Innovative Designs (IVDN) 10-Q 14 Jun 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Apr. 30, 2018	Jun. 06, 2018
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	Apr. 30, 2018
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		27,234,560
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,018

CONDENSED BALANCE SHEETS (Unaud

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Apr. 30, 2018	Oct. 31, 2017
CURRENT ASSETS
Cash	$ 140,066	$ 214,871
Accounts receivable - net of allowance for doubtful accounts of $8,026 and $0 as of April 30, 2018 and October 31, 2017, respectively		23,805
Inventory - net of obsolete inventory reserve of $51,000	797,223	729,845
Inventory on consignment	1,625	1,625
Deposits on inventory	57,330	70,000
Prepaid expenses	14,971	14,653
Total current assets	1,011,215	1,054,799
PROPERTY AND EQUIPMENT - NET	147,364	160,862
OTHER ASSETS
Advance to employees	8,200	4,000
Deposits on equipment	617,000	617,000
Total other assets	625,200	621,000
TOTAL ASSETS	1,783,779	1,836,661
CURRENT LIABILITIES
Accounts payable	168,273	129,278
Current portion of notes payable	18,096	18,096
Accrued interest expense	45,039	44,184
Due to shareholders	98,850	118,500
Accrued expenses	19,190	25,102
Total current liabilities	349,448	335,160
Long-term portion of notes payable	109,904	119,262
TOTAL LIABILITIES	459,352	454,422
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value, 100,000,000 shares authorized, and 27,204,560 and 26,392,310 issued and outstanding as of April 30, 2018 and October 31, 2017	2,720	2,639
Additional paid-in capital	9,971,791	9,725,412
Accumulated deficit	(8,650,084)	(8,345,812)
Total stockholders' equity	1,324,427	1,382,239
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,783,779	$ 1,836,661

CONDENSED BALANCE SHEETS (Unau3

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Apr. 30, 2018	Oct. 31, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 8,026	$ 0
Inventory obsolete reserve	$ 51,000	$ 51,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized	100,000,000	100,000,000
Common stock, issued	27,204,560	26,392,310
Common stock, outstanding	27,204,560	26,392,310

CONDENSED STATEMENTS OF OPERATI

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Income Statement [Abstract]
REVENUES - NET	$ 17,163	$ 39,162	$ 133,366	$ 208,372
OPERATING EXPENSES:
Cost of sales	18,080	25,568	82,462	106,074
Selling, general and administrative expenses	154,888	170,741	345,699	378,212
Total Operating Expenses	172,968	196,309	428,161	484,286
LOSS FROM OPERATIONS	(155,805)	(157,147)	(294,795)	(275,914)
OTHER EXPENSE
Miscellaneous expense	487		1,034	3,424
Interest expense	1,731	3,604	8,443	10,653
Total other expense	2,218	3,604	9,477	14,077
NET LOSS	$ (158,023)	$ (160,751)	$ (304,272)	$ (289,991)
PER SHARE INFORMATION
Net Loss Per Common Share (in dollars per share)	$ (0.006)	$ (0.006)	$ (0.011)	$ (0.011)
Weighted Average Number of Common Shares Outstanding (in shares)	27,033,872	25,396,265	26,880,559	25,383,288

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, 2016	$ 2,537	$ 9,455,674	$ (7,712,757)	$ 1,745,454
Balance at beginning (in shares) at Oct. 31, 2016	25,370,310
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued for services	$ 30	97,670		97,700
Shares issued for services (in shares)	300,000
Sale of stock	$ 72	172,068		172,140
Sale of stock (in shares)	722,000
Net loss			(633,055)	(633,055)
Balance at end at Oct. 31, 2017	$ 2,639	9,725,412	(8,345,812)	1,382,239
Balance at end (in shares) at Oct. 31, 2017	26,392,310
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued for services	$ 10	29,890		29,900
Shares issued for services (in shares)	105,000
Sale of stock	$ 71	216,489		216,560
Sale of stock (in shares)	707,250
Net loss			(304,272)	(304,272)
Balance at end at Apr. 30, 2018	$ 2,720	$ 9,971,791	$ (8,650,084)	$ 1,324,427
Balance at end (in shares) at Apr. 30, 2018	27,204,560

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Apr. 30, 2018	Apr. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (304,272)	$ (289,991)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts	8,026
Common stock issued for services	29,900	7,500
Depreciation	17,756	15,293
(Increase) decrease from changes in:
Accounts receivable	15,779	39,467
Inventory	(67,378)	112,778
Deposits on inventory	12,670
Prepaid expenses	(318)	(3,584)
Advance to employees	(4,200)
Increase (decrease) from changes in:
Accounts payable	38,995	37,818
Accrued interest expense	855	2,600
Accrued expenses	(5,912)	(27,790)
Net cash used in operating activities	(258,099)	(105,909)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(4,258)	(10,000)
Net cash used in investing activities	(4,258)	(10,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock	216,560
Payments on shareholder advances	(19,650)	(26,900)
Payments on notes payable	(9,358)	(17,123)
Net cash provided by (used in) financing activities	187,552	(44,023)
Net decrease in cash	(74,805)	(159,932)
CASH, BEGINNING OF YEAR	214,871	502,777
CASH, END OF THE PERIOD	140,066	342,845
Supplemental disclosure of cash flow information:
Cash paid for interest	$ 7,588	$ 8,053

ACCOUNTING CHANGES AND ERROR CO

ACCOUNTING CHANGES AND ERROR CORRECTIONS	6 Months Ended
	Apr. 30, 2018
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 April 30, 2018, 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, 2018 and 2017.

BASIS OF PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
	Apr. 30, 2018
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, 2017. The results of operations for the three and six month periods ended April 30, 2018 and 2017 are not necessarily indicative of operating results for the full year.

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE	6 Months Ended
	Apr. 30, 2018
Accounts Receivable, Net [Abstract]
ACCOUNTS RECEIVABLE	NOTE 3. ACCOUNTS RECEIVABLE Management evaluates its receivables on a quarterly basis to assess the validity of remaining receivables. During the quarter ended April 30, 2018 management has determined that there is significant doubt regarding the remaining receivable balance of $8,026 and as such applied a 100 percent allowance on the receivable balance. No allowance was deemed necessary for the fiscal year ended October 31, 2017.

INVENTORY

INVENTORY	6 Months Ended
	Apr. 30, 2018
Inventory Disclosure [Abstract]
INVENTORY	NOTE 4. INVENTORY Inventory consists principally of purchased apparel inventory and House Wrap which is manufactured by the Company. Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. Innovative Designs, Inc. (the “Company”) has decided to discontinue the selling of its hunting and swimming line of apparel. The Company has booked a reserve against this inventory at April 30, 2018 and October 31, 2017 of $51,000. Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed.

EARNINGS PER SHARE

EARNINGS PER SHARE	6 Months Ended
	Apr. 30, 2018
PER SHARE INFORMATION
EARNINGS PER SHARE	NOTE 5. 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	6 Months Ended
	Apr. 30, 2018
Income Tax Disclosure [Abstract]
INCOME TAXES	NOTE 6. 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	6 Months Ended
	Apr. 30, 2018
Shipping And Handling Costs
SHIPPING AND HANDLING COSTS	NOTE 7. 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 $9,000 and $11,000 for the six month periods ended April 30, 2018 and 2017, respectively.

COMMON STOCK

COMMON STOCK	6 Months Ended
	Apr. 30, 2018
Equity [Abstract]
COMMON STOCK	NOTE 8. COMMON STOCK During 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 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. During the six-month period ended April 30, 2017, the Company issued 30,000 shares to one director for services performed during the period. The shares issued were valued at $0.25 per share for a price of $7,500. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

DEPOSITS ON EQUIPMENT

DEPOSITS ON EQUIPMENT	6 Months Ended
	Apr. 30, 2018
Deposit Assets [Abstract]
DEPOSITS ON EQUIPMENT	NOTE 9. 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 be made after the first commercial production run of INSULTEX is completed. As of April 30, 2018, 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	6 Months Ended
	Apr. 30, 2018
Segment Reporting [Abstract]
SEGMENT INFORMATION	NOTE 10. SEGMENT INFORMATION We have organized our operations into two segments. We rely on an internal management reporting process that provides segment information for purposes of making financial decisions and allocating resources. The following tables present our business segment information for the six month period ended April 30, 2018 and 2017: 2018 2017 Revenues: Apparel $ 96,172 $ 157,861 House Wrap 37,194 50,511 Total Revenues $ 133,366 $ 208,372 Assets: Apparel $ 556,343 $ 776,593 House Wrap 1,227,436 1,238,063 Total $ 1,783,779 $ 2,014,656 Capital Expenditures: Apparel $ 4,258 $ — Housewrap — $ 10,000 Total $ 4,258 $ 10,000 Depreciation: Apparel $ 6,039 $ 1,640 House Wrap 11,717 13,653 Total $ 17,756 $ 15,293

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS	6 Months Ended
	Apr. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
LEGAL PROCEEDINGS	NOTE 11. 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 expert discovery phase. Expert depositions were completed in June 2018. 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	6 Months Ended
	Apr. 30, 2018
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 12. SUBSEQUENT EVENTS The Company has evaluated subsequent events in accordance with ASC Topic 855, “ Subsequent Events In May 2018, the Company sold 25,000 shares to an individual for $5,000. The shares were valued at $0.20 per share. The Company issued 5,000 shares to one individual for services valued at $1,000. In May 2018, the Company entered into a loan agreement with an individual for $50,000. The loan and $5,000 in interest will be paid on or before June 1, 2019. The individual can convert all principal and interest to shares of Company stock at $0.20 per share.

SEGMENT INFORMATION (Tables)

SEGMENT INFORMATION (Tables)	6 Months Ended
	Apr. 30, 2018
Segment Reporting [Abstract]
Schedule of business segment information	The following tables present our business segment information for the six month period ended April 30, 2018 and 2017: 2018 2017 Revenues: Apparel $ 96,172 $ 157,861 House Wrap 37,194 50,511 Total Revenues $ 133,366 $ 208,372 Assets: Apparel $ 556,343 $ 776,593 House Wrap 1,227,436 1,238,063 Total $ 1,783,779 $ 2,014,656 Capital Expenditures: Apparel $ 4,258 $ — Housewrap — $ 10,000 Total $ 4,258 $ 10,000 Depreciation: Apparel $ 6,039 $ 1,640 House Wrap 11,717 13,653 Total $ 17,756 $ 15,293

ACCOUNTS RECEIVABLE (Details Na

ACCOUNTS RECEIVABLE (Details Narrative) - USD ($)	Apr. 30, 2018	Oct. 31, 2017
Accounts Receivable, Net [Abstract]
Bad debts	$ 8,026	$ 0

INVENTORY (Details Narrative)

INVENTORY (Details Narrative) - USD ($)	Apr. 30, 2018	Oct. 31, 2017
Inventory Disclosure [Abstract]
Inventory valuation reserves	$ 51,000	$ 51,000

SHIPPING AND HANDLING COSTS (De

SHIPPING AND HANDLING COSTS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017
Shipping And Handling Costs
Shipping and handling costs	$ 18,080	$ 25,568	$ 82,462	$ 106,074

COMMON STOCK (Details Narrative

COMMON STOCK (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Oct. 31, 2017
Related Party Transaction [Line Items]
Value of shares issued during the period	$ 216,560		$ 172,140
Value of shares issued for services	$ 29,900		$ 97,700
Three Individual [Member]
Related Party Transaction [Line Items]
Number of shares issued during the period	707,250
Value of shares issued during the period	$ 216,560
Three Individual [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Share price (in dollars per share)	$ 0.32
Three Individual [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Share price (in dollars per share)	$ 0.25
Two Individual [Member]
Related Party Transaction [Line Items]
Number of shares issued for services (in shares)	105,000
Value of shares issued for services	$ 29,900
Two Individual [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Share price for shares issued for services (in dollars per share)	$ 0.40
Two Individual [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Share price for shares issued for services (in dollars per share)	$ 0.18
One Director [Member]
Related Party Transaction [Line Items]
Number of shares issued during the period		30,000
Value of shares issued during the period		$ 7,500
Share price (in dollars per share)		$ 0.25

DEPOSITS ON EQUIPMENT (Details

DEPOSITS ON EQUIPMENT (Details Narrative) - USD ($)	Jul. 12, 2015	Apr. 30, 2018
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
Advanced payment on machine		100,000
Shipping, site improvements and installation of the equipment expenses		$ 17,000

SEGMENT INFORMATION (Details)

SEGMENT INFORMATION (Details) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2018	Apr. 30, 2017	Apr. 30, 2018	Apr. 30, 2017	Oct. 31, 2017
Segment Reporting Information [Line Items]
Total Revenues	$ 17,163	$ 39,162	$ 133,366	$ 208,372
Assets	1,783,779	2,014,656	1,783,779	2,014,656	$ 1,836,661
Capital Expenditures			4,258	10,000
Depreciation			17,756	15,293
Apparel Segment [Member]
Segment Reporting Information [Line Items]
Total Revenues			96,172	157,861
Assets	556,343	776,593	556,343	776,593
Capital Expenditures			4,258
Depreciation			6,039	1,640
House Wrap Segment [Member]
Segment Reporting Information [Line Items]
Total Revenues			37,194	50,511
Assets	$ 1,227,436	$ 1,238,063	1,227,436	1,238,063
Capital Expenditures				10,000
Depreciation			$ 11,717	$ 13,653

SEGMENT INFORMATION (Details Na

SEGMENT INFORMATION (Details Narrative)	6 Months Ended
	Apr. 30, 2018Segment
Segment Reporting [Abstract]
Number of reportable segments	2

SUBSEQUENT EVENTS (Details Narr

SUBSEQUENT EVENTS (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended	12 Months Ended
	May 31, 2018	Apr. 30, 2018	Oct. 31, 2017
Sale of stock		$ 216,560	$ 172,140
Value of shares issued for services		$ 29,900	$ 97,700
Subsequent Event [Member] | Individual [Member]
Sale of stock	$ 25,000
Number stock sold (in shares)	5,000
Share price (in dollars per share)	$ 0.20
Subsequent Event [Member] | Individual [Member] | Loan Agreement [Member]
Face amount	$ 50,000
Repayment of debt amount	$ 5,000
Conversion price	$ 0.20
Subsequent Event [Member] | One Individual [Member]
Number of shares issued for services (in shares)	5,000
Value of shares issued for services	$ 1,000