UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FORM 10-Q☒
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period endedApril 30, 20192020
☐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 incorporation or organization) | (I.R.S. Employer Identification No.) |
124 Cherry Street, Pittsburgh, Pennsylvania | 15223 | |
(Address of principal executive offices) | (Zip Code) |
(412) 799-0350
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has fled all reports required to be filed by Section 13 or 15(d) of the Securities 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 fling requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer | ☐ | |
Non-accelerated filer ☐ | Smaller reporting company | ☒ | |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of June 13, 2019,August 6, 2020 there were 29,009,56031,111,560 shares of the Registrant’s common stock, par value $.0001 per share, outstanding.
Transitional Small Business Disclosure Format: YES ☐ NO ☒
Innovative Designs, Inc.
Index
Form 10-Q for the Quarter Ended April 30, 2020
Page No. | |||
Part I -- Financial Information | |||
Item 1. | Condensed Financial Statements (Unaudited) | ||
Condensed Balance Sheets as of April 30, | |||
5 | |||
6 | |||
7 | |||
Notes to the Condensed Financial Statements | 8 – 12 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Part II -- Other Information | |||
Item 6. | Exhibits | 19 |
2 |
INNOVATIVE DESIGNS, INC. |
CONDENSED BALANCE SHEETS |
APRIL 30, 2020 AND OCTOBER 31, 2019 (UNAUDITED) |
April 30, 2020 | October 31, 2019 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 75,340 | $ | 34,525 | ||||
Accounts receivable - net of allowance for doubtful accounts of $5,860 and $10,409 | 2,359 | 5,948 | ||||||
Inventory - net of obsolete inventory reserve of $75,468 | 634,624 | 636,459 | ||||||
Inventory on consignment | 1,625 | 1,625 | ||||||
Deposits on inventory | 57,330 | 57,330 | ||||||
Current portion of right of use asset | 37,547 | 36,537 | ||||||
Prepaid expenses | 10,018 | 10,018 | ||||||
Total current assets | 818,843 | 782,442 | ||||||
PROPERTY AND EQUIPMENT - NET | 81,841 | 98,495 | ||||||
OTHER ASSETS | ||||||||
Advance to employees | 8,200 | 8,200 | ||||||
Right of use asset, net of current portion | 60,469 | 79,373 | ||||||
Assets held for sale | 600,000 | 600,000 | ||||||
Total other assets | 668,669 | 687,573 | ||||||
TOTAL ASSETS | $ | 1,569,353 | $ | 1,568,510 | ||||
The accompanying notes are an integral part of these condensed financial statements. |
3 |
Part I -- Financial Information
CONDENSED |
APRIL 30, 2020 AND OCTOBER 31, 2019 (UNAUDITED) |
CONDENSED BALANCE SHEETS | ||||||||
April 30, 2019 (Unaudited) and October 31, 2018 | ||||||||
ASSETS | ||||||||
2019 | 2018 | |||||||
CURRENT ASSETS | ||||||||
Cash | $ | 44,358 | $ | 112,203 | ||||
Accounts receivable - net of allowance for doubtful accounts of $10,570 and $10,354 as of April 30, 2019 and October 31, 2018, respectively | 857 | 13,455 | ||||||
Inventory - net of obsolete inventory reserve of $75,468 as of April 30, 2019 and October 31, 2018, respectively | 666,408 | 721,262 | ||||||
Inventory on consignment | 1,625 | 1,625 | ||||||
Deposits on inventory | 57,330 | 57,330 | ||||||
Current portion of right of use asset | 39,482 | 40,584 | ||||||
Prepaid expenses | 10,018 | 11,669 | ||||||
Total current assets | 820,078 | 958,128 | ||||||
PROPERTY AND EQUIPMENT - NET | 115,149 | 131,532 | ||||||
OTHER ASSETS | ||||||||
Advance to employees | 8,200 | 8,200 | ||||||
Assets held for sale | 600,000 | 617,000 | ||||||
Total other assets | 608,200 | 625,200 | ||||||
RIGHT OF USE ASSET, NET OF CURRENT PORTION | 86,900 | 106,368 | ||||||
TOTAL ASSETS | $ | 1,630,327 | $ | 1,821,228 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 343,095 | $ | 194,963 | ||||
Current portion of notes payable | 18,628 | 18,628 | ||||||
Accrued interest expense | 26,121 | 22,885 | ||||||
Due to shareholders | 131,350 | 145,350 | ||||||
Current portion of right of use lease liability | 39,482 | 40,584 | ||||||
Accrued expenses | 10,916 | 10,775 | ||||||
Total current liabilities | 569,592 | 433,185 | ||||||
LONG-TERM PORTION OF NOTES PAYABLE | 90,720 | 100,858 | ||||||
RIGHT OF USE LEASE LIABILITY, NET OF CURRENT PORTION | 86,900 | 106,368 | ||||||
TOTAL LIABILITIES | 747,212 | 640,411 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, $0.0001 par value, 100,000,000 shares authorized, and 28,334,560 and 27,789,560 issued and outstanding as of April 30, 2019 and October 31, 2018 | 2,835 | 2,780 | ||||||
Additional paid-in capital | 10,188,076 | 10,106,731 | ||||||
Accumulated deficit | (9,307,796 | ) | (8,928,694 | ) | ||||
Total stockholders' equity | 883,115 | 1,180,817 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,630,327 | $ | 1,821,228 |
April 30, 2020 | October 31, 2019 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 350,608 | $ | 387,538 | ||||
Current portion of notes payable | 18,628 | 19,168 | ||||||
Accrued interest expense | 15,747 | 19,237 | ||||||
Due to shareholders | 164,770 | 96,100 | ||||||
Current portion of lease liability | 37,547 | 36,537 | ||||||
Accrued expenses | 12,645 | 10,916 | ||||||
Total current liabilities | 599,945 | 569,496 | ||||||
LONG-TERM LIABILITIES | ||||||||
Long-term portion of notes payable | 73,980 | 80,896 | ||||||
Lease liability, net of current portion | 56,467 | 79,373 | ||||||
Total long-term liabilities | 130,447 | 160,269 | ||||||
TOTAL LIABILITIES | 730,392 | 729,765 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Preferred stock, $0.0001 par value, 25,000,000 shares authorized | — | |||||||
Common stock, $0.0001 par value, 100,800,000 shares authorized, and 30,416,560 and 30,116,560 issued and outstanding | 3,088 | 3,013 | ||||||
Common stock to be issued | 10,000 | — | ||||||
Additional paid-in capital | 10,525,863 | 10,404,438 | ||||||
Accumulated deficit | (9,699,990 | ) | (9,568,706 | ) | ||||
Total stockholders' equity | 838,961 | 838,745 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,569,353 | $ | 1,568,510 |
The accompanying notes are an integral part of these condensed financial statements.
4 |
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED APRIL 30, 2020 AND 2019 (UNAUDITED)
INNOVATIVE DESIGNS, INC. | ||||||||||||||||
CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||
Three and Six Month Periods Ended April 30, 2019 and 2018 (Unaudited) | ||||||||||||||||
Three Month Periods Ended April 30, | Six Month Periods Ended April 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
REVENUES - NET | $ | 30,359 | $ | 17,163 | $ | 139,703 | $ | 133,366 | ||||||||
OPERATING EXPENSES: | ||||||||||||||||
Cost of sales | 13,207 | 18,080 | 79,411 | 82,462 | ||||||||||||
Selling, general and administrative expenses | 140,249 | 154,888 | 411,153 | 345,699 | ||||||||||||
153,456 | 172,968 | 490,564 | 428,161 | |||||||||||||
LOSS FROM OPERATIONS | (123,097 | ) | (155,805 | ) | (350,861 | ) | (294,795 | ) | ||||||||
OTHER EXPENSE | ||||||||||||||||
Miscellaneous expense | 600 | 487 | 1,286 | 1,034 | ||||||||||||
Impairment loss on assets held for sale | — | — | 17,000 | — | ||||||||||||
Interest expense | 5,037 | 1,731 | 9,955 | 8,443 | ||||||||||||
Total other expense | 5,637 | 2,218 | 28,241 | 9,477 | ||||||||||||
NET LOSS | $ | (128,734 | ) | $ | (158,023 | ) | $ | (379,102 | ) | $ | (304,272 | ) | ||||
PER SHARE INFORMATION | ||||||||||||||||
Net Loss Per Common Share | $ | (0.005 | ) | $ | (0.006 | ) | $ | (0.014 | ) | $ | (0.011 | ) | ||||
Weighted Average Number of Common Shares Outstanding | 28,211,021 | 27,033,872 | 28,041,880 | 26,880,559 |
Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
REVENUES - NET | $ | 35,808 | $ | 30,359 | $ | 83,234 | $ | 139,703 | ||||||||
OPERATING EXPENSES: | ||||||||||||||||
Cost of sales | 15,311 | 13,207 | 35,699 | 79,411 | ||||||||||||
Selling, general and administrative expenses | 80,612 | 140,249 | 172,157 | 411,153 | ||||||||||||
Total Operating Expenses | 95,923 | 153,456 | 207,856 | 490,564 | ||||||||||||
LOSS FROM OPERATIONS | (60,115 | ) | (123,097 | ) | (124,622 | ) | (350,861 | ) | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Miscellaneous income (expense) | — | (600 | ) | 833 | (1,286 | ) | ||||||||||
Impairment loss on assets held for sale | — | — | — | (17,000 | ) | |||||||||||
Interest expense | (2,279 | ) | (5,037 | ) | (7,495 | ) | (9,955 | ) | ||||||||
Total other income (expense) | (2,279 | ) | (5,637 | ) | (6,662 | ) | (28,241 | ) | ||||||||
NET LOSS | $ | (62,394 | ) | $ | (128,734 | ) | $ | (131,284 | ) | $ | (379,102 | ) | ||||
PER SHARE INFORMATION | ||||||||||||||||
Net Loss Per Common Share | $ | (0.002 | ) | $ | (0.005 | ) | $ | (0.004 | ) | $ | (0.014 | ) | ||||
Weighted Average Number of Common Shares Outstanding | 30,746,560 | 28,211,021 | 30,500,626 | 28,041,880 |
The accompanying notes are an integral part of these condensed financial statements.
5 |
| ||||||||||||||||||||
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
April 30, 2019 (Unaudited) and October 31, 2018 | ||||||||||||||||||||
Common Stock | Common Stock | Additional | Accumulated | |||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Deficit | Total | ||||||||||||||||
Balance at October 31, 2018 | 27,789,560 | $ | 2,780 | $ | 10,106,731 | $ | (8,928,694 | ) | $ | 1,180,817 | ||||||||||
Sale of stock | 545,000 | 55 | 81,345 | — | 81,400 | |||||||||||||||
Net loss | — | — | — | (379,102 | ) | (379,102 | ) | |||||||||||||
Balance at April 30, 2019 | 28,334,560 | $ | 2,835 | $ | 10,188,076 | $ | (9,307,796 | ) | $ | 883,115 |
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
THREE AND SIX MONTHS ENDED APRIL 30, 2020 AND 2019 (UNAUDITED)
Common Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||
Shares | Amount | To be Issued | Capital | Deficit | Total | |||||||||||||||||||
Balance at October 31, 2019 | 30,116,560 | $ | 3,013 | $ | — | $ | 10,404,438 | $ | (9,568,706 | ) | $ | 838,745 | ||||||||||||
Sale of stock | 300,000 | 30 | — | 48,970 | — | 49,000 | ||||||||||||||||||
Net loss | — | — | — | — | (68,890 | ) | (68,890 | ) | ||||||||||||||||
Balance at January 31, 2020 | 30,416,560 | 3,043 | — | 10,453,408 | (9,637,596 | ) | 818,855 | |||||||||||||||||
Sale of stock | 450,000 | 45 | 10,000 | 72,455 | 82,500 | |||||||||||||||||||
Net loss | (62,394 | ) | (62,394 | ) | ||||||||||||||||||||
Balance at April 30, 2020 | 30,866,560 | $ | 3,088 | $ | 10,000 | $ | 10,525,863 | $ | (9,699,990 | ) | $ | 838,961 | ||||||||||||
750,000 | 131,500 | |||||||||||||||||||||||
Balance at October 31, 2018 | 27,789,560 | $ | 2,780 | $ | — | $ | 10,106,731 | $ | (8,928,694 | ) | $ | 1,180,817 | ||||||||||||
Sale of stock | 360,000 | 36 | — | 61,164 | — | 61,200 | ||||||||||||||||||
Net loss | — | — | — | — | (250,368 | ) | (250,368 | ) | ||||||||||||||||
Balance at January 31, 2019 | 28,149,560 | 2,816 | — | 10,167,895 | (9,179,062 | ) | 991,649 | |||||||||||||||||
Sale of stock | 185,000 | 19 | — | 20,181 | — | 20,200 | ||||||||||||||||||
Net loss | — | — | — | — | (128,734 | ) | (128,734 | ) | ||||||||||||||||
Balance at April 30, 2019 | 28,334,560 | $ | 2,835 | $ | — | $ | 10,188,076 | $ | (9,307,796 | ) | $ | 883,115 |
The accompanying notes are an integral part of these condensed financial statements.
6 |
| ||||||||
CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
Six Month Periods Ended April 30, 2019 and 2018 (Unaudited) | ||||||||
For the Six Month Periods Ended | ||||||||
April 30, 2019 | April 30, 2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (379,102 | ) | $ | (304,272 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Allowance for doubtful accounts | 216 | 8,026 | ||||||
Common stock issued for services | — | 29,900 | ||||||
Impairment loss on assets held for sale | 17,000 | — | ||||||
Depreciation | 16,383 | 17,756 | ||||||
Amortization of right of use asset | 20,570 | — | ||||||
(Increase) decrease from changes in: | ||||||||
Accounts receivable | 12,382 | 15,779 | ||||||
Inventory | 54,854 | (67,378 | ) | |||||
Deposits on inventory | — | 12,670 | ||||||
Prepaid expenses | 1,651 | (318 | ) | |||||
Advance to employees | — | (4,200 | ) | |||||
Increase (decrease) from changes in: | ||||||||
Accounts payable | 148,132 | 38,995 | ||||||
Accrued interest expense | 3,236 | 855 | ||||||
Accrued expenses | 141 | (5,912 | ) | |||||
Net cash used in operating activities | (104,537 | ) | (258,099 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital expenditures | — | (4,258 | ) | |||||
Net cash used in investing activities | — | (4,258 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from sale of stock | 81,400 | 216,560 | ||||||
Proceeds from shareholder advances | — | (19,650 | ) | |||||
Payments on shareholder advances | (14,000 | ) | (9,358 | ) | ||||
Payments on right of use lease liability | (20,570 | ) | — | |||||
Payments on notes payable | (10,138 | ) | — | |||||
Net cash provided by financing activities | 36,692 | 187,552 | ||||||
Net decrease in cash | (67,845 | ) | (74,805 | ) | ||||
CASH, BEGINNING OF YEAR | 112,203 | 214,871 | ||||||
CASH, END OF THE PERIOD | $ | 44,358 | $ | 140,066 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 6,719 | $ | 7,588 | ||||
INNOVATIVE DESIGNS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
THREE AND SIX MONTHS ENDED APRIL 30, 2020 AND 2019 (UNAUDITED)
Six Months Ended April 30, | ||||||||
2020 | 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (131,284 | ) | $ | (379,102 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Allowance for doubtful accounts | (4,550 | ) | 216 | |||||
Allowance for obsolete inventory | — | |||||||
Common stock issued for services | — | |||||||
Impairment loss on assets held for sale | — | 17,000 | ||||||
Depreciation | 16,654 | 16,383 | ||||||
Amortization of right of use asset | 17,894 | 20,570 | ||||||
(Increase) decrease from changes in: | ||||||||
Accounts receivable | 8,138 | 12,382 | ||||||
Other receivable | — | |||||||
Inventory | 1,835 | 54,854 | ||||||
Inventory on consignment | — | |||||||
Deposits on inventory | — | |||||||
Prepaid expenses | — | 1,651 | ||||||
Advance to employees | — | |||||||
Increase (decrease) from changes in: | ||||||||
Accounts payable | (36,929 | ) | 148,132 | |||||
Lease liability | — | |||||||
Accrued interest expense | (3,490 | ) | 3,236 | |||||
Accrued expenses | 1,729 | 141 | ||||||
Net cash used in operating activities | (130,003 | ) | (104,537 | ) | ||||
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 | 131,500 | 81,400 | ||||||
Proceeds from shareholder advances | 68,670 | — | ||||||
Payments on shareholder advances | — | (14,000 | ) | |||||
Payments on lease liability | (21,896 | ) | (20,570 | ) | ||||
Payments on notes payable | (7,456 | ) | (10,138 | ) | ||||
Net cash provided by financing activities | 170,818 | 36,692 | ||||||
Net decrease in cash | 40,815 | (67,845 | ) | |||||
CASH, BEGINNING OF YEAR | 34,525 | 112,203 | ||||||
CASH, END OF THE PERIOD | $ | 75,340 | $ | 44,358 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 7,495 | $ | 6,719 | ||||
Cash paid for taxes | $ | — | $ | — |
The accompanying notes are an integral part of these condensed financial statements.
7 |
INNOVATIVE DESIGNS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Three and Six Month Periods Ended April 30, 2020 and 2019 (unaudited) and 2018(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 April 30, 2019,2020, 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, 20192020 and 2018.2019.
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, 2018.2019. The results of operations for the three and six month periods ended April 30, 20192020 and 20182019 are not necessarily indicative of operating results for the full year.
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 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 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 INNOVATIVE DESIGNS, INC. NOTES TO THE CONDENSED FINANCIAL STATEMENTS Three and Six Month Periods Ended April 30, 2020 and 2019 (Unaudited) 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 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. 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. 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 $4,400 INNOVATIVE DESIGNS, INC. NOTES TO THE CONDENSED FINANCIAL STATEMENTS Three and Six Month Periods Ended April 30, 2020 and 2019 (Unaudited) During the six month period ended April 30, 2020, the Company sold 850,000 shares of common stock to investors for total proceeds of $131,500. The stock was issued between $0.125 and During the six month period ended April 30, 2019, the Company sold 545,000 shares of common stock to seven investors for total proceeds of $81,400. The stock was issued between $0.08 and $0.17 per share. On July 12, 2015 the Company reached an agreement with Ketut Jaya to purchase the machinery and equipment utilized to produce the INSULTEX material. The purchase price is $700,000 which was to be paid in four installments. The first installment of $300,000 was to be paid at the execution of the agreement. The second installment of $200,000 was to be paid when the machinery and equipment is ready to be shipped to the United States. The third installment of $100,000 is to be paid once the machinery and equipment is producing INSULTEX, and the fourth and final installment of $100,000 is to be made after the first commercial production run of INSULTEX is completed. As of April 30, The Company entered into a month to month verbal lease INNOVATIVE DESIGNS, INC. NOTES TO THE CONDENSED FINANCIAL STATEMENTS Three and Six Month Periods Ended April 30, 2020 and 2019 (Unaudited) As of April 30, Future amortization of the right of use As disclosed in Note 11, the Company entered into a verbal lease for office space prior to the quarter ended April 30, As of April 30, INNOVATIVE DESIGNS, INC. NOTES TO THE CONDENSED FINANCIAL STATEMENTS Three and Six Month Periods Ended April 30, 2020 and 2019 Total maturities of lease 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 The following tables present our business segment information for the six month periods ended April 30, INNOVATIVE DESIGNS, INC. NOTES TO THE CONDENSED FINANCIAL STATEMENTS Three and Six Month Periods Ended April 30, 2020 and 2019 On November 4, 2016, the On February 24, 2020, the District Court released an opinion granting the Company’s motion to have the The Company continues to 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. The Company has evaluated subsequent events in accordance with ASC Topic 855, “Subsequent Events”, through, INNOVATIVE DESIGNS, INC. 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, 2019. Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Reform Act of 1995. All statements other than statements of historical fact, including statements regarding future results of operation, made in this Quarterly Report on Form 10-Q are forward-looking statements. We use words such as expects, believes, intends, and similar expressions to identify forward-looking statements. Forward looking-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons, including, among others, an adverse outcome in our legal matter with the Federal Trade Commission, competition in our cold weather markets, our inability to secure sufficient funding to maintain and/or expand our current level of operations and the seasonality of our cold weather product line. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, are described in greater detail in our Annual Report on Form 10-K for the fiscal year ended October 31, 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: INNOVATIVE DESIGNS, INC. Results of Operations Comparison of the Three Month Period Ended April 30, The following table shows a comparison of the results of operations between the three month periods ended April 30, Revenues for the three month period ended April 30, Our selling, general and administrative expenses were INNOVATIVE DESIGNS, INC. Comparison of the Six Month Period Ended April 30, The following table shows a comparison of the results of operations between the six month periods ended April 30, Revenues for the six month period ended April 30, Our selling, general and administrative expenses were INNOVATIVE DESIGNS, INC. Liquidity and Capital Resources During the period ended April 30, 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. 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 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 INNOVATIVE DESIGNS, INC. PART II – OTHER INFORMATION On November 4, 2016, the 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 to redress a rescission of revenue the Company received from the sale of House Wrap and a permanent injunction. On February 24, 2020, the District Court released an opinion granting the Company’s motion to have the expert testimony of the FTC’s expert witness struck. The Company has filed a Rule 529 (c) motion. The Company continues to strongly denies the allegation and intends to vigorously defend itself. It is ITEM 1A. Risk Factors In addition to the risk factors included in Effect of the Coronavirus Pandemic The coronavirus pandemic is adversely affecting and is expected to continue to adversely affect our business, financial condition and results of operations. We are unable to predict the extent or nature these effect will have on our business at this During the During As a smaller reporting company, we are not required to provide the information otherwise required by this Item. INNOVATIVE DESIGNS, INC. 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, 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. INNOVATIVE DESIGNS, INC. INNOVATIVE DESIGNS, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Chief Executive Officer and Chief Financial Officer NOTE 2. RIGHT OF USE ASSETS AND LEASE LIABILITIES Form 10-Qfinancial statement for additional disclosure on leasesNOTE 3. GOING CONCERN $379,102$131,284 and a negative cash flow from operations of $104,537$130,003 for the six month period ended April 30, 2019.2020. In addition, the Company has an accumulated deficit of $9,307,796. Management of the Company has represented that they will be able to continue to support the Company’s$9,699,990. Management’s plans include cash needsreceipts through sales, sales of Company stock, and borrowings from private parties. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.NOTE 4. ACCOUNTS RECEIVABLE $10,570$5,860 and $10,354$10,409 as of the quarter ended April 30, 20192020 and as of the fiscal year ended October 31, 2018,2019, respectively. Management has applied an allowance on all balances in excess of 90 days.8 NOTE 5. INVENTORY Innovative Designs, Inc. (the “Company”)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 April 30, 2019January 31, 2020 and October 31, 20182019 of $75,468. Management has determined that no allowance is currently necessary on their House Wrap Inventory. Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed.8INNOVATIVE DESIGNS, INC.NOTES TO THE CONDENSED FINANCIAL STATEMENTSSix Month Periods Ended April 30, 2019 (unaudited) and 2018NOTE 6. EARNINGS PER SHARE NOTE 6.EARNINGS PER SHARENOTE 7. INCOME TAXES NOTE 8. SHIPPING AND HANDLING COSTS and $9,000 for both the six month periods ended April 30, 2020 and 2019.9 NOTE 9. COMMON STOCK 2018, respectively.$0.20 per share. Of these shares, 100,000 shares were issued subsequent to April 30, 2020.NOTE 9.COMMON STOCKWe 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.9INNOVATIVE DESIGNS, INC.NOTES TO THE CONDENSED FINANCIAL STATEMENTSSix Month Periods Ended April 30, 2019 (unaudited) and 2018During the six-month period ended April 30, 2018, the Company sold 707,250 shares of common stock to three investors for total proceeds of $216,560. The stock was issued for prices from $0.25-$0.32$0.17 per share. In addition, the Company issued 105,000 shares to two individuals for services performed during the period. The shares issued were valued at $0.18 and $0.40 per share for a total price of $29,900. 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 10. DEPOSITS ON EQUIPMENT 2019,2020, the Company has made payments of $500,000 in accordance with the agreement and made a $100,000 pre-payment as the machine is not yet producing INSULTEX. Additionally, the Company has incurred $17,000 of additional expenses related to shipping, site improvements and installation of the equipment. Due to various environmental regulations regarding propane emitted from the machine into the air and other costs to assemble the machine the Company expects to incur costs in excess of the current deposit agreement. Management of the Company currently cannot reasonably estimate the costs. During the threesix month period ended January 31,April 30, 2019 Management decided to sell the machine. The shipping and other purchase costs associated with the purchase of the machine that were deemed impaired and accordingly theyoriginally capitalized as part of the machine cost that were written off. The total loss on impairment for the six month period ended April 30, 2019 iswas $17,000.NOTE 11. RIGHT OF USE ASSETS for office space prior toat the quarter ended April 30, 2019time the Company was formed that areis classified as right of use assetsasset and lease liabilities.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 a value of the leases using the average commercial real estate interest rate of 5.50% at the commencement of the office leases.lease. Applying the commercial rate, the Company calculated the present value of $150,496 for the office lease as of April 30, 2019.2020.10 NOTE 11. RIGHT OF USE ASSETS (CONTINUED) 2019,2020, the right of use assets associated with future operating leases arelease is as follows:10INNOVATIVE DESIGNS, INC.NOTES TO THE CONDENSED FINANCIAL STATEMENTSSix Month Periods Ended April 30, 2019 (unaudited) and 2018Total present value of right of use asset under lease agreement $ 150,496 Amortization of right of use asset (52,480 ) Total right of use asset as of April 30, 2020 $ 98,016 Less current portion due within one year 37,547 Long-term right of use asset $ 60,469 Total present value of right of use assets under lease agreements $ 150,496 Amortization of right of use assets (24,114 ) Total right of use assets as of April 30, 3019 $ 126,382 The right of use assets were amortized approximately $3,429 per month. Total amortization expense related to the right of use assets under the verbal lease agreementsagreement was $20,570$17,894 and $0 for the six monthsmonth periods ended April 30, 2020 and 2019, and 2018, respectively.assetsasset as of April 30, 2019 are2020 is as follows:2020 $ 39,482 2021 37,366 2022 38,224 2023 11,310 $ 126,382 2021 $ 37,547 2022 39,664 2023 20,805 $ 98,016 NOTE 12. RIGHT OF USE LEASE LIABILITY NOTE 12.RIGHT OF USE LEASE LIABILITIES20192020 that areis classified as a right of use assetsasset and lease liabilities.liability.2019,2020, the lease liabilitiesliability associated with future payments due under the leases areverbal lease is as follows:Total present value of future lease payments $ 150,496 Principal payments made (24,114 ) Total right of use lease liabilties as of April 30, 2019 $ 126,382 The following is a schedule of future minimum lease payments under the right of use lease agreements together with the present value of the net minimum lease payments as of April 30, 2019:Total future minimum lease payments $ 150,496 Less present value discount (52,480 ) Total right of use lease liability as of April 30, 2020 98,016 Less current portion due within one year 37,547 Long-term right of use liability $ 60,469 Total future minimum lease payments $ 143,500 Less present value discount 17,118 Total right of use lease liabilities as of April 30, 2019 126,382 Less current portion due within one year 39,482 Long-term right of use liabilities $ 86,900 11 (unaudited) and 2018(Unaudited)liabilitiesliability as of April 30, 20192020 are as follows: Total future minimum lease Present value Right of use payments discount lease liabilities 2020 $ 42,000 $ 2,518 $ 39,482 2021 42,000 4,634 37,366 2022 42,000 6,636 35,364 2023 17,500 3,330 14,170 $ 143,500 $ 17,118 $ 126,382 Total future minimum lease payments Present value discount Lease liability 2021 $ 42,000 $ 4,453 $ 37,547 2022 42,000 2,336 39,664 2023 21,000 195 20,805 $ 105,000 $ 6,984 $ 98,016 NOTE 13. SEGMENT INFORMATION NOTE 13.SEGMENT INFORMATIONresources.resources.20192020 and 2018:2019: 2019 2018 2020 2019 Revenues: Apparel $ 107,868 $ 96,172 $ 46,368 $ 107,868 House Wrap 31,835 37,194 36,866 31,835 Total Revenues $ 139,703 $ 133,366 $ 83,234 $ 139,703 Assets (Less Right of Use Asset): Assets: Apparel $ 365,888 $ 556,343 $ 460,916 $ 365,888 House Wrap 1,138,057 1,227,436 1,108,437 1,138,057 Total $ 1,503,945 $ 1,783,779 Capital Expenditures: Apparel $ — $ 4,258 Housewrap — — Total $ — $ 4,258 $ 1,569,353 $ 1,503,945 Depreciation: Apparel $ 4,666 $ 6,039 $ 4,744 $ 4,666 House Wrap 11,717 11,717 11,910 11,717 Total $ 16,383 $ 17,756 $ 16,654 $ 16,383 12 (unaudited) and 2018(Unaudited)NOTE 14. LEGAL PROCEEDINGS NOTE 14.LEGAL PROCEEDINGSFederal Trade Commission (FTC)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 to redress ofa rescission of revenue the Company received from the sale of House Wrap and a permanent injunction. Duepartial government shutdownexpert testimony of the FTC’s expert witness struck. The Company has filed a new trial date was set for July 29, 2019.Rule 529 (c) motion.NOTE 15. SUBSEQUENT EVENTS NOTE 15.SUBSEQUENT EVENTSJuly 26, 2019, which is the date financial statements were available to be issued. The Company identified the below subsequent event.During May 2019,Subsequent to January 31, 2020, the Company sold 125,000150,000 shares of common stock to one investor for total proceedsand issued 100,000 shares of $10,000.common stock subscribed at April 30, 2020. The common stock was issued for $0.08between $0.12 and $0.20 per share. Additionally, during May 2019, one debt holder converted the $50,000 loan and $5,000 of accrued interest to $550,000 shares of stock. The debt was converted at $0.10 per share. 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. 13 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2018.2018.2019. 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.Completing the development, design and prototypes of our products,● Completing the development, design and prototypes of our products, Obtaining retail stores or sales agents to offer and sell our products,● Obtaining retail stores or sales agents to offer and sell our products, Developing our website to sell more of our products.● Developing our website to sell more of our products. 14 20192020 with the Three Month Period Ended April 30, 2018.2019.20192020 and April 30, 2018:2019: Three Month Three Month Period Ended Period Ended April 30, % of April 30, % of Increase 2019 Sales 2018 Sales (Decrease) % Change REVENUE - NET $ 30,359 100.00 % $ 17,163 100.00 % $ 13,196 76.89 % OPERATING EXPENSES Cost of sales 13,207 43.50 % 18,080 105.34 % (4,873 ) -26.95 % Selling, general and administrative expenses 140,249 461.97 % 154,888 902.45 % (14,639 ) -9.45 % Loss from operations (123,097 ) -405.47 % (155,805 ) -907.80 % 32,708 -20.99 % OTHER EXPENSE Miscellaneous expense 600 1.98 % 487 2.84 % 113 23.20 % Interest expense 5,037 16.59 % 1,731 10.09 % 3,306 190.99 % Total other expense 5,637 18.57 % 2,218 12.92 % 3,419 154.15 % Net loss $ (128,734 ) -424.04 % $ (158,023 ) -920.72 % $ 36,014 -22.79 % Three Months Ended April 30, 2020 % of Sales Three Months Ended April 30, 2019 % of Sales Increase (Decrease) % Change REVENUES – NET $ 35,808 100.00 % $ 30,359 100.00 % $ 5,449 17.95 % OPERATING EXPENSES: Cost of sales 15,311 42.76 % 13,207 43.50 % 2,104 15.93 % Selling, general and administrative expenses 80,612 225.12 % 140,249 461.97 % (59,637 ) -42.52 % LOSS FROM OPERATIONS (60,115 ) -167.88 % (123,097 ) -405.47 % 62,982 -51.16 % OTHER INCOME (EXPENSE) Miscellaneous income (expense) — 0.00 % (600 ) -1.98 % 600 -100.00 % Interest expense (2,279 ) -6.36 % (5,037 ) -16.59 % 2,758 -54.75 % NET LOSS $ (62,394 ) -174.25 % $ (128,734 ) -424.04 % $ 66,340 -51.53 % 20192020 were $30,359$35,808 compared to revenues of $17,163$30,359 for the three month period ended April 30, 2018.2019. The increase in revenue is attributable to an increase inwas a result of more sales of apparelour House Wrap product. we voluntarily ceased advertising our House Wrap products as a result of approximately $12,000.the legal action brought by the Federal Trade Commission (“FTC”). See Note 13 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment product sales. Our net loss for the three month period ended April 30, 2019 was ($128,734).$140,249$80,612 for the three months ended April 30, 20192020 compared to $154,888$ 140,249 for the three month period ended April 30, 2018. Professional fees for the period ended April 30, 2019 were $45,159 compared to $32,099 for the three month period ended April 30, 2018.2019. The majority of our professional fees relateddecrease was a result , in part, to the legal fees incurred in connectionfact that we furlough two employees. As a result of having to shut down our operations because of the FTC matter. We expect our professional fees to continue to be substantial during the course of this legal matter.coronovirus pandemic. 13 15 20192020 with the Six Month Period Ended April 30, 2018.2019.20192020 and April 30, 2018:2019: Six Month Six Month Period Ended Period Ended April 30, % of April 30, % of Increase 2019 Sales 2018 Sales (Decrease) % Change REVENUE - NET $ 139,703 100.00 % $ 133,366 100.00 % $ 6,337 4.75 % OPERATING EXPENSES Cost of sales 79,411 56.84 % 82,462 61.83 % (3,051 ) -3.70 % Selling, general and administrative expenses 411,153 294.31 % 345,699 259.21 % 65,454 18.93 % Loss from operations (350,861 ) -251.15 % (294,795 ) -221.04 % (56,066 ) 19.02 % OTHER EXPENSE Miscellaneous expense 1,286 0.92 % 1,034 0.78 % 252 24.37 % Impairment loss on assets held for sale 17,000 12.17 % — 0.00 % 17,000 100.00 % Interest expense 9,955 7.13 % 8,443 6.33 % 1,512 17.91 % Net loss $ (379,102 ) -271.36 % $ (304,272 ) -228.15 % $ (74,830 ) 24.59 % Six Months Ended April 30, 2020 % of Sales Six Months Ended April 30, 2019 % of Sales Increase (Decrease) % Change REVENUES - NET $ 83,234 100.00 % $ 139,703 100.00 % $ (56,469 ) -40.42 % OPERATING EXPENSES: Cost of sales 35,699 42.89 % 79,411 56.84 % (43,712 ) -55.05 % Selling, general and administrative expenses 172,157 206.83 % 411,153 294.31 % (238,996 ) -58.13 % LOSS FROM OPERATIONS (124,622 ) -149.72 % (350,861 ) -251.15 % 226,239 -64.48 % OTHER INCOME (EXPENSE) Miscellaneous income (expense) 833 1.00 % (1,286 ) -0.92 % 2,119 -164.77 % Impairment loss on assets held for sale — 0.00 % (17,000 ) -12.17 % 17,000 -100.00 % Interest expense (7,495 ) -9.00 % (9,955 ) -7.13 % 2,460 -24.71 % NET LOSS $ (131,284 ) -157.73 % $ (379,102 ) -271.36 % $ 247,818 -65.37 % 20192020 were $139,703$83,234 compared to revenues of $133,366 for$139,703for the threesix month period ended April 30, 2018.2019. The increase isdecrease was caused, in part, by the increase inmandatory order to close our apparel salesbusiness on account of approximately $12,000 and the decrease sales in of our House Wrap product line of approximately $6,000.coronovirus pandemic.. 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 13 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment product sales. During the six month period ended April 30, 2019 House Wrap2020 our apparel sales totaled $31,835were $46,368 in comparison with $37,194$$107, 868 during the six month period ended April 30, 2018. Our net loss for the six month period ended April 30, 2019 was ($379,102)2019. .$411,153$91,545 for the sixthree months ended April 30, 2019January 31, 2020 compared to $345,699$270,904 for the sixthree month period ended April 30, 2018.January 31, 2019. The increase was a result of our third party warehouse for inventory charging us $154,635$104,000 in relation to storage of inventory. We do not expect our seasonal help expense or advertising and promotional expenses to increase in the current fiscal year ending October 31, 2019.2020. Subsequent to the period we furloughed two of our employees. 16 2019,2020, we funded our operations from revenues from sales and sale of our common stock. During the sixthree month period ended April 30, 2019,01, 2020, we sold our common stock in private transactions and raised $81,400$72,500 from the sales. If we are not able to either increase our sales revenue or sell more of our common stock during the current quarter, we may not able to support our current cost structure.2015.2015 It is the Company’s current plan to sell 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 and other purchase cost which was written of in the first quarter ofoff during 2019. See Note 10 of the Notes to the Condensed Financial Statements.goods and our efforts to produce our own INSULTEX would be delayed.goods. 17 ITEM 1. LEGAL PROCEEDING engagedthe Company’s belief that the complaint is based on improper testing of the INSULTEX products using the wrong type of testing equipment.a matter withour Annual report on Form 10-K for the Federal Trade Commission. A Form 8-K filed November 4, 2016, describingfiscal year ended October 31, 2019, we include the following:matter is incorporated herein by reference. time.ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS sixthree month period ended April 30, 2019,January 31, 2020, the Company sold 545,000300,000 shares of common stock to sevennine investors for total proceeds of $81,400.$49,000. The stock was issued between $0.08$0.15 and $0.17 per share. 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.May 2019,the three month period ended April 30, 2020, the Company sold 125,000450,000 shares of common stock to one investor for a total proceedsproceed of $10,000.$72,500. The common stock was issued for $0.08 per share. Additionally, during May 2019, one debt holder converted the $50,000 loanbetween $0.12 and $5,000 of accrued interest to $550,000 shares of stock. The debt was converted at $0.10$0.20 per share. 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 ITEM 4T. CONTROLS AND PROCEDURES 2019,2020, 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, second, third and thirdfourth quarter of 2018,2019, 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, 2019 and April 30, 20192020 within the timeline established by the SEC and was required to seek an extension for filing the form.1819 ITEM 66.EXHIBITS *3.1 Revised Certificate of Incorporation **3.2 By-Laws 31.1 Rule 13a - 14a Certification of Chief Executive Officer and Chief Financial Officer 32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer * Incorporated by reference to the Company’s 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 1920 Innovative Designs, Inc. Registrant Date: July 26, 2019August 10, 2020by: /s/ Joseph Riccelli Joseph Riccelli, 2021