12 ReTech Corporation Released its Annual Report for the Year Ended December 31, 2019.
Total non-GAAP Operating Expenses for the 12-month period ended December 31, 2019 were $3,443,931 contrasted with $2,717,978 in the prior year.
The Company reports an annual revenue increase of $1,535,776 year over year!
Las Vegas, NV & Hong Kong, June 22, 2020 (GLOBE NEWSWIRE) -- 12 ReTech Corporation (OTC: RETC), announced today that it has filed its annual Form 10-K with the United States Securities and Exchange Commission for the year ended December 31, 2019. These financial results represent the combined operations of 12 Hong Kong, Ltd., 12 Japan, Ltd., 12 Europe AG and Emotion Fashion Group, Inc. (“EFG”) during the entire 12 month period ended December 31, 2019 and also include the financial results from the dates of acquisition through December 31, 2019 for Red Wire Group, LLC (“RWG”), Rune NYC, LLC (“Rune”), Bluwire Group, LLC (“Bluwire”) and Social Decay, LLC (“Social Sunday”) which were each acquired on various dates during 2019.
For the 12-month period ended December 31, 2019, the Company reported gross sales of $1,628,607 versus $92,831 for the same period in 2018. This represents an increase of $1,535,776 or 1,654.4%.
Had the Company owned all four of its 2019 acquisitions for the entirety of the year, Pro-forma Revenues would have been $5,219,301 for the entirety of 2019. Interested readers should review the MD&A “Select Unaudited Pro-forma 2019 Financial Information” section of the Company’s SEC Form 10-K for more detail.
Angelo Ponzetta, CEO of 12 ReTech Corporation stated, “While the Company had achieved major progress in acquiring revenue growth in 2019, 2020 was supposed to have been the year that we continued our revenue growth and reduced our expenses by consolidating those acquired operations in a march to profitability. Unfortunately, as everyone is aware, the entire world has been impacted by the COVID-19 pandemic related community shutdowns. As a result, we temporarily closed all of our Bluwire retail stores and curtailed our Fashion Group operations.”
Mr. Ponzetta continued, “However, we have been utilizing the downtime to consolidate our fashion brands under the new 12 Fashion Group. banner, At the same time, we designed, produced and began selling cloth face masks to meet demand while we await the resumption of our apparel demand. Realizing that consumer shopping habits will likely change due to COVID-19 we have been redesigning our retail software and technology solutions to function in a safer and more contactless environment. We will begin deploying our technology when finished in our own Bluwire retail stores as they begin to reopen in the 3rd quarter 2020.”
Mr. Ponzetta also disclosed, “We have also consolidated our international businesses (those outside the United States). 12 Europe has been shuttered and we are using our 12 Hong Kong operation to assist servicing 12 Japan’s customers which significantly reduces our expenses in Asia. We are still interested in the European and Asian markets but will handle all of our international opportunities with significantly lower operating costs.”
These overseas changes as well as the divestiture of Emotion Apparel Inc. in the USA has resulted in an “Other Income” gain of $1,023,965 that we recognized during 2019 as a direct result of the closure of 12 Europe and Emotion Apparel operations.
For the 12-month period ended December 31, 2019 the Company's GAAP Net Loss was $12,146,948 vs $8,767,164 for the same period in 2018. This represents an increase of $3,379,784 or 38.6% in the GAAP Net Loss in FY2018 when measured against FY2018’s results.
On a non-GAAP basis, excluding the costs of stock-based compensation, non-cash financing and non-cash impairments, the Company’s non-GAAP net loss in 2019 was $4,031,304 versus a non-GAAP net loss of $4,041,069 in 2018. This represents an improvement of $9,765 or 0.2% in non-GAAP net loss in FY2019 when measured against FY2018’s results.
12 ReTech Corporation Income Statement Comparison
| 2019 | 2018 | Year over Year % Changes |
2019 | 2018 | Year over Year % Changes |
|||||||||||||||||||
| GAAP | GAAP | GAAP | non-GAAP | non-GAAP | non-GAAP | |||||||||||||||||||
| Revenues | 1,628,607 | 92,831 | 1654.4 | % | 1,628,607 | 92,831 | 1654.4 | % | ||||||||||||||||
| Cost of Revenue | 1,122,086 | 50,558 | 2119.4 | % | 1,122,086 | 50,558 | 2119.4 | % | ||||||||||||||||
| Gross Profit | 506,521 | 42,273 | 1098.2 | % | 506,521 | 42,273 | 1098.2 | % | ||||||||||||||||
| Operating Expenses | 3,449,178 | 3,297,907 | 3,449,178 | 3,297,907 | ||||||||||||||||||||
| General & Administrative | 2,119,125 | 1,566,456 | 2,119,125 | 1,566,456 | ||||||||||||||||||||
| Professional Fees | 1,225,699 | 1,142,127 | 1,225,699 | 1,142,127 | ||||||||||||||||||||
| Stock Based Compensation | 5,247 | 579,929 | - | - | ||||||||||||||||||||
| Depreciation | 99,107 | 9,395 | 99,107 | 9,395 | ||||||||||||||||||||
| Total Operating Expenses | 3,449,178 | 3,297,907 | 4.6 | % | 3,443,931 | 2,717,978 | 26.7 | % | ||||||||||||||||
| Loss from Operations | (2,942,657 | ) | (3,255,634 | ) | -9.6 | % | (2,937,410 | ) | (2,675,705 | ) | 9.8 | % | ||||||||||||
| Other Income (Expense) | ||||||||||||||||||||||||
| Other Income | 1,023,965 | 4,691 | 1,023,965 | 4,691 | ||||||||||||||||||||
| Reserve Expense | (2,139,961 | ) | - | - | - | |||||||||||||||||||
| Loss on Debt Extension | - | (75,000 | ) | - | (75,000 | ) | ||||||||||||||||||
| Interest Expense | (8,995,066 | ) | (1,295,055 | ) | (1,985,047 | ) | (1,295,055 | ) | ||||||||||||||||
| Loss on Exchange of Equity Instruments | (132,812 | ) | - | (132,812 | ) | - | ||||||||||||||||||
| Loss on Impairment of Goodwill | (1,971,677 | ) | - | - | - | |||||||||||||||||||
| Loss on Impairment of SW Development | (513,601 | ) | (551,111 | ) | - | - | ||||||||||||||||||
| Gain/(Loss) on Derivative Liability | 3,524,861 | (3,595,055 | ) | - | - | |||||||||||||||||||
| Net Other Income (Expense) | (9,204,291 | ) | (5,511,530 | ) | 67.0 | % | (1,093,894 | ) | (1,365,364 | ) | -19.9 | % | ||||||||||||
| Net Income Gain (Loss) | (12,146,948 | ) | (8,767,164 | ) | 38.6 | % | (4,031,304 | ) | (4,041,069 | ) | -0.2 | % | ||||||||||||
Gross Profit for the 12-month period ended December 31, 2019 was $506,521compared to $42,273 in the same period in 2018 which is an increase of $464,248 or 1,098.2%. FY2019 gross margins of 31.1% are not consistent with our business plan for the period. Challenges arose in a large 12 Fashion Group project that occurred late in the year that were a result of the lack of cash available to purchase raw materials through normal channels. Management considers FY2018 gross margins of 45.5% to be achievable in 2021 and beyond as the Company gets back to normal business operations.
Total non-GAAP Operating Expenses for the 12-month period ended December 31, 2019 were $3,443,931 contrasted with $2,717,978 in the prior year. These results exclude stock compensation expense which slowed considerably in 2019 but are considered as non-Cash based expenses. The year over year increase is consistent with the operation of our four new 2019 businesses and primarily driven by the overhead expenses of our new Bluwire operation.
Mr. Ponzetta noted, “In reviewing our operating results I think it is important to note that while our revenue increased by $1,535,776 or 1,654.4%, our operating expenses only increased by $151,271 or 4.6%. That is a major step in the right direction. I am very excited to begin the re-opening of our Bluwire stores where we are adding new products, expanding merchandise categories and deploying our interactive more contactless retail software!”
Please note that any references regarding figures or data from the Form 10-K are limited or summaries for discussion purposes. For accurate and complete figures, data, and disclosures, reference is made to the actual Form 10-K on file with the SEC and available to be read at www.sec.gov.
Looking forward, Management believes there are important structural differences in the Company’s operations that began in 2019 that will continue to be built upon in the future. We are now operating real businesses and intend to pursue strategies over the next few years that will grow these businesses. Deploying our retail technologies successfully will be the key to growing our operational businesses and hopefully increasing our shareholder value. In addition, we are not finished with our acquisition strategy and will continue to add business operations as opportunities present themselves.
Key in our going forward strategy is the role of proper financing for the operational growth of our businesses. We are not planning on using any more of the common financing mechanisms that plaque our peers in the OTC Markets. As a matter of course, we are considering financing opportunities that are much more reasonable than the financing that we have taken in prior years. More on this later.
Angelo Ponzetta commented, “Our business plan for 2020 will focus on recovering from the COVID-19 shutdowns that have negatively impacted most retailers and brands in the 1st Quarter of 2020. Our stores are temporarily closed in all locations at this moment. The first to reopen will be our store in the Mohegan Sun resort in Connecticut.”
Angelo Ponzetta commented, “Our dependence upon extremely expensive convertible note financing over the past three years has hurt us with large non-cash financial statement expenses driving large GAAP net losses. The good news is, that the Company is showing good progress on eliminating its reliance on these types of financing.”
Angelo Ponzetta continued, “The other issue that has hurt us is that our convertible note financings have caused a large amount of dilution in our outstanding stock over the past two years. The good news is that additional conversions coming to market through this mechanism could disappear in short order!”
Angelo Ponzetta commented, “We continue to work hard to execute our business plan which has been recording significantly larger revenues than in prior years.”
About 12 ReTech Corporation:
12 Retech Corporation is publicly listed on the OTC Markets under the symbol RETC.
“RETAIL REINVENTED”
12 ReTech Corporation has REINVENTED RETAIL for both our own retail outlets and other merchants who would want to license our cutting-edge retail software to experientially engage with consumers, increase revenues, reduce expenses and provide superior service to their customers. In addition to our software licensing business, the company has eight retail outlets that sell electronics and travel-related products at premium U.S.A. airport and casino locations under our Bluwire brand. We create and sell fashionable apparel under our Rune NYC, Social Sunday, Emotion Fashion & Lexi-Lu brands. We produce clothing and travel accessories at our Red Wire Design operation.
As a vertically integrated omni channel retailer 12 ReTech’s technology team truly understands and develops what merchants need in order to thrive in today’s demanding retail environment. We give our retailer clients the abilities and tools that enable them to compete effectively with the likes of Amazon, Walmart and others.
For more information about our Company visit us at www.12ReTech.com. To have your products carried in our stores visit www.bluwire.shop. To learn about our complete design and production services for sewn products, contact us at [email protected] or visit www.redwire.design. To shop our brands please visit www.runenyc.com and www.lexiludancewear.com. For retailers who would like to learn more about our cutting-edge software, contact us in the U.S.A at (530) 539 4329 or at [email protected].
Safe Harbor: This document contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the ability of the Company to successfully implement its turnaround strategy, changes in costs of raw materials, labor, and employee benefits, as well as general market conditions, competition and pricing. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this letter will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as representation by the Company or any other person that the objectives and plans of the Company will be achieved. In assessing forward-looking statements included herein, readers are urged to carefully read those statements. When used in the Annual Report on Form 10-K, the words "estimate," "anticipate," "expect," "believe," and similar expressions are intended to be forward-looking statements.
Investor Relations Contacts:
Mark Gilbert
Magellan FIN, LLC
[email protected]
317-361-2392 (USA)
Corporate Headquarters
[email protected]
