BEIJING, April 24, 2019 /PRNewswire/ -- MMTEC, Inc.
(NasdaqCM: MTC) ("MMTech" or the "Company") a China based technology company that provides
access to the U.S. financial markets announced its financial
results for the year ended December 31,
2018.
Comparison of Results of Operations for the Years Ended
December 31, 2018 and 2017
Revenue. MMTech
generated revenue commencing in August
2018. For the year ended December 31,
2018, MMTech had revenue
from performing professional services for customer of $26,882. MMTech
did not generate any revenue for the year ended December 31, 2017.
Cost of Revenue. Cost of revenue includes the cost
of internal labor and related benefits, and other overhead costs.
For the year ended December 31, 2018,
cost of revenue was $16,308. Since
MMTech started generating revenue
in August 2018, MMTech had neither revenue nor cost of
revenue in the year ended December 31,
2017.
Gross Profit and Gross Margin. Gross profit was $10,574 for the year ended December 31, 2018, representing gross margin of
39.3%.
Operating Expenses. During the years ended December 31, 2018, and 2017, operating expenses included
advertising and marketing, payroll and related benefits,
professional fees, and other general and administrative
expenses.
Selling and Marketing. Advertising and marketing
totaled $171,016 for the year ended
December 31, 2018, as compared to
$0 for the year ended December 31, 2017, an increase of $171,016 or 100.0%. During the year ended
December 31, 2018, MMTech incurred advertising and marketing
costs to enhance our visibility.
Payroll and Related Benefits. Payroll and related
benefits totaled $893,656 for the
year ended December 31, 2018, as
compared to $702,989 for the year
ended December 31, 2017, an increase
of $190,667 or 27.1%. The increase
was primarily attributable to the increase in staff resulting
from business expansion.
Professional Fees. For the year ended December 31, 2018, professional fees primarily
consisted of audit fees, legal service fees, financial consulting
fees, and other fees associated with initial public offering
process and being a public company. MMTech did not incur these fees in the year
ended December 31,
2017. Professional fees totaled $831,821 for the year ended December 31, 2018, as compared to $37,393 for the year ended December 31, 2017, an increase of $794,428 or 2,124.5%.
The significant increase was primarily attributable to an
increase in audit fee of approximately $246,000, an increase in legal service fee of
approximately $311,000, an increase
in financial consulting fee of approximately $50,000 and an increase in other miscellaneous
items of approximately $187,000,
mainly related to the work on our January
2019 initial public offering.
Other General and Administrative Expenses.
For the years ended December 31,
2018, and 2017, other
general and administrative expenses consisted of the following:
Rent and related utilities. For the year ended
December 31, 2018, office rent and
related utilities increased by $175,271, or 212.8%, as compared to the year
ended December 31, 2017, from $82,359
to $275,630. The increase was
primarily attributable to the increase in office space resulting from business expansion.
NASDAQ application and listing fees. For the year ended
December 31, 2018, MMTech incurred NASDAQ application and
listing fees of $75,000 and MMTech did not have corresponding expense in
the year ended December 31, 2017.
Other. Other general and administrative expenses were
primarily comprised of office supplies, internet service fee, and
depreciation. For the year ended December
31, 2018, other general and administrative expenses
increased by $24,879, or 44.7%, as
compared to the year ended December 31,
2017, mainly due to business
expansion from $178,218 to
$441,621.
Loss from Operations. As a result of the foregoing,
for the year ended December 31, 2018,
loss from operations amounted to $2,327,540, as compared to $918,600 for the year ended December 31, 2017, an increase of $1,408,940, or 153.4%.
Other Income (Expense). Other income (expense) mainly
includes interest income from bank deposits, other miscellaneous
expense, foreign currency transaction gain, and loss in equity
method investment. Other expense, net, totaled $21,462 for the year ended December 31, 2018, as compared to $598 for the year ended December 31, 2017, a
change of $20,864, which was mainly
attributable to an increase in loss in equity method investment of
approximately $62,000, offset by
an increase in foreign currency transaction gain of approximately
$41,000.
Income Taxes. MMTech did
not have any income taxes expense for the years ended December 31, 2018, and 2017 since MMTech did not generate any taxable income
in these two fiscal years.
Net Loss. As a result of the factors described
above, net loss was
$2,349,002, or $0.06 per share (basic and diluted), for the year
ended December 31, 2018. Net
loss was $919,198, or $0.02 per share (basic and diluted), for the year
ended December 31, 2017.
Foreign Currency Translation Adjustment. MMTech's reporting currency is the U.S.
dollar. The functional currency of our parent company, MMTEC, MM
Future, MM Fund, MM Capital and MM SPC, is the U.S. dollar and
the functional currency of Gujia and Meimei Zhengtong, 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 $50,586 and a foreign currency translation gain
of $39,610 for the years ended
December 31, 2018, and 2017, respectively. This non-cash
loss had the effect of increasing our reported comprehensive
loss.
As a result of our foreign currency translation adjustment,
MMTech had comprehensive loss of
$2,399,588 and $879,588 for the years ended December 31,
2018, and 2017, respectively.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to
support its current and future operations, satisfy its obligations
and otherwise operate on an ongoing basis. At December 31, 2018, and 2017, MMTech had cash balance of approximately
$94,000 and $238,000, respectively. Most of these funds are
kept in financial institutions located in China.
Working capital (deficit). The following sets forth a
summary of changes in working
capital from December 31,
2017, to December 31, 2018. Working capital deficit increased by
$725,720 to working capital deficit
of $476,737 at December 31, 2018, from working capital of $249,007 at December
31, 2017. The increase in working capital deficit was
primarily attributable to a decrease in cash and cash equivalents
of approximately $144,000, an increase in deferred revenue of
approximately $79,000, an increase in
salary payable of approximately $83,000, an increase in accrued liabilities
and other payables of approximately $283,000, an increase in due to related parties
of approximately $240,000, offset by
an increase in security deposit - current portion of
approximately $50,000, and an
increase in prepaid expenses and other current assets of
approximately $61,000.
Cash Flows for the Year Ended December
31, 2018 Compared to the Year Ended December 31,
2017
Cash Flows. The following summarizes the key components
of cash flows for the year
ended December 31, 2018, compared to the year ended December 31, 2017. Net cash flow used in
operating activities for the year ended December 31, 2018, was $1,870,353, which primarily
reflected net loss of
approximately $2,349,000, and the
changes in operating assets and liabilities primarily consisting of
an increase in prepaid expenses and other current assets of
approximately $63,000, an increase in
security deposits of approximately $14,000, and an increase of prepaid rent of
approximately $17,000, offset by an
increase in deferred revenue of approximately $82,000, an increase in salary payable of
approximately $92,000 and an increase
in accrued liabilities and other payables of approximately
$310,000, and the add-back of
non-cash items consisting of depreciation of approximately
$27,000 and loss in equity method
investment of approximately $62,000.
Net cash flow used in operating activities for the year
ended December 31, 2017, was $961,234, which primarily reflected a net loss of approximately $919,000, and the changes in operating assets and
liabilities primarily consisting of an increase in security deposit
of approximately $26,000, and an
increase in prepaid expenses and other current assets of
approximately $57,000, offset by an
increase in salary payable of approximately $17,000 and the add-back of non-cash items
consisting of depreciation of approximately $21,000 and bad debt expense of approximately
$4,000.
Net cash flow used in investing activities was
$66,313 for the year ended
December 31, 2018, as compared to net cash flow provided by
investing activities of $385,391 for
the year ended December 31, 2017.
During the year ended December 31,
2018, MMTech made payments
for purchase of property and equipment of approximately
$24,000, and made payments in equity
method investment of approximately $42,000. During the year ended December 31, 2017, MMTech received cash proceeds from repayment
of advances to related parties of approximately $392,000, offset by payments made for purchase of
property and equipment of approximately $6,000.
Net cash flow provided by financing activities was
$1,848,894 for the year ended
December 31, 2018, as compared to $66,649 for the year ended December 31, 2017. During the year ended
December 31, 2018, MMTech received proceeds from issuance of
common shares of approximately $1,661,000, received proceeds from shareholders'
contribution of approximately $5,000,
and received advances from related parties of approximately
$206,000 in funding operations, offset by repayments made
to related parties of approximately $24,000. During the year ended December 31,
2017, we received proceeds from shareholders' contribution
of approximately $67,000 in funding
our operations.
Initial Public Offering
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
$6,478,801 after deducting
underwriting discounts and commissions and other offering expenses.
Out of the $6.5 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
$7,472,401 from the issuance of
2,070,000 shares of common stock in January
2019.
MMTech has earmarked and has been using the proceeds of the initial
public offering as follows: approximately $3.13 million for research and development and
additional hiring, approximately
$1.86 million for sales and marketing
and a balance of approximately $2.48
million for additional working capital.
ABOUT MMTEC, INC.
Headquartered in Beijing,
China, our Company was founded on January 4, 2018. We have developed and deployed 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. For
additional information about the Company please refer to its
corporate website at http://www.51mm.com.
FORWARD-LOOKING STATEMENTS
This press release may contain certain "forward-looking
statements" relating to the business of MMTEC, Inc. and its
subsidiary companies. All statements other than statements of
historical fact included herein are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding the Company's ability to
meet its projected output for the term of the supply contract; the
general ability of the Company to achieve its commercial
objectives; the business strategy, plans and objectives of the
Company and its subsidiaries; and any other statements of
non-historical information. These forward-looking statements are
often identified by the use of forward-looking terminology such as
"believes," "expects" or similar expressions, involve known and
unknown risks and uncertainties. Although the Company believes that
the expectations reflected in these forward-looking statements are
reasonable, they do involve assumptions, risks and uncertainties,
and these expectations may prove to be incorrect. Investors should
not place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. The Company's
actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of
factors, including those discussed in the Company's periodic
reports that are filed with the Securities and Exchange Commission
and available on its website at http://www.sec.gov. All
forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by
these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking
statements.
For more information please contact:
China Investor Relations:
Qiong Yu
E-Mail: yq@xgujia.com
Tel: +86-10-5617-2312
View original
content:http://www.prnewswire.com/news-releases/mmtec-inc-announces-2018-year-end-financial-results-300837390.html
SOURCE MMTEC, Inc.