Notes
to the Condensed Consolidated Financial Statements
June
30, 2018
(Unaudited)
NOTE
1. NATURE OF BUSINESS
12
Retech Corporation (“we”, “us”, “our”, “12 ReTech”, “RETC”, or the
“Company”) was incorporated under the laws of the State of Nevada, U.S. as DEVAGO INC. on September 8, 2014. On June
8, 2017, the Company amended our Articles of Incorporation to change the name to 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, Asia, North America and Europe.
Principal
subsidiaries
The
details of the principal subsidiaries of the Company are set out as follows:
Name
of Company
|
|
Place
of Incorporation
|
|
Date
of Incorporation
|
|
Acquisition
Date
|
|
Attributable
Equity Interest %
|
|
Business
|
12
Retail Corporation (“12 Retail”)
|
|
Arizona,
USA
|
|
Sept.
18, 2017
|
|
Formed
by 12 Retech Corporation
|
|
100%
|
|
As
a holding Company to execute the Company’s microbrand roll up acquisition strategy as well as to penetrate the North
American market with our technology to select retailers.
|
|
|
|
|
|
|
|
|
|
|
|
12
Hong Kong Limited (“12HK”)
|
|
Hong
Kong, China
|
|
Feb.
2, 2014
|
|
June
27, 2017
|
|
100%
|
|
Development
of our technology and sales of our technology applications.
|
|
|
|
|
|
|
|
|
|
|
|
12
Japan Limited (“12JP”)
|
|
Japan
|
|
Feb.
12, 2015
|
|
July
31, 2017
|
|
100%
|
|
Consultation
and sales of technology applications.
|
|
|
|
|
|
|
|
|
|
|
|
12
Europe AG (“12EU”)
|
|
Switzerland
|
|
Aug.
22, 2013
|
|
Oct.
26, 2017
|
|
100%
|
|
Consultation
and sales of technology applications.
|
|
|
|
|
|
|
|
|
|
|
|
E-motion Fashion Brands, Inc.F/K/A Emotion Apparel, Inc,
Lexi
Luu
Designs, Inc,
Punkz Gear, Skipjack Dive and Dancewear, Cleo VII
|
|
Re-incorpora-ed,
in Utah, USA F/K/I in California,
USA
|
|
Sept.
9, 2010.
Reincorpor-ated
on July 6,
2018 and changed its name on
July 26
, 2018
|
|
May
1, 2018
|
|
100%
|
|
A
subsidiary of 12 Retail and is the first microbrand acquired under the microbrand acquisition roll up strategy. Operates its
own production facilities that can be utilized by all of the Company’s future microbrands.
|
NOTE
2. GOING CONCERN
The
Company accounts for going concern matters under the guidance of ASU 2014-15,
“Presentation of Financial Statements –
Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern
”
(“ASU 2014-15”). The guidance in ASU 2014-15 sets forth management’s responsibility to evaluate whether there
is substantial doubt about an entity’s ability to continue as a going concern as well as required disclosures. ASU 2014-15
indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether
conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern
for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration
of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are
available to be issued, as well as whether it is probable that management’s plans to address the substantial doubt will
be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt.
These interim financial statements have been
prepared on a going concern basis which assumes the Company will continue to realize its assets and discharge its liabilities
in the normal course of business. As of June 30, 2018, the Company has incurred losses totaling approximately $5.1 million since
inception, has not yet generated significant revenue from its operations, and will require additional funds to maintain our operations.
These factors raise substantial doubt regarding 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 generate future profitable operations and/or obtain the
necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become
due. The Company intends to finance operating costs over the next twelve months through continued financial support from its shareholders,
the issuance of debt securities, private placements of common stock and revenues generated from its first mircrobrand acquisition
Emotion Fashion Brands, Inc. These interim financial statements do not include any adjustments to the recoverability and
classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable
to continue as a going concern.
NOTE
3. ACQUISITIONS
The
Company accounts for all business combinations in accordance with Financial Accounting Standards Board (“FASB”) ASC
805, “Business Combinations” (“ASC 805”), using the acquisition method of accounting. Under this method,
assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition.
The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed,
and
is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, may be made subsequent
to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill.
Any adjustments subsequent to the measurement period would be recorded as income. Results of operations of the acquired entity
are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from
acquired assets. The Company expenses all costs as incurred related to an acquisition in the condensed consolidated statements
of income.
Emotion
Fashion Brands
,
Inc. F/K/A E-motion Apparel, Inc.
On
May 1, 2018, the Company completed the acquisition of E-motion Apparel, Inc. (“EAI”) a California corporation, pursuant
to a Share Exchange Agreement whereby the Company exchanged 1 million of its common shares for 100% of the equity of EAI in a
third-party transaction. The fair value of the 1 million shares of common stock issued amounted to $80,000. EAI owns four wholly-owned
and majority –owned subsidiaries: Lexi Luu Designs, Inc, (a Nevada Corporation), Punkz Gear, Inc, (a Wyoming Corporation),
Cleo VII, Inc. (a Nevada Corporation) and Skipjack Dive & Dance Wear, Inc. (a Nevada Corporation), which together owns five
microbrands that were included in this transaction and target specific niche markets: Lexi-Luu Dancewear, Punkz Gear, Cleo VII,
Skipjack Dive & Dance Wear and E-motion Apparel, Inc.
On July 6, 2018, the Company re-incorporated
EAI. in the state of Utah, USA and later re-named as Emotion Fashion Brands, Inc. and does business under the brand name,
“Emotion Fashions.” Going forward, the Company will operate all brands under the single entity, Emotion Fashion
Brands.
Emotion
Fashion Brands
was founded in 2010 and designs and manufactures
women’s apparel and kids dancewear.
The
acquisition of Emotion Fashion Brands, Inc. was accounted for under ASC 805. The following table summarizes the final allocation
of assets acquired and liabilities assumed as of the Acquisition Date at estimated fair value.
Fair
value below
:
As
of May 1, 2018, the assets and net liabilities acquired were as follows:
Cash
|
|
$
|
779
|
|
Assets (except cash)
|
|
|
39,237
|
|
Goodwill
|
|
|
274,137
|
|
Liabilities
|
|
|
(234,153
|
)
|
Net assets acquired
|
|
$
|
80,000
|
|
The
fair values of the net assets acquired were determined using the market approach, which indicates value for a
subject
asset based on available market pricing for comparable assets. The fair value of the fixed assets of $32,665 has been determined
by a third-party valuation firm and is valued at its estimated liquidation price. The fair value of
the
debt has been determined using an appropriately required yield and comparing against the stated interest rate on
the
debt.
The
purchase price for the acquisition was allocated to the fair value of the assets acquired and liabilities assumed
based
on the estimates of the fair values at the acquisition date, with the amount exceeding the estimated fair values being recorded
as goodwill.
The
fixed assets are being depreciated over their estimated useful lives of 5 years. Goodwill recorded will not be amortized, but
tested for impairment at least annually.
The
Company assumed the liabilities of the Emotion Fashion Brands, which included a disputed $250,000 note that bears a 2%
annual interest rate. The fair market value of the note of $148,051 has been determined as the present value of the expected cash
flow from the note assuming a market rate of interest.
Emotion
Fashion Brands’
results of operations have been included
in the Company’s operating results for the period subsequent to the acquisition on May 1, 2018. Emotion Fashion Brands
contributed revenues of $7,255 and a net loss of $28,357 from the date of acquisition through June 30, 2018.
Revenues
for Emotion Fashion Brands were lower because the company was dormant most of 2017 and first quarter of the 2018. This
was partly due to the fact that the company moved operations from Los Angeles, CA to Salt Lake City Utah. In additional
the company was re-branded and is gearing for its re-launch that began in June 2018.
The below table sets forth selected unaudited
pro forma financial information for the Company as if Emotion Fashion Brands was owned for the entire three and six months ended
June 30, 2018 and 2017.
|
|
Pro
forma
|
|
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
|
2018
|
|
|
2017
|
|
Revenues
|
|
$
|
31,981
|
|
|
$
|
57,205
|
|
Cost
of revenues
|
|
|
36
|
|
|
|
107,042
|
|
Gross
profit (Loss)
|
|
|
31,945
|
|
|
|
(49,837
|
)
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
1,767,045
|
|
|
|
188,629
|
|
Operating
loss
|
|
|
(1,735,100
|
)
|
|
|
(238,466
|
)
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
(860,671
|
)
|
|
|
573,126
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
$
|
(2,595,771
|
)
|
|
$
|
334,660
|
|
|
|
Pro
forma
|
|
|
|
Three
Months Ended
|
|
|
|
June
30,
|
|
|
|
2018
|
|
|
2017
|
|
Revenues
|
|
$
|
23,039
|
|
|
$
|
22,432
|
|
Cost
of revenues
|
|
|
36
|
|
|
|
106,486
|
|
Gross
profit (loss)
|
|
|
23,003
|
|
|
|
(84,054
|
)
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
1,058,452
|
|
|
|
101,021
|
|
Operating
loss
|
|
|
(1,035,449
|
)
|
|
|
(185,075
|
)
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
(687,721
|
)
|
|
|
573,126
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
$
|
(1,723,170
|
)
|
|
$
|
388,051
|
|
The unaudited pro forma information set forth
above is for informational purposes only. The pro forma information should not be considered indicative of actual results that
would have been achieved if the EAI acquisition had occurred on January 1, 2017. The unaudited supplemental pro
forma financial information was calculated by combining the Company’s results with the stand-alone results of EAI for the
identified periods, which were adjusted for certain transactions and other costs that would have been occurred during this pre-acquisition
period.
NOTE
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of
Regulation S-X. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2018. Notes to the unaudited interim condensed consolidated
financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements
for fiscal year 2017 have been omitted. This report should be read in conjunction with the audited consolidated financial statements
and the footnotes thereto for the fiscal year ended December 31, 2017 included in the Company’s Form 10-K as filed with
the Securities and Exchange Commission on April 16, 2018.
Principles
of Consolidation
The consolidated financial statements include
the accounts of the Company and its subsidiaries 12HK, 12JP, 12EU. 12 Retail and Emotion Fashion Brands which includes
E-motion Apparel, Inc., Lexi Luu Designs, Inc., Punkz Gear, Skipjack Dive and Dance Wear, Inc. and Cleo VII, Inc. All inter-company
accounts and transactions have been eliminated. We currently have no investments accounted for using the equity or cost methods
of accounting.
Use
of 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. The estimates and judgments will also affect the
reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith
estimates and judgments.
Reclassifications
Certain
prior period amounts have been reclassified to conform with the current period presentation.
Software
Development Costs
At
June 30, 2018 and December 31, 2017, software development costs totaled $133,240 and $0, respectively. Capitalized costs
related to the software under development are treated as an asset until the development is completed and the software is available
for sale. The Company will amortize the software costs on a straight-line basis over the estimated life of the software product’s
expected life cycle, commencing when the software is first available for general release to customers.
Goodwill
Goodwill
represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill
amount of $274,137 at June 30, 2018 relates to the acquisitions of Emotion Fashion Brands. Goodwill is not amortized,
but is tested annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting
unit below its carrying amount. The Company has determined that there has been no impairment of goodwill at June 30, 2018.
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASC 606, “Revenue from Contracts with Customers.” The Company has evaluated the
new guidance and its adoption did not have a significant impact on the Company’s financial statements and a cumulative effect
adjustment under the modified retrospective method of adoption will not be necessary. The will be no change to the Company’s
accounting policies.
Beneficial
Conversion Feature
If
a conversion feature of convertible debt or preferred stock provides for a rate of conversion that is below market value, this
feature is characterized as a beneficial conversion feature (“BCF”).
A
BCF related to debt is recorded by the Company as a debt discount. In those circumstances, the convertible debt
is
recorded net of the discount related to the BCF. The Company amortizes the discount to interest expense over the life of the debt
using the effective interest method.
A
BCF related to preferred stock is recorded by the Company as a discount to preferred stock. In those circumstances, the convertible
preferred stock is recorded net of the discount related to the BCF. The Company records the amortization of the BCF as a deemed
dividend.
Net
Loss Per Share of Common Stock
The
Company follows ASC 260,
“Earnings per Share”
(“EPS”), which requires presentation of basic EPS
on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation. In the accompanying financial statements, basic earnings (loss) per share are computed
by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
Diluted
earnings per share reflects the potential dilution that could occur if securities were exercised or converted into common stock
or other contracts to issue common stock resulting in the issuance of common stock that would then share in the Company’s
earnings subject to anti-dilution limitations. In a period in which the Company has a net loss, all potentially dilutive securities
are excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact. For the six and three
months ended June 30, 2018 and 2017, potentially dilutive common shares consist of common stock issuable upon the conversion of
Series A Preferred Stock and Series B Preferred Stock (using the if converted method). All potentially dilutive securities were
excluded from the computation of diluted weighted average number of shares of common stock outstanding as they would have had
an anti-dilutive impact.
Financial
Instruments
The
Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, prepaid expenses and
other current assets, accounts payable and accrued liabilities, due to stockholders and notes payable. The carrying amounts of
such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate
market interest rates of these instruments.
Recent
Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements
will not have a material effect on the Company’s financial statements.
NOTE
5 – FIXED ASSETS, NET
Fixed
assets, net at June 30, 2018 and December 31, 2017 consist of the following:
|
|
June
30, 2018
|
|
|
December
31, 2017
|
|
|
|
|
|
|
|
|
Office
equipment
|
|
$
|
7,622
|
|
|
$
|
7,371
|
|
Furniture
and equipment
|
|
|
607
|
|
|
|
607
|
|
Computer
|
|
|
14,077
|
|
|
|
12,998
|
|
Technical
equipment
|
|
|
23,435
|
|
|
|
23,435
|
|
Truck
|
|
|
6,115
|
|
|
|
-
|
|
Machinery
|
|
|
35,994
|
|
|
|
-
|
|
|
|
|
87,850
|
|
|
|
44,411
|
|
Less:
accumulated depreciation
|
|
|
(46,691
|
)
|
|
|
(35,796
|
)
|
Equipment
|
|
$
|
41,159
|
|
|
$
|
8,615
|
|
Depreciation expense for the
three months ended June 30, 2018 and 2017 amount to $1,384 and $2,908, respectively. Depreciation expense for the six
months ended June 30, 2018 and 2017 amounted to $2,533 and $6,100, respectively.
NOTE
6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts
payable and accrued liabilities at June 30, 2018 and December 31, 2017 consists of the following:
|
|
June
30, 2018
|
|
|
December
31, 2017
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
323,886
|
|
|
$
|
30,625
|
|
Accrued
expenses
|
|
|
297,520
|
|
|
|
66,931
|
|
Accrued
interest
|
|
|
60,993
|
|
|
|
8,348
|
|
|
|
$
|
682,399
|
|
|
$
|
105,904
|
|
NOTE
7 - STOCKHOLDER TRANSACTIONS
Due
to stockholders at June 30, 2018 and December 31, 2017 consists of the following:
|
|
June
30, 2018
|
|
|
December
31, 2017
|
|
Daniel
Monteverde
|
|
$
|
9,652
|
|
|
$
|
8,214
|
|
Angelo
Ponzetta
|
|
|
547,140
|
|
|
|
500,798
|
|
Gianni
Ponzetta
|
|
|
157,729
|
|
|
|
160,114
|
|
|
|
$
|
714,521
|
|
|
$
|
669,126
|
|
On
August 12, 2017, Gianni Ponzetta loaned CHF 60,000 ($62,946 at June 30, 2018 and $61,584 at December 31, 2017) to the Company,
which is included in the June 30, 2018 and December 31, 2017 totals. The promissory note is unsecured, bears interest at 1% per
annum and is due December 31, 2019.
The
other amounts due to stockholders are non-interest bearing, unsecured and due on demand.
During the six months ended June 30, 2018
and 2017, total advances and expenses paid directly by stockholders on behalf of the Company were $62,326 and $40,766,
respectively, and the Company repaid $16,931 and $0, respectively.
NOTE
8 – CONVERTIBLE NOTES PAYABLE
Convertible
notes payable at June 30, 2018 and December 31, 2017 which consists of the following:
|
|
June
30, 2018
|
|
|
December
31, 2017
|
|
Dated
September 15, 2017
|
|
$
|
462,500
|
|
|
$
|
387,500
|
|
Dated
December 8, 2017
|
|
|
185,292
|
|
|
|
92,646
|
|
Dated
December 12, 2017
|
|
|
185,292
|
|
|
|
92,646
|
|
Dated
March 15, 2018
|
|
|
100,000
|
|
|
|
-
|
|
Dated
April 27, 2018
|
|
|
100,000
|
|
|
|
-
|
|
Dated
May 17, 2018
|
|
|
60,000
|
|
|
|
-
|
|
Total
convertible notes payable
|
|
|
1,093,084
|
|
|
|
572,792
|
|
|
|
|
|
|
|
|
|
|
Less:
Unamortized debt discount
|
|
|
(88,633
|
)
|
|
|
(164,545
|
)
|
Less:
Unamortized debt discount related beneficial stock conversion
|
|
|
(117,994
|
)
|
|
|
-
|
|
Total
convertible notes
|
|
|
886,457
|
|
|
|
408,247
|
|
|
|
|
|
|
|
|
|
|
Less:
current portion of convertible notes
|
|
|
886,457
|
|
|
|
408,247
|
|
Long-term
convertible notes
|
|
$
|
-
|
|
|
$
|
-
|
|
For the three months ended June 30,
2018 and 2017, the Company recognized interest expense of $641,933 and $0 respectively, all of which represented the
amortization of original issue discounts, debt discounts and beneficial conversion features.
For the six months ended June 30, 2018 and 2017, the company recognized interest expense of $789,883
and $0 respectively, all of which represented the amortization of original issue discounts, debt discounts and beneficial
conversion features.
September
15, 2017 Note
On
September 15, 2017, the Company entered into the promissory note agreement with SBI Investments LLC (“SBI”) for loans
up to a maximum of $1,250,000, together with interest at the rate of 8% per annum. The consideration to the Company for this promissory
note is up to $1,000,000, resulting in a potential original issuance discount (“OID”) of up to $250,000. The maturity
date for each tranche funded shall be six months from the effective date of the respective payment date. The promissory note may
be converted into shares of the Company’s common stock at any time on or after the occurrence of an event of default. The
conversion price shall be the 60% multiplied by the lowest trading price during the 30 trading days period ending, in holder’s
sole discretion on each conversion, on either (i) the last complete trading day prior to the conversion date or (ii) the conversion
date. All terms of the note, including but not limited to interest rate, prepayment terms, conversion discount or look-back period
will be adjusted downward if the Company offers more favorable terms to another party, while this note is in effect.
An
initial promissory note of $200,000 was issued on September 15, 2017 and the Company received cash of $150,000 and recognized
OID of $40,000 and financing cost of $10,000 as debt discount and BCF of $133,333 as debt discounts.
On
November 14, 2017, the Company issued an additional promissory note of $187,500 and received cash of $150,000 and recognized OID
of $37,500 and a BCF of $125,000 as debt discounts.
On
March 30, 2018, the Company entered into an amendment of this note as it was originally due March 15, 2018, which indicates that
a $200,000 tranche is now eligible for conversion at a discount to market. The Company agreed to pay $25,000 to SBI for each 30-day
extension as consideration. The extension amount is automatically added to the face value of the note after each 30-day period.
SBI has agreed to a minimum of a 3-month extension under these same terms. The Company determined this amendment was a debt extinguishment
and recognized a total of $50,000 and $75,000 as a loss on debt extinguishment for the three and six months ended June
30, 2018. For the additional $75,000 of principal added to the balance of the note, an additional BCF of $50,000 was recorded
as debt discount.
As
of June 30, 2018, the Company has determined that there is no reset for the conversion terms of the note. On July 12,
2018, SBI converted $19,990 of this note for 510,204 shares of common stock.
December
8, 2017 Note
On
December 8, 2017, the Company entered into the promissory note agreement with LG Capital Funding, LLC (“LG”) for loans
totaling $185,292. The consideration to the Company is $158,824 resulting in a 15% OID. The maturity date for each note is six
months from the date of issuance. The Company shall pay a one-time interest charge of 9% of the principal amount for each note.
The notes may be converted at any time after the maturity date. The conversion price shall be 75% multiplied by the lowest trading
price during the 10 prior trading days period ending on either (i) the last complete trading day prior to conversion date or (ii)
the conversion date. All terms of the note, including but not limited to interest rate, prepayment terms, conversion discount
or look-back period will be adjusted downward if the Company offers more favorable terms to another party, while this note is
in effect. As additional consideration for the purchase of the notes, the Company issued to LG 121,903 shares of our common stock
each on January 13, 2018 and February 1, 2018, for a total of 243,806 shares, with a value equal to $46,323, based on the previous
day closing price.
The
first note of $92,646 was issued on December 8, 2017. The Company received cash of $75,000 and recognized OID of $13,234 and financing
cost of $4,412 and a BCF of $28,667 as debt discount. The one-time interest charge of 9% of the principal amount of the
note was due on January 1, 2018. In addition, the Company recorded $46,323 as debt discount for the issuance of the common shares.
On
January 10, 2018, LG funded their “back end note” which is the second half commitment from the agreements. The Company
received cash of $75,000 and recognized OID of $13,234 and financing cost of $4,412 and a BCF of $61,764 as debt discounts.
The one-time interest charge of 9% of principal amount of the note was due on February 1, 2018.
As
of June 30, 2018, as a result of reset features the conversion price shall be 60% multiplied by the lowest traded price
during the 10 prior trading day period ending on either (i) the last complete trading day prior to the conversion date or (ii)
the conversion date.
On
July 12, 2018, LG converted $6,289 of the note for
127,056 shares of common stock and on July 24, 2018, LG converted $6,289 of the note for 239,592 shares of common
stock.
December
8, 2017 Note
On
December 8, 2017, the Company entered into the promissory note agreement with Cerberus Finance Group Ltd. (“Cerberus”)
for loans totaling $185,292. The consideration to the Company is $158,824 resulting in a 15% OID. The maturity date for each note
is six months from the date of issuance. The Company shall pay a one-time interest charge of 9% of the principal amount for each
note. The notes may be converted at any time after the Maturity Date. The conversion price shall be the 75% multiplied by the
lowest trading price during the 10 prior trading days period ending on either (i) the last complete trading day prior to conversion
date or (ii) the conversion date. All terms of the note, including but not limited to interest rate, prepayment terms, conversion
discount or look-back period will be adjusted downward if the Company offers more favorable terms to another party, while this
note is in effect. As additional consideration for the purchase of the notes, the Company issued to Cerberus 121,903 shares of
our common stock each on January 13, 2018 and February 1, 2018, for a total of 243,806 shares, with a value equal to $46,323,
based on the previous day closing price.
The
first note of $92,646 was issued on December 8, 2017. The Company received cash of $75,000 and recognized OID of $13,234 and financing
cost of $4,412 and a BCF of $28,667 as debt discounts. The one-time interest charge of 9% of the amount of the Note was
due on January 1, 2018. In addition, the Company recorded $46,323 as debt discount for the issuance of the common shares.
On January 11, 2018, Cerberus
funded their “back end note” which is the second half commitment from the agreements. The Company received cash of
$75,000 and recognized OID of $13,234 and financing cost of $4,412 and a BCF of $61,764 as debt discounts. The one-time
interest charge of 9% of the principal amount of the note was due on February 1, 2018.
As of June 30, 2018,
as a result of reset features the conversion price shall be 60% multiplied by the lowest traded price during the 10 prior trading
day period ending on either (i) the last complete trading day prior to the conversion date or (ii) the conversion date.
On
July, 24, 2018, Cerberus converted $ 4,533 of the note for 100,740 shares of common stock.
March
15, 2018 Note
On
March 14, 2018, the Company entered into a into the promissory note agreement with Eagle Equities, LLC (“Eagle”) for
loans totaling $100,000. The consideration to the Company is $95,000 resulting in a 5% OID. The maturity date of each note is
one year from the date of issuance. The notes carry an interest rate of 12% per annum and interest payments are to be made in
common shares of the Company. The conversion price of the note is 60% multiplied by the lowest trading price of the Common Stock
for the ten prior trading days and the holder can convert the note at the earlier of an uncured default or 181 days from issuance.
The note may be redeemed by the Company at rates ranging from 105% to 130% depending on the redemption date provided that no redemption
is allowed after the 180
th
day. All terms of the note, including but not limited to interest rate, prepayments terms,
conversion discount or look-back period will be adjusted downward if the Company offers more favorable terms to another party,
while this note is in effect. As additional consideration, the Company is to issue to Eagle Equities, LLC shares of common stock
with a value equal to 25% of each note, determined at the time of signing of each note.
The
first note of $50,000 was issued on March 15, 2018. The Company received cash of $47,500 and recognized financing cost of $2,500
and a BCF of $33,333 as debt discounts. The Company issued to Eagle Equities, LLC 137,363 shares of common stock with a value
equal to $12,500. The Company recorded $12,500 as debt discount for the issuance of the common shares. Eagle Equities has LLC
has not yet funded the back end note for the remaining $50,000 at this time.
March
15, 2018 Note
On
March 14, 2018, the Company entered into a into the promissory note agreement with with Adar Bays Capital, LLC (“Adar Bays
Capital”) for loans totaling totaling $100,000. The consideration to the Company is $95,000 resulting in a 5% OID. The maturity
date of each note is one year from the date of issuance. The notes carry an interest rate of 12% per annum and interest payments
are to be made in common shares of the Company. The conversion price of the note is 60% multiplied by the lowest trading price
of the Common Stock for the ten prior trading days and the holder can convert the note at the earlier of an uncured default or
181 days from issuance. The note may be redeemed by the Company at rates ranging from 105% to 130% depending on the redemption
date provided that no redemption is allowed after the 180
th
day. All terms of the note, including but not limited to
interest rate, prepayment terms, conversion discount or look-back period will be adjusted downward in the Company offers more
favorable terms to another party, while this note is in effect. As additional consideration, the Company is to issue to Adar Bays
Capital shares of common stock with a value equal to 25% of each note, determine at the time of signing of each note.
The
first note of $50,000 was issued on March 15, 2018. The Company received cash of $47,500 and recognized financing cost of $2,500
and a BCF of $33,333 as debt discounts. The Company issued to Adar Bays Capital 137,363 shares of our common stock with a value
equal to $12,500. The Company recorded $12,500 as debt discount for the issuance of the common shares. Adar Bays Capital, LLC
has not yet funded the back end note for the remaining $50,000 at this time.
April
27, 2018 Note
On
April 27, 2018 the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC (“Auctus”) whereby the
Company issued to a 9% Convertible Note (“Note”) to Auctus n the principal amount of $100,000 and a maturity date
of January 25, 2019. The conversion price of the Note is $0.05 per share, provided, however, that on or after the earlier
of an event of default or 181 days after issuance date, the conversion price shall equal the lesser of (i) $0.05 per share, (ii)
the lowest trading price during the previous twenty days ending on the last trading day prior to the date of the note, and (iii)
60% of the lowest trading price of the Common stock for the twenty prior trading days prior to the conversion date. Auctus
can convert the Note, at any time, after issuance until the maturity date or the date payment of the default amount. All the terms
of the note, including but not limited to interest rate, prepayment terms, conversion discount or look-back period will be adjusted
downward in the Company offers more favorable terms to another party, while this note is in effect.
The note of $100,000 was issued
on April 27, 2018. The Company received cash of $90,000 and recognized financing cost of $10,000 and a BCF of $28,400 as
debt discounts. In addition, the Company issued to Auctus 700,000 shares of our common stock with a value equal to $61,600 as
a commitment/collateral fee. The Company recorded $61,600 as debt discount for the issuance of the common shares.
May
15, 2018 Note
On
May 15, 2018 the Company entered into 2018 the Company entered into a Securities Purchase Agreement with Bellridge Capital, LP
(“Bellridge”) whereby the Company issued to a 10% Convertible Note (“Note”) to Bellridge in the principal
amount of $60,000 and a maturity date of May 15, 2019. The conversion price of the Note is the lower of $0.08 per share
or 60% of the lowest trading price during the previous twelve days ending on the last trading prior to the date of the delivery
of the notice of conversion. Bellridge can convert the Note at any time after issuance until the maturity date or the date payment
of the default amount. The note may be redeemed by the Company at rates ranging from 120% to 150% depending on the redemption
date. The conversion price will be reduced to equal the effective price per share of any common stock or common stock equivalent
issuances while the note or any amounts accrued remain outstanding.
The
note of $60,000 was issued on May 15, 2018. The Company received cash of $50,000 and recognized financing cost of $10,000 and
a BCF of $50,000 as debt discounts.
As
of June 30, 2018, as a result of the reset features of the note the conversion price is assumed to be $0.01 due to a stock issuance
at that price.
NOTE
9 – NOTE PAYBLE
On May 1, 2018, 12 ReTech acquired Emotion
Fashion Brands, Inc. As part of the acquisition, Emotion Fashion Brands was obligated under a note payable to a third party in
the amount of $250,000, maturing in July 2027 and bearing a 2% interest rate. The note calls for monthly payments to be made to
the third party equal to ten percent (10%) of the gross sales of the Company until paid in full, including accrued interest. When
the note was acquired, the Company recorded the note at its fair market value of $148,051. The note discount is being amortized
to interest expense through maturity. Debt discount amortized amounted to $1,854 for both the three and six months ended June
30, 2018.
NOTE
10 - STOCKHOLDERS’ EQUITY
Amendments
to Articles of Incorporation
On
January 29, 2018, the Company amended its Articles of Incorporation giving its Board of Directors the power to issue up to 50,000,000
shares of Preferred Stock, and to fix the rights, preferences and privileges of each class of preferred stock so created. No shareholder
approval is required in connection with the creation of classes of preferred stock under this authority and the setting of the
rights, preferences and privileges of such shares. The Board of Directors acted to create new series of preferred stock, entitled
Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock.
Effective
March 14, 2018, the Company filed a Certificate of Amendment to its Articles of Incorporation with the state of Nevada to increase
the number of authorized shares of capital stock to 1,050,000,000 shares. The Company increased the number of authorized shares
of common stock to 1,000,000,000. There was no change to the number of shares of authorized preferred stock.
PREFERRED
STOCK
The
Preferred Stock may be divided into such number of series as the Board of Directors may determine. The Board of Directors is authorized
to determine and alter the rights, preferences, privileges and restrictions granted to and imposed upon any wholly unissued series
of Preferred Stock, and to fix the number of shares of any series of Preferred Stock and the designation of any such series of
Preferred Stock. The Board of Directors, within the limits and restrictions stated in any resolution or resolutions of the Board
of Directors originally fixing the number of shares constituting any series, may increase or decrease (but not below the number
of shares such series then outstanding) the number of shares of any series subsequent to the issue of shares of that series.
Series
A Preferred Stock
There
were no issuances of the Series A Preferred Stock during the six months ended June 30, 2018
As
of June 30, 2018, and December 31, 2017, 5,000,000 shares of Series A Preferred Stock were issued and outstanding.
Series
B Preferred Stock
During
the six months ended June 30, 2018, the Company issued Series B Preferred Stock as follows,
|
●
|
On
January 31, 2018, the Company sold 203,000 shares of Series B Preferred Stock to Geneva
Roth Remark Holdings, Inc. (“Geneva”) in exchange for $203,000 before fees.
The Company recognized a BCF of $107,692 as a deemed dividend.
|
|
|
|
|
●
|
On
March 20, 2018, Geneva agreed to purchase an additional 63,000 Series B Preferred shares for $63,000 under the same terms
as the initial purchase on January 31, 2018. The Company recognized a BCF of $32,308 as a deemed dividend.
|
As
of June 30, 2018 and December 31, 2017, 266,000 and 0 shares of Series B Preferred Stock were issued and outstanding, respectively.
As
a subsequent event on, on July 31, 2018 Geneva converted 15,000 shares of Series B preferred shares to 732,783
shares of common stock and on August 14, converted an addition 15,000 shares of Series B preferred shares for 1,500,708.
Series
C Preferred Stock
There
were no issuances of the Series C Preferred Stock during the six months ended June 30, 2018.
On
August 6, 2018, the Board of Directors of 12 ReTech corporation authorized the issuance of one (1) share of our Series C Preferred
Shares to the founder, Angelo Ponzetta, effective August 14, 2018. The Series C Preferred Shares has no equity value,
no preference in liquidation and is not convertible into common shares, but authorizes the holder to vote one billion votes on
any matter that shareholders are entitled to vote for under our Bylaws at a cost of $1.00 per share. The Board believes Company
maintains a consistent vision going forward that can only be achieved if the Founder’s vision is maintained. This vision
is the same vision that all current shareholders bought into as evidenced by their investment into the Company. To ensure
that the founder’s vision is maintained, it is necessary that no outsider person or group can gain voting control
from the founder as the Company.
Series
D Preferred Stock
Series
D Preferred stock are Blank Check Preferred which allows the Board of Directors to subdivide and/or determine the rights, privileges
and other features of this stock. On July 13, 2018, the Company filed an amended certificate of designations increasing the authorized
Series D preferred shares from 1 million to 10 million, as a reallocation of the 50 million Preferred Shares authorized. All of
these 10 million Series D preferred shares are part of the 50 million authorized preferred shares. On July 5, 2018 the Company
filed a certificate of designation to create a subset of the Series D Preferred Stock designated Series D-1 (see below)
Series
D-1 Preferred Stock, on July 2, 2018, the Company entered in to Equity Line of Credit agreement with Oasis Capital,
LLC (“Oasis Agreement”) and as a part of that Agreement the Company created a subset series D-1 preferred stock from
the authorized series D preferred shares having special rights and privileges as follows:
The
total number of shares of Series D-1 Preferred Stock issued was 311,250 shares, with a par value of $0.0001 per share and a stated
value of $2.00 per share (the “Stated Value”). The Series D-1 Preferred Stock as a whole, of which Series D-1 is a
subset, has such powers, preferences, rights and restrictions which shall be determined by the Company’s Board of Directors
in its sole discretion, and which designations and issuances shall not require the approval of the shareholders of the Company.
The
Series D-1 Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank:
(a) senior with respect to dividends and right of liquidation with the Company’s Common Stock, (b) junior with respect to
dividends and right of liquidation with the Company’s Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock; and (c) junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company.
Until twelve months following the issuance of the shares, without the prior written consent of 100% of the holders of the outstanding
shares of Series D-1 Preferred Stock, the Company may not issue any Preferred Stock that is senior to the Series D-1 Preferred
Stock in right of dividends and liquidation. Without the prior written consent of 100% of the holders of the outstanding shares
of Series D-1 Preferred Stock, the Company may not issue or incur any indebtedness or other obligation to pay month that is convertible
into or exchangeable for shares of Common Stock (or into or for any other security that is convertible into or exchangeable for
shares of Common Stock).
Upon
any liquidation, dissolution or winding-down of the Company, the holders of the shares of Series D-1 Preferred Stock shall be
paid in cash, before any payment shall be paid to the holders of Common Stock, or any other Junior Securities, an amount for each
share of Series D-1 Preferred Stock held by such holder equal to 140% of the Stated Value thereof plus any dividends accrued but
unpaid thereon.
Each
share of Series D-1 Preferred Stock together with accrued but unpaid dividends thereon shall be convertible at the option of the
holder thereof, in whole or in part, at any time, without the payment of additional consideration by the holder thereof, into
such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Stated Value per share being
converted plus accrued and unpaid dividends thereon by the Series D-1 Conversion Price in effect at the time of conversion. The
“Series D-1 Conversion Price” per share of Common Stock shall be the lowest traded price of the Common Stock during
the thirty (30) trading day period ending, in Holder’s sole discretion on each conversion, on either (i) the last complete
trading day prior to the Conversion Date or (ii) the Conversion Date (subject to adjustment as provided therein).
Series
D-1 Preferred Stock shall be non-voting except on certain major corporate actions or as required by law. In the event of such
a right to vote, each holder of Series D-1 Preferred Stock shall have the right to the number of votes equal to the number of
Conversion Shares then issuable upon conversion of the Series D-1 Preferred Stock held by such holder.
Before
any dividends shall be paid or set aside for payment on any Junior Security of the Company, each holder of the Series D-1 Preferred
Stock shall be entitled to receive dividends, in the manner provided herein, payable on the Stated Value of the Series D-1 Preferred
Stock at a rate of 8% per annum, which shall be cumulative and be due and payable in shares of Common Stock on the Conversion
Date. Such dividends shall accrue from the date of issue of each share of Series D-1 Preferred Stock, whether or not declared.
Shares
of the Series D-1 Preferred Stock shall be redeemable, in whole or in part, at the option of the Company, by resolution of its
Board of Directors, in cash, at any time during the initial 60 calendar day period after the issuance of the respective Series
D-1 Preferred Stock, subject to the Redemption Notice requirements below, at a price per share equal to 125% of the Stated Value
plus the amount of accrued but unpaid dividends thereon, provided, however, that 125% shall be replaced with 140% if the Company
exercises its option to redeem the Series D-1 Preferred Stock after the initial 60 calendar day period.
As of July 20, 2018 with the execution of
the Oasis Agreement, the Company issued 311,250 shares of Preferred Series D-1 shares. See terms of this agreement are detailed
in subsequent events Footnote 13.
There
were no other issuances of the Series D or Series D-1 Preferred Stock during the six months ended June 30, 2018.
No
shares of Series D Preferred Stock were issued and outstanding as of June 30, 2018. As of August 7, 2018, there were 311,250
shares of Series D Preferred Stock outstanding all, of which are the series D-1 preferred shares.
Common
Stock
The
Company is authorized to issue 1,000,000,000 shares of common stock at a par value of $0.00001.
Common stock issued for the six months
ended June 30, 2018 was as follows:
As described above, the Company issued
1,000,000 shares for the acquisition of EAI.
The Company issued 3,125,000 shares to
a stakeholder for total proceeds of $500,000. The Company received $100,000 at issuance and is to receive $400,000 in payments
from June 2018 through October 2018. At June 30, 2018, the Company was owed $320,000 and such amount is reflected as a subscription
receivable in stockholders’ deficit on the consolidated balance sheet.
In June 2018, the same stakeholder as
described above, who joined the advisory board in June 2018, purchased an additional 3,125,000 shares at a discounted price
of $0.01 per share. As a result of the discount, the Company recognized stock compensation of $218,750 for both the three
and six months ended June 30, 2018.
As discussed above, the Company issued 1,462,338 shares with
the convertible debt.
The Company issued 2,933,332 shares to
various consultants and recognized stock compensation expense of $230,004 for both the three and six months ended June 30, 2018.
As
of June 30, 2018, and December 31, 2017, 93,845,670 and 82,200,000 shares of common stock were issued and outstanding,
respectively.
NOTE
11 - SEGMENTS
The
Company does business on three continents (Asia, North America and Europe) in four different jurisdictions (Hong Kong-special
economic zone of the People’s Republic of China, Japan, United States of America, and The European common market through
Switzerland). These segments are components of the Company about which separate financial information is available and regularly
evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting
policies of the segments are the same as those described in Note 3, Summary of Significant Accounting Policies.
The
following table shows operating activities information by geographic segment for the three and six months ended June 30,
2018 and 2017.
3
months ended June 30, 2018
|
|
North America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Revenue
|
|
$
|
7,254
|
|
|
$
|
9,390
|
|
|
$
|
38
|
|
|
$
|
16,682
|
|
Cost of revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
36
|
|
|
$
|
36
|
|
Operating expense
|
|
$
|
823,449
|
|
|
$
|
133,138
|
|
|
$
|
77,461
|
|
|
$
|
1,034,048
|
|
Depreciation
|
|
$
|
-
|
|
|
$
|
1,267
|
|
|
$
|
117
|
|
|
$
|
1,384
|
|
Operating loss
|
|
$
|
(816,195
|
)
|
|
$
|
(125,015
|
)
|
|
$
|
(77,576
|
)
|
|
$
|
(1,018,786
|
)
|
Interest expense
|
|
$
|
(643,787
|
)
|
|
$
|
(1,773
|
)
|
|
$
|
-
|
|
|
$
|
(645,560
|
)
|
Other Expense
|
|
|
(50,000
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(50,000
|
)
|
Deemed Dividend
|
|
$
|
(140,000
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(140,000
|
)
|
Net loss available to common stockholders
|
|
$
|
(1,649,982
|
)
|
|
$
|
(126,788
|
)
|
|
$
|
(77,576
|
)
|
|
$
|
(1,854,346
|
)
|
3
months ended June 30, 2017
|
|
North
America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
9,018
|
|
|
$
|
-
|
|
|
$
|
9,018
|
|
Cost of revenues
|
|
$
|
-
|
|
|
$
|
0
|
|
|
$
|
-
|
|
|
$
|
0
|
|
Operating expense
|
|
$
|
-
|
|
|
$
|
73,098
|
|
|
$
|
8
|
|
|
$
|
73,106
|
|
Depreciation
|
|
$
|
-
|
|
|
$
|
2,908
|
|
|
$
|
-
|
|
|
$
|
2,908
|
|
Operating loss
|
|
$
|
-
|
|
|
$
|
(66,988
|
)
|
|
$
|
(
8
|
)
|
|
$
|
(
66,996
|
)
|
Interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Other Expense
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net
loss available to common stockholders
|
|
$
|
-
|
|
|
$
|
(66,988
|
)
|
|
$
|
(8
|
)
|
|
$
|
(66,996
|
)
|
6
months ended June 30, 2018
June 30, 2018
|
|
North America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Revenue
|
|
$
|
7,254
|
|
|
$
|
18,332
|
|
|
$
|
38
|
|
|
$
|
25,624
|
|
Cost of revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
36
|
|
|
$
|
36
|
|
Operating expense
|
|
$
|
1,274,021
|
|
|
$
|
319,091
|
|
|
$
|
146,009
|
|
|
$
|
1,739,121
|
|
Depreciation
|
|
$
|
-
|
|
|
$
|
2,290
|
|
|
$
|
243
|
|
|
$
|
2,533
|
|
Operating loss
|
|
$
|
(1,266,767
|
)
|
|
$
|
(303,049
|
)
|
|
$
|
(146,250
|
)
|
|
$
|
(1,716,066
|
)
|
Interest expense
|
|
$
|
(791,737
|
)
|
|
$
|
(1,773
|
)
|
|
$
|
-
|
|
|
$
|
(793,510
|
)
|
Other Expense
|
|
|
(75,000
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(75,000
|
)
|
Deemed Dividend
|
|
$
|
(140,000
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(140,000
|
)
|
Net loss available to common stockholders
|
|
$
|
(2,273,504
|
)
|
|
$
|
(304,822
|
)
|
|
$
|
(146,250
|
)
|
|
$
|
(2,724,576
|
)
|
6
months ended June 30, 2017
June 30, 2017
|
|
North
America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
43,397
|
|
|
$
|
-
|
|
|
$
|
43,397
|
|
Cost of revenues
|
|
$
|
-
|
|
|
$
|
451
|
|
|
$
|
-
|
|
|
$
|
451
|
|
Operating expense
|
|
$
|
-
|
|
|
$
|
150,788
|
|
|
$
|
179
|
|
|
$
|
150,967
|
|
Depreciation
|
|
$
|
-
|
|
|
$
|
6,100
|
|
|
$
|
-
|
|
|
$
|
6,100
|
|
Operating loss
|
|
$
|
-
|
|
|
$
|
(
113,942
|
)
|
|
$
|
(
179
|
)
|
|
$
|
(114,121
|
)
|
Interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net
loss available to common stockholders
|
|
$
|
-
|
|
|
$
|
(113,942
|
)
|
|
$
|
(
179
|
)
|
|
$
|
(114,121
|
)
|
The
following table shows assets information by geographic segment at June 30, 2018 and December 31, 2017.
June
30, 2018
|
|
|
North
America
|
|
|
|
Asia
|
|
|
|
Europe
|
|
|
|
Total
|
|
Fixed
assets, net
|
|
$
|
32,465
|
|
|
$
|
7,724
|
|
|
$
|
970
|
|
|
$
|
41,159
|
|
Total
assets
|
|
$
|
354,602
|
|
|
$
|
166,086
|
|
|
$
|
3,239
|
|
|
$
|
523,927
|
|
December 31, 2017
|
|
North
America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Fixed
assets, net
|
|
$
|
-
|
|
|
$
|
7,383
|
|
|
$
|
1,232
|
|
|
$
|
8,615
|
|
Total assets
|
|
$
|
20,394
|
|
|
$
|
84,206
|
|
|
$
|
27,886
|
|
|
$
|
132,486
|
|
NOTE
12 - SUBSEQUENT EVENTS
The
Company evaluated all events and transactions that occurred after June 30, 2018 and through the date of this filing in accordance
with FASB ASC 855, “Subsequent Events.” The Company determined that it does have a material subsequent events to disclose
as follows
:
Subsequent
Events:
On
July 2, 2018, the Company reserved of 20,000,000 shares of our common stock to Oasis Capital under the Equity Purchase Agreement.
In connection with the Equity Purchase Agreement, Oasis Capital was issued 311,250 shares of the Company’s Series D-1 Preferred
Stock which is convertible, at the option of Oasis Capital, into shares of our common stock, subject to a beneficial ownership
limitation of 4.99% of the then outstanding shares of common stock. Other than the Commitment Shares, the amount and percentage
of shares of our common stock that will be beneficially owned by the selling stockholder after completion of the offering assume
that they will sell all shares of our common stock being offered pursuant to this prospectus.
On
July 13, 2018 the Company increased its authorized Series D Preferred Stock from one million to ten million (10,000,000)
authorized shares of stock from the 50 million total authorized preferred shares. These shares are designated as “Blank
Check Preferred” allowing the Board of Directors to set the rights privileges and voting as determined by the Board of Directors
as well as dividing this Series into other series as the need may arise.
On
July 2, 2018, the Board designated three hundred eleven thousand two hundred fifty (311,250) Series D-1 Preferred Shares of which
all are currently issued and outstanding and designated and issued as part of the Oasis agreement. The Company filed an amended
certificate of designations increasing the authorized Series D preferred shares from 1 million to 10 million. All of these 10
million series D preferred shares are part of the 50 million authorized preferred shares. On July 2, 2018, the company filed a
certificate of designation to create a subset of the Series D Preferred Stock designated Series D-1 (see below)
Series
D-1 Preferred Stock. As a subsequent event on July 2, 2018 The Company entered in to Equity Line of Credit agreement with Oasis
Capital, LLC (“Oasis Agreement”) and as a part of that Agreement the Company created a subset series D-1 preferred
stock from the authorized series D preferred shares having special rights and privileges
The
total number of shares of Series D-1 Preferred Stock this Company is authorized to issue 311,250 shares, with a par value of $0.0001
per share and a stated value of $2.00 per share (the “Stated Value”). The Series D Preferred Stock as a whole, of
which Series D-1 is a subset, has such powers, preferences, rights and restrictions which shall be determined by the Company’s
Board of Directors in its sole discretion, and which designations and issuances shall not require the approval of the shareholders
of the Company.
The
Series D-1 Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank:
(a) senior with respect to dividends and right of liquidation with the Company’s Common Stock, (b) junior with respect to
dividends and right of liquidation with the Company’s Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock; and (c) junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company.
Without the prior written consent of Holders holding a majority of the outstanding shares of Series D-1 Preferred Stock, the Company
may not issue any Preferred Stock that is senior to the Series D-1 Preferred Stock in right of dividends and liquidation. Until
twelve months following the issuance of the shares, without the prior written consent of 100% of the holders of the outstanding
shares of Series D-1 Preferred Stock, the Company may not issue any Preferred Stock that is senior to the Series D-1 Preferred
Stock in right of dividends and liquidation. Without the prior written consent of 100% of the holders of the outstanding shares
of Series D-1 Preferred Stock, the Company may not issue or incur any indebtedness or other obligation to pay month that is convertible
into or exchangeable for shares of Common Stock (or into or for any other security that is convertible into or exchangeable for
shares of Common Stock).
Upon
any liquidation, dissolution or winding-down of the Company, the holders of the shares of Series D-1 Preferred Stock shall be
paid in cash, before any payment shall be paid to the holders of Common Stock, or any other Junior Securities, an amount for each
share of Series D-1 Preferred Stock held by such holder equal to 140% of the Stated Value thereof plus any dividends accrued but
unpaid thereon.
Each
share of Series D-1 Preferred Stock together with accrued but unpaid dividends thereon shall be convertible at the option of the
holder thereof, in whole or in part, at any time, without the payment of additional consideration by the holder thereof, into
such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Stated Value per share being
converted plus accrued and unpaid dividends thereon by the Series D-1 Conversion Price in effect at the time of conversion. The
“Series D-1 Conversion Price” per share of Common Stock shall be the lowest traded price of the Common Stock during
the thirty (30) trading day period ending, in Holder’s sole discretion on each conversion, on either (i) the last complete
trading day prior to the Conversion Date or (ii) the Conversion Date (subject to adjustment as provided therein).
Series
D-1 Preferred Stock shall be non-voting except on certain major corporate actions or as required by law. In the event of such
a right to vote, each holder of Series D-1 Preferred Stock shall have the right to the number of votes equal to the number of
Conversion Shares then issuable upon conversion of the Series D-1 Preferred Stock held by such holder.
Before
any dividends shall be paid or set aside for payment on any Junior Security of the Company, each holder of the Series D-1 Preferred
Stock shall be entitled to receive dividends, in the manner provided herein, payable on the Stated Value of the Series D-1 Preferred
Stock at a rate of 8% per annum, which shall be cumulative and be due and payable in shares of Common Stock on the Conversion
Date. Such dividends shall accrue from the date of issue of each share of Series D-1 Preferred Stock, whether or not declared.
Shares
of the Series D-1 Preferred Stock shall be redeemable, in whole or in part, at the option of the Company, by resolution of its
Board of Directors, in cash, at any time during the initial 60 calendar day period after the issuance of the respective Series
D-1 Preferred Stock, subject to the Redemption Notice requirements below, at a price per share equal to 125% of the Stated Value
plus the amount of accrued but unpaid dividends thereon, provided, however, that 125% shall be replaced with 140% if the Company
exercises its option to redeem the Series D-1 Preferred Stock after the initial 60 calendar day period.
On
August 6, 2018, the Board of Directors of 12 ReTech corporation issuanced one (1) share of our Series C Preferred
Shares to the founder, Angelo Ponzetta, effective August 14, 2018. The series C Preferred Shares has no equity value, no
preference in liquidation and is not convertible into common shares, but authorizes the holder to vote one billion votes on any
matter that shareholders are entitled to vote for under our Bylaws at a cost of $1.00 per share. The Board believes Company maintains
a consistent vision going forward that can only be achieved if the founder’s vision is maintained. This vision is
the same vision that all current shareholders bought into which, as evidenced by their investment into the Company. To ensure
that the founder’s vision is maintained, it is necessary that no outside person or group can gain voting control
from the founder as the Company.