Global Fiber Technologies, Inc. - FORM 10-Q

Attached files

file	filename
EX-31.1 - Global Fiber Technologies, Inc.	gft10qex311093014.htm
EX-32.1 - Global Fiber Technologies, Inc.	gft10qex321093014.htm

FORM 10-Q

______________

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

For the quarterly period ended September 30th, 2014

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

For the transition period from July 1st to September 30th, 2014

Commission file number: 000-52047

______________

Global Fashion Technologies, Inc.

(Exact name of small business issuer in its charter)

______________

	Nevada	11-3746201
	(State or other jurisdiction	(I.R.S. Employer Identification No.)
	of incorporation
	or organization)

9915 Bell Ranch Drive, Santa Fe Springs, CA., 90670

(Address of principal executive offices)

(270-792-5105)

(Issuer’s telephone number)

(FORMERLY Premiere Opportunities Group, Inc 264 Union Blvd, Totowa, NJ, 07512)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 x No o

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 737,866 Shares Outstanding as of September 30, 2014

GLOBAL FASHION TECHNOLOGIES, INC.

INDEX

		Page

PART I	FINANCIAL INFORMATION		3
Item 1.	Financial Statements		3
	Consolidated Balance Sheets		3
	Condensed Consolidated Statements of Operations (Unaudited)		4
	Condensed Consolidated Statements of Cash Flows (Unaudited)		5
	Notes to the Condensed Consolidated Financial Statements (Unaudited)		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		17
Item 4.	Controls and Procedures		17

PART II	OTHER INFORMATION		18
Item 1.	Legal Proceedings		18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		18
Item 3.	Defaults Upon Senior Securities		18
Item 4.	Submission of matters to a Vote of Security Holders		18
Item 5.	Other Information		18
Item 6.	Exhibits		19
	Signatures		20

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

	September 30,			December 31,
	2014			2013
	(Unaudited)

ASSETS

Current assets:
Cash	$	1,969		$	17,389
Accounts receivable		46,730			-
Inventory		437,300			45,000
Total current assets		485,999			62,389

Property, plant and equipment, net		22,199			-
Security deposits		28,000			-
Investments		4,000			-
Due from affiliated companies		82,385			-

Total assets		622,583			62,389

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable		166,461			75,057
Accrued compensation		340,000			340,000
Secured note and accrued interest payable		981,226			978,006
Unsecured notes and accrued interest payable		114,041			109,012
Convertible notes and accrued interest,		425,115			410,115
Advances from related party		941,239			79,599

Total current liabilities		2,968,082			1,991,789

Commitments and contingencies

Stockholders' deficit
Preferred stock $.001 par value, 1,000,000
shares authorized, 200,000 issued and
outstanding		200			200
Common stock $0.001 par value, 300,000,000
shares authorized, 737,866 and 623,580
issued and outstanding		784			624
Additional paid-in capital		5,582,104			5,535,484
Stock subscriptions received		849,519			849,519
Accumulated deficit		(8,547,406	)		(8,315,227	)
Total stockholders' deficit Global Fashion
Technologies, Inc.		(2,114,799	)		(1,929,400	)
Non-controlling interest		(230,700	)		-
Total stockholders' deficit		(2,345,499	)		(1,929,400	)
Total liabilities and stockholders' deficit	$	622,583		$	62,389

The accompanying notes are an integral part of these financial statements

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

	For The Three Months Ended						For The Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013

Revenues	$	--		$	--			334,257			--

Costs of goods sold		--			--			472,463			--

Gross profit		--			--			(138,206	)

Operating expenses:
General and administrative		27,045			--			298,854			--
Research and development		--			--			5,789			--

Total operating expenses		27,045			--			304,643			--

Income (loss) from operations		(27,045	)		--			(442,849	)		--

Other income (expense)
Interest expense and financing costs		6,677			10,068			20,030			20,137

Total other expenses		6,677			10,068			20,030			20,137

Income (loss) beforre provision for income taxes		(33,722	)		(10,068	)		(462,879	)		(20,137	)

Provision for income taxes		--			--			--			--

Net income (loss)	$	(33,722	)	$	(10,068	)		(462,879	)		(20,137	)

Net loss attributable to non-controlling interests		907			--			230,700			--

Net loss attributable to Global Fashion
Technologies, Inc.		(32,815	)		(10,068	)		(232,179	)		(20,137	)

Net income (loss) per common share	$	(0.05	)	$	(0.02	)		(0.63	)		(0.00	)

Weighted average common shares outstanding		737,866			411,755			737,866			518,980

The accompanying notes are an integral part of these financial statements

Global Fashion Technologies, Inc.
(f/k/a Premiere Opportunities Group, Inc. and Subsidiaries)
Consolidated Statements of Cash Flows
(Unaudited)
	For the Nine Months
	Ended September 30,
	2014			2013
Cash flows from operations:
Net income (loss)	$	(232,179	)	$	(20,137	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation		3,700			--
Minority interest		(230,700	)		--
Changes in assets and liabilities:
Inventory		(392,300	)		--
Accounts receivable		(46,730	)		--
Accounts payable		91,404			--
Accrued interest		20,029			20,137
Net cash used in operating activities		(786,776	)		--

Cash flows from investing activities:
Security deposits		(28,000	)		--
Acquisition of fixed assets		(25,899	)		--
Acquisition of investments		(4,000	)		--
Net cash used in investing activities		(57,899	)

Cash flows from financing activities:
Advances to affiliated companies		(82,385	)		--
Proceeds from note payable		50,000
Advances from affiliated companies		861,640			--
Net cash provided by financing activities		829,255			--

Net decrease in cash		(15,420	)		--
Cash at beginning of period		17,389			--
Cash at end of period	$	1,969		$	--

Supplemental disclosure of cash flow information:

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

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

The accompanying notes are an integral part of these financial statements

Global Fashions Technology Group Inc.. and Subsidiaries

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2014

Note 1 – Description of Business

Global Fashions Technology Group, Inc. “the Company”) was incorporated in Nevada on March 25, 2005. On July 19, 2012 the Company filed an amendment with the Nevada Secretary of State to increase its authorized common stock shares to 200,000,000. On December 9, 2013 the Company filed an amendment with the Nevada Secretary of State to increase its authorized common stock shares to 300,000,000.

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

Global Fashions Technology Group, Inc. is the holding company. During the fourth quarter, 2013 the Company became involved in the manufacturing and global distribution of ladies apparel. Trident Merchant Group, Inc. is an operating subsidiary which is a “value added” strategic advisory services company specializing in rendering expertise in the areas of capital planning and procurement, licensing and branding as well as financial engineering and restructuring of it’s client company’s balance sheet and going public process. During the second quarter, 2014 the Company formed Leading Edge Fashions, LLC which it controls 51% of. The non-controlling interest is recorded in the stockholders’ equity section.

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 and a working capital deficit. Consequently, the aforementioned items raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to repay its substantial indebtedness, acquire an operating business and 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, liquidate available assets, 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

The condensed consolidated financial statements of Global Fashion Technologies, Inc. and its subsidiaries included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal recurring nature. The condensed consolidated financial statements and notes thereto are presented in accordance with accounting principles generally accepted in the United States (“GAAP”) and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form 10-K. Certain prior period amounts have been reclassified to conform to the current period’s presentation and did not have an impact on net income.

Principles of Consolidation

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

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.

Trade Accounts Receivable

Trade accounts receivable are stated at outstanding balances, less an allowance for doubtful accounts. The allowance for doubtful accounts is established through provisions charged against income. Accounts deemed to be uncollectible are charged against the allowance and subsequent recoveries, if any, are credited to the allowance. The allowance for doubtful accounts is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management’s periodic evaluation of the adequacy of the allowance is based on past experience, aging of the receivables, adverse situations that may affect a customer’s ability to pay, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires estimates that may be susceptible to significant change. Unpaid balances remaining after the stated payment terms are considered past due.

Inventory

Inventory consists of women’s fashions held for sale and valued at the lower of cost or market. Cost is determined on the first-in, first-out method and includes the cost of merchandise and other costs, including freight and export and import taxes and agent commissions. A periodic review of inventory is performed in order to determine if inventory is properly stated at the lower of cost or market. Factors related to current inventories such as future expected consumer demand and fashion trends, current aging, current and anticipated retail markdowns or wholesale discounts, and class or type of inventory are analyzed to determine estimated net realizable value. Criteria utilized by the Company to quantify aging trends include factors such as average selling cycle and seasonality of merchandise, the historical rate at which merchandise has sold below cost during the average selling cycle, and the value and nature of merchandise currently priced below original cost. A provision is recorded to reduce the cost of inventories to the estimated net realizable values, if appropriate.

Adjustments to reserves related to the net realizable value of inventories are primarily based on the market value of the Company’s physical inventories, cycle counts and recent historical trends. The Company expects the amount of its reserves and related inventories to increase over time as it expands its store base and increases direct-to-consumer sales.

Equipment

Property and equipment are stated at cost. Costs of replacements and major improvements are capitalized, and maintenance and repairs are charged to operations as incurred. Depreciation expense is provided primarily by the straight-line method over the estimated useful lives of the assets, seven years. Depreciation for the nine months ended September 30, 2014 was $3,700.

Revenue Recognition

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

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

Sales Return Reserve

The Company records a reserve for estimated product returns where the sale has occurred during the period reported, but the return is likely to occur subsequent to the period reported and may otherwise be considered in-transit. The reserve for estimated in-transit product returns is based on the Company’s most recent historical return trends. If the actual return rate or experience is materially higher than the Company’s estimate, additional sales returns would be recorded in the future.

Advertising expenses

Advertising costs are expensed when the advertising takes place. The total advertising expenses included in the consolidated statement of operations for the nine months ended September 30, 2014 and 2013 was $186 and $-0-.

Income taxes

Income taxes are accounted for under the asset and liability method as stipulated by A5C 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 A5C 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 (50%) that such deferred tax will not be utilized.

The Company adopted certain provisions under A5C 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 December 31, 2013 and 2012, 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 2010 through 2013.

Impairment or Disposal of Long-Lived Assets:

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

Recently Issued Accounting Pronouncements

There are no other new accounting pronouncements adopted or enacted during the nine months ended September 30, 2014 that had, or are expected to have, a material impact on our financial statements.

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.

Fair Value

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

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

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

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

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

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

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, 2014 or 2013 the Company had no amounts in excess of the FDIC limit.

Earnings (loss) per share

In accordance with SFAS No. 128, “Earnings Per Share,” the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At September 30, 2014 and 2013, potential dilutive securities were convertible notes that are convertible into 285,714 shares of common stock. The potential dilution associated with convertible note was excluded from the calculation for the nine months ended September 30, 2014 and 2013 as it will create an anti-dilutive effect.

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 share holders vote together with the common stock as a single class. The holders of Class B Preferred are entitled to receive all notices relating to voting as are required to be given to the holders of the Common Stock. The holders of shares of Class B Preferred shall be entitled to 10,000 votes per share. The Class B Preferred Stock will have the rights to liquidation as all classes of the Common Stock of the company. The Class B Preferred stock holders are entitled to receive 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, a total of 200,000 shares of the Series B Preferred Stock were issued to a related party for legal and accounting fees paid for the Company’s benefit in the amount of $7,500.

Common Stock

As of September 30, 2014 and December 31, 2013, the Company has 737,866 and 623,580 shares of its $0.001 par value common stock issued and outstanding, respectively. In addition, common stock subscriptions of $849,519 and $849,519 have been received on September 30, 2014 and December 31, 2013, respectively.

Note 4 – Accounts and Notes Payable

Secured Note Payable

The Company and its former consolidated subsidiaries entered into a settlement agreement with R.R. Donnelly & Sons Company (“Donnelly”) on June 6, 2007. As part of the settlement, the Company issued to Donnelly a Secured Promissory Note in the principal sum of $601,048, with an interest rate of 9% per annum and a requirement for monthly payments of $43,577, and granted Donnelly a first lien security interest in all of the Company’s assets. The Company was unable to meet the monthly payments and Donnelly obtained judgment in the amount of $653,841. This note was subsequently sold to a Director of the Company. The balance of this note plus accrued interest totals $981,226 and $978,066 at September 30 , 2014 and December 31, 2013 respectively. On March 31, 2013 the Company’s Board of Directors issued a “Moratorium on Accrued Interest” stating that the interest accrual on this note would cease indefinitely at March 31, 2013 and that all past due accrued interest would be added to the principal portion of the note.

On May 2, 2014 the Company issued a secured promissory note to an individual in the amount of $50,000 payable at 15% interest and due on June 2, 2014. At September 30, 2014 this note has not been paid.

Unsecured Notes Payable

The Company has an unsecured note payable in the principal amount of $67,057. This note was issued to a vendor on August 23, 2007. The note bears interest at the rate of 10% per annum and required monthly payments of $4,500 with final payment due on July 15, 2008. The Company has made no payments under this note and the note is in default. The balance of this note plus accrued interest totals $114,041 and $109,012 at September 30, 2014 and December 31, 2013 respectively

Convertible Notes Payable

The Company’s convertible notes payable consist of two series of unsecured convertible promissory notes; (i) $250,000 in principal amount of 8% convertible notes issued in 2005 to two investors as part of the Company’s 2005 bridge note financing (the “Bridge Notes”), and (ii) $480,000 in aggregate principal amount of 6% convertible notes issued in 2006 and 2007 to sixteen investors pursuant to a private placement offering conducted by Divine Capital Markets LLC (the “Divine Notes”). The balance of the convertible notes payable plus accrued interest and the accrued derivative liability is $425,115 and $410,115 at September 30, 2014 and December 31, 2013.

The Bridge Notes

The Company’s $250,000 Bridge Notes had an original maturity date of October, 2005. The Bridge Notes have not been repaid and are currently in default, and are included in the accompanying financial statements as current liabilities. The principal amount of each Bridge Note is convertible, at the option of the holder at anytime into shares of the Company’s common stock at the rate of $0.0007 per share. The Company may at its election, pay the interest due on the Bridge Notes in shares of common stock at the rate of $0.0014 per share.

The Divine Notes

The Company’s $480,000 Divine Notes have an original maturity date of November, 2009. The principal amount of each Divine Note is convertible, at the option of the holder into shares of the Company’s common stock. The convertible debentures accrue interest at 6% annum and are due three years after issuance. The Company paid $69,800 in fees and commissions to Divine Capital Markets LLC as debt issue costs. Debt issue costs were amortized over the term of the notes and is fully amortized at December 31, 2011.

Upon the occurrence of an event of default, the full unpaid amount of the Divine Notes becomes, at the election of the holder, immediately due and payable. The Company is in default under the terms of the Divine Notes and the notes are included in the accompanying financial statements as current liabilities.

The Divine Notes are convertible into shares of the Company’s common stock at a ratio determined by dividing the dollar amount being converted by 75% of the lowest closing bid of the Company’s common stock for the fifteen (15) trading days immediately preceding the date of conversion. The estimated conversion price at June 30, 2012 is $0.0075 per share and the estimated number of shares issuable upon an election to convert all of the Divine Notes at the March 31, 2012 conversion price would be approximately 64,000,000 shares of common stock. The Company does not have a sufficient number of authorized and unissued shares of common stock to meet this obligation, and will be required to amend its articles of incorporation (which requires shareholder approval) in order to increase its number of authorized shares in order to meet such obligation.

During the year ended December 31, 2012 the Company and the Divine Note holders agreed to the issuance of common stock to convert the notes payable and related accrued interest totaling $810,019. The balance is recorded as stock subscriptions received but not issued.

Note 5 – Consulting Agreement

On August 7, 2007 the Company entered into a Consulting Agreement together with an Investors Rights Agreement with Totowa Consulting Group, Inc. (“Totowa”). The agreements provide for Totowa to assist the Company in its negotiations with creditors and to advise the Company as to financing, cash flow management and business and financial planning. The term of the Consulting Agreement is for 24 months with a monthly fee of $20,000 and provides for the payment of the first seven months in advance with the issuance of 28,000,000 shares of restricted fully vested common stock. The shares issued to Totowa constitute approximately 51.87% of the total shares of common stock outstanding. The Investors Rights Agreement includes a provision that requires the Company sell additional shares to Totowa in the event its ownership interest in the Company’s voting common stock falls below 51% at any time during the seven year period following the date of the Agreement.

The shares of common stock issued to Totowa have been valued based upon the fair value of the services rendered. The Company determined that the value of the services is an appropriate measurement for the fair value of the shares issued, in that the shares of the Company’s common stock are not now actively traded and the share price has continued to decline such that as of the date of this report the quoted bid price is four-tenths of one-cent ($0.004) per share. The accompanying financial statements include $340,000 of accrued consulting fees as of December 31, 2012 and December 31, 2011. During the year ended December 31, 2010 $320,000 of accrued consulting fees under this contract were forgiven and included in additional paid-in capital.

The Consulting Agreement includes a provision for anti-dilution in value, whereby additional shares may be issued to Totowa in the event the trading price of the Company’s common stock declines to an amount less than the original issuance value of one-half of one cent ($0.005) per share as measured by the market price at the six month anniversary of the Agreement.

The Investor Rights Agreement, among other things, (i) prohibits Totowa from transferring its shares to anyone other than certain permissible persons for a period of one year from the date of the Agreement, (ii) grants Totowa registration rights in respect of its shares, and (iii) in the event the Company issues additional voting securities at any time during a period of seven years from the date of the Agreement, grants Totowa the right to purchase further securities in number sufficient for Totowa to maintain ownership of 51% of the outstanding voting securities of the Company at a purchase price equal to the price of Totowa’s original issuance of one-half cent per share.

Note 6 – Share award agreement

On July 8, 2010 the Company a Share Award Agreement (the “Agreement”) with the Company’s Co-Chairmen. The Agreement grants each participant the right to receive up to 7,500,000 shares of the Company’s $.001 par value common stock under the following terms:

The following table sets forth the number of Shares that the Company shall deliver to each of the two Participants at the end of any 20 consecutive day trading period where the Company’s per Share price has closed at or above the following price for each day during such trading period:

Price Achieved	Number of Shares to be Delivered

$0.10	1,250,000
$0.25	1,250,000
$0.50	1,500,000
$1.00	3,500,000
Total	7,500,000

The Company shall have at all times available and reserved for issuance pursuant to this Agreement authorized but unissued Shares in amounts sufficient to meet the Company’s obligations to issue Shares to the Participant under this Agreement.

Vesting and Forfeiture Provisions.

(i) Except as otherwise provided at such time as the Participant is no longer serving for any reason as an officer, director, or employee of the Company or any subsidiary of the Company, the Participant shall forfeit the right to delivery of any further Shares.

(ii) In the event that the Company undergoes a Change in Control while the Participant is serving as an officer, director, or employee of the Company or any subsidiary of the Company or during the period of one year beginning on the first day after the Participant is no longer serving for any reason as an officer, director, or employee of the Company or any subsidiary of the Company, then the Participant shall become vested in 100% of the Shares effective immediately prior to the time of the Change in Control.

(iii) If the Participant dies while serving as an officer, director, or employee of the Company, the Participant shall become vested in 100% of the Shares effective immediately prior to his death.

(iv) If the Company pays any dividend, other than ordinary course cash dividends, to its shareholders while the Participant is serving as an officer, director, or employee of the Company or any subsidiary of the Company, the Participant shall become vested in 100% of the Shares effective immediately prior to such dividend payment.

For each year, the Company shall pay to the Participant such additional compensation as is necessary (after taking into account all federal, state, and local taxes, including income, excise, and employment taxes payable by the Participant as a result of the receipt of such additional compensation) to place the Participant in the same after-tax position he would have been in had no tax been paid or incurred with respect to the benefits received under this Agreement (the “Tax Gross-Up”). The Tax Gross-Up shall be determined assuming that the maximum federal, state, and local tax rates apply to all such amounts and shall include interest and penalties, if any. Any applicable Tax Gross-Up shall be paid to the Participant, withheld, or remitted, as applicable, in cash or stock, at the option of the Company, at the appropriate time but no later than December 31 of each year. Notwithstanding the form of any Tax Gross-Up, it is the intent of the parties that the Participant will be in the same after-tax position he would have been in had no federal, state, and local taxes of any kind (or interest and penalties thereon) been payable with respect

At December 31, 2012 the award period has expired, the conditions were not met to award shares and the Company has no plans to renew the program.

Note 7 – Income Taxes

The Company uses the liability method, whereby deferred taxes and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. On December 31 2013 and 2012, the company has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $8,500,000 at December 31, 2013, and will expire in the years 2026 through 2032.

At December 31, 2013, deferred tax assets consisted of the following:

		2013
Deferred tax assets

Net operating loss carryforward	$	2,825,000

Valuation allowance		(2,825,000	)

Net deferred tax asset	$	---

The utilization of the carryforwards is dependent upon the Company's ability to generate sufficient taxable income during the carryforward period. In addition, utilization of these carryforwards may be limited due to ownership changes as defined in the Internal Revenue Code.

Note 8 – Luminx Holdings, Inc.

During the year ended December 31, 2011 the Company acquired a 15% ownership of Direct LED, Inc. (formerly LuminX, Inc.) in exchange for consulting services. The Company has not assigned a value to the investment at December 31, 2013 and 2012 due to the lack of marketability of the minority interest and the company is still in its start-up. Direct LED, Inc. filed its S-1 Registration Statement with the Securities and Exchange Commission on July 18, 2012 which became effective on January 23, 2013.

Note 9 – Other Events

On April 1, 2014 the Company announced that it has signed a Letter of Intent to purchase 100% of Avani Holdings LLC., the parent company and 100% owner of the Avani Clothing line http://www.avaniclothing.com which is a "Made in USA" active wear brand sold nationally in department store, sports specialty stores, specialty stores, gyms, studios and online. Avani Activewear's earth-friendly collections and sustainable business practices reflect its mission "to leave the earth a little more beautiful than we have found it" by offering organic and sustainable garments to its customer

On February 5, 2014 the Company announced that it has been chosen as a distributor for the Brunello Cuccinelli line of clothing, http://www.brunellocucinelli.com/en. It developed its origins in 1978 when Brunello Cuccinelli realized that colorful cashmere could be an important innovation within the fashion community since up until that time, cashmere was exclusively produced only in natural colors until he changed the face of Cashmere forever.

Their stores today are opened only on the most prestigious streets of major cities in Italy and abroad and in some of the world's most exclusive resort locations. Brunello Cucinelli directly operated stores are in Milan, Paris, New York, Miami, Madrid, Capri, and Saint Moritz. Its franchising boutiques are in London, Tokyo, Moscow, Saint Petersburg, Sylt, Cortina, and Saint Tropez and today is offered only in the most exclusive department stores such as Saks 5thAvenue and Bergdoff Goodman.

The Company plans to distribute this line of clothing into Korea, Mainland China and the balance of the SE Asian markets.

On September 22nd 2014 the Company announced that it has completed agreements with Pure System International Ltd. that call for joint efforts to develop a new business dedicated to fiber rejuvenation. Addressing the a worldwide problem that results in trillions of pounds of textiles being disposed of annually, the partnership will produce a sustainable textile fiber through a highly patented process that returns the textile to a fiber state and prepares the fiber for a variety of new textile end uses. The company is currently considering multi locations for it production facilities as it gears up for initial production in Spring 2015. Global Fashion Technologies Inc is dedicated to marketing branded apparel and related textiles throughout the worldwide markets. Pure System International and Pure Sustainable Product Technologies Inc are dedicated to finding innovative procedures to "up cycle" components found within the global waste stream to develop superior performing products.

On October 31, 2014 Global Fashion Technologies, Inc announced that it has purchased a 40 acre site including a 165,000 sq ft manufacturing facility in Belen New Mexico. Global is partnering with Pure Systems International, LTD to create and operate a new state of the art Textile Fiber Rejuvenation plant at this location. Sustainable products is a very large silo of opportunity since it at the top of the list of the most important things that CEOS of Fortune 500 companies are concentrating on according to research that was done by Verdantix. This paradigm shift in corporate policy positions the Company right in the middle of the vast sustainable fiber need of many major consumer product companies.

Note 10 - Operating Segments

For the nine months ended September 30, 2014 the Company’s revenues were $193,248 from consulting, all of which was from sources within the United States, and $141,009 from the sale of ladies fashions, all of which were from sources in Korea.

Item 2. Management's Discussion and Analysis or Plan of Operation

Plan of Operation

Mr. Mike Rosenbaum, Mr. Omar Barrientos and Mr. Chris Giordano continue to serve on the Board of Directors of Global Fashion Technologies and will do so thru the period of time necessary to allow the company to restructure its balance sheet and create shareholder value through its advisory business and apparel divisions.

During the 2nd quarter we appointed Mr. Thomas Witthuhn as our Chief Executive Officer and member of the Board of Directors. During the 3rd quarter we name Mr. Michael Breen and Mr. Robert

In Q3 we completed the a Name Change and Reverse Stock Split process effectively and strategically repositioning the company into the Branded Textile and Apparel market categories. Global Fashion Technologies continues that strategic refocus on the Textile and Apparel business.

We have two apparel brands Avani and Cabe Studios that are marketed in the US and internationally. We continue to explore acquisitions and joint ventures within the Textile and Apparel business in order to create shareholder value. We continue to evaluate additional apparel brands that will bring considerable upside to the company. We are also evaluating Licensed brands that will expedite entry into market segments that are natural extensions on our current expertise.

In Q3 Global announced an exclusive Strategic Alliance with Pure System International that positions Global as a market leader in the Rejuvenated Fiber market. The “eco-revolution” of reclaiming and up cycling production waste fabrics into superior performing rejuvenated fabrics positions Global for substantial long term growth. Global has created a wholly owned subsidiary to manage and control this venture which will market fiber into all segments of the Textile markets

In October 2014 Global announced a substantial incentive agreement with the State of New Mexico in conjunction with the purchase of a production facility to be used on Fiber Rejuvenation. This 40 acre site currently contains a 165,000 sq ft manufacturing facility. The current facility will support the processing of over 150 million pounds of fiber, prior to executing any plans for expansion of production space. We have begun discussions regarding additional manufacturing locations for the Rejuvenated Fiber business based on market demand.

The Board Members are not compensated in the form of a salary but are being reimbursed for any expenses related to our intended Plan of Operation. As part of our new business model we rely on the expertise of our board members and their expertise in the textile industries as well as other areas including corporate and strategic planning, recapitalizations, merger and acquisitions.

Results of Operations

Our operating results for the three and nine months ended September 30, 2014 and 2013 are summarized as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenue	$Nil			$Nil			$	334,257		$Nil
Cost of Goods Sold	$Nil			$Nil			$	472,463		$Nil
Operating Expenses	$	27,045		$Nil			$	298,854		$Nil
Interest Expenses	$	6,677		$	10,068		$	20,030			20,137
Net Loss	$	(33,722	)	$	(10,068	)	$	(462,879	)	$	(20,137	)

Expenses

Operating expenses for the three and nine month period ended September 30, 2014, increased by 100% as compared to the comparative periods in 2013 primarily as a result beginning of our operations

Revenue

Liquidity and Capital Resources

Working Capital (Deficit)

	At			At
	September 30,			December 31,			Increase/
	2014			2013			(Decrease)
Current Assets	$	485,999		$	62,389		$	679	%
Current Liabilities	$	2,968,082		$	1,991,789		$	49	%
Working Capital (deficit)	$	(2,482,083	)	$	(1,929,400	)	$	29	%

Cash Flows

		Nine Months			Nine Months
		Ended			Ended
		September 30,			September 30,
		2014			2013
Net Cash Provided by (Used in) Operating Activities	$	(786,776	)	$	Nil
Net Cash Provided by (Used in) Investing Activities	$	(57,899)		$	Nil
Net Cash Provided by Financing Activities	$	829,255		$	Nil
Net Increase (Decrease) in Cash During the Period	$	(15,420	)	$	Nil

As of September 30, 2014, we had $1,969 in cash, $485,999 in total current assets, $2,968,082 in total current liabilities and a working capital deficit of $2,482,083. As of December 31, 2013, we had a working capital deficit of $1,929,400.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company has no market risk sensitive instruments.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

At the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our former management, including our principal Executive Officer and our principal accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our principal Executive Officer and our principal accounting Officer concluded that our disclosure controls and procedures were effective to ensure that all material information required to be disclosed in this Quarterly Report on Form 10-Q has been made known to them in a timely fashion

PART II - OTHER INFORMATION

Item 1. Legal Proceedings None.

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

Item 3. Defaults Upon Senior Securities

The Secured Notes are held by the Company’s Co-Chairman Chris H Giordano. Although the Note is technically in default Mr. Giordano has not pursued any action against the Company and may not do so until a later date.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Exhibit	Exhibit
No.

31.1 *	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and Principal Financial & Accounting Officer

32.1 *	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Executive Officer and Principal Financial & Accounting Officer

* Filed herewith.

SIGNATURES

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

			Global Fashion Tehnologies, Inc.


Date November 19, 2014			/ s/ Chris Giordano
			President, Treasurer
			Co-Chairman of the Board

Global Fiber Technologies, Inc. - FORM 10-Q - November 19, 2014

Attached files

Global Fiber Technologies, Inc. Reports