BEIJING, Dec. 20, 2019 /PRNewswire/ -- MMTEC, Inc.
(NASDAQ: MTC) ("MMTEC", "we", "our" or the "Company"), a
China based technology company
that provides access to the U.S. financial markets, today announced
its unaudited financial results for the six months ended
June 30, 2019.
Second Half 2019 Summary
- Revenue was $177,543 for the
six months ended June 30, 2019. The
Company did not generate any revenue for the same period of
2018.
- Gross profit was $111,328 for the six months ended
June 30, 2019. The Company had
neither revenue nor associated costs for the same period of
2018.
- Loss from operations was $1,308,583 for the six months ended
June 30, 2019, as compared to
$1,064,245 for the same period
of 2018.The increase was primarily attributable to the increase in
selling and marketing costs for the financial advisory and
investment banking business line.
- Net loss was $1,326,941 for
the six months ended June 30, 2019,
as compared to net loss of $1,062,249
for the same period of 2018.
- Loss per share both on a basic and fully diluted basis were
$0.07 for the six months ended
June 30, 2019, as compared to loss
per share on a basic and fully diluted basis of $0.02 for the six months ended June 30, 2018.
Mr. Zhen Fan, Chief Executive
Officer of MMTEC, commented, "Our revenue increased to $177,543 for the first half of 2019 due to our
adding financial advisory and investment banking business line and
expanding our investor relations management services business.
Loss from operations increased significantly as a result of
increased the size and distribution of support team for financial
advisory and investment banking business line and investor
relations management services business. The Company maintains
professional service teams in China and the US, offering extensive
experience in domestic and international capital formation,
restructuring, M&A, and related market knowledge."
Mr. Fan continued, "While the volume of business has increased
as compared to the same period last year, the growth was less than
we had expected.
For institutional clients, we have invested significant
resources in the Hong Kong
securities market to attract Chinese-backed securities firms in
Hong Kong to the U.S. market.
Also, as an entity that operates in the financial industry in
China and the U.S., the Company
finds itself subject to the challenges posed by the ongoing tension
in the trade relations between the countries. We believe that the
Sino- U.S. trade friction resulted in adverse effect on our ability
to grow and expand, thus falling short of our growth
expectations."
Operating Results for Six Months Ended June 30, 2019
Revenues
For the six months ended June 30,
2019, our revenues were $177,543. We did not generate any revenue for the
six months ended June 30, 2018.
Cost of Revenue
Cost of revenue consists primarily of internal labor cost
and related benefits, and other overhead costs that are directly
attributable to service provided.
For the six months ended June 30,
2019, cost of revenue was $66,215. Since we started generating revenue in
August 2018, we had neither revenue
nor cost of revenue in the six months ended June 30, 2018.
Gross Profit and Gross Margin
Our gross profit was $111,328 for
the six months ended June 30, 2019,
representing gross margin of 62.7%.
Operating Expenses
During the six months ended June 30,
2019 and 2018, respectively, operating expenses included
selling and marketing, payroll and related benefits, professional
fees, and other general and administrative expenses.
Selling and Marketing Costs
All costs related to selling and marketing are expensed as
incurred. For the six months ended June
30, 2019, selling and marketing costs were $157,440. The Company did not incur any selling
and marketing expenses during the six months ended June 30, 2018.
Payroll and Related Benefits
Payroll and related benefits totaled $404,405 for the six months ended
June 30, 2019, as compared to
$404,644 for the six
months ended June 30, 2018, a
decrease of $239.
Professional Fees
For the six months ended June 30,
2019, professional fees primarily consisted of audit fees,
legal service fees, financial consulting fees, industry consulting
fee, and other fees associated with being a public company.
Professional fees totaled $472,638
for the six months ended June 30,
2019, as compared to $470,190
for the six months ended June 30,
2018, an increase of $2,448.
Other General and Administrative Expenses
For the six months ended June 30,
2019 and 2018, other general and administrative expenses were
$385,428 and 189,411,
respectively.
Loss from Operations
For six months ended June 30,
2019, loss from operations amounted to $1,308,583, as compared to loss from operations
of $1,064,245 for the six months
ended June 30, 2018, an increase of
$244,338, or 23.0%, which was mainly
attributable to the increase selling and marketing costs and other
general and administrative expenses. In order to address the needs
of our financial advisory and investment banking and investor
relations management services business lines, we increased the size
and distribution of our support team, especially our sales
personnel. In turn, the expansion of the Company's overall business
scale has led to increases in other general and administrative
expenses.
Other Income (Expense)
Other income (expense) includes interest income from bank
deposits, other income, other miscellaneous expense, loss on equity
method investment, and foreign currency transaction gain. Other
expense totaled $18,358 for six
months ended June 30, 2019, as
compared to other income of $1,996
for six months ended June 30, 2018, a
change of $20,354, which was mainly
attributable to the decrease in foreign currency transaction
gain.
Income Taxes
We did not have any income taxes expense for the six months
ended June 30, 2019 and 2018 since we
did not generate any taxable income in these two fiscal years.
Net Loss
As a result of the factors described above, our net loss was
$1,326,941, or $0.07 per share (basic and diluted), for the six
months ended June 30, 2019. Our net
loss was $1,062,249, or $0.02 per share (basic and diluted), for the six
months ended June 30, 2018.
Foreign Currency Translation Adjustment
Our reporting currency is the U.S. dollar. The functional
currency of our parent company, MMTEC INC., MM
Future Technology Limited and MM Global Capital Limited, are
the U.S. dollar, and the functional currency of Gujia (Beijing) Technology Co., Ltd., is the Chinese
Renminbi ("RMB"). The financial statements of our subsidiaries
whose functional currency is the RMB are translated to U.S. dollars
using period end rates of exchange for assets and liabilities,
average rate of exchange for revenue and expenses and cash flows,
and at historical exchange rates for equity. Net gains and losses
resulting from foreign exchange transactions are included in the
results of operations. As a result of foreign currency
translations, which are a non-cash adjustment, we reported a
foreign currency translation loss of $20,588 and a foreign currency translation loss
of $26,200 for the six months ended
June 30, 2019 and 2018, respectively.
This non-cash loss had the effect of increasing our reported
comprehensive loss.
Comprehensive Loss
As a result of our foreign currency translation adjustment, we
had comprehensive loss of $1,347,529
and $1,088,449 for the six months
ended June 30, 2019 and 2018,
respectively.
Financial Conditions
As of June 30, 2019, the Company
had cash of $4,934,595, compared to
$93,625 at December 31, 2018. Total working capital was
$4,945,806 as of June 30, 2019, compared to working capital
deficit of $476,713 as of
December 31, 2018.
Net cash used in operating activities for the six months ended
June 30, 2019 was $1,676,458, compared to net cash used of
$1,043,512 for the same period last
year. Net cash provided investing activities was $148,890 for the six months ended June 30, 2019, compared to $24,858 for the same period last year. Net cash
provided by financing activities was $6,682,673 for the six months ended June 30, 2019, compared to $1,666,868 for the same period of last year.
The Company's October 2019
addition of MM Global Securities, Inc. enhanced the Company's
business to an integrated financial service provider which offers
users with various services such as securities trading and asset
management.
As an entity that operates in the financial industry in
China and the United States, the Company finds itself
subject to the challenges posed by the ongoing tension in the trade
relations between the countries.
Shares Authorized and Issued
The Company is authorized to issue 500,000,000 common shares
with a par value of $0.001 per
share.
There are 56,070,000 common shares issued and 20,700,000 common
shares outstanding as of June 30,
2019.
There are 54,000,000 common shares issued and 18,000,000 common
shares outstanding as of December 31,
2018.
On January 7, 2019, the Company
completed its initial public offering on the NASDAQ Capital Market
under the symbol of "MTC". The Company offered 1,800,000 common
shares at $4 per share. Net proceeds
raised by the Company from the initial public offering amounted to
$6,357,801 after deducting
underwriting discounts and commissions and other offering expenses.
Out of the $6.4 million net proceeds,
$500,000 was deposited into an escrow
account to satisfy the initial $500,000 in potential indemnification obligations
arising during an escrow period of two years following the closing
date of January 7, 2019. On
January 7, 2019, the Company sold
additional 270,000 common shares at $4 per share. Net proceeds raised by the Company
amounted to $993,600 after deducting
underwriting discounts. As a result, the Company raised a total of
$7,351,401 from the issuance of
2,070,000 shares of common stock in January
2019.
Recent Developments
On July 9, 2019, the Company
acquired 49% of interest in a newly-formed entity called Xchain
Fintech PTE.LTD. ("Xchain"), a Singapore corporation. Xchain has been formed
for the purpose of providing technical support for the construction
and development of a new solutions for the existing problems of the
traditional financial industry, the difficulty experienced by
investors in investing and allocating investment assets globally,
and the protection of funds and investments by using advanced
technologies, such as artificial intelligence, big data analysis
and blockchain.
Pursuant to the Securities Purchase Agreement dated as of
April 25, 2019, the Company agreed to
purchase from Xiangdong Wen and
Zhen Fan the remaining 75.1% of
outstanding securities of MMBD Trading Ltd., a British Virgin Islands company ("MMBD"). Prior
to the consummation of this acquisition, (i) the Company held 24.9%
of outstanding securities of MMBD, and (ii) each of Xiangdong Wen (the Chairman of the Board) and
Zhen Fan (the Chief Executive
Officer) beneficially owned 37.55% of outstanding securities of
MMBD, respectively. The Company has agreed to pay the aggregate
purchase price of $185,000 for such
securities to be equally divided between the two shareholders of
MMBD. The acquisition closed on October 18,
2019, following the receipt by the Company of requisite
corporate and regulatory approvals, including, without limitation,
FINRA CMA application approval, and the Company's Audit Committee's
review and approval of the terms and provisions of this transaction
involving related parties. Following and as a result of this
acquisition, MMBD has become a wholly-owned subsidiary of the
Company.
Notice
Rounding amounts and percentages: Certain amounts and
percentages included in this press release have been rounded for
ease of presentation. Percentage figures included in this press
release have not in all cases been calculated on the basis of such
rounded figures, but on the basis of such amounts prior to
rounding. For this reason, certain percentage amounts in this press
release may vary from those obtained by performing the same
calculations using the figures in the financial statements. In
addition, certain other amounts that appear in this press release
may not sum due to rounding.
About MMTEC, Inc.
Headquartered in Beijing, China, our Company develops and deploys a
series of platforms, including the ETN Counter Business System, the
PTN Private Fund Investment Management System, the Personal Mobile
Transaction Client System, the PC Transaction Client System, the
Individual and Institutional Integrated Account Management System,
and the Quantitative Investment Transaction Platform, which
comprise a business chain that enables Chinese language speaking
hedge funds, mutual funds, registered investment advisors,
proprietary trading groups, and brokerage firms to engage in
securities market transactions and settlements globally.
In 2019, our company added financial advisory and investment
banking business line to the roster of services it offers to its
customers. Under this new business line, the Company anticipates
providing financial advising and investment banking services,
including, among others, investments, restructuring, IPO and
secondary offering guidance, and venture funding advice, for
PRC-based small and medium-sized enterprises from various
industries that seek access to the US capital markets.
Specifically, the Company intends to assist its customers in
financings and capital formation at different stages of their
growth and development.
Our company has expanded investor relations management services
business to help maintain the relationship between listed companies
and the company's equity, debt investors or potential investors. It
also includes the relationship between listed companies and various
intermediaries in the capital market in the process of
communicating with investors. Our global team of consultative
experts and industry-leading software provides our clients across
all industries, sectors, and regions with strategic actionable
intelligence and unparalleled visibility into the capital markets
for the long term.
More information about the Company can be found
at: www.51mm.com
Forward-Looking Statements
This press release contains forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements that are other than
statements of historical facts. When the Company uses words such as
"may", "will", "intend", "should", "believe", "expect",
"anticipate", "project", "estimate" or similar expressions that do
not relate solely to historical matters, it is making
forward-looking statements. Specifically, the Company's statements
regarding its continued growth, business outlook, and other similar
statements are forward-looking statements. Forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties that may cause the actual results to differ
materially from the Company's expectations discussed in the
forward-looking statements. These statements are subject to
uncertainties and risks including, but not limited to, the
following: the Company's goals and strategies; the Company's future
business development; product and service demand and acceptance;
changes in technology; economic conditions; reputation and brand;
the impact of competition and pricing; government regulations;
fluctuations in general economic and business conditions in
China and assumptions underlying
or related to any of the foregoing and other risks contained in
reports filed by the Company with the Securities and Exchange
Commission, including the Company's most recently filed Annual
Report on Form 20-F and its subsequent filings. For these
reasons, among others, investors are cautioned not to place undue
reliance upon any forward-looking statements in this press release.
Additional factors are discussed in the Company's filings with the
U.S. Securities and Exchange Commission, which are available for
review at www.sec.gov. The Company undertakes no
obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date
hereof.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL DATA
MMTEC, INC. AND
SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(IN U.S.
DOLLARS)
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
ASSETS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
4,934,595
|
$
|
93,625
|
|
Prepaid
rent
|
|
-
|
|
101,298
|
|
Other
receivable
|
|
17,379
|
|
-
|
|
Loan to
employee
|
|
43,638
|
|
-
|
|
Security deposits -
current
|
|
52,114
|
|
51,107
|
|
Prepaid expenses and
other current assets
|
|
171,703
|
|
84,430
|
|
|
|
|
|
|
|
Total Current
Assets
|
|
5,219,429
|
|
330,460
|
|
|
|
|
|
|
NON-CURRENT
ASSETS:
|
|
|
|
|
|
Security deposit –
non-current
|
|
500,000
|
|
-
|
|
Property and
equipment, net
|
|
38,854
|
|
32,428
|
|
Operating lease
right-of-use assets
|
|
151,367
|
|
-
|
|
Equity method
investment
|
|
44,560
|
|
-
|
|
|
|
|
|
|
|
Total Non-current
Assets
|
|
734,781
|
|
32,428
|
|
|
|
|
|
|
|
Total
Assets
|
$
|
5,954,210
|
$
|
362,888
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Deferred
revenue
|
$
|
45,154
|
$
|
79,182
|
|
Salary
payable
|
|
112,858
|
|
185,434
|
|
Accrued liabilities
and other payables
|
|
388
|
|
283,496
|
|
Investee losses in
excess of investment controlled by major
shareholders
|
|
-
|
|
19,426
|
|
Due to Related
Parties
|
|
72,501
|
|
239,635
|
|
Lease liabilities,
current
|
|
42,722
|
|
-
|
|
|
|
|
|
|
|
Total Current
Liabilities
|
|
273,623
|
|
807,173
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
273,623
|
|
807,173
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
(DEFICIT):
|
|
|
|
|
|
Common shares ($0.001
par value; 500,000,000 shares authorized;
|
|
|
|
|
|
56,070,000 shares issued and 20,700,000 shares outstanding at
June 30,2019
|
|
|
|
|
|
54,000,000 shares issued and 18,000,000 outstanding at
December 31, 2018)
|
|
56,070
|
|
54,000
|
|
Additional paid-in
capital
|
|
11,229,339
|
|
3,759,008
|
|
Less: treasury stock,
at cost;
|
|
|
|
|
|
(36,000,000
shares at June 30,2019 and December 31, 2018)
|
|
(36,000)
|
|
(36,000)
|
|
Accumulated
deficit
|
|
(5,459,010)
|
|
(4,132,069)
|
|
Accumulated other
comprehensive loss
|
|
(109,812)
|
|
(89,224)
|
|
|
|
|
|
|
|
Total Shareholders'
Equity (Deficit)
|
|
5,680,587
|
|
(444,285)
|
|
|
|
|
|
|
|
Total Liabilities and
Shareholders' Equity (Deficit)
|
$
|
5,954,210
|
$
|
362,888
|
|
|
|
|
|
|
MMTEC, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(IN U.S.
DOLLARS)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
For the Six
Months
Ended
|
|
For the Six
Months
Ended
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$
|
177,543
|
$
|
-
|
|
|
|
|
|
|
|
COST OF
REVENUE
|
|
66,215
|
|
-
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
111,328
|
|
-
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Selling and
marketing
|
|
157,440
|
|
-
|
|
General and
administrative
|
|
|
|
|
|
|
Payroll and related
benefits
|
|
404,405
|
|
404,644
|
|
|
Professional
fees
|
|
472,638
|
|
470,190
|
|
|
Other general and
administrative
|
|
385,428
|
|
189,411
|
|
|
|
|
|
|
|
|
|
Total Operating
Expenses
|
|
1,419,911
|
|
1,064,245
|
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS
|
|
(1,380,583)
|
|
(1,064,245)
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
Interest
income
|
|
1,768
|
|
251
|
|
Interest
expense
|
|
-
|
|
(12)
|
|
Other income
(expense)
|
|
(114)
|
|
4,581
|
|
Foreign currency
transaction gain
|
|
3,764
|
|
23,682
|
|
Loss on equity method
investment controlled by major
shareholders
|
|
(23,776)
|
|
(26,506)
|
|
|
|
|
|
|
|
|
|
Total Other
Income
|
|
(18,358)
|
|
1,996
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES
|
|
(1,326,941)
|
|
(1,062,249)
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
-
|
|
-
|
|
|
|
|
|
|
|
NET LOSS
|
$
|
(1,326,941)
|
$
|
(1,062,249)
|
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS:
|
|
|
|
|
|
NET LOSS
|
|
(1,326,941)
|
|
(1,062,249)
|
|
OTHER COMPREHENSIVE
LOSS
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
(20,588)
|
|
(26,200)
|
|
COMPREHENSIVE
LOSS
|
$
|
(1,347,529)
|
$
|
(1,088,449)
|
|
|
|
|
|
|
|
NET LOSS PER COMMON
SHARE
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.07)
|
$
|
(0.02)
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING:
|
|
|
|
|
|
Basic and
diluted
|
|
19,955,635
|
|
54,000,000
|
|
|
|
|
|
|
|
MMTEC, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(IN U.S.
DOLLARS)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six
Months Ended
|
|
For the Six
Months Ended
|
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,326,941)
|
$
|
(1,062,249)
|
|
Adjustments to
reconcile net loss from operations to
|
|
|
|
|
|
|
|
Net cash used in
operating activities:
|
|
|
|
|
|
|
|
Depreciation
expense
|
|
|
10,315
|
|
13,181
|
|
|
Loss on equity method
investment controlled by major
shareholders
|
|
|
23,776
|
|
26,506
|
|
|
Noncash lease
expense
|
|
|
150,011
|
|
-
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Security
deposit
|
|
|
(1,107)
|
|
(47)
|
|
|
Prepaid expenses and
other current assets
|
|
|
(104,903)
|
|
(51,224)
|
|
|
Advance from
customer
|
|
|
(34,363)
|
|
-
|
|
|
Salary
payable
|
|
|
(73,471)
|
|
(30,389)
|
|
|
Accrued liabilities
and other payables
|
|
|
(162,144)
|
|
60,710
|
|
|
Lease liabilities,
current
|
|
|
(157,631)
|
|
-
|
|
|
|
|
|
|
|
|
NET CASH USED IN
OPERATING ACTIVITIES
|
|
|
(1,676,458)
|
|
(1,043,512)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(16,885)
|
|
(12,408)
|
|
|
Loan to
employee
|
|
|
(44,243)
|
|
-
|
|
|
Payment in equity
method investment
|
|
|
(87,762)
|
|
(12,450)
|
|
|
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
|
(148,890)
|
|
(24,858)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds received
from issuance of common stock
|
|
|
6,851,401
|
|
1,661,420
|
|
|
Capital contribution
from shareholders
|
|
|
-
|
|
5,448
|
|
|
Repayments to related
parties
|
|
|
(168,728)
|
|
-
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
FINANCING ACTIVITIES
|
|
|
6,682,673
|
|
1,666,868
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH AND CASH
EQUIVALENTS
|
|
|
(16,355)
|
|
(24,143)
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
|
|
4,840,970
|
|
574,355
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - beginning of year
|
|
|
93,625
|
|
237,561
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - end of year
|
|
$
|
4,934,595
|
$
|
811,916
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW
INFORMATION:
|
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
|
|
Interest
|
$
|
-
|
$
|
-
|
|
|
Income
taxes
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from
issuance of stocks directly deposited in
escrow
|
|
$
|
500,000
|
$
|
-
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/mmtec-inc-announces-half-year-2019-unaudited-financial-results-300978197.html
SOURCE MMTEC, Inc.