12 ReTech Corporation Releases Its Annual Report For The Year Ended December 31, 2018.


Las Vegas, NV & Hong Kong, April 16, 2019 (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 period ended December 31, 2018. These financial results represent the combined operations of 12 Hong Kong, Ltd., 12 Japan, Ltd., 12 Europe AG and Emotion Fashion Group, Inc. (“Pre 2019 Acquisitions”) during the 12 months ended December 31, 2018 and also include the financial results for the 12 months ended December 31, 2017. The FY2018 financial results do not include the results from Red Wire Group, LLC (“RWG”) and Rune NYC, LLC (“Rune”) which were acquired in the First Quarter of FY2019.

For the 12-month period ended December 31, 2018, the Company reported gross sales of $92,831 vs $60,787 for the same period in 2017. This represents an increase of $32,044 or 52.7%. These results are consistent with the fact that the Company’s subsidiary Emotion Fashion Group (“EFG”) was acquired in May of 2018 and so far, has not met expectations in sales or operations. Looking forward, the newly acquired RWG and Rune which together generated $1,466,946 in FY2018 revenues will make significant profitable contributions to our USA operations.

Angelo Ponzetta, CEO of 12 ReTech commented, “RWG and Rune have immediately jump started our consumer brand platform operations. We expect them both to grow substantially in the upcoming year. I would not be surprised to see EFG, RWG and Rune together to be operating at a $2.4 million combined run rate by the end of 2019.”

The Company currently has one Japan based customer, Itoya, which deployed our technology in a second store, thus proving out the Company’s value proposition for retailers Looking forward, we expect Itoya to continue to roll out our technology into additional stores during 2019. The Company has also landed Jelmoli of Switzerland as an important 12Sconti customer and expects to start generating revenues from their operations in short order.

As a result, Company management believes that the results for both FY2018 and FY2017 will be judged insignificant in the future, as going forward the Company will begin to realize the results of its business model designed for high growth.

For the 12-month period ended December 31, 2018 the Company's GAAP Net Loss was $8,767,164 vs $1,418,755 for the same period in 2017. This represents an increase of $7,348,409 or 517.9% in the GAAP Net Loss in FY2018 when measured against FY2017’s results.

On a non-GAAP basis, when we exclude the costs of stock-based compensation, financing and non-cash impairments, the Company’s non-GAAP net loss in 2018 was $2,500,025 versus a non-GAAP net loss of $844,324 in 2017.  This represents an increase of $1,655,701 or 196.1% in non-GAAP net loss in FY2018 when measured against FY2017’s results.

Management believes the larger loss — caused by investing in the building of a manufacturing factory, software development, raising working capital, and being a publicly listed entity — is significant but warranted as the Company executes its business plan which, if successful, could rapidly increase shareholder value in the future.

Angelo Ponzetta commented, “Our business plan for 2019 includes the profitable expansion of our EFG, Rune and RWG operations. In order to break even in 2019, we are expanding our existing operations while working on additional acquisitions. New targeted acquisitions will complement what we are doing today, have a good profitable book of business and offer strategic synergy for our future plans in both consumer-brand platform and retail technology. Look out for both operational expansion and acquisition announcements in the coming months.”

Gross Profit for the 12-month period ended December 31, 2018 was $42,273 compared to $11,201 in the same period in 2017 which is an increase of $31,072 or 277.4%.  FY2018 gross margins of 45.5% are consistent with the operation of a technology licensing business combined with a vertically integrated consumer brand operation. As the cost of revenues for licensing fees in our retail technology business are NIL, we expect to see gross margin expansion as we deploy our technology to additional retailers.

Total GAAP Operating Expenses for the 12-month period ended December 31, 2018 were $3,297,907 vs $1,370,715 in the same period in 2017, which is an increase of 140.6%. It is worth noticing that of the GAAP Operating Expenses recorded in 2018, $1,727,236 were non-cash expenses yielding cash burn in FY2018 of $1,570,671, still significant but manageable so far.  Management expects the cash burn to slow appreciably during 2019 as our operations grow in revenues and profitability.

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.

Angelo Ponzetta commented, “Our dependence upon extremely expensive convertible note financing over the past 18 months 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 reducing its reliance on this type of financing. Our growing and cash flow positive operations are helping us to attract more traditional financing than we have used in the past. We hope to announce some positive milestones in this area in the near future.”

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 nine months. While, we still have this issue, the dilutive effects of stock coming to market through this mechanism has slowed. We are working diligently to eliminate this problem.”

Angelo Ponzetta, stated, "Our May 2018 acquisition of Emotion Fashion Brands, Inc. set the stage for the RWG and Rune acquisitions during the first quarter of FY2019. Looking forward, our successful acquisitions of RWG and Rune have provided us with good momentum as they entice other organizations to join us.”

Angelo Ponzetta continued, Red Wire Group was acquired because they had a successful operation in apparel cut and sew manufacturing. We have integrated their operation with our EFG factory and are confidant that their management expertise will make the difference for us going forward. In the six weeks that have elapsed since the acquisition, we have grown their customer base and are experiencing profitable revenue growth.”

Angelo Ponzetta also commented, “More recently, Rune has been acquired and we are already experiencing the benefits of their growing apparel brand. We have added new customers and expect to beat Rune’s prior operational revenue and profitability records. Also, the contacts that Rune’s management brings us are already providing opportunities for us in the retail technology side of our business as well as in additional acquisition opportunities.”

Angelo Ponzetta commented, “We continue to work hard to execute our business model which has been recording revenues in Asia, adapting our software technology to the European and North American markets, introducing new proprietary software products and applications to merchant clients and executing the acquisitions of microbrands previously announced over the course of last year. Today, we are negotiating with several additional micro-brands to complement our existing offerings and we have some other acquisitions in the pipeline that are very exciting as they could accelerate our march to profitability and shorten the timeline to our major goal of listing on a national exchange.”

About 12 ReTech Corporation:

At our core, we are a software company whose technology allows retailers to combat the dual threats of Walmart and Amazon — both online and in physical stores. Our microbrand rollup acquisition strategy allows us to demonstrate the effectiveness of our software, devise and test new products, while providing shareholder value through immediate revenue and earnings growth. The Company operates through our subsidiaries on three continents: 12 Hong Kong, Ltd., 12 Japan, Ltd., 12 Europe A.G., 12 Retail Corporation (and its subsidiaries in North America, including Emotion Fashion Group, Inc., Red Wire Group, LLC and Rune NYC, LLC). For more information please visit our website at www.12ReTech.com.

12 Retech Corporation is publicly listed on the OTC Markets under the symbol RETC.

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
mgilbert@magellanfin.com
317-361-2392 (USA)

Corporate Headquarters
investors@12ReTech.com