Improving financial position supplemented by an aggressive acquisition drive could as well explain why 12 Retech Corp (OTCMKTS: RETC) is rising from the dead. Share price and market activity have picked up in the wake of the company completing a number of financing deals as well as strategic acquisitions.
RETC Price Analysis
A spike in gross sales for the 12 months ended December 31, 2018, has also helped strengthen the stock’s market sentiments in recent weeks. The company has also set sights on the European market with its advertising app, 12 Sconti, as part of its growth strategy.
Trading volume has increased significantly, an indication that investors are streaming back after a long period under bearish pressure. However, 12 ReTech remains subdued below the $0.01 psychological level after a long period of underperformance.
While the price action has picked up pace in recent weeks, it awaits to be seen if the upward momentum is strong enough to spearhead a spike above the $0.01 psychological level. A rally followed by a close above $0.01 mark should reaffirm 12 ReTech breakout credentials.
What Does 12 ReTech Corporation Do?
12 ReTech Corporation casts itself as a software company. The company develops and licenses technologies that allow retailers to combat dual threats on e-commerce and in physical stores. The company operates under a micro brand strategy that allows it to demonstrate the effectiveness of software devise and test new products.
12 ReTech Corporation market sentiments have edged higher following the acquisition of apparel manufacturer, Red Wire Group, in the first quarter. With the acquisition, the company gains access to a profitable and efficient apparel manufacturer set to diversify its operations in addition to strengthening its bottom line.
“We are pleased to add the Red Wire team to our own operations. Their activities, which in FY2018 generated approximately $650K in revenues immediately, bolster our revenues and cash flow. On the other hand, the acquisition allows Red Wire to double its manufacturing capacity more than,” stated Angelo Ponzetta, 12 ReTech’s CEO.
The acquisition paves the way for 12 ReTech Corporation to pursue further acquisitions in the apparel brands business that can complement Red Wire. In March, the company completed the acquisition of a 92.5% stake in Rune NYC LLC, an upcoming women apparel brand.
With Rune NYC, 12 ReTech Corporation gains access to a brand that generated $800,000 in revenues in 2018, expected to grow to $1.2 million in the next 12 months. The parent company expects Red Wire Group manufacturing to help improve Rune’s operating margins. The two companies should also be able to leverage each other’s sales channels in a bid to accelerate sales growth.
In addition to the acquisition drive, 12 ReTech Corporation has launched a new revamped 12 Europe AG website that will suport the launch of the 12 Sconti App. Jelmoli which is one of Switzerland premium department store has confirmed the integration of the 12Sconti app to advertise daily specials that the business offers to customers.
12 Sconti app integration will allow Jelmoli to target new audiences as well as optimize the flow of goods in its stores. In return, customers will be able to buy food and other perishable products at discounted rates on a daily basis.
“With our recently acquired operations in the USA and with the further progress of Jelmoli, I truly believe that our business operations are now very much improved in comparison with previous years. I look forward to announcing additional progress on our path to increased shareholder value,” stated Mr. Ponzetta.
In addition to Jelmoli, 12 ReTech Corporation also has signed-up a Japan-based customer, Itoya that will deploy its advertising platform 12 Sconti app in its second store.
What Next For 12 ReTech Corporation
The acquisition of Red Wire and Rune NYC is poised to strengthen 12 ReTech Corporation cash flow position. The company has also embarked on an aggressive marketing campaign as it seeks to accelerate sales growth in the two stores.
Operations in Europe are also gaining traction as more retail stores continue to adopt the 12 Sconti app. With plans underway to launch another digital advertising network in Europe, 2019 could as well turn out to be an inflection year for 12 ReTech Corporation.
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Disclosure: We have no position in RETC and have not been compensated for this article.