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.
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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.
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.
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The Rejuvenated Uniform Segment
In April 2015, we entered into a joint venture and license agreement with Pure
Systems International, Ltd. to produce and market garments and other accessories
for the commercial uniform marketplace and other market verticals by utilizing
Pure Systems International, Ltd.'s patented processes to up-cycle pre-consumer
textile waste into reusable fiber of equal or better quality than the original
fabric. (the "Rejuvenated Fiber").
In May of 2015, 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
three months period ended June 30, 2020 and the year ended December 31, 2019.
June 30, December 31,
2020 2019 Change %
Cash and cash equivalents $ 4,736 $ 4,794 $ (58 ) -1.2 %
Prepaid interest and deposits $ 42,542 $ 96,214 $ (53,672 ) -55.8 %
Inventories
$ 60,815 $ 60,815 $ - -
Property and equipment $ 188,065 $ 213,037 $ (24,972 ) 11.7 %
Operating lease right of use $ 15,793 $ 46,971 $ (31,178 ) -66.4 %
Intangible assets $ 68,620 $ 69284 $ (664 ) -0.9 %
Total Assets $ 380,571 $ 69,284 $ (110,545 ) -22.5 %
Total Liabilities $ 2,263,420 $ 3,360,423 $ (1,097,003 ) -9.7 %
Stockholders' Deficit $ (2,155,327 ) $ (2,869,307 ) $ 986,458 -34.4 %
The following summary of our results of operations, for the three and six months
ended June 30, 2019, should be read in conjunction with our financial
statements, as included in this Form 10-Q.
Siox months ending June 30, 2020, compared to six months ending June, 2019
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Six Months Ended
June 30,
2020 2019 Change %
Revenue $ 6,027 $ - $ 6,027 100 %
Cost of Revenues 3,860 3,860 100 %
Operating Expenses
Depreciation and Amortization 56,814 - 56,814 100 %
General and administrative expenses 149,483 227,129 (77,646 ) -34.2 %
Stock based compensation
700 83,574 (82,874 ) -99.2 %
Gain from extinguishment of debt 12,041 -100 %
Other expense 35,806 (338,309 ) (140,864 ) -90.8 %
Net loss $ (240,636) (686,971 ) $ (446,335 ) -65.0 %
For the six months ended June 30, 2020, we have revenues of $6,027 with a cost
of $3,860, sales generated from the Company acquired AH Originals, Inc. We
incurred $149,483 in general and administrative expenses, depreciation and
amortization of $56,814, stock-based compensation of $700, and other expense of
$35,806, resulting in a net loss of $240,636.
For the six months ended June 30, 2019, we incurred $227,129 in general and
administrative expenses, stock-based compensation of $83,574, gain on
extinguishment of debt of $12,041 and other expense of $388,309, resulting in a
net loss of $686,971.
The decrease in net loss during six months ended June 30, 2020, compared to six
months ended June 30, 2019 was mainly attributed to the decrease in interest
expenses financing cost and stock based compensation.
Liquidity and Capital Resources
The following table provides selected financial data about our company as of
June 30,2020 and December 31, 2019, respectively.
Working Capital
June 30, 2020 December 31, 2019 Change %
Current Assets $ 108,093 $ 161,824 $ (53,731 ) -33 %
Current Liabilities $ 2,263,420 $ 3,360,423 (325,944 ) -33 %
$ (2,155,327 ) (3,198,600 ) $ (1,043,273 ) -33 %
Our working capital deficit decreased as of June 30,2020, as compared to
December 31, 2019, due mainly to the decrease increase in convertible notes.
Cash Flows
Six Months Ended
June 30,
2020 2019 Change %
Cash Flows used in Operating Activities $ (61,058 ) $ (274,885 ) $ (77,392 ) -112 %
Cash Flows used in Investing Activities $ -
- - -
Cash Flows provided by Financing
Activities $ 61,000 245,575 (49,439 ) -71 %
Net Change in Cash During Period $ 335 (29,310 ) 28,975 -98.9 %
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Cash Flow from Operating Activities
During the six months ended June 301, 2020, net cash used in operating
activities was $61,058 compared to $274,885 during the six months ended June 30,
2019.
The net cash used in operating activities for the six months ended June 30, 2020
was attributed to a net loss of $240,636, decrease by depreciation and
amortization $58,815, amortization of debt discount $27,486, prepaid interest
deposits $53,672 and accounts payable and accrued expenses $35,818.
The net cash used in operating activities for the six months ended June 30, 2019
was attributed to a net loss of $686,971, increased by gain from extinguishment
of debt of $12,041, expense paid for subsidiary of $16,336, a decrease in
prepaid interest and deposits of $13,039 and a decrease in accounts payable and
accrued expenses of $43,974, offset by depreciation of $190, expenses paid for
directly by related party of $25,396, amortization of debt discount of $358,722,
stock based compensation expense of $83,574, an increase in bank indebtedness of
$6 and an increase in accrued interest of $29,588.
Cash Flow from Investing Activities
The Company did not use any funds for investing activities during the six months
ended June 30, 2020 and 2019
Cash Flow from Financing Activities
Net cash from financing activities was $61,000 for the six months ended June 30,
2020 attributable to proceeds from issuance ofconvertible notes.
Net cash from financing activities was $245,575 for the six months ended June
30, 2019 attributed to proceeds from issuance of convertible promissory notes of
$319,500, proceeds from issuance of common stock of $43,500 and proceeds from
subscription payable of $80,000, offset by repayment on a convertible note of
$135,000 and repayment of related party advances of $62,425.
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, 2019, 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.
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