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Las Vegas, NV & Hong Kong, April 18, 2019 (GLOBE NEWSWIRE) --
Dear Fellow Shareholder(s):
First, I would like to take this time to thank many of our stakeholders including our employees, vendors, and most importantly our shareholders for their strong support throughout the last two years. Through a disappointing slump in our stock our stakeholders continued to work hard to turn our ambitions into reality. That hard work is now, in the first quarter of 2019 beginning to bear fruit!
Revenue Status and Plans:
With the recent two acquisitions (Red Wire Group in February 2019 and Rune NYC in March 2019) we have finally obtained some significant ongoing cash flow. During the month of March, we were able to successfully integrate our Red Wire factory and our existing Emotion Fashion factory into a seamless operation under the experienced Red Wire management team. They have ruthlessly reduced costs and streamlined operations. Meanwhile, Rune NYC has already streamlined operations, reduced back office staff and facilities expenses and integrated the majority of their production into the Red Wire factory. The results are that in one single month and for the first time ever, our USA subsidiaries no longer need extra cash from their parent, 12Retech Corporation to sustain their operations!
By applying our marketing and operational expertise, our USA subsidiaries are already expanding their customer bases and increasing their sales order flow. The results are increased production and deliveries which have already been evidenced month to date. These trends have just begun.
The intangible benefits that these two acquisitions brought to us are even more valuable. First, the quality of our new team members is top notch. They are eager to move their business operations forward and the incentives that they have are highly motivating. In addition, their relationships have been especially helpful in lining up potential customers for our retail technology platform (12 Technology Suite) and equally helpful for cross recruiting of new business opportunities for each other. In addition, they have brought forward new acquisition opportunities with which we are already having discussions on.
Our operations in the rest of the world have not been idle. Recently 12 Europe has been particularly aggressive in deploying our 12Sconti APP. In 2018, we had launched 12Sconti in Winterthur, Switzerland to mixed reviews and lackluster response. We replaced management at considerable expense, but that change allowed us to build on what we had learned with a much stronger partner: Jelmoli. This brought our mobile APP to “prime time” with a major player who is encouraging their own customers to download 12Sconti and use it to start purchasing products. Because Jelmoli is such a well-known retailer, additional merchants in Zurich are now climbing aboard the 12Sconti wagon. We have already signed 8 additional retailers whom will be featured in the 12Sconti APP over the next few weeks. We expect to continue to sign up many more merchants throughout the rest of 2019 and beyond.
We are examining the potential to launch a digital advertising network in Europe under the name Visore. It would be a visual and audio story telling platform that up to 12 European luxury brands at a time can participate with to enhance their own brand awareness and generate sales. The initial responses from targeted advertisers have been positive. For more information visit www.12europe.com.
In Asia, we continued to modestly expand in 2018 as ITOYA placed elements of our 12 Technology Suite into a second store. We expect ITOYA to continue to install our hardware and software in additional ITOYA stores in the second half of 2019. That ITOYA has added our technology solutions to their other stores validates the effectiveness of our technology solutions for retailers.
We have nearly completed the next release of our 12 Technology Suite which will now allow shoppers to choose the language they would like to interact in; English, French, German and Japanese, with Spanish in development. Once released, we will actively demonstrate our technology to the long list of retailers we have been talking with over the last 18 months.
The 12 Technology Suite is a comprehensive platform that functions with a variety of components that a retailer can choose from to customize their customer’s in-store and online shopping experiences. The platform and its components are designed to achieve heightened consumer engagement and collect useful consumer behavioral data both in-store and online through its various tools and APPs.
The 12 Technology Suite platform is managed through a dashboard that allows the retailer to update information for customer presentations on all of their varied customer facing devices that the retailer has chosen to deploy. In addition, these devices are used to obtain shopper data for retargeting. 12 ReTech Corporation can provide our software on hardware supplied by us or on hardware supplied by our retailer clients. When selling our products with hardware included, we mark up the hardware and charge a licensing fee with a minimum component and a percentage of the receipts of products sold by retailers through the use of our technology platform.
Management has demonstrated the ability to make strategic acquisitions and our work in this direction continues. We intend to make additional acquisitions. We are negotiating with additional consumer brands and retail operations where we feel that we can demonstrate the effectiveness of our technology. We are also pursuing marketing firms who can help our own brands achieve organic growth. Look for us to make additional synergistic acquisitions throughout 2019 and beyond.
Our Stock Price:
All of us are disappointed by the declining trend of our stock. Like many of our investors, I personally saw my net worth, which is based primarily on my holdings of Company stock decline significantly. There are a couple of reasons for this decline and in my opinion they all relate to the fact that it has taken us this long to start to produce significant subsidiary revenues and positive cash flow. Our initial planned acquisitions did not take place and we had to discover and move forward with new targets, some of which have recently been acquired.
In addition, as a technology company we are forced to spend considerable sums of capital to enhance and improve our technology. Since we did not have significant operations in 2018, we were unable to finance our technology and our acquisitions in any other way than through the use of convertible debt. As that debt comes due, the debt holders generally convert their notes into common stock at a discount to market which is shortly sold into the markets. This has caused considerable dilution and downward pressure on our stock.
As indicated above, the Company has finally made some major strides towards growing revenue and earnings. Red Wire was acquired in February and Rune was acquired in March. They both generate revenues and are cash flow positive. Jelmoli just released Sconti in Europe and is aggressively pushing its deployment. As a new concept for the Swiss consumer markets, recruiting consumers and merchants has been very hard and it will take time to build significant revenues with 12Sconti. However, we are optimistic. The fact that we have joined forces with a determined major retailer in the region who has a sizeable loyal customer base is creating a cascade effect among other retailers who are now signing up for the 12Sconti platform.
From a global point of view, we are optimistic that each coming month will bring revenue growth and associated earnings that will allow the Company to overcome our just announced fiscal deficit! Looking forward, these developments will bring multiples of ten times last years’ revenue.
The Good News:
It stands to reason that as our operating companies produce results and don’t burn cash there would be less and less reliance on using convertible notes for raising capital. We are already seeing that trend taking place. In addition, because our operating companies have financial stability, we should shortly begin to qualify for more traditional forms of debt and equity financing, further reducing our reliance on convertible debt. When the convertible notes are paid off, the downward pressure on the stock should tend to dissipate and with financial good results we should receive a more favorable response from the equity markets.
Announcing progress with our 12 Technology Suite with retailers, particularly in the USA, should also get our Company and stock favorably noticed by the equity markets.
Keep in mind that all the positive things that are happening with our Company were not shown in our recently filed FY2018 Form10-K as we hadn’t acquired Red Wire and Rune during 2018. A portion of the revenue growth will show up when the Company reports its 1st fiscal quarter results in May. However, the first fiscal period that will reflect in its entirety, the results of these acquisitions will be ending on June 30 and is slated to be released by August 14, 2019.
By then, management hopes to have transacted additional acquisitions that would further add to revenues and build earnings, in addition to the expansion and organic growth that we are achieving with our currently owned operations.
In summary, I would like our stakeholders to understand that our management team is dedicated to the Company’s long-term vision and that we are making progress in a lot of areas.
However, we all need to keep in mind the following:
/s/ Angelo Ponzetta
Chief Executive Officer & Founder
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.
Investors Relations Contacts:
Magellan FIN, LLC