IVDN Swings to Profit on Soaring Revenue, Apparel Line Discontinued

TL;DR

**IVDN's massive revenue jump and profit swing are bullish, but the lingering 'going concern' warning means it's still a high-risk bet.**

AI Summary

INNOVATIVE DESIGNS INC (IVDN) reported a significant turnaround, achieving a net income of $302,853 for the nine months ended July 31, 2025, a substantial improvement from a net loss of $100,247 in the prior year period. Revenues surged to $1,952,921 for the nine-month period, up from $644,497 in 2024, representing a 203% increase. For the three months ended July 31, 2025, net income was $62,436, reversing a $59,083 loss in the same period last year, with revenues reaching $612,636, a 120% increase from $278,279. The company's cash and cash equivalents increased to $532,432 as of July 31, 2025, from $185,675 at October 31, 2024. Operating activities generated $320,842 in cash for the nine months ended July 31, 2025, compared to a cash outflow of $41,507 in the prior year. A key business change includes the decision to discontinue the manufacturing of its Artic Armor, hunting, and swimming line of apparel, resulting in a $65,600 reserve against apparel inventory. The company successfully paid off a convertible promissory note and an SBA loan during the period. Despite these improvements, an accumulated deficit of ($10,237,207) and reliance on stock sales and private borrowings for future funding raise substantial doubt about its going concern ability.

Why It Matters

This filing signals a critical turning point for INNOVATIVE DESIGNS INC, moving from significant losses to profitability, which could attract new investors and stabilize its financial footing. The substantial revenue growth of 203% year-over-year for the nine-month period demonstrates strong market acceptance or expanded operations, potentially challenging smaller competitors in its niche. However, the ongoing 'going concern' doubt, despite positive cash flow and net income, indicates underlying structural financial weaknesses that could deter risk-averse investors. The discontinuation of the Artic Armor apparel line suggests a strategic refocus, which could impact employees in that division and alter product availability for customers, while potentially streamlining operations for better profitability.

Risk Assessment

Risk Level: high — Despite reporting a net income of $302,853 and positive cash flow from operations of $320,842 for the nine months ended July 31, 2025, the company explicitly states that its accumulated deficit of ($10,237,207) and reliance on future stock sales and private borrowings raise "substantial doubt regarding the Company's ability to continue as a going concern for a period of one year." This direct statement from management, coupled with the historical accumulated deficit, indicates a high financial risk.

Analyst Insight

Investors should exercise extreme caution and conduct thorough due diligence on IVDN. While the revenue and profit growth are impressive, the explicit 'going concern' warning from management cannot be ignored. Consider this a speculative investment, and only allocate capital that you are prepared to lose entirely, as the long-term viability remains uncertain despite recent operational improvements.

Financial Highlights

debt To Equity

0.13

revenue

$1,952,921

operating Margin

15.6%

total Assets

$2,104,492

total Debt

$236,763

net Income

$302,853

eps

$0.000

gross Margin

49.6%

cash Position

$532,432

revenue Growth

+203%

Revenue Breakdown

Key Numbers

• $1,952,921 — Revenues, net (For the nine months ended July 31, 2025, a 203% increase from $644,497 in 2024.)
• $302,853 — Net income (For the nine months ended July 31, 2025, a significant improvement from a $100,247 net loss in 2024.)
• $532,432 — Cash and Cash Equivalents (As of July 31, 2025, up from $185,675 at October 31, 2024.)
• $320,842 — Net cash provided by operating activities (For the nine months ended July 31, 2025, a positive shift from a $41,507 outflow in 2024.)
• ($10,237,207) — Accumulated deficit (As of July 31, 2025, indicating historical losses despite recent profitability.)
• $65,600 — Reserve against apparel inventory (Due to the discontinuation of the Artic Armor, hunting, and swimming apparel lines.)
• 38,504,003 — Shares of common stock outstanding (As of July 31, 2025, reflecting recent stock issuances.)
• $652,944 — Total deposits on equipment (As of July 31, 2025, with $77,000 remaining owed on said equipment.)

Key Players & Entities

• INNOVATIVE DESIGNS INC (company) — Registrant
• U.S. Small Business Association (regulator) — Loan provider
• Federal Trade Commission (regulator) — Litigation plaintiff
• Ketut Jaya (company) — Machinery and equipment seller
• Dr. David Yarbrough (person) — FTC expert witness
• FASB (regulator) — Accounting standards setter
• SEC (regulator) — Regulatory body
• U.S. District Court Western District of Pennsylvania (regulator) — Court for FTC complaint
• U.S. Court of Appeals for the Third District (regulator) — Appeals court for FTC case

FAQ

Risk Factors

• Going Concern Uncertainty [high — financial]: Despite recent profitability and revenue growth, the company has a substantial accumulated deficit of ($10,237,207) as of July 31, 2025. Continued reliance on stock sales and private borrowings for future funding raises substantial doubt about its ability to continue as a going concern.
• Inventory Obsolescence and Write-downs [medium — operational]: The company recorded a $65,600 reserve against apparel inventory due to the discontinuation of its Artic Armor, hunting, and swimming lines. This indicates potential issues with product lifecycle management and inventory valuation.
• Dependence on External Financing [high — financial]: The company's ability to fund future operations and growth is heavily dependent on its capacity to raise capital through stock sales and private borrowings. This exposes the company to market volatility and investor sentiment.

Industry Context

Innovative Designs Inc. operates in a competitive apparel market. The industry is characterized by evolving consumer trends, supply chain complexities, and the need for efficient inventory management. Companies often face pressure to innovate product lines while managing costs effectively. Recent economic conditions may also influence consumer spending on discretionary apparel items.

Regulatory Implications

The company must adhere to U.S. Generally Accepted Accounting Principles (GAAP) for its financial reporting. Disclosures regarding going concern uncertainties are a critical regulatory requirement, ensuring investors are informed of significant financial risks. Any future stock issuances or debt financings will also be subject to SEC regulations.

What Investors Should Do

1. Monitor cash flow generation and burn rate closely.
2. Analyze the sustainability of revenue growth.
3. Evaluate the company's strategy for addressing the accumulated deficit.

Key Dates

• 2025-07-31: Nine months ended July 31, 2025 — Reported significant revenue growth of 203% to $1,952,921 and a net income of $302,853, a turnaround from a net loss in the prior year.
• 2025-07-31: As of July 31, 2025 — Cash and cash equivalents increased to $532,432, and the company generated $320,842 in cash from operating activities.
• 2024-10-31: Fiscal year ended October 31, 2024 — The company had a net loss and lower cash reserves, providing a baseline for the significant improvements reported in the current period.

Glossary

Accumulated deficit

The cumulative net losses of a company since its inception, minus any cumulative net income. A negative number indicates the company has historically lost more money than it has earned. (Indicates that despite recent profitability, IVDN has a long history of losses, contributing to going concern doubts.)

Going concern

An accounting assumption that a business will continue to operate for the foreseeable future. If there is substantial doubt about a company's ability to continue as a going concern, it must be disclosed. (The company's financial condition raises substantial doubt about its ability to continue as a going concern, a critical disclosure for investors.)

Reserve against inventory

An accounting entry that reduces the carrying value of inventory on the balance sheet to reflect a loss in value, such as obsolescence or damage. (The $65,600 reserve highlights the impact of discontinuing product lines and potential inventory management challenges.)

Year-Over-Year Comparison

Compared to the prior year period, INNOVATIVE DESIGNS INC (IVDN) has demonstrated a dramatic financial turnaround. Revenues for the nine months ended July 31, 2025, surged by 203% to $1,952,921 from $644,497 in 2024, leading to a net income of $302,853, a significant reversal from a $100,247 net loss. Operating cash flow also turned positive, generating $320,842 compared to an outflow of $41,507. However, the company continues to carry a substantial accumulated deficit of ($10,237,207), and its reliance on external financing remains a key risk.

Key Financial Figures

• $300,000 — installments. The first installment of $300,000 is to be made at the execution of the a
• $200,000 — he agreement. The second installment of $200,000 is to be made when the machinery and eq
• $100,000 — United States. The third installment of $100,000 is to be made once the machinery and eq

Filing Documents

• e6848_10-q.htm (10-Q) — 353KB
• e6848_ex31-1.htm (EX-31.1) — 16KB
• e6848_ex31-2.htm (EX-31.2) — 15KB
• e6848_ex32-1.htm (EX-32.1) — 6KB
• e6848_ex32-2.htm (EX-32.2) — 6KB
• 0001731122-25-001250.txt ( ) — 2059KB
• ivdn-20250731.xsd (EX-101.SCH) — 24KB
• ivdn-20250731_cal.xml (EX-101.CAL) — 34KB
• ivdn-20250731_def.xml (EX-101.DEF) — 40KB
• ivdn-20250731_lab.xml (EX-101.LAB) — 193KB
• ivdn-20250731_pre.xml (EX-101.PRE) — 147KB
• e6848_10-q_htm.xml (XML) — 133KB

-- Financial Information

Part I -- Financial Information Page No. Item 1. Condensed Financial Statements (Unaudited) 3 Condensed Balance Sheets as of April 30, 2025 (Unaudited) And October 31, 2024 3 Condensed Statements of Operations for the Three Month Periods Ended April 30, 2025 and 2024 (Unaudited) 4 Condensed Statements of Changes in Stockholders' Equity as of April 30, 2025 (Unaudited) and October 31, 2024 5 Condensed Statements of Cash Flows for the Three Month Periods Ended April 30, 2025 and 2024 (Unaudited) 6 Notes to the Condensed Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 12

-- Other Information

Part II -- Other Information Items 1, 2, 3, 4, 4T and 5. 15 Item 6. Exhibits 16 2

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) INNOVATIVE DESIGNS, INC. Condensed Balance Sheets As of July 31, 2025 (Unaudited) and October 31, 2024 (Audited) July 31, 2025 October 31, 2024 Assets Current assets Cash and Cash Equivalents $ 532,432 $ 185,675 Prepaid Expenses 14,659 Accounts Receivable, Net 271,249 321,893 Inventory, Net 494,985 498,758 Total current assets 1,313,325 1,006,326 Long-Term Assets Property, Plant, and Equipment, Net 32,723 28,060 Advane to Employees 15,500 5,500 Deposits on Inventory 90,000 — Deposits on Equipment 652,944 652,944 Total Long-Term Assets 791,167 686,504 Total assets $ 2,104,492 $ 1,692,830 Liabilities and Stockholders' Deficit Current liabilities Credit Cards $ 3,368 $ 51,175 Accounts Payable 168,251 65,267 Other current Liabilities 42,244 50,017 Total current liabilities 213,863 166,459 Long-Term Liabilities Notes Payable — 23,495 Reserve for unpaid debt 12,900 — Long-Term Shareholder Loans 10,000 60,000 Total Long-Term Liabilities 22,900 83,495 Total liabilities 236,763 249,954 Stockholders' deficit Common stock, $ 0.0001 par value; 100,000,000 shares authorized; 38,504,003 and 37,924,003 shares issued and outstanding as of April 30, 2025 and October 31, 2024, respectively 3,850 3,792 Additional paid-in capital 12,101,059 11,979,117 Accumulated deficit ( 10,237,180 ) ( 10,540,033 ) Total stockholders' deficit 1,867,729 1,442,876 Total liabilities and stockholders' deficit $ 2,104,492 $ 1,692,830 See accompanying notes to financial statements. 3 INNOVATIVE DESIGNS, INC. Condensed Statements of Operations For the Nine Months Ended July 31, 2025, and 2024 (Unaudited) For the Nine Months ended July 31, For the Three Months Ended July 31, 2025 2024 2025 2024 REVENUES, net $ 1,952,921 $ 644,497 $ 612,636 $ 278,279 OPERATING EXPENSES Cost of sales 983,004 376,362 356,102 189,97

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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 financial of Operations in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including such as expects, believes, intends, and similar expressions to identify forward-looking statements. Forward looking-looking statements reflect management's current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons, including, among others, competition in our cold weather markets, our ability to sell out HouseWrap product line, our inability to secure sufficient funding to maintain and/or expand our current level of operations and the seasonality of our cold weather product line. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management's expectations, are described in greater detail in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise except as required by law. Background Innovative Designs, Inc. (hereinafter referred to as the "Company", "we" or "our") was formed on June 25, 2002. We market and sell clothing products such as outdoor apparel, and cold weather gear called "Arctic Armor" that are made from IINSULTEX, a material with buoyancy, scent block and thermal resistant properties. We also market our House Wrap product line, which is a building material with thermal qualities. House Wrap is also made from IINSULTEX. We obtain IINSULTEX through a license agreement with the owner and manufacturer of the material. Since our formation we have devoted our effo

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