UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q10-Q/A

 

☒QUARTERLY REPORT PURSUANT TO SECTION 1313l OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended JanuaryJuly 31, 20182023

 

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)

 

Delaware03-0465528
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)

 

124 Cherry Street

Pittsburgh, Pennsylvania15223

(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.

 

YESYes ☒ NONo ☐

 

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). YESYes ☒ NONo ☐

 

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). YESYes ☐ NONo ☒

 

As of March 12, 2017,September 22, 2023, there were 27,049,56036,417,560 shares of the Registrant’s common stock, par value $.0001 per share, outstanding.

 

Transitional Small Business Disclosure Format: YESYes ☐ NONo ☒

 

 

 

Explanatory Note

Please note the Company is filing this form 10-Q/A to correct an inadvertent tag of shell status as being true instead of false in its Ixbrl tagging.

No other changes were made.

Innovative Designs, Inc.

 

Index

 

Form 10-Q for the Quarter Ended JanuaryJuly 31, 20182023

 

Part I -- Financial InformationPage No.No.
Item 1.Condensed Financial Statements (Unaudited) 1
Condensed Balance Sheets as of JanuaryJuly 31, 20182023 (Unaudited) and October 31, 201720221 3
Condensed Statements of Operations for the Three And Nine Month PeriodPeriods Ended JanuaryJuly 31, 20182023 and 20172022 (Unaudited)2 4
Condensed Statements of Changes in Stockholders’ Equity as of JanuaryJuly 31, 20182023 (Unaudited) and October 31, 201720223 5
Condensed Statements of Cash Flows for the ThreeNine Month PeriodPeriods Ended JanuaryJuly 31, 20182023 and 20172022 (Unaudited)4 6
Notes to the Condensed Financial Statements5 - 7
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations8 - 10 13
Part II -- Other Information 17
Items 1., 2., 3.,1, 2, 3, and 4T.11 17-18
Item 6.Exhibits12 - 14 19

 

 

 

ITEM 1. CONDENSED FINANCIAL STATEMENTS

 

INNOVATIVE DESIGNS, INC.

 

CONDENSED BALANCE SHEETSFINANCIAL STATEMENTS
FOR THE QUARTER ENDED

January

JULY 31, 2018 (Unaudited) and October 31, 20172023

-1-

TABLE OF CONTENTS

PAGE
FINANCIAL STATEMENTS:1 
CONDENSED BALANCE SHEETS3
CONDENSED STATEMENTS OF OPERATIONS4
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY5
CONDENSED STATEMENTS OF CASH FLOWS6
NOTES TO FINANCIAL STATEMENTS7

 

ASSETS 
  2018  2017 
CURRENT ASSETS        
Cash $195,440  $214,871 
Accounts receivable  28,395   23,805 
Inventory - net of obsolete inventory reserve of $51,000  789,256   729,845 
Inventory on consignment  1,625   1,625 
Deposits on inventory  48,330   70,000 
Prepaid expenses  11,445   14,653 
Total current assets  1,074,491   1,054,799 
         
PROPERTY AND EQUIPMENT - NET  156,242   160,862 
         
OTHER ASSETS        
Advance to employees  8,200   4,000 
Deposits on equipment  617,000   617,000 
         
Total other assets  625,200   621,000 
         
TOTAL ASSETS $1,855,933  $1,836,661 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY
         
CURRENT LIABILITIES        
Accounts payable $183,120  $129,278 
Current portion of notes payable  18,096   18,096 
Accrued interest expense  46,481   44,184 
Due to shareholders  107,250   118,500 
Accrued expenses  19,190   25,102 
Total current liabilities  374,137   335,160 
         
Long-term portion of notes payable  114,246   119,262 
         
TOTAL LIABILITIES  488,383   454,422 
         
STOCKHOLDERS’ EQUITY        
Common stock, $0.0001 par value, 100,000,000 shares authorized, and 26,793,310 and 26,392,310 issued and outstanding as of January 31, 2018 and October 31, 2017  2,679   2,639 
Additional paid-in capital  9,856,932   9,725,412 
Accumulated deficit  (8,492,061)  (8,345,812)
Total stockholders’ equity  1,367,550   1,382,239 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,855,933  $1,836,661 

-2-

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

         
  July 31, 2023 October 31, 2022
     
ASSETS    
     
CURRENT ASSETS:        
Cash $178,817   263,293 
Accounts receivable, net  82   11,203 
Inventory, net  588,874   494,580 
         
Total current assets  767,773   769,076 
         
PROPERTY AND EQUIPMENT, net  24,247   5,960 
         
OTHER ASSETS:        
Inventory on consignment  —   1,625 
Deposits on inventory  —   80,000 
Advance to employees  13,200   13,200 
Deposits on equipment  719,944   607,370 
         
Total other assets  733,144   702,195 
         
TOTAL $1,525,164  $1,477,231 
         
 LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
CURRENT LIABILITIES:        
Accounts payable $275,487  $162,063 
Current portion of note payable  20,265   20,128 
Accrued interest of stockholder loans  54,073   46,345 
Current portion of stockholder loans  71,668   110,631 
Accrued expenses  3,778   3,778 
         
Total current liabilities  425,271   342,945 
         
LONG-TERM LIABILITIES:        
Long-term portion of note payable  49,530   64,547 
Long-term portion of stockholder loans  —   66,667 
         
Total long-term liabilities  49,530   131,214 
         
STOCKHOLDERS’ EQUITY:        
Preferred stock, $0.0001 par value,        
25,000,000 shares authorized  —   — 
Common stock, $0.0001 par value, 100,800,000 shares authorized, and 36,092,560 and 34,650,560 issued and outstanding  3,612   3,467 
Common stock to be issued  —    —  
Additional paid-in capital  11,637,980   11,335,184 
Accumulated deficit  (10,591,228)  (10,335,579)
         
Total stockholders’ equity  1,050,363   1,003,072 
         
TOTAL $1,525,164  $1,477,231 

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

 

-3-

INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF OPERATIONS     
THREE AND NINE MONTHS ENDED JULY 31, 2023 AND 2022 (UNAUDITED)

                 
  Three Months Ended July 31, Nine Months Ended July 31,
  2023 2022 2023 2022
         
REVENUES, net $124,650  $135,048  $223,546  $235,164 
                 
OPERATING EXPENSES:                
Cost of sales  76,480   56,224   106,839   109,884 
Selling, general and administrative expenses  124,944   115,384   359,917   545,212 
                 
Total operating expenses  201,424   171,608   466,756   655,096 
                 
Income (loss) from operations  (76,774)  (36,560)  (243,210)  (419,932)
                 
OTHER INCOME (EXPENSE):                
Miscellaneous income (expense)  —   260,000   7,519   260,000 
Interest expense  (6,421)  (10,710)  (17,652)  (34,450)
Depreciation  (769)  (373)  (2,306)  (1,118)
                 
Total other income (expense)  (7,190)  248,917   (12,439)  224,432 
                 
Net income (loss) $(83,964) $212,357  $(255,649) $(195,500)
                 
PER SHARE INFORMATION - UNDILUTED:                
Net income (loss) per common share  (0.002)  0.006  $(0.007) $(0.006)
                 
Weighted average number of common shares outstanding  35,656,821   33,845,560   35,339,663   33,845,560 
                 
PER SHARE INFORMATION - DILUTED:                
Net income (loss) per common share  (0.002)  0.006  $(0.007) $(0.006)
                 
Weighted average number of common shares outstanding  36,633,430   34,902,893   36,153,406   34,902,893 

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

-4-

INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY    

THREE AND NINE MONTHS ENDED JULY 31, 2023 AND 2022 (UNAUDITED)

                         
  Common Stock Common Stock Additional Paid-In Accumulated  
  Shares Amount To Be Issued Capital Deficit Total
             
Balance at October 31, 2022  34,650,560  $3,467  $—  $11,335,184  $(10,335,579) $1,003,072 
                         
Sale of stock  500,000   50   —   109,950   —   110,000 
                         
Shares issued for services  27,000   3   —   5,937   —   5,940 
                         
Net income (loss)  —   —   —   —   (59,094)  (59,094)
                         
Balance at January 31, 2023  35,177,560   3,520   —   11,451,071   (10,394,673)  1,059,918 
                         
Sale of stock  —   —   —   —   —   — 
                         
Shares issued for services  —   —   —   —   —   — 
                         
Net income (loss)  —   —   —   —   (112,591)  (112,591)
                         
Balance at April 30, 2023  35,177,560   3,520   —   11,451,071   (10,507,264)  947,327 
                         
Sale of stock  695,000   70   —   140,931   —   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 at July 31, 2023  36,092,560   3,612   —   11,637,980   (10,591,228)  1,050,363 
                         
Balance at October 31, 2021  33,315,560  $3,333  $—  $11,039,118  $(10,110,090) $932,361 
                         
Sale of stock  340,000   34   —   60,966   —   61,000 
                         
Shares issued for services  50,000   5   —   9,995   —   10,000 
                         
Net income (loss)  —   —   —   —   (132,040)  (132,040)
                         
Balance at January 31, 2022  33,705,560   3,372   —   11,110,079   (10,242,130)  871,321 
                         
Sale of stock  120,000   12   —   25,188   —   25,200 
                         
Shares issued for services  700,000   70   —   174,930   —   175,000 
                         
Net income (loss)          —   —   (275,816)  (275,816)
                         
Balance at April 30, 2022  34,525,560   3,454   —   11,310,197   (10,517,946)  795,705 
                         
Sale of stock  —   —   —   —   —   — 
                         
Shares issued for services  —   —   —   —   —   — 
                         
Net income (loss)  —   —   —   —   212,357   212,357 
                         
Balance at July 31, 2022  34,525,560  $3,454  $—  $11,310,197  $(10,305,589) $1,008,062 

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

 

 - 1 --5-

 

 

INNOVATIVE DESIGNS, INC. 

CONDENSED STATEMENTS OF OPERATIONS

Three Month Period Ended January 31, 2018 and 2017 (Unaudited)
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CASH FLOWS   

NINE MONTHS ENDED JULY 31, 2023 AND 2022 (UNAUDITED)

 

       
  Three Month Periods Ended January 31, 
  2018  2017 
       
REVENUES - NET $116,203  $169,210 
         
OPERATING EXPENSES:        
Cost of sales  64,382   77,126 
Selling, general and administrative expenses  190,811   202,838 
   255,193   279,964 
         
LOSS FROM OPERATIONS  (138,990)  (110,754)
         
OTHER EXPENSE        
Miscellaneous expense  547   1,437 
Interest expense  6,712   7,049 
Total other expense  7,259   8,486 
         
NET LOSS $(146,249) $(119,240)
         
PER SHARE INFORMATION        
Net Loss Per Common Share $(0.005) $(0.005)
         
Weighted Average Number of Common Shares Outstanding  26,732,245   25,370,310 

         
  Nine Months Ended July 31,
  2023 2022
     
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss) $(255,649) $(195,500)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:        
Bad debt expense  —   — 
Common stock issued for services  41,940   185,000 
Depreciation  2,306   1,118 
Amortization of right of use asset  —   30,510 
Gain on sale of asset  (7,519)  — 
(Increase) decrease from changes in:        
Accounts receivable  11,121   (8,412)
Inventory  (92,669)  11,104 
Deposits on inventory  80,000   (40,000)
Receivable due  —   (260,000)
Increase (decrease) from changes in:        
Accounts payable and accrued expenses  113,424   45,826 
Accrued interest expense  7,728   (2,640)
         
Net cash provided by (used in) operating activities  (99,318)  (232,994)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchase of equpment  (20,593)  — 
Deposits on equipment  (112,574)  (7,370)
Proceeds from sale of equipment  7,519   — 
         
Net cash provided by (used in) investing activities  (125,648)  (7,370)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from sale of stock  261,000   86,200 
Payments on shareholder advances  (105,630)  (135,667)
Payments on lease liability  —   (30,510)
Proceeds on notes payable  —   1,818 
Payments on notes payable  (14,880)  (2,418)
         
Net cash provided by (used in) financing activities  140,490   (80,577)
         
NET INCREASE (DECREASE) IN CASH  (84,476)  (320,941)
         
CASH, BEGINNING OF YEAR  263,293   480,451 
         
CASH, END OF THE PERIOD $178,817  $159,510 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
         
Cash paid for interest $9,924  $37,090 
         
Non-cash financing activities - common stock issued for services $41,940  $185,000 

 

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

 

 - 2 -

INNOVATIVE DESIGNS, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY 

January 31, 2018 (Unaudited) and October 31, 2017

                
  Common Stock  Common Stock  Additional  Accumulated    
  Number of Shares  Amount  Paid-in Capital  Deficit  Total 
                
Balance at October 31, 2016  25,370,310  $2,537  $9,455,674  $(7,712,757) $1,745,454 
                     
Shares issued for services  300,000   30   97,670   —   97,700 
                     
Sale of stock  722,000   72   172,068   —   172,140 
                     
Net loss  —   —   —   (633,055)  (633,055)
                     
Balance at October 31, 2017  26,392,310   2,639   9,725,412   (8,345,812)  1,382,239 
                     
Shares issued for services  50,000   5   19,995   —   20,000 
                     
Sale of stock  351,000   35   111,525   —   111,560 
                     
Net loss  —   —   —   (146,249)  (146,249)
                     
Balance at January 31, 2018  26,793,310  $2,679  $9,856,932  $(8,492,061) $1,367,550 

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

 - 3 --6-

 

 

INNOVATIVE DESIGNS, INC.

 

CONDENSED NOTES TO FINANCIAL STATEMENTS OF CASH FLOWS

Three Month Period Ended January 31, 2018 and 2017 (Unaudited)

       
  For the Three Month Periods Ended 
  January 31, 2018  January 31, 2017 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss $(146,249) $(119,240)
Adjustments to reconcile net loss to net cash used in operating activities:        
Common stock issued for services  20,000   — 
Depreciation  8,878   7,730 
(Increase) decrease from changes in:        
Accounts receivable  (4,590)  971 
Inventory  (59,411)  74,075 
Deposits on inventory  21,670   — 
Prepaid expenses  3,208   5,330 
Advance to employees  (4,200)  — 
Increase (decrease) from changes in:        
Accounts payable  53,842   25,252 
Accrued interest expense  2,297   2,669 
Accrued expenses  (5,912)  (1,210)
Net cash used in operating activities  (110,467)  (4,423)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Capital expenditures  (4,258)  (10,000)
Net cash used in investing activities  (4,258)  (10,000)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from sale of stock  111,560   — 
Payments on shareholder advances  (11,250)  (16,900)
Payments on notes payable  (5,016)  (12,447)
Net cash provided by (used in) financing activities  95,294   (29,347)
         
Net decrease in cash  (19,431)  (43,770)
         
CASH, BEGINNING OF YEAR  214,871   502,777 
         
CASH, END OF THE PERIOD $195,440  $459,007 
         
Supplemental disclosure of cash flow information:        
Cash paid for interest $4,415  $4,380 

 

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, 2023, the changes therein for the three and nine month periods then endedandtheresultsofoperationsforthethreeandninemonthperiodsended July31,2023 and2022.

ThefinancialstatementsincludedintheForm10-Q(the“Form”)arepresentedinaccordance with the requirements of the Form and do not include all of the disclosures required by accounting principles generally accepted in the United States of America. For additional information, reference is made to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2022. The accompanying notesresults of operations for the three and nine month periods ended July 31, 2023 and 2022 are not necessarily indicative of operating results for the full year.

2.GOING CONCERN

These financial statements have been prepared on a going concern basis, which implies that theCompanywillcontinuetorealizeitsassetsanddischargeitsliabilitiesinthenormalcourse ofbusiness.TheCompanyhadanetlossof($255,649)andanegativecashflowof($84,476) fortheninemonthperiodendedJuly31,2023.Inaddition,theCompanyhasan integral partaccumulated deficit of ($10,591,228). 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 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 goingconcern.

3.ACCOUNTS RECEIVABLE

Accounts receivable 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. Therewerenobalancesover90daysasJuly31,2023.AsofOctober31,2022,balancesover 90 days totaled $5,860 which have been recorded as anallowance.

 

 - 4 --7-

 

 

INNOVATIVE DESIGNS, INC.
NOTES TO FINANCIAL STATEMENTS

INNOVATIVE DESIGNS, INC. 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three Month Period Ended January

4.OPENING AND CLOSING BALANCE OF RECEIVABLES

The opening balance of accounts receivable was $11,203which was net of the allowance for doubtful accounts of $5,860. The ending balance of accounts receivable for the nine month periodendedJuly31, 2018 and 2017 (Unaudited)2023was$82.Therewasnotanallowancefordoubtfulaccountsatthe end of theperiod.

 

NOTE 1.5.In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly Innovative Designs, Inc.’s financial position as of January 31, 2018, the changes therein for the three period then ended and the results of operations for the three month period ended January 31, 2018 and 2017.INVENTORY

 

NOTE 2.The financial statements included in the Form 10-Q are presented in accordance with the requirements of the Form and do not include all of the disclosures required by accounting principles generally accepted in the United States of America. For additional information, reference is made to the Innovative Designs, Inc.’s annual report on Form 10-K for the fiscal year ended October 31, 2017. The results of operations for the three month period ended January 31, 2018 and 2017 are not necessarily indicative of operating results for the full year.

NOTE 3.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. Innovative Designs, Inc. (the “Company”) has decided to discontinue the selling of its hunting and swimming line of apparel. The Company has booked a reserve against this inventory at January 31, 2018 and October 31, 2017 of $51,000. 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 againstapparelinventoryasofJuly31,2023andOctober31,2022of$75,468.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 asneeded.

6.WARRANTIES

The Company provides a ten-year limited warranty covering defects in workmanship. These warrantiesareincludedinthecontractanddonotprovidecustomerswithaserviceinaddition toassuranceofcompliancewithagreed-uponspecifications.TheCompanydoesnotconsider these assurance-type warranties to be separate performanceobligations.

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.NOTE PAYABLE

During 2005, the Company entered into an agreement with the U.S. Small Business Association. 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%.

8.STOCKHOLDER LOANS

StockholderloanstotheCompany,includingaccruedinteresttotaled$125,741and$226,793 as of July 31, 2023 and 2022, respectively. The loans bear interest between 10% and12%.

-8-

INNOVATIVE DESIGNS, INC.
NOTES TO FINANCIAL STATEMENTS

 

NOTE 4.9.EARNINGS PER SHAREREVENUES

 

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 contractsshouldbecombinedandaccountedforasasinglecontractandwhetheracombined 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 combinedorsinglecontractintomultipleperformanceobligationscouldchangetheamountof revenue and profit recorded in a given period. Contracts are considered to contain a single performanceobligationifthepromisetotransferindividualgoodsorservicesisnotseparately identifiable from other promises in thecontracts.

For contracts with multiple performance obligations, the Company allocates the transaction pricetoeachperformanceobligationusingthebestestimateofthestandalonesellingpriceof each distinct good or service in thecontract.

10.EARNINGS PER SHARE

The Company calculates net income (loss)loss per share in accordance with Financial Accounting StandardsBoard(“FASB”)AccountingStandardCodification(“ASC”)Topic260,“Earningsper Share”.Basicearnings(loss)pershareiscalculatedbydividingincome(loss)bytheweighted average number of common shares outstanding for the period. During the periodspresented, theCompanyonlyhascommonstockoutstanding. In2021,theCompanyissuedaconvertible debt instrument. In addition, the Company onlyalso has common stock outstanding. As a result, warrants of 954,000 and 994,000 as ofJuly31,2023 and2022,respectively. The Companyhas calculateddilutedearningsper share was not calculated.utilizing the outstanding stock warrants and convertible debt.

 

NOTE 5.11.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 lossandtaxcreditcarryforwardsavailabletooffsetfuturetaxableincome.Changesinenacted tax rates or laws result in adjustments to recorded deferred tax assets and liabilities in the periodsinwhichthetaxlawsareenactedortaxratesarechanged.TheCompanywillcontinue to evaluate its income tax obligation throughout the year and will record a tax provision when it isnecessary.

 

 - 5 --9-

 

 

INNOVATIVE DESIGNS, INC. 

INNOVATIVE DESIGNS, INC.
NOTES TO FINANCIAL STATEMENTS

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three Month Period Ended January 31, 2018 and 2017 (Unaudited)

NOTE 6.12.SHIPPING AND HANDLING COSTS

 

TheCompanypaysshippingandhandlingcostsonbehalfofcustomersforpurchasedapparel 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 Wraphouse wrap orders, the customer pays the shipping cost. The shipping and handling costs associated with customer orders was approximately $5,500$27,070 and $7,900$21,199 for the threenine month periods ended JanuaryJuly 31, 20182023 and 2017, 2022,respectively.

 

NOTE 7.13.COMMON STOCK

 

During the threenine month period ended JanuaryJuly 31, 2018,2023, the Company sold 351,000645,000 shares of commonstockto three fourinvestorsfortotalproceedsof$131,000,oneinvestorexercised40,000 warrants for stock for total proceeds of $111,560.$10,000, and 230,000 shares were issued to two investors for services. The stock was issued for prices from $0.30 - $0.32between $0.20 and $0.25 pershare. In addition, the Company issued 50,000 shares to one individual for services performed during the period. The shares issued were valued at $0.40 per share for a price of $20,000. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

 

During the threenine month period ended JanuaryJuly 31, 20172022, the Company sold 460,000 shares of commonstocktoseveninvestorsfortotalproceedsof$86,200andissued750,000sharesto eight individuals for services. The stock was issued no stock.between $0.17 and $0.25 pershare.

 

NOTE 8.14.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 $700,000 which was$700,000 and to be paidmade in four installments. The first installment of $300,000 wasis to be paidmade at the execution of the agreement. The second installment of $200,000 wasis to be paidmade when the machinery and equipment is ready to be shipped to the United States. The third installment of $100,000 is to be paidmade 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.completed. As of JanuaryOctober 31, 2018, the Company has made payments of $500,000$500,000 in accordance with the agreement and made an advanced payment of $100,000a $100,000 pre-payment as the machine is not yet producing INSULTEX. Additionally, the Company has incurred $17,000$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. In February 2023, the Company made an additional prepayment of $10,000 on the equipment and owes an additional $73,000 for the installation of the equipment.

During the fiscal year ending October 31, 2022, the Company made deposits on a separate piece of equipment of $7,370. During the three quarters ended July 31, 2023, the Company made additional deposits of $29,574 on this piece of equipment. Total deposits for this piece equipment as of July 31, 2023 total $36,944.

Total deposits made for the three quarters ended July 31, 2023 total $112,574.

-10-

INNOVATIVE DESIGNS, INC.
NOTES TO FINANCIAL STATEMENTS

Total overall depositsonequipmentasofJuly31,2023and2022were$719,944and $607,370, respectively.

 

NOTE 9.15.

SEGMENT INFORMATION

LEASE

We have organized our operations

FASBASCTopic842,“Leases”,establishesarightofuse(“ROU”)modelthatrequiresalessee to recognize a ROU asset and lease liability on the condensed balance sheets. ROU assets andleaseliabilitiesarerecognizedatthecommencementdatebasedonthepresentvalueof lease payments over the lease term. ROU assets are reduced each period by an amount equaltothedifferencebetweentheleaseexpenseandtheamountofinterestexpenseonthe leaseliability,usingtheeffectiveinterestmethod. TheCompanyusedtheaveragecommercial 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 ofoperations.

The Company entered into two segments. We relya 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. Asaresult,theCompanyhaselectedtoapplytheshort-termleaseexemption to its lease of the facilities and therefore has not recorded a ROU asset and related lease liability.

16.SEGMENT INFORMATION

TheCompanyhasorganizedoperationsintotwosegmentsbasedonaninternalmanagement reporting process that provides segment information for purposes of making financial decisions and allocating resources.resources.

ThefollowingtablespresenttheCompany’sbusinesssegmentinformationfortheninemonth period ended July 31, 2023 and2023:

Schedule of business segment information        
  2023 2022
Revenues:        
Apparel $31,105  $59,126 
House wrap  192,441   176,038 
         
Total revenues $223,546  $235,164 
         
Assets:        
Apparel $167,822  $81,045 
House wrap  1,318,342   1,546,171 
         
Total assets $1,486,164   1,627,216 
         
Depreciation:        
Apparel $—  $— 
House wrap  2,306   1,118��
         
Total depreciation $2,306  $1,118 

 

 - 6 --11-

 

 

INNOVATIVE DESIGNS, INC. 

INNOVATIVE DESIGNS, INC.
NOTES TO FINANCIAL STATEMENTS

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three Month Period Ended January 31, 2018 and 2017 (Unaudited)

The following tables present our business segment information for the three month period ended January 31, 2018 and 2017:

 

  2018  2017 
Revenues:      
Apparel $86,063  $146,063 
House Wrap  30,140   23,147 
Total Revenues $116,203  $169,210 
Assets:        
Apparel $581,654  $955,112 
House Wrap  1,274,279   1,251,554 
Total $1,855,933  $2,206,666 
         
Capital Expenditures:        
House Wrap $4,258  $10,000 
Total $4,258  $10,000 
         
Depreciation:        
Apparel $2,853  $1,775 
House Wrap  6,025   5,955 
Total $8,878  $7,730 

NOTE10.17.LEGAL PROCEEDINGS

 

On November 4, 2016, the Federal Trade Commission (FTC)(“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 doesdid not have substantiationofclaimsmadebytheCompanyregardingtheRvalueandenergyefficiencyof its INSULTEX House Wraphouse wrap products. The complaint asks asto redress ofa rescission of revenue the Company received from the sale of House Wrapthe house wrap and a permanent injunction. The parties are currentlyOn September 24, 2020, a judgment was entered in favor of the Company as to all claims set forth in the expert discovery phase.FTC complaint. It was further ordered that as there were no remaining claims in the action the case shall be marked asclosed.

 

OnNovember23,2020,theCompanywasinformedthattheFTChadfiledanoticeofappeal in regard to the case. The Company strongly deniesappeal is from the allegation and intends to vigorously defend itself. It isDistrict Court’s September 24, 2020, Order granting the Company’s beliefMotion 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 February14,2020,strikingDr.DavidYarbrough’sexperttestimonymadeonbehalfoftheFTC. The FTC filed its appeal and on March 24, 2021, the Company filed itsanswer.

On July 22, 2021, the Registrant was informed that the complaint is based on improper testingU.S. Court of Appeals for the Third District affirmed the District Court’s ruling in favor of the INSULTEX products usingRegistrant. The ruling was in connection with the wrong typeFTC complaint filed against the Registrant in November 2016, alleging, among other matters, that the Registrant did not have substantiation for claims made by the RegistrantregardingtheR-valueandenergyefficiencyofitsINSULTEXhousewrapproducts.

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 testing equipment.Pennsylvania, Case No.2:16-cv-01669-NBF. On June 29, 2022, a settlement order was signed by the Court. Pursuant to the Order, the FTC paid the Company $260,000 to resolve all such claims. The parties agreed to waive all rights to appeal or otherwise challenge or contest the validity of the Order.

 

NOTE 11.18.SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events in accordance with ASC Topic 855, “SubsequentEvents”,through March 14, 2018, September20,2023whichisthedatefinancialstatementswere available to be issued. The Company identified the belowno material subsequent events. events that require recognition or additional disclosure in these financialstatements.

 

The Company sold 256,250 shares to two individuals for total proceeds of $80,000.

The Company verbally extended the Riccelli Properties note with no set maturity date.

 

 - 7 --12-

 

INNOVATIVE DESIGNS, INC.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, 2017.2022.

 

Disclosure Regarding Forward-Looking Statements

 

Certain statements made in this report, and other written or oral statements made by orThis Quarterly Report 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, areForm 10-Q includes forward-looking statements within the meaning of these laws. Examplesthe Private Securities Reform Act of such1995. All statements other than statements of historical fact, including statements regarding future results of operation, made in this report include descriptionsQuarterly 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, an adverse outcome in our legal matter with the Federal Trade Commission, competition in our cold weather markets, our inability to secure sufficient funding to maintain and/or expand our current level of operations and the seasonality of our planscold weather product line. These risks and strategies with respect to developing certain market opportunities and our overall business plan. All forward-looking statements are subject to certainuncertainties, as well as other risks and uncertainties that could cause our actual eventsresults to differ materiallysignificantly from those projected. We believe that these forward-looking statementsmanagement’s expectations, are reasonable; however, you should not place undue reliancedescribed in greater detail in our Annual Report on such statements. These statements are based on current expectations and speak only as ofForm 10-K for the date of such statements. We undertakefiscal year ended October 31, 2017. The Company undertakes no obligationsobligation to publiclypublicity update or revise any forward-looking statement, whether as a result of new information, future events new information or otherwise.otherwise except as required by law.

 

Background

 

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

 

●Completing the development, design and prototypes of our products,

●Obtaining retail stores or sales agents to offer and sell our products,

●Developing our website to sell more of our products.

In an attempt to increase global business we recently entered into two separate agreements to market INSULTEX to the military market of India and to enter the apparel market in the United States.

 - 8 --13-

 

 

INNOVATIVE DESIGNS, INC.

 

Results of Operations

 

Comparison of the Three Month Period Ended JanuaryJuly 31, 20182023 with the Three Month Period Ended JanuaryJuly 31, 2017.2022.

 

        Three Month Period Ended 31-Jul 2023    % of Sales    Three Month Period Ended 31-Jul 2022    % of Sales    Increase (Decrease)    % Change
             
REVENUE - NET $124,650.00      $135,048.00      $-10,398.00   -8.3%
                         
OPERATING EXPENSES                        
 Cost of sales $76,480.00   61.4% $56,224.00   41.6% $20,256.00   26.5%
 Selling, general and                        
 administrative expenses $124,944.00   100.2% $115,384.00   85.4% $9,560.00   7.7%
Total Operating Expenses $201,424.00      $171,608.00             
Loss from operations $-76,774.00   -61.6% $-36,560.00   -27.1% $-40,214.00   52.4%
                         
Other income (expense)                        
Miscellaneous Income (expense) $0.00      $260,000.00   100.0% $-260,000.00   100.0%
 Interest expense $-6,421.00   -5.2% $-10,710.00   -7.9% $4,289.00   -66.8%
Depreciation $-769.00      $-373.00   -0.3% $-396.00   51.5%
Total other income (expense) $-7,190.00      $248,917.00   184.3% $-256,107.00   3562.0%
Net Loss $-83,964.00   -7.4% $212,357.00   157.2% $-296,321.00   352.9%

  Three Month
Period Ended
January 31,
2018		  % of
Sales		  Three Month
Period Ended
January 31,
2017		  % of
Sales		  Increase
(Decrease)		  % Change 
REVENUE - NET $116,203   100.00% $169,210   100.00% $(53,007)  -31.33%
                         
OPERATING EXPENSES                        
Cost of sales  64,382   55.40%  77,126   45.58%  (12,744)  -16.52%
Selling, general and                        
administrative expenses  190,811   164.20%  202,838   119.87%  (12,027)  -5.93%
                         
Loss from operations  (138,990)  -119.61%  (110,754)  -65.45%  (28,236)  25.49%
                         
OTHER EXPENSE                        
Miscellaneous expense  547   0.47%  1,437   0.85%  (890)  -61.93%
Interest expense  6,712   5.78%  7,049   4.17%  (337)  -4.78%
                         
Net loss $(146,249)  -125.86% $(119,240)  -70.47% $(28,573)  23.96%

Revenues for the three month period ended JanuaryJuly 31, 20182023 were $116,203$124,650 compared to revenues of $169,210$135,048 for the three month period ended JanuaryJuly 31, 2017. The decrease in revenue is attributable to the FTC matter with regard to our House Wrap products as we no longer advertise the insulating quality of these products. The decrease in revenue for our apparel products is attributable to the fact that we are devoting significant portion of our limited resources to the FTC matter.2021. See Note 916 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment products sales. Our net loss for the three-month period ended July 31, 2023, was ($83,964).

Our cost of sales was $76,480 for the three months ended July 31, 2023, compared to $56,224 for the three months ended July 31, 2022. The increase is largely on account of the increase in the price we pay to our supplier of the House Wrap product line.

Our selling, general and administrative expenses were $124,944 for the three month period ended JanuaryJuly 31, 20182023 compared to $115,384 for the three month period ended July 31, 2022.

-14-

  INNOVATIVE DESIGNS, INC.

Comparison of the Nine Month Period Ended July 31, 2023, with the Nine Month Period Ended July 31, 2022.

The following table shows a comparison of the results of operations between the nine month periods ended July 31, 2023 and July 31, 2022:

        Nine Month Period Ended 31-Jul 2023    % of Sales    Nine Month Period Ended 31-Jul 2022    % of Sales    Increase (Decrease)    % Change
             
REVENUE - NET $223,546.00      $235,164.00      $-11,618.00   -5.2%
                         
OPERATING EXPENSES                        
Cost of sales $106,839.00   47.8% $109,884.00   46.7% $-3,045.00   -2.9%
Selling, general and                        
administrative expenses $359,917.00   161.0% $545,212.00   231.8% $-185,295.00   -51.5%
Total Operating Expenses $466,756.00      $655,096.00             
Loss from operations $-243,210.00   -108.8% $-419,932.00   -178.6% $176,722.00   -72.7%
                         
Other income (expense)                        
Miscellaneous Income (expense) $7,519.00      $260,000.00   100.0% $-252,481.00   100.0%
 Interest expense $-17,652.00   -7.9% $-34,450.00   -14.6% $16,798.00   -95.2%
Depreciation $-2,306.00      $-1,118.00   -0.5% $-1,188.00   51.5%
Total other income (expense) $-12,439.00      $224,432.00   95.4% $-236,871.00   1904.3%
Net Loss $-255,649.00   -114.4% $-195,500.00   -83.1% $-60,149.00   23.5%

Revenues for the nine month period ended July 31, 2023 were $223,546 compared to revenues of $235,164 for the nine month period ended July 31, 2021. The decrease is caused, by the decrease in our apparel sales and the sales in our House Wrap product line. The apparel sales were adversely affected by warm weather. During the nine month period ended July 31, 2023 House Wrap sales totaled $192,441 in comparison with $176,038 during the nine month period ended July 31, 2022. See Note 16 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment product sales. Our net loss for the nine month period ended July 31, 2023 was ($146,249)255,649).

 

Our selling, general and administrative expenses were $190,811$106,839 for the threenine months ended July 31, 2023, compared to $109,884 for the nine month period ended JanuaryJuly 31, 2018 compared to $202,838 for the three month period ended January 31, 2017.2022. Professional fees for the period ended January 31, 2018 were $95,206 compared to $58,211 for the three month period ended January 31, 2017. The majority of our professional fees relate to the legal fees incurred in connection to the FTC matter. We expect our professional fees to continue to be substantial during the course of this legal matter.approximately $63,000. Salaries were approximately $107,000, travel expenses were approximately $20,000 and rent expense was $21,000.

 

 - 9 --15-

 

 

INNOVATIVE DESIGNS, INC.

 

Liquidity and Capital Resources

 

During the period ended JanuaryJuly 31, 2018,2023, we funded our operations from revenues and from sales andof our securities.

Subsequent to the period we raised $60,000 from the sale of our common stock.securities.

 

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 INSULTEXInsultex products and to purchase equipment needed for the manufacture of the INSULTEXInsultex product. The Company reached an agreement with the manufacturer of the INSULTEXInsultex material to purchase a machine capable of producing the INSULTEXInsultex material. Also included in the proposed agreement will be the propriety formula that creates INSULTEX.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. TheIt is the Company has not made anintentions to have the equipment operational but cannot currently provide a time estimate. Among the factors affecting the time estimate ofare the cost required forfinancial resources available to the Company, finding a suitable facility and bringing the operation of the machine into compliance with the environmental regulations but it is consideredtechnical personnel from abroad to be a substantial amount. We are in the permitting stage relating to environmental issues necessary to begin the installation ofinstall 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. Earlier this year, our CEO traveled to Indonesia to inspect the manufacturing facility of the Ketut Group where Insultex is currently produced. He also discussed with Ketut management the plans for the Company to install in the United States the machinery and equipment utilized to produce the Insultex material and for Ketut to arrange for the technical personal needed to assist in the installation. The Company is currently looking for a suitable site for the onshore manufacturing of Insultex. It is also seeking the financing needed to accomplish the installation which is estimated to cost between 1.5 to 2 million dollars.

The Company will produce INSULTEXInsultex under its own brand name. See Note 814 of the Notes to the Condensed Financial Statements.

We must purchase new quality control testing equipment for our products. The vendor is currently working on the project and we expect delivery of the equipment within the next few weeks. After such testing is complete the certification process can begin. We have paid approximately $39,000 as of July 31, 2023, for the equipment.

 

Long Term: The Company will continue to fund its operations from revenues, borrowings from private parties and the possible sale of our securities. Should we not be able to rely on the private sources for borrowing and /or increased sales, our operations would be severely affected as we would not be able to fund our purchase orders to our suppliers for finished goods and our efforts to produce our own INSULTEXInsultex would be delayed.

 

 - 10 --16-

 

 

INNOVATIVE DESIGNS, INC.

 

PART II – OTHER INFORMATION

ITEM 1.LEGAL PROCEEDING

 

The Company is engaged in a matter with the Federal Trade Commission. A Form 8-K filed November 4, 2016, describing this matter is incorporated herein by reference.ITEM 1. LEGAL PROCEEDING

 

See Note 17 of the Notes to Condensed Financial Statements appearing elsewhere in this Report.

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

 

During the three-month period ended January 31, 2018, the CompanyITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 17, 2023, we issued 185,000 shares of our common stock to a consultant for services pursuant to an agreement dated April 17, 2023. Also on May 17, 2023, we sold 351,00050,000 Units to one investor at a price of $.20 per Unit. Each Unit contained one share of common stock and a warrant with a two year term to purchase one share of common stock. The  warrant has an exercise price of $.20 per warrant. We received $10,000 in proceeds.

On June 2, 2023, , we sold 40,000 Units each to one investors at a price of $.25 per Unit. The warrant had an exercise price of $.25. We received $10,000 in total proceeds.

On June 23, 2023, a warrant holder exercised warrants to purchase 40,000 shares of common stock at an exercise price of $.25. We received $10,000 in proceeds.

Between August 16, 2023, and August 24, 2023, we sold a total of 180,000 Unites to five investors at a price of $.25 per Unit. The warrant had an exercise price of $0.25 per warrant. Total proceeds were $45,000.

On September 6, 2023, we sold 20,000 Units each to three investors for total proceeds of $111,560. The stock was issued for prices from $0.30 - $0.32 per share. In addition, the Company issued 50,000 shares to one individual for services performed during the period. The shares issued were valued at $0.40 per share for a price of $20,000. $.25 per Unit. The warrant had an exercise price of $.25 per warrant.

We believe that Section 4(2)relied on Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.amended.

 

-17-

  INNOVATIVE DESIGNS, INC.

ITEM 3.QUANTITATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3.  QUANTITATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company, we are not required to provide the information otherwise required by this Item.

 

ITEM 4T.CONTROLS AND PROCEDURES

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 JanuaryJuly 31, 2018,2023, our principleprincipal 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. During the first quarter of 2018, the Company was not able to close the books and records in a timely fashion. Consequently, the Company was unable to file its Form 10-Q for the period ended January 31, 2018 within the timeline established by the SEC and was required to seek an extension for filing the form.

 

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.

 

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INNOVATIVE DESIGNS, INC.

ITEM 6. EXHIBITS

*3.1
ITEM 6.EXHIBITS
*3.1Revised Certificate of Incorporation
**3.2By-Laws
31.1Rule 13a - 14a Certification of Chief Executive Officer and Chief Financial Officer
32.131.2Rule 13a-14a Certification of Chief Executive Officer and Chief Financial Officer
32.1Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
*31.2Section 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: March 14, 2018September 27, 2023by:By: /s/ Joseph Riccelli
Joseph Riccelli, Chief Executive Officer
and Chief Financial Officer

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