Global Fiber Technologies, Inc. - FORM 10-Q

Attached files

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EX-32.1 - Global Fiber Technologies, Inc.	ex321.htm
EX-31.1 - Global Fiber Technologies, Inc.	ex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

-----------------

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-52047

Global Fashion Technologies, Inc.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)	11-3746201 (I.R.S. Employer Identification No.)
2001 Route 46, Suite 310 Parsippany, New Jersey (Address of principal executive offices)	07054 (Zip Code)
(973)291-8900 (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☐Yes☒No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☐Yes☒No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer☐	Accelerated filer☐
Non-accelerated filer☐ (Do not check if a smaller reporting company)	Smaller reporting company☒

SEC 1296 (01-12) Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐Yes☒No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

☐Yes☐No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of June 30, 2015, there were 17,265,828 shares of the Issuer's common stock issued and outstanding.

PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.

Global Fashion Technologies, Inc. and Subsidiaries
(f/k/a Premiere Opportunities Group, Inc. and Subsidiaries)
Consolidated Balance Sheets

	June 30,			December 31,
	2015			2014
	(Unaudited)				*

ASSETS

Current assets:
Cash	$	1,322		$	755
Subscription receivable		20,000			-
Prepaid royalty expense		37,500			-
Total current assets		58,822			755

Property and equipment		2,650			-

Total assets		61,472			755

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable		47,635			98,471
Accrued compensation		-			340,000
Secured note and accrued interest payable		100,000			100,000
Secured note and accrued interest payable - related party		-			931,306
Unsecured notes and accrued interest payable		120,320			116,968
Convertible notes and accrued interest,		440,115			430,115
Advances from related party		93,451			87,131
Current liabilities from discontinued operations		870,045			870,045

Total current liabilities		1,671,566			2,974,036

Commitments and contingencies

Stockholders' deficit
Preferred stock $0.001 par value, 1,000,000
shares authorized, 200,000 shares issued and
outstanding		200			200
Common stock $0.001 par value, 400,000,000
shares authorized, 17,265,828 and 1,758,500
shares issued and outstanding, 87,665 and 0 issuable
as of June 30, 2015 and December 31, 2014, respectively		17,353			1,759
Additional paid-in capital		27,182,468			6,438,915
Stock subscriptions received		-			791,319
Accumulated deficit		(28,810,115	)		(9,779,153	)

Total Global Fashion Technologies, Inc.
stockholders' deficit		(1,610,094	)		(2,546,960	)
Non-controlling interest		-			(426,321	)
Total stockholders' deficit		(1,610,094	)		(2,973,281	)

Total liabilities and stockholders' deficit	$	61,472		$	755

*Derived from audited financial statements

The accompanying notes are an integral part of these financial statements

Global Fashion Technologies, Inc. and Subsidiaries
(f/k/a Premiere Opportunities Group, Inc. and Subsidiaries)
Consolidated Statements of Operations
(Unaudited)

	For The Three Months Ended						For The Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014

Revenues	$	-		$	61,373		$	4,000		$	193,248

Operating expenses:
General and administrative		58,739			67,042			57,517			134,298
Participation share compensation - related party		1,514,060						1,514,060			-
Consulting fees share expense		89,283			-			89,283			-
Stock based compensation		1,609,375			-			1,609,375			-
Research and development		-			5,789			-			5,789
Failed acquisition costs paid in stock		993,316			-			1,013,999			-
Failed acquisition costs paid in stock - related party		923,520			-			923,520			-
Debt extinguishment costs - related party		2,785,000			-			11,250,034			-

Total operating expenses		7,973,293			72,831			16,457,788			140,087

Income (loss) from operations		(7,973,293	)		(11,458	)		(16,453,788	)		53,161

Other expense
Interest expense and financing costs		6,676			6,677			13,352			13,353

Total other expense		6,676			6,677			13,352			13,353

Income (loss) from continuing operations
before provision for income taxes		(7,979,969	)		(18,135	)		(16,467,140	)		39,808

Provision for income taxes		-			-			-			-

Income (loss) from continuing operations	$	(7,979,969	)	$	(18,135	)	$	(16,467,140	)	$	39,808

Loss from discontinued operations, net of tax		(2,563,822	)		(468,965	)		(2,563,822	)		(468,965	)

Net loss		(10,543,791	)		(487,100	)		(19,030,962	)		(429,157	)

Net loss attributable to non-controlling interests		-			229,793			-			229,793

Net loss attributable to Global Fashion
Technologies, Inc.		(10,543,791	)		(257,307	)		(19,030,962	)		(199,364	)

Net loss per share from continuing operations	$	(0.52	)	$	(0.02	)	$	(1.76	)	$	0.05
Net loss per share from discontinued operations	$	(0.17	)	$	(0.64	)	$	(0.27	)	$	(0.64	)
Net loss per share attributable to Global Fashion
Technologies, Inc.	$	(0.68	)	$	(0.35	)	$	(2.04	)	$	(0.27	)

Weighted average common shares outstanding		15,493,494			737,866			9,346,821			737,866

The accompanying notes are an integral part of these financial statements

Global Fashion Technologies, Inc. and Subsidiaries
(f/k/a Premiere Opportunities Group, Inc. and Subsidiaries)
Consolidated Statements of Cash Flows
(Unaudited)
	For the Six Months
	Ended June 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(19,030,962	)	$	(199,364	)
Net loss from discontinued operations,
net of taxes and minority interest		(2,563,822	)		(239,172	)
Loss from continuing operations		(16,467,140	)		39,808

Adjustments to reconcile net loss to net cash
used in operating activities:
Debt extinguishment costs - related party		11,250,034			-
Depreciation		-			1,850
Failed acquisition costs paid in stock		968,750			-
Failed acquisition costs paid in stock - related party		923,520			-
Stock based compensation expense		1,609,375			-
Stock issued for services		89,283			-
Participation share compensation - related party		1,514,060			-
Changes in assets and liabilities:
Accounts receivable		-			(46,730	)
Accounts receivable - related party		-			-
Inventory		-			-
Prepaid expenses		(37,500	)
Accounts payable		(50,836	)		61,591
Accrued interest		13,352			13,352
Net cash (used) provided by operating activities		(187,102	)		69,871

Cash flows used in investing activities:
Security deposits		-			(28,000	)
Additions to property and equipment		(2,650	)		(25,899	)
Acquisition of investments		-			(4,000	)
Total cash flows used in investing activities		(2,650	)		(57,899	)

Cash flows from financing activities:
Advances to affiliated companies		-			(127,400	)
Advances from related party		18,973			-
Proceeds from note payable		-			100,000
Repayment of related party advance		(26,654	)		-
Proceeds from the sale of common stock		198,000			-
Total cash flows from financing activities		190,319			(27,400	)

Discontinued activities:
Net cash used in operating activities		-			-
Net cash used in investing activities		-			-
Net cash used in financing activities		-			-
Net cash flows from discontinued activities		-			-

Net increase (decrease) in cash		567			(15,428	)
Cash at beginning of period		755			17,389
Cash at end of period	$	1,322		$	1,961

Supplemental disclosure of cash flow information:

Cash paid during the periods for:
Interest		-			-
Income taxes	$	-		$	-

Non-cash financing sources:
Common stock issued for reduction of debt	$	931,306		$	46,780

The accompanying notes are an integral part of these financial statements

GLOBAL FASHION TECHNOLOGIES, INC. AND SUBSIDIARIES

(f/k/a Premiere Opportunities Group, Inc. and Subsidiaries)

Notes To Consolidated Financial Statements

June 30, 2015

NOTE 1 – DESCRIPTION OF BUSINESS

Global Fashion Technologies, Inc. ("the Company") was incorporated in Nevada on March 25, 2005. As of June 30, 2015 and December 31, 2014, the Company had 400,000,000 shares of authorized common stock.

On August 4, 2014, the Board of Directors of the Company and the majority shareholders of the Company, approved a reverse stock split of the outstanding shares of the Company's common stock, par value $0.001 per share (the "Common Stock"), at a ratio of 1-for-350 (the "Reverse Stock Split") effective at 5:00 p.m. EDT on August 15, 2014. The Amendment was filed with the Secretary of State of Nevada on August 6, 2014, and took effect on August 15, 2014 at 5:00 p.m. EDT. As a result of the reverse stock split, every 350 shares of the Company's old authorized common stock was converted into one share of the Company's new authorized common stock. All references to common stock shares have been adjusted to reflect the results of the reverse stock split as if it had occurred at the inception of the Company.

Global Fashion Technologies, Inc. is the holding company. During the fourth quarter of 2013, the Company became involved in the manufacturing and global distribution of ladies apparel. Trident Merchant Group, Inc. was an operating subsidiary which is a "value added" strategic advisory services company specializing in rendering expertise in the areas of capital planning and procurement, licensing and branding as well as financial engineering and restructuring of its client company's balance sheet and going public process. During the second quarter of 2014, the Company formed Leading Edge Fashions, LLC, of which it controls 51%. The non-controlling interest is recorded in the stockholders' equity section. Effective December 31, 2014, the Company's Board of Directors determined it was in the best interest of the Company to discontinue the operations of Leading Edge Fashions, LLC.

The Company created a new limited liability company, Pure361, LLC ("Pure361") in May 2015. The Company owns 51% of Pure361. Pure361 entered into a license agreement with Pure System International Ltd. ("Pure") related to potential future operations.

Basis of Presentation: Unaudited Interim Financial Information

The accompanying interim condensed consolidated financial statements are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all of the normal recurring adjustments necessary to present fairly the financial position and results of operations as of and for the periods presented. The interim results are not necessarily indicative of the results to be expected for the full year or any future period.

Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Company believes that the disclosures are adequate to make the interim information presented not misleading. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto included in the Company's Report on Form 10-K filed on February 3, 2016 for the years ended December 31, 2014 and 2013.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiary Trident Merchant Group, Inc., Leading Edge Fashion, LLC which is 51% owned, and Pure361, LLC which is 51% owned. All significant intercompany accounts and transactions have been eliminated.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net (loss).

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and investments in money market funds. The Company considers all highly-liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.

Equipment

Property and equipment are stated at cost. Costs of replacements and major improvements are capitalized, and maintenance and repairs are charged to operations as incurred. Depreciation expense is provided primarily by the straight-line method over the estimated useful lives of the assets, seven years.

Revenue Recognition

Revenue for the women's fashion division is recognized at the point-of-sale for retail store sales, net of estimated customer returns. Revenue is recognized at the completion of a job or service for the consulting division. Revenue is presented on a net basis and does not include any tax assessed by a governmental or municipal authority. Payment for merchandise at stores and through the Company's direct-to-consumer channel is tendered by cash, check, credit card, debit card or gift card. Therefore, the Company's need to collect outstanding accounts receivable for its retail and direct-to-consumer channel is negligible and mainly results from returned checks or unauthorized credit card transactions. The Company maintains an allowance for doubtful accounts for its consulting service accounts receivable, which management reviews on a regular basis and believes is sufficient to cover potential credit losses and billing adjustments. Deposits for consulting services are recognized as a sale upon completion of service.

The Company accounts for a gift card transaction by recording a liability at the time the gift card is issued to the customer in exchange for consideration from the customer. A liability is established and remains on the Company's books until the card is redeemed by the customer, at which time the Company records the redemption of the card for merchandise as a sale or when it is determined the likelihood of redemption is remote, based on historical redemption patterns. Revenues attributable to gift card liabilities relieved after the likelihood of redemption becomes remote are included in sales and are not material.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company accounts for income taxes pursuant to Accounting Standards Codification ("ASC") 740, Income Taxes, which utilizes the asset and liability method of computing deferred income taxes. The objective of this method is to establish deferred tax assets and liabilities for any temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.

ASC 740 also provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a "more-likely-than-not" recognition threshold at the effective date to be recognized. During the six months ended June 30, 2015 and 2014 the Company recognized no adjustments for uncertain tax positions.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. No interest and penalties related to uncertain tax positions were recognized at June 30, 2015 and June 30, 2014. The Company expects no material changes to unrecognized tax positions within the next twelve months.

The Company has not filed federal and state tax returns from inception through December 31, 2015. The tax periods since inception are open to examination by federal and state authorities.

Impairment or Disposal of Long-Lived Assets

ASC Topic 360 (formerly FASB issued Statement No. 144), "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144") clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to their estimated fair value based on the best information available.

Use of Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value

FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820") establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:

Level 1—Quoted market prices for identical assets or liabilities in active markets or observable inputs;

Level 2—Significant other observable inputs that can be corroborated by observable market data; and

Level 3—Significant unobservable inputs that cannot be corroborated by observable market data.

The carrying amounts of cash, accounts receivable, accrued compensation, accounts payable and other liabilities, accrued interest payable, and short-term portion of notes payable approximate fair value because of the short-term nature of these items.

Earnings (Loss) per Share

In accordance with SFAS No. 128, "Earnings Per Share," the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

NOTE 3 – NOTES PAYABLE

Secured Note Payable

The Company and its former consolidated subsidiaries entered into a settlement agreement with R.R. Donnelly & Sons Company ("Donnelly") on June 6, 2007. As part of the settlement, the Company issued to Donnelly a Secured Promissory Note in the principal sum of $601,048, with an interest rate of 9% per annum and a requirement for monthly payments of $43,577, and granted Donnelly a first lien security interest in all of the Company's assets. The Company was unable to meet the monthly payments and Donnelly obtained judgment in the amount of $601,048. This note was subsequently sold to a Director of the Company. On March 31, 2013 the Company's Board of Directors issued a "Moratorium on Accrued Interest" stating that the interest accrual on this note would cease indefinitely at March 31, 2013 and that all past due accrued interest would be added to the principal portion of the note. The balance of this note plus accrued interest totals $ 0 and $ 931,306 at June 30, 2015 and December 31, 2014, respectively.

NOTE 3 – NOTES PAYABLE (Continued)

On March 1, 2015 the principal and accrued interest in the amount of $931,306 was converted into 6,062,154 shares of common stock which was valued at $9,396,338. The Company recorded $8,465,034 of debt extinguishment cost.

As of December 14, 2014, the Company owed $785,764 to trade creditors of Leading Edge Fashion LLC, a discontinued operation which was controlled by the Company. The Company paid the outstanding obligation on July 1, 2016 through the issuance of 600,000 shares of common stock.

On November 25, 2014 the Company issued a secured promissory note to an individual in the amount of $100,000 at 10% interest and due on April 1, 2015. The balance of this note plus accrued interest totals $102,465 and $100,833 at June 30, 2015 and December 31, 2014 respectively. On April 1, 2016 the Company entered into a forbearance agreement. The Company was granted an extension of the note through September 30, 2016 in consideration for 200,000 shares of common stock with interest accruing after March 29, 2016 at 12%. The note is in default after September 30, 2016 as the note remains unpaid.

Unsecured Notes Payable

The Company has an unsecured note payable in the principal amount of $67,057. This note was issued to a vendor on August 23, 2007. The note bears interest at the rate of 10% per annum and required monthly payments of $4,500 with final payment due on July 15, 2008. The Company has made no payments under this note and the note is in default. The balance of this note plus accrued interest totals $120,320 and $116,968 at June 30, 2015 and December 31, 2014 respectively.

Convertible Notes Payable

The Company issued an 8% unsecured convertible note payable in the amount of $250,000 in 2005. The conversion feature has expired and the note is in default. The balance of the principal and interest is $440,115 and $430,115, as of June 30, 2015 and December 31, 2014, respectively.

During the year ended December 31, 2012 the Company and certain holders agreed to convert the notes payable and related accrued interest totaling $791,319 into 89,000 shares of the Company's common stock. The above balance was reflected as stock subscriptions received but not issued as of December 31, 2014 and reclassified to additional paid in capital as of June 30, 2015 and the shares are still issuable.

NOTE 4 – CAPITAL STOCK

Preferred Stock

The Company has designated a "Class B Convertible Preferred Stock" (the "Class B Preferred". The number of authorized shares totals 1,000,000 and the par value is $.001 per share. The Class B Preferred shareholders vote together with the common stock as a single class. The holders of Class B Preferred are entitled to receive all notices relating to voting as are required to be given to the holders of the Common Stock. The holders of shares of Class B Preferred shall be entitled to 10,000 votes per share. The Class B

Preferred Stock will have the rights to liquidation as all classes of the Common Stock of the Company. The Class B Preferred stock holders are entitled to receive non-cumulative dividends at the rate of 8% per annum, in preference and priority to any payment of any dividend on the common stock. The Class B Preferred Stock shall be redeemed by the Corporation for 100% of the original purchase price plus the amount of cash dividends accrued on the earlier of 6 months from the date of issuance, or the date that the Corporation received its funding from any outside source in conjunction with a merger, reverse merger or any change of control. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of the Class B Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any assets of the Corporation to the holders of the Common Stock, the amount of $.035 per share plus any and all accrued but unpaid dividends.

During the fourth quarter of 2011, a total of 200,000 shares of the Series B Preferred Stock were issued to a related party for legal and accounting fees paid for the Company's benefit in the amount of $7,500.

Common Stock

The Company's par value of its common stock was incorrectly stated as $0.35 in its December 31, 2014 financial statements, which was included with its form 10-K. This resulted in the overstatement on the balance sheet of the value of common stock by $613,110 and the understatement of additional paid-in-capital by $613,110. These amounts have been corrected in the March 31, 2015 stockholders' equity section of the balance sheet. There was no impact on the total stockholders' deficit.

As of June 30, 2015 and December 31, 2014, the Company has 17,265,828 and 1,758,500 shares of its $0.001 par value common stock issued and outstanding, respectively. In addition, as of June 30, 2015, the Company had 87,665 shares of common stock issuable. The common stock subscriptions of $791,319 have been received as of December 31, 2014. The $791,319 of subscriptions received has been reclassified to equity as of June 30, 2015.

The Company issued in the quarter ended June 30, 2015, 71,426 shares of its common stock for consulting services and additional 500,000 shares related to a placement agent agreement. The common shares were valued at $714,825 based on the trading price at the time of issuance. The value of the 500,000 shares of common stock issued was treated as the cost of capital related to a future private equity offering.

In April 2015 the Company issued 2,330,000 shares of common stock to several entities related to their funding of failed acquisition attempts by the Company as well as toward the Company's discontinued operations. The Company also issued 155,000 shares to five individuals related to these failed acquisition attempts. The common stock was valued at $1.25 per share based on the trading price of the stock at the time of issuance.

In April 2015 the Company issued 624,000 shares of common stock to an individual related to the funding of failed acquisition attempts by the Company. The common stock was valued at $923,520 based on the trading price of the stock at the time of issuance.

In April 2015 the Company raised gross proceeds from the issuance of 80,000 shares of common stock to two investors for $0.25 per share, which resulted in a corresponding subscription receivable as of June 30, 2015. The subscription amount was subsequently received in November 2015.

The Company issued 187,500 shares of its common stock to directors as stock based compensation in the three month period ended June, 30, 2015. The common stock was valued at $234,375 based on the trading price of the stock at the time of issuance.

During the three month period ended June 30, 2015, two directors were each issued 50,000 shares of common stock as stock based compensation. The common stock was valued at $136,500 based on the trading price of the stock at the time of each issuance.

In the three month period ended June 30, 2015, 1,211,248 shares of common stock were issued to a director as a participation fee. The common stock was valued at $1.25 per share based on the trading price at the time of issuance.

In the three months ended June 30, 2015, 686,000 shares of common stock were issued for $105,500 in cash.

In the three months ended June 30, 2015, the Company issued 2,500,000 shares of its common stock to two employees as an extinguishment of debt resulting from salary that had been accrued. The common stock was valued at $1.25 per share based on the trading price of the stock at the time of issuance. This issuance resulted in $2,785,000 of debt extinguishment costs.

NOTE 5 – INCOME TAXES

The Company uses the liability method, whereby deferred taxes and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. On December 31 2013 and 2012, the Company has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $10,000,000 at December 31, 2014, and will expire in the years 2026 through 2034.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

On March 15, 2015 the Company entered into a trademark license agreement with True Beauty, LLC which controls the trademark EMME. EMME is a market pioneer and trusted voice of the "Full-Figured" market. Under this licensing agreement the Company, will design, produce and market the EMME® Activewear Collection. On April 13, 2016, the agreement was amended regarding the term and minimum royalties. The Company paid $50,000 in April 2015 for its 2015 royalties.

The additional minimum royalties are as follows:

2016 $ 100,000

2017 150,000

2018 250,000

2019 250,000

$ 750,000

The contract is renewable for five consecutive one year terms commencing on January 1, 2020 if the Company reaches seventy percent of its projected sales by September 30^th of the previous year.

As of January 18, 2016, the Company is a party to one pending litigation matter entitled Randazzo LLC v. Avani Holdings LLC & Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to evict Avani Holdings LLC from its rented premises in California and to recover unpaid rent. The Company does not operate out of the premises in question and has never signed any leases or other documents with the plaintiff. Consequently, there appears to be no legitimate cause of action against the Company. However, the Company is attempting to resolve the matter due to the relatively-small amount in controversy. The unpaid rent being sought by the plaintiff is $26,595.

As of January 18, 2016, the Company has been named as a defendant in the matter of Patrick Kalashyan v. Avani Holdings, LLC & Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff to recover monies owed on a September 23, 2011 settlement agreement signed between the Plaintiff and Avani Holdings, LLC. The Company was never a party to this agreement and never acquired Avani Holdings, LLC. Consequently, there is no legitimate cause of action against the Company. The Company is vigorously defending itself as it has no legal liability for a debt of Avani Holdings, LLC. The amount being sought by the plaintiff is $150,000 plus interest.

NOTE 7 – DISCONTINUED OPERATIONS

In December 2014, the Company's Leading Edge Fashions, LLC retail businesses in which it owned 51% was classified as discontinued operations. Based on the Company's strategy to allocate resources to its businesses relative to their growth potential and those with the greater right to win in the marketplace, the Company determined that this business did not align with the Company's long-term growth plans.

As of June 30, 2015 and December 31, 2014, $870,045 of current liabilities from discontinued operations includes $785,764 loan payable and $84,281 accounts payable.

NOTE 8 – RELATED PARTY TRANSACTIONS

The Company has received advances from an Officer and member of the Board of Directors of the Company in the amount of $93,451and $87,131 at June 30, 2015 and December 31, 2014, respectively.

The Company issued in the quarter ended June 30, 2015, 2.5 million shares of the Company's common stock valued at $3,125,000 in consideration of settlement of $340,000 of outstanding payroll owed to two officers of the Company. This issuance resulted in $2,785,000 of debt extinguishment costs.

NOTE 9 - NET LOSS PER SHARE

Potentially dilutive securities are excluded from the calculation of net loss per share when their effect would be anti-dilutive. For all periods presented in the consolidated financial statements, all potentially dilutive securities have been excluded from the diluted share calculations as they were anti-dilutive as a result of the net losses incurred for the respective periods. Accordingly, basic shares equal diluted shares for all periods presented.

NOTE 10 - SUBSEQUENT EVENTS

On August 21, 2015, the Company entered into a separation agreement with a former executive of the Company. The Company agreed to pay $37,500 and issue 200,000 shares of the Company's common stock valued at $200,000 subject to a lock-up/leak-out agreement. The former employee will receive one percent of any net profit of Pure 361 LLC (a limited liability company formed in the state of Delaware on May 18, 2015, which the Company has a 51 percent ownership in) for a period of five years beginning with the first profitable year.

In 2016, the Company issued an additional 315,000 shares of its common stock to third-parties for services rendered, 50,000 shares to a director for his services, 200,000 shares to a note holder in conjunction with the extension of the terms of a note; 87,500 shares related to conversion of monies due to a related party, and 1,139,001 shares to five individuals for monies received from subscription agreements that were entered into with the Company.

In July through September 2016, the Company received $265,000 from one or more officers of the Company to fund continuing operations.

Management has evaluated the impact of events occurring after June 30, 2015 up to the date of the filing of these interim unaudited condensed consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion is intended to assist you in understanding our business and the results of our operations. It should be read in conjunction with the Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this report as well as our Report on Form 10K filed with the Securities and Exchange Commission for the period ending December 31, 2014. Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements". These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Company Overview

Global Fashion Technologies Inc. ("GFTI", 'We" or the "Company") is a development stage rejuvenation technology company which will be offering branded fabrics, apparel and uniforms to the corporate, hotel, hospital and military markets. We will achieve this by utilizing a patented and proprietary process for rejuvenating textile waste into high quality fabrics and apparel. In addition, we will also be offering branded apparel into both online and brick and mortar environments. This will initially be through a license we signed with EMME®, a former Ford Supermodel, for the purposes of marketing and manufacturing the EMME® brand of Activewear to the vastly under-served curvy/plus size market.

The Women's Apparel Segment

On March 15, 2015 the Company entered into a trademark license agreement with True Beauty, LLC which controls the trademark EMME® . EMME® is a market pioneer and trusted voice of the "Full-Figured" market. Under this licensing agreement the Company will design, produce and market the EMME® Activewear Collection.

As of November 1, 2016, the Company has completed the design of the Spring 2017 line and has received quotes from contract manufacturers. Samples for fitting have been requested from the selected vendors. The Fall 2017 line concept has been created and is now ready to enter into design phase.

The Rejuvenated Uniform Segment

In April 2015, we entered into a joint venture and license agreement with Pure Systems International, Ltd. to produce and market garments and other accessories for the commercial uniform marketplace and other market verticals by utilizing Pure Systems International, Ltd.'s patented processes to up-cycle pre-consumer textile waste into reusable fiber of equal or better quality than the original fabric. (the "Rejuvenated Fiber")

In May of 2015, the Company created a new limited liability company, Pure361, LLC ("Pure361") of which the Company owns 51% and Pure Systems International, Ltd. owns 49%. Pure361 has the exclusive licensee to use Pure System International Ltd.'s patented Rejuvenated Fiber in conjunction with the commercial uniform marketplace and other market verticals.

The Rejuvenated Cardboard Segment

In conjunction with its focus on rejuvenated technologies, the Company is exploring the possibility of also manufacturing a rejuvenated cardboard product, and is in the early stages of exploring this potential opportunity.

Trident Merchant Group, Inc.

Trident Merchant Group, Inc. is an operating subsidiary which is a "value added" strategic advisory services company specializing in rendering expertise in the areas of capital planning and procurement, licensing and branding as well as financial engineering and restructuring of its client company's balance sheet and going public process.

Liquidity, Capital Resources and Material Changes in Financial Condition

As of June 30, 2015, our current assets were $58,822 as compared to $755 in current assets as of December 31, 2014.

As of June 30, 2015, our current liabilities were $1,671,566 as compared to $2,974,036 in current liabilities as of December 31, 2014. This change in the Company's financial condition was primarily related to R.R. Donnelly & Sons Company note which was acquired by a director and converted on March 1, 2015 into 6,062,154 shares of the Company's common stock. On March 1, 2015 the principal and accrued interest in the amount of $931,306 related to the R.R. Donnelly & Sons Company note was converted into 6,062,154 shares of common stock of the Company. As a result of this conversion, the $931,306 liability due to "secured note and accrued interest payable - related party" that existed as of December 14, 2014, was reduced to $0 as of June 30, 2015. In addition, an officer's accrued wages of $340,000 as of December 31, 2014 were converted to 2.5 million shares of common stock at $1.25 during the six months ended June 30, 2015, reducing the accrued compensation from $340,000 to $0 as of June 30, 2015.

Net cash used in operating activities for the six months ended June 30, 2015 was $187,102 compared to net cash provided from operating activities for the six months ended June 30, 2014 of $69,871. Cash provided by or used by operating activities is driven by our net loss and adjusted by non-cash items as well as changes in operating assets and liabilities. Non-cash adjustments primarily include debt extinguishment cost, failed acquisition noncash expense, discontinued operation expense, stock compensation expense, stock issued for services, and participation share compensation. The net loss for the six months ended June 30, 2015 of $19,030,962 was essentially offset by these non-cash adjustments totaling $18,918,844. Changes in assets and liabilities provided an offset to the non-cash expenses of $74,984.

Net cash flows used in investing activities consisted of $2,650 in additions to property and equipment for the six months ended June 30, 2015, compared to $25,899 and an additional $32,000 in other investing activities for the six months ended June 30, 2014.

Net cash provided by financing activities of $190,319 for the six month period ending June 30, 2015 was primarily due to $198,000 paid to the Company from the sale of common stock and advances from a related party of $18,973, offset by payment of $26,654 to a related party for an advance.

We are currently dependent upon receiving loans from our shareholders. We expect to raise additional capital to continue moving the Company towards profitability.

The Company does not currently have any substantial revenues, and is reliant on its ability to raise additional capital to continue execution of its business plan to move the Company forward towards profitability.

Results of Operations for the Three Months Ended June 30, 2015 and 2014

The Company experienced a net loss of $10,543,791 in the second quarter of 2015 compared to net loss of $487,100 in the second quarter of 2014. This change was primarily due to the settlement of $340,000 of accrued salary through the issuances of 2,500,000 shares of common stock resulting in an extinguishment of debt in the amount of $2,785,000. The Company also incurred failed acquisition expense in the amount of $1,916,836, of which $1,892,270 was related to common stock issued for expenses incurred related to the failed acquisition. The Company issued 1,000,000 shares of common stock valued at $1,250,000 as sign-on bonuses to two key employees (500,000 shares each) and 287,500 shares of common stock valued at $359,375 to the Company's board members for their services. The Company issued 1,211,248 shares of its common stock valued at $1,514,060 to a related party for participation expenses and common stock issued for consulting expenses valued at $89,283. In addition, there was a decrease in revenues for the three months ended June 30, 2015 when compared to the three months ended June 30, 2014. While the Company's revenue was $61,373 for the three months ended June 30, 2014, it was $0 for the three months ended June 30, 2015. This reduction in revenue in for the second quarter in 2015 as compared to 2014 is due to the fact that a majority of the revenue received in the second quarter of 2014 related to one-time payments for consulting services.

General and administrative costs were reduced to $58,739 for the three months ended June 30, 2015 compared to $67,042 for the three months ended June 30, 2014. This reduction of $8,303 is a result of a decrease in second quarter operating expenses from 2014 to 2015.

Research and development costs were $0 for the three months ended June 30, 2015 compared to $5,789 for the three months ended June 30, 2014.

Interest expense was $6,676 and $6,677 for the three months ended June 30, 2015 and 2014, respectively.

Loss from discontinued operations, net of tax increased to $2,563,822 for the three months ended June 30, 2016 from $468,965 for the three months ended June 30, 2014. The $2,563,822 incurred in the second quarter of 2015 was related to additional costs of Leading Edge Fashions, LLC.

Net loss attributable to non-controlling interests was $0 for the three months ended June 30, 2015 compared to $229,793 for the three months ended June 30, 2014. The entity which owned the non-controlling interest of Leading Edge Fashions, LLC became incapable of funding their share of the losses incurred in the fourth quarter of 2014, and therefore, the minority interest from December 31, 2014 was charged to discontinued operations for the three and six months ended June 30, 2015. In addition, 1,710,000 shares of common stock were issued at $1.25 per share for additional losses from discontinued operations for the three and six months ended June 30, 2015.

Results of Operations for the Six Months Ended June 30, 2015 and 2014

The Company experienced a net loss of $19,030,962 in the six months ended June 30, 2015 compared to net loss of $468,965 in six months ended June 30, 2014. This change was primarily due to the settlement of $340,000 of accrued salary through the issuances of 2,500,000 shares of common stock resulting in an extinguishment of debt in the amount of $2,785,000, the R.R. Donnelly & Sons Company note acquired by a director and converted into common stock which resulted in a debt extinguishment cost of $8,465,034 failed acquisition expense of $1,937,519, of which $1,892,270 was related to common stock issued for expenses incurred related to the failed acquisition. The Company issued 1,000,000 shares of common stock valued at $1,250,000 as sign-on bonuses to two key employees (500,000 shares each) and 287,500 shares of common stock valued at $359,375 to the Company's board members for their services. The Company issued 1,211,248 shares of its common stock valued at $1,514,060 to a related party for participation expenses and common stock issued for consulting expenses valued at $89,283. In addition, there was a decrease in revenues for the six months ended June 30, 2015 when compared to the six months ended June 30, 2014. While the Company's revenue was $193,248 for the six months ended June 30, 2014, it was $4,000 for the six months ended June 30, 2015. This reduction in revenue in for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 is due to the fact that a majority of the revenue received in the second quarter of 2014 related to one-time payments for consulting services.

General and administrative costs were reduced to $57,517 for the six months ended June 30, 2015 compared to $134,298 for the six months ended June 30, 2014. This reduction of $76,781 is a result of a decrease in first six months operating expenses from 2014 to 2015.

Research and development costs were $0 for the six months ended June 30, 2015 compared to $5,789 for the six months ended June 30, 2014.

Interest expense was $13,352 and $13,353 for the six months ended June 30, 2015 and 2014, respectively.

Loss from discontinued operations, net of tax increased to $2,563,822 for the six months ended June 30, 2016 from $468,965 for the six months ended June 30, 2014. The $2,563,822 incurred in the first half of 2015 was related to additional costs of Leading Edge Fashions, LLC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company qualifies as a smaller reporting company as defined by §229.10(f)(1) and therefore is not required to provide the information required by this Item.

Item 4. Controls and Procedures.

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2015. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II -- OTHER INFORMATION

Item 1. Legal Proceedings.

As of the date of this filing, the Company is a party to two pending litigation matters. One matter is entitled Randazzo LLC v. Avani Holdings LLC & Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to evict Avani Holdings LLC from its rented premises in California and to recover unpaid rent. GFTI does not operate out of the premises in question and has never signed any leases or other documents with the plaintiff. A judgment of eviction was entered, but GFTI does not operate out of the premises in question and therefore did not appear in the matter to oppose the judgment of eviction. The plaintiff is also seeking unpaid rent in the amount of $26,595.45.

The second matter is entitled Patrick Kalashyan v. Avani Holdings, LLC & Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff to recover monies owed on a September 23, 2011 settlement agreement signed between the Plaintiff and Avani Holdings, LLC. The Company was never a party to this agreement and never acquired Avani Holdings, LLC. Consequently, there is no legitimate cause of action against the Company, and the Company is vigorously defending itself as it has no legal liability for a debt of Avani Holdings, LLC. The amount being sought by the plaintiff is $150,000 plus interest.

Item 1A. Risk Factors.

The Company qualifies as a smaller reporting company as defined by §229.10(f)(1) and therefore is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In the three months ended June 30, 2015, 686,000 shares of common stock were issued for $105,500 in cash.

All of the shares described above were issued by the Company in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 4(2). All of the purchasers of the unregistered securities were all known to us and our management, through pre-existing business relationships, as long standing business associates, friends, and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to our management in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to us. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

Item 3. Defaults Upon Senior Securities.

As of June 30, 2015, the Company was in default of an unsecured note payable in the principal amount of $67,057. This note was issued to a vendor on August 23, 2007, and the balance of this note plus accrued interest totals $120,320 as of June 30, 2015.

As of June 30, 2015, the Company was in default of the Company's $250,000 Bridge Notes that had an original maturity date of October, 2005. The Bridge Notes have not been repaid and are included in the accompanying financial statements as current liabilities. The conversion feature has expired.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

Item 5.01 - Entry Into A Definitive Material Agreement

On May 15, 2015, the Board of Directors of the Company approved an agreement between the Company and Pure System International, Ltd. ("Pure") to utilize Pure's patented and proprietary process for rejuvenating textile waste into high quality fabrics and apparel in order to produce branded fabrics, apparel and uniforms to the corporate, hotel, hospital and military markets. In furtherance of this rejuvenated uniform segment of the Company, the Company and Pure formed a new limited liability company, Pure361, LLC ("Pure361") of which the Company owns 51% and Pure Systems International, Ltd. owns 49%. Pure361 has the exclusive licensee to use Pure's patented Rejuvenated Fiber in conjunction with the commercial uniform marketplace and other market verticals.

Item 5.02 - Appointment of Certain Officers

On May 15, 2015, the Board of Directors of the Company approved the hiring of Paul Serbiak, one of the Company's directors, as the Chief Operating Officer of the Company. Mr. Serbiak received a signing bonus of 500,000 shares of the Company's common stock, and the Board of Directors approved an at-will employment contract for Mr. Serbiak that provides for a base salary of $12,000 per month. Mr. Serbiak's contract also contains performance incentive stock options, exercisable at an average of the twenty-day market close price, for up to 500,000 additional shares if the Company meets certain benchmarks. Mr. Serbiak does not have any family relationships with any other director or officer of the Company, and there are no transactions in which the directors have an interest requiring disclosure under Item 404(a) of Regulation S-K.

On May 15, 2015, the Board of Directors of the Company approved the hiring of K. Joy Nunn, one of the Company's directors, as the Chief Technical Officer of the Company. Ms. Nunn received a signing bonus of 500,000 shares of the Company's common stock, and the Board of Directors approved an at-will employment contract for Ms. Nunn that provides for a base salary of $12,000 per month. Ms. Nunn's contract also contains performance incentive stock options, exercisable at an average of the twenty-day market close price, for up to 1,000,000 additional shares of the Company if certain benchmarks are met, up to and including $1,500,000 in revenue from the rejuvenated uniform business. Ms. Nunn is also eligible to receive an additional 1,000,000 stock options for every $100,000,000 the Company earns from the rejuvenated uniform business in excess of the additional $1,500,000. Ms. Nunn does not have any family relationships with any other director or officer of the Company, and there are no transactions in which the directors have an interest requiring disclosure under Item 404(a) of Regulation S-K.

Item 6. Exhibits.

Exhibit		Description
3.1		Articles of Incorporation*
3.2(i)		By-Laws*
3.2(ii)		First Amended and Restated By-Laws of Premiere Publishing Group, Inc. dated December 14, 2007**
31.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).***
32.1		Certification pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002***
101		Interactive data files pursuant to Rule 405 of Regulation S-T.

*	Incorporated by reference to the Registration Statement filed with the Commission on November 29, 2005 (333-129977)
**	Incorporated by reference to Form 8-K filed with the Commission on December 12, 2007 (000-52047)
***	Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Global Fashion Tehnologies, Inc.


Date November 16, 2016			/ s/ Chris Giordano
			President and Treasurer

Global Fiber Technologies, Inc. - FORM 10-Q - November 17, 2016

Attached files

Global Fiber Technologies, Inc. Reports