UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

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

 

For the quarterly period ended March 31, 2021

 

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.)

 

 

50 Division Street Suite 501

Somerville, New Jersey

 

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. ☒ 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). ☒ 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

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    ☒ 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.

 

1,254,239,584 shares of common stock issued and outstanding as of September 15, 2021

 

 
 

 

   

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

 

18

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

22

 

Item 4.

Controls and Procedures

 

22

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

23

 

Item 1A.

Risk Factors

 

23

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

23

 

Item 3.

Defaults Upon Senior Securities

 

23

 

Item 4.

Mine Safety Disclosures

 

23

 

Item 5.

Other Information

 

23

 

Item 6.

Exhibits

 

24

 

SIGNATURE

 

 

25

 

 

 

2

 

  

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Global Fiber Technologies, Inc.

(formerly ECO TEK 360, INC. and Subsidiaries)

Condensed Consolidated Balance Sheets

 

 

 

March 31,

2021

 

 

December 31,

2020

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 10,767

 

 

$ 8,548

 

Prepaid interest and deposits

 

 

-

 

 

 

-

 

Inventories

 

 

60,815

 

 

 

60,815

 

Total Current Assets

 

 

71,582

 

 

 

69,363

 

Operating lease right-of-use assets

 

 

 

 

 

 

-

 

Property and equipment, net

 

 

150,607

 

 

 

163,093

 

Intangible assets

 

 

112,463

 

 

 

129,462

 

TOTAL ASSETS

 

$ 334,652

 

 

$ 361,918

 

LIABILITIES AND STOCKHOLDERS DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

295,500

 

 

 

299,732

 

Accrued compensation

 

 

501,250

 

 

 

501,250

 

Unsecured notes and accrued interest payable

 

 

236,339

 

 

 

232,808

 

Convertible notes and accrued interest - net of debt discount of $245,191 and $52,720, respectively

 

 

355,397

 

 

 

349,222

 

Convertible notes and accrued interest - related party

 

 

72,534

 

 

 

71,534

 

Promissory note and accrued interest - related party

 

 

365,794

 

 

 

362,440

 

Derivative liabilities

 

 

548,406

 

 

 

620,149

 

Advances from related parties

 

 

134,655

 

 

 

114,655

 

Related party loans and accrued interest

 

 

256,529

 

 

 

253,927

 

Self-liqudating promissory notes

 

 

151,875

 

 

 

150,000

 

Subscription payable

 

 

100,000

 

 

 

100,000

 

Operating lease liabilities

 

 

-

 

 

 

-

 

Current liabilities from discontinued operations

 

 

84,281

 

 

 

84,281

 

Total Current Liabilities

 

 

3,102,560

 

 

 

3,139,998

 

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, 2,500,000,000 shares authorized,1,253,239,584 shares issued and outstanding as of March 31, 2021and December 31, 2020, shares Issuable 147,819,000 as of March 31,2021 and December 31,2020.

 

 

1,253,239

 

 

 

1,253,239

 

Additional paid-in capital

 

 

29,789,774

 

 

 

29,789,774

 

Stock subscription receivable

 

 

-

 

 

 

-

 

Accumulated deficit

 

 

(33,811,121 )

 

 

(33,821,293 )

 Stockholders' deficit

 

 

(2,767,908 )

 

 

(2,778,080 )

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$ 334,652

 

 

$ 361,918

 

     

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 Month ended

 

 

 

March 31,

2021

 

 

March 31,

2020

 

 

 

 

 

 

 

 

REVENUE

 

$ 193

 

 

$ 1,916

 

COST OF REVENUES

 

 

1,050

 

 

 

3,005

 

GROSS PROFIT (LOSS)

 

 

(857 )

 

 

(1,089 )

OPERATING EXPENSES

 

 

 

 

 

 

 

 

General and administrative

 

 

12,689

 

 

 

99,846

 

Depreciation and Amortization

 

 

29,485

 

 

 

28,407

 

Consulting fees share expense

 

 

-

 

 

 

-

 

Officer salaries and compensation

 

 

-

 

 

 

-

 

Stock based compensation

 

 

-

 

 

 

-

 

Gain from extinguishment of debt

 

 

-

 

 

 

-

 

Gain on extinguishment of debt - related party

 

 

-

 

 

 

-

 

Total Operating Expenses

 

 

42,174

 

 

 

128,253

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(43,031 )

 

 

(129,342 )

 

 

 

 

 

 

 

 

 

OTHER EXPENSE

 

 

 

 

 

 

 

 

Loss on change in fair value of derivative liabilities

 

 

(71,743 )

 

 

-

 

Interest expense and financing costs

 

 

14,938

 

 

 

35,806

 

Interest expense - related parties

 

 

3,602

 

 

 

-

 

Total other expense

 

 

(53,203 )

 

 

35,806

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

10,172

 

 

 

(165,148 )

 

 

 

 

 

 

 

 

 

Net loss per share

 

$ 0.00

 

 

$ (0.01 )

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

127,063,682

 

 

 

21,209,691

 

    

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)

Statement of Stockholders' Deficit

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Total

 

 

 

Class B Preferred Stock

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficiency

 

Balance December 31, 2020

 

 

200,000

 

 

$ 200

 

 

 

1,253,239,584

 

 

$ 1,253,239

 

 

$ 29,789,774

 

 

$ (33,721,293 )

 

$ (2,778,080 )

Options issued for consulting services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Common stock issuable for settlement of a convertible note

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Debt discount - Convertible promissory note and warrants

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Net loss for the quarter end March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,172

 

 

 

10,172

 

Balance - March 31, 2021

 

 

200,000

 

 

$ 200

 

 

 

1,253,239,584

 

 

$ 1,253,239

 

 

$ 29,789,774

 

 

$ (33,811,121 )

 

$ (2,767,908 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2019

 

 

200,000

 

 

$ 200

 

 

 

26,446,236

 

 

$ 26,446

 

 

$ 29,789,473

 

 

$ (32,685,425 )

 

$ (2,869,306 )

Conversion of notes payable

 

 

 

 

 

 

 

 

 

 

432,129,278

 

 

 

431,729

 

 

 

 

 

 

 

 

 

 

 

431,729

 

Issuance of common for services

 

 

 

 

 

 

 

 

 

 

700,000

 

 

 

700

 

 

 

 

 

 

 

 

 

 

 

700

 

Cancellation of shares

 

 

 

 

 

 

 

 

 

 

(300,000 )

 

 

(300 )

 

 

300

 

 

 

 

 

 

 

-

 

Net loss for the quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(165,148 )

 

 

(165,148 )

Balance March 31,2020

 

 

200,000

 

 

$ 200

 

 

 

458,975,514

 

 

$ 458,575

 

 

$ 29,789,773

 

 

$ (32,850,573 )

 

$ (2,602,025 )

  

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

For the three months ended March 31, 2021 and 2020

(Unaudited)

 

 

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

 

(unaudited)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$ 10,172

 

 

$ (165,148 )

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

 

 

 

 

 

 

 

 

Depreciation - Property and equipment

 

 

12,486

 

 

 

12,486

 

Depreciation - Operating lease right-of-use assets

 

 

-

 

 

 

15,589

 

Change in derivative liability

 

 

(71,743 )

 

 

332

 

Amortization - Intangible assets

 

 

16,999

 

 

 

332

 

Prepaid interest and deposits

 

 

-

 

 

 

30,590

 

Accounts payable and accrued expenses

 

 

(4,232 )

 

 

31,473

 

Accrued interest

 

 

18,537

 

 

 

5,526

 

Net cash used in operating activities

 

 

(17,781 )

 

 

(69,152 )

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Advances from related parties

 

 

20,000

 

 

 

-

 

Proceeds from issuance of convertible promissory note, net

 

 

-

 

 

 

69,488

 

Repayment of unsecured loans

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

20,000

 

 

 

69,488

 

Net change in cash and cash equivalents

 

 

2,219

 

 

 

336

Cash and cash equivalents - beginning of period

 

 

8,548

 

 

 

4,794

 

Cash and cash equivalents - end of period

 

$ 10,767

 

 

$ 5,130

Supplemental Cash Flow Disclosures

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ -

 

 

$ -

 

Cash paid for income taxes

 

$ -

 

 

$ -

 

Non-Cash Investing and Financing Activity:

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible notes

 

$

 

 

$ 431,729

 

  

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

March 31, 2020

 

NOTE 1 – DESCRIPTION OF BUSINESS AND GOING CONCERN

 

Global Fiber Technologies, Inc. (“the Company”) was incorporated in Nevada on March 25, 2005. As of March 31, 2021 and December 31, 2020, the Company had 2,500,000,000 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 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, and had no operations to date nor did it have assets or liabilities as of March 31, 2021 and December 31, 2020, respectively.

  

 
7

Table of Contents

 

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 March 31, 2021

 

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/A filed on October 12/2021, for the years ended December 31, 2020 and 2019.

  

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 $33,811,121 and $33,821,293 as of March 31, 2020, and December 31, 2020, respectively, which includes a net gain and net loss of $10,172 and $165,148 for the three months ended March 31, 2021, and 2020, respectively. In addition, as of March 31, 2021, and December 31, 2020, the Company had a working capital deficit of $3,030,978 and $3,070,635 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.

  

 
8

Table of Contents

 

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, Authentic Heroes 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 over 51% owned subsidiaries Authentic Heroes Inc. and ECO CHAIN 360, Inc., had no operations, assets, or liabilities as of March 31, 2021, and December 31, 2020. 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.

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Raw Material

 

$ 13,631

 

 

$ 13,631

 

Finished Goods

 

 

47,184

 

 

 

47,184

 

 

 

$ 60,815

 

 

$ 60,815

 

   

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

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Furniture and Equipment

 

$ 218,315

 

 

$ 218,315

 

Forklift

 

 

20,433

 

 

 

204,33

 

 

 

 

238,748

 

 

 

238,748

 

Less accumulated depreciation

 

 

(88,141 )

 

 

(75,655 )

 

 

$ 150,607

 

 

$ 163,093

 

   

Depreciation expense amounted to $12,486 for the three months ended March 31, 2021, and 2020, respectively.

 

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

   

 
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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 three months ended March 31, 2021 and 2020, 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.

 

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 March 31, 2021 and December 31, 2020.

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Patent

 

$ 12,406

 

 

$ 12,406

 

Websites

 

 

10,690

 

 

 

10,690

 

Royalties

 

 

125,000

 

 

 

125,000

 

 

 

 

148,096

 

 

 

148,096

 

Less accumulated amortization

 

 

(35,633 )

 

 

(18,636 )

 

 

$ 112,463

 

 

$ 129,460

 

  

 
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Amortization expense amounted to $16,999 and $307 for the three months ended March 31, 2021 and 2020, 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.

   

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 March 31, 2021, and December 31, 2020, 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 2011 through 2020.

 

 
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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 March 31, 2021 and 2020, the Company incurred $0 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.

   

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.

 

 
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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 March 31, 2021 and December 31, 2020, 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.

 

Common Stock

 

As of March 31, 2021 and December 31, 2020, the Company had 1,253,239,584 shares of its $0.001 par value common stock issued and outstanding, respectively. In addition, as of March 31, 2021, and December 31, 2020, the Company had 147,819,000 shares of common stock issuable, respectively.

 

During the three months ended March 31, 2021, the Company no issuance of common shares occurred.

 

During the first quarter of 2021 the company convertible promissory notes Principal balance $596,863 and accrued interest of $37,336 issued a total of 431,729,278 shares of common stock.

  

 
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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 three months ended March 31, 2021

 

 

 

Three Months

Ended

March 31,

2021

 

 

 

 

 

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 following table summarizes information relating to outstanding and exercisable stock warrants as of March 31, 2021:

 

Warrants Outstanding

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

Average

Remaining

Contractual

 

 

Weighted

Average

Exercise

 

 

Warrants

Exercisable

Number of

 

Number of Shares

 

 

life (in years)

 

 

Price

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

1,150,363

 

 

 

2.20

 

 

$ 0.20

 

 

 

1,150,363

 

 

As of March 31, 2021 and December 31, 2020, the intrinsic value warrants outstanding was $0 and $0 based on the closing market price of $0.01 on March 31, 2021 and $0.01 on December 31, 2020, respectively.

 

NOTE 4 – NOTES PAYABLE

 

Unsecured Notes Payable

 

The balances of unsecured notes as of March 31, 2021 and December 31, 2020 was $236,622 and $233,091, balances include accrued interest of $14,836 and 9,717 as of March 31,2021 and December 31, 2020 respectively.

 

Unsecured promissory notes are notes received from individual accredited investors from November 2014 to 2017 and interest accrued at 5% except for two notes amounting to $25,000 which is non-interest-bearing note.

 

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 $72,534 and $71,234 at March 31, 2021 and December 31, 2020.

 

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 plus accrued interest totals was $253,927 at March 31, 2021 and December 31, 2020.

 

Convertible Notes Payable

 

There was no conversion of notes during the first quarter ending March 31,2021. As of March 31, 2021, and December 31, 2020, the total balance of convertible notes plus accrued interest was $355,397 and $349,222 net of debt discount of $245,191

  

During the first quarter of 2020 a total of $709,362 convertible promissory notes was converted into 731,729,278 shares common stock. and $52,720, respectively.

  

Subscription Payable

 

As of March 31, 2021, and December 31, 2020, the subscription payable was $100,000 respectively.

   

 
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NOTE 5 – RELATED PARTY TRANSACTIONS

 

During the three months period there were no significant related party transactions except for accrual of interest due on convertible notes $14,060 and $7,270 for office expenses.

 

NOTE 6 – COMMITMENTS AND CONTINGENCIES

 

Covid 19

A novel strain of coronavirus (“Covid-19”) emerged globally in December 2019 and has been declared a pandemic. The extent to which Covid-19 will impact our customers, business, results and financial condition will depend on current and future developments, which are highly uncertain and cannot be predicted at this time. While the Company’s day-to-day operations beginning March 2020 have been impacted, we have suffered less immediate impact as most staff can work remotely and can continue to develop our product offerings.

 

That said we have seen our business opportunities develop more slowly as business partners and potential customers are dealing with Covid-19 issues, working remotely and these issues are causing delays in decision making and finalization of negotiations and agreements.

   

NOTE 7 – 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:

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Warrants

 

 

1,150,363

 

 

 

1,150,363

 

Options

 

 

2,700,000

 

 

 

2,700,000

 

Convertible notes payable, including accrued interest

 

 

154,496,946

 

 

 

154,496,946

 

 

 

 

158,347,309

 

 

 

158,347,309

 

 

NOTE 8 – SUBSEQUENT EVENTS

 

Subsequent to March 31, 2021, and through the date that these financials were made available, the Company had no significant subsequent events the affects our financial statements as of report date.

  

 
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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.

 

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.

 

 
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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.

 

Results of Operations

 

The following table provides selected financial data about our company for the three months period ended March 30, 2021 and the year ended December 31, 2020.

 

 

 

March 31,

 

 

December 31,

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Cash and cash equivalents

 

$

10,767

 

 

$

8,548

 

 

$

2,219

 

 

 

25.96

%

Prepaid interest and deposits

 

$

 

 

 

$

-

 

 

$

-

 

 

-

%

Inventories

 

$

60,815

 

 

$

60,815

 

 

$

-

 

 

-

%

Property and equipment

 

$

150,607

 

 

$

163,093

 

 

$

(12,486

)

 

 

(7.66

)%

Intangible assets

 

$

112,463

 

 

$

129,462

 

 

$

(16,999

)

 

 

(13.13

)%

Total Assets

 

$

334,652

 

 

$

361,918

 

 

$

(27,266

)

 

 

(7.53

)%

Total Liabilities

 

$

(3,102,560

)

 

$

(3,139,998

)

 

$

(37,438

)

 

 

1.19

%

Stockholders’ Deficit

 

$

(2,839,651

)

 

$

(2,778,080

)

 

$

(61,571

)

 

 

2.22

%

     

 
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The following summary of our results of operations, for the three months ended March 31, 2021, should be read in conjunction with our financial statements, as included in this Form 10-Q.

 

Three months ending March 31, 2021, compared to three months ending March 31, 2020

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Revenue

 

$ 193

 

 

$ (1,916 )

 

$ (1,723 )

 

 

(89.93 )%

Cost of Revenues

 

 

(1,050 )

 

 

(3,005 )

 

 

(1,955 )

 

 

65.06 %

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and Amortization

 

 

(29,485 )

 

 

(28,407 )

 

 

(1,078 )

 

 

3.79 %

General and administrative expenses

 

 

(12,689 )

 

 

(99,846 )

 

 

87,157

 

 

 

(87.29 )%

Gain from extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense)

 

 

53,203

 

 

 

(35,806 )

 

 

89,009

 

 

 

248.59 %

Net income/(loss)

 

$ 10,172

 

 

 

(165,148 )

 

$ 175,320

 

 

 

(106.16 )%

 

Net loss decreased by $175,320 compared to previous year’s first quarter of operations primarily due to reduction of compensation and office administrative cost $87,157 and Interest expenses on convertible notes $20,868 due to decrease in convertible notes as the result conversion to equity.

   

Liquidity and Capital Resources

 

The following table provides selected financial data about our company as of March 31, 2021 and December 31, 2020, respectively.

 

Working Capital

 

 

 

March 31,

2021

 

 

December 31,

2020

 

 

Change

 

 

%

 

Current Assets

 

$ 71,582

 

 

$ 69,3634

 

 

$ 2,219

 

 

 

3.20 %

Current Liabilities

 

$ 3,102,560

 

 

 

3,139,998

 

 

 

(37,438 )

 

 

1.19 %

 

 

$ (3,030,978 )

 

 

(3,070,635 )

 

$ (39,657 )

 

 

(1.29 )%

    

Our working capital deficit increased as of March 31,2021, compared to December 31, 2020 due mainly to the accrual of interest on various convertible and promissory during the first quarter.

 

Cash Flows

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Cash Flows used in Operating Activities

 

$

(17,781

)

 

$

(69,152

)

 

$

(51,371

)

 

 

(74.29

)%

Cash Flows used in Investing Activities

 

 

 

 

 

$

-

 

 

 

-

 

 

 

 

 

Cash Flows provided by Financing Activities

 

$

20,000

 

 

 

69,488

 

 

 

(49,488

)

 

 

(71.22

)%

Net Change in Cash During Period

 

$

2,219

 

 

 

336

 

 

 

1,883

 

 

 

560.42

%

      

 
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Cash Flow from Operating Activities

 

During the three months ended March 31, 2021, net cash used in operating activities was $17,781 compared to $69,153 during the three months ended March 31, 2020.

 

The net cash used in operating activities of $17,781 for the three months ended March 31, 2021 was attributed to a net loss of $61,571 offset by depreciation and amortization $29,483, decrease in derivative liability of $71,743, decrease in accounts payable and accrued expenses of $4,232 and increase in accrued interest of $18,537.

 

The net cash used in operating activities of $69,152 for the three months ended March 31, 2020 was attributed to a net loss of $165,148 offset by depreciation and amortization $28,407, decrease in prepaid interest and increase 30,590 in accounts payable and accrued expenses of $31,473.

  

Cash Flow from Investing Activities

 

The Company did not use any funds for investing activities during the three months ended March 31, 2021 and March 31, 2020.

 

Cash Flow from Financing Activities

 

During the three months ended March 31, 2021, net cash provided by financing activities was $20,000 compared to $69,488 during the three months ended March 31, 2020.

 

Net cash from financing activities for the three months period March 31, 2021, attributed to proceeds from advances from related party.

 

Net cash from financing activities for the three months period March 31, 2020, attributed to proceeds from issuance of convertible promissory notes.

 

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, 2020, 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.

 

 
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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.

 

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 March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
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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.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

 
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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

 

 
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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: October 15, 2021

 

/s/ Christopher Giordano

 

 

Christopher Giordano

 

 

President

 

 

(Principal Executive Officer)

 

 

 

Dated: October 15, 2021

 

/s/ Paul Serbiak

 

 

Paul Serbiak

 

 

Chief Executive Officer

 

 

(Principal Financial Officer and Principal Accounting Officer)

 

  

 
25

 

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