INNOVATIVE DESIGNS INC - Annual Report: 2009 (Form 10-K)

Unassociated Document

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x Annual report under section 13 or 15(d) of the Securities Act of 1934.

For the fiscal year ended October 31, 2009

o Transition report under section 13 or 15(d) of the Securities 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 Number)

223 North Main Street, Suite 1
Pittsburgh, Pennsylvania		15215
(Address of principal executive offices)		(Zip Code)

(412) 799-0350

(Registrant’s telephone number including area code)

Securities to be registered pursuant to Section 12(b) of the Exchange Act:

Securities registered or to be registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $.001 par value per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to section 13 or Section 15 (d) of the Act.

o Yes x No

Check whether the issuer (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 past 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 x No o

Indicate by check mark if disclosure of delinquent filers to Item 405 of Regulation S-K (sec. 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check One)

Large accelerated filer o		Accelerated filer o

Non-accelerated filer o		Smaller reporting company x

(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 Exchange Act).

Yes o No x

The issuer’s revenues for its most recent fiscal year were $890,700.

The aggregate market value of the voting stock, consisting solely of common stock, held by non-affiliates of the issuer computed by reference to the closing price of such stock was $2,067,935 as of January 25, 2010.

The number of shares of the issuer’s common stock outstanding, as of January 25, 2010 was 18,698,743.

Transitional Small Business Disclosure Format: Yes o No x

ITEM 1.

DESCRIPTION OF BUSINESS.

The Company, which was incorporated in the State of Delaware on June 25, 2002, markets cold weather recreational and industrial clothing products that are made from INSULTEX, a low density foamed polyethylene, a material with buoyancy, scent block, and thermal resistant properties. We have a license agreement directly with the owner of the INSULTEX Technology.

During 2006, an Involuntary Chapter 7 Petition was filed against us based upon a judgment award from an Italian Arbitration Panel. On October 31, 2007, we were dismissed from the bankruptcy case.

The distribution rights we have are derived from our license agreement. As such, we purchase INSULTEX to be used in the manufacturing of our products. Similarly, other companies are free to purchase INSULTEX from us assuming that it is a company within the distribution jurisdiction that we have, which is worldwide with the exception of Korea and Japan. Other than Korea and Japan, we are the sole worldwide supplier/distributor of the INSULTEX material.

We offer the following products containing INSULTEX:

Floating Swimwear: Product under our product name "Swimeez". Our swimwear is designed to be a swim aid. The interior lining of our swimwear product is made from INSULTEX, which enhances floatability.

Hunting Apparel Line: Our hunting apparel provides almost total block from odors provided by the INSULTEX material.

Arctic Armor Line: The Arctic Armor line, introduced in April of 2006, consists of a jacket, bib and gloves. The suit contains 3 layers of INSULTEX for uncompromised warmth and provides the user with guaranteed buoyancy. The gloves contain a single layer of INSULTEX and are windproof, waterproof and good to sub-zero temperatures as are the jacket and bibs.

Our products, except for our gloves which are manufactured in China by purchase order, are manufactured, under agreement, at a facility we currently utilize in Indonesia. We assumed no material costs associated with the design, prototyping, and testing of these products because: (a) we did not utilize the services of any outside consultant or company for these purposes; (b) although we used the services of our Chief Executive Officer and Vice President of Sales and Marketing for these purposes, their efforts are part of their normal responsibilities; (c) prior to the time we had undertaken to design and prototype of these products, we purchased the materials to accomplish these tasks, the cost of which did not exceed $1000; and (d) the testing of these products was performed in the "field" by our employees and our Manufacturer's Representative groups, as part of their normal responsibilities.

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The INSULTEX License and Manufacturing Agreement

Under the terms of the agreement between us and the Ketut Group, Ketut Group agrees to promptly deliver to Innovative Designs, Inc. within twenty-eight (28) days of receiving an order, all INSULTEX ordered by us. Under the terms of the agreement, we are required to pay a fixed amount per meter of INSULTEX. This fixed amount will not change under the agreement for a period of ten (10) years after the date of the agreement was signed, which was April 1, 2006. The agreement provides that after the ten (10) year period, the price of the INSULTEX shall be adjusted for a subsequent ten (10) year term, no more than twelve percent (12%) per the subsequent ten (10) year period. We order INSULTEX from time to time as needed and are not required to purchase any minimum amount of INSULTEX during the term of the agreement, and we are not required to make any minimum annual payment. However, should we place an order, any quantity ordered must be a minimum of 35,000 meters of INSULTEX. We are not required to pay any part of any sublicense fee that we receives from third party sublicensees, and we are not required to pay any fees to the Ketut Group. This agreement will be in full legal force and effect for an initial term of ten (10) years from the date of its execution. We have the option to renew this agreement for up to three (3) successive terms of ten (10) years each by giving notice of our intention to so renew not less than ninety (90) days prior to the expiration of the then-current term.

The Haas Agreement

On June 16, 2003, we completed an agreement with Haas Outdoors in which Haas Outdoors granted us a non-exclusive wholesale license in North America to: (a) manufacture, or sell products or to have manufactured for us, and to sell licensed products of Haas Outdoors; and (b) use the licensed trademark of Haas Outdoors in association with the marketing and sale of licensed products. The agreement defines licensed products as a product which bears or otherwise includes Haas Outdoors' licensed design and is further restricted to mean only our stadium pack. "Licensed design" is defined in the agreement as the camouflage pattern(s) known as the Mossy Oak Break-Up and/or New BreakUp and Duck Blind patterns and which is covered by Haas Outdoors' copyrights, including but limited to United States Copyright Registration No. 2,227,642. The agreement defines "licensed trademark" as Haas Outdoors' trademarks Mossy Oak Break-Up and/or New BreakUp and Duck Blind patterns. The term of the agreement is two years from the effective date of the agreement, May 30, 2003. During 2007, the Company extended the terms of this agreement with Haas Outdoors for an additional two years. We paid a one time $250 licensing fee for these rights. We are also required to pay to Haas Outdoors a running royalty, which is included in the price of fabrics purchased from licensed vendors of Haas Outdoors.

In addition, the agreement provides that we, as the licensee in the agreement are required to: (a) place on the licensed products in a manner prescribed by copyright laws and unless otherwise indicated, a sufficient copyright notice including the copyright notice, the year of publication, and an identification of Haas Outdoors as the owner; and (b) in all instances where Haas Outdoors so desires, we will include on licensed products the authorized trademark associated with the authorized design. We also agreed that nothing in the agreement will confer upon us any proprietary interest in the licensed designs, the licensed trademarks, or any other copyright, trademark and patents rights owned by Haas Outdoors. In addition, we agreed that Haas Outdoors is the owner of the licensed designs and licensed trademarks and that we will not contest the validity or enforceability of the licensed trademarks or Haas Outdoors copyrights in the licensed designs.

The Jordan Agreement.

In April 2008, we entered into a licensed agreement with Jordan Outdoor Enterprises, Ltd. for the use of their REAL TREE and ADVANTAGE trademarked artistic camouflage designs. We may use the designs in our hooded jacket, insulated bibs and waterproof/breathable gloves. We must submit all samples of proposed products for preapproval as well as all catalog, advertising, display or promotional copy. Official hangtags or stickers must be affixed to all covered products. All fabrics with the authorized patters must be purchased from an authorized fabric source. The term of the agreement is for five years with the licensor having the right to the agreement upon thirty days notice. We paid a $500 execution fee.

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Swimeez Product

Our Swimeez product is intended for use by the following groups that are in the Company’s target market for these products:

Toddlers and children from the ages of 3 to 12 who are learning to swim;

Handicapped persons; and

Adults learning to swim.

Hunting Line

Our hunting line products are intended for use by the following consumer group that are in the Company’s target market for these products:

Hunting enthusiasts; and

Professional hunters.

Arctic Armor Line

Our Arctic Armor line products are intended for use by the following consumer groups that are in the Company’s target market for these products:

Ice fisherman

Snowmobilers

Utility workers

Oil/gas pipeline workers

Railroad workers

Construction workers

Ski resort workers; and

First responders.

House Wrap

In early January 2008, we announced that we had completed our research and development effort on a new use for INSULTEX as a house wrap for the building construction industry. This house wrap will provide barrier protection plus moisture vapor transmission and the novel feature of approximately R2 insulation. The house wrap was designed specifically to add enhanced insulating characteristics. In addition the house wrap will be priced competitively with existing house wraps that do not provide any insulation. The development efforts were conducted by our own personnel. The testing phase has been completed and we are now awaiting third party test results.

Website and Retailers

We sell both wholesale and retail products on our website. Our website, located at www.idigear.com, contains information on our products, technical information on INSULTEX insulation, e-commerce capabilities with "shopping cart", wholesaler information and order forms, company contact information, and links to retailers that carry our products. We have obtained the services of BA Web Productions who assists us in designing and continually developing our website. Our website features a "wholesaler only" area, allowing our wholesalers access to information, ordering, and reordering. The web site is hosted by Nidhog Hosting. The secure payment gateway provider for our online e-commerce is SkipJack Financial Services.

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Our products are offered and sold by retailers, distributors and companies in approximately twenty-five states, Canada, Russia and Finland who purchase our products at wholesale prices which they plan to sell at their retail prices, or use within their industry:

Sales

We primarily sell our products through independent sales agents and agencies. Once we have made contact with a potential sales agency or solo agent, we evaluate their existing accounts, the capacity and potential for them to effectively push our products. We also look at their current product lines through the sales channel. Our market area is the outdoor industry which includes all activity done in cold weather. These activities include recreational such as hunting, ice fishing, snowmobiling, and industries such as oil and gas, utilities and construction. Once we agree to bring on an independent sales agent or agency, we enter into a standard agreement.

A typical sales representative agreement will have a term of one year with the right of either party to terminate upon thirty days written notice. We do not provide any free samples of our products and all sales expenses are the sole obligation of the sales agent. In the case of our agreement for Russia and Finland, the agent is required to prepay for all products ordered.

Certain retailers buy directly from us. We have no verbal or written agreements with them. These retailers purchase our products strictly on a purchase order basis. During our last fiscal year, we sold our products to such retailers as Gander Mountain, Scheels All Sports, and Frank’s Great Outdoors. Some of our distributors during the last fiscal year were Triple S Pro Fishing Supplies, KTL Canada and Cannon Tackle.

We distribute our products to the following:

Swimeez Products

We distribute our Swimeez products through sporting goods catalogs and through the internet.

Hunting Apparel Line

We distribute our hunting apparel through national and local retail chains.

Six pocket pants, 1/2 zip pullover jacket with collar, parka jacket, fleece jacket, guide series shirt, bib coveralls in light weight, bib coveralls in arctic weight. We distribute these products to the public, through product information mailings to prospective retail buyers and private showings to targeted buyers in the retail industry.

Arctic Armor Line

We distribute the Arctic Armor Line to retailers and distributors across the United States, Canada and in Russia and Finland. These products are also marketed to utility companies, oil/gas pipeline workers, railroad workers, first responders and to construction workers.

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Our marketing program consists of the following:

MARKETING COMPONENT

Webside Development and Internet Marketing

We contract with marketing consultants to:

(a) increase visitation to our website;

(b) link with other established websites;

(d) conduct banner advertising;

(e) develop arrangements with online retailers that purchase our products on a wholesale basis.

Sales Representatives

Our vice president of sales and marketing works to:

(a) sell our merchandise to retail chain stores;

(b) attend and network trade shows to establish industry related contracts;

(d) provide support to our manufacturer representatives

Contract with Manufacturer

We utilize the services of sales agencies to represent our products in the United States, Canada, and Russia and Finland.

Public Relations Campaign

Subject to funding, we plan to contract with marketing consultants to develop and distribute press releases regarding company status, product innovations, and other notable events and developments. Currently our public relations are conducted by our own staff.

Design and Develop

We presently use our own staff for services related to literature, displays, develop brochures, point-of-sale displays, mailers, media materials, and literature and sales tools for our sales representatives and manufacturer representatives. At such time as we have sufficient funding, we intend to contract out some of these services.

Establish Wholesale

We are and continue to develop relationships or distribution relationships with retail points for our products to retail chain outlets and mass merchandisers to sell our products.

Develop Trade Show Booth

We use our own personnel to design and develop a portable display booth, and product materials to be used in sporting goods and outdoor apparel trade shows.

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We ship wholesale product orders by United Parcel Service or trucking companies. Retail orders from our website are shipped United Parcel Ground Service or Federal Express overnight. The costs of shipping our finished goods are paid by our customers. We have not instituted any formal arrangements or agreements with United Parcel Service, Federal Express or trucking companies, and we do not intend to do so.

Our "idigear" label is sewn on all of our products. Haas Outdoors, Inc.'s Mossy Oak Break Up and New Break Up and Duck Blind hang tags are attached only to our "Mossy Oak pattern" stadium pack products. Additionally, we will be utilizing the Mossy Oak camouflage on the new products that we are in the development stages of introducing, which will feature the Mossy Oak hang tag with our "idigear" hang tag. REAL TREE and ADVANTAGE hangtags are used for products using these patterns.

INSULTEX will be used in all our finished goods and will be purchased directly from the Ketut Group.

All of our products, except for our gloves, which are produced in China, are sub-manufactured by PT Lidya and Natalia located in Indonesia. Indonesia does not impose quotas that limit the time period or quantity of items which can be imported. The United States Customs Service imposes a 9% importation duty on all finished goods, based upon our completed stadium packs. All other products are 6.5% including INSULTEX.

We have no verbal or written agreements or long term agreements with PT Lidya and Natalia and we do not plan to obtain any such agreements. Our products are manufactured on a per order basis.

The fulfillment process involved in completing wholesale orders for non-stocked swimsuit, hunting line and arctic armor products is described below:

We receive a purchase order for a certain number of items from a wholesale purchaser by hand delivery, fax, courier, or mail, with an authorized signature of the purchaser. We do not accept telephone orders.

We contact our sub-manufacturers with the details of the order, including the number of units to be produced according to design or model, size, or color. The sub-manufacturer procures all materials required for the product.

We complete and forward a purchase order to the manufacturer. The manufacturer approves or disapproves a purchase order.

If the purchase order is approved, the manufacturer responds with a final cost, production schedule and date the goods will be delivered to us.

Our sub-manufacturers ship finished goods to us.

We receive finished goods, and facilitate turn-around for shipment to retailers. Goods are received in our distribution center where they are packaged in Master Packs, hang tags attached, and UPC/UCC codes labels applied to items for retailer distribution.

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Any inventory we maintain is stored at our warehousing facility. Our warehouse facility has the capacity to hold 250,000 finished products in inventory.

In late 2003, we were granted a trademark for our name "idigear" with the United States Patent and Trademark Office.

In late 2005, we were granted the mark "INSULTEX" by the United States Patent and Trademark Office.

The INSULTEX Technology is protected by a Korean patent. We have been granted a license for marketing and distribution rights for use of INSULTEX in swimeez and stadium packs and the rights to purchase INSULTEX for the manufacture of other apparel and accessory items and any other use containing INSULTEX.

In December 2009, we filed a patent application, No. 12 642714, with the United States Patent and Trademark Office for our Composite House Warp.

Our production costs are limited to the invoices we receive from our sub-manufacturer, PT Lidya and Natalia, on a per production basis and for our gloves from our supplier in China.

Because we use sub-manufacturers for our products, we do not require any equipment for manufacturing and we do expect to incur any material costs affiliated with purchase of plant and significant equipment. We do not currently have any plant or significant equipment to sell.

We have spent no funds on research and development of our products. In March of 1999, our ex-affiliate, RMF Global, hired and paid $5,275 to Vartest Laboratories, Inc. to perform testing of the INSULTEX material. Other than the testing performed by Vartest Laboratories, Inc, Innovative Designs, Inc. has spent no significant funds on research and development.

The Vartest Laboratories test results establish the buoyancy and insulation qualities of INSULTEX. The results are as follows:

Issue	Test Result

Fabric Weight	0.042 oz./square yard	Low
Fabric Thickness	0.021 inches	Thin
Thermal Retention	Clo value: 2.0	Good
Air Permeability (protection from wind)	0.01 cubic feet of air/min/ft2 of material (Good)	Low
Moisture Permeability (protection from water)	5 grams/sq. meter/24 hrs. (Good)	Low

During 2005, the Company hired Texas Research Institute Austin, Inc. to perform testing on the permeation of gas on the INSULTEX product. The testing was based upon accepted industry practices. The permeation test resulted in almost no detection of the gas through the INSULTEX throughout the testing procedures.

Although we are not aware of the need for any government approval of our principal products, we may be subject to such approvals in the future.

United States and foreign regulations may subject us to increased regulation costs, and possibly fines or restrictions on conducting our business. We are subject, directly or indirectly, to governmental regulations pertaining to the following government agencies:

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Federal Trade Commission

The product suppliers and manufacturers of our products, to the extent that they are involved in the manufacturing, processing, formulating, packaging, labeling and advertising of the products, may be subject to regulations by the Federal Trade Commission which may bring injunctive action to terminate the sale of such products, impose civil penalties, criminal prosecutions, product seizures, and voluntary recalls. Should we or our suppliers become subject to any such orders or actions, our brand name reputation and that of our suppliers and products will be adversely affected and our business would be negatively affected.

United States Customs Service

We are required to pay a 7.1% importation duty to the United States Customs Service on all finished goods. All other products are 6.5% including INSULTEX. We import INSULTEX from Indonesia from the Ketut Group, in accordance with Innovative Design’s agreement with the Ketut Group.

United States Department of Labor's Occupational Safety and Health Administration

Because our sub-manufacturers manufacture our completed products, we and our sub-manufacturers will be subject to the regulations of the United States Department of Labor's Occupational Safety and Health Administration.

We are not aware of any governmental regulations that will affect the Internet aspects of our business. However, due to increasing usage of the Internet, a number of laws and regulations may be adopted relating to the Internet covering user privacy, pricing, and characteristics and quality of products and services. Furthermore, the growth and development of Internet commerce may prompt more stringent consumer protection laws imposing additional burdens on those companies conducting business over the Internet. The adoption of any additional laws or regulations may decrease the growth of the Internet, which, in turn, could decrease the demand for Internet services and increase the cost of doing business on the Internet. These factors may have an adverse affect on our business, results of operations, and financial condition.

Moreover, the interpretation of sales tax, libel, and personal privacy laws applied to Internet commerce is uncertain and unresolved. We may be required to qualify to do business as a foreign corporation in each such state or foreign country. Our failure to qualify as a foreign corporation in a jurisdiction where we are required to do so could subject us to taxes and penalties. Any such existing or new legislation or regulation, including state sales tax, or the application of laws or regulations from jurisdictions whose laws do not currently apply to our business, could have a material adverse affect on our business, results of operations and financial condition.

We currently have no costs associated with compliance with environmental regulations. Because we do not manufacture our products, but rather they are manufactured by our sub-manufacturers, we do not anticipate any costs associated with environmental compliance. Moreover, the delivery and distribution of our products will not involve substantial discharge of environmental pollutants. However, there can be no assurance that we will not incur such costs in the future.

We estimate that all of our revenues will be from the sale of our products. We will sell our products at prices above our original cost to produce our products. Prices for some of our products will be lower than similar products of our competitors, while others will be higher. We expect our product prices to be lower than network marketing companies, but higher compared with retail establishments that directly manufacture their own products.

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Products that are sold directly by our website will be priced according to our Manufacturer Suggested Retail Prices. Our wholesale clients will purchase our products at our wholesale prices. We recommend that our retailer clients sell our products at the Manufacturer Suggested Retail Prices that we provide to them which are the same prices for products on our website; however, they are not required to do so and may price our products for retail sale at their discretion. We have established M.A.P. (minimum advertised pricing) on our Arctic Armor™ suit in an attempt to allow all retailers and distributors carrying the line to obtain reasonable gross margin dollars.

We currently have a total of 4 employees, 2 of which are full time employees and 2 of which are part-time employees. We also use a consultant to head our sales and marketing effort.

We have no collective bargaining or employment agreements.

Reports and Other Information to Shareholders

We are subject to the informational requirements of the Securities Exchange Act of 1934. Accordingly, we file annual, quarterly and other reports and information with the Securities and Exchange Commission. You may read and copy these reports and other information we file at the Securities and Exchange Commission's public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Our filings are also available to the public from commercial document retrieval services and the Internet world wide website maintained by the Securities and Exchange Commission at www.sec.gov.

ITEM 1A

RISK FACTORS.

Competition

The markets served by the Company are highly competitive. Competitive pricing pressure could result in loss of customers or decreased profit margins. Competition by product type includes the following:

The markets for our products are increasingly competitive. Our competitors have substantially longer operating histories, greater brand name and company name recognition, larger customer bases and greater financial, operating, and technical resources than us. Because we are financially and operationally smaller than our competitors, we will encounter difficulties in capturing market share. Our competitors are able to conduct extensive marketing campaigns and create more attractive pricing of their target markets than we are.

Some of our biggest competitors in the floating swimwear market are:

www.floatingswimwear.com;

www.maui.net/-welck; and

www.hotshop.at/enlisch/swimc.

Welck-em Floats located in Lahaina, Hawaii;

Aqua Leisure Industries located in Avon, Massachusetts; and

Swim Coach websites located in the United Kingdom.

Some of our biggest competitors in the hunting apparel line are:

Russell Athletics

Scentlock

Various big-box private labels

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Some of our biggest competitors in the Arctic Armor™ line are:

Ice Clam Corporation

Vexilar

Mustang Survival

We compete in the following ways:

A. Emphasize the Advantages of our Products.

Floating Swimwear Products

We emphasize the following characteristics of our swimeez swimsuit product:

inherent buoyancy of INSULTEX which is sewn into our swimsuit and results in a less obtrusive swimming experience while still retaining buoyancy in comparison to some of our competitors; and

low weight.

Hunting Line

We emphasize the following characteristics and advantages of our hunting line products:

light weight;

compactness;

water proof;

thermal insulation properties which makes a thinner more compact and warmer garment or accessory than some of our competitors;

competitive wholesale and retail prices; and

introduction of a new proprietary technical insulation, i.e. "INSULTEX", to the hunting industry that has fewer such technical insulations in use by that industry; and

scent barrier.

Arctic Armor Line

We emphasize the following characteristics and advantages of our Arctic Armor line products:

light weight

waterproof

windproof

sub-zero protection

buoyancy

The basis for our above product claims is derived from the Vartest Lab Results, a fiber/yarn, fabric and apparel testing firm.

INSULTEX provides a scent barrier which we had a permeation test performed on at the Texas Research Institute Austin, Inc. The product was subjected to gas simulant for an eight-hour period. The product was tested for permeation of the gas every three minutes for the duration of the test with almost no detection of the gas throughout the test. The testing was based upon accepted industry practices as well as the test method used.

B. Utilize our web site to promote, market, and sell our products to consumers.

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C. Utilize professional sales representatives and manufacturer representatives to sell our products to established retailers, especially sporting goods retailers.

Use television advertising to promote our products. In mid-October 2008, we began a nationwide television advertising campaign. We resumed this advertising in November 2009. The 60 second spots explain the benefits of our Artic Armor line along with a video showing the suits in a variety of outdoor activities.

Our products have the following disadvantages in comparison to the products of our competitors:

Lack of brand name recognition or recognition of the properties of INSULTEX and its advantages. We, as well as our products, have little brand name recognition compared to our competitors. And we may encounter difficulties in establishing product recognition. Also, although our products have insulation properties, the material "down" has a widespread and established reputation as being the superior insulation in the market, while the properties and advantages of INSULTEX has little public recognition.

There can be no assurance that we will be able to compete in the sale of our products, which could have a negative impact upon our business.

We do not expect our business to be dependent on one or a few customers or retailers; however, there is no assurance that we will not become so dependent.

Cyclicality

The Company’s apparel sales fluctuate based on temperature and weather conditions. Our products are suitable primarily for cold weather conditions. This will cause a cyclical effect on sales. It also makes our revenues totally dependent on cold weather

Material Acquisition

All of the materials and items required to manufacture our products are purchased by our manufacturer in Indonesia with the exception of the Mossy Oak material and the Real Tree. We order the Mossy Oak material and it is delivered to our manufacturer.

The Company has only one supplier of INSULTEX, the special material which is manufactured within the apparel of our products. Additionally, we have one manufacturer that produces the apparel on behalf of the Company, located in Indonesia. Any delays in getting INSULTEX and/or our finished products adversely affect our revenue stream

Our Indonesia based manufacturer, PT Lidya and Natalia, has sole discretion in the sourcing and ordering of materials for their production runs, the costs of which we reimburse PT Lidya and Natalia.

Geographic Concentration

Many of the Company’s sales to retailers are concentrated in colder climates of the United States and Canada. To the extent that any regional economic downturn impacts these regions, the Company will be adversely affected.

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Management

The Company is dependent on the management of Joseph Riccelli, Sr., our Chief Executive Officer. The loss of Mr. Riccelli’s services could have a negative impact on the performance and growth of the Company for some period of time.

Stock Price

The Company’s stock is thinly traded. Should a major shareholder decide to liquidate its position, there could be a negative effect on the price of the stock until this condition is resolved.

Penny Stock Considerations

Our shares are "penny stocks" as that term is generally defined in the Securities Exchange Act of 1934 as equity securities with a price of less than $5.00. Our shares may be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or "accredited investor" must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:

Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;

Disclose commissions payable to the broker-dealer and its registered representatives and current bid and offer quotations for the securities;

Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value and information regarding the limited market in penny stocks; and

Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account.

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our stock, which may affect the ability of shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities if our securities become publicly traded. In addition, the liquidity for our securities may be adversely affected, with a corresponding decrease in the price of our securities. Our shares may someday be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.

Sarbanes-Oxley

Unless the current requirement for compliance with Section 404 of the Sarbanes-Oxley is changed, the Company will experience higher internal and auditing costs to comply by the end of fiscal 2010.

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Significant Customer

None according to Company

ITEM 2.

PROPERTIES.

Since May 2002, we have maintained our executive offices of 1500 square feet at 223 North Main Street, Suite 1, Pittsburgh, Pennsylvania 15215. We pay monthly rent of $700.00 to Riccelli Properties, a property management firm owned by our Chief Executive Officer, Joseph Riccelli. We have a verbal lease agreement with Riccelli Properties to pay Riccelli Properties $700 per month. This verbal agreement further provides that we or Riccelli Properties may terminate this verbal lease at any time with 30 days written notice.

In October 2002, we arranged for the lease of warehouse space for our inventory and raw materials at 124 Cherry Street, Etna, Pennsylvania. This facility encompasses 13,000 square feet of storage space on the first floor and 2,000 square feet for our sales department offices located on the second floor. We have entered into a verbal agreement with the owner of the building and we pay $2,600 per month for the space. This facility is composed of: (a) warehouse and storage areas including four (4) shipping bays and a distribution area consisting of square footage to store upward of 250,000 finished goods products; and (b) four (4) offices, one (1) conference room, with presentation area and sample display and (2) bathrooms totaling approximately 2,000 square feet located on the second floor. The building in which our offices are located is owned by Frank Riccelli, and is subject to a $120,000 mortgage. Mr. Frank Riccelli is the brother to our Chief Executive Officer. The condition of our leased property is good.

We do not own any property nor do we have any plans to own any property in the future. We do not currently intend to develop properties. We are not subject to competitive conditions for property and currently have no property to insure. We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages. Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities. We consider the condition of our leased property to be suitable for our needs.

ITEM 3.

LEGAL PROCEEDINGS.

We are subject to dispute and litigation in the ordinary course of our business. None of these matters, in the opinion of our management, is material or likely to result in a material effect on us based upon information available at this time.

In 2009, we filed a trademark application for “Arctic Armor”. A Notice of Opposition was filed by a third party who objected to the word “Armor”. During 2009, we reached an amicable settlement over our use of the word.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

- 14 -

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Below is the market information pertaining to the range of the high and low bid information of our common stock for each quarter for the last two fiscal years. Our common stock is quoted on the OTC Bulletin Board under the symbol IVDN. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

FY 2009	Low		High
Fourth Quarter	$	.06	$	.35
Third Quarter	$	.20	$	.38
Second Quarter	$	.05	$	.46
First Quarter	$	.20	$	.45

FY 2008	Low		High
Fourth Quarter	$	.30	$	.47
Third Quarter	$	.37	$	.50
Second Quarter	$	.26	$	.64
First Quarter	$	.39	$	.90

On January 25, 2010, the closing bid price was $.25.

The source of the above data is http://finance.yahoo.com.

Holders.

As of January 25, 2010, we had 160 holders of record of our common stock. We have one class of stock outstanding. We have no shares of our preferred stock outstanding.

Dividends.

We have not declared any cash dividends on our stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payment of dividends will depend on our earnings and financial position and such other factors as the Board of Directors deems relevant.

Recent Sales of Unregistered Securities.

On December 11, 2008, we issued a total of 20,000 shares of our common stock for cash for $.40 per share or $8,000 in a private placement to one investor. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as an offering not involving a public offering.

On December 30, 2008, we issued a total of 70,000 shares of our common stock for cash for $.30 per share or $21,000 in a private placement to one investor. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as an offering not involving a public offering.

- 15 -

On December 30, 2008, we issued a total of 1,500 shares of our common stock to a salesman for their services for $.30 per share or $450. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as an offering not involving a public offering.

On February 5, 2009, we issued a total of 100,000 shares of our common stock to a financial consultant for their services for $.25 per share or $25,000. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as an offering not involving a public offering.

On February 5, 2009, we issued a total of 25,000 shares of our common stock to our sales and marketing manager for $.25 per share or $6,250. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as an offering not involving a public offering.

On March 6, 2009, we issued a total of 54,000 shares of our common stock for financial public relations to a consultant for $.40 per share or $21,600. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as an offering not involving a public offering. Subsequently on June 2, 2009, the Company cancelled 27,000 shares of this stock for non-performance of services. The shares were valued at $.40 per share or an aggregate of $10,800.

On May 26, 2009, we issued 5,000 shares of our common stock to a salesman for $.30 per share or $1,500. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as an offering not involving a public offering.

ITEM 7.

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

General

The following information should be read in conjunction with the consolidated 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 -

Background

Innovative Designs, Inc. (hereafter referred to as the “Company”, “we” or “our”) was formed on June 25, 2002. We market and sell clothing products such as swim wear, hunting apparel, and cold weather gear called “Artic Armor” that are made from INSULTEX, a material with buoyancy, scent block and thermal resistant properties. We obtain INSULTEX through a license agreement with the owner and manufacturer of the material.

Results of Operations

Comparison of the fiscal year ended October 31, 2009, with the fiscal year ended October 31, 2008.

The following table shows a comparison of the results of operations between the fiscal years ended October 31, 2009 and October 31, 2008:

	Fiscal Year Ended October 31, 2009			% of Sales			Fiscal Year Ended October 31, 2008			% of Sales			$ Increase (Decrease)			% Change

REVENUE	$	837,224			100	%	$	543,137			100	%	$	294,087			54.1	%

OPERATING EXPENSES
Cost of sales		378,110			45.2	%		477,645			87.9	%		(99,535	)		(20.8	)%
Selling, general and administrative expenses		418,834			50.0	%		617,740			73.9	%		(198,907	)		(32.2	)%

Income/(loss) from operations		40,280			4.8	%		(552,248	)		(101.7	)%		592,528			107.3	%

OTHER INCOME (EXPENSE)
Other income		5,000			.6	%		-			-			5,000			100.0	%
Interest income (expense)		(23,280	)		(2.8	)%		(66,533	)		(12.3	)%		43,253			65.0	%
Arbitration award		-			-			4,176,000			-			(4,176,000	)		(100.0	)%
Net income
	$	22,000			2.6	%	$	3,557,219			654.9	%	$	(3,535,219	)		( 99.4	)%

Fiscal years ended October 31, 2009 and 2008

Results of Operations

Revenues for the fiscal year ended October 31, 2009, were $837,224 compared to revenues of $543,137 for the comparable period in 2008. The increase in revenues is a result of the increased demand for our Artic Amour line of products. We also brought on new sales and distributors organizations in 2009. The colder weather is also a factor in our level of sales. Almost all our sales consisted of our Artic Armor line of products with the balance being our hunting line of products.

- 17 -

Selling, general and administrative expenses were $418,834 for the fiscal year ended October 31, 2009, compared to $617,740 for the comparable period in 2008. The decrease is primarily on account of our increased direct internet sales where we are able or achieve higher margins. We also did not have any legal fees relating to our bankruptcy proceedings.

Liquidity and Capital Resources

During the fiscal year ended October 31, 2009, we funded our operations with revenues from sales, sales of our securities in private transactions and loans from our Chief Executive Officer and others. We will continue to fund operations from revenues and borrowings and the possible sale of securities. Until we are able to secure commercial funding arrangements we will be required to rely on these sources for our funding.

Short Term: We funded our operations with revenues from sales and loans from our Chief Executive Officer and others and with the sale of our common stock in private placements. Our ability to obtain outside funding of either debt or equity has been adversely affected by our former status in bankruptcy. Further, the bankruptcy status has resulted in customers reducing their sales activity or ceasing to do business with us or all together. The loss of this revenue had an adverse impact on the Company’s short term liquidity. The financial institution, Enterprise Bank, as a result of our bankruptcy proceeding, eliminated the amounts we can borrow on our lines of credit.

Our debt obligations consist of the following:

US SBA Loan. The amount was $280,100. This was a disaster loan assistance program. The date of the loan was July 12, 2005. The interest rate is 2.9% yearly. Payments are $1,186 per month for thirty years. The loan is guaranteed by our CEO and he and his spouse have pledged certain assets as collateral for the loan. The loan was modified on January 23, 2006. The new loan amount is $430,000. The monthly payments are $1,820 and the loan matures in July 2035. As the loan was for a specific disaster assistance program we cannot obtain any additional funds.

Redevelopment Authority of Allegheny County. The amount was $13,923. This was a business relief program loan as a result of Hurricane Ivan. Monthly payments are $290 and there is no interest on the loan. The loan matures in 47 months and is personally guaranteed by our CEO and a subordinated lien has been placed against all of the Company’s business assets. As this loan was for a specific disaster assistance program we are not able to obtain additional funds from this source.

James Kearney. The principal amount of the loan is $65,000 and the interest owed is $92,000. Interest has stopped on the loan. Interest and principle are due and payable in full at any time after December 10, 2005.

Dean Kolocouris. Mr. Kolocouris is a director of the Company. The amount of the loan is $10,000. We have repaid $20,000 plus interest of $2,000. Interest is at 10% for 90 days and the loan is now due on demand. This advance has been paid in full as of January 28, 2010.

Riccelli Properties. Riccelli Properties is owned by our CEO. The amount of the advances is $74,000. The advances were made on an oral basis at various times between 2004 and 2009. The advances are non-interest bearing and there are no repayment terms.

- 18 -

Xunjin Hua. The amount of the loan is $40,000. Interest is at 10% for 90 days. The principal and interest is due on demand on November 15, 2009. As of January 28, 2010, $22,000 has been paid with the balance due in February 2010.

Frank Riccelli. The amount of the loan is $15,000. Interest is at 10% for 90 days. The principal and interest is due on demand on November 15, 2009. As of January 28, 2010, the advance has been paid in full.

Dr. John V. Bailliet. The amount of the loan is $10,000. Interest is at 10% for 90 days. The principal and interest is due on demand on November 28, 2009. As of January 28, 2010, the advance has been paid in full.

Frank Riccelli. The amount of the loan is $40,000. Interest is at 10% for 90 days. The principal and interest is due on demand on January 20, 2010. As of January 28, 2010, $22,000 has been paid.

The Company intends to repay these debt obligation with funds it generates from revenues, from the possible sale of its securities either debt or equity, from advances from its CEO or other stockholders or from commercial loan arrangements. Because we cannot currently access commercial lending facilities, should we not be able to continue to obtain funding from our CEO and/or other individuals or sell our securities or should our revenues decrease our operations would be severely effected 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 and has been successful in expanding its sales base into the oil and gas industry and the railroad industry and other areas where cold weather clothing is required.

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 effected as we would not be able to fund our purchase orders to our suppliers for finished goods. The Company is currently pursing financing to fund its long-term liquidity needs. We are attempting to obtain purchase order financing which would greatly assist our cash flow and allow us to expand our marketing efforts. We are also seeking a commercial line of credit.

ITEM 8.

FINANCIAL STATEMENTS.

Our audited financial statements may be found beginning on page 29 elsewhere in this report.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.

None

- 19 -

ITEM 9A. (T)

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Management, including our principal executive/financial officer, evaluated the effectiveness of the design and operation of disclosure controls and procedures as of October 31, 2009 and, based on their evaluation, our principal executive/financial officers have concluded that these controls and procedures are ineffective. Throughout the reporting period, the Company’s former Chief Financial Officer would calculate the Company’s monthly cost of sales and month end inventory balances using the retail method of accounting. Under the retail method, which is a method widely used by merchandising firms to value or estimate ending inventory, a “cost-to-retail” factor (a percentage) is applied to sales to determine an estimate of the amount of inventory that was sold to produce the monthly sales. After the Company estimated the inventory sold, it would reduce its end of the month inventory balance by this amount. At the end of each quarter, the Company takes physical count of the product on hand and trues up the quarter end inventory balance. During the last quarter of 2008, the Company performed a physical count of the products on hand at October 31, 2008, however, it did not true up the value of the inventory on hand in its general ledger as a result of the physical count. At the time when the error was found, the Company maintained a separate inventory subsidiary ledger. The error was discovered when the Company’s Chief Financial Officer was comparing the ending balance in its inventory subsidiary ledger to the ending inventory balance in the general ledger. The total cumulative amount for the fourth quarter was $16,653.

With the discovery of this error, the Company ceased using the retail method of accounting to account for its monthly cost of sales and ending inventory balances, effective February 2009. The Company also purchased integrated inventory software that tracks purchases and sales of inventory using actual inventory values rather than a factor under the retail method of accounting. The Company began using this software effective February 1, 2009. With the purchase of the inventory software and no longer using the retail method of accounting, Management believes the change in its controls and procedures will mitigate errors from occurring in inventory with respect to inventory cost.

Effective March 19, 2008, our Chief Executive Officer temporarily assumed the duties of the Chief Financial Officer.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting as defined in Rule 13-15(f) of the Securities Exchange Act. Our management determined that our internal control over financial reporting was effective as of October 31, 2008.

Our management has conducted an evaluation of the effectiveness of our internal control over financial reporting as of October 31, 2008, based on the framework and criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

There have been no significant changes in our internal control over financial reporting during the fiscal year ended October 31, 2009 and 2008, or subsequent to October 31, 2009, that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting, except as discussed above.

- 20 -

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Our executive officers are elected annually by our board of directors. A majority vote of the directors who are in office is required to fill vacancies on the board. Each director shall be elected for the term of one (1) year and until his successor is elected and qualified, or until his earlier resignation or removal. The directors named below will serve until the next annual meeting of our shareholders or until a successor is elected and has accepted the position.

Our directors and executive officers are as follows:

Name	Age	Position	Term

Joseph Riccelli	59	Chief Executive Officer/Chief Financial Officer/Chairman and Principal Accounting Officer	1 year
Dean P. Kolocouris	38	Director	1 year
Robert D. Monsour	58	Director	1 year
Daniel P. Rains	56	Director	1 year

Joseph Riccelli has been our Chief Executive Officer and Chairman of the Board since our inception in June 2002. Mr. Riccelli was the owner of Pittsburgh Foreign and Domestic, a sole proprietor car dealership located in Glenshaw, Pennsylvania. Joseph Riccelli attended Point Park College located in Pittsburgh, Pennsylvania from 1971 to 1972.

Dean P. Kolocouris has been one of our Directors since our inception in June 2002. From December 1996 to present, Mr. Kolocouris has been a Loan Officer and Assistant Vice President at Eastern Savings Bank located in Pittsburgh, Pennsylvania. In June 1993, Mr. Kolocouris received a Bachelors Degree in Finance from Duquesne University located in Pittsburgh, Pennsylvania.

Robert D. Monsour has been one of our Directors since our inception in June 2002. From November 1997 to 2005, Mr. Monsour was the Administrator of RGM Medical Management, a medical management firm headquartered in Pittsburgh, Pennsylvania. Thereafter he has acted as a consultant specializing in litigation support to various attorneys and law firms in Western Pennsylvania. Mr. Monsour received the following degrees from the University of Pittsburgh located in Pittsburgh, Pennsylvania: (a) Juris Doctor Degree in May 1983; (b) completed the course of study for a Masters Degree in International Affairs at the Graduate School of Public and International Affairs in May 1983, with the exception of a required Masters Thesis; and (c) Bachelor of Arts Degree in Political Science in May 1978.

Daniel P. Rains has been a director since March 2007. Mr. Rains is currently Vice President of business development at McCarl’s, Inc., and a mechanical contracting firm. He has held this position for fifteen years. From 1981 through 1987, Mr. Rains was a professional football player for the Chicago Bears. He is a graduate of the University of Cincinnati.

Section 16(a) Beneficial Ownership Reporting Compliance

Mr. Robert Monsour, a director, sold common stock on April 2, 2009. He had to apply for new filing codes in order to file his Form 4. He did not receive them until April 28, 2009, at which time he filed the form 4.

- 21 -

Audit Committee

We do not have a separate standing Audit Committee. Therefore, our entire Board of Directors acts as the Audit Committee. The Board of Directors has determined that Mr. Dean Kolocouris is its financial expert. Mr. Kolocouris is a loan officer for a bank and has a degree in Finance.

Nominating and Compensation Committees

We do not have either a nominating committee or a compensation committee. The basis for the Board of Directors to not have a nominating committee is the fact that our principal stockholder who is also our CEO and Chairman of the Board controls approximately sixty percent of the voting stock. And the Company has never held an Annual Meeting of stockholders. New board members are recommended to the Board by the Chairman of the Board.

Board of Directors Meetings

During the last full fiscal year there were three meetings of the Board of Directors.

Code of Ethics

We have not, as yet, adopted a code of ethics. We have only one full time executive officer/ chief financial officer who also acts as our principal accounting officer. To date, our operations have been so minimal and our staff so small that we have not considered a formal standard relating to the conduct of our personnel.

ITEM 11. EXECUTIVE COMPENSATION.

The following Executive Compensation Chart highlights the terms of compensation for our Executives.

Summary Compensation Table

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)

Joseph Riccelli,	2009		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -
Chief Executive
Officer Chairman

Joseph Riccelli,	2008		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -
Chief Executive
Officer Chairman

- 22 -

Except for $15,000 paid in December 2009, our Chief Executive Officer has not been paid any compensation since inception.

There are no employment agreements between us and our executive officer Joseph Riccelli, Sr. There are no change of control arrangements, either by means of a compensatory plan, agreement, or otherwise, involving our current or former executive officers. There are no automobile lease agreements or key man life insurance policies that are to the benefit of our executive officers, in which we would make such payments. There are no standard or other arrangements in which our directors are compensated for any services as a director, including any additional amounts payable for committee participation or special assignments. In December 2007, all of the directors except Mr. Riccelli were awarded 25,000 shares each of our common stock. There are no other arrangements in which any of our directors were compensated during our last fiscal year for any service provided as a director.

Other than Mr. Ricelli, who is our CEO, the Board of Directors considers the remaining Directors Messrs. Monsour, Koloccouris and Rains to be independent directors.

Director Compensation

Name	Fees Paid Or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)

Dean P. Kolocouris		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -
Robert D. Monsour		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -
Daniel P. Rains		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -
Joseph Riccelli		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -		- 0 -

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND DIRECTOR INDEPENDANCE

The following table sets forth the ownership as of January 25, 2010 (a) by each person known by us to be the beneficial owner of more than five percent (5%) of our outstanding common stock, and/or (b) by each of our directors, by all executive officers and our directors and executive officers as a group.

To the best of our knowledge, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in our control.

- 23 -

Security Ownership of Management

Title of Class

Name and Address

Amount

Nature

Percent

Common Stock

Joseph Riccelli

9,469,000

Direct

Chief Executive Officer

Chairman of the Board of Directors

(1)

831,000

Indirect

4.4

142 Loire Valley Drive

Pittsburgh, PA 15209

Common Stock

Robert D. Monsour

- 0 -

Director

6131 Saltzburg Road

Murrysville, PA 15668

Common Stock

Dean P. Kolocouris

52,000

Direct

Director

120 Timberglen Drive

Imperial, PA 15126

Common Stock

Daniel P. Rains

75,000

Direct

2509 Wigham Road

Aliquippa, PA 15001

All Directors and Executive Officers as a Group

10,427,000

55.7

*	Represents less than one percent.

(1)	Represents 561,000 shares of common stock held in the Gino A. Riccelli Trust and 240,000 shares of common stock held in the Joseph A. Riccelli Trust. Both Trusts are for the sons of our Chief Financial Officer. Mr. Joseph Riccelli, Sr. is the trustee of both trusts.

By virtue of his stock ownership or control over our stock, Mr. Riccelli may be deemed to “control” the Company.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Our officers and directors may encounter conflicts of interests between our business objectives and their own interests. We have not formulated a policy for the resolution of such conflicts. Future transactions or arrangements between or among our officers, directors and shareholders, and businesses they control, may result in conflicts of interest, and the conflicts may be resolved in favor of businesses that our officers or directors are affiliated, which may have an adverse affect on our revenues.

Our officers and directors have the following conflicts of interests:

We lease our executive offices from Riccelli Properties, which is solely owned by our Chief Executive Officer, Joseph Riccelli, Sr., for which we pay $700 per month for a total of $8,400 per year and we lease our warehouse space from the brother of our Chief Financial Officer. We pay $2,600 per month for a total of $31,200 per year.

- 24 -

We have received advances from some of our Executive officers and directors.

We received various advances from Riccelli Properties from 2004 through 2009. We currently owe approximately $74,000 on the advances; there are no written loan documents to evidence these advances. There is no interest rate on the advances and the advances have no specified repayment terms.

Independence of Board Members

The Company has adopted the NASDAQ Listing Rules; Rule 5605 and 5605 (a) (20, for determining the independence of its directors. Directors are deemed independent only if the Board affirmatively determines that the director has no material relationship with the Company directly or as an officer, share owner or partner of an entity that has a relationship with the Company or any other relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

The aggregate fees billed for the fiscal years ended October 31, 2009 and 2008 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows: (a) during fiscal year ended October 31, 2009 and 2008, our current auditors, Louis Plung & Company billed the Company $17,500 and $15,000 for professional services, respectively.

Audit Related Fees

None.

Tax Fees

None.

All Other Fees

None.

- 25 -

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit
Number		Description
3.1		Certificate of Incorporation*
3.2		Bylaws*
4		Specimen Stock Certificate*
10.1		Exclusive License and Manufacturing Agreement by and between Ko-Myung Kim, Ketut Jaya and Innovative Designs, Inc. [Confidential Treatment Requested]**
10.2		Authorization dated April 1, 2008 by and between Jordan Outdoor Enterprises, Ltd and Innovative Designs, Inc.***
10.3		License Agreement effective May 30, 2005 by and between Hass outdoors, Inc. and Innovative Designs, Inc.***
10.4		Loan Authorization Agreement, dated July 12, 2005 between the U. S. Small Business Administration and Innovative Designs, Inc.***
10.5		Loan Agreement between Redevelopment Authority of Allegheny County and Innovative Designs, Inc. dated June 2, 2005.***
10.6		Motor Vehicle Installment Sale Contract dated September 26, 2005.***
10.7		Change in Terms Agreement between Enterprise Bank and Innovative Designs, Inc. dated June 1, 2006.***
10.8		Agreement by and between Innovative Designs, Inc and James Kearney dated July 28, 2004.***
10.9		Note Agreement between Innovative Designs, Inc. and Dean Kolocouris dated September 25, 2006.***
10.10		Note Agreement between Innovative Designs, Inc. and Dean Koloccouris dated August 27, 2007.***
10.11		Agreement dated April 7, 2006 by and between Innovative Designs, Inc. and Tom Nelson.****
10.12		Personal Service Agreement dated May 5, 2005, by and between Innovative Designs, Inc. and William Thomas Mass.****
23.0		Consent of Independent Registered Public Accounting Firm.
31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002.
99		Test Results from Vartest Lab.*
100		Test Results from Texas Research Institute Austin, Inc.*

Previously filed as exhibits to Registration Statement on Form SB-2 filed on March 11, 2003

Previously filed as exhibit to Form 10-KSB filed on February 8, 2008

***

Previously filed as exhibits to Form 10-K/A filed November 23, 2009

****

Previously filed as exhibits to Form 10-K/A-1 filed January 10, 2010

Reports on Form 8-K

None

- 26 -

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		INNOVATIVE DESIGNS, INC.
		(Registrant)

Date: January 28, 2010	by:	/s/ Joseph Riccelli
		Joseph Riccelli
		Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: January 28, 2010	by:	/s/ Joseph Riccelli
		Joseph Riccelli
		Chief Executive Officer, Chief Financial Officer, Principle
		Accounting Officer, and Chairman
		of the Board of Directors

Date: January 28, 2010	by:	/s/ Dean P. Kolocouris
		Dean P. Kolocouris
		Director

Date: January 28, 2010	by:	/s/ Robert D. Monsour
		Robert D. Monsour
		Director

Date: January 28, 2010	by:	/s/ Daniel Rains
		Daniel Rains
		Director

- 27 -

INNOVATIVE DESIGNS, INC.

FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT

October 31, 2009 and 2008

- 28 -

INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Board of Directors

Innovative Designs, Inc.

Pittsburgh, Pennsylvania

We have audited the accompanying balance sheet of Innovative Designs, Inc. as of October 31, 2009, and the related statements of operations, stockholders' deficit, and cash flows for the years ended October 31, 2009 and 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Innovative Designs, Inc. as of October 31, 2009, and the results of its operations, and its cash flows for the years ended October 31, 2009 and 2008, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred significant losses from operations and has working capital and stockholders’ deficiencies. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to this matter are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainies.

/s/ Louis Plung & Company, LLP

Pittsburgh, Pennsylvania

January 28, 2010

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INNOVATIVE DESIGNS, INC.

BALANCE SHEET

October 31, 2009

	2009
ASSETS

CURRENT ASSETS:
Cash	$	26,872
Accounts receivable		119,123
Inventory		811,730
Deposits on inventory		123,312
Total current assets		1,081,037

PROPERTY AND EQUIPMENT, NET		4,642

TOTAL ASSETS	$	1,085,679

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	53,983
Current portion of notes payable		177,029
Accrued interest expense		98,800
Accounts payable - related party		28,220
Current portion of related party debt		84,000
Due to shareholders		214,764
Accrued expenses		896
Total current liabilities		657,692

LONG-TERM LIABILITIES
Long-term portion of notes payable		388,928
Total long term liabilities		388,928

TOTAL LIABILITIES		1,046,620

STOCKHOLDERS' DEFICIT:
Preferred stock, $.0001 par value, 100,000,000 shares authorized Common stock, $.0001 par value, 500,000,000 shares authorized, 18,703,743 issued and outstanding		1,873
Additional paid in capital		5,638,018
Accumulated deficit		(5,600,832	)
Total stockholders' (deficit)		39,059

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,085,679

The accompanying notes are an integral part of these financial statements.

- 30 -

INNOVATIVE DESIGNS, INC.

STATEMENTS OF OPERATIONS

For the Years Ended October 31, 2009 and 2008

	2009			2008

REVENUE	$	837,224		$	543,137

OPERATING EXPENSES:
Cost of sales		378,110			477,645
Selling, general and administrative expenses		418,834			617,740
		769,944			1,095,385

Income (loss) from operations		40,280			(552,248	)

OTHER INCOME AND (EXPENSE):
Other income		5,000			-
Interest expense		(23,280	)		(66,533	)
Arbitration award		-			4,176,000
		(18,280	)		4,109,467

Net income	$	22,000		$	3,557,219

Per share information -
basic and fully diluted

Weighted Average Shares Outstanding		18,640,135			18,150,675

Net income		.001			.196

The accompanying notes are an integral part of these financial statements.

- 31 -

INNOVATIVE DESIGNS, INC.

STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Years Ended October 31, 2009 and 2008

	Common Stock						Additional
	Shares			Amount			Paid in Capital			Retained Deficit			Total

Balance at October 31, 2007		17,096,193		$	1,711		$	5,049,064		$	(9,180,051	)	$	(4,129,276	)

Shares issued for cash		505,050			50			208,716			-			208,766

Shares issued for services		594,000			59			216,291			-			216,350

Shares issued for extinguishment of debt		260,000			26			90,974			-			91,000

Net income		-			-			-			3,557,219			3,557,219

Balance at October 31, 2008		18,455,243			1,846			5,565,045			(5,622,832	)		(55,941	)

Shares issued for services		185,500			21			54,779			-			54,800

Shares issued for cash		90,000			9			28,991			-			29,000

Return of shares for non-performance of services		(27,000	)		(3	)		(10,797	)		-			(10,800	)

Net income		-			-			-			22,000			22,000
		18,703,743		$	1,873		$	5,638,018		$	(5,600,832	)	$	39,059

The accompanying notes are an integral part of these financial statements.

- 32 -

INNOVATIVE DESIGNS, INC.

STATEMENTS OF CASHFLOW

For the Years Ended October 31, 2009 and 2008

	2009			2008

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	22,000		$	3,557,219
Adjustments to reconcile net income to cash used in operating activities:
Common stock issued for extinguishment of debt		-			91,000
Common stock issued for services		54,800			216,350
Common stock returned for noncompliance of services		(10,800	)		-
Depreciation and amortization		6,033			5,277
Changes in operating assets and liabilities:
Accounts receivable		40,005			49,873
Inventory		(79,435	)		313,795
Deposits on inventory		181,688			(305,000	)
Customer deposits		(9,823	)		59,823
Accounts payable		(34,906	)		29,575
Accrued expenses		(16,589	)		13,009
Accrued interest on notes payable		(19,200	)		26,005
Accrued liability related to arbitration award		-			(4,176,000	)
Deferred revenue		-			-
Net cash used in operating activities		133,773			(119,074	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		-			(2,200	)
Net cash provided (used) in investing activities		-			(2,200	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on note payable		(106,437	)		(145,523	)
Payment on related party note		(128,000	)		(18,000	)
Payment of shareholder advances		(113,736	)		(3,000	)
Common stock issued for cash		29,000			208,765
Proceeds from loan payable to related party		84,000			95,000
Proceeds from notes payable		105,749			-
Net cash (used) provided by financing activities		(129,424	)		137,242

Net increase in cash		4,349			15,968

Cash - beginning of period		22,523			6,555
Cash - end of period	$	26,872		$	22,523

Supplemental cash flow information:

Cash paid for interest	$	16,480		$	46,938

The accompanying notes are an integral part of these financial statements.

- 33 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations - Innovative Designs, Inc. (the “Company”), which was incorporated in the State of Delaware on June 25, 2002, markets cold weather recreational and industrial clothing products that are made from INSULTEX, a low density foamed polyethylene, a material with buoyancy, scent block, and thermal resistant properties. These products are offered and sold by retailers, distributors, and companies throughout the United States, Canada, Russia and Finland.

Basis of Accounting - The financial statements are prepared using the accrual basis of accounting in which revenues are recognized when earned and expenses are recognized when incurred.

Fiscal Year End - The Company’s fiscal year ends on October 31.

Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results may differ from these estimates and assumptions.

Cash and Cash Equivalents - The Company defines cash and cash equivalents as those highly liquid investments purchased with a maturity of three months or less.

Revenue Recognition - The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is probable. Revenue is derived from sales of the Company’s recreational products such as artic armor, stadium packs, floating swimwear and hunting apparel. Sales of these items are recognized when the items are shipped. The Company offers a 5 day return policy and no warranty on all of its products. All sales outside the United States are entered into using the U.S. dollar as its functional currency.

Financial Instruments - Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2009 and 2008. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts receivable, accounts payable and notes payable. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values. The carrying value of the Company’s long-term debt approximated its fair value based on the current market conditions for similar debt instruments.

Allowance for Bad Debts - The Company considers all accounts receivable balances to be fully collectable at October 31, 2009, accordingly, no allowance for doubtful accounts is provided. If amounts become uncollectible, they will be charged to operations when the determination is made.

Inventory - Inventory consists principally of purchased finished goods. Inventory is stated at the lower of cost or market on a first-in, first-out basis.

- 34 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

Property and Equipment - Property and equipment are recorded at cost. Depreciation is computed using the straight line method over the estimated useful lives of the related assets.

Property and equipment are summarized by major classification as follows:

Equipment	7 years
Furniture and fixtures	7 years
Leasehold improvements	5 years
Automobiles	5 years

Maintenance and repairs are charged to operating expenses as incurred, significant improvements are capitalized. When property is sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations.

Impairment of Long-Lived Assets - The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value. There was no impairment of long-lived assets during 2009.

Income Taxes - The Company follows FASB ASC 740 "Accounting for Income Taxes" for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Net Income (Loss) Per Common Share - The Company calculates net income (loss) per share as required by Statement of Financial Accounting Standards FASB ASC 260, "Earnings per Share." Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. The Company did not compute dilutive earnings per share because there is only one class of stock.

Stock-Based Compensation - The Company accounts for equity instruments issued to employees for services based on the fair value of the equity instruments issued and accounts for equity instruments issued to other than employees based on the fair value of the consideration received or the fair value of the equity instruments, whichever is more reliably measurable.

- 35 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

The Company accounts for stock based compensation in accordance with FASB ASC 718, “Accounting for Stock-Based Compensation." The provisions of FASB ASC 718 allow companies to either expense the estimated fair value of stock options or to continue to follow the intrinsic value method set forth in APB Opinion 25, "Accounting for Stock Issued to Employees" (APB 25) but disclose the pro forma effects on net income (loss) had the fair value of the options been expensed. The Company has elected to continue to apply APB 25 in accounting for its stock option incentive plans.

New Accounting Pronouncements - In June 2009, FASB issued Statement of Financial Accounting Standards (SFAS) No. 166, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement removes the concept of a qualifying special – purpose entity from Statement 140 and removes the exception from applying FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to qualifying special purpose entities. Furthermore, this Statement clarifies that the objective of paragraph 9 of Statement 140 is to determine whether a transferor and all of the entities included in the transferor’s financial statements being presented have surrendered control over transferred financial assets and limits the circumstances in which a financial asset, or portion of a financial asset, should be derecognized when the transferor has not transferred the entire original financial asset to an entity that is not consolidated with the transferor in the financial statements being presented and/or when the transferor has continuing involvement with the transferred financial asset. This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This statement must be applied to transfers occurring on or after the effective date. The Company is currently assessing the impact, if any, that the issuance of this Statement will have on its financial statements.

In June 2009, FASB issued Statement of Financial Accounting Standards (SFAS) No. 167, an amendment of FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities. This Statement amends Interpretation 46(R) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics:

The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance.

The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance.

This Statement shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company is currently assessing the impact, if any, that the issuance of this Statement will have on its financial statements.

- 36 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

In October 2009, FASB issued Accounting Standards Update No. 2009-13 that provides amendments to the criteria in FASB Accounting Standards Codification (ASC) Subtopic 605-25, Revenue Recognition – Multiple Element Arrangements for separating consideration in multiple-deliverable arrangements. As a result of those amendments, multiple-deliverable arrangements will be separated in more circumstances than under existing U.S. GAAP. The amendments in this Update establish a selling price hierarchy for determining the selling price of a deliverable, utilizing vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. Furthermore, the Update will replace the term fair value in the revenue allocation guidance with selling price to clarify that the allocation of revenue is based on entity-specific assumptions rather than assumptions of a marketplace participant. Lastly, the amendments in this Update will eliminate the residual method of allocation, requiring that the arrangement consideration be allocated at the inception of the arrangement to all deliverables and also require that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This Update is effective for fiscal years beginning on or after June 15, 2010. Earlier application is permitted. The Company is currently assessing the impact, if any, that the issuance of this Update will have on its financial statements.

In October 2009, FASB issued Accounting Standards Update No. 2009-14 that provides amendments to the criteria in FASB Accounting Standards Codification (ASC) Subtopic 985-605, Software – Revenue Recognition. The amendments in this Update change the accounting model for revenue arrangements that include both tangible products and software elements. Tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are no longer within the scope of the software revenue guidance in Subtopic 985-605. In addition, the amendments in this Update require that hardware components of a tangible product containing software components always be excluded from the software revenue guidance. In that regard, the amendments in this Update provide additional guidance on how to determine which software, if any, relating to the tangible product also would be excluded from the scope of software revenue guidance. This Update is effective for fiscal years beginning on or after June 15, 2010. Earlier application is permitted. This Update will not have a material impact on the financial statements of the Company.

In October 2009, FASB issued Accounting Standards Update No. 2009-15 that provides amendments to the criteria in FASB Accounting Standards Codification (ASC) Subtopic 470-20, Debt – Debt with Conversion and Other Options. The amendments as outlined within this Update provide accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features and other options. This Update is effective for fiscal years beginning on or after December 15, 2009 and interim periods with those fiscal years for outstanding arrangements and is effective for interim or annual periods beginning on or after June 15, 2009 for arrangements entered into in those periods. Early application is prohibited. This Update will not have a material impact on the financial statements of the Company.

- 37 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

In December 2009, FASB issued Accounting Standards Update No. 2009-16 that amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 166, Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140. The amendments in this Accounting Standards Update improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance and the exception that permitted sale accounting for certain mortgage securitizations when a transferor has not surrendered control over the transferred financial assets. In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets. Comparability and consistency in accounting for transferred financial assets will also be improved through clarifications of the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. This Update must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This statement must be applied to transfers occurring on or after the effective date. The Company is currently assessing the impact, if any, that the issuance of this Update will have on its financial statements.

In December 2009, FASB issued Accounting Standards Update No. 2009-17 that amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). The amendments in this Accounting Standards Update replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An approach that is expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity. The amendments in this Update also require additional disclosures about a reporting entity’s involvement in variable interest entities, which will enhance the information provided to users of financial statements. This Update shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company is currently assessing the impact, if any, that the issuance of this Update will have on its financial statements.

In January 2010, FASB issued Accounting Standards Update No. 2010-01 that clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). This Update is effective for fiscal years beginning after December 15, 2009. Early application is prohibited. This Update will not have a material impact on the financial statements of the Company.

- 38 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

In January 2010, FASB issued Accounting Standards Update No. 2010-02 that provides amendments to Subtopic 810-10 and related guidance within U.S. GAAP to clarify the scope of the decrease in ownership provisions of the Subtopic and related guidance. The amendments in this Update also clarify that the decrease in ownership guidance does not apply to certain transactions even if they involve businesses. This Update is effective for fiscal years beginning on or after December 15, 2009. This update is only applicable to companies that have previously adopted ACS 810 (formerly known as FAS 160). This Update will not have a material impact on the financial statements of the Company.

2.	GOING CONCERN AND LEGAL PROCEEDINGS

The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company has experienced significant losses from operations. In addition, the Company has an accumulated deficit of $5,600,832 at October 31, 2009.

The Company's ability to continue as a going concern is contingent upon its ability to expand its operations and secure additional financing. The Company is currently pursuing financing for its operations and seeking to expand its operations. Failure to secure such financing or expand its operations may result in the Company not being able to continue as a going concern.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

On July 30, 2008, Elio D. Cattan and Eliotex srl filed a Motion to Strike Satisfaction of Judgment in the action filed at 04-00593 in the United States District Court for the Western District of Pennsylvania. The basis for the relief requested was Cattan’s averment that Innovative Designs defrayed certain of the expenses in Greystone, Inc.’s litigation in the United States, and that assistance violated Pennsylvania public policy regarding champerty and maintenance.

On February 5, 2009, The Honorable Arthur J. Schwab entered an Order on the Motion of Elio Cattan and Eliotex, SRL (collectively, “Cattan”) to strike the assignment and satisfaction of judgment filed at Docket No. 04-00593 by Elite Properties, LLC. Counsel for Innovative Designs, Inc. sought to preclude the District Court from rendering any determination on the merits as to the ownership of the Judgment or the propriety of the State Court execution proceedings by which ownership of the Judgment was transferred.

The District Court did not adopt or substantiate the legal argument brought forward by Counsel for Cattan, and did not render any findings on the merits that would disturb Elite Properties, LLC’s ownership of the IDI Judgment at the time it was satisfied.

On March 31, 2009, Eliotex, srl (“Eliotex”) and Elio Cattan (“Cattan”) filed a Motion to Strike Assignment and Satisfaction of Judgment in the Court of Common Pleas of Allegheny County, Pennsylvania at Case No. GD-06-011327. The Motion requests that the Court invalidate State Court execution proceedings on the default judgment entered against Eliotex and Cattan by Greystone, Inc. (“Greystone”) by which Greystone purchased at Sheriff Sale the default judgment against IDI entered in favor of Eliotex and Cattan in Italian arbitration proceedings and confirmed by the District Court. The Motion further requests that the Court strike the purchase of an assignment of that judgment from Greystone, and its subsequent satisfaction, by Elite Properties, LLC. IDI consented to the issuance of a Rule to Show Cause why the relief should not be granted.

- 39 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

On June 10, 2009, Eliotex and Cattan filed a Verification to their Motion. IDI filed its Answer to Rule to Show Cause on June 23, 2009. Eliotex and Cattan conducted no discovery within the 60 day time period provided for by the Order issuing the Rule, and no oral argument on the Rule has been requested.

On January 22, 2010 , counsel for IDI and Eliotex/Cattan participated in a oral argument before the Honorable R. Stanton Wettick, Jr. of the Court of Common Pleas of Allegheny County, Pennsylvania on the Rule to Show Cause regarding Eliotex/Cattan’s Motion to Strike Assignment of Judgement. The Judge heard arguments, and has asked the parties to brief two issues: (1) whether Eliotex/Cattan have standing to challenge the assignment from Greystone to Elite Properties; and (2) whether the dealings between IDI and Greystone constitute champerty and maintenance.

Counsel for IDI is confident that the Motion will be adjudicated in favor of Innovative Designs, Inc. The Motion is based on the grounds that the District Court expressly refused to adopt, and is being adjudicated by Judge Wettick,, who in 2007 upheld the propriety of the execution proceedings at the time of a prior challenge by Eliotex/Cattan.

3.	PROPERTY AND EQUIPMENT

Property and equipment are summarized by major classifications as follows:

	2009

Equipment	$	17,002
Furniture and fixtures		11,092
Leasehold improvements		4,806
Automobile		10,294

		43,194
Less accumulated depreciation		38,552

	$	4,642

Depreciation expense for the years ended October 31, 2009 and 2008 was $6,033 and $5,277, respectively.

- 40 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

4.	BORROWINGS

Borrowings at October 31, 2008 consisted of the following:

	2009
Related Party Borrowings

Loan Payable - Related party; Riccelli Properties. Loan Payable is non-interest bearing with no payment terms.	$	74,000

Loan Payable - Dean Kolocouris due December 31, 2009; interest is 10% for 90 days.		10,000

Total Related Party Borrowings	$	84,000

Other Borrowings

Note Payable - James Kearney; interest is flat rate of $8,000; principal and interest due and payable in full at any time after December 10, 2005.	$	65,000

Note Payable - Redevelopment Authority of Allegheny County; due June 2010; payable in monthly installments of $290. This is a non-interest bearing note.		688

Note Payable - U.S. Small Business Administration; due December 2035; payable in monthly installments of $1,820 including interest at 2.9% per annum.		395,269

Loan Payable - Xunjin Hua; due November 15, 2009, payable on demand; interest is 10% for 90 days.		40,000

Loan Payable - Frank Riccelli; due November 15, 2009; interest is 10% for 90 days.		15,000

Subtotal	$	515,957

- 41 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

	2009
Subtotal from page 42	$	515,957

Loan Payable - Dr. John V. Bailliet; due November 28, 2009, payable on demand; interest is 10% for 90 days.		10,000

Loan Payable - Frank Riccelli; due January 20, 2010; interest is 10% for 90 days.		40,000

Total Other Borrowings	$	565,957

Total Borrowings	$	649,957

Less current portion of Related Party Borrowings		(84,000	)

Less current portion of Other Borrowings		(177,029	)

Total Long-Term Borrowings	$	388,928

Maturities of debt for the next five years after October 2009 are as follows:

	Related Party		Other
Year Ending October 31,	Borrowings		Borrowings		Total

2010	$	84,000	$	177,029	$	261,029
2011		-		10,859		10,859
2012		-		11,178		11,178
2013		-		11,506		11,506
2014 and thereafter		-		355,385		355,385

	$	84,000	$	565,957	$	649,957

In July 2005, the Company received a no interest loan with Redevelopment Authority of Allegheny County in the amount of $13,923. The Company qualified for a loan due to the significant loss of inventory, raw materials, and equipment when its leased warehouse, in which it maintained these items, was flooded by the remnants of Hurricane Ivan in September 2004. The loan is to be repaid over a forty-seven month period in equal payments of approximately $290, commencing July 1, 2006. The loan balance was $689 at October 31, 2009.

- 42 -

INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

In July 2005, the Company was approved for a low interest promissory note from the U.S. Business Administration in the amount of $280,100. The Company qualified for the loan due to the significant loss of inventory, raw materials, and equipment when its leased warehouse, in which it maintained these items, was flooded by the remnants of Hurricane Ivan in September 2004. The note bears interest at an annual rate of 2.9%. Monthly installment payments, including principal and interest, will be $1,186 beginning five months

from the date of the promissory note. The note will be payable over 30 years. Certain guarantees of collateral were made by the Company’s Chief Executive Officer and shareholder, Joseph Riccelli to service the note. The Company is to use the loan proceeds to repair or replace the following: approximately $6,200 for machinery and equipment; approximately $80,100 for furniture and fixtures; approximately $148,700 for inventory; and approximately $45,100 for working capital. The Company has received the full amount of this loan at October 31, 2005. In January 2006 the Company amended the promissory note with the Small Business Administration increasing the principal balance to $430,500. The note still bears an annual interest rate of 2.9% and matures on July 13, 2035. Monthly payments, including principal and interest, will increase to $1,820 due every month beginning February 13, 2006. All remaining principal and accrued interest are due and payable on July 13, 2035. The loan balance was $395,268 at October 31, 2009.

In September 2005, the Company signed a new loan agreement with James Kearney for a note payable. This new agreement is for a prior note payable of $100,000, dated July 2004, in addition to accrued interest of $62,000. This note bears interest at a flat rate of $8,000 per quarter (frozen at October 31, 2008). The principal of $65,000 and interest of $92,000 are payable in full at any time after December 10, 2005.

In August 2009, the Company entered into a loan payable with Xunjin Hua for $40,000. This loan was to be used to fund operations of the Company. This loan is due on demand, including interest at 10% for 90 days. The loan balance at October 31, 2009 was $40,000. $20,000 of this loan was paid as of January 28, 2010.

In August 2009, the Company entered into a loan payable with Dr. John V. Bailliet for $10,000. This loan was to be used to fund operations of the Company. This loan is due on demand, including interest at 10% for 90 days. The loan balance at October 31, 2009 was $10,000. The full balance of this loan and the interest was paid as of January 28, 2010.

In August 2009, the Company entered into a loan payable with Frank Riccelli for $15,000. This loan was to be used to fund operations of the Company. This loan is due on demand, including interest at 10% for 90 days. The loan balance at October 31, 2009 was $15,000. The full balance of this loan and the interest was paid as of January 28, 2010.

In September 2009, the Company entered into a loan payable with a related party, Dean Kolocouris for $10,000. This loan was to be used to fund operations of the Company. This loan is due on demand, including interest at 10% for 90 days. The loan balance at October 31, 2009 was $10,000. The full balance of this loan and the interest was paid as of January 28, 2010.

In October 2009, the Company entered into a loan payable with Frank Riccelli for $40,000. This loan was to be used to fund operations of the Company. This loan is due on demand, including interest at 10% for 90 days. The loan balance at October 31, 2009 was $40,000. The full balance of this loan and the interest was paid as of January 28, 2010.

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INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

5.	EXCLUSIVE LICENSING AND MANUFACTURING AGREEMENT

On April 16, 2006, the Company entered into an Exclusive License and Manufacturing Agreement (the “Agreement”) with the Ketut Group, with an effective date of April 1, 2006, whereby the Company acquired an exclusive license to develop, use, sell, manufacture and market products related to or utilizing INSULTEX™, Korean Patent Number, (0426429) or any Insultex Technology. At the behest of the Board of Directors, the Insultex trademark was chosen as the mark to identify the product utilized by Innovative since its inception, and was originally registered by Joseph Riccelli on February 17, 2005. The new trademark, intended to avoid confusion arising from the use of the old Eliotex trademark in association with a new, subsequent, different and separately-patented product, was assigned by Mr. Riccelli to the Company on April 25, 2006, with that assignment to become effective upon final approval of the Statement of Use by the United States Patent and Trademark Office. The License was awarded by the Korean inventor, an individual who is part of the Ketut Group, and the manufacturer of INSULTEX™. The Company received an exclusive forty (40) year worldwide license, except for Korea and Japan, with an initial term of ten (10) years and an option to renew the License for up to three (3) successive ten (10) year terms. Additionally, the Company was granted the exclusive rights to any current or future inventions, improvements, discoveries, patent applications and letters of patent which the Ketut Group controls or may control related to INSULTEX™. Furthermore, the Company has the right to grant sub-licenses to other manufacturers for the use of INSULTEX™ or any Insultex Technology.

6.	CONCENTRATIONS

Earned revenues for the fiscal year ending October 31, 2008 include revenues earned from one major customer. The major customer accounted for approximately 11% of total Company earned revenue for fiscal year ending October 31, 2008. There were no open accounts receivable from this customer at October 31, 2008. There were no concentration of customers for the fiscal year ending October 31, 2009.

The Company only has one supplier of INSULTEX, the special material which is manufactured within the apparel of the Company. Additionally, the Company only has one manufacturer that produces the apparel on behalf of the Company, located in Indonesia.

7.	INCOME TAXES

The Company accounts for income taxes under FASB ASC 740, which requires use of the liability method. FASB ASC 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

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INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences are as follows:

	2009			2008

Income tax provision at the federal statutory rate		34	%		34	%
Effect of operating losses		34	%		34	%

		-			-

The Company's deferred tax asset is as follows:

	2009			2008

Deferred tax assets	$	2,479		$	8,065
Less: valuation allowance		(2,479	)		(8,065	)

Net deferred taxes	$	-		$	-

The Company has a net operating loss of approximately $2,968,205 and $1,204,672 at October 31, 2009 and 2008, respectively, which can be carried forward through October 31, 2029. The principal difference between the net operating loss for book purposes and income tax purposes results from common shares issued for services aggregating of $216,350 and $6,000 at October 31, 2009 and 2008, respectively.

FASB Interpretation 48, “Accounting for Uncertainty in Income Taxes”, is effective for fiscal years beginning after December 15, 2006. This interpretation clarifies the accounting for uncertainty in income taxes recognized in enterprise’s financial statements in accordance with FASB ASC 740, Accounting for Income Taxes. The interpretation prescribes a recognition threshold and measurement attributable for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not believe this will have an impact on the financial statements.

8.	COMMITMENTS

The Company currently maintains two offices which are leased pursuant to an oral agreement on a month-to-month basis for approximately $3,300 per month. For the years ended October 31, 2009 and 2008, rent expense totaled approximately $38,400 and $39,600, respectively.

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INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

9.	QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	First			Second			Third			Fourth
2009	Quarter			Quarter			Quarter			Quarter		Year

Revenue	$	591,164		$	57,666		$	26,616		$	161,778	$	837,224
(Loss) from operations		3,228			( 51,958	)		(141,566	)		230,576		40,280

NET INCOME (LOSS)	$	(2,220	)	$	(56,418	)	$	(144,473	)	$	225,111	$	22,000

Weighted average shares outstanding		18,449,910			18,846,743			18,646,743			18,646,743		18,640,135

Basic income/(loss) per share		(.001	)		(.003	)		(.008	)		.012		.001

2008	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Year

Revenue	$	234,183		$	34,133		$	85,141		$	189,680		$	543,137
(Loss) from operations		(17,895	)		( 255,759	)		(87,041	)		(191,553	)		(552,248	)

NET INCOME (LOSS)	$	(24,916	)	$	(26,981	)	$	4,088,393		$	(479,277	)	$	3,557,219

Weighted average shares outstanding		17,522,343			18,024,073			18,034,743			18,455,243			18,150,675

Basic loss per share		(.0014	)		(.0015	)		22.67			(.026	)		.196

10.	COMMON STOCK

On November 1, 2007, we issued a total of 425,000 shares of our common stock to two consultants for business consulting services for $.35 per share or $148,750. One consultant received 225,000 shares and the other consultant received 200,000 shares. The Company’s CEO and the service provider negotiated the value of the services to be performed on behalf of the Company. The negotiated value was divided by the approximate trading value of the Company’s common stock on the date the transaction was entered into to calculate the number of shares issued to the service provider. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

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INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

On November 2, 2007, we issued 3,000 shares of our common stock for cash for $.40 per share or $1,200. We relied on Section 4(2) of the Act for the sale. We believed that Section 4(2) was available because the sale did not involve a public offering and there was no general solicitation or general advising involved in the sale.

On November 3, 2007, we issued 110,000 shares of our common stock to a noteholder in exchange for the note. The noteholder is a shareholder of the Company. The closing price of our common stock on that date was $.35 per share making the value of the transaction $38,500. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On November 3, 2007, we issued a total of 6,000 shares of our common stock to a consultant for services relating to the use of our Arctic Armor line of products to the law enforcement community. The closing price of our common stock on that date was $.40. Based on the closing price, the value of the common stock issued was $2,400. The Company’s CEO and the service provider negotiated the value of the services to be performed on behalf of the Company. The negotiated value was divided by the approximate trading value of the Company’s common stock on the date the transaction was entered into to calculate the number of shares issued to the service provider. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On November 3, 2007, we issued, in a private placement, a total of 47,150 shares of our common stock for cash for $.40 a share to seven investors. Based on the closing price, the value of the common stock issued was $18,860. The shares were issued without registration pursuant to the exemption provided by Section 506 of Regulation D promulgated under the Securities Act of 1933, as amended as an offering to “accredited investors” as that term in defined in Regulation D.

On December 20, 2007, we issued each of our director’s, and a former director, except our CEO and Chairman of the Board 25,000 shares of our common stock for their services. We also issued 25,000 shares to our Vice-president Sales, 30,000 shares to one of our legal counsel for their services and 25,000 shares for marketing services. The closing price of our common stock was $.40 per share. These shares were accrued in the prior year (October 31, 2007) financial statements as these services were performed during the fiscal year ended October 31, 2007. Based on the closing price, the value of the shares issued was $72,000, which approximated the value of the services. The Company’s CEO and the service provider negotiated the value of the services to be performed on behalf of the Company. The negotiated value was divided by the approximate trading value of the Company’s common stock on the date the transaction was entered into to calculate the number of shares issued to the service provider. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On December 2, 2007, we issued a total of 118,800 shares of our common stock to five investors in a private placement. Based on the closing price, the value of the common stock issued was $50,335. The shares were issued without registration pursuant to the exemption provided in Section 506 of regulation D, promulgated under the Securities Act of 1933, as amended as an offering to “accredited investors” as that term is defined in Regulation D.

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INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

On January 4, 2008, we issued 67,500 shares of our common stock for cash to three investors in a private placement. Based on the closing price, the value of the common stock issued was $30,375. The shares were issued without registration pursuant to the exemption provided in Section 506 of Regulation D promulgated under the Securities Act of 1933, as amended as an offering to “accredited investors” as that term is defined in Regulation D.

On January 7, 2008, we issued 40,000 shares of our common stock in exchange for debt to a stockholder of the Company. The closing price of our common stock on that date was $.35 per share. Based on the closing price, the value of the stock was $14,000 which equaled the amount of debt due to the stockholder. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On February 29, 2008, we issued 110,000 shares of our common stock in exchange for debt and accrued interest for $.35 per share to a stockholder of the Company. Based on the closing price, the value of the stock was $38,500 which equaled the amount of debt and accrued interest due to the stockholder. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On February 29, 2008, we issued 11,100 shares of our common stock for cash for $.45 per share or $4,995 in a private placement to one investor. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On March 18, 2008, we issued 18,000 shares of our common stock to a consultant for design services for $.40 per share or $7,200. The Company’s CEO and the service provider negotiated the value of the services to be performed on behalf of the Company. The negotiated value was divided by the approximate trading value of the Company’s common stock on the date the transaction was entered into to calculate the number of shares issued to the service provider. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On May 23, 2008, we issued a total of 25,000 shares of our common stock to two consultants, one for 15,000 shares and the other for 10,000 shares, for consulting services relating to the use of our Arctic Armor products in the railroad industry for $.40 per share or $10,000. The Company’s CEO and the service provider negotiated the value of the services to be performed on behalf of the Company. The negotiated value was divided by the approximate trading value of the Company’s common stock on the date the transaction was entered into to calculate the number of shares issued to the service provider. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On June 30, 2008, we issued 10,000 shares of our common stock to a consultant for business consulting services relating to our Arctic Armor line of products for $.40 per share or $4,000. The Company’s CEO and the service provider negotiated the value of the services to be performed on behalf of the Company. The negotiated value was divided by the approximate trading value of the Company’s common stock on the date the transaction was entered into to calculate the number of shares issued to the service provider. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

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INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

On June 30, 2008, we issued 62,500 shares of our common stock for cash for $.40 per share or $25,000 in a private placement to one investor who was a stockholder of the Company. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On July 8, 2008, we issued 125,000 shares of our common stock for cash for $.40 per share or $50,000 to one investor who was a stockholder of the Company. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On July 29, 2008, we issued 50,000 shares of our common stock for cash for $.40 per share or $20,000 to one investor who was a stockholder of the Company. The shares were issued without registration pursuant to the exemption provided by section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On September 8, 2008, we issued 20,000 shares of our common stock for cash for $.40 per share or $8,000 in a private placement to one investor. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On September 8, 2008, we issued a total of 10,000 shares of our common stock for $.40 per share or $4,000 for marketing services to one consultant. The Company’s CEO and the service provider negotiated the value of the services to be performed on behalf of the Company. The negotiated value was divided by the approximate trading value of the Company’s common stock on the date the transaction was entered into to calculate the number of shares issued to the service provider. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On September 18, 2008, we issued a total of 100,000 shares of our common stock for $.40 per share or $40,000 for business and financial consulting services to a consultant who is also a stockholder of the Company. The Company’s CEO and the service provider negotiated the value of the services to be performed on behalf of the Company. The negotiated value was divided by the approximate trading value of the Company’s common stock on the date the transaction was entered into to calculate the number of shares issued to the service provider. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended as an offering not involving a public offering.

On December 11, 2008, we issued a total of 20,000 shares of our common stock for cash for $.40 per share or $8,000. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended.

On December 30, 2008, we issued a total of 70,000 shares of our common stock for cash for $.30 per share or $21,000. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended.

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INNOVATIVE DESIGNS, INC.

NOTES TO FINANCIAL STATEMENTS

On December 30, 2008, we issued a total of 1,500 shares of our common stock for professional services for $.30 per share or $450. The negotiated value was divided by the approximate trading value of the Company’s common stock and the date the transaction was entered into to calculate the number of shares issued to the services provided. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended.

On February 5, 2009, we issued a total of 100,000 shares of our common stock for professional services for $.25 per share or $25,000. The negotiated value was divided by the approximate trading value of the Company’s common stock and the date the transaction was entered into to calculate the number of shares issued to the services provided. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended.

On February 5, 2009, we issued a total of 25,000 shares of our common stock for professional services for $.25 per share or $6,250. The negotiated value was divided by the approximate trading value of the Company’s common stock and the date the transaction was entered into to calculate the number of shares issued to the services provided. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended.

On March 6, 2009, we issued a total of 54,000 shares of our common stock for professional services for $.40 per share or $21,600. The negotiated value was divided by the approximate trading value of the Company’s common stock and the date the transaction was entered into to calculate the number of shares issued to the services provided. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended. Subsequently on June 2, 2009, the Company cancelled 27,000 shares of this stock for non-performance of services. The shares were valued at $.40 per share or an aggregate of $10,800.

On May 26, 2009, we issued 5,000 shares of our common stock for professional services for $.30 per share or $1,500. The negotiated value was divided by the approximate trading value of the Company’s common stock and the date the transaction was entered into to calculate the number of shares issued to the services provided. The shares were issued without registration pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended.

11.	SUBSEQUENT EVENTS

The Company has evaluated subsequent events in accordance with Accounting Standards Codification Topic 855, Subsequent Events, through January 28, 2010, which is the date the financial statements were available to be issued. During our evaluation no subsequent event items were identified.

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