Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jul. 31, 2017 | Sep. 14, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | INNOVATIVE DESIGNS INC | |
Entity Central Index Key | 1,190,370 | |
Document Type | 10-Q | |
Trading Symbol | IVDN | |
Document Period End Date | Jul. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 25,747,310 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED BALANCE SHEETS (Unaud
CONDENSED BALANCE SHEETS (Unaudited) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
CURRENT ASSETS | ||
Cash | $ 264,908 | $ 502,777 |
Accounts receivable | 14,562 | 72,143 |
Inventory - net of obsolete inventory reserve of $40,000 | 794,375 | 936,587 |
Inventory on consignment | 1,625 | 1,625 |
Prepaid expenses | 17,861 | 17,485 |
Total current assets | 1,093,331 | 1,530,617 |
PROPERTY AND EQUIPMENT - NET | 168,969 | 176,925 |
OTHER ASSETS | ||
Advance to employee | 4,000 | 4,000 |
Deposits on equipment | 617,000 | 617,000 |
Total other assets | 621,000 | 621,000 |
TOTAL ASSETS | 1,883,300 | 2,328,542 |
CURRENT LIABILITIES | ||
Accounts payable | 151,009 | 116,512 |
Current portion of notes payable | 15,467 | 15,467 |
Accrued interest expense | 55,484 | 49,885 |
Due to shareholders | 75,100 | 119,000 |
Accrued expenses | 61,535 | 93,333 |
Total current liabilities | 358,595 | 394,197 |
Long-term portion of notes payable | 167,053 | 188,891 |
TOTAL LIABILITIES | 525,648 | 583,088 |
STOCKHOLDERS' EQUITY | ||
Common stock, $0.0001 par value, 100,000,000 shares authorized, and 25,747,310 and 25,370,310 issued and outstanding as of July 31, 2017 and October 31, 2016 | 2,575 | 2,537 |
Additional paid-in capital | 9,543,926 | 9,455,674 |
Accumulated deficit | (8,188,849) | (7,712,757) |
Total stockholders' equity | 1,357,652 | 1,745,454 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,883,300 | $ 2,328,542 |
CONDENSED BALANCE SHEETS (Unau3
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Inventory obsolete reserve | $ 40,000 | $ 40,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 25,747,310 | 25,370,310 |
Common stock, outstanding | 25,747,310 | 25,370,310 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Income Statement [Abstract] | ||||
REVENUES - NET | $ 41,811 | $ 159,643 | $ 250,183 | $ 497,807 |
OPERATING EXPENSES: | ||||
Cost of sales | 39,463 | 75,944 | 145,537 | 258,895 |
Selling, general and administrative expenses | 183,868 | 184,999 | 562,080 | 580,953 |
Total operating expense | 223,331 | 260,943 | 707,617 | 839,848 |
LOSS FROM OPERATIONS | (181,520) | (101,300) | (457,434) | (342,041) |
OTHER EXPENSE | ||||
Miscellaneous expense | (2,559) | |||
Interest expense | (5,446) | (15,156) | (16,099) | (53,162) |
Total other expense | (5,446) | (15,156) | (18,658) | (53,162) |
NET LOSS | $ (186,966) | $ (116,456) | $ (476,092) | $ (395,203) |
PER SHARE INFORMATION | ||||
Net Loss Per Common Share (in dollars per share) | $ (0.007) | $ (0.005) | $ (0.019) | $ (0.016) |
Weighted Average Number of Common Shares Outstanding (in shares) | 25,616,962 | 25,340,310 | 25,461,892 | 25,045,664 |
CONDENSED STATEMENTS OF CHANGES
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Oct. 31, 2015 | $ 2,437 | $ 8,902,744 | $ (7,080,334) | $ 1,824,847 |
Balance at beginning (in shares) at Oct. 31, 2015 | 24,371,310 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares issued for services | $ 12 | 67,188 | 67,200 | |
Shares issued for services (in shares) | 120,000 | |||
Shares issued for fixed assets | $ 3 | 23,997 | 24,000 | |
Shares issued for fixed assets (in shares) | 30,000 | |||
Sale of stock | $ 85 | 461,745 | 461,830 | |
Sale of stock (in shares) | 849,000 | |||
Net loss | (632,423) | (632,423) | ||
Balance at ending at Oct. 31, 2016 | $ 2,537 | 9,455,674 | (7,712,757) | 1,745,454 |
Balance at ending (in shares) at Oct. 31, 2016 | 25,370,310 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares issued for services | $ 16 | 47,684 | 47,700 | |
Shares issued for services (in shares) | 160,000 | |||
Sale of stock | $ 22 | 40,568 | 40,590 | |
Sale of stock (in shares) | 217,000 | |||
Net loss | (476,092) | (476,092) | ||
Balance at ending at Jul. 31, 2017 | $ 2,575 | $ 9,543,926 | $ (8,188,849) | $ 1,357,652 |
Balance at ending (in shares) at Jul. 31, 2017 | 25,747,310 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (476,092) | $ (395,203) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Common stock issued for services | 47,700 | 52,200 |
Depreciation | 22,856 | 14,384 |
Increase (decrease) from changes in: | ||
Accounts receivable | 57,581 | 28,013 |
Inventory | 142,212 | (53,713) |
Inventory on consignment | (1,625) | |
Deposits on inventory | 78,320 | |
Prepaid expenses | (376) | (5,025) |
Advance to employee | (4,000) | |
Accounts payable | 34,497 | (25,510) |
Accrued interest expense | 5,599 | (20,018) |
Accrued expenses | (31,798) | 4,622 |
Net cash used in operating activities | (197,821) | (327,555) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Deposits on equipment | (187,000) | |
Capital expenditures | (14,900) | (88,299) |
Net cash used in investing activities | (14,900) | (275,299) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of stock | 40,590 | 461,830 |
Payments on shareholder advances | (43,900) | (179,630) |
Payments on notes payable | (21,838) | (32,882) |
Net cash (used in) provided by financing activities | (25,148) | 249,318 |
Net decrease in cash | (237,869) | (353,536) |
CASH, BEGINNING OF YEAR | 502,777 | 1,151,904 |
CASH, END OF THE PERIOD | 264,908 | 798,368 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 11,001 | 73,180 |
Supplemental schedule of noncash financing activies: | ||
Stock issued for services related to fixed asset additions | $ 24,000 |
ACCOUNTING CHANGES AND ERROR CO
ACCOUNTING CHANGES AND ERROR CORRECTIONS | 9 Months Ended |
Jul. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
ACCOUNTING CHANGES AND ERROR CORRECTIONS | NOTE 1. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly Innovative Designs, Inc.’s financial position as of July 31, 2017, the changes therein for the three and nine month periods then ended and the results of operations for the three and nine month periods ended July 31, 2017 and 2016. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | 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 Innovative Designs, Inc.’s annual report on Form 10-K for the fiscal year ended October 31, 2016. The results of operations for the three and nine month periods ended July 31, 2017 and 2016 are not necessarily indicative of operating results for the full year. |
INVENTORY
INVENTORY | 9 Months Ended |
Jul. 31, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 3. INVENTORY Inventory consists principally of purchased apparel inventory and House Wrap which is manufactured by the Company. Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. Innovative Designs, Inc. (the “Company”) has decided to discontinue the selling of its hunting and swimming line of apparel. The Company has booked a reserve against this inventory at July 31, 2017 and October 31, 2016 of $40,000. Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Jul. 31, 2017 | |
PER SHARE INFORMATION | |
EARNINGS PER SHARE | NOTE 4. EARNINGS PER SHARE The Company calculates net income (loss) per share in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 260 “Earnings per Share” |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Jul. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 5. INCOME TAXES The Company accounts for income taxes in accordance with ASC Topic 740 “Income Taxes” 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. |
SHIPPING AND HANDLING COSTS
SHIPPING AND HANDLING COSTS | 9 Months Ended |
Jul. 31, 2017 | |
Shipping And Handling Costs | |
SHIPPING AND HANDLING COSTS | NOTE 6. SHIPPING AND HANDLING COSTS The Company pays shipping and handling costs on behalf of customers for purchased apparel merchandise. These costs are billed back to the customer through the billing invoice. The shipping and handling costs associated with merchandise ordered by the Company are included as part of inventory as these costs are allocated across the merchandise received. With House Wrap orders, the customer pays the shipping cost. The shipping and handling costs associated with customer orders was approximately $16,000 and $25,000 for the nine month periods ended July 31, 2017 and 2016, respectively. |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Jul. 31, 2017 | |
Equity [Abstract] | |
COMMON STOCK | NOTE 7. COMMON STOCK During the quarter ended April 30, 2017, the Company issued stock to one director for services. The stock was issued at a price of $0.25 per share. The Company issued 30,000 shares for services in February 2017 valued at $7,500. Pursuant to Rule 12b-15 under the Securities and Exchange Act of 1934, as amended, this Form 10-Q includes new certifications by our principal executive officer and principal financial officer under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. During the quarter ended July 31, 2017, the Company issued stock to one shareholder for services. The stock was issued at a price of $0.30 per share. The Company issued 100,000 shares to the stockholders for services in April 2017 valued at $30,000. The Company also issued 30,000 shares of stock to an individual valued at $0.34 per share for services in May 2017 valued at $10,200. Pursuant to Rule 12b-15 under the Securities and Exchange Act of 1934, as amended, this Form 10-Q includes new certifications by our principal executive officer and principal financial officer under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Additionally for the quarter ended July 31, 2017, the Company sold stock for a price ranging from $0.18-$0.22 per share. The Company sold 217,000 shares of stock in June and July of 2017 for an aggregate price of $40,590. 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 this 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. |
DEPOSITS ON EQUIPMENT
DEPOSITS ON EQUIPMENT | 9 Months Ended |
Jul. 31, 2017 | |
Deposit Assets [Abstract] | |
DEPOSITS ON EQUIPMENT | N OTE 8. DEPOSITS ON EQUIPMENT On July 12, 2015 the Company reached an agreement with Ketut Jaya to purchase the machinery and equipment utilized to produce the INSULTEX material. The purchase price is $700,000 which was to be paid in four installments. The first installment of $300,000 was to be paid at the execution of the agreement. The second installment of $200,000 was to be paid when the machinery and equipment is ready to be shipped to the United States. The third installment of $100,000 is to be paid once the machinery and equipment is producing INSULTEX, and the fourth and final installment of $100,000 is to made after the first commercial production run of INSULTEX is completed. As of July 31, 2017, the Company has made payments of $500,000 in accordance with the agreement, and made a $100,000 pre-payment as the machine is not yet producing INSULTEX. Additionally, the Company has incurred $17,000 of additional expenses related to shipping, site improvements and installation of the equipment. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Jul. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 9. SEGMENT INFORMATION We have organized our operations into two segments. We rely on an internal management reporting process that provides segment information for purposes of making financial decisions and allocating resources . The following tables present our business segment information for the nine month period ended July 31, 2017 and 2016: 2017 2016 Revenues: Apparel $ 161,015 $ 195,949 House Wrap 89,168 301,858 Total Revenues $ 250,183 $ 497,807 Assets: Apparel $ 680,465 $ 1,316,622 House Wrap 1,202,835 1,291,711 Total $ 1,883,300 $ 2,608,333 Capital Expenditures: House Wrap $ 14,900 $ 88,299 Total $ 14,900 $ 88,299 Depreciation: Apparel $ 5,184 $ 1,388 House Wrap 17,672 12,996 Total $ 22,856 $ 14,384 |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 9 Months Ended |
Jul. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL PROCEEDINGS | NOTE 10. LEGAL PROCEEDINGS On November 4, 2016, the Federal Trade Commission (FTC) filed a complaint against the Company in the U.S. District Court Western District of Pennsylvania, number 16-1669. In the complaint, the FTC alleges, that, among other matters, the Company does not have substantiation of claims made by the Company regarding the R value and energy efficiency of its INSULTEX House Wrap products. The complaint asks as redress of rescission of revenue the Company received from the sale of House Wrap and a permanent injunction. The parties are currently in the discovery phase. The Company strongly denies the allegation and intends to vigorously defend itself. It is the Company’s belief that the complaint is based on improper testing of the INSULTEX products using the wrong type of testing equipment. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Jul. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS The Company has evaluated subsequent events in accordance with ASC Topic 855, “ Subsequent Events During August 2017, the Company entered into a notes payable agreement with Riccelli Properties for $40,672. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of business segment information | The following tables present our business segment information for the nine month period ended July 31, 2017 and 2016: 2017 2016 Revenues: Apparel $ 161,015 $ 195,949 House Wrap 89,168 301,858 Total Revenues $ 250,183 $ 497,807 Assets: Apparel $ 680,465 $ 1,316,622 House Wrap 1,202,835 1,291,711 Total $ 1,883,300 $ 2,608,333 Capital Expenditures: House Wrap $ 14,900 $ 88,299 Total $ 14,900 $ 88,299 Depreciation: Apparel $ 5,184 $ 1,388 House Wrap 17,672 12,996 Total $ 22,856 $ 14,384 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Inventory valuation reserves | $ 40,000 | $ 40,000 |
SHIPPING AND HANDLING COSTS (De
SHIPPING AND HANDLING COSTS (Details Narrative) - USD ($) | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Shipping And Handling Costs | ||
Shipping and handling costs | $ 16,000 | $ 25,000 |
COMMON STOCK (Details Narrative
COMMON STOCK (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 9 Months Ended | 12 Months Ended | ||
May 30, 2017 | Apr. 30, 2017 | Feb. 28, 2017 | Jul. 31, 2017 | Jul. 31, 2017 | Oct. 31, 2016 | |
Value of shares issued for services | $ 47,700 | $ 67,200 | ||||
Sale of stock | $ 40,590 | $ 40,590 | $ 461,830 | |||
Number stock sold (in shares) | 217,000 | |||||
Minimum [Member] | ||||||
Stock sold price (in dollars per share) | $ 0.18 | $ 0.18 | ||||
Maximum [Member] | ||||||
Stock sold price (in dollars per share) | $ 0.22 | $ 0.22 | ||||
One Director [Member] | ||||||
Share price (in dollars per share) | $ 0.25 | |||||
Number of shares issued for services | 30,000 | |||||
Value of shares issued for services | $ 7,500 | |||||
One Shareholder [Member] | ||||||
Share price (in dollars per share) | $ 0.30 | |||||
Number of shares issued for services | 100,000 | |||||
Value of shares issued for services | $ 30,000 | |||||
An Individual [Member] | ||||||
Share price (in dollars per share) | $ 0.34 | |||||
Number of shares issued for services | 30,000 | |||||
Value of shares issued for services | $ 10,200 |
DEPOSITS ON EQUIPMENT (Details
DEPOSITS ON EQUIPMENT (Details Narrative) - USD ($) | Jul. 12, 2015 | Jul. 31, 2017 |
Deposit Assets [Abstract] | ||
Description of assets contract | The purchase price is $700,000 and to be made in four installments. The first installment of $300,000 is to be made at the execution of the agreement. The second installment of $200,000 is to be made when the machinery and equipment is ready to be shipped to the United States. The third installment of $100,000 is to be made once the machinery and equipment is producing INSULTEX, and the fourth and final installment of $100,000 is to made after the first commercial production run of INSULTEX is completed. | |
Purchase price of equipment | $ 700,000 | |
First installment for equipment | 300,000 | |
Second installment for equipment | 200,000 | |
Third installment for equipment | 100,000 | |
Fourth installment for equipment | $ 100,000 | |
Deposits on equipment | $ 500,000 | |
Shipping, site improvements and installation of the equipment expenses | $ 17,000 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||
Total Revenues | $ 41,811 | $ 159,643 | $ 250,183 | $ 497,807 | |
Assets | 1,883,300 | 2,608,333 | 1,883,300 | 2,608,333 | $ 2,328,542 |
Capital Expenditures | 14,900 | 88,299 | |||
Depreciation | 22,856 | 14,384 | |||
Apparel Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenues | 161,015 | 195,949 | |||
Assets | 680,465 | 1,316,622 | 680,465 | 1,316,622 | |
Depreciation | 5,184 | 1,388 | |||
House Wrap Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenues | 89,168 | 301,858 | |||
Assets | $ 1,202,835 | $ 1,291,711 | 1,202,835 | 1,291,711 | |
Capital Expenditures | 14,900 | 88,299 | |||
Depreciation | $ 17,672 | $ 12,996 |
SEGMENT INFORMATION (Details Na
SEGMENT INFORMATION (Details Narrative) | 9 Months Ended |
Jul. 31, 2017Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Aug. 31, 2017USD ($) |
Subsequent Event [Member] | Notes Payable Agreement [Member] | Riccelli Properties [Member] | |
Face amount | $ 40,672 |