INNOVATIVE DESIGNS INC - Quarter Report: 2010 January (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
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x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
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For the
quarterly period ended January 31, 2010
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
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For the
transition period from _______ to ________.
Commission
File Number: 000-51791
INNOVATIVE
DESIGNS, INC.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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03-0465528
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(State
or other jurisdiction of
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(I.R.S.
Employer
|
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incorporation
or organization)
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Identification
No.)
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223 North
Main Street, Suite 1
Pittsburgh,
Pennsylvania 15215
(Address
of Principal Executive Offices, Zip Code)
(412)
799-0350
(Issuer’s
Phone Number Including Area Code)
N/A
(Former
Name or Former Address, if changed since last report)
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 preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES x NO ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer”, “accelerated
filer” and “smaller reporting Company” in Rule 12b-2 of the Exchange
Act.
(Check
One)
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Large
Accelerated Filer ¨
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Accelerated
Filer ¨
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Non-accelerated
Filer ¨
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Smaller
reporting company x
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(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 ¨ NO x
As of
March 12, 2010, there were 18,703,743 shares of the Registrant’s common stock,
par value $.0001 per share, outstanding.
Transitional
Small Business Disclosure Format: YES ¨ NO x
Innovative
Designs, Inc.
Index
Form 10-Q
for the Quarter Ended January 31, 2010
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Page No.
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Part
I — Financial Information
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Item
1.
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Condensed
Financial Statements (unaudited)
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1
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Condensed
Balance Sheets at January 31, 2010 (Unaudited)
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and
October 31, 2009
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1
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Condensed
Statements of Operations for the Three Months Ended
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January
31, 2010 and 2009
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2
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Condensed
Statement of Changes in Stockholders’ Equity (Deficit) at
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January
31, 2010 and October 31, 2009
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3
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Condensed
Statements of Cash Flows for the Three Months
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|||
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Ended
January 31, 2010 and 2009
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4
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Notes
to Condensed Financial Statements
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5 –
7
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Item
2.
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Management’s
Discussion and Analysis of Financial Condition
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and
Results of Operations
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8 –
10
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Item
T.
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Controls
and Procedures
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10
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Part
II — Other Information
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Item
I.
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Legal Proceedings |
11
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Item
6.
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Exhibits
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11
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ITEM
1. CONDENSED FINANCIAL STATEMENTS
INNOVATIVE
DESIGNS, INC.
CONDENSED
BALANCE SHEETS
January 31, 2010 (Unaudited)
and October 31, 2009
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2010
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2009
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|||||||
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ASSETS
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||||||||
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CURRENT
ASSETS:
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||||||||
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Cash
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$ | 218,175 | $ | 26,872 | ||||
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Accounts
receivable
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194,567 | 119,123 | ||||||
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Inventory
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630,422 | 811,730 | ||||||
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Deposits
on inventory
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136,758 | 123,312 | ||||||
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Total
current assets
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1,179,922 | 1,081,037 | ||||||
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PROPERTY
AND EQUIPMENT, NET
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1,402 | 4,642 | ||||||
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TOTAL
ASSETS
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$ | 1,181,324 | $ | 1,085,679 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
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||||||||
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CURRENT
LIABILITIES:
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||||||||
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Accounts
payable
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$ | 61,403 | $ | 53,983 | ||||
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Current
portion of notes payable
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96,774 | 177,029 | ||||||
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Accrued
interest expense
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94,000 | 98,800 | ||||||
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Accounts
payable - related party
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28,220 | 28,220 | ||||||
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Related
party debt
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63,000 | 84,000 | ||||||
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Shareholders
advances
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206,364 | 214,764 | ||||||
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Accrued
expenses
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896 | 896 | ||||||
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Total
current liabilities
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550,657 | 657,692 | ||||||
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LONG-TERM
LIABILITIES:
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||||||||
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Long-term
portion of notes payable
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380,930 | 388,928 | ||||||
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Total
long term liabilities
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380,930 | 388,928 | ||||||
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TOTAL
LIABILITIES
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931,587 | 1,046,620 | ||||||
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STOCKHOLDERS'
EQUITY:
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||||||||
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Preferred
stock, $.0001 par value, 100,000,000 shares authorized
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||||||||
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Common
stock, $.0001 par value, 500,000,000 shares authorized, 18,703,743 shares
issued and outstanding
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1,873 | 1873 | ||||||
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Additional
paid in capital
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5,638,018 | 5,638,018 | ||||||
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Accumulated
deficit
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(5,390,154 | ) | (5,600,832 | ) | ||||
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Total
stockholders' equity
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249,737 | 39,059 | ||||||
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TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 1,181,324 | $ | 1,085,679 | ||||
The
accompanying notes are an integral part of these financial
statements.
- 1
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INNOVATIVE
DESIGNS, INC.
STATEMENTS
OF OPERATIONS
(Unaudited)
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For the Three Months Ended
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||||||||
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January 31, 2010
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January 31, 2009
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|||||||
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REVENUE
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$ | 636,676 | $ | 591,164 | ||||
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OPERATING
EXPENSES:
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||||||||
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Cost
of sales
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264,572 | 255,150 | ||||||
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Selling,
general and administrative expenses
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149,528 | 105,439 | ||||||
| 414,100 | 360,589 | |||||||
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Income
from operations
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222,576 | 230,575 | ||||||
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INTEREST
EXPENSE
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(11,898 | ) | (5,465 | ) | ||||
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Net
income
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$ | 210,678 | $ | 225,110 | ||||
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Per
share information - basic and fully diluted
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||||||||
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Weighted
Average Shares Outstanding
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18,646,743 | 18,449,910 | ||||||
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Net
income per share
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.011 | .012 | ||||||
The
accompanying notes are an integral part of these financial
statements.
- 2
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INNOVATIVE
DESIGNS, INC.
STATEMENTS
OF STOCKHOLDERS’ EQUITY (DEFICIT)
January 31, 2010 (Unaudited)
and October 31, 2009
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Common Stock
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Additional
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|||||||||||||||||||
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Shares
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Amount
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Paid in Capital
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Retained Deficit
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Total
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||||||||||||||||
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Balance
at October 31, 2008
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18,455,243 | $ | 1,846 | $ | 5,565,045 | $ | (5,622,832 | ) | $ | (55,941 | ) | |||||||||
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Shares
issued for services
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185,500 | 21 | 54,779 | - | 54,800 | |||||||||||||||
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Shares
issued for cash
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90,000 | 9 | 28,991 | - | 29,000 | |||||||||||||||
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Return
of shares for non-performance of services
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(27,000 | ) | (3 | ) | (10,797 | ) | - | (10,800 | ) | |||||||||||
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Net
income
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- | - | - | 22,000 | 22,000 | |||||||||||||||
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Balance
at October 31, 2009
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18,703,743 | 1,873 | 5,638,018 | (5,600,832 | ) | 39,059 | ||||||||||||||
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Net
income
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- | - | - | 210,678 | 210,678 | |||||||||||||||
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Balance
at January 31, 2010
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18,703,743 | $ | 1,873 | $ | 5,638,018 | $ | (5,390,154 | ) | $ | 249,737 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
- 3
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INNOVATIVE
DESIGNS, INC.
STATEMENTS
OF CASHFLOW
(Unaudited)
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For the Three Months Ended
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||||||||
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January 31, 2010
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January 31, 2009
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|||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES
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||||||||
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Net
income
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$ | 210,678 | $ | 225,110 | ||||
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Adjustments
to reconcile net income to cash
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||||||||
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provided
by operating activities:
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||||||||
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Common
stock issued for services
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- | 450 | ||||||
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Depreciation
and amortization
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3,240 | 1,197 | ||||||
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Changes
in operating assets and liabilities:
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||||||||
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Accounts
receivable
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(75,444 | ) | (75,867 | ) | ||||
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Inventory
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181,308 | (52,315 | ) | |||||
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Deposit
on inventory
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(13,446 | ) | 251,183 | |||||
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Accounts
payable
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7,420 | (50,848 | ) | |||||
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Accrued
expenses
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- | (14,713 | ) | |||||
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Accrued
interest expense
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(4,800 | ) | - | |||||
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Customer
deposits
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- | (9,823 | ) | |||||
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Net
cash provided by operating activities
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308,956 | 274,374 | ||||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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||||||||
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Payments
on note payable
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(88,253 | ) | (57,405 | ) | ||||
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Payment
on related party debt
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(21,000 | ) | (33,000 | ) | ||||
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Payment
of shareholder advances
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(8,400 | ) | (55,936 | ) | ||||
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Common
stock issued for cash
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- | 27,000 | ||||||
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Net
cash (used in) provided by financing activities
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(117,653 | ) | (119,341 | ) | ||||
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Net
increase in cash
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$ | 191,303 | $ | 155,033 | ||||
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Cash
- beginning of year
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$ | 26,872 | $ | 22,523 | ||||
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Cash
- end of period
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$ | 218,175 | $ | 177,556 | ||||
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Supplemental
cash flow information:
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||||||||
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Cash
paid for interest
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$ | 11,898 | $ | 5,465 | ||||
The
accompanying notes are an integral part of these financial
statements.
- 4
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INNOVATIVE
DESIGNS, INC.
NOTES TO
THE CONDENSED FINANCIAL STATEMENTS
For the Three Month Period
Ended January 31, 2010
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1.
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BASIS OF PRESENTATION
- INTERIM FINANCIAL
STATEMENTS
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The
accompanying unaudited condensed financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America (“GAAP”) for interim financial information and the
general instructions to Form 10-Q. Accordingly, they do not
include all information and footnotes required by GAAP for complete
financial statements. These interim financial statements should
be read in conjunction with our audited financial statements and notes
thereto included in our Annual Report on Form 10-K for the fiscal year
ended October 31, 2009. The preparation of financial statements
in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those
estimates. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a
fair presentation have been included. The results of operations
for the periods presented are not necessarily indicative of the results
that may be expected for the year ending October 31, 2010 or any future
period.
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2.
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FASB ACCOUNTING
STANDARDS CODIFICATION TOPIC 718 SHARE-BASED PAYMENT (FASB ASC
718)
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FASB ASC
718 establishes standards for the accounting and transactions in which an entity
exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entity’s equity
instruments or that may be settled by the issuance of those equity
instruments. This Statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. This Accounting Standard Codification does not change
the accounting guidance for share-based payment transactions with parties other
than employees provided in FASB ASC 718 as originally issued and EITF Issue No.
96-18, “Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or
Services.” This Accounting Standard Codification does not address the
accounting for employee share ownership plans, which are subject to AICPA
Statement of Position 93-6, Employers’ Accounting for Employee
Stock Ownership Plans. The adoption of FASB ASC 718 by the
Company did not have a material impact on the Company’s financial position,
results of operations or cash flows. There was no change in the
status of outstanding shares or in the Equity Compensation Plan since October
31, 2006, and no shares were granted to employees of the Company for services
rendered or to be rendered.
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3.
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EARNINGS PER
SHARE
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Innovative
Designs, Inc. (the “Company”) calculates net income (loss) per share as required
by FASB ASC Topic 260, Earnings per Share. Basic earnings (loss) per
share is calculated by dividing income (loss) by the weighted average number of
common shares outstanding for the period. Diluted earnings (loss) per
share is calculated by dividing net income (loss) by the weighted average number
of common shares and dilutive common stock equivalents
outstanding. During the periods presented common stock equivalents
were not considered as their effect would be anti-dilutive.
- 5
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INNOVATIVE
DESIGNS, INC.
NOTES TO
THE CONDENSED FINANCIAL STATEMENTS
For the Three Month Period
Ended January 31, 2010
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4.
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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 had experienced significant losses from operations. However,
the Company’s 2008 operations resulted in net income of $22,000 and during the
first quarter of 2010, the Company had net income of approximately
$211,000. This positive trend from operations has helped decrease the
Company accumulated deficit which was $5,390,154 at January 31,
2010.
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.
- 6
-
INNOVATIVE
DESIGNS, INC.
NOTES TO
THE CONDENSED FINANCIAL STATEMENTS
For the Three Month Period
Ended January 31, 2010
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. The Motion is dormant and likely to
remain so for the foreseeable future.
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 has 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.
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5.
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INCOME
TAXES
|
The
Company follows FASB ASC Topic 740 “Accounting 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 asset or liability
each period. The Company has net operating losses (NOLs) carry
forwards that can be used to eliminate the tax liability in the current period
and therefore no tax liability or tax provision is reflected in these current
quarterly financial statements.
The
Company will continue to evaluate its income tax obligation throughout the year
and will record a tax provision when it is necessary.
|
6.
|
SUBSEQUENT
EVENTS
|
The
Company has evaluated subsequent events in accordance with Accounting Standards
Codification Topic 855, Subsequent Events, through March 12, 2010, which is the
date financial statements were available to be issued. During the
evaluation no subsequent event items were identified by the
Company.
- 7
-
INNOVATIVE
DESIGNS, INC.
For the Three Month Period
Ended January 31, 2010
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General
The
following information should be read in conjunction with the consolidated
financial statements and the notes thereto and in conjunction with Management’s
Discussion and Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the fiscal year ended October 31,
2010.
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.
Background
Innovative
Designs, Inc. (hereinafter referred to as the “Company”, “we or “our”) was
formed on June 25, 2002. We market and sell clothing products such
as hunting apparel, and cold weather gear called “Artic Armor” that
are made from INSULTEX, a material with buoyancy, scent block and thermal
resistant proprieties. We obtain INSULTEX through a license agreement
with the owner and manufacturer of the material. Since our formation
we have devoted our efforts to:
|
|
·
|
Completing
the development, design and prototypes of our
products,
|
|
|
·
|
Obtaining
retail stores or sales agents to offer and sell our products,
and
|
|
|
·
|
Developing
our website to sell more of our
products.
|
- 8
-
INNOVATIVE
DESIGNS, INC.
For the Three Month Period
Ended January 31, 2010
Results
of Operations
Comparison
of the Three Months Ended January 31, 2010 with the Three Months Ended January
31, 2009.
Revenues
The
following table shows a comparison of the results of operations between the
three months ended January 31, 2010 and three months ended January 31,
2009:
|
Three
Months
Ended
January
31,
2010
|
%
of
Sales
|
Three
Months
Ended
January
31,
2009
|
%
of
Sales
|
$
Increase
(Decrease)
|
%
Change
|
|||||||||||||||||||
|
REVENUE
|
$ | 636,676 | 100 | % | $ | 591,164 | 100 | % | $ | 45,512 | 7.7 | % | ||||||||||||
|
OPERATING
EXPENSES
|
||||||||||||||||||||||||
|
Cost
of sales
|
264,572 | 41.6 | % | 254,700 | 43.1 | % | 9,872 | 3.9 | % | |||||||||||||||
|
Selling, general
and administrative
expenses
|
149,528 | 23.5 | % | 105,889 | 17.9 | % | 43,639 | 41.2 | % | |||||||||||||||
|
Income
(loss) from operations
|
414,100 | 65.0 | % | 360,589 | 61.0 | % | 53,511 | 14.8 | % | |||||||||||||||
|
OTHER
INCOME (EXPENSE)
|
||||||||||||||||||||||||
|
INTEREST EXPENSE
|
(11,898 | ) | (1.9 | )% | (5,465 | ) | (.9 | )% | (6,433 | ) | (117.7 | )% | ||||||||||||
| (11,898 | ) | (1.9 | )% | (5,465 | ) | (.9 | )% | (6.433 | ) | (117.7 | )% | |||||||||||||
|
Net
income (loss)
|
$ | 210,678 | 33.1 | % | $ | 225,110 | 38.1 | % | $ | (14,432 | ) | (6.4 | )% | |||||||||||
For the
three months ended January 31, 2010, revenues were $636,676 compared to revenues
of $591,164 for the three month period ended January 31, 2009. The
increase in sales revenue for the three months ended January 31, 2010, over the
corresponding period ending January 31, 2009, is a result of our selling more of
our Artic Armor line of products. Nearly all of our sales are for
this product line. As Artic Armor is a cold weather product line, as
the weather changes from the cold seasons, our sales greatly
decrease. During the quarter we continued to utilize television
advertising which is very effective for our internet sales. We do not
pay sales commissions on such sales.
Our
selling, general and administrative expenses increased by approximately $44,000
from the comparable three month period. The increase from the three
month period ended January 31, 2009, was a result mostly of the following; an
increase in professional fees of approximately $12,000, salary expenses
increased by $15,000, increased selling commissions of approximately $4,000, an
increase in our loan repayments of approximately $7,000, advertising cost
increases of approximately $2,700 and a rent payment caused by timing of
approximately $6,000.
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INNOVATIVE
DESIGNS, INC.
For the Three Month Period
Ended January 31, 2010
In March
2010, we signed up two sales agencies agreements one that covers the state of
Alaska and the other with a sale group that covers twenty-two
states.
Liquidity
and Capital Recourses
During
the quarter ended January 31, 2010, we funded our operations from revenues from
sales.
Short
Term: We will continue to fund our operations from sales and short term
borrowings from shareholders and others and the possible sale of our
securities. We currently have no commercial credit facilities
available to us. We continue to pay our creditors when payments are
due.
Long
Term: The Company will continue fund its operations from revenues, borrowings
from private parties and the possible sale of our securities. We will
continue to seek to obtain commercial lending, but our former bankruptcy filing
and the general tight lending environment has made this task
difficult. Should we not be able to rely on the private sources for
borrowing, our operations would be severely effected as we would not be able to
fund our purchase orders to our suppliers for finished goods. We
continue to pursue commercial funding sources which would greatly assist our
cash flow and allow us to expand our marketing efforts.
ITEM T.
CONTROLS AND PROCEDURES
Management
has developed and implemented a policy and procedures for reviewing, on a
quarterly basis, our disclosure controls and procedures and our internal control
over financial reporting. Effective March 19, 2008, our Chief
Executive Officer temporarily assumed the duties of our Chief Financial
Officer. As of the date of filing this Form 10-Q, the Chief Executive
Officer continues these duties. During the second quarter of 2009,
the Company hired an outside Certified Public Accountant to analyze and prepare
the books and records on a quarterly basis. As such, only immaterial
reclassifications were made during the first quarter of 2010.
Changes
in Internal Control Over Financial Reporting
During
the most recent fiscal quarter, there were no changes in the Company’s internal
control over financial reporting identified in connection with the evaluation
required by paragraph (d) of Exchange Act Rules 13(a)-15 or 15d-15 that have
materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
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INNOVATIVE
DESIGNS, INC.
For the Three Month Period
Ended January 31, 2010
PART
II
ITEM I.
LEGAL PROCEEDINGS
During
the period on January 22, 2010, counsel for IDI and Eliotex/Cattan participated
in an 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
Judgment. 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.
ITEM 6.
EXHIBITS
|
*3.1
|
Certificate
of Incorporation
|
|
|
*3.2
|
By
Laws
|
|
|
10.1A
|
Form
of Sales Agency Agreement
|
|
|
31.1
|
Rule
13a - 14a Certification of Chief Executive Office and Chief Financial
Officer
|
|
|
32.1
|
|
Section
1350 Certification of Chief Executive Officer and Chief Financial
officer
|
|
*
|
|
Incorporated
by reference to the Company’s registration statement on Form SB-2, filed
March 11,
2003
|
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INNOVATIVE
DESIGNS, INC.
For the Three Month Period
Ended January 31, 2010
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
Innovative Designs, Inc.
|
||
|
Registrant
|
||
|
Date:
March 12, 2010
|
By:
|
/s/ Joseph Riccelli
|
|
Joseph
Riccelli, Chief Executive Officer
|
||
|
and
Chief Financial Officer
|
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