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 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.
Background
Innovative Designs, Inc. (hereafter referred to as the “Company”, “we” or “our”) produces and sells a house wrap product using Insultex a material with thermal resistance and buoyancy properties. We also offer a cold weather product line called “Artic Armor” which also uses Insultex. We no longer produce any Artic Armor products. We are only selling from our existing inventory. We obtain Insultex through a license agreement with the owner and manufacturer of the material. In December 2015, we took delivery of equipment capable of producing our own Insultex. At such time as we have sufficient funding, we intend to put the equipment into production and use the Insultex from this equipment in the production of our House Wrap product and for the sale of Insultex to others.
Results of Operations
Comparison of the fiscal year ended October 31, 2025, with the fiscal year ended October 31, 2024.
The following table shows a comparison of the results of operations between the fiscal years ending October 31, 2025, and October 31, 2024:
Fiscal Year Ended
Fiscal Year Ended
Increase
of sales
of sales
(Decrease)
% Change
REVENUE - NET
OPERATING EXPENSES
Cost of sales
Selling and G&A expenses
Total Operating Expenses
Income (loss) from operations
Other income (expenses)
Gain (loss) on sale of equipment
Interest Income
Interest expense
Depreciation
Total other income (expense)
Net income (loss)
Weight average common shares outstanding - undiluted
Income (loss) per common share - undiluted
Results of Operations
Revenues for the fiscal year ended October 31, 2025, were $2,765,149 compared to revenues of $1,382,415 for the comparable period ending October 31, 2024. House Wrap product revenue totaled $2,757,614 for the period compared to $1,324,127 for fiscal year ended October 31, 2025 and October 31, 2024, respectively. All of the remaining revenues were derived from our Arctic Armor and related product lines which totaled $7,535 for the period compared to revenues of $51,602 for the fiscal year ended October 31, 2025 and October 31, 2024, respectively. Revenues are net of returns and discounts. We continue to work on rebuilding our House Wrap product line brand.
Cost of goods sold for the fiscal year ended October 31, 2025, was $1,405,459, compared to $753,723 for the fiscal year ended October 31, 2024. The increase of $651,736 was due to the significant increase of the sales.
Selling, general and administrative expenses increased from $490,838 in fiscal year ended October 31, 2024 to $859,084 in the fiscal year ended October 31, 2025. This increase reflects was also due to the increase of sales with more activities, specifically reflected in the professional fees of $300,535, payroll expenses of $254,417,outside services of $65,754, etc.
During the fiscal year ended October 31, 2025, we funded our operations from revenues and the private sales of our common stock and the stock issuance for services which helped the cash flows. We received a total of $42,000 from the sale of stock. We will continue to fund our operations from revenues, private borrowings and the sale of our common stock until we are able to produce sales sufficient to cover our cost structure or to secure commercial lending arrangements.
On July 12, 2015, the Company reached an agreement with Ketut Jaya to purchase machinery and equipment utilized to produce the INSULTEX material. The purchase price is $700,000 and to be made in four installments. The first installment of $300,000 is to be made at the execution of the agreement. The second installment of $200,000 is to be made when the machinery and equipment is ready to be shipped to the United States. The third installment of $100,000 is to be made once the machinery and equipment is producing INSULTEX, and the fourth and final installment of $100,000 is to be made after the first commercial production run of INSULTEX is completed. As of October 31, 2016, the Company has made payments of $600,000. In addition to the final payments, the Company will have to have the equipment and machines installed and ensure that the machine can be operated in compliance with environmental regulations. The Company has not made an estimate of the costs required for bringing the machine into compliance, but it is considered to be substantial. Given the expected time and cost of bringing the equipment into production mode and our current financial condition we are unable to estimate when we will be able to do so.
We also must purchase new quality control testing equipment for use in testing Insultex. The testing equipment is finished, and we are in discussions with the vendor regarding certain charges. Once we take delivery of the equipment it will have to go through a certification process. Once the testing equipment is certified, we intend to begin the process of having Insultex certified by ICC Evaluation Services, LLC (“ICC-ES”). ICC-ES certifies, among other items, building materials and products of which our House Wrap falls under. The reason we need to have ICC-ES certification is that we believe in order to get large orders for House Wrap ICC-ES certification will be required. The other component part of the House Wrap produced by a third party is ICC-Es certified. Getting ICC-ES certification is costly and time consuming.
During the period we paid $10,396 on our loans. Short Term: We funded our operations with revenues from sales, private sales of our common stock and from a legal settlement.
The Company intends to repay these debt obligations with funds it generates from revenues, from the possible sale of its securities, either debt or equity, from advances from our stockholders or others. Because we cannot currently access commercial lending facilities, should we not be able to continue to obtain funding from these sources should our revenues decrease, our operations would be severely affected as we would not be able to fund our purchase orders to our suppliers for finished goods. The Company continues to pay its creditors when payments are due.
Long Term: The Company will continue to fund operations from revenues, borrowings and the possible sale of its securities. Should we not be able to continue to rely on these sources our operations would be severely affected as we would not be able to fund our purchase orders to our suppliers for finished goods.
