BEIJING, Oct. 15, 2020 /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, 2020.
First Half 2020 Summary
- Revenues increased by 85.35% from $177,543 to $329,070 following the October 18, 2019 consolidation of MMBD Trading
Limited and MM Global Securities, Inc. into the Company. MM Global
generated commission fees on customer securities transactions by
providing brokerage service.
- Cost of revenue decreased by 89.39% from $66,215 to $7,026
due to the 90.35% decline of revenues from the investor
relationship advisory services.
- Gross profit increased by 189.27% to $322,044 as compared to $111,328 for the same period in 2019, while the
gross profit margin was 97.86%, as compared to 62.70% for the same
period in 2019.
- Loss from operations was $1,041,361 for the six months ended June 30, 2020, as compared to $1,308,583 for the same period of 2019. The
decrease was primarily attributable to the increase in revenue and
the decrease in payroll and related benefits in selling and
marketing costs and general and administrative.
- Net loss was $1,011,152 for the
six months ended June 30, 2020, as
compared to net loss of $1,326,941
for the same period of 2019.
- Loss per share both on a basic and fully diluted basis were
$0.05 for the six months ended
June 30, 2020, as compared to loss
per share on a basic and fully diluted basis of $0.07 for the six months ended June 30, 2019.
Xiangdong Wen, the Company's
Chief Executive Officer and Chairman, commented, "Our revenue
increased to $329,070 for the first
half of 2020 as a result of our increased sales force in the
broker- dealer business. Loss from operations decreased
significantly as a result of the revenue increase and decrease in
the size and distribution of support team for investor relations
management services business and market data services
business."
Mr. Wen continued, "As for the Company's future strategy, in the
face of the trade tension between China and the United
States, the Company intend to increase its investment in the
following two areas to address challenges of the changing market
environment.
First, the Company believes that Chinese investors will continue
demand investments in U.S. securities and diversified asset
allocations. To this end, the Company set up the asset management
department to form a series of Manager of Managers ("MOM")
funds, with the main goal of attracting small and
medium-sized institutional investors and helping them set up the
fund to issue securities fund products. The Company will also help
those investors with marketing and promotion of subscriptions by
ordinary investors, to help ordinary investors realize the
allocation of overseas assets and obtain high-quality asset
management services. In addition, the Company remains optimistic
about the opening up of China's
securities markets, and plans to establish a new U.S. team to
service small and medium-sized overseas investment institutions,
especially Wall Street institutions, to invest in Chinese
securities market, acting as a bridge for Sino-US securities
investment transactions."
Operating Results for Six Months Ended June 30, 2020
Revenues
We derive our revenues from (1) data services and related
technical support (the "Market data services"); (2) investor
relations management services business to help maintain the
relationship between listed companies and the company's equity,
debt investors or potential investors(the "Investor relations
management services"); and (3) commissions through customer
securities transactions ("Commissions").
The following tables illustrate the Company's revenue by revenue
type:
|
|
For the six months
Ended
June 30,
|
|
|
|
2019
|
|
|
2020
|
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
Market data
services
|
|
|
34,363
|
|
|
|
44,146
|
|
Investor relations
management services
|
|
|
143,180
|
|
|
|
13,807
|
|
Commissions
|
|
|
-
|
|
|
|
271,117
|
|
Total
revenues
|
|
|
177,543
|
|
|
|
329,070
|
|
Cost of Revenue
Cost of revenue consists primarily of internal labor cost
and related benefits, and other overhead costs that are directly
attributable to services provided.
Cost of revenues decreased by $59,189, or 89.39%, to $7,026 for the six months ended June 30, 2020 from $66,215 for the same period last year. The
decrease in cost of revenues is directly linked to the 90.36%
decline of investor relationship advisory services revenues.
Commissions revenue disclosed net revenue without cost.
Gross Profit and Gross Margin
Gross profit was $322,044 for the
six months ended June 30, 2020,
representing gross margin of 97.86%.
Operating Expenses
During the six months ended June 30,
2020 and 2019, 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. Selling and marketing costs decreased by $80,772, or 51.30%, to $76,668 for the six months ended June 30, 2020 from $157,440 for the same period last year.
Payroll and Related Benefits
Payroll and related benefits totaled $479,261 for the six months ended June 30, 2020, as compared to $404,405 for the six months ended June 30, 2019, an increase of $74,856.
Professional Fees
For the six months ended June 30,
2020, 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 $403,300
for the six months ended June 30,
2020, as compared to $472,638
for the six months ended June 30,
2019, a decrease of $69,338.
Other General and Administrative Expenses
For the six months ended June 30,
2020 and 2019, other general and administrative expenses
were $404,176 and $385,428, respectively.
Loss from Operations
For six months ended June 30,
2020, loss from operations amounted to $1,041,361, as compared to loss from operations
of $1,308,583 for the six months
ended June 30, 2019, a decrease of
$267,222, or 20.42%, which was mainly
attributable to the increase revenue and the decrease selling and
marketing costs and professional fees. In order to respond to the
impact of COVID-19, the Company reduced the market data service and
investor relations management services business lines, and
decreased the size and distribution of its support team, especially
the sales personnel. As COVID-19 delayed the launch of business
initiatives, professional fees decreased as compared with the same
period of last year. In turn, the expansion of the Company's
overall business scale has led to increases in payroll and related
benefits and 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
income totaled $30,209 for six months
ended June 30, 2019, as compared to
other expense of $18,358 for six
months ended June 30, 2019, a change
of $48,567, which was mainly
attributable to the increase in interest income and other
income.
Income Taxes
We did not have any income taxes expense for the six months
ended June 30, 2020 and 2019 since we
did not generate any taxable income in these two periods.
Net Loss
As a result of the factors described above, our net loss was
$1,011,152, or $0.05 per share (basic and diluted), for the six
months ended June 30, 2020. Our net
loss was $1,326,941, or $0.07 per share (basic and diluted), for the six
months ended June 30, 2019.
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, MM Fund SPC, MM Global Capital
Limited, MMBD Trading Limited, MMBD Investment Advisory Company
Limited and MM Global Securities, INC, 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 $23,138 and a foreign currency translation loss
of $20,588 for the six months ended
June 30, 2020 and 2019, 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 $1,034,290
and $1,347,529 for the six months
ended June 30, 2020 and 2019,
respectively.
Financial Conditions
As of June 30, 2020, the Company
had cash of $1,829,837, compared to
$3,642,521 at December 31, 2019. Total working capital was
$1,797,362 as of June 30, 2020, compared to working capital
$3,542,211 as of December 31, 2019.
Net cash used in operating activities for the six months ended
June 30, 2020 was $1,101,161, compared to $1,676,458 for the same period last year. Net
cash used in investing activities was $742,236 for the six months ended June 30, 2020, compared to $148,890 for the same period last year. Net cash
provided by financing activities was $41,250 for the six months ended June 30, 2020, compared to $6,682,673 for the same period of last year.
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 shares with a par
value of $0.001 per share.
There were 56,070,000 shares issued and 20,070,000 shares
outstanding as of June 30, 2020 and
December 31, 2019.
Recent Developments
Pursuant to the investment agreement dated July 21, 2020, the company paid 750,000 shares to
Tony Wayne Network Technology Co., Limited as compensation of a
Hong Kong and China based consulting program. There were
treasury stock of 36,000,000 shares at June
30, 2020 and December 31,
2019. The company cancelled the 36,000,000 treasury stock at
August 20, 2020. After the treasury
stock was cancelled, there were 20,820,000 shares issued and
outstanding as of October 15,
2020.
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, such as the ETN Counter Business System, the
PTN Private Fund Investment Management System, 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 2020, the company used
internally designed and built system with the US brokerage license
and the Cayman fund management qualification to form a series of
MOM funds, with the main goal of discovering small and medium-sized
institutional investors and helping them set up the fund to issue
securities fund products.
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,
2020
|
|
December 31,
2019
|
|
(UNAUDITED)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,829,837
|
|
$
|
3,642,521
|
Accounts receivable,
net
|
|
15,011
|
|
|
16,029
|
Other
receivable
|
|
-
|
|
|
78,624
|
Loan to
employee
|
|
169,503
|
|
|
172,013
|
Security deposits -
current
|
|
10,875
|
|
|
46,512
|
Prepaid expenses and
other current assets
|
|
376,701
|
|
|
392,011
|
|
|
|
|
|
|
Total Current
Assets
|
|
2,401,927
|
|
|
4,347,710
|
|
|
|
|
|
|
NON-CURRENT
ASSETS:
|
|
|
|
|
|
Security deposit -
noncurrent
|
|
604,047
|
|
|
605,588
|
Property and
equipment, net
|
|
130,385
|
|
|
132,016
|
Operating lease
right-of-use asset
|
|
767,159
|
|
|
979,885
|
Long-term
investment
|
|
928,199
|
|
|
143,346
|
|
|
|
|
|
|
Total Non-current
Assets
|
|
2,429,790
|
|
|
1,860,835
|
|
|
|
|
|
|
Total
Assets
|
$
|
4,831,717
|
|
$
|
6,208,545
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Deferred
revenue
|
$
|
18,137
|
|
$
|
63,246
|
Salary
payable
|
|
160,162
|
|
|
174,741
|
Accrued liabilities
and other payables
|
|
39,200
|
|
|
222,152
|
Due to related
parties
|
|
8,000
|
|
|
6,030
|
Operating lease
liabilities - current
|
|
379,066
|
|
|
339,330
|
|
|
|
|
|
|
Total Current
Liabilities
|
|
604,565
|
|
|
805,499
|
|
|
|
|
|
|
NON-CURRENT
LIABILITIES:
|
|
|
|
|
|
Operating lease
liabilities - noncurrent
|
|
465,530
|
|
|
648,334
|
Loan
payable
|
|
41,250
|
|
|
-
|
|
|
|
|
|
|
Total Non-current
Liabilities
|
|
506,780
|
|
|
648,334
|
|
|
|
|
|
|
Total
Liabilities
|
|
1,111,345
|
|
|
1,453,833
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
Common shares ($0.001
par value; 500,000,000 shares authorized; 56,070,000
shares issued and 20,070,000 shares outstanding at June 30,2020
and
December 31, 2019)
|
|
56,070
|
|
|
56,070
|
Additional paid-in
capital
|
|
11,229,289
|
|
|
11,229,339
|
Less: treasury stock,
at cost;
|
|
|
|
|
|
(36,000,000 shares at
June 30, 2020 and December 31, 2019)
|
|
(36,000)
|
|
|
(36,000)
|
Accumulated
deficit
|
|
(7,386,455)
|
|
|
(6,375,303)
|
Accumulated other
comprehensive loss
|
|
(142,532)
|
|
|
(119,394)
|
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
3,720,372
|
|
|
4,754,712
|
|
|
|
|
|
|
Total Liabilities and
Shareholders' Equity
|
$
|
4,831,717
|
|
$
|
6,208,545
|
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,
2020
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
REVENUE
|
$
|
329,070
|
|
$
|
177,543
|
|
|
|
|
|
|
COST OF
REVENUE
|
|
7,026
|
|
|
66,215
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
322,044
|
|
|
111,328
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Selling and
marketing
|
|
76,668
|
|
|
157,440
|
General and
administrative
|
|
|
|
|
|
Payroll and related
benefits
|
|
479,261
|
|
|
404,405
|
Professional
fees
|
|
403,300
|
|
|
472,638
|
Other general and
administrative
|
|
404,176
|
|
|
385,428
|
|
|
|
|
|
|
Total Operating
Expenses
|
|
1,363,405
|
|
|
1,419,911
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS
|
|
(1,041,361)
|
|
|
(1,308,583)
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
Interest
income
|
|
27,571
|
|
|
1,768
|
Other
income
|
|
25,204
|
|
|
-
|
Other
expenses
|
|
(721)
|
|
|
(114)
|
Foreign currency
transaction gain (loss)
|
|
(3,525)
|
|
|
3,764
|
Loss on equity method
investment
|
|
(18,320)
|
|
|
(23,776)
|
|
|
|
|
|
|
Total Other Income
(Expense)
|
|
30,209
|
|
|
(18,358)
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES
|
|
(1,011,152)
|
|
|
(1,326,941)
|
|
|
|
|
|
|
INCOME
TAXES
|
|
-
|
|
|
-
|
|
|
|
|
|
|
NET LOSS
|
$
|
(1,011,152)
|
|
$
|
(1,326,941)
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS:
|
|
|
|
|
|
NET LOSS
|
|
(1,011,152)
|
|
|
(1,326,941)
|
OTHER COMPREHENSIVE
LOSS
|
|
|
|
|
|
Foreign
currency translation adjustments
|
|
(23,138)
|
|
|
(20,588)
|
COMPREHENSIVE
LOSS
|
$
|
(1,034,290)
|
|
$
|
(1,347,529)
|
|
|
|
|
|
|
NET LOSS PER COMMON
SHARE
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.05)
|
|
$
|
(0.07)
|
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
Basic and
diluted
|
|
20,070,000
|
|
|
19,955,635
|
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,
2020
|
|
June 30,
2019
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net loss
|
$
|
(1,011,152)
|
|
$
|
(1,326,941)
|
Adjustments to
reconcile net loss from operations to net cash used in
operating
activities:
|
|
|
|
|
|
Depreciation
expense
|
|
10,338
|
|
|
10,315
|
Loss on equity method
investment
|
|
18,320
|
|
|
23,776
|
Noncash lease
expense
|
|
145,246
|
|
|
150,011
|
Loss on
acquisition
|
|
721
|
|
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Operating lease
liability
|
|
(75,003)
|
|
|
(157,631)
|
Accounts
Receivable
|
|
1,018
|
|
|
-
|
Security
deposit
|
|
35,194
|
|
|
(1,107)
|
Prepaid expenses and
other current assets
|
|
14,733
|
|
|
(104,903)
|
Deferred
revenue
|
|
(44,485)
|
|
|
(34,363)
|
Salary
payable
|
|
(12,456)
|
|
|
(73,471)
|
Accrued liabilities
and other payables
|
|
(183,636)
|
|
|
(162,144)
|
|
|
|
|
|
|
NET CASH USED IN
OPERATING ACTIVITIES
|
|
(1,101,162)
|
|
|
(1,676,458)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Collection of loan to
third party
|
|
78,002
|
|
|
-
|
Cash proceeds from
acquisition
|
|
279
|
|
|
-
|
Purchase of property
and equipment
|
|
(10,636)
|
|
|
(16,885)
|
Loan to
employee
|
|
-
|
|
|
(44,243)
|
Payment in equity
method investment
|
|
(809,881)
|
|
|
(87,762)
|
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
(742,236)
|
|
|
(148,890)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Cash proceeds from
long-term loan
|
|
41,250
|
|
|
-
|
Proceeds from
issuance of stocks
|
|
-
|
|
|
6,851,401
|
Repayments to related
parties
|
|
-
|
|
|
(168,728)
|
|
|
|
|
|
|
NET CASH PROVIDED BY
FINANCING ACTIVITIES
|
|
41,250
|
|
|
6,682,673
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH AND CASH EQUIVALENTS
|
|
(10,536)
|
|
|
(16,355)
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
(1,812,684)
|
|
|
4,840,970
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - beginning of period
|
|
3,642,521
|
|
|
93,625
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - end of period
|
$
|
1,829,837
|
|
$
|
4,934,595
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
Interest
|
$
|
-
|
|
$
|
-
|
Income
taxes
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
Remeasurement of the
lease liabilities and right-of-use assets due to lease
modification
|
$
|
29,904
|
|
$
|
-
|
Proceeds from
issuance of stocks deposited in escrow
|
$
|
-
|
|
$
|
500,000
|
Consideration of
acquisition payable to related party
|
$
|
1,000
|
|
$
|
-
|
View original
content:http://www.prnewswire.com/news-releases/mmtec-inc-announces-half-year-2020-unaudited-financial-results-301153084.html
SOURCE MMTEC, Inc.