UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q10-Q/A
☒ | QUARTERLY REPORT PURSUANT TO SECTION |
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)
Delaware | 03-0465528 |
(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 27,049,560 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
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 |
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, $ par value, | ||||||||
shares authorized | — | — | ||||||
Common stock, $ par value, shares authorized, and and 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.
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.
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%.
StockholderloanstotheCompany,includingaccruedinteresttotaled$125,741and$226,793 as of July 31, 2023 and 2022, respectively. The loans bear interest between 10% and12%. -8-
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.
The Company calculates net
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.
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
During the
During the
On July 12, 2015, the Company reached an agreement with Ketut Jaya to purchase the machinery and equipment utilized to produce the INSULTEX material. The purchase price is During the fiscal year 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-
Total overall depositsonequipmentasofJuly31,2023and2022were$719,944and $607,370, respectively.
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
TheCompanyhasorganizedoperationsintotwosegmentsbasedonaninternalmanagement reporting process that provides segment information for purposes of making financial decisions and allocating ThefollowingtablespresenttheCompany’sbusinesssegmentinformationfortheninemonth period ended July 31, 2023 and2023:
On November 4, 2016, the Federal Trade Commission
OnNovember23,2020,theCompanywasinformedthattheFTChadfiledanoticeofappeal in regard to the case. The On July 22, 2021, the Registrant was informed that the 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
The Company has evaluated subsequent events in accordance with ASC Topic 855, “SubsequentEvents”,through
INNOVATIVE DESIGNS, INC. ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following information should be read in conjunction with the financial statements and the notes thereto and in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended October 31,
Background
Innovative
INNOVATIVE DESIGNS, INC.
Results of Operations
Comparison of the Three Month Period Ended
Revenues for the three month period ended 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 -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:
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 $176,038 during the nine month period ended July 31, 2022. See Note 16 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment product sales. Our net loss for the nine month period ended July 31, 2023 was ($
Our selling, general and administrative expenses were
INNOVATIVE DESIGNS, INC.
Liquidity and Capital Resources
During the period ended Subsequent to the period we raised $60,000 from the sale of our
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 The Company will produce 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
INNOVATIVE DESIGNS, INC.
PART II – OTHER INFORMATION
See Note 17 of the Notes to Condensed Financial Statements appearing elsewhere in this Report.
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 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 We
-17- INNOVATIVE DESIGNS, INC. 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
Management has developed and implemented a policy and procedures for reviewing, on a quarterly basis, our disclosure controls and procedures. During the period ended
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.
INNOVATIVE DESIGNS, INC. ITEM 6. EXHIBITS
-19- 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.
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