MMTEC, Inc. Announces Half Year 2021 Unaudited Financial Results
MMTEC, Inc. (NASDAQ: MTC) announced a revenue increase of 54.09% to $507,048 for the six months ended June 30, 2021, driven by growth in commission fees and market data services. However, costs surged by 852.29% to $66,908, impacting gross profit, which rose 36.67% to $440,140 but saw the gross margin decline to 86.80%. The company reported a net loss of $2,367,612, or $0.10 per share, reflecting increased operating expenses. Future plans include applying for a Hong Kong securities broker license while gradually reducing retail operations.
- Revenue increased by 54.09% to $507,048 driven by higher commissions and market data service fees.
- Gross profit rose by 36.67% to $440,140, maintaining a high gross profit margin of 86.80%.
- Cash position improved significantly to $14,603,601 from $1,425,926 at the end of 2020.
- Net loss increased to $2,367,612 compared to $1,011,152 in the prior year, indicating escalating financial challenges.
- Operating loss grew by 76.24% to $1,835,262 due to rising expenses in marketing, payroll, and professional fees.
- Cost of revenue surged by 852.29%, significantly impacting overall profitability.
BEIJING, Sept. 30, 2021 /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, 2021.
First Half 2021 Summary
- Revenues increased by
54.09% from$329,070 to$507,048 as a result of the increase in commissions fees and market data services fees and development of fund management services as the administrator of MOM Fond, MM Fund Growth SP, during the six months ended June 30, 2021. - Cost of revenue increased by
852.29% to$66,908 for the six months ended June 30, 2021 from$7,026 for the same period in 2020. - Gross profit increased by
36.67% to$440,140 as compared to$322,044 for the same period in 2020, while the gross profit margin was86.80% , as compared to97.86% for the same period in 2020. - Loss from operations was
$1,835,262 for the six months ended June 30, 2021, as compared to$1,041,361 for the same period of 2020. The increase was primarily attributable to the increase in operating expenses. We increased the size of and level of spending on support team for investment banking business, fund management services business, and market data services business. - Net loss was
$2,367,612 for the six months ended June 30, 2021, as compared to net loss of$1,011,152 for the same period of 2020. - Loss per share both on a basic and fully diluted basis were
$0.10 for the six months ended June 30, 2021, as compared to loss per share on a basic and fully diluted basis of$0.05 for the six months ended June 30, 2020.
Xiangdong Wen, the Company's Chief Executive Officer and Chairman, commented, "Our revenue increased to
Mr. Wen continued, "As for the Company's future strategy, the Company is applying for Hong Kong securities broker license to develop services including securities trading, investment advice and asset management for Hong Kong clients. In addition, the Company will reduce retail business gradually because of the Chinese government's requirements for cross-border data security supervision."
Operating Results for Six Months Ended June 30, 2021
Revenues
We derive our revenues from (1) data services and related technical support (the "Market data services"); (2) investor relations management services business to help maintain the relationship between listed companies and the company's equity, debt investors or potential investors (the "Investor relations management services"); (3) commissions through customer securities transactions ("Commissions") and (4) fund management services as the administrator of the fund ("Fund management services").
The following tables illustrate the Company's revenue by revenue type:
For the six months Ended June 30, | ||||||||
2020 | 2021 | |||||||
US$ | US$ | |||||||
Market data services | 44,146 | 85,635 | ||||||
Investor relations management services | 13,807 | - | ||||||
Commissions | 271,117 | 341,803 | ||||||
Fund management services | - | 79,610 | ||||||
Total revenues | 329,070 | 507,048 | ||||||
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 increased by
Gross Profit and Gross Margin
Gross profit was
Operating Expenses
During the six months ended June 30, 2021 and 2020, 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
Payroll and Related Benefits
Payroll and related benefits totaled
Professional Fees
For the six months ended June 30, 2021, 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
Other General and Administrative Expenses
For the six months ended June 30, 2021 and 2020, other general and administrative expenses were
Loss from Operations
For six months ended June 30, 2021, loss from operations amounted to
Other Income (Expense)
Other income (expense) includes interest income from bank deposits, other income, other miscellaneous expense, impairment loss on long-term investment, and foreign currency transaction gain. Other expense totaled
Income Taxes
We did not have any income taxes expense for the six months ended June 30, 2021 and 2020 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
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 gain of
Comprehensive Loss
As a result of our foreign currency translation adjustment, we had comprehensive loss of
Financial Condition
As of June 30, 2021, the Company had cash of
Net cash used in operating activities for the six months ended June 30, 2021 was
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
There were 25,120,000 shares issued and 25,120,000 shares outstanding as of June 30, 2021.
There were 20,820,000 shares issued and 20,820,000 shares outstanding as of December 31, 2020.
Follow-on offering
On February 22, 2021 The Company entered into a Securities Purchase Agreement with certain institutional investors in connection with a registered direct offering of 4,300,000 of the Company's common shares, at a purchase price of
Recent Developments
Pursuant to the investment agreement dated as of September 1, 2021, the Company has agreed to invest USD 350,000 to acquire a
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, | December 31, | |||||||
(UNAUDITED) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 14,603,601 | $ | 1,425,926 | ||||
Accounts receivable, net | 170,758 | 46,390 | ||||||
Loan receivable - related party | 93,762 | 92,831 | ||||||
Security deposits - current portion | - | 500,000 | ||||||
Prepaid expenses and other current assets | 171,736 | 187,994 | ||||||
Total Current Assets | 15,039,857 | 2,253,141 | ||||||
NON-CURRENT ASSETS: | ||||||||
Security deposits - non-current portion | 114,023 | 112,891 | ||||||
Property and equipment, net | 98,387 | 102,882 | ||||||
Operating lease right-of-use assets | 500,216 | 662,609 | ||||||
Long-term investment | - | 578,749 | ||||||
Total Non-current Assets | 712,626 | 1,457,131 | ||||||
Total Assets | $ | 15,752,483 | $ | 3,710,272 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Salary payable | 126,427 | 131,445 | ||||||
Accrued liabilities and other payables | 98,316 | 94,799 | ||||||
Due to related parties | 720 | 1,433 | ||||||
Operating lease liabilities - current | 416,133 | 430,352 | ||||||
Total Current Liabilities | 641,596 | 658,029 | ||||||
NON-CURRENT LIABILITIES: | ||||||||
Loan Payable | - | 41,250 | ||||||
Operating lease liabilities - non-current | 121,776 | 315,190 | ||||||
Total Non-current Liabilities | 121,776 | 356,440 | ||||||
Total Liabilities | 763,372 | 1,014,469 | ||||||
SHAREHOLDERS' EQUITY: | ||||||||
Common shares ( | 25,120 | 20,820 | ||||||
Additional paid-in capital | 26,866,489 | 12,233,589 | ||||||
Accumulated deficit | (11,924,511) | (9,556,899) | ||||||
Accumulated other comprehensive income (loss) | 22,013 | (1,707) | ||||||
Total Shareholders' Equity | 14,989,111 | 2,695,803 | ||||||
Total Liabilities and Shareholders' Equity | $ | 15,752,483 | $ | 3,710,272 | ||||
MMTEC, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||
(IN U.S. DOLLARS) | ||||||||
(UNAUDITED) | ||||||||
For the | For the | |||||||
June 30, | June 30, | |||||||
REVENUE | $ | 507,048 | $ | 329,070 | ||||
COST OF REVENUE | 66,908 | 7,026 | ||||||
GROSS PROFIT | 440,140 | 322,044 | ||||||
OPERATING EXPENSES: | ||||||||
Selling and marketing | 97,146 | 76,668 | ||||||
General and administrative | ||||||||
Payroll and related benefits | 669,299 | 479,261 | ||||||
Professional fees | 837,457 | 403,300 | ||||||
Other general and administrative expenses | 671,500 | 404,176 | ||||||
Total Operating Expenses | 2,275,402 | 1,363,405 | ||||||
LOSS FROM OPERATIONS | (1,835,262) | (1,041,361) | ||||||
OTHER INCOME (EXPENSE): | ||||||||
Interest income | 526 | 27,571 | ||||||
Other income | 66,940 | 24,483 | ||||||
Foreign currency transaction loss | (16,319) | (3,525) | ||||||
Impairment loss on long-term investment | (583,497) | - | ||||||
Loss on equity method investment | - | (18,320) | ||||||
Total Other Income (Expense) | (532,350) | 30,209 | ||||||
LOSS BEFORE INCOME TAXES | (2,367,612) | (1,011,152) | ||||||
INCOME TAXES | - | - | ||||||
NET LOSS | $ | (2,367,612) | $ | (1,011,152) | ||||
COMPREHENSIVE LOSS: | ||||||||
NET LOSS | (2,367,612) | (1,011,152) | ||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
Foreign currency translation adjustments | 23,720 | (23,138) | ||||||
TOTAL COMPREHENSIVE LOSS | $ | (2,343,892) | $ | (1,034,290) | ||||
NET LOSS PER COMMON SHARE | ||||||||
Basic and diluted | $ | (0.10) | $ | (0.05) | ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||||||
Basic and diluted | 23,860,884 | 20,070,000 | ||||||
MMTEC, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(IN U.S. DOLLARS) | ||||||||
(UNAUDITED) | ||||||||
For the | For the | |||||||
June 30, | June 30, | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (2,367,612) | $ | (1,011,152) | ||||
Adjustments to reconcile net loss from operations to net cash used in operating | ||||||||
Depreciation expense | 14,322 | 10,338 | ||||||
Impairment loss on long-term investment | 583,497 | - | ||||||
Loss on equity method investment | - | 18,320 | ||||||
Noncash lease expense | 168,733 | 145,246 | ||||||
Gain on extinguishment of debt | (41,548) | - | ||||||
Foreign currency transaction loss | 35,464 | - | ||||||
Other noncash expense | - | 721 | ||||||
Changes in operating assets and liabilities: | ||||||||
Operating lease liabilities | (214,724) | (75,003) | ||||||
Accounts receivable | (124,368) | 1,018 | ||||||
Security deposits | - | 35,194 | ||||||
Prepaid expenses and other current assets | 516,649 | 14,733 | ||||||
Deferred revenue | - | (44,485) | ||||||
Salary payable | (5,695) | (12,456) | ||||||
Accrued liabilities and other payables | 3,808 | (183,636) | ||||||
NET CASH USED IN OPERATING ACTIVITIES | (1,431,474) | (1,101,162) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Collection of loan to related party | - | 78,002 | ||||||
Cash proceeds from acquisition | - | 279 | ||||||
Purchase of property and equipment | (8,806) | (10,636) | ||||||
Purchase of long-term investment | - | (809,881) | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (8,806) | (742,236) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from long-term loan | - | 41,250 | ||||||
Proceeds from issuance of stocks | 14,637,200 | - | ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 14,637,200 | 41,250 | ||||||
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS | (19,245) | (10,536) | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 13,177,675 | (1,812,684) | ||||||
CASH AND CASH EQUIVALENTS - beginning of period | 1,425,926 | 3,642,521 | ||||||
CASH AND CASH EQUIVALENTS - end of period | $ | 14,603,601 | $ | 1,829,837 | ||||
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 | $ | - | $ | 29,904 | ||||
Consideration of acquisition payable to related party | $ | - | $ | 1,000 | ||||
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SOURCE MMTEC, Inc.
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