UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

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

 

 For the quarterly period ended September 30, 2019 

 

  or 

 

  ¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 

For the transition period from ____________ to ____________

 

  Commission File Number   000-52047 

 

GLOBAL FIBER TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

         

Nevada

11-3746201

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

 

 

142, Belmont Ave, Unit #1 Somerset NJ 00873

 

08876

(Address of principal executive offices)

 

(Zip Code)

 

(732) 695-4389

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

None

None

 

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.  x YES     ¨ NO

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). x YES     ¨ NO

 

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

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

Emerging growth company

¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ¨ YES     x NO

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

 PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after 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.

 

30,563,682 shares of common stock issued and outstanding as of November 19, 2019

 

 
 
 
 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

29

 

Item 4. 

Controls and Procedures 

 

29

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

 

 

Item 1. 

Legal Proceedings 

 

30

 

Item 1A. 

Risk Factors 

 

30

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds 

 

31

 

Item 3. 

Defaults Upon Senior Securities 

 

31

 

Item 4. 

Mine Safety Disclosures

 

31

 

Item 5. 

Other Information

 

31

 

Item 6.

Exhibits

 

32

 

SIGNATURE

 

 

33

 

 

 
2
 
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Global Fiber Technologies, Inc.

(formerly ECO TEK 360, INC. and Subsidiaries)

Condensed Consolidated Balance Sheets

 

 

 

September 30,

2019

 

 

December 31,

2018*

 

ASSETS

 

(Unaudited)

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 50,227

 

 

$ 29,310

 

Prepaid interest and deposits

 

 

100,548

 

 

 

21,311

 

Inventories

 

 

60,815

 

 

 

-

 

Total Current Assets

 

 

211,590

 

 

 

50,621

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

222,618

 

 

 

1,113

 

Intangible assets

 

 

19,616

 

 

 

-

 

TOTAL ASSETS

 

$ 453,824

 

 

$ 51,734

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

207,473

 

 

 

263,869

 

Accrued compensation

 

 

501,250

 

 

 

501,250

 

Unsecured notes and accrued interest payable

 

 

254,253

 

 

 

196,083

 

Convertible notes and accrued interest - net of debt discount of $552,898 and $52,720, respectively

 

 

605,152

 

 

 

99,968

 

Convertible notes and accrued interest - related party

 

 

66,500

 

 

 

63,500

 

Promissory note and accrued interest - related party

 

 

239,850

 

 

 

-

 

Advances from related parties

 

 

159,750

 

 

 

255,296

 

Related party loans and accrued interest

 

 

242,079

 

 

 

234,273

 

Subscription payable

 

 

100,000

 

 

 

20,000

 

Current liabilities from discontinued operations

 

 

84,281

 

 

 

84,281

 

Total Current Liabilities

 

 

2,460,588

 

 

 

1,718,520

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Stockholders’ Deficit

 

 

 

 

 

 

 

 

Preferred stock, Class B, $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, 22,231,273 and 19,975,927 shares issued and outstanding, 6,688,666 and 1,168,666 issuable as of September 30, 2019 and December 31, 2018, respectively

 

 

28,921

 

 

 

21,145

 

Additional paid-in capital

 

 

30,200,294

 

 

 

29,335,171

 

Accumulated deficit

 

 

(32,236,179 )

 

 

(31,023,302 )

Stockholders’ deficit

 

 

(2,006,764 )

 

 

(1,666,786 )

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$ 453,824

 

 

$ 51,734

 

 

*Derived from audited information

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
3
 
Table of Contents

 Global Fiber Technologies, Inc.

(formerly ECO TEK 360, INC. and Subsidiaries)

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

$ 1,784

 

 

$ -

 

 

$ 1,784

 

 

$ -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$ 142,052

 

 

$ 29,866

 

 

$ 369,181

 

 

$ 160,970

 

Stock based compensation

 

 

60,000

 

 

 

11,700

 

 

 

143,574

 

 

 

11,700

 

Gain from extinguishment of debt

 

 

-

 

 

 

(5,394 )

 

 

(12,041 )

 

 

(5,394 )

Total Operating Expenses

 

 

202,052

 

 

 

36,172

 

 

 

500,714

 

 

 

167,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(200,268 )

 

 

(36,172 )

 

 

(498,930 )

 

 

(167,276 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense and financing costs

 

 

318,654

 

 

 

38,929

 

 

 

699,318

 

 

 

58,777

 

Interest expense - related parties

 

 

6,984

 

 

 

3,372

 

 

 

14,629

 

 

 

10,790

 

Total other expense

 

 

325,638

 

 

 

42,301

 

 

 

713,947

 

 

 

69,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

 

(525,906 )

 

 

(78,473 )

 

 

(1,212,877 )

 

 

(236,843 )

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$ (525,906 )

 

$ (78,473 )

 

$ (1,212,877 )

 

$ (236,843 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

$ (0.02 )

 

$ (0.00 )

 

$ (0.04 )

 

$ (0.01 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

28,740,782

 

 

 

20,670,376

 

 

 

27,994,505

 

 

 

20,537,346

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
4
 
Table of Contents

 

Global Fiber Technologies, Inc.

(formerly ECO TEK 360, INC. and Subsidiaries)

Consolidated Statements of Stockholders’ Deficit

For the Nine Months and Three Months Ended September 30, 2019 and 2018

(Unaudited)

 

 

 

Class B Preferred Stock

 

 

Common Stock

 

 

Additional 

 

 

 

 

Total

 

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Stockholders’

Deficiency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - December 31, 2018

 

 

200,000

 

 

$ 200

 

 

 

21,144,593

 

 

$ 21,145

 

 

$ 29,335,171

 

 

$ (31,023,302 )

 

$ (1,666,786 )

Options issued for consulting services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

83,574

 

 

 

-

 

 

 

83,574

 

Common stock issuable for settlement of a convertible note

 

 

-

 

 

 

-

 

 

 

70,588

 

 

 

71

 

 

 

5,576

 

 

 

-

 

 

 

5,647

 

Debt discount - Convertible promissory note and warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

217,500

 

 

 

-

 

 

 

217,500

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(406,019 )

 

 

(406,019 )

Balance - March 31, 2019

 

 

200,000

 

 

$ 200

 

 

 

21,215,181

 

 

$ 21,216

 

 

$ 29,641,821

 

 

$ (31,429,321 )

 

$ (1,766,084 )

Common stock issued for cash

 

 

-

 

 

 

-

 

 

 

190,000

 

 

 

190

 

 

 

43,310

 

 

 

-

 

 

 

43,500

 

Common stock issued for repayment of related party loan

 

 

-

 

 

 

-

 

 

 

50,000

 

 

 

50

 

 

 

12,450

 

 

 

-

 

 

 

12,500

 

Acquisition of assets from related party

 

 

-

 

 

 

-

 

 

 

6,400,000

 

 

 

6,400

 

 

 

-

 

 

 

-

 

 

 

6,400

 

Debt discount - Convertible promissory note and warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

102,000

 

 

 

-

 

 

 

102,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(280,952 )

 

 

(280,952 )

Balance - June 30, 2019

 

 

200,000

 

 

$ 200

 

 

 

27,855,181

 

 

$ 27,856

 

 

$ 29,799,581

 

 

$ (31,710,273 )

 

$ (1,882,636 )

Common stock issued for consulting services

 

 

-

 

 

 

-

 

 

 

300,000

 

 

 

300

 

 

 

59,700

 

 

 

-

 

 

 

60,000

 

Common stock issued for conversion of convertible note

 

 

-

 

 

 

-

 

 

 

764,758

 

 

 

765

 

 

 

59,315

 

 

 

-

 

 

 

60,080

 

Debt discount - Convertible promissory note and warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

281,698

 

 

 

-

 

 

 

281,698

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(525,906 )

 

 

(525,906 )

Balance - September 30, 2019

 

 

200,000

 

 

$ 200

 

 

 

28,919,939

 

 

$ 28,921

 

 

$ 30,200,294

 

 

$ (32,236,179 )

 

$ (2,006,764 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class B Preferred Stock

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Total

 

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Stockholders’

Deficiency

 

Balance - December 31, 2017

 

 

200,000

 

 

$ 200

 

 

 

20,500,093

 

 

$ 20,500

 

 

$ 29,175,692

 

 

$ (30,578,048 )

 

$ (1,381,656 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(123,341 )

 

 

(123,341 )

Balance - March 31, 2018

 

 

200,000

 

 

$ 200

 

 

 

20,500,093

 

 

$ 20,500

 

 

$ 29,175,692

 

 

$ (30,701,389 )

 

$ (1,504,997 )

Common stock issued for consulting services

 

 

-

 

 

 

-

 

 

 

50,000

 

 

 

50

 

 

 

5,450

 

 

 

-

 

 

 

5,500

 

Debt discount - Convertible promissory note and warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

67,874

 

 

 

-

 

 

 

67,874

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(35,029 )

 

 

(35,029 )

Balance - June 30, 2018

 

 

200,000

 

 

$ 200

 

 

 

20,550,093

 

 

$ 20,550

 

 

$ 29,249,016

 

 

$ (30,736,418 )

 

$ (1,466,652 )

Stock based compensation

 

 

-

 

 

 

-

 

 

 

97,500

 

 

 

98

 

 

 

11,602

 

 

 

-

 

 

 

11,700

 

Common stock issued for extension of note

 

 

-

 

 

 

-

 

 

 

25,000

 

 

 

25

 

 

 

4,225

 

 

 

-

 

 

 

4,250

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(78,473 )

 

 

(78,473 )

Balance - September 30, 2018

 

 

200,000

 

 

$ 200

 

 

 

20,672,593

 

 

$ 20,673

 

 

$ 29,264,843

 

 

$ (30,814,891 )

 

$ (1,529,175 )

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
5
 
Table of Contents

 

Global Fiber Technologies, Inc.

(formerly ECO TEK 360, INC. and Subsidiaries)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$ (1,212,877 )

 

$ (236,843 )

Adjustments to reconcile net income (loss) to net cash from operating activities:

 

 

 

 

 

 

 

 

Gain from extinguishment of debt

 

 

(12,041 )

 

 

(5,394 )

Depreciation

 

 

11,593

 

 

 

285

 

Amortization

 

 

307

 

 

 

-

 

Expenses paid for directly by related party

 

 

25,897

 

 

 

153,675

 

Amortization of debt discount

 

 

660,128

 

 

 

33,549

 

Stock based compensation expense

 

 

143,574

 

 

 

11,700

 

Stock issued for services

 

 

-

 

 

 

5,500

 

Non-cash interest

 

 

-

 

 

 

4,250

 

Non-cash expenses

 

 

-

 

 

 

2,500

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Expense paid for subsidiary

 

 

(16,336 )

 

 

-

 

Prepaid interest and deposits

 

 

(112,087 )

 

 

29,500

 

Accounts payable and accrued expenses

 

 

(56,396 )

 

 

(42,935 )

Accrued interest

 

 

53,821

 

 

 

31,868

 

Net cash used in operating activities

 

 

(514,417 )

 

 

(12,345 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

(18,500 )

 

 

-

 

Acquisition of intangible assets

 

 

(3,723 )

 

 

-

 

Net cash used in investing activities

 

 

(22,223 )

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from issuance of convertible promissory note, net

 

 

633,000

 

 

 

100,000

 

Proceeds from issuance of common stock

 

 

43,500

 

 

 

-

 

Proceeds from subscription payable

 

 

80,000

 

 

 

-

 

Proceeds from unsecured loans

 

 

50,000

 

 

 

-

 

Repayment on a convertible note

 

 

(135,000 )

 

 

 

 

Repayment of related party advance

 

 

(108,943 )

 

 

(87,394 )

Repayment of unsecured loans

 

 

(5,000 )

 

 

-

 

Net cash provided by financing activities

 

 

557,557

 

 

 

12,606

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

20,917

 

 

 

261

 

Cash and cash equivalents - beginning of period

 

 

29,310

 

 

 

-

 

Cash and cash equivalents - end of period

 

$ 50,227

 

 

$ 261

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Disclosures

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ -

 

 

$ -

 

Cash paid for income taxes

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Non-Cash Investing and Financing Activity:

 

 

 

 

 

 

 

 

Shares issued for related party loan

 

$ 12,500

 

 

$ -

 

Acquisition of assets from related party through the issuance of common stock and a note

 

$ 275,277

 

 

$ -

 

Shares issued for settlement of convertible notes

 

$ 65,727

 

 

$ -

 

Discount related to convertible debts

 

$ 1,160,306

 

 

$ -

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
6
 
Table of Contents

 

GLOBAL FIBER TECHNOLOGIES, INC.

(FORMERLY ECO TEK 360, INC.)

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

NOTE 1 – DESCRIPTION OF BUSINESS AND GOING CONCERN

 

Global Fiber Technologies, Inc. (“the Company”) was incorporated in Nevada on March 25, 2005. As of September 30, 2019 and December 31, 2018, the Company had 400,000,000 shares of authorized common stock.

 

During the second quarter, 2014 the Company formed Leading Edge Fashions, LLC of which it controls 51%. 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 for the purpose of operating the portion of the Company’s business that is involved with the collection, rejuvenation and manufacturing of garments and other accessories for the uniform marketplace that serves the hospitality, food service, medical, manufacturing, education, military, transportation and other commercial uniform industries. The Company owns 51% of Pure361. Pure361 entered into a license agreement with Pure System International Ltd. (“Pure”), the minority owner of Pure 361, related to potential future operations in which Pure361 was granted the exclusive license to use certain licensed intellectual property related to the manufacturing of uniforms from recyclable waste. Pure361 has had no operations to date nor did it have assets or liabilities as of September 30, 2019 and December 31, 2018, respectively.

 

The Company created a new wholly owned subsidiary, Progressive Fashions Inc. (“PFI”) in February 2016 for the purpose of designing, producing and marketing the EMME® Activewear Collection. On June 5, 2017 the Company and True Beauty, LLC (the company that controls the EMME® trademark) terminated the license agreement. PFI has had no operations to date nor did it have assets or liabilities as of September 30, 2019 and December 31, 2018, respectively.

 

The Company created a new subsidiary, ECO CHAIN 360, Inc. in November 2018 for the purpose of operating as an intermediary providing an expedited trading platform for buyers and sellers to efficiently consummate fiber transactions. The Company owns 51% of ECO CHAIN 360, Inc. ECO CHAIN 360, Inc. has had no operations to date nor did it have assets or liabilities as of September 30, 2019 and December 31, 2018, respectively.

 

On June 18, 2019, the Company completed its acquisition of assets from AH Originals, Inc. (“AHO”), a corporation controlled by the same owner group of Global Fiber Technologies, Inc., for the consideration of 6,400,000 shares of common stock of the Company to be issued and the issuance of a promissory note of $447,150 that bears 3% interest per annum and have a one year term with eight options to extend the maturity date for three-month periods. In addition, the Company issued to AHO 200,000 common shares of Authentic Heroes, Inc. (“AHI”), a subsidiary created by the Company, to hold the purchased assets. AHI has commenced minimal operations as of September 30, 2019.

 

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 condensed 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 condensed 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 April 16, 2019 for the years ended December 31, 2018 and 2017.

 

 
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Going Concern

 

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. The Company has an accumulated deficit of $32,236,179 and $31,023,302 as of September 30, 2019 and December 31, 2018, respectively, which include net losses of $1,212,877 and $236,843 for the nine months ended September 30, 2019 and 2018, respectively. In addition, as of September 30, 2019 and December 31, 2018, the Company had a working capital deficit of $2,248,998 and $1,667,899 respectively, with limited cash resources available. Consequently, the aforementioned items raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management plans to raise additional debt or equity and continue to settle obligations by issuing stock. Management plans to continue to raise additional debt and equity until the Company has positive cash flows from an operating company.

 

The Company’s ability to continue as a going concern is dependent upon its ability to repay or settle its current indebtedness, generate positive cash flow from an operating company, and/or raise capital through equity and debt financing or other means on desirable terms. If the Company is unable to obtain additional funds when they are required or if the funds cannot be obtained on favorable terms, management may be required to restructure the Company or cease operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

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 subsidiaries, Trident Merchant Group, Inc. and Progressive Fashions Inc., and its majority owned subsidiaries, Leading Edge Fashion, LLC, Pure361, LLC and ECO CHAIN 360, Inc. which are 51% owned. All significant intercompany accounts and transactions have been eliminated. As noted above in Note 1, our 51% owned subsidiaries, Pure361, Leading Edge Fashions, LLC and ECO CHAIN 360, Inc., had no operations, assets or liabilities as of September 30, 2019 and December 31, 2018. Because of this, a non-controlling interest is not reflected in these financial statements. In addition, the Company has consolidated Authentic Heroes, Inc., Inc. of which the Company owns 80%.

 

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.

 

Inventories

 

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value.

 

On June 18, 2019, the Company acquired inventories from AH Originals, Inc. for an aggregate amount of $60,815.

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Raw Material

 

$ 13,631

 

 

$ -

 

Finished Goods

 

 

47,184

 

 

 

-

 

 

 

$ 60,815

 

 

$ -

 

 

 
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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 as follows:

 

Equipment

5 Years

Furniture and Fixtures

7 Years

Forklift

3 Years

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Furniture and Equipment

 

$ 215,315

 

 

$ 2,650

 

Forklift

 

 

20,433

 

 

 

-

 

 

 

 

235,748

 

 

 

2,650

 

Less accumulated depreciation

 

 

(13,131 )

 

 

(1,537 )

 

 

$ 222,618

 

 

$ 1,113

 

 

Depreciation expense amounted to $11,593 and $285 for the nine months ended September 30, 2019 and 2018, respectively.

 

On June 18, 2019, the Company acquired equipment from AH Originals, Inc. for an aggregate amount of $214,598.

 

The long-lived assets of the Company are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” (“ASC 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the nine months ended September 30, 2019 and 2018, no impairment losses have been identified.

 

Intangible Assets

 

The Company accounts for intangible assets (including trademarks and website) in accordance with ASC 350 “Intangibles-Goodwill and Other” (“ASC 350”). ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. In addition, ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units; assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or goodwill impairment at future reporting dates.

 

The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, either on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.

 

 
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On June 18, 2019, the Company acquired intangible assets from AH Originals, Inc. for an aggregate amount of $16,200, which includes website of $10,690 and patent of $5,510.

 

We amortize the cost of our intangible assets over the 15-year estimated useful life on a straight line basis.

 

The following table sets forth the amortization for the intangible assets at September 30, 2018 and December 31, 2017

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Patent

 

$ 9,233

 

 

$ -

 

Websites

 

 

10,690

 

 

 

-

 

 

 

 

19,923

 

 

 

-

 

Less accumulated amortization

 

 

(307 )

 

 

-

 

 

 

$ 19,616

 

 

$ -

 

 

Amortization expense amounted to $307 and $0 for the nine months ended September 30, 2019 and 2018, respectively.

 

Prepaid interest and deposits

 

Prepaid interest and deposits consist of prepaid consulting fees, OTC market annual fees and license agreement. Prepaid interest is amortized over the life of the related liability.

 

Revenue Recognition

 

The Company recognizes revenue from its contracts with customers in accordance with ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.

 

Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.

 

Accounts Receivable

 

Accounts receivable are recorded in accordance with ASC 310, ”Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company does not currently have any amount recorded as an allowance for doubtful accounts. Based on management’s estimate and based on all accounts being current, the Company has not deemed it necessary to reserve for doubtful accounts at this time.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method as stipulated by ASC 740 “Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management’s view it is more likely than not that such deferred tax asset will be unable to be utilized.

 

 
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The Company adopted certain provisions under ASC Topic 740, which provide interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective with the Company’s adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the financial statements as a component of income taxes.

 

In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of September 30, 2019 and December 31, 2018, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. The Company’s tax returns are subject to examination by the federal and state tax authorities for the years ended 2006 through 2018.

 

Stock-based Compensation

 

We account for stock-based awards at fair value on the date of grant, and recognize compensation over the service-period that they are expected to vest. We estimate the fair value of stock options and stock purchase warrants using the Black-Scholes option pricing model. The estimated value of the portion of a stock-based award that is ultimately expected to vest, taking into consideration estimated forfeitures, is recognized as expense over the requisite service periods. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time, of other comparative securities, equal to the weighted average life of the options. The estimate of stock awards that will ultimately vest requires judgment, and to the extent that actual forfeitures differ from estimated forfeitures, such differences are accounted for as a cumulative adjustment to compensation expenses and recorded in the period that estimates are revised. For the nine months ended September 30, 2019 and 2018, the Company incurred $83,574 and $0 for stock based compensation, respectively.

 

Beneficial Conversion Feature

 

For conventional convertible debt where the rate of conversion is below market value, the Company records any “beneficial conversion feature” (“BCF”) intrinsic value as additional paid in capital and related debt discount.

 

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

Debt Issue Costs

 

The Company may pay debt issue costs in connection with raising funds through the issuance of debt whether convertible or not or with other consideration. These costs are recorded as debt discounts and are amortized over the life of the debt to the statement of operations as amortization of debt discount.

 

Original Issue Discount

 

If debt is issued with an original issue discount, the original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized over the life of the debt to the statement of operations as amortization of debt discount. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

 
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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. Significant items subject to such estimates and assumptions include the valuation of stock based awards issued and derivatives embedded in financial instruments. Estimates are used in the determination of depreciation, the valuation of non-cash issuances of common stock, stock options and warrants, valuing convertible notes for beneficial conversion features, among others.

 

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

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

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

 

The carrying amounts of cash, 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.

 

Concentration of Credit Risk

 

The carrying value of short-term financial instruments, including cash, restricted cash, trade accounts receivable, accounts payable, accrued expenses and short-term debt, approximates the fair value of these instruments. These financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market. The Company maintains cash balances at financial institutions that are insured by the FDIC. At September 30, 2019 and December 31, 2018, the Company had no amounts in excess of the FDIC limit.

 

New Accounting Pronouncements

 

In July 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This update addresses several aspects of the accounting for nonemployee share-based payment transactions and expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The main provisions of the update change the way nonemployee awards are measured in the financial statements. Under the simplified standards, nonemployee options will be valued once at the date of grant, as compared to at each reporting period end under ASC 505-50. At adoption, all awards without established measurement dates will be revalued one final time, and a cumulative effect adjustment to retained earnings will be recorded as the difference between the pre-adoption value and new value. Companies will be permitted to make elections to establish the expected term and either recognize forfeitures as they occur or apply a forfeiture rate. Compensation expense recognition using a graded vesting schedule will no longer be permitted. This pending content is the result of the FASB’s Simplification Initiative, to maintain or improve the usefulness of the information provided to the users of financial statements while reducing cost and complexity in financial reporting. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. Because the Company does not currently have any outstanding awards to non-employees for which a measurement date has not been established the adoption of ASU 2018-07 does not have a material impact to the Company’s financial statements and related disclosures upon adoption. The adoption of this standard will change the way that the Company accounts for non-employee compensation in the future.

 

 
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In January 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842, which amends ASC Topic 842. Among other things, the new standard requires us to recognize a right of use asset and a lease liability on our balance sheet for leases. It also changes the presentation and timing of lease-related expenses. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect this guidance may have on its financial position, results of operations, comprehensive income, cash flows and disclosures.

 

In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) intended to improve financial reporting around leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets - referred to as “lessees”- to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. For public companies, the standard is effective for fiscal years beginning after December 15, 2018 and interim periods therein. Earlier adoption is permitted for any annual or interim period for which financial statements have not yet been issued. The Company adopted this ASU beginning on January 1, 2019 and will utilize the modified retrospective transition approach, as prescribed within this ASU. The adoption of ASC 842, did not have a material effect on the Company’s financial statements.

 

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.

 

NOTE 3 – 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 stockholders are entitled to receive non-cumulative dividends at the rate of 8% per annum, and are accrued daily. 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, 2011, 200,000 shares of the Series B Preferred Stock were issued to a related party for reimbursement of $7,500 of legal and accounting fees paid on behalf of the Company.

 

Common Stock

 

As of September 30, 2019 and December 31, 2018, the Company had 22,231,273 and 19,975,927 shares of its $0.001 par value common stock issued and outstanding, respectively. In addition, as of September 30, 2019 and December 31, 2018, the Company had 6,688,666 and 1,168,666 shares of common stock issuable, respectively.

 

 
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During the nine months ended September 30, 2019, the Company issued common shares as follows,

 

 

·

On January 8, 2019, the Company issued 70,588 common shares valued at $0.08 per share for a total of $5,647 to repay the outstanding amount of a convertible note of $17,688, resulting in a gain from debt extinguishment of $12,041.

 

·

On May 10, 2019, the Company issued 50,000 common shares valued at $0.25 for $12,500 to repay the loan from the President and Director of the Company.

 

·

In May 2019, the Company issued 190,000 common shares for cash proceeds of $43,500

 

·

The Company will issue 6,400,000 common shares valued at $0.001 par value for total of $6,400 as partial consideration for the acquisition of assets from AH Original, Inc. (“AOH”), a common controlled corporation owned by the same owner group of the Company.

 

 

 

 

·

On July 1, 2019, the Company issued 300,000 shares of common stock valued at $60,000, based on market price on the issuance dates, as partial consideration to a corporation for investor relations services.

 

 

 

 

·

During three months ended September 30, 2019, the Company issued 764,758 shares of common shares to convert the principal amount of $53,352 and accrued interest of $5,728 of convertible notes.

 

During the year ended December 31, 2018, the Company issued common shares as follows,

 

 

·

On June 15, 2018, 50,000 common shares were issued at a fair value of $5,500 as a commitment fee for the issuance of a $112,238 convertible note. In addition, the Company granted warrants to purchase 112,238 shares of common stock at $0.35 per share exercisable for a period of two years. The fair value of these warrants at the time they were granted was approximately $11,224 and was calculated using the Black-Scholes-Merton model (see Note 4).

 

 

 

 

·

On August 15, 2018, the Company issued 25,000 common shares valued at $0.17 per share for a total of $4,250 to extend the loans’ maturity date.

 

 

 

 

·

On August 20, 2018, the Company issued 97,500 common shares valued at $0.12 per share for a total of $11,700 as compensation to the president and CEO of the Company.

 

 

 

 

·

In October 2018, the Company issued 222,000 common shares valued at $0.15 for $33,300 to repay the loan from the President and Director of the Company.

 

 

 

 

·

In April 2018, the Company issued 250,000 common shares valued at $0.15 for $37,500 for consulting services which is being amortized over the one year service period. As of December 31, 2018, prepaid consulting expense related to this agreement was $11,507.

 

Warrants Exercisable to Common Shares

 

The following assumptions were used to determine the fair value for the warrants granted using a Black-Scholes-Merton pricing model during the nine months ended September 30, 2019:

 

 

 

Nine Months

Ended

 

 

 

September 30,

2019

 

Fair value of common stock at measurement date

 

$

 0.20-$0.49

 

Expected term at issuance

 

2years-5years

 

Expected average volatility

 

324%-631

%

Expected dividend yield

 

 

-

 

Risk-free interest rate

 

2.33%-2.57

%

 

 
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The below table summarizes the activity of warrants exercisable for common shares during the nine months ended September 30, 2019 and the year ended December 31, 2018:

 

 

 

Number of

 

 

Weighted Average

 

 

 

Shares

 

 

Exercise Price

 

Balance as of December 31, 2017

 

 

-

 

 

$ -

 

Granted

 

 

112,238

 

 

 

0.35

 

Exercised

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

Balance as of December 31, 2018

 

 

112,238

 

 

$ 0.35

 

Granted

 

 

588,125

 

 

 

0.28

 

Exercised

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

Balance as of September 30, 2019

 

 

700,363

 

 

$ 0.29

 

 

The following table summarizes information relating to outstanding and exercisable stock warrants as of September 30, 2019:

 

Warrants Outstanding

 

 

 

 

 

 

 

Weighted Average

 

 

Weighted

 

 

Warrants

 

 

 

 

Remaining Contractual

 

 

Average

Exercise

 

 

Exercisable

Number of

 

Number of Shares

 

 

life (in years)

 

 

Price

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

700,363

 

 

 

3.40

 

 

$ 0.29

 

 

 

700,363

 

 

As of September 30, 2019 and December 31, 2018, the intrinsic value warrants outstanding was $0 and $0 based on the closing market price of $0.10 on September 30, 2019 and $0.17 on December 31, 2018, respectively.

 

Stock Options

 

During the year ended December 31, 2017, the Company granted 2,650,000 options to consultants, employees and management. One hundred thousand of those options had an exercise price of $.0001, and 250,000 options at an exercise price of $0.01 vested immediately and were valued at the fair value of the Company’s stock at the measurement date less the exercise price. The value of the options was $151,490 and recorded as stock based compensation. The other 2,300,000 of options vested immediately and the fair value of these options were calculated using the Black-Scholes-Merton model. The stock compensation expense related to these options for the year ended December 31, 2017 was $433,870. During the nine months ended September 30, 2019, the expiry terms of 875,000 options granted during year ended December 31, 2017 were extended for two years, resulting in fair value adjustment of $46,513 recorded under stock based compensation expense.

 

No stock options were issued during the year ended December 31, 2018.

 

During the nine months ended September 30, 2019, the Company granted 50,000 options to consultants with an exercise price of $0.50 vested immediately and the fair value of these options were calculated using the Black-Scholes-Merton model. The stock compensation expense related to these options was $37,061.

 

 
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The following assumptions were used to determine the fair value for the options granted using a Black-Scholes-Merton pricing model during the nine months ended September 30, 2019:

 

 

 

For the

Nine months

ended

September 30,

2019

 

Fair values

 

$ 0.30

 

Exercise price

 

$ 0.50

 

Expected term at issuance

 

3 years

 

Expected average volatility

 

 

94.62 %

Expected dividend yield

 

 

 

Risk-free interest rate

 

 

2.34 %

 

A summary of the change in stock purchase options outstanding for the nine months ended September 30, 2019 and the year ended December 31, 2018 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

Weighted

 

 

Weighted

 

 

Remaining

 

 

 

 

 

 

Average

 

 

Average

 

 

Contractual

 

 

 

Options

 

 

Exercise

 

 

Grant Date

 

 

Life

 

 

 

Outstanding

 

 

Price

 

 

Fair Value

 

 

(Years)

 

Balance - December 31, 2017

 

 

2,650,000

 

 

$ 0.33

 

 

$ 0.33

 

 

 

6.92

 

Options issued

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Options expired

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Balance - December 31, 2018

 

 

2,650,000

 

 

$ 0.33

 

 

$ 0.30

 

 

 

5.92

 

Options issued

 

 

50,000

 

 

$ 0.50

 

 

$ 0.30

 

 

 

2.73

 

Options expired (See note above)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Balance - September 30, 2019

 

 

2,700,000

 

 

$ 0.34

 

 

$ 0.30

 

 

 

5.37

 

 

The following table shows information on our vested and unvested options outstanding during the nine months ended September 30, 2019 and the year ended December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

Weighted

 

 

Weighted

 

 

Remaining

 

 

 

 

 

 

Average

 

 

Average

 

 

Contractual

 

 

 

Options

 

 

Exercise

 

 

Grant Date

 

 

Life

 

 

 

Outstanding

 

 

Price

 

 

Fair Value

 

 

(Years)

 

Balance - December 31, 2017, unvested

 

 

-

 

 

$ -

 

 

$ -

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - December 31, 2018, unvested

 

 

-

 

 

$ -

 

 

$ -

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options issued

 

 

50,000

 

 

$ 0.50

 

 

$ 0.30

 

 

 

2.73

 

Options vested

 

 

50,000

 

 

$ 0.50

 

 

$ 0.30

 

 

 

2.73

 

Options expired (See note above)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Balance – September 30, 2019, unvested

 

 

-

 

 

$ -

 

 

$ -

 

 

 

-

 

 

As of September 30, 2019 and December 31, 2018, the intrinsic value of 350,000 options and 350,000 options was $32,490 and $56,990 based on the closing market price of $0.10 on September 30, 2019 and $0.17 on December 31, 2018, respectively.

 

 
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NOTE 4 – NOTES PAYABLE

 

Unsecured Notes Payable

 

On November 25, 2014, the Company issued an unsecured promissory note to an individual in the amount of $100,000 at 10% interest and due on April 1, 2015. 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 of 150,000 shares of common stock valued at $150,000 with interest accruing after March 29, 2016 at 12%. The lender was issued an additional 50,000 shares valued at $50,000 to extend the note to August 31, 2017. On September 24, 2019, the Company made $5,000 repayment. The note and accrued interest was $165,605 and $157,855 as of September 30, 2019 and December 31, 2018. The initial extension fee was amortized ratably over the extension period of 180 days. The note remains unpaid as of September 30, 2019, and is currently in default.

 

During the year ended December 31, 2016, the Company received two separate payments of $12,500, totaling $25,000, as secured notes. The notes are non-interest bearing, and have no terms of repayment. The balance of the notes was $25,000 as of September 30, 2019 and December 31, 2018.

 

On December 12, 2016, the Company issued an unsecured promissory note to an investor. The note bears interest at 5% and matured on June 30, 2017. As of December 31, 2016, payments from the investor are $2,200. On January 11, 2017, the investor loaned an additional $5,000 related to the promissory note. The balance of this note plus accrued interest totals $8,179 and $7,909 as of September 30, 2019 and December 31, 2018, respectively. The notes are currently unpaid and in default.

 

On March 14, 2017, the Company issued an unsecured promissory note to an investor in the amount of $5,000. The note bears interest at 4% and matures on March 14, 2018. The balance of this note plus interest totals $5,469 and $5,319 as of September 30, 2019 and December 31, 2018, respectively and is currently in default.

 

During the three months ended September 30, the Company received four separate payments of $12,500, totaling $50,000, as secured notes. The notes are non-interest bearing, and have no terms of repayment. The balance of the notes was $50,000 as of September 30, 2019.

  

Convertible Notes Payable – related party

 

In August 2015, the Company issued an unsecured promissory note to an investor in the amount of $50,000, convertible to common stock at $1.00 per share. The note bears an interest rate of 8% per annum and matured on August 8, 2016. The note is currently unpaid and in default. The note does not contain a beneficial conversion feature. The balance of this note plus accrued interest totals were $66,500 and $63,500 at September 30, 2019 and December 31, 2018, respectively.

 

Promissory Notes Payable – related party

 

On June 18, 2019, the Company issued a promissory note at a principal amount of $447,150 as part of the consideration for the acquisition of assets from AH Originals, Inc., a corporation controlled by the same owner group of Global Fiber Technologies, Inc. The promissory note bears 3% interest per annum and have a one year term with eight options to extend the maturity date for three-month periods. The balance of this note, net of note discount of $211,123 plus accrued interest totals were $239,850 at September 30, 2019.

 

 
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Convertible Notes Payable

 

On June 15, 2018, The Company issued a convertible promissory note to an investor in the amount of $112,238, with an original issue discount of $9,738, convertible into common stock at the lower of $0.35 per share or a fixed conversion price of 75% multiplied by the lowest traded price of the common stock during the ten consecutive trading day period immediately preceding the notice of conversion. The Company recorded an additional liability for the value transferred to the note holder by the ability of the note holder to obtain a conversion price at a fixed discount to the trading price of the Company’s common stock in the amount of $37,413 and has treated that amount as a discount to the note and is amortizing this discount over the life of the note to interest expense. Under U.S. GAAP, this type of note is known as Stock-Settled Debt. The note bears interest at 5% per annum and matures on June 15, 2019. In connection with issuance of the note, the Company issued warrants to purchase 112,238 shares of common stock at $0.35 per share exercisable for a period of two years. The fair value of these warrants at the time they were granted was $11,224 and was calculated using the Black-Scholes-Merton model. The market value of the stock and the historical volatility of the Company’s stock on the day the warrant was granted was $0.11 and 273%, respectively. The total beneficial conversion feature discount recognized was $56,650. The total discount of $115,024 is being amortized over the term of the note. On January 8, 2019, the note holder converted the remaining balance of debt and accrued interest outstanding of $17,688 into a total of 70,588 shares, resulting in a gain from extinguishment of debt of $12,041. The Company made payments totaling $135,000 to repay the balance due on the convertible note in January 2019.

 

On January 3, 2019, the Company issued a convertible promissory note in the amount of $86,250, convertible into common stock at the lower of the lowest trading price within the prior twenty-five days of the execution of the note or a fixed conversion price of 50% multiplied by the lowest traded price of the common stock during the twenty-five consecutive trading day period immediately preceding the conversion date. The Company recorded $86,250 as a liability on stock settled debt associated with this convertible note. The note bears interest at 12% per annum and matures on October 3, 2019. In connection with issuance of the note, the Company issued warrants to purchase 215,625 shares of common stock at $0.20 per share exercisable for a period of five years. The fair value of these warrants at the time they were granted was $43,125 and was calculated using the Black-Scholes-Merton model. The market value of the stock and the historical volatility of the Company’s stock on the day the warrant was granted was $0.20 and 631%, respectively. The total beneficial conversion feature discount recognized was $118,125. The total discount of $172,500 is being amortized over the term of the note. During three months ended September 30, 2019, the Company issued 400,000 shares of common shares to convert the principal amount of $13,772 and accrued interest of $5,728 of the convertible note. The balance of the liability, note and accrued interest was $160,380 and the related unamortized discount was $1,601 as of September 30, 2019.

 

On January 15, 2019, the Company issued a convertible promissory note in the amount of $60,000, with an original issue discount of $3,000, convertible into common stock at the lower of $0.21 per share or a fixed conversion price of 65% multiplied by the lowest traded price of the common stock during the ten consecutive trading day period immediately preceding the notice of conversion. The Company recorded $32,308 as a liability on stock settled debt associated with this convertible note. The note bears interest at 5% per annum and matures on January 15, 2020. The note bears interest at 5% per annum and matures on January 16, 2020. In connection with issuance of the note, the Company issued warrants to purchase 50,000 shares of common stock at $0.21 per share exercisable for a period of two years. The fair value of these warrants at the time they were granted was $10,276 and was calculated using the Black-Scholes-Merton model. The market value of the stock and the historical volatility of the Company’s stock on the day the warrant was granted was $0.21 and 324%, respectively. The total beneficial conversion feature discount recognized was $74,532. The total discount of $92,308 is being amortized over the term of the note. During three months ended September 30, 2019, the Company issued 220,758 shares of common shares to convert the principal amount of $30,000 of the convertible note. The balance of the liability, note and accrued interest was $64,219 and the related unamortized discount was $9,018 as of September 30, 2019.

 

On January 23, 2019, the Company issued a convertible promissory note in the amount of $58,000, with an original issue discount of $5,000, convertible into common stock at a fixed conversion price of 60% of the lowest traded price of the common stock during the twenty consecutive trading day period immediately preceding the notice of conversion. The Company recorded $38,667 as a liability on stock settled debt associated with this convertible note. The note bears interest at 10% per annum and matures on January 23, 2020. The total beneficial conversion feature discount recognized was $88,667. The total discount of $96,667 is being amortized over the term of the note. The balance of the liability, note and accrued interest was $100,640 and the related unamortized discount was $30,212 as of September 30, 2019.

 

 
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On February 7, 2019, the Company issued a convertible promissory note in the amount of $45,500, with an original issue discount of $4,000, convertible into common stock at the lower of the lowest trading price within the prior twenty-five days of the note or a fixed conversion price of 50% multiplied by the lowest traded price of the common stock during the twenty-five consecutive trading day period immediately preceding the conversion date. The Company recorded $45,500 as a liability on stock settled debt associated with this convertible note. The note bears interest at 12% per annum and matures on October 25, 2019. In connection with issuance of the note, the Company issued warrants to purchase 97,500 shares of common stock at $0.35 per share exercisable for a period of three years. The fair value of these warrants at the time they were granted was $47,531 and was calculated using the Black-Scholes-Merton model. The market value of the stock and the historical volatility of the Company’s stock on the day the warrant was granted was $0.49 and 324%, respectively. The total beneficial conversion feature discount recognized was $45,500. The total discount of $91,000 is being amortized over the term of the note. During three months ended September 30, 2019, the Company issued 144,000 shares of common shares to convert the principal amount of $9,580 of the convertible note. The balance of the liability, note and accrued interest was $84,816 and the related unamortized discount was $6,938 as of September 30, 2019.

 

On April 8, 2019, the Company issued three convertible promissory notes in the amount of $38,500 for an aggregate amount of $115,500, convertible into common stock at the lower of the lowest trading price within the prior twenty days of the note or 60% multiplied by the lowest traded price of the common stock during the twenty consecutive trading day period immediately preceding the conversion date. The Company recorded $77,001 as a liability on stock settled debt associated with these convertible notes. The notes bear interest at 8% per annum and mature on January 8, 2020. In connection with the issuance of the convertible notes, the Company granted warrants to purchase 225,000 shares of common stock at $0.35 exercisable for a period of five years. The fair value of these warrants at the time they were granted was $45,000 and was calculated using the Black-Scholes-Merton model. The market value of the stock and the historical volatility of the Company’s stock on the day the warrant was granted was $0.20 and 621%, respectively. The total beneficial conversion feature discount recognized was $134,001. The total discount of $192,501 is being amortized over the term of the note. The balance of the liability, note and accrued interest was $196,931 and the related unamortized discount was $69,198 as of September 30, 2019.

 

On July 19, 2019, the Company issued a convertible promissory note in the amount of $63,000, convertible into common stock at 61% multiplied by the lowest traded price of the common stock during the ten consecutive trading day period immediately preceding the conversion date. The Company recorded $40,279 as a liability on stock settled debt associated with this convertible note. The note bears interest at 10% per annum and matures on July 19, 2020. The total beneficial conversion feature discount recognized was $100,279. The total discount of $103,279 is being amortized over the term of the note. The balance of the liability, note and accrued interest was $104,487 and the related unamortized discount was $82,921 as of September 30, 2019. The note can be prepaid at any time during the 180 days subsequent to the issuance of the note. The prepayment amount is the applicable prepayment percentage ranging from 120% to 140% times the principal amount of the note and unpaid interest. The note has a cross default provisions, which if the Company has other notes in default allows at the option of the holder to consider the note to be in default.

 

On July 30, 2019, the Company issued a convertible promissory note in the amount of $43,000, convertible into common stock at 61% multiplied by the lowest traded price of the common stock during the ten consecutive trading day period immediately preceding the conversion date. The Company recorded $27,492 as a liability on stock settled debt associated with this convertible note. The note bears interest at 10% per annum and matures on July 30, 2020. The total beneficial conversion feature discount recognized was $67,492. The total discount of $70,492 is being amortized over the term of the note. The balance of the liability, note and accrued interest was $71,199 and the related unamortized discount was $58,638 as of September 30, 2019. The note can be prepaid at any time during the 180 days subsequent to the issuance of the note. The prepayment amount is the applicable prepayment percentage ranging from 120% to 140% of the principal amount of the note and unpaid interest. The note has a cross default provisions, which if the Company has other notes in default allows at the option of the holder to consider the note to be in default.

 

On August 13, 2019, the Company issued a convertible promissory note in the amount of $60,000, with an original issue discount of $2,500, convertible into common stock at the lower of the lowest trading price within the prior ten days of the note or a fixed conversion price of 61% multiplied by the lowest traded price of the common stock during the ten consecutive trading day period immediately preceding the conversion date. The Company recorded $38,361 as a liability on stock settled debt associated with this convertible note. The note bears interest at 10% per annum and matures on May 13, 2020. The total beneficial conversion feature discount recognized was $73,059. The total discount of $79,059 is being amortized over the term of the note. The balance of the liability, note and accrued interest was $99,051 and the related unamortized discount was $65,931 as of September 30, 2019. The note can be prepaid at any time during the 180 days subsequent to the issuance of the note. The prepayment amount is the applicable prepayment percentage ranging from 120% to 140% of the principal amount of the note and unpaid interest. The note has a cross default provisions, which if the Company has other notes in default allows at the option of the holder to consider the note to be in default.

 

 
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On August 25, 2019, the Company issued three convertible promissory notes in the amount of $52,500 for an aggregate amount of $157,500, with an original issue discount of $2,500 for an aggregate amount of $7,500, convertible into common stock at the lower of the fixed price at $0.45 per share or 60% multiplied by the lowest traded price of the common stock during the fifteen consecutive trading day period immediately preceding the conversion date. The Company recorded $10,500 as a liability on stock settled debt associated with these convertible notes. The notes bear interest at 8% per annum and mature on May 25, 2020. In connection with the issuance of the convertible notes, the Company granted warrants to purchase 450,000 shares of common stock at $0.30 exercisable for a period of five years. The fair value of these warrants at the time they were granted was $85,500 and was calculated using the Black-Scholes-Merton model. The market value of the stock and the historical volatility of the Company’s stock on the day the warrant was granted was $0.19 and 626%, respectively. The total beneficial conversion feature discount recognized was $166,500. The total discount of $262,500 is being amortized over the term of the note. The balance of the liability, note and accrued interest was $263,674 and the related unamortized discount was $228,442 as of September 30, 2019. The note can be prepaid at any time during the 180 days subsequent to the issuance of the note. The prepayment amount is 150% of the principal amount of the note and unpaid interest. The note has a cross default provisions, which if the Company has other notes in default allows at the option of the holder to consider the note to be in default.

 

On August 5, 2019, the Company issued three convertible promissory notes in the amount of $12,500, convertible into common stock at the fixed price at $0.25 per share at maturity date of the note on May 5, 2020. The notes bear interest at 8% per annum and mature on February 5, 2020. The balance of note and accrued interest was $12,653 as of September 30, 2019.

 

The Company has amortized $660,128 of the debt discount during the nine months ended September 30, 2019.

 

As of September 30, 2019 and December 31, 2018, the total balance of convertible notes plus accrued interest was $605,152 and $99,968, net of debt discount of $552,898 and $52,720, respectively.

 

Subscription Payable

 

During the nine months ended September 30, 2019 and the year ended December 31, 2018, the Company received $80,000 and $20,000 prepayment related to a future private placement offering. As of September 30, 2019 and December 31, 2018, the subscription payable was $100,000 and $20,000, respectively.

 

NOTE 5 – ACQUISITIONS OF ASSETS

 

On June 18, 2019, the Company completed its acquisition of assets from AH Originals, Inc., a corporation controlled by the same owner group of Global Fiber Technologies, Inc., for the consideration of 6,400,000 shares of common stock to be issued, cash advances of $32,850 and the issuance of a promissory note of $447,150 bears 3% interest per annum and has a one year term with eight options to extend the maturity date for three-month periods. Management did not consider the transaction to be a business combination due to the common control of AHO and the Company. The assets were recorded at the carrying value. The stock was recorded at is par value and the debt as its fair value. Management considered the 3% interest per the note to be below market and recorded a discount of $211,123.

 

The acquired assets and assumed liabilities from AH Originals, Inc. summarized as follows:

 

Assets Acquisition

 

 

 

Equipment

 

$ 214,598

 

Inventory

 

 

60,815

 

Web Site

 

 

10,690

 

Patent

 

 

5,510

 

 

 

$ 291,613

 

Less Assumed Liabilities

 

 

16,336

 

 

 

$ 275,277

 

 

 
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NOTE 6 – DISCONTINUED OPERATIONS

 

During 2014, the Company’s Leading Edge Fashions, LLC retail businesses, of 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 September 30, 2019 and December 31, 2018, current liabilities from discontinued operations includes $84,281 accounts payable.

 

During the nine months ended September 30, 2019 and September 30, 2018, the Company had no income or loss from discontinued operations.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

During the nine months ended September 30, 2019, the Company’s President paid on behalf of the Company $15,775 of expenses and was repaid $87,784 through cash and $12,500 through the issuance of 50,000 shares of common stock valued at $0.25. During the year ended December 31, 2018, the Company settled $33,300 of advances by issuing to the president of the Company 222,000 shares of common stock valued at $0.15 per share. The President of the Company was owed $147,199 and $231,708 at September 30, 2019 and December 31, 2018, respectively.

 

During the nine months ended September 30, 2019, the CEO and Director of the Company paid on behalf of the Company $10,122 of expenses and was repaid $21,159. The CEO and Director of the Company was owed $12,551 and $23,588 at September 30, 2019 and December 31, 2018, respectively.

  

During 2016, the Company received loans from the CEO and a member of the board of directors totaling $284,900. In the year ended December 31, 2017, the Company received additional loans from these individuals in the amount of $160,650. The loans bear interest at 5% per annum and matured on June 30, 2017 and September 30, 2017. During the year ended December 31, 2017, $241,059 of the notes and interest was converted at approximately $0.19 for 580,000 common shares. The conversion of debt resulted in a gain on extinguishment of debt in the amount of $130,859 in the year ended December 31, 2017. The balance of these notes and accrued interest were $242,079 and $234,273 as of September 30, 2019 and December 31, 2018, respectively.

 

In March 2017, the Company loaned a related party $20,000. The loan bears interest at the rate of 5% per annum and has a term of six months. During the year ended December 31, 2017, $14,463 was repaid. During the year ended December 31, 2018, the loan balance of $5,936 was determined to be uncollectible and an allowance for doubtful accounts was set up for the full amount of the receivable.

 

NOTE 8 – 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 has the right to design, produce and market the EMME® Activewear Collection. On April 13, 2016, the agreement was amended regarding the term and minimum royalties. The royalty expense was $0 for the three months ended September 30, 2019. On June 5, 2017, the Company and True Beauty, LLC, entered into an agreement to terminate the agreement. The Company is required to make twelve repayments totaling $37,500 to resolve all amounts outstanding. For the year ended December 31, 2018, the Company entered into a settlement agreement with True Beauty, LLC which controls the trademark EMME. The Company paid $5,000 to settle all outstanding balances with True Beauty, LLC. As a result, the Company recorded gain on settlement of debt of $5,394.

 

 
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As of the date of this filing, the Company is a party to three pending litigation matters. The Company does not believe it has any liability nor has it accrued any liability as of September 30, 2019 and December 31, 2018 for the following:

 

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. ECTX 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 ECTX 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.

 

The second matter is entitled Patricia Witthuhn v. Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to collect wages allegedly due pursuant to her employment with Avani Holdings LLC. The Company never hired Ms. Witthuhn and never acquired Avani Holdings, LLC. Consequently, there is no legitimate cause of action against the Company. However, due to cash flow constraints, the Company is unable to hire outside counsel for this litigation. The amount being sought by the plaintiff is approximately $15,000.

 

The third matter is entitled William Corso v. Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to collect wages allegedly due pursuant to his employment with Avani Holdings LLC. The Company never hired Mr. Corso and never acquired Avani Holdings, LLC. Consequently, there is no legitimate cause of action against the Company. However, due to cash flow constraints, the Company is unable to hire outside counsel for this litigation. The amount being sought by the plaintiff is approximately $40,000.

 

On June 18, 2019, the Company completed its acquisition of assets from AH Originals, In. and assumed lease for the facility where the equipment purchased is located. The lease will be expired on September 30, 2020.

 

The following is a schedule of minimum future rentals on leases as of September 30, 2019:

 

Year Ending December 31:

 

 

 

2019

 

$ 11,865

 

Thereafter

 

 

35,595

 

Total minimum future rentals

 

$ 47,460

 

 

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.

 

Potentially dilutive securities were comprised of the following:

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Warrants

 

 

1,150,363

 

 

 

112,238

 

Options

 

 

2,700,000

 

 

 

2,650,000

 

Convertible notes payable, including accrued interest

 

 

19,749,863

 

 

 

943,794

 

 

 

 

23,600,226

 

 

 

3,706,032

 

 

NOTE 10 – SUBSEQUENT EVENTS

 

Subsequent to September 30, 2019 and through the date that these financials were made available, the Company had the following subsequent events:

 

Subsequent to September 30, 2019 through the date of the 10-Q filing, the Company issued 943,743 shares of common shares to repay the principal amount of $35,112 and accrued interest of $2,053 of convertible notes.

 

On October 16, 2019, the Company issued 700,000 shares of common stock valued at $5,320, based on market price on the issuance date to a vendor for services.

 

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

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our consolidated unaudited financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

 

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

 

As used in this quarterly report, the terms “we”, “us”, “our company”, mean Global Fiber Technologies, Inc. a Nevada corporation, and our wholly-owned subsidiaries Trident Merchant Group, Inc. and Progressive Fashions Inc. and our majority-owned subsidiaries Leading Edge Fashion LLC, Pure361, LLC., Eco Chain 360, Inc. and Authentic Heroes, Inc., unless otherwise indicated.

 

General Overview

 

Global Fiber Technologies, Inc. was incorporated in Nevada on March 25, 2005 under the name “Premier Publishing Group, Inc.”. Originally formed as a publishing company, our company ceased publishing operations in or around 2007.

 

After ceasing the publishing operations, our company’s operations consisted solely of utilizing the expertise of our Board Members and outside agents to further the efforts our advisory services business plan through a wholly-owned subsidiary known as Trident Merchant Group, Inc.

 

In addition, during the fourth quarter of 2013, our company became involved in the manufacturing and global distribution of ladies’ apparel. During the second quarter, 2014 our company formed Leading Edge Fashions, LLC of which it controlled 51% of the membership interest. Effective December 31, 2014 our Board of Directors determined it was in the best interest of our company to discontinue the operations of Leading Edge Fashions, LLC, and in 2014 our company stopped developing a footprint in the apparel business due to cash restraints and logistics and ceased agreements with all third-parties to distribute their products into SE Asia and China.

 

Trident has also ceased operations to concentrate on the opportunities related to rejuvenating fibers and re-purposing them into finished products.

 

Our company created a new limited liability company, Pure361, LLC (“Pure361”) in May 2015 for the purpose of operating the portion of our company’s business that is involved with the collection, rejuvenation and manufacturing of garments and other accessories for the uniform marketplace that serves the hospitality, food service, medical, manufacturing, education, military, transportation and other commercial uniform industries. Our company owns 51% of Pure361. Pure361 entered into a license agreement with Pure System International Ltd. (“Pure”), the minority owner of Pure 361, related to potential future operations in which Pure361 was granted the exclusive license to use certain licensed intellectual property related to the manufacturing of uniforms from recyclable waste. Pure361 has had no operations to date, nor did it have any assets or liabilities as of September 30, 2019 or December 31, 2018.

 

 
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We created a new wholly owned subsidiary, Progressive Fashions Inc. (“PFI”) in February 2016 for the purpose of designing, producing and marketing the EMME® Activewear Collection. On June 5, 2017 our company and True Beauty, LLC (the company that controls the EMME® trademark) terminated the license agreement in order to focus resources on the Rejuvenated Uniform Segment. PFI has generated no revenue to date, nor did it have any assets or liabilities as of September 30, 2019 or December 31, 2018.

 

On May 28, 2019, we entered into an asset purchase agreement (the “Purchase Agreement”) with AH Originals, Inc. (“AH”), pursuant to which we will acquire from AH certain assets including: equipment (which includes a Della’ Orco Sample Line, Electro Steam Boiler/Steamer and Schulz 5 HP Condenser), inventory, materials, intellectual property (including PCT/US2018/047918 - Authenticatable Articles, Fabric and Method of Manufacture, 16/311,095 - Authenticatable Articles, Fabric and Method of Manufacture, as well as the rights the trademarks, trade names, logos, etc. For “Authentic Heroes”, “Feel the Bond”, and “Event Worn Reborn”), along with all domain names of AH. The purchase will be paid through the issuance of 6,400,000 shares of our common stock and 200,000 shares of common stock of Authentic Heroes, Inc. (a subsidiary created by the Company to receive and operate the purchased assets), and the remaining $480,000 will be paid through a promissory note at 3% interest with a three-year term. Our company is not assuming any liabilities of AH other than the lease for the facility where the equipment is located.

 

The terms of the Purchase Agreement completed on June 18, 2019. The aggregate consideration was $447,150 payable via a promissory note at 3% interest with an amended loan term with an initial term of one-year and eight options for the noteholder to extend the maturity date for three-month periods, as opposed to the original three-year term. The balance of the purchase price was to be paid through the delivery to Seller of 6,400,000 shares of our common stock and 200,000 shares of common stock of Authentic Heroes, Inc. (a subsidiary created by our company to receive and operate the purchased assets). Our company did not assume any liabilities of AH other than the lease for the facility where the equipment purchased is located.

 

On July 17, 2019 Authentic Heroes Inc., our majority owned subsidiary entered into a “merchandise license agreement” with IMG/Football Greats Alliance whereby Authentic Heroes will make authenticated replicas of “game worn” jerseys utilizing its trade secrets and patent pending processes. Terms of the deal were deemed and implied confidential by the contract.

 

Our address is 50 Division Street, Suite 501, Somerville, New Jersey 08876. Our corporate website is http://ecotek360.com/.

 

We have never declared bankruptcy or been in receivership. We have earned minimal revenues and have limited cash on hand. We have sustained losses since inception and have primarily relied upon the sale of our securities and loans from related parties for funding.

 

Our Current Business

 

We are currently in the development stage. Our business plan is to operate a fiber rejuvenation technology company. It plans on 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.

 

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”).

 

 
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In May of 2015, we created a new limited liability company, Pure361, LLC (“Pure361”) of which our 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.

 

Ms. Joy Nunn, our company’s former CTO and Board member resigned as of February 14, 2017, but our company still maintains a license with Pure System International, Ltd.

 

To further strengthen its capabilities in the Rejuvenated Uniform segment our company has identified alternative technologies to those under license from Pure Systems. The company will be developing customers using this alternative technology by working with equipment vendors and toll manufacturers to produce sales samples.

 

The Rejuvenated Cardboard Segment

 

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

 

Results of Operations

 

The following table provides selected financial data about our company for the nine month period ended September 30, 2019 and the year ended December 31, 2018.

 

 

 

September 30,

 2019

 

 

December 31,

2018

 

 

Change

 

 

%

 

Cash and cash equivalents

 

$ 50,227

 

 

$ 29,310

 

 

$ 20,917

 

 

 

71 %

Prepaid interest and deposits

 

$ 100,548

 

 

$ 21,311

 

 

$ 79,237

 

 

 

372 %

Inventories

 

$ 60,815

 

 

$ -

 

 

$ 60,815

 

 

 

100 %

Property and equipment

 

$ 222,618

 

 

$ 1,113

 

 

$ 221,505

 

 

 

19902 %

Intangible assets

 

$ 19,616

 

 

$ -

 

 

$ 19,616

 

 

 

100 %

Total Assets

 

$ 453,824

 

 

$ 51,734

 

 

$ 402,090

 

 

 

777 %

Total Liabilities

 

$ 2,460,588

 

 

$ 1,718,520

 

 

$ 742,068

 

 

 

43 %

Stockholders’ Deficit

 

$ (2,006,764 )

 

$ (1,666,786 )

 

$ (339,978 )

 

 

20 %

 

The following summary of our results of operations, for the three and nine months ended September 30, 2019, should be read in conjunction with our financial statements, as included in this Form 10-Q.

 

Three months ending September 30, 2019 compared to three months ending September 30, 2018:

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

%

 

Revenue

 

$ 1,784

 

 

$ -

 

 

$ 1,784

 

 

 

100 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

142,052

 

 

 

29,866

 

 

 

112,186

 

 

 

376 %

Stock based compensation

 

 

60,000

 

 

 

11,700

 

 

 

48,300

 

 

 

413 %

Gain from extinguishment of debt

 

 

-

 

 

 

(5,394 )

 

 

5,394

 

 

(100

)% 

Other expense

 

 

(325,638 )

 

 

(42,301 )

 

 

(283,337 )

 

 

670 %

Net loss

 

$ (525,906 )

 

$ (78,473 )

 

$ (447,433 )

 

 

570 %

 

 
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For the three months ended September 30, 2019 and September 30, 2018, we recognized revenue of $1,784 and $0, respectively.

 

For the three months ended September 30, 2019, we incurred $142,052 in general and administrative expenses, $60,000 in stock based compensation and other expense of $325,638, resulting in a net loss of $525,906.

 

For the three months ended September 30, 2018, we incurred $29,866 in general and administrative expenses, $11,700 in stock based compensation, $42,301 in other expense and recognized $5,394 in gain from extinguishment of debt, resulting in a net loss of $78,473.

 

The increase in net loss during the three months ended September 30, 2019 compared to the three months ended September 30, 2018 was mainly attributed to the increase in consulting fees, marketing cost, professional fees, amortization of debt discount from convertible notes and interest expenses incurred from the convertible notes during the three months ended September 30, 2019.

 

Nine months ending September 30, 2019 compared to nine months ending September 30, 2018:

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

%

 

Revenue

 

$ 1,784

 

 

$ -

 

 

$ 1,784

 

 

 

100 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

369,181

 

 

 

160,970

 

 

 

208,211

 

 

 

129 %

Stock based compensation

 

 

143,574

 

 

 

11,700

 

 

 

131,874

 

 

 

1127 %

Gain from extinguishment of debt

 

 

(12,041 )

 

 

(5,394 )

 

 

(6,647 )

 

 

123 %

Other expense

 

 

(713,947 )

 

 

(69,567 )

 

 

(644,380 )

 

 

926 %

Net loss

 

$ (1,212,877 )

 

$ (236,843 )

 

$ (976,034 )

 

 

412 %

 

For the nine months ended September 30, 2019 and September 30, 2018, we recognized revenue of $1,784 and $0, respectively.

 

For the nine months ended September 30, 2019, we incurred $369,181 in general and administrative expenses, $143,574 in stock-based compensation, $713,947 in other expense and recognized $12,041 in gain from extinguishment of debt, resulting in a net loss of $1,212,877.

 

For the nine months ended September 30, 2019, we incurred $160,970 in general and administrative expenses, $11,700 in stock-based compensation, $69,567 in other expense and recognized $5,394 in gain from extinguishment of debt, resulting in a net loss of $236,843.

 

The increase in net loss during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was mainly attributed to the increase in consulting fees, marketing cost, professional fees, stock based compensation from stock options, amortization of debt discount from convertible notes and interest expenses incurred from the convertible notes during the nine months ended September 30, 2019.

 

 
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Liquidity and Capital Resources

 

The following table provides selected financial data about our company as of September 30, 2019 and December 31, 2018, respectively.

 

Working Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2019

 

 

December 31,

2018

 

 

Change

 

 

%

 

Current Assets

 

$ 211,590

 

 

$ 50,621

 

 

$ 160,969

 

 

 

318 %

Current Liabilities

 

$ 2,460,588

 

 

$ 1,718,520

 

 

$ 742,068

 

 

 

43 %

Working Capital (deficit)

 

$ (2,248,998 )

 

$ (1,667,899 )

 

$ (581,099 )

 

 

35 %

 

Cash Flows

 

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

Cash Flows used in Operating Activities

 

$ (514,417 )

 

$ (12,345 )

 

$ (502,072 )

Cash Flows used in Investing Activities

 

$ (22,223 )

 

$ -

 

 

$ (22,223 )

Cash Flows provided by Financing Activities

 

$ 557,557

 

 

$ 12,606

 

 

$ 544,951

 

Net Change in Cash During Period

 

$ 20,917

 

 

$ 261

 

 

$ 20,656

 

 

Our working capital deficit increased as of September 30, 2019, as compared to December 31, 2018 due to the increase in our total current liabilities attributed to the increase in convertible notes and promissory notes.

 

Cash Flow from Operating Activities

 

During the nine months ended September 30, 2019, net cash used in operating activities was $514,417 compared to $12,345 during the nine months ended September 30, 2018.

 

The net cash used in operating activities for the nine months ended September 30, 2019 was attributed to a net loss of $1,212,877, increased by gain from extinguishment of debt of $12,041, expense paid for subsidiary of $16,336, an increase in prepaid interest and deposits of $112,087 and a decrease in accounts payable and accrued expenses of $56,396, offset by depreciation of $11,593, amortization of $307, expenses paid for directly by related party of $25,897, amortization of debt discount of $660,128, stock based compensation expense of $143,574 and an increase in accrued interest of $53,821.

 

The net cash provided by operating activities for the nine months ended September 30, 2018 was attributed to a net loss of $236,843, increased by gain from extinguishment of debt of $5,394 and a decrease in accounts payable and accrued expenses of $42,935, offset by depreciation of $285, expenses paid for directly by related party of $153,675, amortization of debt discount of $33,549, stock issued for services of $11,700, stock issued for services of $5,500, non-cash interest of $4,250, non-cash expenses of $2,500, a decrease in prepaid interest and deposits of $29,500 and an increase in accrued interest of $31,868.

 

Cash Flow from Investing Activities

 

During the nine months ended September 30, 2019, net cash used in investing activities was $22,223 from the acquisition of property, plant and equipment of $18,500 and acquisition of intangible assets of $3,723.

 

The Company did not use any funds for investing activities during the nine months ended September 30, 2018.

 

 
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Cash Flow from Financing Activities

 

During the nine months ended September 30, 2019, net cash provided by financing activities was $557,557 compared to $12,606 during the nine months ended September 30, 2018.

 

Net cash from financing activities was $557,557 for the nine months ended September 30, 2019 attributed to proceeds from issuance of convertible promissory notes of $633,000, proceeds from issuance of common stock of $43,500, proceeds from subscription payable of $80,000, proceeds from unsecured loans of $50,000, offset by repayment on a convertible note of $135,000, repayment of related party advances of $108,943 and repayment of unsecured loans of $5,000.

 

Net cash from financing activities was $12,606 for the nine months ended September 30, 2018, including proceeds from issuance of convertible promissory note of $100,000, offset by repayment of related party advance of $87,394.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

The report of our auditors on our audited financial statements for the fiscal year ended December 31, 2018, contains a going concern qualification as we have suffered losses since our inception. We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

 

Limited Operating History; Need for Additional Capital

 

There is no historical financial information about us upon which to base an evaluation of our performance. We are a development stage company and have not generated any revenues from operations to fully implement our business plan. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, and competition from larger organizations. We will require equity and/or debt financing to provide for the capital required to implement our plans. We will require additional funds to operate for the next year.

 

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations.

 

 
28
 
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Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure 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 September 30, 2019. 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 as a result of the following material weaknesses:

 

The specific material weakness identified by our management was ineffective controls over certain aspects of the financial reporting process because of a lack of a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements and inadequate segregation of duties. A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements would not be prevented or detected on a timely basis.

 

We expect to be materially dependent upon a third party to provide us with accounting consulting services for the foreseeable future. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses in our disclosure controls and procedures and internal control over financial reporting will not result in errors in our financial statements which could lead to a restatement of those financial statements.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
29
 
Table of Contents

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

As of the date of this filing, the Company is a party to three 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. ECTX 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 ECTX 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.

 

The second matter is entitled Patricia Witthuhn v. Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to collect wages allegedly due pursuant to her employment with Avani Holdings LLC. The Company never hired Ms. Witthuhn and never acquired Avani Holdings, LLC. Consequently, there is no legitimate cause of action against the Company. However, due to cash flow constraints, the Company is unable to hire outside counsel for this litigation. The amount being sought by the plaintiff is approximately $15,000.

 

The third matter is entitled William Corso v. Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to collect wages allegedly due pursuant to his employment with Avani Holdings LLC. The Company never hired Mr. Corso and never acquired Avani Holdings, LLC. Consequently, there is no legitimate cause of action against the Company. However, due to cash flow constraints, the Company is unable to hire outside counsel for this litigation. The amount being sought by the plaintiff is approximately $40,000.

 

Item 1A. Risk Factors

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

 
30
 
Table of Contents

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities

 

On November 25, 2014, the Company issued an unsecured promissory note to an individual in the amount of $100,000 at 10% interest and due on April 1, 2015. 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 of 150,000 shares of common stock valued at $150,000 with interest accruing after March 29, 2016 at 12%. The lender was issued an additional 50,000 shares valued at $50,000 to extend the note to August 31, 2017. On September 24, 2019, the Company made $5,000 repayment. The note and accrued interest was $165,605 and $157,855 as of September 30, 2019 and December 31, 2018. The initial extension fee was amortized ratably over the extension period of 180 days. The note remains unpaid as of September 30, 2019, and is currently in default.

 

During the year ended December 31, 2016, the Company received two separate payments of $12,500, totaling $25,000, as secured notes. The notes are non-interest bearing, and have no terms of repayment. The balance of the notes was $25,000 as of September 30, 2019 and December 31, 2018.

 

On December 12, 2016, the Company issued an unsecured promissory note to an investor. The note bears interest at 5% and matured on June 30, 2017. As of December 31, 2016, payments from the investor are $2,200. On January 11, 2017, the investor loaned an additional $5,000 related to the promissory note. The balance of this note plus accrued interest totals $8,179 and $7,909 as of September 30, 2019 and December 31, 2018, respectively. The notes are currently unpaid and in default.

 

On March 14, 2017, the Company issued an unsecured promissory note to an investor in the amount of $5,000. The note bears interest at 4% and matures on March 14, 2018. The balance of this note plus interest totals $5,469 and $5,319 as of September 30, 2019 and December 31, 2018, respectively and is currently in default.

 

In August 2015, the Company issued an unsecured promissory note to an investor in the amount of $50,000, convertible to common stock at $1.00 per share. The note bears an interest rate of 8% per annum and matured on August 8, 2016. The note is currently unpaid and in default. The note does not contain a beneficial conversion feature. The balance of this note plus accrued interest totals were $66,500 and $63,500 at September 30, 2019 and December 31, 2018, respectively.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

 
31
 
Table of Contents

 

Item 6. Exhibits

 

Exhibit Number

Description

Incorporated by Reference

 

Form

 

Exhibit

 

Filing Date

(3)

 

(i) Articles of Incorporation (ii) Bylaws

 

3.1

 

Articles of Incorporation, as filed with the Nevada Secretary of State

 

SB-2

 

3.1

 

November 29, 2005

3.2

 

Certificate of Designations, Rights and Preferences of the Class C Preferred Stock

 

8-K

 

10.5

 

August 10, 2010

3.3

 

Certificate of Amendment filed by Global Fashion Technologies, Inc. with the Secretary of the State of Nevada on August 6, 2014

 

8-K

 

5.1

 

August 7, 2014

3.4

 

Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209, as filed with the Secretary of the State of Nevada on August 6, 2014

 

8-K

 

5.2

 

August 7, 2014

3.5

 

Certificate of Amendment filed with the Secretary of the State of Nevada on January 10, 2017

 

8-K

 

5.1

 

January 23, 2017

3.6

 

Certificate of Amendment filed with the Secretary of the State of Nevada on April 18, 2019.

 

8-K

 

5.1

 

May 7, 2019

3.7

 

By-Laws adopted February 14, 2017

 

8-K

 

February 22, 2017

(10)

 

Material Contracts

 

10.1

 

May 28, 2019 Asset Purchase Agreement between the Company and AH Originals, Inc.

 

8-K

 

10.1

 

May 29, 2019

(14)

 

Code of Ethics

 

14.1

 

Code of Ethics

 

10-KSB

 

14.1

 

April 14, 2008

(21)

 

Subsidiaries of Registrant

 

21.1

 

Trident Merchant Group, Inc., a Nevada corporation (wholly owned)

 

21.2

 

Progressive Fashions Inc., a Nevada corporation (wholly owned)

 

21.3

 

Leading Edge Fashion, LLC (majority owned)

 

21.4

 

Pure361, LLC (majority owned)

 

21.5

 

Global Fiber Technologies, Inc. (majority owned)

 

(31)

Rule 13a-14 (d)/15d-14d) Certifications

 

31.1*

Section 302 Certification by the Principal Executive Officer

 

31.2*

 

Section 302 Certification by the Principal Financial Officer and Principal Accounting Officer

 

(32)

Section 1350 Certifications

 

32.1**

Section 906 Certification by the Principal Executive Officer

 

32.2**

 

Section 906 Certification by the Principal Financial Officer and Principal Accounting Officer

 

101**

Interactive Data File

 

101.INS

XBRL Instance Document

 

101.SCH

XBRL Taxonomy Extension Schema Document

 

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

 

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

___________

* Filed herewith.

** Furnished herewith

 

 
32
 
Table of Contents

 

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 FIBER TECHNOLOGIES, INC.

 

 

(Registrant)

 

 

 

 

 

Dated: November 19, 2019

 

/s/ Christopher Giordano

 

 

Christopher Giordano

 

 

President

 

 

(Principal Executive Officer)

 

 

 

Dated: November 19, 2019

 

/s/ Paul Serbiak

 

 

Paul Serbiak

 

 

Chief Executive Officer

 

 

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

33

 

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