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INNOVATIVE DESIGNS INC SEC Filing Form 10-Q Quartely report 2/2017, submited: 2017-06-19

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Form 10-Q

The SEC form 10-Q is a comprehensive report of a company's performance that must be submitted quarterly by all public companies to the Securities and Exchange Commission. In the 10-Q, firms are required to disclose relevant information regarding their financial position. The form must be submitted on time, and the information should be available to all interested parties.

The 10-Q is due 35 days (it used to be 45 days) after each of the first three fiscal quarters. There is no filing after the fourth quarter because that is when the 10-K is filed.

10-Q 1 s106584_10q.htm QUARTERLY REPORT

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended April 30, 2017

 

OR

 

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the transition period from _______ to ________.

 

Commission File Number: 000-51791

 

INNOVATIVE DESIGNS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   03-0465528
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

124 Cherry Street

Pittsburgh, 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  x     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  x     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 x

 

(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  x

 

As of June 14, 2017, there were 25,530,310 shares of the Registrant’s common stock, par value $.0001 per share, outstanding.

 

Transitional Small Business Disclosure Format:  YES ¨     NO  x

 

 

 

 

Innovative Designs, Inc.

 

Index

 

Form 10-Q for the Quarter Ended April 30, 2017

 

    Page No.
     
  Part I — Financial Information  
     
Item 1. Condensed Financial Statements (Unaudited)  
     
  Condensed Balance Sheets as of April 30, 2017 (Unaudited) and October 31, 2016 1
     
  Condensed Statements of Operations for the Three and Six Month Periods Ended April 30, 2017 and 2016 (Unaudited) 2
     
  Condensed Statements of Changes in Stockholders’ Equity as of April 30, 2017 (Unaudited) and October 31, 2016 3
     
  Condensed Statements of Cash Flows for the Six Month Periods Ended April 30, 2017 and 2016 (Unaudited) 4
     
  Notes to the Condensed Financial Statements 5 - 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition  and Results of Operations 8 - 11
     
  Part II — Other Information  
     
Items 1., 2., 3., and 4T. 12
     
Item 6. Exhibits 13

 

 

 

 

ITEM 1. CONDENSED FINANCIAL STATEMENTS

 

INNOVATIVE DESIGNS, INC.

 

CONDENSED BALANCE SHEETS

April 30, 2017 (Unaudited) and October 31, 2016

 

   2017   2016 
         
ASSETS          
CURRENT ASSETS          
Cash  $342,845   $502,777 
Accounts receivable   32,676    72,143 
Inventory - net of obsolete inventory reserve of $40,000   823,809    936,587 
Inventory on consignment   1,625    1,625 
Prepaid expenses   21,069    17,485 
Total current assets   1,222,024    1,530,617 
           
PROPERTY AND EQUIPMENT - NET   171,632    176,925 
           
OTHER ASSETS          
Advance to employee   4,000    4,000 
Deposits on equipment   617,000    617,000 
           
Total other assets   621,000    621,000 
           
TOTAL ASSETS  $2,014,656   $2,328,542 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
CURRENT LIABILITIES          
Accounts payable  $154,330   $116,512 
Current portion of notes payable   15,467    15,467 
Accrued interest expense   52,485    49,885 
Due to shareholders   92,100    119,000 
Accrued expenses   65,543    93,333 
Total current liabilities   379,925    394,197 
           
Long-term portion of notes payable   171,768    188,891 
           
TOTAL LIABILITIES   551,693    583,088 
           
STOCKHOLDERS' EQUITY          
Common stock, $0.0001 par value, 100,000,000 shares authorized, and 25,400,310 and 25,370,310 issued and outstanding as of April 30, 2017 and October 31, 2016   2,540    2,537 
Additional paid-in capital   9,463,171    9,455,674 
Accumulated deficit   (8,002,748)   (7,712,757)
Total stockholders' equity   1,462,963    1,745,454 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $2,014,656   $2,328,542 

 

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

 

 - 1 - 

 

 

INNOVATIVE DESIGNS, INC.

 

CONDENSED STATEMENTS OF OPERATIONS

Three and Six Month Periods Ended April 30, 2017 and 2016 (Unaudited)

  

   Three Month Periods Ended April 30,   Six Month Periods Ended April 30, 
   2017   2016   2017   2016 
                 
REVENUES - NET  $39,162   $110,278   $208,372   $338,164 
                     
OPERATING EXPENSES:                    
Cost of sales   25,568    84,197    106,074    182,951 
Selling, general and administrative expenses   170,741    152,090    378,212    395,954 
    196,309    236,287    484,286    578,905 
                     
LOSS FROM OPERATIONS   (157,147)   (126,009)   (275,914)   (240,741)
                     
OTHER EXPENSE                    
Miscellaneous expense   -    -    (3,424)   - 
Interest expense   (3,604)   (19,526)   (10,653)   (38,006)
Total other expense   (3,604)   (19,526)   (14,077)   (38,006)
                     
NET LOSS  $(160,751)  $(145,535)  $(289,991)  $(278,747)
                     
PER SHARE INFORMATION                    
Net Loss Per Common Share  $(0.006)  $(0.006)  $(0.011)  $(0.011)
                     
Weighted Average Number of Common Shares Outstanding   25,396,265    25,185,643    25,383,288    24,896,722 

 

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

 

 - 2 - 

 

  

INNOVATIVE DESIGNS, INC.

 

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

April 30, 2017 (Unaudited) and October 31, 2016

 

   Common Stock   Common Stock   Additional   Accumulated     
   Number of Shares   Amount   Paid-in Capital   Deficit   Total 
                     
Balance at October 31, 2015   24,371,310   $2,437   $8,902,744   $(7,080,334)  $1,824,847 
                          
Shares issued for services   120,000    12    67,188    -    67,200 
                          
Shares issued for fixed assets   30,000    3    23,997    -    24,000 
                          
Sale of stock   849,000    85    461,745    -    461,830 
                          
Net loss   -    -    -    (632,423)   (632,423)
                          
Balance at October 31, 2016   25,370,310    2,537    9,455,674    (7,712,757)   1,745,454 
                          
Shares issued for services   30,000    3    7,497    -    7,500 
                          
Net loss   -    -    -    (289,991)   (289,991)
                          
Balance at April 30, 2017   25,400,310   $2,540   $9,463,171   $(8,002,748)  $1,462,963 

 

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

 

 - 3 - 

 

 

INNOVATIVE DESIGNS, INC.

 

CONDENSED STATEMENTS OF CASH FLOWS

Six Month Periods Ended April 30, 2017 and 2016 (Unaudited)

 

   For the Six Month Periods Ended 
   April 30, 2017   April 30, 2016 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(289,991)  $(278,747)
Adjustments to reconcile net loss to net cash used in operating activities:          
Common stock issued for services   7,500    52,200 
Depreciation   15,293    7,605 
Increase (decrease) from changes in:          
Accounts receivable   39,467    (15,930)
Inventory   112,778    (84,111)
Inventory on consignment   -    (1,625)
Deposits on inventory   -    78,320 
Prepaid expenses   (3,584)   (10,185)
Accounts payable   37,818    (34,449)
Accrued interest expense   2,600    (29,838)
Accrued expenses   (27,790)   58,295 
Net cash used in operating activities   (105,909)   (258,465)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Deposits on equipment   -    (167,000)
Capital expenditures   (10,000)   (88,299)
Net cash used in investing activities   (10,000)   (255,299)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from sale of stock   -    461,830 
Payments on shareholder advances   (26,900)   (109,630)
Payments on notes payable   (17,123)   (20,925)
Net cash (used in) provided by financing activities   (44,023)   331,275 
           
Net decrease in cash   (159,932)   (182,489)
           
CASH, BEGINNING OF YEAR   502,777    1,151,904 
           
CASH, END OF THE PERIOD  $342,845   $969,415 
Supplemental disclosure of cash flow information:           
Cash paid for interest  $8,053   $67,844 
Supplemental schedule of noncash financing activies:           
Stock issued for services related to fixed asset additions  $-   $24,000 

 

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

 

 - 4 - 

 

 

INNOVATIVE DESIGNS, INC.

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Six Month Period Ended April 30, 2017 and 2016 (Unaudited)

 

NOTE 1.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 April 30, 2017, the changes therein for the three and six month periods then ended and the results of operations for the three and six month periods ended April 30, 2017 and 2016.

 

NOTE 2.The financial statements included in the Form 10-Q are presented in accordance with the requirements of the Form and do not include all of the disclosures required by accounting principles generally accepted in the United States of America. For additional information, reference is made to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2016. The results of operations for the three and six month periods ended April 30, 2017 and 2016 are not necessarily indicative of operating results for the full year.

 

NOTE 3.INVENTORY

 

Inventory consists principally of purchased apparel inventory and House Wrap which is manufactured by the Company. Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. Innovative Designs, Inc. (the “Company”) has decided to discontinue the selling of its hunting and swimming line of apparel. The Company has booked a reserve against this inventory at April 30, 2017 and October 31, 2016 of $40,000. Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed.

 

NOTE 4.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 5.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.

 

 - 5 - 

 

 

INNOVATIVE DESIGNS, INC.

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Six Month Period Ended April 30, 2017 and 2016 (Unaudited)

 

NOTE 6.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 $11,000 and $17,000 for the six month periods ended April 30, 2017 and 2016, respectively.

 

NOTE 7.COMMON STOCK

 

During the six month period ended April 30, 2017, the Company issued stock to one director for services. The stock was issued at a price of $0.25 per share. The Company issued 30,000 shares for services valued at $7,500. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

 

NOTE 8.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 made after the first commercial production run of INSULTEX is completed. As of April 30, 2017, 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.

 

NOTE 9.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 six month period ended April 30, 2017 and 2016:

 

 - 6 - 

 

 

INNOVATIVE DESIGNS, INC.

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

Six Month Period Ended April 30, 2017 and 2016 (Unaudited)

 

   2017   2016 
         
Revenues:          
Apparel  $157,861   $193,201 
House Wrap   50,511    144,963 
Total Revenues  $208,372   $338,164 
           
Assets:          
Apparel  $776,593   $1,970,346 
House Wrap   1,238,063    871,314 
Total  $2,014,656   $2,841,660 
           
Capital Expenditures:          
House Wrap  $10,000   $112,299 
Total  $10,000   $112,299 
           
Depreciation:          
Apparel  $1,640   $921 
House Wrap   13,653    6,684 
Total  $15,293   $7,605 

  

NOTE 10.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, number 16-1669. In the complaint, the FTC alleges, that, among other matters, the Company does 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 redress of rescission of revenue the Company received from the sale of House Wrap and a permanent injunction. The parties are currently in the discovery phase.

 

The Company strongly denies the allegation and intends to vigorously defend itself. It is the Company’s belief that the complaint is based on improper testing of the INSULTEX products using the wrong type of testing equipment.

 

NOTE 11.SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events in accordance with ASC Topic 855, “Subsequent Events”, through June 14, 2017, which is the date financial statements were available to be issued. The Company identified the below subsequent events.

 

On April 25, 2017, the Company issued 100,000 shares of stock for services valued at $30,000.

 

On May 19, 2017, the Company issued 30,000 shares of stock for services valued at $10,200.

 

 - 7 - 

 

  

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, 2016.

 

Disclosure Regarding Forward-Looking Statements

 

Certain statements made in this report, and other written or oral statements made by or on behalf of the Company, may constitute “forward-looking statements” within the meaning of the federal securities laws. When used in this report, the words “believes,” “expects,” “estimates,” “intends” and similar expressions are intended to identify forward-looking statements. Statements regarding future events and developments and our future performance, as well as our expectations, beliefs, plans, intentions, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Examples of such statements in this report include descriptions of our plans and strategies with respect to developing certain market opportunities and our overall business plan. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. We believe that these forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligations to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise.

 

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.

 

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

 

 - 8 - 

 

 

INNOVATIVE DESIGNS, INC.

 

Results of Operations

 

Comparison of the Three Month Period Ended April 30, 2017 with the Three Month Period Ended April 30, 2016.

 

   Three Month       Three Month             
   Period Ended       Period Ended             
   April 30,   % of   April 30,   % of   Increase     
   2017   Sales   2016   Sales   (Decrease)   % Change 
                         
REVENUE - NET   $39,162    100.00%  $110,278    100.00%  $(71,116)   -64.49%
                               
OPERATING EXPENSES                               
Cost of sales   25,568    65.29%   84,197    76.35%   (58,629)   -69.63%
Selling, general and administrative expenses   170,741    435.99%   152,090    137.92%   18,651    12.26%
                               
Loss from operations    (157,147)   -401.27%   (126,009)   -114.26%   (31,138)   24.71%
                               
OTHER EXPENSE                              
 Interest expense   (3,604)   -9.20%   (19,526)   -17.71%   15,922    -81.54%
                               
Net loss   $(160,751)   -410.48%  $(145,535)   -131.97%  $(15,216)   10.46%

 

Revenues for the three month period ended April 30, 2017 were $39,162 compared to revenues of $110,278 for the three period ended April 30, 2016. The decrease is caused, by the decrease in our apparel sales and the sales in our House Wrap product line. The apparel sales were adversely affected by warm weather. In December 2016, we voluntarily ceased advertising our House Wrap products as a result of the legal action brought by the Federal Trade Commission (“FTC”). See Note 9 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 April 30, 2017 was ($160,751).

 

Our selling, general and administrative expenses were $170,741 for the three month period ended April 30, 2017 compared to $152,090 for the three month period ended April 30, 2016. The increase was a result of professional expenses being incurred in the second quarter of 2017, in the amount of approximately $84,000, a 63% increase from the comparable period.

 

 - 9 - 

 

 

INNOVATIVE DESIGNS, INC.

 

Comparison of the Six Month Period Ended April 30, 2017 with the Six Month Period Ended April 30, 2016.

 

The following table shows a comparison of the results of operations between the six month periods ended April 30, 2017 and April 30, 2016:

 

   Six Month       Six Month             
   Period Ended       Period Ended             
   April 30,   % of   April 30,   % of   Increase     
   2017   Sales   2016   Sales   (Decrease)   % Change 
                         
REVENUE - NET   $208,372    100.00%  $338,164    100.00%  $(129,792)   -38.38%
                               
OPERATING EXPENSES                               
 Cost of sales   106,074    50.91%   182,951    54.10%   (76,877)   -42.02%
 Selling, general and  administrative expenses   378,212    181.51%   395,954    117.09%   (17,742)   -4.48%
                               
Loss from operations    (275,914)   -132.41%   (240,741)   -71.19%   (35,173)   14.61%
                               
OTHER EXPENSE                              
 Miscellaneous expense   3,424    1.64%   -    0.00%   3,424    100.00%
 Interest expense   10,653    5.11%   38,006    11.24%   (27,353)   -71.97%
                               
Net loss   $(289,991)   -139.17%  $(278,747)   -82.43%  $(11,244)   4.03%

  

Revenues for the six month period ended April 30, 2017 were $208,372 compared to revenues of $338,164 for the six month period ended April 30, 2016. The decrease is caused, by the decrease in our apparel sales and the sales in our House Wrap product line. The apparel sales were adversely affected by warm weather. In December 2016, we voluntarily ceased advertising our House Wrap products as a result of the legal action brought by the Federal Trade Commission (“FTC”). See Note 9 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment products sales. During the six month period ended April 30, 2017 House Wrap sales totaled $50,511 in comparison with $144,963 during the six month period ended April 30, 2016. Our net loss for the six month period ended April 30, 2017 was ($289,991).

 

Our selling, general and administrative expenses were $378,212 for the six months ended April 30, 2017 compared to $395,954 for the six month period ended April 30, 2016. The decrease was a result, in part, by lower seasonal help expense and less advertising and promotional expense. We do not expect our seasonal help expense or advertising and promotional expenses to increase in the current fiscal year ending October 31, 2017.

 

 - 10 - 

 

 

INNOVATIVE DESIGNS, INC.

 

Liquidity and Capital Resources

 

During the period ended April 30, 2017, we funded our operations from revenues from sales.

 

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. 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 8 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.

 

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INNOVATIVE DESIGNS, INC.

 

PART II – OTHER INFORMATION

 

ITEM 1.LEGAL PROCEEDING

 

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

 

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

 

During the six month period ended April 30, 2017, the Company issued stock to one director for services. The stock was issued at a price of $0.25 per share. The Company issued 30,000 shares for services valued at $7,500. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

 

Subsequent to April 30, 2016, the Company issued stock for services. On April 25, 2017, the Company issued 100,000 shares of stock for services valued at $30,000. On May 19, 2017, the Company issued 30,000 shares of stock for services valued at $10,200. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

 

ITEM 3.QUANTITATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4T.CONTROLS AND PROCEDURES

 

Management has developed and implemented a policy and procedures for reviewing, on a quarterly basis, our disclosure controls and procedures. During the period ended April 30, 2017, 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. During the first and second quarter of 2017, the Company was not able to close the books and records in a timely fashion. Consequently, the Company was unable to file its Form 10-Q for the period ended January 31, 2017 and April 30, 2017 within the timeline established by the SEC and was required to seek an extension for filing the form.

 

Changes in Internal Control Over Financial Reporting

 

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

 

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INNOVATIVE DESIGNS, INC.

 

ITEM 6.EXHIBITS

 

*3.1Revised Certificate of Incorporation

 

**3.2By-Laws

 

31.1Rule 13a - 14a Certification of Chief Executive Officer and Chief Financial Officer

 

32.1Section 1350 Certification of Chief Executive Officer and Chief Financial 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:  June 14, 2017 by: /s/ Joseph Riccelli
    Joseph Riccelli, Sr., Chief Executive Officer
    and Chief Financial Officer

 

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INNOVATIVE DESIGNS INC Latest filings

Filing dateCompanyFormQuarterYear
2017-09-15INNOVATIVE DESIGNS INC10-Q32017view
2017-09-08INNOVATIVE DESIGNS INCNT 10-Q32017view
2017-06-19INNOVATIVE DESIGNS INC10-Q/A22017view
2017-06-19INNOVATIVE DESIGNS INC10-Q22017view
2017-06-05INNOVATIVE DESIGNS INCNT 10-Q22017view
2017-03-30INNOVATIVE DESIGNS INC412017view
2017-03-27INNOVATIVE DESIGNS INC4/A12017view
2017-03-20INNOVATIVE DESIGNS INC10-Q12017view
2017-03-09INNOVATIVE DESIGNS INCNT 10-Q12017view
2017-02-07INNOVATIVE DESIGNS INC10-K12017view