Dont worry - 12 is not that small, its all about touching the right point inside the girl, and that spot os appr 5 cm from the opening ;) its not all about size, its what you do with it. And you have fingers and a tongue ;) they can be used too!
The size of the penis (or the testes either) does not relate to the amount of fertile sperm you put out. In one ejaculation, a man puts out millions of sperm. This has nothing to do with how long or short the hose is that they travel through. Try not to stress, but if it is driving you cuckoo, see a therapist. I don't think you will have ANY problems reproducing as long as you don't stop yourself from having sex.
And, to second what Lenanorway says, the clitoris in the woman is right at the front of the vagina, not deep in the back. In fact, the back third of the vagina has no nerves at all. You can have all your play right at the front (you could please the lady by folding your hand into a fist and caressing her with your first finger's first knuckle, that would be well more than deep enough) and she can get an orgasm from that. Men with the opposite problem (a very long or very wide penis) can find that their wife dislikes sex because it hurts to be penetrated that deeply.
Don't be gullible about what you see in porno films. They are made by men to be dramatic and impress other men, and don't demonstrate anything about what a woman likes. If women were porn film makers, you would see a lot more realistic action that does not rely on a tape measure to impress. If you have sex with joy and with genuine interest in the lady, your penis length will not matter to her.
In short, you asked "What's wrong with me sexually?" Nothing, just anxiety. But that can get in the way of sex, since someone who is too anxious will hold back. Deal with the anxiety by gaining knowledge and by talking to a counselor, and you'll find that your desire comes back.
If this is true, and there is nothing serious with me, I'd be your genie and your wish would be my command
I can't actually tell you how depressed I am due to this. Been constantly failing in bed and got no hope
Talk in depth to your doctor or urologist, to put your fears to rest about amount and viability of sperm. Then, go talk to a counselor about the anxiety you have built up around this issue. Performance anxiety can indeed be crippling. Luckily, performance anxiety is in the brain and can be addressed. Also in the meantime, why not get some more exercise, it does wonders both for stress and for being a "skinny fat man with not much muscles" too. Just remember, guys are competitive and have developed this "inches equals superiority" mythology as a way to beat each other up, but it has no basis in fact, as any doctor will tell you.