MMTEC, Inc. Announces Half Year 2022 Unaudited Financial Results
MMTEC, Inc. (NASDAQ: MTC) reported a 44.64% increase in revenue to $733,400 for the first half of 2022, driven by software sales. Gross profit rose 41.53% to $622,910, with a gross margin of 84.93%. However, the company faced a significant operational loss of $2,927,617, up 59.52% from the previous year, due to increased operating expenses, particularly in selling and marketing. The net loss was $2,887,201, with a loss per share of $0.92. Litigation contingency of $450,000 was accrued amidst ongoing FINRA investigations.
- Revenue increased by 44.64% to $733,400.
- Gross profit rose by 41.53% to $622,910, maintaining a high gross margin of 84.93%.
- Loss from operations increased by 59.52% to $2,927,617 due to rising operating expenses.
- Net loss increased to $2,887,201 compared to $2,367,612 in the prior year.
- Accrued litigation loss contingency of $450,000 due to FINRA investigation.
BEIJING, Sept. 9, 2022 /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, 2022.
First Half 2022 Summary
- Revenues increased by
44.64% from$507,048 to$733,400 as a result of the increase in software sales revenue during the six months ended June 30, 2022. - Gross profit increased by
41.53% to$622,910 as compared to$440,140 for the same period in 2021, while the gross profit margin was84.93% , as compared to86.80% for the same period in 2021. - Loss from operations was
$2,927,617 for the six months ended June 30, 2022, as compared to$1,835,262 for the same period of 2021. The increase was primarily attributable to the increase in operating expenses. We increased the size of and level of spending on support team for our investment banking business, fund management services business and software sales business. We accrued litigation loss contingency of$450,000 to settle with FINRA. - Net loss was
$2,887,201 for the six months ended June 30, 2022, as compared to net loss of$2,367,612 for the same period of 2021. - Loss per share both on a basic and fully diluted basis were
$0.92 for the six months ended June 30, 2022, as compared to loss per share on a basic and fully diluted basis of$0.99 for the six months ended June 30, 2021.
Xiangdong Wen, the Company's Chief Executive Officer and Chairman, commented, "Our revenue increased to
Mr. Wen continued, "As for the Company's future strategy, we will actively promote cooperative relationships with Chinese companies listed in the US and provide them with financing, mergers and acquisitions, and financial advisory services. In addition, we will attempt to further increase the construction of investment banking teams, provide high-quality services, and continue to expand the market."
Operating Results for Six Months Ended June 30, 2022
Revenues
We derive our revenues from: (1) data services and related technical support (the "Market data services"); (2) software sales and related technical support, which are primarily software to facilitate stock trading and clearing (the "Software sales"); (3) commissions through customer securities transactions ("Commissions"); and (4) fund management services as the administrator of the fund ("Fund management services").
The following tables illustrate the Company's revenue by revenue type:
For the six months Ended June 30, | |||||||||||
2021 | 2022 | ||||||||||
US$ | US$ | ||||||||||
Market data services | 85,635 | 71,928 | |||||||||
Software sales | - | 646,052 | |||||||||
Fund management services | 79,610 | 12,145 | |||||||||
Commissions | 341,803 | 3,275 | |||||||||
Total revenues | 507,048 | 733,400 |
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, 2022 and 2021, 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, 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
Other General and Administrative Expenses
For the six months ended June 30, 2022 and 2021, other general and administrative expenses were
Loss from Operations
For six months ended June 30, 2022, loss from operations amounted to
Other Income (Expense)
Other income (expense) includes interest income from bank deposits, other income, impairment loss on long-term investment, and foreign currency transaction gain (loss). Other income totaled
Income Taxes
We did not have any income taxes expense for the six months ended June 30, 2022 and 2021 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, HC Securities (HK) Limited, MMBD Trading Limited, MMBD Investment Advisory Company Limited, Fundex SPC 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
Comprehensive Loss
As a result of our foreign currency translation adjustment, we had comprehensive loss of
Financial Condition
As of June 30, 2022, the Company had cash of
Net cash used in operating activities for the six months ended June 30, 2022 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 50,000,000 shares with a par value of
There were 3,137,001 common shares issued and outstanding as of June 30, 2022 and December 31, 2021. This takes into account the 1-for-10 reverse stock split on the Company's common stock that was effectuated on July 13, 2022.
Legal Proceedings
In the normal course of business, 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. MM Global has responded to FINRA inquires and is subject to an investigation conducted by FINRA. In June 2022, FINRA's Department of Enforcement concluded its investigation and alleges that there have been violations of the federal securities laws and FINRA rules. The Company intends to settle and as of September 9, 2022, the settlement negotiations are still in process. The Company assesses the likelihood of adverse outcome to the matter, as well as the range of probable losses to the extent losses are reasonably estimable. The Company records accruals to the extent that management concludes a loss is probable and the financial impact, should an adverse outcome occur, is reasonable estimable. As of June 30, 2022, the Company accrued a liability of
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 July 13, 2022, the Company implemented a 1-for-10 reverse stock split. As a result of the reverse split, on July 27, 2022, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC ("NASDAQ") confirming that the Company had regained compliance with NASDAQ's minimum bid price requirement under Listing Rule 5550(a)(2). The Company regained compliance with NASDAQ's requirements when the closing bid price for the Company's common stock was at or above
On August 10, 2022, Company entered into a common stock purchase agreement, which was subsequently amended and restated on August 12, 2022 (the "Purchase Agreement"), with VG Master Fund SPC ("VG"). Subject to specified terms and conditions, the Company may, from time to time during the term of the Purchase Agreement, sell to VG up to the lesser of (a)
Follow on offering
On August 24, 2022, the Company's shelf registration statement for up to
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, 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.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL DATA
MMTEC, INC. AND SUBSIDIARIES | |||||||||
As of | |||||||||
June 30, | December 31, | ||||||||
(UNAUDITED) | |||||||||
ASSETS | |||||||||
CURRENT ASSETS: | |||||||||
Cash and cash equivalents | $ | 7,023,053 | $ | 11,206,220 | |||||
Accounts receivable, net | 466,812 | 194,856 | |||||||
Loan receivable, net | 2,100,000 | 2,100,000 | |||||||
Security deposits - current portion | 6,947 | 102,326 | |||||||
Prepaid expenses and other current assets | 1,350,400 | 245,021 | |||||||
Total Current Assets | 10,947,212 | 13,848,423 | |||||||
NON-CURRENT ASSETS: | |||||||||
Security deposits - non-current portion | 163,572 | 29,460 | |||||||
Property and equipment, net | 222,302 | 267,433 | |||||||
Operating lease right-of-use assets | 1,100,379 | 442,185 | |||||||
Total Non-current Assets | 1,486,253 | 739,078 | |||||||
Total Assets | $ | 12,433,465 | $ | 14,587,501 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
CURRENT LIABILITIES: | |||||||||
Deferred revenue | $ | - | $ | 123,434 | |||||
Salary payable | 234,035 | 276,356 | |||||||
Accrued liabilities and other payables | 699,556 | 372,168 | |||||||
Operating lease liabilities - current | 304,953 | 356,274 | |||||||
Total Current Liabilities | 1,238,544 | 1,128,232 | |||||||
NON-CURRENT LIABILITIES: | |||||||||
Operating lease liabilities - non-current | 786,178 | 107,545 | |||||||
Total Non-current Liabilities | 786,178 | 107,545 | |||||||
Total Liabilities | 2,024,722 | 1,235,777 | |||||||
SHAREHOLDERS' EQUITY: | |||||||||
Common shares ( | 31,370 | 31,370 | |||||||
Additional paid-in capital | 29,884,600 | 29,884,600 | |||||||
Accumulated deficit | (19,494,855) | (16,607,654) | |||||||
Accumulated other comprehensive income (loss) | (12,372) | 43,408 | |||||||
Total Shareholders' Equity | 10,408,743 | 13,351,724 | |||||||
Total Liabilities and Shareholders' Equity | $ | 12,433,465 | $ | 14,587,501 | |||||
MMTEC, INC. AND SUBSIDIARIES | |||||||||
For the six | For the six | ||||||||
June 30, 2022 | June 30, 2021 | ||||||||
REVENUE | $ | 733,400 | $ | 507,048 | |||||
COST OF REVENUE | 110,490 | 66,908 | |||||||
GROSS PROFIT | 622,910 | 440,140 | |||||||
OPERATING EXPENSES: | |||||||||
Selling and marketing | 887,173 | 97,146 | |||||||
General and administrative | |||||||||
Payroll and related benefits | 1,022,931 | 669,299 | |||||||
Professional fees | 696,556 | 837,457 | |||||||
Other general and administrative expenses | 943,867 | 671,500 | |||||||
Total Operating Expenses | 3,550,527 | 2,275,402 | |||||||
LOSS FROM OPERATIONS | (2,927,617) | (1,835,262) | |||||||
OTHER INCOME (EXPENSE): | |||||||||
Interest income | 19,663 | 526 | |||||||
Impairment loss on long-term investment | - | (583,497) | |||||||
Other income | 2,576 | 66,940 | |||||||
Foreign currency transaction gain (loss) | 18,177 | (16,319) | |||||||
Total Other Income (Expense) | 40,416 | (532,350) | |||||||
LOSS BEFORE INCOME TAXES | (2,887,201) | (2,367,612) | |||||||
INCOME TAXES | - | - | |||||||
NET LOSS | $ | (2,887,201) | $ | (2,367,612) | |||||
COMPREHENSIVE LOSS: | |||||||||
NET LOSS | (2,887,201) | (2,367,612) | |||||||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||
Foreign currency translation adjustments | (55,780) | 23,720 | |||||||
COMPREHENSIVE LOSS | $ | (2,942,981) | $ | (2,343,892) | |||||
NET LOSS PER COMMON SHARE | |||||||||
Basic and diluted | $ | (0.92) | $ | (0.99) | |||||
WEIGHTED AVERAGE NUMBER OF | |||||||||
Basic and diluted | 3,137,001 | 2,386,088 | |||||||
MMTEC, INC. AND SUBSIDIARIES | ||||||||
For the Six | For the Six Months | |||||||
June 30, 2022 | June 30, 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (2,887,201) | $ | (2,367,612) | ||||
Adjustments to reconcile net loss from operations to | ||||||||
net cash used in operating activities: | ||||||||
Depreciation expense | 39,024 | 14,322 | ||||||
Impairment loss on long-term investment | - | 583,497 | ||||||
Noncash lease expense | 163,218 | 168,733 | ||||||
Foreign currency transaction loss (gain) | (18,177) | 35,464 | ||||||
Gain on extinguishment of debt | - | (41,548) | ||||||
Changes in operating assets and liabilities: | ||||||||
Operating lease liabilities | (193,925) | (214,724) | ||||||
Accounts receivable | (278,617) | (124,368) | ||||||
Security deposits | (41,604) | - | ||||||
Prepaid expenses and other current assets | (1,115,439) | 516,649 | ||||||
Deferred revenue | (121,382) | - | ||||||
Salary payable | (37,390) | (5,695) | ||||||
Accrued liabilities and other payables | 338,252 | 3,808 | ||||||
NET CASH USED IN OPERATING ACTIVITIES | (4,153,241) | (1,431,474) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (6,036) | (8,806) | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (6,036) | (8,806) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of stocks | - | 14,637,200 | ||||||
NET CASH PROVIDED BY FINANCING | - | 14,637,200 | ||||||
EFFECT OF EXCHANGE RATE ON CASH AND | (23,890) | (19,245) | ||||||
NET INCREASE (DECREASE) IN CASH AND | (4,183,167) | 13,177,675 | ||||||
CASH AND CASH EQUIVALENTS - beginning of | 11,206,220 | 1,425,926 | ||||||
CASH AND CASH EQUIVALENTS - end of period | $ | 7,023,053 | $ | 14,603,601 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW | ||||||||
Cash paid for: | ||||||||
Interest | $ | - | $ | - | ||||
Income taxes | $ | - | $ | - | ||||
NON-CASH INVESTING AND FINANCING | ||||||||
Remeasurement of the lease liabilities and | $ | 830,860 | $ | - |
For Media Enquiries:
Jessie Chang
jessie@xgujia.com
View original content:https://www.prnewswire.com/news-releases/mmtec-inc-announces-half-year-2022-unaudited-financial-results-301621218.html
SOURCE MMTEC, Inc.
FAQ
What were MMTEC's earnings for the first half of 2022?
How much did MMTEC's revenue increase in the first half of 2022?
What is the gross profit margin for MMTEC in 2022?
What operational loss did MMTEC incur in the first half of 2022?