0001144204-12-034618.txt : 20120613 0001144204-12-034618.hdr.sgml : 20120613 20120613142359 ACCESSION NUMBER: 0001144204-12-034618 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20120430 FILED AS OF DATE: 20120613 DATE AS OF CHANGE: 20120613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INNOVATIVE DESIGNS INC CENTRAL INDEX KEY: 0001190370 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED TEXTILE PRODUCTS [2390] IRS NUMBER: 030465528 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-51791 FILM NUMBER: 12904861 BUSINESS ADDRESS: STREET 1: 223 NORTH MAIN STREET STREET 2: STE 1 CITY: PITTSBURGH STATE: PA ZIP: 15215 BUSINESS PHONE: 4127990350 MAIL ADDRESS: STREET 1: 223 NORTH MAIN STREET STREET 2: STE 1 CITY: PITTSBURGH STATE: PA ZIP: 15215 10-Q 1 v315723_10q.htm FORM 10-Q

 

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, 2012

 

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.)

 

223 North Main Street, Suite 1

Pittsburgh, Pennsylvania 15215

(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, 2012, there were 18,810,743 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, 2012

 

      Page No.
     Part I — Financial Information    
         
Item 1.   Condensed Financial Statements (Unaudited)    
         
    Condensed Balance Sheets as of April 30, 2012 (Unaudited)    
    and October 31, 2011   1
         
    Condensed Statements of Operations for the    
    Three Months Ended April 30, 2012 and 2011,    
    Six Months Ended April 30, 2012 and 2011 (Unaudited)   2
         
    Condensed Statements of Changes in Stockholders’ Equity    
    as of April 30, 2012 (Unaudited) and October 31, 2011   3
         
    Condensed Statements of Cash Flows for the    
    Six Months Ended April 30, 2012 and 2011 (Unaudited)   4
         
    Notes to the Condensed Financial Statements   5 - 6
         
Item 2.   Management’s Discussion and Analysis of Financial Condition    
    and Results of Operations   7 - 10
         
Item 4T.   Controls and Procedures   10 - 11
         
    Part II — Other Information    
         
Item 6.   Exhibits   12 – 14

  

 
 

 

ITEM 1. CONDENSED FINANCIAL STATEMENTS

 

INNOVATIVE DESIGNS, INC.

 

CONDENSED BALANCE SHEETS

April 30, 2012 (Unaudited) and October 31, 2011

 

   2012   2011 
         
 ASSETS        
         
CURRENT ASSETS          
Cash  $54,777   $91,209 
Accounts receivable   37,238    191,135 
Inventory - net of obsolete inventory reserve of $65,000 and $116,439 respectively   629,417    700,931 
Deposits on inventory   -    37,896 
Prepaid insurance   10,579    - 
Total current assets   732,011    1,021,171 
           
PROPERTY AND EQUIPMENT - NET   1,045    1,271 
TOTAL ASSETS  $733,056   $1,022,442 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
CURRENT LIABILITIES          
Accounts payable  $42,263   $77,979 
Current portion of notes payable   28,262    110,178 
Accrued interest expense   115,417    104,703 
Due to shareholders   137,600    247,100 
Accrued expenses   8,978    6,470 
Total current liabilities   332,520    546,430 
           
Long-term portion of notes payable   353,094    363,160 
           
TOTAL LIABILITIES   685,614    909,590 
           
STOCKHOLDERS' EQUITY          
Preferred stock, $0.0001 par value, 100,000,000 shares authorized   -    - 
Common stock, $0.0001 par value, 500,000,000 shares authorized, and 18,810,743 and 18,775,743 issued and outstanding as of April 30, 2012 and October 31, 2011   1,883    1,880 
Additional paid-in capital   5,658,658    5,648,161 
Accumulated deficit   (5,613,099)   (5,537,189)
Total stockholders' equity   47,442    112,852 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $733,056  1,022,442 

 

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

  

-1-
 

 

INNOVATIVE DESIGNS, INC.

 

CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended April 30, 2012 and 2011, Six Months Ended April 30, 2012 and 2011

(Unaudited)

 

   Three Months Ended April 30,   Six Months Ended April 30, 
   2012   2011   2012   2011 
                 
REVENUES - NET  $45,471   $34,161   $597,242   $715,170 
                     
OPERATING EXPENSES:                    
Cost of sales   20,657    29,826    227,029    329,123 
Selling, general and administrative expenses   194,288    144,369    409,972    303,740 
    214,945    174,195    637,001    632,863 
                     
INCOME/(LOSS) FROM OPERATIONS   (169,474)   (140,034)   (39,759)   82,307 
                     
OTHER EXPENSE:                    
Interest expense   (14,455)   (9,617)   (36,151)   (32,019)
Total other expense   (14,455)   (9,617)   (36,151)   (32,019)
                     
NET INCOME/(LOSS)  $(183,929)  $(149,651)  $(75,910)  $50,288 
                     
PER SHARE INFORMATION                    
Basic and fully diluted                    
                     
Net Income/(Loss) Per Common Share  $(0.010)  $(0.008)  $(0.004)  $0.003 
                     
Weighted Average Number of                    
Common Shares Outstanding   18,783,132    18,722,743    18,779,397    18,722,743 

 

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

 

-2-
 

 

INNOVATIVE DESIGNS, INC.

 

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

April 30, 2012 (Unaudited) and October 31, 2011

 

   Common Stock   Common Stock   Additional   Accumulated     
   Number of Shares   Amount   Paid-in Capital   Deficit   Total 
                     
Balance at October 31, 2010   18,730,743   $1,875   $5,643,666   $(5,552,255)  $93,286 
                          
Shares issued for services   45,000    5    4,495    -    4,500 
                          
Net income   -    -    -    15,066    15,066 
                          
Balance at October 31, 2011   18,775,743    1,880    5,648,161    (5,537,189)   112,852 
                          
Shares issued for services   35,000    3    10,497    -    10,500 
                          
Net income   -    -    -    (75,910)   (75,910)
                          
Balance at April 30, 2012   18,810,743   $1,883   $5,658,658   $(5,613,099)  $47,442 

  

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

 

-3-
 

  

INNOVATIVE DESIGNS, INC.

 

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   For the Six Months Ended 
   April 30, 2012   April 30, 2011 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income/(loss)  $(75,910)  $50,288 
Adjustments to reconcile net income/(loss) to          
net cash provided by operating activities:          
Common stock issued for services   10,500    4,500 
Depreciation   226    269 
Provision for inventory reserves   (51,439)   - 
Increase (decrease) from changes in:          
Accounts receivable   153,897    108,716 
Inventory   122,953    361,001 
Deposits on inventory   37,896    (173,528)
Prepaid insurance   (10,579)   - 
Accounts payable   (35,716)   (2,599)
Accrued expenses   2,508    119 
Accrued interest expense   10,714    (12,156)
           
Net cash provided by operating activities   165,050    336,610 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Payments on shareholder advances   (109,500)   (62,400)
Payments on related party note   -    (37,500)
Payments on notes payable   (91,982)   (250,548)
           
Net cash used in financing activities   (201,482)   (350,448)
           
Net decrease in cash   (36,432)   (13,838)
           
CASH, BEGINNING OF YEAR   91,209    116,950 
           
CASH, END OF THE PERIOD  $54,777   $103,112 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $25,437   $44,175 

 

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

  

-4-
 

 

INNOVATIVE DESIGNS, INC.

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the Six Month Period Ended April 30, 2012 (Unaudited)

 

 

NOTE 1. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company’s financial position as of April 30, 2012, the changes therein for the six month period then ended and the results of operations for the six month periods ended April 30, 2012 and 2011.

 

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, 2011. The results of operations for the six month periods ended April 30, 2012 and 2011 are not necessarily indicative of operating results for the full year.

 

NOTE 3.INVENTORY

 

Inventory consists principally of purchased finished goods. Inventory is stated at the lower of cost or market 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 this inventory at October 31, 2011 of approximately $116,000. Based on the company’s review of inventory, the Company decreased the reserve to $65,000 during the quarter ended January 31, 2012. Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed.

 

NOTE 4.EARNINGS PER SHARE

 

Innovative Designs, Inc. (the “Company”) calculates net income (loss) per share in accordance with 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.DEPOSITS

 

The Company only has one manufacturer that produces the apparel on behalf of the Company, located in Indonesia. The Company will send deposits to the manufacturer for future production of the apparel. As of April 30, 2012, the Company had no deposits for the production of apparel.

 

NOTE 6.INCOME TAXES

 

The Company accounts for income taxes in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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.

 

-5-
 

 

INNOVATIVE DESIGNS, INC.

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the Six Month Period Ended April 30, 2012 (Unaudited)

 

The Company will continue to evaluate its income tax obligation throughout the year and will record a tax provision when it is necessary.

 

NOTE 7.COMMON STOCK

 

On April 12, 2012, the Company issued 35,000 shares of our stock to Mr. Rick Tocchet for professional services. The shares issued were valued at $.30 a share or an aggregate price of $10,500. We believe that Section 4(2) was available because the sale did not involve a public offering and there was no general solicitation or general advertising involved in the sale. 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.SHIPPING AND HANDLING COSTS

 

The Company pays shipping and handling costs on behalf of customers for purchased merchandise. The shipping and handling costs are billed back to the customer through the billing invoice. The shipping and handling costs were approximately $69,000 and $59,000 for the six month periods ending April 30, 2012 and 2011, respectively. These costs are included in selling, general and administrative expenses.

 

NOTE 9.SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events in accordance with Accounting Standards Codification Topic 855, Subsequent Events, through June 14, 2012, which is the date financial statements were available to be issued. With the exception of the matter discussed below, no subsequent event items were identified by the Company.

 

Subsequent to the quarter ended April 30, 2012, the Company received a short-term advance of $100,000 from a private lender.

 

-6-
 

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 consolidated 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, 2011.

 

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 “Artic Armor” that are made from INSULTEX, a material with buoyancy, scent block and thermal resistant proprieties. 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, and
·Developing our website to sell more of our products.

 

-7-
 

 

INNOVATIVE DESIGNS, INC.

 

Results of Operations

 

Comparison of the Three Months Ended April 30, 2012 with the Three Months Ended April 30, 2011.

 

The following table shows a comparison of the results of operations between the three month periods ended April 30, 2012 and April 30, 2011:

 

   Three Months       Three Months             
   Ended       Ended             
   April 30,   % of   April 30,   % of   Increase     
   2012   Sales   2011   Sales   (Decrease)   % Change 
                         
REVENUE  $45,471    100.00%  $34,161    100.00%  $11,310    33.11%
                               
OPERATING EXPENSES                              
Cost of sales   20,657    45.43%   29,826    87.31%   (9,169)   -30.74%
Selling, general and                              
administrative expenses   194,288    427.28%   144,369    422.61%   49,919    34.58%
                               
Loss from operations   (169,474)   -372.71%   (140,034)   -409.92%   (29,440)   -21.02%
                               
OTHER EXPENSE                              
Interest expense   (14,455)   -31.79%   (9,617)   -28.15%   (4,838)   -50.31%
                               
Net loss  $(183,929)   -404.50%  $(149,651)   -438.07%  $(34,278)   -22.91%

 

Revenues for the quarter ended April 30, 2012, were $45,471 compared to revenues of $34,161 for the quarter ended April 30, 2011. Approximately 70% of our revenue for the period was from our Artic Armor product line.

 

Our selling, general and administrative expenses were $194,288 for the three months ended April 30, 2012 compared to $144,369 for the three months ended April 30, 2011. Part of the increase was a result of an increase in professional fees.

 

-8-
 

 

INNOVATIVE DESIGNS, INC.

 

 

Results of Operations

 

Comparison of the Six Months Ended April 30, 2012 with the Six Months Ended April 30, 2011.

 

The following table shows a comparison of the results of operations between the six month periods ended April 30, 2012 and April 30, 2011:

 

   Six Months       Six Months             
   Ended       Ended             
   April 30,   % of   April 30,   % of   Increase     
   2012   Sales   2011   Sales   (Decrease)   % Change 
                         
REVENUE  $597,242    100.00%  $715,170    100.00%  $(117,928)   -16.49%
                               
OPERATING EXPENSES                              
Cost of sales   227,029    38.01%   329,123    46.02%   (102,094)   -31.02%
Selling, general and                              
administrative expenses   409,972    68.65%   303,740    42.47%   106,232    34.97%
                               
Income/(loss) from                              
operations   (39,759)   -6.66%   82,307    11.51%   (122,066)   -148.31%
                               
OTHER INCOME/(EXPENSE)                              
Interest expense   (36,151)   -6.05%   (32,019)   -4.48%   (4,132)   12.90%
                               
Net income  $(75,910)   -12.71%  $50,288    7.03%  $(126,198)   -250.95%

 

Revenues for the six months ended April 30, 2012, were $597,242 compared to revenues of $715,170 for the six months ended April 30, 2011. The decrease was a result of the warmer weather that was experienced in the geographic areas that we market our cold weather apparel.

 

Our selling, general and administrative expenses were $409,972 for the six months ended April 30, 2012 compared to $303,740 for the six months ended April 30, 2011. The increase was a result of an increase in professional fees and bank service charges.

 

As a result of the warm winter just experienced, we believe that orders for our cold weather products for the forthcoming season will be placed later than usual as customers try to determine what the extent of the cold season will be.

 

In February 2012, we announced in a press release that our House Wrap product had drawn the interest of several large homebuilders and that samples had been sent to them for evaluation. In order for such homebuilders to buy our House Wrap it must have an ICC certification. ICC is the International Code Council. We are in the process of having a testing machine built that will ensure the House Wrap complies with ICC standards. We expect the testing machine to be completed in June, 2012. We are also in advanced discussions with a large nationwide retailer to sell our House Wrap. We are using an independent sales force experienced in this industry.

 

-9-
 

 

INNOVATIVE DESIGNS, INC.

 

The House Wrap Product will be produced, on a purchase order basis, by a third party manufacturer located in the Northeastern section of the Unites States. The finished product will be stored at our warehouse facility and at the manufacturer’s plant.

 

We are also having a seam tape, made to our specifications, produced that will be sold with the House Wrap.

 

Liquidity and Capital Recourses

 

During the quarter ended April 30, 2012, we funded our operations from revenues from sales. Subsequent to April 30, 2012, we received a short-term advance of $100,000 from a private lender.

 

Short Term: We will continue to fund our operations from sales and short term borrowings from shareholders and others and the possible sale of our securities. We currently have no commercial credit facilities available to us. We continue to pay our creditors when payments are due.

 

Long Term: The Company will continue to fund its operations from revenues, borrowings from private parties and the possible sale of our securities. We have ceased trying to obtain commercial lending. Should we not be able to rely on the private sources for borrowing, our operations would be severely effected as we would not be able to fund our purchase orders to our suppliers for finished goods.

 

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

 

On April 12, 2012, the Company, issued 35,000 shares of its restricted common stock to Mr. Rick Tocchet for professional services. The shares were valued at $.30 per share for an aggregate price of $10,500. The shares were issued without registration under the Securities Act, of 1933, as amended, pursuant to Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

 

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 fourth quarter ended October 31, 2011, our principle executive/financial officer concluded that these controls and procedures were ineffective. During the fourth quarter ended October 31, 2011 and the first quarter ended January 31, 2012, the Company was not able to close the books and records in a timely fashion. Consequently, the Company was not able to file its Form 10K or its Form 10Q within the timeline established by the SEC. There were no reclassifications made during the first quarter of 2012. Management will take action to correct these procedures moving forward.

 

-10-
 

 

INNOVATIVE DESIGNS, INC.

 

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.

 

-11-
 

 

INNOVATIVE DESIGNS, INC.

  

PART II – OTHER INFORMATION

 

ITEM 6. EXHIBITS

 

*3.1Certificate of Incorporation

 

*3.2By -Laws

 

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

 

32.1Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

 

     *Incorporated by reference to the Company’s registration statement on Form SB-2, filed March 11, 2003

 

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 13, 2012 By: /s/ Joseph Riccelli
    Joseph Riccelli, Chief Executive Officer
    and Chief Financial Officer

  

-12-

 

EX-31.1 2 v315723_ex31-1.htm EXHIBIT 31.1

EXHIBIT 31.1

INNOVATIVE DESIGNS, INC.

CERTIFICATIONS

 

I, Joseph Riccelli, certify that:

 

1.         I have reviewed this quarterly report on Form 10-Q of Innovative Designs, Inc.;

 

2.         Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3.         Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4.         I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.         I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 13, 2012   by: /s/ Joseph Riccelli
      Joseph Riccelli, Sr.
      Chief Executive Officer

 

 

 

EX-32.1 3 v315723_ex32-1.htm EXHIBIT 32.1

EXHIBIT 32.1

SECTION 906 CERTIFICATION

 

CERTIFICATION REQUIRED BY

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Innovative Designs, Inc. (the "Company") on Form 10-Q for the quarterly period ended April 30, 2012, 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: June 13, 2012   by: /s/ Joseph Riccelli
      Joseph Riccelli
      Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, and Director
     

 

 

 

 

 

 

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INVENTORY
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Apr. 30, 2012
Inventory Disclosure [Abstract]  
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NOTE 3. INVENTORY

 

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BASIS OF PRESENTATION - INTERIM FINANCIAL STATEMENTS
6 Months Ended
Apr. 30, 2012
Organization, Consolidation and Presentation Of Financial Statements [Abstract]  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
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, 2011. The results of operations for the six month periods ended April 30, 2012 and 2011 are not necessarily indicative of operating results for the full year.
XML 15 R2.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED BALANCE SHEETS (USD $)
Apr. 30, 2012
Oct. 31, 2011
ASSETS    
Cash $ 54,777 $ 91,209
Accounts receivable 37,238 191,135
Inventory - net of obsolete inventory reserve of $65,000 and $116,439 respectively 629,417 700,931
Deposits on inventory 0 37,896
Prepaid insurance 10,579 0
Total current assets 732,011 1,021,171
PROPERTY AND EQUIPMENT - NET 1,045 1,271
TOTAL ASSETS 733,056 1,022,442
LIABILITIES AND STOCKHOLDERS' EQUITY    
Accounts payable 42,263 77,979
Current portion of notes payable 28,262 110,178
Accrued interest expense 115,417 104,703
Due to shareholders 137,600 247,100
Accrued expenses 8,978 6,470
Total current liabilities 332,520 546,430
Long-term portion of notes payable 353,094 363,160
TOTAL LIABILITIES 685,614 909,590
STOCKHOLDERS' EQUITY    
Preferred stock, $0.0001 par value, 100,000,000 shares authorized 0 0
Common stock, $0.0001 par value, 500,000,000 shares authorized, and 18,810,743 and 18,775,743 issued and outstanding as of April 30, 2012 and October 31, 2011 1,883 1,880
Additional paid-in capital 5,658,658 5,648,161
Accumulated deficit (5,613,099) (5,537,189)
Total stockholders' equity 47,442 112,852
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 733,056 $ 1,022,442
XML 16 R6.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED STATEMENTS OF CASH FLOWS (USD $)
6 Months Ended
Apr. 30, 2012
Apr. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income/(loss) $ (75,910) $ 50,288
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:    
Common stock issued for services 10,500 4,500
Depreciation 226 269
Provision for inventory reserves (51,439) 0
Increase (decrease) from changes in:    
Accounts receivable 153,897 108,716
Inventory 122,953 361,001
Deposits on inventory 37,896 (173,528)
Prepaid insurance (10,579) 0
Accounts payable (35,716) (2,599)
Accrued expenses 2,508 119
Accrued interest expense 10,714 (12,156)
Net cash provided by operating activities 165,050 336,610
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payments on shareholder advances (109,500) (62,400)
Payments on related party note 0 (37,500)
Payments on notes payable (91,982) (250,548)
Net cash used in financing activities (201,482) (350,448)
Net decrease in cash (36,432) (13,838)
CASH, BEGINNING OF YEAR 91,209 116,950
CASH, END OF THE PERIOD 54,777 103,112
Supplemental disclosure of cash flow information:    
Cash paid for interest $ 25,437 $ 44,175
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XML 18 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
FASB ACCOUNTING STANDARDS CODIFICATION TOPIC 210 COMPREHENSIVE INCOME (FASB ASC 210)
6 Months Ended
Apr. 30, 2012
Accounting Changes and Error Corrections [Abstract]  
Accounting Changes and Error Corrections [Text Block]
NOTE 1. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company’s financial position as of April 30, 2012, the changes therein for the six month period then ended and the results of operations for the six month periods ended April 30, 2012 and 2011.
XML 19 R3.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED BALANCE SHEETS [Parenthetical] (USD $)
Apr. 30, 2012
Oct. 31, 2011
Inventory Reserves (in dollars) $ 65,000 $ 116,439
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized 100,000,000 100,000,000
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized 500,000,000 500,000,000
Common stock, shares issued 18,810,743 18,775,743
Common stock, shares outstanding 18,810,743 18,775,743
XML 20 R1.htm IDEA: XBRL DOCUMENT v2.4.0.6
DOCUMENT AND ENTITY INFORMATION
6 Months Ended
Apr. 30, 2012
Jun. 14, 2012
Entity Registrant Name INNOVATIVE DESIGNS INC  
Entity Central Index Key 0001190370  
Current Fiscal Year End Date --10-31  
Entity Filer Category Smaller Reporting Company  
Trading Symbol ivdn  
Entity Common Stock, Shares Outstanding   18,810,743
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Apr. 30, 2012  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2012  
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CONDENSED STATEMENTS OF OPERATIONS (USD $)
3 Months Ended 6 Months Ended
Apr. 30, 2012
Apr. 30, 2011
Apr. 30, 2012
Apr. 30, 2011
REVENUES - NET $ 45,471 $ 34,161 $ 597,242 $ 715,170
OPERATING EXPENSES:        
Cost of sales 20,657 29,826 227,029 329,123
Selling, general and administrative expenses 194,288 144,369 409,972 303,740
Total OperatingExpenses 214,945 174,195 637,001 632,863
INCOME/(LOSS) FROM OPERATIONS (169,474) (140,034) (39,759) 82,307
OTHER EXPENSE:        
Interest expense (14,455) (9,617) (36,151) (32,019)
Total other expense (14,455) (9,617) (36,151) (32,019)
NET INCOME/(LOSS) $ (183,929) $ (149,651) $ (75,910) $ 50,288
PER SHARE INFORMATION Basic and fully diluted        
Net Income/(Loss) Per Common Share (in dollars per share) $ (0.010) $ (0.008) $ (0.004) $ 0.003
Weighted Average Number of Common Shares Outstanding (in shares) 18,783,132 18,722,743 18,779,397 18,722,743
XML 23 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAXES
6 Months Ended
Apr. 30, 2012
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
NOTE 6. INCOME TAXES

 

The Company accounts for income taxes in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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.

XML 24 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
DEPOSITS
6 Months Ended
Apr. 30, 2012
Deposits [Abstract]  
Deposits [Text Block]
NOTE 5. DEPOSITS

 

The Company only has one manufacturer that produces the apparel on behalf of the Company, located in Indonesia. The Company will send deposits to the manufacturer for future production of the apparel. As of April 30, 2012, the Company had no deposits for the production of apparel.

XML 25 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUBSEQUENT EVENTS
6 Months Ended
Apr. 30, 2012
Subsequent Events [Abstract]  
Subsequent Events [Text Block]
NOTE 9. SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events in accordance with Accounting Standards Codification Topic 855, Subsequent Events, through June 14, 2012, which is the date financial statements were available to be issued. With the exception of the matter discussed below, no subsequent event items were identified by the Company.

 

Subsequent to the quarter ended April 30, 2012, the Company received a short-term advance of $100,000 from a private lender.

XML 26 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
COMMON STOCK
6 Months Ended
Apr. 30, 2012
Stockholders Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
NOTE 7. COMMON STOCK

 

On April 12, 2012, the Company issued 35,000 shares of our stock to Mr. Rick Tocchet for professional services. The shares issued were valued at $.30 a share or an aggregate price of $10,500. We believe that Section 4(2) was available because the sale did not involve a public offering and there was no general solicitation or general advertising involved in the sale. 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.

XML 27 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
SHIPPING AND HANDLING COSTS
6 Months Ended
Apr. 30, 2012
Shipping and Handling Costs [Abstract]  
Shipping and Handling Costs [Text Block]
NOTE 8. SHIPPING AND HANDLING COSTS

 

The Company pays shipping and handling costs on behalf of customers for purchased merchandise. The shipping and handling costs are billed back to the customer through the billing invoice. The shipping and handling costs were approximately $69,000 and $59,000 for the six month periods ending April 30, 2012 and 2011, respectively. These costs are included in selling, general and administrative expenses.

XML 28 R5.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Total
Balance at Oct. 31, 2010 $ 1,875 $ 5,643,666 $ (5,552,255) $ 93,286
Balance (in shares) at Oct. 31, 2010 18,730,743      
Shares issued for services 5 4,495 0 4,500
Shares issued for services (in shares) 45,000      
Net income 0 0 15,066 15,066
Balance at Oct. 31, 2011 1,880 5,648,161 (5,537,189) 112,852
Balance (in shares) at Oct. 31, 2011 18,775,743      
Shares issued for services 3 10,497 0 10,500
Shares issued for services (in shares) 35,000      
Net income 0 0 (75,910) (75,910)
Balance at Apr. 30, 2012 $ 1,883 $ 5,658,658 $ (5,613,099) $ 47,442
Balance (in shares) at Apr. 30, 2012 18,810,743      
XML 29 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
EARNINGS PER SHARE
6 Months Ended
Apr. 30, 2012
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]
NOTE 4. EARNINGS PER SHARE

 

Innovative Designs, Inc. (the “Company”) calculates net income (loss) per share in accordance with 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.

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