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
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 endedOctober 31, 2020 . The Company undertakes no obligation to publicity update or revise any forward-looking statement, whether as a result of new information, future events or otherwise except as required by law. Background
Innovative Designs, Inc. (hereinafter referred to as the "Company", "we" or "our") was formed onJune 25, 2002 . We market and sell clothing products such as outdoor apparel, and cold weather gear called "Arctic Armor" that are made from INSULTEX, a material with buoyancy, scent block and thermal resistant properties. We also market our House Wrap product line which is a building material with thermal qualities. House Wrap is also made from INSULTEX. We obtain INSULTEX through a license agreement with the owner and manufacturer of the material. Since our formation we have devoted our efforts to:
? Completing 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.
11INNOVATIVE DESIGNS, INC. Results of Operations
Comparison of the Three-Month Period Ended
Three Month Three Month Period Ended Period Ended January 31, % of January 31, % of Increase 2023 Sales 2022 Sales (Decrease) % Change REVENUE - NET$ 71,647 100 %$ 62,400 100 %$ 9,247 15 % OPERATING EXPENSES Cost of sales 17,010 24 % 32,346 52 % (15,336 ) -47 % Selling, general and administrative expenses 113,882 159 % 150,246 241 % (36,364 ) -24 % 130,892 183 % 182,592 293 % (51,700 ) -28 %
(Loss) Income from operations (59,245 ) -83 % (120,192 )
-193 % 60,947 -51 % Other income (expense) 7,519 10 % - 0 % 7,519 100 % Other Expense Interest expense (6,599 ) -9 % (11,476 ) -18 % 4,877 -42 % Depreciation expense (769 ) -1 % (372 ) -1 % (397 ) 107 % Net (Loss) Income$ (59,094 ) -82 %$ (132,040 ) -212 %$ 72,946 -55 % Revenues for the three-month period endedJanuary 31, 2023 , was$71,647 compared to revenues of$62,400 for the three-month period endedJanuary 31, 2022 . The increase in revenue is primarily attributable to more sales of our House Wrap product. See Note 13 of the Notes to the Condensed Financial Statements appearing elsewhere in this Report for a description of our segment products sales. Our net loss for the three-month period endedJanuary 31, 2022 , was ($ 132,040 ) compared to a net loss of ($ 35,965 ) for the same period in 2021. Our selling, general and administrative expenses were$114,651 for the three-month period endedJanuary 31, 2023 , compared to$150,618 for the three-month period endedJanuary 31, 2022 . Professional fees for the three-month period endedJanuary 31, 2023 , were$19,481 compared to$40,610 for the three-month period endedJanuary 31, 2022 . The decrease is primarily a result of lower accounting and legal costs. Salary was$35,773 for the three-months endedJanuary 31, 2023 compared to$43,284 for the three months endedJanuary 31 ,
2022. 12
Liquidity and Capital Resources
During the three-month period ended
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 inDecember 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 intentions to have the equipment operational but cannot currently provide a time estimate. Among the factors affecting the time estimate are financial resources available to the Company, finding a suitable facility and bringing technical personal from abroad to install the equipment. The Company has currently made deposits of$600,000 on the equipment. The Company has incurred$17,000 of additional expenses related to shipping. The Company will produce INSULTEX under its own brand name. See Note 10 of the Notes to the Condensed Financial Statements. We also must purchase new quality control testing equipment for our House Wrap Product line which we estimate may cost approximately$100,000 . However, we have not as yet received a quote from the vendor. We have placed a$7,000 deposit with the vendor. Once the equipment is built it will have to go through a certification process. 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 INSULTEX would be delayed. 13INNOVATIVE DESIGNS, INC.
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