MMTEC(MTC) - 2023 Q4 - Annual Report

Financial Performance - Total net revenues for the year ended December 31, 2023, were $869,935, a decrease from$1,073,351 in 2022, with consulting services contributing $800,000, representing 92.0$696,987, with a gross margin of 80.1%, an increase from 78.5% in 2022, primarily due to higher margins from consulting services [303]. - Loss from operations amounted to $4,840,337 for the year ended December 31, 2023, a decrease of$1,071,281, or 18.1%, compared to 2022 [322]. - Net income from discontinued operations was $53,267,761 for the year ended December 31, 2023, primarily due to the gain on the sale of Alpha Mind [328]. - The company reported a net income of$48,875,781 for the year ended December 31, 2023, compared to a net loss of $5,645,376 for 2022 [329]. Revenue Breakdown - Revenue from software sales and maintenance dropped to$24,098 in 2023 from $676,049 in 2022, indicating a significant decline in this segment [298]. - Placement agent services revenue was$45,837 in 2023, down from $372,677 in 2022, reflecting the impact of business development changes [298]. Expenses - Selling and marketing expenses decreased by$106,333, or 10.6%, to $901,319 in 2023, compared to$1,007,652 in 2022 [305]. - Payroll and related benefits totaled $2,512,781 in 2023, a decrease of$97,068, or 3.7%, from $2,609,849 in 2022, due to reduced spending on software development [306]. - Professional fees for 2023 amounted to$1,031,274, a decrease from $1,210,445 in 2022, with audit fees increasing significantly by 117.7$165,594, or 85.8%, for the year ended December 31, 2023, attributed to reduced demand for technical services [317]. - Travel and entertainment expenses increased by $82,570, or 116.5$45,184, or 10.9%, compared to 2022, primarily due to increased office space needs [316]. Cash Flow and Working Capital - Cash balance as of December 31, 2023, was approximately $1,760,000, down from$3,810,000 in 2022 [335]. - Working capital decreased by $6,831,699 to$1,029,589 as of December 31, 2023, from $7,861,288 as of December 31, 2022, representing an 86.9$5,151,508, reflecting a net loss from continuing operations of $4,391,980 [342]. - Net cash used in investing activities was$86,538,549 for the year ended December 31, 2023, compared to $3,544,105 in 2022 [346]. - Net cash provided by financing activities was$89,666,750 for the year ended December 31, 2023, significantly up from $1,750,140 in 2022 [348]. Financing and Capital Structure - The company raised approximately$88,000,000 from the issuance of convertible promissory notes during the year ended December 31, 2023 [348]. - The company made payments for business acquisition totaling approximately $87,000,000 during the year ended December 31, 2023 [346]. - The company has a shelf registration statement effective for up to$300,000,000 in securities, allowing for future capital raises [356]. - The Company acquired an 85% ownership stake in Alpha Mind for a total purchase price of $99,650,000, with$91,650,000 paid in cash and $7,000,000 in a convertible promissory note [360]. Shareholder Information - As of December 31, 2023, the Company has 199,145,041 ordinary shares issued and outstanding [361]. Research and Development - Research and development expenses for the year ended December 31, 2023, were$363,958, a decrease from $828,869 in 2022 and$744,422 in 2021 [362]. Currency Impact - The RMB depreciated by 9.2% in fiscal 2022 and appreciated by 1.7% in fiscal year 2023, impacting the Company's financial results reported in U.S. dollars [465]. Regulatory and Other Income - Regulatory fees decreased by $510,557, or 98.9$448,357 for the year ended December 31, 2023, an increase of $201,118 compared to 2022 [323]. Debt and Default Status - The Company had short-term borrowings of$241,750 as of December 31, 2023, compared to no short-term borrowings in 2022 [466]. - There has been no default of any indebtedness nor any arrearage in the payment of dividends [467].