MMTEC, INC. Annual Report - How They Did This Year

I’ve put together this guide to help you understand how MMTEC, Inc. performed this year. My goal is to turn complex financial filings into plain English so you can decide if this company fits your investment goals.

1. What does this company do and how did they perform?

MMTEC is a holding company based in the British Virgin Islands that focuses on financial technology services in Hong Kong and China. It operates as a parent company managing subsidiaries that handle securities, fund management, and tech services, earning revenue through brokerage commissions, advisory fees, and software service fees.

This year, the company focused on "housekeeping" by dissolving or selling several subsidiaries, including those that were losing money and driving up administrative costs. This strategy is intended to cut the drag caused by underperforming legacy assets.

2. Financial performance: The "Profit" Picture

The numbers show a company working to stabilize its business model:

• 2025: The company lost about $56.1 million.
• 2024: The company lost about $91.2 million.
• 2023: The company reported a $45.5 million profit, driven by a one-time $52.8 million gain from the sale of Alpha Mind Technology.

Recent losses were primarily driven by $48.2 million in bad debts and high interest payments. With core revenue dropping over 60% compared to the previous year, the company is currently not generating profit from its day-to-day operations.

3. Major wins and challenges

Management is currently prioritizing cost-cutting by closing or selling entities to reduce operating expenses, which reached $12 million last year. However, the company is significantly smaller than it was previously, with total assets shrinking by nearly 40%. Investors should consider whether this "slimming down" represents a focused effort to improve efficiency or a response to a struggling business model.

4. Financial health

The company is currently operating with limited liquidity, holding less than $1.5 million in cash. They have not paid dividends in three years and have no plans to initiate them. Additionally, the company frequently moves money between subsidiaries using interest-free, "on-demand" loans totaling over $20 million. These internal arrangements have not been tested in court, creating a risk that these funds may be difficult to recover if a subsidiary faces insolvency.

5. Key risks

• Regulatory Uncertainty: Operating in China and Hong Kong subjects the company to evolving regulations. Changes in rules regarding "critical infrastructure" could impact their ability to maintain operating licenses.
• The "Loss" Trend: Consecutive years of heavy losses have led auditors to issue a "going concern" warning. If the company cannot improve its financial position, it may need to raise capital by selling more shares, which would dilute the value of current holdings.
• Key Personnel: The company’s operations are heavily dependent on CEO Xiangdong Wen and CFO Min Kong. Their departure could trigger clauses requiring the immediate repayment of company debts.

Final Thought for Investors: When looking at MMTEC, the primary question is whether the current restructuring will successfully stabilize the company's finances. Given the "going concern" warning from auditors, the high level of bad debt, and the reliance on internal loans, this remains a high-risk situation. Before investing, consider if you are comfortable with the uncertainty surrounding their regulatory environment and their ability to generate cash flow from their remaining assets.