Nevada
(State or other jurisdiction of incorporation or organization)
|
11-3746201
(I.R.S. Employer Identification No.)
|
2001 Route 46, Suite 310
Parsippany, New Jersey
(Address of principal executive offices)
|
07054
(Zip Code)
|
(973)291-8900
(Registrant's telephone number, including area code)
|
|
Large accelerated filer☐
|
Accelerated filer☐
|
Non-accelerated filer☐
(Do not check if a smaller reporting company)
|
Smaller reporting company☒
|
Global Fashion Technologies, Inc. and Subsidiaries
|
||||||||
(f/k/a Premiere Opportunities Group, Inc. and Subsidiaries)
|
||||||||
Consolidated Balance Sheets
|
||||||||
September 30,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
(Unaudited)
|
*
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
40,008
|
$
|
32,989
|
||||
Subscription receivable
|
20,000
|
10,000
|
||||||
Total current assets
|
60,008
|
42,989
|
||||||
Property and equipment
|
2,252
|
2,252
|
||||||
Total assets
|
62,260
|
45,241
|
||||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
54,608
|
51,108
|
||||||
Accrued compensation | 216,000 | 108,000 | ||||||
Secured note and accrued interest payable
|
124,266
|
110,000
|
||||||
Convertible notes and accrued interest,
|
55,312
|
52,312
|
||||||
Advances from related parties
|
282,789
|
115,633
|
||||||
Current liabilities from discontinued operations
|
84,281
|
870,045
|
||||||
Total current liabilities
|
817,256
|
1,307,098
|
||||||
Commitments and contingencies
|
||||||||
Stockholders' deficit
|
||||||||
Preferred stock $0.001 par value, 1,000,000
|
||||||||
shares authorized, 200,000 shares issued and
|
||||||||
outstanding
|
200
|
200
|
||||||
Common stock $0.001 par value, 400,000,000
|
||||||||
shares authorized, 19,209,161 and 17,537,660
|
||||||||
shares issued and outstanding, 901,166 and 1,377,667 issuable
|
||||||||
as of September 30, 2016 and December 31, 2015, respectively
|
20,110
|
18,915
|
||||||
Additional paid-in capital
|
28,299,149
|
27,630,906
|
||||||
Accumulated deficit
|
(29,074,455
|
)
|
(28,911,878
|
)
|
||||
Total Global Fashion Technologies, Inc.
|
||||||||
stockholders' deficit
|
(754,991
|
)
|
(1,261,857
|
)
|
||||
Total liabilities and stockholders' deficit
|
$
|
62,260
|
$
|
45,241
|
||||
*Derived from audited financial statements
|
||||||||
The accompanying notes are an integral part of these financial statements
|
Global Fashion Technologies, Inc. and Subsidiaries
|
||||||||||||||||
(f/k/a Premiere Opportunities Group, Inc. and Subsidiaries)
|
||||||||||||||||
Consolidated Statements of Operations
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
For The Three Months Ended
|
For The Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
$
|
18,750.00
|
$
|
-
|
$
|
18,750
|
$
|
4,000
|
||||||||
Operating expenses:
|
||||||||||||||||
General and administrative
|
146,220
|
71,094
|
290,387
|
128,611
|
||||||||||||
Participation share compensation - related party
|
-
|
-
|
-
|
1,514,060
|
||||||||||||
Consulting fees share expense
|
21,258
|
-
|
359,438
|
89,283
|
||||||||||||
Stock based compensation
|
-
|
-
|
50,000
|
1,609,375
|
||||||||||||
Failed acquisition costs paid in stock
|
-
|
(5,254
|
)
|
-
|
1,008,745
|
|||||||||||
Failed acquisition costs paid in stock - related party
|
-
|
-
|
-
|
923,520
|
||||||||||||
Employee stock settlement costs
|
-
|
200,000
|
-
|
200,000
|
||||||||||||
Debt extinguishment costs - related party
|
-
|
-
|
-
|
11,250,034
|
||||||||||||
Total operating expenses
|
167,478
|
265,840
|
699,825
|
16,723,628
|
||||||||||||
Loss from operations
|
(148,728
|
)
|
(265,840
|
)
|
(681,075
|
)
|
(16,719,628
|
)
|
||||||||
Other expense
|
||||||||||||||||
Interest expense and financing costs
|
51,500
|
6,676
|
117,266
|
20,028
|
||||||||||||
Total other expense
|
51,500
|
6,676
|
117,266
|
20,028
|
||||||||||||
Loss from continuing operations
|
||||||||||||||||
before provision for income taxes
|
(200,228
|
)
|
(272,516
|
)
|
(798,341
|
)
|
(16,739,656
|
)
|
||||||||
Provision for income taxes
|
-
|
-
|
-
|
-
|
||||||||||||
Loss from continuing operations
|
$
|
(200,228
|
)
|
$
|
(272,516
|
)
|
$
|
(798,341
|
)
|
$
|
(16,739,656
|
)
|
||||
Income (Loss) from discontinued operations, net of tax
|
635,764
|
(213
|
)
|
635,764
|
(2,564,035
|
)
|
||||||||||
Net income (loss)
|
435,536
|
(272,729
|
)
|
(162,577
|
)
|
(19,303,691
|
)
|
|||||||||
Net loss per share from continuing operations
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
(1.39
|
)
|
||||
Net income (loss) per share from discontinued operations
|
$
|
0.03
|
$
|
(0.00
|
)
|
$
|
0.03
|
$
|
(0.21
|
)
|
||||||
Net income (loss) per share
|
$
|
0.02
|
$
|
(0.02
|
)
|
$
|
(0.01
|
)
|
$
|
(1.60
|
)
|
|||||
Weighted average common shares outstanding
|
19,209,161
|
17,354,958
|
18,683,965
|
12,045,534
|
Global Fashion Technologies, Inc. and Subsidiaries
|
||||||||
(f/k/a Premiere Opportunities Group, Inc. and Subsidiaries)
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
(Unaudited)
|
||||||||
For the Nine Months
|
||||||||
Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(162,577
|
)
|
$
|
(19,303,691
|
)
|
||
Net Income (loss) from discontinued operations,
|
||||||||
net of taxes and minority interest
|
635,764
|
(2,564,035
|
)
|
|||||
Loss from continuing operations
|
(798,341
|
)
|
(16,739,656
|
)
|
||||
Adjustments to reconcile net loss to net cash
|
||||||||
used in operating activities:
|
||||||||
Debt extinguishment costs - related party
|
-
|
11,250,034
|
||||||
Failed acquisition costs paid in stock
|
-
|
968,750
|
||||||
Failed acquisition costs paid in stock - related party
|
-
|
923,520
|
||||||
Stock compensation expense
|
50,000
|
1,609,375
|
||||||
Stock issued for services
|
359,438
|
89,283
|
||||||
Employee stock settlement cost
|
-
|
200,000
|
||||||
Participation share compensation - related party
|
-
|
1,514,060
|
||||||
Changes in assets and liabilities:
|
||||||||
Prepaid expenses
|
-
|
(18,750
|
)
|
|||||
Accounts payable
|
3,500
|
(52,844
|
)
|
|||||
Accrued expenses
|
225,266
|
20,028
|
||||||
Net cash used in operating activities
|
(160,137
|
)
|
(236,200
|
)
|
||||
Cash flows used in investing activities:
|
||||||||
Additions to property and equipment
|
-
|
(2,650
|
)
|
|||||
Total cash flows used in investing activities
|
-
|
(2,650
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Advances from related party
|
265,000
|
18,937
|
||||||
Proceeds from note payable
|
-
|
50,000
|
||||||
Repayment of related party advance
|
(97,844
|
)
|
(26,654
|
)
|
||||
Proceeds from the sale of common stock
|
-
|
198,000
|
||||||
Total cash flows from financing activities
|
167,156
|
240,283
|
||||||
Discontinued activities:
|
||||||||
Net cash used in operating activities
|
-
|
-
|
||||||
Net cash used in investing activities
|
-
|
-
|
||||||
Net cash used in financing activities
|
-
|
-
|
||||||
Net cash flows from discontinued activities
|
-
|
-
|
||||||
Net increase (decrease) in cash
|
7,019
|
1,433
|
||||||
Cash at beginning of period
|
32,989
|
755
|
||||||
Cash at end of period
|
$
|
40,008
|
$
|
2,188
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the periods for:
|
||||||||
Interest
|
$
|
-
|
$
|
-
|
||||
Income taxes
|
$
|
-
|
$
|
-
|
||||
Non-cash financing sources:
|
||||||||
Common stock issued for reduction of debt
|
$
|
-
|
$
|
931,306
|
Year
|
||||
2016
|
$
|
100,000
|
||
2017
|
150,000
|
|||
2018
|
250,000
|
|||
2019
|
250,000
|
|||
Total
|
$
|
750,000
|
Exhibit
|
Description
|
|
3.1
|
|
Articles of Incorporation*
|
3.2(i)
|
|
By-Laws*
|
3.2(ii)
|
|
First Amended and Restated By-Laws of Premiere Publishing Group, Inc. dated December 14, 2007**
|
31.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).***
|
32.1
|
|
Certification pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002***
|
101
|
Interactive data files pursuant to Rule 405 of Regulation S-T.
|
*
|
Incorporated by reference to the Registration Statement filed with the Commission on November 29, 2005 (333-129977)
|
**
|
Incorporated by reference to Form 8-K filed with the Commission on December 12, 2007 (000-52047)
|
***
|
Filed herewith
|
GLOBAL FASHION TECHNOLOGIES, INC.
|
||
By:
|
/s/ Christopher Giordano | |
Christopher Giordano
|
||
Date: December 12, 2016
|
President, Treasurer and Director
|
|
Principal Executive Officer and
Principal Financial Officer
|
Document and Entity Information |
9 Months Ended |
---|---|
Sep. 30, 2016
shares
| |
Document And Entity Information | |
Entity Registrant Name | Global Fashion Technologies, Inc. |
Entity Central Index Key | 0001338929 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 19,209,161 |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2016 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred Stock, shares issued | 200,000 | 200,000 |
Preferred Stock, shares outstanding | 200,000 | 200,000 |
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 400,000,000 | 400,000,000 |
Common Stock, shares issued | 19,209,161 | 17,537,660 |
Common Stock, shares outstanding | 19,209,161 | 17,537,660 |
Common Stock, shares issuable | 901,166 | 1,377,667 |
Description of Business |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Description Of Business | |
Description of Business | NOTE 1 – DESCRIPTION OF BUSINESS
Global Fashion Technologies, Inc. ("the Company") was incorporated in Nevada on March 25, 2005. As of September 30, 2016 and December 31, 2015, the Company had 400,000,000 shares of authorized common stock.
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 took effect on August 15, 2014 at 5:00 p.m. EDT. As a result of the reverse stock split, every 350 shares of the Company's old authorized common stock was 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 Fashion Technologies, Inc. during the fourth quarter, 2013 became involved in the manufacturing and global distribution of ladies apparel. Trident Merchant Group, Inc. is a wholly owned subsidiary which provided "value added" strategic advisory services. During the second quarter, 2014 the Company formed Leading Edge Fashions, LLC of which it controls 51%. The non-controlling interest is recorded in the stockholders' deficit section. Effective December 31, 2014 the Company's Board of Directors determined it was in the best interest of the Company to discontinue the operations of Leading Edge Fashions, LLC.
The Company created a new limited liability company, Pure361, LLC ("Pure361") in May 2015 for the purpose of operating the portion of the Company's business that is involved with the collection, rejuvenation and manufacturing of garments and other accessories for the uniform marketplace that serves the hospitality, food service, medical, manufacturing, education, military, transportation and other commercial uniform industries. The Company owns 51% of Pure361. Pure361 entered into a license agreement with Pure System International Ltd. ("Pure") the minority owner of Pure 361, related to potential future operations, in which Pure361 was granted the exclusive license to use certain licensed intellectual property related to the manufacturing of uniforms from recyclable waste.
The Company created a new wholly owned subsidiary, Progressive Fashions Inc. ("PFI") in February 2016 for the purpose of designing, producing and marketing the EMME® Activewear Collection. The Company has had no operations to date.
Basis of Presentation: Unaudited Interim Financial Information
The accompanying interim condensed consolidated financial statements are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all of the normal recurring adjustments necessary to present fairly the financial position and results of operations as of and for the periods presented. The interim results are not necessarily indicative of the results to be expected for the full year or any future period.
Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Company believes that the disclosures are adequate to make the interim information presented not misleading. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto included in the Company's Report on Form 10-K filed on November 21, 2016 for the years ended December 31, 2015 and 2014.
Going Concern
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. The Company has an accumulated deficit of $29,074,455 and $28,911,878 as of September 30, 2016 and December 31, 2015, respectively, that include losses of $162,577 and $19,132,725 for the nine months ended September 30, 2016 and year ended December 31, 2015, respectively. 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 or settle its current indebtedness, acquire an operating business and raise capital through equity and debt financing or other means on desirable terms. In September 2016, the Company deemed 600,000 shares of common stock as issuable in settlement of $785,764 of liabilities from discontinued operations. If the Company is unable to obtain additional funds when they are required or if the funds cannot be obtained on favorable terms, management may be required to restructure the Company or cease operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiary Trident Merchant Group, Inc., Leading Edge Fashion, LLC which is 51% owned, and Pure361, LLC which is 51% owned. All significant intercompany accounts and transactions have been eliminated.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net (loss).
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.
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.
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 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.
Income Taxes
The Company accounts for income taxes pursuant to Accounting Standards Codification ("ASC") 740, Income Taxes, which utilizes the asset and liability method of computing deferred income taxes. The objective of this method is to establish deferred tax assets and liabilities for any temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.
ASC 740 also provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a "more-likely-than-not" recognition threshold at the effective date to be recognized. During the nine months ended September 30, 2016 and 2015 the Company recognized no adjustments for uncertain tax positions.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. No interest and penalties related to uncertain tax positions were recognized at September 30, 2016 and 2015. The Company expects no material changes to unrecognized tax positions within the next twelve months.
The Company has not filed federal and state tax returns from inception through December 31, 2015. The tax periods since inception are open to examination by federal and state authorities.
Impairment or Disposal of Long-Lived Assets
ASC Topic 360 (formerly FASB 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.
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 nine 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.
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.
|
Notes Payable |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes Payable | |
Notes Payable | NOTE 3 – NOTES PAYABLE
Secured Note Payable
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. On April 1, 2016 the Company entered into a forbearance agreement. The Company was granted an extension of the note through September 30, 2016 in consideration of 200,000 shares of common stock valued at $100,000, with interest accruing after March 29, 2016 at 12%. The note is unpaid and in default after September 30, 2016. The carrying value of this note, net of the $100,000 extension fee as of September 30, 2016 is $100,000, plus the accrued interest of $24,266. The note and accrued interest was $110,000 as of December 31, 2015. The extension fee was amortized ratably over the extension period of 180 days.
Unsecured Notes Payable
Convertible Notes Payable
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 matures on August 8, 2016. The note is currently unpaid and in default. 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 2 years. The balance of this note plus accrued interest totals $55,312 and $52,312 at September 30, 2016 and December 31, 2015, respectively. |
Capital Stock |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Equity [Abstract] | |
Capital Stock | NOTE 4 – CAPITAL STOCK
Preferred Stock
The Company has designated a "Class B Convertible
Preferred Stock" (the "Class B Preferred". The number of authorized shares totals 1,000,000 and the par value is $.001
per share. The Class B Preferred shareholders vote together with the common stock as a single class. The
holders of Class B Preferred are entitled to receive all notices relating to voting as are required to be given to the holders
of the Common Stock. The holders of shares of Class B Preferred shall be entitled to 10,000 votes per share. The
Class B Preferred Stock will have the rights to liquidation as all classes of the Common Stock of the Company. The
Class B Preferred stock holders are entitled to receive non-cumulative dividends at the rate of 8% per annum, in preference and
priority to any payment of any dividend on the common stock. 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 of 2011, a total of 200,000 shares of the Series B Preferred Stock was issued to a related party for $7,500 of legal and accounting fees that the related party paid on behalf of the Company.
Common Stock
In April 2015, the Company issued 2.2 million shares of common stock and deemed 300,000 shares of common stock issuable in consideration for the settlement of $340,000 of outstanding payroll owed to two officers of the Company. The shares were valued at $1.25 per share, totaling $3,125,000. This issuance resulted in debt extinguishment costs of $2,785,000. In the nine months ended September 30, 2016, the Company issued 192,500 shares of its common stock, reducing the shares issuable to the president of the Company from 300,000 shares to 107,500 shares.
In February 2016, the Company issued 50,000 shares of its common stock at a value of $1.00 per share for $50,000 to a board director for payment of services.
In March 2016, the Company issued 250,000 shares of its common stock at a value of $1.00 per share for $250,000 in payment for consulting services. In addition, the Company granted a warrant to the consultant to purchase 250,000 shares of common stock at $0.50 per share for a period of two years. The fair value of these warrants at the time they were granted was approximately $170,000 and was calculated using the Black-Scholes-Merton model. The expense related to this stock option for the nine months ended September 30, 2016 was $56,658.
In March 2016, the Company issued 50,000 shares of its common stock at a value of $1.00 per share for $50,000 as payment for consulting services.
In the three month period ended March 31, 2016, the Company issued 200,000 shares of its common stock at a value of $.50 per share, the original principle of a note in the amount of $100,000, in conjunction with the extension of the terms of the note. The $100,000 was amortized to interest expense over the six month extension period.
In March 2016, the Company issued 884,001 shares of its common stock at approximately $0.25 per share amounting to $223,232 to five individuals for monies received in 2015 from subscription agreements that were entered into with the Company in 2015. 106,001 shares remain issuable related to these subscription agreements as of September 30, 2016.
In April 2016, the Company issued 5,000 shares of common stock valued at $0.55 per share for $2,750 of consulting services.
In April 2016, the Company received a subscription receivable for 40,000 shares of common stock.
As of December 31, 2014, the Company owed $785,764 to trade creditors of Leading Edge Fashion LLC, a discontinued operation which was controlled by the Company. The Company paid the outstanding obligations on July 1, 2016 by agreeing to issue as full consideration for the amount owed the trade creditors. The 600,000 shares of common stock were issuable as of September 30, 2016. |
Income Taxes |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 5 – 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 September 30, 2016 and December 31, 2015, the Company has no tax liability. The net deferred tax asset generated by the loss carryforward has been fully reserved. The cumulative net operating loss carry-forward is approximately $13,000,000 at December 31, 2015, and will expire in the years 2026 through 2035. |
Commitments and Contingencies |
9 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Commitments and Contingencies | NOTE 6 – COMMITMENTS AND CONTINGENCIES
On March 15, 2015 the Company entered into a trademark license agreement with True Beauty, LLC which controls the trademark EMME. EMME is a market pioneer and trusted voice of the "Full-Figured" market. Under this licensing agreement the Company will design, produce and market the EMME® Activewear Collection. On April 13, 2016, the agreement was amended regarding the term and minimum royalties.
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.
As of January 18, 2016, the Company is a party to one pending litigation matter 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. The Company does not operate out of that premises and has never signed any leases or other documents with the plaintiff. Consequently, management believes there to be no legitimate cause of action against the Company. However, the Company is attempting to resolve the matter due to the relatively small amount in controversy. The unpaid rent being sought by the plaintiff is $26,595.
As of January 18, 2016, the Company has been named as a defendant in the matter of 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 is not party to this agreement and never completed purchase of Avani Holdings, LLC. Consequently, management believes there is no legitimate cause of action against the Company. The Company is vigorously defending its position in the lawsuit. The amount being sought by the plaintiff is $150,000 plus interest. |
Discontinued Operations |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 7 – DISCONTINUED OPERATIONS
During 2014, the Company's Leading Edge Fashions, LLC retail businesses, of which it owned 51%, was classified as discontinued operations. Based on the Company's strategy to allocate resources to its businesses relative to their growth potential and those with the greater right to win in the marketplace, the Company determined that this business did not align with the Company's long-term growth plans.
As of September 30, 2016 and December 31, 2015, $870,045 of current liabilities from discontinued operations includes $0 and $785,764 loan payable, respectively, and $84,281 accounts payable. The loan payable was converted to common stock in July 2016, which resulted in a gain on the extinguishment of debt related to discontinued operations in the amount of $635,764. |
Related Party Transactions |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 8 – RELATED PARTY TRANSACTIONS
In July through September 2016, the Company received $200,000 from its chief operating officer as a loan. The Company also received $65,000 in September 2016 from the president of the Company as an advance. The Company owed these executives of the Company advances totaling $282,789 and $115,633 at September 30, 2016 and December 31, 2015, respectively.
|
Net Loss Per Share |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | NOTE 9 - NET LOSS PER SHARE
Potentially dilutive securities are excluded from the calculation of net loss per share when their effect would be anti-dilutive. For all periods presented in the consolidated financial statements, all potentially dilutive securities have been excluded from the diluted share calculations as they were anti-dilutive as a result of the net losses incurred for the respective periods. Accordingly, basic shares equal diluted shares for all periods presented. As of September 30, 2016, the Company had 250,000 options and 25,000 warrants outstanding. |
Subsequent Events |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 10 - SUBSEQUENT EVENTS
Management has evaluated the impact of events occurring after September 30, 2016 up to the date of the filing of these interim unaudited condensed consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | 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., Leading Edge Fashion, LLC which is 51% owned, and Pure361, LLC which is 51% owned. All significant intercompany accounts and transactions have been eliminated. |
Reclassification | Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net (loss). |
Cash and Cash Equivalents | 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.
|
Equipment | 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. |
Revenue Recognition | 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 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. |
Income taxes | Income Taxes
The Company accounts for income taxes pursuant to Accounting Standards Codification ("ASC") 740, Income Taxes, which utilizes the asset and liability method of computing deferred income taxes. The objective of this method is to establish deferred tax assets and liabilities for any temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.
ASC 740 also provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a "more-likely-than-not" recognition threshold at the effective date to be recognized. During the nine months ended September 30, 2016 and 2015 the Company recognized no adjustments for uncertain tax positions.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. No interest and penalties related to uncertain tax positions were recognized at September 30, 2016 and 2015. The Company expects no material changes to unrecognized tax positions within the next twelve months.
The Company has not filed federal and state tax returns from inception through December 31, 2015. The tax periods since inception are open to examination by federal and state authorities. |
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets
ASC Topic 360 (formerly FASB 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. |
Use of Accounting Estimates | 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 | 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. |
Earnings (loss) per share | 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. |
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Minimum Royalties |
|
Description of Business (Details Narrative) - shares |
Aug. 04, 2014 |
Sep. 30, 2016 |
Dec. 31, 2015 |
Dec. 31, 2013 |
---|---|---|---|---|
Description Of Business Details Narrative | ||||
Common Stock, shares authorized | 400,000,000 | 400,000,000 | ||
Reverse stock split | 1 for 350 | |||
Non-controlling interest | 51.00% |
Going Concern (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Going Concern Details Narrative | |||||
Accumulated deficit | $ (29,074,455) | $ (29,074,455) | $ (28,911,878) | ||
Net loss | $ 435,536 | $ (272,729) | $ (162,577) | $ (19,303,691) | $ (19,132,725) |
Shares of common stock issued in settlement of liabilities from discontinued operations, shares | 600,000 | ||||
Shares of common stock issued in settlement of liabilities from discontinued operations, amount | $ 785,764 |
Notes Payable (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Secured Promissory Note | ||
Date Issued | Nov. 25, 2014 | |
Maturity Date | Apr. 01, 2015 | |
Terms | default | |
Shares issued for debt | 200,000 | |
Shares issued for debt, amount | $ 100,000 | |
Interest rate after default | 12.00% | |
Secured Promissory Note | ||
Note Payable Issued | $ 100,000 | |
Interest Rate | 10.00% | |
Notes Payable | $ 100,000 | $ 110,000 |
Accrued interest | $ 24,766 | |
Promissory Note [Member] | ||
Date Issued | Aug. 01, 2015 | |
Maturity Date | Aug. 08, 2016 | |
Note Payable Issued | $ 50,000 | |
Interest Rate | 8.00% | |
Notes Payable | $ 55,312 | $ 52,312 |
Convertible rate, per share | $ 1.00 | |
Warrant for common shares | 25,000 | |
Warrant, per share | $ 1.25 |
Income Taxes (Details Narrative) |
Dec. 31, 2015
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Net Operating loss carry-forward | $ 13,000,000 |
Commitments and Contingencies - Minimum Royalties (Details) - USD ($) |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|---|
Commitments and Contingencies Disclosure [Abstract] | |||||
Royalty Commitment | $ 250,000 | $ 250,000 | $ 150,000 | $ 100,000 | $ 750,000 |
Commitments and Contingencies (Details Narrative) |
1 Months Ended |
---|---|
Jan. 18, 2016
USD ($)
| |
Pending Litigation #1 [Member] | |
Date | 1/18/2016 |
Allegations | unpaid rent |
Alleged Damages | $ 26,595 |
Pending Litigation #2 [Member] | |
Date | 1/18/2016 |
Allegations | debt of Avani Holdings, LLC. |
Alleged Damages | $ 150,000 |
Discontinued Opeartions - Leading Edge Fashions, LLC (Details Narrative) |
Sep. 30, 2016 |
---|---|
Business Combinations [Abstract] | |
Ownership | 15.00% |
Discontinued Operations (Details Narrative) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Current liabilities from discontinued operations | $ 84,281 | $ 870,045 |
Gain on the extinguishment of debt | 635,764 | |
Loan Payable [Member] | ||
Current liabilities from discontinued operations | 0 | 785,764 |
Accounts Payable [Member] | ||
Current liabilities from discontinued operations | $ 84,281 | $ 84,281 |
Related Party Transactions (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Related Party Transactions [Abstract] | |||
Advances from related party | $ 282,789 | $ 282,789 | $ 115,633 |
Proceeds from Related Party | $ 65,000 | $ 200,000 |
Net Loss Per Share (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016
shares
| |
Warrants [Member] | |
Potentially dilutive securities | 25,000 |
Options [Member] | |
Potentially dilutive securities | 250,000 |
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