UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-55915

12 ReTech Corporation

(Exact name of registrant as specified in its charter)

Nevada |  | 38-3954047
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

515 E. Grant St, Suite 150 Phoenix, AZ |  | 85004
(Address of principal executive offices) |  | (Zip Code)

Registrant’s telephone number: 530-539-4329

Securities registered under Section 12(b) of the Act:

none

Securities registered under Section 12(g) of the Act:

Common Stock, par value $.00001 per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” smaller reporting company and “emerging growth company” in Rule 12b-2 of the Exchange Act.

| Large accelerated filer [ ] |  | Accelerated filer [ ]
| Non-accelerated filer [ ] |  | Smaller reporting Company [X]
| Emerging Growth Company [ ] |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

The number of shares of common stock ($0.00001 par value) outstanding as of June 1, 2021 was 5,593,994,474.

DOCUMENTS INCORPORATED BY REFERENCE: None.

12 RETECH CORPORATION

FOR THE YEAR ENDED

DECEMBER 31, 2020

Index to Report

|  | Page
PART I |  |
Item 1. | Business | 4
Item 1A. | Risk Factors | 13
Item 2. | Properties | 18
Item 3. | Legal Proceedings | 19
PART II |  |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 20
Item 6. | Selected Financial Data | 21
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 32
Item 8. | Financial Statements and Supplementary Data | 33
Item 9. | Controls and Procedures | 34
PART III |  |
Item 10. | Directors, Executive Officers, and Corporate Governance | 36
Item 11. | Executive Compensation | 40
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 43
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 46
Item 14. | Principal Accounting Fees and Services | 47
PART IV |  |
Item 15. | Exhibits and Financial Statement Schedules | 48

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FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not intend, and undertake no obligation, to update any forward-looking statement. You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

| - | our current lack of working capital;
| - | inability to raise additional financing;
| - | the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
| - | deterioration in general or regional economic conditions;
| - | adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
| - | inability to efficiently manage our operations;
| - | inability to achieve future sales levels or other operating results; and
| - | the unavailability of funds for capital expenditures.
| - | Underestimating the long-term effects of the COVID-19 pandemic to our business.
| - | The failure of shoppers to return to old shopping habits and buying patterns due to the disruption from COVID-19.
| - | The failure of the economy to recover such that unemployment declines significantly enough.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Item 1A. Risk Factors” in this document.

Throughout this Annual Report references to “we”, “our”, “us”, “12 ReTech”, “RETC”, “the Company”, and similar terms refer to 12 ReTech Corporation.

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PART I

ITEM 1. BUSINESS

12 ReTech Corporation is a holding company with subsidiaries that develop, sell, and install software that we believe enhance the shopping experience for shoppers and retailers. As a holding company we also acquire synergistic operating companies that manufacture and sell fashion and other products to other retailers as well as selling these products online. In October 2019, we acquired retail stores in airport terminals and casinos solidifying us as a true Omni-Channel retailer. Owning our own brick and mortar stores will allow us to deploy our cutting-edge software and Apps in the United States, to demonstrate its effectiveness at attracting shoppers and inducing them to purchase. In our own stores, we plan to test, in real time, new software products which should delight consumers and generate incremental revenues and profits for our stores. If we can show incremental revenues and profits for ourselves, we believe that other retailers may follow our example and deploy our software solutions themselves.

With the intended future launch of our social shopping app which is in development in 2021 (see subsequent events) we intend to associate with other retailers on a new shopping platform that will benefit both consumers and retailers in new and exciting ways.

During the 4th quarter 2019 and continuing in the first quarter 2020 amid the effects of the pandemic created by COVID-19, the Company chose to consolidate its operations around three operating entities; 12 Tech, Inc., formed in Arizona on December 26, 2019 (“12 Tech”) and 12 Retail Corporation, formed on September 17th, 2017 (“12 Retail”), and the 12 Fashion Group, Inc formed on June 26, 2020.

12 Retail operates its own retail outlet(s) as well as those of Bluwire Group, LLC (“Bluwire”) that operates retail stores in airports (mainly in international terminals) and casinos. Because of their locations mainly in international terminals of airports, all Bluwire Company owned stores and all but one royalty store remains closed due to Covid-19. 12 Retail will also serve to demonstrate the effectiveness of the software technology created by 12 Tech in improving revenues and profits for retailers as well as providing access to other retailers through our soon to be launched social shopping app and through our wholesale fashion business relationships.

12 Fashion Group, Inc., an Arizona Corporation, was formed on June 26, 2020, and operates our fashion wholesale and direct to consumer brands, including Rune NYC, Social Sunday, and Red Wire Design, as well as consolidating remaining operations from our other smaller fashion acquisitions.

Today, 12 Tech aims to provide technology solutions both online and inside retail brick and mortar that helps retailers acquire customers, reduce overhead expenses, streamline operations, and gain incremental revenues and profits. Existing 12 Tech solutions are deployed mainly in Asia. We are planning to deploy our solutions in the United States retail markets, which serve the world’s largest consumer economy. While we continue to operate in Asia, we have consolidated our international units, which were focused on our technology deployment (“12 Japan” and “12 Europe”), and consolidated our software development company 12 Hong Kong, Ltd (“12 HK”), under 12 Tech to further streamline our own operations.

As the retail environment continues to evolve, we as both retailers and technologists, will evolve with it. We believe our developed software, both current and in development, will delight consumers, provide contactless experiential shopping, and assist retailers with the recapture of their revenues as they combat the dual threats of Amazon and Walmart. Our software, once fully deployed and implemented, may provide retailers with another effective online and mobile sales channel besides their current options of Google, Amazon, and/or Facebook/Instagram.

As an innovative retail technology company that has been built through acquisitions and ideas, we will continue to search for additional synergistic acquisitions that bring incremental revenues and profitability and/or provide innovative software solutions.

The Opportunity:

Brick and mortar retailers continue to struggle against online competition and the largest big box retailers. This struggle was not made any easier with the advent of the COVID-19 pandemic in 2020. We believe the enforced lock-down and social distancing restrictions will change consumer behaviors, maybe permanently, in ways that no one could have predicted in 2019.

Throughout history, great change also provides great opportunity. 12 ReTech believes that our software solutions for business will provide effective tools that businesses can and will use to entice consumers back to their businesses to purchase products and services in new ways. As restrictions become more and more a part of the new normal, consumers will be anxious to get out of their homes to enjoy life again. We believe that each business must provide information and resources to allow consumers to feel safe shopping in stores, dining in restaurants and traveling.

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Management believes that consumers will want assurances that the business has taken steps to ensure their safety and protect them from COVID-19, the flu, and the next virus that may come along, but they will want to be engaged and find their shopping, dining, and travel to also be experiential, entertaining, fun, and safe.

Businesses will need to be able to contact and engage with consumers from a distance, whether at their homes, offices (to a lesser extent), online, and through mobile apps, as well as in their physical stores. We believe that our technology solutions allow consumers to get product or service information, share their choices with their social network, and purchase or reserve products and services in physical locations and online, so consumers can choose to be contactless.

World-wide retailing represents approximately $28 trillion in revenues, while in 2018 in the U.S. alone, all forms of retailing represented $5.35 trillion in annual revenues (according to Statista March 2019). While management believes that the Company’s software and technologies can benefit almost all retailers, the Company will initially focus on the Electronics, Apparel, and Cosmetics sectors where they believe we can have the biggest impact and which market generated over $346 billion in 2018 revenues in just the U.S. (Statista March 2019).

Management believes that the fallout from COVID-19 will provide a tremendous opportunity for those developers, like our Company, that quickly adapt their software and create new applications to provide solutions that consumers and business need. While businesses were reluctant to change before this pandemic, they are all now forced to look for new solutions, which we intend to provide. Many of our applications, with some additional development, as well as new software solutions, will quickly solve these problems. For example:

We were contactless before it was cool!™ In 2018, we launched our 12 Sconti App in Europe which, among other things, allowed the consumers to receive offers from participating nearby retailers that the consumer could purchase right from their smart phone, walk into the retailer and pick up their goods, just by showing their QR code. What we learned from this app is being applied to our new social shopping app, which is now in development.

Our Acquisition Strategy:

The Company targets for acquisition those synergistic companies that provide immediate revenue, and the potential for growth in revenue and earnings and/or may provide entries to license or sell our software and technology to other businesses and consumer brands, and/or will provide support services to our existing operations. Therefore, we target acquisitions that can benefit from our technology platform and expertise to grow their operations, brands that can give us entry into other businesses, and support companies for our brands and technologies.

We now target for acquisition those companies with at least $3 million in annual sales, that have existing management teams which complement our own. We will also acquire smaller companies that, when added to our own, allows us to leverage our existing operations without significantly increasing our costs. Other candidates would be companies with existing software for our technology subsidiary or companies where we can demonstrate the effectiveness of our technology. We are, of course, always looking to acquire larger companies or brands. We in fact have been and are still in talks with larger entities, but these are our minimum requirements.

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Our Technology Rollout Strategy:

Our subsidiary 12 Tech has, through 12 Japan and 12 Hong Kong, already deployed and tested our existing USXS software applications at ITOYA LTD in Japan. Using the knowledge that we gained from that real-world experience and adapting it to the post COVID-19 reality, we have begun to demonstrate some of our solutions in the United States of America.

During 2021, as the U.S. beings to re-open, we plan to deploy our technology in our retail stores. By demonstrating the lift that our technology achieves, we will then use our relationships that have been developed from our fashion brands to approach other businesses with this information to license the software to them. However, until we launch our new social shopping app with features to allow users to interact with our screens, our existing technology will not be very effective as we believe that post Covid most consumers will be reluctant to touch a public touch screen.

In the fourth quarter of 2021, we plan to announce and launch our new consumer-based social shopping mobile App that any consumer-based business can subscribe to in order to reach and interact with consumers easily in fun and innovative ways, and especially contactless.

For more information about our individual software technology offerings visit our website for the most up-to date information at www.12retech.com

Our intellectual property:

The Company’s intellectual property consists of the logos, trademarks, Universal Resource Locator(s) (URLs), software applications, signage, proprietary processes and procedures, exclusive software licenses from others, functional specifications, software, hundreds of fashion patterns owned by the parent as well as its subsidiaries.

In addition, the Company’s Bluwire Group subsidiary licenses its name, trademark, and proprietary store processes to two external licensees who each operate two stores in airport terminals (Minneapolis-St. Paul and John F. Kennedy airports).

As of the date of this report, the Company owns many Universal Resource Locator(s) (URLs) including but not limited to:

-www.12retech.com

-www.12japan.jp

-www.12hongkong.com

-www.12europe.com

-www.12retail.com

-www.12sconti.com

-www.12fgrp.com

-www.lexiludancewear.com

-www.lexiluudancewear.com

-www.emotionfashiongroup.com

-www.emotionfashions.com

-www.redwire.design

-www.runenyc.com

-www.bluwireonline.com

-www.bluwire.shop

-www.socialsunday.com

Future Intellectual Property Strategy

The Company intends to continue its development of its technologies and will continue to apply for patents for future product developments including our social shopping app now in development. The Company’s strategy is to protect the technologies with patents in Europe, the United States, and Japan. Following product development, each product, based on the technologies, will be further protected individually by new patent filings worldwide.

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History & Significant Events:

- The Company was formed in Nevada on September 8, 2014 as Devago Inc. as a start-up Company engaged in the creation of mobile software applications or “App(s)”.

- On March 30, 2017, the Company received an S-1 Notice of Effectiveness from the United States Securities and Exchange Commission (the “SEC”).

- On June 7, 2017, we entered into the Share Exchange Agreement with 12 Hong Kong Limited, a Hong Kong Special Administrative Region corporation (“12HK”), and the Shareholders of 12HK (the “12HK Shareholders”).

- On June 8, 2017, the Company filed with the State of Nevada Amended and Restated Articles of Incorporation, reflecting: (1) a change the Company’s name from Devago, Inc. to 12 ReTech Corporation; and, (2) an increase in the Company’s authorized shares of Common Stock from 100,000,000 to 500,000,000, and decrease its authorized shares of undesignated Preferred Stock from 100,000,000 to 50,000,000.

- On June 21, 2017, the Financial Industry Regulatory Authority (“FINRA”) approved a six-for-one (6:1) forward split of the Company’s common stock. The Company also facilitated the cancellation of 19,800,000 pre-split shares of its restricted common stock and such stock was returned to the Company’s treasury.

- On June 27, 2017, the Company completed the acquisition of 12 Hong Kong, Ltd, which became a wholly owned subsidiary. Pursuant to the Share Exchange Agreement, the Company acquired Four Million (4,000,000) shares of 12HK representing 100% of the issued and outstanding equity of 12HK from the 12HK Shareholders (the “12HK Shares”) in exchange for an aggregate of 55,000,000 shares of Company stock, consisting of: (i) 50,000,000 shares of common stock; and, (ii) 5,000,000 shares of Series A Preferred Stock.

- On June 27, 2017, as a result of closing the acquisition of 12HK, the Company was no longer a shell corporation as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.

- On July 31, 2017, the Company acquired all the outstanding equity of 12 Japan, Ltd. (“12JP”), which became a wholly owned subsidiary. Pursuant to the Share Exchange Agreement, the Company acquired One Hundred One Thousand (101,000) shares of 12JP, representing 100% of the issued and outstanding equity of 12JP, from the 12JP shareholders in exchange for; i) Five Million (5,000,000) shares of its Common Stock; and, (ii) Five Hundred Thousand (500,000) shares of its Series A Preferred Stock. As required in the Share Exchange Agreement and concurrently with closing, the Company canceled five million (5,000,000) of its common stock and five hundred thousand (500,000) of the Company’s Series A preferred stock beneficially owned by the Company’s majority stockholder, which were returned to the Company’s treasury.

- On September 13, 2017, the Company changed its fiscal year from November 30 to December 31.

- On September 17, 2017, the Company formed 12 Retail Corporation an Arizona corporation, to be a holding company for its operating companies in retail and fashion.

- On September 27, 2017, the Company appointed Daniele Monteverde as the Chief Financial Officer (“CFO”) and director.

- On October 26, 2017, pursuant to a Share Exchange Agreement, the Company exchanged Three Million Eight Hundred Seven Thousand Nine Hundred Seventy-Six (3,807,976) of its common shares for One Thousand (1,000) of common shares of 12 Europe A.G. (“12EU”), representing 100% of the issued and outstanding equity of 12EU, and 12EU became a wholly owned subsidiary of the Company.

- On October 30, 2017, Richard J. Berman joined the advisory board.

- 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.

- On January 29, 2018, the Company designated three additional classes of Preferred Shares having the rights, preferences and privileges of each class of preferred stock as indicated; (i) The Series B Preferred Stock, which will consist of 1,000,000 shares of Series B Preferred Stock, par value $0.00001 per share with each shares having a value of $1.00 when issued and convertible into common stock at a discount to be agreed between the Company and the indicated shareholder, (ii) Series C Preferred Stock, which will consist of two shares of Series C Preferred Stock, par value $0.00001 per share and each share shall each cast 1 billion votes for any matters requiring a vote of shareholders, and shall not be convertible into common stock, and (iii) Series D Preferred Stock, par value $0.00001 and shall be deemed Blank Check Preferred allowing the Board of Directors at some future date to determine the rights, privileges and preferences as they may deem appropriate.

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- On January 29, 2018 and March 14, 2018, the Company sold 203,000 and 63,000 Preferred Series B shares, respectively to Geneva Roth Remark Holdings, Inc. (“Geneva”), a New York corporation, for $1.00 per share. These shares may be converted by the Holder at a 35% discount to market after being held for six months under a discount formula. These shares also can be redeemed at the option of the Company at any time for a cash amount equal to the defined redemption percentage and carry a mandatory redemption by the Company of all previously unredeemed or unconverted shares fifteen months following the issuance date.

- On March 12, 2018, The Company, through its subsidiary 12 Retail, acquired 100% of the equity in E-motion Apparel, Inc, a California corporation, pursuant to a Share Exchange Agreement (see Section “Subsequent Events”), which itself owns four other microbrands that target specific niche markets: Lexi-Luu Dancewear, Punkz Gear, Cleo VII and Skipjack Dive & Dance Wear. This company, now located in Salt Lake City, Utah, operates its own production and fulfillment facility that management believes can be utilized by all of the Company’s future microbrand acquisitions as a competitive advantage to quickly produce, market, sell and deliver many smaller quantities of garments, keeping online sales channels fresh.

- On March 14, 2018, upon the written consent of the majority of shareholder votes eligible to vote as of March 14, 2018, the Company increased its common authorized shares from 500 Million (500,000,000) shares to One Billion (1,000,000,000) shares of common stock.

- On March 16, 2018, the Company filed Form 8A-12G announcing that the common stock of the Company as described on Form S-1/A, filed on February 10th, 2015 and effective March 30, 2015 incorporated herein by reference are registered. Through this filing, the Company became a Mandatory Filer with the SEC.

- On March 20, 2018, Geneva agreed to purchase an additional 68,000 Series B Preferred shares for $68,000 under the same terms as their initial purchase on January 31, 2018.

- In June 2018, Dominic D’Alleva joined the advisory board. In conjunction with his advisory board position, 12 ReTech issued 3,125,000 shares to him on July 19, 2018.

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- On July 2, 2018, the Company entered in an Equity Line of Credit agreement with Oasis Capital, LLC (“Oasis Agreement”), and as a part of that Agreement the Company was obligated to create a subset Series D-1 Preferred Stock from the authorized Series D Preferred Stock having special rights and privileges. The total number of shares of Series D-1 Preferred Stock issued was 311,250 shares, with a par value of $0.00001 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

- On July 2, 2018, the Company reserved 100,000,000 shares of our common stock for 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 these 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 5, 2018, the Company filed a certificate of designation to create a subset of the Series D Preferred Stock, designated Series D-1.

-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 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 have no equity value, no preference in liquidation, and are not convertible into common shares, but authorizes the holder to vote one billion (1,000,000,000) votes on any matter that shareholders are entitled to vote for under our Bylaws at a face value of $1.00 per share. The Board believes that this was necessary so that the 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.

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- On September 29, 2018, the Company issued a total of 54,840 shares of our Series D-3 Preferred Shares to a related party at a price of $5 par value in exchange for various considerations as discussed in the Notes section of this filing.

-On January 9, 2019, the Company filed a Certificate of Designation to create One Million (1,000,000) Series D-5 Convertible Preferred Stock with par value $0.00001 and stated value of $4.00 per share.

-On January 9, 2019, the Company filed a Certificate of Designation to create One Million (1,000,000) Series D-6 Convertible Preferred Stock with par value $0.00001 and stated value of $5.00 per share.

-On January 11, 2019, the Company filed an amendment to Series C Preferred shares where each issued and outstanding shares of Series C Preferred Stock shall be entitled to Eight Billion (8,000,000,000) votes at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration (by vote or written consent). Holders of shares of Series C Preferred Stock shall vote together with the holders of Common Shares as a single class.

-On January 14, 2019, the Company acquired Red Wire Group, LLC a Utah limited liability Company (“Red Wire”) pursuant to an Exchange of Equity Agreement (the “Exchange Agreement”) with the members of Red Wire (the “Members) in exchange for (i) 75% of the membership interests of Red Wire in exchange for 54,000 shares of the Corporation’s Series D-6 Preferred Stock and (ii) the remaining 25% of the membership interests of Red Wire in exchange for 37,500 shares of the Corporation’s Series D-5 Preferred Stock.

-On February 19, 2019, the Company acquired 92.5% of the membership interest Rune NYC, LLC, a New York limited liability Company (“Rune”) in exchange for 82,588 shares of the Corporation’s Series D-5 Preferred Stock pursuant to an Exchange of Equity Agreement.

- On March 8, 2019, the Company increased its authorized shares of common stock from 1 billion (1,000,000,000) shares to 8 billion (8,000,000,000) shares pursuant to the effectiveness of its filed Form 14C.

- On March 14, 2019, the Company entered into a PIPE Equity Purchase Agreement whereby an institutional investor agreed to purchase up to $500,000 worth of the Company’s D-2 Preferred Shares with a $2.00 face value and purchase at a discount to face value. In the first tranche, the Company sold 103,500 D-2 Preferred Shares and received net proceeds after expenses of $100,000. The D-2 Preferred Shares are convertible to common shares after a 6 month or longer holding period at market price. (See Form 8-K filed on March 20, 2019). Concurrent with the execution of the PIPE Equity Purchase Agreement, the Company executed an Exchange Agreement with the same institution investor allowing that investor to exchange all its Series D-1 Preferred Shares for newly issued Series D-2 Preferred Shares. (See Form 8-K filed on March 20, 2019). The Company then filed with the State of Nevada a new Certificate of Designation authorizing 2.5 million Series D-2 Preferred Shares from their blank check Preferred Shares. (See Form 8-K filed on March 20, 2019).

- On August 20, 2019, the Company had successfully discharged all of its debts associated with 12 Europe A.G., as part of the completion of the 12 Europe A.G., bankruptcy filing except for certain social benefit payments still owed of approximately $35K by the Company.

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- Beginning in the third quarter 2019 continuing in 2020, the Company began to consolidate and streamline its operations. The first step, on September 30, 2019, the Company foreclosed on its liens on E-motion Apparel Inc., taking possession of assets and brands and returning E-motion Apparel, Inc. equity to the Seller. This action resulted in the Company recognized other income of $511,489 which is discussed in further detail in the Notes of this filing.

- On October 1, 2019, the Company acquired 51% of Bluwire Group, LLC a Florida limited liability company, a retailer with 11 airport terminal locations and one casino location under an equity exchange agreement. The Company issued 500,000 of its Series A Preferred Shares to the sellers, who retained 30% of Bluwire. Nineteen percent (19%) is reserved for 12 months for potential equity investors into Bluwire. Any of the equity not used to raise capital for Bluwire over that period would be divided equally between the Company and the Sellers. The Sellers will continue with Bluwire under consulting agreements.

- On October 18, 2019, the Company successfully completed its reverse stock split and reduced its common stock outstanding by a ratio of one hundred for one. While the board of directors and a majority of the voting interests of the Company had also approved an increase in the authorized common shares in an amount up to 20 billion common shares within 12 months of July 18, 2019, at this time management has elected to keep the authorized stock at 8 billion common shares.

- On November 20, 2019, the Company acquired 100% of equity of Social Decay, LLC dba Social Sunday (“Social Sunday”), a New Jersey limited liability company for 30,000 of the Company’s Series D-6 Preferred Shares. An additional 12,000 Series D-6 Preferred Shares were issued to the Seller (but held in escrow for performance-based award) on same day.

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- On January 16, 2020, Geneva Roth agreed to purchase an additional 53,000 Series B Preferred shares for $53,000 under the same terms as their prior purchases.

- On March 16, 2020, as part of the Company’s streamlining operations and partially because of COVID-19, the Company filed a Chapter 11 Reorganization of Red Wire Group, LLC. The Company’s 12 Fashion Group continues to service Red Wire Group customers under the trade name Red Wire Design. The bankruptcy was discharged on or about September 2020 and all debts were extinguished. 12 Fashion Group continues to service those customers acquired as well as obtaining new accounts by marketing under the d/b/a Red Wire Designs.

- On March 16, 2020, the President of the United States of America issued a stay-at-home instructions and business closure directive in response to COVID-19 pandemic. Management took steps to promptly close all its Bluwire stores and Fashion Group operations, laying off the vast majority of its employees. The Company’s landlords and Libertas, Vox and Reliant have all agreed to collections deferment of an indeterminant duration. (see note above regarding individual agreements. The Fashion Group continues limited operations in creating and producing PPE materials.

- The Federal Government of the United States of America on March 27, 2020, passed the Cares Act allowing companies access to quality SBA Payroll Protection Loans (PPP). These loans provide for certain funding based on previous employment which in part may be forgivable under certain conditions. The remaining portion needs to be repaid over 2 years with a 6-month moratorium on payments and carry a 1% annual interest rate. These loans require no collateral nor personal guarantees. During the period from May 5, 2020 to May 22, 2021, the Company’s subsidiaries quality and received an aggregate of $294,882 in 2020 and $302,602 in 2021 in PPP loans.

- In August 2020, two of the Company’s subsidiaries qualified for the United States Small Business Administration (“SBA”) Economic Industry Disaster Loans (“EIDL”) and the Company received $325,300 under the program. These loans are unsecured, have no personal guaranty, carry a 3.75% annual interest rate with aggregate monthly payments of 13 months after receipt of funds. Management has used these funds to retain key personnel, pay regulatory fees, rent, began work on a new website for Bluwire, make progress on their retail app, and acquire product to re-open one of its Bluwire Stores.

- On May 18, 2021, the Company filed its required filings with the State of Nevada and became current and increased its authorized common shares from 8 Billion to 20 Billion common shares.

- In May 2021, advisory board member, Richard Berman invested $50,000 in exchange for preferred shares with the option to invest a further $100,000 over the next few months.

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ITEM 1A. RISK FACTORS

An investment in our common stock involves a high degree of risk and should not be made by anyone who cannot afford to lose their entire investment. You should consider carefully the risks set forth in this section, together with the other information contained in this report, before making a decision to invest in our common stock. Our business, operating results, and financial condition could be seriously harmed, and you could lose your entire investment if any of the following risks were to occur. This document is not intended to be an offer of any securities nor a solicitation of any offer to buy or sell.

Risks Related to Our Business

Until the acquisition of our brands, we are a Company with limited operating history, little revenue and still have to rely on our ability to raise capital to fund operations and there can be no assurance we will ever reach profitability or be able to continue to raise capital to fund operations.

The Company commenced limited operations in June of 2017, with the acquisition of 12 Hong Kong, Ltd. The Company then acquired 12 Japan, Ltd in August 2017, followed by 12 Europe A.G. in October 2017. 12 Japan, Ltd brought a small portion of revenue, insufficient to fund operations, while 12 Europe A.G. brought no revenue and was subsequently closed on August 20, 2019. Throughout 2019, we made four acquisitions including Red Wire Group, Rune, Bluwire, and Social Sunday, which together brought significant revenue but not enough profit to offset the costs of being public and developing and launching our core technology initiative. Therefore, we have limited operating history on which to make an investment decision. Accordingly, the Company has a limited operating history and the business strategy while promising may not be successful. Failure to implement the business strategy could materially adversely affect our business, financial condition, and results of operations. Through December 31, 2019, the Company’s business has not shown a profit in operations and has generated little revenues. There can be no assurance we will achieve or attain profitability or be able to raise sufficient capital to stay in business. If we cannot achieve operating profitability or raise capital, we may not be able to meet our working capital requirements, which could have a material adverse effect on our business operating results and financial condition resulting in the loss of an investors’ entire investment in us.

We need substantial additional capital to grow and fund our present and planned business and business strategy. Until we have made significant brand acquisitions, the Company’s working capital may not be sufficient for our needs.

Our current and planned operations contemplate funding in the future. Failure to meet funding milestones may have a significant adverse effect on our growth and anticipated revenues and we may have to curtail our business strategy. If we receive less funding than planned, we will have to revise our business model and reduce proposed plans. Without significant funding, we will not be able to execute on our business operations and may be forced to cease operations. At this time, there can be no assurance we will be able to obtain the funding we need and even if we obtain such funding that it will be on terms and conditions favorable to us and our existing shareholders. Without funding we will not be able to proceed with planned operations or meet existing obligations.

Our independent registered public accounting firm’s report states that there is substantial doubt that we will be able to continue as a going concern. Our possible inability to stay in business could result in a total loss on investment by our shareholders.

Our accompanying financial statements have been prepared assuming that we will continue as a “going concern.” As discussed in Note 2 to the Company’s December 31, 2020 consolidated financial statements, we had little revenues, have minimal business operations, have recurring losses and have negative working capital and a stockholders’ deficit. These issues raise substantial doubt about our ability to continue as a “going concern.” Our ability to stay in business will, in part, depend on our ability to raise additional funding or continue to make brand acquisitions. Our financial statements do not include any adjustment that might result from the outcome of this uncertainty.

We may experience service failures or interruptions due to defects in the software, infrastructure or processes that comprise our Apps and other software, any of which could adversely affect our business.

Our software may contain undetected defects in the software, infrastructure, or processes. If these defects lead to failures in our Apps, we could experience delays or lost revenues during the period required to correct the cause of the defects. Furthermore, we cannot be certain that defects will not be found in new software or upgraded existing software or that service disruptions will not occur in the future, resulting in loss of, or delay in, market acceptance, which could have an adverse effect on our business, results of operations and financial condition.

If we do not successfully maintain the 12 ReTech brand in our existing markets or successfully market the 12 ReTech brand in new markets, our revenues and earnings could be materially and adversely affected.

We believe that developing, maintaining, and enhancing the 12 ReTech brand in a cost-effective manner is critical in expanding our customer base. Promotion of our brand will depend largely on continuing our sales and marketing efforts and providing high-quality products and App software to our customers. We cannot be assured that these efforts will be successful in marketing the 12 ReTech brand. If we are unable to successfully promote our brand, or if we incur substantial expenses in attempting to do so, our revenues and earnings could be materially and adversely affected.

Our internal systems and operations are untested and may not be adequate and could adversely affect our ability to continue our planned business.

Our internal systems and operations are new and unproven at scale. On the technology portion of our business, we have not demonstrated the ability to make the large-scale deployments necessary if a large retailer would indicate they wanted to fully implement our solutions. We may need to find an installation partner with the necessary experience to perform these large-scale installations. Our inability to scale or find that experienced partner or vendor could have a material adverse effect upon our business, results of operations and financial condition and could force us to halt our planned operations or continued expansion of those planned operations, causing us to lose any opportunity to gain significant anticipated market share in our industry. Our ability to compete effectively and to manage future growth will require us to continue to improve our operational systems, our organization, and our financial and management controls, reporting systems, and deployment procedures. We may fail to make these improvements effectively. Additionally, our efforts to make these improvements may divert the focus of our personnel and we may not be able to effectively continue our planned operations, which may materially and adversely affect our business, results of operations and financial condition.

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Our inability to attract and maintain key personnel required to implement our business strategy could adversely affect our ability to continue our current and planned business resulting in slower growth.

While we have so far been able to attract high caliber people, we are competing with many other entities for these services some of whom are better funded then we are. We are trying to grow our effort to provide services and we are still hiring key positions and integrating personnel at all levels into a cohesive team. If executives or other new hires integrate poorly, perform badly, or do not have the anticipated experience or skill sets required, our current and planned business endeavors could be harmed. Planned personnel, management practices and controls may also prove to be inadequate to provide services, acquire customers and partners and operate the business, and any gaps or failures may have a material adverse effect on our business, financial condition, and results of operations.

Increased competition may have an adverse effect on our ability to continue our current and planned business operations and result in our going out of business and may have a material adverse effect on our business, financial condition, and results of operations.

We may see increased competition in our markets. On the technology side of our business, many players are entering the marketplace including Hitachi, IBM, and others. While we believe that our solutions are better due to our experience as retailers, our competitors are entrenched and very well-funded. The competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements and devote greater resources to develop, promote and sell their products or services. In addition, increased competition could result in reduced fees, reduced margins and loss of market share, any of which could harm our business. We cannot guarantee that we can compete successfully against current or future competitors, many of which have substantially more capital, existing brand recognition, resources, and access to additional financing. All these competitive pressures may result in increased marketing costs, or loss of market share or otherwise may materially and adversely affect our business, results of operations, and financial condition.

We may be unable to patent future improvements and/or update our technology.

We use technology advancements of our own and from suppliers to provide more advanced services with more efficient economics for our customers. Technology advancement is very fast paced in today’s digital world and can lead to changing standards and new modes of providing services. The advancement of other technology not available to us or within our financial ability to adopt that may make our products or future products unsaleable. Keeping pace with the introduction of new standards, customer requirements, or the advancement of other technology may make our products uncompetitive or obsolete. The failure to keep pace with these changes and to continue to enhance and improve our products and features could harm our ability to attract and retain customers for our technology.

The effectiveness of our disclosure controls and procedures and internal control over financial reporting

The Company has a limited number of personnel which may lead to the risk of limited controls and procedures. For the aforementioned reason, there is a limit on the quantity of internal controls during our financial reporting process.

The Company’s CFO is currently the CEO of another Company

The Company CFO is also the CEO of another business and therefore may have limited time to work on the business and may experience time conflicts.

Our Board of Directors lacks independent directors as members.

Our CEO and CFO are also on our Board of Directors and as a result the Board of Directors may lack some independence.

The stock ownership of our chief executive officer and the ability to control the Company

The Company’s Chief Executive Officer is also one of the most significant shareholders of the Company and as a result exercises significant control over the Company.

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There are a large number of shares of common stock underlying the outstanding preferred stock and convertible notes

The Company has outstanding preferred stock and convertible notes which are potentially convertible into common stock. Should all these convertible instruments convert into common stock, the number of common shares issued would lead to substantial dilution of the current common shareholders.

Although we have attempted to discuss meaningful factors, our investors need to be aware that other factors and risks may become important in the future. New risks may emerge at any time. We cannot predict such risks or estimate the extent to which they may affect our operations and financial performance. Investors should carefully consider the discussion of risks and the other information included in this Report, including the Cautionary Information Regarding Forward-Looking Information provided above in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The effects of this worldwide pandemic on our business have not been fully determined at this time. Since March 16, 2020, the world was affected by a pandemic virus called COVID-19, and all our businesses were affected by closures and/or reductions in volume. Businesses around the world were closed, as well as airports and casinos, and consumers were told to shelter at home. The long-term effect of this on the psyche of consumers and the worldwide economy are unknown. Their short- and long-term effects on our business is undetermined at the time of this report.

Risks to our businesses related to COVID-19

The ongoing systemic challenges of the retail and restaurant industries due to changes in consumer habits, online and with mobile Apps, have been further exacerbated and accelerated due to 2020’s COVID-19 pandemic. The business closures mandated by government agencies around the world, coupled by governmental stay at home orders and consumer fears of infection, may forever significantly change consumer behavior in unforeseen ways. While these challenges provide significant opportunity to market and sell our new technologies as well as our fashion products, at this stage it may be difficult to predict the trend of overall consumer behavior.

Due to COVID-19, the solvency of our potential customers for our technology and products may be in doubt and their ability to make payments to us may be at risk. For example, see recent post COVID-19 bankruptcies such as J. C. Penney Company, Inc, J.Crew, Pier 1 Imports, Modell’s Sporting Goods, Food First Global Restaurants, Neiman Marcus, and Garden Fresh Restaurants, to name a few.

Also due to COVID-19, there has been an extreme reduction in travel, thereby significantly affecting the number of customers in our Company owned stores, thereby further potentially reducing revenue for those stores. This reduction in traffic through retail stores and restaurants in airports and casinos may also further reduce our ability to gain additional subscribers for our technologies.

Another impact of COVID-19 on our operations, that our vendors are operating at reduced capacity or have closed, which could impact our flow of inventory or raw materials for an indeterminate amount of time until such time as those vendors can be replaced or resume operations at full capacity.

We may face challenges rehiring some or all of the workforce that was laid off due to COVID-19 and may have to recruit and hire replacement employees in the future for our businesses. As a result, management expects to face additional costs to get back our operations at full capacity.

For more information about our response to COVID-19, see our specific COVID-19 disclosures.

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Our operating results may be substantially different than that which management projects. The creditworthiness of our customers, changes in the availability of capital due to a downturn in the economy undue regulation and legal uncertainties, all of which would increase our cash requirements which may materially and adversely affect our business, results of operations and financial condition.

Therefore, financial results could materially differ from that projected by management. Projections are less and less reliable the further out those projections are made based on all of the above reasons.

An increase in laws and regulations could contribute to a decline in the growth of the industry and could decrease demand for our products and services and increase our cost of doing business. Moreover, the applicability of existing laws is uncertain with regards to many issues. Our business, financial condition, and results of operations could be seriously impaired by any new legislation or regulation. The application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations and to other services which may materially and adversely affect our business, results of operations and financial condition.

Planned acquisitions come with various risks, along with dilution to our shareholders, which could negatively affect our stock prices and may materially and adversely affect our business, results of operations and financial condition.

Acquisitions, mergers, and joint ventures entered into by us may have an adverse effect on our business. We expect to engage in acquisitions, mergers, or joint ventures as part of our long-term business strategy. These transactions involve significant challenges and risks including that the transaction does not advance our business strategy, that we do not realize a satisfactory return on our investment, or that we experience difficulty in the integration of new assets, employees, business systems, and technology, or diversion of management’s attention from our other businesses. These events may materially and adversely affect our business, results of operations and financial condition.

Risks related to the competition of our current and future brands acquired or to be acquired by our subsidiaries, 12 Retail Corporation and 12 Fashion Group, Inc.

Our current and planned brand acquisitions are in the highly competitive fashion industry. Many of those acquisitions will compete directly with better funded and better-known brands. While Management believes that it can compete directly with these larger brands, gambling on the public’s changing attitudes towards “looking the same as everyone else” and wanting individuality and on the Company’s proprietary technology to provide positive results there are no guarantees that the Company will be able to compete effectively.

The current and future state of the economy may materially and adversely affect our business, results of operations and financial condition.

Our business may be adversely affected by changes in domestic economic conditions, including inflation or deflation, changes in consumer preferences, changes in consumer spending rates, personal bankruptcy and the ability to collect our customer accounts. Changes in economic conditions may adversely affect the demand for our products and make it more difficult to collect customer accounts, thereby negatively affecting our business, operating results and financial condition. The recent disruptions in credit and other financial markets and deterioration of national and global economic conditions could, among other things, impair the financial condition of some of our customers and suppliers, thereby increasing customer bad debts or non-performance by suppliers. If we experience bad debts or slow paying customers in significant quantities, our cash flow will be limited and our ability to pay our own obligations will be questionable. As a small business these issues will affect us more than our larger competitors putting financial strain on our business and threatening our survival particularly since we have limited capital to rely on to overcome cash flow issues of slow paying customers. If our customers are unable to pay or pay slowly it may materially and adversely affect our business, results of operations and financial condition.

Risks Related to the Retail Industry

The retail industry has been reeling ever since 2008 related to less shoppers, and more purchases being done online. This has led to such venerable names as Sears Roebuck and Co, and J.C. Penney, and many others filing bankruptcy, and some disappearing forever, such as BCBG-MAXAZRIA, which no longer has any brick-and-mortar retail locations. With COVID-19, we believe this trend will accelerate. Our Management believes that only those retailers that are able to find new ways to attract consumers to the stores and learn how to sell through new channels, such as mobile apps and online, will survive.

Our business is dependent on the ability of our fashion brands to sell to brick-and-mortar retailers, as well as to sell products to online retailers and to successfully market our products on mobile apps and online. The seismic transition occurring in the retail industry may impair our ability to be successful in these efforts.

Our technology division intends to sell and license our technology solutions to brick and mortar retailers and restaurants whose financial health and ability to raise capital will determine if they will even be able to afford our solutions. We face collection risks and client retention risks in selling to retailers and restaurants who may not remain in business.

Extending credit in this environment where our technology or fashion group will be difficult, and we may suffer losses because of it. These risks may impede our ability to prosper.

Risks related to old debts and current and potential litigation.

Due to the number of operations acquired and the impact of the Covid-19 Pandemic, the Company has fallen behind on many of the obligations of certain subsidiaries. Some of these have resulted in litigation (see litigation section).

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Risks of Acquiring Operations.

We face risks of successfully integrating acquired businesses into our operations.

An acquired business may require additional capital infusions to survive. Capital raising is difficult in any environment especially in a post COVID-19 world. Failing to successfully raise a sufficient amount of capital is a risk to the continuation of the acquired businesses operations.

We will need to integrate the acquired businesses back office accounting into our own systems in order to successfully continue to execute our SEC mandated reporting duties. Failing to do so is a risk to our ongoing SEC fully reporting status.

We will need to integrate the acquired businesses personnel into our own teams whether they be operational or back office. Failing to do so is a risk to the ongoing operations of an acquired operation. Sellers or existing management that may be retained after the acquisitions may not perform well in the new environment. This may impede our ability to rapidly grow or even maintain management of the acquisitions. In consolidating our acquisitions, we may find difficulties merging different teams that have different cultures, and therefore we may not fully realize the benefits anticipates.

We may experience unforeseen challenges in realizing the cost-saving synergies and business expansion benefits of any or all acquisitions.

Future stock issuances could severely dilute our current shareholders’ interests.

Our Board of Directors has the authority to issue up to 20,000,000,000 authorized shares of our common stock or stock warrants and options to acquire such common stock. Our Board of Directors has the authority to issue up to 50,000,000 shares of preferred shares that have various rights of conversion to common stock. Refer to Description of Registrant’s Securities below for full details of Series A, Series B, Series C, and Series D Preferred Shares. The future issuance of common stock may result in dilution in the percentage of our common stock held by our existing stockholders. Also, any stock we sell in the future may be valued on an arbitrary basis by us and the issuance of shares of common stock for future services, acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our existing stockholders.

We do not expect to pay dividends on our common shares in the foreseeable future.

We do not expect to declare or pay any dividends on our common stock in the foreseeable future. The declaration and payment in the future of any cash or stock dividends on the common stock will be at the discretion of our Board of Directors and will depend upon a variety of factors, including our ability to service our outstanding indebtedness, if any, and to pay dividends on securities ranking senior to the common stock, our future earnings, if any, capital requirements, financial condition and such other factors as our Board of Directors may consider to be relevant from time to time. Our earnings, if any, are expected to be retained for use in expanding our business.

Risks Related to Our Common Stock

Our common stock is classified as a “penny stock” under SEC Rules and Regulations, which means there is a very limited trading market for our shares.

Our common stock is deemed to be “penny stock” as that term is defined in Rule 3a511 of the SEC. Penny stocks are stocks (i) with a price of less than five dollars per share; (ii) that are not traded on a “recognized” national exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ listed stocks must still meet requirement (i) above); or (iv) in issuers with net tangible assets less than $2,000,000 (if the issuer has been in continuous operation for at least three years); or $5,000,000 (if in continuous operation for less than three years); or with average revenues of less than $6,000,000 for the last three years.

Section 15(g) of the Exchange Act and Rule 15g2 of the SEC require broker dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.”

Moreover, Rule 15g9 of the SEC requires broker dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker dealer to (i) obtain from the investor information concerning his, her or its financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor, and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for investors in our common stock to resell their shares to third parties or to otherwise dispose of such shares.

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Due to the substantial instability in our common stock price, you may not be able to sell your shares at a profit or at all, and as a result, any investment in our shares could be totally lost.

The public market for our common stock is very limited. As with the market for many other small companies, any market price for our shares is likely to continue to be very volatile. Our common stock has very limited volume and as a “penny stock,” many brokers will not trade in our stock limiting our stock’s liquidity. As such it may be difficult to sell shares of our common stock.

Our common stock has a limited trading history, and it will be difficult to determine any market trends or prices for our shares and additional shares that become available under Rule 144 could cause the price of our stock to decrease.

Our common stock currently is quoted on the OTC Pink Sheets under the symbol “RETC”. However, with very little trading history, a trading market that does not represent an “established trading market”, volatility in the bid and asked prices and the fact that our common stock is very thinly traded, you could lose all or a substantial portion of your funds if you make an investment in us. Additionally, as more shares become available for resale, it is likely there will be negative pressures on our stock price. The sale or potential sale of shares of our common stock that may become publicly tradable under Rule 144 in the future may have a severe adverse impact on any market that develops for our common stock, and you may lose your entire investment or be unable to resell any shares in us that you purchase.

There are a large number of shares of common stock underlying our outstanding preferred stock and convertible notes.

The Company has outstanding Preferred Stock and Convertible Notes with possibility of conversion into a number of common shares. Although we have attempted to discuss meaningful factors, our investors need to be aware that other factors and risks may become important in the future. New risks may emerge at any time. We cannot predict such risks or estimate the extent to which they may affect our operations and financial performance. Investors should carefully consider the discussion of risks and the other information included in this Annual Report on Form 10-K, including the Cautionary Information Regarding Forward-Looking Information provided above in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

ITEM 2. PROPERTIES

As of the date of the filing of this report, the Company leases numerous stores, facilities, and offices for itself and its subsidiaries, which in total is 7,206 square feet for a Base monthly rent of $79,882, as detailed below:

-12 ReTech Corporate - Leases under 200 square feet of office space at 420 Lexington Avenue Suite 1200 New York City, N.Y. 10170 USA for a monthly fee of $2,095. The Lease provides conference room space on an hourly fee basis and is month to month. In addition, 12 ReTech has access to office and conference room space on an at needed basis at 515 E. Grant Street #150 Phoenix, Arizona 85004.

-12HK- Rented a virtual office space on a yearly lease which ended October 9, 2018. The annual cost was $795 and was located at Unit 1104, 11/F Crawford House 70 Queens Road Central, Hong Kong.

-12 Retail Corporation- has access to office space and conference facilities at 515 E. Grant Street, Suite 150 Phoenix, Arizona 85004 that it shares with its parent 12 ReTech Corporation for a use fee as needed. 12 Retail Corporation also operates a variety of facilities through its two divisions of approximately 7,006 square feet for a base monthly rental costs of $76,992. 12 Retail Corporation operates a 3,663 square foot retail location in the Mohegan Sun Casino at a rental cost of 8% per month which lease read from minimum guaranteed rent will expire in June, 2021. Management intends to extend this relief based on the current traffic in the Casino. It also maintains the following facilities detailed below:

| ● | 12 Fashion Group, Inc. leased approximately 1500 square Feet in NYC for a Base monthly rental costs of $5,700 and maintains 200 square feet of design space in Ogden Utah for a monthly rent of $1000 per month

| ● | -Bluwire Group, LLC leased approximately 6,156 square Feet for a Base monthly rental costs of $42,332, which is detailed below:

| ○ | Bluwire Denver- Had three Kiosk locations, 2002K which is 120 Square feet, 2014B 34 Square feet, 4008B 34 square feet. Base monthly rent was $20,960. Two of the kiosks were closed permanently on November 1, 2019. The remaining kiosk was closed permanently effective February 1, 2020.

| ○ | Bluwire Dulles A and B –Space A is number 32 which is 877 square feet and Space B number 59A which is 593 square feet. Base monthly rent is $20,333. Lease is scheduled to expire November 2020. The cancellation has been held in abeyance due to the Covid-19 Pandemic until we are ready to open.

| ○ | Bluwire JFK –Space 23S.C. which is 320 Square feet. We have a 6-year lease that expires April 30, 2020. Base monthly rent was $10,600 per month. This lease has not been renewed. However, we have been in talks with the landlord to lease different space that would be more advantageous to the Company without endangering the locations run by our royalty stores.

| ○ | Bluwire Newark –Space 20 which is 515 square feet. Base monthly rent was $15,083 plus 15% of gross sales exceeding $100,000 in any given month. Lease agreement is month to month agreement. This location is in abeyance due to the Covid-19 pandemic and the Company has plans to re-open in the third quarter 2021 at which time management believes that the longer term lease will e based solely on a percentage of sales.

| ○ | -Bluwire Mohegan Sun -3,663 square foot lease with Mohegan Tribal Gaming. Base monthly rent is $6,916, plus a percentage rent equal to 8% of the gross sales that exceeds $86,450 per month until January 2021. Lease expires on April 14, 2021. This lease has been renegotiated and taken over by a different subsidiary of the company that was able to fully stock the store with inventory.

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During the year ended December 31, 2020, the Company permanently shuttered the following facilities to consolidate revenue and decrease expenses (not counted above):

In December 2019, the Company closed its Red Wire Group facility located at 85 W. Louise Avenue, Salt Lake City Utah eliminating 5,000 square feet and monthly rent of $2,884.

In July 2019 the Company moved out of its Emotion Fashion Group Facilities eliminating the operation and the lease expense for the leased location that was Executed by a former company of a similar name which was used by Emotion Fashion Group in Salt Lake City, Utah USA. This eliminated 6,450 square feet and $4,000 per month in rent expense.

ITEM 3. LEGAL PROCEEDINGS

During the ordinary course of business, and as a result of quickly completing multiple acquisitions and the business disruption due to the Covid-19 Pandemic the Company has become involved in some litigation, has some disputed claims and possible contingencies as follows:

Claims and Litigation:

| ● | Auctus Fund Management (“Auctus”) vs. 12 ReTech Corporation. Auctus Filed suit in August 2019 claiming breach of contract on a convertible promissory note dated April 25, 2018, which had a remaining principal balance of nearly $40,000. Auctus claimed damages totaling over $482,000. The Company had entered into a settlement agreement with Auctus that required the Company to make a cash payment of $117,000 and which was dependent on the Company receiving funding from a foreign investor. That investment did not occur, and the Company was unable to perform. Upon information and belief, management believes that Auctus will at some point re-institute that lawsuit. Management has reserved on its financial statements a sum in excess of $482,000 in regards to this claim. To the best of management’s knowledge, Auctus has not taken other actions.
| ● | Bellridge Capital, LP, one of the Company’s convertible debt providers has sued the Company for non-performance and has obtained a default judgment in the amount of $214,195.74 in the southern district of New York. The Company maintains that service of process is defective and the Company will also assert lack of jurisdiction if any collection effort is ever undertaken among other potential legal cleans and defenses
| ● | J&S properties sued the Company in regards to a lease for a subsidiary in-the State of Utah that was never guaranteed by the Company and obtained a default judgement in Salt Lake County. The Company maintains that it was never properly served and has, it believes, substantial defenses that it will raise should J&S properties ever try to enforce the judgment.
| ● | RedWire Group, LLC (“RedWire Group”) filed for bankruptcy under Chapter 11 subsection V on March 6, 2020, and the case in ongoing. The Company has funded the initial costs, as well as some ongoing storage costs for RedWire Group equipment. The Company plans to liquidate the equipment and some other assets to pay creditors. This Chapter 11 was converted by the Court to a Chapter 7 and discharged. The equipment was liquidated in 2021, and the Bank (Bank of American Fork) has been paid in full and all other debts have been discharged.
| ● | Leider Enterprises, Inc. D/b/a SM Distribution Inc a Florida corporation sued Bluwire Sun, LLC in Florida. Bluwire Sun never received any product from this company and is defending this lawsuit in Florida.
| ● | Rottenberg, Meril, Solomon, Bertiger & Guttilla (“Rottenberg”) sued the Company in Bergen County New Jersey and obtained a default judgement because the Company was never served. The Company believes it has substantial counterclaims and defenses should Rottenberg ever tries to enforce this judgement.
| ● | PCG Advisory Group (PSG) obtained a default judgement of $63,350 in New York because, we believe, it never properly served the Company and has tried to domesticate that judgement in Arizona. The Arizona Court refused to domesticate the judgment and has given PSG some time to prove proper service. That period has expired.
| ● | VXB & Orfwid d/b/a Lost + Wander sued the Company’s Social Decay d/b/a Social Sunday subsidiary and also named the Company for invoices. The Company never guaranteed obligations for Social Sunday and intends to vigorously defend this lawsuit as meritless.
| ● | Tessco Technologies V Bluwire filed suit in Maryland. The Company has not been properly served and if served would dispute jurisdiction as well as other defenses on behalf of its Bluwire subsidiary.
| ● | George Sharpe, In May 2021 sued the Company in Nevada to try to obtain custodianship of the Company. This was defeated and the Company will be filing for attorney fees, although there are no guarantees the court will award us our attorney fees or other outcomes.

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PART II

Item 5. Market Information

Our common stock was traded under our former name DEVAGO, INC. on the over-the-counter pink market from December 30, 2014 to June 8, 2017 under the symbol “DVGG”. Effective June 8, 2017, the Company changed its name to 12 RETECH CORPORATION and effective on or around June 8, 2017 the quotation symbol was changed to “RETC” where our stock traded on OTC Markets’ over-the-counter pink sheet market. On March 16, 2018, the Company filed Form 8A-12G and became a mandatory filer with the United States Securities and Exchange Commission. The following table sets forth the high and low bid prices for our common stock on the OTC Markets over-the-counter pink market from January 1,2020 to December 31,2020. The source of these quotations is www.OTCMarkets.com quarterly market summary. The bid prices are inter-dealer prices, without retail markup, markdown, or commission, and may not reflect actual transactions.

Quarter Ending |  | High Bid |  |  | Low Bid |
December 31, 2020 |  |  | 0.0007 |  |  |  | 0.0003 |
September 30, 2020 |  |  | 0.0003 |  |  |  | 0.0001 |
June 30, 2020 |  |  | 0.0003 |  |  |  | 0.0001 |
March 31, 2020 |  |  | 0.0006 |  |  |  | 0.0007 |

Holders of Common Stock

As of June 1, 2021, the closing price for the Company’s common stock on OTC Markets was $0.0012 per share. We had over 1,900 stockholders of record of the 5,593,994,474 shares outstanding.

Dividends

The payment of dividends on the Company’s Common Stock is subject to the discretion of the Company’s Board of Directors and will depend, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors. We have not paid nor declared any dividends on our common stock since our inception and, by reason of our present financial status and our contemplated financial requirements do not anticipate paying any dividends in the foreseeable future.

We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders will be payable when, as, and if declared by our Board of Directors, based upon the Board’s assessment of:

| ● | our financial condition;
| ● | earnings;
| ● | need for funds;
| ● | capital requirements;
| ● | prior claims of preferred stock to the extent issued and outstanding; and
| ● | other factors, including any applicable laws.

Therefore, there can be no assurance that any dividends on the common stock will ever be paid.

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ITEM 6. SELECT FINANCIAL DATA

As a “smaller reporting” as defined in Item 10(f)(1) of SEC Regulation S-K, we are not required to provide the information required by this item. The reader is cautioned to carefully read the “Management’s Discussion & Analysis” below, as well as the financial statements included in this report.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this quarterly report. References in the following discussion and throughout this annual report to “we”, “our”, “us”, “12 ReTech Corporation”, “12 ReTech”, “RETC”, “the Company”, and similar terms refer to, 12 ReTech Corporation. unless otherwise expressly stated or the context otherwise requires. This discussion contains forward-looking statements that involve risks and uncertainties. 12 ReTech Corporation actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this filing.

Company

12 ReTech Corporation is a holding company with subsidiaries that develop, sell, and install software that we believe enhance the shopping experience for shoppers and retailers. As a holding company, we also acquire synergistic operating companies that manufacture and sell Fashion products to other retailers as well as selling products online. In October 2019 we also acquired retail stores in airport terminals and casinos to create a true Omni-Channel retailer. The plan was this would allow us to deploy our cutting-edge software in the United States to demonstrate its effectiveness, as well as to test, real time new software products to continue to delight consumers and generate additional revenue and profits for retailers.

During the 4th quarter 2019 and continuing in the first quarter 2020 and with the effects of the pandemic created by COVID-19, the Company consolidated operations around two operating entities; 12 Tech, Inc., formed in Arizona on December 26, 2019 (“12 Tech”) and 12 Retail Corporation, formed on June 27th, 2017 (“12 Retail”).

12 Retail is itself divided into three operating units; 12 Retail, Bluwire Group, LLC (“Bluwire”) that will operate our airport retail stores in airports, 12 Retail itself which will operate our casino store(s), and 12 Fashion Group, Inc. that operates our fashion wholesale and direct to consumer brands, including Rune NYC, Social Sunday, Red Wire Design, Emotion Fashion Group. 12 Retail will serve to demonstrate the effectiveness of the software technology created by 12 Tech in improving revenues and profits for emailers as well as providing access to other retailers through our whole fashion business relationships.

12 Tech, Inc, provides technology solutions to physical retailers currently mainly in Asia and is now positioned in the United States market, the world’s largest. We have consolidated or shuttered our international units focused on our technology deployment (“12 Japan” and “12 Europe”), and consolidated our software company 12 Hong Kong, Ltd (“12 HK”) under 12 Tech to further streamline operations.

As the retail environment continues to evolve, we as retailers and as primarily a technology company will evolve with it. We believe our developed software and those products in development will delight consumers, provide contactless experiential shopping, and bring revenue back to retailers as they combat the dual threat of Amazon and Walmart. Our software, once fully deployed and implemented, may provide retailers with another electronic and effective sales channel other than Google, Amazon, and/or Facebook/Instagram.

As an innovative holding company that has been built through acquisitions and ideas, we will continue to search for other synergistic acquisitions that bring additional revenues, and/or provide innovative software solutions.

Throughout 2019, the Company made a number of acquisitions for its 12 Retail subsidiary. The criteria management used in selecting and completing these acquisitions was; 1) Each acquisition had significant revenue, 2) management identified that the acquisition could at some point assist in the deployment of our retail software technology, 3) the business could benefit from expense consolidation and better management controls, and 4) be able to be acquired and managed within the resources available to the Company.

In each case, after acquisition, we looked for ways to streamline operations, and shed expensive facilities, reduce labor and material costs, while maintaining and/or growing the revenue and increasing the margins. This process can appear to be messy to an outsider but is a process that management believes will ultimately yield the biggest rewards for our shareholders over time. In most cases each acquisition was followed by a larger acquisition as the Company built momentum. Consequently, the Company had its largest revenue quarter in the 4th quarter of 2019 when it topped $1 million in quarterly revenues for the first time ($1,003,549 vs $ 19,105 in 2018).

In the first quarter of 2020, the processes discussed here continued and accelerated until our business was interrupted by nationwide closures due to the COVID-19 pandemic. Management used this period once most operations were closed to more swiftly shutter unprofitable retail stores, close the unprofitable Utah factory, and further streamline operations which management believes may make the Company a much stronger player post COVID-19 pandemic. (See Risk Factors).

During the 4th quarter of 2019 the company completed the last two acquisitions for the year (Bluwire Group, LLC & Social Decay d/b/a Social Sunday) and began to consolidate them into 12 Retail. 12 Retail was itself divided into two operating segments; Retail and Fashion. Angelo Ponzetta, our CEO who had 25 years of retail experience, was named as the acting CEO of Bluwire, and Emily Santamore, with over 10 years of experience in the fashion industry, was named President of 12 Fashion Group, Inc.

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Principal subsidiaries as December 31, 2020.

The details of the principal subsidiaries of the Company as of December 31, 2020, are set out as follows (additional consolidation may occur in the future):

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 roll up acquisition strategy as well as to penetrate the North American market with our technology to select retailers. Separated into two division: 12 Fashion Group, Inc., and Bluwire Group, LLC.
Red Wire Group, LLC |  | Utah, USA |  | July 2, 2015 |  | February 19, 2019 |  |  | 100 | % |  | Operations are consolidated into 12 Fashion Group, and this company is closed, and we filed a Chapter 11 Subsection V on March 6, 2020. This was discharged on or about September 2020 and. is permanently closed
Rune NYC, LLC |  | New York, USA |  | Jan 23, 2013 |  | March 14, 2019 |  |  | 92.5 | % |  | Operated by 12 Fashion Group, Inc., an unincorporated division of 12 Retail. Operates contemporary women’s ‘Athleisure’ brand which is primarily sold to retailers.
Bluwire Group, LLC (“Bluwire”) |  | Florida, USA |  | Feb 1, 2010 |  | October 1, 2019 |  |  | 60.5 | % |  | A subsidiary of 12 Retail with 12 brick and mortar stores was acquired.
Social Decay, LLC dba Social Sunday (“Social Sunday”) |  | New Jersey, USA |  | Sept 24, 2014 |  | November 1, 2019 |  |  | 100 | % |  | Operated by 12 Fashion Group Inc., a division of 12 Retail. Operates a contemporary women’s clothing brand primarily sold to wholesalers.
12 Tech Inc |  | Arizona, USA |  | Dec 26,2019 |  | Formed by 12 Retech |  |  | 100 | % |  | As a holding Company to execute the Company’s technology strategy.
12 Hong Kong Limited (“12HK”) |  | Hong Kong, China |  | February 2, 2014 |  | June 27, 2017 |  |  | 100 | % |  | A subsidiary of 12 Tech Inc. Development and sales of technology applications. Services customers in Asia, including Japan.
12 Japan Limited (“12JP”) |  | Tokyo, Japan |  | February 12, 2015 |  | July 31, 2017 |  |  | 100 | % |  | A subsidiary of 12 Tech Inc. Consultation and sales of technology applications. As of June 2020, our Japanese customer (s) is serviced by 12 Hong Kong.
12 Europe AG (“12EU”) |  | Switzerland |  | August 22, 2013 |  | October 26, 2017 |  |  | 100 | % |  | As of September 2019, this company is closed.
12 Fashion Group Inc |  | Arizona, USA |  | June 26, 2020 |  | Formed by 12 Retech |  |  | 100 | % |  | Formed as a subsidiary of 12 Retech to hold and operate the wholesale and Retail fashion and apparel operations.

12 Retail Corporation: a subsidiary of 12 ReTech Corporation Operates its own retail store (as of March 2021 as a subsequent event) and manages two main subsidiaries each of which have multiple subsidiaries; 12 Fashion Group, Inc and Bluwire Group, LLC.

12 Fashion Group Inc; A subsidiary of 12 retail, Inc. has the following subsidiaries;

On February 19, 2019 we acquired Red Wire Group, LLC. (“RWG”) a Utah Limited Liability company pursuant to a Share Exchange Agreement whereby the Company exchanged and the members of RWG (the “Members”) Pursuant to the terms of the Exchange Agreement, the Company will acquire (i) 75% of the membership interests of RWG in exchange for 54,000 shares of the Corporation’s Series D-6 Preferred Stock and with a stated value of $5.00 (ii) the remaining 25% of the membership interests of RWG in exchange for 37,500 shares of the Corporation’s Series D-5 Preferred Stock with a stated value of $4.00 per share, RWG operates its own “cut & sew” operation for independent third parties contract to produce cloths operating out of its factory in Salt Lake City, Utah.

As of the end of November 30, 2019, we closed the factory in Utah while 12 Fashion Group retained the customers by completing the orders in process. We were able to produce the products through 3rd party factories in New York City and Los Angeles for less than it cost us to produce the products in our own factory in Salt Lake City, Utah. On March 6, 2020, the company filed a Chapter 11 Bankruptcy filing in Phoenix Arizona. This filing allowed us to sell the equipment we no longer need, pay off the secured creditors and shed all of Red Wire’s debt from our balance sheet. The bankruptcy was discharged on or about September 2020 and all debts were extinguished. 12 Fashion Group continues to service those customers acquired as well as obtaining new accounts by marketing under the d/b/a Red Wire Designs.

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| - | One March 14, 2019 we acquired Rune NYC, LLC. (“Rune”) a New York Corporation pursuant to a Share Exchange Agreement whereby the Company exchanged with the members of Rune (the “Members”), the members of representing 92.5% of the membership interests have agreed to tender their interests to the Corporation, and the Corporation closed out the tender offer period and the Exchange Agreement became effective. Accordingly, pursuant to the terms of the Exchange Agreement, at closing the Company acquired 92.5% of the membership interests of Rune in exchange for 82,588 shares of the Corporation’s Series D-5 Preferred Stock with a stated value of $4.00 per share. Rune’s operations continued uninterrupted in New York City following the closing and retained key employees as the leading part of 12 Fashion Group.

| - | On November 20, 2019 Social Decay, LLC d/b/a Sunday, (“Social”) a New Jersey Limited liability company, was acquired by the Company pursuant to a share exchange agreement whereby the Company exchanged the Company’s 30,000 D-6 Shares for 100% of the total outstanding equity of Social and the member of Social (the “Member”). That Member was retained by the Company, but subsequent to the year end on April 15, 2020 she resigned and as a consequence, forfeited the additional 12,000 D-6 Shares held in escrow as a performance incentive. The D-6 shares have a face value of $5.00 per share, and are convertible into the Company’s common shares. Subsequent to year end in March 2020, Social’s print factory was closed in part due to the COVID-19 Pandemic. Social’s products are marketing and manufactured by the staff of 12 Fashion Group.

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| - | Bluwire Group, LLC. On October 1, 2019 the Company acquired the retailer with 11 airport terminal locations and one casino location under an equity exchange agreement. Under the terms of the Agreement the Company issued to the Sellers 500,000 Series A Preferred Shares in exchange for 51% of the equity in Bluwire Group, LLC and its subsidiaries (“Bluwire”). The Sellers retained 30% of Bluwire and 19% is reserved for 12 months for potential equity investors into Bluwire. Any of that equity not used to raise capital for Bluwire over that period would be divided equally between the Company and the Sellers. No capital was raised for Bluwire Group and this 19% was issued to 12 ReTech Corporation

| - | 12 Tech, Inc. An Arizona corporation is a subsidiary of 12 ReTech Corporation and has a number of subsidiaries (“12Tech”). On December 26, 2019, the Company formed 12 Tech to spearhead the Company’s software technology development and to focus more effort on the largest retail market in the world: the United States of America. The Company then closed or consolidated under 12 Tech all its other software technology companies and maintains the following subsidiaries;

| - | 12 Hong Kong, Ltd., a corporation organized in the special economic region of Hong Kong is a subsidiary of 12 Tech, Inc. On June 27, 2017 the Company acquired 12 Hong Kong, Ltd. in a share exchange transaction. Originally this is the Company that managed all the Company’s proprietary and licensed technology that is utilized and sold by the other subsidiaries. With the formation of 12 Tech that role is now being managed by 12 Tech. Today, 12 HK operates as a subsidiary of 12 Tech and serves as the marketing and sales hub for Asia, particularly the Chinese market and now services our customers in Japan, formerly managed by 12 Japan Ltd.

| - | 12 Japan, LTD. Organized in Japan and is a subsidiary of 12 Tech inc. After the initial acquisition of 12 Hong Kong, LTD during 2017 and the first half of 2018 the Company made several acquisitions including 12 Japan, LTD. Subsequent to this acquisition, the Company took steps to consolidate the assets and streamline operations that effectively by the end the 3rd quarter 2019, this Company no longer functions as independent subsidiary. In the third quarter of 2019 the Company closed the offices of 12 Japan, and its flagship customer ITOYA and the revenue generated will be serviced and managed by 12 Hong Kong.

| - | 12 Europe, A.G. 12 Europe A.G. was acquired in 2017, and underperformed. In the third quarter 2019 it was determined by management that the costs of continuing to support the expenses of an independent 12 Europe A.G., were unsupportable. Therefore, the Company reaffirmed its previous master representation agreement between 12 Hong Kong, LTD and Coppola, AG so that the software customers in Europe can continue to be supported and then closed its operations in Europe. On August 20, 2019, the Company had successfully discharged all of its debts associated with 12 Europe A.G., as part of the completion of the 12 Europe A.G., bankruptcy filing except for certain social benefit payments still owed approximately $35K by the Company. Therefore, this subsidiary is no longer in existence.

Business and Operations

12 ReTech Corporation is a Technology company that is creating software that management believes will create new platforms and tools for smaller retailers to compete with major companies like Amazon and Walmart and delight consumers. To better understand the entire retail environment the Company has acquired operating companies that sell direct to consumers online and in physical stores as well as to other retailers. These acquisitions, in addition to providing current revenue to the Company management believes that they will provide entree to other retailers for the sale and or licensing of our technology solutions.

From an operating perspective, 12 ReTech Corporation is a holding company with two main operating companies that themselves may now and/or in the future own other subsidiaries. They are: 12 Retail Corporation which now operates our casino stores and subsidiaries Bluwire Group, LLC, 12 Fashion Group, Inc and others, and 12 Tech Inc that designs and develops our retail software.

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The Company has earned money from four different revenue streams (in declining order): Retail Sales, Wholesale and Online sales of Fashion products, Royalty Payments for 3rd party licensing of the Bluwire name, and technology sales.

Effects on us of the Covid-19 Pandemic

2020 was an unusual year, in that at nearly the same time the entire world was in the grip of the Covid-19 pandemic with unprecedented closings of businesses, a virtual cessation of most business and personal travel, lockdown and stay at home orders. As a Company centered on retail and which derives the most significant portion of its revenue from retail stores in airports and casinos, we were hit particularly hard. In retail, the 1st quarter of every year is the slowest revenue quarter of any year, and even before that first quarter ended all of our retail stores were closed due to the pandemic. Only the casino store was able to be re-opened in mid-December 2020 to lackluster sales. Supply chains were interrupted, and it became difficult to re-stock our retail store for the holiday season which also delayed its re-opening to mid-December, after an aborted restart in September. The supply chain problems also delayed the receipt of fabric and other products needed by our Fashion Group as they began to re-emerge from under the pandemic closures. Our fashion group, being based-in NYC was closed for many months and only reopened in July to produce masks. All of the stores our fashion group would sell to were also closed. Our technology division, 12 Tech Inc, was also hard hit. Not only were retailers closed and conserving cash like we were, but it became apparent that consumers would no longer interact with public touchscreens, which was the corner stone of our technology. In other words, our technology was made obsolete in the blink of an eye.

The Company managed survival during the pandemic by squirreling cash and obtaining PPP and or EIDL loans from the SBA. We attempted to retain all of our key employees utilizing these funds, but as a subsequent event by June 2021 most have found other jobs once the PPP money ran out. This presents challenges for our airport stores re-openings, as it is a long process to get employees certified (“badged”) to work in airports. This will further slow our re-openings during 2021. We also renegotiated various leases and commitments to make us more streamlined and efficient as we re-open and expand. In Japan, we renegotiated out licensing arrangement with ITOYA whereby they managed more of the day to day software for a smaller fee and we eliminated virtually all of our costs there. We also learned that the App we had developed there was strongly used by Japanese consumers of ITOYA and we could re-develop it for the U.S. market. This process is well on the way and management believes will create the next great shopping platform.

For more information about our existing technology please visit our website at www.12retech.com.

Financing and Convertible Debt

To finance our operations the Company has historically resorted to a number of convertible debt providers (see Note 10). These debt providers have in many cases exercised their rights to convert their debt into the Company’s common stock at a discount to market. They then sell that stock to recover their investment and profits. This has over time depressed the value of our Company’s common stock and caused a significant dilution to our shareholders. This could not be avoided, and management believes it was necessary in order to provide continuation of the Company’s business so that we could make significant acquisitions. The Company has been building revenue momentum through these acquisitions and is no longer exclusively reliant on this form of fund raising. The vast majority of the funds the Company has received over the last 4 months have been sourced through non-convertible debt incurred by our operating subsidiaries. There is, however, still a considerable amount of convertible debt that needs to be retired over the near term. Management is working closely with the convertible note holders to find less dilutive alternatives and management believes that in first half of 2021 it will arrive at a solution that will involve less dilution, may require some cash payments from other sources including an equity offering and/or debt offerings through one or more of its subsidiaries as well as leak out provisions negotiated with the convertible debt holders themselves.

The Company had also entered into a $12 million dollar Equity Line of Credit with Oasis Capital which it has been unable to access due to some delays in the audits of one of its acquired subsidiaries. That has been resolved and Management has been in talks with Oasis on amending that original offering, so that the Company may refile the S-1 required with the SEC. The equity line of credit is ineffective at the current share price, and we will not be able to reinstitute at current share price levels.

In addition, Management has received tentative commitments for preferred Equity Funding that if completed would allow the Company to fully retire the convertible debt. Management, however, cautions readers that while promising no Equity or Debt funding can truly be counted upon until the money is in the bank. The exact amount of the final funding and timing have not been fully determined at this time.

However, management believes that now that the Company has significant and growing revenue, has streamlined operations, is set to launch its software products in its own stores in the United States, and has access to more standard debt capital, that the issues associated with the convertible debt have become more manageable and therefore will be resolved more favorably to the Company than was previously observed.

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YEAR ENDED December 31, 2020 COMPARED TO THE YEAR ENDED December 31, 2019

Amounts reflected in our financial statements are accounted for under common control accounting (see footnotes).

Revenues

During the year ended December 31, 2020 our revenues decreased to $721,312 from $1,628,607 in the prior comparable year. This represents and decrease of $907,295 or 56%, which is primarily the result of the global pandemic due to COVID 19 on our Bluwire subsidiary and 12 Fashion Group subsidiary. The government forced the closure of all our store locations on March 16, 2020. When allowed, the company was able to re-open one of our store locations in December 2020. We hope to open additional store locations in the near future.

Cost of revenues

During the twelve months ended December 31, 2020 we incurred Cost of Revenues associated with the delivery of our products in the amount of $385,236, as compared to $1,122,086 for the comparable period in 2019. These expenses are related to costs of delivering goods. In 2020, our Cost of Revenues as a percentage of Revenues was 53% as compared to 66% in the prior comparable period. The lower cost of revenues as a percentage of Revenues in 2020 is mainly the result of on cutting purchases of inventory and production materials due to COVID 19.

General and Administrative

Our general and administrative expenses for the year ended December 31, 2020 were $1,762,856, a significant decrease of $361,516 or 17% when compared to $2,124,372 for the year ended December 31, 2019. The decrease is a result of impact due to COVID 19 and forced closure of operations during many months.

Professional fees

Our professional fee expenses for the year ended December 31, 2020 were $683,251 a decrease of $542,448 or 44% when, compared to $1,225,699 for the year ended December 31, 2019. Our professional fees include expenses related to our external auditors, legal costs, and consultants. In order to preserve our subsidiaries operations, the company conserved on spending from the period of closure on March 16, 2020 until December 31, 2020.

Depreciation and amortization

Our depreciation expense for the year ended December 31, 2020 were $439,269 an increase of $340,163 or 343% when, compared to $99,107 for the year ended December 31, 2019. Our depreciation and amortization expense includes intangibles and leasehold improvements added October 1, 2019 as part of the Bluwire acquisition. As such the company had twelve months of depreciation and amortization as opposed to three months in 2019.

Other Expense

Our Other Expenses increased by $10,187,508 or 110% to $19,391,799 for the year ended December 31, 2020 compared to $9,204,291 for the year ended December 31, 2019. There are four main components of the increase of the 2020 Other Expense category:

| 1. | A significant increase in loss of change in derivative liability of $18,860,260 for the year ended December 31, 2020 compared to $3,524,861 for twelve months ended December 31, 2019 resulting in an increase of $22,385,121 which is the result of the calculation of derivative liability using Black-Scholes.
| 2. | A decrease in other income to $431,937 for the year ended December 31, 2020 compared to $1,023,965 for twelve months ended December 31, 2019. Other income was primarily the result from the write off of certain debts which was described in 2019 10K.
| 3. | A decrease in general default reserve expense of for the year ended December 31, 2020 of $491,897 as of December 31, 2020 compared to $2,139,961 as of December 31, 2019.
| 4. | A decrease in interest expense of $8,523,487 to $471,579 as of December 31, 2020 compared to $8,995,066 for the ended December 31, 2019.

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See these components described in further detail below.

Other Income

During 2019, the Company recognized a loss impairment of software development costs of $513,601 December 31, 2019 without a similar comparable expense during the prior period ending December 31, 2019. Periodically, management reviews its capitalized costs to determine if they are properly valued or should they be impaired. As of September 30, 2019. Management had capitalized approximately $513,601 in development costs for its 12 Technology Suite and 12 Sconti APP. While management still believes in the long-term validity of these software applications, the fact remains that adoption by retailers has not met management’s expectations. This led management to cut costs in the 12 Europe and 12 Japan operations. Therefore, management believes that the capitalized costs for the software development should be fully impaired during the 4th quarter of 2019.

Also, during 2019, the Company recognized other income primarily from 12 Europe declaring bankruptcy on August 26, 2019, whereby all debts of the company were eliminated with the exception of $35,757 in accounts payable resulting in a gain of $445,244. In addition, as discussed in Note 4, the Company effectively foreclosed on its liens against the assets of Emotion Apparel, Inc. taking possession of assets including the brands; Lexi-Luu, Emotion Fashion Group, Punkz Gear and retuned the equity of Emotion Apparel, Inc. and its subsidiaries to the Seller. As a result of the debts related to Emotion Apparel, Inc, which reverted to the Seller including all accounts payable, accrued expenses and notes payable resulting in a gain of $511,486 to the Company. Lastly, after careful review by management, certain accounts payable were determined not to be valid expenses. These payables totaling approximately $68,000 were offset as a gain to other income.

In 2020, the company filed for bankruptcy for the Red Wire Group. As a result, the company recognized other income as a result of write off of debt associated with Red Wire Group. In addition, the company also closed its Denver Bluwire store location, as such the company wrote off associated intercompany loans.

Interest Expense

There was also a decrease in interest expense of $8,523,487 to $471,579 as of December 31, 2020 compared to $8,995,066 for the period ended December 31, 2019. Decrease in interest expenses is related to decrease in convertible notes’ convertible preferred stock during the same period. As well as a significant decrease in interest expense associated with the additional derivative liability and for the general default reserve.

Change in Derivative Liability

There was a loss as a result of the change of derivative liability of $18,860,260 as of December 31, 2020 compared to gain of $3,524,861 for the period ended December 31, 2019. The reason for the change was because of a change in the calculation method from Lattice model to Black-Scholes model.

General Reserve Expense

The company recognized a general default reserve expense of for the year ended December 31, 2020 of $491,897 compared to 2,139,961 as of December 31, 2019. On July 25, 2019 the Company was served with a lawsuit from Auctus Fund, LLC (“Auctus”). For additional details, see MD&A including the settlement of $120,375 which is still pending. However, management calculated a default reserve which represents the additional amount management would have to payout to all note holders in the event of the default. Management quantified what this amount would be which includes additional premiums, additional accrued interest and default accrued interest in 2019 and updated these calculations in 2020. The total reserve quantified by management amounted to $2,278,648 as of December 31, 2020.

Net Income

During the year ended December 31, 2020, we incurred a net loss of $21,940,137 compared to a net loss of $12,150,698 for the year ended December 31, 2019. This increased loss is primarily the result of the increase in the change in derivative liability and compounded by the significant decrease in revenues as a result of the global pandemic of COVID 19 during 2020.

The Company is expending working capital to further their business plan. This includes the further development, refinement and improvement of their software and its adaptation to various languages and geography. The Company is also expending working capital on the development of new technology which is designed to further enhance the attractiveness of their offerings to their target customer base.

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Significant Acquisitions in 2019

In the first quarter of 2019 the Company made two significant acquisitions as detailed above with the acquisition of Red Wire Group on February 19, 2019 and Rune NYC, LLC on March 14, 2019. the Company gained two revenue-producing operations. As also detailed above on October 1, 2019 the Company acquired Bluwire Group, LLC and effective November 1, 2019, the Company acquired Social Decay, LLC dba Social Sunday. With the combination of these acquisitions, management believes that the Company will benefit, and it will significantly expand the sales channels for all of its brands. As of December 31, 2019, the Company performed its annual impairment test on all reporting units and determined that each unit had indicating factors of impairment due to failure to meet respective sales projections. For further details, see Note 3.

Management believes that these acquisitions are “game changers” for the Company for two more reasons; 1) the wholesale customers acquired sell to are and will become targets for the Company to sell its disruptive retail technology solution to other retailers and 2) is already attracting interest among other companies that would like to join the 12 ReTech team either through acquisition or through strategic partnership.

While management believes the results of operations for 2019 for the acquired companies are not indicative of the future results for all of the reasons herein above combined with impact of COVID-19, management believes it is important to show how materially the prior year’s revenues would have been for the Company had they been acquired at the beginning of 2019 without the material improvements we have made since acquiring them.

Liquidity and Capital Resources

The Company has met its current capital requirements primarily through the issuance of debt-equity and preferred stock. Management views the working capital that is raised through debt-equity or preferred equity offerings as being equivalent to raising working capital via common equity subscriptions, but with the added bonus of allowing the common equity value to rise through the passage of time and simultaneous achievement of the Company’s business goals. Any conversion of debt into equity could occur at a higher equity valuation then the Company currently has. The Company has reserved the right to repurchase these debt-equity interests and preferred stock at a predetermined premium should management determine that this is in the best interests of shareholders at an appropriate future point in time.

Operating expenses for the Company have been paid from revenue as well as from the issuance of debt-equity and preferred stock subscriptions. At December 31, 2020 the Company had a deficit in working capital (current liabilities in excess of current assets) of $31,490,395. A portion of this working capital deficit has been financed loans from stockholders. As of December 31, 2020, amounts owed to stockholders totaled $383,753. At December 31, 2019, the Company had a deficit in working capital (current liabilities in excess of current assets) of $11,786,147. A portion of this working capital deficit has been financed loans from stockholders. As of December 31, 2019, amounts owed to stockholders totaled $384,091. The increase in working capital deficit when compared to December 31, 2019 was principally due to an increase derivative liabilities and to a lesser extent, increase in accounts payable.

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The Company has financed our cash flow requirements through the issuance of debt-equity and preferred stock. As the Company expands, we may continue to experience net negative cash flows from operations, pending generation of significant revenues. Additionally, we anticipate obtaining additional financing to fund operations through debt-equity and preferred stock offerings to the extent available or to obtain additional financing to the extent necessary to augment our working capital balances.

Management believes that our acquisition strategy will successfully provide significant revenues, potential profits as well as access to traditional bank and asset-based credit lines. In addition, Management believes that existing shareholders, lenders and prospective new investors will provide the additional cash needed to meet our obligations as they become due.

The Company filed a Certificate of Designation on January 9, 2019 to create 1,000,000 Series D-5 Convertible Preferred Stock with par value $0.00001 and stated value of $4.00 per share. Also on January 9, 2019, the Company filed a Certificate of Designation to create One Million (1,000,000) Series D-6 Convertible Preferred Stock with par value $0.00001 and stated value of $5.00 per share.

The Company filed an amendment on January 11, 2019 to Series C Preferred shares where each issued and outstanding shares of Series C Preferred Stock shall be entitled to 8,000,000,000 votes at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration (by vote or written consent). Holders of shares of Series C Preferred Stock shall vote together with the holders of Common Shares as a single class.

The Company also filed with the State of Nevada an Amendment to its Articles of Incorporation on March 8, 2018, that increased it authorized common shares from One billion to eight billion common shares authorized. On March 14, 2019, the Company entered into a PIPE Equity Purchase Agreement whereby an institutional investor agreed to purchase up to $500,000 worth of the Company’s D-2 Preferred Shares with a $2.00 face value at to be determined discount to face value. Concurrent with the execution of this Agreement, the Company sold 103,500 preferred D-2 Preferred Shares and received net proceeds after expenses of $100,000 (Tranche #1). The D-2 Preferred Shares are convertible to common shares after a 6 month or more holding period at market price. (See Form 8-K filed on March 20, 2019).

Concurrent with the execution of the PIPE Funding Agreement the Company executed an Exchange Agreement with the same institution investor whereby that investor exchange all of its Series D-1 preferred shares for newly issued Series D-2 Preferred Shares. (See Form 8-K filed on March 20, 2019).

In connection with the with PIPE Funding Agreement and the Exchange Agreement listed above the Company filed with the State of Nevada a new Certificate of Designation which took 2.5 million of the blank check preferred shares the Company has and designated them as Series D-2 Preferred Shares. (See Form 8-K filed on March 20, 2019).

On September 25. 2019, the Company’s Rune subsidiary entered into two separate future receivables purchase agreements with Vox Funding and received gross proceeds for $49,000 which were used in part to retire a previous and smaller obligation to Vox Funding. The Agreements provided for payment over 6 months and carries a fee of $1,470. This obligation is not convertible under any terms into Company Stock.

On September 26, 2019, the Company sold 9,009 Series D-2 Convertible Shares to Oasis Capital and received $10,000.

29

In connection with the acquisition of Bluwire Group, LLC, on October 3, 2019, one of the Sellers of Bluwire provided $300,000 capital contribution to its Bluwire. This obligation is not convertible into Company stock under any terms. This capital contribution to Bluwire has not been adequately documented. In Addition, on October 15, 2019, the Company’s Bluwire subsidiary entered into a future receivable purchase agreement with Libertas Funding and received $343,000. This agreement provides for payment over 8 months and caries a fee of $7,000. This obligation is not convertible under any terms into Company stock. Lastly, on November 5, 2019, the Company’s Rune subsidiary entered into a future receivables purchase agreement with Vox funding and received gross proceeds for $145,500 which were used in part to retire a previous and smaller obligation to Vox Funding. The Agreement provided for payment over 6 months and carries a fee of $4,500. This obligation is not convertible under any terms into Company Stock. After the March 16, 2020 Covid shut down, all payment ceased by verbal mutual agreement. In May 2021, the Company entered into a verbal agreement with Vox to repay $250 per week and all collection efforts are put on hold and forbearance on other receivable holders.

On March 18, 2020, the Company entered into a back end promissory note agreement with Adar Alef, LLC (“Adar”) for loans totaling $33,600. The consideration to the Company was $30,000 with $3,600 of legal fees. As a subsequent event, on March 25, 2020, the Company entered into a back end promissory note agreement with LG Capital, LLC (“LG”) for loans totaling $33,600. The consideration to the Company was $30,000 with $3,600 of legal fees. The note is convertible after 181 days at a (i) $0.0075 ceiling or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.

On March 5, 2020, the Company’s Bluwire subsidiary entered into a second future receivable purchase agreement with Reliant Funding and received $83,000. This agreement provides for payment over 6 months and carries a fee of $3,000. This obligation is not convertible under any terms into Company stock. This agreement has been in forbearance since April 2021, and the Company pays $10 per week until Bluwire Newark is re-opened.

In the future we will need to generate sufficient revenues from operations in order to eliminate or reduce the need to sell additional stock or obtain additional loans. However, there can be no assurance we will be successful in raising the necessary funds to execute our high growth business plan.

At December 31, 2020, the Cash and Cash Equivalents balance was $11,784 compared to December 31, 2019, the Cash and Cash Equivalents balance was $118,860.

During the year ended December 31, 2020, the current liabilities increased by $19,409,181 when compared to December 31, 2019. The primary reason for the increase was the increase in derivative liabilities of $18,438,798 to $23,798,240 and accounts payable of $1,020,96 to $3,187,592 as of December 31, 2020 compared to $5,359,422 and $2,167,496 as of December 31, 2019. Due to Covid 19 pandemic, the company tried to preserve operations and obtained extended terms from most of its creditors.

As discussed earlier, it is likely that the Company will need to obtain additional working capital through debt-equity and preferred stock capital raises until the Company can generate sufficiently profitable revenues to sustain the cash burn rate that the Company’s business plan calls for.

Although, our business plan calls for high growth, we anticipate that we may continue to incur operating losses during the next twelve months. Our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies at our stage, particularly companies in new and rapidly evolving markets. Our roll up acquisition strategy seeks to mitigate some of those risks, but until more acquisitions can be completed, consolidated, and we reap the benefits of consolidation, we cannot accurately include their results in our projection of cash needs.

Risks include, but are not limited to, an evolving and unpredictable business model and the management of growth and the consummation and assimilation of multiple acquisitions. These factors raise substantial doubt about our ability to continue as a going concern. To address these risks, we must, among other things, increase our customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition, and results of operations.

30

Impact of COVID-19

Like most other business in the United States, our businesses have been severely impacted by the COVID-19 Pandemic. While the first quarter of any calendar year is historically the slowest quarter of the year for revenues, for our main operating subsidiaries the first quarter of 2020 was severely impacted by US Government’s business shutdowns and stay at home orders related to COVID-19. We derive most of our revenue from our 12 Retail Corporation, which is itself composed of two Operating units: 12 Fashion Group and Bluwire Group, LLC.

In response to the President’s “stay at home” orders, on March 16, 2020, we promptly laid off almost all of our 12 Fashion Group employees and contractors. 12 Fashion Group retained three employee/contractors and focused on producing and selling of washable reusable masks, both wholesale and direct to consumer online.

Our Bluwire retail stores in Newark airport, Dallas airport, and JFK international airport were temporarily closed on or about March 17, 2020. Our Casino location was temporarily closed on or about March 17, 2020 when the Mohegan Sun Casino itself was closed. We laid off all of our Bluwire employee/contractors except two members of the headquarters staff who continued to source innovative products for our stores when they re-open, some of which will be uniquely desired by consumers due to changing buying habits due to COVID-19.

The financial effects of these closures are reflected in the Management Discussion and Analysis.

The Cares Act and the Payroll Protection Program SBA Loans (PPP Loans).

The Company has applied for PPP Loans for all of its U.S. operating Companies, and is in the process of analyzing if it would qualify for similar governmental assistance for its reduced operating unit in Japan (12 Japan Ltd). The Company has qualified and received for an aggregate of $294,882 of PPP Loans for its operating companies. These funds are being used to re-hire previously laid off personnel where appropriate and hire new personal that management believes better fits the post COVID-19 shut down environment. The Company is hiring personnel that will help the operating units generate revenues in a more contactless environment and to create changes to our cutting-edge retail software to help our stores and well as other retailers attract consumers in this new environment. The Cares Act provides very favorable terms for the repayment or forgiveness of the monies lent to qualifying businesses like ours. While the final rules are not yet formalized, the initial guidelines allow for complete forgiveness for monies spent on approved expenses such as payroll and labor with non- approved expenses to be paid back over 2 years at 1% annual interest with no payments for the first 6 months after receipt. No collateral was pledged for these loans and management did not have to sign any personal guarantees. Management will make every effort to utilize these PPP loan funds in a manner that may allow for complete forgiveness of the loan(s) while providing the best opportunity for the continuity and growth of the business.

During the COVID-19 shutdown period management sourced new products and vendors for its businesses and is now optimistic that it will shortly obtain additional funding of debt or preferred equity to grow our business.

Reliance on the SEC’s March 25, 2019 order regarding extension of filing deadlines due to COVID-19

As a direct result of the COVID-19 shutdowns and travel restrictions, the SEC provided for any public company impacted by COVID-19 to extend its filing of its 10-K or 10-Q or other required filings for 45 additional days and would still be eligible for the further normal extensions of 15 and 5 days respectively. As noted herein, we have been extremely impacted on an operational level, delayed in obtaining information from our foreign subsidiaries in Hong Kong and Japan, as well as being delayed in our ability to obtain capital for the professional fees to complete our filings, and further compromised by the fact that our CEO and CFO are both restricted from travel to the United States at this time as they are in Hong Kong and Japan respectively. Therefore, we filed for a 45 day and 15-day NT10–KA Filing extensions in reliance on the March 25, 2020, order and have further been in communication with the SEC for additional consideration for timely filing under these extraordinary circumstances.

However, due to cash restraints with all of our closed operations, the Company was unable to meet any deadline to complete this audit and the quarterly reports (forms 10-Q) in a timely fashion during 2020 and the first quarter 2021. The Company retained auditor BF Borgers on April 28, 2021 and will complete all delinquent filings in the second quarter 2021. With our businesses reopening and revenues being generated, Management believes that it can continue to make timely filings in the future.

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. Since we have not yet generated significant revenue, we have negative cash flows from operations, and negative working capital we have included a reference to the substantial doubt about our ability to continue as a going concern in connection with our consolidated financial statements for the year ended December 31, 2020. Our total accumulated deficit at December 31, 2020 was $44,475,900 compared to $22,756,345 as of December 31, 2019.

These consolidated financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing will be obtained as required and that our assets will be realized, and liabilities settled in the ordinary course of business. If we are unable to obtain additional financing, we may cease operations and not be able to execute on operating plans. Accordingly, these consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

31

Elected Mandatory Filer Status

The Company filed Form 8A-12G with the Securities and Exchange Commission on March 16, 2018 and therefore became a mandatory filer with the Securities and Exchange Commission.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, and expenses and the disclosure of contingent assets and liabilities. We use assumptions that we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. We believe there have been no significant changes in accounting policies during the year ended December 31, 2019. See Note 3 to the consolidated statements in this Annual Report for a complete discussion of our significant accounting policies and estimates.

Recently Issued Accounting Standards

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position, or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its consolidated financial statements. See Note 3 to the consolidated statements in this Annual Report for a complete discussion of our significant accounting policies and estimates.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

32

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

12 RETECH CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

| Page
Report of Independent Registered Public Accounting Firm for the year ended December 31, 2019 | F-1
Report of Independent Registered Public Accounting Firm for the year ended December 31, 2020 | F-2
Consolidated Balance Sheets | F-3
Consolidated Statements of Operations and Comprehensive Loss | F-4
Consolidated Statement of Changes in Stockholders’ Deficit | F-5
Consolidated Statements of Cash Flows | F-6
Notes to the Consolidated Financial Statements | F-7

33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

12 ReTech Corporation

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of 12 ReTech Corporation and subsidiaries (the “Company”) as of December 31, 2019 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in the financial statements, the Company has suffered substantial net losses, has not generated significant revenue from its operations, and will require additional funds to maintain operations, all of which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are disclosed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities law and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

/s/ dbbmckennon |

We have served as the Company’s auditors from 2019 to 2020.

San Diego, California

June 18, 2020

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

12 ReTech Corporation

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of 12 ReTech Corporation and subsidiaries (the “Company”) as of December 31, 2020 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in the financial statements, the Company has suffered substantial net losses, has not generated significant revenue from its operations, and will require additional funds to maintain operations, all of which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are disclosed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities law and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

/s/ BF Borgers |

We have served as the Company’s auditors since 2021

Lakewood, Colorado

June 28, 2021

F-2

12 RETECH CORPORATION

Consolidated Balance Sheets

|  | December 31, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
ASSETS |  |  |  |  |  |  |  |
Current Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 11,784 |  |  | $ | 118,860 |
Accounts receivable |  |  | 3,108 |  |  |  | 131,605 |
Inventory |  |  | 177,172 |  |  |  | 241,987 |
Prepaid expenses |  |  | 12,920 |  |  |  | 7,600 |
Total Current Assets |  |  | 204,984 |  |  |  | 500,051 |
Fixed assets, net |  |  | 88,228 |  |  |  | 348,396 |
ROU Asset |  |  | 52,671 |  |  |  | 303,071 |
Other Asset |  |  | - |  |  |  | 179,100 |
Security deposit |  |  | 241,250 |  |  |  | 60,824 |
TOTAL ASSETS |  | $ | 587,133 |  |  | $ | 1,391,442 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |  |  |  |  |  |  |  |
Current Liabilities: |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 3,187,592 |  |  | $ | 2,167,496 |
Due to stockholders |  |  | 383,753 |  |  |  | 384,091 |
Related Party Notes payable, net of discounts |  |  | 31,000 |  |  |  | 346,000 |
Convertible notes payable, net of discounts |  |  | 1,268,647 |  |  |  | 1,308,092 |
Derivative liabilities |  |  | 23,798,240 |  |  |  | 5,359,442 |
General default reserve |  |  | 2,278,648 |  |  |  | 1,769,791 |
Notes payable, net of discounts |  |  | 35,000 |  |  |  | - |
Lease liability |  |  | 52,671 |  |  |  | 245,207 |
Bank loans |  |  | 249,937 |  |  |  | 233,250 |
Merchant cash advances, net of discounts |  |  | 409,892 |  |  |  | 472,829 |
Total Current Liabilities |  |  | 31,695,379 |  |  |  | 12,286,198 |
Lease Liability |  |  |  |  |  |  | 59,372 |
SBA and PPP Loans |  |  | 620,182 |  |  |  | - |
Total Long - Term Liabilities |  |  | 620,182 |  |  |  | 59,372 |
Total Liabilities |  |  | 32,315,561 |  |  |  | 12,345,570 |
Commitments and Contingencies |  |  |  |  |  |  |  |
Series B Preferred Stock, 1,000,000 shares designated; $0.00001 par value, $1.00 stated value; 170,400 shares and 121,000 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively. Liquidation preference $170,400 |  |  | 170,400 |  |  |  | 121,000 |
Series D-1 Preferred Stock, 500,000 shares designated; $0.00001 par value $2.00 stated value; 0 shares issued and outstanding at December 31, 2020 and December 31, 2019. Liquidation preference $0 as of December 31, 2020 |  |  | - |  |  |  | - |
Series D-2 Preferred Stock, 2,500,000 shares designated; $0.00001 par value, $2.00 stated value; 912,368 shares and 935,368 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively. Liquidation preference $2,607,162 |  |  | 2,607,162 |  |  |  | 2,442,542 |
Series D-3 Preferred Stock, 500,000 shares designated; $0.00001 par value $5.00 stated value; 54,840 shares issued and outstanding at December 31, 2020 and December 31, 2019. Liquidation preference $274,234 |  |  | 274,234 |  |  |  | 274,234 |
Stockholders’ Deficit: |  |  |  |  |  |  |  |
Preferred stock: 50,000,000 authorized; $0.00001 par value: |  |  |  |  |  |  |  |
Series A Preferred Stock, 10,000,000 shares designated; $0.00001 par value; 9,197,566 and 9,183,816 shares issued and outstanding at December 31, 2020 and December 31, 2019 |  |  | 93 |  |  |  | 92 |
Series C Preferred Stock, 2 shares designated; $0.00001 par value; 1 share issued and outstanding at December 31, 2020 and December 31, 2019 |  |  | 1 |  |  |  | 1 |
Series D-5 Preferred Stock, 1,000,000 shares designated; $0.00001 par value, $4.00 stated value; 128,494 shares and 128,494 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively |  |  | 513,976 |  |  |  | 513,976 |
Series D-6 Preferred Stock, 1,000,000 shares designated; $0.00001 par value $5.00 stated value; 104,680 shares issued and outstanding at December 31, 2020 and December 31, 2019. |  |  | 523,400 |  |  |  | 523,400 |
Common stock: 8,000,000,000 authorized, $0.00001 par value; 1,177,103,618 and 36,935,303 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively |  |  | 11,768 |  |  |  | 369 |
Additional paid-in capital |  |  | 9,282,228 |  |  |  | 8,341,811 |
Minority interest |  |  | (634,297 | ) |  |  | (412,753 | )
Accumulated other comprehensive income |  |  | (1,493 | ) |  |  | (2,455 | )
Accumulated deficit |  |  | (44,475,900 | ) |  |  | (22,756,345 | )
Total Stockholders’ Deficit |  |  | (34,780,224 | ) |  |  | (13,791,904 | )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |  | $ | 587,133 |  |  | $ | 1,391,442 |

The accompanying notes are an integral part of these consolidated financial statements

F-3

12 RETECH CORPORATION

Consolidated Statements of Operations

|  | Twelve Months Ended |
|  | December 31, |
|  | 2020 |  |  | 2019 |
Revenues |  | $ | 721,312 |  |  | $ | 1,628,607 |
Cost of revenue |  |  | 385,236 |  |  |  | 1,122,086 |
Gross Profit |  |  | 336,076 |  |  |  | 506,521 |
Operating Expenses |  |  |  |  |  |  |  |
General and administrative |  |  | 1,762,856 |  |  |  | 2,124,372 |
Professional fees |  |  | 683,251 |  |  |  | 1,225,699 |
Depreciation and amortization |  |  | 439,269 |  |  |  | 99,107 |
Total Operating Expenses |  |  | 2,885,376 |  |  |  | 3,449,178 |
Loss from operations |  |  | (2,549,300 | ) |  |  | (2,942,657 | )
Other Expense |  |  |  |  |  |  |  |
Other income |  |  | 431,937 |  |  |  | 1,023,965 |
Reserve Expense |  |  | (491,897 | ) |  |  | (2,139,961 | )
Interest expense |  |  | (471,579 | ) |  |  | (8,995,066 | )
Gain/loss on derivative liability |  |  | (18,860,260 | ) |  |  | 3,524,861 |
Net Other Expense |  |  | (19,391,799 | ) |  |  | (9,204,291 | )
Net Loss |  | $ | (21,941,099 | ) |  | $ | (12,146,948 | )
Other comprehensive income- foreign currency translation adjustment |  |  | 962 |  |  |  | (3,750 | )
Comprehensive Loss |  | $ | (21,940,137 | ) |  | $ | (12,150,698 | )
Minority Interest |  | $ | (221,544 | ) |  | $ | (571,506 | )
Net Loss to 12 ReTech Corporation |  |  | (21,718,593 | ) |  |  | (11,579,192 | )
Net Loss Per Common Share: Basic and Diluted |  | $ | (0.03 | ) |  | $ | (0.45 | )
Weighted Average Number of Common Shares Outstanding: Basic and Diluted |  |  | 641,140,917 |  |  |  | 26,837,252 |

The accompanying notes are an integral part of these consolidated financial statements

F-4

12 RETECH CORPORATION

Consolidated Statements of Stockholders Deficit

Years ended December 31, 2020 and 2019

|  | Series A Preferred Stock |  |  | Series C Preferred Stock |  |  | Series D-5 Preferred Stock |  |  | Series D-6 Preferred Stock |  |  | Common Stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Number of Shares |  |  | Amount |  |  | Number of Shares |  |  | Amount |  |  | Number of Shares |  |  | Amount |  |  | Number of Shares |  |  | Amount |  |  | Number of Shares |  |  | Amount |  |  | Paid-in Capital |  |  | Minority Interest |  |  | Comprehensive Income |  |  | Accumulated Deficit |  |  | Stockholders’ Deficit |
Balance - December 31, 2018 |  |  | 6,500,000 |  |  | $ | 65 |  |  |  | 1 |  |  | $ | 1 |  |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | 6,542,520 |  |  | $ | 65 |  |  | $ | 5,336,977 |  |  | $ |  |  |  | $ | 1,295 |  |  | $ | (11,180,903 | ) |  | $ | (5,842,500 | )
Common stock issued for conversion of notes payable and accrued interest |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 17,803,260 |  |  |  | 178 |  |  |  | 251,344 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 251,522 |
Common stock issued for Preferred Shares conversion |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12,652,023 |  |  |  | 127 |  |  |  | 357,102 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 357,229 |
Preferred Stock issued with acquisition |  |  | 500,000 |  |  |  | 5 |  |  |  | - |  |  |  | - |  |  |  | 120,088 |  |  |  | 480,352 |  |  |  | 97,600 |  |  |  | 488,000 |  |  |  | - |  |  |  | - |  |  |  | 199,995 |  |  |  | 158,753 |  |  |  | - |  |  |  | - |  |  |  | 1,327,105 |
Preferred Stock issued for services |  |  | 114,165 |  |  |  | 1 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 62,999 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 63,000 |
Series D-2 shares exchanged for common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (62,500 | ) |  |  | (1 | ) |  |  | (523,438 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (523,439 | )
Exchange series A preferred stock for related party and third party liabilities |  |  | 1,915,151 |  |  |  | 19 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,154,572 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,154,591 |
Relief of derivative through conversion and issuance of preferred stock derivatives |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,427,533 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,427,533 |
Preferred shares issued for compensation |  |  | 154,500 |  |  |  | 2 |  |  |  | - |  |  |  | - |  |  |  | 8,406 |  |  |  | 33,624 |  |  |  | 7,080 |  |  |  | 35,400 |  |  |  | - |  |  |  | - |  |  |  | 40,245 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 109,271 |
Dividends |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 34,482 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 34,482 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (571,506 | ) |  |  | (3,750 | ) |  |  | (11,575,442 | ) |  |  | (12,150,698 | )
Balance - December 31, 2019 |  |  | 9,183,816 |  |  |  | 92 |  |  |  | 1 |  |  |  | 1 |  |  |  | 128,494 |  |  |  | 513,976 |  |  |  | 104,680 |  |  |  | 523,400 |  |  |  | 36,935,303 |  |  |  | 369 |  |  |  | 8,341,811 |  |  |  | (412,753 | ) |  |  | (2,455 | ) |  |  | (22,756,345 | ) |  |  | (13,791,904 | )
Common stock issued for conversion of notes payable and accrued interest |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 785,026,210 |  |  |  | 7,850 |  |  |  | 111,124 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 118,974 |
Common stock issued for Preferred Shares conversion |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 355,142,105 |  |  |  | 3,550 |  |  |  | 42,448 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 45,998 |
Series D-2 shares exchanged for common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Preferred shares issued for Cash |  |  | 13,750 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,051 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,051 |
Preferred shares issued for compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Relief of derivative through conversion and issuance of preferred stock derivatives |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Dividends and Paid in Capital |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 354,990 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 354,990 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 426,803 |  |  |  | (221,543 | ) |  |  | 962 |  |  |  | (21,719,555 | ) |  |  | (21,513,334 | )
Balance December 31, 2020 |  |  | 9,197,566 |  |  |  | 92 |  |  |  | 1 |  |  |  | 1 |  |  |  | 128,494 |  |  |  | 513,976 |  |  |  | 104,680 |  |  |  | 523,400 |  |  |  | 1,177,103,618 |  |  |  | 11,770 |  |  |  | 9,282,228 |  |  |  | (634,296 | ) |  |  | (1,493 | ) |  |  | (44,475,900 | ) |  |  | (34,780,225 | )

The accompanying notes are an integral part of these consolidated financial statements

F-5

12 RETECH CORPORATION

Consolidated Statements of Cash Flows

|  | Twelve Months Ended |
|  | December 31, |
|  | 2020 |  |  | 2019 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |
Net Loss |  | $ | (21,941,099 | ) |  | $ | (12,146,948 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 439,269 |  |  |  | 99,107 |
Stock based compensation |  |  | - |  |  |  | 207,271 |
Amortization of debt discount |  |  | 4,460 |  |  |  | 1,068,669 |
Impairment of goodwill |  |  | - |  |  |  | 1,971,677 |
Increase in notes payable and Series D-2 for defaults |  |  | 491,897 |  |  |  | 2,139,961 |
Accrual of dividends on preferred stock |  |  | 41,243 |  |  |  | 201,636 |
Impairment of software development cost |  |  | - |  |  |  | 513,601 |
Gain/loss on derivative liability and additional interest expense recorded on issuance |  |  | 18,860,260 |  |  |  | 3,524,862 |
Loss on exchange and issuance of preferred stock |  |  | 109,080 |  |  |  | 674,644 |
Excess fair market value of common shares over liabilities settled |  |  | - |  |  |  | 196,713 |
Relief of notes payable and other liabilities through rescindment of emotion acquisition |  |  | - |  |  |  | (163,805 | )
Accounts receivable |  |  | 128,497 |  |  |  | (40,474 | )
Prepaid Expenses |  |  | (5,320 | ) |  |  | (2,716 | )
Inventory |  |  | 64,815 |  |  |  | 49,141 |
Other current assets |  |  | 179,100 |  |  |  | 114,119 |
Lease liability |  |  | (1,508 | ) |  |  | 1,508 |
Security deposit |  |  | - |  |  |  | 11,913 |
Accounts payable and accrued liabilities |  |  | 1,020,096 |  |  |  | 509,541 |
Net Cash Provided By (Used in) Operating Activities |  |  | (609,211 | ) |  |  | (1,069,580 | )
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  | 399 |  |  |  | (16,146 | )
Cash received from acquisition |  |  | - |  |  |  | 67,872 |
Cash paid on acquisition |  |  | - |  |  |  | (79,937 | )
Software development costs |  |  | - |  |  |  | (142,483 | )
Security deposit |  |  | (180,426 | ) |  |  | - |
Net Cash Used in Investing Activities |  |  | (180,027 | ) |  |  | (170,694 | )
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Proceeds (repayments) from stockholders |  |  | (338 | ) |  |  | 29,646 |
Proceeds from convertible notes payable and notes payable |  |  | 80,000 |  |  |  | 539,915 |
Repayment of convertible notes payable |  |  | - |  |  |  | (99,684 | )
Proceeds from preferred and common stock |  |  | 5,000 |  |  |  | 131,000 |
Proceeds from related party notes payable |  |  | - |  |  |  | 331,000 |
Proceeds from SBA and PPP loans |  |  | 620,182 |  |  |  |  |
Proceeds on merchant financing |  |  | - |  |  |  | 566,000 |
Payments on merchant financing |  |  | (62,937 | ) |  |  | (170,244 | )
Proceeds from bank loans |  |  | 16,687 |  |  |  |  |
Net Cash Provided by Financing Activities |  |  | 658,593 |  |  |  | 1,497,877 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents |  |  | (962 | ) |  |  | (3,750 | )
Net decrease in cash and cash equivalents |  |  | (130,644 | ) |  |  | 84,889 |
Cash and cash equivalents, beginning of period |  |  | 118,860 |  |  |  | 37,721 |
Cash and cash equivalents, end of period |  | $ | 11,784 |  |  | $ | 118,860 |
Supplemental cash flow information |  |  |  |  |  |  |  |
Cash paid for interest |  | $ | - |  |  | $ | - |
Cash paid for taxes |  | $ | - |  |  | $ | - |
Non-cash transactions: |  |  |  |  |  |  |  |
Discounts on convertible notes payable |  | $ | - |  |  | $ | 539,915 |
Conversions of convertible notes payable, accrued interest and derivatives |  | $ | 120,300 |  |  | $ | 1,072,707 |
Reduction of APIC related to derivative recorded on Preferred Stock in equity |  | $ | 428,735 |  |  | $ | 582,824 |
Preferred stock issued for acquisitions |  | $ | - |  |  | $ | 1,327,105 |
Conversion of Series B and D-2 preferred stock to common stock |  | $ | 45,300 |  |  | $ | 357,229 |
Issuance of Series D-2 for accounts payable |  | $ | - |  |  | $ | 200,000 |
Issuance of Series A for liabilities and related party payables |  | $ | - |  |  | $ | 1,154,491 |
Net liabilities acquired from Emotion acquisition |  | $ | - |  |  | $ | 734,388 |
Exchange of common and preferred stock for different series |  | $ | - |  |  | $ | 53,439 |

The accompanying notes are an integral part of these consolidated financial statements

F-6

12 RETECH CORPORATION

Notes to the Consolidated Financial Statements

NOTE 1. NATURE OF BUSINESS

12 ReTech Corporation is a holding company with subsidiaries that develop, sell, and install software that we believe enhance the shopping experience for shoppers and retailers. As a holding company we also acquire synergistic operating companies that manufacture and sell fashion and other products to other retailers as well as selling these products online. In October 2019, we acquired retail stores in airport terminals and casinos solidifying us as a true Omni-Channel retailer. Owning our own brick and mortar stores will allow us to deploy our cutting-edge software and Apps in the United States, to demonstrate its effectiveness at attracting shoppers and inducing them to purchase. In our own stores, we plan to test in real time new software products which should delight consumers and generate incremental revenues and profits for our stores. If we can show incremental revenues and profits for ourselves, we believe that other retailers may follow our example and deploy our software solutions themselves.

With the intended future launch of our social shopping app which is in development in 2021 (see subsequent events) we intend to associate with other retailers on a new shopping platform that will benefit both consumers and retailers in new and exciting ways.

During the 4th quarter 2019 and continuing in the first quarter 2020, amid the effects of the pandemic created by COVID-19, the Company chose to consolidate its operations around three operating entities; 12 Tech, Inc., formed in Arizona on December 26, 2019 (“12 Tech”) and 12 Retail Corporation, formed on September 17th, 2017 (“12 Retail”), and the 12 Fashion Group, Inc formed on June 26, 2020.

12 Retail operates its own retail outlet(s) as well as those of Bluwire Group, LLC (“Bluwire”) that operates retail stores in airports (mainly in international terminals) and casinos. Because of their locations mainly in international terminals of airports, all Bluwire Company owned stores and all but one royalty store remains closed due to Covid-19. 12 Retail will also serve to demonstrate the effectiveness of the software technology created by 12 Tech in improving revenues and profits for retailers, as well as providing access to other retailers through our soon to be launched social shopping app and through our wholesale fashion business relationships.

12 Fashion Group, Inc an Arizona Corporation, was formed on June 26, 2020, and it operates our fashion wholesale and direct to consumer brands including Rune NYC, Social Sunday, and Red Wire Design, as well as consolidating remaining operations from our other smaller fashion acquisitions.

Today, 12 Tech aims to provide technology solutions both online and inside retail brick and mortar that helps retailers acquire customers, reduce overhead expenses, streamline operations, and gain incremental revenues and profits. Existing 12 Tech solutions are deployed mainly in Asia. We are planning to deploy our solutions in the United States retail markets, which serve the world’s largest consumer economy. While we continue to operate in Asia, we have consolidated our international units, which were focused on our technology deployment (“12 Japan” and “12 Europe”), and consolidated our software development company 12 Hong Kong, Ltd (“12 HK”), under 12 Tech to further streamline our own operations.

Reverse Stock Split and increase in authorized shares

On October 18, 2019, the Company completed a 100-for-1 reverse common stock split reducing the outstanding common shares to 25,410,391. Upon the stock split, the Company’s authorized common shares of 8,000,000,000 did not change. The reverse split has been retroactively applied to share amounts in these consolidated financial statements. As a subsequent event, as of May 18, 2021 the authorized was increased to 20,000,000,000 shares of common stock.

F-7

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 financial statements have been prepared on a going concern basis which assumes the Company will continue to realize it assets and discharge its liabilities in the normal course of business. As of December 31, 2020, the Company has incurred losses totaling $44,475,900 since inception, has not yet generated significant revenue from its operations, and will require additional funds to maintain our operations. As of December 31, 2020, the Company had a working capital deficit of $31,490,395. 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 and private placements of common stock. These 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. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“GAAP”) and presented in US dollars. The fiscal year end is December 31.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries 12HK, 12JP, 12EU. 12 Retail, Rune NYC, LLC (“Rune”), Red Wire Group, LLC (“RWG”), Bluwire Group, LLC (“Bluwire”), Social Decay LLC dba Social Sunday (“Social Sunday”) and Emotion Fashion Group which included Emotion 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 on consolidation. We currently have no investments accounted for using the equity or cost methods of accounting.

F-8

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. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, stock-based compensation, derivate instruments, accounting for preferred stock, and the valuation of acquired assets and liabilities. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $11,784 and $118,860 in cash and cash equivalents as at December 31, 2020 and 2019, respectively.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Revenue Recognition

Under Financial Accounting Standards Board (“FASB”) Topic 606, “Revenue from Contacts with Customers” (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation.

F-9

The Company’s revenue consists primarily of product sales from our retail stores operating in airport terminals and casinos. Revenue for retail customers is recognized upon completion of the transaction in the point-of-sale system and satisfaction of the sale by providing the corresponding inventory at the retail location. Revenue is recognized upon transfer of control of promised products to customers, generally as risk of loss pass, in an amount that reflects the consideration the Company expects to receive in exchange for those products. Shipping and handling costs are expensed as incurred and are included in cost of revenue. Sales taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from revenue.

The Company earns ancillary revenue including royalty payments and software licensing fees.

Business Combinations

The Company accounts for all business combinations in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), using the acquisition method of accounting. Under this method, assets and liabilities, including any 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 operations 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 consolidated statements of operations.

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of December 31, 2020 and 2019, the Company did not have an allowance for doubtful accounts.

Inventory

Inventories, consisting of a computer application, a mirror with a computer screen and touch monitor, are primarily accounted for using the first-in-first-out (“FIFO”) method and are valued at the lower of cost or market value. Inventories on hand are evaluated on an on-going basis to determine if any items are obsolete or in excess of future market needs. Items determined to be obsolete are reserved for. As of December 31, 2020, all inventory on hand is pursuant to our Bluwire and Rune acquisitions (see Note 4).

Fixed Assets

Fixed assets are recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the term of the related lease or the estimated useful life of the asset. The useful lives are as follows:

Office equipment | 3 years
Furniture and equipment | 6 years
Computer | 4 years
Technical equipment | 3.3 years

Maintenance and repairs are charged to operations as incurred. Expenditures that substantially increase the useful lives of the related assets are capitalized. When properties are disposed of, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported in the period the transaction takes place.

F-10

Software Development Costs

Under ASC 350-40, capitalized costs related to the software under development are treated as an asset until the development is completed and the software is available for licensure under a software-as-a-service (“SaaS”) arrangement. Periodically, management reviews its capitalized costs to determine if they are properly valued or should they be impaired. During the year ended December 31, 2019, the Company fully impaired $513,601 in development costs for its 12 Technology suite and 12 Sconti APP, which is included in other expenses in the consolidated statements of operations.

Goodwill

Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets (property and equipment) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

Goodwill is tested annually at December 31 for impairment and upon the occurrence of certain events or substantive changes in circumstances.

The Company accounts for the impairment of goodwill under the provisions of ASU 2011-08 (“ASU 2011-08”), “Intangibles Goodwill and Other (Topic 350): Testing Goodwill for Impairment.” ASU 2011-08 updated the guidance on the periodic testing of goodwill for impairment. The updated guidance gives companies the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company performs impairment testing for goodwill using a three-step approach. Step “zero” of the annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step “one” of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. Step “one” of the quantitative impairment test compares the net assets of the of the relevant reporting entity to its carrying value. Step “two” of the quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill.

As of December 31, 2019, the Company performed its annual impairment test on all reporting units and determined that each unit had indicating factors of impairment due to failure to meet respective sales projections. As a result, the Company fully impaired the goodwill from each 2019 acquisition as follows:

Redwire |  | $ | 480,381 |
Rune |  |  | 394,440 |
Bluwire |  |  | 623,072 |
Social Decay |  |  | 473,784 |
|  | $ | 1,971,677 |

The impairment expense is included in other expense in the consolidated statements of operations.

As of December 31, 2020, the company had fully amortized all remaining long-term assets and intellectual property during 2020. As a result, there were no longer any assets to impair as of December 31, 2020.

F-11

Convertible Debt and Convertible Preferred Stock

When the Company issues convertible debt or convertible preferred stock, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities from Equity, and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives and Hedging. Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations.

If a conversion feature does not meet the conditions to be separated and accounted for as an embedded derivative liability, the Company then determines whether the conversion feature is “beneficial”. A conversion feature would be considered beneficial if the conversion feature is “in the money” when the host instrument is issued or, under certain circumstances, later. If convertible debt contains a beneficial conversion feature (“BCF”), the amount of the amount of the proceeds allocated to the BCF reduces the balance of the convertible debt, creating a discount which is amortized over the debt’s term to interest expense in the consolidated statements of operations.

When a convertible preferred stock contains a BCF, after allocating the proceeds to the BCF, the resulting discount is either amortized over the period beginning when the convertible preferred stock is issued up to the earliest date the conversion feature may be exercised, or if the convertible preferred stock is immediately exercisable, the discount is fully amortized at the date of issuance. The amortization is recorded similar to a dividend.

Financial Instruments and Fair Value Measurements

The Company’s financial instruments consist primarily of cash, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities, convertible notes payable and due to stockholders. 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.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Observable inputs are based on market data obtained from sources independent of the Company. Unobservable inputs reflect our own assumptions based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs used to measure fair value into three broad levels, defined as follows:

| Level 1 | — | Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date.
| Level 2 | — | Inputs other than quoted prices included within Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.
| Level 3 | — | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. Unobservable inputs for the asset or liability that reflect management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability as of the reporting date.

F-12

The Company carries certain derivative financial instruments using inputs classified as Level 3 in the fair value hierarchy on the Company’s consolidated balance sheets. Refer to Note 11 for detail on the derivative liability.

Further, the Company determined that the certain notes should be measured and carried at fair value in the consolidated financial statements according to ASC 480, as they are settleable in a variable number of shares based on a fixed monetary amount known at inception.

Stock-Based Compensation

ASC 718, “Compensation - Stock Compensation”, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes”. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. At December 31, 2020 and 2019, the Company recognized a full valuation allowance against the recorded deferred tax assets.

Net Loss per Share

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. On October 18, 2019, the Company successfully completed its reverse stock split and reduced its common stock outstanding by a ratio of one hundred for one. Per ASC 505-10, if a reverse split occurs after the date of the latest reported balance sheet but before the release of the financial statements, then such changes in the capital structure must be given retroactive effect in the balance sheet. As such, the reverse split has been retroactively applied to these financial statements.

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 years ended December 31, 2020 and 2019, potentially dilutive common shares consist of common stock issuable upon the conversion of convertible notes payable, Series A Preferred Stock, Series B Preferred Stock, Series D-2 Preferred Stock, Series D-3 Preferred Stock, Series D-5 Preferred Stock and Series D-6 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.

F-13

Discontinued Operations

In accordance with ASU 2014-08, the Company considers discontinued operations a disposal of a component that represents a strategic shift or will have a major effect on an entity’s operations and financial results.

Foreign Currency Translation

The accompanying financial statements are presented in U.S. dollars (“USD”), the reporting currency. The functional currencies of the Company’s foreign operations are the Hong Kong Dollar (“HKD”), Japanese Yen (“JPY”), and Swiss Franc (“CHF”). In accordance with ASC 830, “Foreign Currency Matters”, the assets and liabilities are translated into USD at current exchange rates. Revenue and expenses are translated at average exchange rates for the period. Resulting translation adjustments are reflected as accumulated other comprehensive income in stockholders’ deficit. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are charged to operations as incurred. There were no material transaction gains or losses in the periods presented.

Comprehensive Income

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the condensed consolidated financial statements. During the years ended December 31, 2020 and 2019, the Company’s only component of comprehensive income was foreign currency translation adjustments.

Contingencies

The Company follows ASC 450-20, “Loss Contingencies” to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no loss contingencies as of December 31, 2020 and 2019.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which supersedes nearly all existing revenue recognition guidance under accounting principles generally accepted in the United States of America. The core principle of this ASU is that revenue should be recognized for the amount of consideration expected to be received for promised goods or services transferred to customers. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, and assets recognized for costs incurred to obtain or fulfill a contract. ASU 2014-09 was scheduled to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date,” which deferred the effective date of ASU 2014-09 by one year and allowed entities to early adopt, but no earlier than the original effective date. ASU 2014-09 is now effective for public business entities for the annual reporting period beginning January 1, 2018. This update allows for either full retrospective or modified retrospective adoption. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” which amends guidance previously issued on these matters in ASU 2014-09. The effective date and transition requirements of ASU 2016-10 are the same as those for ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients,” which clarifies certain aspects of the guidance, including assessment of collectability, treatment of sales taxes and contract modifications, and providing certain technical corrections. The effective date and transition requirements of ASU 2016-12 are the same as those for ASU 2014-09.

F-14

The Company adopted the new guidance as of January 1, 2018. The Company has evaluated the new guidance and the 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.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) which supersedes existing guidance on accounting for leases in “Leases (Topic 840).” The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company evaluated the effects of adopting ASU 2016-02 on its consolidated financial statements and determined the amount of lease assets and liabilities which was associated with the Bluwire leases. As such, the company recognized a lease asset of $303,071 and short- term lease liability of $245,207 and long- term lease liability of $59,372 in 2019. The company recognized a lease asset of $52,671 and short- term lease liability of $52,671and long- term lease liability of zero in 2020.The other leases do not have significant impact on the Company’s consolidated financial statements as of the date of the filing of this report.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company adopted this standard as of January 1, 2019 and it did not have any material impact on its consolidated financial statements.

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 4 – ACQUISITIONS

Acquisitions

Red Wire Group, LLC

On February 19, 2019, the Company completed the acquisition of Red Wire Group, LLC. (“RWG”) a Utah limited liability company, pursuant to a share exchange agreement whereby the Company exchanged shares of the Company’s Series D-5 and Series D-6 Preferred Stock for 100% of the outstanding equity of RWG. Pursuant to the terms of the exchange agreement, the Company acquired (i) 75% of the membership interests of RWG in exchange for 54,000 shares of the Company’s Series D-6 Preferred Stock (stated value of $5.00 per share), and (ii) the remaining 25% of the membership interests of RWG in exchange for 37,500 shares of the Company’s Series D-5 Preferred Stock (stated value of $4.00 per share). The total purchase consideration for the RWG acquisition was $450,000, including the fair value of D-5 and D-6 Preferred Stock of $420,000 and $30,000 in cash.

The RWG acquisition was accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed. These values are subject to change as we perform additional reviews of our assumptions utilized.

F-15

The following table summarizes the provisional purchase price allocations relating to the RWG acquisition:

|  | Preliminary |
|  | Purchase Price |
|  | Allocation |
Cash and cash equivalents |  | $ | 10 |
Inventory |  |  | 48,000 |
Fixed assets, net |  |  | 58,110 |
Goodwill |  |  | 480,381 |
Accounts payable and accrued liabilities |  |  | (136,501 | )
Net assets acquired |  | $ | 450,000 |

The fixed assets acquired are being depreciated over their estimated useful lives of 5 years.

As of December 31, 2019, the Company determined, based on various qualitative and quantitative factors, that the acquired goodwill had indicators of impairment and therefore recorded a full impairment charge of $480,381.

RWG’s results of operations have been included in the Company’s operating results for the period from February 1, 2019. RWG contributed revenues of $594,735 for the year ended December 31, 2019. The results of RWG for 2020 is consolidated along with the revenues of the other 12 Retail subsidiaries. On March 6, 2020, Red Wire Group filed for bankruptcy under Chapter 11 subsection V on March 6, 2020, and the case in ongoing. The Company has funded the initial costs, as well as some ongoing storage costs for RedWire Group equipment. The Company plans to liquidate the equipment and some other assets to pay creditors. This Chapter 11 was converted by the Court to a Chapter 7 and discharged.

Rune NYC, LLC

Effective March 14, 2019, the Company completed the acquisition of Rune NYC, LLC (“Rune”), a New York limited liability company, pursuant to a share exchange agreement whereby the Company exchanged shares of the Company’s Series D-5 Preferred Stock for 92.5% of the total outstanding equity of Rune and the members of Rune (the “Members”). The Company issued an aggregate of 82,588 shares of Series D-5 Preferred Stock with a stated value of $4.00 per share, and cash consideration of $49,937, for total purchase consideration of $380,289.

The Rune acquisition was accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired, liabilities assumed and fair value of the minority interest. These values are subject to change as we perform additional reviews of our assumptions utilized.

The following table summarizes the provisional purchase price allocations relating to the Rune acquisition:

|  | Preliminary |
|  | Purchase Price |
|  | Allocation |
Cash and cash equivalents |  | $ | 12,914 |
Accounts receivable, net |  |  | 23,506 |
Other current assets |  |  | 9,750 |
Goodwill |  |  | 394,440 |
Accounts payable and accrued liabilities |  |  | (29,487 | )
Non-controlling interest |  |  | (30,834 | )
Net assets acquired |  | $ | 380,289 |

As of December 31, 2019, the Company determined, based on various qualitative and quantitative factors, that the acquired goodwill had indicators of impairment and therefore recorded a full impairment charge of $394,440.

Rune’s results of operations have been included in the Company’s operating results for the period from March 1, 2019. Rune contributed revenues of $163,050 in 2019. The results of Rune for 2020 is consolidated along with the revenues of the other 12 Retail subsidiaries.

Bluwire Group, LLC

On October 1, 2019, the Company completed the acquisition of Bluwire Group, LLC (“Bluwire”), a Florida limited liability company, pursuant to a share exchange agreement whereby the Company exchanged shares of the Company’s Series A Preferred Stock for 60.5% of the outstanding equity of Bluwire. Pursuant to the terms of the exchange agreement, at closing the Company acquired 60.5% of the membership interests of Bluwire in exchange for 500,000 shares of the Company’s Series A Preferred Stock. The total purchase consideration for the Bluwire acquisition was $200,000, the fair value of the Series A Preferred Stock issued.

F-16

The Bluwire acquisition was accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired, liabilities assumed and fair value of the minority interest. These values are subject to change as we perform additional reviews of our assumptions utilized.

The following table summarizes the provisional purchase price allocations relating to the Bluwire acquisition:

|  | Preliminary |
|  | Purchase Price |
|  | Allocation |
Cash and cash equivalents |  | $ | 51,530 |
Accounts receivable, net |  |  | 62,333 |
Inventory |  |  | 212,777 |
Other assets |  |  | 179,100 |
Fixed assets, net |  |  | 271,449 |
Security deposit |  |  | 59,800 |
Goodwill |  |  | 623,072 |
Accounts payable and accrued liabilities |  |  | (736,468 | )
Due to stockholders |  |  | (395,674 | )
Non-controlling interest |  |  | (127,919 | )
Net assets acquired |  | $ | 200,000 |

The fixed assets acquired are being depreciated over their estimated useful lives of 5 years, as well as leasehold improvements which are amortized over the short of the useful lives or lease term. Other assets consist of the preliminary fair value of intangible assets acquired upon the acquisition, including Bluwire’s trademark and lease assets.

As of December 31, 2019, the Company determined, based on various qualitative and quantitative factors, that the acquired goodwill had indicators of impairment and therefore recorded a full impairment charge of $623,072.

Bluwire’s results of operations have been included in the Company’s operating results for the period from October 1, 2019. Bluwire contributed revenues of $790,534 in 2019. The results of Bluwire for 2020 is consolidated along with the revenues of the other 12 Retail subsidiaries.

Social Decay, LLC dba Social Sunday

On November 20, 2019, the Company completed the acquisition of Social Decay, LLC dba Social Sunday (“Social Sunday”), a New Jersey limited liability company, pursuant to a share exchange agreement whereby the Company exchanged shares of the Company’s Series D-6 Preferred Stock for 100% of the total outstanding equity of Social Sunday and the member of Social Sunday (the “Member”). The Company issued an aggregate of 30,000 shares of Series D-6 Preferred Stock with a stated value of $5.00 per share, and an additional 12,000 shares were issued and held in escrow, for total purchase consideration of $210,000.

The Social Sunday acquisition was accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired, liabilities assumed and fair value of the minority interest. These values are subject to change as we perform additional reviews of our assumptions utilized.

F-17

The following table summarizes the provisional purchase price allocations relating to the Social Sunday acquisition:

|  | Preliminary |
|  | Purchase Price |
|  | Allocation |
Cash and cash equivalents |  | $ | 3,418 |
Accounts receivable, net |  |  | 13,189 |
Inventory |  |  | 55,211 |
Fixed assets, net |  |  | 20,529 |
Goodwill |  |  | 473,784 |
Accounts payable and accrued liabilities |  |  | (356,131 | )
Net assets acquired |  | $ | 210,000 |

The fixed assets acquired are being depreciated over their estimated useful lives of 5 years.

As of December 31, 2019, the Company determined, based on various qualitative and quantitative factors, that the acquired goodwill had indicators of impairment and therefore recorded a full impairment charge of $473,784.

Social Sunday’s results of operations have been included in the Company’s operating results for the period from November 1, 2019. Social Sunday contributed revenues of $55,638 in 2019. The results of Social Sunday for 2020 is consolidated along with the revenues of the other 12 Retail subsidiaries.

Acquisition – Other

The Company acquired these entities to expand their retail operations. In addition, the goodwill in connection with these acquisitions is not expected to be deductible for tax purposes. Intangibles are amortized over their expected life from one to five years.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the Company’s financial results as if the RWG, Rune, Bluwire and Social Sunday’s acquisitions had occurred as of January 1, 2019. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisition been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project the Company’s future financial results. The pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisitions:

|  | Pro forma twelve months ended December 31 |
|  | 2019 |
Revenues |  | $ | 5,219,301 |
Cost of revenues |  |  | 2,845,331 |
Gross profit |  |  | 2,373,970 |
Operating expenses |  | $ | 5,799,715 |
Operating losses |  | $ | (9,204,291 | )
Net Loss |  | $ | (12,630,036 | )
Earnings Per Share |  | $ | (0.47 | )

F-18

Dispositions

Emotion Apparel, Inc. & Emotion Fashion Group, 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 1.0 million of its common shares for 100% of the outstanding equity of EAI, in a third-party transaction. The acquisition of EAI was accounted for under ASC 805.

The Original EAI Transaction was accounted for as follows: The fair value of the 1.0 million shares of common stock issued amounted to $80,000. EAI owned 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. During the fourth quarter of 2018, the Company determined that the goodwill associated with the acquisition should be fully impaired and recorded an impairment expense of $551,111.

On July 6, 2018, the Company incorporated a new Emotion Apparel, Inc. in the state of Utah and immediately re-named it as Emotion Fashion Group, Inc. (“Emotion Fashion Group” or “EFG”) and does business under the brand name, “Emotion Fashions.”

On September 30, 2019, the Company foreclosed on its liens taking possession of the assets including the brands; Lexi-Luu, Emotion Fashion Group, Punkz Gear, and retuned the stock in Emotion Apparel, Inc. and its subsidiaries to the Seller. As a result, the Company wrote off the payables of Emotion Apparel, Inc. to other income, including $511,486 in accounts payable and accrued liabilities and $250,000 in notes payable.

The Company determined that the disposition of Emotional Apparel did not meet the criteria for discontinued operations reporting.

12 Europe, A.G.

12 Europe A.G. which was acquired in 2017 has underperformed against expectation. In the third quarter 2019 it was determined by management that the costs of continuing to support the expenses of an independent 12 Europe A.G., were unsupportable. Therefore, the Company reaffirmed its previous master representation agreement between 12 Hong Kong, LTD and Coppola, AG so that the software customers in Europe can continue to be supported, and then closed its operations in Europe. On August 20, 2019, the Company had successfully discharged all of its debts associated with 12 Europe A.G., as part of the completion of the 12 Europe A.G. bankruptcy filing, except for certain social benefit payments still owed approximately $35,000 by the Company. Therefore, this subsidiary is no longer in existence. Management does not consider this closure as a condition for discontinued operations as master representation agreement between 12 Europe has now been transferred to 12 Hong Kong and Coppola AG. As such, the software customer in Europe will continue to be supported. As such the total discharged accounts payable totaled $445,244 and were offset to other income.

The Company determined that the disposition of 12 Europe A.G. did not meet the criteria for discontinued operations reporting.

NOTE 5 – PREPAID EXPENSE AND OTHER CURRENT ASSETS

Prepaid expense and other current assets at December 31, 2020 and 2019 consists of the following:

|  | December 31, 2020 |  |  | December 31, 2019 |
Prepaid expense |  | $ | 12,920 |  |  | $ | 7,600 |
Other current assets |  |  | - |  |  |  | - |
|  | $ | 12,920 |  |  | $ | 7,600 |

NOTE 6 – FIXED ASSETS, NET

Fixed assets, net at December 31, 2020 and 2019 consists of the following:

|  | December 31, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Office equipment |  | $ | 280,966 |  |  | $ | 281,365 |
Furniture and equipment |  |  | 58,118 |  |  |  | 58,118 |
Computer |  |  | 13,704 |  |  |  | 13,704 |
Technical equipment |  |  | 27,492 |  |  |  | 27,492 |
Truck |  |  | - |  |  |  | - |
Intellectual Property |  |  | 78,506 |  |  |  | 78,506 |
Machinery |  |  |  |  |  |  | - |
|  |  | 458,786 |  |  |  | 458,785 |
Less: accumulated depreciation |  |  | (370,557 | ) |  |  | (110,388 | )
Equipment |  | $ | 88,228 |  |  | $ | 348,396 |

Depreciation and amortization for the years ended December 31, 2020 and 2019 amounted to $439,269 and $99,107, respectively.

F-19

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at December 31, 2020 and 2019 consists of the following:

|  | December 31, |
|  | 2020 |  |  | 2019 |
Accounts payable |  | $ | 1,356,812 |  |  | $ | 1,249,740 |
Accrued expenses |  |  | 1,241,850 |  |  |  | 548,920 |
Accrued Salaries |  |  | 139,300 |  |  |  | 111,000 |
Accrued board of director fees |  |  | 150,000 |  |  |  | 30,000 |
Accrued interest |  |  | 299,631 |  |  |  | 191,836 |
|  | $ | 3,187,592 |  |  | $ | 2,167,496 |

NOTE 8 - DUE TO STOCKHOLDERS

Due to stockholders at December 31, 2020 and 2019 consists of the following:

|  | December 31, |
|  | 2020 |  |  | 2019 |
Daniel Monteverde |  |  | - |  |  |  | 1,388 |
Angelo Ponzetta |  |  | 11,217 |  |  |  | 10,167 |
Christopher Burden |  |  | 172,536 |  |  |  | 172,536 |
Maurice Ojeda |  |  | 200,000 |  |  |  | 200,000 |
|  | $ | 383,753 |  |  | $ | 384,091 |

During the year December 31, 2019, the Company converted amounts to Daniele Monteverde and Angelo Ponzetta totaling $723,253 into Series A Preferred Shares, which was treated as contributed capital.

In connection with the Bluwire acquisition, the Company assumed liabilities to Bluwire’s members, Christopher Burden and Maurice Ojeda, totaling $372,536. The amounts do not incur interest and are due on demand. See Note 8 for additional information.

As of December 31, 2020 and 2019, accounts payable and accrued liabilities included salaries of $139,300 and $111,000, respectively, and accrued board of director fees of $150,000 and $30,000, respectively.

F-20

NOTE 9 – RELATED PARTY NOTES PAYABLE

On September 30, 2019, the Company foreclosed on its liens taking possession of the assets including the brands; Lexi-Luu, Emotion Fashion Group, Punkz Gear, and retuned the stock in Emotion Apparel, Inc. and its subsidiaries to the Seller. As a result, the Company wrote off the payables of Emotion Apparel, Inc. to other income, including $261,486 in accounts payable and accrued liabilities and $250,000 in notes payable.

On October 3, 2019, Bluwire inaccurate posted a promissory note to a related party $300,000 and it accrued interest of $15,000 in 2019 when it should have been posted to equity. During 2020, the Company converted this note into equity, and accordingly reclassed $300,000 into additional paid-in capital.

As of December 31, 2020 and 2019, there were two demand notes outstanding totaling $31,000.

NOTE 10 – NOTES PAYABLE

On December 21, 2020 the company issued a note payable to a private investor for $35,000 in exchange for cash. As of December 31, 2020 there was one outstanding note payable for $35,000.

NOTE 11 – SBA AND PPP LOANS

On March 27, 2020, the Federal Government of the United States of America passed the Cares Act allowing companies access to quality SBA Payroll Protection Loans (PPP). These loans provide for certain funding based on previous employment which in part may be forgivable under certain conditions. The remaining portion needs to be repaid over 2 years with a 6-month moratorium on payments and carry a 1% annual interest rate. These loans require no collateral nor personal guarantees. During the period from May 5, 2020 to May 22, 2021, the Company’s subsidiaries quality and received an aggregate of $294,882 in 2020 and $302,602 in 2021 in PPP loans. As a subsequent event, the company applied and a received a second round of PPP funding from the period January 23, 2021 to April 5, 2021 of $302,602.

In August 2020, two of the Company’s subsidiaries qualified for the United States Small Business Administration (“SBA”) Economic Industry Disaster Loans (“EIDL”) and the Company received $325,300 under the program. These loans are unsecured, have no personal guaranty, carry a 3.75% annual interest rate with aggregate monthly payments of 13 months after receipt of funds. Management has used these funds to retain key personnel, pay regulatory fees, rent, begin work on a new website for Bluwire, make progress on this retail APP and acquire product to re-open one of its Bluwire Stores.

NOTE 12 – CONVERTIBLE NOTES PAYABLE

Convertible notes payable at December 31, 2020 and 2019 consists of the following:

|  | December 31, |
|  | 2020 |  |  | 2019 |
Dated September 15, 2017 |  | $ | 318,492 |  |  | $ | 337,653 |
Dated April 25, 2018 |  |  | 40,123 |  |  |  | 40,123 |
Dated September 21, 2018 |  |  | 56,714 |  |  |  | 56,714 |
Dated October 18, 2018 |  |  | 60,000 |  |  |  | 60,000 |
Dated November 28, 2018 |  |  | 33 |  |  |  | 25,443 |
Dated November 28, 2018 |  |  | 21,700 |  |  |  | 57,870 |
Dated November 29, 2018 |  |  | 25,000 |  |  |  | 25,000 |
Dated December 13, 2018 |  |  | 105,000 |  |  |  | 105,000 |
Dated January 15, 2019 |  |  | 115,000 |  |  |  | 115,000 |
Dated February 7, 2019 |  |  | 111,276 |  |  |  | 132,720 |
Dated February 19, 2019 |  |  | 64,500 |  |  |  | 64,500 |
Dated February 19, 2019 |  |  | 55,125 |  |  |  | 55,125 |
Dated March 13, 2019 |  |  | 55,125 |  |  |  | 55,125 |
Dated May 14, 2019 |  |  | 26,500 |  |  |  | 26,500 |
Dated May 17, 2019 |  |  | 27,825 |  |  |  | 27,825 |
Dated August 1, 2019 |  |  | 56,194 |  |  |  | 56,194 |
Dated August 7, 2019 |  |  | 55,125 |  |  |  | 55,125 |
Dated October 3, 2019 |  |  | 5,350 |  |  |  | 5,350 |
Dated October 25, 2019 |  |  | 6,825 |  |  |  | 6,825 |
Dated March 19, 2020 |  |  | 33,600 |  |  |  | - |
Dated March 25, 2020 |  |  | 33,600 |  |  |  | - |
Total convertible notes payable |  |  | 1,273,107 |  |  |  | 1,308,092 |
Less: Unamortized debt discount |  |  | (4,460 | ) |  |  | - |
Total convertible notes |  |  | 1,268,647 |  |  |  | 1,308,092 |
Less: current portion of convertible notes |  |  | 1,268,647 |  |  |  | 1,308,092 |
Long-term convertible notes |  | $ | - |  |  | $ | - |

On March 18, 2020 the Company entered into a promissory note agreement with Adar Alef, LLC (“Adar”) for loans totaling $33,600. The consideration to the Company is $30,000 with $3,600 legal fees and OID. The note is convertible after 181 days at a (i) $0.0075 ceiling or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.

On March 25, 2020 the Company entered into a promissory note agreement with LG Capital Funding, LLC (“LG”) for loans totaling $33,600. The note is convertible after 181 days at a (i) $0.0075 ceiling or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.

During the years ended December 31, 2020 and 2019, the Company recognized interest expense of $471,579 and $8,995,066, respectively, which represented the amortization of original issue discounts and debt discounts. As of December 31, 2019, all original issue and debt discounts pertaining to outstanding convertible notes were fully amortized. As of December 31, 2020, the unamortized debt discount of $4,460 are related to the new convertible notes issued in 2020.

During the year ended December 31, 2020, the Company converted principal and unpaid accrued interest totaling $120,300 into an aggregate of 785,026,210 shares of common stock. During the year ended December 31, 2019, the Company converted principal and unpaid accrued interest totaling $251,521 into an aggregate of 17,803,260 shares of common stock.

F-21

The Company has twenty-one (21) outstanding convertible notes as of December 31, 2020 with a total outstanding principal of $1,273,107. The 2019 notes matured from January 2020 to May 2020. The 2020 notes matured in September 2020. These notes carry an interest rate ranging between 8% and 12% per annum. The notes carry an original issue discounts ranging between 10% to 25% of the face value of each note.

The notes 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 prices of the notes include 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.

For some notes, the Company agreed to pay a one-time interest charge of 9% of the principal amount for each note. The notes may be converted at specified times per the respective agreements. 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 notes, 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.

The notes 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 180th day.

The following table is a rollforward of activity, by each noteholder, for the years ended December 31, 2020 and 2019:

|  | Loan Holder |  | Principal Amount |  |  | Date |  | Maturity |  | OID & Financing Costs |  |  | Balance at 12 31 17 |  |  | Additions |  |  | Payments |  |  | Conversion |  |  | Balance at 12 31 18 |  |  | Additions |  |  | Payments |  |  | Conversion |  |  | Balance at 12 31 19 |  |  | Additions |  |  | Payments |  |  | Conversion |  |  | Balance at 12 31 20
1 |  | SBI Investment |  | $ | 200,000 |  |  | 9/27/2017 |  | 3/15/2018 |  |  |  |  |  |  | 200,000 |  |  |  | 75,000 |  |  |  | (25,000 | ) |  |  | (93,150 | ) |  |  | 156,850 |  |  |  | - |  |  |  | - |  |  |  | (6,697 | ) |  |  | 150,153 |  |  |  |  |  |  |  |  |  |  | $ | (19,160.78 | ) |  | 130,992
1 |  | SBI Investment |  | $ | 187,500 |  |  | 11/14/2017 |  | 5/14/2018 |  |  |  |  |  |  | 187,500 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 187,500 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 187,500 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 187,500
2 |  | LG Capital Funding, LLC |  | $ | 185,292 |  |  | 12/8/2017 |  | 6/8/2018 |  |  | 17,646 |  |  |  | 92,646 |  |  |  | 92,646 |  |  |  | - |  |  |  | (133,032 | ) |  |  | 52,260 |  |  |  | - |  |  |  | - |  |  |  | (52,260 | ) |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0
3 |  | Cerberus Finance Group Ltd |  | $ | 185,292 |  |  | 12/12/2017 |  | 6/8/2018 |  |  | 17,646 |  |  |  | 92,646 |  |  |  | 92,646 |  |  |  | (25,000 | ) |  |  | (53,183 | ) |  |  | 107,109 |  |  |  | - |  |  |  | (99,684 | ) |  |  | (7,425 | ) |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | -
4 |  | Eagle Equities LLC |  | $ | 50,000 |  |  | 3/15/2018 |  | 3/15/2019 |  |  | 2,500 |  |  |  | - |  |  |  | 50,000 |  |  |  | - |  |  |  | (50,000 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | -
5 |  | Adar Capital LLC |  | $ | 50,000 |  |  | 3/15/2018 |  | 3/15/2019 |  |  | 2,500 |  |  |  | - |  |  |  | 50,000 |  |  |  | - |  |  |  | (50,000 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | -
6 |  | Bellridge Capital LP |  | $ | 60,000 |  |  | 5/17/2018 |  | 5/17/2019 |  |  | 10,000 |  |  |  | - |  |  |  | 60,000 |  |  |  | - |  |  |  | (44,000 | ) |  |  | 16,000 |  |  |  | - |  |  |  | - |  |  |  | (16,000 | ) |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | -
7 |  | Auctus |  | $ | 100,000 |  |  | 4/27/2018 |  | 4/25/2019 |  |  | 10,000 |  |  |  | - |  |  |  | 100,000 |  |  |  | - |  |  |  | (59,877 | ) |  |  | 40,123 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 40,123 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 40,123
8 |  | Bellridge Capital LP |  | $ | 60,000 |  |  | 9/17/2018 |  | 3/15/2019 |  |  | 10,000 |  |  |  | - |  |  |  | 60,000 |  |  |  | - |  |  |  | - |  |  |  | 60,000 |  |  |  | - |  |  |  | - |  |  |  | (3,286 | ) |  |  | 56,714 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 56,714
9 |  | Eagles Equity |  | $ | 50,000 |  |  | 9/21/2018 |  | 3/15/2019 |  |  | 2,500 |  |  |  | - |  |  |  | 50,000 |  |  |  | - |  |  |  | (50,000 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | -
10 |  | Adar Bay |  | $ | 50,000 |  |  | 10/4/2018 |  | 10/4/2018 |  |  | 2,500 |  |  |  | - |  |  |  | 50,000 |  |  |  | - |  |  |  | (50,000 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | -
11 |  | Bellridge Capital LP |  | $ | 60,000 |  |  | 10/18/2018 |  | 10/18/2019 |  |  | 10,000 |  |  |  | - |  |  |  | 60,000 |  |  |  | - |  |  |  | - |  |  |  | 60,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 60,000 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 60,000
12 |  | Adar Alef Omnibus |  | $ | 64,500 |  |  | 11/28/2018 |  | 11/29/2019 |  |  | 4,125 |  |  |  | - |  |  |  | 64,500 |  |  |  | - |  |  |  | - |  |  |  | 64,500 |  |  |  | - |  |  |  | - |  |  |  | (39,057 | ) |  |  | 25,443 |  |  |  |  |  |  |  |  |  |  | $ | (25,410.13 | ) |  | 33
13 |  | Adar Alef Debt Purchase |  | $ | 25,000 |  |  | 11/28/2018 |  | 11/29/2019 |  |  |  |  |  |  | - |  |  |  | 25,000 |  |  |  | - |  |  |  | (25,000 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | -
14 |  | LG Capital Omnibus |  | $ | 64,500 |  |  | 11/28/2018 |  | 11/29/2019 |  |  | 4,125 |  |  |  | - |  |  |  | 64,500 |  |  |  | - |  |  |  | - |  |  |  | 64,500 |  |  |  | - |  |  |  | - |  |  |  | (6,630 | ) |  |  | 57,870 |  |  |  |  |  |  |  |  |  |  | $ | (36,170.00 | ) |  | 21,700
15 |  | LG Capital Debt Purchase |  | $ | 25,000 |  |  | 11/29/2018 |  | 11/29/2018 |  |  |  |  |  |  | - |  |  |  | 25,000 |  |  |  | - |  |  |  | - |  |  |  | 25,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 25,000 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 25,000
16 |  | LG Capital Omnibus |  | $ | 105,000 |  |  | 12/13/2018 |  | 12/14/2019 |  |  | 5,000 |  |  |  | - |  |  |  | 105,000 |  |  |  | - |  |  |  | - |  |  |  | 105,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 105,000 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 105,000
17 |  | LG Capital Omnibus |  | $ | 115,000 |  |  | 1/15/2019 |  | 1/15/2020 |  |  | 5,750 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 115,000 |  |  |  | - |  |  |  | - |  |  |  | 115,000 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 115,000
18 |  | Adar Alef Omnibus |  | $ | 132,720 |  |  | 2/7/2019 |  | 2/7/2020 |  |  | 6,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 132,720 |  |  |  | - |  |  |  | - |  |  |  | 132,720 |  |  |  |  |  |  |  |  |  |  | $ | (21,444.27 | ) |  | 111,276
19 |  | Adar Alef Debt Note |  | $ | 108,055 |  |  | 2/7/2019 |  | 2/7/2019 |  |  | 8,371 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 108,055 |  |  |  | - |  |  |  | (108,056 | ) |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  | -
20 |  | Adar Alef Omnibus |  | $ | 64,500 |  |  | 2/19/2019 |  | 2/19/2020 |  |  | 4,125 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 64,500 |  |  |  | - |  |  |  | - |  |  |  | 64,500 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 64,500
21 |  | LG Capital Omnibus |  | $ | 55,125 |  |  | 2/19/2019 |  | 2/19/2020 |  |  | 2,500 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 55,125 |  |  |  | - |  |  |  | - |  |  |  | 55,125 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 55,125
22 |  | LG Capital Omnibus |  | $ | 55,125 |  |  | 3/13/2019 |  | 3/13/2020 |  |  | 2,500 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 55,125 |  |  |  | - |  |  |  | - |  |  |  | 55,125 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 55,125
23 |  | Adar Alef Omnibus #2 Back End |  | $ | 26,500 |  |  | 5/14/2019 |  | 2/20/2020 |  |  | 1,500 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 26,500 |  |  |  | - |  |  |  | - |  |  |  | 26,500 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 26,500
24 |  | LG Capital Omnibus #5 |  | $ | 27,825 |  |  | 5/17/2019 |  | 5/15/2020 |  |  | 2,825 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 27,825 |  |  |  | - |  |  |  | - |  |  |  | 27,825 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 27,825
25 |  | Adar Alef Omnibus #2 BE 3rd Tranche |  | $ | 56,194 |  |  | 8/1/2019 |  | 2/7/2020 |  |  | 50,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 56,194 |  |  |  | - |  |  |  | - |  |  |  | 56,194 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 56,194
26 |  | LG Capital Omnibus #7 |  | $ | 55,125 |  |  | 8/6/2019 |  | 2/7/2020 |  |  | 50,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 55,125 |  |  |  | - |  |  |  | - |  |  |  | 55,125 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 55,125
27 |  | Adar Alef Omnibus #2 BE 4th Tranche |  | $ | 5,350 |  |  | 10/3/2019 |  | 2/7/2020 |  |  | 5,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 5,350 |  |  |  | - |  |  |  | - |  |  |  | 5,350 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,350
28 |  | LG Capital Omnibus #8 |  | $ | 6,825 |  |  | 10/25/2019 |  | 10/26/2020 |  |  | 5,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | 6,825 |  |  |  | - |  |  |  | - |  |  |  | 6,825 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 6,825
29 |  | Adar Alef Omnibus # 5th Tranche |  | $ | 33,600 |  |  | 3/19/2020 |  | 9/19/2020 |  |  | 3,600 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 33,600 |  |  |  |  |  |  |  |  |  |  | 33,600
30 |  | LG Caputal Funding, LLC |  | $ | 33,600 |  |  | 3/25/2020 |  | 9/20/2020 |  |  | 3,600 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 33,600 |  |  |  |  |  |  |  |  |  |  | 33,600
Convertible note total |  |  |  |  |  |  |  |  |  |  | 214,021 |  |  |  | 572,792 |  |  |  | 1,024,292 |  |  |  | (50,000 | ) |  |  | (608,242 | ) |  |  | 938,842 |  |  |  | 708,344 |  |  |  | (99,684 | ) |  |  | (239,411 | ) |  |  | 1,308,092 |  |  |  | 67,200 |  |  |  | - |  |  |  | (102,185 | ) |  | 1,273,107

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, determined at the time of signing of each note.

As of December 31, 2020, all were past maturity, in default and due on demand. As such, the Company accelerated the amortization of the remaining unamortized original issue and debt discounts during 2019.

The Company calculated a default reserve which represents the additional amount the Company would have to pay to all note holders in the event of the default. Management calculated the amount utilizing additional premiums, accrued interest and default accrued interest as per the agreements. As of December 31, 2020 and 2019, the Company recorded a general default reserve of $2,278,658 and $1,769,791, respectively.

F-22

NOTE 13 – DERIVATIVE LIABILITIES

The Company classified certain conversion features in the convertible notes and preferred stock issued as embedded derivative instruments due to the variable conversion price feature and potential adjustments to conversion prices due to events of default. These conversion features are recorded as derivative liabilities at fair value in the consolidated financial statements. These fair value estimates were measured using inputs classified as Level 3 of the fair value hierarchy. The Company develops unobservable Level 3 inputs using the best information available in the circumstances, which might include its own data, or when it believes inputs based on external data better reflect the data that market participants would use, its bases its inputs on comparison with similar entities. Due to the existence of down round provisions, which create a path-dependent nature of the conversion prices of the convertible notes, For the 2019 audit, the Company used a Lattice-Based Simulation model, which incorporates inputs classified as Level 3 was appropriate. During 2020 the Company reconsidered and reverted to the Black-Scholes model.

The following table present the assumptions used in the Lattice-Based and Black-Scholes Simulation models to determine the fair value of the derivative liabilities as of December 31, 2020 and 2019:

|  | December 31, 2020 (Black-Scholes) |
Risk-free interest rates |  |  | 0.21 | %
Expected life (years) |  |  | 1.00 year |
Expected dividends |  |  | 0 | %
Expected volatility |  |  | 467 | %

|  | December 31, 2019 (Lattice Model) |
Risk-free interest rates |  |  | 1.74 – 2.63 | %
Expected life (years) |  |  | 0.05 – 1.00 years |
Expected dividends |  |  | 0 | %
Expected volatility |  |  | 226 – 736 | %

The following table provides a roll-forward of the fair values of the Company’s derivative liabilities for the years ended December 31, 2020 and 2019:

|  | Year Ended December 31, 2020 |
Balance – December 31, 2019 |  | $ | 5,359,442 |
Additional new conversion option derivatives |  |  | 7,272 |
Conversion of note derivatives |  |  | (428,733 | )
Change in fair market value of derivative liabilities |  |  | 18,860,260 |
Balance – December 31, 2020 |  | $ | 23,798,240 |

|  | Year Ended December 31, 2019 |
Balance – December 31, 2018 |  | $ | 2,696,470 |
Issuance of new derivative liabilities |  |  | 7,592,844 |
Conversions to paid-in capital |  |  | (822,187 |
Reclass to additional paid-in capital |  |  | (582,824 |
Change in fair market value of derivative liabilities |  |  | (3,524,861 |
Balance – December 31, 2019 |  | $ | 5,359,442 |

F-23

NOTE 14 – MERCHANT FINANCING

On June 27, 2019, the Company’s Rune subsidiary entered into another future receivable purchase agreement with Vox Funding and received $19,400. This agreement provides for payment over 7 months and carried a fee of $7,600. This obligation is not convertible under any terms into Company stock.

On August 20, 2019, the Company had successfully discharged all of its debts associated with 12 Europe A.G., as part of the completion of the 12 Europe A.G., bankruptcy filing except for certain social benefit payments still owed of approximately $35,000 by the Company.

On September 24, 2019, the Company’s Rune subsidiary entered into another future receivable purchase agreement with Vox Funding and received $14,550. This agreement provides for payment over 3.5 months and carried a fee of $4,800. This obligation is not convertible under any terms into Company stock.

On September 24, 2019, the Company’s Rune subsidiary entered into another future receivable purchase agreement with Vox Funding and received $17,666. This agreement provides for payment over 9 months and carried a fee of $12,900 and retired a prior obligation of $15,353. This obligation is not convertible under any terms into Company stock.

On October 11, 2019, the Company’s Bluwire subsidiary entered into a future receivable purchase agreement with Libertas Funding and received $343,000. This agreement provides for payment over 8 months and caries a fee of $7,000. This obligation is not convertible under any terms into Company stock. The balance of this note is approximately $360,000 as of December 31, 2019.

On November 4, 2019, the Company’s Bluwire subsidiary entered into a second future receivable purchase agreement with Libertas Funding and received $145,500. This agreement provides for payment over 6 months and caries a fee of $4,500. This obligation is not convertible under any terms into Company stock. The balance of this note is approximately $162,000 as of December 31, 2019.

On December 18, 2019, the Company’s Rune subsidiary entered into another future receivable purchase agreement with Vox Funding and received $24,279.49. This agreement provides for payment over 8.5 months and carried a fee of $24,759.91 and retired prior obligation of $29,020.60. This obligation is not convertible under any terms into Company stock.

On December 23, 2019, the Company’s Red Wire Group subsidiary entered into a future receivable purchase agreement with Vox Funding and received $24,200. This agreement provides for payment over 5.5 months and carried a fee of $12,050. This obligation is not convertible under any terms into Company stock.

On January 4, 2020, the Company’s Rune subsidiary entered into another future receivable purchase agreement with Vox Funding and received $14,500. This agreement provides for payment over 70 business days and carried a fee of $4,850. This obligation is not convertible under any terms into Company stock.

On January 24, 2020, the Company’s Social Sunday subsidiary entered into a first future receivable purchase agreement with Vox Funding and received $14,500. This agreement provides for payment over 3.5 months and carried a fee of $4,850. This obligation is not convertible under any terms into Company stock.

On March 3, 2020, the Company’s Social Sunday subsidiary entered into a second future receivable purchase agreement with Vox Funding and received $5,605. This agreement provides for payment over 2 months and carried a fee of $1,895. This obligation is not convertible under any terms into Company stock.

On March 5, 2020, the Company’s Bluwire subsidiary entered into a third future receivable purchase agreement with Reliant Funding and received $83,000. This agreement provides for payment over 6 months and caries a fee of $3,000. This obligation is not convertible under any terms into Company stock.

As of December 31, 2020, the Company had total merchant financing payables of $412,647 with unamortized discounts of $2,754 for net payable of $409,892.

As of December 31, 2019 the Company had total merchant financing payables of $631,664 with unamortized discounts of $158,835 for net payable of $472,829.

On March 16 2020, as part of the Company’s streamlining operations and partially because of COVID-19, the Company filed a Chapter 11 Reorganization of Red Wire Group, LLC. The Company’s 12 Fashion Group continues to service Red Wire Group customers under the trade name Red Wire Design.

On March 16, 2020, the President of the United States of America issued a stay-at-home instructions and business closure directive in response to COVID-19 pandemic. Management took steps to promptly close all its Bluwire stores and Fashion Group operations, laying off the vast majority of its employees. The Company’s landlords and Libertas, Vox and Reliant have all agreed to collections deferment of an indeterminant duration (see note above regarding individual agreements). The Fashion Group continues limited operations in creating and producing PPE materials.

F-24

Additional Working Capital from convertible debt and under the CARES Act.

The Federal Government of the United States of America on March 27, 2020, passed the Cares Act allowing companies to quality SBA Payroll Protection Loans (PPP). These loans provide for certain funding based on previous employment which in part may be forgivable under certain conditions. The remaining portion needs to be repaid over 2 years with a 6-month moratorium on payments and carry a 1% annual interest rate. These loans require no collateral nor personal guarantees. During the period from May 5, 2020 to May 22, 2021, the Company’s subsidiaries quality and received an aggregate of $294,882 in 2020 and $302,602 in 2021 in PPP loans.

In August 2020, two of the Company’s subsidiaries qualified for the United States Small Business Administration (“SBA”) Economic Industry Disaster Loans (“EIDL”) and the Company received $325,300 under the program. These loans are unsecured, have no personal guaranty, carry a 3.75% annual interest rate with aggregate monthly payments of 13 months after receipt of funds. Management has used these funds to retain key personnel, pay regulatory fees, rent, begin work on a new website for Bluwire, make progress on this retail APP and acquire product to re-open one of its Bluwire Stores.

Beginning in December 2020 and continuing through the date of this report, as a series of subsequent events, the Company’s 12 Retail subsidiary has received short term fundings from a private investor ranging between $30,000 and $50,000 in advances that are paid back and renewed in 45 to 60 day intervals for inventory and special orders for customers.

On March 18, 2020, the Company received $30,000 from Adar Alef, LLC (“Adar”) from a $33,600 convertible promissory note agreement including fees and legal expenses of $3,600. The note is convertible after 181 days at a (i) $0.0075 ceiling or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.

On March 25, 2020, the Company received $30,000 from LG Capital, LLC (“LG”) from a $33,600 convertible promissory note agreement including fees and legal expenses of $3,600. The note is convertible after 181 days at a (i) $0.0075 ceiling or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.

On April 30, 2021 the Company received $30,000 from SBI and an additional $40,000 on May 17, 2021 (see below).

On April 21, 2021 and May 4 2021 the Company received $50,000 from Adar Alef and on June 1st an additional $50,000.

On May 6, 2021 the Company received $30,000 as an additional advance from Oasis Capital pursuant to previous agreements with Oasis and on May 13, 2021 an additional $50,000.

On May 17, 2021 the Company received an additional $40,000 from SBI.

On May 18, 2021, the Company filed its required filings with the State of Nevada and became current and increased its authorized common shares from 8 Billion to 20 Billion common shares.

In May 2021, advisory board member, Richard Berman invested $50,000 in exchange for preferred shares with the option to invest a further $100,000 over the next few months.

NOTE 15 - STOCKHOLDERS’ DEFICIT

As of December 31, 2020 and 2019, the Company’s Articles of Incorporation, as amended and restated, is authorized to issue 8,000,000,000 shares of common stock at par value of $0.0001 and 50,000,000 shares of preferred stock at par value of $0.00001.

F-25

Reverse Stock Split and increased authorized common shares

On October 18, 2019, the Company completed a 100 for 1 reverse common stock split reducing the outstanding common shares to 25,410,391. The authorized common shares remain at 8 billion authorized common stock. As a subsequent event, as of May 18, 2021 the authorized was increased to 20,000,000,000 shares of common 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 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.

The Series B Redeemable Convertible Preferred Stock is classified as temporary equity as it is mandatorily redeemable by the holder at a future date. The Series D-1 and D-2 Preferred Stock are classified as temporary equity as they are redeemable immediately. The Series D-3 Preferred Stock is also classified as temporary equity due to its put option, which providers the holders the right to put the shares to the Company for cash if they elect not to convert into shares of common stock.

Series A Preferred Stock

As of December 31, 2020 and 2019, there were 10,000,000 designated shares of Series A Preferred Stock.

Liquidation

In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of any junior stock by reason of their ownership of such stock an amount per share for each share of Series A Preferred Stock held by them equal to the sum of the liquidation preference. If upon the liquidation, dissolution or winding up of the Company, the assets of the Company legally available for distribution to the holders of the Series A Preferred Stock are insufficient to permit the payment to such Holders of the full amounts specified in this Section then the entire remaining assets of the Company legally available for distribution shall be distributed with equal priority and pro rata among the holders of the Series A Preferred Stock in proportion to the full amounts they would otherwise be entitled to receive.

Redemption

The Series A Preferred Stock shall have no redemption rights.

F-26

Conversion

The “Conversion Ratio” per share of the Series A Preferred Stock in connection with any Conversion shall be at a ratio of 1:20, meaning every (1) one Preferred A share shall convert into 20 shares of Common Stock of the Company (the “Conversion”). Holders of Class A Preferred Shares shall have the right, exercisable at any time and from time to time to convert any or all their shares of the Class A Preferred Shares into Common Stock at the Conversion Ratio.

Voting

The Holder of each share of Series A Preferred Stock shall have such number of votes as is determined by multiplying (a) the number of shares of Series A Preferred Stock held by such holder; and, (b) by 20. The holders of Series A Preferred Stock shall vote together with all other classes and series of common and preferred stock of the Company as a single class on all actions to be taken by the common stock shareholders of the Company

2020 and 2019 Transactions

During the year ended December 31, 2020, the Company issued 1,250 shares of Series A preferred stock for total proceeds of $5,000. In 2020, the Company issued 12,750 shares of Series A preferred stock for a negligible fair value.

During the year ended December 31, 2019, the Company issued Series A Preferred Stock as follows:

- | The Company issued 1,915,151 Series A shares upon conversion of accounts payable, accrued liabilities, board director fees and due to stockholders totaling $1,154,591.
- | The Company issued 114,165 Series A shares for compensation and 154,500 shares for professional services for an aggregate fair value of $103,247.
- | In October 2019, the Company issued 500,000 Series A shares in connection with the Bluwire acquisition. - During the third quarter, 2020 the company issued $12,750 Series A shares in restricted shares to employees under the Employee Restricted Stock Plan. - In December 2020, the company issued $1,250 Series A shares for cash. - In March 2021, the company issued 1,250 Series A shares for cash. - In April 2021, the company issued 1,250 Series A shares for cash. - In April 2021, the company issued 25,000 Series A shares for cash.

As of December 31, 2020 and 2019, there was 9,197,816 and 9,183,816 shares of Series A Preferred Stock deemed issued and outstanding.

Series B Preferred Stock

As of December 31, 2020 and 2019, there were 1,000,000 designated shares of Series B Preferred Stock.

Liquidation

Holders of Series B Preferred Stock shall have a liquidation preference junior to Series A holders.

Conversion

Each share of Series B Preferred Stock shall be convertible at the option of the holder at any time into shares of common stock at a conversion price equal to 65% multiplied by lowest average traded price during the ten (10) trading day period ending.

Voting

Series B Preferred Stock shall be non-voting on any matters requiring shareholder vote.

Dividends

Series B Preferred Stock will carry an annual cumulative dividend, compounded monthly, payable solely upon redemption, liquidation or conversion.

F-27

Redemption

The Series B Preferred Stock is mandatorily redeemable by the holder 15 months after issuance, and therefore is classified as temporary equity in the consolidated balance sheet.

2020 and 2019 Transactions

During the year ended December 31, 2020, the Company issued Series B Preferred Stock as follows:

| - | On January 16, 2020, an existing Series B stockholder purchased 53,000 Series B Preferred shares for proceeds of $53,000 under the same terms as their prior purchases.
| - | The holders of 3,600 shares of Series B Preferred Stock converted these shares for 29,353,846 shares of common stock.

During the year ended December 31, 2019, the Company issued Series B Preferred Stock as follows:

| - | The holders of 68,000 shares of Series B Preferred Stock converted these shares for 1,815,742 shares of common stock.
| - | In November 2019, the Company issued 68,000 shares of Series B Preferred Stock for $68,000.
| - | In December 2019 the company issued 53,000 shares of Series B Preferred Stock for $53,000.

Series C Preferred Stock

As of December 31, 2020 and 2019, there were two designated shares of Series C Preferred Stock.

The Series C Preferred Shares have no equity value, no preference in liquidation, is not convertible into common shares and does not accrue dividends or have redemption rights. Each issued and outstanding share of Series C Preferred Stock authorizes the holder to vote eight billion (8,000,000,000) votes on any matter that shareholders are entitled to vote for under our Bylaws at a cost of $1.00 per share. Holders of shares of Series C Preferred Stock shall vote together with the holders of Common Shares as a single class.

As of December 31, 2020 and 2019, there is one share of S Series C Preferred Stock issued and outstanding.

F-28

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.

The total number of shares of Series D Preferred Stock the Company is authorized to issue is ten million (10,000,000) shares.

Series D-1 Preferred Stock

On July 2, 2018, the Company entered into an 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 Stock having special rights and privileges as follows:

As of December 31, 2020 and 2019, there were 500,000 shares designated as Series D-1 Preferred Stock with a stated value of $2.00 per share (the “Stated Value”).

Liquidation

Holders of Series D-1 Preferred Stock shall have a liquidation preference junior to Series A, B and C holders. 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 an amount for each share of Series D-1 Preferred Stock held by such holder equal to 140% of the Stated Value plus any dividends accrued but unpaid.

Conversion

Each share of Series D-1 Preferred Stock, together with accrued but unpaid dividends, shall be convertible at the option of the holder at any time into shares of common stock as is determined by dividing the Stated Value per share being converted plus accrued and unpaid dividends by the Series D-1 Conversion Price. 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.

Voting

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.

Dividends

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.

Redemption

Shares of the Series D-1 Preferred Stock shall be redeemable in cash, at any after the issuance of the respective Series D-1 Preferred Stock at a price per share equal to 125% of the Stated Value plus the amount of accrued but unpaid dividends, 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. Therefore, the Series D-1 Preferred Stock is classified as temporary equity in the consolidated balance sheet.

F-29

During the year ended December 31, 2019, the Company issued Series D-1 Preferred Stock as follows:

| - | During the first quarter of 2019, Oasis Capital converted 28,500 shares for 630,000 shares common stock and reduced the principal outstanding balance by $57,000. As such, the Company recorded a change in derivative liability associated the Series D-1 Preferred Shares of $86,428.
| - | On March 14, 2019, the Company executed an agreement with Oasis Capital, whereby the Company agreed to exchange the remaining outstanding 282,750 Series D-1 shares for 282,750 Series D-2 Preferred Shares. In addition, the Company executed an agreement whereby 62,250 outstanding D-1 shares were exchanged for 62,250 Series D-2 preferred shares in exchange of $100,000. In addition, the Company agreed to pay 1,425 shares of D-2 shares as a finance charge for this agreement. The excess fair value of the shares exchanged was recorded as additional interest expense.

As of December 31, 2020 and 2019, there are 0 Preferred Series D-1 shares issued and outstanding, respectively.

Series D-2 Preferred Stock

The total number of shares of Series D-2 Preferred Stock the Company is authorized to issue 2,500,000 shares, with a stated value of $2.00 per share.

Dividends

Before any dividends shall be paid or set-side for payment on any junior security, each holder of Series D-2 Preferred Stock shall be entitled to receive dividends payable on the stated value of the Series D-2 Preferred Stock at a rate of 8% per annum, or 18% per annum following the occurrence of an event of default, which shall be cumulative and be due and payable in shares of common stock on the conversion date or in cash on the redemption date. Such dividends shall accrue from the date of issue of each share of Series D-2 Preferred Stock.

Liquidation

Holders of Series D-2 Preferred Stock shall have a liquidation preference junior to Series A, B, C and D-1 holders.

Conversion

Each share of Series D-2 Preferred Stock, together with accrued but unpaid dividends, shall be convertible at the option of the holder at any time into shares of common stock as is determined by dividing the Stated Value per share being converted plus accrued and unpaid dividends by the Series D-2 Conversion Price. The “Series D-2 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.

Redemption

The Series D-2 Preferred Stock is classified temporary equity due to the fact that the shares are redeemable immediately.

F-30

In 2020, the Company converted an aggregate of 23,000 shares of Series D-2 Preferred Stock with a fair value of $46,000 into 355,142,105 shares of common stock.

The Company issued 346,625 Series D-2 shares to Oasis Capital with a value of $692,850. On April 1, 2019, Oasis Capital received $103,500 in exchange for 103,500 Series D-2 shares. On May 9, 2019, the Company received $50,000 in exchange for 45,045 Series D-2 Preferred Shares from Oasis Capital with which the Company had previously executed the PIPE Securities Purchase Agreement in March of 2019. During the year ended December 31, 2019 Oasis Capital redeemed $127,580 or 63,790 shares of its Series D-2 Preferred shares for 3,000,000 common shares. In addition, Oasis purchased an additional 9,009 series D-2 Preferred shares for $10,000. For the year ended December 2019, Oasis redeemed and exchanged $127,580 or 63,790 shares of its D-2 Preferred shares for 10,536,281 commons shares.

On April 3, 2019, the Company entered into a Securities Exchange Agreement with Mr. D’Alleva and issued him 332,032 Series D-2 Preferred Shares in exchange for the 6,250,000 common shares that Mr. D’Alleva had previously purchased from the Company.

Mr. D’Alleva received 318,750 Series D-2 shares in exchange for the 62,500 common shares that he previously purchased for $531,250. He will also receive an additional 13,282 Series D-2 Preferred shares in the form of debt discount in this share exchange.

On April 3, 2019, concurrent with the PIPE Securities Purchase Agreement entered into with Mr. D’Alleva, the Company entered into a PIPE Securities Purchase Agreement with Dominic D’Alleva to sell to Mr. D’Alleva in various $25,000 tranches up to 93,750 Series D-2 Preferred Shares for a commitment of a $150,000 investment into the Company.

Thus far, Mr. D’Alleva has purchased 15,625 Series D-2 Preferred Shares for $25,000. He has delivered $12,500 and the Company expects him to deliver the remainder of the purchase price in the current period.

In addition, on April 3, 2019, the Company entered into a PIPE Securities Purchase Agreement with a key technology vendor where the Company exchanged 125,000 Series D-2 Preferred Shares for $200,000 of Company debt held by that vendor. An additional $50,000 was expensed as a result of this transaction. During the fourth quarter Oasis converted 6,040 Series D-2 Preferred shares.

As of December 31, 2020 the Company had 912,368 Series D-2 Preferred Shares with a redemption value of $2,607,162 and 935,368 Series D-2 Preferred Shares with a redemption value of $2,442,542 as of December 31, 2019.

Series D-3 Preferred Shares

The total number of shares of Series D Preferred Stock the Company is authorized to issue is 500,000 shares.

Conversion

The Holder may convert some, part of all of the Series D-3 shares into common shares of the Company based on the closing market price on the day before notice of conversion is presented to the Company.

Dividends

The Company will pay dividends on the Series D-3 Preferred Stock at the rate of 10% per annum and shall pre-pay the Holder the first 12 month’s dividends from proceeds. After 12 months the Company would pay the pro-rata interest on a monthly basis due the first of each month and late after the 10th of each month.

F-31

Redemption

At the option of the Holder the Company may be obligated to redeem any non-converted shares of Series D-3 Preferred Stock that are not deemed to be incentive shares and that are not deemed to be settlement shares through the issuance of a “PUT” to the Company. At the conclusion of the PUT Notice Period, the Holder may at any time request a redemption of some, part, or all of Holder’s any non-converted shares of Series D-3 Preferred Stock by providing the Company with a PUT DEMAND. The Company would then be obligated to redeem any undisputed Securities within 10 business days of receipt of the PUT DEMAND. The Holder may at any time after issuing a PUT NOTICE rescind the PUT option which could then only be re-instituted through a future PUT NOTICE. The Series D-3 Preferred Stock is classified as temporary equity due to the existence of the PUT.

As of December 31, 2020 and 2019, there were 54,840 Preferred Series D-3 shares outstanding at $5.00 par representing a total of $274,234. There were accrued dividends of $61,977 and $34,482 at December 31, 2020 and 2019, respectively.

Series D-4 Preferred Stock

In April 2020, the Company authorized one million (1,000,000) shares of Series D-4 Preferred stock with a face value of $100. The shares have no dividends, are non-voting, and have a liquidation preference after Series D-3 Preferred Shares. These shares are convertible into the Company’s common shares at no discount.

Series D-5 Preferred Stock

The total number of shares of Series D-5 Preferred Stock the Company is authorized to issue 1,000,000 shares, with a stated value of $4.00 per share.

Liquidation

The holders shall be paid in cash after the holders of the superior preferred shares (Series A, B, D-1, and D-2), but before any junior securities, including common shares and other shares have no liquidation preferences.

Conversion

The holder may convert some or all of its Series D-5 Preferred Shares into common shares of the Company based on the closing market price on the day of or the day before notice of conversion.

Dividends

Series D-5 Preferred Stock will carry an annual dividend of 6% which will be paid in arrears.

Voting

Holders of the shares of Series D-5 Preferred Stock shall not have the right to vote on any matter as to which shareholders are required or permitted to vote, except as otherwise required by law.

2019 Transactions

On February 21, 2019, the Company issued 37,500 shares for 25% interest in the Red Wire Group. On March 14, 2019, the Company issued 82,588 shares of Series D-5 Preferred Stock for 92.5% interest in Rune. See Note 4. In addition, the Company issued 2,625 Series D-5 shares in exchange for professional Services.

As of December 31, 2020 and 2019, the Company had 128,494 Series D-5 Preferred Shares outstanding with a face value of $513,976. The company recorded had accrued dividends of $47,400 and $20,452 at December 31, 2020 and 2019, respectively.

Series D-6 Preferred Stock

The total number of shares of Series D-6 Preferred Stock the Company is authorized to issue 1,000,000 shares, with a stated value of $5.00 per share.

Liquidation

The holders shall be paid in cash after the holders of the superior preferred shares (Series A, B, D-1, and D-2), but before any junior securities, including common shares and other shares have no liquidation preferences.

Conversion

The holder may convert some or all its Series D-6 Preferred Shares of the Company based on the closing market price on the day of or the day before notice of conversion.

Dividends

Series D-6 Preferred Stock shall not declare or accrue any dividends.

Voting

Holders of the shares of Series D-6 Preferred Stock shall not have the right to vote on any matter as to which shareholders are required or permitted to vote, except as otherwise required by law

2019 Transactions

- The Company issued 55,600 shares for an additional 75% interest in the Red Wire Group. See Note 4.

- The Company issued 7,080 shares as compensation for a value of $35,400.

- The Company issued 42,000 shares pursuant to the acquisition of Social Sunday. See Note 4.

There were no shares issued for 2020.

As of December 31, 2020 and 2019, the Company had 104,680 Series D-6 Preferred Shares with a face value of $523,400.

F-32

Common Stock

2020 Transactions

During the year ended December 31, 2020, the Company converted principal and unpaid accrued interest totaling $120,300 into an aggregate of 785,026,210 shares of common stock.

During the year ended December 31, 2020, the Company converted an aggregate of 23,000 shares of Series D-2 Preferred Stock with a fair value of $46,000 into 355,142,105 shares of common stock.

2019 Transactions

On October 18, 2019. the Company completed a 100 for 1 reverse common stock split reducing the outstanding common shares to 25,410,391. All of the above transactions occurred prior to the completion of the Reverse Stock split and with the exception of the authorized common shares which remain at 8 billion authorized common stock issuances listed here had the effect of being divided by 100.

The Company issued an aggregate of 17,803,260 shares in exchange of the settlement of convertible debt. The Company issued 12,652,023 common shares to Geneva Roth and Oasis Capital in exchange for Preferred Shares.

As of December 31, 2020 and 2019, 1,177,103,618 and 36,935,303 shares of common stock were issued and outstanding, respectively.

NOTE 16 - INCOME TAXES

The Company operates in the United States and its wholly owned subsidiaries operate in Japan, Hong Kong and Switzerland and files tax returns in these jurisdictions.

F-33

Loss from continuing operations before income tax expense (benefit) is as follows:

|  | For the Years Ended |
|  | December 31, |
|  | 2020 |  |  | 2019 |
Tax jurisdiction from: |  |  |  |  |  |  |  |
- US |  | $ | (22,106,596 | ) |  | $ | (11,180,704 | )
- Foreign |  |  |  |  |  |  |  |
Hong Kong (HK) |  |  | (258,861 | ) |  |  | (788,542 | )
Japan (JP) |  |  | (20,988 | ) |  |  | (39,642 | )
Switzerland (EU) |  |  | 404,331 |  |  |  | (215,687 | )
Loss before income taxes |  | $ | (21,940,137 | ) |  | $ | (12,146,948 | )

There was no provision for income taxes for the years ended December 31, 2020 and 2019, as the Company has tax losses in all jurisdictions. The expected approximate income tax rate for 2020 and 2019 for United States is 21%, Hong Kong is 16.5%, Japan is 30%, and Switzerland is 20%, whereas the actual rate was zero. The total income tax benefit differs from the expected income tax benefit principally due to the valuation allowance recorded against the deferred tax assets which are principally comprised of net operating losses (“NOLs”) and permanent differences due to a significant amount of non-cash income and expenses.

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2020 and 2019:

|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
NOL carryforwards |  |  |  |  |  |  |  |
United States – current rate |  | $ | 3,563,537 |  |  | $ | 2,917,945 |
United States – effect of change in statutory rate |  |  | - |  |  |  | - |
-Foreign |  |  | 682,324 |  |  |  | 728.789 |
Total |  |  | 4,246,044 |  |  |  | 3.646,734 |
Less: valuation allowance |  |  | (4,264,044 | ) |  |  | (3,646,734 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |

The Company applies the authoritative accounting guidance under ASC 740 for the recognition, measurement, classification, and disclosure of uncertain tax positions taken or expected to be taken in a tax return. The Company provided a full valuation allowance against its deferred tax assets as of December 31, 2019 and 2018. This valuation allowance reflects the estimate that it is more likely than not that the net deferred tax assets may not be realized.

The Company has approximately $20,500,000 of U.S. and foreign carryforwards, the tax effect of which is approximately $4,200,000 as of December 31, 2020. Certain of these carryforwards begin to expire in 2024.

The U. S. NOL carryforwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382. The Company has not performed a study to determine if the NOL carryforwards are subject to these Section 382 limitations. In addition, the Company has foreign NOLs. The Company is still evaluating the impact of a change in stock ownership and the potential limitation of foreign NOLs.

A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a portion of these assets will not be realized. The Company has recorded a full valuation allowance of $4,264,044 and $3,646,734 for deferred tax assets existing as of December 31, 2020 and 2019, respectively. The change in the valuation allowance was an increase of $617,310 and $2,115,542 for the years ended December 31, 2020 and 2019, respectively. The valuation allowance as of December 31, 2020 and 2019 is attributable to NOL carryforwards in the United States and foreign jurisdictions.

F-34

The Company’s tax returns are subject to examination by tax authorities in the U.S., various state and foreign jurisdictions. The Company is generally no longer subject to examinations for years prior to 2014. The Company is currently delinquent in its income tax filings.

NOTE 17 - COMMITMENTS

Lease Commitments

The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.

Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments.

The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.

Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.

Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s income statement in the same line item as expense arising from fixed lease payments. As of and during the year ended December 31, 2020, management determined that there were no variable lease costs.

Right of Use Asset

In connection with the Bluwire acquisition, the Company recognized a right of use asset of $52,671. The Company used an effective borrowing rate of 13% within the calculation. The lease agreement matures in August 2021. Minimum rental payments 2021 are $52,671, respectively.

Operating Leases

On August 13, 2020 the Company’s 12 Fashion Group, a division of 12 Retail Corporation, entered into a new office location under a 2 year lease with an option for a third year beginning on August 17, 2020. This new location is 1600 square feet and caries a base monthly rent of $5651.30 plus a pro-rated expenses for garbage and utilities of $743. Management believes that this additional space is necessary to manage the consolidation of its fashion brands.

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Other Commitments

The Company has a significant contract with an independent contractor third party company which plays a critical role to the ongoing operations of the Company. The contract is for an initial period of five years for which can be cancelled upon six month’s notice and payment of all outstanding fees. The minimum monthly payment is $35,000 for which additional amounts are to be reimbursed for expenses, etc. During the years ended December 31, 2020 and 2019, the Company paid $220,975 and $476,037, respectively, under the contract to which an additional $269,290 was payable as of December 31, 2020. The Company relies upon the third party for obtaining financing, targeting acquisitions, general corporate guidance, financial reporting, etc. See Note 10 for discussion regarding issuances of Series A and common stock to the third party.

Contingencies

| ● | Auctus Fund Management (“Auctus”) vs. 12 ReTech Corporation. Auctus Filed suit in August 2019 claiming breach of contract on a convertible promissory note dated April 25, 2018, which had a remaining principal balance of nearly $40,000. Auctus claimed damages totaling over $482,000. The Company had entered into a settlement agreement with Auctus that required the Company to make a cash payment of $117,000 and which was dependent on the Company receiving funding from a foreign investor. That investment did not occur, and the Company was unable to perform. Upon information and belief, management believes that Auctus will at some point re-institute that lawsuit. Management has reserved on its financial statements a sum in excess of $482,000 in regards to this claim. To the best of management’s knowledge, Auctus has not taken other actions.

| ● | Bellridge Capital, LP, one of the Company’s convertible debt providers has sued the Company for non-performance and has obtained a default judgment in the amount of $214,195.74 in the southern district of New York. The Company maintains that service of process is defective, and the Company will also assert lack of jurisdiction if any collection effort is ever undertaken among other potential legal claims and defenses

| ● | J&S properties sued the Company in regards to a lease for a subsidiary in-the State of Utah that was never guaranteed by the Company and obtained a default judgement in Salt Lake County. The Company maintains that it was never properly served and has, it believes, substantial defenses that it will raise should J&S properties ever try to enforce the judgment.

| ● | RedWire Group, LLC (“RedWire Group”) filed for bankruptcy under Chapter 11 subsection V on March 6, 2020, and the case in ongoing. The Company has funded the initial costs, as well as some ongoing storage costs for RedWire Group equipment. The Company plans to liquidate the equipment and some other assets to pay creditors. This Chapter 11 was converted by the Court to a Chapter 7 and discharged. The equipment was liquidated in 2021, and the Bank (Bank of American Fork) has been paid in full and all other debts have been discharged.

| ● | Leider Enterprises, Inc. D/b/a SM Distribution Inc a Florida corporation sued Bluwire Sun, LLC in Florida. Bluwire Sun never received any product from this company and is defending this lawsuit in Florida.

| ● | Rottenberg, Meril, Solomon, Bertiger & Guttilla (“Rottenberg”) sued the Company in Bergen County New Jersey and obtained a default judgement because the Company was never served. The Company believes it has substantial counterclaims and defenses should Rottenberg ever tries to enforce this judgement.
| ● | PCG Advisory Group (PSG) obtained a default judgement of $63,350 in New York because, we believe, it never properly served the Company and has tried to domesticate that judgement in Arizona. The Arizona Court refused to domesticate the judgment and has given PSG some time to prove proper service. That period has expired.
| ● | VXB & Orfwid d/b/a Lost + Wander sued the Company’s Social Decay d/b/a Social Sunday subsidiary and also named the Company for invoices. The Company never guaranteed obligations for Social Sunday and intends to vigorously defend this lawsuit as meritless.
| ● | Tessco Technologies V Bluwire filed suit in Maryland. The Company has not been properly served and if served would dispute jurisdiction as well as other defenses on behalf of its Bluwire subsidiary.
| ● | George Sharpe, In May 2021 sued the Company in Nevada to try to obtain custodianship of the Company. This was defeated and the Company will be filing for attorney fees, although there are no guarantees the court will award us our attorney fees or other outcomes.

NOTE 18 – SUBSEQUENT EVENTS

The Company evaluated all events and transactions that occurred after December 31, 2020 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 April 30, 2021 the Company received $30,000 from SBI and an additional $40,000 on May 17, 2021 (see below).

| - | On April 21, 2021 and May 4 2021 the Company received $50,000 from Adar Alef and on June 1st an additional $50,000.

| - | On May 6, 2021 the Company received $30,000 as an additional advance from Oasis Capital pursuant to previous agreements with Oasis and on May 13, 2021 an additional $50,000.

| - | On May 17, 2021 the Company received an additional $40,000 from SBI.

- | On May 18, 2021, the Company filed its required filings with the State of Nevada and became current and increased its authorized common shares from 8 Billion to 20 Billion common shares.

| - | In May 2021, advisory board member, Richard Berman invested $50,000 in exchange for preferred shares with the option to invest a further $100,000 over the next few months.

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ITEM 9. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Accounting Officer concluded that our disclosure controls and procedures, as of December 31, 2020 were not effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding disclosure. A control system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a Company have been detected.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management, with the participation of the principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based on the criteria established by COSO, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2020 as a result of the identification of the material weaknesses described below.

Specifically, management identified the following control deficiencies: (1) The Company has not properly segregated duties as two or three individuals initiate, authorize, and complete all transactions. The Company has not implemented measures that would prevent the individuals from overriding the internal control system; (2) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines and (3) the Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software.

Our Company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2021: (i) adopt sufficient written policies and procedures for accounting and financial reporting, (ii) complete the implementation of QuickBooks Enterprise solution for consistent recording and accounting of all transactions across all business groups started in 2020. The remediation efforts set out are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Accordingly, while the Company has identified certain material weakness in its system of internal control over financial reporting, it believes that is has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles generally accepted in the United States of America.

While our internal controls are improving there is more work to do as our Company continued to recover from the Pandemic and increases employment so that we can better segregate Suites. During 2020 Management has taken steps to segregate duties. Personnel and officers who make journal entries have no control of the bank accounts. Operational personnel have no control over financial reporting.

The operations team consists of three main team members. One who is President of the Fashion Group, another as acting director of operations of the retail group and a store manager of our one open retail store. The Tech team consists of another three team members. One who is director of technology and in charge of developing the new APP. Another who is a UX development and another who is App Platform team leader. Our US operations are managed by several team members who co-ordinate all of the above at my directions of CEO.

Individual operations team members make requests for A/P payments, inventory, and materials or for things to be purchased outside of the ordinary course of business. Those need to be approved by the initial supervisor where appropriate, reviewed and approved by a USA coordinator and then authorized by CEO. The authorized payments are then sent to the paymaster for payment and the Comptroller for posting and review to ensure that only authorized payments are made.

Based on the aforementioned, all of the tasks are segregated so that no one person can issue payments on their own. Any payment must be in line with the payments unanimously authorized by the board.

Management has determined that current resources would be appropriately applied elsewhere and when resources permit, they will alleviate material weaknesses through various steps.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the Securities Exchange Commission that permit the Company to provide only management’s report in this annual report.

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Changes in Internal Control Over Financial Reporting

During the year ended December 31, 2020 there were no changes in the Company’s internal controls over financial reporting known to the Chief Executive Officer or the Chief Accounting Officer that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers and Directors.

Each director of the Company serves for a term of one year and until his successor is elected and qualified at the next Annual Shareholders’ Meeting, or until his death, resignation, or removal. Each officer of the Company serves for a term of one year and until his successor is elected and qualified at a meeting of the Board of Directors.

The following sets forth information about our directors and executive officers as of December 31, 2020.

NAME |  | AGE |  | POSITION
Angelo Ponzetta |  | 60 |  | Chairman of the Board, Chief Executive Officer, Secretary, President
Daniele Monteverde |  | 69 |  | Chief Financial Officer, Director
Dominick D’Alleva |  | 68 |  | Advisory Board Member
Richard J. Berman |  | 79 |  | Advisory Board Member

The above listed officers and directors will serve until the next annual meeting of the shareholders or until their death, resignation, retirement, removal, or disqualification, or until their successors have been duly elected and qualified. Vacancies in the existing Board of Directors are filled by majority vote of the remaining Directors. Officers of the Company serve at the will of the Board of Directors. There are no agreements or understandings for any officers or director to resign at the request of another person and no officer or director is acting on behalf of or will act at the direction of any other person.

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Appointment of new directors and officers (last five years to present)

Mr. Angelo Ponzetta

President, Chief Executive Officer, Secretary and Chairman of the Board of Directors & Founder. Mr. Ponzetta also serves as the sole director or CEO or managing member (as appropriate) of each of our subsidiaries:

Mr. Ponzetta has served as our Chief Executive Officer, President, Secretary and Chairman of the Board of Directors since June 27, 2017. Mr. Ponzetta served as the Chief Executive Officer and Secretary of 12 Hong Kong, Ltd from 2010 and still serves in that capacity since 12 Hong Kong was acquired by the Company on June 27, 2017. Mr. Ponzetta has extensive experience in technology, engineering, and retail. It was based on these experiences that he became the driving force behind the Company’s potentially disruptive technology.

In the technology field, Mr. Ponzetta worked for over 10 years in programming and development of processing systems at Kern AG and then in the IT department of a Swiss Bank.

His retail career began in 1992 in Asia when he joined the Swiss Trading Company UTC Japan, in the position as Executive Director to oversee the entire Finance and Marketing department of Fashion, Jewelry, and Watches. In 1994, he was then promoted to President and Representative Director, and managed the entire Company including offices in Taiwan, Singapore, and Hong Kong.

In 1999, he joined CARAN d’ACHE (Luxury Writing Instruments, leather and Fine Art Material manufacturer based in Geneva), to build up the brand in Japan. In 2001, his responsibilities were expanded to oversee all over Asia Pacific as Asia President.

Mr. Ponzetta has been actively involved in many business organizations including several Foreign Chambers of Commerce in Japan. He served on the EBC (European Business Council) Board of Governors, as well as the Board of the Japan-Swiss Society, and was for a full term of two years (2005/2006) the President of the Swiss Chamber & Commerce in Japan.

Mr. Ponzetta was educated in Switzerland where he obtained his first degree in Engineering Micro-Computer from Bern Technikum. He also has a Bachelors Degree in Organizational Management from the OMS in Zurich, and a Bachelor’s Degree in Business Administration from the GSBA in Zurich.

Mr. Daniele Monteverde

Chief Financial Officer since June 27, 2017 and a Director of the Company since October 30, 2017.

From 2015 to September 2017, Mr. Monteverde has served as the President and Chief Executive Officer of 12 Japan, Ltd where he was instrumental in managing the Company’s first retail customer who purchased and installed the Company’s cutting-edge technology: Itoya, Ltd. Mr. Monteverde also serves the function of Chief Financial Officer of 12 Japan from September 2017 to Present.

In addition to his responsibilities on behalf of the Company, Mr. Monteverde owns and operates a number of successful companies: CEO of Aquarium, Inc a video production, editing and recording Company for marketing, distribution and other commercial applications located in Japan (2005- present), President and CEO of Latina International Corporation, Inc a creative boutique agency located in Japan (1987-present), President and CEO of Arriba Entertainment, Inc a music production company located in Japan (1999-present), Founder and Senior Managing Director of Eureka, Inc an event management and production company located in Japan (2016-present), Founder and Senior Managing Director of Three W, Inc a digital content production company located in Japan (2019-present).

Mr. Monteverde holds a Ph.D. in Engineering (Specializing in Business Administration) from the University of Buenos Aires.

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Ms. Emily Santamore

President of 12 Fashion Group, Inc. since January 23, 2020.

From 2013 to present, Ms. Santamore served as the senior executive of Rune NYC LLC, which was acquired by the Company in March 2019. Ms. Santamore is a fashion industry professional, who, previous to founding Rune NYC, developed and launched more than 15 other brands for a major international fashion house. She was named as Remodista Woman to Watch In Retail Disruption 2017 and has received numerous other awards.

Ms. Santamore is a serial entrepreneur, whose first company, Moral Fever, was launched in 2003 to provide sustainable women’s fashions.

She received a Bachelor of Fine Arts from the Tyler School of Art at Temple University in 2002.

Mr. Dominick D’Alleva

Advisory Board Member of the Company since June 2018.

From 1995 to present time, he has been a principal with D and D Realty Company, LLC, a privately owned New York based New York limited liability Company involved in the acquisition and financing of real estate. From 1986 to 1995, he was engaged in residential New York City real estate for his own account and as general counsel to various real estate acquisition firms. From December 2014 to October 2016, Mr. D’Alleva was Chairman of the Board of Warren Resources, Inc. a publicly traded energy Company which was reorganized in 2016. From 1983 to 1985, he served as Executive Vice President, Director and General Counsel of Swanton Corporation which engaged in energy, retail and financial services businesses. From 1980 to 1983, he was Associate Counsel for Damson Oil Corporation. From 1977 to 1980, he was an associate with Simpson, Thatcher & Bartlett specializing in securities and corporate law.

Mr. D’Alleva received a Bachelor of Arts degree Summa Cum Laude from Fordham University in 1974 and earned his Juris Doctor degree with honors from Yale University in 1977.

Richard J. Berman

Advisory Board Member of the Company since October 30, 2017.

Richard Berman’s business career spans over 35 years of venture capital, senior management, and merger & acquisitions experience. Mr. Berman is a well-respected and seasoned professional, senior executive and public Company Board member with extensive experience in many business sectors including finance, technology, retail, bioscience, and real estate.

Mr. Berman has served as a director or officer of more than a dozen public and private companies. In 2016 he joined the advisory Board of Medifirst, while in 2014 he was elected Chairman of MetaStat Inc. From 2006-2011, he was Chairman of National Investment Managers, a Company with $12 billion in pension administration assets. Mr. Berman is a director of three public healthcare companies: Advaxis, Inc., Caladrius Biosciences, Inc., and Cryoport Inc.

From 2002 to 2010, he was a director of Nexmed Inc where he also served as Chairman/CEO in 2008 and 2009 (now called Apricus Biosciences, Inc.). From 1998-2000, he was employed by Internet Commerce Corporation (now Easylink Services) as Chairman and CEO and was a director from 1998 to 2012. Previously, Mr. Berman worked at Goldman Sachs; was Senior Vice President of Bankers Trust Company, where he started the M&A and Leveraged Buyout Departments; created the largest battery Company in the world in the 1980’s by merging Prestolite, General Battery and Exide to form Exide Technologies (XIDE); helped to create what is now Soho (NYC) by developing five buildings; and advised on over $4 billion of M&A transactions in over 300 deals.

He is a past Director of the Stern School of Business of NYU where he obtained his BS and MBA. He also has US and foreign law degrees from Boston College and The Hague Academy of International Law, respectively.

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Resignations of officer and Board directors (last 5 years)

Former Officers and Directors:

Jose Armando Acosta Crespo – Former President, Chief Executive & Financial Officer and Secretary.

Mr. Crespo served as President, Chief Executive Officer, Chief Financial Officer, Secretary and sole Director from inception (September 2014) until June 27, 2017 when Angelo Ponzetta was appointed.

From November 2010 to February 2012, Mr. Crespo was the Director of Technology in Santo Domingo, Dominican Republic for Servicio de Transacciones Seguras STS, a high-tech solutions Company. In November of 2012, he formed and developed DIACO Business SRL dba DIACO Events, a private and corporate event management and event planning services firm. From August 2013 to November 2014, Mr. Acosta worked for an IT Department as a Continuous Improvement & Project Manager Consultant in Santo Domingo, Dominican Republic for Nearshore Call Center Services, a BPO Company in the call center industry.

Mr. Acosta holds a Bachelor’s Degree in Business Administration from the Instituto Tecnologico of Santo Domingo “INTEC”.

Kirk Kimerer – Former Chief Marketing Officer.

Kirk Kimerer served as Chief Marketing Officer from October 2017 until August 2018. Due to the delays with the Company’s original planned acquisitions and as part of the Company’s continued efforts to reduce costs and benefit shareholders, the board of directors and Mr. Kimerer decided in August 2018 to temporarily eliminate the position of Chief Marketing Officer until such time as the Company has substantial retail operations. Mr. Kimerer is pursuing his other interests while he still a “friend” to the Company.

Daniel Wong – Former 12 Hong Kong Ltd Chief Operating & Technology Officer.

Mr. Wong was appointed on Jan. 1, 2018 as the Chief Operating and Technology Officer of 12 Hong Kong, Ltd under an unspecified term on an “at will” basis agreement with 12 Hong Kong, Ltd with an annual Salary of $150,000 U.S. Mr. Wong was terminated by mutual agreement in June 2018.

Stefan Gugisberg – Former 12 Europe A.G. Chief Executive Officer.

Mr. Stefan Gugisberg was appointed on November 1, 2017 as the Chief Executive Officer of 12 Europe A.G. (now defunct), with an annual salary of $144,000 U.S. Mr. Gugisberg was terminated by mutual agreement effective October 31, 2018. A package to terminated Mr. Gugisberg employment included total compensation of CHF 43,924 or approximately USD $48,593 to be paid in instalments.

To our knowledge, during the last five years none of our directors and executive officers (including those of our subsidiaries) has:

Yes | ● | Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,
|  | In September 2019, the Company completed a bankruptcy and liquidation of it’s wholly-owned subsidiary, 12 Europe A.G., of which Angelo Ponzetta was a Board Member. On March 6, 2020, the Company filed a Chapter 11 Subsection V bankruptcy filing on its Red Wire Group LLC subsidiary. Angelo Ponzetta managing member.
No | ● | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses,
No | ● | Been subject to any order, judgment or decree, not subsequently reversed suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,
No | ● | Been found by a court jurisdiction of contempt (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

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Board Composition and Committees

Other than the formation of a non-voting Advisory Board no committees of the Board of directors have been formed.

Audit Committee

We have not yet appointed an audit committee and our board of directors currently acts as our audit committee. At the present time, we believe that the members of the board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We do look for oversight advice from our Advisory Board as well. Our Company, however, recognizes the importance of good corporate governance and intends to appoint an audit committee comprised entirely of independent directors, including at least one financial expert upon completing an acquisition of an operating Company.

Advisory Board of Directors:

On October 30, 2017, the Company has created an Advisory Board of Directors to bring additional experience and strategic contacts to the Company. In October 2017, the Company appointed Richard Berman. In June 2018, the Company appointed Dominck D’Alleva. The Company is actively interviewing other qualified candidates for future consideration.

Indemnification of Officers and Directors.

Section 78.138 of the NRS provides that a director or officer will not be individually liable unless it is proven that (i) the director’s or officer’s acts or omissions constituted a breach of his or her fiduciary duties, and (ii) such breach involved intentional misconduct, fraud or a knowing violation of the law.

Section 78.7502 of NRS permits a Company to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending or completed action, suit or proceeding if the officer or director (i) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner the officer or director reasonably believed to be in or not opposed to the best interests of the corporation and, if a criminal action or proceeding, had no reasonable cause to believe the conduct of the officer or director was unlawful.

Section 78.751 of NRS permits a Nevada Company to indemnify its officers and directors against expenses incurred by them in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of final disposition thereof, upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that such officer or director is not entitled to be indemnified by the Company. Section 78.751 of NRS further permits the Company to grant its directors and officers additional rights of indemnification under its articles of incorporation or bylaws or otherwise.

Section 78.752 of NRS provides that a Nevada Company may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another Company, partnership, joint venture, trust or other enterprise, for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the Company has the authority to indemnify him against such liability and expenses.

Our Articles of Incorporation provide that no director or officer of our Company will be personally liable to our Company or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or (ii) the unlawful payment of dividends. In addition, our bylaws permit for the indemnification and insurance provisions in Chapter 78 of the NRS.

Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling our Company pursuant to provisions of our articles of incorporation and bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

At the present time, there is no pending litigation or proceeding involving a director, officer, employee, or other agent of ours in which indemnification would be required or permitted. We are not aware of any threatened litigation or proceeding, which may result in a claim for such indemnification.

Further, in the normal course of business, we may have in our contracts indemnification clauses, written as either mutual where each party will indemnify, defend, and hold each other harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties; or single where we have agreed to hold certain parties harmless against losses etc.

ITEM 11. EXECUTIVE COMPENSATION

Overview of Compensation Program

We currently have not appointed members to serve on a Compensation Committee of the Board of Directors. Until a formal committee is established, our entire Board of Directors has responsibility for establishing, implementing, and continually monitoring adherence with the Company’s compensation philosophy. The Board of Directors ensures that the total compensation paid to the executives is fair, reasonable, and competitive.

Role of Executive Officers in Compensation Decisions

The Board of Directors makes all compensation decisions for, and approves recommendations regarding equity awards to, the executive officers and Directors of the Company. Decisions regarding the non-equity compensation of other employees of the Company are made by management.

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The table below summarizes the total compensation paid to or earned by our Executive Officers, for the years ended December 31, 2020 and December 31, 2019.

Summary Compensation Table |
Name and Principal Positions |  | Year |  |  | Accrued Compensation |  |  | Bonus |  | Option Awards |  | Non-Equity Incentive Plan Compensation |  | Equity Compensation |  | All Other Compensation |  | Total |
Angelo Ponzetta, CEO, Chairman |  |  | 2019 |  |  | $ | 150,000 |  |  | None |  | None |  | None |  | None |  | None |  | $ | 150,000 |
Angelo Ponzetta, CEO, Chairman (1) |  |  | 2020 |  |  | $ | 150,000 |  |  | None |  | None |  | None |  | None |  | None |  | $ | 150,000 |
Daniele Monteverde CFO, Director |  |  | 2019 |  |  | $ | 120,000 |  |  | None |  | None |  | None |  | None |  | None |  | $ | 120,000 |
Daniele Monteverde CFO, Director (2) CFO, Director |  |  | 2020 |  |  | $ | 120,000 |  |  | None |  | None |  | None |  | None |  | None |  | $ | 120,000 |
Kirk Kimerer CMO (3) Joined 10/19/17 |  |  | 2019 |  |  | $ | 26,798 |  |  | None |  | None |  | None |  | None |  | None |  | $ | 26,798 |
Richard J. Berman Advisory Board (4) Joined 10/30/17 |  |  | 2019 |  |  | $ | 120,000 |  |  | None |  | None |  | None |  | None |  | None |  | $ | 120,000 |
Richard J. Berman Advisory Board (4) Joined 10/30/17 |  |  | 2020 |  |  | $ | 180,000 |  |  | None |  | None |  | None |  | None |  | None |  | $ | 180,000 |
Emily Santamore CEO (5) Join 03/19 |  |  | 2019 |  |  | $ | 90,000 |  |  | None |  | None |  | None |  | None |  | None |  | $ | 90,000 |

| (1) | (1) Angelo Ponzetta’s salary was increased to $12,500 per month starting in 2018. Mr. Ponzetta has agreed to defer the remaining regular payments until the Company has more consistent cash flow. In September, 2019, Mr. Ponzetta converted the majority of outstanding payable to 823,244 Series A Preferred Stock. In light of the company’s difficulties during COVID, Mr. Ponzetta has only a minimum amount of cash and deferred the rest, the remaining amount has been accrued as of December 31, 2020.
| (2) | Daniele Monteverde’s monthly salary is to be $10,000 per month beginning in November 2017 and continued until December 2020. However, Mr. Monteverde has agreed to defer regular payment until the Company has more consistent cash flow. In September, 2019, Mr. Monteverde converted the majority of outstanding payable to 382,012 Series A Preferred Stock. Due to the company’s financial restraints, the company has deferred all of his compensation and as such for the remaining months in 2019 and 2020, Mr. Monteverde has deferred his compensation as such it has been accrued as of December 31, 2020.
| (3) | Mr. Kimerer’s monthly salary was $8,000 per month for the period of January through June 2018. Mr. Kimerer was paid $20,298 during 2018. Mr. Kimerer was not with the company in 2019 nor 2020.
| (4). | The Company paid Mr. Berman $17,500 during 2018. Mr. Berman has been accruing compensation of $10,000 per month for 2019 and 2020. In September 2019, the Company converted his then accrued compensation to 441,027 Series A preferred stock. Due to the company’s financial restraints, the company has deferred all of his compensation for the remaining months in 2019 and all of 2020, Mr. Berman deferred his compensation as such it has been accrued as of December 31, 2020. In addition, Mr. Berman has paid for our facilities on Lexington Avenue out of his own funds and we have deferred reimbursement.
| (5) | Emily Santamore monthly salary was $7,500 for the period March 2019 to December 2019. Ms. Santamore’s salary was increased to $15,000 per month of which $5,000 is deferred in January 2020.

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The Company does not currently offer stock options or warrants and does not have any plans to do so. The Company has instituted a restricted Stock plan to incentivize employees.

In September 2019, the Company instituted an Employee / Vendor Restricted Stock Plan (“Plan”) to incentivize employees and key vendors, and align their goals with that of all of our shareholders. The Plan provides for the issuance of a certificate to each eligible participant that represents issued Series A Preferred Shares (“Shares”). The Shares have a three-year cliff vest, which may be accelerated if the Company’s Common Shares maintain a $4 closing share prices in any 30-day period, or the Company up-listed its Common Shares to a nationally recognized exchange. During the vesting period, participants forfeit their shares in the event of termination or resignation. The Board of Directors periodically determines the amount of shares to be awarded, and at filing of this report, there are 119,250 Series A Preferred Shares issued (see “Series A Preferred Shares” in this report for the details of the rights, preferences, and restrictions for Series A Preferred Shares).

Employment Agreements

There are no employment agreements in place at the Company, except the following:

| - | Greg Hael, consultant to 12 Fashion Group - former majority member of Red Wire Group, LLC. Has a 3-year consulting agreement with Red Wire Group LLC, whose payments were deferred until such time as the company was profitable and cash-flowing sufficient to make such payments. This contract has been discharged in the Red Wire Group Chapter 7 bankruptcy.
| - | Emily Santamore, President of 12 Fashion Group - has a 3-year management contract to manage 12 Fashion Group, Inc. As of January 23, 2020, Ms. Santamore was promoted to President of the entire 12 Fashion Group, an unincorporated division of 12 Retail at a salary of $15,000 per month, subject to deferment of any amount over $5,000 per month until such time as 12 Fashion Group can afford to make the higher payments. This arrangement supersedes the Rune NYC management contract.
| - | Chris Burden, member of Bluwire Group - as of October 1, 2019, Mr. Burden, who has previously served as President of Bluwire Group, LLC continued to nominally hold the title without the responsibility and has a 3-year consulting contract, with $5,000 per month payments that have been deferred. Mr. Burden has performed no services to the Company since the Covid-19 pandemic in March, 2020.
| - | Mauricio Ojeda, member of Bluwire Group - as of October 1, 2010, Mr. Ojeda, who previously served as the Chief Operating Officer of Bluwire Group, LLC continued to nominally hold the title without performing the responsibilities and has a 3-year consulting contract with $7,500 per month payments, with all but two payments having been deferred. Mr. Ojeda has performed no services for the Company since before the Covid-19 pandemic of 2020.
| - | Samantha Sisca, former President of Social Decay - resigned her position on April 15, 2020, which she had held for the Company from the acquisition date of November 19, 2019 until the time of her resignation. The management agreement called for $7,000 in monthly payments, which were partially paid during the period in consultation with Ms. Sisca, based on the cash flow of the subsidiary she managed. Ms. Siska has quit her job and provided no services to the Company since March 2020. The Company maintains a number of causes of action regarding Ms. Sisca, and management has not determined what actions it will take, if any.
| - | Stefan Gugisberg, former CEO of 12 Europe A. G. (now defunct) (see resignations for details)

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 29, 2020 by (i) each person who is known by us to own beneficially more than 10% of our outstanding common stock; (ii) each of our officers and directors; and (iii) all of our directors and officers as a group.

As of December 31, 2020, there are 36,152,866 common shares outstanding and 5 million Series A Preferred Shares outstanding. Each Series A Preferred Shares is convertible to 20 common shares upon conversion and until conversion allows the holder to 20 votes. Consequently, the chart below is based upon 8,050,000,000 eligible votes.

Name and Address |  | Position |  | Shares Owned (1) |  |  | Percentage owned |
Angelo Ponzetta, Unit B, 22/F, Times Centre, 391-407 Jaffe Road, Wanchai, Hong Kong - Common Shares |  | CEO |  |  | 450,580 |  |  |  | 0.01 | %
Angelo Ponzetta Preferred Series A Shares- 5.1 million (Convertible at 1 Series A Preferred Share for 20 common shares) |  | CEO |  |  | Votes: 102,000,000 |  |  |  | 1.24 | %
Angelo Ponzetta Preferred Series C Shares- 1 share at costs $1.00 (The Series C Preferred Shares have no equity value, no preference in liquidation and is not convertible into common shares, authorizes the holder to vote one billion (8,000,000,000) votes on any matter that shareholders are entitled to vote for under our Bylaws. |  | CEO |  |  | Votes: 8,000,000,000 |  |  |  | 98 | %
Angelo Ponzetta – Aggregate |  | CEO |  |  | Votes: 8,102,450,580 |  |  |  | 99 | %
Daniele Monteverde Hanegi -1-30-8, Setagaya-ku, Tokyo 156-0042 – Common Shares |  | CFO |  |  | 35,500 |  |  |  | 0.00 | %
Daniele Monteverde Preferred Series A Shares- 1.13 million (Convertible at 1 Series A Preferred share for 20 common shares) |  | CFO |  |  | Votes: 22,600,000 |  |  |  | 0.28 | %
Daniele Monteverde – Aggregate |  | CFO |  |  | Votes: 22,635,500 |  |  |  | 0.28 | %
All officers and directors as a group (2 persons) |  |  |  |  | Votes: 8,125,086,080 |  |  |  | 99 | %

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SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. As of March 29, 2019, there are no outstanding warrants and convertible notes payable are owned by investors who are not management, directors or beneficial owners of more than 10% of the outstanding shares.

Description of Registrant’s Securities

Company Stock

On March 8, 2019, the Company filed a with the Securities and Exchange Commission a Form 14C which increased the aggregate number of shares which this Company has the authority to issue from One Billion Fifty Million (1,050,000,000) to Eight Billion Fifty Million (8,050,000,000) shares, consisting of (a) Eight Billion (8,000,000,000) shares of Common Stock, par value $0.00001 per share (the “Common Stock”) and (b) fifty million (50,000,000) shares of Preferred Stock, par value $0.00001 per share (the “Preferred Stock”). Of the Preferred Stock we have 8 classes designated as; Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series D-1 Preferred Stock, Series D-3 Preferred Stock, Series D-5 Preferred Stock, and Series D-6 Preferred Stock. As a subsequent event, as of May 18, 2021 the authorized was increased to 20,000,000,000 shares of common stock.

Series A Preferred Stock; each Series A Preferred Share is convertible to 20 shares of Common Stock, and has a liquidation preference over all of the Company’s other shares, and each Series A Preferred Share carries 20 votes on any matter requiring a vote of shareholders. This class consists of ten million (10,000,000) shares authorized, of which there 6,500,000 shares and 9,183,566 as of December 31, 2018 and December 31, 2019 (and as of the date of this report) respectively.

Series B. Preferred Stock; each Series B Preferred Share is non-voting, has a face value of $1, and is second in liquidation preference to Series A, and is convertible into Common Shares at a 35% discount to market. There are one million (1,000,000) shares authorized, with 68,000 and 121,000 outstanding as of December 31, 2018 and December 31, 2019 respectively. As of the date of this report, there are 174,000 outstanding.

Series C Preferred Stock; each Series C Preferred Share has no liquidation preference, is not convertible, is non-transferable, and has special voting privileges whereby each share of Series C Preferred has 8,000,000,000 in any matter requiring a vote of the shareholders. There are two shares are authorized of which one share was issued and outstanding as of December 31, 2018 and 1 issued and outstanding as of December 31, 2019.

Series D Preferred Stock; there are ten million shares of Series D Preferred Stock, designated as “Blank Check Preferred” allowing the Board of directors to set the rights privileges and voting as determined by the Board as well as dividing this Series into other series as the need may arise. The Company has elected to create subclasses of Series D Preferred Shares, as follows:

Series D-1 Preferred Stock; consists of one million (1,000,000) shares of Series D-1 Preferred stock, with a face value of $2, and has a liquidation preference after Series B Preferred Shares, these shares are convertible into the Company’s Common Shares at a 25% discount to market or redeemable by the Company in a range of 125% - 140% of the face value, depending on how long the shares were outstanding. These shares are non-voting, with 311,250 and 0 outstanding as of December 31, 2018 and December 31, 2019 respectively. As of the date of this report, there are none outstanding.

Series D-2 Preferred Stock; consists of two million five hundred thousand (2,500,000) shares of Series D-2 Preferred stock, with a face value of $2, have a 8% annual dividend, are non-voting, and has a liquidation preference after Series D-1 Preferred Shares, these shares are convertible into the Company’s Common Shares at no discount and redeemable by the Company at the face value. There were 0 and 923,268 outstanding as of December 31, 2018 and December 31, 2019 respectively. As of the date of this report, there are 923,268 outstanding.

Series D-3 Preferred Stock; consists of one million (1,000,000) shares of Series D-3 Preferred stock, with a face value of $5, has a liquidation preference after Series D-2 Preferred Shares, have a 10% annual dividend, convertible at face value into Common Shares. For any shares held before May 31, 2019, there was a one-time PUT option, whereby the Company would be obligated to buy the shares back from the holder at face value, this PUT option was unexercised. There were 54,846 and 54,840 outstanding as of December 31, 2018 and December 31, 2019, respectively. As of the date of this report, there are 54,840 outstanding.

Series D-4 Preferred Stock; As a subsequent event in April 2020, the Company authorized one million (1,000,000) shares of Series D-4 Preferred stock, with a face value of $100, no annual dividend, are non-voting, and has a liquidation preference after Series D-3 Preferred Shares, these shares are convertible into the Company’s Common Shares at no discount. There were N/A and N/A outstanding as of December 31, 2018 and December 31, 2019, respectively.

Series D-5 Preferred Stock; consists of one million (1,000,000) shares of Series D-5 Preferred Stock, has a $4 face value, has a 6% annual dividend payable in arrears, has no voting rights, convertible to Common Stock at face value. There were N/A and 128,494 Series D-5 Shares outstanding as of December 31, 2018 and December 31, 2019, respectively. As of the date of this report, there are 128,494 outstanding.

Series D-6 Preferred Stock; consists of one million (1,000,000) shares of Series D-6 Preferred Stock, has a face value of $5, there are no dividends, the shares are convertible at face value. There were N/A and 104,680 Series D-6 Shares outstanding as of December 31, 2018 and December 31, 2019, respectively. As of the date of this report, there are 104,680 outstanding.

Common Stock

Each share of Common Stock shall have, for all purposes, one (1) vote per share. Subject to the preferences applicable to Preferred Stock outstanding at any time, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions in cash, property or shares of stock of the Company as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Company legally available therefore. The holders of Common Stock issued and outstanding have and possess the right to receive notice of shareholders’ meetings and to vote upon the election of directors or upon any other matter as to which approval of the outstanding shares of Common Stock or approval of the common shareholders is required or requested.

On March 14, 2019, The Company increased its authorized Common shares to 8,000,000,000 shares at a par value of $0.00001. On October 18, 2019 the Company completed a 1 for 100 reverse common stock split reducing the outstanding common shares to 25,410,391 at that time. Since that time, the Company’s convertible debt holders have converted a portion of their debt into 573,593,567 Common Shares, resulting in 599,003,958 Common Shares outstanding as of May 22, 2020. Adjusted for the reverse stock split, there were 6,542,519 and 36,935,303 Common Shares outstanding as of December 31, 2018 and December 31, 2019, respectively.

In the twelve months ended December 31, 2020, the Company issued 1,140,168,315 Common Shares 5,538,488 versus 30,392,784 in the twelve months ended December 31, 2019.

As a subsequent event, as of May 18, 2021 the authorized was increased to 20,000,000,000 shares of common stock.

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Voting Rights

Except as otherwise required by law or as may be provided by the resolutions of the Board of Directors authorizing the issuance of common stock, all rights to vote and all voting power shall be vested in the holders of common and Preferred stock. Each share of common stock shall entitle the holder thereof to one vote.

No Cumulative Voting

Except as may be provided by the resolutions of the Board of Directors authorizing the issuance of common stock, cumulative voting by any shareholder is expressly denied.

Rights upon Liquidation, Dissolution or Winding-Up of the Company Upon any liquidation, dissolution or winding-up of the corporation, whether voluntary or involuntary, the remaining net assets of the Company shall be distributed first to holders of Preferred Stock, excluding Series C Preferred Shares and then pro rata to the holders of the common stock.

We refer you to our Articles of Incorporation, any amendments thereto, and certificate of designation Bylaws, and the applicable provisions of the Nevada Revised Statutes for a more complete description of the rights and liabilities of holders of our securities.

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Item 13. Certain Relationships and Related Transactions, and Director Independence.

There are certain conflicts of interest between the Company and our officers and directors. Mr. Angelo Ponzetta our Chief Executive Officer and Chairman was the principal owner and controlling officer of each of our first three acquisitions: 12 Hong Kong Ltd, 12 Japan Ltd and 12 Europe A.G. As such, there were some intercompany transactions between the entities as well as transactions with officers that are considered related party transactions. Angelo Ponzetta’s brother Gianni was a shareholder and officer of 12 Europe A.G. and is now a less than 5% shareholder of the Company.

Daniele Monteverde our Chief Financial Officer and director was a both a principal and officer of both 12 Hong Kong Ltd. And 12 Japan. Mr. Monteverde has many business interests, including his ownership of Aquarium Inc which in the past has been a supplier of content for the Company’s interactive Mirrors and marketing videos. These products were provided in the past to the Company at a 50% discount to the market price that Aquarium Inc. would charge other clients, saving the Company about $4,500. For certain periods of time Mr. Monteverde provided “free” office space to 12 Japan, Inc, in the offices of one of his other companies. Management believes that the rental savings were immaterial to the scope of the operation. Mr. Monteverde has many other business interests to which he currently devotes attention and may be expected to do so although management time should be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through his exercise of judgment in a manner which is consistent with his fiduciary duties to the Company.

Other than disclosed in herein, none of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its common stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past two fiscal years, or in any proposed transaction, which has materially affected or will affect the Company.

Due to stockholders at December 31, 2020 and December 31, 2019 consists of the following:

|  | December 31, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Daniel Monteverde |  | $ | - |  |  | $ | 1,388 |
Angelo Ponzetta |  |  | 11,217 |  |  |  | 10,167 |
Christopher Burden |  |  | 172,536 |  |  |  | 172,536 |
Maurice Ojeda |  |  | 200,000 |  |  |  | 204,000 |
|  | $ | 383,753 |  |  | $ | 384,091 |

On August 12, 2017, Gianni Ponzetta loaned CHF 60,000. The promissory note was unsecured, bore an interest at 1% per annum and is due December 31, 2019. In September 2018, Gianni Ponzetta converted this note and all the due to Gianni Ponzetta payables to Preferred D-3 shares. See Preferred D-3 shares in Note 13 below. During the 12 months ended December 31, 2019 total advances and expenses paid directly by stockholders on behalf of the Company $107,326 and $36,931.

Christopher Burden and Maurice Ojeda were prior owners of Bluwire and the liability noted here is owed by the Bluwire subsidiary.

The other amounts due to stockholders are non-interest bearing, unsecured and due on demand.

During the twelve months ended December 31, 2019, the Company exchanged most its accounts payables due to Daniele Monteverde and Angelo Ponzetta of approximately $723,253 into Series A Preferred shares. See Note 13 Series A Preferred Stock for further details.

With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner:

| ● | Disclosing such transactions in reports where required;
| ● | Disclosing in any and all filings with the SEC, where required;
| ● | Obtaining disinterested directors’ consent; and
| ● | Obtaining shareholder consent where required.

Director Independence

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTC Pink on which shares of the Company’s Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Director” means a person other than an Executive Officer or employee or any other individual having a relationship, which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

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According to the NASDAQ definition, we have no independent directors.

Review, Approval or Ratification of Transactions with Related Persons

We are a smaller reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 14. Principal Accounting Fees and Services.

Audit Fees

The aggregate fees billed by our independent auditor, Ben Borgers, for professional services rendered for the audits of our annual financial statements of the fiscal years ended December 31, 2020 totaled $25,000. The aggregate fees billed by Ben Borgers for professional services rendered for the review of the financial statements included in our quarterly reports included on Form 10Q for period ending March 31, June 30, and September 30, 2020 was $7,500.

Audit-Related Fees

Included above.

Tax Fees

None

All Other Fees

None

Audit Fees - Consists of fees for professional services rendered by our independent registered accounting firm for the audit of our annual financial statements and review of the financial statements or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.

Audit-related Fees - Consists of fees for assurance and related services by our independent registered accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”

Tax Fees - Consists of fees for professional services rendered by our independent registered accounting firm for tax compliance, tax advice and tax planning.

All Other Fees - Consists of fees for products and services provided by our independent registered accounting firm, other than the services reported under “Audit fees,” “Audit-related fees”, and “Tax fees” above.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. In the absence of an Audit Committee the full board of directors performs all of the functions of an audit committee including selecting and engaging our auditors. We do require approval in advance of the performance of professional services to be provided to us by our independent registered accounting firm. Additionally, all services rendered by our independent registered accounting firm are performed pursuant to a written engagement letter between us and the independent registered accounting firm.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)(1)(2) Financial Statements. See the audited financial statements for the year ended December 31, 2019 contained in Item 8 above which are incorporated herein by this reference.

ITEM 16. FORM 10-K SUMMARY

None.

EXHIBIT INDEX

Number |  | Description of Exhibit
3.01 |  | Articles of Incorporation filed with the SEC on Form S-1 in December 30, 2014
3.01a |  | Amended and Restated Articles of Incorporation filed with the SEC on Form 8-k on June 14, 2017
3.01b |  | Articles of Amendment filed with the SEC on Form 8-k on February 02, 2018
3.01c |  | Certificate of Designation filed with the SEC on Form 8-k on February 02, 2018.
3.02 |  | By-Laws filed with the SEC on Form S-1 on December 30, 2014
10.01 |  | Share Exchange Agreement between Devago, Inc (12 ReTech Corporation) and 12 Hong Kong, Ltd filed on Form 8-k on June 7, 2017
10.02 |  | Share Exchange Agreement between 12 ReTech Corporation and 12 Japan, Ltd filed with the SEC on Form 8-k on August 02, 2017
10.03 |  | Share Exchange Agreement between 12 ReTech Corporation and 12 Europe A.G. and the shareholder of 12 Europe A.G. filed with the SEC on 8-k on October 30, 2017
10.04 |  | Share Exchange Agreement between 12 ReTech Corporation and E-motion Apparel, Inc, and the shareholder attached hereto.
10.05 |  | Stock Purchase Agreement between 12 ReTech Corporation and Geneva Roth Remark Holdings, Inc., as filed with the SEC on 8-k on January 29, 2018
10.06 |  | Securities Purchase Agreement between 12 ReTech Corporation and EMA Financial, LLC, attached hereto
31.1 |  | Certification of Principal Officer to Rule 14a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934 as emended
31.2 |  | Certification of Principal Accounting Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended
32.1 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
32.2 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Accounting Officer)

33.1 |  | Issuance of Series D-3 Preferred Stock.
33.2 |  | Certificate of Designation of Series D-5 Preferred Stock.
33.3 |  | Certificate of Designation of Series D-6 Preferred Stock.
33.4 |  | Certificate of Amendment to Certificate of Designation of Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock.
34. |  | Certificate of Amendment filed with the State of Nevada with filed Definitive 14C filed on August 16, 2019 for the 2019 Reverse Split of Common Stock and Authority to Increase Authorized Common Stock
35. |  | Share Exchange Agreement between 12 ReTech Corporation and Red Wire Group. LLC on Form 8K filed on February 25, 2019.
33.5 |  | Certificate of Designation of Series D-2 Preferred Stock.
36. |  | Share Exchange Agreement between 12 ReTech Corporation and Rune, NYC, LLC on Form 8K filed on March 21, 2019 .
37. |  | Share Exchange agreement for majority control between 12 ReTech Corporation and Bluwire Group, LLC on form 8k on October 15, 2019.
38. |  | Share agreement between 12 ReTech Corporation and Social Decay,LLC on form 8K on November 20, 2019
39. |  | Amendment to the Articles of Incorporation with the state of Nevada to to Reverse Split of 12 ReTech common stock a 1 for 500 reverse split of its outstanding common stock on form 8K on August 11, 2020.
40. |  | Amendment to the Articles of Incorporation to increase authorized from 16,000,000,000 to 20,000,000,000 common shares on form 8k on August 14, 2020.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

12 ReTech Corporation

Date: June 28, 2021 |  | /s/ Angelo Ponzetta
| By: | Angelo Ponzetta
|  | Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

12 ReTech Corporation

Date: June 28, 2021 |  | /s/ Angelo Ponzetta
| By: | Angelo Ponzetta
| Its: | Chief Executive Officer,
|  | (Principal Executive Officer)

|  | /s/ Daniele Monteverde
| By: | Daniele Monteverde
| Its: | Chief Financial Officer

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