MMTEC, INC. Announces 2018 Year-End Financial Results

BEIJING,April 24,2019 -- 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,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,representing gross margin of 39.3%.

Operating Expenses. During the years ended December 31,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,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,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,as compared to $702,989 for the year ended December 31,an increase of $190,667 or 27.1%. The increase was primarily attributable to the increase in staff resulting frombusiness expansion.

Professional Fees. For the year ended December 31,professional fees primarily consisted of audit fees,legal service fees,financial consulting fees,and otherfees 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,as compared to $37,393 for the year ended December 31,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,an increase in financial consulting fee of approximately $50,000 and an increase in other miscellaneous items of approximately $187,mainly related to the work on our January 2019 initial public offering.

Other General and Administrative Expenses.

For the years ended December 31,other general and administrative expenses consisted of the following:

Rent and related utilities. For the year ended December 31,office rent and related utilities increased by $175,271,or 212.8%,as compared to the year ended December 31,from $82,359 to $275,630. The increase was primarily attributable to the increase inoffice space resulting from business expansion.

NASDAQ application and listing fees. For the year ended December 31,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,other general and administrative expenses increased by $24,879,or 44.7%,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,loss from operations amounted to $2,327,540,as compared to $918,600 for theyear ended December 31,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,andloss in equity method investment. Other expense,net,totaled $21,462 for the year ended December 31,as compared to $598 for the year endedDecember 31,a change of $20,864,which was mainly attributable to an increase in loss in equity method investment of approximately $62,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,and 2017 since MMTech did not generate any taxable income in thesetwo 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),2018. Net loss was $919,198,or $0.02 per share (basic and diluted),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 andMM SPC,is the U.S. dollar and the functional currency of Gujia and Meimei Zhengtong,is the Chinese Renminbi ("RMB"). The financial statements ofour subsidiaries whose functional currency is the RMB are translated to U.S. dollars using period end rates of exchange for assets and liabilities,averagerate of exchange for revenue and expenses and cash flows,and at historical exchange rates for equity. Net gains and losses resulting from foreign exchangetransactions are included in the results of operations. As a result of foreign currency translations,which are a non-cash adjustment,we reported a foreigncurrency translation loss of $50,586 and a foreign currency translation gain of $39,610 for the years ended December 31,respectively. Thisnon-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 December31,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 onan ongoing basis. At December 31,MMTech had cash balance of approximately $94,000 and $238,respectively. Most of these funds are keptin financial institutions located in China.

Working capital (deficit). The following sets forth a summary of changes inworking capital from December 31,to December 31,2018.Working capital deficit increased by $725,720 to working capital deficit of $476,737 at December 31,from working capital of $249,007at December 31,2017. The increase in working capital deficit was primarily attributable to a decrease in cash and cash equivalents of approximately$144,an increase in deferred revenue of approximately $79,an increase in salary payable of approximately $83,an increase in accruedliabilities and other payables of approximately $283,an increase in due to related parties of approximately $240,offset by an increase in securitydeposit- current portion of approximately $50,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 EndedDecember 31,2017

Cash Flows. The following summarizes the key components ofcash flows for the year ended December 31,compared to the year ended December 31,2017. Net cash flow used in operating activities for the year ended December 31,was $1,870,353,which primarily reflectednet loss of approximately $2,and the changes in operating assets and liabilities primarily consisting of an increase in prepaid expenses and other current assets of approximately $63,an increase in security deposits of approximately $14,and an increase of prepaid rent of approximately $17,offset by an increase in deferred revenue of approximately $82,an increase in salary payable of approximately $92,000 and an increase in accrued liabilities and other payables of approximately $310,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,was $961,234,which primarily reflected a net loss of approximately $919,and the changes in operating assets and liabilities primarily consisting of an increase in security deposit of approximately $26,and an increase in prepaid expenses and other current assets of approximately $57,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,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,MMTech made payments for purchase of property and equipment of approximately $24,and made payments in equity method investment of approximately $42,000. During the year ended December 31,MMTech received cash proceeds from repayment of advances to related parties of approximately $392,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,as compared to $66,649 for the year ended December 31,MMTech received proceeds from issuance of common shares of approximately $1,661,received proceeds from shareholders' contribution of approximately $5,and received advances from related parties of approximately $206,000 in fundingoperations,offset by repayments made to related parties of approximately $24,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,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:

ChinaInvestor Relations:

Qiong Yu

E-Mail: yq@xgujia.com

Tel: +86-10-5617-2312

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