A UNITED STATES
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WASHINGTON, D.C. 20549
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Innovative Designs, Inc.
Index
Form 10-Q for the Quarter Ended April 30, 2024
| Part I -- Financial Information | Page No. | |
| Item 1. | Condensed Financial Statements (Unaudited) | |
| Condensed Balance Sheets as of April 30, 2024 (Unaudited) And October 31, 2023 | 2 | |
| Condensed Statements of Operations for the Six-Month Periods Ended April 30, 2024 and 2023 (Unaudited) | 3 | |
| Condensed Statements of Changes in Stockholders’ Equity as of April 30, 2024 (Unaudited) and October 31, 2023 | 4 | |
| Condensed Statements of Cash Flows for the Six-Month Periods Ended April 30, 2024 and 2023 (Unaudited) | 5 | |
| Notes to the Condensed Financial Statements | 6 | |
| Item 2. | Management’s Discussion and Analysis 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 | 17 |
INNOVATIVE DESIGNS, INC
CONDENSED BALANCE SHEET
AS OF APRIL 30, 2024 AND OCTOBER 31, 2023
| ASSETS | April 30, 2024 | October 31, 2023 | ||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Accounts Receivable, Net | $ | $ | ||||||
| Inventory, Net | $ | $ | ||||||
| Other Current Receivables | $ | $ | ||||||
| Total Current Assets | $ | $ | ||||||
| Long-Term Assets | ||||||||
| Property, Plant, and Equipment, Net | $ | $ | ||||||
| Deposits on Equipment | $ | $ | ||||||
| Total Long-Term Assets | $ | $ | ||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Credit Cards | $ | $ | ||||||
| Accounts Payable | $ | $ | ||||||
| Other Current Liabilities | $ | $ | ||||||
| Total Current Liabilities | $ | $ | ||||||
| Long-Term Liabilities | ||||||||
| Notes Payable | $ | $ | ||||||
| Total Long-Term Liabilities | $ | $ | ||||||
| Total Liabilities | $ | $ | ||||||
| Stockholders Equity | ||||||||
| Common Stock; $ par value; shares authorized; and shares issued and outstanding as of April 30, 2024 and October 31, 2023 respectively | $ | $ | ||||||
| Paid-In Capital | $ | $ | ||||||
| Retained Earnings (Deficit) | $ | ( |
) | $ | ( |
) | ||
| Net Income (Loss) | $ | ( |
) | $ | ( |
) | ||
| Total Stockholders' Equity (Deficit) | $ | $ | ||||||
| Total Liabilities and Stockholders Equity (Deficit) | $ | $ | ||||||
-2-
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENT OF OPERATIONS
PERIOD ENDING APRIL 30, 2024
| Six-Month Ended April 30, | Three-Month Ended April 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of Goods Sold | $ | $ | $ | $ | ||||||||||||
| Gross Profit | $ | $ | $ | $ | ||||||||||||
| Operating Expenses | $ | $ | $ | $ | ||||||||||||
| Income (Loss) from operations | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||
| Other Income (Expenses) | ||||||||||||||||
| Gain (Loss) on Assets | $ | $ | $ | $ | ||||||||||||
| Depreciation Expenses | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Interest Expenses | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Total other income (expenses) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net Income (Loss) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||
| Earnings Per Share - Basic | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Earnings Per Share - diluted | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Weighted average common shares outstanding | ||||||||||||||||
-3-
Innovative Design, Inc
Statements of Change in Stockholder’s Equity
Six-Month Ending April 30, 2024 (Unaudited)
| Common Shares | Additional Paid-In | Accumulated | Total Stockholders | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||
| Balance - October 31, 2022 | $ | $ | $ | ( | $ | |||||||||||||||
| | ||||||||||||||||||||
| Sale of Stock | $ | $ | $ | |||||||||||||||||
| Shares Issued for Services | $ | $ | $ | $ | ||||||||||||||||
| Net Income (Loss) | — | $ | ( | ) | $ | ( | ) | |||||||||||||
| Balance at January 31, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net Income (Loss) | — | $ | ( | ) | $ | ( | ) | |||||||||||||
| Balance at April 30, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance - October 31, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Sale of stock | $ | $ | $ | $ | ||||||||||||||||
| Stock issued for services | $ | $ | ||||||||||||||||||
| Net Income (Loss) | — | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||
| Balance – January 31,2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Sale of stock | $ | $ | $ | |||||||||||||||||
| Net Income (Loss) | — | $ | $ | |||||||||||||||||
| Balance – April 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
-4-
INNOVATIVE DESIGNS, INC.
STATEMENT OF CASH FLOWS
AS OF APRIL 30, 2024 (UNAUDITED)
| Six-Month Ended April 30 | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net Loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Increase/(Decrease) in Depreciation / Amortization | $ | $ | ||||||
| Changes In Operating Assets and Liabilities | ||||||||
| Increase in Credit Cards Liabilities | $ | $ | ||||||
| Increase/(Decrease) Accounts Payables and Other Current Liabilities | $ | ( |
) | $ | ||||
| (Increase) / Decrease in Interest and Other Receivables | $ | ( |
) | $ | ||||
| (Increase) / Decrease in Inventory | $ | $ | ( |
) | ||||
| Decrease in Prepaid Expenses | $ | ( |
) | $ | ||||
| Net Cash Used In Operating Activities | $ | ( |
) | $ | ( |
) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Increase / (Decrease) in Deposits on Machinery & Equipment | $ | $ | ||||||
| Net Cash Used In Investing Activities | $ | $ | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Issuance of Stock | $ | $ | ||||||
| Increase / (Decrease) in Notes Payable | $ | ( |
) | $ | ( |
) | ||
| Net Cash Used In Financing Activities | $ | $ | ||||||
| Net Increase (Decrease) In Cash | $ | $ | ( |
) | ||||
| Cash at the Beginning of the Period | $ | $ | ||||||
| Cash at the End of the Period | $ | $ | ||||||
-5-
Innovative Designs Inc
Notes to Financial Statements
| 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 April 30, 2024, the changes therein for the six-month periods that ended and the results of operations for the six-month periods ended April 30, 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 six-month period ending April 30, 2024 are not necessarily indicative of operating results for the full year.
The Company’s unaudited consolidated 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 ???? the “2023 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.
The unaudited consolidated 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 six months ended April 30, 2024, are not necessarily indicative of the results for the year ending October 31, 2024 , or for any future period.
As of April 30, 2024, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2023 Annual Report.
| 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 ($
| 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 $
| 4. | OPENING AND CLOSING BALANCE OF RECEIVABLES |
The opening balance of accounts receivable was $
-6-
| 5. | 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 April 30, 2024 and October 31, 2023 of $
| 6. | 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.
| 7. | NOTES PAYABLE |
During December 2023, the Company entered into a convertible
promissory note in the amount of $
During 2005, the Company entered into an agreement with the U.S.
Small Business Association. The note is payable in monthly installments of $
As of April 30, 2024, all notes payables are up to date.
| 8. | LOANS |
Loans to the Company, including accrued interest,
totaled $
-7-
| 9. | 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.
| 10. | 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
| 11. | 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.
-8-
| 12. | 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 $
| 13. | COMMON STOCK |
During the six-month period ending April 30, 2024, the Company
sold shares of common stock to eight investors for total proceeds of $
| 14. | 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 $
During the fiscal year ended October
31, 2022, the Company made deposits on a separate piece of equipment of $
Total overall deposits on equipment as
of April 30, 2024 and October 31, 2023 were $
-9-
| 15. | 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
| 16. | 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.
-10-
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
$
| 17. | ADPOTED 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.
| 18. | SUBSEQUENT EVENTS |
The Company has evaluated subsequent events in accordance with ASC Topic 855, ”Subsequent Events”, through October 1, 2024, which is the date financial statements were available to be issued. The Company identified no material subsequent events that require recognition or disclosure.
-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, 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 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, 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:
| ● | Completing the development, design and prototypes of our products, | |
| ● | Obtaining retail stores or sales agents to offer and sell our products, | |
| ● | Developing our website to sell more of our products. |
-12-
Results of Operations
Comparison of the Three-Month Period Ended April 30, 2024, with the Three-Month Period Ended April 30, 2023.
The following table shows a comparison of the results of operations between the three month periods ended April 30, 2024, and April 30, 2023:
| Three Month | Three Month | |||||||||||||||||||||||
| Period Ended | Period Ended | |||||||||||||||||||||||
| 30-April | % | 30-April | % | Increase | ||||||||||||||||||||
| 2024 | of Sales | 2023 | of Sales | (Decrease) | % Change | |||||||||||||||||||
| REVENUE - NET | $ | 300,331.00 | $ | 27,249.00 | $ | 273,062.00 | 90.9 | % | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Cost of sales | $ | 151,560.00 | 50.5 | % | $ | 13,349.00 | 49.0 | % | $ | 138,211.00 | 91.2 | % | ||||||||||||
| Selling, general and administrative expenses | $ | 121,040.00 | 40.3 | % | $ | 121,091.00 | 444.2 | % | $ | 51.00 | 0.0 | % | ||||||||||||
| Total Operating Expenses | $ | 121,040.00 | $ | 121,091.00 | ||||||||||||||||||||
| Income/Loss from operations | $ | 27,731.00 | 9.2 | % | ($ | 107,191.00 | ) | -393.4 | % | $ | 134,922.00 | 486.5 | % | |||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Miscellaneous Income (expense) | $ | 0.00 | $ | 0.00 | 100.0 | % | $ | 0.00 | 100.0 | % | ||||||||||||||
| Interest expense | ($ | 4,338.00 | ) | -1.4 | % | ($ | 4,632.00 | ) | -17.0 | % | $ | 294.00 | -6.8 | % | ||||||||||
| Depreciation | ($ | 1,165.00 | ) | $ | 768.00 | -2.8 | % | ($ | 397.00 | ) | 34.1 | % | ||||||||||||
| Total other income (expense) | ($ | 5,503.00 | ) | -1.8 | % | ($ | 5,400.00 | ) | -19.8 | % | ($ | 103.00 | ) | 1.9 | % | |||||||||
| Net Income (Loss) | $ | 22,228.00 | 7.4 | % | ($ | 112,591.00 | ) | -413.2 | % | $ | 134,819.00 | 606.5 | % | |||||||||||
Revenues for the three-month period ended April 30, 2024, were $300,331 compared to revenues of $27,249 for the three-month period ended April 30, 2023. The increase in revenue is attributable solely to an increase in sales of our Houswrap product line. During the period we had no sales of any apparel.
Our selling, general and administrative expenses (“SG&A”) were $121,040 for the three months ended April 30, 2024, compared to $121,091 for the three-month period ended April 30, 2023. In February of 2024, we hired a son of our former CEO as a consultant at a rate of $1,000 per week. On September 30, 2024, the consulting arrangement was ended.
-13-
INNOVATIVE DESIGNS, INC.
Results of Operations
Comparison of the Six-Month Period Ended April 30, 2024, with the Six -Month Period Ended April 30, 2023.
| Six Month | Six Month | |||||||||||||||||||||||
| Period Ended | Period Ended | |||||||||||||||||||||||
| 30-April | % | 30-April | % | Increase | ||||||||||||||||||||
| 2024 | of Sales | 2023 | of Sales | (Decrease) | % Change | |||||||||||||||||||
| REVENUE - NET | $ | 366,217.00 | $ | 98,896.00 | $ | 267,321.00 | 73.0 | % | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Cost of sales | $ | 186,384.00 | 50.9 | % | $ | 30,359.00 | 30.7 | % | $ | 156,025.00 | 83.7 | % | ||||||||||||
| Selling, general and administrative expenses | $ | 206,722.00 | 56.4 | % | $ | 234,974.00 | 237.6 | % | $ | -28,252.00 | -13.7 | % | ||||||||||||
| Total Operating Expenses | $ | 206,722.00 | $ | 234,974.00 | ||||||||||||||||||||
| Loss from operations | $ | -26,889.00 | -7.3 | % | $ | -166,434.00 | -168.3 | % | $ | 139,548.00 | -519.0 | % | ||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Miscellaneous Income (expense) | $ | 0.00 | $ | 7,519.00 | 100.0 | % | $ | -7,519.00 | 100.0 | % | ||||||||||||||
| Interest expense | $ | -11,946.00 | -3.3 | % | $ | -11,231.00 | -11.4 | % | $ | -715.00 | 6.0 | % | ||||||||||||
| Depreciation | $ | -2,329.00 | $ | -1,537.00 | -1.6 | % | $ | -792.00 | 34.0 | % | ||||||||||||||
| Total other income (expense) | $ | -14,275.00 | $ | -5,249.00 | -5.3 | % | $ | -9,026.00 | 63.2 | % | ||||||||||||||
| Net Loss | $ | -41,164.00 | -11.2 | % | $ | 171,686.00 | -173.6 | % | $ | 130,522.00 | -317.1 | % | ||||||||||||
Revenues for the six-month period ended April 30, 2024, were $366,217 compared to revenues of $98,896 for the six-month period ended April 30, 2024. The increase in revenue is nearly all attributable to an increase in our House Wrap products’ revenue as we had approximately $7,000 in apparel sales during the period.
As of September 27,2024, we have a backlog of approximately $247,00 in orders for our Housewrap product line.
As of August 30, 2024, one of our Distributors has generated approximately $550,000 in sales.
SG&A expenses were $206,722 for the six month period ended April 30, 2024, compared to $234,974 for the six month period ended April 30, 2023.
In the period starting May 1, 2024, to September 3, 2024, our sales have increased 158% over the period beginning November 1, 2023, to April 30, 2024.
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INNOVATIVE DESIGNS, INC.
Liquidity and Capital Resources
During the three-month period ended April 30, 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 $600,000 on the equipment. The Company has incurred $17,000 of additional expenses related to shipping. The Company will produce Insultex under its own brand name. See Note 14 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 August 30, 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 Housewrap 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.
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 Personal. Mr. Gregory Domian is our Executive Vice-President, Operations. Should we lose the services of Mr. Domian our operations would be materially affected.
ITEM 1B Climate-Related Disclosure.
N/A
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INNOVATIVE DESIGNS, INC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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.
ITEM 5. Other Information
During the quarter ended April 30, 2024, no director or officer of the Company
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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 |
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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: October 1, 2024 | by: | /s/ John Thomas |
| John Thomas, Chief Executive Officer | ||
| and Chief Financial Officer |
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