10-Q

A

UNITED STATES

SECURITIES

AND EXCHANGE COMMISSION

WASHINGTON,

D.C. 20549

FORM

10-Q

☒	QUARTERLY<br> REPORT PURSUANT TO SECTION 13l OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended July 31, 2022

OR

☐	TRANSITION REPORT<br>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<br> of	(I.R.S. Employer
incorporation or organization)	Identification No.)

124 Cherry Street

Pittsburgh, Pennsylvania 15223

(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.

YES

☒ NO ☐

Indicate

by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). YES ☒ NO ☐

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). YES ☐ NO ☒

As

of September 14, 2022, there were 34,475,560 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 July 31, 2018

	Part I -- Financial Information	Page No.
Item 1.	Condensed Financial Statements (Unaudited)
	Condensed Balance Sheets as of July 31, 2022 (Unaudited) and October 31, 2021	1
	Condensed Statements of Operations for the Three And Nine Month Periods Ended July 31, 2022 and 2021 (Unaudited)	3
	Condensed Statements of Changes in Stockholders’ Equity as of July 31, 2022 (Unaudited) and October 31, 2021	4
	Condensed Statements of Cash Flows for the Nine Month Periods Ended July 31, 2022 and 2021 (Unaudited)	5
	Notes to the Condensed Financial Statements	6 - 11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12 - 15
	Part II -- Other Information
Items 1, 2, 3, and 4T.		16
Item 6.	Exhibits	17

i

ITEM 1. CONDENSED FINANCIAL STATEMENTS

INNOVATIVE DESIGNS, INC.
CONDENSED BALANCE SHEETS
JULY 31, 2022 (UNAUDITED) AND OCTOBER 31, 2021
		October<br> 31, 2021
---	---	---	---
ASSETS
CURRENT<br> ASSETS
Cash	159,510	$	480,451
Accounts<br> receivable - net of allowance for doubtful accounts of 5,860	9,613		1,201
Inventory<br> - net of obsolete inventory reserve of 75,468	531,484		542,588
Current<br> portion of right of use asset	10,452		40,962
Receivable<br> due	260,000		—
Total<br> current assets	971,059		1,065,202
PROPERTY<br> AND EQUIPMENT - NET	6,332		7,450
OTHER<br> ASSETS
Inventory<br> on consignment	1,625		1,625
Deposits<br> on inventory	40,000		—
Advance<br> to employees	8,200		8,200
Deposits<br> on equipment	607,370		600,000
Total<br> other assets	657,195		609,825
TOTAL<br> ASSETS	1,634,586	$	1,682,477

All values are in US Dollars.

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

1

INNOVATIVE DESIGNS, INC.
CONDENSED BALANCE SHEETS
JULY 31, 2022 (UNAUDITED) AND OCTOBER 31, 2021
			October<br> 31, 2021
---	---	---	---	---	---
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT<br> LIABILITIES
Accounts<br> payable	294,306		$	228,667
Current<br> portion of notes payable	18,628			18,628
Current<br> portion of lease liability	10,452			40,962
Accrued<br> interest expense	40,496			43,136
Due<br> to stockholders	119,630			188,632
Accrued<br> expenses	5,223			25,037
Total<br> current liabilities	488,735			545,062
LONG-TERM<br> LIABILITIES
Long-term<br> portion of due to stockholders	66,667			133,332
Long-term<br> portion of notes payable	71,122			71,722
Total<br> long-term liabilities	137,789			205,054
TOTAL<br> LIABILITIES	626,524			750,116
STOCKHOLDERS'<br> EQUITY
Preferred<br> stock, 0.0001 par value, 25,000,000 shares authorized				—
Common<br> stock, 0.0001 par value, 100,800,000 shares authorized, and 34,375,560 and 33,315,560 issued and outstanding	3,454			3,333
Common<br> stock to be issued
Additional<br> paid-in capital	11,310,197			11,039,118
Accumulated<br> deficit	(10,305,589	)		(10,110,090	)
Total<br> stockholders' equity	1,008,062			932,361
TOTAL<br> LIABILITIES AND STOCKHOLDERS' EQUITY	1,634,586		$	1,682,477

All values are in US Dollars.

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

2

INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JULY 31, 2022 AND 2021 (UNAUDITED)
	Three<br> Months Ended July 31,						Nine<br> Months Ended July 31,
---	---	---	---	---	---	---	---	---	---	---	---	---
	2022			2021			2022			2021
REVENUES<br> - NET	$	135,048		$	110,475		$	235,164		$	176,388
OPERATING<br> EXPENSES:
Cost<br> of sales		56,224			50,712			109,884			78,352
Selling,<br> general and administrative expenses		115,757			66,845			546,330			275,998
Total<br> Operating Expenses		171,981			117,557			656,214			354,350
LOSS<br> FROM OPERATIONS		(36,933	)		(7,082	)		(421,050	)		(177,962	)
OTHER<br> INCOME (EXPENSE)
Miscellaneous<br> income (expense)		260,000			33,652			260,000			62,475
Interest<br> expense		(10,710	)		(13,417	)		(34,450	)		(30,810	)
Total<br> other income (expense)		249,290			20,235			225,550			31,665
NET<br> (LOSS) INCOME	$	212,357		$	13,153		$	(195,500	)	$	(146,297	)
PER<br> SHARE INFORMATION - UNDILUTED
Net<br> Loss Per Common Share	$	0.006		$	0.000		$	(0.006	)	$	(0.005	)
Weighted<br> Average Number of Common Shares Outstanding		33,845,560			32,216,560			33,845,560			31,776,560
PER<br> SHARE INFORMATION - DILUTED
Net<br> Loss Per Common Share	$	0.006		$	0.000		$	(0.006	)	$	(0.005	)
Weighted<br> Average Number of Common Shares Outstanding		34,902,893			32,229,060			34,902,893			31,789,060
The accompanying notes are an integral part of these condensed financial statements.
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3

INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
THREE AND NINE MONTHS ENDED JULY 31, 2022 AND 2021 (UNAUDITED)
	Common<br> Stock				Common Stock To<br> be		Additional<br> Paid-in		Accumulated
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Shares		Amount		Issued		Capital		Deficit			Total
Balance at October<br> 31, 2021		33,315,560	$	3,333	$	—	$	11,039,118	$	(10,110,090	)	$	932,361
Sale<br>of stock		340,000		34		—		60,966		—			61,000
Shares<br>issued for services		50,000		5				9,995					10,000
Net<br>loss		—		—		—		—		(132,040	)		(132,040	)
Balance at January 31, 2022		33,705,560		3,372		—		11,110,079		(10,242,130	)		871,321
Sale<br>of stock		120,000		12				25,188					25,200
Shares<br>issued for services		700,000		70				174,930					175,000
Net<br>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<br>issued for services		—		—				—		—			—
Net<br> income						—				212,357			212,357
Balance<br> at July 31, 2022		34,525,560	$	3,454	$	—	$	11,310,197	$	(10,305,589	)	$	1,008,062
Balance at October 31, 2020		31,211,560	$	3,123	$	—	$	10,574,828	$	(9,730,028	)	$	847,923
Sale of stock		—		—		—		—		—			—
Shares<br> issued for services		100,000		10		—		24,990		—			25,000
Net<br> loss		—		—		—		—		(35,965	)		(35,965	)
Balance at January 31, 2021		31,311,560		3,133		—		10,599,818		(9,765,993	)		836,958
Sale of stock		280,000		28				69,972		—			70,000
Shares<br> issued for services		500,000		50				63,950					64,000
Net<br>loss		—		—		—		—		(123,485	)		(123,485	)
Balance at April 30, 2021		32,091,560		3,211		—		10,733,740		(9,889,478	)		847,473
Sale of stock		240,000		24				59,976					60,000
Shares<br> issued for services		10,000		1				1,999					2,000
Net<br>Income						—				13,153			13,153
Balance<br> at July 31, 2021		32,341,560	$	3,236	$	—	$	10,795,715	$	(9,876,325	)	$	922,626
The accompanying notes are an integral part of these condensed financial statements.
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4

INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 2022 AND 2021 (UNAUDITED)

---

	Nine<br> Months Ended July 31,
	2022			2021
CASH<br> FLOWS FROM OPERATING ACTIVITIES:
Net<br> loss	$	(195,500	)	$	(146,297	)
Adjustments<br> to reconcile net loss to net cash used in operating activities:
Allowance<br> for doubtful accounts		—			—
Common<br> stock issued for services		185,000			66,000
Depreciation		1,118			24,981
Amortization<br> of right of use asset		30,510			28,881
(Increase)<br> decrease from changes in:
Accounts<br> receivable		(8,412	)		16,844
Inventory		11,104			25,821
Deposits<br> on inventory		(40,000	)		—
Receivable<br> due		(260,000	)
Increase<br> (decrease) from changes in:
Accounts<br> payable and accrued expenses		45,826			(66,534	)
Accrued<br> interest expense		(2,640	)		(11,420	)
Net<br> cash used in operating activities		(232,994	)		(61,724	)
CASH<br> FLOWS FROM INVESTING ACTIVITIES
Increase<br> in deposit on Equipment		(7,370	)		—
Net<br> cash used in investing activities		(7,370	)		—
CASH<br> FLOWS FROM FINANCING ACTIVITIES:
Proceeds<br> from sale of stock		86,200			155,000
Forgivness<br> from loans		—			(33,652	)
Proceeds<br> from shareholder advances		—			250,000
Payments<br> on shareholder advances		(135,667	)		—
Payments<br> on lease liability		(30,510	)		(28,881	)
Proceeds<br> on notes payable		1,818			—
Payments<br> on notes payable		(2,418	)		(1,820	)
Net<br> cash provided by financing activities		(80,577	)		340,647
Net<br> change in cash		(320,941	)		278,923
CASH,<br> BEGINNING OF YEAR		480,451			48,009
CASH,<br> END OF THE PERIOD	$	159,510		$	326,932
Supplemental<br> disclosure of cash flow information:
Cash<br> paid for interest	$	37,090		$	39,100
Cash<br> paid for taxes	$	—		$	—

---

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

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5

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Nine Month Periods Ended July 31, 2022

and 2021 (Unaudited)

NOTE 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 financial position as of July 31, 2022, the changes therein for the three and nine month periods then ended and the results of operations for the three and nine month periods ended July 31, 2022 and 2021.

The financial statements included in the Form 10-Q are presented in accordance with the requirements of the Form and do not include all of the disclosures required by accounting principles generally accepted in the United States of America. For additional information, reference is made to the Innovative Designs, Inc.’s annual report on Form 10-K for the fiscal year ended October 31, 2021. The results of operations for the three and nine month periods ended July 31, 2022 and 2021 are not necessarily indicative of operating results for the full year.

NOTE 2.	RIGHT OF USE ASSETS AND LEASE LIABILITIES

During the quarter ended April 30, 2019, the Company implemented Accounting Standards Update 2016-02, Leases. Under the new guidance, a lessee must be recorded a liability for lease payments (referred to as the lease liability) and an asset for the right to use the leased asset during the lease term (referred to at the right of use asset) for all leases, regardless of whether they are designated as finance or operating leases. This election requires the lessee to recognize lease expense on a straight-line basis over the lease term. The right of use assets and corresponding right of use liabilities have been recorded using the present value of the leases. See Notes 11 and 12 within the financial statement for additional disclosure on leases

NOTE 3.	GOING CONCERN

These 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 ($195,500) and a negative cash flow from operations of ($232,994) for the nine month period ended July 31, 2022. In addition, the Company has an accumulated deficit of ($10,305,589). 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 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 going concern.

NOTE 4.	ACCOUNTS RECEIVABLE

Management 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 of $5,860 as of the July 31, 2022 and October 31, 2021. Management has applied an allowance on all balances in excess of 90 days.

6

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Nine Month Periods Ended July 31, 2022

and 2021 (Unaudited)

NOTE 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 hunting and swimming line of apparel. The Company has booked a reserve against apparel inventory at July 31, 2022 and October 31, 2021 of $75,468. Management has determined that no allowance is currently necessary on their House Wrap Inventory. Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed.

NOTE 6.	EARNINGS PER SHARE

The Company calculates net income (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 and has subsequently retired this debt in May of 2022. In addition, the Company also has stock warrants of 994,000 and 860,000 as of July 31, 2022 and 2021, respectively. The Company has calculated diluted earnings per share utilizing the outstanding stock warrants and convertible debt.

NOTE 7.	INCOME TAXES

The Company accounts for income taxes in accordance with ASC Topic 740 "Income Taxes", which requires an asset and liability approach for financial reporting purposes.

Deferred income taxes are provided for differences between the tax bases of assets and liabilities and the financial reporting amounts at the end of the period, and for net operating loss and tax credit carryforwards available to offset future taxable income. Changes in enacted tax rates or laws result in adjustments to recorded deferred tax assets and liabilities in the periods in which the tax laws are enacted or tax rates are changed. The Company will continue to evaluate its income tax obligation throughout the year and will record a tax provision when it is necessary.

NOTE 8.	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 $21,199 and $6,400 for the nine month periods ended July 31, 2022 and 2021, respectively.

7

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Nine Month Periods Ended July 31, 2022

and 2021 (Unaudited)

NOTE 9.	COMMON STOCK

During the nine month period ended July 31,

2022, the Company sold 460,000 shares of common stock to seven investors for total proceeds of $86,200 and issued 750,000 shares to eight investors for services. The stock was issued between $0.17 and $0.25 per share.

During the nine month period ended July 31,

2021, the Company sold 520,000 shares of common stock to twelve investors for total proceeds of $130,000 and issued 610,000 shares to nine investors for services. The stock was issued between $0.12 and $0.25 per share.

NOTE 10.	DEPOSITS ON EQUIPMENT

On July 12, 2015 the Company reached an agreement with Ketut Jaya to purchase the machinery and equipment utilized to produce the INSULTEX material. The purchase price is $700,000 which was to be paid in four installments. The first installment of $300,000 was to be paid at the execution of the agreement. The second installment of $200,000 was to be paid when the machinery and equipment is ready to be shipped to the United States. The third installment of $100,000 is to be paid once the machinery and equipment is producing INSULTEX, and the fourth and final installment of $100,000 is to be made after the first commercial production run of INSULTEX is completed. As of April 30, 2020, the Company has made payments of $500,000 in accordance with the agreement and made a $100,000 pre-payment as the machine is not yet producing INSULTEX. Additionally, the Company has incurred $17,000 of additional expenses related to shipping, site improvements and installation of the equipment. Due to various environmental regulations that must be met and other costs to assemble the machine the Company expects to incur costs in excess of the current deposit agreement. Management of the Company currently cannot reasonably estimate the costs. During the six month period ended April 30, 2019 Management decided to sell the machine. The shipping and other purchase costs associated with the purchase of the machine that were originally capitalized as part of the machine cost that were written off. The total loss on impairment for the six month period ended April 30, 2019 was $17,000. In July 2021, management has decided that it is no longer selling this equipment and is moving forward with plans of putting it in service in the future.

In May of 2022, the Company made an additional

deposit of $7,320 for a new testing machine.

NOTE 11.	RIGHT OF USE ASSETS

The Company entered into a month to month

verbal lease at the time the Company was formed that is classified as right of use asset and lease liability. The lease for the Company’s office space is estimated to be through October 2022. In accordance with ASU 2016-02, the Company calculated the present value of the leases using the average commercial real estate interest rate of 5.50% at the commencement of the office lease. Applying the commercial rate, the Company calculated the present value of $150,496 for the office lease as of April 30, 2020.

8

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Nine Month Periods Ended July 31, 2022

and 2021 (Unaudited)

NOTE 11.	RIGHT OF USE ASSETS (CONTINUED)

As of July 31, 2022, the right of use assets associated with future operating lease is as follows:

Right of use assets associated with future operating leases
Total present value of right of use asset under lease agreement	$	150,496
Amortization of right of use asset – operating lease		(140,044	)
Total right of use asset – operating lease as of July 31, 2022	$	10,452
Less current portion due within one year		10,452
Long-term right of use asset – operating lease	$	-0-

Total amortization expense related to the

right of use assets under the verbal lease agreement was $30,510 and $28,881 for the nine month periods ended July 31, 2022 and 2021, respectively.

Future amortization of the right of use asset as of July 31, 2022 is as follows:

Future amortization of right of use assets
2022	$	10,452
NOTE 12.	RIGHT OF USE LEASE LIABILITY
---	---

As disclosed in Note 11, the Company entered into a verbal lease for office space prior to the quarter ended July 31, 2022 that is classified as a right of use asset and lease liability.

As of July 31, 2022, the lease liability associated with future payments due under the verbal lease is as follows:

Schedule of future minimum lease payments
Total future minimum lease payments	$	150,496
Principal payments made as of the period ended <br>  <br>July 31, 2022		(140,044	)
Total operating lease liability as of July 31, 2022		10,452
Less current portion due within one year		10,452
Long-term operating lease liability	$	-0-

9

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Nine Month Periods Ended July 31, 2022

and 2021 (Unaudited)

Total maturities of lease liability as of July 31, 2022 are as follows:

Schedule of maturities of lease liabilities
	Total future minimum lease payments		Present value discount		Operating lease liability
2022	$	10,500	$	48	$	10,452
NOTE 13.	SEGMENT INFORMATION
---	---

We have organized our operations into two segments. We rely on an internal management reporting process that provides segment information for purposes of making financial decisions and allocating resources.

The following tables present our business segment information for the nine month periods ended July 31, 2022 and 2021:

Schedule of business segment information
	2022		2021
Revenues:
Apparel	$	59,126	$	49,675
House<br> Wrap		176,038		126,713
Total<br> Revenues	$	235,164	$	176,388
Assets:
Apparel	$	81,045	$	135,542
House<br> Wrap		1,546,171		1,503,627
Total	$	1,627,216	$	1,639,169
Depreciation:
Apparel	$	-0-	$	7,116
House<br> Wrap		1,118		17,865
Total	$	1,118	$	24,981

10

INNOVATIVE DESIGNS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Three and Nine Month Periods Ended July 31, 2022

and 2021 (Unaudited)

NOTE 14.	LEGAL PROCEEDINGS

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

On November 23, 2020, the Company was informed that the FTC had filed a notice of appeal in regard to the case. The appeal is from the District Court’s September 24, 2020, Order granting the Company’s Motion for Judgment on Partial Findings Pursuant to Fed. R. Civ. P. 52(c) and subsequent Judgment in favor of the Company and from the District Court’s February 14, 2020, striking Dr. David Yarbrough’s expert testimony made on behalf of the FTC. The FTC filed its appeal and on March 24, 2021, the Company filed its answer.

On July 22, 2021, the Registrant was informed that the United States 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 Federal Trade Commission 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 INSULTIX 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 shall pay the Company $260,000 to resolve all such claims. The parties agreed to waive all rights to appeal or otherwise challenge or contest the validity of the Order.

NOTE 15.	SUBSEQUENT EVENTS

The Company has evaluated subsequent events in accordance with ASC Topic 855, “Subsequent Events”, through September 14, 2022, which is the date financial statements were available to be issued.

On August 30, 2022, the Company received

a partial payment of $200,000 from the settlement with the FTC.

11

INNOVATIVE DESIGNS, INC.

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

General

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The following information should be read in conjunction with the financial statements and the notes thereto and in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021.

Forward-Looking Statements

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This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Reform Act of 1995. All statements other than statements of historical fact, including statements regarding future results of operation, made in this Quarterly Report on Form 10-Q are forward-looking statements. We use words such as expects, believes, intends, and similar expressions to identify forward-looking statements. Forward looking-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons, including, among others, an adverse outcome in our legal matter with the Federal Trade Commission, competition in our cold weather markets, our inability to secure sufficient funding to maintain and/or expand our current level of operations and the seasonality of our cold weather product line. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, are described in greater detail in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021. The Company undertakes no obligation to 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

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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<br> the development, design and prototypes of our products,
●	Obtaining<br> distributers, retail stores or sales agents to offer and sell our products,
●	Developing<br> our website to sell more of our products.

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INNOVATIVE DESIGNS, INC.

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Results of Operations

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Comparison of the Three Month Period Ended July 31, 2022, with the Three Month Period Ended July 31, 2021.

	Three Month Period Ended July 31, 2022			% of Sales			Three Month Period Ended July 31, 2021			% of Sales			Increase (Decrease)			% Change
REVENUE - NET	$	135,048			100	%	$	110,475			100	%	$	24,573			22	%
OPERATING EXPENSES
Cost of sales		56,224			42	%		50,712			46	%		5,512			11	%
Selling, general and administrative expenses		115,385			85	%		58,518			53	%		56,867			97	%
		171,609			127	%		109,230			99	%		62,379			57	%
(Loss) Income from operations		(36,561	)		-27	%		1,245			1	%		(37,806	)		-3037	%
Other income (expense)		260,000			193	%		33,652			30	%		226,348			0	%
Other Expense
Interest expense		(10,710	)		-8	%		(13,417	)		-12	%		2,707			-20	%
Depreciation expense		(372	)		0	%		(8,327	)		-8	%		7,955			-96	%
Net (Loss) Income	$	212,357			157	%	$	13,153			12	%	$	199,204			1515	%

Revenues for the three month period ended July 31, 2022 were $135,048 compared to revenues of $110,475 for the three month period ended July 31, 2021. The increase in revenue is attributable to more sales of our HouseWrap product line. See Note 13 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment products sales. Our net loss for the three month period ended July 31, 2022 was ($213,357).

Our selling, general and administrative expenses were $115,385 for the three month period ended July 31, 2022, compared to $58,518 for the three month period ended July 31, 2021. The increase is primarily the result of an increase in payroll as we brought back two employees who had been furloughed as a result of the pandemic.

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INNOVATIVE DESIGNS, INC.

Comparison of the Nine Month Period Ended July 31, 2022, with the Nine Month Period Ended July 31, 2021.

The following table shows a comparison of the results of operations between the nine month periods ended July 31, 2022 and July 31, 2021:

	Nine Month Period Ended July 31, 2022			% of Sales			Nine Month Period Ended July 31, 2021			% of Sales			Increase (Decrease)			% Change
REVENUE - NET	$	235,164			100	%	$	176,388			100	%	$	58,776			33	%
OPERATING EXPENSES
Cost of sales		109,884			47	%		78,352			44	%		31,532			40	%
Selling, general and administrative expenses		545,212			232	%		251,017			142	%		294,195			117	%
		655,096			279	%		329,369			187	%		325,727			99	%
Loss from operations		(419,932	)		-179	%		(152,981	)		-87	%		(266,951	)		174	%
Other income (expense)		260,000			111	%		62,475			35	%		197,525			0	%
Other Expense
Interest expense		(34,450	)		-15	%		(30,810	)		-17	%		(3,640	)		12	%
Depreciation expense		(1,118	)		0	%		(24,981	)		-14	%		23,863			-96	%
Net Loss	$	(195,500	)		-83	%	$	(146,297	)		-83	%	$	(49,203	)		34	%

Revenues for the nine month period ended July 31, 2022 were $235,164 compared to revenues of $176,388 for the nine month period ended July 31, 2021. The increase is the result of more sales of our HouseWrap product line. The apparel sales were adversely affected by warm weather. See Note 13 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment product sales. During the nine month period ended July 31, 2022 House Wrap sales totaled $176,038 in comparison with $126,713 during the nine month period ended July 31, 2021. Our net loss for the nine month period ended July 31, 2022, was ($195,500).

Our selling, general and administrative expenses were $545,212 for the nine months ended July 31, 2022, compared to $251,017 for the nine month period ended July 31, 2021. The increase was a result, in part, by an increase in payroll expenses of approximately $101,000 as we brought back two employees who had been furloughed during the pandemic. we also incurred $50,000 in marketing cost through the issuance of our common stock. Directors’ fees increased by $33,000 as we issued common stock to members of the Board of Directors. Shipping costs increased by $9,000 from the prior nine month period.

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INNOVATIVE DESIGNS, INC.

Liquidity and CapitalResources

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During the nine period ended July 31, 2022, we funded our operations from revenues from sales and the sale of our common stock.

Short Term: We will continue to fund our operations from sales and the sale of our securities. We continue to pay our creditors when payments are due. We will require more funds to be able to order the material for our INSULTEX products and to purchase equipment needed for the manufacture of the INSULTEX product. The Company reached an agreement with the manufacturer of the INSULTEX material to purchase a machine capable of producing the INSULTEX material. Also included in the proposed agreement will be the propriety formula that creates INSULTEX. The Company took delivery of the equipment in December 2015. The Company will have to have the machine installed and ensure that it can be operated in compliance with all environmental rules and regulations. The Company has not made an estimate of the cost required for bringing the operation of the machine into compliance with the environmental regulations, but it is considered to be a substantial amount. We are in the permitting stage relating to environmental issues necessary to begin the installation of the equipment. However, given our current limited financial resources we are not devoting the resources needed to complete the permitting process. The Company has currently made deposits of $600,000 on the equipment. The Company has incurred $17,000 of additional expenses related to shipping. The Company will produce INSULTEX under its own brand name. See Note 10 of the Notes to the Condensed Financial Statements. We also must purchase new quality control equipment for our HouseWrap product line. A deposit of $7,320 has been made however, we do not have a full cost estimate from the builder. We have estimated a cost of approximately $100,000.

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.

Subsequent to the period on August 29, 2022, we received approximately $200,000 as partial payment on the amount owed under the settlement agreement with the FTC. See Note 14 of the Notes to the Condensed Financial Statement appearing elsewhere in this Report.

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INNOVATIVE DESIGNS, INC.

PART II – OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDING

See Note 14 of the Notes to Financial Statements appearing elsewhere in this Report.

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 3.	QUANTITATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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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 July 31, 2022, our principal executive/financial officer concluded that these controls and procedures were ineffective. At this time, we do not have the financial resources to employ a financial staff with accounting and financial expertise. Once we have the necessary financial resources, we plan to hire and designate an individual responsible for identifying reportable developments and to implement procedures designed to remediate the material weakness by focusing additional attention and resources in our internal accounting functions.

Changes in Internal Control Over Financial Reporting

During the most recent fiscal quarter, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13(a)-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Until the Company has the financial resources to employ a financial staff with accounting and financial expertise, to be able to properly account for internal financial reporting, errors that may have a material effect on the financial statements have the potential to occur.

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INNOVATIVE DESIGNS, INC.

ITEM 6.	EXHIBITS
*3.1	Revised Certificate of Incorporation
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**3.2	By-Laws
31.1	Rule 13a - 14a Certification of Chief Executive Officer and Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
*	Incorporated by reference to the Company’s<br> Form 10-K filed February 12, 2015
**	Incorporated by reference to the Company’s<br> registration statement on Form SB-2, filed March 11, 2003
99***	Incorporated by reference to the Company’s Current Report on Form 8-k, filed November 4, 2016

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INNOVATIVE DESIGNS, INC.

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<br> Designs, Inc.
	Registrant
Date: September 13, 2022	by:	/s/ Joseph Riccelli
		Joseph Riccelli, Chief Executive Officer and Chief<br> Financial Officer

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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<br>be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,<br>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<br>reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the<br>preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented<br>in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period<br>covered by this report based on such evaluation; and
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(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting<br>that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect,<br>the registrant's internal control over financial reporting; and
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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<br>financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report<br>financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant<br>role in the registrant’s internal control over financial reporting.
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Date: September 13, 2022	by:	/s/ Joseph Riccelli
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		Joseph Riccelli
		Chief Executive Officer

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 July 31, 2022, 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<br>section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents,<br>in all material respects, the financial condition and results of operations of the Company.
Date: September 13, 2022	by:	/s/ Joseph Riccelli
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		Joseph Riccelli
		Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director