Revenues in the First Quarter of 2019 by Itself Were 2.4 Times Larger Than Our Entire 2018 Revenue Results.
First Quarter non-GAAP Net Loss Reduced by 25% Compared to Prior Year Period.
Las Vegas, NV & Hong Kong, May 21, 2019 (GLOBE NEWSWIRE) -- 12 ReTech Corporation RETC, announced today that it has filed its annual Form 10-Q with the United States Securities and Exchange Commission for the period ended March 31, 2019. The results were filed yesterday on May 20, 2019. These financial results represent the combined operations of 12 Hong Kong, Ltd., 12 Japan, Ltd., 12 Europe AG and Emotion Fashion Group, Inc., Red Wire Group, LLC ("RWG") and Rune NYC, LLC ("Rune").
For the 3-month period ended March 31, 2019, the Company reported gross sales of $221,129 vs $8,942 for the same period in 2018. This represents an increase of $212,187 or 2,372.9%. These results represent a dramatic improvement in the operations of the Company and are consistent with the expectations of Company management for the newly acquired RWG and Rune operations in the first months of 12 ReTech's ownership.
Angelo Ponzetta, CEO of 12 ReTech commented, "RWG and Rune have performed consistently through the ownership transition so far, where we have made operational improvements that have lowered expenses so that both subsidiaries have become cash flow positive. Going forward, we are now focusing on revenue growth while keeping overhead expenses stable. We expect both RWG and Rune to grow substantially during the rest of the year and beyond. To better understand the growth that we are looking for, readers should understand that 12 ReTech's 1st quarter revenues are 2.4 times larger than the revenues for the entire prior year."
The Company generated $73,231 worth of Gross Profit on $221,129 in Gross Sales in the quarter realizing a Gross Margin of 33.1%. Management is targeting a low 40's gross margin percentage level going forward for the intermediate future as the current business mix mostly comes from our consumer brand platform. As the Company expands its 12 Technology Suite - Software as a Service business, Management would expect to see larger gross margins generated.
Angelo Ponzetta, continued, "We are pleased with Gross Margins at this level of business and think that we can maintain and perhaps expand these levels at a higher output level, which we are working towards"
For the 3-month period ended March 31, 2019 the Company's GAAP Net Loss increased to $1,703,607 compared to $870,230 for the same period in 2018. This represents a substantial increase in the GAAP Net Loss when measured against last year's comparable period. Management indicates that the larger net loss is due to various non-cash financing costs incurred during the first quarter of 2019. These non-cash financing costs include among other categories, Amortization of debt discount and Loss on derivative liability.
When excluding the non-cash financing expenses from both periods, the non-GAAP Net Loss decreased to $597,573 from $747,111 in the prior period or improved by 25%. The non-cash financing expenses are related to debt and equity financing that occurred in the first quarter as the Company raised working capital at a slower rate than in prior periods.
Angelo Ponzetta, continued, "Shrinking our non-GAAP Net Loss over the prior year's first quarter is definitely a good step in the right direction. I am expecting to see additional improvements in our future financial reports, as we grow our operational businesses and expect them to contribute to the continued shrinkage of the enterprises net losses. In addition, recent cost cutting in our European subsidiary should reduce our enterprise expenses by another $125,000 per quarter or better in upcoming reporting periods."
Angelo Ponzetta reiterated, "In addition to the expansion of our 12 Technology Suite operations, our consumer brand platform 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."
Please note that any references regarding figures or data from the Form 10-Q are limited or summaries for discussion purposes. For accurate and complete figures, data, and disclosures, reference is made to the actual Form 10-Q on file with the SEC and available to be read at www.sec.gov.
Angelo Ponzetta added, "On the acquisition front, we have been busy working on potential transactions that will give us substantially larger scale quickly and would give us an immediate opportunity to put our 12 Technology Suite into a North American based retail operation. We would look to jump start our retail technology plans and demonstrate its effectiveness for helping retailers to effectively compete against the likes of Amazon and Walmart."
Angelo Ponzetta commented, "We continue to work hard on executing our 12 Technology Suite 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."
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
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