UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November 2023

 

Commission File Number: 001-38766

  

MMTEC, INC.

(Translation of registrant’s name into English)

 

Room 2302, 23rd Floor
FWD Financial Center
308 Des Voeux Road Central
Sheung Wan, Hong Kong
Tel: +852 36908356

(Address of Principal Executive Office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F ☒        Form 40-F ☐

 

 

 

 

 

 

EXPLANATORY NOTE

 

This Report of Foreign Private Issuer on Form 6-K filed by MMtec, Inc. (together with our subsidiaries, unless the context indicates otherwise, “we,” “us,” “our,” or the “Company”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or the Company’s future financial performance. The Company has attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions, uncertainties and other factors may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. The information in this Report on Form 6-K is not intended to project future performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company does not guarantee future results, levels of activity, performance or achievements. The Company expectations are as of the date this Form 6-K is filed, and the Company does not intend to update any of the forward-looking statements after the date this Report on Form 6-K is filed to confirm these statements to actual results, unless required by law.

 

1

 

 

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL DATA

 

MMTEC, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

(UNAUDITED)

 

   As of 
  

June 30,

2023

  

December 31,
2022

 
   US$   US$ 
ASSETS        
CURRENT ASSETS        
Cash and cash equivalents  $2,004,307   $3,825,477 
Accounts receivable, net   2,364,950    295,683 
Loan receivable, net   676,643    4,620,824 
Security deposits - Current   7,984    8,274 
Short-term investment   266,513    - 
Prepaid expenses and other current assets   1,774,171    172,205 
Deferred offering cost   112,748    112,748 
           
Total current assets   7,207,316    9,035,211 
           
NON-CURRENT ASSETS:          
Security deposits - Non - current   136,723    140,746 
Property and equipment, net   205,738    184,423 
Deposit for business acquisition   -    1,000,000 
Operating lease right - of - use assets   844,778    1,055,127 
Intangible asset   5,224,439    - 
Goodwill   106,935,130    - 
Deferred Tax Assets - Non-current   70,681    - 
Other non - current assets   691,965    - 
           
Total non-current assets   114,109,454    2,380,296 
           
Total assets  $121,316,770   $11,415,507 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Salary payable   283,281    372,980 
Accrued liabilities and other payables   3,133,483    395,352 
Advance from customer   288,696    - 
Accrued interest   1,343,600    - 
Operating lease liabilities - Current   475,931    405,591 
           
Total current liabilities   5,524,991    1,173,923 
           
NON-CURRENT LIABILITIES:          
Accrued liabilities - Non-current   146,475    209,250 
Operating lease liabilities - Non-current   406,460    647,983 
Convertible bond   58,311,869    - 
           
Total non-current liabilities   58,864,804    857,233 
           
Total liabilities  $64,389,795   $2,031,156 
           
SHAREHOLDERS’ EQUITY:          
Common shares ($0.01 par value; 50,000,000 shares authorized; 99,145,041 and 5,145,041 shares issued and outstanding at June 30, 2023 and December 31, 2022)   991,451    51,451 
Additional paid-in capital   77,557,407    31,727,407 
Accumulated deficit   (36,630,402)   (22,253,030)
Accumulated other comprehensive loss   (206,665)   (141,477)
           
Total shareholders’ equity attributable to MMTEC, INC.   41,711,791    9,384,351 
           
Non- controlling interests   15,215,184    - 
           
Total shareholders’ equity   56,926,975    9,384,351 
           
Total liabilities and shareholders’ equity  $121,316,770   $11,415,507 

 

2

 

 

MMTEC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(IN U.S. DOLLARS)

(UNAUDITED)

 

   For the six months ended
June 30,
2023
   For the six months ended
June 30,
2022
 
   US$   US$ 
REVENUES  $2,856,449   $733,400 
           
COST OF REVENUES   2,729,615    110,490 
           
GROSS PROFIT   126,834    622,910 
           
OPERATING EXPENSES:          
Selling and marketing   1,008,732    887,173 
General and administrative          
Payroll and related benefits   1,191,171    1,022,931 
Professional fees   519,200    696,556 
Other general and administrative expenses   497,530    943,867 
           
Total Operating Expenses   3,216,633    3,550,527 
           
LOSS FROM OPERATIONS   (3,089,799)   (2,927,617)
           
OTHER INCOME (EXPENSE)          
Interest income   61,959    19,663 
Interest expense   (11,425,657)   - 
Other income   12,090    2,576 
Foreign currency transaction (loss)/gain   (1,922)   18,177 
           
Total Other Income (Expense)   (11,353,530)   40,416 
           
LOSS BEFORE INCOME TAXES   (14,443,329)   (2,887,201)
           
INCOME TAXES   (1,737)   - 
           
NET LOSS   (14,445,066)   (2,887,201)
           
Less: Net loss attributable to non-controlling interest   (67,694)   - 
           
NET LOSS ATTRIBUTABLE TO MMTEC, INC.  $(14,377,372)  $(2,887,201)
           
COMPREHENSIVE LOSS:          
NET LOSS   (14,445,066)   (2,887,201)
OTHER COMPREHENSIVE INCOME (LOSS)          
Foreign currency translation adjustments   (80,926)   (55,780)
           
TOTAL COMPREHENSIVE LOSS   (14,525,992)   (2,942,981)
           
Less: Comprehensive loss attributable to non-controlling interests   (83,432)   - 
           
COMPREHENSIVE LOSS ATTRIBUTABLE TO MMTEC, INC.  $(14,442,560)  $(2,942,981)
           
NET LOSS PER COMMON SHARE          
Basic  $(0.46)  $(0.92)
Diluted  $(0.30)  $(0.92)
           
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:          
Basic   31,154,116    3,137,001 
Diluted   83,411,491    3,137,001 

 

3

 

 

MMTEC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN U.S. DOLLARS)

(UNAUDITED)

 

  

For the six months ended
June 30,
2023

  

For the six months ended
June 30,
2022

 
   US$    US$ 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(14,445,066)  $(2,887,201)
Adjustments to reconcile net loss from operations to net cash used in operating activities:          
Depreciation expense   21,969    39,024 
Allowance for bad debts   (204)   - 
Gain on short-term investment   (534)     
Non-cash lease expense   204,510    163,218 
Foreign currency transaction loss (gain)   (3,326)   (18,177)
Deferred taxes expense   111    - 
Imputed interest expense   11,425,469    - 
           
Change in operating assets and liabilities:          
Operating lease liabilities   (187,244)   (193,925)
Accounts receivable   (147,016)   (278,617)
Accounts payable   86,202    - 
Security deposits   211    (41,604)
Prepaid expenses and other current assets   (500,283)   (1,115,439)
Advance from customers   291,658    (121,382)
Salary payable   (140,660)   (37,390)
Accrued liabilities and other payables   376,638    338,252 
           
NET CASH USED IN OPERATING ACTIVITIES:   (3,017,565)   (4,153,241)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Proceeds from disposal  of property and equipment   7,903    - 
Purchase of property and equipment   -    (6,036)
Loan repayment from to third parties   293,945    - 
Cash proceeds from acquisition   916,840    - 
Deposit for business acquisition   1,000,000    - 
Long-term investment in equity   (89,000,000)   - 
           
NET CASH USED IN INVESTING ACTIVITIES   (86,781,312)   (6,036)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of convertible bond   88,000,000    - 
           
NET CASH PROVIDED BY FINANCING ACTIVITIES   88,000,000    - 
           
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS   (22,293)   (23,890)
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (1,821,170)   (4,183,167)
           
CASH AND CASH EQUIVALENTS - Beginning of period   3,825,477    11,206,220 
           
CASH AND CASH EQUIVALENTS - End of period  $2,004,307   $7,023,053 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid for:          
Interest  $(188)  $- 
Income taxes  $(1,737)  $- 
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Acquisition by issuing convertible promissory note  $7,000,000   $- 
Conversion of bond to equity  $46,770,000   $- 
Remeasurement of the lease liabilities and right-of-use assets due to lease modification  $-   $830,860 

 

4

 

 

SUBMITTED HEREWITH

 

Exhibits:

 

99.1   News Release dated November 17, 2023

 

5

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

  MMTEC, INC.
     
  By: /s/ Min Kong
    Min Kong, Chief Financial Officer

 

Date: November 17, 2023

 

 

6

 

Exhibit 99.1

 

MMTEC, Inc. Announces Half Year 2023 Unaudited Financial Results

 

First Half Year of 2023 Financial Highlights

 

Revenues increased by 289.48% from approximately $0.73 million to approximately $2.86 million as a result of the acquisition of Alpha Mind Technology Limited, an insurance agency and insurance technology company (“Alpha Mind”), during the six months ended June 30, 2023.

 

Gross profit decreased by 79.64% to approximately $0.13 million as compared to approximately $0.62 million for the same period in 2022, while the gross profit margin was 4.44%, as compared to 84.93% for the same period in 2022.  Alpha Mind has a relatively lower gross profit margin, since it mainly collects commission from selling insurance products as compensation for its agency services.

 

Loss from operations was approximately $3.09 million as compared to approximately $2.93 million for the same period in 2022. The increase was primarily attributable to the decrease in gross profit.

 

Net loss was approximately $14.45 million as compared to net loss of approximately $2.89 million for the same period of 2022. The increase in net loss is mainly attributable to the increase in interest expense of approximately $11.42 million from issuing convertible promissory notes.

 

Loss per share on a basic and a fully diluted basis were $0.46 and $0.30, respectively, as compared to loss per share on a basic and a fully diluted basis of $0.92 for the same period in 2022.  

 

Xiangdong Wen, the Company’s Chief Executive Officer and Chairman, commented, “We completed the acquisition of Alpha Mind Technology Limited during the first half of 2023, which expanded the scope of our business into insurance agency industry. Our revenue increased to approximately $2.86 million for the first half of 2023 and further growth is expected for the remainder of 2023. In addition, we expect to continue to invest in our support teams for both our investment banking business and our insurance agency business.”

 

Mr. Wen continued, “The Company will continue to promote cooperative relationships with Chinese companies listed in the US and provide them with one-stop and high-quality investment banking services. In addition, we will actively expand the business scope to overseas market and set up overseas offices to help small and medium-sized companies in Europe and other Asian countries to provide initial listing, financing, mergers and acquisitions, and financial advisory services, helping them integrate into capital markets more efficiently as well as continuously enhance our competitiveness.”

 

Operating Results for Six Months Ended June 30, 2023

 

Revenues

 

The following tables illustrate the Company’s revenue by revenue type:

 

   For the Six Months Ended
June 30,
 
   2023   2022 
   US$   US$ 
Insurance agency services   2,794,364    - 
Placement agent services   37,578    - 
Market data services   -    71,928 
Software sales   24,507    646,052 
Fund management services   -    12,145 
Commissions   -    3,275 
Total revenues   2,856,449    733,400 

  

Cost of Revenues

 

Cost of revenue consists primarily of commissions paid to distribution channels, internal labor costs and related benefits, and other overhead costs that are directly attributable to services provided.

 

Cost of revenues increased by approximately $2.62 million, or 2,370.46%, to approximately $2.73 million for the six months ended June 30, 2023 from $110,490 for the same period last year. The increase in cost of revenues is directly linked to the increase of insurance agency service revenues.

 

 

 

 

Gross Profit and Gross Margin

 

Gross profit was $126,834 for the six months ended June 30, 2023, representing gross margin of 4.44%, as compared to 84.93% for the same period in 2022. The decrease in gross profit margin is primarily attributed to our insurance agency business, which mainly collects commissions from selling insurance products as compensation for its agency services.

 

Operating Expenses

 

During the six months ended June 30, 2023 and 2022, 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 increased by $121,559, or 13.70%, to approximately $1.01 million for the six months ended June 30, 2022 from $887,173 for the same period last year.

 

Payroll and Related Benefits

 

Payroll and related benefits totaled approximately $1.19 million for the six months ended June 30, 2023, as compared to approximately $1.02 million for the six months ended June 30, 2022, an increase of $168,240.

 

Professional Fees

 

For the six months ended June 30, 2023 and 2022, professional fees primarily consisted of audit fees, legal service fees, financial consulting fees and other fees associated with being a public company. Professional fees totaled $519,200 for the six months ended June 30, 2023, as compared to $696,556 for the six months ended June 30, 2022, a decrease of $177,356.

 

Other General and Administrative Expenses

 

For the six months ended June 30, 2023 and 2022, other general and administrative expenses were $497,530 and $943,867, respectively. The decrease in other general and administrative expense was mainly attributable to the decrease of $450,000 in litigation loss contingency, which represented an estimated fine of $450,000 from a FINRA investigation in 2022.

 

Loss from Operations

 

For six months ended June 30, 2023, loss from operations were approximately $3.09 million as compared to loss from operations of approximately $2.93 million for the six months ended June 30, 2022, an increase of $162,182, or 5.54%, which was mainly attributable to the decrease in gross profit and increase in selling and marketing costs, payroll and related benefits.

 

Other Income (Expense)

 

Other income (expense) includes interest income from bank deposits, interest expense from the issuance of convertible promissory notes, other income, and foreign currency transaction gain (loss). Other expense totaled approximately $11.35 million for six months ended June 30, 2023, as compared to other income of $40,416 for six months ended June 30, 2022, a change of $11.39 million which was mainly attributable to the increase in interest expense from the Company’s issuance of approximately $11.43 million in convertible promissory notes.

 

Income Taxes

 

Income tax  was $1,737 for the six months ended June 30, 2023 which was attributable from the insurance agency business acquired by the Company, while income tax amounted to nil for the six months ended June 30, 2022.

 

2

 

 

Net Loss

 

As a result of the factors described above, our net loss was approximately $14.44 million, or $0.46 per basic share and $0.30 per diluted share, for the six months ended June 30, 2023. Our net loss was approximately $2.89 million, or $0.92 per share (basic and diluted), for the six months ended June 30, 2022.

 

Net Loss attributable to MMTEC, Inc.

 

After deducting non-controlling interests of $67,694, net loss attribute to our holding company, MMTEC, Inc., was approximately $14.37 million for the six months ended June 30, 2023.

 

Foreign Currency Translation Adjustment

 

Our reporting currency is the U.S. dollar. The functional currency of MMTEC INC., MM Future Technology Limited, MM Fund SPC, HC Securities (HK) Limited, MMBD Trading Limited, MMBD Investment Advisory Company Limited, Fundex SPC, MM Global Securities, INC, Alpha Mind Technology Limited (BVI) is the U.S. dollar. The functional currency of Alpha Mind Technology Limited (HK) is the Hong Kong dollar. The functional currency of Gujia (Beijing) Technology Co., Ltd, Jiachuang Yingan (Beijing) Information & Technology Co., Ltd, Huaming Insurance Agency Co., Ltd and Huaming Yunbao (Tianjin) Technology Co., Ltd is the Chinese Renminbi (“RMB”). The financial statements of the Company’s subsidiaries whose functional currency is the RMB and Hong Kong dollar 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 $80,926 and a foreign currency translation loss of $55,780 for the six months ended June 30, 2023 and 2022, 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 approximately $14.53 million and $2.94 million for the six months ended June 30, 2023 and 2022, respectively.

 

Financial Condition

 

As of June 30, 2023, the Company had cash of approximately $2.0 million, compared to approximately $3.83 million as of December 31, 2022. Total working capital was $1.75 million as of June 30, 2023, compared to working capital of $7.86 million as of December 31, 2022.

 

Net cash used in operating activities for the six months ended June 30, 2023 was approximately $3.02 million, compared to $4.15 million for the same period last year. Net cash used in investing activities was approximately $86.78 million for the six months ended June 30, 2023, compared to $6,036 for the same period last year. Net cash provided by financing activities was $88.0 million for the six months ended June 30, 2023, compared to $nil 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 issued an unsecured senior convertible promissory note of $40.0 million to a non-U.S. investor on February 22, 2023. On February 24, 2023, the investor converted all outstanding balance of notes into ordinary shares, par value $0.01 per share, at conversion price of $0.05 per share, which represents 80,000,000 ordinary shares.

 

The Company issued a senior convertible promissory note of $70.0 million to an investor on March 31, 2023. On May 11, 2023, the investor converted $2.82 million of outstanding balance of the note into ordinary shares, par value $0.01 per share, at conversion price of $0.705 per share, which represents 4,000,000 ordinary shares.

 

The Company issued a senior convertible promissory note of $7.0 million to the sellers of Alpha Mind Technology Limited on June 7, 2023. On June 14, 2023, the sellers converted $3,950,000 of outstanding balance of the note into ordinary shares, par value $0.01 per share, at a conversion price of $0.395 per share, which represents 10,000,000 ordinary shares.

 

As a result, there were 99,145,041 common shares issued and outstanding as of June 30, 2023.

 

3

 

 

Legal Proceedings

 

In the normal course of business, MM Global Securities, Inc. (“MM Global”) is engaged in various trading and brokerage activities on a principal and agency basis through a clearing broker. As a regulated FINRA broker-dealer MM Global is subject to regulatory trading inquiries and investigations to determine whether any violations of federal securities or FINRA rules may have occurred. As such, MM Global has responded to FINRA inquires. MM Global submitted a Letter of Acceptance, Waiver, and Consent for the purpose of proposing a settlement of the alleged rule violations on September 9, 2022. Without admitting or denying the findings by FINRA related to Case Number 2019062623, the Company was censured and fined $450,000. Two individuals’ registration capacities were suspended for 45 days, fined $20,000 and $5,000 respectively. The Company elected to pay the fine via a 36 months’ installment plan with $38,250 installment fee. As of June 30, 2023 the Company has total unpaid balance of $272,025, recorded the current portion as “Accrued liabilities and other payables” and non-current portion as “Accrued Liabilities, Non-current” in consolidation financial statement.

 

Other than MM Global, we are currently not involved in any legal proceedings; nor are we aware of any claims that could have a material adverse effect on our business, financial condition, results of operations or cash flows.

 

Recent Developments

 

On May 16, 2023, the Company entered into an Equity Acquisition Agreement (the “Purchase Agreement”) with Alfa Crest Investment Limited, a British Virgin Islands company (“Alfa Crest”), CapitoLabs Limited, a British Virgin Islands company (“CapitoLabs”, and together with Alfa Crest, the “Sellers”) and Alpha Mind Technology Limited, a British Virgin Islands company (“Target” or “Alpha Mind”). Pursuant to the Purchase Agreement, the Sellers agreed to sell and the Company agreed to purchase, the Sellers’ shares of Target’s issued and outstanding ordinary shares, which represent an 85% ownership stake in Target, for aggregate purchase price of $99,650,000 (the “Purchase Price”). The Purchase Price was paid as follows: (a) $1.0 million was paid by the Company to the Sellers as a good faith deposit on May 8, 2023, (b) the Company  paid the Sellers an aggregate of $91,650,000 in cash at closing, and (c) the Company paid the remaining $7.0 million of the Purchase Price to the Sellers in the form of a convertible promissory note.

 

The transactions contemplated in the Purchase Agreement closed on June 7, 2023. In accordance with the Purchase Agreement, the $1.0 million good faith deposit previously made by the Company was credited towards the Purchase Price. In addition, at closing, the Company paid the Sellers an aggregate of $91,650,000 in cash, and issued to the Sellers a senior convertible promissory note (the “Note”) for the remaining $7.0 million of the Purchase Price. The note accrues interest at 1% per annum and matures 24 months following the effective date. The note is convertible at any time and the conversion price will be calculated with a discount of fifty-four percent (54%) to the lowest closing price of the last twenty (20) trading days immediately prior to the date of the conversion notice.

 

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 Hong Kong, China, we mainly focus on investment banking and asset management, providing customers with one-stop and all-round financial services. In addition to traditional incubation and investment in domestic and foreign companies listed in the United States, we also launched the HiFund platform to attract global institutional and individual investors to invest in the most competitive Chinese assets.

 

More information about the Company can be found at: www.haisc.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.

 

4

 

 

MMTEC, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

(UNAUDITED)

 

   As of 
  

June 30,

2023

   December 31,
2022
 
   US$   US$ 
ASSETS        
CURRENT ASSETS        
Cash and cash equivalents  $2,004,307   $3,825,477 
Accounts receivable, net   2,364,950    295,683 
Loan receivable, net   676,643    4,620,824 
Security deposits - Current   7,984    8,274 
Short-term investment   266,513    - 
Prepaid expenses and other current assets   1,774,171    172,205 
Deferred offering cost   112,748    112,748 
           
Total current assets   7,207,316    9,035,211 
           
NON-CURRENT ASSETS:          
Security deposits - Non-current   136,723    140,746 
Property and equipment, net   205,738    184,423 
Deposit for business acquisition   -    1,000,000 
Operating lease right -of - use assets   844,778    1,055,127 
Intangible asset   5,224,439    - 
Goodwill   106,935,130    - 
Deferred Tax Assets - Non-current   70,681    - 
Other  non-current assets   691,965    - 
           
Total non-current assets   114,109,454    2,380,296 
           
Total assets  $121,316,770   $11,415,507 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Salary payable   283,281    372,980 
Accrued liabilities and other payables   3,133,483    395,352 
Advance from customer   288,696    - 
Accrued interest   1,343,600    - 
Operating lease liabilities - Current   475,931    405,591 
           
Total current liabilities   5,524,991    1,173,923 
           
NON-CURRENT LIABILITIES:          
Accrued liabilities - Non-current   146,475    209,250 
Operating lease liabilities - Non-current   406,460    647,983 
Convertible bond   58,311,869    - 
           
Total non-current liabilities   58,864,804    857,233 
           
Total liabilities  $64,389,795   $2,031,156 
           
SHAREHOLDERS’ EQUITY:          
Common shares ($0.01 par value; 50,000,000 shares authorized; 99,145,041 and 5,145,041 shares issued and outstanding at June 30, 2023 and December 31, 2022)   991,451    51,451 
Additional paid-in capital   77,557,407    31,727,407 
Accumulated deficit   (36,630,402)   (22,253,030)
Accumulated other comprehensive loss   (206,665)   (141,477)
           
Total shareholders’ equity attributable to MMTEC, INC.   41,711,791    9,384,351 
           
Non-controlling  interests   15,215,184    - 
           
Total shareholders’ equity   56,926,975    9,384,351 
           
Total liabilities and shareholders’ equity  $121,316,770   $11,415,507 

 

5

 

 

MMTEC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(IN U.S. DOLLARS)

(UNAUDITED)

 

  

For the six months ended
June 30,
2023

  

For the six months ended
June 30,
2022

 
   US$   US$ 
REVENUES  $2,856,449   $733,400 
           
COST OF REVENUES   2,729,615    110,490 
           
GROSS PROFIT   126,834    622,910 
           
OPERATING EXPENSES:          
Selling and marketing   1,008,732    887,173 
General and administrative          
Payroll and related benefits   1,191,171    1,022,931 
Professional fees   519,200    696,556 
Other general and administrative expenses   497,530    943,867 
           
Total Operating Expenses   3,216,633    3,550,527 
           
LOSS FROM OPERATIONS   (3,089,799)   (2,927,617)
           
OTHER INCOME (EXPENSE)          
Interest income   61,959    19,663 
Interest expense   (11,425,657)   - 
Other income   12,090    2,576 
Foreign currency transaction (loss)/gain   (1,922)   18,177 
           
Total Other Income (Expense)   (11,353,530)   40,416 
           
LOSS BEFORE INCOME TAXES   (14,443,329)   (2,887,201)
           
INCOME TAXES   (1,737)   - 
           
NET LOSS   (14,445,066)   (2,887,201)
           
Less: Net loss attributable to non-controlling interest   (67,694)   - 
           
NET LOSS ATTRIBUTABLE TO MMTEC, INC.  $(14,377,372)  $(2,887,201)
           
COMPREHENSIVE LOSS:          
NET LOSS   (14,445,066)   (2,887,201)
OTHER COMPREHENSIVE INCOME (LOSS)          
Foreign currency translation adjustments   (80,926)   (55,780)
           
TOTAL COMPREHENSIVE LOSS   (14,525,992)   (2,942,981)
           
Less: Comprehensive loss attributable to non-controlling interests   (83,432)   - 
           
COMPREHENSIVE LOSS ATTRIBUTABLE TO MMTEC, INC.  $(14,442,560)  $(2,942,981)
           
NET LOSS PER COMMON SHARE          
Basic  $(0.46)  $(0.92)
Diluted  $(0.30)  $(0.92)
           
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:          
Basic   31,154,116    3,137,001 
Diluted   83,411,491    3,137,001 

  

6

 

 

MMTEC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY  

(IN U.S. DOLLARS)

(UNAUDITED)

 

   Common Shares*   Additional       Accumulated Other   Total  
   Number of
Shares
   Amount   Paid-in
Capital 
   Accumulated
Deficit
   Comprehensive
Loss
   Shareholders’
Equity
 
       US$   US$   US$   US$   US$ 
Balance, December 31, 2021   3,137,001   $31,370   $29,884,600   $(16,607,654)  $43,408   $13,351,724 
Net loss for the six months ended June 30, 2022   -    -    -    (2,887,201)   -    (2,887,201)
Foreign currency translation adjustment   -    -    -    -    (55,780)   (55,780)
Balance, June 30, 2022   3,137,001   $31,370   $29,884,600   $(19,494,855)  $(12,372)  $10,408,743 

 

*After giving effect to the reverse stock split effected on July 13, 2022.

 

   Common Shares   Additional      Accumulated Other   Non-   Total 
   Number of
Shares
   Amount   Paid-in
Capital
   Accumulated
Deficit
   Comprehensive
Loss
   controlling
Interests
  

Shareholders’
Equity

 
       US$   US$   US$   US$   US$   US$ 
Balance, December 31, 2022   5,145,041   $51,451   $31,727,407   $(22,253,030)  $(141,477)   -   $9,384,351 
Acquisition of additional non-controlling interest   -    -    -    -    -    15,298,616    15,298,616 
Conversion of bond to equity   94,000,000    940,000    45,830,000    -    -    -    46,770,000 
Net loss attributable to MMTEC, INC. for the six months ended June 30, 2023   -    -    -    (14,377,372)   -    -    (14,377,372)
Net loss attributable to non-controlling interests   -    -    -    -    -    (67,694)   (67,694)
Foreign currency translation adjustment   -    -    -    -    (65,188)   (15,738)   (80,926)
Balance, June 30, 2023   99,145,041   $991,451   $77,557,407   $(36,630,402)  $(206,665)  $15,215,184   $56,926,975 

 

7

 

 

MMTEC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN U.S. DOLLARS)

(UNAUDITED)

 

  

For the six months ended
June 30,
2023

  

For the six months ended
June 30,
2022

 
   US$    US$ 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(14,445,066)  $(2,887,201)
Adjustments to reconcile net loss from operations to net cash used in operating activities:          
Depreciation expense   21,969    39,024 
Allowance for bad debts   (204)   - 
Gain on short-term investment   (534)     
Non-cash lease expense   204,510    163,218 
Foreign currency transaction loss (gain)   (3,326)   (18,177)
Deferred taxes expense   111    - 
Imputed interest expense   11,425,469    - 
           
Change in operating assets and liabilities:          
Operating lease liabilities   (187,244)   (193,925)
Accounts receivable   (147,016)   (278,617)
Accounts payable   86,202    - 
Security deposits   211    (41,604)
Prepaid expenses and other current assets   (500,283)   (1,115,439)
Advance from customers   291,658    (121,382)
Salary payable   (140,660)   (37,390)
Accrued liabilities and other payables   376,638    338,252 
           
NET CASH USED IN OPERATING ACTIVITIES:   (3,017,565)   (4,153,241)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Proceeds from disposal of property and equipment   7,903    - 
Purchase of property and equipment   -    (6,036)
Loan repayment from to third parties   293,945    - 
Cash proceeds from acquisition   916,840    - 
Deposit for business acquisition   1,000,000    - 
Long-term investment in equity   (89,000,000)   - 
           
NET CASH USED IN INVESTING ACTIVITIES   (86,781,312)   (6,036)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of convertible bond   88,000,000    - 
           
NET CASH PROVIDED BY FINANCING ACTIVITIES   88,000,000    - 
           
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS   (22,293)   (23,890)
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (1,821,170)   (4,183,167)
           
CASH AND CASH EQUIVALENTS - Beginning of period   3,825,477    11,206,220 
           
CASH AND CASH EQUIVALENTS - End of period  $2,004,307   $7,023,053 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid for:          
Interest  $(188)  $- 
Income taxes  $(1,737)  $- 
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Acquisition by issuing convertible promissory note  $7,000,000   $- 
Conversion of bond to equity  $46,770,000   $- 
Remeasurement of the lease liabilities and right-of-use assets due to lease modification  $-   $830,860 

 

8

 


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