{"url_path":"/sec/ivdn/10-k/2026/item-1","section_key":"item-1","section_title":"Item 1 DESCRIPTION OF BUSINESS.","topic":"sec","document":{"doc_type":"10-K/A","doc_date":"2026-05-18","source_url":"https://www.sec.gov/Archives/edgar/data/1190370/0001731122-26-000756-index.html","accession_number":"0001731122-26-000756","cik":"0001190370","ticker":"IVDN","issuer_name":"INNOVATIVE DESIGNS INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1190370/0001731122-26-000756-index.html","primary_entity_key":"0001190370","primary_entity_name":"INNOVATIVE DESIGNS INC"},"word_count":2875,"has_tables":true,"body_markdown":"ITEM 1. DESCRIPTION OF BUSINESS.\n\n \n\nThe Company was incorporated in the\nState of Delaware on June 25, 2002. We operate in two separate business segments: a house wrap for the building construction industry\nand cold weather clothing. Both of our segment lines use products made from Insultex, which is a low-density polyethylene semi-crystalline,\nclosed cell foam in which the cells are totally evacuated. with buoyancy, scent block, and thermal resistant properties. We have a license\nagreement directly with the owner of the Insultex technology. In December 2015, we took delivery of equipment capable of producing Insultex.\nGiven the time and cost of bringing the equipment into production mode and our current financial condition until we are able to begin\nmanufacturing Insultex, we will continue to operate under the license agreement for the manufacture of Insultex used in our products.\n\n \n\nOther companies are free to purchase\nInsultex from us assuming that it is a company within the distribution jurisdiction that we have, which is worldwide with the exception\nof Korea and Japan. Other than Korea and Japan, we are the sole worldwide supplier/distributor of the Insultex material.\n\n \n\nWe offer the following products containing\nInsultex:\n\n \n\n●House\nWrap: Our house wrap product is designed for the home building construction industry.\nThis product, made from Insultex provides barrier protection plus moisture vapor transmission\nand approximately R-3 and R-6 value insulation. We no longer manufacture the R-3 product\nline and are only selling it from our inventory. House Wrap is a multi-ply weatherization\nmembrane that provides a protective layer under a building’s outer covering that resists\nwater and air infiltration, preventing mold and mildew buildup that could cause structural\nrotting. What differentiates Insultex from its competition is the fact that it offers an\nR-Value, the term used to measure thermal resistance, and is most commonly used when referring\nto the insulating qualities of a building structure, thus increasing energy efficiency. We\nare currently working on developing a House Wrap product line for the commercial building\nconstruction industry.\n\n \n\n●In December 2016, we temporarily suspended any advertising of our House\nWrap product line. We took this action as a result of a lawsuit brought by the Federal Trade Commission (‘FTC”). On September\n24, 2020, a judgment was entered in favor of the Company against the FTC as to all claims by the FTC. The judgment was upheld on appeal\nby the FTC on July 22, 2021. In March of 2021, we resumed advertising for our House Wrap products. We also sell a tape that is designed\nto be used with the House Wrap.\n\n \n\n●Floating Swimwear: Product under our product\nname “Swimeez”. Our swimwear is designed to be a swim aid. The interior lining of our swimwear product is made from INSULTEX,\nwhich enhances floatability. This product was discontinued during 2010 and we are only selling from our existing inventory.\n\n \n\n●Hunting Ap p arel Line: Our hunting apparel provides almost\ntotal block from odors provided by the INSULTEX material. This product was discontinued during 2010 and we are only selling from our existing\ninventory.\n\n \n\n●Arctic Armor Line: The Arctic Armor line,\nintroduced in April of 2006, consists of a jacket, bib and gloves. The suit contains 3 layers of INSULTEX for uncompromised warmth and\nprovides the user with guaranteed buoyancy. The gloves contain a single layer of INSULTEX and are windproof, waterproof and good to sub-zero\ntemperatures as are the jacket and bibs. We are currently only selling from our existing inventory.\n\n \n\n●Insultex Material: We sell Insultex material in bulk to non-competing customers.\n\n \n\nWe also offer a product that helps restore the waterproof\ncharacter of the outer side of our Arctic Armor clothing. In addition, we offer cold weather headgear and base insulation clothing product.\n\n \n\nWe no longer manufacture our apparel products containing Insultex.\nWe only sell from our existing inventory..\n\n \n\n 4\n\n \n\n \n\nFor financial information regarding each segment, please\nsee Note 10 of the Notes to Financial Statements appearing elsewhere in this Report. The Insultex License and Manufacturing Agreement\n\n \n\nUnder the terms of the agreement between\nus and the Ketut Group, Ketut Group agrees to promptly deliver to Innovative Designs, Inc. within twenty-eight (28) days of receiving\nan 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\nfixed amount will not change under the agreement for a period of ten (10) years after the date of the agreement was signed, which was\nApril 1, 2006. The agreement provides that after the ten (10) year period, the price of the Insultex shall be adjusted for a subsequent\nten (10) year term, no more than twelve percent (12%) for the subsequent ten (10) year period. We order Insultex from time to time as\nneeded and are not required to purchase any minimum amount of Insultex during the term of the agreement, and we are not required to make\nany minimum annual payment. However, should we place an order; any quantity ordered must be a minimum of 100,000 yards of Insultex. We\nare not required to pay any part of any sublicense fee that we receive from third party sub-licensees, and we are not required to pay\nany 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\nof 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\nof our intention to so renew not less than ninety (90) days prior to the expiration of the then-current term. The Company has exercised\nthe first ten-year renewal option. We purchased the equipment capable of producing Insultex from the Ketut Group.\n\n \n\nCOLD WEATHER CLOTHING PRODUCTS\n\n \n\nArctic Armor Line\n\n \n\nOur Arctic Armor line products are intended for use by\nthe following consumer groups that are in the Company’s target market for these products: We are currently only selling these products\nform our existing inventory.\n\n \n\n●Ice fisherman\n\n \n\n●Snowmobilers\n\n \n\n●Utility workers\n\n \n\n●Oil/gas pipeline workers\n\n \n\n●Railroad workers\n\n \n\n●Construction workers\n\n \n\n●Ski resort workers; and\n\n \n\n●Police and First Responders.\n\n \n\nWebsite and Retailers\n\n \n\nWe sell both wholesale and retail\nproducts on our web site. Our web site, located at www.idigear.com, contains information on our products, technical information on Insultex\ninsulation, e-commerce capabilities with “shopping cart”, wholesaler information and order forms, company contact information,\nand links to retailers that carry our products. We have obtained the services of The Hive Agency who assists us in designing and continually\ndeveloping our website. Our products are offered and sold by retailers, distributors and through our web site in all states and Canada.\nExcept for products sold through our web site, others who purchase our products do so at wholesale prices which they plan to sell at their\nretail prices or use within their industry.\n\n \n\n 5\n\n \n\n \n\nSales\n\n \n\nWe sell our products online, to distributors\nand through independent sales agents and agencies. Once we have made contact with a potential sales agency or solo agent, we evaluate\ntheir existing accounts, the capacity and potential for them to effectively push our products. We also look at their current product lines\nthrough the sales channel. Our primary market area is the outdoor industry which includes all activity done in cold weather. These activities\ninclude recreational such as hunting, ice fishing, snowmobiling, and industries such as oil and gas, utilities and construction. Once\nwe agree to bring on an independent sales agent or agency, we enter into a standard agreement.\n\n \n\nA typical sales representative agreement will have a term\nof 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\nand all sales expenses are the sole obligation of the sales agent.\n\n \n\nCertain retailers buy directly from us. We have no verbal\nor written agreements with them. These retailers purchase our products strictly on a purchase order basis.\n\n \n\nSwimeez Products\n\n \n\nWe distribute our Swimeez products through our web site.\nHunting Apparel Line\n\n \n\nWe distribute our hunting apparel through our web site.\nArctic Armor Line\n\n \n\nWe distribute the Arctic Armor Line through our web site,\nto retailers and to distributors across the United States and Canada. These products are also marketed to utility companies, oil/gas pipeline\nworkers, railroad workers, police and first responders, and to construction workers.\n\n \n\nHOUSE WRAP\n\n \n\nHouse Wrap\n\n \n\nIn early January 2008, we announced\nthat we had completed our research and development effort on a new use for Insultex as a house wrap for the home building construction\nindustry. This house wrap provides barrier protection plus moisture vapor transmission and the feature of approximately R-3 and R-6 value\ninsulation. The Insultex House Wrap was designed to specifically add enhanced insulating characteristics. In addition, the House Wrap\nis priced competitively with existing house wraps that do not provide any insulation. The development efforts were conducted by our own\npersonnel and an outside consultant. In December 2016, we temporarily suspended any advertising for our House Wrap product line as we\nwere in litigation with the Federal Trade Commission (“FTC”). The litigation has concluded as to the matters set forth in\nthe FTC complaint and in March 2021, we resumed advertising for our House Wrap products.\n\n \n\nInsultex House Wrap\n\n \n\nDuring our last fiscal year, the following customers each accounted\nfor more than ten percent of our total sales of our House Wrap product, A-Team Building Supplies, LLC (10.3%), and Built Link Solutions\n(77%).\n\n \n\nCompetition\n\n \n\nMany companies offer a type of house\nwrap, some with insulating properties. These companies have large operations and are well financed. Some of the larger companies are DuPont,\nand Kimberly Clark. The Company expects to face intense competition with others who have much greater resources in the building construction\nsupply industry.\n\n \n\nOur marketing program consists of the following:\n\n \n\n 6\n\n \n\n \n\nMARKETING COMPONENT\n\n \n\nWebsite Development and Internet Marketing\n\n \n\nWe\ncontract with marketing consultants to:\n\n \n\n(a)increase visitation to our website.\n\n \n\n(b)link with other established websites.\n\n \n\n(c)issue press releases to on-line publications.\n\n \n\n(d)conduct banner advertising.\n\n \n\n(e)develop arrangements with online retailers that purchase our products on a wholesale basis.\n\n \n\nSales Representatives\n\n \n\nOur Vice President of sales and marketing works to:\n\n \n\n(a)sell our merchandise to retail chain stores.\n\n \n\n(b)initiate relationships with local and national recreational organizations; and\n\n \n\n(c)provide support to our distributor representatives\n\n \n\nContract with Manufacturer\n\n \n\nWe utilize the services of sales agencies to represent our products\nin the United States and Canada.\n\n \n\nDesign and Develop\n\n \n\nWe presently use our own staff for\nservices related to literature, displays, develop brochures, point-of-sale displays, mailers, media materials, and literature and sales\ntools for our sales representatives and manufacturer representatives. At such time as we have sufficient funding, we intend to contract\nout some of these services. We no longer manufacture the R-3 House Wrap.\n\n \n\nEstablish Wholesale\n\n \n\nWe are and continue to develop relationships\nor distribution relationships with retail points for our products to retail chain outlets and mass merchandisers to sell our products.\nWe currently have two domestic distributors.. Each distributor has a certain territory. Our domestic distributors collectively cover the\nfollowing jurisdictions: Texas, Oklahoma, Louisiana, North and South Dakota, Minnesota, Iowa, Michigan, Ohio, Pennsylvania, New York,\nWest Virginia, Maryland, Colorado, Illinois, Maine, New Hampshire, New Jersey, Oregon, Vermont, Washington, Wisconsin, New Mexico and\nVirginia.\n\n \n\nWe ship wholesale product orders\nby United Parcel Service or trucking companies. Retail orders from our website are shipped United Parcel Ground Service or Federal Express\novernight. The costs of shipping our finished goods are paid by our customers. We have not instituted any formal arrangements or agreements\nwith United Parcel Service, Federal Express or trucking companies, and we do not intend to do so.\n\n \n\nAny apparel inventory we maintain\nis stored at our warehousing facility. Our warehouse facility has the capacity to hold 250,000 units of finished products in inventory.\nOur House Wrap inventory is stored in our facility and in the facility that manufactures it.\n\n \n\n 7\n\n \n\n \n\nIn 2004, we were granted a trademark for our name “idigear”\nwith the United States Patent and Trademark Office. In 2007, we were granted the mark “Insultex” by the United States Patent\nand Trademark Office.\n\n \n\nIn 2011, we were granted a trademark for “Insultex House\nWrap” by the United States Patent and Trademark Office.\n\n \n\nThe Company has rights under a U.S Patent titled “Composite\nFabric Material and Apparel Made Therefrom” which issued April 30, 2013. The Company has rights under a U.S. Paten titled “Composite\nMaterials” which issued February 21, 2017, published on September 5, 2013.\n\n \n\nThe Company caused to have filed\na utility patent application on December 18, 2009, titled “Composite House Wrap” which claimed priority to provisional patent\napplication titled “Composite House Wrap” on December 18, 2008. A patent application was published on June 24, 2010. Although\nno patent issued from this original disclosure, this publication prevents third parties from patenting concepts obvious over these original\nteaching of the Company.\n\n \n\nThe Company caused to have filed a\nutility patent application on May 31, 2017, titled “Process for Forming Closed Cell Expanded Low density Polyethylene Foam and Products\nFormed Thereby”, published January 24, 2018. The Company then caused to have filed a utility patent application on July 31, 2020,\nwhich application was published February 11, 2021. In January 2023, the U.S Patent and Trademark Office issue a Notice of Allowance and\na patent shall issue in due course.\n\n \n\nAdditional patent application on other property concepts are\nalso being planned.\n\n \n\nOur production costs are limited to the invoices we receive\nfor Insultex from Ketut Group and our House Wrap product from the manufacturer. Although we are not aware of the need for any government\napproval of our principal products, we may be subject to such approvals in the future.\n\n \n\nUnited States and foreign regulations\nmay subject us to increased regulation costs, and possibly fines or restrictions on conducting our business. We are subject, directly\nor indirectly, to governmental regulations pertaining to the following government agencies:\n\n \n\nUnited States Customs Service\n\n \n\nWe are required to pay a 6.5% importation\nduty to the United States Customs Service on all imported products. We import Insultex from Indonesia from the Ketut Group, in accordance\nwith our agreement with the Ketut Group.\n\n \n\nUnited States Department of Labor’s Occupational Safety\nand Health Administration\n\n \n\nBecause our sub-manufacturers manufacture\nour completed products, we and our sub-manufacturers will be subject to the regulations of the United States Department of Labor’s\nOccupational Safety and Health Administration.\n\n \n\nWe are not aware of any governmental\nregulations that will affect the Internet aspects of our business. However, due to increasing usage of the Internet, a number of laws\nand regulations may be adopted relating to the Internet covering user privacy, pricing, and characteristics and quality of products and\nservices. Furthermore, the growth and development of Internet commerce may prompt more stringent consumer protection laws imposing additional\nburdens on those companies’ conducting business over the Internet. The adoption of any additional laws or regulations may decrease\nthe growth of the Internet, which, in turn, could decrease the demand for Internet services and increase the cost of doing business on\nthe Internet. These factors may have an adverse effect on our business, results of operations, and financial condition.\n\n \n\n 8\n\n \n\n \n\nMoreover, the interpretation of sales\ntax, libel, and personal privacy laws applied to Internet commerce is uncertain and unresolved. We may be required to qualify to do business\nas a foreign corporation in each such state or foreign country. Our failure to qualify as a foreign corporation in a jurisdiction where\nwe are required to do so could subject us to taxes and penalties. Any such existing or new legislation or regulation, including state\nsales tax, or the application of laws or regulations from jurisdictions whose laws do not currently apply to our business, could have\na material adverse effect on our business, results of operations and financial condition.\n\n \n\nWe currently have no costs associated\nwith compliance with environmental regulations. Because we do not manufacture our products, but rather they are manufactured by our sub-manufacturers,\nwe do not anticipate any costs associated with environmental compliance. Moreover, the delivery and distribution of our products will\nnot involve substantial discharge of environmental pollutants. However, there can be no assurance that we will not incur such costs in\nthe future.\n\n \n\nWe estimate that all of our revenues\nwill be from the sale of our products. We will sell our products at prices above our original cost to produce our products. We expect\nour product prices to be lower than network marketing companies, but higher compared with retail establishments that directly manufacture\ntheir own products.\n\n \n\nWe currently have a total of two full time employees.\nWe hire part-time personnel as needed. We have no collective bargaining or employment agreements.\n\n \n\nReports and Other Information to Shareholders\n\n \n\nWe are subject to the informational\nrequirements of the Securities Exchange Act of 1934. Accordingly, we file annual, quarterly and other reports and information with the\nSecurities and Exchange Commission. You may read and copy these reports and other information we file at the Securities and Exchange Commission’s\npublic reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Our filings are also available to the public from\ncommercial document retrieval services and the Internet worldwide website maintained by the Securities and Exchange Commission at www.sec.gov."}