U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Commission file number: 000-51791

Innovative Designs, Inc.

(Exact name of registrant as specified in its charter)

(412)799-0350

(Registrant’s telephone number including area code)

Securities to be registered pursuant to Section 12(b) of the Exchange Act:

________________

________________

Securities registered or to be registered pursuant to Section 12(g) of the Exchange Act:

(Title of Class)

Common Stock, $.0001 par value per share

IndicateIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☒No

Indicate by check mark if the registrant is not required to file reports pursuant to section 13 or Section 15 (d) of the Act.

☐ Yes ☒No

Check whether the issuer (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 past 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 for such shorter period that the registrant was required to submit and post such files). Yes☒ No ☐

Indicate by check mark if disclosure of delinquent filers to Item 405 of Regulation S-K (sec. 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check One)

Emerging reporting Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐No☒

The issuer’s revenues for its most recent fiscal year were $202,253.$ 263,293.

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was $6,674,796..$3,298,951. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purposes.

The number of shares of the registrant’s common stock outstanding on August 2, 2020,February 8, 2023, was 32,231,560.35,262,560.

Transitional Small Business Disclosure Format: Yes ☐ No ☒

The Company was incorporated in the State of Delaware on June 25, 2002. We operate in two separate business segments; cold weather clothing andsegments: a house wrap for the building construction industry.industry and cold weather clothing. Both of our segment lines use products made from INSULTEX,Insultex, which is a low-density foamed polyethylene semi-crystalline, closed cell foam in which the cells are totally evacuated. with buoyancy, scent block, and thermal resistant properties. We have a license agreement directly with the owner of the INSULTEX Technology.Insultex technology. In December 2015, we took delivery of equipment capable of producing INSULTEX.Insultex. Given the time and cost of bringing the equipment into production mode and our current financial condition it is our current intentionuntil we are able to attempt to sell the equipment. Webegin manufacturing Insultex, we will continue to operate under the license agreement for the manufacture of INSULTEXInsultex used in our products.

Other companies are free to purchase INSULTEXInsultex from us assuming that it is a company within the distribution jurisdiction that we have, which is worldwide with the exception of Korea and Japan. Other than Korea and Japan, we are the sole worldwide supplier/distributor of the INSULTEXInsultex material.

We offer the following products containing INSULTEX:Insultex:

We also offer a product that helps restore the waterproof character of the outer side of our Arctic Armor clothing. In addition, we offer cold weather headgear and a base insulation clothing product.

OurWe no longer manufacture our apparel products containing INSULTEX are manufactured, under agreement, at a facility we currently utilize in Indonesia.Insultex. We assumed no material costs associated with the design, prototyping, and testing of these products because: (a) we did not utilize the services of any outside consultant or company for these purposes and (b) although we used the services ofonly sell from our Chief Executive Officer and Vice President of Sales and Marketing for these purposes, their efforts are part of their normal responsibilities.existing inventory. Our INSULTEXInultex House Wrap product is manufactured in the United States through a third-party manufacturer.manufacturers. 

For financial information regarding each segment, please see Note 10 of the Notes to Financial Statements appearing elsewhere in this Report.

The INSULTEXInsultex License and Manufacturing Agreement

Under the terms of the agreement between us and the Ketut Group, Ketut Group agrees to promptly deliver to Innovative Designs, Inc. within twenty-eight (28) days of receiving an order, all INSULTEXInsultex ordered by us. Under the terms of the agreement, we are required to pay a fixed amount per meter of INSULTEX.Insultex. This fixed amount will not change under the agreement for a period of ten (10) years after the date of the agreement was signed, which was April 1, 2006. The agreement provides that after the ten (10) year period, the price of the INSULTEXInsultex shall be adjusted for a subsequent ten (10) year term, no more than twelve percent (12%) for the subsequent ten (10) year period. We order INSULTEXInsultex from time to time as needed and are not required to purchase any minimum amount of INSULTEXInsultex during the term of the agreement, and we are not required to make any minimum annual payment. However, should we place an order; any quantity ordered must be a minimum of 100,000 yards of INSULTEX.Insultex. We are not required to pay any part of any sublicense fee that we receive from third party sub-licensees, and we are not required to pay any fees to the Ketut Group. This agreement will be in full legal force and effect for an initial term of ten (10) years from the date of its execution. We have the option to renew this agreement for up to three (3) successive terms of ten (10) years each by giving notice of our intention to so renew not less than ninety (90) days prior to the expiration of the then-current term. The Company has exercised the first ten-year renewal option. We purchased the equipment capable of producing INSULTEXInsultex from the Ketut Group.

COLD WEATHER CLOTHING PRODUCTS

Arctic Armor Line

Our Arctic Armor line products are intended for use by the following consumer groups that are in the Company’s target market for these products: We are currently only selling these products form our existing inventory.

Website and Retailers

We sell both wholesale and retail products on our web site. Our web site, located at www.idigear.com, contains information on our products, technical information on INSULTEXInsultex insulation, e-commerce capabilities with “shopping cart”, wholesaler information and order forms, company contact information, and links to retailers that carry our products. We have obtained the services of BA Web Productions who assists us in designing and continually developing our website. Our web site features a “wholesaler only” area, allowing our wholesalers access to information, ordering, and reordering. Our products are offered and sold by retailers, distributors and through our web site in all states and Canada. Except for products sold through our web site, others who purchase our products do so at wholesale prices which they plan to sell at their retail prices or use within their industry.

Sales

We sell our products online, to distributors and through independent sales agents and agencies. Once we have made contact with a potential sales agency or solo agent, we evaluate their existing accounts, the capacity and potential for them to effectively push our products. We also look at their current product lines through the sales channel. Our primary market area is the outdoor industry which includes all activity done in cold weather. These activities include recreational such as hunting, ice fishing, snowmobiling, and industries such as oil and gas, utilities and construction. Once we agree to bring on an independent sales agent or agency, we enter into a standard agreement.

A typical sales representative agreement will have a term of one year with the right of either party to terminate upon thirty days written notice. We do not provide any free samples of our products and all sales expenses are the sole obligation of the sales agent.

Certain retailers buy directly from us. We have no verbal or written agreements with them. These retailers purchase our products strictly on a purchase order basis. During our last fiscal year, we sold our products to such retailers as Canadian Tire Corporation Limited. Some of our distributors during the last fiscal year were Pro Fishing Supplies and Fleece Corner. We distribute our products to the following:

Swimeez Products

We distribute our Swimeez products through our web site.

Hunting Apparel Line

We distribute our hunting apparel through our web site.

Our hunting apparel consists of a six pocket pants, 1/2 zip pullover jacket with collar, parka jacket, fleece jacket, bib coveralls in light weight, and bib coveralls in arctic weight.

Arctic Armor Line

We distribute the Arctic Armor Line through our web site, to retailers and to distributors across the United States and Canada. These products are also marketed to utility companies, oil/gas pipeline workers, railroad workers, police and first responders, and to construction workers.

During our last fiscal year, three customersone customer accounted for more than ten percent of our cold weather clothing products sales, Pro Fishing Supplies (30.4%)., Canadian Tire Corporation Limited (22.9%) and Fleece Corner (12.2%(13.0%).

HOUSE WRAP

House Wrap

In early January 2008, we announced that we had completed our research and development effort on a new use for INSULTEXInsultex as a house wrap for the home building construction industry. This house wrap provides barrier protection plus moisture vapor transmission and the feature of approximately R-3 and R-6 value insulation. The INSULTEXInsultex House Wrap was designed to specifically add enhanced insulating characteristics. In addition, the house wrapHouse Wrap is priced competitively with existing house wraps that do not provide any insulation. The development efforts were conducted by our own personnel and an outside consultant. In December 2016, we temporarily suspended any advertising for our House Wrap product line as we are currentlywere in litigation with the Federal Trade Commission (“FTC”). InThe litigation has concluded as to the first part of 2020,matters set forth in the FTC complaint and in March 2021, we resumed advertising for our House Wrap products. Please see “Legal Proceedings” appearing elsewhere in this report.

INSULTEXInsultex House Wrap

During our last fiscal year two customers accounted for more than ten percent of our total sales of our House Wrap product, A-Team Building Supplies, LLC (19.5%(41.0%) and Eddie’s Ace Hardware (17.7%Jerry’ Home Improvement Center (10.2%).

Competition

Many companies offer a type of house wrap some with insulating properties. These companies have large operations and are well financed. Some of the larger companies are DuPont, Owens-Corning and Kimberly Clark. The Company expects to face intense competition with others who have much greater resources in the building construction supply industry.

Our marketing program consists of the following:

MARKETING COMPONENT

Website Development and Internet Marketing

We contract with marketing consultants to:

(a) increase visitation to our website;website.

(b) link with other established websites;websites.

(c) issue press releases to on-line publications;publications.

(d) conduct banner advertising;advertising.

(e) develop arrangements with online retailers that purchase our products on a wholesale basis.

Sales Representatives

Our vice presidentVice President of sales and marketing works to:

(a) sell our merchandise to retail chain stores;stores.

(b) attend and network trade shows to establish industry related contracts;

(c) initiate relationships with local and national recreational organizations; and

(d)(c) provide support to our manufacturerdistributor representatives

Contract with Manufacturer

We utilize the services of sales agencies to represent our products in the United States and Canada.

Design and Develop

We presently use our own staff for services related to literature, displays, develop brochures, point-of-sale displays, mailers, media materials, and literature and sales tools for our sales representatives and manufacturer representatives. At such time as we have sufficient funding, we intend to contract out some of these services. We no longer manufacture the R-3 House Wrap.

Establish Wholesale

We are and continue to develop relationships or distribution relationships with retail points for our products to retail chain outlets and mass merchandisers to sell our products.

Develop Trade Show Booth

We use our own personnel to designcurrently have five domestic distributors and developone international. Each distributor has a portable display booth,certain territory. Our domestic distributors collectively cover the following jurisdictions; Texas, Oklahoma, Louisiana, North and product materials to be used in sporting goodsSouth Dakota, Minnesota, Iowa, Michigan, Ohio, Pennsylvania, New York, West Virginia, Maryland and outdoor apparel trade shows. DuringVirginia. Our international distributor territory covers the last fiscal year, we did not attend any trade shows.UK, EU the Commonwealth countries except for Canada and Africa.

We ship wholesale product orders by United Parcel Service or trucking companies. Retail orders from our website are shipped United Parcel Ground Service or Federal Express overnight. The costs of shipping our finished goods are paid by our customers. We have not instituted any formal arrangements or agreements with United Parcel Service, Federal Express or trucking companies, and we do not intend to do so.

INSULTEXInsultex is used in all our Arctic Armor finished goods, except for our headwear, and is purchased directly from the Ketut Group.headwear.

All of our cold weather clothing products, except for our gloves, which are purchased from a supplier in the U.S., are sub-manufactured by PT Lidya and Natalia located in Indonesia. Indonesia does not impose quotas that limit the time period or quantity of items which can be imported. The U.S. Customs Service imposes an importation duty of 6.5% on all our imported products.

We have no verbal or written agreements or long-term agreements with PT Lidya and Natalia, and we do not plan to obtain any such agreements. Our products, including our House Wrap, are manufactured on a per order basis.

The fulfillment process involved in completing wholesale orders for non-stocked Arctic Armor products and House Wrap product is described below:

Any apparel inventory we maintain is stored at our warehousing facility. Our warehouse facility has the capacity to hold 250,000 units of finished products in inventory. Our House Wrap inventory is stored in our facility and in the facility that manufactures it.

In 2004, we were granted a trademark for our name “idigear” with the United States Patent and Trademark Office.

In 2007, we were granted the mark “INSULTEX”“Insultex” by the United States Patent and Trademark Office.

In 2011, we were granted a trademark for “INSULTEX HOUSE WRAP”“Insultex House Wrap” by the United States Patent and Trademark Office.

In December 2009, weThe Company has rights under a U.S Patent tiled “Composite Fabric Material and Apparel Made Therefrom” which issued April 30, 2013.

The Company has rights under a U.S. Paten titled “Composite Materials” which issued February 21, 2017, published on September 5, 2013.

The Company caused to have filed a utility paten application on December 18, 2009, titled “Composite House Wrap” which claimed priority to provisional patent application No. 12 642714, with the United States Patent and Trademark Office for our Compositetitled “Composite House Wrap. TheWrap” on December 18, 2008. A patent application is still pending. In order to obtain the broadest possiblewas published on June 24, 2010. Although no patent protection forissued from this invention Innovative Designs, Inc. has appealed a portionoriginal disclosure, this publication prevents third parties from patenting concepts obvious over these original teaching of the decision of the Patent Trial and Appeal Board (PTAB) entered in Appeal 2015-006289 to the Court of Appeals for the Federal Circuit (CAFC) under 35 U.S.C. §141. The portion of the decision of the Patent Trial and Appeal Board (PTAB) entered in Appeal 2015-006289 reversing the examiner’s rejection has not been appealed. Innovative Designs, Inc. expects a favorable action allowing for the broadest possible patent protection to be obtained.

We had filed a provisional application in December 2008. The patent is currently held by our Chief Executive Officer and a consultant to the Company.

In February of 2010, our Chief Executive OfficerThe Company caused to have filed a utility patent application for a composite fabric material and apparel made therefrom. The patent has been allowed. The patent has been assigned to the Company.

Inon May 2016, our Chief Executive Officer and a consultant to the Compliant filed a patent application relating to INSULTEX entitled31, 2017, titled “Process for Forming Closed Cell Expanded Low Densitydensity Polyethylene Foam and Products Formed Thereby”., published January 24, 2018.. The Company then caused to have filed a utility patent application on July 31, 2020, which application was published February 11, 2021. In January 2023, the U.S Patent and Trademark Office issue a Notice of Allowance and a patent shall issue in due course.

Additional patent applications o other property concepts are also being pursued,

Our production costs are limited to the invoices we receive for Insultex from our sub-manufacturer, PT LidyaKetut Group and Natalia, on a per production basis and for our gloves from our supplier in the U.S and for our House Wrap product from the manufacturer.

Although we are not aware of the need for any government approval of our principal products, we may be subject to such approvals in the future.

United States and foreign regulations may subject us to increased regulation costs, and possibly fines or restrictions on conducting our business. We are subject, directly or indirectly, to governmental regulations pertaining to the following government agencies:

United States Customs Service

We are required to pay a 6.5% importation duty to the United States Customs Service on all imported products. We import INSULTEXInsultex from Indonesia from the Ketut Group, in accordance with Innovative Design’sour agreement with the Ketut Group.

United States Department of Labor’s Occupational Safety and Health Administration

Because our sub-manufacturers manufacture our completed products, we and our sub-manufacturers will be subject to the regulations of the United States Department of Labor’s Occupational Safety and Health Administration.

We are not aware of any governmental regulations that will affect the Internet aspects of our business. However, due to increasing usage of the Internet, a number of laws and regulations may be adopted relating to the Internet covering user privacy, pricing, and characteristics and quality of products and services. Furthermore, the growth and development of Internet commerce may prompt more stringent consumer protection laws imposing additional burdens on those companiescompanies’ conducting business over the Internet. The adoption of any additional laws or regulations may decrease the growth of the Internet, which, in turn, could decrease the demand for Internet services and increase the cost of doing business on the Internet. These factors may have an adverse effect on our business, results of operations, and financial condition.

Moreover, the interpretation of sales tax, libel, and personal privacy laws applied to Internet commerce is uncertain and unresolved. We may be required to qualify to do business as a foreign corporation in each such state or foreign country. Our failure to qualify as a foreign corporation in a jurisdiction where we are required to do so could subject us to taxes and penalties. Any such existing or new legislation or regulation, including state sales tax, or the application of laws or regulations from jurisdictions whose laws do not currently apply to our business, could have a material adverse effect on our business, results of operations and financial condition.

We currently have no costs associated with compliance with environmental regulations. Because we do not manufacture our products, but rather they are manufactured by our sub-manufacturers, we do not anticipate any costs associated with environmental compliance. Moreover, the delivery and distribution of our products will not involve substantial discharge of environmental pollutants. However, there can be no assurance that we will not incur such costs in the future.

We estimate that all of our revenues will be from the sale of our products. We will sell our products at prices above our original cost to produce our products. Prices for some of our products will be lower than similar products of our competitors, while others will be higher. We expect our product prices to be lower than network marketing companies, but higher compared with retail establishments that directly manufacture their own products.

Products that are sold directly by our website will be priced according to our Manufacturer Suggested Retail Prices. Our wholesale clients will purchase our products at our wholesale prices. We recommend that our retailer clients sell our products at the Manufacturer Suggested Retail Prices that we provide to them which are the same prices for products on our website; however, they are not required to do so and may price our products for retail sale at their discretion. We have established M.A.P. (minimum advertised pricing) on our Arctic Armor™ suit in an attempt to allow all retailers and distributors carrying the line to obtain reasonable gross margin dollars.

We currently have a total of 3two full time employees. We hire part-time personnel as needed.

We have no collective bargaining or employment agreements.

Reports and Other Information to Shareholders

We are subject to the informational requirements of the Securities Exchange Act of 1934. Accordingly, we file annual, quarterly and other reports and information with the Securities and Exchange Commission. You may read and copy these reports and other information we file at the Securities and Exchange Commission’s public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Our filings are also available to the public from commercial document retrieval services and the Internet worldwide website maintained by the Securities and Exchange Commission at www.sec.gov.

Lack of Sufficient Operating Funds-Going Concern

Our independent registered public accounting firm for the fiscal year ended October 31, 2020,2022, has included an explanatory paragraph in their opinion that accompanies our audited financial statements for the fiscal year ended October 31, 2020,2022, indicating that as a result of the Company having had net losses and negative cash flows and an accumulated deficit there is substantial doubt about the Company’s ability to continue as a going concern. Because we are not able to generate sufficient funds from sales and because we are unable to access commercial sources of credit, we are consistently underfunded. As a result, our growth is very limited, and we have difficulty in sustaining our current level of operations. We are not able to initiate adequate marketing programs, hire additional staff, develop new products or have flexibility in ordering productsInsultex from our manufacturers..manufacturer. Additionally, we must replace our quality control testing equipment for our House Wrap product line which we estimate may cost $100,000.. In the past, we have depended on borrowings from our CEO and other private parties, primarily stockholders in the private sale of our common stock or debt. . Should we not be able to continue to rely on these sources of funding and increase our revenue stream to at least meet our current level of operations and to purchase new testing equipment the ability of the Company to continue as a going concern will be adversely affected.

Competition

The markets served by the Company are highly competitive. Competitive pricing pressure could result in loss of customers or decreased profit margins. Competition by product type includes the following:

The markets for our products are increasingly competitive. Our competitors have substantially longer operating histories, greater brand name and company name recognition, larger customer bases and greater financial, operating, and technical resources than us. Because we are financially and operationally smaller than our competitors, we will encounter difficulties in capturing market share. Our competitors are able to conduct extensive marketing campaigns and create more attractive pricing of their target markets than we are.

Some of our biggest competitors for our House Wrap product line are;

Some of our biggest competitors in the Arctic Armor™ line are:

We compete in the following ways:

Arctic Armor Line

We emphasize the following characteristics and advantages of our Arctic Armor line products:

INSULTEXInsultex provides a scent barrier which we had a permeation test performed on at the Texas Research Institute Austin, Inc. The product was subjected to gas stimulant for an eight-hour period. The product was tested for permeation of the gas every three minutes for the duration of the test with almost no detection of the gas throughout the test. The testing was based upon accepted industry practices as well as the test method used.

HOUSE WRAP

Our House Wrap product

Our products have the following disadvantages in comparison to the products of our competitors:

There can be no assurance that we will be able to compete in the sale of our products, which could have a negative impact upon our business.

We do not expect our business to be dependent on one or a few customers or retailers; however, there is no assurance that we will not become so dependent.

Cyclicality

The Company’s Arctic Armor apparel sales fluctuate based on temperature and weather conditions. Our products are suitable primarily for cold weather conditions. This will cause a cyclical effect on sales. It also makes our revenues totally dependent on cold weather.weather for this product line. For the fiscal year ended October 31, 2022, our cold weather products accounted for approximately 25% of our total revenue.

Material Acquisition

All of the materials and items required to manufacture our cold weather clothing products are purchased by our manufacturer in Indonesia.

The Company currently has only one supplier of INSULTEX,Insultex, the special material which is manufactured within the apparel of our cold weather products and our House Wrap product. Additionally, we have one manufacturer that produces the apparel on behalf of the Company, located in Indonesia. Currently, we are only selling apparel from our inventory. Any delays in getting INSULTEX and/or our finished productsInsultex will adversely affect our revenue stream. Once we have our own equipment operating, we will be able to produce INSULTEX.Insultex. We intend to use such INSULTEXInsultex for our House Wrap product.product.at the present time.

Our Indonesia based manufacturer, PT Lidya and Natalia, has sole discretion in the sourcing and ordering of materials for their production runs, the costs of which we reimburse PT Lidya and Natalia.

Geographic Concentration

Most of the Company’s sales for its cold weather clothing products to retailers are concentrated in colder climates of the United States and Canada. To the extent that any regional economic downturn impacts these regions, the Company will be adversely affected.

Management

The Company is dependent on the management of Joseph Riccelli, our Chief Executive Officer. The loss of Mr. Riccelli’s services could have a negative effect on the performance and growth of the Company for some period of time.

Stock Price-Delisting from the OTCQB Market

The Company’s stock is thinly traded. Should a major shareholder decide to liquidate its position, there could be a negative effect on the price of the stock until this condition is resolved. . Additionaly, On April 22, 2021, the OTC Markets Group notified the Company that the grace period to cure its filing delinquency had expired and accordingly the Company would be moved from the OTCQB market to the Pink market. This has resulted in a number of brokerage firms to not be able to offer trading services for the stock. The Company intends to work as expeditiously as possible to complete the delinquent SEC reports to bring itself current in its reporting obligations and then request to be moved back to the OTCQB market. Until the Company is current in its filing obligations trading in the Company’s stock will be severly limited.

Penny Stock Considerations

Our shares are “penny stocks” as that term is generally defined in the Securities Exchange Act of 1934 as equity securities with a price of less than $5.00. Our shares may be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth, exclusive of one’s residence, in excess of $1,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our stock, which may affect the ability of shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities if our securities become publicly traded. In addition, the liquidity for our securities may be adversely affected, with a corresponding decrease in the price of our securities.

ITEM 1B Unresolved Staff Comments.

Not applicable.None.

In October 2002, we arranged for theWe lease of warehouse space for our inventory and raw materials at 124 Cherry Street, Etna, Pennsylvania. We also use this space as our principal executive offices. This facility encompasses 13,000 square feet of storage space on the first floor and 2,000 square feet for our sales department offices located on the second floor. We have entered into a verbal agreement with the owner of the building and we pay $3,500 per month for the space. This facility is composed of: (a) warehouse and storage areas including four (4) shipping bays and a distribution area consisting of square footage to store upward of 250,000 finished goods products; and (b) four (4) offices, one (1) conference room, with presentation area and sample display and (2) bathrooms totaling approximately 2,000 square feet located on the second floor. Mr. Frank Riccelli is the brother to our Chief Executive Officer and the owner of the property. The condition of our leased property is good.

We do not own any property, nor do we have any plans to own any property in the future. We do not currently intend to develop properties. We are not subject to competitive conditions for propertygood and currently have no property to insure. We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages. Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities. We consider the condition of our leased property to be suitable for our needs.

On November 4, 2016, the FTC filed a complaint against the Company in the U.S. District Court Western District of Pennsylvania, Case number 16-1669. In the complaint, the FTC alleges that, among other matters, the Company did not have substantiation of claims made by the Company regarding the R value and energy efficiency of its INSULTEX House Wrap products. The complaint asks as to redress a rescission of revenue the Company received from the sale of House Wrap and a permanent injunction. On September 24, 2020, a judgment was entered in favor of the Company as to all claims set forth in the FTC complaint. It was further ordered that as there were no remaining claims in the action the case shall be marked as closed.

On November 23, 2020, the Company was informed that the FTC had filed a notice of appeal in regard to the case. The appeal is from the District Court’s September 24, 2020, Order granting the Company’s Motion for Judgment on Partial Findings Pursuant to Fed. R. Civ. P. 52(c) and subsequent Judgment in favor of the Company and from the District Court’s February 14, 2020, striking Dr. David Yarbrough’s expert testimony made on behalf of the FTC. The FTC filed its appeal and on March 24, 2021, the Company filed its answer and on July 22, 2021, the Company was informed that the United States Court of Appeals for the Third District affirmed the District Court’s ruling in favor of the Company. The case number is No.20-3379.

PART II

BelowOur Common Stock is the market information pertaining to the range of the high and low bid information of our common stock for each quarter for the last two fiscal years. Our common stock is quotedtraded on the OTC Bulletin BoardOTCQB tier under the symbol IVDN. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

On August 2, 2021 the closing bid price was $0.34.

The source of the above data is www.otcmarkets.com.

Holders

As of August 2, 2021,January 30, 2023, we had 204249 holders of record of our common stock. stock (not including beneficial holders of stock held in street names).

We have one class of stock outstanding. We have no shares of our preferred stock outstanding.

Dividends

We have not declared any cash dividends on our stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payment of dividends will depend on our earnings and financial position and such other factors as the Board of Directors deems relevant.

Recent Sales of Unregistered Securities.

During the fiscal year endedOn October 31, 2019, the Company sold 1,867,0005, 2022, we issued 125,000 shares of common stock to nine investors for total proceeds of $264,040. The stock was issued between $0.08 and $0.17 per share. During the fiscal year ended October 31,2019, 550,000 shares of common stock were issued to one note holder for the extinguishment of a $50,000 note payable and $5,000 of accrued interest. This stock was issued at $0.10 per share. The Company issued 210,000 shares of common stock to three individuals for services valued at $35,500. The stock was issued between $0.15 and $0.20 per share. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set for the restrictions on their transferability and sale.

On November 14, 2019 the Company sold 100,000 shares of itsour Common Stock to one individual at a price of $.15 per share.marketing consultant for services.

On December 18, 2019,Subsequent to the Companyperiod we sold 200,000 shares of its Common Stock500,000 Units to one individual at a price of $.17 per share.

On February 14, 2020, the Company sold 100,000 shares of its Common Stock to one individual at a price of $.125 per share.

On February 15, 2020, the Company sold 200,000 shares of its Common Stock to one individual at a price of $.15 per share.

On February 28, 2020, the Company sold 25,000 shares of its Common Stock tone individual at a price of $.20 per share.

On April 21, 2020, the Company sold 100,000 shares of its Common Stock to one individual at a price of $.10 per share.

On May 28, 2020, the Company sold 150,000 shares of its common Stock to one individual at a price of $.18 per share.

On August 29, 2020, the Company sold 100,000 shares of its Common Stock to one individual at a price of $.12 per share.

On December 30, 2020, the Company issued 100,000 shares of its Common Stock to one individualinvestor in exchange for a debt in the amount of approximately $25,000. The shares were valued at $.12 per share.

On February 5, 2020, the Company issued 25,000 shares of its Common Stock to two Directors for services and 250,000 shares to its CEO and chairman of the Board of Directors for services. The Company also issued 50,000 shares each to two consultants and 50,000 shares for profession services. All of the shares were valued at $.12 per share.

In March 2021, the Company commenced a private placement of a unit offering.and received $110,000 in proceeds. Each unit consists ofUnit contained one share of Common Stock priced at $.25 and one Common Stock Purchase Warrant.common stock purchase warrant. The Warrant is forwarrant has a term of two years. The Warrantyears with an exercise price is $.25 per warrant.of $.45. The minimum investment is $10,000. The cost of a unit is $.25.

On March 2, 2021, the Company sold 40,000 units to one individual.

On March 12, 2021, the Company sold 60,000 units to one individual.

On March 17, 2021, the Company issued 50,000 shares of its common stock to a consultant. The stock was valued at $.20 per share.

On April 23, 2021, the Company sold 40,000 units, 60,000 unitsand 40,000 units to three individuals.

On April 26, 2021, the Company sold 40,000 units toalso has piggy-back registration rights for one individual.

On May 16, 2021, the Company sold 60,000 units ot one individual.

On May 20, 2021, the Company sold 40,000 units to one individual.

On June 2, 2021, the Company sold 40,000 units, 40,000 units 20,000 units and 40,000 units to four individuals.year. Each Unit cost $. 22.

The Company relied in Section 4(2) of the Securities Act of 1933, as amended and Regulation D, Rule 506 (c) promulgated thereunder. The securities are “restricted securities” as that term is defined under the Securities Act and each stock certificate bears a legend restricting their transferability.

As a smaller reporting company, under SEC regulations, we are not required to furnish selected financial data.

General

The following information should be read in conjunction with the financial statements and the notes thereto appearing elsewhere in this report.

Disclosure Regarding Forward-Looking Statements

Certain statements made in this report, and other written or oral statements made by or on behalf of the Company, may constitute “forward-looking statements” within the meaning of the federal securities laws. When used in this report, the words “believes,” “expects,” “estimates,” “intends,” and similar expressions are intended to identify forward-looking statements. Statements regarding future events and developments and our future performance, as well as our expectations, beliefs, plans, intentions, estimates, or projections relating to the future, are forward-looking statements within the meaning of these laws. Examples of such statements in this report include descriptions of our plans and strategies with respect to developing certain market opportunities, and our overall business plan. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. Weprojected we believe that these forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligations to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise.

Background

Innovative Designs, Inc. (hereafter referred to as the “Company”, “we” or “our”) was formed on June 25, 2002. We marketproduces and sell cold weather clothing products called “Arctic Armor” that are, except for our headwear, made from INSULTEX,sells a house wrap product using Insultex a material with buoyancy, scent blockthermal resistance and thermal resistantbuoyancy properties. We also offer our House Wrapa cold weather product line called “Artic Armor” which is also made from INSULTEX.uses Insultex. We no longer produce any Artic Armor products. We are only selling form our existing inventory. We obtain INSULTEX for our cold weather clothing productsInsultex through a license agreement with the owner and manufacturer of the material. In December 2015, we took delivery of equipment capable of producing our own INSULTEX. We are currently seeking a facility whereInsultex. At such time as we have sufficient funding, we intend put the equipment can be installed. We intend tointo production and use the INSULTEXInsultex from this equipment in the production of our House Wrap product and for the sale of INSULTEXInsultex to others.

Results of Operations

Comparison of the fiscal year ended October 31, 2020,2022, with the fiscal year ended October 31, 2019.2021.

The following table shows a comparison of the results of operations between the fiscal years ended October 31, 20202022 and October 31, 2019:2021:

Results of Operations

Revenues for the fiscal year ended October 31, 2020,2022, were $202,253$ 258,734 compared to revenues of $215,975$225,601 for the comparable period ending October 31, 2019.2021. House Wrap product revenue totaled $ 131,285193,302 for the period compared to $80,469$169,375 for Fiscal Yearfiscal year ended October 31, 2019.2022. Nearly all of the remaining revenues were derived from our Arctic Armor and related product linelines which totaled $70.968$65,432 for the period compared to revenues of $135,506$56,226 for the Fiscal Yearfiscal year ended October 31, 2019. The decrease in revenue is attributable to the FTC matter with regard to our House Wrap products as we did not advertise for this product line during the period. The decrease in revenue for our apparel product line is attributable to the fact that we are devoting significant portion of our limited resources to the FTC matter.2021. Revenues are net of returns and discounts. We estimate that approximately sixty percentcontinue to work on rebuilding our House Wrap product line brand after doing no advertising during the time of the FTC litigation, November 2016 to July 2021, and the effect of the litigation on our cold weather apparelHouse Wrap products are sold to outdoor sportsmen, primarily those engagedacceptance, and the use of Insultex in ice fishing.other applications in the marketplace.

Selling, general and administrative expense decreasedincreased from $577,060$411,716 in fiscal year 2019,2021, to $341,132$666,239 in the fiscal year ending October 31, 2012.2022. This decreaseincrease reflects, in part, $53,000 more for advertising and marketing, a decreasepayroll increase of $75,000, a reinstatement fee of $14,000 for listing on the OTCQB and stock base compensation to our directors of $71,000 and $75,000 in stock based compensation expenseto a marketing consultant. Profession fees decreased during the period by $17,000 as a result of furloughing two employees in March 2019, and a decrease in professional fees from $ 210,044 in fiscal year 2019, to $71,183 for fiscal year 2020.the FTC litigation wound down.

Our cost of sales increased from $126,645$96,728 as of October 31, 20192021, to $131,280$118,997 as of October 31, 2019.2022.

Liquidity and Capital Resources

During the fiscal year ended October 31, 2020,2022, we funded our operations from revenues, a legal settlement and the private sales of our common stock. During the period, we received $260,000 from a settlement with the FTC for legal fees incurred in connection with the FTC litigation. Subsequent to the period, we receive $110,000 from the sale of our Common Stock. We will continue to fund our operations from these sourcesrevenues, private borrowings and the sale of our common stock until we are able to produce sales sufficient to cover our cost structure or to secure commercial lending arrangements.

On July 12, 2015, the Company reached an agreement with Ketut Jaya to purchase 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, 2016, the Company has made payments of $600,000. In addition to the final payments, the Company will have to have the equipment and machines installed and ensure that the machine can be operated in compliance with environmental regulations. The Company has not made an estimate of the costs required for bringing the machine into compliance, but it is considered to be substantial. Given the expected time and cost of bringing the equipment into production mode and our current financial condition we are unable to estimate when we will be able to do so.

We also must purchase new quality control testing equipment for our House Wrap product line which we estimate will cost approximately $100,000. However, we have not as yet received a quote from the vendor. We have placed a $7,000 deposit with the vendor. Once the equipment is built it iswill have to go through a certification process.

During the period we paid $144,666 on our intention to attempt to sell the equipment.loans.

Short Term: We funded our operations with revenues from sales, private sales of our common stock and from loans from our Chief Executive Officer and others.a legal settlement. We could not access commercial lines of credit during our last fiscal year.

Our existing debt obligations as of October 31, 2020, consist of the following:

The Company intends to repay these debt obligations with funds it generates from revenues, from the possible sale of its securities either debt or equity, from advances from its CEOour stockholders or other stockholders.others. Because we cannot currently access commercial lending facilities, should we not be able to continue to obtain funding from our CEO and/or other individuals or sell our securities orthese sources should our revenues decrease, our operations would be severely effectedaffected as we would not be able to fund our purchase orders to our suppliers for finished goods. The Company continues to pay its creditors when payments are due.

Long Term: The Company will continue to fund operations from revenues, borrowings and the possible sale of its securities. Should we not be able to continue to rely on these sources our operations would be severely effectedaffected as we would not be able to fund our purchase orders to our suppliers for finished goods.

Subsequent to the period in December 2020, the Company borrowed $200,000 from an individual. The note is secured by one of the Company’s patent. The term of the loan is three years and the interest rate is 12% per annum. The loan is to be repaid in yearly installments with the first payment of $66,666.00 to be paid on the 180^th day from the date of the loan. Thereafter, each installment will be due and payable one year from the date of the loan and each succeeding calendar until three years from the date of the loan year. On April 29, 2021, the Company issued a convertible promissory note in the principle amount of $50,000. The interest rate is 8% and the note matures in one year. The amount of the note may be converted into shares of the Company’s Common Stock at the rate of one share for each $.50 of the outstanding amounts due and owning under the note.

As a smaller reporting company under SEC Regulation, we are not required to provide this information.

Index to Financial Statements

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the

Board of Directors of Innovative Designs, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Innovative Designs, Inc. (the “Company”)Company) as of October 31, 20202022 and 2019,2021, the related statements of operations, changes in stockholders’ equity and cash flows, for each of the two years in the two year period ended October 31, 2020,2022, and the related notes (collectively, referred to as the “financial statements”)financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 20202022 and 2019,2021, and the results of its operations and its cash flows for each of the two years in the two-year period ended October 31, 2020,2022, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that thethat Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company had net losses and negative cash flows from operations for the years ended October 31, 20202022 and 2021 and an accumulated deficit at October 31, 2020.2022 and 2021. These factors raise substantial doubt about itsthe Company’s ability to continue as a going concern for one year from the issuance date of these financial statements. Management’s plans are also described in Note 2. The financial statements do not include adjustments that might result from the outcome of this uncertainty.

Basis offor Opinion

These financial statements are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on the Company’sCompany's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)(PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our auditaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to frauderror or error.fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit,audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our auditaudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditaudits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.

/s/ Boyle CPA,

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition

Critical Audit Matter Description

The Company’s recognition of revenue involves the evaluation against five criteria described by generally accepted accounting principles. With regards to the Company’s transaction classes the primary criteria is the satisfaction of their performance obligations.

How the Critical Audit Matter Was Addressed in the Audit

Our procedures related to the Company meeting their performance obligations included evaluation of initial sale transaction documentation, shipping records, and invoices.

RW Group, LLC

We have served as the Company’sCompany's auditor since 20202021.

Bayville, NJ
August 4, 2021Kennett Square, PA

February 13, 2023

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

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

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