Nine Months Ended July 31, 2024 and 2023

(Unaudited)

 

                     
   For the
Three months ended
July 31,    		  For the
Nine months ended
July 31,
   2024         
          
REVENUES, net  $278,279   $124,650   $644,497   $223,546 
OPERATING EXPENSES                    
Cost of sales   189,978    76,480    376,362    106,839 
Selling, general and administrative   expenses   142,224    124,944    348,946    359,917 
Total operating expenses   332,202    201,424    725,308    466,756 
Income (loss) from operations   (53,922)   (76,774)   (80,811)   (243,210)
OTHER INCOME (EXPENSES)                    
 Miscellaneous income (expense)        —         7,519 
 Interest expense   (3,837)   (6,421)   (15,783)   (17,652)
 Depreciation   (1,324)   (769)   (3,653)   (2,306)
 Total other income (expense)   (5,161)   (7,190)   (19,436)   (12,439)
Net income (loss)  $(59,083)  $(83,964)  $(100,247)  $(255,649)
                     
Loss per share of common stock
 - Basic and diluted		  $(0.002)  $(0.002)  $(0.003)  $(0.007)
                     
Weighted average shares of common stock
 - Basic and diluted		   37,839,003    36,633,430    36,972,827    36,153,406 


 

See accompanying notes to financial statements.

 

4 

 

 

INNOVATIVE DESIGNS, INC.

Condensed Statements of Changes in Stockholders’ Equity

Three Months and Nine Months Ended July 31, 2024 and 2023

(Unaudited)

 

                          
   Common Stock  Additional   Paid in  Accumulated  Total Stockholders’
   Shares  Amount  Capital  Deficit  Deficit
Balance October 31, 2022   34,650,560   $3,467   $11,335,184   $(10,335,579)  $1,003,072 
                          
Sale of stock   50,000    50    109,950    —    110,000 
Shares issued for services   27,000    3    5,937    —    5,940 
Net income (loss)   —    —    —    (59,094)   (44,730)
Balance January 31, 2023   34,727,560    3,520    11,451,071    (10,394,673)   1,059,918 
Net income (loss)   —    —    —    (112,591)   (112,591)
                          
Balance April 30, 2023   34,727,560    3,520    11,451,071    (10,507,264)   947,327 
                          
Sale of stock   695,000    70    140,930    —    141,000 
Exercise of warrants   40,000    4    9,996    —    10,000 
Shares issued for services   180,000    18    35,982    —    36,000 
 Net income (loss)   —    —    —    (83,964)   (83,964)
Balance July, 2023   35,642,560    3,612    11,637,979    (10,591,228)   1,050,363 
                          
Balance October 31, 2023   36,532,560   $3,653   $11,741,935   $(10,636,955)  $1,08,633 
                          
Sale of stock   580,888    58    105,862    —    105,920 
Stock issued for services   670,000    67    121,333    —    121,400 
Net income (loss)   —    —    —    (63,393)   (63,393)
                          
Balance January 31, 2024   37,783,448    3,778    11,969,130    (10,700,348)   1,272,560 
                          
Sale of stock   55,555    6    9,994    —    10,000 
Net income (loss)   —    —    —    22,228    22,228 
                          
Balance April 30, 2024   37,839,003    3,784    11,979,124    (10,678,120)   1,304,788 
                          
Net income (loss)   —    —    —    (59,082)   (59,082)
                          
Balance July 31, 2024   37,839,003   $3,784   $11,979,124   $(10,737,202)  $1,245,706 

 

See accompanying notes to financial statements.

 

5 

 

 

INNOVATIVE DESIGNS, INC.

Statements of Cash Flows

For the Nine Months Ended July 31, 2024 and 2023

(Unaudited)

 

           
   2024  2023
Cash flows from operating activities          
Net income (loss)  $(100,247)  $(255,649)
Stock issuance for services   121,400    41,940 
Depreciation   3,653    2,306 
Gain on sale of assets        (7,519)
Adjustments to reconcile net income to net cash provided by operating activities:          
 Accounts receivable   (26,222)   11,121 
 Inventory   78,198    (92,669)
 Deposits in inventory   (28,500)   80,000 
 Prepaid and other receivables   2,700    — 
Credit card payable   (4,025)   — 
Accounts payable and accrued expenses   5,391    113,424 
Due to shareholders   (93,855)   7,728 
Net cash provided by (used in) operating activities   (41,507)   (99,318)
           
Cash flows from investing activities          
Purchase of assets   (9,558)   (20,593)
Deposits on equipment   —    (112,574)
Proceeds from sale of equipment   —    7,519 
Net cash provided by (used in) financing activities   (9,558)   (125,648)
           
Cash flows from financing activities          
Proceeds from sale of stock   115,920    261,000 
Payment on shareholder advances   —    (105,630)
Payments on notes payable   (19,190)   (14,880)
Net cash provided by (used in) investing activities   96,730    140,490 
           
Net change in cash and cash equivalents   45,665    (84,476)
Cash and cash equivalents, beginning of period   238,677    263,293 
Cash and cash equivalents, end of period  $284,342   $178,817 
           
Supplemental disclosure of cash flow information          
Cash paid for interest  $15,783   $9,924 
Non-cash financing activities  $121,400   $41,940 


 

See accompanying notes to financial statements.

 

6 

 

 

INNOVATIVE DESIGNS, INC. 

Notes to the Condensed Financial Statements

For the Period Ended September 30, 2024

 

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 (the “Company”) financial position as of July 31, 2024, the changes therein for the nine-month periods that ended and the results of operations for the nine-month periods ended July 31, 2024.

 

The condensed financial statements included in the Form 10-Q (the “Form”) are presented in accordance with the requirements of the Form and do not include all of the disclosures required by generally accepted accounting principles 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 ending October 31, 2023. The results of operations for the nine-month period ending July 31, 2024 are not necessarily indicative of operating results for the full year.

 

The Company’s unaudited condensed financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended October 31, 2023, and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2023, filed with the SEC on February 23, 2024 (the “2023 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.

 

The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the three and nine months ended July 31, 2024, are not necessarily indicative of the results for the year ending October 31, 2024 , or for any future period.

 

As of July 31 2024, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2023 annual report.

 

NOTE 2 – GOING CONCERN

 

These condensed 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 ($29,296) and a negative cash flow of ($41,507) from operation activities for the nine-month period ending July 31, 2024. In addition, the Company has an accumulated deficit of ($10,707,203). 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 condensed financial statements. These condensed 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 3 – ACCOUNTS RECEIVABLE

 

Accounts receivables are reported at their net realizable value. The Company 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. There were $150 in receivables over 90 days as of July 31, 2024, and no balances over 90 days as of October 31, 2024. As of July 31, 2024, the balance of accounts receivable was $57,272, net of allowances.

 

7 

 

 

NOTE 4 – 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 as of July 31, 2024 and October 31, 2023 of $65,600. Management has determined that no allowance is currently necessary on the house wrap inventory.

 

Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed. As of July 31, 2024, the total value of the inventory on hand prior to the allowance for obsolete inventory was $536,678, and the net value was $471,078.

 

NOTE 5 – WARRANTIES

 

The Company provides a ten-year limited warranty covering defects in workmanship. These warranties are included in the contract and do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications. The Company does not consider these assurance-type warranties to be separate performance obligations. Management has determined that no warranty reserve is currently necessary on the Company’s products. Management will continue to evaluate the need for a warranty reserve throughout the year and make adjustments as needed.

 

NOTE 6 – NOTES PAYABLE

 

During December 2023, the Company entered into a convertible promissory note in the amount of $50,000 due and payable in December 2024 at an annual interest rate of 6.0%. The note is secured by $100,000 of the Company’s inventory. Any principal and unpaid accrued interest outstanding as of the due date may be converted to common stock at a value of $0.20 per share.

 

During 2005, the Company entered into an agreement with the U.S. Small Business Association (SBA). As of July 31, 2024, the note payable to SBA was $47,903. The note is payable in monthly installments of $1,820 with the balance due and payable in November 2026, at an interest rate of 2.60%.

 

As of April 30, 2024, all notes payables are up to date.

 

NOTE 7 – REVENUES

 

Revenues are measured based on the amount of consideration specified in a contract with a customer. The Company recognizes revenue when and as performance obligations (i.e., obligations to transfer goods and/or services) are satisfied, which generally occurs with the transfer of control of the goods or services to the customer.

 

To determine proper revenue recognition, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether a combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment, and the decision to combine contracts or separate a combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Contracts are considered to contain a single performance obligation if the promise to transfer individual goods or services is not separately identifiable from other promises in the contracts.

 

For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract.

 

8 

 

 

NOTE 8 – EARNINGS PER SHARE

 

The Company calculates net 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 2,429,443 and 2,373,888 as of July 31, 2024, and October 31, 2023, respectively. The Company has calculated diluted earnings per share utilizing the outstanding stock warrants and convertible debt

 

NOTE 9 – INCOME TAXES

 

The Company accounts for income taxes in accordance with FASB 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 10 – 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 $34,332 and $27,070 for the nine-month ended July 31, 2024 and 2023, respectively.

 

NOTE 11 – COMMON STOCK

 

During the nine-month period ending July 31, 2024, the Company sold 580,888 shares of common stock to eight investors for total proceeds of $105,920, and 670,000 shares were issued to two individuals for services. The stock was issued between $0.18 and $0.20 per share. Additionally, the Company sold 55,555 shares of common stock to one investor for total proceeds of $10,000. The stock was issued at $0.18 per share.

 

NOTE 12 – 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. Additionally, the Company has incurred $17,000 of additional expenses related to shipping, site improvements and installation of the equipment. During 2019, the Company determined the shipping costs of $17,000 were impaired and these costs were written off the balance due. During the fiscal year ended October 31, 2023, the Company made additional prepayments totaling $16,000 on the equipment.

 

9 

 

 

During the fiscal year ended October 31, 2022, the Company made deposits on a separate piece of equipment of $7,370. During the fiscal year ended October 31, 2023, the Company made additional deposits of $29,574 on this piece of equipment. There have been no additional deposits made as of April 30, 2024 The remaining balance owed on said equipment as of April 30, 2024 is $77,000.

 

Total overall deposits on equipment as of July 31, 2024 and October 31, 2023 were $652,944.

 

NOTE 13 – LEASE

 

FASB ASC Topic 842,”Leases”, establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the condensed balance sheets. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ROU assets are reduced each period by an amount equal to the difference between the lease expense and the amount of interest expense on the lease liability, using the effective interest method. The Company used the average commercial real estate interest rate of 5.50% to calculate the present value of the lease. The Company recognizes lease expense on a straight-line basis over the leased term on the condensed statements of operations.

 

The Company entered into a lease for office space at the time the Company was formed through June 2022. Effective July 2022, the Company is leasing the office space on a month to month basis. As a result, the Company has elected to apply the short-term lease exemption to its lease of the facilities and therefore has not recorded a ROU asset and related lease liability.

 

NOTE 14 – 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, 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 to redress a rescission of revenue the Company received from the sale of the 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 U.S. 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 FTC 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 INSULTEX 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.

 

10 

 

 

NOTE 15 – ADOPTED PRONOUNCEMENT

 

The requirements of the following FASB statement were adopted for the Company’s condensed financial statements:

 

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, ”Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 introduces a new impairment model, the current expected credit loss (“CECL”) model. The model applies to most assets that are measured at amortized cost and requires those assets to be presented at the net amount expected to be collected. In addition, credit losses on available-for-sale debt securities are to be recognized through an allowance account. ASU 2016-13 also expands existing disclosure requirements. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and interim periods therein, and requires retrospective application. The Company adopted the new standard effective November 1, 2023, and there were no material changes to the condensed balance sheets, condensed statements of operations, condensed statements of changes in stockholders’ equity, and condensed statements of cash flows as a result of the adoption.

 

NOTE 16 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events in accordance with ASC Topic 855, ”Subsequent Events”, through the date financial statements were available to be issued. The Company identified no material subsequent events that require recognition or disclosure except the following:

 

On October 3, 2024, the Board accepted the resignation of Joseph Riccelli, Sr. as the registrant’s Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, effective immediately. The Board also appointed Joseph A. Riccelli to serve as the registrant’s Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, effective immediately. In addition, on October 3, 2024, the Board of Directors determined that Joseph Riccelli, Sr. will continue to serve as Chairman of the Board of Directors. It is expected that the registrant will retain Joseph Riccelli, Sr. as a consultant to facilitate a smooth transition and for his vast knowledge of the production and products, and the relationships with the registrant’s most important vendors.

 

Also on October 3, 2024, the Board accepted the resignation of Dean Kolocouris, effective immediately.

 

11 

 

 

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, 2021.

 

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-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 House Wrap 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, 2021. 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 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 IINSULTEX, 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 IINSULTEX. We obtain IINSULTEX through a license agreement with the owner and manufacturer of the material. Since our formation we have devoted our efforts to:

 

·Complete 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.

 

Results of Operations

 

Comparison of the Three-Month Period Ended July 31, 2024, with the Three-Month Period Ended July 31, 2023.

 

The following table shows a comparison of the results of operations between the three month periods ended July 31, 2024, and July 31, 2023:

 

12 

 

 

   Three Month     Three Month         
   Ended  %  Ended  %  Increase   
   7/31/2024  of sales  7/31/2023  of sales  (Decrease)  % Change
                   
REVENUE - NET   278,279         124,650         153,629    123.2%
                               
OPERATING EXPENSES                              
Cost of sales   189,978    68.3%   76,480    61.4%   85,416    148.4%
Selling and G&A expenses   142,223    51.1%   124,944    100.2%   17,481    13.8%
Total Operating Expenses   332,201    119.4%   201,424    161.6%   102,897    64.9%
Income (loss) from operations   (53,922)   -19.4%   (76,774)   -61.6%   50,732    -29.8%
                               
Other income (expenses)                              
Miscellaneous income (expense)   —                          
Interest expense   (3,837)   -1.4%   (6,421)   -5.2%   2,584    -40.2%
Depreciation   (1,324)   -0.5%   (769)   -0.6%   (555)   72.2%
Total other income (expense)   (5,161)   -1.9%   (7,190)   -5.8%   2,029    -28.2%
Net income (loss)   (59,083)   -21.2%   (83,964)   -67.4%   52,761    -29.6%

 

Revenues for the three-month period ended July 31, 2024, were $278,279 compared to revenues of $124,650 for the three-month period ended July 31, 2023. The increase in revenue is attributable solely to an increase in sales of our House wrap product line.

 

Our costs of sale, selling, general and administrative expenses (“SG&A”) were $332,201 for the three months ended July 31, 2024, compared to $201,424 for the three-month period ended July 31, 2023. In February of 2024, we hired a son of our former CEO as a consultant to increase the sales.

 

Comparison of the Nine-Month Period Ended July 31, 2024, with the Nine -Month Period Ended July 31, 2023.

 

   Nine Month     Nine Month         
   Ended  %  Ended  %  Increase   
   7/31/2024  of sales  7/31/2023  of sales  (Decrease)  % Change
                   
REVENUE - NET   644,497         223,546         420,951    188.3%
                               
OPERATING EXPENSES                              
Cost of sales   376,362    58.4%   106,839    47.8%   241,442    252.3%
Selling and G&A expenses   348,946    54.1%   359,917    161.0%   (10,769)   -3.0%
Total Operating Expenses   725,308    112.5%   466,756    208.8%   230,673    55.4%
Income (loss) from operations   (80,811)   -12.5%   (243,210)   -108.8%   190,278    -66.8%
                               
Other income (expenses)                              
Miscellaneous income (expense)   —    —    7,519    3.4%   (7,519)   -100.0%
Interest expense   (15,783)   -2.4%   (17,652)   -7.9%   1,869    -10.6%
Depreciation   (3,653)   -0.6%   (2,306)   -1.0%   (1,347)   58.4%
Total other income (expense)   (19,436)   -3.0%   (12,439)   -5.6%   522    -4.2%
Net income (loss)   (100,247)   -15.6%   (255,649)   -114.4%   190,800    -63.7%

 

Revenues for the nine-month period ended July 31, 2024, were $644,497 compared to revenues of $223,546 for the nine-month period ended July 31, 2024. The increase in revenue is nearly all attributable to an increase in our House Wrap products’ revenue.

 

13 

 

 

As of September 27,2024, we have a backlog of approximately $247,00 in orders for our House wrap product line.

 

As of August 30, 2024, one of our Distributors has generated approximately $550,000 in sales.

 

Cost of sale and SG&A expenses were $725,308 for the nine month period ended July 31, 2024, compared to $466,756 for the nine month period ended July 31, 2023.

 

Liquidity and Capital Resources

 

During the three-month period ended July 31, 2024, we funded our operations from revenues and the sale of our common stock.

 

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 $652,944 on the equipment. The Company will produce Insultex under its own brand name. See Note 13 of the Notes to the Condensed Financial Statements.

 

The new quality control testing equipment for our House Wrap Product line has been built. We have reached an agreement with the vendor on the final amount. As of July 31, 2024, we have paid approximately $134,000 in deposits for the equipment. We expect to accept delivery of the equipment when we are able to reach an agreement with a testing laboratory that will house the equipment. Once the equipment is installed it will have to go through a certification process before we will be able to conduct tests on our Insultex products. Once the testing equipment is certified, we intend to begin the process of having Insulted certified by ICC Evaluation Services, LLC (“ICC-ES”). ICC-ES certifies, among other items, building materials and products of which our House Wrap falls under. The reason we need to have ICC-ES certification is that we believe in order to get large orders for House Wrap, ICC-ES certification will be required. The other component part of the House wrap produced by a third party is ICC-Es certified. Getting ICC-ES certification is costly and time consuming.

 

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 IINSULTEX would be delayed.

 

Subsequent to the period, on September 26, 2024, we appointed a new CEO/CFO. Please see our Form 8-K filed on September 27, 2024.

 

 Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Critical Accounting Policies and Estimates

 

Revenue Recognition: We recognize revenue from product sales when all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured.

 

14 

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDING

 

 See Note 16 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, 2023.Set forth below are additional risk factors.

 

Sole Source for Insultex. We rely on a single source for the Insultex material. We do not believe we could obtain Insultex from any other source. Insultex is manufactured by a company in Indonesia using proprietary technology Should we not be able to obtain Insultex from this company for any reason we could no longer maintain operations.

 

Reliance on Key Personnel. Mr. Gregory Domian is our Executive Vice-President, Sales and Marketing. Should we lose the services of Mr. Domian our operations would be materially affected.

 

ITEM 1B Climate-Related Disclosure.

 

N/A

 

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

 

N/A

 

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, 2024,, 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.

 

15 

 

 

ITEM 5. Other Information

 

During the quarter ended July 31, 2024, no director or officer of the Company adopted or terminated a “rule 10b5-1 trading arrangement” or “non-Rule 10b-5 trading arrangement” as such terms are defined in Item 408(a) of Regulation S-K.

 

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

 

16 

 

 

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.

 

Date: December 20, 2024  
   
  Joseph A. Riccelli
  Chief Executive Officer
  Chief Financial Officer

 

17

 

 

 

EXHIBIT 31.1

INNOVATIVE DESIGNS, INC.

CERTIFICATIONS

 

I, Joseph A. 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: December 20, 2024  
  Joseph A. Riccelli
  Chief Executive Officer

 

 

 

 

EXHIBIT 31.2

INNOVATIVE DESIGNS, INC.
CERTIFICATIONS

 

I, Joseph A 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: October 1, 2024    
  by: /s/ Joseph A Riccelli
    Joseph A 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, 2024, 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: December 20, 2024  
   
  Joseph A. Riccelli, CEO
  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, 2024, 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: December 20, 2024  
   
  Joseph A. Riccelli
  Chief Executive Officer
  Chief Financial Officer
  Principal Accounting Officer

 

 

 

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 9 Months Ended
Jul. 31, 2024
Dec. 22, 2024
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Document Fiscal Year Focus 2024  
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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  
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v3.24.4
Condensed Balance Sheets - USD ($)
Jul. 31, 2024
Oct. 31, 2023
Current assets    
Cash and Cash Equivalents $ 284,342 $ 238,677
Accounts Receivable, Net 57,272 31,050
Inventory, Net 471,078 549,276
Other current assets 34,000 8,200
Total current assets 846,692 827,203
Long-Term Assets    
Property, Plant, and Equipment, Net 29,384 23,479
Deposits on Equipment 652,944 652,944
Total Long-Term Assets 682,328 676,423
Total assets 1,529,020 1,503,626
Current liabilities    
Credit Cards 67,634 71,659
Accounts Payable 79,694 144,967
Other current Liabilities 98,748 121,938
Total current liabilities 246,076 338,564
Long-Term Liabilities    
Notes Payable 37,239 56,429
Total Long-Term Liabilities 37,239 56,429
Total liabilities 283,315 394,993
Stockholders’ deficit    
Common stock, $0.0001 par value; 100,000,000 shares authorized; 37,839,560 and 36,532,560 shares issued and outstanding as of July 31, 2024 and October 31, 2023, respectively 3,784 3,653
Additional paid-in capital 11,979,124 11,741,935
Accumulated deficit (10,737,203) (10,335,578)
Total stockholders’ deficit 1,245,705 1,108,633
Total liabilities and stockholders’ deficit $ 1,529,020 $ 1,503,626
v3.24.4
Condensed Balance Sheets (Parenthetical) - $ / shares
Jul. 31, 2024
Oct. 31, 2023
Statement of Financial Position [Abstract]    
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 37,839,560 36,532,560
Common stock, shares outstanding 37,839,560 36,532,560
v3.24.4
Condensed Statements of Operations - USD ($)
 3 Months Ended 9 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Jul. 31, 2024
Jul. 31, 2023
Income Statement [Abstract]        
REVENUES, net $ 278,279 $ 124,650 $ 644,497 $ 223,546
OPERATING EXPENSES        
Cost of sales 189,978 76,480 376,362 106,839
Selling, general and administrative   expenses 142,224 124,944 348,946 359,917
Total operating expenses 332,202 201,424 725,308 466,756
Income (loss) from operations (53,922) (76,774) (80,811) (243,210)
OTHER INCOME (EXPENSES)        
 Miscellaneous income (expense)     7,519
 Interest expense (3,837) (6,421) (15,783) (17,652)
 Depreciation (1,324) (769) (3,653) (2,306)
 Total other income (expense) (5,161) (7,190) (19,436) (12,439)
Net income (loss) $ (59,083) $ (83,964) $ (100,247) $ (255,649)
Earnings Per Share - Basic $ (0.002) $ (0.002) $ (0.003) $ (0.007)
Earnings Per Share - diluted $ (0.002) $ (0.002) $ (0.003) $ (0.007)
Weighted average common shares outstanding 37,839,003 36,633,430 36,972,827 36,153,406
Weighted average common shares outstanding 37,839,003 36,633,430 36,972,827 36,153,406
v3.24.4
Condensed Statements of Changes in Stockholders' Equity - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
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 50,000      
Stock issued for services $ 3 5,937 5,940
Shares issued for services, shares 27,000      
Net income (loss) (59,094) (44,730)
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 34,727,560      
Net income (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 34,727,560      
Sale of stock $ 70 140,930 141,000
Sale of stock, shares 695,000      
Exercise of warrants $ 4 9,996 10,000
Exercise of warrants, shares 40,000      
Stock issued for services $ 18 35,982 36,000
Shares issued for services, shares 180,000      
Net income (loss) (83,964) (83,964)
Ending balance, value at Jul. 31, 2023 $ 3,612 11,637,979 (10,591,228) 1,050,363
Ending balance, shares at Jul. 31, 2023 35,642,560      
Beginning balance, value at Oct. 31, 2023 $ 3,653 11,741,935 (10,636,955) 108,633
Beginning balance, shares at Oct. 31, 2023 36,532,560      
Sale of stock $ 58 105,862 105,920
Sale of stock, shares 580,888      
Stock issued for services $ 67 121,333 121,400
Shares issued for services, shares 670,000      
Net income (loss) (63,393) (63,393)
Ending balance, value at Jan. 31, 2024 $ 3,778 11,969,130 (10,700,348) 1,272,560
Ending balance, shares at Jan. 31, 2024 37,783,448      
Beginning balance, value at Oct. 31, 2023 $ 3,653 11,741,935 (10,636,955) 108,633
Beginning balance, shares at Oct. 31, 2023 36,532,560      
Ending balance, value at Jul. 31, 2024 $ 3,784 11,979,124 (10,737,202) 1,245,706
Ending balance, shares at Jul. 31, 2024 37,839,003      
Beginning balance, value at Jan. 31, 2024 $ 3,778 11,969,130 (10,700,348) 1,272,560
Beginning balance, shares at Jan. 31, 2024 37,783,448      
Sale of stock $ 6 9,994 10,000
Sale of stock, shares 55,555      
Net income (loss) 22,228 22,228
Ending balance, value at Apr. 30, 2024 $ 3,784 11,979,124 (10,678,120) 1,304,788
Ending balance, shares at Apr. 30, 2024 37,839,003      
Net income (loss) (59,082) (59,082)
Ending balance, value at Jul. 31, 2024 $ 3,784 $ 11,979,124 $ (10,737,202) $ 1,245,706
Ending balance, shares at Jul. 31, 2024 37,839,003      
v3.24.4
Statements of Cash Flows - USD ($)
 9 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Cash flows from operating activities    
Net income (loss) $ (100,247) $ (255,649)
Stock issuance for services 121,400 41,940
Depreciation 3,653 2,306
Gain on sale of assets   (7,519)
Adjustments to reconcile net income to net cash provided by operating activities:    
 Accounts receivable (26,222) 11,121
 Inventory 78,198 (92,669)
 Deposits in inventory (28,500) 80,000
 Prepaid and other receivables 2,700
Credit card payable (4,025)
Accounts payable and accrued expenses 5,391 113,424
Due to shareholders (93,855) 7,728
Net cash provided by (used in) operating activities (41,507) (99,318)
Cash flows from investing activities    
Purchase of assets (9,558) (20,593)
Deposits on equipment (112,574)
Proceeds from sale of equipment 7,519
Net cash provided by (used in) financing activities (9,558) (125,648)
Cash flows from financing activities    
Proceeds from sale of stock 115,920 261,000
Payment on shareholder advances (105,630)
Payments on notes payable (19,190) (14,880)
Net cash provided by (used in) investing activities 96,730 140,490
Net change in cash and cash equivalents 45,665 (84,476)
Cash and cash equivalents, beginning of period 238,677 263,293
Cash and cash equivalents, end of period 284,342 178,817
Supplemental disclosure of cash flow information    
Cash paid for interest 15,783 9,924
Non-cash financing activities $ 121,400 $ 41,940
v3.24.4
Pay vs Performance Disclosure - USD ($)
 3 Months Ended
Jul. 31, 2024
Apr. 30, 2024
Jan. 31, 2024
Jul. 31, 2023
Apr. 30, 2023
Jan. 31, 2023
Pay vs Performance Disclosure [Table]            
Net Income (Loss) $ (59,082) $ 22,228 $ (63,393) $ (83,964) $ (112,591) $ (44,730)
v3.24.4
BASIS OF PRESENTATION
 9 Months Ended
Jul. 31, 2024
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 (the “Company”) financial position as of July 31, 2024, the changes therein for the nine-month periods that ended and the results of operations for the nine-month periods ended July 31, 2024.

 

The condensed financial statements included in the Form 10-Q (the “Form”) are presented in accordance with the requirements of the Form and do not include all of the disclosures required by generally accepted accounting principles 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 ending October 31, 2023. The results of operations for the nine-month period ending July 31, 2024 are not necessarily indicative of operating results for the full year.

 

The Company’s unaudited condensed financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended October 31, 2023, and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2023, filed with the SEC on February 23, 2024 (the “2023 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.

 

The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the three and nine months ended July 31, 2024, are not necessarily indicative of the results for the year ending October 31, 2024 , or for any future period.

 

As of July 31 2024, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2023 annual report.

 
v3.24.4
GOING CONCERN
 9 Months Ended
Jul. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
GOING CONCERN

NOTE 2 – GOING CONCERN

 

These condensed 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 ($29,296) and a negative cash flow of ($41,507) from operation activities for the nine-month period ending July 31, 2024. In addition, the Company has an accumulated deficit of ($10,707,203). 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 condensed financial statements. These condensed 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.

 
v3.24.4
ACCOUNTS RECEIVABLE
 9 Months Ended
Jul. 31, 2024
Receivables [Abstract]  
ACCOUNTS RECEIVABLE

NOTE 3 – ACCOUNTS RECEIVABLE

 

Accounts receivables are reported at their net realizable value. The Company 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. There were $150 in receivables over 90 days as of July 31, 2024, and no balances over 90 days as of October 31, 2024. As of July 31, 2024, the balance of accounts receivable was $57,272, net of allowances.
v3.24.4
INVENTORY
 9 Months Ended
Jul. 31, 2024
Inventory Disclosure [Abstract]  
INVENTORY

NOTE 4 – 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 as of July 31, 2024 and October 31, 2023 of $65,600. Management has determined that no allowance is currently necessary on the house wrap inventory.

 

Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed. As of July 31, 2024, the total value of the inventory on hand prior to the allowance for obsolete inventory was $536,678, and the net value was $471,078.

 
v3.24.4
WARRANTIES
 9 Months Ended
Jul. 31, 2024
Warranties  
WARRANTIES

NOTE 5 – WARRANTIES

 

The Company provides a ten-year limited warranty covering defects in workmanship. These warranties are included in the contract and do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications. The Company does not consider these assurance-type warranties to be separate performance obligations. Management has determined that no warranty reserve is currently necessary on the Company’s products. Management will continue to evaluate the need for a warranty reserve throughout the year and make adjustments as needed.

 
v3.24.4
NOTES PAYABLE
 9 Months Ended
Jul. 31, 2024
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 6 – NOTES PAYABLE

 

During December 2023, the Company entered into a convertible promissory note in the amount of $50,000 due and payable in December 2024 at an annual interest rate of 6.0%. The note is secured by $100,000 of the Company’s inventory. Any principal and unpaid accrued interest outstanding as of the due date may be converted to common stock at a value of $0.20 per share.

 

During 2005, the Company entered into an agreement with the U.S. Small Business Association (SBA). As of July 31, 2024, the note payable to SBA was $47,903. The note is payable in monthly installments of $1,820 with the balance due and payable in November 2026, at an interest rate of 2.60%.

 

As of April 30, 2024, all notes payables are up to date.

 
v3.24.4
REVENUES
 9 Months Ended
Jul. 31, 2024
Revenue from Contract with Customer [Abstract]  
REVENUES

NOTE 7 – REVENUES

 

Revenues are measured based on the amount of consideration specified in a contract with a customer. The Company recognizes revenue when and as performance obligations (i.e., obligations to transfer goods and/or services) are satisfied, which generally occurs with the transfer of control of the goods or services to the customer.

 

To determine proper revenue recognition, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether a combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment, and the decision to combine contracts or separate a combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Contracts are considered to contain a single performance obligation if the promise to transfer individual goods or services is not separately identifiable from other promises in the contracts.

 

For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract.
v3.24.4
EARNINGS PER SHARE
 9 Months Ended
Jul. 31, 2024
Earnings Per Share [Abstract]  
EARNINGS PER SHARE

NOTE 8 – EARNINGS PER SHARE

 

The Company calculates net 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 2,429,443 and 2,373,888 as of July 31, 2024, and October 31, 2023, respectively. The Company has calculated diluted earnings per share utilizing the outstanding stock warrants and convertible debt

 
v3.24.4
INCOME TAXES
 9 Months Ended
Jul. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 9 – INCOME TAXES

 

The Company accounts for income taxes in accordance with FASB 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

 
v3.24.4
SHIPPING AND HANDLING COSTS
 9 Months Ended
Jul. 31, 2024
Shipping And Handling Costs  
SHIPPING AND HANDLING COSTS

 NOTE 10 – 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 $34,332 and $27,070 for the nine-month ended July 31, 2024 and 2023, respectively.

 
v3.24.4
COMMON STOCK
 9 Months Ended
Jul. 31, 2024
Equity [Abstract]  
COMMON STOCK

NOTE 11 – COMMON STOCK

 

During the nine-month period ending July 31, 2024, the Company sold 580,888 shares of common stock to eight investors for total proceeds of $105,920, and 670,000 shares were issued to two individuals for services. The stock was issued between $0.18 and $0.20 per share. Additionally, the Company sold 55,555 shares of common stock to one investor for total proceeds of $10,000. The stock was issued at $0.18 per share.

 
v3.24.4
DEPOSITS ON EQUIPMENT
 9 Months Ended
Jul. 31, 2024
Deposits On Equipment  
DEPOSITS ON EQUIPMENT

NOTE 12 – 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. Additionally, the Company has incurred $17,000 of additional expenses related to shipping, site improvements and installation of the equipment. During 2019, the Company determined the shipping costs of $17,000 were impaired and these costs were written off the balance due. During the fiscal year ended October 31, 2023, the Company made additional prepayments totaling $16,000 on the equipment.

 

During the fiscal year ended October 31, 2022, the Company made deposits on a separate piece of equipment of $7,370. During the fiscal year ended October 31, 2023, the Company made additional deposits of $29,574 on this piece of equipment. There have been no additional deposits made as of April 30, 2024 The remaining balance owed on said equipment as of April 30, 2024 is $77,000.

 

Total overall deposits on equipment as of July 31, 2024 and October 31, 2023 were $652,944.

 
v3.24.4
LEASE
 9 Months Ended
Jul. 31, 2024
Lease  
LEASE

NOTE 13 – LEASE

 

FASB ASC Topic 842,”Leases”, establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the condensed balance sheets. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ROU assets are reduced each period by an amount equal to the difference between the lease expense and the amount of interest expense on the lease liability, using the effective interest method. The Company used the average commercial real estate interest rate of 5.50% to calculate the present value of the lease. The Company recognizes lease expense on a straight-line basis over the leased term on the condensed statements of operations.

 

The Company entered into a lease for office space at the time the Company was formed through June 2022. Effective July 2022, the Company is leasing the office space on a month to month basis. As a result, the Company has elected to apply the short-term lease exemption to its lease of the facilities and therefore has not recorded a ROU asset and related lease liability.

 
v3.24.4
LEGAL PROCEEDINGS
 9 Months Ended
Jul. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
LEGAL PROCEEDINGS

NOTE 14 – 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, 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 to redress a rescission of revenue the Company received from the sale of the 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 U.S. 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 FTC 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 INSULTEX 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.
v3.24.4
ADOPTED PRONOUNCEMENT
 9 Months Ended
Jul. 31, 2024
Adopted Pronouncement  
ADOPTED PRONOUNCEMENT

NOTE 15 – ADOPTED PRONOUNCEMENT

 

The requirements of the following FASB statement were adopted for the Company’s condensed financial statements:

 

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, ”Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 introduces a new impairment model, the current expected credit loss (“CECL”) model. The model applies to most assets that are measured at amortized cost and requires those assets to be presented at the net amount expected to be collected. In addition, credit losses on available-for-sale debt securities are to be recognized through an allowance account. ASU 2016-13 also expands existing disclosure requirements. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and interim periods therein, and requires retrospective application. The Company adopted the new standard effective November 1, 2023, and there were no material changes to the condensed balance sheets, condensed statements of operations, condensed statements of changes in stockholders’ equity, and condensed statements of cash flows as a result of the adoption.

 
v3.24.4
SUBSEQUENT EVENTS
 9 Months Ended
Jul. 31, 2024
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 16 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events in accordance with ASC Topic 855, ”Subsequent Events”, through the date financial statements were available to be issued. The Company identified no material subsequent events that require recognition or disclosure except the following:

 

On October 3, 2024, the Board accepted the resignation of Joseph Riccelli, Sr. as the registrant’s Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, effective immediately. The Board also appointed Joseph A. Riccelli to serve as the registrant’s Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, effective immediately. In addition, on October 3, 2024, the Board of Directors determined that Joseph Riccelli, Sr. will continue to serve as Chairman of the Board of Directors. It is expected that the registrant will retain Joseph Riccelli, Sr. as a consultant to facilitate a smooth transition and for his vast knowledge of the production and products, and the relationships with the registrant’s most important vendors.

 

Also on October 3, 2024, the Board accepted the resignation of Dean Kolocouris, effective immediately.

v3.24.4
GOING CONCERN (Details Narrative)
 9 Months Ended
Jul. 31, 2024
USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Negative cash flow $ 29,296
Operation activities 41,507
Accumulated deficit $ 10,707,203
v3.24.4
ACCOUNTS RECEIVABLE (Details Narrative) - USD ($)
Oct. 31, 2024
Jul. 31, 2024
Receivables [Abstract]    
Receivable balance $ 150 $ 57,272
v3.24.4
INVENTORY (Details Narrative) - USD ($)
Jul. 31, 2024
Oct. 31, 2023
Inventory Disclosure [Abstract]    
Reserve against apparel inventory $ 65,600 $ 65,600
Allowance for obsolete inventories $ 536,678 $ 471,078
v3.24.4
NOTES PAYABLE (Details Narrative) - USD ($)
 1 Months Ended 9 Months Ended
Dec. 31, 2023
Jul. 31, 2024
Convertible promissory note amount $ 50,000  
Interest rate 6.00%  
Secured note $ 100,000  
Conversion price $ 0.20  
Note payable   $ 47,903
U S Small Business Administration [Member]    
Interest rate   2.60%
Monthly installments   $ 1,820
v3.24.4
EARNINGS PER SHARE (Details Narrative) - shares
Jul. 31, 2024
Oct. 31, 2023
Earnings Per Share [Abstract]    
Stock of warrants 2,429,443 2,373,888
v3.24.4
SHIPPING AND HANDLING COSTS (Details Narrative) - USD ($)
 3 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Shipping And Handling Costs    
Shipping and handling costs $ 34,332 $ 27,070
v3.24.4
COMMON STOCK (Details Narrative) - USD ($)
 9 Months Ended
Jul. 31, 2024
Jul. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Proceeds from sale of stock $ 115,920 $ 261,000
Eight Investors [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Shares issued for services 580,888  
Proceeds from sale of stock $ 105,920  
Two Investors [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Shares issued for services 670,000  
Two Investors [Member] | Minimum [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Share price $ 0.18  
Two Investors [Member] | Maximum [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Share price $ 0.20  
v3.24.4
DEPOSITS ON EQUIPMENT (Details Narrative) - USD ($)
 9 Months Ended 12 Months Ended
Jul. 12, 2015
Jul. 31, 2024
Oct. 31, 2023
Oct. 31, 2019
Oct. 31, 2018
Oct. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Deposits on equipment   $ 652,944 $ 652,944      
Separate Piece Of Equipments [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Deposits on equipment     29,574     $ 7,370
Remaining balance owed on said equipment   $ 77,000        
Ketut Jaya [Member] | INSULTEX Material [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Purchase price machinery and equipment $ 700,000       $ 500,000  
Description of purchase price payment terms   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.        
Prepayment for machinery and equipment         100,000  
Additional expenses related to equipment         $ 17,000  
Shipping costs       $ 17,000    
Additional preprepayment for machinery and equipment     $ 16,000      
v3.24.4
LEASE (Details Narrative)
 9 Months Ended
Jul. 31, 2024
Lease  
Interest rate 5.50%
Operation lease description The Company entered into a lease for office space at the time the Company was formed through June 2022. 
v3.24.4
LEGAL PROCEEDINGS (Details Narrative)
Jun. 29, 2022
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Payment for settlement $ 260,000
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