Innovative Designs Inc (IVDN)

[NevoTX]

Webverse, IVDN bought a machine that can make INSULTEX and brought the machine to the United States... but they can't use it. It would apparently cost so much to get the machine to meet environmental regulations that, according to IVDN's latest 10K report, "Given the time and cost of bringing the equipment into production mode and our current financial condition, it is our current intention to attempt to sell the equipment."

So... no "Made in the USA" sticker is coming to INSULTEX any time soon.

Greendolphin has claimed that IVDN owns patents "worth millions." However, it's unclear to me from the company's filings what patents are actually owned by IVDN. IVDN claims to have filed patent application 12 642714, which was denied by the PTO, but IVDN appealed. It appears to me that the 2018 10K says this appeal is still pending, but the document at https://casetext.com/admin-law/ex-parte-riccelli-et-al-2 suggests to me this appeal has already been denied. So I honestly don't know what's going on there.

I count 3 additional patents that IVDN claims to own in the 10K, but there are no details about any of them, only that they were filed in Dec. 2008, Feb. 2010, and May 2016. "Filing" a patent does not mean that the patent has been granted. I suspect, therefore, that IVDN actually does not own any valid patents at all. (Actually, I take that back; the Feb. 2010 patent "has been allowed." I still don't know what the patent actually is, though, and the USPTO's search site appears to be down.)

The only 'real' asset that IVDN appears to have is an exclusive licensing agreement. They are allowed to sell INSULTEX anywhere in the world except Korea and Japan. However, since they can't manufacture the product themselves, what IVDN really has is the right to buy a product from a manufacturer in Indonesia and sell that product to customers in markets other than Korea and Japan.

However, the manufacturer is under no obligation to actually produce any product that IVDN wishes to order. And if they do decide to satisfy an order from IVDN, there are no agreements on the price that the manufacturer can charge IVDN.

So, IVDN is incapable of manufacturing INSULTEX themselves, and the one (apparently) manufacturer that is (currently) able to make the product is under no obligation to actually produce product that IVDN orders. Which means that even if IVDN *is* able to generate sales, they have no way to ensure that they can deliver the product they just sold.

If it costs too much for IVDN to operate the machine they've already bought to make INSULTEX, I'm very skeptical that they'll be able to find another manufacturer willing to spin up production capability. (Presumably, that would be more expensive than getting the already-existing machine working, which IVDN claims is not economically viable.) So IVDN is entirely at the mercy of the only manufacturer of the product. (This risk is called out in the 10K; I'm just making it obvious.)

I think IVDN is in a world of hurt, and the more I look at this company and the comments others are making, the more I am convinced that the only way for IVDN to succeed is to sell its way out of its current position. Given the company's historical revenues and expenses, I'm not convinced that current management is capable of doing that. Uber, Virgin Galactic, and Tesla all have investors willing to keep pouring money into the companies to keep them afloat. These companies have CEO's that investors have confidence in, and they have plans to get to profitability. IVDN has none of that. (I also don't expect Uber to be around 3 years from now. Tesla I expect will be; they've got some serious competitive advantages and are starting to show profitability. I know nothing about Virgin Galactic but I don't think a comparison between them and IVDN is likely to be relevant.)

Without sales, personal loans from the CEO are only going to be able to keep IVDN running until his pockets are empty. At that point, I don't see a survival strategy for the company.

They'd better get to selling INSULTEX, and selling a lot of it.