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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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934.
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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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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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|||
Condensed
Balance Sheets at January 31, 2008 and October 31, 2007
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1
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|||
Condensed
Statements of Operations for the Three Months Ended January 31,
2008 and
2007
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2
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|||
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||||
Condensed
Statement of Changes in Stockholders’ Deficit at January 31, 2008 and
October 31, 2007
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3
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|||
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||||
Condensed
Statements of Cash Flows for the Three Months Ended January 31,
2008 and
2007
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4
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|||
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||||
Notes
to Condensed Financial Statements
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5
-
7
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|||
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||||
Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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8
-
10
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||
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||||
Item
3.
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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
2.
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Unregistered
Sale of Equity Securities and Use of Proceeds
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11
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||
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||||
Item
5.
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Other
Information
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12
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||
Item
6.
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Exhibits
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12
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2008
|
2007
|
||||||
ASSETS
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|||||||
CURRENT
ASSETS:
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|||||||
Cash
|
$
|
211,016
|
$
|
6,555
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|||
Accounts
receivable
|
155,427
|
209,000
|
|||||
Inventory
|
1,061,282
|
1,046,090
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|||||
Total
current assets
|
1,427,725
|
1,261,645
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
12,555
|
13,752
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|||||
TOTAL
ASSETS
|
$
|
1,440,280
|
$
|
1,275,397
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|||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
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|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
-
|
$
|
9,314
|
|||
Current
portion of notes payable
|
231,109
|
300,742
|
|||||
Accrued
interest expense
|
88,200 |
91,995
|
|||||
Accounts
payable - related party
|
28,220 |
28,220
|
|||||
Current
portion of related party debt
|
126,000 |
146,000
|
|||||
Due
to shareholders
|
236,500 |
236,500
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|||||
Accrued
expenses
|
- |
4,476
|
|||||
Accrued
liability related to arbitration award
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4,176,000 |
4,176,000
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|||||
Total
current liabilities
|
4,886,029
|
4,993,247
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|||||
LONG-TERM
LIABILITIES:
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|||||||
Long-term
portion of notes payable
|
404,025 |
411,426
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|||||
Total
long term liabilities
|
404,025
|
411,426
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|||||
TOTAL
LIABILITIES
|
5,290,054
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5,404,673
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|||||
STOCKHOLDERS'
DEFICIT:
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|||||||
Preferred
stock, $.0001 par value, 100,000,000 shares authorized
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|||||||
Common
stock, $.0001 par value, 500,000,000 shares
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|||||||
authorized,
17,913,643 and 17,096,193 shares
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|||||||
issued
and outstanding
|
1,793 |
1,711
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|||||
Additional
paid in capital
|
5,353,400 |
5,049,064
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|||||
Accumulated
deficit
|
(9,204,967
|
)
|
(9,180,051
|
)
|
|||
Total
stockholders' (deficit)
|
(3,849,774
|
)
|
(4,129,276
|
)
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|||
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$
|
1,440,280
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$
|
1,275,397
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For
the Three Months Ended
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|||||||
January
31, 2008
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January
31, 2007
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||||||
REVENUE
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$
|
234,183
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$
|
215,683
|
|||
OPERATING
EXPENSES:
|
|||||||
Cost
of sales
|
135,825
|
85,908
|
|||||
Non-cash
stock compensation
|
2,400
|
6,000
|
|||||
Selling,
general and
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|||||||
administrative
expenses
|
113,853
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69,694
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|||||
252,078
|
161,602
|
||||||
Income
(loss) from operations
|
(17,895
|
)
|
54,081
|
||||
OTHER
INCOME AND (EXPENSE):
|
|||||||
Interest
expense
|
(7,021
|
)
|
(7,199
|
)
|
|||
Net
income (loss)
|
$
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(24,916
|
)
|
$
|
46,882
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||
Per
share information -
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|||||||
basic
and fully diluted
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|||||||
Weighted
Average
|
|||||||
Shares
Outstanding
|
17,522,343
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16,906,030
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|||||
Net
income (loss) per share
|
(.001
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)
|
.003
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Common
Stock |
Additional
Paid in |
Retained
|
||||||||||||||
Shares
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Amount
|
Capital
|
Deficit
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Total
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||||||||||||
Balance
at October 31, 2006
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16,901,193
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$
|
1,691
|
$
|
4,971,084
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$
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(9,233,144
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)
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$
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(4,260,369
|
)
|
|||||
Shares
issued for services
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15,000
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2
|
5,998
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-
|
6,000
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|||||||||||
Services
performed -
|
||||||||||||||||
shares
to be issued
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180,000
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18
|
71,982
|
-
|
72,000
|
|||||||||||
Net
income
|
-
|
-
|
-
|
53,093
|
53,093
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|||||||||||
Balance
at October 31, 2007
|
17,096,193
|
1,711
|
5,049,064
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(9,180,051
|
)
|
(4,129,276
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)
|
|||||||||
Shares
issued for services
|
6,000
|
1
|
2,399
|
-
|
2,400
|
|||||||||||
Shares
issued for cash
|
661,450
|
66
|
249,452
|
-
|
249,518
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|||||||||||
Shares
issued for
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||||||||||||||||
extinguishment
of debt
|
150,000
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15
|
52,485
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-
|
52,500
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|||||||||||
Net
loss
|
-
|
-
|
-
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(24,916
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)
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(24,916
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)
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|||||||||
Balance
at January 31, 2008
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17,913,643
|
$
|
1,793
|
$
|
5,353,400
|
$
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(9,204,967
|
)
|
$
|
(3,849,774
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)
|
For
the Three Months Ended
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|||||||
January
31, 2008
|
January
31, 2007
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
income (loss)
|
$
|
(24,916
|
)
|
$
|
46,882
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||
Adjustments
to reconcile net income (loss) to cash
|
|||||||
provided
by (used in) operating activities:
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|||||||
Common
stock issued for services
|
2,400
|
6,000
|
|||||
Depreciation
and amortization
|
1,197
|
1,197
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
53,573
|
(59,040
|
)
|
||||
Inventory
|
(15,192
|
)
|
32,438
|
||||
Accounts
payable
|
(9,314
|
)
|
-
|
||||
Accrued
expenses
|
(8,271
|
)
|
613
|
||||
Other
assets
|
-
|
4,013
|
|||||
Net
cash provided by (used in) operating activities
|
(523
|
)
|
32,103
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Payments
on note payable
|
(24,534
|
)
|
(36,873
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)
|
|||
Payment
on related party note
|
(20,000
|
)
|
-
|
||||
Receipt
of shareholder advances
|
-
|
10,000
|
|||||
Common
stock issued for cash
|
249,518
|
-
|
|||||
Net
cash (used in) provided by financing activities
|
204,984
|
(26,873
|
)
|
||||
Net
increase (decrease) in cash
|
$
|
204,461
|
$
|
5,230
|
|||
Cash
- beginning of year
|
$
|
6,555
|
$
|
66,275
|
|||
Cash
- end of period
|
$
|
211,016
|
$
|
71,505
|
|||
Supplemental
cash flow information:
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|||||||
Cash
paid for interest
|
$
|
3,049
|
$
|
3,162
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1.
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BASIS
OF PRESENTATION - INTERIM FINANCIAL STATEMENTS
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2.
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ADOPTION
OF SFAS NO. 123 (REVISED 2004) SHARE-BASED
PAYMENT
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3. |
EARNINGS
PER SHARE
|
4.
|
GOING
CONCERN AND LEGAL PROCEEDINGS
|
· |
Raising
funding either through the sale of our common stock or through
borrowing;
|
· |
Developing
and evolving our marketing plan;
|
· |
Completing
the development, design and prototypes of our products,
and
|
· |
Obtaining
retail stores or sales agents to offer and sell our
products.
|
Three
Months
Ended
January
31, 2008
|
%
of
Sales
|
Three
Months
Ended
January
31, 2007
|
%
of
Sales
|
$
Increase
(Decrease)
|
%
Change
|
||||||||||||||
REVENUE
|
$
|
234,183
|
100
|
%
|
$
|
215,683
|
100
|
%
|
$
|
18,500
|
8.6
|
%
|
|||||||
OPERATING
EXPENSES
|
|||||||||||||||||||
Cost
of sales
|
135,825
|
58.0
|
%
|
85,908
|
39.8
|
%
|
49,917
|
58.1
|
%
|
||||||||||
Non-stock
compensation
|
2,400
|
1.0
|
%
|
6,000
|
35.9
|
%
|
(3,600
|
)
|
(60
|
%)
|
|||||||||
Selling,
general
and administrative
expenses
|
113,853
|
48.6
|
%
|
69,694
|
32.3
|
%
|
44,159
|
63.4
|
%
|
||||||||||
252,078
|
107.6
|
%
|
161,602
|
72.1
|
%
|
90,476
|
56.0
|
%
|
|||||||||||
Income
(loss) from
operations
|
(17,895
|
)
|
(7.6
|
%)
|
54,081
|
27.9
|
%
|
(71,976
|
)
|
(133.1%)
|
)
|
||||||||
OTHER
INCOME (EXPENSE)
|
|||||||||||||||||||
Interest
expense
|
(7,021
|
)
|
(3.0
|
%)
|
(7,199
|
)
|
(3.3
|
)%
|
178
|
(2.5
|
%)
|
||||||||
(7,021
|
)
|
(3.0
|
%)
|
(7,199
|
)
|
(3.3
|
)%
|
178
|
(2.5
|
%)
|
|||||||||
Net
income (loss)
|
$
|
(24,916
|
)
|
(10.6
|
%)
|
$
|
46,882
|
24.5
|
%
|
$
|
(71,798
|
)
|
(153.1
|
%)
|
*3.1 |
Certificate
of Incorporation
|
*3.2 |
By
Laws
|
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
|
Innovative
Designs, Inc.
Registrant
|
||
|
|
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Date:
March 19, 2008
|
/s/
Joseph Riccelli
|
|
Joseph
Riccelli, Chief Executive Officer
|
||
and
Chief Financial Officer
|