General
The following information should be read in conjunction with the financial statements and the notes thereto appearing elsewhere in this report.
Disclosure Regarding Forward-Looking Statements
Certain statements made in this report, and other written or oral statements made by or on behalf of the Company, may constitute "forward-looking statements" within the meaning of the federal securities laws. When used in this report, the words "believes," "expects," "estimates," "intends," and similar expressions are intended to identify forward-looking statements. Statements regarding future events and developments and our future performance, as well as our expectations, beliefs, plans, intentions, estimates, or projections relating to the future, are forward-looking statements within the meaning of these laws. Examples of such statements in this report include descriptions of our plans and strategies with respect to developing certain market opportunities, and our overall business plan. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected we believe that these forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligations to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise. 16 BackgroundInnovative Designs, Inc. (hereafter referred to as the "Company", "we" or "our") produces and sells a house wrap product using Insultex a material with thermal resistance and buoyancy properties. We also offer a cold weather product line called "Artic Armor" which also uses Insultex. We no longer produce anyArtic Armor products. We are only selling form our existing inventory. We obtain Insultex through a license agreement with the owner and manufacturer of the material. InDecember 2015 , we took delivery of equipment capable of producing our own Insultex. At such time as we have sufficient funding, we intend put the equipment into production and use the Insultex from this equipment in the production of our House Wrap product and for the sale of Insultex to others. Results of Operations
Comparison of the fiscal year ended
The following table shows a comparison of the results of operations between the
fiscal years ended
Fiscal Year Fiscal Year Ended Ended October 31, % of October 31, % of Increase % 2022 Sales 2021 Sales (Decrease) Change REVENUE$ 258,734 100.00 %$ 225,601 100.00 %$ 33,133 15 % OPERATING EXPENSES Cost of sales 118,997 46 % 96,728 43 % 22,269 23 % Selling, general and administrative expenses 666,239 257 % 411,716 182 % 254,523 62 % 785,236 -303 % 508,444 225 % 276,792 54 % Loss from operations (526,502 ) -203 % (282,843 ) -125 % (243,659 ) 86 % OTHER INCOME/(EXPENSE) Other income 371,000 143 % 33,652 15 % 337,348 1002 % Interest expense (42,072 ) -16 % (49,112 ) -22 % 7,040 -14 % Loss on disposal of equipment -0- 0 % (24,429 ) -11 % (24,429 ) 100 % Net loss$ (197,574 ) -76 %$ (322,732 ) -143 %$ 125,158 -39 % Weighted average common shares outstanding - undiluted 34,650,560 32,263,560 Loss per common share - undiluted$ (0.01 ) $ (0.01 ) 17 Results of Operations Revenues for the fiscal year ended October 31, 2022, were$ 258,734 compared to revenues of$225,601 for the comparable period endingOctober 31, 2021 . House Wrap product revenue totaled$ 193,302 for the period compared to$169,375 for fiscal year endedOctober 31, 2022 . Nearly all of the remaining revenues were derived from our Arctic Armor and related product lines which totaled$65,432 for the period compared to revenues of$56,226 for the fiscal year endedOctober 31, 2021 . Revenues are net of returns and discounts. We continue to work on rebuilding our House Wrap product line brand after doing no advertising during the time of theFTC litigation,November 2016 toJuly 2021 , and the effect of the litigation on our House Wrap products acceptance, and the use of Insultex in other applications in the marketplace. Selling, general and administrative expense increased from$411,716 in fiscal year 2021, to$666,239 in the fiscal year endingOctober 31, 2022 . This increase reflects, in part,$53,000 more for advertising and marketing, a payroll increase of$75,000 , a reinstatement fee of$14,000 for listing on the OTCQB and stock base compensation to our directors of$71,000 and$75,000 in stock based compensation to a marketing consultant. Profession fees decreased during the period by$17,000 as theFTC litigation wound down.
Our cost of sales increased from
Liquidity and Capital Resources
During the fiscal year endedOctober 31, 2022 , we funded our operations from revenues, a legal settlement and the private sales of our common stock. During the period, we received$260,000 from a settlement with theFTC for legal fees incurred in connection with theFTC litigation. Subsequent to the period, we receive$110,000 from the sale of our Common Stock. We will continue to fund our operations from revenues, private borrowings and the sale of our common stock until we are able to produce sales sufficient to cover our cost structure or to secure commercial lending arrangements. OnJuly 12, 2015 , the Company reached an agreement withKetut Jaya to purchase 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 tothe 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 ofOctober 31, 2016 , the Company has made payments of$600,000 . In addition to the final payments, the Company will have to have the equipment and machines installed and ensure that the machine can be operated in compliance with environmental regulations. The Company has not made an estimate of the costs required for bringing the machine into compliance, but it is considered to be substantial. Given the expected time and cost of bringing the equipment into production mode and our current financial condition we are unable to estimate when we will be able to do so. We also must purchase new quality control testing equipment for our House Wrap product line which we estimate will 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.
During the period we paid
Short Term: We funded our operations with revenues from sales, private sales of our common stock and from a legal settlement. We could not access commercial lines of credit during our last fiscal year. 18
The Company intends to repay these debt obligations with funds it generates from revenues, from the possible sale of its securities either debt or equity, from advances from our stockholders or others. Because we cannot currently access commercial lending facilities, should we not be able to continue to obtain funding from these sources should our revenues decrease, our operations would be severely affected as we would not be able to fund our purchase orders to our suppliers for finished goods. The Company continues to pay its creditors when payments are due. Long Term: The Company will continue to fund operations from revenues, borrowings and the possible sale of its securities. Should we not be able to continue to rely on these sources our operations would be severely affected as we would not be able to fund our purchase orders to our suppliers for finished goods.
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