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COMMITMENTS | 12 Months Ended
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Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS | 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 the 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 the 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 12 Fashion Group and 12 Retail, the Company recognized a right of use asset of $355,882. The lease agreements mature between November 2022 and December 2023. Minimum rental payments in 2022 are $179,349 and long-term lease liability $176,533, respectively. Operating Leases In December 2021, the Company’s 12 Fashion Group, a division of 12 Retail Corporation, entered into a new office location under a 2 year lease. This new location is 1,700 square feet and caries a base monthly rent of $4,500 plus a pro-rated expenses for garbage and utilities. Also, in November 2021, the Company’s 12 Fashion Group division also entered into 1 year lease agreement in Long Island City. This new location is 1,510 square feet and carries a base monthly rent of $4,620 plus a pro-rated expenses for garbage and utilities. Management believes that this additional space is necessary to manage the consolidation of its fashion brands. 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 months’ 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, 2021 and 2020, the Company paid $271,375 and $$220,975, respectively, under the contract to which an additional $525,552 was payable as of December 31, 2021. 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 it had the right to convert all or a portion of the debt into publicly traded shares and asserted damages totalling over $482,000. The Company had entered into a settlement agreement with Auctus that required the Company to make a cash payment of $120,375 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. Auctus had moved to restore the suit to the Court’s active docket. The Court denied the request but said it would entertain a claim based on diversity of citizenship. 12 ReTech has heard nothing more, but the possibility of claims remains. In addition to the claims for $482,000, claims for interest, attorney’s fees and costs could add substantially to the liability.
| ● | 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. A judgment was obtained against 12 ReTech Corp. on October 14, 2020 in the amount of $217,195.74, plus 24% accrued interest, from March 21, 2019. The matter has settled and a satisfaction of judgment has been filed. 12 ReTech is waiting on a determination from Bellridge whether the satisfaction of judgment must be recorded because of the potential of a judgment lien.
| ● | J&S properties sued the Company regarding 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. A default judgment was obtained against 12 ReTech Corp. on February 7, 2020 in the total of $54,124.10, plus attorneys’ fees and costs in the amount of $10,230.10. The company does not believe it was ever served. It has substantial defenses it intends to raise if and when the company tries to domesticate the judgment either in Arizona or Nevada.
| ● | 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. 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. The cause of action is for Breach of Contract, Account Stated, Unjust Enrichment, Goods Sold and Quantum Meruit. The amount of the claim is for approximately $38,000, plus attorneys’ fees and costs. Bluwire Sun, LLC and 12 ReTech Corp. allege they did not order the goods supposedly sold to them and they did not receive or accept delivery of any of the goods in the state of 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. A judgment was obtained against 12 ReTech Corp. on August 13, 2020 in the amount of $16,975,29. The Company believes it has substantial counterclaims and defenses should Rottenberg ever try to enforce this judgement.
| ● | PCG Advisory Group (“PAG”) 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 PAG 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 named the Company for invoices. 12 ReTech acquired a controlling interest in Social Decay, LLC d/b/a Social Sunday after the time frame of the claimed invoices. 12 ReTech only got notice of this claim on June 1, 2021 and intends to contest on the grounds of service of process and lack of liability for Social Decay’s debts. We have no record of ever guaranteeing payment, assuming the obligations, or in any way obligating 12 ReTech for Social Decay’s bills. A default has been entered. A judgment “prove up” will come next. Plaintiff’s complaint says its damages are $41,667.18 and it requests additional attorneys’ fees and costs. 12 ReTech’s lawyers have withdrawn and a hearing is set for March 10, 2022 to determine whether to deem admitted certain requests to admit filed by Plaintiff. 12 ReTech will contest any collection efforts outside the State of California on the grounds that it does no business there.
| ● | 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 sued the Company in May 2021 in Nevada to try to obtain custodianship of the Company. The judge in this matter has ruled against the Plaintiff and in favor of 12 ReTech. There may be further proceedings involving Plaintiff’s claims and 12 ReTech Corp.’s claims for costs and attorneys’ fees. This matter has been resolved.
| ● | Montoya v. Lexi-Luu Designs, in the State of Arizona, Maricopa County Superior Court. 12 ReTech Corp. was not named on the summons but was served with the complaint. Montoya is suing Lexi-Luu Designs which was formed in 2018 for claims against another company. A Motion to Dismiss the lawsuit was denied. The claims asserted date from 2016, over two years before Lexi-Luu Designs was organized. Plaintiff has not moved the case along.
| ● | Momentum CFO (“Momentum”) was the contract accounting back-office service used by Social Decay, LLC. Social Decay, LLC had an outstanding balance with Momentum. As stated previously, 12 ReTech purchased the 100% membership interests of Social Decay, LLC, however, the debts of Social Decay, LLC were never assumed by 12 ReTech Corporation in any purchase contract or otherwise. As previously mentioned, the seller of Social Decay, LLC was contracted to remain on and run the business, but instead quit and abandoned the business, and the company has been closed since then. 12 ReTech could possibly make claims for counterclaims or attorneys’ fees but nothing is presently pending.

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- Definition The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI http://asc.fasb.org/topic&trid=2144648 + Details
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