Innovative Designs Inc 10-Q for FY2021 Q1
Innovative Designs Inc (IVDN)
About this 10-Q
Innovative Designs Inc filed this 10-Q on September 20, 2021, covering the quarter ended January 31, 2021 (FY2021 Q1).
Headline figures
Quarter ended January 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $40.02K
- down 15.6% from $47.43K a year earlier
- Net loss
- $35.97K
- compared with a net loss of $68.89K 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. |
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the quarterly period ended
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As of September 13, 2021, there were shares of the Registrant’s common stock, par value $.0001 per share, outstanding.
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Innovative Designs, Inc.
Index
Form 10-Q for the Quarter Ended January 31, 2021
| Part I -- Financial Information | Page No. | |
| Item 1. | Condensed Financial Statements (Unaudited) | |
| Condensed Balance Sheets as of January 31, 20 (Unaudited) And October 31, 2020 | 1 | |
| Condensed Statements of Operations for the Three Month Periods Ended January 31, 2021 and 2020 (Unaudited) | 3 | |
| Condensed Statements of Changes in Stockholders’ Equity as of January 31, 2021 (Unaudited) and October 31, 2020 | 4 | |
| Condensed Statements of Cash Flows for the Three Month Periods Ended January 31, 2021 and 2020 (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 - 13 |
| Part II -- Other Information | ||
| Items 1, 2, 3, 4, 4T and 5. | 14 - 15 | |
| Item 6. | Exhibits | 16 |
| i |
| INNOVATIVE DESIGNS, INC. |
| CONDENSED BALANCE SHEETS |
| JANUARY 31, 2021 (UNAUDITED) AND OCTOBER 31, 2020 |
| January 31, 2021 | October 31, 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable - net of allowance for doubtful accounts of $ | ||||||||
| Inventory - net of obsolete inventory reserve of $ | ||||||||
| Current portion of right of use asset | ||||||||
| Total current assets | ||||||||
| PROPERTY AND EQUIPMENT - NET | ||||||||
| OTHER ASSETS | ||||||||
| Inventory on consignment | ||||||||
| Deposits on inventory | ||||||||
| Advance to employees | ||||||||
| Right of use asset, net of current portion | ||||||||
| Deposits on equipment | ||||||||
| Total other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed financial statements. | ||||||||
| -1- |
| INNOVATIVE DESIGNS, INC. |
| CONDENSED BALANCE SHEETS |
| JANUARY 31, 2021 (UNAUDITED) AND OCTOBER 31, 2020 |
| January 31, 2021 | October 31, 2020 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Current portion of notes payable | ||||||||
| Accrued interest expense | ||||||||
| Due to shareholders | ||||||||
| Current portion of lease liability | ||||||||
| Accrued expenses | ||||||||
| Total current liabilities | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Long-term portion of notes payable | ||||||||
| Lease liability, net of current portion | ||||||||
| Total long-term liabilities | ||||||||
| TOTAL 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 LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed financial statements. | ||||||||
| -2- |
| INNOVATIVE DESIGNS, INC. |
| CONDENSED STATEMENTS OF OPERATIONS |
| THREE MONTHS PERIODS ENDED JANURARY 31, 2021 AND 2020 (UNAUDITED) |
| Three Months Ended January 31, | ||||||||
| 2021 | 2020 | |||||||
| REVENUES - NET | $ | $ | ||||||
| OPERATING EXPENSES: | ||||||||
| Cost of sales | ||||||||
| Selling, general and administrative expenses | ||||||||
| Total Operating Expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Miscellaneous income (expense) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| PER SHARE INFORMATION | ||||||||
| Net Loss Per Common Share | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Number of Common Shares Outstanding | ||||||||
| The accompanying notes are an integral part of these condensed financial statements. |
| -3- |
| INNOVATIVE DESIGNS, INC. |
| CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY |
| JANUARY 31, 2021 (UNAUDITED) AND OCTOBER 31, 2020 |
| Common Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||
| Shares | Amount | To be Issued | Capital | Deficit | Total | |||||||||||||||||||
| Balance at October 31, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Sale of stock | ||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at January 31, 2021 | ( | ) | ||||||||||||||||||||||
| The accompanying notes are an integral part of these condensed financial statements. |
| -4- |
| INNOVATIVE DESIGNS, INC. |
| CONDENSED STATEMENTS OF CASH FLOWS |
| THREE MONTHS ENDED JANUARY 31, 2021 AND 2020 (UNAUDITED) |
| For the Three Month Periods | ||||||||
| Ended | ||||||||
| January 31, 2021 | January 31, 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | ( | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Allowance for doubtful accounts | ( | ) | ||||||
| Allowance for obsolete inventory | ||||||||
| Common stock issued for services | ||||||||
| Impairment loss on assets held for sale | ||||||||
| Depreciation | ||||||||
| Amortization of right of use asset | ||||||||
| (Increase) decrease from changes in: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivable | ||||||||
| Inventory | ||||||||
| Inventory on consignment | ||||||||
| Deposits on inventory | ||||||||
| Prepaid expenses | ||||||||
| Advance to employees | ||||||||
| Increase (decrease) from changes in: | ||||||||
| Accounts payable | ( | ) | ||||||
| Lease liability | ( | ) | ( | ) | ||||
| Accrued interest expense | ( | ) | ( | ) | ||||
| Accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Deposits on equipment | ||||||||
| Capital expenditures | ||||||||
| Net cash used in investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of stock | ||||||||
| Proceeds from shareholder advances | ||||||||
| Payments on shareholder advances | ( | ) | ||||||
| Payments on lease liability | ||||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ||||||||
| CASH, BEGINNING OF YEAR | ||||||||
| CASH, END OF THE PERIOD | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed financial statements. | ||||||||
| -5- |
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Three Month Periods Ended January 31, 2021 and 2020 (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 January 31, 2021, the changes therein for the three periods then ended and the results of operations for the three periods ended January, 2021 and 2020.
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, 2020. The results of operations for the three periods ended January, 2021 and 2020 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 ($
| 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 $
| -6- |
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Three Month Periods Ended January 31, 2021 and 2020 (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 selling of its hunting and swimming
line of apparel. The Company has booked a reserve against apparel inventory at January 31, 2020 and October 31, 2019 of $
| 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. As a result, diluted earnings per share was not calculated.
| 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 $
| -7- |
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Three Month Periods Ended January 31, 2021 and 2020 (Unaudited)
| NOTE 9. | COMMON STOCK |
During the three month period
ended January 31, 2021, the Company sold shares of common stock to one investors for total proceeds of $
During the three month period
ended January 31, 2020, the Company sold shares of common stock to nine investors for total proceeds of $
| 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.
| 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 June 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
| -8- |
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Three Month Periods Ended January 31, 2021 and 2020 (Unaudited)
| NOTE 11. | RIGHT OF USE ASSETS (CONTINUED) |
As of January 31, 2021, 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 | $ | |||
| Amortization of right of use asset | ( | ) | ||
| Total right of use asset as of January 31, 2021 | $ | |||
| Less current portion due within one year | ||||
| Long-term right of use asset | $ |
Total amortization expense
related to the right of use assets under the verbal lease agreement was $
Future amortization of the right of use asset as of January 31, 2021 is as follows:
| Future amortization of right of use assets | |||||
| 2022 | $ | ||||
| 2023 | |||||
| $ |
| 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 January 31, 2020 that is classified as a right of use asset and lease liability.
As of January 31, 2021, 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 | $ | |||
| Principal payments made as of the period ended January 31, 2021 | ( | ) | ||
| Total right of use lease liability as of January 31, 2021 | ||||
| Less current portion due within one year | ||||
| Long-term right of use liability | $ |
| -9- |
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Three Month Periods Ended January 31, 2021 and 2020 (Unaudited)
Total maturities of lease liability as of January 31, 2021 are as follows:
| Schedule of maturities of lease liabilities | ||||||||||||||
| Total future minimum lease payments | Present value discount | Right of use lease liability | ||||||||||||
| 2021 | $ | $ | $ | |||||||||||
| 2022 | ||||||||||||||
| $ | $ | $ | ||||||||||||
| NOTE 13. | SEGMENT INFORMATION |
We have organized our operations
into two
The following tables present our business segment information for the three month periods ended January 31, 2021 and 2020:
| Schedule of business segment information | ||||||||
| 2021 | 2020 | |||||||
| Revenues: | ||||||||
| Apparel | $ | $ | ||||||
| House Wrap | ||||||||
| Total Revenues | $ | $ | ||||||
| Assets: | ||||||||
| Apparel | $ | $ | ||||||
| House Wrap | ||||||||
| Total | $ | $ | ||||||
| Depreciation: | ||||||||
| Apparel | $ | |||||||
| House Wrap | ||||||||
| Total | $ | $ | ||||||
| -10- |
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Three Month Periods Ended January 31, 2021 and 2020 (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 and on July 22, 2021, the Company was informed that the United States Court of Appeals for the Third District affirmed the District Court's ruling in favor of the Company. The case number is No.20-3379.
| NOTE 15. | SUBSEQUENT EVENTS |
The Company has evaluated subsequent events in accordance with ASC Topic 855, 'Subsequent Events', through, which is the date financial statements were available to be issued. The Company identified the below subsequent event.
In June 2021, the Company's PPP Loan
was forgiven by the Small Business Administration. The Company will recognized $
| -11- |
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, 2020.
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-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons, including, among others, , competition in our cold weather markets, our ability to sell out HouseWrap product line, 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, 2020. 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. |
| -12- |
INNOVATIVE DESIGNS, INC.
Results of Operations
Comparison of the Three Month Period Ended January 31, 2021 with the Three Month Period Ended January 31, 2020.
| Three Month | Three Month | |||||||||||||||||||||||
| Period Ended | Period Ended | |||||||||||||||||||||||
| Januray 31, | % of | Januray 31, | % of | Increase | ||||||||||||||||||||
| 2021 | Sales | 2020 | Sales | (Decrease) | % Change | |||||||||||||||||||
| REVENUE - NET | $ | 40,017 | 100 | % | $ | 47,426 | 100 | % | $ | (7,409 | ) | -16 | % | |||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Cost of sales | 18,635 | 47 | % | 20,388 | 43 | % | (1,753 | ) | -9 | % | ||||||||||||||
| Selling, general and | ||||||||||||||||||||||||
| administrative expenses | 72,883 | 182 | % | 83,218 | 175 | % | (10,335 | ) | -12 | % | ||||||||||||||
| 91,518 | 229 | % | 103,606 | 218 | % | (12,088 | ) | -12 | % | |||||||||||||||
| Loss from operations | (51,501 | ) | -129 | % | (56,180 | ) | -118 | % | 4,679 | -8 | % | |||||||||||||
| Other income (expense) | 28,823 | 72 | % | 833 | 2 | % | 27,990 | 3360 | % | |||||||||||||||
| Other Expense | ||||||||||||||||||||||||
| Interest expense | (4,960 | ) | -12 | % | (5,216 | ) | -11 | % | 256 | -5 | % | |||||||||||||
| Depreciation expense | (8,327 | ) | -21 | % | (8,327 | ) | -18 | % | — | 0 | % | |||||||||||||
| Net Loss | $ | (35,965 | ) | -90 | % | $ | (68,890 | ) | -145 | % | $ | 32,925 | -48 | % | ||||||||||
Revenues for the three month period ended January 31, 2021 were $40,017 compared to revenues of $47,426 for the three month period ended January 31, 2020. The decrease in revenue is attributable a decrease in our apparel products revenue, $33,937 for the period compared to $ 43,661 for the three month period ended January 31, 2020. The decrease in revenue for our apparel products is attributable, in part, to the fact that during the period we devoted a significant portion of our limited resources to the Federal Trade Commission legal matter. HouseWrap sales were $6,080 for the period compared to $3,765 in sales for the period ended January 31, 2020. We believe our HouseWrap sales were adversely affected by the COVID pandemic as many contractors could not access other building materials on account of supply chain bottlenecks. 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 January 31, 2021 was ($35,965).
Our Cost of Goods sold expenses were $18,635 for the three month period ended January 31, 2021 compared to $20,388 for the three month period ended January 31, 2020. Professional fees for the three month period ended January 31, 2021 were $24,555 compared to $6,660 for the three month period ended January 31, 2020. The majority of our professional fees relate to the legal fees incurred in connection to the FTC matter. We expect our professional fees to decrease going forward.
| -13- |
INNOVATIVE DESIGNS, INC.
Liquidity and Capital Resources
During the three month period ended January 31, 2021, we funded our operations from revenues from sales, a loan of $200,000 and sale of our common stock in the amount of $25,000. In May of 2020, we were granted a Paycheck Protection Program loan in the amount of $ 33, 652. The loan was forgiven in June 2021.
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 financial resources available to the Company, finding a suitable facility and bringing technical personal from abroad to install the equipment. The Company has currently made deposits of $600,000 on the equipment. The Company has incurred $17,000 of additional expenses related to shipping. The Company will produce INSULTEX under its own brand name. See Note 10 of the Notes to the Condensed Financial Statements.
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, 2020.
ITEM 1A Risk Factors
See Risk factors set forth in in Part I Item 1A of the Company’s Annual report on Form 10-K for the fiscal year ended October 31, 2020.
| -14- |
INNOVATIVE DESIGNS, INC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
See Part II Item 5 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2020.
ITEM 3. Defaults upon Senior Securities
None
Item 4 Mine Safety Disclosures
Not applicable
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 January 31, 2021, our principle 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.
ITEM 5. Other Information
None
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INNOVATIVE DESIGNS, INC.
ITEM 6. EXHIBITS
| *3.1 | Revised Certificate of Incorporation |
| **3.2 | By-Laws |
| 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 |
| 31.2 | 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 |
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: September 17, 2021 | by: | /s/ Joseph Riccelli |
| Joseph Riccelli, Chief Executive Officer | ||
| and Chief 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 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: September 17, 2021 | 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: September 17, 2021 | by: | /s/ Joseph Riccelli |
| Joseph Riccelli | ||
| Chief Financial Officer, Principal Accounting 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 January 31, 2021, 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: September 17, 2021 | 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, 2021, 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: | September 17, 2018 | by: | /s/ Joseph Riccelli |
| Joseph Riccelli | |||
| Chief Executive Officer, Chief | |||
| Financial Officer, Principal | |||
| Accounting Officer | |||