ACQUISITION

9 Months Ended

Sep. 30, 2017

NOTE 4. ACQUISITION

12 JAPAN Limited

On July 31, 2017, 12 the Company (“RETC”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with 12 Japan Limited, a corporation duly formed and validly existing under the laws of Japan (“12 Japan”), and the Shareholders of 12 Japan (the “12 Japan Shareholders”). Pursuant to the Share Exchange Agreement, the Company will acquire One Hundred One Thousand (101,000) shares of 12 Japan, representing 100% of the issued and outstanding equity of 12 Japan, from the 12 Japan shareholders and in exchange the Company shall issue to 12 Japan: (i) Five Million (5,000,000) shares of RETC Common Stock; and, (ii) Five Hundred Thousand (500,000) shares of RETC Series A Preferred Stock. As a result of the Share Exchange Agreement, 12 Japan shall become a wholly owned subsidiary of the Company. The Share Exchange Agreement contains customary representations and warranties. Additionally, the Share Exchange Agreement required that concurrently with closing the Company’s management facilitate: (i) the cancellation of Five Million (5,000,000) of RETC Common Stock currently beneficially owned by the Company’s officers and directors; and, (ii) the cancellation of Five Hundred Thousand (500,000) of RETC Series A Preferred Stock currently beneficially owned by the Company’s officers and directors. Collectively, such shares shall be cancelled and returned to the Company’s treasury.

Management determined that the Company was the acquirer in the business combination in accordance with FASB ASC Topic 805, “Business Combinations,” based on the following factors: (i) there was a change in control of 12 Japan; (ii) the Company was the entity in the transaction that issued its equity instruments, and in a business combination, the acquirer usually is the entity that issues its equity interests; (iii) the Company’s pre-transaction directors retained the largest relative voting rights of the Company post-transaction; (iv) the composition of the Company’s current board of directors and management was the result of the appointment by the Company’s pre-transaction directors.

The following table summarizes the fair value of the consideration paid by the Company and the fair value amounts assigned to the assets acquired on the acquisition date:

	July 31,
Fair Value of Consideration:	2017

5,000,000 shares of common stock	$	2,600,000
500,000 Series A Preferred shares		5,200,000
Total Purchase Price	$	7,800,000

	July 31,
Fair Value of Consideration:	2017

Assets	$	157,240
Liabilities assumed		(168,890	)
Goodwill		7,811,650
Fair value of total assets	$	7,800,000

Revenues of $8,845 and net loss of $18,611 since the acquisition date are included in the consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2017.

Unaudited proforma results of operations for the nine months ended September 30, 2017 and 2016 as though the Company acquired 12 Japan on the first day of January 1, 2016:

	Nine months ended
	September 30,
	2017			2016

Revenues	$	52,933		$	76,294
Cost of revenues		(503	)		(35,153	)
Gross profit		52,430			41,141

Operating expenses		(8,198,626	)		(181,425	)
Operating loss		(8,146,196	)		(140,284	)

Other income (expense)		(3,244	)		6

Net Loss	$	(8,149,440	)		(140,278	)