Authentic Holdings, Inc. - Annual Report: 2015 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

(Mark One)

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

For the fiscal year ended December 31, 2015

or

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

Commission File Number:  000-52047

Global Fashion Technologies, Inc.

(Exact name of registrant as specified in its charter)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐Yes☒No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐Yes☒No

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

☐Yes☒No

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

☐Yes☒No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

☐Yes☒No

 

 

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

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

☐Yes☒No

Global Fashion Technologies, Inc

FORM 10-K

For The Fiscal Year Ended December 31, 2015

INDEX

PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K and the documents incorporated by reference herein contain forward-looking statements that are not statements of historical fact and may involve a number of risks and uncertainties.  These statements related to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable.  These statements may also relate to our future prospects, developments and business strategies.

We have used the words "anticipate," "believe," "estimate," "expect," "intend," "may," "will," "plan," "predict," "project" and similar terms and phrases, including references to assumptions, in this annual report on Form 10-K and our incorporated documents to identify forward-looking statements.  These forward-looking statement are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements.  The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

l	General economic and industry conditions;

l	Out history of losses, deficits and negative operating cash flows;

l	Our limited operating history;

l	Industry competition;

l	Environmental and governmental regulation;

l	Protection and defense of our intellectual property rights;

l	Reliance on, and the ability to attract, key personnel;

l	Other factors including those discussed in "Risk Factors" in this annual report on Form 10-K and our incorporated documents.

You should keep in mind that any forward-looking statement made by us in this annual report or elsewhere speaks only as of the date on which we make it.  New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us.  We have no duty to, and do not intend to, update or revise the forward-looking statements in this annual report after the date of filing, except as may be required by law.  In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this annual report or elsewhere might not occur.

In this annual report on Form 10-K, the terms "Premiere," "Company," "we," "us" and "our" refer to Global Fashion Technologies, Inc. and its subsidiaries.

Company History

Global Fashion Technologies, Inc. ("GFTI", 'We" or the "Company") was incorporated in Nevada on March 25, 2005 as Premier Publishing Group, Inc.  Originally formed as a publishing company, the Company ceased its publishing operations in or around 2007.

After ceasing the publishing operations of the former management, the 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, the Company became involved in the manufacturing and global distribution of ladies apparel.  However, in 2014 the 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.

 

 

Current Overview of the Company

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

The Women's Apparel Segment

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

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

The Rejuvenated Uniform Segment

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

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

The Rejuvenated Cardboard Segment

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

Trident Merchant Group, Inc.

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

 

 

 

 

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

The Company currently leases office space in Parsippany, New Jersey.

 

 

As of the date of this filing, the Company is a party to two pending litigation matters.  One matter is entitled Randazzo LLC v. Avani Holdings LLC & Global Fashion Technologies, Inc.  This litigation was initiated by the plaintiff in order to evict Avani Holdings LLC from its rented premises in California and to recover unpaid rent.  GFTI does not operate out of the premises in question and has never signed any leases or other documents with the plaintiff.  A judgment of eviction was entered, but GFTI does not operate out of the premises in question and therefore did not appear in the matter to oppose the judgment of eviction.  The plaintiff is also seeking unpaid rent in the amount of $26,595.

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

None.

PART II

Our common stock currently trades on the OTC Bulletin Board under the symbol "GFTI." The following table states the range of the high and low bid-prices per share of our common stock for each of the calendar quarters for fiscal year 2015, as reported by the OTC Bulletin Board. These quotations represent inter-dealer prices, without retail mark-up, markdown, or commission, and may not represent actual transactions. The last price of our common stock as reported on the OTC Bulletin Board on December 31, 2015 was $0.50 per share. As of December 31, 2015, there were 213 shareholders of record of our common stock.  This number does not include beneficial owners from whom shares are held by nominees in street name.

 

Fiscal Year 2015

Dividend Policy and Holders

 

No dividends have been paid to date on our common stock and no change of this policy is under consideration by our board of directors. Our board of directors is not required to declare or pay dividends on our securities. The payment of dividends in the future will be determined by our board of directors in light of conditions then existing, including our earnings, financial requirements, general business conditions, reinvestment opportunities, and other factors. There are otherwise no restrictions on the payment of dividends existing at this time. We had 213 stockholders of record of our common stock on December 31, 2015.

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

Liquidity, Capital Resources and Material Changes in Financial Condition

 

 

Net cash flows used in investing activities consisted of $2,650 and $0 in additions to property and equipment for the years ended December 31, 2015 and 2014, respectively.

Net cash provided by financing activities of $522,501 for the year ended December 31, 2015 was primarily due to $458,000 paid to the Company from the sale of common stock, proceeds received from the issuance of a $50,000 note payable and advances from a related party of $41,155, offset by payment of $26,654 to a related party for an advance.

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

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

Results of Operations for the Year Ended December 31, 2015 and 2014

 

Interest expense was $42,016 and $27,956 for the year ended December 31, 2015 and 2014, respectively.

Loss from discontinued operations, net of tax increased to $2,585,535 for the year ended December 31, 2015 from $870,045 for the year ended December 31, 2014.  The $2,585,535 incurred in the first half of 2015 was related to additional costs of Leading Edge Fashions, LLC.

Net loss attributable to non-controlling interests was $0 for the year ended December 31, 2015 compared to $426,322 for the year ended December 31, 2014.  The entity which owned the non-controlling interest of Leading Edge Fashions, LLC became incapable of funding their share of the losses incurred in the fourth quarter of 2014, and therefore, the minority interest from December 31, 2014 was charged to discontinued operations for the year ended December 31, 2015. In addition, 1,710,000 shares of common stock were issued at $1.25 per share for additional losses from discontinued operations for the year ended December 31, 2015.

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

See pages F-1 through F-17

None.

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 December 31, 2015.  Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.  Such officer also confirmed that there was no change in our internal control over financial reporting during the year ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

None.

PART III

ITEM 10.     DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

  

Our directors and officers, as of December 31, 2015, are set forth below. The directors hold office for their respective term and until their successors are duly elected and qualified. Vacancies in the existing Board are filled by a majority vote of the remaining directors. The officers serve at the will of the Board of Directors.

 

 

 

(a) & (b) Directors and executive officers:

 

The directors of the Company are elected to serve until the next annual shareholders' meeting or until their respective successors are elected and qualified. Officers of the Company hold office until the meeting of the Board of Directors immediately following the next annual shareholders' meeting or until removal by the Board of Directors.

 

As of December 31, 2015, there were no persons who were not directors and/or executive officers that were expected to make significant contributions to the business of the Company.

There are no family relationships between any directors and/or executive officers.

 

Frederick Paul Andrieni is the founder of Andrieni & Associates, LLC; a private equity firm through which he made strategic equity investments, led technology based investments and served as strategic consultant, board member and CEO in numerous companies in their investment portfolio.  Fred has over 30 years' experience in refining concepts and visions into a viable direction for start-up companies.  Prior to Andrieni & Associates, LLC, Mr. Andrieni was founder of High Pointe Custom Homes, LLC (high-end custom home builder); Endotec, LLC, (the first laparoscopic surgical device company), EnviroTec, (tire recycling process that utilized pyrolysis technology), Diagnostic Medical Instruments (DMI); and Microvations, Inc.  (the first touch-screen information terminal).  Mr. Andrieni honed his keen interest in technology at the start of his career as Director of Fields Sales and Marketing Eastern Division for Anheuser-Busch, Inc. where he managed a task force that was specifically focused on marketing new products.

Omar G. Barrientos was the president, treasurer and a director of U.S.A. Sunrise Beverages Inc., from August 1990, until September 2002. From September 2002 to June 2006 Mr. Barrientos was the president, treasurer and a director of Sunrise U.S.A. Incorporated. Mr. Barrientos received a license as a Real Estate Mortgage Broker under the South Dakota Banking Commission in 1981 and was the principal of Ombar Financial Services, and its affiliates Tri-Star Financial Services Brokerage and Moody Trust Co., in Rapid City SD. From 1986 to 1990, Mr. Barrientos served as president of Mexico U.S.A. (member of a chain of Mexican restaurants) located in Rapid City, SD. Mr. Barrientos is the owner of 4,000,000 shares of the Company's common stock.

 

 

Michael A. Breen has been serving as a member of our Board of Directors since September 16, 2014. Since 1991, Mr. Breen has been practicing law in his own private practice with offices in Bowling Green and Scottsville, Kentucky.  Mr. Breen graduated from the University of Kentucky College of Law in Lexington, Kentucky in 1983.  In 1980, Mr. Breen earned a B.A. from the University of Kentucky, in Lexington, Kentucky and was Phi Beta Kappa.  Mr. Breen is a member of the Kentucky and Tennessee Bar Associations.  Mr. Breen's career has been marked by a number of noteworthy accomplishments. In 1995, Mike was certified as a civil trial specialist by the National Board of Trial Advocacy. He also enjoys speaking and writing on the law and in 1996 published a book on insurance called Bad Faith in Kentucky: a Primer. It is the leading work on the subject. In 1996, Mr. Breen received his "AV" rating from Martindale-Hubbell, a national attorney rating service. It is the highest ranking a lawyer can receive.  Mr. Breen's legal acumen makes him a valuable resource to the Company's Board of Directors

Christopher A. Giordano is the owner of Birchwood Capital Advisors, LLC., which provides financial and business consulting services to small and medium size businesses primarily in the bankruptcy and work-out arenas. Birchwood was the manager of the Distressed Opportunities Fund, LP from the period of 1990 through 2001. The fund was a principal investor and or advisor to 37 Bankruptcies and Out of Court Restructurings. From 1980 through 1990, Mr. Giordano served as a Senior VP in the Asset Management division Paine Webber. Mr. Giordano formed and owned Manchester Rhone Securities, an NASD member firm which underwrote several IPO's, until its sale in 1993.

Kareyn Joy Nunn has been at the forefront of renewable post-industrial resources technology for over twenty years. She has combined a desire for greater environmental stewardship along with an intuitive instinct in the area of regeneration technology to emerge as one of the global leaders in the field. From the early days in business development with American Renewable Resources to her role as CEO of Circle Sustainable Technologies, Joy has either authored or co-authored twenty industry related patents, centered on the regeneration of textile, leather and wood post-industrial scrap. The success of these technological breakthroughs led to the development of strategic manufacturing processes for the re-purposing of waste streams into sustainable products. The applied derivatives of the sustainable products have been in the markets of personal care, apparel, home furnishings and automotive, just to name a few. Joy has developed a global network of raw materials supply relationships and manufacturing partners and she will oversee the construction of new waste regeneration facilities throughout the world.  Joy founded and led one of the nation's premier Sustainability Consortium's, USA Consortium for Sustainability.  Members of this Consortium included, Ford, Mazda, Springs Industry, Collins and Aikman, Nike, PGI, Estee Lauder, Staples, Dow Reichhold Industries, Wal-Mart, Marks and Spencer and others too numerous to name.  Sustainable Products were created with and for these industry giants from Mrs., Nunn's technologies and commercialized as a part of these Consortium meetings. In 2007, under Joy's leadership, Sustainable Solutions, Inc. won Oklahoma State University's Green Award for Sustainability. Additionally, Circle 360, LLC won the 2010 World of Wipes (WOW) Innovation Award while under Joy's direction. She has been featured in numerous articles in industry trade magazines and quoted by prominent authors such as Paul Hawken in his book, Blessed Unrest.

Michael Rosenbaum , now retired, was formerly the Executive VP and Director of Vector Group, Inc a NYSE public company. He was also  vice chairman of Skybox, Inc which was sold for over 300 million cash to Marvel Group. Within the last 18 months he sold his interest in a luxury beachfront  real estate development project in Virgin Gorda BVI. He is a director of Common  Sense- a feminine hygiene co and Lithotech Grou- a medical device co. He has a  BA from Yale and MIA and LLB from Columbia University.

Robert Schneiderman was the founder of ScripsAmerica Inc., (SCRC) which started operations in 2010.  As of December 31, 2014, he was its CEO as well as a member of the Board of Directors. He has guided the Company to its status of generating over $30,000,000 in revenue in 2014 and becoming a profitable operation. Mr. Schneiderman has an extensive background of accomplishments. His experience includes using his established network to facilitate the financing of public and non public companies and assisting with mergers and acquisitions. He has been involved with marketing and consulting on a vast array of projects. These projects have included expansion of clients' customer base via product development, placement into mass retail, development of marketing programs, and effectively establishing and maintaining communications between all involved parties. Mr. Schneiderman possesses expertise in implementing marketing strategies, developing advertising-media programs, project management, structuring of operational systems, facilitation of client needs, procedures, expanding marketing channels, liaison between marketing channels-services and clients, as well as contract negotiations. Mr. Schneiderman has had personnel, operations, financial management and supervisory experience for 32 years as CEO of a prominent Philadelphia recruiting firm. In addition, he has served as committee chairman for charity and community service organizations guiding, advising, recruiting and motivating volunteers and has engaged in hands-on supervision and activity in the areas of fundraising, gala events, special event planning, social event planning, enhancement of membership recruitment procedures, writing of newsletter articles, and speeches. Mr. Schneiderman earned a B.S. in Business from Temple University.

 

 

Paul Serbiak is currently a Managing Partner of Pure Systems Sustainable Product Technologies as well as CEO and founder of Ideas To Market First, LLC, an innovation practice that specializes in open innovation strategy and developing unused IP for corporate clients.  Paul career includes serving as a Global Vice President at Johnson and Johnson as well as senior strategic roles at Procter & Gamble and Kimberly Clark.

 

 

None.

None.

 

Section 16(A) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and furnish us with copies of all Section 16(a) forms they file.  Based on our review of the EDGAR database, We believe that the following persons are delinquent in filing the required forms for the year ended December 31, 2015:  Christopher Giordano, Omar Barrientos, Paul Serbiak, K. Joy Nunn, Fred Andreini, Michael Breen, Michael Rosenbaum and Robert Schneiderman.  The Company will remind these individuals of the required forms and ensure that all required forms are timely filed moving forward.

Code of Ethics

 

We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.  Our Code of Ethics is designed to deter wrongdoing and promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;  (ii) full, fair, accurate, timely and understandable disclosure  in reports and documents that we file with, or submit to, the SEC and in our other public communications;  (iii) compliance with applicable  governmental laws, rules and regulations; (iv) the prompt internal reporting of violations of our Code of Ethics to an appropriate  person or persons identified in the code; and (v) accountability for adherence to our Code of Ethics.  We will provide any person without charge a copy of our code of ethics upon receiving a written request which may be mailed to our office at 2001 Route 46, Suite 201, Parsippany, New Jersey 07054.

 

ITEM 11.     EXECUTIVE COMPENSATION

Summary Compensation of Officers

The following table sets forth certain information with respect to compensation paid in 2015 to the Company's executive officers.

 

 

(1)                 On April 15, 2015, Christopher Giordano and Omar Barrientos were issued 2,500,000 shares of the Company's common stock, collectively, as an extinguishment of debt for salaries that were accrued prior to 2015.  This resulted in an extinguishment of debt in the amount of $2,785,000.  However, since the conversion was related to salary that accrued prior to 2015, such amount was not included in the 2015 compensation table.

(3)  The employment contracts for Paul Serbiak and K. Joy Nunn both include performance incentive stock options based upon the Company meeting certain performance conditions.  The Company did not meet the requisite performance conditions in 2015, and it is unlikely that the Company will meet the requisite performance conditions in 2016.  Due to the foregoing, this compensation is not being recognized in either 2015 or 2016 pursuant to FASB ASC Topic 718.

(4)  On August 21, 2015, Thomas H. Witthuhn received 200,000 shares of the Company's common stock pursuant to the terms of his separation agreement with the Company.  These shares were valued at $200,000 based on the trading price at the time of the issuance.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information with respect to outstanding equity awards for the Company's executive officers.

 

 

Compensation of Directors

The following table sets forth certain information with respect to compensation paid in 2015 to some of the Company's Directors.  This table does not include the Company's officers who were compensated as set forth above for service to the Company in their roles as officers, not directors.

(1)  Each of the four board members in the table were awarded 50,000 shares of common stock for their service on the Company's Board of Directors in 2015.

(2)  Mr. Schneiderman's shares were not yet issued as of December 31, 2015, but were issued subsequently for his 2015 service on the Board of Directors.

Other than as set forth in the table above, the Company has not compensated any Board members for their participation on the Board and does not have any standard or other arrangements for compensating them for such services.   The Company may issue shares of common stock or options to acquire shares of the Company's common stock to members of the Board in consideration for their services as members of the Board.  The Company does expect to reimburse Directors for expenses incurred in connection with their attendance at meetings of the Board.

Security Ownership of Management and Certain Beneficial Owners

The following table indicates the number of shares of both our common and preferred stock that were beneficially owned as of December 31, 2015, by (1) each person known by us to be the owner of more than 5% of our outstanding shares of preferred stock, (2) our directors, (3) our executive officers, and (4) our directors and executive officers as a group. In general, "beneficial ownership" includes those shares a director or executive officer has sole or shared power to vote or transfer (whether or not owned directly) and rights to acquire common stock through the exercise of stock options or warrants exercisable currently or that become exercisable within 60 days. Except as indicated otherwise, the persons named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. We based our calculation of the percentage owned on 18,915,327 beneficially owned shares of common stock outstanding as of December 31, 2015, and 200,000 beneficially owned shares of preferred stock outstanding on December 31, 2015. The address of each director and executive officer listed below is c/o Global Fashion Technologies, Inc., 2001 RT 46, Waterview Plaza, Suite 201, Parsippany, New Jersey.

 

 

* Represents less than 1%

(1)  Christopher Giordano beneficially owns 200,000 shares of Class B Preferred Stock, which is 100% percent of the outstanding shares in the class.  The Class B Preferred shareholders vote together with the common stock as a single class and the holders of Class B Preferred are entitled to 10,000 votes per share.

 

 

Securities Authorized for Issuance Under Executive Compensation Plans

As of December 31, 2015, the Company had equity compensation plans with K. Joy Nunn and Paul Serbiak.  A summary table of the potential share issuances based upon these plans is set forth below:

Transactions with Related Persons

For the period ending December 31, 2015, there were no material transactions with related parties other than (a) the conversion of accrued salary due to Christopher Giordano and Omar Barrientos into 2,500,000 shares of common stock as set forth in Item 11 above, and (b) the conversion into common stock of the principal and accrued interest in the amount of $931,306 related to the R.R. Donnelly & Sons Company note owned by Birchwood Captial Advisors LLC that was converted into 6,062,154 shares of common stock of the Company by Christopher Giordano as set forth in Item 7 above.

Promoters and Certain Control Persons

The Company has not had a promoter at any time during the last five fiscal years.

In addition, there are no parents of the Company.

Director Independence

The directors of the Company are also the executive officers of the Company as well as direct and/or beneficial shareholders of the Company and therefore are not independent directors. Members of the Company's management may become associated with other firms involved in a range of business activities. Consequently, there are potential inherent conflicts of interest in their acting as officers and directors of the Company. Insofar as the officers and directors are engaged in other business activities, management anticipates they will devote as much time to the Company's affairs as is reasonably needed.

 

 

 

The officers and directors are, so long as they are officers or directors of the Company, subject to the restriction that all opportunities contemplated by the Company's plan of operation which come to their attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made available to the Company and the companies that they are affiliated with on an equal basis. A breach of this requirement will be a breach of the fiduciary duties of the officer or director. If the Company or the companies in which the officers and directors are affiliated with both desire to take advantage of an opportunity, then said officers and directors would abstain from negotiating and voting upon the opportunity. However, all directors may still individually take advantage of opportunities if the Company should decline to do so. Except as set forth above, the Company has not adopted any other conflict of interest policy with respect to such transactions.

The following table sets forth fees billed to us for principal accountant fees and services during the years ended December 31, 2014 and December 31, 2015.

PART IV

Exhibits have been filed separately with the United States Securities and Exchange Commission in connection with the Annual Report on Form 10-K or have been incorporated into the report by reference.

 

 

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Act of 1933, this report has been signed by the following persons in the capacities and on the dates indicated.

---

 

 

REPORT OF INDEPENDENT REGISTRERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Global Fashions Technologies, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Global Fashion Technologies, Inc. and Subsidiaries (the Company) as of December 31, 2015, and the related consolidated statements of operations, cash flows, and stockholders' deficit for the year then ended. These consolidated financial statements are the responsibility of the entity's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Global Fashion Technologies, Inc. and Subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has an accumulated deficit of $28,911,878 that includes a loss of $19,132,725 for the year ended December 31, 2015.  Those conditions raise substantial doubt about its ability to continue as a going concern.  Management's plans regarding those matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  Our opinion is not modified with respect to that matter.

/s/ L J Soldinger Associates

Deer Park, IL

 

December 7, 2016

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Global Fashion Technologies, Inc.

We have audited the accompanying consolidated balance sheets of Global Fashion Technologies, Inc. as of December 31, 2014 and the related consolidated statements of operations, stockholders' deficit, and cash flows for the year ended December 31, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Global Fashion Technologies, Inc. as of December 31, 2014 and the results of its operations and its cash flows for the year ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to consolidated financial statements, the Company has incurred accumulated deficits of $9,779,153 as of December 31, 2014 that include losses of $1,890,248 for the year ended December 31, 2014. These factors raise substantial doubt about its ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Oakland Gardens, New York      

December 1, 2016

---

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

 

 

Global Fashion Technologies, Inc. and Subsidiaries

---

 

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASU's) to the FASB's Accounting Standards Codification. The Company considers the applicability and impact of all new or revised ASU's.

 

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 remains outstanding. The note was also issued with a warrant for this investor to purchase 25,000 shares of common stock at $1.50 for a period of two years.  The fair value of these warrants was approximately $3,909 as of December 31, 2015 and was calculated using the Black-Scholes-Merton model.

In April 2015, the Company and two members of executive management executed employment agreements which provided stock option awards for a minimum 250,000 shares of common stock each in conjunction with the schedule included with the employment agreement.  The stock option awards will be issued only when the Company reaches certain sales targets. All stock option awards earned by the executives shall have an exercise price equal to the fair market value of the common stock of GFTI at the close of market unless otherwise adjusted by the Board of Directors of GFTI at a later date.  The value of these options as of December 31, 2015 is $0 due to the extreme unlikelihood of the Company meeting its sales goals that trigger the issuances.

The Company and its former consolidated subsidiaries entered into a settlement agreement with R.R. Donnelly & Sons Company ("Donnelly") on June 6, 2007.  As part of the settlement, the Company issued to Donnelly a Secured Promissory Note in the principal sum of $601,048, with an interest rate of 9% per annum and a requirement for monthly payments of $43,577, and granted Donnelly a first lien security interest in all of the Company's assets.  The Company was unable to meet the monthly payments and Donnelly obtained judgment in the amount of $601,048.  This note was subsequently sold to a Director of the Company.  On March 31, 2013, the Company's Board of Directors, along with the Director's consent, 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 March 1, 2015, the principal and accrued interest in the amount of $931,306 was converted into 6,062,154 shares of common stock which was valued at $9,396,338.  The Company recorded $8,465,034 of debt extinguishment cost. The balance of this note plus accrued interest totals $ 0 and $ 931,306 at December 31, 2015 and 2014, respectively.

 

On May 2, 2014 the Company issued a secured promissory note to an individual in the amount of $100,000 payable at 10% interest and due on June 2, 2014.  After the due date, this note accrued interest at a rate of 15% annually until paid.  The note was converted to 180,000 shares on June 1, 2014.  The accrued interest for this note is $417 at December 31, 2014.

On November 25, 2014, the Company issued a secured promissory note to an individual in the amount of $100,000 at 10% interest and due on April 1, 2015. The balance of this note plus accrued interest totals $110,000 and $101,833 at December 31, 2015 and 2014, respectively.  On April 1, 2016 the Company entered into a forbearance agreement.  The Company was granted an extension of the note through September 30, 2016 in consideration for 200,000 shares of common stock valued at $200,000 with interest accruing after March 29, 2016 at 12%.  The note is unpaid and in default after September 30, 2016.

The Company issued an 8% unsecured convertible note payable in the amount of $250,000 in 2005.  The conversion feature had expired and the note was in default.  The statute of limitations for the holders of this note to initiate litigation expired, and therefore the note and its related accrued interest totaling $450,115 have been written off and recorded as income from debt extinguishment. The balance of the principal and interest is $0 and $430,115 as of December 31, 2015 and 2014, respectively.

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 was also issued with a warrant for this investor to purchase 25,000 shares of common stock at $1.50 for a period of two years.  The note remained outstanding at September 30, 2016.

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

At December 31, 2015 and 2014, deferred tax assets consisted of the following:

The following table provides a summary of amounts included in discontinued operations:

 

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

 

NOTE 10 – Commitments and Contingencies (Continued)

The additional minimum royalties are as follows:

 

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

Potentially dilutive securities were comprised of the following:

In 2016, the Company issued 192,500 shares of its common stock to the president of the Company which reduced his issuable shares to 107,500 related to the conversion of his accrued salary, 345,000 shares to third-parties for services rendered, 200,000 shares to a note holder in conjunction with the extension of the terms of a note, 50,000 shares to a director for his services, and 884,001 shares to five individuals for monies received from subscription agreements that were entered into with the Company in 2015.  There were also 106,001 shares of common stock deemed to be issuable for monies received from subscription agreements that were entered into with the Company in 2015.