Mail Stop 3561
April 28, 2006
Mr. Joseph Riccelli
Chief Executive Officer
Innovative Designs, Inc.
223 North Main Street
Suite 1
Pittsburg, PA 15215
Re: Innovative Designs, Inc.
Form 10-KSB for the Fiscal Year Ended October 31, 2005
Form 10-QSB for the Quarterly Period Ended January 31,
2006
File No. 1-51791
Dear Mr. Riccelli
We have reviewed your filings and have the following
comments.
We have limited our review to your financial statements and
related
disclosures and do not intend to expand our review to other
portions
of your document. Please be as detailed as necessary in your
explanations. Where indicated, we think you should revise your
disclosures in future filings in response to these comments. If
you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. In some of our
comments,
we may ask you to provide us with information so we may better
understand your disclosure. After reviewing this information, we
may
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-KSB for the Fiscal Year Ended October 31, 2005
General
1. We note that you describe yourself as a development stage
enterprise throughout your document. If you believe this
description
to be appropriate, please revise your Form 10-KSB as follows:
a. Please have your auditors provide a revised audit report to
include statements of stockholders` deficit, operations and cash
flows from the period since your inception through December 31,
2005.
b. Present a statement of stockholders` deficit from the period
since
your inception to December 31, 2005.
If you believe that you are no longer a development stage
enterprise,
please remove all references to "development stage" throughout
your
document and include an appropriate discussion of your results of
operations for each of the last two years within Management`s
Discussion and Analysis . In your discussion, please address the
key
variable and other qualitative and quantitative factors which are
necessary to an understanding and evaluation of your business.
Further, please disclose any known material trends, events or
uncertainties that have had or that are reasonably expected to
have a
material impact on sales or income from continuing operations, the
causes for any material changes from period to period in one or
more
line items of your financial statements, and any seasonal aspects
that had a material effect on the financial condition or results
of
operation.
Financial Statements and Independent Auditors` Report
Independent Auditors` Report
2. Please have your auditors revise their audit report to state
that
the audit was conducted in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Your
current audit report, which refers to the "auditing" standards of
the
Public Company Accounting Oversight Board (United States) is not
sufficient in this regard as the reference to the standards of the
Public Company Accounting Oversight Board (PCAOB) should not be
limited in any way. Please refer to PCAOB Auditing Standard No.
1
and SEC Release 34-49707.
Notes to Financial Statements
6. Conversion of Notes Payable-Related Party to Equity
3. We note your disclosure related to the issuance of 1,909,098
shares of your common stock in satisfaction of $763,639 of your
note
payable to RMF-Global Inc. Please revise to reflect the issuance
of
these shares in the "common stock shares" and "amount" columns in
your Statements of Stockholders` Deficit for the year ended
October
31, 2005. Please also tell us how you accounted for the
extinguishment of your note payable. Please include in your
response
a comparison of the fair value of shares issued with the amount of
notes payable extinguished.
3. Contingencies and Uncertainties
3. We note that you learned of an arbitration award against you
in
the amount of $4,176,000 subsequent to October 31, 2005, but prior
to
the issuance of your financial statements. Please tell us your
basis
in U.S. GAAP for not recognizing a liability on your October 31,
2005
balance sheet for this uncertainty in the context of SFAS No. 5,
Accounting for Contingencies.
Form 10-QSB for the Quarterly Period Ended January 31, 2006
4. Please make appropriate changes addressing the comments above
in
your Form 10-QSB.
* * * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
cover letter that keys your responses to our comments and provides
any requested information. Detailed cover letters greatly
facilitate
our review. Please understand that we may have additional
comments
after reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Scott Ruggiero at (202) 551-3331 if you have
questions regarding comments on the financial statements and
related
matters. Please contact me at (202) 551-3716 with any other
questions.
Sincerely,
William Choi
Branch Chief
Mr. Joseph Riccelli
Innovative Designs, Inc.
April 28, 2006
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