Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Document And Entity Information | |
Entity Registrant Name | MDJM LTD |
Entity Central Index Key | 0001741534 |
Trading Symbol | mdjh |
Entity Current Reporting Status | Yes |
Current Fiscal Year End Date | --12-31 |
Entity Interactive Data Current | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Entity Common Stock, Shares Outstanding | 11,640,820 |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2019 |
Document Transition Report | false |
Document Shell Company Report | false |
Amendment Flag | false |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Shell Company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Current Assets | ||
Cash and cash equivalents | $ 6,552,677 | $ 6,692,557 |
Accounts receivable, net of allowance for doubtful accounts $10,774 and $49,963, respectively | 2,155,158 | 1,767,804 |
Other receivables | 69,977 | 38,701 |
Prepaid expenses | 60,020 | 235,642 |
Prepaid income tax | 3,620 | |
Total Current Assets | 8,837,832 | 8,738,324 |
Property and equipment, net | 70,154 | 21,302 |
Other Assets | ||
Deferred tax assets | 33,440 | 135,471 |
Operating Lease Assets, net | 391,871 | |
Other receivable - long term | 99,532 | |
Total Other Assets | 524,843 | 135,471 |
Total Assets | 9,432,829 | 8,895,097 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 460,690 | 575,087 |
VAT and other taxes payable | 107,662 | 137,695 |
Deferred income | 26,429 | |
Operating lease liabilities, current | 91,737 | |
Total Current Liabilities | 686,518 | 712,782 |
Long-term operating lease liabilities | 247,382 | |
Total Liabilities | 933,900 | 712,782 |
Equity: | ||
Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share, 11,640,820 and 11,621,459 shares issued and outstanding as of December 31, 2019 and 2018 respectively | 11,641 | 11,621 |
Additional paid in capital | 6,734,681 | 6,664,295 |
Statutory reserve | 262,954 | 232,542 |
Retained earnings | 1,948,804 | 1,526,110 |
Accumulated other comprehensive loss | (280,345) | (229,587) |
Total MDJM Ltd stockholders' equity | 8,677,735 | 8,204,981 |
Non controlling interest | (178,806) | (22,666) |
Total Liabilities and Equity | $ 9,432,829 | $ 8,895,097 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 26, 2018 |
Consolidated Balance Sheets | |||
Allowance for doubtful accounts, accounts receivable | $ 10,774 | $ 49,963 | |
Ordinary shares, shares authorized | 50,000,000 | 50,000,000 | |
Ordinary shares, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Ordinary shares, shares issued | 11,640,820 | 11,621,459 | 10,380,000 |
Ordinary shares, shares outstanding | 11,640,820 | 11,621,459 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Revenue | $ 5,679,977 | $ 2,408,448 | $ 5,532,244 |
Operating Expenses: | |||
Selling expenses | 186,641 | 82,225 | 263,797 |
Payroll, payroll taxes and others | 3,710,697 | 2,214,975 | 3,067,837 |
Professional fees | 634,372 | ||
Operating leases expenses | 184,802 | 141,959 | 115,615 |
Depreciation and amortization | 15,180 | 12,575 | 7,232 |
Reduction for doubtful accounts, net | (38,883) | (146,174) | 194,149 |
Other general and administrative | 628,608 | 667,267 | 293,931 |
Total Operating Expenses | 5,321,417 | 2,972,827 | 3,942,561 |
Income (loss) from Operations | 358,560 | (564,379) | 1,589,683 |
Other income: | |||
Gain (loss) on disposal of asset | 1,705 | (1,213) | |
Gain on foreign currency exchange | 12,072 | ||
Loss on disposal of subsidiary | (4,970) | ||
Interest income | 30,662 | 26,565 | 32,112 |
Other income (expense) | 2,707 | (57,028) | |
Total other income | 42,176 | 26,565 | (26,129) |
Income (loss) before income tax | 400,736 | (537,814) | 1,563,554 |
Income tax | (101,372) | (396,552) | |
Net income (loss) | 299,364 | (537,814) | 1,167,002 |
Net loss attributable to non controlling interest | 153,742 | 21,843 | |
Net income (loss) attributable to MDJM Ltd shareholders | $ 453,106 | $ (515,971) | $ 1,167,002 |
Net income (loss) per ordinary share attributable to MDJM Ltd shareholders | $ 0.04 | $ (0.05) | $ 0.11 |
Weighted-average shares outstanding, basic and diluted | 11,640,661 | 10,400,408 | 10,380,000 |
Comprehensive income (loss): | |||
Net income (loss) | $ 299,364 | $ (537,814) | $ 1,167,002 |
Other comprehensive income (loss), net of tax: | |||
Change in foreign currency translation adjustments | (53,156) | (170,344) | 270,019 |
Total other comprehensive income (loss) | 246,208 | (708,158) | 1,437,021 |
Comprehensive loss attributable to non-controlling interest | 2,398 | 823 | |
Comprehensive income (loss) attributable to MDJM Ltd shareholders | $ 248,606 | $ (707,335) | $ 1,437,021 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Ordinary Shares | Additional Paid in Capital | Statutory Reserve | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Total |
Balance at Dec. 31, 2016 | $ 10,380 | $ 2,562,057 | $ 108,982 | $ 998,639 | $ (330,085) | $ 3,349,973 | |
Balance (shares) at Dec. 31, 2016 | 10,380,000 | ||||||
Comprehensive income (loss): | |||||||
Net loss or income | 123,560 | 1,043,442 | 1,167,002 | ||||
Other comprehensive income (loss), net of tax: | |||||||
Change in foreign currency translation adjustments | 270,019 | 270,019 | |||||
Balance at Dec. 31, 2017 | $ 10,380 | 2,562,057 | 232,542 | 2,042,081 | (60,066) | 4,786,994 | |
Balance (shares) at Dec. 31, 2017 | 10,380,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Proceeds from initial public offering - net of offering costs | $ 1,241 | 4,102,238 | 4,103,479 | ||||
Proceeds from initial public offering - net of offering costs (shares) | 1,241,459 | ||||||
Comprehensive income (loss): | |||||||
Net loss or income | (515,971) | (21,843) | $ (537,814) | (537,814) | |||
Other comprehensive income (loss), net of tax: | |||||||
Change in foreign currency translation adjustments | (169,521) | (823) | (170,344) | ||||
Balance at Dec. 31, 2018 | $ 11,621 | 6,664,295 | 232,542 | 1,526,110 | (229,587) | (22,666) | 8,182,315 |
Balance (shares) at Dec. 31, 2018 | 11,621,459 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Proceeds from initial public offering - net of offering costs | $ 20 | 70,386 | 70,406 | ||||
Proceeds from initial public offering - net of offering costs (shares) | 19,361 | ||||||
Comprehensive income (loss): | |||||||
Net loss or income | 30,412 | 422,649 | (153,742) | 299,364 | |||
Other comprehensive income (loss), net of tax: | |||||||
Change in foreign currency translation adjustments | (50,758) | (2,398) | (53,156) | ||||
Balance at Dec. 31, 2019 | $ 11,641 | $ 6,734,681 | $ 262,954 | $ 1,948,804 | $ (280,345) | $ (178,806) | $ 8,498,929 |
Balance (shares) at Dec. 31, 2019 | 11,640,820 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Equity (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Changes in Equity | |||
Net offering costs | $ 26,399 | $ 2,103,816 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | |||
Net income (loss) | $ 299,364 | $ (537,814) | $ 1,167,002 |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 15,180 | 12,575 | 7,232 |
(Reduction) increase of provision for doubtful accounts | (38,883) | (146,174) | 194,149 |
Gain on foreign currency exchange | (12,072) | ||
(Gain) loss on disposal of assets | (1,705) | 1,213 | |
Decrease in deferred tax assets | 101,166 | 72,975 | 102,099 |
Changes in operating assets and liabilities: | |||
(Increase) decrease in accounts receivables | (374,592) | (83,189) | 516,593 |
(Increase) decrease in other receivables | (4,630) | 41,441 | 103,603 |
(Decrease) increase in prepaid expense | 120,907 | (150,273) | (297,392) |
(Decrease) increase in prepaid income tax | 3,605 | (3,762) | |
(Decrease) increase in accounts payable and accrued expenses | (107,980) | 131,876 | (430,286) |
(Decrease) increase in VAT and other tax payable | (28,518) | 18,843 | (50,753) |
Increase in deferred income | 26,657 | ||
Net Cash (Used in) Provided by Operating Activities | (1,501) | (643,502) | 1,313,460 |
Cash Flows from Investing Activities: | |||
Purchase of property and equipment | (66,354) | (1,215) | (19,659) |
Advance to Jiayuan Project | (127,804) | ||
Proceeds from disposal of asset | 3,330 | ||
Net Cash Used in Investing Activities | (190,828) | (1,215) | (19,659) |
Cash Flows from Financing Activities: | |||
Proceeds from initial public offering - net of offering costs of $26,399, $2,103,816 and $0, respectively | 70,406 | 4,103,479 | |
Net Cash Provided by Financing Activities | 70,406 | 4,103,479 | |
Effect of exchange rate changes on cash and cash equivalents | (17,957) | 116,055 | 161,593 |
Net (decrease) increase in cash and cash equivalents | (139,880) | 3,574,817 | 1,455,394 |
Cash and cash equivalents - beginning of the year | 6,692,557 | 3,117,740 | 1,662,346 |
Cash and cash equivalents - end of the year | $ 6,552,677 | 6,692,557 | 3,117,740 |
Cash paid for: | |||
Income taxes | $ 271,817 | $ 294,454 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Cash Flows | |||
Net offering costs | $ 26,399 | $ 2,103,816 | $ 0 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Organization MDJM LTD (the “Company” or “MDJM”) was incorporated on January 26, 2018, under the laws of the Cayman Islands as an exempted company under the name of MDJLEAD LTD. Effective on May 7, 2018, the Company changed its corporate name to MDJM LTD. The Company, through its consolidated variable interest entity (“VIE”), is principally engaged in providing end-to-end services in the life cycle of a residential real estate project, including primary real estate agency services, real estate consulting services, and training and evaluation with respect to primary agency sales services in the People’s Republic of China (the “PRC”). In addition, through subsidiaries of its VIE, the Company started providing tourism development services in 2018. The Company or MDJM, and its subsidiaries and consolidated VIE are also collectively referred to as the “Group.” The company’s subsidiaries and consolidated VIE are also referred to as “Subsidiaries”. MDJCC Limited (“MDJM Hong Kong”) was incorporated on February 9, 2018, under the laws of Hong Kong. MDJM owns 100% of the equity interests of MDJM Hong Kong. Beijing Mingda Jiahe Technology Development Co., Ltd. (“Mingda Beijing”), is a limited liability company organized on March 9, 2018, under the laws of the PRC, a wholly-foreign owned entity (“WFOE”) and 100% owned by MDJM Hong Kong. Tianjin Mingda Jiahe Real Estate Co., Ltd. (“Mingda Tianjin” or “VIE”), is a limited liability company organized on September 25, 2002 under the laws of the PRC. The following table lists the wholly-owned subsidiaries and the consolidated VIE of the Company: Date of Place of Percentage of Name of the Company Incorporation Incorporation Ownership MDJM Hong Kong February 9, 2018 Hong Kong 100% Mingda Beijing (WFOE) March 9, 2018 PRC 100% Mingda Tianjin (VIE) September 25, 2002 PRC VIE VIE Arrangements PRC regulations currently prohibit or restrict foreign ownership of companies that provide services in certain industries. To comply with these regulations, on April 28, 2018, Mingda Beijing entered into a series of contractual arrangements with Mingda Tianjin. These agreements provide Mingda Beiing effective control over and the ability to receive substantially all of the economic benefits of Mingda Tianjin. Agreement That Transfers Economic Benefits of Mingda Tianjin On April 28, 2018, Mingda Beijing entered into an “Exclusive Business Cooperation Agreement” (the “Business Agreement”) with Mingda Tianjin. Pursuant to the Business Agreement, Mingda Beijing will provide a series of consulting and technical support services to Mingda Tianjin and is entitled to receive 100% of Mingda Tianjin’s net income after deduction of required PRC statutory reserve as a service fee. The service fee is paid annually or at any such time agreed by Mingda Beijing and Mingda Tianjin. The term of this Business Agreement is valid for 10 years upon execution of the agreement and may be extended or terminated prior to the expiration date at will by Mingda Beijing. Unless expressly provided by the Business Agreement, without prior written consent of Mingda Beijing, Mingda Tianjin may not engage any third party to provide the services offered by Mingda Beijing under the agreement. Agreements That Provide Effective Control over Mingda Tianjin On April 28, 2018, each of the shareholders of the Minda Tianjin entered into an “Exclusive Call Option Agreement” (the “Option Agreement”) with Mingda Beijing. Pursuant to the Option Agreements, each of the shareholders of Mingda Tianjin granted an irrevocable and unconditional option to Mingda Beijing or its designees to acquire all or part of such shareholder’s equity interests in Mingda Tianjin at its sole discretion, to the extent as permitted by PRC laws and regulations then in effect. The consideration for such acquisition of all equity interests in Mingda Tianjin will be equal to the registered capital of Mingda Tianjin, and if PRC law requires the consideration to be greater than the registered capital, the consideration will be the minimum amount as permitted by PRC law. The Option Agreements are valid for 10 years upon execution of the agreements and may be extended prior to the expiration date at will by Mingda Beijing. On April 28, 2018, each of the shareholders of Mingda Tianjin also entered into an “Equity Pledge Agreement” (the “Pledge Agreements”) with Mingda Beijing. Pursuant to the Pledge Agreements, these shareholders pledged their respective equity interests in Mingda Tianjin to guarantee the performance of the obligations of Mingda Tianjin. Mingda Beijing, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. Pursuant to the Pledge Agreements, each of the shareholders of Mingda Tianjin cannot transfer, sell, pledge, dispose of, or otherwise create any new encumbrance on their respective equity interests in Mingda Tianjin without the prior written consent of Mingda Beijing. The equity pledge right will expire when the exclusive business cooperation between Mingda Beijing and Mingda Tianjin is terminated and all service fees are paid. The equity pledges of Mingda Tianjin have been registered with the relevant local branch of the State Administration for Industry and Commerce, or SAIC. Risks in relation to the VIE structure The Company believes that Mingda Beijing’s contractual arrangements with Mingda Tianjin are in compliance with the PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements and the interests of the shareholders of Mingda Tianjin may diverge from that of the Company and that may potentially increase the risk that they would seek to act inconsistently with the contractual terms, for example by influencing Mingda Tianjin not to pay the service fees when required to do so. The Company’s ability to control Mingda Tianjin also depends on the power of attorney Mingda Beijing has to vote on all matters requiring shareholder approval in Mingda Tianjin. As noted above, the Company believes this power of attorney is legally enforceable but may not be as effective as direct equity ownership. In addition, if the legal structure and contractual arrangements were found to be in violation of any existing PRC laws and regulations, the Company may be subject to fines or other actions. The Company does not believe such actions would result in the liquidation or dissolution of the Company, Mingda Beijing, or Mingda Tianjin. The Company, through its subsidiaries and the contractual arrangements, has (i) the power to direct the activities of Mingda Tianjin that most significantly affect the entity’s economic performance and (ii) the right to receive benefits from Mingda Tianjin. Accordingly, the Company is the primary beneficiary of Mingda Tianjin and has consolidated the financial results of Mingda Tianjin. The accompanying consolidated financial statements present the historical financial position, results of operations, and cash flows of Mingda Tianjin and its subsidiaries, and adjusted for the effects of the corporate restructure as disclosed per above. Accordingly, the accompanying consolidated financial statements have been prepared as if the current corporate structure (“Restructuring” or “Reorganization”) had been in existence throughout the periods presented (see Note 9 for the 10,380,000 ordinary shares of MDJM issued on January 26, 2018, in connection with the Reorganization). |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of consolidation The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements include the financial statements of Mingda Tianjin and its subsidiaries and branch offices. All significant inter-company accounts and transactions have been eliminated on consolidation. The Group evaluates each of its interests in private companies to determine whether or not the investee is a VIE and, if so, whether the Group is the primary beneficiary of such VIE. In determining whether the Group is the primary beneficiary, the Group considers if the Group (i) has power to direct the activities that most significantly affects the economic performance of the VIE, and (ii) receives the economic benefits of the VIE that could be significant to the VIE. If deemed the primary beneficiary, the Group consolidates the VIE. Mingda Tianjin has the following branch offices and/or subsidiaries, which have been included in the accompanying consolidated financial statements: Percentage Date of Place of of Name of Branch Offices/Subsidiaries of Mingda Formation Formation Ownership Tianjin Mingda Jiahe Real Estate Co., Ltd. Yangzhou Branch October 18, 2017 Yangzhou, China N/A Tianjin Mingdajiahe Real Estate Co., Ltd. Suzhou Branch October 13, 2017 Suzhou, China N/A Tianjin Mingdajiahe Real Estate Co., Ltd. Chengdu Branch June 24, 2019 Chengdu, China N/A XiShe (Tianjin) Business Management Co., Ltd. October 20, 2017 Tianjin, China XiShe (Tianjin) Culture and Media Co., Ltd. July 25, 2018 Tianjin, China Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. March 9, 2018 Tianjin, China To explore new business opportunity, the Group formed Xishe Jiayuan (Tianjin) Business Operation & Management Co. Ltd. (“Jiayuan”) on November 22, 2018. The Group owned a 70% controlling interest in Jiayuan. Jiayuang had no business activities in 2018 .On September 30, 2019, the Group entered into a Share Transfer Agreement with Tianjin Jin Yong Tai Property Management Ltd. (“JYT”), the owner of the remaining 30% equity interest (the non-controlling interest) of Jiayuan. JYT was not a related party of the Group. Pursuant to the Share Transfer Agreement, the Group transferred its 70% ownership interest in Jiayuan to JYT. Accordingly, the results of operation of Jiayuan from January 1, 2019 to September 30, 2019, the date the Group lost control of Jiayuan, were included in the accompanying consolidation financial statements. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from such estimates. Significant accounting estimates reflected in the Group’s financial statements include useful lives and valuation of long-lived assets, allowance for doubtful accounts, assumptions related to the consolidation of entities in which the Group holds variable interests, and valuation allowance on deferred tax. Reclassification of Financial Statement Accounts Certain prior period amounts have been reclassified to conform with the current period presentation. These reclassifications have no effect on the previously reported financial position, results of operations, and cash flows. Fair Value of Financial Instruments The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 ‑ Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date; Level 2 ‑ Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data; and Level 3 ‑ Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable, other receivables, prepaid expenses, prepaid income tax, deferred tax assets, accounts payable and accrued liabilities, income tax payable, and other taxes payable approximate their fair value based on the short-term maturity of these instruments. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and all highly liquid investments with an original maturity of three months or less. The Group maintains cash and cash equivalents with various commercial banks within the PRC. The Company has not experienced any losses in the bank accounts and believes it is not exposed to any risks on its cash held in PRC banks. Property and Equipment, Net Property and equipment are carried at cost, less accumulated depreciation. Costs include any incremental costs that are directly attributable to the construction or acquisition of the item of property and equipment. Maintenance and repairs are expensed as incurred, while major maintenance and remodeling costs are capitalized if they extend the useful life of the asset. Depreciation is computed using the straight-line method over the estimated useful lives. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in the results of operations. Estimated Classification Useful Life Office Equipment and Fixtures 3 or 5 years Computers 3 or 5 years Software 2 or 10 years Vehicles 4 or 5 years Revenue Recognition The Group adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) effective January 1, 2018 by using the modified retrospective transition method. The adoption had no material impact on the Group’s consolidated financial statements and there was no adjustment to the beginning retained earnings on January 1, 2018. The Group determines revenue recognition through the following five steps: (i) identification of the contract, or contracts, with a customer, (ii) identification of the performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations in the contract, and (v) recognition of revenue when, or as, it satisfies a performance obligation. The Group’s service contracts typically include the terms of parties, services to be provided, service covered period, details of service fee calculation, and terms or conditions when services are to be paid. The performance obligation of the Group is clearly defined as to sale of real properties specified in the contracts. The performance obligation is satisfied when at the point of closing of the sales contract with each property buyer is completed and, when the developer received the proceeds from the sales (cash and/or bank loans). The commission fee is determined based on the total value of property sold multiplied by the commission rate agreed upon in the contracts. The commission rates vary among developers. The payment terms also vary with certain developers dividing the contracts into several phases and making payment when a phase has been completed. These variable considerations will not change the calculation of commission fee. The transaction price is determined based on the commission rate and properties sold. The Group’s major revenue is commission fees from selling real estate properties. Commission revenue from property brokerage is recognized when: (i) the Group has completed its performance obligation to sell properties per contract, (ii) the property developer and the buyer completed a property sales transaction and the developer received full or partial amount of proceeds from the buyer or full payment from the banker if mortgaged, and (iii) the property developer granted confirmation to the Group to issue an invoice per contract. The Group recognizes revenue net of value added taxes (“VAT”). The Group did not handle any monetary transactions nor act as an escrow intermediary between developers and buyers. Certain sales contracts allow developers to withhold certain percentage of total commission for a certain period as a risk fund to cover potential damages caused by sales activities of the Group. In these circumstances, the Group will not determine that its performance obligations have been fulfilled until the withholding period has passed. Since the amount being withheld is the risk of loss from the sales transaction, the Group records the amount withheld by developers as deferred income and will recognize the income when the withholding period has passed and the amount withheld is confirmed by the developers. Additionally, the Group provides consulting services to its clients, such as training, advertising and marketing. Revenue recognized from consulting is net of VAT. Revenue from consulting services was $155,217, $51,818, and $4,187 for the years ended December 31, 2019, 2018, and 2017, respectively. Segment Information The Group uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Group’s reportable segments. All of the Group’s operations are considered by the chief operating decision maker to be aggregated in one reportable operating segment. Currently, all of the Group’s customers are in the PRC and major income is derived from commission-based service, which represented 97.1%, 97.4% and 99.9% of total revenue in the years of 2019, 2018 and 2017, respectively, and minimal consulting and other services which represented 2.9%, 2.6%, and 0.1% of total revenue in the years of 2019, 2018, and 2017, respectively. Through Mingda Tianjin and its three branch offices in Chengdu, Suzhou, and Yangzhou, the Group own and operate a primary real estate agency service business in the following local markets, Tianjin, Chengdu, Yangzhou, and Suzhou, which represent 83%, 5%, 9%, and 3% of total agency revenue for the year ended December 31, 2019, respectively, represent 95%, 0%, 4%, and 1% of total agency revenue for the year ended December 31, 2018, respectively and 97%, 3%, 0%, and 0% of total agency revenue for the year ended December 2017, respectively. Leases ASC 842 requires the Group to determine whether a contract is a lease or contains a lease at the inception of the contract, considering all relevant facts and circumstances. A` contract is a lease or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. A lease is classified as a finance lease when the lease meets any of the following criteria: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease not classified as a finance lease is classified as an operating lease. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee should include payments to be made in optional periods only if the lessee is reasonably certain to exercise its option to extend the lease or not exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. The Group elected not to recognize on the balance sheet leases with terms of 12 months or less. The Group typically only includes the initial lease term in its assessment of a lease arrangement. Options to extend a lease are not included in the Group’s assessment unless there is reasonable certainty that the Group will renew. Business Tax and Value Added Tax (“VAT”) The PRC government implemented a VAT reform pilot program, which replaced the business tax with VAT. Since May 2016, the changes from business tax to VAT have been expanded to all other service sectors which used to be subject to business tax. The VAT rate applicable to subsidiaries and consolidated VIE of the Company is 6%. The Company accrues VAT payable when sales invoices are generated. Deferred Offering Costs Deferred offering costs consist principally of all direct offering costs incurred by the Company, such as underwriting, legal, accounting, consulting, printing, and other registration related costs in connection with the initial public offering (“IPO”) of the Company’s ordinary shares. Such costs are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds. In the event the offering is unsuccessful or aborted, the costs will be expensed. Deferred offering costs of $2,103,816 and $26,399 were charged to additional paid-in capital in connection with the Company's IPO with its first closing and second closing completed on December 26, 2018 and January 4, 2019, respectively. Marketing and Advertising Expenses Marketing and advertising expenses consist primarily of marketing planning fees and advertisements expenses used for targeted property sales. The Group expenses all marketing and advertising costs as incurred and records these costs within “Selling expenses” on the consolidated statements of operations when incurred. The Group incurred marketing and advertising expenses of $79,535, $2,889, and $178,878 for the years ended December 31, 2019, 2018, and 2017, respectively. Income Taxes The Company's subsidiary and VIE in the PRC are governed by the income tax laws of the PRC. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities, and their reported amounts in the financial statements, net operating loss carry forwards and credits by applying enacted statutory tax rates applicable to future years when the reported amounts of the asset or liability are expected to be recovered or settled, respectively. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. The Group only recognizes tax liabilities related to uncertain tax positions when such positions are more likely than not of being sustained upon examination. For such positions, the Group recognizes the largest amount of tax liabilities that is more than fifty percent likely of being sustained upon the ultimate settlement of such uncertain position. There were no such tax liabilities recognized in the accompanying consolidated financial statements. The Group records interest and penalties as a component of income tax expense. There were no such interest and penalties for the years ended December 31, 2019, 2018, and 2017, respectively. Noncontrolling Interest Noncontrolling interest is classified as a separate line item in the equity section and disclosures in the Company’s consolidated financial statements have distinguished the interest of the Company from the interest of noncontrolling interest holders. Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. was 49% owned by nonrelated third parties as of December 31, 2019 and 2018, respectively. Per Share Amounts The Company computes per share amounts in accordance with ASC Topic 260 “Earnings per Share ” (EPS), which requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the net income (loss) available to holders of ordinary shares by the weighted-average number of ordinary shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted in the issuance of ordinary shares that then shared in the earnings of the Company, if any. This is computed by dividing net earnings by the combination of dilutive ordinary share equivalents. There were no dilutive ordinary share equivalents as of December 31, 2019, 2018, and 2017, respectively. Accordingly, basic and diluted loss per share were the same. December 31, December 31, December 31, 2019 2018 2017 Numerator for earnings per share: Net income (loss) attributable to the Company’s shareholders $ 453,106 $ (515,971) $ 1,167,002 Denominator for basic and diluted earnings per share: Basic weighted average ordinary shares * 11,640,661 10,400,408 10,380,000 Per share amount Per share - basic and diluted $ 0.04 $ (0.05) $ 0.11 * Prior to the formation of MDJM, Mingda Tianjin issued 10,380,000 ordinary shares to its shareholders. Each shareholder of Mingda Tianjin was expected to receive MDJM’s share at a one-to-one ratio. On January 26, 2018, MDJM issued 10,380,000 ordinary shares to entities controlled by the shareholders of Mingda Tianjin. All references to numbers of ordinary shares and per share amounts in the accompanying consolidated financial statements have been adjusted to reflect such issuance of shares on a retrospective basis from the earliest period presented. Comprehensive Income The Company follows ASC 220‑10, “Reporting Comprehensive Income,” which requires the reporting of comprehensive income in addition to net income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income. Comprehensive income generally represents all changes in shareholders’ equity during the period except those resulting from investments by, or distributions to shareholders. Foreign Currency Translation The functional currency of the Company is the Chinese Renminbi (“RMB”). The U.S. dollar is used as the reporting currency of the Group. Monetary assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollar at the rates of exchange ruling at the balance sheet date. Equity accounts are translated at historical exchange rates, and revenue, expenses, gains, and losses are translated using the average rate for the year. Translation adjustments are reported as foreign currency translation adjustment and are shown as a separate component of other comprehensive income (loss) in the consolidated statements of changes in equity and consolidated statements of operations and comprehensive income(loss). December 31, December 31, December 31, US$ Exchange Rate 2019 2018 2017 At end of the period - RMB 6.9668 6.8778 6.5075 Average rate for the period ended - RMB 6.9072 6.6187 6.7588 The financial records of certain of the Company’s subsidiaries and VIE are maintained in local currencies other than the U.S. dollar, such as RMB, which are their functional currencies. Transactions in other currencies are recorded at the rates of exchange prevailing when the transactions occur. Transaction gains and losses are recognized in the consolidated statements of operations and comprehensive income (loss). There were $12,072, $0, and $0 transaction gain recorded in the years ended December 31, 2019, 2018, and 2017, respectively. Concentration Risk The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environment in the PRC, and by the general state of the economy of the PRC. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the PRC. Per PRC regulations, the maximum insured bank deposit amount is approximately $71,770 (RMB 500,000) for each financial institution. The Company’s total unprotected cash in bank amounted to $6,138,142 and $6,321,940, as of December 31, 2019 and 2018, respectively. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. Deconsolidation In accordance with ASC 810-40, deconsolidation of a subsidiary occurs when: (a) some or all of the ownership interests of the subsidiary are sold resulting in the loss of a controlling financial interest; (b) a contractual agreement granting control of the subsidiary expires; (c) the subsidiary issues its shares to outsiders reducing the parent’s ownership interest resulting in the loss of a controlling financial interest; or (d) the subsidiary becomes subject to the control of a government, court, administrator or regulator. The parent should recognize a gain or loss measured as the difference between: (a) the aggregate of: (i) the fair value of any consideration received, (ii) the fair value of any retained non-controlling interest, and (iii) the carrying amount of any non-controlling interest at the date the subsidiary is deconsolidated; and (b) the carrying amount of the subsidiary’s assets and liabilities. A subsidiary should be deconsolidated from the date a controlling financial interest is lost and should also consider the equity components included in the non-controlling interest and the amounts previously recognized in accumulated other comprehensive income (loss), i.e. the foreign currency translation adjustment. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes and replaces nearly all existing U.S. GAAP revenue recognition guidance, including industry-specific guidance. The authoritative guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The five steps are: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when or as each performance obligation is satisfied. The authoritative guidance applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC. The adoption of Topic 606 had no material impact on the Group’s consolidated financial statements and there was no adjustments made to the beginning retained earnings on January 1,2018. On May 10, 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which clarifies the scope of modification accounting for share-based compensation arrangements by providing guidance on the types of changes to the terms and conditions of share-based compensation awards to which an entity would be required to apply modification accounting under ASC 718. ASU 2017-09 is effective for annual periods beginning after December 15, 2017. The adoption of this guidance had no material impact on the Group’s consolidated financial statements. On February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. This update requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity’s leasing arrangements. ASU 2016-02 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2018, with early application permitted. The Group adopted this new accounting standard effective on January 1, 2019 on a modified retrospective basis and applied the new standard on leases through a cumulative-effect adjustment to the beginning retained earnings. The adoption of this authoritative guidance resulted in the recognition of operating lease assets and operating lease liabilities but did not have an impact on the Group’s consolidated operating results, beginning retained earnings, and cash flows. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220). This update provides companies with the option to reclassify stranded tax effects caused by the 2017 Tax Cuts and Jobs Act, or the 2017 Tax Act, from accumulated other comprehensive income to retained earnings. This standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The adoption of this standard had no material impact on the Group’s consolidated financial statements. Recently Issued Accounting Pronouncements The Group considers the applicability and impact of all ASUs. The ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Group’s consolidated financial position and/or results of operations. In June 2016, the FASB issued ASU No. 2016‑13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016‑13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016‑13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016‑13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. The Group is currently in the process of evaluating the impact of the adoption of ASU 2016‑13 on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU. The Group is currently evaluating the potential impact of this new guidance. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS RECEIVABLE | |
ACCOUNTS RECEIVABLE | NOTE 3 – ACCOUNTS RECEIVABLE Accounts receivable and allowance for doubtful accounts consist of the following at December 31, 2019 and 2018: December 31, December 31, 2019 2018 Accounts receivable $ 2,165,932 $ 1,817,767 Allowance for doubtful accounts (10,774) (49,963) Accounts receivable, net $ 2,155,158 $ 1,767,804 Accounts receivables are primarily due from the customers - real estate developers and are recognized and carried at the amount billed to a customer, net of allowance for doubtful accounts, which is an estimate for credit losses based on a review of all outstanding amounts on a periodic basis. The Company maintains an allowance for doubtful accounts which requires significant judgments by management. The Company establishes a provision for doubtful accounts receivable when there is objective evidence that the Company may not be able to collect the receivables when due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on customers’ credit, business, financial status, payment history, and ongoing relationship, management makes conclusions on whether any balances outstanding at the end of each reporting period will be deemed uncollectible on an individual basis and on an aging trend analysis basis. Accounts receivable balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of December 31, 2019, the Group reserved $10,774 of allowance for doubtful accounts, which was 20% of the accounts receivable with age more than one year from two customers due to the collectability issues. As of December 31, 2018, the Group reserved $49,963 of allowance for doubtful accounts, which was 20% of the accounts receivable from two customers due to the collectability issues. Major Customers For the year ended December 31, 2019, the Group had three major customers (projects). Revenue from each of these customers was over 10% of its total revenue. Revenue from these top three customers represented approximately 58% of its total revenue, with 31%, 16%, and 11%, respectively, from Taida He Yue Hai, Ge Diao Ping Yuan, and Wanke Xi Lu. The accounts receivable from these three customers (projects) were $192,679, $185,216, and $377,276, respectively, as of December 31, 2019. During the year ended December 31, 2018, the Group had four major customers (projects). Revenue from each of these customers was over 10% of its total revenue. Revenue from the Group’s top four customers represented approximately 76% of its total revenue, with 28%, 25%, 12%, and 11%, respectively, from Ge Diao Ping Yuan, Ping Yue Jian Nan, Zi Xi Tai, and Ge Diao Song Jian. The accounts receivable from these four customers were $230,803, $62,783, $67,969, and $120,080, respectively, as of December 31, 2018. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE 4 – PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: December 31, December 31, 2019 2018 Office Equipment and Fixtures $ 71,258 $ 50,224 Software 17,242 17,465 Auto 44,110 32,636 Total Assets 132,610 100,325 Less accumulated depreciation (62,456) (79,023) Net Assets $ 70,154 $ 21,302 The Company sold its used auto to a third party in January 2019 and received proceeds of $3,330. The cost of $32,497 and accumulated depreciation of $30,872 were derecognized from the balance sheet. The Company recognized a gain of $1,705 from the sale for the year ended December 31, 2019. For the years ended December 31, 2019, 2018, and 2017, depreciation expense was $15,180, $12,575, and $7,232, respectively. |
INCOME TAX AND DEFERRED TAX ASS
INCOME TAX AND DEFERRED TAX ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAX AND DEFERRED TAX ASSETS | |
INCOME TAX AND DEFERRED TAX ASSETS | NOTE 5 – INCOME TAX AND DEFERRED TAX ASSETS The Company and its subsidiaries and VIE have no presence in the United States and does not conduct business in the United States, so no United States income tax is imposed upon the Company and its subsidiaries and VIE. MDJM was incorporated under the laws of the Cayman Islands. Under the current laws of the Cayman Islands, the Company and its subsidiaries are not subject to tax on income or capital gain. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed. MDJM Hong Kong was incorporated under the laws of Hong Kong and is subject to the uniform tax rate of 16.5%. Under Hong Kong tax law, it is exempted from the Hong Kong income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on the remittance of dividends. MDJM Hong Kong did not have significant activities in Hong Kong in the years ended December 31, 2019, 2018, and 2017, respectively. The Group conducts substantially all of its business through its VIE and subsidiaries of the VIE, the operating entities located in the PRC, and they are subject to PRC income taxes. The Group’s subsidiary and VIE in the PRC are subject to a 25% standard tax rate for the years ended December 31, 2019, 2018, and 2017, respectively. The Group adopted ASC 740‑10‑25 Accounting for Uncertainty in Income Taxes and such adoption did not have any material impact on the accompanying consolidated financial statements. The Group through its Chinese subsidiary and VIE are principally engaged in the business located in the PRC and therefor, are subject to income taxes in the PRC. Tax regulations are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. All tax positions taken, or expected to be taken, continue to be more likely than not ultimately settled at the full amount claimed. The Company’s tax filings are subject to the PRC tax bureau’s examination for a period up to five years. The Company is not currently under any examination by the PRC tax bureau. Deferred income tax assets are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements, net operating loss carry forwards and credits. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided in accordance with the laws of the relevant taxing authorities. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in which temporary differences are expected to be reversed or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of comprehensive income in the period of the enactment of the change. Significant components of the Company’s deferred tax assets are as follows at December 31, 2019 and 2018: 2019 2018 Deferred tax items Accounts receivable, net $ 12,807 $ 49,963 Accrued expenses 112,954 162,089 Deferred income 26,429 64,153 Depreciation (18,429) — Net operating loss carryforward 57,695 327,473 Total deferred items 191,456 603,678 Tax rate at 25 % 25 % Deferred tax assets 47,864 150,920 Valuation allowance (14,424) (15,449) Deferred tax assets, net $ 33,440 $ 135,471 The provision for income taxes are summarized as follows: 2019 2018 2017 Current $ 206 $ — $ 338,194 Deferred tax adjustment 101,166 (134,454) 58,358 Change in valuation allowance — 134,454 — Total $ 101,372 $ — $ 396,552 Reconciliation of the statutory income tax rate and the Company’s effective income tax rate for the years ended December 31, 2019, 2018, and 2017, respectively, are as follows: 2019 2018 2017 Hong Kong statutory income tax rate 16.5 % 16.5 % — Valuation allowance recognized with respect to the loss in the Hong Kong Company (16.5) % (16.5) % — PRC statutory income tax rate 25.0 % 25.0 % 25.0 % Effect of income tax exemptions and reliefs in the PRC companies 0.0 % 0.0 % 0.0 % Effect of loss carryforward in the PRC companies (24.9) % (25.0) % 0.0 % Effect of non-deductible expenses in the PRC companies 0.0 % 0.0 % 0.4 % Effective rate 0.1 % 0.0 % 25.4 % Aggregate undistributed earnings of the Company’s subsidiary, VIE and VIE’s subsidiaries located in the PRC that are available for distribution at December 31, 2019 are considered to be indefinitely reinvested and accordingly, no provision has been made for the Chinese dividend withholding taxes that would be payable upon the distribution of those amounts to any entity within the Company that is outside of the PRC. The Company does not have any present plan to pay any cash dividends on its ordinary shares in the foreseeable future. It intends to retain most of its available funds and any future earnings for use in the operation and expansion of its business. As of December 31, 2019 and 2018, the Company had not declared any dividends. As of December 31, 2019 and 2018, the Company had no significant uncertain tax positions that qualify for either recognition or disclosure in the financial statements. As of December 31, 2019, income tax returns for the tax years ended December 31, 2015 through December 31, 2019 remained open for statutory examination by PRC tax authorities. The uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities. Based on the outcome of any future examinations, or as a result of the expiration of statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits for tax positions taken regarding previously filed tax returns, might materially change from those recorded as liabilities for uncertain tax positions in the Company’s consolidated financial statements as of December 31, 2019 and 2018. In addition, the outcome of these examinations may impact the valuation of certain deferred tax assets (such as net operating losses) in future periods. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits, if any, as a component of income tax expense. The Company does not anticipate any significant increases or decreases to its liability for unrecognized tax benefit within the next 12 months. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of income taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined, but an underpayment of income tax liability exceeding RMB100,000 (approximately $14,000) is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. Accounting for Uncertainty in Income Taxes The tax authority of the PRC government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s PRC entities’ tax filings, which may lead to additional tax liabilities. ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company’s tax positions and concluded that no provision for uncertainty in income taxes was necessary as of December 31, 2019 and 2018. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consisted of the following as of December 31, 2019 and 2018: 2019 2018 Payroll and social security payable $ 342,040 $ 334,734 Bonus payable 47,367 162,089 Other payables and accrued liabilities 71,283 78,264 Total Accounts Payable and Accrued Liabilities $ 460,690 $ 575,087 |
VAT AND OTHER TAXES PAYABLE
VAT AND OTHER TAXES PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
VAT AND OTHER TAXES PAYABLE | |
VAT AND OTHER TAXES PAYABLE | NOTE 7 – VAT AND OTHER TAXES PAYABLE VAT and other taxes payable consisted of the following as of December 31, 2019 and December 31, 2018: 2019 2018 VAT payable $ 107,146 $ 120,305 Surcharge and fees 312 15,114 Income tax payable 204 — Other taxes — 2,276 Total Other Taxes Payable $ 107,662 $ 137,695 In May 2016, the business tax has been incorporated into VAT in China, which means there will be no more business or sales tax and accordingly some business operations previously taxed in the name of business tax will be taxed in the manner of VAT thereafter. The Company is subject to a 6% VAT for all of its commission income. Surcharge and fees payable include urban maintenance and construction tax payable, additional education tax payable, and local education tax payable. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
LEASES | NOTE 8 - LEASES The Group leases all of its offices under various non-cancelable lease agreements that expire on various dates through 2023. The Group evaluates contracts entered into to determine whether the contract involves the use of property which is either explicitly or implicitly identified in the contract. The Group evaluates whether it controls the use of the asset, which is determined by assessing whether it obtains substantially all economic benefits from the use of the asset, and whether it has the right to direct the use of the asset. If these criteria are met and the Group has identified a lease, it would be accounted for under the requirements of ASC 842. Upon the possession of a leased asset, the Group determines its classification as an operating or finance lease. All of its real estate leases are classified as operating leases. The Group’s real estate leases have initial terms ranging from one to five years. Renewal options are generally not recognized as part of the right-of-use assets and lease liabilities as it is not reasonably certain at commencement date that the Group would exercise the options to extend the lease. The Group’s real estate leases typically provide for fixed minimum rent payments. For operating leases that include rent holidays and rent escalation clauses, the Group recognize lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. As of December 31, 2019, the Group had one long-term lease which became effective on January 1, 2019, and which will be expired on December 31, 2023. The Group used the Chinese bank long-term lending annual rate of 4.35% for a typical five years lease, in determining the present value of future lease payments. The same rate was used as the discount rate to measure the lease liability at January 1, 2019, the date of adoption. For other leases with lease terms of 12 months or less, the Group made an election not to recognize lease assets and lease liabilities. The lease expense recognized for such leases is on a straight-line basis over the lease terms. A summary of operating lease right-of-use assets and liabilities as of December 31, 2019 is as follows: Operating Lease Assets 2019 Main office $ 479,744 Total operating lease assets - initial measurement 479,744 Less: accumulated amortization (87,873) Operating Lease Assets, net $ 391,871 Operating Lease Liabilities Total operating lease liabilities - initial measurement $ 479,744 Accrued interest 17,628 Payment to liabilities (158,253) Total operating lease liabilities 339,119 Less: operating lease liabilities, current (91,737) Long-term Operating Lease Liabilities $ 247,382 As of December 31, 2019, future minimum lease payments for operating leases consisted of the following: For the Years Ending December 31, Operating Leases 2020 $ 105,502 2021 105,502 2022 105,502 2023 52,751 Total minimum payments 369,257 Less: imputed interest (30,138) Total operating lease liabilities $ 339,119 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 9 – STOCKHOLDERS’ EQUITY Ordinary Shares The Company is authorized to issue up to 50,000,000 ordinary shares, par value $0.001 per share. Prior to the formation of the Company, its VIE, Mingda Tianjin, issued 10,380,000 founders’ shares to its shareholders. Mr. Siping Xu, chief executive officer and chairman of the Company, currently owned 10,200,000 shares, or 88% of the outstanding ordinary shares. In connection with the corporate restructuring and in anticipation of the IPO of the Company’s equity security, each shareholder of Mingda Tianjin received MDJM’s ordinary share at a one-to-one ratio. On January 26, 2018, MDJM issued 10,380,000 ordinary shares to entities controlled by the shareholders of Mingda Tianjin. All references to the numbers of ordinary shares and per share amounts in the accompanying consolidated financial statements have been adjusted to reflect the issuance of 10,380,000 shares on a retrospective basis as if such shares were issued and outstanding throughout the periods presented. Pursuant to a registration statement filed with the Securities and Exchange Commission (“SEC”) and declared effective by the SEC on November 13, 2018, the Company completed the first closing of its IPO on December 26, 2018. A total of 1,241,459 ordinary shares were sold at a price of $5 per share to the public at the first closing. The Company received a total of $6,207,295 in gross proceeds from its first closing of its IPO. In connection with this public offering, the Company incurred direct offering costs of $2,103,816, which included audit, legal, consulting, commission, and other expenses. Per ASC 505, the Company classified these direct offering costs in the equity section to offset additional paid in capital. On January 4, 2019, the Company completed the second closing of its IPO. A total of 19,361 additional ordinary shares were issued at a price of $5 per share. The total proceeds of this second closing were $96,805. There was a total of $26,399 direct cost in connection with the second closing. Underwriter Warrants Pursuant to the Engagement Letter (defined below), the Company agreed to grant the underwriter of its IPO, Network 1 Financial Securities, Inc. (“NETW”), underwriter warrants equal to 10% of the total number of the Company’s ordinary shares being sold in the IPO, at the closing of the IPO. The underwriter’s warrants were non-exercisable for six months after the closing of the offering and will expire five years after the effective date of the registration statement. The underwriter’s warrants are exercisable at a price equal to 125% of $5, the public offering price in the IPO. The underwriter’s warrants are not redeemable. The underwriter’s warrants provide for cashless exercise and contain provisions for on demand registration of the sale of the underlying ordinary shares at the Company’s expense and unlimited “piggyback” registration rights for a period of five years after the closing of the IPO at the Company’s expense. The Company sold 1,241,459 and 19,361 ordinary shares at the closings of its IPO on December 26, 2018, and January 4, 2019, respectively. A total of 126,082 underwriter’s warrants were issued on January 4, 2019. Underwriter’s warrants were valued at $1.51 per warrant using Black-Scholes Model. A risk-free rate of 4.35% per annum and volatility of 35% were used in the Black-Scholes Model calculation. The total value of the underwriter warrants amounted to $190,384. The underwriter warrants were classified as equity and credit to paid-in capital account, which was offset by the same amount recorded as additional paid-in capital-underwriter cost. |
NONCONTROLLING INTEREST
NONCONTROLLING INTEREST | 12 Months Ended |
Dec. 31, 2019 | |
NONCONTROLLING INTEREST | |
NONCONTROLLING INTEREST | NOTE 10 - NONCONTROLLING INTEREST Noncontrolling interest are classified as a separate line item in the equity section and disclosures in the Company's consolidated financial statements have distinguished the interest of the Company from the interest of noncontrolling interest holders. Xishe Xianglin (Tianjin) Business Operation & Management Co. Ltd. was 49% owned by nonrelated third parties as of December 31, 2019 and 2018, respectively. Noncontrolling interest consists of following at December 31, 2019: Amount Noncontrolling interest at December 31, 2017 $ — Net loss attributable to noncontrolling interest (21,843) Foreign currency translation adjustment attributable to noncontrolling interest (823) Noncontrolling interest at December 31, 2018 (22,666) Net loss attributable to noncontrolling interest (153,742) Foreign currency translation adjustment attributable to noncontrolling interest (2,398) Noncontrolling interest at December 31, 2019 $ (178,806) |
STATUTORY RESERVE
STATUTORY RESERVE | 12 Months Ended |
Dec. 31, 2019 | |
STATUTORY RESERVE | |
STATUTORY RESERVE | NOTE 11 - STATUTORY RESERVE Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund.” Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). The statutory surplus reserve fund is non-discretionary other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of shares currently held by them, provided that the remaining statutory surplus reserve balance after such issuance is not less than 25% of the registered capital before the conversion. The statutory reserve of Mingda Tianjin amounted to $262,954 and $232,542 as of December 31, 2019 and 2018, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 - COMMITMENTS AND CONTINGENCIES Country Risk As the Group’s principal operations are currently conducted in the PRC, it is subject to considerations and risks not typically associated with companies in North America and Western Europe. These risks include, among others, risks associated with the political, economic, and legal environments and foreign currency exchange limitations encountered in the PRC. The Group’s results of operations may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, among other things. In addition, all of the Group’s transactions in the PRC are denominated in RMB, which must be converted into other currencies before remittance from the PRC. Both conversion of RMB into foreign currencies and remittance of foreign currencies abroad subject to the regulations of foreign currency governed by the PRC regulatory agents. Service Contract On July 16, 2018, the Company signed a two-year Investor Relations Agreement (the “IR Agreement”) with Ascent Investor Relations Inc. (“Ascent”). Pursuant to the IR Agreement, Ascent will act as an investor counsel and provide related services to MDJM from July 16, 2018, to July 15, 2020. As consideration, the Company will pay $4,140 per month to Ascent before being listed on the market of Nasdaq and $7,820 per month after being listed on the market of Nasdaq. Either party may terminate the IR Agreement by providing a written notice of termination for any reason at any time during the second year of the IR Agreement. On September 17, 2019, the Company gave a notice of termination to Ascent and the IR Agreement terminated on December 17, 2019. On September 6, 2018, the Company signed an Engagement Letter (the "Engagement Letter") with NETW. Pursuant to the Engagement Letter, the Company engaged NETW as the Company’s exclusive lead or managing underwriter and/or book runner and investment banker in connection with the sale of at least of $6,000,000 worth of the Company’s ordinary shares. The Company agreed to pay NETW an underwriting discount or spread of seven percent (7%) of the gross proceeds from investors introduced by NETW and five percent (5%) of the gross proceeds from investors introduced by the Company. NETW was also entitled to a corporate finance fee equal to two percent (2%) of the gross proceeds of the offering. The Company also agreed to reimburse NETW up to $75,000 out of pocket expenses related to the offering. The Engagement Letter expired on September 6, 2019. Legal Proceeding Except for the following disclosure, the Group is currently not a party to any litigation of which, if determined adversely to it, would individually or in the aggregate be reasonably expected to have a material adverse effect on its business, operating results, cash flows, or financial condition. On January 3, 2018, Mingda Tianjin filed a civil complaint in Jizhou District People’s Court, Tianjin City (the “Jizhou Court”), alleging a breach of contract against Tianjin Huacheng Century Investment Co. Ltd. (the “Defendant”). Mingda Tianjin and the Defendant entered into a Sales Agency Service Contract on May 1, 2014, as supplemented on November 23, 2015, pursuant to which Mingda Tianjin was expected to provide sales agency services to the Defendant for real estate projects developed by the Defendant. Mingda Tianjin stated that it had performed its duty fully in accordance with the Sales Agency Service Contract and its accompanying agreements signed by both parties. However, since November 2015, the Defendant had defaulted on sales agency fees and retention fees earned by Mingda Tianjin pursuant to the Sales Agency Service Contract, for an aggregate amount of RMB2,792,854, approximately $429,700. Mingda Tianjin and the Defendant reached a civil mediation agreement as approved by the Jizhou Court by agreeing that the Defendant will pay Mingda Tianjin the sales agency fee by installments, with the first installment of RMB 500,000, approximately $76,900, due by or before February 9, 2018, the second installment of RMB1,146,427, approximately $176,400, due by or before October 31, 2018, and the third installment of RMB1,146,427, approximately $176,400, due by or before December 31, 2018. The first installment of $76,900 was received in 2018. On January 9, 2019, the Company reached a settlement with the Defendant. The Defendant agreed to pay 90% of balance due, which equivalent to RMB 2,063,569, approximately $300,033, by January 10, 2019. The Company received a total of $300,033 (2,063,568 RMB) on January 10, 2019, and the case was closed. On September 18, 2018, Mingda Tianjin filed a civil complaint in Binhai District People’s Court, Tianjin City (the “Binhai Court”), alleging a breach of contract against Tianjin Binhai Real Estate. Ltd. (“Tianjin Binhai”) and claimed $267,217 (RMB1,845,722) receivable for the service delivered to Tianjin Binhai. Pursuant to the judgement made by Binhai Court, Tianjin Binhai paid $251,387 (RMB1,736,378) in November 2018, and $15,265 (RMB105,437) on September 5, 2019. The case was closed. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 13 – RELATED PARTY TRANSACTIONS On January 26, 2018, MDJM issued 10,380,000 ordinary shares to its beneficial owners, including some of its executive officers and directors indirectly, in connection with entering into the VIE contractual arrangements, in a private transaction under Cayman Island laws, with 10,200,000 ordinary shares issued to MDJH LTD, an entity 100% controlled by Siping Xu, MDJM’s CEO, chairman of the board, and director, 10,000 ordinary shares issued to CANDM LTD, an entity 100% controlled by Yang Li, MDJM’s director, and 10,000 ordinary shares issued to MNCC LTD, an entity 100% controlled by Mengnan Wang, MDJM’s CFO. MDJM conducts real estate services business through Mingda Tianjin, a VIE that it controls through a series of contractual arrangements between its PRC subsidiary, Mingda Beijing, and Mingda Tianjin. The shareholders of Mingda Tianjin include but are not limited to MDJM’s principal shareholder, Mr. Siping Xu. Such contractual arrangements provide MDJM (i) the power to control Mingda Tianjin, (ii) the exposure or rights to variable returns from its involvement with Mingda Tianjin, and (iii) the ability to affect those returns through use of its power over Mingda Tianjin to affect the amount of its returns. |
LOSS ON DISPOSAL OF SUBSIDIARY
LOSS ON DISPOSAL OF SUBSIDIARY | 12 Months Ended |
Dec. 31, 2019 | |
LOSS ON DISPOSAL OF SUBSIDIARY | |
LOSS ON DISPOSAL OF SUBSIDIARY | NOTE 14 – LOSS ON DISPOSAL OF SUBSIDIARY To explore new business opportunity, the Group formed Jiayuan on November 22, 2018. The Group owned a 70% controlling interest in Jiayuan. Jiayuan had no activity in 2018. On September 30, 2019, the Group entered into a Share Transfer Agreement with JYT, the owner of the remaining 30% equity interest (the non-controlling interest) in of Jiayuan. JYT was not a related party of the Group. Pursuant to the Share Transfer Agreement, the Group transferred its 70% ownership interest in Jiayuan to JYT. Yuan Zhang, the 100% owner of JYT, signed an Acquisition Agreement with the Group and agreed to pay a total of $143,538 (RMB1,000,000) to the Group in five installments over 35 months. The Group recorded the fair value of the note receivable of $126,712 as consideration for relinquishing its ownership interest in Jiayuan and settlement of obligations of Jiayuan to the Group. Thus, JYT became the 100% owner of Jiayuan immediately after September 30, 2019. The Group recorded a loss on disposal of subsidiary of $4,970. The Group had recorded its share of the operating loss of Jiayuan until the date of disposition, totaling $61,345. As Jiayuan had not commenced its planned rental operation as of the date of disposition, the Group concluded that Jiayuan was not a major line of business nor a major geographical area of operation of the reporting Group, and its disposal was not significant enough to be presented as discontinued operation. The Group treated the $143,538 note receivable as a consideration from disposal of subsidiary. To determine the fair market value of the future payments, the Group used 5.75% as an annual discount rate, which consists of 4.75% Chinese benchmark business loan rate, plus 1% as a risk factor. The fair value of the future payments of $143,538 (RMB1,000,000) was assessed at $126,712 at September 30, 2019, the date when control is lost in Jiayuan. Total note receivable of $126,712 at December 31, 2019 consisted of $27,179, which included in “Other receivable” and $99,532 was presented under the caption of “Other receivable-long term” in the accompanying consolidated financial statements. Yuan Zhang, the 100% owner of JYT, is not a related party of the Group. Pursuant to PRC laws, liability of an individual who entered into an agreement is unlimited and secured by his or her personal wealth. Repayment in full amount is expected in the future, and no allowance is considered necessary at December 31, 2019. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 15 – SUBDEQUENT EVENTS In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China. The spread of this virus has caused business disruptions beginning in January 2020, including the closure of the majority of business on mainland China. In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread throughout the world. The spread of COVID-19 has caused public health officials to recommend precautions to mitigate the spread of the virus, such as, cease traveling to non-essential jobs and curtail all unnecessary travel, and stay at home as much as possible. Because of the quarantines and travel restrictions mandated by the Chinese government, from the end of January to mid-March of 2020, many real estate projects the Group were promoting and selling were suspended, which adversely impacted its business during that period. However, because its operating income and earnings have historically been lower during the first quarter than other quarters due to the winter and the Chinese New Year holiday period, the Group believe this seasonality partially mitigated the adverse impact on its full-year operating results. Starting from the end of March 2020, the COVID-19 outbreak in China appeared to have slowed down and these real estate projects began to reopen. Although the Group believes its operations have resumed to the level before the COVID-19 outbreak as of April 2020 and even though the Group currently expects to continue the promotion and sales of real estate projects as it typically did, to the extent COVID-19 further impacts its promotion and sale of real estate projects, its financial condition, results of operations, and cash flows could be adversely affected. On April 10, 2020, Mingda Tianjin filed a civil complaint in Hexi District People’s Court, Tianjin City (the “Hexi Court”), alleging a breach of contract against Tianjin Tian Fang Lishan Real Estate. Ltd. (“Tian Fang Lishan”). Mingda Tianjin entered into a Sales Agency Service Contract with Tian Fang Lishan and completed all the services under the contract. Mingda Tianjin claimed that Tian Fang Lishan owed unpaid service fee of $15,632 as of the filing date. The Hexi Court accepted the case on April 10, 2020. The case is ongoing. |
RESTRICTED NET ASSETS OR PARENT
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | NOTE 16 – RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION As of December 31, 2019, the Company's operations are conducted through its PRC subsidiary and VIE, which can only pay dividends out of their retained earnings determined in accordance with the accounting standards and regulations in the PRC and after they have met the PRC requirements for appropriation to statutory reserve. In addition, a majority of the Company's businesses and assets are denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People's Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. Approval of foreign currency payments by the People's Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers' invoices, shipping documents, and signed contracts. These currency exchange control procedures imposed by the PRC government authorities may restrict the ability of the Company's PRC subsidiary to transfer their net assets to MDJM LTD (the "Parent Company") through loans, advances, or cash dividends. Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of this test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant's proportionate share of net assets of its consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company in the form of loans, advances or cash dividends without the consent of a third party. The restricted net assets of the Company's PRC subsidiary amounted to approximately $5,967,000 and $4,969,000 as of December 31, 2019 and 2018, respectively. The Company's PRC subsidiary' net assets as of December 31, 2019 and 2018 exceeded 25% of the Company's consolidated net assets. Accordingly, Parent Company's condensed financial statements have been prepared in accordance with Rule 5-04 and Rule 12-04 of SEC Regulation S-X, and are as follows. MDJM LTD CONDENSED BALANCE SHEETS As of December 31, 2019 2018 Assets Cash $ 4,995,834 $ 5,626,079 Prepaid expense 1,532 — Current Assets 4,997,366 5,626,079 Investment in subsidiaries 4,621,653 4,144,076 Total Assets $ 9,619,019 $ 9,770,155 Liabilities and Equity Current liabilities $ 550 $ — Due to subsidiaries 940,734 1,565,174 Total liabilities 941,284 1,565,174 Equity: Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share, 11,640,820 and 11,621,459 shares issued and outstanding as of December 31, 2019 and 2018, respectively 11,641 11,621 Additional paid in capital 6,734,681 6,664,295 Statutory reserve 262,954 232,542 Retained earnings 1,948,804 1,526,110 Accumulated other comprehensive loss (280,345) (229,587) Total MDJM Ltd stockholders’ equity 8,677,753 8,204,981 Total Liabilities and Equity $ 9,619,019 $ 9,770,155 MDJM LTD CONDENSED STATEMENTS OF OPERATIONS AND COMPEREHENAIVE INCOME (LOSS) For the Years Ended December 31, 2019 2018 Revenue $ — $ — Share of profit (loss) in subsidiaries 453,106 (515,971) Start-up fees — 42,574 Other general and administrative expenses 101,948 — Total Operating Expenses 101,948 42,574 Income (loss) from operations 351,158 (558,545) Interest income 26,719 — Net Income / (Loss) $ 377,877 $ (558,545) Other comprehensive income (loss): Foreign currency translation adjustments (50,758) (169,521) Comprehensive income (loss) $ 327,119 $ (728,066) *There were no operating activities in 2017 as MDJMLTD was incorporated in January 2018. MDJM LTD CONDENSED STATEMENTS OF CASH FLOWS For the Years Ended December 31 2019 2018 Net Cash Used in Operating Activities $ (76,211) $ (42,574) Net Cash (Used in) Provided by Investing Activities (624,440) 1,565,174 Net Cash Provided by Financing Activities 70,406 4,103,479 Net (decrease) increase in cash and cash equivalents (630,245) 5,626,079 Cash and cash equivalents - beginning of the year 5,626,079 — Cash and cash equivalents - end of the year $ 4,995,834 $ 5,626,079 *There were no operating activities in 2017 as MDJM LTD was incorporated in January 2018. Base of Preparation The condensed financial information of the Parent Company has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements. Certain information and footnote disclosures normally included in financial statements prepared in conformity with U.S. GAAP have been condensed or omitted. The Parent Company only financial information has been derived from the Group’s consolidated financial statements and should be read in conjunction with the Group’s consolidated financial statements. The Company records its investment in its subsidiary under the equity method of accounting as prescribed in ASC 323-10 Investment-Equity Method and Joint Ventures. Such investments are presented on the balance sheets as “Investments in subsidiaries” and share of the subsidiaries’ profit or loss are shown as “Share of profit in subsidiaries” on the statements of operation. Due from (to) subsidiaries Due from (to) subsidiaries represented the fund advanced to subsidiaries or expenses paid by subsidiaries on behalf of parent Company. Due from (to) subsidiaries is interest free and due on demand. The Company and its subsidiaries were included in the accompanying consolidated financial statements where the inter-company balances and transactions were eliminated upon consolidation. Initial Public Offering Pursuant to a registration statement filed with the SEC and declared effective by the SEC on November 13, 2018, the Company completed the first closing of its IPO on December 26, 2018. A total of 1,241,459 ordinary shares were sold at a price of $5 per share to the public at the first closing. The Company received a total of $6,207,295 in gross proceeds from its first closing of its IPO. In connection with this public offering, the Company incurred direct offering costs of $2,103,816, which included audit, legal, consulting, commission, and other expenses. Per ASC 505, the Company classified these direct offering costs in the equity section to offset additional paid in capital. On January 4, 2019, the Company completed the second closing of its IPO. A total of 19,361 additional ordinary shares were issued at a price of $5 per share. The total proceeds of this second closing were $96,805. There was a total of $26,399 direct cost in connection with the second closing. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of consolidation | Basis of consolidation The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements include the financial statements of Mingda Tianjin and its subsidiaries and branch offices. All significant inter-company accounts and transactions have been eliminated on consolidation. The Group evaluates each of its interests in private companies to determine whether or not the investee is a VIE and, if so, whether the Group is the primary beneficiary of such VIE. In determining whether the Group is the primary beneficiary, the Group considers if the Group (i) has power to direct the activities that most significantly affects the economic performance of the VIE, and (ii) receives the economic benefits of the VIE that could be significant to the VIE. If deemed the primary beneficiary, the Group consolidates the VIE. Mingda Tianjin has the following branch offices and/or subsidiaries, which have been included in the accompanying consolidated financial statements: Percentage Date of Place of of Name of Branch Offices/Subsidiaries of Mingda Formation Formation Ownership Tianjin Mingda Jiahe Real Estate Co., Ltd. Yangzhou Branch October 18, 2017 Yangzhou, China N/A Tianjin Mingdajiahe Real Estate Co., Ltd. Suzhou Branch October 13, 2017 Suzhou, China N/A Tianjin Mingdajiahe Real Estate Co., Ltd. Chengdu Branch June 24, 2019 Chengdu, China N/A XiShe (Tianjin) Business Management Co., Ltd. October 20, 2017 Tianjin, China XiShe (Tianjin) Culture and Media Co., Ltd. July 25, 2018 Tianjin, China Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. March 9, 2018 Tianjin, China To explore new business opportunity, the Group formed Xishe Jiayuan (Tianjin) Business Operation & Management Co. Ltd. (“Jiayuan”) on November 22, 2018. The Group owned a 70% controlling interest in Jiayuan. Jiayuang had no business activities in 2018 .On September 30, 2019, the Group entered into a Share Transfer Agreement with Tianjin Jin Yong Tai Property Management Ltd. (“JYT”), the owner of the remaining 30% equity interest (the non-controlling interest) of Jiayuan. JYT was not a related party of the Group. Pursuant to the Share Transfer Agreement, the Group transferred its 70% ownership interest in Jiayuan to JYT. Accordingly, the results of operation of Jiayuan from January 1, 2019 to September 30, 2019, the date the Group lost control of Jiayuan, were included in the accompanying consolidation financial statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from such estimates. Significant accounting estimates reflected in the Group’s financial statements include useful lives and valuation of long-lived assets, allowance for doubtful accounts, assumptions related to the consolidation of entities in which the Group holds variable interests, and valuation allowance on deferred tax. |
Reclassification of Financial Statement Accounts | Reclassification of Financial Statement Accounts Certain prior period amounts have been reclassified to conform with the current period presentation. These reclassifications have no effect on the previously reported financial position, results of operations, and cash flows. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 ‑ Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date; Level 2 ‑ Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data; and Level 3 ‑ Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable, other receivables, prepaid expenses, prepaid income tax, deferred tax assets, accounts payable and accrued liabilities, income tax payable, and other taxes payable approximate their fair value based on the short-term maturity of these instruments. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and all highly liquid investments with an original maturity of three months or less. The Group maintains cash and cash equivalents with various commercial banks within the PRC. The Company has not experienced any losses in the bank accounts and believes it is not exposed to any risks on its cash held in PRC banks. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are carried at cost, less accumulated depreciation. Costs include any incremental costs that are directly attributable to the construction or acquisition of the item of property and equipment. Maintenance and repairs are expensed as incurred, while major maintenance and remodeling costs are capitalized if they extend the useful life of the asset. Depreciation is computed using the straight-line method over the estimated useful lives. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in the results of operations. Estimated Classification Useful Life Office Equipment and Fixtures 3 or 5 years Computers 3 or 5 years Software 2 or 10 years Vehicles 4 or 5 years |
Revenue Recognition | Revenue Recognition The Group adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) effective January 1, 2018 by using the modified retrospective transition method. The adoption had no material impact on the Group’s consolidated financial statements and there was no adjustment to the beginning retained earnings on January 1, 2018. The Group determines revenue recognition through the following five steps: (i) identification of the contract, or contracts, with a customer, (ii) identification of the performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations in the contract, and (v) recognition of revenue when, or as, it satisfies a performance obligation. The Group’s service contracts typically include the terms of parties, services to be provided, service covered period, details of service fee calculation, and terms or conditions when services are to be paid. The performance obligation of the Group is clearly defined as to sale of real properties specified in the contracts. The performance obligation is satisfied when at the point of closing of the sales contract with each property buyer is completed and, when the developer received the proceeds from the sales (cash and/or bank loans). The commission fee is determined based on the total value of property sold multiplied by the commission rate agreed upon in the contracts. The commission rates vary among developers. The payment terms also vary with certain developers dividing the contracts into several phases and making payment when a phase has been completed. These variable considerations will not change the calculation of commission fee. The transaction price is determined based on the commission rate and properties sold. The Group’s major revenue is commission fees from selling real estate properties. Commission revenue from property brokerage is recognized when: (i) the Group has completed its performance obligation to sell properties per contract, (ii) the property developer and the buyer completed a property sales transaction and the developer received full or partial amount of proceeds from the buyer or full payment from the banker if mortgaged, and (iii) the property developer granted confirmation to the Group to issue an invoice per contract. The Group recognizes revenue net of value added taxes (“VAT”). The Group did not handle any monetary transactions nor act as an escrow intermediary between developers and buyers. Certain sales contracts allow developers to withhold certain percentage of total commission for a certain period as a risk fund to cover potential damages caused by sales activities of the Group. In these circumstances, the Group will not determine that its performance obligations have been fulfilled until the withholding period has passed. Since the amount being withheld is the risk of loss from the sales transaction, the Group records the amount withheld by developers as deferred income and will recognize the income when the withholding period has passed and the amount withheld is confirmed by the developers. Additionally, the Group provides consulting services to its clients, such as training, advertising and marketing. Revenue recognized from consulting is net of VAT. Revenue from consulting services was $155,217, $51,818 |
Segment Information | Segment Information The Group uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Group’s reportable segments. All of the Group’s operations are considered by the chief operating decision maker to be aggregated in one reportable operating segment. Currently, all of the Group’s customers are in the PRC and major income is derived from commission-based service, which represented 97.1%, 97.4% and 99.9% of total revenue in the years of 2019, 2018 and 2017, respectively, and minimal consulting and other services which represented 2.9%, 2.6%, and 0.1% of total revenue in the years of 2019, 2018, and 2017, respectively. Through Mingda Tianjin and its three branch offices in Chengdu, Suzhou, and Yangzhou, the Group own and operate a primary real estate agency service business in the following local markets, Tianjin, Chengdu, Yangzhou, and Suzhou, which represent 83%, 5%, 9%, and 3% of total agency revenue for the year ended December 31, 2019, respectively, represent 95%, 0%, 4%, and 1% of total agency revenue for the year ended December 31, 2018, respectively and 97%, 3%, 0%, and 0% of total agency revenue for the year ended December 2017, respectively. |
Leases | Leases ASC 842 requires the Group to determine whether a contract is a lease or contains a lease at the inception of the contract, considering all relevant facts and circumstances. A` contract is a lease or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. A lease is classified as a finance lease when the lease meets any of the following criteria: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease not classified as a finance lease is classified as an operating lease. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee should include payments to be made in optional periods only if the lessee is reasonably certain to exercise its option to extend the lease or not exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. The Group elected not to recognize on the balance sheet leases with terms of 12 months or less. The Group typically only includes the initial lease term in its assessment of a lease arrangement. Options to extend a lease are not included in the Group’s assessment unless there is reasonable certainty that the Group will renew. |
Business Tax and Value Added Tax ("VAT") | Business Tax and Value Added Tax (“VAT”) The PRC government implemented a VAT reform pilot program, which replaced the business tax with VAT. Since May 2016, the changes from business tax to VAT have been expanded to all other service sectors which used to be subject to business tax. The VAT rate applicable to subsidiaries and consolidated VIE of the Company is 6%. The Company accrues VAT payable when sales invoices are generated. |
Deferred Offering Costs | Deferred Offering Costs Deferred offering costs consist principally of all direct offering costs incurred by the Company, such as underwriting, legal, accounting, consulting, printing, and other registration related costs in connection with the initial public offering (“IPO”) of the Company’s ordinary shares. Such costs are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds. In the event the offering is unsuccessful or aborted, the costs will be expensed. Deferred offering costs of $2,103,816 and $26,399 were charged to additional paid-in capital in connection with the Company's IPO with its first closing and second closing completed on December 26, 2018 and January 4, 2019, respectively. |
Marketing and Advertising Expenses | Marketing and Advertising Expenses Marketing and advertising expenses consist primarily of marketing planning fees and advertisements expenses used for targeted property sales. The Group expenses all marketing and advertising costs as incurred and records these costs within “Selling expenses” on the consolidated statements of operations when incurred. The Group incurred marketing and advertising expenses of $79,535, $2,889, and $178,878 for the years ended December 31, 2019, 2018, and 2017, respectively. |
Income Taxes | Income Taxes The Company's subsidiary and VIE in the PRC are governed by the income tax laws of the PRC. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities, and their reported amounts in the financial statements, net operating loss carry forwards and credits by applying enacted statutory tax rates applicable to future years when the reported amounts of the asset or liability are expected to be recovered or settled, respectively. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. The Group only recognizes tax liabilities related to uncertain tax positions when such positions are more likely than not of being sustained upon examination. For such positions, the Group recognizes the largest amount of tax liabilities that is more than fifty percent likely of being sustained upon the ultimate settlement of such uncertain position. There were no such tax liabilities recognized in the accompanying consolidated financial statements. The Group records interest and penalties as a component of income tax expense. There were no such interest and penalties for the years ended December 31, 2019, 2018, and 2017, respectively. |
Noncontrolling Interest | Noncontrolling Interest Noncontrolling interest is classified as a separate line item in the equity section and disclosures in the Company’s consolidated financial statements have distinguished the interest of the Company from the interest of noncontrolling interest holders. Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. was 49% owned by nonrelated third parties as of December 31, 2019 and 2018, respectively. |
Per Share Amounts | Per Share Amounts The Company computes per share amounts in accordance with ASC Topic 260 “Earnings per Share ” (EPS), which requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the net income (loss) available to holders of ordinary shares by the weighted-average number of ordinary shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted in the issuance of ordinary shares that then shared in the earnings of the Company, if any. This is computed by dividing net earnings by the combination of dilutive ordinary share equivalents. There were no dilutive ordinary share equivalents as of December 31, 2019, 2018, and 2017, respectively. Accordingly, basic and diluted loss per share were the same. December 31, December 31, December 31, 2019 2018 2017 Numerator for earnings per share: Net income (loss) attributable to the Company’s shareholders $ 453,106 $ (515,971) $ 1,167,002 Denominator for basic and diluted earnings per share: Basic weighted average ordinary shares * 11,640,661 10,400,408 10,380,000 Per share amount Per share - basic and diluted $ 0.04 $ (0.05) $ 0.11 * Prior to the formation of MDJM, Mingda Tianjin issued 10,380,000 ordinary shares to its shareholders. Each shareholder of Mingda Tianjin was expected to receive MDJM’s share at a one-to-one ratio. On January 26, 2018, MDJM issued 10,380,000 ordinary shares to entities controlled by the shareholders of Mingda Tianjin. All references to numbers of ordinary shares and per share amounts in the accompanying consolidated financial statements have been adjusted to reflect such issuance of shares on a retrospective basis from the earliest period presented. |
Comprehensive Income | Comprehensive Income The Company follows ASC 220‑10, “Reporting Comprehensive Income,” which requires the reporting of comprehensive income in addition to net income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income. Comprehensive income generally represents all changes in shareholders’ equity during the period except those resulting from investments by, or distributions to shareholders. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of the Company is the Chinese Renminbi (“RMB”). The U.S. dollar is used as the reporting currency of the Group. Monetary assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollar at the rates of exchange ruling at the balance sheet date. Equity accounts are translated at historical exchange rates, and revenue, expenses, gains, and losses are translated using the average rate for the year. Translation adjustments are reported as foreign currency translation adjustment and are shown as a separate component of other comprehensive income (loss) in the consolidated statements of changes in equity and consolidated statements of operations and comprehensive income(loss). December 31, December 31, December 31, US$ Exchange Rate 2019 2018 2017 At end of the period - RMB 6.9668 6.8778 6.5075 Average rate for the period ended - RMB 6.9072 6.6187 6.7588 The financial records of certain of the Company’s subsidiaries and VIE are maintained in local currencies other than the U.S. dollar, such as RMB, which are their functional currencies. Transactions in other currencies are recorded at the rates of exchange prevailing when the transactions occur. Transaction gains and losses are recognized in the consolidated statements of operations and comprehensive income (loss). There were $12,072, $0, and $0 transaction gain recorded in the years ended December 31, 2019, 2018, and 2017, respectively. |
Concentration Risk | Concentration Risk The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environment in the PRC, and by the general state of the economy of the PRC. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the PRC. Per PRC regulations, the maximum insured bank deposit amount is approximately $71,770 (RMB 500,000) for each financial institution. The Company’s total unprotected cash in bank amounted to $6,138,142 and $6,321,940, as of December 31, 2019 and 2018, respectively. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. |
Deconsolidation | Deconsolidation In accordance with ASC 810-40, deconsolidation of a subsidiary occurs when: (a) some or all of the ownership interests of the subsidiary are sold resulting in the loss of a controlling financial interest; (b) a contractual agreement granting control of the subsidiary expires; (c) the subsidiary issues its shares to outsiders reducing the parent’s ownership interest resulting in the loss of a controlling financial interest; or (d) the subsidiary becomes subject to the control of a government, court, administrator or regulator. The parent should recognize a gain or loss measured as the difference between: (a) the aggregate of: (i) the fair value of any consideration received, (ii) the fair value of any retained non-controlling interest, and (iii) the carrying amount of any non-controlling interest at the date the subsidiary is deconsolidated; and (b) the carrying amount of the subsidiary’s assets and liabilities. A subsidiary should be deconsolidated from the date a controlling financial interest is lost and should also consider the equity components included in the non-controlling interest and the amounts previously recognized in accumulated other comprehensive income (loss), i.e. the foreign currency translation adjustment. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes and replaces nearly all existing U.S. GAAP revenue recognition guidance, including industry-specific guidance. The authoritative guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The five steps are: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when or as each performance obligation is satisfied. The authoritative guidance applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC. The adoption of Topic 606 had no material impact on the Group’s consolidated financial statements and there was no adjustments made to the beginning retained earnings on January 1,2018. On May 10, 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which clarifies the scope of modification accounting for share-based compensation arrangements by providing guidance on the types of changes to the terms and conditions of share-based compensation awards to which an entity would be required to apply modification accounting under ASC 718. ASU 2017-09 is effective for annual periods beginning after December 15, 2017. The adoption of this guidance had no material impact on the Group’s consolidated financial statements. On February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. This update requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity’s leasing arrangements. ASU 2016-02 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2018, with early application permitted. The Group adopted this new accounting standard effective on January 1, 2019 on a modified retrospective basis and applied the new standard on leases through a cumulative-effect adjustment to the beginning retained earnings. The adoption of this authoritative guidance resulted in the recognition of operating lease assets and operating lease liabilities but did not have an impact on the Group’s consolidated operating results, beginning retained earnings, and cash flows. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220). This update provides companies with the option to reclassify stranded tax effects caused by the 2017 Tax Cuts and Jobs Act, or the 2017 Tax Act, from accumulated other comprehensive income to retained earnings. This standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The adoption of this standard had no material impact on the Group’s consolidated financial statements. Recently Issued Accounting Pronouncements The Group considers the applicability and impact of all ASUs. The ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Group’s consolidated financial position and/or results of operations. In June 2016, the FASB issued ASU No. 2016‑13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016‑13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016‑13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016‑13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. The Group is currently in the process of evaluating the impact of the adoption of ASU 2016‑13 on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU. The Group is currently evaluating the potential impact of this new guidance. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures. |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
Schedule of wholly-owned subsidiaries and the consolidated VIE | Date of Place of Percentage of Name of the Company Incorporation Incorporation Ownership MDJM Hong Kong February 9, 2018 Hong Kong 100% Mingda Beijing (WFOE) March 9, 2018 PRC 100% Mingda Tianjin (VIE) September 25, 2002 PRC VIE |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of variable interest entities | Percentage Date of Place of of Name of Branch Offices/Subsidiaries of Mingda Formation Formation Ownership Tianjin Mingda Jiahe Real Estate Co., Ltd. Yangzhou Branch October 18, 2017 Yangzhou, China N/A Tianjin Mingdajiahe Real Estate Co., Ltd. Suzhou Branch October 13, 2017 Suzhou, China N/A Tianjin Mingdajiahe Real Estate Co., Ltd. Chengdu Branch June 24, 2019 Chengdu, China N/A XiShe (Tianjin) Business Management Co., Ltd. October 20, 2017 Tianjin, China XiShe (Tianjin) Culture and Media Co., Ltd. July 25, 2018 Tianjin, China Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. March 9, 2018 Tianjin, China |
Schedule of basic and diluted loss per share | December 31, December 31, December 31, 2019 2018 2017 Numerator for earnings per share: Net income (loss) attributable to the Company’s shareholders $ 453,106 $ (515,971) $ 1,167,002 Denominator for basic and diluted earnings per share: Basic weighted average ordinary shares * 11,640,661 10,400,408 10,380,000 Per share amount Per share - basic and diluted $ 0.04 $ (0.05) $ 0.11 * Prior to the formation of MDJM, Mingda Tianjin issued 10,380,000 ordinary shares to its shareholders. Each shareholder of Mingda Tianjin was expected to receive MDJM’s share at a one-to-one ratio. On January 26, 2018, MDJM issued 10,380,000 ordinary shares to entities controlled by the shareholders of Mingda Tianjin. All references to numbers of ordinary shares and per share amounts in the accompanying consolidated financial statements have been adjusted to reflect such issuance of shares on a retrospective basis from the earliest period presented. |
Schedule of foreign currency translation | December 31, December 31, December 31, US$ Exchange Rate 2019 2018 2017 At end of the period - RMB 6.9668 6.8778 6.5075 Average rate for the period ended - RMB 6.9072 6.6187 6.7588 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS RECEIVABLE | |
Schedule of accounts receivable and allowance for doubtful accounts | December 31, December 31, 2019 2018 Accounts receivable $ 2,165,932 $ 1,817,767 Allowance for doubtful accounts (10,774) (49,963) Accounts receivable, net $ 2,155,158 $ 1,767,804 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | December 31, December 31, 2019 2018 Office Equipment and Fixtures $ 71,258 $ 50,224 Software 17,242 17,465 Auto 44,110 32,636 Total Assets 132,610 100,325 Less accumulated depreciation (62,456) (79,023) Net Assets $ 70,154 $ 21,302 |
INCOME TAX AND DEFERRED TAX A_2
INCOME TAX AND DEFERRED TAX ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAX AND DEFERRED TAX ASSETS | |
Schedule of deferred tax assets | 2019 2018 Deferred tax items Accounts receivable, net $ 12,807 $ 49,963 Accrued expenses 112,954 162,089 Deferred income 26,429 64,153 Depreciation (18,429) — Net operating loss carryforward 57,695 327,473 Total deferred items 191,456 603,678 Tax rate at 25 % 25 % Deferred tax assets 47,864 150,920 Valuation allowance (14,424) (15,449) Deferred tax assets, net $ 33,440 $ 135,471 |
Schedule of provision for income taxes | 2019 2018 2017 Current $ 206 $ — $ 338,194 Deferred tax adjustment 101,166 (134,454) 58,358 Change in valuation allowance — 134,454 — Total $ 101,372 $ — $ 396,552 |
Schedule of reconciliation of the statutory income tax rate and the effective income tax rate | 2019 2018 2017 Hong Kong statutory income tax rate 16.5 % 16.5 % — Valuation allowance recognized with respect to the loss in the Hong Kong Company (16.5) % (16.5) % — PRC statutory income tax rate 25.0 % 25.0 % 25.0 % Effect of income tax exemptions and reliefs in the PRC companies 0.0 % 0.0 % 0.0 % Effect of loss carryforward in the PRC companies (24.9) % (25.0) % 0.0 % Effect of non-deductible expenses in the PRC companies 0.0 % 0.0 % 0.4 % Effective rate 0.1 % 0.0 % 25.4 % |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
Schedule of accounts payable and accrued liabilities | Accounts payable and accrued liabilities consisted of the following as of December 31, 2019 and 2018: 2019 2018 Payroll and social security payable $ 342,040 $ 334,734 Bonus payable 47,367 162,089 Other payables and accrued liabilities 71,283 78,264 Total Accounts Payable and Accrued Liabilities $ 460,690 $ 575,087 |
VAT AND OTHER TAXES PAYABLE (Ta
VAT AND OTHER TAXES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
VAT AND OTHER TAXES PAYABLE | |
Schedule of vat and other taxes payable | VAT and other taxes payable consisted of the following as of December 31, 2019 and December 31, 2018: 2019 2018 VAT payable $ 107,146 $ 120,305 Surcharge and fees 312 15,114 Income tax payable 204 — Other taxes — 2,276 Total Other Taxes Payable $ 107,662 $ 137,695 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
Summary of operating lease right-of-use assets and liabilities | Operating Lease Assets 2019 Main office $ 479,744 Total operating lease assets - initial measurement 479,744 Less: accumulated amortization (87,873) Operating Lease Assets, net $ 391,871 Operating Lease Liabilities Total operating lease liabilities - initial measurement $ 479,744 Accrued interest 17,628 Payment to liabilities (158,253) Total operating lease liabilities 339,119 Less: operating lease liabilities, current (91,737) Long-term Operating Lease Liabilities $ 247,382 |
Summary of future minimum lease payments for operating leases | As of December 31, 2019, future minimum lease payments for operating leases consisted of the following: For the Years Ending December 31, Operating Leases 2020 $ 105,502 2021 105,502 2022 105,502 2023 52,751 Total minimum payments 369,257 Less: imputed interest (30,138) Total operating lease liabilities $ 339,119 |
NONCONTROLLING INTEREST (Tables
NONCONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NONCONTROLLING INTEREST | |
Schedule of noncontrolling interest | Amount Noncontrolling interest at December 31, 2017 $ — Net loss attributable to noncontrolling interest (21,843) Foreign currency translation adjustment attributable to noncontrolling interest (823) Noncontrolling interest at December 31, 2018 (22,666) Net loss attributable to noncontrolling interest (153,742) Foreign currency translation adjustment attributable to noncontrolling interest (2,398) Noncontrolling interest at December 31, 2019 $ (178,806) |
RESTRICTED NET ASSETS OR PARE_2
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
Schedule of condensed balance sheet | MDJM LTD CONDENSED BALANCE SHEETS As of December 31, 2019 2018 Assets Cash $ 4,995,834 $ 5,626,079 Prepaid expense 1,532 — Current Assets 4,997,366 5,626,079 Investment in subsidiaries 4,621,653 4,144,076 Total Assets $ 9,619,019 $ 9,770,155 Liabilities and Equity Current liabilities $ 550 $ — Due to subsidiaries 940,734 1,565,174 Total liabilities 941,284 1,565,174 Equity: Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share, 11,640,820 and 11,621,459 shares issued and outstanding as of December 31, 2019 and 2018, respectively 11,641 11,621 Additional paid in capital 6,734,681 6,664,295 Statutory reserve 262,954 232,542 Retained earnings 1,948,804 1,526,110 Accumulated other comprehensive loss (280,345) (229,587) Total MDJM Ltd stockholders’ equity 8,677,753 8,204,981 Total Liabilities and Equity $ 9,619,019 $ 9,770,155 |
Summary of condensed statements of operations | MDJM LTD CONDENSED STATEMENTS OF OPERATIONS AND COMPEREHENAIVE INCOME (LOSS) For the Years Ended December 31, 2019 2018 Revenue $ — $ — Share of profit (loss) in subsidiaries 453,106 (515,971) Start-up fees — 42,574 Other general and administrative expenses 101,948 — Total Operating Expenses 101,948 42,574 Income (loss) from operations 351,158 (558,545) Interest income 26,719 — Net Income / (Loss) $ 377,877 $ (558,545) Other comprehensive income (loss): Foreign currency translation adjustments (50,758) (169,521) Comprehensive income (loss) $ 327,119 $ (728,066) *There were no operating activities in 2017 as MDJMLTD was incorporated in January 2018. |
Schedule of statemeny of cash flows | MDJM LTD CONDENSED STATEMENTS OF CASH FLOWS For the Years Ended December 31 2019 2018 Net Cash Used in Operating Activities $ (76,211) $ (42,574) Net Cash (Used in) Provided by Investing Activities (624,440) 1,565,174 Net Cash Provided by Financing Activities 70,406 4,103,479 Net (decrease) increase in cash and cash equivalents (630,245) 5,626,079 Cash and cash equivalents - beginning of the year 5,626,079 — Cash and cash equivalents - end of the year $ 4,995,834 $ 5,626,079 *There were no operating activities in 2017 as MDJM LTD was incorporated in January 2018. |
ORGANIZATION AND DESCRIPTION _3
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) | 12 Months Ended |
Dec. 31, 2019 | |
MDJCC Limited ("MDJH Hong Kong") | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |
Percentage of Ownership | 100.00% |
MDJM Hong Kong | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |
Date of Incorporation | Feb. 9, 2018 |
Place of Incorporation | Hong Kong |
Percentage of Ownership | 100.00% |
Mingda Beijing (WFOE) | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |
Date of Incorporation | Mar. 9, 2018 |
Place of Incorporation | PRC |
Description of Ownership | 100% |
Mingda Tianjin (VIE) | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |
Date of Incorporation | Sep. 25, 2002 |
Place of Incorporation | PRC |
Description of Ownership | VIE |
ORGANIZATION AND DESCRIPTION _4
ORGANIZATION AND DESCRIPTION OF BUSINESS (Detail Textuals) - shares | Apr. 28, 2018 | Apr. 28, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 26, 2018 |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||||
Common stock, shares issued | 11,640,820 | 11,621,459 | 10,380,000 | ||
MDJCC Limited ("MDJH Hong Kong") | |||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||||
Percentage of Ownership | 100.00% | ||||
Mingda Tianjin (VIE) | Mingda Beijing (WFOE) | |||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||||
Term of the business agreement | 10 years | ||||
Mingda Tianjin (VIE) | Mingda Beijing (WFOE) | Exclusive Business Cooperation Agreement | |||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||||
Ownership percent of variable interest entity | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Variable Interest Entities (Details) | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 22, 2018 |
Tianjin Mingda Jiahe Real Estate Co., Ltd. Yangzhou Branch | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Date of Formation | Oct. 18, 2017 | |||
Place of Formation | Yangzhou, China | |||
Tianjin Mingdajiahe Real Estate Co., Ltd. Suzhou Branch | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Date of Formation | Oct. 13, 2017 | |||
Place of Formation | Suzhou, China | |||
Tianjin Mingdajiahe Real Estate Co., Ltd. Chengdu Branch | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Date of Formation | Jun. 24, 2019 | |||
Place of Formation | Chengdu, China | |||
XiShe (Tianjin) Business Management Co., Ltd. | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Ownership interest held | 100.00% | |||
Date of Formation | Oct. 20, 2017 | |||
Place of Formation | Tianjin, China | |||
XiShe (Tianjin) Culture and Media Co., Ltd. | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Ownership interest held | 100.00% | |||
Date of Formation | Jul. 25, 2018 | |||
Place of Formation | Tianjin, China | |||
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | ||||
Variable Interest Entity [Line Items] | ||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49.00% | 49.00% | ||
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Ownership interest held | 51.00% | |||
Date of Formation | Mar. 9, 2018 | |||
Place of Formation | Tianjin, China | |||
Xishe Jiayuan (Tianjin) Business Operation & Management Co. Ltd | ||||
Variable Interest Entity [Line Items] | ||||
Ownership interest held | 70.00% | |||
Tianjin Jin Yong Tai Property Management Ltd | ||||
Variable Interest Entity [Line Items] | ||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 30.00% | |||
Tianjin Jin Yong Tai Property Management Ltd | Jiayuan Project | ||||
Variable Interest Entity [Line Items] | ||||
Ownership interest transferred | 70.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Estimated Useful Life of Fixed Assets (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Office Equipment and Fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Office Equipment and Fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years |
Computers | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Computers | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 2 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 10 years |
Vehicles | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 4 years |
Vehicles | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Basic and Diluted Loss Per Share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator for earnings per share: | |||
Net income (loss) attributable to the Company's shareholders | $ 453,106 | $ (515,971) | $ 1,167,002 |
Denominator for basic and diluted earnings per share: | |||
Basic weighted average ordinary shares | 11,640,661 | 10,400,408 | 10,380,000 |
Per share amount | |||
Per share - basic and diluted | $ 0.04 | $ (0.05) | $ 0.11 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Foreign Currency Translation (Details) - ¥ / $ | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
At end of the period - RMB | 6.9668 | 6.8778 | 6.5075 |
Average rate for the period ended - RMB | 6.9072 | 6.6187 | 6.7588 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 12 Months Ended | ||||||
Dec. 31, 2019CNY (¥)segmentshares | Dec. 31, 2019USD ($)segmentshares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares | Jan. 04, 2019USD ($) | Dec. 26, 2018USD ($) | Jan. 26, 2018shares | |
Product Information [Line Items] | |||||||
Number of operating segment | segment | 1 | 1 | |||||
Percentage of total revenue | 2.90% | 2.90% | 2.60% | 0.10% | |||
Deferred offering costs | $ 2,103,816 | ||||||
Additional paid in capital | 6,734,681 | $ 6,664,295 | |||||
Marketing and advertising expenses | 79,535 | 2,889 | $ 178,878 | ||||
Interest and penalties | $ 0 | $ 0 | $ 0 | ||||
Dilutive ordinary share | shares | 0 | 0 | 0 | 0 | |||
Foreign currency transaction gain | $ 12,072 | ||||||
Maximum insured bank deposit | ¥ 500,000 | 71,770 | |||||
Total unprotected cash in bank | $ 6,138,142 | $ 6,321,940 | |||||
Issuance of ordinary shares | shares | 11,640,820 | 11,621,459 | 10,380,000 | ||||
Variable interest entities expect to receivable share at ratio | $ 1 | ||||||
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | |||||||
Product Information [Line Items] | |||||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49.00% | 49.00% | |||||
Tianjin | |||||||
Product Information [Line Items] | |||||||
Percentage of agency revenue | 83.00% | 83.00% | 95.00% | 97.00% | |||
Chengdu | |||||||
Product Information [Line Items] | |||||||
Percentage of agency revenue | 5.00% | 5.00% | 0.00% | 3.00% | |||
Yangzhou | |||||||
Product Information [Line Items] | |||||||
Percentage of agency revenue | 9.00% | 9.00% | 4.00% | 0.00% | |||
Suzhou | |||||||
Product Information [Line Items] | |||||||
Percentage of agency revenue | 3.00% | 3.00% | 1.00% | 0.00% | |||
IPO | |||||||
Product Information [Line Items] | |||||||
Deferred offering costs | $ 2,103,816 | ||||||
IPO | First Closing | |||||||
Product Information [Line Items] | |||||||
Additional paid in capital | $ 26,399 | ||||||
IPO | Second Closing | |||||||
Product Information [Line Items] | |||||||
Additional paid in capital | $ 26,399 | ||||||
Consulting Services | |||||||
Product Information [Line Items] | |||||||
Revenue from contact with customers | $ 155,217 | $ 51,818 | $ 4,187 | ||||
Subsidiaries and Consolidated Variable Interest Entities | |||||||
Product Information [Line Items] | |||||||
Applicable value added tax rates | 6.00% | 6.00% |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
ACCOUNTS RECEIVABLE | ||
Accounts receivable | $ 2,165,932 | $ 1,817,767 |
Allowance for doubtful accounts | (10,774) | (49,963) |
Accounts receivable, net | $ 2,155,158 | $ 1,767,804 |
ACCOUNTS RECEIVABLE (Detail Tex
ACCOUNTS RECEIVABLE (Detail Textuals) | 12 Months Ended | ||
Dec. 31, 2019USD ($)customer | Dec. 31, 2018USD ($)customer | Dec. 31, 2017 | |
Revenue, Major Customer | |||
Number of customers | customer | 2 | 2 | |
Allowance for Doubtful Accounts Receivable, Current | $ 10,774 | $ 49,963 | |
Concentration Risk, Percentage | 2.90% | 2.60% | 0.10% |
Customer Two | |||
Revenue, Major Customer | |||
Concentration Risk, Percentage | 20.00% | 20.00% | |
Major Customers | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 4 | |
Major Customers | Net revenue | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 4 | |
Concentration Risk, Percentage | 58.00% | 76.00% | |
Major Customers | Net revenue | Ge Diao Ping Yuan | |||
Revenue, Major Customer | |||
Concentration Risk, Percentage | 16.00% | 28.00% | |
Major Customers | Net revenue | Ping Yue Jian Nan | |||
Revenue, Major Customer | |||
Concentration Risk, Percentage | 25.00% | ||
Major Customers | Net revenue | Zi Xi Tai | |||
Revenue, Major Customer | |||
Concentration Risk, Percentage | 12.00% | ||
Major Customers | Net revenue | Ge Diao Song Jian | |||
Revenue, Major Customer | |||
Concentration Risk, Percentage | 11.00% | ||
Major Customers | Net revenue | Taida He Yue Hai | |||
Revenue, Major Customer | |||
Concentration Risk, Percentage | 31.00% | ||
Major Customers | Net revenue | Wanke Xi Lu | |||
Revenue, Major Customer | |||
Concentration Risk, Percentage | 11.00% | ||
Major Customers | Accounts receivable | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 4 | |
Major Customers | Accounts receivable | Ge Diao Ping Yuan | |||
Revenue, Major Customer | |||
Accounts receivable | $ 185,216 | $ 230,803 | |
Major Customers | Accounts receivable | Ping Yue Jian Nan | |||
Revenue, Major Customer | |||
Accounts receivable | 62,783 | ||
Major Customers | Accounts receivable | Zi Xi Tai | |||
Revenue, Major Customer | |||
Accounts receivable | 67,969 | ||
Major Customers | Accounts receivable | Ge Diao Song Jian | |||
Revenue, Major Customer | |||
Accounts receivable | $ 120,080 | ||
Major Customers | Accounts receivable | Taida He Yue Hai | |||
Revenue, Major Customer | |||
Accounts receivable | 192,679 | ||
Major Customers | Accounts receivable | Wanke Xi Lu | |||
Revenue, Major Customer | |||
Accounts receivable | $ 377,276 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items]Property, Plant and Equipment | ||
Total Assets | $ 132,610 | $ 100,325 |
Less accumulated depreciation | (62,456) | (79,023) |
Net Assets | 70,154 | 21,302 |
Office Equipment and Fixtures | ||
Property, Plant and Equipment [Line Items]Property, Plant and Equipment | ||
Total Assets | 71,258 | 50,224 |
Software | ||
Property, Plant and Equipment [Line Items]Property, Plant and Equipment | ||
Total Assets | 17,242 | 17,465 |
Auto | ||
Property, Plant and Equipment [Line Items]Property, Plant and Equipment | ||
Total Assets | $ 44,110 | $ 32,636 |
PROPERTY AND EQUIPMENT, NET (_2
PROPERTY AND EQUIPMENT, NET (Detail Textuals) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT, NET | ||||
(Repayment) proceeds from subsidiaries | $ 3,330 | $ 3,330 | ||
Cost of auto sold | 32,497 | |||
Accumulated depreciation of auto sold | 30,872 | |||
Gain (loss) on disposal of asset | 1,705 | $ (1,213) | ||
Depreciation expense for property and equipment | $ 15,180 | $ 12,575 | $ 7,232 |
INCOME TAX AND DEFERRED TAX A_3
INCOME TAX AND DEFERRED TAX ASSETS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred tax items | |||
Accounts receivable, net | $ 12,807 | $ 49,963 | |
Accrued expenses | 112,954 | 162,089 | |
Deferred income | 26,429 | 64,153 | |
Depreciation | (18,429) | ||
Net operating loss carryforward | 57,695 | 327,473 | |
Total deferred items | $ 191,456 | $ 603,678 | |
Tax rate at | 25.00% | 25.00% | 25.00% |
Deferred tax assets | $ 47,864 | $ 150,920 | |
Valuation allowance | (14,424) | (15,449) | |
Deferred tax assets, net | $ 33,440 | $ 135,471 |
INCOME TAX AND DEFERRED TAX A_4
INCOME TAX AND DEFERRED TAX ASSETS (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
INCOME TAX AND DEFERRED TAX ASSETS | |||
Current | $ 206 | $ 338,194 | |
Deferred tax adjustment | 101,166 | $ (134,454) | 58,358 |
Change in valuation allowance | $ 134,454 | ||
Income Tax Expense (Benefit) | $ 101,372 | $ 396,552 |
INCOME TAX AND DEFERRED TAX A_5
INCOME TAX AND DEFERRED TAX ASSETS (Details 2) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the statutory income tax rate and the Company's effective income tax | |||
Effect of income tax exemptions and reliefs in the PRC companies | 0.00% | 0.00% | 0.00% |
Effect of loss carryforward in the PRC companies | (24.90%) | (25.00%) | 0.00% |
Effect of non-deductible expenses in the PRC companies | 0.00% | 0.00% | 0.40% |
Effective rate | 0.10% | 0.00% | 25.40% |
HongKong | |||
Reconciliation of the statutory income tax rate and the Company's effective income tax | |||
Valuation allowance recognized with respect to the loss in the Hong Kong Company | (16.50%) | (16.50%) | |
Statutory income tax rate | 16.50% | 16.50% | |
China | |||
Reconciliation of the statutory income tax rate and the Company's effective income tax | |||
Statutory income tax rate | 25.00% | 25.00% | 25.00% |
INCOME TAX AND DEFERRED TAX A_6
INCOME TAX AND DEFERRED TAX ASSETS (Detail Textuals) | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019USD ($) | |
Income Tax And Deferred Tax Assets [Line Items] | ||||
Uniform tax rate | 25.00% | 25.00% | 25.00% | |
Period for statute of limitations due to computation errors | 3 years | |||
Period for statute of limitations under special circumstances | 5 years | |||
Maximum amount of underpayment of tax liability | ¥ 100,000 | $ 14,000 | ||
Period for statute of limitations if tax liability exceeds RMB100,000 | 10 years | |||
PRC tax Jurisdiction | ||||
Income Tax And Deferred Tax Assets [Line Items] | ||||
Examination Period | 5 years | |||
Hong Kong | ||||
Income Tax And Deferred Tax Assets [Line Items] | ||||
Uniform tax rate | 16.50% |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ||
Payroll and social security payable | $ 342,040 | $ 334,734 |
Bonus payable | 47,367 | 162,089 |
Other payables and accrued liabilities | 71,283 | 78,264 |
Total Accounts Payable and Accrued Liabilities | $ 460,690 | $ 575,087 |
VAT AND OTHER TAXES PAYABLE (De
VAT AND OTHER TAXES PAYABLE (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
VAT AND OTHER TAXES PAYABLE | ||
VAT payable | $ 107,146 | $ 120,305 |
Surcharge and fees | 312 | 15,114 |
Income tax payable | 204 | |
Other taxes | 2,276 | |
Total Other Taxes Payable | $ 107,662 | $ 137,695 |
VAT AND OTHER TAXES PAYABLE (_2
VAT AND OTHER TAXES PAYABLE (Detail Textuals) | 1 Months Ended |
May 31, 2016 | |
VAT AND OTHER TAXES PAYABLE | |
Value added tax percentages of commission income | 6.00% |
LEASES (Details)
LEASES (Details) | Dec. 31, 2019 |
Lessee, Lease, Description [Line Items] | |
Long-term lending annual rate | 4.35% |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Initial term of lease | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Initial term of lease | 5 years |
LEASES - Summary of operating l
LEASES - Summary of operating lease right-of-use assets and liabilities (Details) - Dec. 31, 2019 | CNY (¥) | USD ($) |
Operating Lease Assets [Abstract] | ||
Total operating lease assets - initial measurement | ¥ 479,744 | |
Less: accumulated amortization | (87,873) | |
Operating Lease Assets, net | 391,871 | $ 391,871 |
Total operating lease liabilities - initial measurement | 479,744 | |
Accrued interest | 17,628 | |
Payment to liabilities | 158,253 | |
Total operating lease liabilities | 339,119 | |
Less: operating lease liabilities, current | 91,737 | 91,737 |
Long-term Operating Lease Liabilities | 247,382 | $ 247,382 |
Main Office [Member] | ||
Operating Lease Assets [Abstract] | ||
Total operating lease assets - initial measurement | ¥ 479,744 |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments (Details) | Dec. 31, 2019CNY (¥) |
Future minimum lease payments for operating leases | |
2020 | ¥ 105,502 |
2021 | 105,502 |
2022 | 105,502 |
2023 | 52,751 |
Total minimum payments | 369,257 |
Less: imputed interest | 30,138 |
Total operating lease liabilities | ¥ 339,119 |
STOCKHOLDERS' EQUITY (Detail Te
STOCKHOLDERS' EQUITY (Detail Textuals) - USD ($) | Jan. 04, 2019 | Dec. 26, 2018 | Dec. 26, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 26, 2018 |
Common stock, shares authorized | 50,000,000 | 50,000,000 | ||||
Common stock par value, per share | $ 0.001 | $ 0.001 | ||||
Common stock, shares issued | 11,640,820 | 11,621,459 | 10,380,000 | |||
Common stock, shares, outstanding | 11,640,820 | 11,621,459 | ||||
Cost related to sold of ordinary shares | $ 2,103,816 | |||||
Underwriter Warrants | ||||||
Warrants issued | 126,082 | |||||
IPO | ||||||
Public offering price | $ 5 | $ 5 | ||||
Proceeds from ordinary shares sold | $ 6,207,295 | |||||
Cost related to sold of ordinary shares | $ 2,103,816 | $ 2,103,816 | ||||
IPO | Network 1 Financial Securities, Inc. | ||||||
Ordinary shares sold (in shares) | 19,361 | 1,241,459 | 1,241,459 | |||
IPO | Underwriter Warrants | Network 1 Financial Securities, Inc. | ||||||
Percentage of public offering price as warrants exercise price | 125.00% | |||||
Public offering price | $ 5 | $ 5 | ||||
Percentage of total number of ordinary shares sold as warrants granted | 10.00% | |||||
Warrants expiration period | 5 years | 5 years | ||||
Period for registration rights | 5 years | |||||
Second closing of IPO | ||||||
Ordinary shares sold (in shares) | 19,361 | |||||
Share Price | $ 5 | |||||
Proceeds from ordinary shares sold | $ 96,805 | |||||
Payments of Stock Issuance Costs | $ 26,399 | |||||
Mingda Tianjin (VIE) | Mr. Siping Xu | ||||||
Common stock, shares issued | 10,380,000 | |||||
Common stock, shares, outstanding | 10,380,000 | |||||
Number of common stock owned | 10,200,000 | |||||
Percentage of outstanding ordinary shares | 88.00% | |||||
MDJCC Limited ("MDJH Hong Kong") | ||||||
Common stock, shares issued | 10,380,000 | |||||
Common stock, shares, outstanding | 10,380,000 |
STOCKHOLDERS' EQUITY (Detail _2
STOCKHOLDERS' EQUITY (Detail Textuals 1) | Jan. 04, 2019USD ($)$ / shares |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Total value of underwriter warrants | $ | $ 190,384 |
Price per warrant | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | $ / shares | 1.51 |
Risk-free rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 4.35 |
Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 35 |
NONCONTROLLING INTEREST (Detail
NONCONTROLLING INTEREST (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Movements in Noncontrolling interest | ||
Noncontrolling interest at the beginning of the year | $ (22,666) | |
Net loss attributable to noncontrolling interest | (153,742) | $ (21,843) |
Foreign currency translation adjustment attributable to noncontrolling interest | (2,398) | (823) |
Noncontrolling interest at the end of the year | $ (178,806) | $ (22,666) |
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | ||
NONCONTROLLING INTEREST | ||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49.00% | 49.00% |
Movements in Noncontrolling interest | ||
Noncontrolling interest at the beginning of the year | $ (22,666) | |
Net loss attributable to noncontrolling interest | (153,742) | $ (21,843) |
Foreign currency translation adjustment attributable to noncontrolling interest | (2,398) | (823) |
Noncontrolling interest at the end of the year | $ (178,806) | $ (22,666) |
STATUTORY RESERVE (Details)
STATUTORY RESERVE (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
STATUTORY RESERVE | ||
Statutory reserve of mingda tianjin | $ 262,954 | $ 232,542 |
COMMITMENTS AND CONTINGENCIES-
COMMITMENTS AND CONTINGENCIES- Additional Information (Details) - USD ($) | Sep. 06, 2018 | Jul. 16, 2018 | Jul. 16, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Other Commitments [Line Items] | |||||
Maximum value of ordinary shares sold | $ 70,406 | $ 4,103,479 | |||
Ascent Investor Relations Inc [Member] | Investor Relations Agreement | |||||
Other Commitments [Line Items] | |||||
Consideration paid per month before listed in the market of Nasdaq | $ 4,140 | ||||
Consideration paid per month after listed in the market of Nasdaq | $ 7,820 | ||||
Investor Relations Agreement Period | 2 years | ||||
Network 1 Financial Securities, Inc. | IPO | |||||
Other Commitments [Line Items] | |||||
Maximum value of ordinary shares sold | $ 6,000,000 | ||||
Description of underwriting discount and spread | The Company agreed to pay NETW an underwriting discount or spread of seven percent (7%) of the gross proceeds from investors introduced by NETW and five percent (5%) of the gross proceeds from investors introduced by the Company | ||||
Percentage of gross proceeds of offering as corporate finance fee | 2.00% | ||||
Maximum reimbursement out of pocket expenses related to offering | $ 75,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Legal proceeding (Detaills) - Mingda Tianjin (VIE) | Sep. 05, 2019CNY (¥) | Sep. 05, 2019USD ($) | Jan. 10, 2019CNY (¥) | Jan. 10, 2019USD ($) | Jan. 03, 2018CNY (¥) | Jan. 03, 2018USD ($) | Nov. 30, 2018CNY (¥) | Nov. 30, 2018USD ($) | Sep. 18, 2018CNY (¥) | Sep. 18, 2018USD ($) | Nov. 30, 2015CNY (¥) | Nov. 30, 2015USD ($) | Jan. 10, 2019USD ($) |
Loss Contingencies [Line Items] | |||||||||||||
First installment of sales agency fees received | ¥ 1,845,722 | $ 267,217 | |||||||||||
payment of installments | 105,437 | 15,265 | 1,736,378 | 251,387 | |||||||||
Tianjin Huacheng Century Investment Co. Ltd | Sales Agency Service Contract | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Loss Contingency, default amount of sales agency fees and retention fees | ¥ 2,792,854 | $ 429,700 | |||||||||||
Civil Mediation Agreement | Tianjin Huacheng Century Investment Co. Ltd | Sales Agency Service Contract | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
First installment of sales agency fees due by or before February 9, 2018 | ¥ 500,000 | $ 76,900 | |||||||||||
Second installment of sales agency fees due by or before October 31, 2018 | 1,146,427 | 176,400 | |||||||||||
Third installment of sales agency fees due by or before December 31, 2018 | ¥ 1,146,427 | $ 176,400 | |||||||||||
Percentage of balance due as agreed to pay by defendant | 90.00% | 90.00% | |||||||||||
Balance of damages due | ¥ 2,063,569 | $ 300,033 | |||||||||||
Total amount received from defendant | ¥ 2,063,568 | $ 300,033 |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) | 1 Months Ended |
Jan. 26, 2018shares | |
MDJM | |
Related Party Transaction [Line Items] | |
Common share issued | 10,200,000 |
Candm Ltd | |
Related Party Transaction [Line Items] | |
Common share issued | 10,000 |
MNCC LTD | |
Related Party Transaction [Line Items] | |
Common share issued | 10,000 |
Beneficial Owners | |
Related Party Transaction [Line Items] | |
Common share issued | 10,380,000 |
Mr. Siping Xu | MDJM | |
Related Party Transaction [Line Items] | |
Percentages of ownership controlled | 100.00% |
Mr. Yang Li | Candm Ltd | |
Related Party Transaction [Line Items] | |
Percentages of ownership controlled | 100.00% |
Mr. Mengnan Wang | MNCC LTD | |
Related Party Transaction [Line Items] | |
Percentages of ownership controlled | 100.00% |
LOSS ON DISPOSAL OF SUBSIDIARY
LOSS ON DISPOSAL OF SUBSIDIARY (Details) | 1 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Sep. 30, 2019CNY (¥) | Sep. 30, 2019USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
ROU operating lease assets | ¥ 391,871 | $ 391,871 | ||||||
Lease liability | ¥ | ¥ 339,119 | |||||||
Operating lease expense | $ 184,802 | $ 141,959 | $ 115,615 | |||||
MDJCC Limited ("MDJH Hong Kong") | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership interest held | 100.00% | 100.00% | ||||||
Jiayuan Project | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Fair value of consideration | $ 126,712 | |||||||
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership interest held by non controlling parent | 49.00% | 49.00% | 49.00% | |||||
Tianjin Jin Yong Tai Property Management Ltd. ("JYT") | Jiayuan Project | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership interest held by non controlling parent | 30.00% | 30.00% | ||||||
Discontinued operations, disposed by sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Loss on disposal of subsidiary | $ 4,970 | |||||||
Discontinued operations, disposed by sale | Jiayuan Project | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership interest held | 100.00% | 100.00% | ||||||
Duration of repayment schedule (in months) | 35 months | |||||||
Present value of consideration | ¥ 1,000,000 | $ 143,538 | ||||||
Loss on disposal of subsidiary | $ 61,345 | |||||||
Discontinued operations, disposed by sale | Tianjin Jin Yong Tai Property Management Ltd. ("JYT") | Jiayuan Project | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership interest held | 100.00% | 100.00% | ||||||
Jiayuan Project | Discontinued operations, disposed by sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Discount rate (as a percent) | 5.75% | 5.75% | ||||||
Chinese benchmark business loan rate (as a percent) | 4.75% | 4.75% | ||||||
Risk factor (as a percent) | 1.00% | 1.00% | ||||||
Present value of consideration | ¥ 1,000,000 | $ 143,538 | ||||||
Fair value of consideration | 126,712 | $ 126,712 | ||||||
Jiayuan Project | Discontinued operations, disposed by sale | MDJCC Limited ("MDJH Hong Kong") | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership interest held | 70.00% | |||||||
Ownership interest transferred | 70.00% | |||||||
Jiayuan Project | Discontinued operations, disposed by sale | Other receivable-long term | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Fair value of consideration | 99,532 | |||||||
Jiayuan Project | Discontinued operations, disposed by sale | Other receivable | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Fair value of consideration | $ 27,179 |
SUBSEQUENT EVENTS - Additional
SUBSEQUENT EVENTS - Additional Information (Details) | Apr. 10, 2020USD ($) | Jan. 10, 2019CNY (¥) | Jan. 10, 2019USD ($) | Jan. 04, 2019shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jan. 10, 2019USD ($) | Dec. 26, 2018$ / shares |
Subsequent Event [Line Items] | ||||||||
Ordinary shares sold | $ | $ 70,406 | $ 4,103,479 | ||||||
Tianjin Huacheng Century Investment Co. Ltd | Civil Mediation Agreement | Sales Agency Service Contract | Mingda Tianjin (VIE) | ||||||||
Subsequent Event [Line Items] | ||||||||
Percentage of balance due as agreed to pay by defendant | 90.00% | 90.00% | ||||||
Balance of damages due | ¥ 2,063,569 | $ 300,033 | ||||||
Total amount received from defendant | ¥ 2,063,568 | $ 300,033 | ||||||
Underwriter Warrants | ||||||||
Subsequent Event [Line Items] | ||||||||
Warrants issued | shares | 126,082 | |||||||
Second closing of IPO | ||||||||
Subsequent Event [Line Items] | ||||||||
Ordinary shares sold (in shares) | shares | 19,361 | |||||||
IPO | ||||||||
Subsequent Event [Line Items] | ||||||||
Common share price per share | $ / shares | $ 5 | |||||||
Subsequent Event | Mingda Tianjin (VIE) | ||||||||
Subsequent Event [Line Items] | ||||||||
Unpaid service fee | $ | $ 15,632 |
RESTRICTED NET ASSETS OR PARE_3
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 26, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | |||||
Cash | $ 6,552,677 | $ 6,692,557 | $ 3,117,740 | $ 1,662,346 | |
Current Assets | 8,837,832 | 8,738,324 | |||
Total Assets | 9,432,829 | 8,895,097 | |||
Liabilities and Equity | |||||
Current liabilities | 686,518 | 712,782 | |||
Total Liabilities | 933,900 | 712,782 | |||
Ordinary shares | 11,641 | 11,621 | |||
Additional paid in capital | 6,734,681 | 6,664,295 | |||
Retained earnings (accumulated deficit) | 1,948,804 | 1,526,110 | |||
Accumulated other comprehensive income | (280,345) | (229,587) | |||
Total MDJM Ltd stockholders' equity | 8,677,735 | 8,204,981 | |||
Total Liabilities and Equity | $ 9,432,829 | $ 8,895,097 | |||
Ordinary shares, shares authorized | 50,000,000 | 50,000,000 | |||
Common stock par value, per share | $ 0.001 | $ 0.001 | |||
Common stock, shares issued | 11,640,820 | 11,621,459 | 10,380,000 | ||
Ordinary shares, shares outstanding | 11,640,820 | 11,621,459 | |||
MDJM | |||||
Assets | |||||
Cash | $ 4,995,834 | $ 5,626,079 | |||
Prepaid expense | 1,532 | 0 | |||
Current Assets | 4,997,366 | 5,626,079 | |||
Investment in subsidiaries | 4,621,653 | 4,144,076 | |||
Total Assets | 9,619,019 | 9,770,155 | |||
Liabilities and Equity | |||||
Current liabilities | 550 | 0 | |||
Due to subsidiaries | 940,734 | 1,565,174 | |||
Total Liabilities | 941,284 | 1,565,174 | |||
Ordinary shares | 11,641 | 11,621 | |||
Additional paid in capital | 6,734,681 | 6,664,295 | |||
Statutory reserve | 262,954 | 232,542 | |||
Retained earnings (accumulated deficit) | 1,948,804 | 1,526,110 | |||
Accumulated other comprehensive income | (280,345) | (229,587) | |||
Total MDJM Ltd stockholders' equity | 8,677,753 | 8,204,981 | |||
Total Liabilities and Equity | $ 9,619,019 | $ 9,770,155 |
RESTRICTED NET ASSETS OR PARE_4
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Revenue | $ 5,679,977 | $ 2,408,448 | $ 5,532,244 |
Other general and administrative expenses | 628,608 | 667,267 | 293,931 |
Total Operating Expenses | 5,321,417 | 2,972,827 | 3,942,561 |
Income (loss) from Operations | 358,560 | (564,379) | 1,589,683 |
Interest income | 30,662 | 26,565 | 32,112 |
Net income (loss) | 299,364 | (537,814) | 1,167,002 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | (53,156) | (170,344) | 270,019 |
Comprehensive income (loss) attributable to MDJM Ltd shareholders | 248,606 | (707,335) | $ 1,437,021 |
MDJM | |||
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Revenue | 0 | 0 | |
Share of profit (loss) in subsidiaries | 453,106 | (515,971) | |
Start-up fees | 0 | 42,574 | |
Other general and administrative expenses | 101,948 | 0 | |
Total Operating Expenses | 101,948 | 42,574 | |
Income (loss) from Operations | 351,158 | (558,545) | |
Interest income | 26,719 | 0 | |
Net income (loss) | 377,877 | (558,545) | |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | (50,758) | (169,521) | |
Comprehensive income (loss) attributable to MDJM Ltd shareholders | $ 327,119 | $ (728,066) |
RESTRICTED NET ASSETS OR PARE_5
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS - STATEMENTS OF CASH FLOWS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | |||
Net Cash (Used in) Provided by Operating Activities | $ (1,501) | $ (643,502) | $ 1,313,460 |
Cash Flows from Investing Activities: | |||
Net Cash Used in Investing Activities | (190,828) | (1,215) | (19,659) |
Cash Flows from Financing Activities: | |||
Net Cash Provided by Financing Activities | 70,406 | 4,103,479 | |
Net (decrease) increase in cash and cash equivalents | (139,880) | 3,574,817 | 1,455,394 |
Cash and cash equivalents - beginning of the year | 6,692,557 | 3,117,740 | 1,662,346 |
Cash and cash equivalents - end of the year | 6,552,677 | 6,692,557 | 3,117,740 |
Net offering costs | 26,399 | 2,103,816 | $ 0 |
MDJM | |||
Cash Flows from Operating Activities: | |||
Net Cash (Used in) Provided by Operating Activities | (76,211) | (42,574) | |
Cash Flows from Investing Activities: | |||
Net Cash Used in Investing Activities | (624,440) | 1,565,174 | |
Cash Flows from Financing Activities: | |||
Net Cash Provided by Financing Activities | 70,406 | 4,103,479 | |
Net (decrease) increase in cash and cash equivalents | (630,245) | 5,626,079 | |
Cash and cash equivalents - beginning of the year | 5,626,079 | ||
Cash and cash equivalents - end of the year | $ 4,995,834 | $ 5,626,079 |
RESTRICTED NET ASSETS OR PARE_6
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS - Additional Information (Details) - USD ($) | Jan. 04, 2019 | Dec. 26, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Condensed Balance Sheet Statements, Captions [Line Items] | |||||
Restricted net assets | $ 5,967,000 | $ 4,969,000 | |||
Direct offering costs | $ 26,399 | $ 2,103,816 | $ 0 | ||
IPO | |||||
Condensed Balance Sheet Statements, Captions [Line Items] | |||||
Number of shares sold | 19,361 | 1,241,459 | |||
Selling price | $ 5 | $ 5 | |||
Gross proceeds | $ 96,805 | $ 6,207,295 | |||
Direct offering costs | $ 26,399 | $ 2,103,816 |