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  4. [10-Q] INNOVATIVE DESIGNS INC Quarterly Earnings Report

Profit but going concern risk for Innovative Designs (IVDN) in Q2 filing

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
10-Q

Rhea-AI Filing Summary

Innovative Designs, Inc. reported a small profit for the quarter ended April 30, 2026 but continues to face serious financial pressure. Quarterly revenue was $808,666, slightly above $796,369 a year earlier, driven solely by higher House Wrap sales.

Net income for the quarter was $106,060 and $267,701 for the six months, yet operating cash flow was negative $126,002, with cash falling to $358,308 from $605,052 at the start of the period. The company still has an accumulated deficit of $9,777,629 and discloses that these factors raise substantial doubt about its ability to continue as a going concern for one year from issuance.

Positive

  • None.

Negative

  • Going concern uncertainty: Despite reporting net income of $267,701 for the six months ended April 30, 2026, management cites negative operating cash flow and a $9,777,629 accumulated deficit as factors that raise substantial doubt about the Company’s ability to continue as a going concern for one year from issuance.

Insights

Profitability improved, but going concern risk and cash burn remain elevated.

Innovative Designs generated six-month revenue of $1,440,867 and net income of $267,701, indicating a profitable period on paper. However, operating activities used $126,002 of cash, and quarter-end cash was only $358,308, highlighting weak cash generation.

Management explicitly states that the accumulated deficit of $9,777,629, negative operating cash flow, and reliance on sales, equity issuance and private borrowings create “substantial doubt” about the company’s ability to continue as a going concern for one year from issuance. This language is a clear financial risk signal.

The payoff of a $20,000 note payable and limited total liabilities of $208,748 modestly improve the balance sheet, but future viability depends on sustaining House Wrap demand and securing sufficient funding. Subsequent filings will clarify whether revenue growth or new financing eases this going concern uncertainty.

Quarterly revenue $808,666 Three months ended April 30, 2026
Six‑month revenue $1,440,867 Six months ended April 30, 2026
Six‑month net income $267,701 Six months ended April 30, 2026
Quarter‑end cash $358,308 Cash and cash equivalents as of April 30, 2026
Accumulated deficit $9,777,629 As of April 30, 2026
Operating cash flow ($126,002) Net cash used in operating activities, six months ended April 30, 2026
Inventory before allowance $579,366 Inventory on hand prior to obsolete reserve, April 30, 2026
Shares outstanding 38,504,003 shares Common stock issued and outstanding as of April 30, 2026
going concern financial
"These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year"
A going concern is a business that is expected to continue its operations and meet its obligations for the foreseeable future, rather than shutting down or selling off assets. This assumption matters to investors because it indicates stability and ongoing profitability, making the business a more reliable investment. Think of it as believing a restaurant will stay open and serve customers, rather than closing down suddenly.
current expected credit loss (CECL) financial
"ASU 2016-13 introduces a new impairment model, the current expected credit loss (“CECL”) model"
right of use (ROU) asset financial
"establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability"
ICC Evaluation Services, LLC (ICC-ES) technical
"we intend to begin the process of having Insultex certified by ICC Evaluation Services, LLC (“ICC-ES”)"
Basic earnings (loss) per share financial
"Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted average number of common shares"
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AUNITED STATES
SECURITIESAND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13l OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended April 30, 2026 OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the transition period from ___________ to ______________.

 

Commission File Number: 000-51791

 

INNOVATIVE DESIGNS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware 03-0465528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

  

124 Cherry Street
Pittsburgh, Pennsylvania 15223

(Address of Principal Executive Offices, Zip Code)

 

(412) 799-0350

(Issuer’s Phone Number IncludingArea Code)

 

N/A

(Former Name or FormerAddress, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☐ No ☒

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes ☒ NO ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting Company” in Rule 12b-2 of the ExchangeAct.

 

(Check One)

 

Large Accelerated Filer ☐ Accelerated Filer ☐
Non-accelerated Filer ☐ Smaller reporting company ☒
(Do not check if a smaller reporting company)  

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct). YES ☐ NO ☒

 

As of April 30, 2026, there were 38,504,003 shares of the Registrant’s common stock, par value $.0001 per share, outstanding. Transitional Small Business Disclosure Format: YES ☐ NO ☒

 

1

 

 

Innovative Designs, Inc.

 

Index

 

Form 10-Q for the Quarter Ended April 30, 2026

 

  Part I -- Financial Information Page No.
     
Item 1. Condensed Financial Statements (Unaudited) 3
     
  Condensed Balance Sheets as of April 30, 2026 (Unaudited) And October 31, 2025 3
     
  Condensed Statements of Operations for the Three Month Periods Ended April 30, 2026 and 2025 (Unaudited) 4
     
  Condensed Statements of Changes in Stockholders’ Equity as of April30, 2026 (Unaudited) and October 31, 2025 5
     
  Condensed Statements of Cash Flows for the Three Month Periods Ended April 30, 2026 and 2025 (Unaudited) 6
     
  Notes to the Condensed Financial Statements 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 12
     
  Part II -- Other Information  15
     
Items 1, 2, 3, 4, 4T and 5. 15
     
Item 6. Exhibits 16

 

2

 

 

 PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

 

INNOVATIVE DESIGNS, INC.

Condensed Balance Sheets

As of April 30, 2026 (Unaudited) and October 31, 2025 (Audited)

 

                 
    April 30,
2026		   October 31,
2025
Assets                
Current assets                
Cash and Cash Equivalents   $ 358,308     $ 605,052  
Accounts Receivable, Net     661,375       344,700  
Inventory, Net     579,366       537,713  
Other Current Assets     62,361       31,078  
Total current assets     1,661,410       1,518,543  
Long-Term Assets                
Property, Plant, and Equipment, Net     94,488       30,530  
Deposits on Inventory     78,047       —  
Deposits on Equipment     702,083       662,944  
Total Long-Term Assets     874,618       693,474  
Total assets   $ 2,536,028     $ 2,212,017  
                 
Liabilities and Stockholders’ Deficit                
Current liabilities                
Credit Cards   $ 17,443     $ 11,964  
Accounts Payable     116,446       78,750  
Other current Liabilities     61,959       38,824  
Total current liabilities     195,848       129,538  
Long-Term Liabilities                
 Reserve for unpaid debt     12,900       12,900  
 Long-Term Shareholder Loans     —       10,000  
Total Long-Term Liabilities     12,900       22,900  
Total liabilities     208,748       152,438  
                 
Stockholders’ deficit                
Common stock, $0.0001 par value; 100,000,000 shares authorized; 38,504,003 and 38,504,003 shares issued and outstanding as of April 30, 2026 and October 31, 2025, respectively     3,850       3,850  
Additional paid-in capital     12,101,059       12,101,059  
Accumulated deficit     (9,777,629 )     (10,045,330 )
Total stockholders’ deficit     2,327,280       2,059,579  
Total liabilities and stockholders’ deficit   $ 2,536,028     $ 2,212,017  

 

See accompanying notes to financial statements.

 

3

 

 

INNOVATIVE DESIGNS, INC.

Condensed Statements of Operations

For the Six Months Ended April 30, 2026, and 2025

(Unaudited)

 

                                 
      For the
Six Months ended
April 30, 		    For the
Three Months Ended
April 30,
    2026     2025     2026     2025
                 
REVENUES, net   $ 1,440,867     $ 1,326,451     $ 808,666     $ 796,369  
OPERATING EXPENSES                                
 Cost of sales     662,401       626,902       414,835       395,872  
 SG&A Expense     501,689       471,922       285,133       199,824  
Total operating expenses     1,164,090       1,098,824       699,968       595,696  
                                 
Income (loss) from operations     276,777       227,627       108,698       200,673  
                                 
OTHER INCOME (EXPENSES)                                
 Cash Rewards             153               153  
 Interest Income     2,909               1,634          
 Interest expense     (4,339 )     2,587       (2,151 )     5,849  
 Depreciation     (7,646 )     (3,811 )     (2,121 )     (2,487 )
 Total other income (expense)     (9,076 )     (1,071 )     (2,638 )     3,515  
                                 
Net income (loss)   $ 267,701     $ 226,556     $ 106,060     $ 204,188  
                                 
Loss per share of common stock - Basic and diluted   $ 0.000     $ 0.000     $ 0.01     $ 0.001  
                                 
Weighted average shares of common stock  - Basic     38,504,336       38,504,336       38,504,336       38,504,336  
- Diluted     38,504,336       38,504,336                  


 

See accompanying notes to financial statements.

 

4

 

 

INNOVATIVE DESIGNS, INC.

Condensed Statements of Changes in Stockholders’ Equity

Six Months Ended April 30, 2026, and 2025

(Unaudited)

 

                                         
    Common Stock   Additional   Paid in   Accumulated   Total Stockholders’
    Shares   Amount   Capital   Deficit   Deficit
Balance October 31, 2024     37,924,003     $ 3,792     $ 11,979,117     $ (10,540,033 )   $ 1,442,876  
                                         
Sale of stock     120,000       12       29,988       —       30,000  
Shares issued for services     260,000       26       51,974       —       52,000  
Net income (loss)     —       —       —       36,202       36,202  
                                         
Balance January 31, 2025     38,304,003       3,830       12,061,079       (10,503,831 )     1,561,078  
                                         
Sale of Stock     50,000     $ 5     $ 9,995       —     $ 10,000  
Shares issue for Services     150,000     $ 15       29,985             $ 30,000  
Net Income (Loss)     —       —       —     $ 204,188     $ 204,189  
Balance April 30, 2025     38,504,003     $ 3,850     $ 12,101,059     $ (10,299,643 )   $ 1,805,266  
                                         
Balance October 31, 2025     38,504,003       3,850       12,101,059       (10,045,330 )     2,059,579  
                                         
Sale of stock     —       —       —       —       —  
Shares issued for Services     —       —       —       —       —  
Net Income (Loss)     —       —       —       161,641       161,641  
                                         
Balance January 31, 2026     38,504,003     $ 3,850     $ 12,101,059     $ (9,883,689 )   $ 2,221,220  
                                         
Sale of Stock     —     $ —     $ —             $ —  
Stock issued for Commission     —     $ —     $ —             $ —  
Net Income (Loss)                           $ 106,060     $ 106,060  
                                         
Balance April 30, 2026     38,504,003     $ 3,850     $ 12,101,059     $ (9,777,629 )   $ 2,327,280  

 

See accompanying notes to financial statements.

 

5

 

 

INNOVATIVE DESIGNS, INC.

Statements of Cash Flows

For the Six Months Ended April 30, 2026 and 2025

(Unaudited)

 

                 
    2026   2025
Cash flows from operating activities                
Net income (loss)   $ 267,701     $ 226,556  
Stock issuance for services     —       82,000  
Depreciation     7,646       3,811  
Gain on sale of assets     —       —  
Adjustments to reconcile net income to net cash provided by operating activities:                
 Accounts receivable and other receivables     (326,675 )     (384,851 )
 Inventory     (41,653 )     67,203  
 Deposits in inventory     (78,047 )     (58,000 )
Credit card payable     5,478       (42,591 )
Accounts payable and accrued expenses     39,548       (23,589 )
Net cash provided by (used in) operating activities     (126,002 )     (129,461 )
                 
Cash flows from investing activities                
 Purchase of assets     (71,603 )     (10,666 )
 Deposits on equipment     (39,139 )     —  
Proceeds from sale of equipment     —       —  
Net cash provided by (used in) financing activities     (110,742 )     (10,666 )
                 
Cash flows from financing activities                
 Proceeds from sale of stock     —       40,000  
 Payment on shareholder advances     (10,000 )     —  
 Increase (Decrease) in reserve for unpaid debt     —       12,900  
Net cash provided by (used in) investing activities     (10,000 )     52,900  
                 
Net change in cash and cash equivalents     (246,744 )     (87,227 )
Cash and cash equivalents, beginning of period     605,052       201,765  
Cash and cash equivalents, end of period   $ 358,308     $ 114,538  

 

6

 

 

INNOVATIVE DESIGNS, INC.

Notes to the Condensed Financial Statements

For the Period Ended April 30, 2026

 

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 (the “Company”) financial position as of April 30, 2026, the changes therein for the three-month periods that ended and the results of operations for the three-month periods ended April 30, 2026.

 

The condensed financial statements included in the Form 10-Q (the “Form”) are presented in accordance with the requirements of the Form and do not include all of the disclosures required by generally accepted accounting principles in the United States of America. For additional information, reference is made to the Company’s annual report on Form 10-K for the fiscal year ending October 31, 2025. The results of operations for the three-month period ending April 30, 2026, are not necessarily indicative of operating results for the full year.

 

The Company’s unaudited condensed financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended October 31, 2025, and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2025, filed with the SEC on January 30, 2026 (the “2025 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.

 

The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the three months ended April 30, 2026, are not necessarily indicative of the results for the year ending October 31, 2025, or for any future period.

 

As of April 30, 2026, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2025 annual report.

 

NOTE 2 – GOING CONCERN

 

These condensed 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 income of $267,201 and a negative cash flow of $126,002 from operation activities for the three-month period ending April 30, 2026. In addition, the Company has an accumulated deficit of ($9,777,629). Management’s plans include cash receipts 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 condensed financial statements. These condensed 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.

 

7

 

 

NOTE 3 – ACCOUNTS RECEIVABLE

 

Accounts receivables are reported at their net realizable value. The Company 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. There were $0 in receivables over 90 days as of April 30, 2026, and no balances over 90 days as of October 31, 2025. As of April 30, 2026, the balance of accounts receivable was $661,375, net of allowances.

 

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. The Company has decided to discontinue the manufacturing of its Artic Armor, hunting and swimming line of apparel. The Company has booked a reserve against apparel inventory as of April 30, 2026 and October 31, 2025 of $65,600. Management has determined that no allowance is currently necessary on the house wrap inventory.

 

Management will continue to evaluate its obsolete inventory reserve throughout the year and make adjustments as needed. As of April 30, 2026, the total value of the inventory on hand prior to the allowance for obsolete inventory is $579,366.

 

NOTE 5 – WARRANTIES

 

The Company provides a ten-year limited warranty covering defects in workmanship. These warranties are included in the contract and do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications. The Company does not consider these assurance-type warranties to be separate performance obligations. Management has determined that no warranty reserve is currently necessary on the Company’s products. Management will continue to evaluate the need for a warranty reserve throughout the year and make adjustments as needed.

 

8

 

 

NOTE 6 – NOTES PAYABLE

 

In January 2013, the Company entered into a loan agreement with Corinthian Development for $20,000 to fund operations of the Company. This loan is due on demand, including interest at an annual rate of 10% with an original maturity date of May 2013. This loan was extended through a verbal agreement and currently has no set maturity date. On February 27, 2026, the loan was paid back in full. As of April 30, 2026, the balance of the loan was $0.

 

As of April 30, 2026, all notes payables are up to date.

 

NOTE 7 – REVENUES

 

Revenues are measured based on the amount of consideration specified in a contract with a customer. The Company recognizes revenue when and as performance obligations (i.e., obligations to transfer goods and/or services) are satisfied, which generally occurs with the transfer of control of the goods or services to the customer.

 

To determine proper revenue recognition, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether a combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment, and the decision to combine contracts or separate a combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Contracts are considered to contain a single performance obligation if the promise to transfer individual goods or services is not separately identifiable from other promises in the contracts.

 

For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract.

 

NOTE 8 – EARNINGS PER SHARE

 

The Company calculates net 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. In 2021, the Company issued a convertible debt instrument. In addition, the Company also has stock warrants of 2,549,443 and 2,429,443 as of April 30, 2026, and October 31, 2025, respectively. The Company has calculated diluted earnings per share utilizing the outstanding stock warrants and convertible debt

 

NOTE 9 – INCOME TAXES

 

The Company accounts for income taxes in accordance with FASB 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

 

 NOTE 10 – 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 $59,183 and $36,775 for the three-month ended April 30, 2026 and 2025, respectively.

 

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NOTE 11 – COMMON STOCK

 

As of April 30, 2026, the total stock issued is 38,504,003

 

NOTE 12 – 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 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 be made after the first commercial production run of INSULTEX is completed. As of October 31, 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. During 2019, the Company determined the shipping costs of $17,000 were impaired and these costs were written off the balance due. During the fiscal year ended October 31, 2023, the Company made additional prepayments totaling $16,000 on the equipment.

 

During the fiscal year ended October 31, 2022, the Company made deposits on a separate piece of equipment of $7,370. During the fiscal year ended October 31, 2023, the Company made additional deposits of $29,574 on this piece of equipment. On January 12, 2026, a payment in the amount of $39,139 was made to complete the purchase of this equipment. The company does not currently have this equipment in their possession and expect to acquire it in the near future.

 

There have been no additional deposits made as of April 30, 2026

 

Total overall deposits on equipment as of April 30, 2026 and October 31, 2025 were $702,083 and $662,944, respectively.

 

NOTE 13 – LEASE

 

FASB ASC Topic 842,”Leases”, establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the condensed balance sheets. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ROU assets are reduced each period by an amount equal to the difference between the lease expense and the amount of interest expense on the lease liability, using the effective interest method. The Company used the average commercial real estate interest rate of 5.50% to calculate the present value of the lease. The Company recognizes lease expense on a straight-line basis over the leased term on the condensed statements of operations.

 

The Company entered into a lease for office space at the time the Company was formed through June 2022. Effective July 2022, the Company is leasing the office space on a month to month basis. As a result, the Company has elected to apply the short-term lease exemption to its lease of the facilities and therefore has not recorded a ROU asset and related lease liability.

 

NOTE 14 – 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, Case number 16-1669. In the complaint, the FTC alleges that, among other matters, the Company did 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 to redress a rescission of revenue the Company received from the sale of the house wrap and a permanent injunction. On September 24, 2020, a judgment was entered in favor of the Company as to all claims set forth in the FTC complaint. It was further ordered that as there were no remaining claims in the action the case shall be marked as closed.

 

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On November 23, 2020, the Company was informed that the FTC had filed a notice of appeal in regard to the case. The appeal is from the District Court’s September 24, 2020, Order granting the Company’s Motion for Judgment on Partial Findings Pursuant to Fed. R. Civ. P. 52(c) and subsequent Judgment in favor of the Company and from the District Court’s February 14, 2020, striking Dr. David Yarbrough’s expert testimony made on behalf of the FTC. The FTC filed its appeal and on March 24, 2021, the Company filed its answer.

 

On July 22, 2021, the Registrant was informed that the U.S. Court of Appeals for the Third District affirmed the District Court’s ruling in favor of the Registrant. The ruling was in connection with the FTC complaint filed against the Registrant in November 2016, alleging, among other matters, that the Registrant did not have substantiation for claims made by the Registrant regarding the R-value and energy efficiency of its INSULTEX house wrap products.

 

In November 2021, in connection with the FTC litigation, the Company filed an application for attorney fees, expenses and cost in the U.S. District Court for the Western District of Pennsylvania, Case No.2:16-cv-01669-NBF. On June 29, 2022, a settlement order was signed by the Court. Pursuant to the Order, the FTC paid the Company $260,000 to resolve all such claims. The parties agreed to waive all rights to appeal or otherwise challenge or contest the validity of the Order.

 

As of April 30, 2026, there are no additional or current legal proceedings.

 

NOTE 15 – ADOPTED PRONOUNCEMENT

 

The requirements of the following FASB statement were adopted for the Company’s condensed financial statements:

 

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, ”Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 introduces a new impairment model, the current expected credit loss (“CECL”) model. The model applies to most assets that are measured at amortized cost and requires those assets to be presented at the net amount expected to be collected. In addition, credit losses on available-for-sale debt securities are to be recognized through an allowance account. ASU 2016-13 also expands existing disclosure requirements. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and interim periods therein, and requires retrospective application. The Company adopted the new standard effective November 1, 2023, and there were no material changes to the condensed balance sheets, condensed statements of operations, condensed statements of changes in stockholders’ equity, and condensed statements of cash flows as a result of the adoption.

 

NOTE 16 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events in accordance with ASC Topic 855, ”Subsequent Events”, through the date financial statements were available to be issued. The Company identified no material subsequent events that require recognition or disclosure except the following:

 

As of April 30, 2026, there are no material subsequent events to report

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

General

 

The following information should be read in conjunction with the 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, 2025.

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation 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, competition in our cold weather markets, our ability to sell out HouseWrap product line, 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, 2021. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise except as required by law.

 

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 IINSULTEX, 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 IINSULTEX. We obtain IINSULTEX through a license agreement with the owner and manufacturer of the material. Since our formation we have devoted our efforts to:

 

●Complete the development, design and prototypes of our products,

 

●Obtaining retail stores or sales agents to offer and sell our products’

 

●Developing our website to sell more of our products.

 

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Results of Operations

 

Comparison of the Three-Month Period Ended April 30, 2026, with the Three-Month Period Ended April 30, 2025.

 

The following table shows a comparison of the results of operations between the three month periods ended April 30, 2026, and April 30, 2025:

 

    Three Month       Three Month            
    Ended   %   Ended   %   Increase    
    4/31/2026   of sales   4/31/2025   of sales   (Decrease)   % Change
                         
REVENUE - NET     808,666       100.0 %     796,369       100.0 %     12,297       15.4 %
                                                 
OPERATING EXPENSES                                                
Cost of sales     414,835       51.3 %     395,872       49.7 %     18,963       4.8 %
Selling and G&A expenses     285,133       35.3 %     199,824       25.1 %     85,309       42.7 %
Total Operating Expenses     699,968       86.6 %     595,696       74.8 %     104,272       17.5 %
Income (loss) from operations     108,698       13.4 %     200,673       25.2 %     (91,975 )     -45.8 %
                                                 
Other income (expenses)                                                
Miscellaneous income (expense)     1,634       0.1 %     153       0.0 %     1,481       968.0 %
Interest expense     (2,151 )     -0.2 %     5,849       0.7 %     (8,000 )     -136.8 %
Depreciation     (2,121 )     -0.2 %     (2,487 )     -0.3 %     366       14.7 %
Total other income (expense)     (2,638 )     0.3 %     3,515       0.4 %     (1,853 )     -40.4 %
Net income (loss)     106,060       13.1 %     204,188       25.6 %     (98,128 )     -48.1 %

 

Revenues for the three-month period ended April 30, 2026, were $808,666 compared to revenues of $796,369 for the three-month period ended April 30, 2025. The increase in revenue is attributable solely to an increase in sales of our House wrap product line.

 

Our costs of sale, selling, general and administrative expenses (“SG&A”) were $285,133 for the three months ended April 30, 2026, compared to $199,824 for the three-month period ended January 31, 2025. In February of 2024, we hired a son of our former CEO as a consultant to increase the sales.

 

Liquidity and Capital Resources

 

During the three-month period ended April 30, 2026, we funded our operations from revenues and the sale of our common stock.

 

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. We will require more funds to be able to order the material for our Insultex products and to purchase equipment needed for the manufacture of the Insultex product. 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 2015. The Company will have to have the machine installed and ensure that it can be operated in compliance with all environmental rules and regulations. It is the Company’s intention to have the equipment operational but cannot currently provide a time estimate. Among the factors affecting the time estimate are the financial resources available to the Company, finding a suitable facility and bringing technical personnel from abroad to install the equipment. The Company has currently made deposits of $652,944 on the equipment. The Company will produce Insultex under its own brand name. See Note 13 of the Notes to the Condensed Financial Statements.

 

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The new quality control testing equipment for our House Wrap Product line has been built. We have reached an agreement with the vendor on the final amount. As of April 30, 2026, we have paid approximately $39,139 in deposits for the equipment. We expect to accept delivery of the equipment when we are able to reach an agreement with a testing laboratory that will house the equipment. Once the equipment is installed it will have to go through a certification process before we will be able to conduct tests on our Insultex products. Once the testing equipment is certified, we intend to begin the process of having Insulted certified by ICC Evaluation Services, LLC (“ICC-ES”). ICC-ES certifies, among other items, building materials and products of which our House Wrap falls under. The reason we need to have ICC-ES certification is that we believe in order to get large orders for House Wrap, ICC-ES certification will be required. The other component part of the Housewrap produced by a third party is ICC-Es certified. Getting ICC-ES certification is costly and time consuming.

 

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 goods and our efforts to produce our own IINSULTEX would be delayed.

 

 Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Critical Accounting Policies and Estimates

 

Revenue Recognition: We recognize revenue from product sales when all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured.

 

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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDING

 

See Note 16 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report.

 

ITEM 1ARisk Factors

 

See Risk factors set forth in Part I Item 1Aof the Company’sAnnual report on Form 10-K for the fiscal year ended October 31, 2024.Set forth below are additional risk factors.

 

Sole Source for Insultex. We rely on a single source for the Insultex material. We do not believe we could obtain Insultex from any other source. Insultex is manufactured by a company in Indonesia using proprietary technology Should we not be able to obtain Insultex from this company for any reason we could no longer maintain operations.

 

Reliance on Key Personnel. Mr. Joseph A Riccelli Jr is our President / CEO. Should we lose the services of Mr. Riccelli our operations would be materially affected.

 

ITEM 1B Climate-Related Disclosure.

 

N/A

 

TEM 2. UNREGISTERED SALES OF EQUITY SECURITIESAND USE OF PROCEEDS

 

N/A

 

ITEM 3. Defaults upon Senior Securities

 

None

 

Item 4 Mine Safety Disclosures

 

Not applicable

 

ITEM 4T. CONTROLSAND PROCEDURES

 

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 ExchangeAct 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 full time 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.

 

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ITEM 6. EXHIBITS

 

*3.1 Revised Certificate of Incorporation
   
**3.2 By-Laws
   
31.1 Rule 13a - 14a Certification of Chief Executive Officer
   
31.2 Rule 13a-14a Certification of Chief Financial Officer and Principal Accounting Officer
   
32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
   
32.2 Section 1350 Certification of Chief Financial Officer and Chief Accounting 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

 

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SIGNATURES

 

Pursuant to the requirements of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: June 16, 2026  
   
  Joseph A. Riccelli
  Chief Executive Officer
  Chief Financial Officer

 

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Source: View Original Filing on SEC EDGAR

FAQ

How did Innovative Designs (IVDN) perform financially for the quarter ended April 30, 2026?

Innovative Designs reported quarterly revenue of $808,666 and net income of $106,060. For the six months, revenue was $1,440,867 with net income of $267,701, reflecting profitable operations but not resolving broader liquidity and solvency concerns disclosed elsewhere.

What going concern risks does Innovative Designs (IVDN) disclose in this 10-Q?

The company notes net income but negative operating cash flow of $126,002, limited cash of $358,308, and an accumulated deficit of $9,777,629. Management states these factors raise substantial doubt about its ability to continue as a going concern for one year from issuance.

How are Innovative Designs’ (IVDN) revenues changing compared to last year?

Quarterly revenue was $808,666 versus $796,369 a year earlier, and six‑month revenue was $1,440,867 versus $1,326,451. The filing attributes the revenue increase solely to higher sales of its House Wrap product line, rather than apparel or other categories.

What is the cash position and cash flow situation for Innovative Designs (IVDN)?

Cash and cash equivalents were $358,308 as of April 30, 2026, down from $605,052 at the beginning of the period. Operating activities used $126,002 of cash over six months, while additional outflows went to equipment purchases and shareholder loan repayment.

How many shares of common stock does Innovative Designs (IVDN) have outstanding?

The company reports 38,504,003 shares of common stock issued and outstanding as of April 30, 2026, with a par value of $0.0001 per share. Additional paid‑in capital totals $12,101,059, reflecting prior equity financings and share issuances.