{"url_path":"/sec/ivdn/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS.","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":1062,"has_tables":true,"body_markdown":"ITEM 1A RISK FACTORS.\n\n \n\nLack of Sufficient Operating Funds-Going Concern\n\n \n\nWith unprecedented sales, the company is concerned about\npossible cash flow issues going forward. This problem exists due to the current payment terms with their manufacturers versus account\npayable terms that are issued to accounts. The company is attempting to negotiate better terms with its manufacturers in an attempt to\navoid purchase order financing or obtaining a commercial loan.\n\n \n\nCompetition\n\n \n\nThe markets served by the Company are highly competitive.\nCompetitive pricing pressure could result in loss of customers or decreased profit margins. Competition by product type includes the following:\n\n \n\nThe markets for our products are increasingly\ncompetitive. Our competitors have substantially longer operating histories, greater brand name and company name recognition, larger customer\nbases and greater financial, operating, and technical resources than us. Because we are financially and operationally smaller than our\ncompetitors, we may encounter difficulties in capturing market share. Our competitors are able to conduct extensive marketing campaigns\nand create more attractive pricing of their target markets than we are.\n\n \n\n 9\n\n \n\n \n\nSome of our biggest competitors for our House Wrap product line\nare;\n\n \n\n●Dupont\n\n \n\n●Kimberly Clark.\n\n \n\nSome of our biggest competitors in the Arctic Armor™ line\nare:\n\n \n\n●Ice Clam Corporation\n\n \n\n●Vexilar\n\n \n\n●Mustang Survival\n\n \n\n●Frabill\n\n \n\n●Stryker\n\n \n\nWe compete in the following ways:\n\n \n\nA.Emphasize the Advantages of our Products.\n\n \n\nArctic Armor Line\n\n \n\nWe emphasize the following characteristics and advantages of\nour Arctic Armor line products:\n\n \n\n●light weight\n\n \n\n●waterproof\n\n \n\n●windproof\n\n \n\n●sub-zero protection\n\n \n\n●buoyancy\n\n \n\nInsultex provides a scent barrier\nwhich we had a permeation test performed on at the Texas Research Institute Austin, Inc. The product was subjected to gas stimulant for\nan eight-hour period. The product was tested for permeation of the gas every three minutes for the duration of the test with almost no\ndetection of the gas throughout the test. The testing was based upon accepted industry practices as well as the test method used.\n\n \n\nHOUSE WRAP\n\n \n\nOur House Wrap product\n\n \n\n●Utilize our web site to promote, market, and sell our products to consumers.\n\n \n\n●Utilize\nprofessional sales representatives, distributors and manufacturer representatives to sell\nour products to established retailers, contractors and end users.\n\n \n\n 10\n\n \n\n \n\nOur products have the following disadvantages in comparison\nto the products of our competitors:\n\n \n\n●Lack\nof brand name recognition or recognition of the properties of Insultex and its advantages.\nWe, as well as our products, have little brand name recognition compared to our competitors.\nAnd we may encounter difficulties in establishing product recognition. Also, although our\nproducts have insulation properties, the material “down” has a widespread and\nestablished reputation as being the superior insulation in the market, while the properties\nand advantages of Insultex has little public recognition.\n\n \n\nCyclicality\n\n \n\nThe Company’s Arctic Armor\napparel sales fluctuate based on temperature and weather conditions. Our products are suitable primarily for cold weather conditions.\nThis will have a cyclical effect on sales. It also makes our revenues totally dependent on cold weather for this product line. For the\nfiscal year ended October 31, 2023, our cold weather products accounted for approximately 10% of our total revenue. Sales of the company’s\nInsultex House Wrap may fluctuate during the colder months as builders and contractors attain less business. Sales in the typically warmer\nstates will see no changes.\n\n \n\nMaterial Acquisition\n\n \n\nThe Company has only one supplier\nof Insultex, the special material which is manufactured within the apparel of our cold weather products and our House Wrap product. Additionally,\nwe have one manufacturer that produces the apparel on behalf of the Company, located in Indonesia. Currently, we are only selling apparel\nfrom our inventory. Any delays in getting Insultex will adversely affect our revenue stream. Once we have our own equipment operating,\nwe will be able to produce Insultex. We intend to use such Insultex for our House Wrap product.at the present time.\n\n \n\nGeographic Concentration\n\n \n\nMost of the Company’s sales for its cold weather clothing\nproducts to retailers are concentrated in colder climates of the United States and Canada.\n\n \n\nManagement\n\n \n\nThe Company is dependent on the management of Joseph Riccelli\nJr, our Chief Executive Officer. The loss of Mr. Riccelli Jr’s services could have a negative effect on the performance and growth\nof the Company for some period of time.\n\n \n\nPenny Stock Considerations\n\n \n\nOur shares are “penny stocks”\nas that term is generally defined in the Securities Exchange Act of 1934 as equity securities with a price of less than $5.00. Our shares\nmay be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving\na penny stock.\n\n \n\nUnder the penny stock\nregulations, a broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor”\nmust make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the\ntransaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth, exclusive of\none’s residence, in excess of $1,000,000 or annual income exceeding $200,000\nindividually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock\nregulations the broker-dealer is required to:\n\n \n\n●Deliver, prior to any transaction involving a penny stock, a disclosure\nschedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction\nis otherwise exempt;\n\n \n\n 11\n\n \n\n \n\n●Disclose commissions payable to the broker-dealer and its registered representatives and current bid\nand offer quotations for the securities;\n\n \n\n●Send monthly statements disclosing recent price information pertaining\nto the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny\nstocks; and\n\n \n\n●Make a special written determination that the penny stock is a suitable\ninvestment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock\ntransaction in the customer’s account.\n\n \n\nBecause of these regulations, broker-dealers\nmay encounter difficulties in their attempt to sell shares of our stock, which may affect the ability of shareholders or other holders\nto sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These\nadditional sales practice and disclosure requirements could impede the sale of our securities if our securities become publicly traded.\nIn addition, the liquidity of our securities may be adversely affected, with a corresponding decrease in the price of our securities."}