BEIJING, Oct. 16, 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 SummaryRevenues 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, 2020RevenuesWe 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 EndedJune 30,20192020US$US$Market data services34,36344,146Investor relations management services143,18013,807Commissions-271,117Total revenues177,543329,070Cost of RevenueCost 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 MarginGross profit was $322,044 for the six months ended June 30, 2020, representing gross margin of 97.86%.Operating ExpensesDuring 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 CostsAll 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 BenefitsPayroll 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 FeesFor 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 ExpensesFor the six months ended June 30, 2020 and 2019, other general and administrative expenses were $404,176 and $385,428, respectively.Loss from OperationsFor 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 TaxesWe 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 LossAs 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 AdjustmentOur 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 LossAs 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 ConditionsAs 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 IssuedThe Company is authorized to issue 500,000,000 shares with a par value of $0.001 per share.There were 56,070,000
