Innovative Designs Inc 10-Q for FY2024 Q1
Innovative Designs Inc (IVDN)
About this 10-Q
Innovative Designs Inc filed this 10-Q on April 30, 2024, covering the quarter ended January 31, 2024 (FY2024 Q1).
Headline figures
Quarter ended January 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $65.89K
- down 8.0% from $71.65K a year earlier
- Net loss
- $63.39K
- compared with a net loss of $59.09K a year earlier
- Diluted EPS
- -$0.00
- compared with -$0.00 a year earlier
A UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13l OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from _______ to ________.
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| incorporation or organization) | Identification No.) |
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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.
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| Large Accelerated Filer ☐ | Accelerated Filer ☐ |
| Smaller reporting company |
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Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO
As of April 22, 2024, there were shares of the Registrant’s common stock, par value $.0001 per share, outstanding.
Transitional Small Business Disclosure Format: YES ☐ NO ☒
Innovative Designs, Inc.
Index
Form 10-Q for the Quarter Ended January 31, 2024
| Part I -- Financial Information | Page No. | |
| Item 1. | Condensed Financial Statements (Unaudited) | |
| Condensed Balance Sheets as of January 31, 2024 (Unaudited) And October 31, 2023 | 5 | |
| Condensed Statements of Operations for the Three Month Periods Ended January 31, 2024 and 2023 (Unaudited) | 7 | |
| Condensed Statements of Changes in Stockholders’ Equity as of January 31, 2024 (Unaudited) and October 31, 2023 | 8 | |
| Condensed Statements of Cash Flows for the Three Month Periods Ended January 31, 2024 and 2023 (Unaudited) | 9 | |
| Notes to the Condensed Financial Statements | 10 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 |
| Part II -- Other Information | ||
| Items | 1, 2, 3, 4, 4T and 5. | 17 |
| Item 6. | Exhibits | 19 |
2
INNOVATIVE DESIGNS, INC.
FINANCIAL STATEMENTS
FOR THE QUARTER ENDED
JANUARY 31, 2024
3
TABLE OF CONTENTS
4
| CONDENSED BALANCE SHEETS |
| JANUARY 31, 2024 (UNAUDITED) AND OCTOBER 31, 2023 |
| January 31, 2024 | October 31, 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid rent | ||||||||
| Total current assets | ||||||||
| PROPERTY AND EQUIPMENT, net | ||||||||
| OTHER ASSETS: | ||||||||
| Deposits on inventory | | |||||||
| Advance to employees | ||||||||
| Deposits on equipment | ||||||||
| Total other assets | ||||||||
| TOTAL | $ | $ | ||||||
The accompanying notes are an integral part of these condensed financial statements.
5
| CONDENSED BALANCE SHEETS |
| JANUARY 31, 2024 (UNAUDITED) AND OCTOBER 31, 2023 |
| January 31, 2024 | October 31, 2023 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | |||||||
| Current portion of notes payable | ||||||||
| Accrued interest of stockholder loans | ||||||||
| Current portion of stockholder loans | ||||||||
| Total current liabilities | ||||||||
| LONG-TERM LIABILITIES, | ||||||||
| Long-term portion of notes payable | ||||||||
| Total long-term liabilities | ||||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred stock, $ par value, shares authorized | ||||||||
| Common stock, $ par value, shares authorized, and and issued and outstanding | ||||||||
| Common stock to be issued | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| TOTAL | $ | $ | ||||||
The accompanying notes are an integral part of these condensed financial statements.
6
INNOVATIVE DESIGNS, INC.
| CONDENSED STATEMENTS OF OPERATIONS | ||||||||
| THREE MONTHS ENDED JANUARY 31, 2024 AND 2023 (UNAUDITED) | ||||||||
| Three Months Ended January 31, | ||||||||
| 2024 | 2023 | |||||||
| REVENUES, net | $ | |||||||
| OPERATING EXPENSES: | ||||||||
| Cost of sales | ||||||||
| Selling, general and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE): | ||||||||
| Miscellaneous income (expense) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Depreciation | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | ||
| PER SHARE INFORMATION - UNDILUTED: | ||||||||
| Net income (loss) per common share | ( | ) | ( | ) | ||||
| Weighted average number of common shares outstanding | ||||||||
| PER SHARE INFORMATION - DILUTED: | ||||||||
| Net income (loss) per common share | ( | ) | ( | ) | ||||
| Weighted average number of common shares outstanding | ||||||||
The accompanying notes are an integral part of these condensed financial statements.
7
INNOVATIVE DESIGNS, INC.
| CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY |
| THREE MONTHS ENDED JANUARY 31, 2024 AND 2023 (UNAUDITED) |
| Common Stock | Common Stock To Be | Additional Paid-In | Accumulated | |||||||||||||||||||||
| Shares | Amount | Issued | Capital | Deficit | Total | |||||||||||||||||||
| Balance at October 31, 2023 | ( | ) | ||||||||||||||||||||||
| Sale of stock | ||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||
| Net income (loss) | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at January 31, 2024 | ( | ) | ||||||||||||||||||||||
| Balance at October 31, 2022 | ( | ) | ||||||||||||||||||||||
| Sale of stock | ||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||
| Net income (loss) | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at January 31, 2023 | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed financial statements.
8
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 2024 AND 2023 (UNAUDITED)
| Three Months Ended January 31, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Common stock issued for services | ||||||||
| Depreciation | ||||||||
| Gain on sale of asset | ( | ) | ||||||
| (Increase) decrease from changes in: | ||||||||
| Accounts receivable | ||||||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid rent | ( | ) | ||||||
| Deposits on inventory | ( | ) | ||||||
| Advances to employees | ( | ) | ||||||
| Increase (decrease) from changes in: | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accrued interest expense | ( | ) | ||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Deposits on equipment | ||||||||
| Proceeds from sale of equipment | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of stock | ||||||||
| Payments on shareholder advances | ( | ) | ( | ) | ||||
| Proceeds from notes payable | ||||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ||||||||
| NET INCREASE (DECREASE) IN CASH | ( | ) | ( | ) | ||||
| CASH, BEGINNING OF YEAR | ||||||||
| CASH, END OF THE PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Non-cash financing activities - common stock issued for services | $ | $ | ||||||
The accompanying notes are an integral part of these condensed financial statements.
9
INNOVATIVE
DESIGNS, INC.
NOTES TO FINANCIAL STATEMENTS
| 1. | BASIS OF PRESENTATION |
In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly Innovative Designs, Inc.’s (the “Company”) financial position as of January 31, 2024, the changes therein for the three month periods then ended and the results of operations for the three month periods ended January 31, 2024 and 2023.
The condensed financial statements included in the Form 10-Q (the “Form”) are presented in accordance with the requirements of the Form and do not include all of the disclosures required by 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, 2023. The results of operations for the three month periods ended January 31, 2024 and 2023 are not necessarily indicative of operating results for the full year.
| 2. | GOING CONCERN |
These condensed financial statements
have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities
in the normal course of business. The Company had a net loss of ($
| 3. | ACCOUNTS RECEIVABLE |
Accounts 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. There were
| 4. | OPENING AND CLOSING BALANCE OF RECEIVABLES |
The
opening balance of accounts receivable was $
| 5. | INVENTORY |
Inventory
consists principally of purchased apparel inventory and house wrap which is manufactured by the Company.
Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. The Company has decided to discontinue
the manufacturing of its Artic Armor, hunting and swimming line of apparel. The Company
has booked a reserve against apparel inventory as of January 31, 2024 and October 31, 2023 of $
| 6. | WARRANTIES |
The Company provides a ten-year limited warranty covering defects in workmanship. These warranties are included in the contract and do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications. The Company does not consider these assurance-type warranties to be separate performance obligations.
10
INNOVATIVE DESIGNS,
INC.
NOTES TO FINANCIAL STATEMENTS
Management has determined that no warranty reserve is currently necessary on the Company’s products. Management will continue to evaluate the need for a warranty reserve throughout the year and make adjustments as needed.
| 7. | NOTES PAYABLE |
During
December 2023, the Company entered into a convertible promissory note in the amount of $
During
2005, the Company entered into an agreement with the U.S. Small Business Association. The note is payable in monthly installments of
$
| 8. | STOCKHOLDER LOANS |
Stockholder
loans to the Company, including accrued interest totaled $
| 9. | REVENUES |
Revenues are measured based on the amount of consideration specified in a contract with a customer. The Company recognizes revenue when and as performance obligations (i.e., obligations to transfer goods and/or services) are satisfied, which generally occurs with the transfer of control of the goods or services to the customer.
To determine proper revenue recognition, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether a combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment, and the decision to combine contracts or separate a combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Contracts are considered to contain a single performance obligation if the promise to transfer individual goods or services is not separately identifiable from other promises in the contracts.
For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract.
| 10. | EARNINGS PER SHARE |
The
Company calculates net loss per share in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standard Codification (“ASC”) Topic 260, “Earnings
per Share”. Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted average number of common
shares outstanding for the period. During the periods presented, the Company only has common stock outstanding. In 2021, the Company
issued a convertible debt instrument. In addition, the Company also has stock warrants of
| 11. | INCOME TAXES |
The Company accounts for income taxes in accordance with FASB ASC Topic 740 “Income Taxes”, which requires an asset and liability approach for financial reporting purposes.
11
INNOVATIVE DESIGNS,
INC.
NOTES TO FINANCIAL STATEMENTS
Deferred income taxes are provided for differences between the tax bases of assets and liabilities and the financial reporting amounts at the end of the period, and for net operating loss and tax credit carryforwards available to offset future taxable income. Changes in enacted tax rates or laws result in adjustments to recorded deferred tax assets and liabilities in the periods in which the tax laws are enacted or tax rates are changed. The Company will continue to evaluate its income tax obligation throughout the year and will record a tax provision when it is necessary.
| 12. | SHIPPING AND HANDLING COSTS |
The
Company pays shipping and handling costs on behalf of customers for purchased apparel merchandise. These costs are billed back to the
customer through the billing invoice. The shipping and handling costs associated with merchandise ordered by the Company are included
as part of inventory as these costs are allocated across the merchandise received. With house wrap orders, the customer pays the shipping
cost. The shipping and handling costs associated with customer orders was approximately $
| 13. | COMMON STOCK |
During
the three month period ended January 31, 2024, the Company sold shares of common stock to eight investors for total proceeds
of $
During
the three month period ended January 31, 2023, the Company sold shares of common stock to one investor for total proceeds of
$
| 14. | DEPOSITS ON EQUIPMENT |
On
July 12, 2015, the Company reached an agreement with Ketut Jaya to purchase the machinery and equipment utilized to produce the
INSULTEX material. The purchase price is $
During
the fiscal year ended October 31, 2022, the Company made deposits on a separate piece of equipment of $
Total
overall deposits on equipment as of January 31, 2024 and 2023 were $
12
INNOVATIVE DESIGNS,
INC.
NOTES TO FINANCIAL STATEMENTS
| 15. | LEASE |
FASB
ASC Topic
842, “Leases”, establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU asset
and lease liability on the condensed balance sheets. ROU assets and lease liabilities are recognized at the commencement date based on
the present value of lease payments over the lease term. ROU assets are reduced each period by an amount equal to the difference between
the lease expense and the amount of interest expense on the lease liability, using the effective
interest method. The Company used the average commercial real estate interest rate of
| 16. | SEGMENT INFORMATION |
The Company has organized operations into two segments based on an internal management reporting process that provides segment information for purposes of making financial decisions and allocating resources.
The following tables present the Company’s business segment information for the nine month period ended January 31, 2024 and 2023:
| Schedule of business segment information | ||||||||
| 2024 | 2023 | |||||||
| Revenues: | ||||||||
| Apparel | $ | $ | ||||||
| House wrap | ||||||||
| Total revenues | $ | $ | ||||||
| Assets: | ||||||||
| Apparel | $ | $ | ||||||
| House wrap | ||||||||
| Total assets | $ | |||||||
| Depreciation: | ||||||||
| Apparel | $ | $ | ||||||
| House wrap | ||||||||
| Total depreciation | $ | $ | ||||||
| 17. | LEGAL PROCEEDINGS |
On November 4, 2016, the Federal Trade Commission (“FTC”) filed a complaint against the Company in the U.S. District Court Western District of Pennsylvania, Case number 16-1669. In the complaint, the FTC alleges that, among other matters, the Company did not have substantiation of claims made by the Company regarding the R value and energy efficiency of its INSULTEX house wrap products. The complaint asks to redress a rescission of revenue the Company received from the sale of the house wrap and a permanent injunction. On September 24, 2020, a judgment was entered in favor of the Company as to all claims set forth in the FTC complaint. It was further ordered that as there were no remaining claims in the action the case shall be marked as closed.
13
INNOVATIVE DESIGNS,
INC.
NOTES TO FINANCIAL STATEMENTS
On November 23, 2020, the Company was informed that the FTC had filed a notice of appeal in regard to the case. The appeal is from the District Court’s September 24, 2020, Order granting the Company’s Motion for Judgment on Partial Findings Pursuant to Fed. R. Civ. P. 52(c) and subsequent Judgment in favor of the Company and from the District Court’s February 14, 2020, striking Dr. David Yarbrough’s expert testimony made on behalf of the FTC. The FTC filed its appeal and on March 24, 2021, the Company filed its answer.
On July 22, 2021, the Registrant was informed that the U.S. Court of Appeals for the Third District affirmed the District Court’s ruling in favor of the Registrant. The ruling was in connection with the FTC complaint filed against the Registrant in November 2016, alleging, among other matters, that the Registrant did not have substantiation for claims made by the Registrant regarding the R-value and energy efficiency of its INSULTEX house wrap products.
In
November 2021, in connection with the FTC litigation, the Company filed an application for attorney fees, expenses and cost in the U.S.
District Court for the Western District of Pennsylvania, Case No.2:16-cv-01669-NBF. On June 29, 2022, a settlement order was signed by
the Court. Pursuant to the Order, the FTC paid the Company $
| 18. | ADOPTED PRONOUNCEMENT |
The requirements of the following FASB statement were adopted for the Company’s condensed financial statements:
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 introduces a new impairment model, the current expected credit loss (“CECL”) model. The model applies to most assets that are measured at amortized cost and requires those assets to be presented at the net amount expected to be collected. In addition, credit losses on available-for-sale debt securities are to be recognized through an allowance account. ASU 2016-13 also expands existing disclosure requirements. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and interim periods therein, and requires retrospective application. The Company adopted the new standard effective November 1, 2023, and there were no material changes to the condensed balance sheets, condensed statements of operations, condensed statements of changes in stockholders’ equity, and condensed statements of cash flows as a result of the adoption.
| 19. | SUBSEQUENT EVENTS |
The Company has evaluated subsequent events in accordance with ASC Topic 855, “Subsequent Events”, through April 26, 2024 which is the date financial statements were available to be issued. The Company identified no material subsequent events that require recognition or additional disclosure in these financial statements.
14
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, 2023.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding future results of operation, made in this Quarterly Report on Form 10-Q are forward-looking statements. We use words such as expects, believes, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons, including, among others, our ability to sell out HouseWrap product line, our inability to secure sufficient funding to maintain and/or expand our current level of operations. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, are described in greater detail in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023. The Company undertakes no obligation to publicity update or revise any forward-looking statement, whether as a result of new information, future events or otherwise except as required by law.
Background
Innovative Designs, Inc. (hereinafter referred to as the “Company”, “we” or “our”) was formed on June 25, 2002. We market and sell clothing products such as outdoor apparel, and cold weather gear called “Arctic Armor” that are made from INSULTEX, a material with buoyancy, scent block and thermal resistant properties. We also market our House Wrap product line which is a building material with thermal qualities. House Wrap is also made from 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:
| ● | 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. |
15
INNOVATIVE DESIGNS, INC.
Results of Operations
Comparison of the Three-Month Period Ended January 31, 2024, with the Three Month Period Ended January 31, 2023
| Three Month | Three Month | |||||||||||||||||||||||
| Period Ended | Period Ended | |||||||||||||||||||||||
| 31-Jan | % | 31-Jan | % | Increase | ||||||||||||||||||||
| 2024 | of Sales | 2023 | of Sales | (Decrease) | % Change | |||||||||||||||||||
| REVENUE - NET | $ | 65,886.00 | $ | 71,647.00 | ($ | 5,761.00 | ) |
| -8.7 | % | ||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Cost of sales | $ | 34,824.00 | 52.9 | % | $ | 17,010.00 | 23.7 | % | $ | 17,814.00 | 51.2 | % | ||||||||||||
| Selling, general and administrative expenses | $ | 85,682.00 | 130.0 | % | $ | 113,882.00 | 158.9 | % | ($ | 28,200.00 | ) | -32.9 | % | |||||||||||
| Total Operating Expenses | $ | 120,506.00 | $ | 130,892.00 | ||||||||||||||||||||
| Loss from operations | ($ | 54,620.00 | ) | -82.9 | % | ($ | 59,245.00 | ) | -82.7 | % | $ | 4,625.00 | -8.5 | % | ||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Miscellaneous Income (expense) | $ | 0.00 | $ | 7,519.00 | 100.0 | % | ($ | 7,519.00 | ) | 100.0 | % | |||||||||||||
| Interest expense | ($ | 7,608.00 | ) | -11.5 | % | ($ | 6,599.00 | ) | -9.2 | % | ($ | 1,009.00 | ) | 13.3 | % | |||||||||
| Depreciation | ($ | 1,165.00 | ) | ($ | 769.00 | ) | -1.1 | % | ($ | 396.00 | ) | 34.0 | % | |||||||||||
| Total other income (expense) | ($ | 8,773.00 | ) | $ | 151.00 | 0.2 | % | ($ | 8,924.00 | ) | 101.7 | % | ||||||||||||
| Net Loss | ($ | 63,393.00 | ) | -96.2 | % | ($ | 59,094.00 | ) | -82.5 | % | ($ | 4,299.00 | ) | 6.8 | % | |||||||||
Revenues for the three-month period ended January 31, 2024, was $65,886 compared to revenues of $71,647 for the three-month period ended January 31, 2023. The decrease in revenue is primarily attributable to less sales of our cold weather apparel product. We are only selling this product line from our existing inventory which has limited sizes and colors. As a result, the distributors we had for this product line no longer are ordering any of our apparel. See Note 16 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 January 31, 2024, was $ 63,394 compared to a net loss of $ 59,094 for the same period in 2023.
Our selling, general and administrative expenses were $85,682 for the three-month period ended January 31, 2024, compared to $113,882 for the three-month period ended January 31, 2023.
Liquidity and Capital Resources
During the three-month period ended January 31, 2024, we funded our operations from revenues from sales, a loan and sale of our common stock.
During the period we raised $131,000 from the sale of our common stock in private placement. On stockholder exercised warrants to purchase common stock and we received $10,000. In December 2023, we also issued a promissory note in the principal amount of $50,000. The term of the note is one year and the interest rate is 6%. We granted a security interest in $100,000 worth of our inventory. The note is convertible at the holder’s option into shares of our common stock at the rate of $.20 per share.
16
INNOVATIVE DESIGNS, INC.
Short Term: We will continue to fund our operations from sales and the sale of our securities. We continue to pay our creditors when payments are due. We will require more funds to be able to order the material for our INSULTEX products and to purchase equipment needed for the manufacture of the INSULTEX product. The Company reached an agreement with the manufacturer of the INSULTEX material to purchase a machine capable of producing the INSULTEX material. Also included in the proposed agreement will be the propriety formula that creates INSULTEX. The Company took delivery of the equipment in December 2015. The Company will have to have the machine installed and ensure that it can be operated in compliance with all environmental rules and regulations. It is the Company intentions to have the equipment operational but cannot currently provide a time estimate. Among the factors affecting the time estimate are the financial resources available to the Company, finding a suitable facility and bringing technical personnel from abroad to install the equipment. The Company has currently made deposits of $637,000 on the equipment. The Company has incurred $17,000 of additional expenses related to shipping. The Company will produce INSULTEX under its own brand name. See Note 14 of the Notes to the Condensed Financial Statements.
The new quality control testing equipment for our House Wrap Product line has been built. We have reached an agreement with the vendor on the final amount owed. The total cost of the equipment was approximately $114,000. We expect to accept delivery of the equipment when our testing lab has secured a new testing facility. Once the equipment is installed it will have to go through a certification process. Once the testing equipment is certified, we intend to begin the process of having Insultex certified by ICC Evaluation Services, LLC (“ICC-ES”). ICC-ES certifies, among other items, building materials and products of which our House Wrap falls under. The reason we need to have ICC-ES certification is that we believe in order to get large orders for House Wrap, ICC-ES certification will be required. The other component part of the House Wrap produced by a third party is ICC-Es certified. Getting ICC-ES certification is costly and time consuming.
Long Term: The Company will continue to fund its operations from revenues, borrowings from private parties and the possible sale of our securities. Should we not be able to rely on the private sources for borrowing and /or increased sales, our operations would be severely affected as we would not be able to fund our purchase orders to our suppliers for finished goods and our efforts to produce our own INSULTEX would be delayed.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
See Legal Proceedings set forth in Part I Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2023.
ITEM 1A Risk Factors
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 1B Climate-Related Disclosure
n/a
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On October 1, 2023, we sold 100,000 Units each to two investors for total proceed of $46,000. Each Unit consisted of one share of common stock and one warrant to purchase a share of common stock at $.25 per share. The term of the warrants are two years.
On November 28, 2023, we issue 630,000 shares of our common stock to our landlord in payment of back rent valued at $113,400. We also issued 40,000 shares to a director for consulting services at a price of $20 per share.
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INNOVATIVE DESIGNS, INC.
On December 27, 2023, we sold 25,000 Units to one investor and received proceeds of $5,000.
On December 21, 2023, we sold 32,000 Units to one investor and received proceeds of $5,120.
On January 10, 2024, we sold 60,000 Units to one investor and received proceeds of $10,800.
On January 15, 2024, we sold 50,000 Units to one investor and received proceeds of $10,000. We also sold 277,778 Units to one investor and received proceeds of $50,000.
On January 17, 2024, we sold 25,00 Units to one investor and received proceeds of $5,000.
On January 22, 2024, we sold 55,555 Units to one investor and received proceeds of $10,000.
On January 24, 2024, we sold 55,555 Units to one investor and received proceeds of $10,000.
On February 8, 2024, we sold 55,555 Units to one investor and received proceeds of $10,000.
We relied on Section 4 (2) of the Securities Act of 1933, as amended, and regulation D promulgated thereunder as the exemptions from registration for the above transactions.
ITEM 3. Defaults upon Senior Securities
None
Item 4 Mine Safety Disclosures
Not applicable
ITEM 4T. CONTROLS AND PROCEDURES
As of January 31, 2024, our Chief Executive Officer/Chief Financial Officer identified the following specific material weaknesses in the Company’s internal controls over its financial reporting processes:
| ● | The Company is not maintaining supporting schedules, or the schedules being maintained are inaccurate to support amounts presented and disclosed in the financial statements. Specific schedules in relation to inventory deposits, inventory reserves, fixed assets, debt balance (and related accrued interest) were not available, or in the case of debt schedules were not accurate and in accordance with the loan documents | |
| ● | The Company’s internal controls policies are ineffective, or not being complied with, to identify errors, in the financial statements. These deficiencies may be considered as “material weaknesses”. | |
| ● | In addition, the Company does not utilize an internal accounting system that captures all Company activity on a timely basis. Certain transactions, such as sales and receivables are maintained in one system and disbursements and accounts payable are maintained manually. On a quarterly basis this information is sent to an external accountant to retroactively enter the information into a general ledger system and then prepare the financial statements. The lack of a single accounting system presents multiple opportunities for errors to occur, and further contributes to a lack of timely internal and external financial reporting. |
This was due to our limited resources, including the absence of an internal financial staff member with accounting and financial expertise and deficiencies in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls.
However, the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Item 5. Other Information.
During the quarter ended January 31, 2024, no director or officer, as defined
in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended ( the “Exchange Act”)
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INNOVATIVE DESIGNS, INC.
ITEM 6. EXHIBITS
| *3.1 | Revised Certificate of Incorporation |
| **3.2 | By-Laws |
| 10.0 | Form of convertible note |
| 31.1 | Rule 13a - 14a Certification of Chief Executive Officer |
| 31.2 | Rule 13a-14a Certification of Chief Financial Officer and Principal Accounting Officer |
| 32.1 | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer |
| 32.2 | Section 1350 Certification of Chief Financial Officer and Chief Accounting Officer |
| * | Incorporated by reference to the Company’s Form 10-K filed February 12, 2015 |
| ** | Incorporated by reference to the Company’s registration statement on Form SB-2, filed March 11, 2003 |
| 99*** | Incorporated by reference to the Company’s Current Report on Form 8-k, filed November 4, 2016 |
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.
| Innovative Designs, Inc. | ||
| Registrant | ||
| Date: April 30, 2024 | by: | /s/ Joseph Riccelli |
| Joseph Riccelli, Chief Executive Officer and Chief Financial Officer |
20
INNOVATIVE DESIGNS, INC.
EXHIBIT 10.0
THIS NOTE AND THE SHARES OF COMMON STOCK ACQUIRABLE ON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION SHALL BE SATISFACTORY TO THE BORROWER, THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE PROMISSORY NOTE
| $50,000 | Pittsburgh, Pennsylvania |
| December 20, 2023 |
FOR VALUE RECEIVED, the undersigned, Innovative Designs, Inc., a Delaware Borrower (the “Borrower”), agrees and promises to pay to the Sol & Tina Waxman Foundation (the “Holder”) at 3241 Sterlingshire Drive, Las Vegas, NV 89146, or at such other place or places as the Holder may designate in writing, the principal amount of FIFTY THOUSAND Dollars ($50,000), with interest as provided, in legal tender of the United States of America, in immediately available funds, as follows:
| (a) | The unpaid principal amount from time to time outstanding shall bear interest from this date until paid at a rate equal to the sum of 6% per year. Interest shall be computed for the actual number of days elapsed on the basis of a year of 360 days. |
| (c) | The entire principal amount of this Note, together with accrued but unpaid interest, shall be due and payable on December 20, 2024. |
| (d) | The Borrower may at its option from time to time, at any time, prepay this Note in whole or in part on not less than 15 days written notice delivered to the Holder. Upon such prepayment, the Borrower shall also pay the interest accrued on that portion of principal so prepaid to the date of prepayment. |
| 1. | Place and Manner of Payment. All sums due under this Note are payable not later than 12:00 P.M., Pittsburgh time, on the date such payment is due, in immediately available funds, without offset or setoff. |
| 2. | Collateral. Borrower herby grant the Holder a security interest in One Hundred Thousand ($100,000) Dollars of Borrower’s inventory priced at cost (the “Collateral”). Borrower herby covenants to keep the Collateral in good condition. |
3. Events of Default; Consequences. In the event of the occurrence of an Event of Default (as defined) the Holder may declare the entire unpaid principal balance of this Note, together with interest accrued, immediately due and payable at the place of payment, without presentment, protest, notice or demand, all of which are expressly waived. The term “Event of Default” shall mean:
| (a) | the failure to pay the principal or interest due under this Note within ten days after the day on which any such payment is due; |
| (b) | the Borrower shall make an assignment for the benefit of creditors or admit in writing its inability to pay its debts generally as they become due or fail to generally pay its debts as they become due; an order, judgment or decree shall be entered for relief in respect of or adjudicating the Borrower or any of its subsidiaries bankrupt or insolvent; the Borrower or any of its subsidiaries shall petition or apply to any tribunal for the appointment of, or taking of possession by, a trustee, receiver, custodian, or liquidator or other similar official of the Borrower or any subsidiary or of any substantial part of any of their respective assets; the Borrower or any of its subsidiaries shall commence any proceeding relating to the Borrower or any subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, or any such petition or application is filed or any such proceeding is commenced against the Borrower or any of its subsidiaries and such petition, application or proceeding is not dismissed within 60 days; |
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INNOVATIVE DESIGNS, INC.
| (c) | Any representation or warranty made by the Borrower herein is breached or is false or misleading in any material respect, or any schedule, certificate, financial statement, report, notice, or other writing furnished by the Borrower to the Holder is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified. |
3. No Setoff, Etc. The obligations of the Borrower to pay the principal balance and interest due to the Holder shall be absolute and unconditional and the Borrower shall make such payment without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense, setoff, recoupment, or counterclaim which the Borrower may have or assert against the Holder or any other person.
4. Waiver of Presentment, Etc. The Borrower waives presentment, demand, notice of dishonor, protest and notice of nonpayment and protest.
5. Costs of Collection. The Borrower shall pay all costs and expenses of collection incurred by the Holder, including reasonable attorneys’ fees.
6. Conversion.
| (a) | Commencing on the date hereof , the Holder may at any time prior to 5:00 p.m., Pittsburgh time, on December 20, 2024, convert the principal amount of this Note or any portion of the original principal amount outstanding under this Note on the date of its initial issuance (unless such amount is the only amount then remaining outstanding under this Note in which event the conversion of the remaining principal amount then outstanding shall be permitted) into fully paid and nonassessable shares of the Borrowers restricted Common Stock, par value $.0001 per share (the “Common Stock”), on the basis of one share of such stock for each $ Twenty Cents ($.20) (the “Conversion Price”) in principal amount and any accrued but unpaid interest of this Note. Such conversion shall be effected by the surrender of this Note at the principal office of the Borrower (or such other office or agency of the Borrower in the continental United States as the Borrower may designate by notice in writing to the Holder) at any time during usual business hours, together with notice in writing that the Holder wishes to convert a portion or all of this Note, which notice shall also state the name(s) (with addresses) and denominations in which the certificate(s) for Common Stock shall be issued and shall include instructions for delivery thereof. Such conversion shall be deemed to have been effected as of the close of business on the date on which this Note shall have been surrendered and such notice shall have been received, and at such time (the “Voluntary Conversion Date”) the rights of the Holder with respect to the principal amount of the Note converted shall cease and the person(s) in whose name(s) any certificate(s) for Common Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented by such certificate(s). As soon as practicable after the Voluntary Conversion Date, the Borrower shall deliver to, or as directed by, the Holder, certificates representing the number of shares of Common Stock issuable by reason of such conversion registered in such name or names and such denomination or denominations as the Holder shall have specified, together with cash as provided in Section 8 in respect of any fraction of a share of such stock otherwise issuable upon such conversion. The Borrower shall also make payment to the Holder of accrued interest to the date of conversion on the portion of the Note converted in accordance with the manner of payment provisions of Section 1 of this Note. In each case of conversion of this Note in part only, the Borrower shall receive and hold this Note as a fiduciary agent of the Holder, shall endorse on this Note the date and amount of this Note so converted, and such amount shall be deemed no longer outstanding. Upon such endorsement, the Borrower shall promptly return this Note to the Holder. |
2
INNOVATIVE DESIGNS, INC.
| (b) | At any time after the date hereof the Borrower shall be entitled, after giving 15 days prior written notice to the Holder of its intent to prepay all or any portion of this Note and receipt of notice from the Holder within such 15 days that he declines to accept prepayment, to compel the conversion of this Note or such portion into fully paid and nonassessable shares of Common Stock at the ratio and (to the extent not inconsistent with the provisions of this subsection (b)) in the manner set forth in subsection (a) of this Section 6. In the event the Holder shall fail to surrender this Note together with a written notice stating the names (with addresses) and denominations in which the certificate(s) for Common Stock shall be issued (including instructions for delivery) on or before the tenth day after the date of the Prepayment Notice, this Note shall be deemed to have been surrendered for conversion on such date. The earlier of the date this Note and said written notice are surrendered or such tenth day after the date of the Prepayment Notice shall be referred to for purposes of this Note as the “Mandatory Conversion Date.” Such conversion shall be deemed to have been effected as of the close of business on the Mandatory Conversion Date, and at such time the rights of the Holder shall cease and (i) the person(s) in whose name(s) any certificate(s) for Common Stock are to be issued upon such conversion, or (ii) in the event the Holder has failed to surrender this Note and the written notice as provided, the Holder, shall be deemed to have become the holder or holders of record of the shares of Common Stock represented by such certificate(s). As soon as practicable after the Mandatory Conversion Date (but in no event more than fifteen Business Days), the Borrower shall deliver to the Holder, or as directed by the Holder if such be the case, certificates representing the number of shares of Common Stock issuable by reason of such conversion registered in the name of the Holder or, if such be the case, in such name or names and in such denomination or denominations as the Holder shall have specified, together with cash as provided in Section 8 in respect of any fraction of a share of such stock otherwise issuable upon such conversion. The Borrower shall also make payment to the Holder of accrued interest to the date of conversion on the converted Note in accordance with the manner of payment provisions of Section 1 of this Note. |
7. Adjustment Provisions. In order to prevent dilution of and to the conversion rights of the Holder hereunder, the number of shares of Common Stock to be issued by the Borrower upon conversion hereof shall be subject to adjustment from time to time as provided in this Section 7. For purposes of this Section 7, the term “Common Stock” shall mean the Common Stock and any other class of stock ranking on parity with such stock.
(a) Subdivisions and Combinations. In the event the Borrower shall at any time subdivide (by any stock split, stock dividend or otherwise) one or more classes of its outstanding Common Stock into a greater number of shares of such stock, the Conversion Price shall be proportionately decreased. Conversely, in the event the outstanding shares of one or more classes of Common Stock shall at any time be combined into a smaller number of shares (by reverse stock split or otherwise), the Conversion Price shall be proportionately increased. In the case of any stock dividend described in this subsection (b), the adjustment to be made shall be made as of the time immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend; provided, however, that if such record date shall have been fixed and such dividend shall not have been fully paid on the date fixed, such adjustment shall be cancelled as of the close of business on such record date and, thereafter, the Conversion Price shall be adjusted pursuant to this subsection (b) as of the time of actual payment of such dividend. In the case of any subdivision (other than a stock dividend) or combination described in this subsection (a), the adjustment to be made pursuant hereto shall be made as of the close of business on the date immediately prior to the date upon which such corporate action becomes effective.
(b) Organic Changes, Etc. If any capital reorganization or reclassification of the capital stock of the Borrower (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of an issuance of Common Stock by dividend or other distribution or by reason of a subdivision or combination), or any consolidation or merger of the Borrower with or into another Borrower, or any sale of all or substantially all of the Borrower’s property and assets to any person, firm or Borrower (collectively, any “Organic Change”) shall be effected in such a way that holders of Common Stock shall be entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, then, as a condition to such Organic Change, lawful and adequate provision shall be made whereby the Holders shall thereafter have the right to acquire and receive upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock of the Borrower immediately theretofore acquirable and receivable (directly or upon subsequent conversion,
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INNOVATIVE DESIGNS, INC.
assuming unrestricted convertibility) upon the conversion of this Note, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore acquirable and receivable (directly or upon subsequent conversion, assuming unrestricted convertibility) upon conversion of this Note had such Organic Change not taken place (except that the terms of the parenthetical provision at the end of the next sentence shall be applied in determining the number of shares of Common Stock immediately theretofore acquirable and receivable). In any such case, appropriate provision shall be made with respect to the Holder’s rights and interests to the end that the provisions contained in this Note (including without limitation provisions for adjustments of the number of shares of Common Stock acquirable and receivable upon the exercise of the conversion rights granted herein) shall thereafter be applicable in relation to any shares of stock, securities or assets thereafter deliverable upon the conversion of this Note (including, in the case of any such consolidation, merger or sale in which the successor Borrower or purchasing entity is other than the Borrower, an immediate adjustment in the number of shares of Common Stock acquirable and receivable upon conversion of this Note). In the event of a merger or consolidation of the Borrower with or into another Borrower or the sale of all or substantially all of the Borrower’s property and assets to another Borrower as a result of which a number of shares of common stock of the surviving or purchasing Borrower greater or lesser than the number of shares of Common Stock of the Borrower outstanding immediately prior to such merger, consolidation or sale are issuable to holders of Common Stock, the aggregate number of shares of Common Stock into which this Note was convertible in effect immediately prior to such merger, consolidation or sale shall be adjusted as though there were a subdivision or combination of the outstanding shares of Common Stock. The provisions of this subsection (b) shall similarly apply to successive Organic Changes.
8. Fractional Interests. The Borrower shall not be required to issue any fractional shares of Common Stock on the conversion of this Note. If any fraction of a share of Common Stock except for the provisions of this Section would be issuable upon conversion of this Note, the Borrower shall purchase such fraction for an amount in cash equal to the current market price of such fraction on the last Business Day prior to conversion.
9. Voting. Nothing contained in this Note shall be construed as conferring upon the Holder the right to vote or to consent or to receive notice as a stockholder in respect of the meetings of stockholders for the election of directors of the Borrower or any other matter.
10. Notices.
(a) Any notice pursuant to this Note to be given or made by the Holder to or upon the Borrower shall be sufficiently given or made if sent by certified or registered mail, postage prepaid, addressed (until another address is sent by the Borrower to the Holder) as follows:
Sol & Waxman Foundation
3240 Sterlingshire Drive
Las Vegas, NV 89146
Attention: Jeffries Stone, Trustee
(b) Any notice pursuant to this Note to be given or made by the Borrower to or upon the Holder shall be sufficiently given or made if sent by certified or registered mail, postage prepaid, addressed (until another address is sent by the Holder to the Borrower) to the address of the Holder set forth above.
11. Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the Commonwealth of Pennsylvania.
12. Modification and Waiver. No modification or waiver of neither any provision of this Note, nor any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing signed by the Holder and then such modification or waiver shall be effective only in the specific instance for the specific purpose given.
4
IN WITTNESS HEREOF, intending to be legally bound the undersigned has set his hand and seal as of the first date written above.
| By: | ||
| Joseph Riccelli, Chief Executive Officer | ||
5
EXHIBIT 31.1
EXHIBIT 31.1
INNOVATIVE DESIGNS, INC.
CERTIFICATIONS
I, Joseph Riccelli, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Innovative Designs, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: April 30, 2024 | by: | /s/ Joseph Riccelli |
| Joseph Riccelli | ||
| Chief Executive Officer |
EXHIBIT 31.2
INNOVATIVE DESIGNS, INC.
CERTIFICATIONS
I, Joseph Riccelli, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Innovative Designs, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: April 30, 2024 | by: | /s/ Joseph Riccelli |
| Joseph Riccelli | ||
| Chief Financial Officer, Principal Accounting Officer |
EXHIBIT 32.1
EXHIBIT 32.1
SECTION 906 CERTIFICATION
CERTIFICATION REQUIRED BY
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Innovative Designs, Inc. (the “Company”) on Form 10-Q for the quarterly period ended January 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 30, 2024 | by: | /s/ Joseph Riccelli |
| Joseph Riccelli | ||
| Chief Executive Officer |
EXHIBIT 32.2
SECTION 906 CERTIFICATION
CERTIFICATION REQUIRED BY
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Innovative Designs, Inc. (the “Company”) on Form 10-Q for the quarterly period ended January 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 30, 2024 | by: | /s/ Joseph Riccelli |
| Joseph Riccelli | ||
| Chief Executive Officer, Chief | ||
| Financial Officer, Principal | ||
| Accounting Officer |