{"url_path":"/sec/ivdn/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Financial Statements and Supplementary Data","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":5855,"has_tables":true,"body_markdown":"Item 8. Financial Statements and Supplementary Data\n\n \n\n 15\n\n \n\n \n\nINNOVATIVE\nDESIGNS, INC.\n\n \n\nFINANCIAL STATEMENTS\n\n \n\nFiscal Years Ended October 31,\n2025 and 2024\n\n \n\nTable of Contents\n\n \n\n \n**Page**\n\n[REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM](#r_001)\nF-2\n\n[BALANCE SHEETS](#a_001)\nF-4\n\n[STATEMENTS OF OPERATIONS](#a_002)\nF-5\n\n[STATEMENTS OF CHANGES IN STOCKJOLDER’S EQUITY](#a_003)\nF-6\n\n[STATEMENTS OF CASH FLOWS](#a_004)\nF-7\n\n[NOTES TO THE FINANCIAL STATEMENTS](#a_005)\nF-8\n\n \n\nF-1\n\n \n\n \n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\n \n\n**To the Board of Directors and Shareholders of Innovative\nDesigns, Inc.**\n\n** **\n\n**Opinion on the Financial Statements**\n\n** **\n\nWe have audited the accompanying balance\nsheets of Innovative Designs, Inc. (the\n\n“Company”)\nas of October 31, 2025 and 2024, and the related statements of operations, changes in stockholders’\nequity, and cash flows for each of the years in the period ended October 31, 2025, including\nthe related notes (collectively referred to as the “financial statements”).\n\n \n\nIn our opinion, the financial\nstatements present fairly, in all material respects, the financial position of the Company\nas of October 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the period ended October\n31, 2025, in conformity with accounting principles generally accepted in the United States of America.\n\n \n\nBasis for Opinion\n\n \n\nThese financial\nstatements are the responsibility of the Company’s management. Our responsibility is\nto express an opinion on the Company’s financial statements based on our audit.\n\n \n\nWe\nare a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)\nand are required to be independent with respect to the Company in accordance with the U.S.\nfederal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe\nconducted our audit in accordance with the standards of the PCAOB. Those standards require\nthat we plan and perform the audit to obtain reasonable assurance about whether the financial\nstatements are free of material misstatement, whether due to error or fraud.\n\n \n\nThe Company is not required to have,\nnor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required\nto obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the efectiveness\nof the Company’s internal control over financial reporting. Accordingly,\nwe express no such opinion.\n\n \n\nOur audit included performing procedures\nto assess the risks of material misstatement of the financial statements and performing\nprocedures that respond to those risks. Such procedures included examining, on a test basis,\nevidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles\nused and significant estimates made by management, as well as evaluating the overall presentation\nof the financial statements. We believe that our audit provides a reasonable basis for\nour opinion.\n\n \n\nF-2\n\n \n\n \n\nSubstantial Doubt About the Company’s Ability to\nContinue as a Going Concern\n\n \n\nThe accompanying financial statements\nhave been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements,\nsubstantial doubt exists about the Company’s ability to continue as a going concern\nfor a period of one year after the date that the financial statements are issued. Management’s\nplans regarding these matters are also described in Note 2. Our opinion is not modified with respect to this matter.\n\n \n\nCritical Audit Matters\n\n \n\nThe critical audit matters communicated\nbelow are matters arising from the current period audit of the financial statements that were communicated or required to be communicated\nto the audit committee and that:\n\n \n\n1.relate to accounts or disclosures that are material to the financial statements; and\n\n   \n\n2.involved our especially challenging, subjective, or complex judgments.\n\n \n\n \n\nThe communication of critical audit\nmatters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the\ncritical audit matters below, providing separate\nopinions on the critical audit matters or on the accounts or disclosures to which they relate. We\ndetermined that there are no critical audit matters.\n\n \n\nWe have served as the Company’s auditor\nsince 2024.\n\n \n\n**Asesoria Global, S.A.**\n\n** **\n\nGuatemala City, Guatemala\n\n \n\nJanuary 29, 2026\n\n  7184\n\nF-3\n\n \n\n \n\nINNOVATIVE\nDESIGNS, INC.\n\nBALANCE SHEETS\n\n \n\n  \n    \n   \n\n  \nOctober\n31, \nOctober\n31,\n\n  \n2025 \n2024\n\nASSETS \n    \n   \n\nCurrent\nAssets \n    \n   \n\nCash \n$605,052  \n$185,675 \n\nAccounts\nreceivable, net \n 344,700  \n 321,893 \n\nPrepaid\nExpenses \n 10,578  \n — \n\nInventory,\nnet \n 537,713  \n 498,758 \n\nTotal\nCurrent Assets \n 1,498,043  \n 1,006,326 \n\n  \n    \n   \n\nPROPERTY\nAND EQUIPMENT \n 30,530  \n 28,060 \n\nOTHER\nASSETS \n    \n   \n\nAdvance\nto employees \n 20,500  \n 5,500 \n\nDeposits\non equipment \n 662,944  \n 652,944 \n\n  \n    \n   \n\nTOTAL\nASSETS \n$2,212,017  \n$1,692,830 \n\n  \n    \n   \n\nLIABILITIES\n& STOCKHOLDERS’ DEFICIT \n    \n   \n\nCurrent\nLiabilities \n    \n   \n\nAccounts\nPayable \n$78,750  \n$65,267 \n\nCurrent\nportion of notes payable \n 36,724  \n 20,934 \n\nAccrued\ninterest \n 2,100  \n 29,083 \n\nShareholder’s\nloans \n —  \n 50,000 \n\nAccrued\nexpenses \n 11,964  \n 51,175 \n\nTotal\nCurrent Liabilities \n 129,538  \n 216,459 \n\nLong-term\nLiabilities \n    \n   \n\nLong-term\nportion of note payable \n —  \n 23,495 \n\nReserve\nfor unpaid debt \n 12,900  \n — \n\nLong-term\nportion of shareholder’s loans \n 10,000  \n 10,000 \n\nTotal\nLiabilities \n 152,438  \n 249,954 \n\n  \n    \n   \n\nCommitments\nand Contingencies (Note 5) \n    \n   \n\n  \n    \n   \n\nStockholders’\nDeficit \n    \n   \n\nPreferred\nstock, par value $0.0001; 25,000,000 shares authorized \n —  \n — \n\nCommon\nstock, par value $0.0001; 100,800,000 shares authorized, 38,504,003 and 37,924,003 shares issued and outstanding as of October 31,\n2025 and 2024, respectively \n 3,850  \n 3,792 \n\nAdditional\nPaid-In-Capital \n 12,101,059  \n 11,979,117 \n\nAccumulated\nDeficit \n (10,045,330) \n (10,540,033)\n\nTotal\nStockholders’ equity \n 2,059,579  \n 1,442,876 \n\n  \n    \n   \n\nTOTAL\nLIABILITIES & STOCKHOLDERS’ EQUITY \n$2,212,017  \n$1,692,830 \n\n \n\nThe accompanying notes are an integral part\nof these financial statements.\n\n \n\nF-4\n\n \n\n \n\nINNOVATIVE DESIGNS, INC.\n\nSTATEMENTS\nOF OPERATIONS\n\n \n\n  \n    \n   \n\n  \nFor\nthe years ended October 31,\n\n  \n2025 \n2024\n\n  \n  \n \n\nREVENUES,\nnet \n$2,765,149  \n$1,382,733 \n\nOPERATING\nEXPENSES \n    \n   \n\nCost\nof sales \n 1,405,459  \n 753,723 \n\nSelling,\ngeneral and administrative expenses \n 859,084  \n 495,815 \n\nTOTAL\nOPERATING EXPENSES \n 2,264,543  \n 1,249,538 \n\n  \n    \n   \n\nIncome\n(loss) from operations \n 500,606  \n 133,195 \n\n  \n    \n   \n\nOTHER\nINCOME (EXPENSES) \n    \n   \n\nGain\n(loss) on sale of property and equipment \n —  \n — \n\nInterest\nIncome \n 980  \n   \n\nDepreciation\nExpense \n (8,196) \n   \n\nInterest\nexpense \n 1,313  \n (36,272)\n\nTotal\nother income (expense) \n (5,903) \n (36,272)\n\n  \n    \n   \n\nPROVISION\nFOR INCOME TAXES \n —  \n — \n\nNET\nINCOME (LOSS) \n 494,703  \n$96,923 \n\n  \n    \n   \n\nPER\nSHARE INFORMATION: UNDILUTED \n    \n   \n\nNet\nincome (loss) per common share \n$0.01  \n$0.00 \n\nWeighted\naverage number of common shares \n 38,316,256  \n 37,276,150 \n\nPER\nSHARE INFORMATION: DILUTED \n    \n   \n\nNet\nincome (loss) per common share \n$0.01  \n$0.00 \n\nWeighted\naverage number of common shares \n 38,316,256  \n 37,276,150 \n\n \n\nThe accompanying notes are an integral part\nof these financial statements.\n\n \n\nF-5\n\n \n\n \n\nINNOVATIVE\nDESIGNS, INC.\n\n**STATEMENTS OF CHANGES IN STOCKHOLDERS’\nEQUITY**\n\n** **\n\n****\n\n  \n    \n    \n    \n    \n   \n\n  \nCommon Stock \n  \n  \n \n\n  \n  \n  \n  \nTotal\n\n  \n  \nAdditional \nAccumulated \nStockholders’\n\n  \nShares \nAmount \nPaid-In- Capital \nDeficit \nDeficit\n\n  \n  \n  \n  \n  \n \n\nBalance, October 31, 2023 \n 36,617,560  \n$3,662  \n$11,741,928  \n$(10,636,957) \n$1,108,633 \n\n  \n    \n    \n    \n    \n   \n\nSale of stock \n 636,443  \n 64  \n 115,856  \n —  \n 115,920 \n\nShares issued for services \n 670,000  \n 67  \n 121,333  \n —  \n 121,400 \n\nNet loss \n —  \n —  \n —  \n 96,923  \n 96,923 \n\n  \n    \n    \n    \n    \n   \n\nBalance, October 31, 2024 \n 37,924,003  \n$3,792  \n$11,979,117  \n$(10,540,033) \n$1,442,876 \n\n  \n    \n    \n    \n    \n   \n\nSale of stock \n 170,000  \n 17  \n 39,983  \n —  \n 40,000 \n\nShares issued for services \n 410,000  \n 41  \n 81,959  \n —  \n 82,000 \n\nNet income (loss) \n —  \n —  \n —  \n 494,703  \n 494,703 \n\n  \n    \n    \n    \n    \n   \n\nBalance, October 31, 2025 \n 38,504,003  \n$3,850  \n$12,101,059  \n$(10,045,330) \n$2,059,579 \n\n** **\n\nThe accompanying notes are an integral part\nof these financial statements.\n\n \n\nF-6\n\n \n\n \n\nINNOVATIVE DESIGNS, INC.\n\nSTATEMENTS\nOF CASH FLOWS\n\n \n\n  \n    \n   \n\n  \n**For\nthe years ended October 31,**\n\n  \n2025 \n2024\n\nOPERATING\nACTIVITIES \n    \n   \n\nNet\nincome (loss) \n$494,703  \n$96,923 \n\nAdjustments\nto reconcile net loss to net cash used in operations: \n    \n   \n\nStock\npayment for services \n 82,000  \n 121,400 \n\nDepreciation \n 8,196  \n 4,977 \n\nGain\non sale of assets \n —  \n — \n\n(Increase)\ndecrease from changes in: \n    \n   \n\nAccounts\nreceivable \n (22,858) \n (290,844)\n\nInventory \n (38,956) \n 50,519 \n\nDeposit\nin inventory \n —  \n — \n\nIncrease\n(decrease) from changes in: \n    \n   \n\nAccounts\npayable and accrued expenses \n 13,534  \n (151,362)\n\nAccrued\nexpenses \n (76,772) \n (33,281)\n\n  \n    \n   \n\nNet\ncash used in Operating Activities \n 459,847  \n (201,668)\n\n  \n    \n   \n\nINVESTING\nACTIVITIES \n    \n   \n\nPurchase\nof Equipment \n (10,666) \n (9,558)\n\nDeposits\non equipment \n (10,000) \n — \n\nProceeds\nfrom sale of equipment \n —  \n — \n\nAdvances\nto employees \n (15,000) \n 2,700 \n\n  \n    \n   \n\nNet\ncash provided by (used in) investing activities \n (35,666) \n (6,858)\n\n  \n    \n   \n\nFINANCING\nACTIVITIES \n    \n   \n\nProceeds\nfrom share issuances \n 40,000  \n 115,920 \n\nProceeds\nfrom exercise of warrants \n —  \n — \n\nProceeds\nfrom notes payable \n (50,000) \n 50,000 \n\nPayments\non stockholder loans \n —  \n — \n\nPayments\non notes payable \n 5,196  \n (10,396)\n\n  \n    \n   \n\nNet\ncash provided by Financing Activities \n (4,804) \n 155,524 \n\n  \n    \n   \n\nNet\ncash increase (decrease) for period \n 419,377  \n (53,002)\n\nCash\nat beginning of period \n 185,675  \n 238,677 \n\nCash\nat end of period \n$605,052  \n$185,675 \n\n  \n    \n   \n\nSUPPLEMENTAL \n    \n   \n\nCash\npaid for taxes \n$—  \n$— \n\nCash\npaid for interest \n$(1,313) \n$35,272 \n\n  \n    \n   \n\nNoncash\nInvesting and Financing Information \n    \n   \n\nStock\nissued for services \n$82,000  \n$121,400 \n\n \n\nThe accompanying notes are an\nintegral part of these financial statements.\n\n \n\nF-7\n\n \n\n \n\nNOTE 1. NATURE OF ORGANIZATION AND\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\n\n \n\nInnovative Designs,\nInc. (the “Company”), which was incorporated in the State of Delaware on June 25, 2002, markets cold weather recreational\nand industrial clothing products, as well as house wrap, which are made from INSULTEX, a low-density foamed polyethylene, a material with\nbuoyancy, scent block, and thermal resistant properties. The Company’s clothing and house wrap is offered and sold by retailers,\ndistributors, and companies throughout the United States and Canada.\n\n \n\nThe Company operates\ntwo reportable segments: apparel and house wrap. The apparel segment offers a wide variety of extreme cold weather apparel and related\nitems. The house wrap segment offers the INSULTEX house wrap which has an R-value of 3 and an R-value of 6, as well as the Company’s\nseam tape.\n\n \n\nBasis of Accounting\n\n \n\nThe accompanying financial statements have been prepared in\naccordance with accounting principles generally accepted in the United States of America, (GAAP).\n\n \n\nFiscal Year End\n\n \n\nThe Company’s year-end is October 31.\n\n \n\nUse of Estimates\n\n \n\nThe preparation of financial statements\nin conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities\nand disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses\nduring the reporting period. Actual results could differ from those estimates.\n\n \n\nCash and Cash Equivalents\n\n \n\nThe Company considers all highly liquid investments with the\noriginal maturities of three months or less to be cash equivalents.\n\n \n\nEstimated Uncollectible Accounts\n\n \n\nManagement evaluates\nits receivables on a quarterly basis to assess the validity of remaining receivables. Management has determined that there is a significant\ndoubt regarding the receivable balance of $1,024 as of October 31, 2025. Management has determined that there is not a significant doubt\nregarding the receivable balance for fiscal year ended October 31, 2024.\n\n \n\nAccounts Receivable\n\n \n\nThe opening balance of accounts receivable was\n$321,893 which was net of the allowance for doubtful accounts of $0. The ending balance of accounts receivable was $344,700 net of the\nallowance for doubtful accounts.\n\n \n\nInventory\n\n \n\nInventory consists primarily of finished goods.\nInventory is stated at the lower of cost or net realizable value and is valued based on first-in first-out. Net realizable value is the\nestimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.\n\n \n\nDuring the fiscal year ended October 31,\n2010, the Company discontinued its hunting and swimming lines of apparel. Therefore, a reserve of $65,600 was recorded as of October\n31, 2025 and 2024.\n\n \n\nF-8\n\n \n\n \n\nDeposits\non Inventory\n\n \n\nThe Company has one\nmanufacturer located in Indonesia that produces the apparel on behalf of the Company. The Company sends deposits to the manufacturer for\nfuture production of the apparel based on approved purchase orders between the Company and the manufacturer. Once finished, purchase orders\nare received by the Company and the deposits associated with the purchase orders are transferred into inventory. As of October 31, 2025,\nthe Company made the deposits of $0 on inventory, and 0 zero balance of deposits on inventory as of October 31, 2024.\n\n \n\nProperty and\nequipment Property and equipment\n\n \n\nProperty and equipment are carried at cost less accumulated\ndepreciation. Depreciation is provided over the assets’ estimated useful lives, using the straight-line method. Estimated useful\nlives of the plant and equipment are as follows:\n\n \n\nSchedule of Estimated useful lives of plant and equipment\n \n\nEquipment,\nFurniture and fixtures\n5-10\nyears\n\n \n\nThe cost and related accumulated depreciation\nof assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of operations.\nThe cost of maintenance and repairs is charged to the statements of operations as incurred, whereas significant renewals and betterments\nare capitalized.\n\n \n\nDeposits on Equipment\n\n \n\nOn July 12,\n2015, the Company reached an agreement with Ketut Jaya to purchase the machinery and equipment utilized to produce the INSULTEX\nmaterial. 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\nexecution of the agreement. The second installment of $200,000 is to be made when the machinery and equipment is ready to be shipped\nto the United States. The third installment of $100,000 is to be made once the machinery and equipment is producing INSULTEX, and\nthe fourth and final installment of $100,000 is to be made after the first commercial production run of INSULTEX is completed. As of\nOctober 31, 2018, the Company has made payments of $500,000 in accordance with the agreement and made a $100,000 pre-payment as the\nmachine is not yet producing INSULTEX. Additionally, the Company has incurred $17,000 of additional expenses related to shipping,\nsite improvements and installation of the equipment. During 2019, the Company determined the shipping costs of $17,000 were impaired\nand these costs were written off the balance due. In February 2023 and August 2023, the Company made an additional prepayment of\n$10,000 and $6,000, respectively, on the equipment.\n\n \n\nDuring the fiscal\nyear ended October 31, 2022, the Company made deposits on a separate piece of equipment of $7,370. During the fiscal year ended October\n31, 2023, the Company made additional deposits of $29,574 on this piece of equipment. During the\nfiscal year ended October 31, 2025, the company made an additional deposit of $10,000 on this piece of equipment. Total deposits\nfor this piece equipment as of October 31, 2025 total $46,944.\n\n \n\nTotal deposits made were $662,944 and $652,944\nas of October 31, 2025 and 2024, respectively.\n\n \n\nImpairment of Long-lived Assets.\n\n \n\nManagement considers\nthe valuation and depreciation of property and equipment. Management considers both the current and future levels of undiscounted cash\nflow generated by the Company and the continuing value of property and equipment to determine when and if an impairment has occurred.\nAny write-downs due to impairment are charged to operations at the time the impairment is identified. No such write-downs due to impairment\nhave been recorded for the fiscal years ended October 31, 2025 and 2024.\n\n \n\nFair Value of Financial Instruments\n\n \n\nASC 820 Fair Value Measurements and Disclosures establish a\nthree-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three\nlevels based on the extent to which inputs used in measuring fair value are observable in the market.\n\n \n\nF-9\n\n \n\n \n\nThese tiers include:\n\n \n\nLevel 1: defined\nas observable inputs such as quoted prices in active markets;\n\n \n\nLevel 2: defined\nas inputs other than quoted prices in active markets that are either directly or indirectly observable; and\n\n \n\nLevel 3: defined\nas unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.\n\n \n\nThe carrying value of the Company’s cash, other current\nassets, accounts payable, accrued expenses and advances from related parties approximates its fair value due to their short-term maturity\n\n \n\nIncome Taxes\n\n \n\nThe Company accounts for its income\ntaxes in accordance with ASC 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for future tax consequences\nattributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective\ntax bases and tax credits and carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply\nto taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax\nassets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.\n\n \n\nRevenue Recognition\n\n \n\nRevenues are measured\nbased on the amount of consideration specified in a contract with a customer. The Company recognizes revenue when and as performance obligations\n(i.e., obligations to transfer goods and/or services) are satisfied, which generally occurs with the transfer of control of the goods\nor services to the customer.\n\n \n\nTo determine proper\nrevenue recognition, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and\nwhether a combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant\njudgment, and the decision to combine contracts or separate a combined or single contract into multiple performance obligations could\nchange the amount of revenue and profit recorded in a given period. Contracts are considered to contain a single performance obligation\nif the promise to transfer individual goods or services is not separately identifiable from other promises in the contracts.\n\n \n\nFor contracts with\nmultiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of\nthe standalone selling price of each distinct good or service in the contract.\n\n \n\nConcentration of Credit Risk\n\n \n\nThe Company maintains\nits cash balances with a financial institution which management believes to be of high credit quality. The accounts are insured by the\nFederal Deposit Insurance Company (“FDIC”) up to $250,000 in coverage. The balances in the accounts may, at times, exceed\nthe federally insured limits. The Company has not experienced any losses on deposits and management believes the Company is not exposed\nto any significant credit risk related to these accounts.\n\n \n\nShipping\nand Handling Shipping and Handling\n\n \n\nThe Company pays shipping\nand handling costs on behalf of customers for purchased apparel merchandise. These costs are billed back to the customer through the billing\ninvoice. The shipping and handling costs associated with merchandise ordered by the Company are included as part of inventory as these\ncosts are allocated across the merchandise received. With house wrap orders, the customer pays the shipping cost. The shipping and handling\ncosts associated with customer orders was approximately $74,635 and $61,124 for the fiscal years ended October 31, 2025 and 2024, respectively.\n\n \n\nF-10\n\n \n\n \n\nWarrants\n\n \n\nThe Company provides\na ten-year limited warranty covering defects in workmanship. These warranties are included in the contract and do not provide customers\nwith a service in addition to assurance of compliance with agreed-upon specifications. The Company does not consider these assurance-type\nwarranties to be separate performance obligations.\n\n \n\nManagement has determined\nthat no warranty reserve is currently necessary on the Company’s products. Management will continue to evaluate the need for a warranty\nreserve throughout the year and make adjustments as needed\n\n \n\nStock-Based Compensation\n\n \n\nThe Company accounts for share-based\ncompensation awards in accordance with ASC 718, “Compensation - Stock Compensation”. The cost of services received from employees\nand non-employees in exchange for awards of equity instruments is recognized in the statement of operations based on the estimated fair\nvalue of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The\nCompany records forfeitures as they occur.\n\n \n\nEarnings (Loss) Per Share\n\n \n\nThe Company calculates\nnet loss per share in accordance with FASB ASC Topic 260 *“Earnings Per Share”*. Basic earnings (loss) per share is calculated\nby dividing net income (loss) by the weighted average number of common shares outstanding for the fiscal year. During the fiscal years\npresented, the Company only has common stock outstanding. In 2021, the Company issued a convertible debt instrument. In addition, the\nCompany also has stock warrants of 954,000 and 954,000 as of October 31, 2025 and 2024. The Company has calculated diluted earnings (loss)\nper share utilizing the outstanding stock warrants and convertible debt.\n\n \n\nRecent Accounting Pronouncements\n\n \n\nThere have been no recent accounting\npronouncements or changes in accounting pronouncements during the year ended October 31, 2025 that are of significance or potential significance\nto the Company.\n\n \n\nNOTE 2. GOING CONCERN\n\n \n\nThese\nfinancial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and\ndischarge its liabilities in the normal course of business. The Company had net income of $494,703 for the year ended October 31, 2025,\nand net income of $96,923 for the year ended October 31, 2024. The Company also had positive cash flows from operations of $459,847 and\nnegative cash flow of ($201,668) for the fiscal year ended October 31, 2025 and 2024, respectively.\nIn addition, the Company has an accumulated deficit of ($10,045,330).\nThese factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from\nthe issuance of these financial statements. Management’s plans include cash receipts through sales, sales of Company stock, and\nborrowings from private parties. These financial statements do not include any adjustments to the recoverability and classification of\nrecorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.\n\n \n\nNOTE 3. LEASE\n\n \n\nFASB ASC Topic 842,\n*“Leases”*, establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU asset and\nlease liability on the balance sheets. ROU assets and lease liabilities are recognized at the commencement date based on the present value\nof lease payments over the lease term. ROU assets are reduced each period by an amount equal to the difference between the lease expense\nand the amount of interest expense on the lease liability, using the effective interest method. The Company used the average commercial\nreal estate interest rate of 5.50% to calculate the present value of the lease. The Company recognizes lease expense on a straight-line\nbasis over the leased term on the statements of operations.\n\n \n\nF-11\n\n \n\n \n\nThe Company entered\ninto a lease for office space at the time the Company was formed through June 2022. Effective July 2022, the Company is leasing the office\nspace on a month to month basis. As a result, the Company has elected to apply the short-term lease exemption to its lease of the facilities\nand therefore has not recorded a ROU asset and related lease liability.\n\n \n\n**NOTE 4 – PROPERTY AND EQUIPMENT**  \n\n \n\nProperty\nand equipment are summarized by major classifications as follows:\n\n  \n\nSchedule of property\nand equipment \n    \n   \n\n  \n  **October 31, 2024** \n  **October 31, 2024**\n\nEquipment \n$1,500  \n$12,593 \n\nContainer \n 24,400  \n 24,400 \n\nAutomobile \n 31,317  \n 9,558 \n\n  \n    \n   \n\nTotal \n 57,217  \n 46,551 \n\n  \n    \n   \n\nAccumulated depreciation \n 26,687  \n 18,491 \n\n  \n$30,530  \n$28,060 \n\n \n\nFor the years ended October 31, 2025 and\n2024, the Company recognized depreciation expense in the amount of $8,196 and 4,977, respectively.\n\n \n\nNOTE 5. NOTE PAYABLE\n\n \n\nIn July 2005, the\nCompany was approved for a low interest promissory note from the U.S. Small Business Administration in the amount of $280,100. In January\n2006, the Company amended the promissory note to increase the principal balance to $430,500. The note calls for monthly payments of $1,820,\nbears interest at an annual rate of 2.9%, and matures on July 13, 2035. A payment of $40,672 was made on the note during the fiscal year\nended October 31, 2017, due to the sale of real estate by Riccelli Properties that was collateral on the promissory note. On June 4, 2025,\na payment was made to finalize the loan and close out the remaining balance.\n\n \n\nAs of October 31, 2025\nand 2024, the note payable had the following balances:\n\n \n\nSchedule of note payable \n    \n   \n\n  \n2025 \n2024\n\n  \n  \n \n\nU.S.\nSmall Business Administration \n 0  \n 44,429 \n\n  \n    \n   \n\n  \n 0  \n 44,429 \n\nLess\ncurrent portion \n 0  \n 20,934 \n\n  \n    \n   \n\nLong-tem\nportion of note payable \n 0  \n 23,495 \n\n \n\nSchedule of long term debt maturity  \n   \n\nYears\nEnding October 31, \nAmount\n\n  \n \n\n2025  \n 0 \n\n2026  \n 0 \n\n2027  \n 0 \n\n   \n   \n\nTotal  \n 0 \n\n \n\nF-12\n\n \n\n \n\n**NOTE 6. STOCKHOLDER LOAN**\n\n \n\n**ROBERTA RICCELLI**\n\n \n\nIn February 2012,\nthe Company entered into a loan agreement with Robert Riccelli for $8,000 to fund operations of the Company. This loan is due on demand,\nincluding interest at an annual rate of 10% with an original maturity date of June 2012. The loan was extended through a verbal agreement\nand currently has no set maturity date. The loan was paid off as of fiscal year end October 31, 2024.\n\n \n\n**CORINTHIAN DEVELOPMENT**\n\n** **\n\nIn January 2013, the\nCompany entered into a loan agreement with Corinthian Development for $20,000 to fund operations of the Company. This loan is due on demand,\nincluding interest at an annual rate of 10% with an original maturity date of May 2013. This loan was extended through a verbal agreement\nand currently has no set maturity date. As of October 31, 2025, the balance of the loan was\n$10,000.\n\n \n\n**LAWRENCE****FRASER**\n\n** **\n\nIn December 2020,\nthe Company entered into a loan agreement with Lawrence Fraser for $200,000. The loan is payable in yearly installments of $66,666, with\nthe balance due and payable in December 2023 at an annual interest rate of 12%. The loan is secured by one of the Company’s patents.\nAs of October 31, 2024, the loan was paid in full.\n\n \n\nWaxman\nFoundation\n\n \n\nIn December 2023, the Company entered into\na loan agreement with Waxman Foundation for $50,000. The loan was payable in December 2024 and was extended through June 2025. The\nannual interest rate is 6% per annum. The loan is secured by the inventory. As of June 23, 2025, the loan balance was paid\noff in full.\n\n \n\nAs of October\n31, 2025 and 2024, the shareholder loans had the following balances:\n\n \n\nSchedule of stockholder loans \n    \n   \n\n  \n2024 \n2025\n\nRoberta Riccelli \n$—  \n$— \n\nCorinthian Development \n 10,000  \n 10,000 \n\nLawrence Fraser \n —  \n — \n\nWaxman Foundation \n —  \n 50,000 \n\n  \n$10,000  \n$60,000 \n\n \n\nSchedule of maturity of stockholder loans  \n   \n\nYears Ending October 31, \nAmount\n\n  \n \n\n2025  \n 10,000 \n\n   \n   \n\nTotal  \n 10,000 \n\n \n\nNOTE 7. OTHER INCOME (EXPENSES)\n\n \n\nFor the year ending October 31, 2025, the Company incurred\ninterest expenses of negative $1,312. For the year ended October 31, 2024, the Company had interest expenses of $36,272.\n\n \n\nF-13\n\n \n\n \n\nNOTE 8. EXCLUSIVE LICENSING AND\nMANUFACTURING AGREEMENT\n\n \n\nOn April 16, 2006,\nthe Company entered into an exclusive licensing and manufacturing agreement with the Ketut Group, with an effective date of April 1, 2006,\nwhereby the Company acquired an exclusive license to develop, use, sell, manufacture, and market products related to or utilizing the\nINSULTEX brand, Korean patent number 0426429, or any INSULTEX technology. At the behest of the Board of Directors, the INSULTEX trademark\nwas chosen as the mark to identify the product utilized by the Company since its inception and was originally registered to Joseph Riccelli,\nSr. on February 17, 2005. The new trademark, intended to avoid confusion arising from the use of the old Eliotex trademark in association\nwith a new, subsequent, different, and separately patented product, was assigned by Joseph Riccelli to the Company on April 25, 2006,\nwith that assignment to become effective upon final approval of the statement of use by the United States Patent and Trademark Office.\nThe license was awarded by the Korean inventor, an individual who is part of the Ketut Group, and the manufacturer of INSULTEX. The Company\nreceived an exclusive forty year worldwide license, except for Korea and Japan, with an initial term of ten years and an option to renew\nthe license for up to three successive ten year terms. The first ten year option was exercised. Additionally, the Company was granted\nthe exclusive rights to any current or future inventions, improvements, discoveries, patent applications, and letters of patent which\nthe Ketut Group controls, or may control, related to INSULTEX. Furthermore, the Company has the right to grant sub-licenses to other manufacturers\nfor the use of INSULTEX or any INSULTEX technology.\n\n \n\nNOTE 9. CONCENTRATION\n\n \n\nRevenues from two\ncustomers were approximately 95.2% and 87.3% of the Company’s revenues for the fiscal years ended October 31, 2025 and 2024, respectively.\n\n \n\nThe Company only has\none supplier of INSULTEX, the special material which is manufactured for the Company. Additionally, the Company only has one manufacturer\nin Massachusetts that produces house wrap on behalf of the Company.\n\n \n\nThis poses a concentration\nrisk on both the customer and supplier side.\n\n \n\nNOTE 10. INCOME TAXES\n\n \n\nIn\nprior years, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition,\nno benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. For the 2023 tax year,\nfiscal year ended October 31, 2024, the Company had net operating loss carryforwards of approximately $7,537,366 for tax purposes. The\ncarryforwards are available to offset taxable income of future periods and begin to expire after\nthe Company’s 2038 tax year, fiscal year ending October 31, 2039. Effective for tax years ending in 2019 or later, net operating\nlosses cannot be carried back, but can be carried forward to future tax years indefinitely. Realization of the deferred tax benefit\nrelated to the carryforward is dependent on the Company generating sufficient taxable income in the future, against which the loss can\nbe offset, which is not guaranteed.\n\n \n\nDeferred income taxes\nreflect the net tax effect of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes\nand the amounts used for income tax purposes, as well as tax benefits of net operating loss carryforwards. The significant components\nof the Company’s deferred tax assets and liabilities relate to the following:\n\n \n\nSchedule of deferred tax assets and liabilities \n    \n   \n\n  \nAs\nof October 31, 2025 \nAs\nof October 31, 2024\n\nNet\noperating loss carryforward \n$7,537,366  \n$7,537,366 \n\nEffective\ntax rate (Fed: 21%, State: 7.99%) \n 28.99% \n 28.99%\n\nDeferred\ntax assets \n 2,185,082  \n 2,185,082 \n\nLess:\nValuation allowance \n (2,185,082) \n (2,185,082)\n\nNet\ndeferred asset \n$—  \n$— \n\n  \n\nF-14\n\n \n\n \n\nNOTE 11. COMMITMENTS\n\n \n\nThe Company leases its executive\noffices/warehouse space from Frank Riccelli, a stockholder and brother of Joseph Riccelli, Sr., the Company’s consultant, for $3,500\na month. The lease is based on a verbal agreement with month-to-month terms. For the fiscal years ended October 31, 2025 and 2024,\nrent expense was $42,000 and $42,000, respectively.\n\n \n\nNOTE 12. SEGMENT INFORMATION\n\n \n\nThe Company has organized operations into two\nsegments as discussed in Note 1 to the financial statements, based on an internal management reporting process that provides segment information\nfor purposes of making financial decisions and allocating resources.\n\n \n\nThe following tables present the Company’s\nbusiness segment information for the fiscal years ended October 31, 2025 and 2024:\n\n \n\nSchedule of business segment information \n    \n   \n\nRevenue \n2025 \n2024\n\nApparel \n$7,535  \n$51,602 \n\nHouse wrap \n 2,757,614  \n 1,324,127 \n\nTotal revenue \n$2,765,149  \n$1,375,729 \n\nCapital expenditures \n    \n   \n\nApparel \n$—  \n$— \n\nHouse wrap \n 30,530  \n 6,858 \n\nTotal Assets \n$30,530  \n$6,858 \n\nDepreciation \n    \n   \n\nApparel \n$—  \n$— \n\nHouse wrap \n 8,196  \n 4,977 \n\nTotal depreciation \n$8,196  \n$4,977 \n\n \n\nNOTE 13. COMMON STOCK\n\n \n\nDuring the fiscal year ended October 31,\n2023, the Company sold 1,635,000 shares of common stock to sixteen investors for total proceeds of $355,000, one investor exercised 40,000\nwarrants for stock for total proceeds of $10,000, and 230,000 shares were issued to two investors for services valued at $41,940. The\nstock was issued between $0.20 and $0.25 per share. Management believes that Section 4(2) of the Securities Act of 1933, as amended, was\navailable because these transactions did not involve a public offering and there was no general solicitation of general advertising involved\nin these transactions. The Company placed legends on the stock certificate stating that the securities were not registered under the Securities\nAct and set for the restrictions on their transferability and sale.\n\n \n\nDuring the fiscal year ended October 31,\n2022, the Company sold 460,000 shares of common stock to seven investors for total proceeds of $86,200, and\n875,000 shares of common stock were issued to eight individuals for services valued at $210,000. The stock was issued between $0.17\nand $0.25 per share. Management believes that Section 4(2) of the Securities Act of 1933, as amended, was available because these\ntransactions did not involve a public offering and there was no general solicitation of general advertising involved in these\ntransactions. The Company placed legends on the stock certificate stating that the securities were not registered under the\nSecurities Act and set for the restrictions on their transferability and sale.\n\n \n\nDuring the year ended October 31, 2024,\nthe Company sold 580,888 shares of common stock to eight investors for total proceeds of $105,920,\nand 670,000 shares were issued to two individuals for services. The stock was issued between $0.18 and $0.20 per share.\nAdditionally, the Company sold 55,555 shares of common stock to one investor for total proceeds of $10,000. The stock was issued at\n$0.18 per share.\n\n \n\nF-15\n\n \n\n \n\nDuring the fiscal year ended October 31,\n2025, the Company sold 170,000 shares of Common Stock to two investors for total proceeds of $40,000. The stocks were issued between $0.20\nand $0.25 per share. Additionally, the Company issued 410,000 share of Common Stock to service providers for services rendered for a total\nof $82,000. The shares were issued between $0.20 and $0.25 per share.\n\n \n\nNOTE\n14. RELATED PARTY TRANSACTIONS\n\n \n\nThe Company has entered into various loan agreements\nwith related parties. These agreements are classified as stockholder loans as described in Note 6 to the financial statements.\n\n \n\nThe Company has also entered into a verbal lease\nagreement as described in Notes 3 and 11 to the financial statements.\n\n \n\n**NOTE 15. LEGAL PROCEEDINGS**\n\n** **\n\nOn November 4, 2016, the Federal Trade\nCommission (“FTC”) filed a complaint against the Company in the U.S. District Court Western District of Pennsylvania, Case\nnumber 16-1669. In the complaint, the FTC alleges that, among other matters, the Company did not have substantiation of claims made by\nthe Company regarding the R value and energy efficiency of its INSULTEX house wrap products. The complaint asks to redress a rescission\nof revenue the Company received from the sale of the house wrap and a permanent injunction. On September 24, 2020, a judgment was entered\nin favor of the Company as to all claims set forth in the FTC complaint. It was further ordered that as there were no remaining claims\nin the action the case shall be marked as closed.\n\n \n\nOn November 23, 2020, the Company was informed\nthat the FTC had filed a notice of appeal in regard to the case. The appeal is from the District Court’s September 24, 2020, Order\ngranting the Company’s Motion for Judgment on Partial Findings Pursuant to Fed. R. Civ. P. 52(c) and subsequent Judgment in favor\nof the Company and from the District Court’s February 14, 2020, striking Dr. David Yarbrough’s expert testimony made on behalf\nof the FTC. The FTC filed its appeal and on March 24, 2021, the Company filed its answer.\n\n \n\nOn\nJuly 22, 2021, the Registrant was informed that the U.S. Court of Appeals for the Third District affirmed the District Court’s ruling\nin favor of the Registrant. The ruling was in connection with the FTC complaint filed against the Registrant in November 2016, alleging,\namong other matters, that the Registrant did not have substantiation for claims made by the Registrant regarding the R-value and energy\nefficiency of its INSULTEX house wrap products.\n\n \n\nIn November 2021, in connection with the\nFTC litigation, the Company filed an application for attorney fees, expenses and cost in the U.S. District Court for the Western District\nof Pennsylvania, Case No.2:16-cv-01669-NBF. On June 29, 2022, a settlement order was signed by the Court. Pursuant to the Order, the FTC\npaid the Company $260,000 to resolve all such claims. The parties agreed to waive all rights to appeal or otherwise challenge or contest\nthe validity of the Order\n\n \n\nNOTE 16. SUBSEQUENT EVENTS\n\n \n\nIn accordance with SFAS 165 (ASC 855),\nSubsequent Events, the Company has analyzed its operations subsequent to January 28, 2026 to the date these financial statements were\nissued, and has determined that it does not have any material subsequent events to disclose.\n\n \n\nF-16"}