Document And Entity Information
Document And Entity Information - shares | 12 Months Ended | |
Dec. 31, 2021 | Apr. 16, 2022 | |
Document Information [Line Items] | ||
Document Type | 20-F | |
Document Registration Statement | false | |
Document Annual Report | true | |
Document Period End Date | Dec. 31, 2021 | |
Document Transition Report | false | |
Document Shell Company Report | false | |
Entity File Number | 001-38768 | |
Entity Registrant Name | MDJM LTD | |
Entity Incorporation, State or Country Code | E9 | |
Entity Address, Address Line One | Suite C-1505, Saidun Center | |
Entity Address, Address Line Two | Xikang Road, Heping District | |
Entity Address, City or Town | Tianjin | |
Entity Address, Country | CN | |
Title of 12(b) Security | Ordinary Shares | |
Trading Symbol | MDJH | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 11,675,216 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
ICFR Auditor Attestation Flag | false | |
Document Accounting Standard | U.S. GAAP | |
Entity Shell Company | false | |
Entity Central Index Key | 0001741534 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | FY | |
Auditor Name | RBSM LLP | |
Auditor Firm ID | 587 | |
Auditor Location | New York, New York | |
Business Contact | ||
Document Information [Line Items] | ||
Contact Personnel Name | Siping Xu | |
City Area Code | 86 | |
Contact Personnel Fax Number | 86-2283520851 | |
Local Phone Number | 2283520851 | |
Contact Personnel Email Address | charlie.cai@mdjmjh.com |
Consolidated Balance Sheets
Consolidated Balance Sheets ¥ in Millions | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | |
Current Assets | |||
Cash, cash equivalents, and restricted cash | $ 5,744,078 | $ 6,110,693 | [1] |
Accounts receivable, net of allowance for doubtful accounts of $76,462 and $15,477, respectively | 2,137,711 | 4,062,343 | |
Prepaid expenses | 29,031 | 23,346 | |
Other receivables | 98,594 | 92,168 | |
Total Current Assets | 8,009,414 | 10,288,550 | |
Property and equipment, net | 49,012 | 65,703 | |
Other Assets | |||
Deferred tax assets | 15,382 | 24,890 | |
Operating lease assets, net | 224,127 | 319,828 | |
Receivable from related parties | 71,035 | ||
Other receivable - long term | 53,794 | ||
Total Other Assets | 310,544 | 398,512 | |
Total Assets | 8,368,970 | 10,752,765 | |
Current Liabilities: | |||
Accounts payable and accrued liabilities | 1,028,210 | 1,147,530 | |
VAT and other taxes payable | 136,126 | 207,352 | |
Deferred income | 23,091 | 18,780 | |
Operating lease liabilities, current | 162,735 | 102,056 | |
Total Current Liabilities | 1,350,162 | 1,475,718 | |
Long-term operating lease liabilities | 61,392 | 161,559 | |
Total Liabilities | 1,411,554 | 1,637,277 | |
Equity: | |||
Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share, 11,675,216 and 11,675,216 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 11,675 | 11,675 | |
Additional paid in capital | 6,845,394 | 6,845,394 | |
Statutory reserve | 327,140 | 327,140 | |
Retained earnings | (282,791) | 2,142,657 | |
Accumulated other comprehensive loss | 62,903 | (37,558) | |
Total MDJM Ltd stockholders' equity | 6,964,321 | 9,289,308 | |
Noncontrolling interest | (6,905) | (173,820) | |
Total Liabilities and Equity | $ 8,368,970 | $ 10,752,765 | |
[1] | $647 was removed from opening balance in 2021 resulted from deconsolidation |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Allowance for doubtful accounts, accounts receivable | $ 76,462 | $ 15,477 |
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 | 11,675,216 | 11,675,216 |
Ordinary shares, shares outstanding | 11,675,216 | 11,675,216 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Revenue | $ 4,466,233 | $ 5,868,725 | $ 5,679,977 |
Operating Expenses: | |||
Selling expenses | 47,480 | 95,207 | 186,641 |
Payroll, payroll taxes and others | 5,554,186 | 4,668,507 | 3,710,697 |
Professional fees | 460,274 | 404,850 | 634,372 |
Operating leases expenses | 117,686 | 116,532 | 184,802 |
Depreciation and amortization | 24,910 | 21,996 | 15,180 |
Allowance for doubtful accounts, net | 59,625 | 3,786 | (38,883) |
Other general and administrative | 471,557 | 316,989 | 628,608 |
Total Operating Expenses | 6,735,718 | 5,627,867 | 5,321,417 |
Income (loss) from Operations | (2,269,485) | 240,858 | 358,560 |
Other income (Expense): | |||
Gain on sale of asset | 1,705 | ||
(Loss) gain on foreign currency transactions | (14,402) | (31,109) | 12,072 |
Loss on deconsolidation | (8,350) | ||
Interest income | 2,094 | 68,701 | 30,662 |
Other income | 47,340 | 8,343 | (2,263) |
Total other income | 26,682 | 45,935 | 42,176 |
Income (loss) before income tax | (2,242,803) | 286,793 | 400,736 |
Income tax | (9,963) | (32,900) | (101,372) |
Net income (loss) | (2,252,766) | 253,893 | 299,364 |
Net loss attributable to noncontrolling interest | (7,048) | (4,146) | (153,742) |
Net income (loss) attributable to MDJM Ltd ordinary shareholders | $ (2,245,718) | $ 258,039 | $ 453,106 |
Net income (loss) per ordinary share attributable to MDJM Ltd ordinary shareholders - basic | $ (0.19) | $ 0.02 | $ 0.04 |
Net income (loss) per ordinary share attributable to MDJM Ltd ordinary shareholders - diluted | $ (0.19) | $ 0.02 | $ 0.04 |
Weighted-average shares outstanding: | |||
Basic | 11,675,216 | 11,652,882 | 11,640,661 |
Diluted | 11,675,216 | 11,652,882 | 11,640,661 |
Comprehensive income (loss): | |||
Net Income (loss) | $ (2,252,766) | $ 253,893 | $ 299,364 |
Other comprehensive income (loss), net of tax: | |||
Change in foreign currency translation adjustments | 94,694 | 251,919 | (53,156) |
Total other comprehensive income (loss) | (2,158,072) | 505,812 | 246,208 |
Comprehensive income (loss) attributable to noncontrolling interest | (143) | (9,132) | 2,398 |
Comprehensive income (loss) attributable to MDJM Ltd ordinary shareholders | $ (2,158,215) | $ 496,680 | $ 248,606 |
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, 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 Income (loss) | 30,412 | 422,694 | (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 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Proceeds from initial public offering - net of offering costs | $ 34 | 110,713 | 110,747 | ||||
Proceeds from initial public offering - net of offering costs (shares) | 34,396 | ||||||
Comprehensive income (loss): | |||||||
Net Income (loss) | 64,186 | 193,853 | (4,146) | 253,893 | |||
Other comprehensive income (loss), net of tax: | |||||||
Change in foreign currency translation adjustments | 242,787 | 9,132 | 251,919 | ||||
Balance at Dec. 31, 2020 | $ 11,675 | 6,845,394 | 327,140 | 2,142,657 | (37,558) | (173,820) | 9,115,488 |
Balance (shares) at Dec. 31, 2020 | 11,675,216 | ||||||
Comprehensive income (loss): | |||||||
Deconsolidated noncontrolling interest | (179,730) | 179,730 | |||||
Net Income (loss) | (2,245,718) | (7,048) | (2,252,766) | ||||
Other comprehensive income (loss), net of tax: | |||||||
Change in foreign currency translation adjustments | 100,461 | (5,767) | 94,694 | ||||
Balance at Dec. 31, 2021 | $ 11,675 | $ 6,845,394 | $ 327,140 | $ (282,791) | $ 62,903 | $ (6,905) | $ 6,957,416 |
Balance (shares) at Dec. 31, 2021 | 11,675,216 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Equity (Parenthetical) - USD ($) | Aug. 26, 2020 | Jan. 04, 2019 |
Consolidated Statements of Changes in Equity | ||
Net offering costs | $ 2,760 | $ 26,399 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||||
Cash Flows from Operating Activities: | ||||||
Net (loss) income | $ (2,252,766) | $ 253,893 | $ 299,364 | |||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||
Depreciation and amortization | 24,910 | 21,996 | 15,180 | |||
Changes in allowance for doubtful accounts | 59,625 | 3,786 | (38,883) | |||
Loss (gain) on foreign currency transactions | 14,402 | 31,109 | (12,072) | |||
Gain on sale of asset | (1,705) | |||||
Loss on deconsolidation | 8,350 | |||||
Non cash operating lease expense | 103,459 | 92,621 | 88,632 | |||
Non cash interest expense (income) | 5,327 | (5,926) | ||||
Changes in deferred tax assets | 9,963 | 10,180 | 101,166 | |||
Changes in operating assets and liabilities: | ||||||
Decrease (increase) in accounts receivables | 1,969,361 | (1,676,789) | (374,592) | |||
Decrease (increase) in other receivables | 16,190 | 24,282 | (4,630) | |||
(Increase) decrease in prepaid expense | (2,664) | 38,346 | 174,113 | |||
Decrease in prepaid income tax | 3,605 | |||||
(Decrease) increase in accounts payable and accrued expenses | (162,279) | 622,118 | (107,980) | |||
(Decrease) increase in Income, VAT and other tax payable | (85,526) | 87,761 | (28,518) | |||
Decrease in operating lease liabilities | (46,474) | (92,621) | (141,838) | |||
Increase (decrease) in deferred income | 3,841 | (8,889) | 26,657 | |||
Net Cash Used in Operating Activities | (334,281) | (598,133) | (1,501) | |||
Cash Flows from Investing Activities: | ||||||
Purchase of office equipment and software | (6,600) | (13,416) | (66,354) | |||
Advance made to deconsolidated subsidiary | (127,804) | |||||
Advance to related parties | (71,035) | |||||
Loan repayment received | 23,724 | 14,492 | ||||
Proceeds from disposal of asset | 3,330 | |||||
Net Cash (Used in) Provided by Investing Activities | (53,911) | 1,076 | (190,828) | |||
Cash Flows from Financing Activities: | ||||||
Proceeds from Regulation S offering - August 26, 2020, net of offering costs of $2,760 | 110,747 | |||||
Proceeds from initial public offering - net of offering costs of $26,399 | 70,406 | |||||
Net Cash Provided by Financing Activities | 110,747 | 70,406 | ||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 22,224 | 44,326 | (17,957) | |||
Net decrease in cash, cash equivalents and restricted cash | (365,968) | (441,984) | (139,880) | |||
Cash, cash equivalents, and restricted cash - beginning of the period * | [1] | 6,110,693 | 6,552,677 | 6,692,557 | ||
Cash, cash equivalents, and restricted cash - end of the period | 5,744,078 | 6,110,693 | [1] | 6,552,677 | [1] | |
Cash and cash equivalents | 4,796,299 | 4,976,527 | 4,995,843 | |||
Restricted foreign currency | 947,779 | 1,134,166 | 1,556,834 | |||
Total cash, cash equivalents, and restricted cash | 5,744,078 | 6,110,693 | $ 6,552,677 | |||
Cash paid for: | ||||||
Income taxes | $ 23,553 | $ 39 | ||||
[1] | $647 was removed from opening balance in 2021 resulted from deconsolidation |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Consolidated Statements of Cash Flows | |
Cash balance removed from deconsolidation | $ 647 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2021 | |
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 subsidiaries and 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 (“PRC”). The Company or MDJM, and its subsidiaries and consolidated VIE are also collectively referred to as the “Group,” or where appropriate, the terms the “Group,” “we,” “our,” or “us” also referred to MDJM or the Company and its subsidiaries and the consolidated VIE as a whole. The Company’s subsidiaries and consolidated VIE are also referred to as “operating entities.” MDJCC Limited (“MDJM Hong Kong”) was incorporated on February 9, 2018, under the laws of Hong Kong. MDJM owned 100% interest of MDJM Hong Kong. MD Local Global Limited (“MDJM UK”) was incorporated in the United Kingdom (“UK”) under the Companies Act 2006 as a private company on October 28, 2020, and it is registered in England and Wales. MDJM owned 100% interest of MDJM UK. For the six months ended June 30, 2021, MDJM UK has received an initial funding of $3,100,000 from MDJM. Mansions Estate Agent Ltd (“Mansions Estate”) was incorporated pursuant to England laws as a limited company on June 15, 2021, to conduct residential property management and real estate agencies business. MD UK holds 51% of the equity interest in Mansions Estate, 41% of the equity interest is held by Ocean Tide Wealth Limited, a specialist mortgage broker in the United Kingdom, and the remaining 8% is held by Mingzhe Zhang. 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. On February 2, 2021, Mingda Tianjin changed its name to “Mingdajiahe (Tianjin) Co., Ltd.” The following table lists the 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% MDJM UK October 28, 2020 England and Wales 100% Mansions Estate June 15, 2021 England and Wales 51% 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 industrials. To comply with these regulations, on April 28, 2018, Mingda Beijing entered into a series of contractual arrangements with Mingda Tianjin. Due to PRC legal restrictions on foreign ownership in the real estate sector, neither we nor our subsidiaries own any equity interest in Mingda Tianjin. Instead, for accounting purposes, we control and receive the economic benefits of Mingda Tianjin’s business operation through a series of contractual arrangements (the “VIE Agreements”), which enables us to consolidate the financial results of the VIE and its subsidiaries in our consolidated financial statements under U.S. GAAP. Agreements that Transfer 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 of 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 Enable us to Control and Receive the Economic Benefits of Mingda Tianjin’s Business Operation through the VIE Agreements 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 the VIE. 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 the VIE 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 the VIE 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 the VIE not to pay the service fees when required to do so. The Company’s ability to control and receive the economic benefits of Mingda Tianjin’s business operation through the VIE Agreements, and to consolidate the financial results of the VIE and its subsidiaries in its consolidated financial statements also depends on the power of attorney Mingda Beijing has to vote on all matters requiring shareholder approval in the VIE. 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 the VIE. The Company, through its subsidiaries and the VIE Agreements, has (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (2) the right to receive benefits from the VIE. Accordingly, the Company is the primary beneficiary of the VIE and has consolidated the financial results of the VIE. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
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 and related notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The accompanying consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE and the subsidiaries and branch offices of the VIE. 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 the Subsidiaries Owned by VIEs Incorporation Incorporation Ownership Mingdajiahe (Tianjin) Co., Ltd. Suzhou Branch October 13, 2017 Suzhou, China N/A Mingdajiahe (Tianjin) Co., Ltd. Chengdu Branch June 24, 2019 Chengdu, China N/A Mingda Tianjin had the following branch offices and/or subsidiaries been included in the previous issued consolidated financial statements. These offices and subsidiaries were dissolved in 2021 and deconsolidated from the accompanying consolidated financial statements for the year ended December 31, 2021. Percentage Date of Place of of Name of the Deconsolidated Subsidiaries Owned by VIEs Incorporation Incorporation Ownership Mingdajiahe (Tianjin) Co., Ltd. Yangzhou Branch October 18, 2017 Yangzhou, China N/A Xishe (Tianjin) Business Management Co., Ltd. October 20, 2017 Tianjin, China 100% Xishe (Tianjin) Culture and Media Co., Ltd. July 25, 2018 Tianjin, China 100% Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. March 9, 2018 Tianjin, China 51% Use of Estimates The preparation of these consolidated 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. 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, Cash Equivalents, and Restricted Cash 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. Cash in PRC denominated in RMB may not be freely transferable to out of the PRC because of exchange control regulations or other reasons. Such restricted cash amounted $947,779 and $1,134,166 as of December 31, 2021 and 2020, respectively. 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. Office Equipment and Fixtures 3 or 5 years Computers 3 years Software 2 or 10 years Vehicles 4 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: (1), identification of the contract, or contracts, with a customer, (2), identification of the performance obligations in the contract, (3), determination of the transaction price, (4), allocation of the transaction price to the performance obligations in the contract; and (5), recognition of revenue when, or as, we satisfy a performance obligation. The operating entities’ 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 operating entities 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 operating entities have 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 operating entities 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 the developers and the 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 operating entities. In these circumstances, the Group will not determine that the operating entities’ 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. The Group engages in the business of managing rental property via its UK subsidiary Mansions Estate commenced in August 2021. Mansions Estate receives a one-time referral fee from tenants, based on a certain percentage of total leased value of lease agreement. The Group recognizes the revenue, when: a) the lease agreement is executed, and b) the tenant made its first payment. Mansions Estate also provides management services to tenants and collects service fees. Management service fees are recognized on a monthly basis. The prepayment of monthly service fee is recorded as deferred income. Revenue from managing rental property in the UK amounted to $19,469 in 2021. Additionally, the operating entities provide consulting services to their clients, such as training, design and marketing. Revenue recognized from consulting is net of VAT. Revenue from consulting services was $38,746, $103,140 and $155,217 for the years ended December 31, 2021, 2020 and 2019, 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, most of the operating entities’ customers are in the PRC and major income is derived from commission-based service, which represented 99%, 98.2% and 97.1% of total revenue for the years ended December 31, 2021, 2020 and 2019, respectively. Minimal property management, consulting and other services which represented 0.4% and 0.9% of total revenue for the year ended December 31, 2021, respectively, and 0.0% and 1.8% of total revenue for the year ended December 31, 2020, respectively, and 0.0% and 2.9% of total revenue for the year ended December 31, 2019, respectively. Through Mingda Tianjin and its branch offices in Chengdu, Suzhou, and Yangzhou (deconsolidated in 2021), the PRC operating entities own and operate a primary real estate agency service business in the following local markets, Tianjin, Chengdu, Suzhou and Yangzhou. The revenue from each local market represented 75%, 23%, 2%, and 0% of total agency revenue for the year ended December 31, 2021, respectively, represented 65%, 30%, 3%, and 2% of total agency revenue for the year ended December 31, 2020, respectively, represented 83%, 5%, 9%, and 3% of total agency revenue for the year ended December 31, 2019. 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 revenue is recognized. The UK government will charge VAT on business services and commission. The standard VAT rate is 20%. All income of Mansion Estate in UK will subject to VAT. The Company accrues VAT payable when revenue is recognized. 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. 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 $0, $42,493 and $79,535 for the years ended December 31, 2021, 2020, and 2019, respectively. Income Taxes The Company’s operation in China is governed by the income tax laws of the PRC. The Chinese Corporate Income Tax applies to all companies in China, foreign owned & Chinese owned. It is levied on company profits at a rate of 25%. The Company’s operation in United Kingdom is governed by the income tax laws of the UK. The normal rate of corporation tax is 19% for the financial year beginning April 1, 2021 and will be maintained at this rate for the financial year beginning April 1, 2022. 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, 2021, 2020, and 2019, respectively. Non-Controlling 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 the noncontrolling interest holder. Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. was 49% owned by an unrelated third party as of December 31, 2020 and 2019, respectively. Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. dissolved in 2021 and deconsolidated in consolidated financial statements ended on December 31, 2021. Mansions Estate was 49% owned by other two unrelated parties as of December 31, 2021. 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. The Group has total of 126,082 underwriter’s warrants outstanding as of December 31, 2021. The underwriter’s warrants are exercisable at a price $6.25. As of December 31, 2021 and 2020, the Group’s closing stock price was $1.78 and $4.20, respectively. Therefore, these warrants are excluded as the potential diluted shares. 2021 2020 2019 Numerator for earnings per share: Net income (loss) attributable to the Company’s ordinary shareholders $ (2,245,718) $ 258,039 $ 453,106 Denominator for basic and diluted earnings per share: Basic and weighted average ordinary shares 11,675,216 11,652,882 11,640,661 Per share amount Per share - basic and diluted $ (0.19) $ 0.02 $ 0.04 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 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. December 31, December 31, December 31, 1 US$ = RMB 2021 2020 2019 At end of the period - RMB 6.3524 6.5378 6.9668 Average rate for the period ended - RMB 6.4491 6.9003 6.9072 1 US$ = GBP At end of the period - GBP 0.7419 — — Average rate for the period ended - GBP 0.7327 — — 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 denominated in currencies other than the functional currency 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 $(14,402), $(31,109), and $12,072 transaction (loss) gain recorded for the years ended December 31, 2021, 2020 and 2019, 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 $78,710 (RMB500,000 on December 31, 2021 exchange rate) for each depositor. The Company’s total unprotected cash in bank amounted to approximately $2,268,000 and $5,821,000, as of December 31, 2021 and 2020, 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. The Company’s subsidiary has bank accounts in the United Kingdom. Customer deposits held by banks, building societies and credit unions (including in Northern Ireland) in UK establishments that are authorized by the Prudential Regulation Authority (PRA) are protected by the Financial Services Compensation Scheme (FSCS) up to GBP85,000, which was approximately $114,600 (translated on December 31, 2021 exchange rate). The Company’s total unprotected cash in bank amounted to approximately $2,913,000 and $0, as of December 31, 2021 and 2020, 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, 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. Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the previously reported financial positions, results of operations and cash flows. Recently Adopted Accounting Pronouncements 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 January 1, 2019. The adoption of this authoritative guidance resulted in the recognition of operating lease assets and operating lease liabilities. The adoption of this authoritative guidance had no impact on the Group’s consolidated operating results, beginning retained earnings, and cash flows since the lease commenced on January 1, 2019. 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. 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 adoption of this standard had no material impact on the Group’s consolidated financial statements. In December 2019, the FASB issued Accounting Standards Update 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU summarizes the FASB’s recently issued Accounting Standards Update (ASU) No. 2019-12, simplifying the Accounting for Income Taxes. The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of this ASU had no material impact on our 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, excluding entities eligible to be smaller reporting company. For all other entities, the requirements are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2016-13 has been amended by ASU 2019-04, ASU 2019-05, and ASU 2019-11. For entities that have not yet adopted ASU No. 2016-13, the effective dates and transition methodology for ASU 2019-04, ASU 2019-05, and ASU 2019-11 are the same as the effective dates and transition methodology in ASU 2016-13. The Group did not adopt this standard yet due to the status of smaller reporting company. The Group plans to adopt this standard for the year beginning January 1, 2023. We do not expect the adoption of this standard will have material impact on the Group’s consolidated financial statements. 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, 2021 | |
ACCOUNTS RECEIVABLE | |
ACCOUNTS RECEIVABLE | NOTE 3 – ACCOUNTS RECEIVABLE Accounts receivable are primarily agent service fee receivable due from the customers - real estate developers and are recognized and carried at the amount billed to a customer, net of allowance for expected loss from doubtful accounts. On December 31, 2021 and 2020, accounts receivable and allowance for doubtful accounts consist of the following: 2021 2020 Accounts receivable $ 2,214,173 $ 4,077,820 Allowance for doubtful accounts (76,462) (15,477) Accounts receivable, net $ 2,137,711 $ 4,062,343 The Group maintains an allowance for doubtful accounts which required 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, 2021, the Group reserved $76,462 of allowance for doubtful accounts, which consisted of a 100% reserve from two customers due to collectability, and a 5% reserve from three customers with receivable age between 180 days and 365 days. As of December 31, 2020, the Group reserved $15,477 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. Major Customers For the twelve months ended December 31, 2021, 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 67% of the total revenue, with 34%, 23%, and 10%, respectively, from Ge Diao Ping Yuan, Taida Shang Qing Cheng, and Ge Diao Liu Yuan. The accounts receivable from these three customers (projects) were $737,476, $1,116,552, and $10,643, respectively, as of December 31, 2021. For the year ended December 31, 2020, 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 61% of its total revenue, with 29%, 16%, and 16%, respectively, from Taida Shang Qing Cheng, Ge Diao Ping Yuan, and Wanke Xi Lu. The accounts receivable from these three customers (projects) were $1,851,254, $311,172, and $281,723, respectively, as of December 31, 2020. 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. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE 4 – PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: 2021 2020 Office Equipment and Fixtures $ 99,404 $ 90,094 Software 18,910 18,374 Auto 48,376 47,004 Total Assets 166,690 155,472 Less accumulated depreciation (117,678) (89,769) Net Assets $ 49,012 $ 65,703 For the years ended December 31, 2021, 2020, and 2019, depreciation expense was $24,910, $21,996, and $15,180, respectively. |
INCOME TAX AND DEFERRED TAX ASS
INCOME TAX AND DEFERRED TAX ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
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 for the years ended December 31, 2021, 2020 and 2019, respectively. MDJM UK and Mansion Estate were incorporated in the UK. A UK company will be subject to UK corporation tax on its income profits and capital profits. The normal rate of corporation tax is 19% for the financial year beginning April 1, 2021, and will be maintained at this rate for the financial year beginning April 1, 2022. The Group conducts substantially most of its business through the VIE and subsidiaries of the VIE, and they are subject to PRC income taxes. The Group’s subsidiary and VIE in the PRC are subject to a standard tax rate of 25%. At the beginning of 2019, China State Administration of Taxation issued a new income tax abatement policy to small business with taxable income less than RMB3 million, number of employees less than 300, and total assets less than RMB50 million for the tax periods from January 1, 2019 to December 31, 2021. According to the new tax abatement policy, the income tax rate is reduced to 5% for small business with taxable income less than RMB1 million, the income tax rate is reduced to 10% for small business with taxable income from RMB1 million to RMB3 million. For the years ended December 31, 2021, 2020 and 2019, the Group is qualified to receive the above tax abatement. 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. 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 consisted of accounts receivable, net, accrued liabilities and valuation allowance. The deferred tax assets were $15,382 and $24,890 as of December 31, 2021 and 2020, respectively. Significant components of the Group’s deferred tax assets consist of following: 2021 2020 Deferred tax items Accounts receivable, net $ 19,115 $ 3,869 Accrued expenses — 27,860 Net operating loss - UK 3,305 — Valuation allowance (7,038) (6,839) Deferred tax assets, net $ 15,382 $ 24,890 The provision for income tax for the years ended December 31, 2021, 2020 and 2019 were summarized as follows: 2021 2020 2019 Current $ — $ 22,720 $ 206 Deferred tax adjustment 9,963 10,180 101,166 Total income tax $ 9,963 $ 32,900 $ 101,372 Reconciliation of the statutory income tax rate and the Company’s effective income tax rate for the years ended December 31, 2021, 2020 and 2019, respectively, were as follows: China 2021 2020 2019 Hong Kong statutory income tax rate 16.50 % 16.50 % 16.50 % Valuation allowance recognized with respect to the loss in Hong Kong Company -16.50 % -16.50 % -16.50 % PRC statutory income tax rate 25.00 % 25.00 % 25.00 % Effect of income tax exemptions and reliefs in the PRC companies -25.00 % -17.33 % 0.00 % Effect of valuation and deferred tax adjustments -0.66 % 2.89 % -24.90 % Effective rate -0.66 % 10.56 % 0.10 % United Kingdom UK statutory income tax rate 19.00 % Valuation allowance recognized with respect to the loss in UK -10.86 % Effect of valuation and deferred tax adjustments 0.00 % Effective rate 8.14 % Aggregate undistributed earnings of the Company’s subsidiaries, VIE and VIE’s subsidiaries located in the PRC that are available for distribution on December 31, 2021 and December 31, 2020 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, 2021 and 2020, the Company had not declared any dividends. As of December 31, 2021 and 2020, the Company had no significant uncertain tax positions that qualify for either recognition or disclosure in the financial statements. As of December 31, 2021, income tax returns for the tax years ended December 31, 2016, through December 31, 2020 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, 2021. 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 $15,500) 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. The tax authority of the PRC government conducts periodic and 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, 2021, 2020 and 2019. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2021 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consist of the following as of December 31, 2021 and 2020: 2021 2020 Payroll and social security payable $ 167,470 $ 230,430 Bonus payable 774,571 820,140 Other payables and accrued liabilities 86,169 96,960 Total Accounts Payable and Accrued Liabilities $ 1,028,210 $ 1,147,530 |
VAT AND OTHER TAXES PAYABLE
VAT AND OTHER TAXES PAYABLE | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 and 2020: 2021 2020 VAT payable $ 121,602 $ 162,034 Surcharge and fees 14,524 21,339 Income tax payable — 23,979 Total VAT and Other Taxes Payable $ 136,126 $ 207,352 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 and subsidiaries are generally subject to a 6% VAT rate for its commission income. Surcharge and fees payable include urban maintenance and construction tax payable, additional education tax payable, and local education tax payable. The standard rate of VAT in the UK is 20%. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
LEASES | |
LEASES | NOTE 8 - LEASES The operating entities lease all of their 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 operating entities’ real estate leases have initial terms ranging from one The PRC operating entities had one long-term lease which became effective on January 1, 2019, and which will be expired on December 31, 2023. The Group adopted new accounting standard ASC 842 effective January 1, 2019. The Group used 4.35%, the Chinese bank long-term lending annual rate for a typical five years lease as an incremental borrowing rate, in determining the present value of future lease payments. The same rate was used as the discount rate to measure the lease liability on January 1, 2019, the date of adoption. At initial measurement, the Group recorded a non-cash ROU asset of $479,744 (RMB 3,342,278 translated on December 31, 2019 exchange rate, and a noncash lease liability of $479,744 (RMB 3,342,278 translated on December 31, 2019). A summary of operating lease right-of-use assets and liabilities as of December 31, 2021 and 2020 were as follows: Operating Lease Assets 2021 2020 Main offices operating lease assets - initial measurement $ 479,744 $ 479,744 Less: accumulated amortization (275,382) (179,611) Foreign exchange effects 19,765 19,695 Operating Lease Assets, net $ 224,127 $ 319,828 Operating Lease Liabilities Total operating lease liabilities - initial measurement $ 479,744 $ 479,744 Accrued interest 41,124 31,394 Accumulated payment to liabilities (316,506) (263,755) Foreign exchange effects 19,765 16,232 Total operating lease liabilities 224,127 263,615 Less: operating lease liabilities, current (162,735) (102,056) Long-term Operating Lease Liabilities $ 61,392 $ 161,559 During the year ended December 31, 2021, the Company missed one scheduled rental payment (lease repayment). Consequently, current lease liabilities increased. The following table summarizes the maturity of lease liabilities under operating lease as of December 31, 2021: For the 12 months ended Operating Leases December 31, 2022 $ 115,706 December 31, 2023 115,706 Total minimum payments 231,412 Less: imputed interest (7,285) Total operating lease liabilities $ 224,127 The operating entities will lease temporary office spaces used for ongoing projects based on the needs. These leases are normally with terms of 12 months or less, and an option of renewing. Due to the temporary nature of these office spaces, 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 operating entities will renew the lease. The Group elected not to recognize on the balance sheet for leases with terms of 12 months or less. The lease expense recognized for such leases is on a straight-line basis over the lease terms. For the years ended December 31, 2021, 2020, and 2019, such operating lease expense amounted to $3,715, $10,012, and $17,045, respectively. For the years ended December 31, 2021, 2020, and 2019, total operating lease expense amounted to $117,686, $116,532, and $184,802, respectively. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2021 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' 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. On January 26, 2018, MDJM issued 10,380,000 ordinary shares to entities controlled by the shareholders of Mingda Tianjin. 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 the Initial Public Offering (“IPO”) of its ordinary shares 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 the 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. On August 20, 2020, the Board of Directors of MDJM approved to offer and sell an aggregate of 34,396 ordinary shares at $3.3 per share in reliance on the exemption under Rule 902 of Regulation S promulgated under the Securities Act of 1933, as amended (“Regulation S”). The proceeds are intended for working capital and general corporate purposes. The offering was closed on August 20, 2020 and the Company received gross proceeds of $113,507. Underwriter Warrants Pursuant to the IPO Agreement (defined below), the Company agreed to grant the underwriter of its IPO, Network 1 Financial Securities, Inc., 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. The 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 underwriter warrants amounted to $190,384. The underwriter warrants were classified as equity and credit to the additional paid-in capital-underwriter cost 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, 2021 | |
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 Group’s consolidated financial statements have distinguished the interest of the Group from the interest of the noncontrolling interest holder. Prior to 2021, noncontrolling interest represented Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. 49% ownership interests owned by an unrelated third party. Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. was dissolved in 2021 and deconsolidated from the consolidated financial statements ended December 31, 2021. Noncontrolling interest in 2021 represented Mansions Estate’s 49% ownership interests owned by other two unrelated parties. Mansions Estate commenced its business in the UK from August 2021. Amount Noncontrolling interest on December 31, 2019 $ (178,806) Net loss attributable to noncontrolling interest - 2020 (4,146) Foreign currency translation adjustment attributable to noncontrolling interest 9,132 Noncontrolling interest on December 31, 2020 $ (173,820) Deconsolidated noncontrolling interest in 2021 173,820 Net loss attributable to noncontrolling interest - 2021 (7,048) Foreign currency translation adjustment attributable to noncontrolling interest 143 Noncontrolling interest on December 31, 2021 $ (6,905) |
STATUTORY RESERVE
STATUTORY RESERVE | 12 Months Ended |
Dec. 31, 2021 | |
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 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 $327,140 as of December 31, 2021 and 2020, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
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 December 25, 2019, the Company signed a one-year Investor Relations Agreement (“IR Agreement II”) with Weitian Group LLC. (“Weitian”). Pursuant to the IR Agreement II, Weitian will act as an investor counsel and provide related services to MDJM from January 1, 2020, to December 31, 2020. IR Agreement II shall be automatically renewed for consecutive twelve-month terms unless it is terminated or replaced with another agreement. As a consideration, the Company will pay $4,000 per month to Weitian. Either party may terminate the IR Agreement II by providing a written notice ten days before the date of termination. Legal Proceeding Except for the following disclosure, we are currently not a party to any litigation of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash flows or financial condition. The operating entities will file a civil complaint in local district’s court if there is a dispute on accounts receivable with customers. Historically, the operating entities have won the civil complaint and received the amounts awarded by court. During 2021, 10 such complaint cases were closed and the operating entities collected approximately $1.07 million from customers. As of December 31, 2021, one case was still ongoing. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 13 – RELATED PARTY TRANSACTIONS 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS On January 14, 2022, Mingda Jiahe Development Investment Co., Ltd (“MD Japan”) was incorporated pursuant to Japanese laws. MDJM holds 100% of the equity interest in MD Japan. As of the date of this report, MD Japan has not generated any revenue. On February 15, 2022, MD Lokal Global GmbH (“MD German”) was incorporated pursuant to German laws. MDJM holds 100% of the equity interest in MD German. As of the date of this report, MD German has not generated any revenue. On March 18, 2022, the Chengdu Branch Office of Mingda Tianjin filed a civil complaint in the People's Court of Dujiangyan City, Sichuan Province, alleging breach of contract and unpaid service fee against Chengdu TEDA New City. The total amount claimed is $552,282 (RMB3,508,315.12 translated at December 31, 2021 exchange rate). The case is still pending filing at the court. On February 17, 2022, Mingda Tianjin filed a civil complaint in Gusu District Court of Suzhou City, Jiangsu Province, alleging unpaid service fee and breach of contract against Tianfang (Suzhou) Real Estate Co., Ltd. The claimed amount is the unpaid base of $45,926 (RMB291,742.17 translated at December 31, 2021 exchange rate), plus a 0.1‰ per day breaching late fee. The case is still under review by the Gusu District People's Court in Suzhou. |
RESTRICTED NET ASSETS OR PARENT
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2021 | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | NOTE 15 – RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION As of December 31, 2021, the Company’s major 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 $2,993,761 and $5,008,022 as of December 31, 2021 and 2020, respectively. The Company’s PRC subsidiary’ net assets as of December 31, 2021 and 2020 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. 2021 2020 Assets Cash $ 1,743,412 $ 4,976,511 Prepaid expense 3,881 2,258 Current Assets 1,747,293 4,978,769 Due from subsidiaries - outside of PRC 3,171,035 — Investment is subsidiaries - in PRC 2,932,508 5,140,775 Total Assets $ 7,850,836 $ 10,119,544 Liabilities and Equity Current liabilities $ — $ — Due to subsidiaries 886,515 830,236 Total Liabilities 886,515 830,236 Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share, 11,675,216 and 11,675,216 shares issued outstanding 11,675 11,675 Additional paid in capital 6,845,394 6,845,394 Statutory reserve 327,140 327,140 Retained earnings (deficit) (282,791) 2,142,657 Accumulated other comprehensive loss 62,903 (37,558) Total MDJM Ltd stockholders’ equity 6,964,321 9,289,308 Total Liabilities and Equity $ 7,850,836 $ 10,119,544 MDJM LTD CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) For the Years Ended December 31, 2021 2020 2019 Revenue $ — $ — $ — Share of profit (loss) in subsidiaries (2,245,718) 258,039 453,106 Other general and administrative expenses (123,572) (73,421) (101,948) Income (Loss) from Operations (2,369,290) 184,618 351,158 Interest income 6,852 55,125 26,719 Net Income (Loss) (2,362,438) 239,743 377,877 Other comprehensive income (loss): Foreign currency translation adjustments 100,461 242,787 (50,758) Comprehensive Income (Loss) $ (2,261,977) $ 482,530 $ 327,119 MDJM LIMITED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Year Ended December 31, 2021 2020 2019 Net cash used in operating activities $ (118,343) $ (19,572) $ (76,211) Net cash (used in) provided by investing activities (3,114,756) (110,498) (624,440) Net cash provided by financing activities — 110,747 70,406 Net (decrease) increase in cash and cash equivalents (3,233,099) (19,323) (630,245) Cash and cash equivalents - beginning of the period 4,976,511 4,995,834 5,626,079 Cash and cash equivalents - end of the period $ 1,743,412 $ 4,976,511 $ 4,995,834 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. Regulation S Offering On August 20, 2020, the Board of Directors of MDJM Ltd approved to offer and sell an aggregate of 34,396 ordinary shares at $3.3 per share in reliance on the exemption under Rule 902 of Regulation S promulgated under the Securities Act of 1933, as amended (“Regulation S”). The proceeds are intended for working capital and general corporate purposes. The offering was closed on August 20, 2020 and the Company received gross proceeds of $113,507. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of consolidation | Basis of consolidation The Company’s consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The accompanying consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE and the subsidiaries and branch offices of the VIE. 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 the Subsidiaries Owned by VIEs Incorporation Incorporation Ownership Mingdajiahe (Tianjin) Co., Ltd. Suzhou Branch October 13, 2017 Suzhou, China N/A Mingdajiahe (Tianjin) Co., Ltd. Chengdu Branch June 24, 2019 Chengdu, China N/A Mingda Tianjin had the following branch offices and/or subsidiaries been included in the previous issued consolidated financial statements. These offices and subsidiaries were dissolved in 2021 and deconsolidated from the accompanying consolidated financial statements for the year ended December 31, 2021. Percentage Date of Place of of Name of the Deconsolidated Subsidiaries Owned by VIEs Incorporation Incorporation Ownership Mingdajiahe (Tianjin) Co., Ltd. Yangzhou Branch October 18, 2017 Yangzhou, China N/A Xishe (Tianjin) Business Management Co., Ltd. October 20, 2017 Tianjin, China 100% Xishe (Tianjin) Culture and Media Co., Ltd. July 25, 2018 Tianjin, China 100% Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. March 9, 2018 Tianjin, China 51% |
Use of Estimates | Use of Estimates The preparation of these consolidated 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. |
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, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash 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. Cash in PRC denominated in RMB may not be freely transferable to out of the PRC because of exchange control regulations or other reasons. Such restricted cash amounted $947,779 and $1,134,166 as of December 31, 2021 and 2020, respectively. |
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. Office Equipment and Fixtures 3 or 5 years Computers 3 years Software 2 or 10 years Vehicles 4 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: (1), identification of the contract, or contracts, with a customer, (2), identification of the performance obligations in the contract, (3), determination of the transaction price, (4), allocation of the transaction price to the performance obligations in the contract; and (5), recognition of revenue when, or as, we satisfy a performance obligation. The operating entities’ 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 operating entities 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 operating entities have 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 operating entities 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 the developers and the 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 operating entities. In these circumstances, the Group will not determine that the operating entities’ 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. The Group engages in the business of managing rental property via its UK subsidiary Mansions Estate commenced in August 2021. Mansions Estate receives a one-time referral fee from tenants, based on a certain percentage of total leased value of lease agreement. The Group recognizes the revenue, when: a) the lease agreement is executed, and b) the tenant made its first payment. Mansions Estate also provides management services to tenants and collects service fees. Management service fees are recognized on a monthly basis. The prepayment of monthly service fee is recorded as deferred income. Revenue from managing rental property in the UK amounted to $19,469 in 2021. Additionally, the operating entities provide consulting services to their clients, such as training, design and marketing. Revenue recognized from consulting is net of VAT. Revenue from consulting services was $38,746, $103,140 and $155,217 for the years ended December 31, 2021, 2020 and 2019, respectively. |
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, most of the operating entities’ customers are in the PRC and major income is derived from commission-based service, which represented 99%, 98.2% and 97.1% of total revenue for the years ended December 31, 2021, 2020 and 2019, respectively. Minimal property management, consulting and other services which represented 0.4% and 0.9% of total revenue for the year ended December 31, 2021, respectively, and 0.0% and 1.8% of total revenue for the year ended December 31, 2020, respectively, and 0.0% and 2.9% of total revenue for the year ended December 31, 2019, respectively. Through Mingda Tianjin and its branch offices in Chengdu, Suzhou, and Yangzhou (deconsolidated in 2021), the PRC operating entities own and operate a primary real estate agency service business in the following local markets, Tianjin, Chengdu, Suzhou and Yangzhou. The revenue from each local market represented 75%, 23%, 2%, and 0% of total agency revenue for the year ended December 31, 2021, respectively, represented 65%, 30%, 3%, and 2% of total agency revenue for the year ended December 31, 2020, respectively, represented 83%, 5%, 9%, and 3% of total agency revenue for the year ended December 31, 2019. |
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 revenue is recognized. The UK government will charge VAT on business services and commission. The standard VAT rate is 20%. All income of Mansion Estate in UK will subject to VAT. The Company accrues VAT payable when revenue is recognized. |
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. |
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 $0, $42,493 and $79,535 for the years ended December 31, 2021, 2020, and 2019, respectively. |
Income Taxes | Income Taxes The Company’s operation in China is governed by the income tax laws of the PRC. The Chinese Corporate Income Tax applies to all companies in China, foreign owned & Chinese owned. It is levied on company profits at a rate of 25%. The Company’s operation in United Kingdom is governed by the income tax laws of the UK. The normal rate of corporation tax is 19% for the financial year beginning April 1, 2021 and will be maintained at this rate for the financial year beginning April 1, 2022. 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, 2021, 2020, and 2019, respectively. |
Non-Controlling Interest | Non-Controlling 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 the noncontrolling interest holder. Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. was 49% owned by an unrelated third party as of December 31, 2020 and 2019, respectively. Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. dissolved in 2021 and deconsolidated in consolidated financial statements ended on December 31, 2021. Mansions Estate was 49% owned by other two unrelated parties as of December 31, 2021. |
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. The Group has total of 126,082 underwriter’s warrants outstanding as of December 31, 2021. The underwriter’s warrants are exercisable at a price $6.25. As of December 31, 2021 and 2020, the Group’s closing stock price was $1.78 and $4.20, respectively. Therefore, these warrants are excluded as the potential diluted shares. 2021 2020 2019 Numerator for earnings per share: Net income (loss) attributable to the Company’s ordinary shareholders $ (2,245,718) $ 258,039 $ 453,106 Denominator for basic and diluted earnings per share: Basic and weighted average ordinary shares 11,675,216 11,652,882 11,640,661 Per share amount Per share - basic and diluted $ (0.19) $ 0.02 $ 0.04 |
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 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. December 31, December 31, December 31, 1 US$ = RMB 2021 2020 2019 At end of the period - RMB 6.3524 6.5378 6.9668 Average rate for the period ended - RMB 6.4491 6.9003 6.9072 1 US$ = GBP At end of the period - GBP 0.7419 — — Average rate for the period ended - GBP 0.7327 — — 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 denominated in currencies other than the functional currency 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 $(14,402), $(31,109), and $12,072 transaction (loss) gain recorded for the years ended December 31, 2021, 2020 and 2019, 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 $78,710 (RMB500,000 on December 31, 2021 exchange rate) for each depositor. The Company’s total unprotected cash in bank amounted to approximately $2,268,000 and $5,821,000, as of December 31, 2021 and 2020, 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. The Company’s subsidiary has bank accounts in the United Kingdom. Customer deposits held by banks, building societies and credit unions (including in Northern Ireland) in UK establishments that are authorized by the Prudential Regulation Authority (PRA) are protected by the Financial Services Compensation Scheme (FSCS) up to GBP85,000, which was approximately $114,600 (translated on December 31, 2021 exchange rate). The Company’s total unprotected cash in bank amounted to approximately $2,913,000 and $0, as of December 31, 2021 and 2020, 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, 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. |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the previously reported financial positions, results of operations and cash flows. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements 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 January 1, 2019. The adoption of this authoritative guidance resulted in the recognition of operating lease assets and operating lease liabilities. The adoption of this authoritative guidance had no impact on the Group’s consolidated operating results, beginning retained earnings, and cash flows since the lease commenced on January 1, 2019. 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. 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 adoption of this standard had no material impact on the Group’s consolidated financial statements. In December 2019, the FASB issued Accounting Standards Update 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU summarizes the FASB’s recently issued Accounting Standards Update (ASU) No. 2019-12, simplifying the Accounting for Income Taxes. The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of this ASU had no material impact on our 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, excluding entities eligible to be smaller reporting company. For all other entities, the requirements are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2016-13 has been amended by ASU 2019-04, ASU 2019-05, and ASU 2019-11. For entities that have not yet adopted ASU No. 2016-13, the effective dates and transition methodology for ASU 2019-04, ASU 2019-05, and ASU 2019-11 are the same as the effective dates and transition methodology in ASU 2016-13. The Group did not adopt this standard yet due to the status of smaller reporting company. The Group plans to adopt this standard for the year beginning January 1, 2023. We do not expect the adoption of this standard will have material impact on the Group’s consolidated financial statements. 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, 2021 | |
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% MDJM UK October 28, 2020 England and Wales 100% Mansions Estate June 15, 2021 England and Wales 51% 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, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of variable interest entities | Percentage Date of Place of of Name of the Subsidiaries Owned by VIEs Incorporation Incorporation Ownership Mingdajiahe (Tianjin) Co., Ltd. Suzhou Branch October 13, 2017 Suzhou, China N/A Mingdajiahe (Tianjin) Co., Ltd. Chengdu Branch June 24, 2019 Chengdu, China N/A Percentage Date of Place of of Name of the Deconsolidated Subsidiaries Owned by VIEs Incorporation Incorporation Ownership Mingdajiahe (Tianjin) Co., Ltd. Yangzhou Branch October 18, 2017 Yangzhou, China N/A Xishe (Tianjin) Business Management Co., Ltd. October 20, 2017 Tianjin, China 100% Xishe (Tianjin) Culture and Media Co., Ltd. July 25, 2018 Tianjin, China 100% Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. March 9, 2018 Tianjin, China 51% |
Schedule of estimated useful life of fixed assets | Office Equipment and Fixtures 3 or 5 years Computers 3 years Software 2 or 10 years Vehicles 4 years |
Schedule of basic and diluted loss per share | 2021 2020 2019 Numerator for earnings per share: Net income (loss) attributable to the Company’s ordinary shareholders $ (2,245,718) $ 258,039 $ 453,106 Denominator for basic and diluted earnings per share: Basic and weighted average ordinary shares 11,675,216 11,652,882 11,640,661 Per share amount Per share - basic and diluted $ (0.19) $ 0.02 $ 0.04 |
Schedule of foreign currency translation | December 31, December 31, December 31, 1 US$ = RMB 2021 2020 2019 At end of the period - RMB 6.3524 6.5378 6.9668 Average rate for the period ended - RMB 6.4491 6.9003 6.9072 1 US$ = GBP At end of the period - GBP 0.7419 — — Average rate for the period ended - GBP 0.7327 — — |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
ACCOUNTS RECEIVABLE | |
Schedule of accounts receivable and allowance for doubtful accounts | 2021 2020 Accounts receivable $ 2,214,173 $ 4,077,820 Allowance for doubtful accounts (76,462) (15,477) Accounts receivable, net $ 2,137,711 $ 4,062,343 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | 2021 2020 Office Equipment and Fixtures $ 99,404 $ 90,094 Software 18,910 18,374 Auto 48,376 47,004 Total Assets 166,690 155,472 Less accumulated depreciation (117,678) (89,769) Net Assets $ 49,012 $ 65,703 |
INCOME TAX AND DEFERRED TAX A_2
INCOME TAX AND DEFERRED TAX ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAX AND DEFERRED TAX ASSETS | |
Schedule of deferred tax assets | 2021 2020 Deferred tax items Accounts receivable, net $ 19,115 $ 3,869 Accrued expenses — 27,860 Net operating loss - UK 3,305 — Valuation allowance (7,038) (6,839) Deferred tax assets, net $ 15,382 $ 24,890 |
Schedule of provision for income taxes | 2021 2020 2019 Current $ — $ 22,720 $ 206 Deferred tax adjustment 9,963 10,180 101,166 Total income tax $ 9,963 $ 32,900 $ 101,372 |
Schedule of reconciliation of the statutory income tax rate and the effective income tax rate | China 2021 2020 2019 Hong Kong statutory income tax rate 16.50 % 16.50 % 16.50 % Valuation allowance recognized with respect to the loss in Hong Kong Company -16.50 % -16.50 % -16.50 % PRC statutory income tax rate 25.00 % 25.00 % 25.00 % Effect of income tax exemptions and reliefs in the PRC companies -25.00 % -17.33 % 0.00 % Effect of valuation and deferred tax adjustments -0.66 % 2.89 % -24.90 % Effective rate -0.66 % 10.56 % 0.10 % United Kingdom UK statutory income tax rate 19.00 % Valuation allowance recognized with respect to the loss in UK -10.86 % Effect of valuation and deferred tax adjustments 0.00 % Effective rate 8.14 % |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
Schedule of accounts payable and accrued liabilities | Accounts payable and accrued liabilities consist of the following as of December 31, 2021 and 2020: 2021 2020 Payroll and social security payable $ 167,470 $ 230,430 Bonus payable 774,571 820,140 Other payables and accrued liabilities 86,169 96,960 Total Accounts Payable and Accrued Liabilities $ 1,028,210 $ 1,147,530 |
VAT AND OTHER TAXES PAYABLE (Ta
VAT AND OTHER TAXES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
VAT AND OTHER TAXES PAYABLE | |
Schedule of vat and other taxes payable | 2021 2020 VAT payable $ 121,602 $ 162,034 Surcharge and fees 14,524 21,339 Income tax payable — 23,979 Total VAT and Other Taxes Payable $ 136,126 $ 207,352 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
LEASES | |
Summary of operating lease right-of-use assets and liabilities | Operating Lease Assets 2021 2020 Main offices operating lease assets - initial measurement $ 479,744 $ 479,744 Less: accumulated amortization (275,382) (179,611) Foreign exchange effects 19,765 19,695 Operating Lease Assets, net $ 224,127 $ 319,828 Operating Lease Liabilities Total operating lease liabilities - initial measurement $ 479,744 $ 479,744 Accrued interest 41,124 31,394 Accumulated payment to liabilities (316,506) (263,755) Foreign exchange effects 19,765 16,232 Total operating lease liabilities 224,127 263,615 Less: operating lease liabilities, current (162,735) (102,056) Long-term Operating Lease Liabilities $ 61,392 $ 161,559 |
Summary of future minimum lease payments for operating leases | The following table summarizes the maturity of lease liabilities under operating lease as of December 31, 2021: For the 12 months ended Operating Leases December 31, 2022 $ 115,706 December 31, 2023 115,706 Total minimum payments 231,412 Less: imputed interest (7,285) Total operating lease liabilities $ 224,127 |
NONCONTROLLING INTEREST (Tables
NONCONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
NONCONTROLLING INTEREST | |
Schedule of noncontrolling interest | Amount Noncontrolling interest on December 31, 2019 $ (178,806) Net loss attributable to noncontrolling interest - 2020 (4,146) Foreign currency translation adjustment attributable to noncontrolling interest 9,132 Noncontrolling interest on December 31, 2020 $ (173,820) Deconsolidated noncontrolling interest in 2021 173,820 Net loss attributable to noncontrolling interest - 2021 (7,048) Foreign currency translation adjustment attributable to noncontrolling interest 143 Noncontrolling interest on December 31, 2021 $ (6,905) |
RESTRICTED NET ASSETS OR PARE_2
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
Schedule of condensed balance sheet | 2021 2020 Assets Cash $ 1,743,412 $ 4,976,511 Prepaid expense 3,881 2,258 Current Assets 1,747,293 4,978,769 Due from subsidiaries - outside of PRC 3,171,035 — Investment is subsidiaries - in PRC 2,932,508 5,140,775 Total Assets $ 7,850,836 $ 10,119,544 Liabilities and Equity Current liabilities $ — $ — Due to subsidiaries 886,515 830,236 Total Liabilities 886,515 830,236 Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share, 11,675,216 and 11,675,216 shares issued outstanding 11,675 11,675 Additional paid in capital 6,845,394 6,845,394 Statutory reserve 327,140 327,140 Retained earnings (deficit) (282,791) 2,142,657 Accumulated other comprehensive loss 62,903 (37,558) Total MDJM Ltd stockholders’ equity 6,964,321 9,289,308 Total Liabilities and Equity $ 7,850,836 $ 10,119,544 |
Summary of condensed statements of operations | 2021 2020 2019 Revenue $ — $ — $ — Share of profit (loss) in subsidiaries (2,245,718) 258,039 453,106 Other general and administrative expenses (123,572) (73,421) (101,948) Income (Loss) from Operations (2,369,290) 184,618 351,158 Interest income 6,852 55,125 26,719 Net Income (Loss) (2,362,438) 239,743 377,877 Other comprehensive income (loss): Foreign currency translation adjustments 100,461 242,787 (50,758) Comprehensive Income (Loss) $ (2,261,977) $ 482,530 $ 327,119 |
Schedule of statement of cash flows | 2021 2020 2019 Net cash used in operating activities $ (118,343) $ (19,572) $ (76,211) Net cash (used in) provided by investing activities (3,114,756) (110,498) (624,440) Net cash provided by financing activities — 110,747 70,406 Net (decrease) increase in cash and cash equivalents (3,233,099) (19,323) (630,245) Cash and cash equivalents - beginning of the period 4,976,511 4,995,834 5,626,079 Cash and cash equivalents - end of the period $ 1,743,412 $ 4,976,511 $ 4,995,834 |
ORGANIZATION AND DESCRIPTION _3
ORGANIZATION AND DESCRIPTION OF BUSINESS - Wholly-Owned Subsidiaries and Consolidated VIE (Details) | 12 Months Ended | |||
Dec. 31, 2021 | Oct. 28, 2020 | Mar. 09, 2018 | Feb. 09, 2018 | |
MDJCC Limited ("MDJH Hong Kong") | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Percentage of Ownership | 100.00% | |||
MD Local Global Limited ("MDJM UK") | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Date of Incorporation | Oct. 28, 2020 | |||
Place of Incorporation | England and Wales | |||
Percentage of Ownership | 100.00% | 100.00% | ||
Mansions Estate | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Date of Incorporation | Jun. 15, 2021 | |||
Place of Incorporation | England and Wales | |||
Percentage of Ownership | 51.00% | |||
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% | 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 | |||
Percentage of Ownership | 100.00% | |||
Tianjin Mingdajiahe Real Estate Co., Ltd. | ||||
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 - Additional Information (Details) - USD ($) | Apr. 28, 2018 | Jun. 30, 2021 | Jun. 15, 2021 |
Mingda Beijing (WFOE) | Mansions Estate Agent Ltd | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||
Equity interests held | 8.00% | ||
MDJM UK [Member] | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||
Initial fund received | $ 3,100,000 | ||
MDJM UK [Member] | Mansions Estate Agent Ltd | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||
Equity interests held | 51.00% | ||
Ocean Tide Wealth Limited | Mansions Estate Agent Ltd | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||
Equity interests held | 41.00% | ||
Tianjin Mingdajiahe Real Estate Co., Ltd. | Mingda Beijing (WFOE) | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | |||
Term of the business agreement | 10 years | ||
Tianjin Mingdajiahe Real Estate Co., Ltd. | 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) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Mingdajiahe (Tianjin) Co., Ltd. Suzhou Branch | |||
Variable Interest Entity [Line Items] | |||
Date of Formation | Oct. 13, 2017 | ||
Place of Formation | Suzhou, China | ||
Mingdajiahe (Tianjin) Co., Ltd. Chengdu Branch | |||
Variable Interest Entity [Line Items] | |||
Date of Formation | Jun. 24, 2019 | ||
Place of Formation | Chengdu, China | ||
Mingdajiahe (Tianjin) Co., Ltd. Yangzhou Branch | VIEs | |||
Variable Interest Entity [Line Items] | |||
Date of Formation | Oct. 18, 2017 | ||
Place of Formation | Yangzhou, China | ||
Xi She (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 | ||
Xi She (Tianjin) Wen Hua Chuan Mei 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% | 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 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Estimated Useful Life of Fixed Assets (Details) | 12 Months Ended |
Dec. 31, 2021 | |
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 | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 3 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 | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 4 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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator for earnings per share: | |||
Net income (loss) attributable to the Company's ordinary shareholders | $ (2,245,718) | $ 258,039 | $ 453,106 |
Denominator for basic and diluted earnings per share: | |||
Weighted average ordinary shares - basic | 11,675,216 | 11,652,882 | 11,640,661 |
Per share amount | |||
Per share - basic | $ (0.19) | $ 0.02 | $ 0.04 |
Per share - diluted | $ (0.19) | $ 0.02 | $ 0.04 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Foreign Currency Translation (Details) | Dec. 31, 2021¥ / $ | Dec. 31, 2021£ / $ | Dec. 31, 2020¥ / $ | Dec. 31, 2019¥ / $ |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
At end of the period | 6.3524 | 0.7419 | 6.5378 | 6.9668 |
Average rate for the period ended | 6.4491 | 0.7327 | 6.9003 | 6.9072 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 12 Months Ended | |||||||
Dec. 31, 2021USD ($)segment$ / sharesshares | Dec. 31, 2021CNY (¥)segmentshares | Dec. 31, 2021GBP (£)segmentshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)shares | Apr. 01, 2021 | Jan. 04, 2019$ / shares | Dec. 26, 2018USD ($)$ / shares | |
Product Information [Line Items] | ||||||||
Restricted cash | $ 947,779 | $ 1,134,166 | ||||||
Number of operating segment | segment | 1 | 1 | 1 | |||||
Percentage of total revenues | 99.00% | 99.00% | 99.00% | 98.20% | 97.10% | |||
Additional paid in capital | $ 6,845,394 | $ 6,845,394 | ||||||
Marketing and advertising expenses | 0 | 42,493 | $ 79,535 | |||||
Accrued interest and penalties | 0 | 0 | 0 | |||||
Interest and penalties | $ 0 | $ 0 | $ 0 | |||||
Weighted average ordinary shares - diluted | shares | 11,675,216 | 11,675,216 | 11,675,216 | 11,652,882 | 11,640,661 | |||
Foreign currency transaction gain (loss) | $ (14,402) | $ (31,109) | $ 12,072 | |||||
Financial services compensation scheme | £ | £ 85,000 | |||||||
Maximum insured bank deposit | 78,710 | ¥ 500,000 | ||||||
Total unprotected cash in bank | $ 2,268,000 | $ 5,821,000 | ||||||
Issuance of ordinary shares | shares | 11,675,216 | 11,675,216 | ||||||
Underwriter's warrants outstanding | shares | 126,082 | |||||||
Underwriter's warrants exercisable price | $ / shares | $ 6.25 | |||||||
Share price | $ / shares | $ 1.78 | $ 4.20 | ||||||
Income from manage of rental property | $ 19,469 | |||||||
Standard VAT (as percent) | 20.00% | 20.00% | 20.00% | |||||
Rate of corporation tax | 19.00% | |||||||
United Kingdom | ||||||||
Product Information [Line Items] | ||||||||
Financial services compensation scheme | $ 114,600 | |||||||
Total unprotected cash in bank | $ 2,913,000 | $ 0 | ||||||
China | ||||||||
Product Information [Line Items] | ||||||||
Uniform tax rate | 25.00% | 25.00% | 25.00% | |||||
China | Chinas | ||||||||
Product Information [Line Items] | ||||||||
Uniform tax rate | 25.00% | 25.00% | 25.00% | |||||
Rate of corporation tax | 19.00% | |||||||
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | ||||||||
Product Information [Line Items] | ||||||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49.00% | 49.00% | 49.00% | |||||
Mansions Estate | ||||||||
Product Information [Line Items] | ||||||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49.00% | |||||||
Tianjin | ||||||||
Product Information [Line Items] | ||||||||
Percentage of agency revenue | 75.00% | 75.00% | 75.00% | 65.00% | 83.00% | |||
Chengdu | ||||||||
Product Information [Line Items] | ||||||||
Percentage of agency revenue | 23.00% | 23.00% | 23.00% | 30.00% | 5.00% | |||
Yangzhou | ||||||||
Product Information [Line Items] | ||||||||
Percentage of agency revenue | 0.00% | 0.00% | 0.00% | 2.00% | 3.00% | |||
Suzhou | ||||||||
Product Information [Line Items] | ||||||||
Percentage of agency revenue | 2.00% | 2.00% | 2.00% | 3.00% | 9.00% | |||
Major Customers | Net revenue | ||||||||
Product Information [Line Items] | ||||||||
Percentage of total revenues | 67.00% | 67.00% | 67.00% | 61.00% | 58.00% | |||
IPO | ||||||||
Product Information [Line Items] | ||||||||
Deferred offering costs | $ 2,103,816 | |||||||
Share price | $ / shares | $ 5 | $ 5 | ||||||
Consulting Services | ||||||||
Product Information [Line Items] | ||||||||
Revenue from contact with customers | $ 38,746 | $ 103,140 | $ 155,217 | |||||
Minimal property management, consulting | Major Customers | Net revenue | ||||||||
Product Information [Line Items] | ||||||||
Percentage of total revenue | 0.40% | 0.40% | 0.40% | 0.00% | 0.00% | |||
other services | Major Customers | Net revenue | ||||||||
Product Information [Line Items] | ||||||||
Percentage of total revenue | 0.90% | 0.90% | 0.90% | 1.80% | 2.90% | |||
Subsidiaries and Consolidated Variable Interest Entities | ||||||||
Product Information [Line Items] | ||||||||
Applicable value added tax rates | 6.00% | 6.00% | 6.00% |
ACCOUNTS RECEIVABLE - Schedule
ACCOUNTS RECEIVABLE - Schedule of Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
ACCOUNTS RECEIVABLE | ||
Accounts receivable | $ 2,214,173 | $ 4,077,820 |
Allowance for doubtful accounts | (76,462) | (15,477) |
Accounts receivable, net | $ 2,137,711 | $ 4,062,343 |
ACCOUNTS RECEIVABLE - Additiona
ACCOUNTS RECEIVABLE - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2021USD ($)customer | Dec. 31, 2020USD ($)customer | Dec. 31, 2019USD ($)customer | |
Revenue, Major Customer | |||
Allowance for Doubtful Accounts Receivable, Current | $ 76,462 | $ 15,477 | |
Percentage of total revenues | 99.00% | 98.20% | 97.10% |
Customer Two | |||
Revenue, Major Customer | |||
Number of customers | customer | 2 | 2 | |
Percentage of total revenues | 100.00% | 20.00% | |
Customer receivables age | 180 days | ||
Customer Three | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | ||
Percentage of total revenues | 5.00% | ||
Customer receivables age | 365 days | ||
Major Customers | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 3 | 3 |
Major Customers | Net revenue | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 3 | 3 |
Percentage of total revenues | 67.00% | 61.00% | 58.00% |
Major Customers | Net revenue | Ge Diao Ping Yuan | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 34.00% | 16.00% | |
Major Customers | Net revenue | Taida Shang Qing Cheng | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 23.00% | 29.00% | |
Major Customers | Net revenue | Ge Diao Song Jian | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 16.00% | ||
Major Customers | Net revenue | Ge Diao Liu Yuan | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 10.00% | ||
Major Customers | Net revenue | Taida He Yue Hai | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 31.00% | ||
Major Customers | Net revenue | Wanke Xi Lu | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 16.00% | 11.00% | |
Major Customers | Accounts receivable | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 3 | 3 |
Major Customers | Accounts receivable | Ge Diao Ping Yuan | |||
Revenue, Major Customer | |||
Accounts receivable | $ 737,476 | $ 311,172 | |
Major Customers | Accounts receivable | Taida Shang Qing Cheng | |||
Revenue, Major Customer | |||
Accounts receivable | 1,116,552 | 1,851,254 | |
Major Customers | Accounts receivable | Ge Diao Song Jian | |||
Revenue, Major Customer | |||
Accounts receivable | $ 185,216 | ||
Major Customers | Accounts receivable | Ge Diao Liu Yuan | |||
Revenue, Major Customer | |||
Accounts receivable | $ 10,643 | ||
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 | $ 281,723 | $ 377,276 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items]Property, Plant and Equipment | ||
Total Assets | $ 166,690 | $ 155,472 |
Less accumulated depreciation | (117,678) | (89,769) |
Net Assets | 49,012 | 65,703 |
Office Equipment and Fixtures | ||
Property, Plant and Equipment [Line Items]Property, Plant and Equipment | ||
Total Assets | 99,404 | 90,094 |
Software | ||
Property, Plant and Equipment [Line Items]Property, Plant and Equipment | ||
Total Assets | 18,910 | 18,374 |
Auto | ||
Property, Plant and Equipment [Line Items]Property, Plant and Equipment | ||
Total Assets | $ 48,376 | $ 47,004 |
PROPERTY AND EQUIPMENT, NET - A
PROPERTY AND EQUIPMENT, NET - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | |||
Depreciation expense for property and equipment | $ 24,910 | $ 21,996 | $ 15,180 |
INCOME TAX AND DEFERRED TAX A_3
INCOME TAX AND DEFERRED TAX ASSETS - Significant Components of Company's Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax items | ||
Accounts receivable, net | $ 19,115 | $ 3,869 |
Accrued expenses | 27,860 | |
Loss carryforward | 3,305 | |
Valuation allowance | (7,038) | (6,839) |
Deferred tax assets, net | $ 15,382 | $ 24,890 |
INCOME TAX AND DEFERRED TAX A_4
INCOME TAX AND DEFERRED TAX ASSETS - Income tax benefit and Provision for Income Tax (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
INCOME TAX AND DEFERRED TAX ASSETS | |||
Current | $ 22,720 | $ 206 | |
Deferred tax adjustment | $ 9,963 | 10,180 | 101,166 |
(Income tax benefit) income tax | $ 9,963 | $ 32,900 | $ 101,372 |
INCOME TAX AND DEFERRED TAX A_5
INCOME TAX AND DEFERRED TAX ASSETS - Reconciliation of Statutory Income Tax Rate and Company's Effective Income Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Chinas | |||
Reconciliation of the statutory income tax rate and the Company's effective income tax | |||
statutory income tax rate | 16.50% | 16.50% | 16.50% |
Valuation allowance recognized with respect to the loss | (16.50%) | (16.50%) | (16.50%) |
PRC statutory income tax rate | 25.00% | 25.00% | 25.00% |
Effect of income tax exemptions and reliefs in the PRC companies | (25.00%) | (17.33%) | 0.00% |
Effect of valuation and deferred tax adjustments | (0.66%) | 2.89% | (24.90%) |
Effective rate | (0.66%) | 10.56% | 0.10% |
United Kingdom | |||
Reconciliation of the statutory income tax rate and the Company's effective income tax | |||
statutory income tax rate | 19.00% | ||
Valuation allowance recognized with respect to the loss | (10.86%) | ||
Effect of valuation and deferred tax adjustments | 0.00% | ||
Effective rate | 8.14% |
INCOME TAX AND DEFERRED TAX A_6
INCOME TAX AND DEFERRED TAX ASSETS - Additional Information (Details) | 12 Months Ended | 36 Months Ended | |||||
Dec. 31, 2021CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2021CNY (¥)employee | Dec. 31, 2021USD ($) | Dec. 31, 2021CNY (¥) | Dec. 31, 2020USD ($) | |
Income Tax And Deferred Tax Assets [Line Items] | |||||||
Rate of corporation tax | 19.00% | 19.00% | |||||
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 | $ 15,500 | ¥ 100,000 | |||||
Period for statute of limitations if tax liability exceeds RMB100,000 | 10 years | ||||||
Taxable income | ¥ | ¥ 1,000,000 | ¥ 1,000,000 | ¥ 3,000,000 | ¥ 3,000,000 | |||
Number of employees | employee | 300 | ||||||
Assets | $ 8,368,970 | ¥ 50,000,000 | $ 10,752,765 | ||||
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% | 16.50% | 16.50% | ||||
China | |||||||
Income Tax And Deferred Tax Assets [Line Items] | |||||||
Uniform tax rate | 25.00% | ||||||
China | Income tax less than RMB 1 million | |||||||
Income Tax And Deferred Tax Assets [Line Items] | |||||||
Uniform tax rate | 5.00% | ||||||
China | Income tax less than RMB 1 million to RMB 3 million | |||||||
Income Tax And Deferred Tax Assets [Line Items] | |||||||
Uniform tax rate | 10.00% |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ||
Payroll and social security payable | $ 167,470 | $ 230,430 |
Bonus payable | 774,571 | 820,140 |
Other payables and accrued liabilities | 86,169 | 96,960 |
Total Accounts Payable and Accrued Liabilities | $ 1,028,210 | $ 1,147,530 |
VAT AND OTHER TAXES PAYABLE (De
VAT AND OTHER TAXES PAYABLE (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
VAT AND OTHER TAXES PAYABLE | ||
VAT payable | $ 121,602 | $ 162,034 |
Surcharge and fees | 14,524 | 21,339 |
Income tax payable | 23,979 | |
Total VAT and Other Taxes Payable | $ 136,126 | $ 207,352 |
VAT AND OTHER TAXES PAYABLE - A
VAT AND OTHER TAXES PAYABLE - Additional Information (Details) | 1 Months Ended |
May 31, 2016 | |
VAT AND OTHER TAXES PAYABLE | |
Value added tax percentages of commission income | 6.00% |
Value added tax percentages of urban maintenance and construction tax payable | 20.00% |
Value added tax percentages of education tax payable | 20.00% |
Value added tax percentages of local education tax payable | 20.00% |
LEASES (Details)
LEASES (Details) | 12 Months Ended | |||
Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | |
Lessee, Lease, Description [Line Items] | ||||
Long-term lending annual rate | 4.35% | |||
Non-cash ROU asset | $ 479,744 | ¥ 3,342,278 | ||
Non-cash lease liability | 479,744 | ¥ 3,342,278 | ||
Amount of operating lease expense | $ 3,715 | $ 10,012 | 17,045 | |
Operating leases expenses | $ 117,686 | $ 116,532 | $ 184,802 | |
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) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Lease Assets [Abstract] | ||
Less: accumulated amortization | $ (275,382) | $ (179,611) |
Foreign exchange effects | 19,765 | 19,695 |
Operating lease assets, net | 224,127 | 319,828 |
Total operating lease liabilities - initial measurement | 479,744 | 479,744 |
Accrued interest | 41,124 | 31,394 |
Accumulated payment to liabilities | (316,506) | (263,755) |
Foreign exchange effects | 19,765 | 16,232 |
Total operating lease liabilities | 224,127 | 263,615 |
Less: operating lease liabilities, current | 162,735 | 102,056 |
Long-term Operating Lease Liabilities | 61,392 | 161,559 |
Main Offices | ||
Operating Lease Assets [Abstract] | ||
Main offices operating lease assets - initial measurement | $ 479,744 | $ 479,744 |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Future minimum lease payments for operating leases | ||
December 31, 2022 | $ 115,706 | |
December 31, 2023 | 115,706 | |
Total minimum payments | 231,412 | |
Less: imputed interest | (7,285) | |
Total operating lease liabilities | $ 224,127 | $ 263,615 |
SHAREHOLDERS' EQUITY - Ordinary
SHAREHOLDERS' EQUITY - Ordinary Shares (Details) - USD ($) | Aug. 20, 2020 | Jan. 04, 2019 | Dec. 26, 2018 | Dec. 26, 2018 | Dec. 31, 2020 | Dec. 31, 2021 | 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 | 11,675,216 | 11,675,216 | |||||
Common stock, shares, outstanding | 11,675,216 | 11,675,216 | |||||
Gross proceeds | $ 110,747 | ||||||
Underwriter Warrants | |||||||
Warrants issued | 126,082 | ||||||
IPO | |||||||
Public offering price | $ 5 | $ 5 | |||||
Gross proceeds | $ 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 | ||||||
Gross proceeds | $ 96,805 | ||||||
Payments of Stock Issuance Costs | $ 26,399 | ||||||
Security Purchase Agreement | |||||||
Common stock, shares authorized | 34,396 | ||||||
Common stock par value, per share | $ 3.3 | ||||||
Gross proceeds | $ 113,507 | ||||||
MDJCC Limited ("MDJH Hong Kong") | |||||||
Common stock, shares issued | 10,380,000 |
SHAREHOLDERS' EQUITY - Addition
SHAREHOLDERS' EQUITY - Additional Information (Details) | Dec. 31, 2021$ / shares | Jan. 04, 2019USD ($)$ / shares |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Total value of underwriter warrants | $ | $ 190,384 | |
Exercise price of warrants | $ 6.25 | |
Price per warrant | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Movements in Noncontrolling interest | |||
Noncontrolling interest at the beginning of the year | $ (173,820) | ||
Net loss attributable to noncontrolling interest | (7,048) | $ (4,146) | $ (153,742) |
Noncontrolling interest at the end of the year | $ (6,905) | $ (173,820) | |
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | |||
NONCONTROLLING INTEREST | |||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49.00% | 49.00% | 49.00% |
Movements in Noncontrolling interest | |||
Noncontrolling interest at the beginning of the year | $ (173,820) | $ (178,806) | |
Net loss attributable to noncontrolling interest | (7,048) | (4,146) | |
Deconsolidated noncontrolling interest | 173,820 | ||
Foreign currency translation adjustment attributable to noncontrolling interest | 143 | 9,132 | |
Noncontrolling interest at the end of the year | $ (6,905) | $ (173,820) | $ (178,806) |
STATUTORY RESERVE (Details)
STATUTORY RESERVE (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
STATUTORY RESERVE | ||
Statutory reserves | $ 327,140 | $ 327,140 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - Weitian Group LLC. - Investor Relations Agreement | Dec. 25, 2019USD ($) |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Consideration paid per month | $ 4,000 |
Investor Relations Agreement Period | 1 year |
Investor Relations Agreement renewal term (consecutive months) | 12 months |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Legal Proceeding (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($)itemcomplaint | |
COMMITMENTS AND CONTINGENCIES | |
Number of cases filed | complaint | 10 |
Amount collected from accounts receivables | $ | $ 1,070 |
Number of case still open | item | 1 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 12 Months Ended | |||
Dec. 31, 2021USD ($) | Dec. 31, 2021CNY (¥) | Feb. 15, 2022 | Jan. 14, 2022 | |
Chengdu TEDA | ||||
Subsequent Event [Line Items] | ||||
Litigation Settlement, Expense | $ 552,282 | ¥ 3,508,315.12 | ||
Tianfang (Suzhou) Real Estate Co., Ltd | ||||
Subsequent Event [Line Items] | ||||
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid | $ 45,926 | ¥ 291,742.17 | ||
Legal settlement Breaching Late Fee Percentage | 0.10% | 0.10% | ||
MD Local Global Limited ("MDJM UK") | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Equity interests held | 100.00% | 100.00% |
RESTRICTED NET ASSETS OR PARE_3
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS (Details) $ / shares in Units, ¥ in Millions | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2021CNY (¥)shares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Assets | |||||
Cash | $ 4,796,299 | $ 4,976,527 | $ 4,995,843 | ||
Current Assets | 8,009,414 | 10,288,550 | |||
Total Assets | 8,368,970 | ¥ 50 | 10,752,765 | ||
Liabilities and Equity | |||||
Current liabilities | 1,350,162 | 1,475,718 | |||
Total Liabilities | 1,411,554 | 1,637,277 | |||
Ordinary shares | 11,675 | 11,675 | |||
Additional paid in capital | 6,845,394 | 6,845,394 | |||
Retained earnings (deficit) | (282,791) | 2,142,657 | |||
Accumulated other comprehensive loss | 62,903 | (37,558) | |||
Total MDJM Ltd stockholders' equity | 6,964,321 | 9,289,308 | |||
Total Liabilities and Equity | $ 8,368,970 | $ 10,752,765 | |||
Ordinary shares, shares authorized | shares | 50,000,000 | 50,000,000 | 50,000,000 | ||
Common stock par value, per share | $ / shares | $ 0.001 | $ 0.001 | |||
Common stock, shares issued | shares | 11,675,216 | 11,675,216 | 11,675,216 | ||
Ordinary shares, shares outstanding | shares | 11,675,216 | 11,675,216 | 11,675,216 | ||
MDJM | |||||
Assets | |||||
Cash | $ 1,743,412 | $ 4,976,511 | $ 4,995,834 | $ 5,626,079 | |
Prepaid expense | 3,881 | 2,258 | |||
Current Assets | 1,747,293 | 4,978,769 | |||
Due from subsidiaries - outside of PRC | 3,171,035 | ||||
Investment is subsidiaries - in PRC | 2,932,508 | 5,140,775 | |||
Total Assets | 7,850,836 | 10,119,544 | |||
Liabilities and Equity | |||||
Due to subsidiaries | 886,515 | 830,236 | |||
Total Liabilities | 886,515 | 830,236 | |||
Ordinary shares | 11,675 | 11,675 | |||
Additional paid in capital | 6,845,394 | 6,845,394 | |||
Statutory reserve | 327,140 | 327,140 | |||
Retained earnings (deficit) | (282,791) | 2,142,657 | |||
Accumulated other comprehensive loss | 62,903 | (37,558) | |||
Total MDJM Ltd stockholders' equity | 6,964,321 | 9,289,308 | |||
Total Liabilities and Equity | $ 7,850,836 | $ 10,119,544 |
RESTRICTED NET ASSETS OR PARE_4
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Revenue | $ 4,466,233 | $ 5,868,725 | $ 5,679,977 |
Other general and administrative expenses | 471,557 | 316,989 | 628,608 |
Total Operating Expenses | 6,735,718 | 5,627,867 | 5,321,417 |
Income (loss) from Operations | (2,269,485) | 240,858 | 358,560 |
Net income (loss) | (2,252,766) | 253,893 | 299,364 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | 94,694 | 251,919 | (53,156) |
MDJM | |||
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Revenue | 0 | 0 | 0 |
Share of profit (loss) in subsidiaries | (2,245,718) | 258,039 | 453,106 |
Other general and administrative expenses | (123,572) | (73,421) | (101,948) |
Income (loss) from Operations | (2,369,290) | 184,618 | 351,158 |
Interest income | 6,852 | 55,125 | 26,719 |
Net income (loss) | (2,362,438) | 239,743 | 377,877 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | 100,461 | 242,787 | (50,758) |
Comprehensive Income (Loss) | $ (2,261,977) | $ 482,530 | $ 327,119 |
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash Flows from Operating Activities: | |||
Net cash used in operating activities | $ (334,281) | $ (598,133) | $ (1,501) |
Cash Flows from Investing Activities: | |||
Net cash (used in) provided by investing activities | (53,911) | 1,076 | (190,828) |
Cash Flows from Financing Activities: | |||
Net cash provided by financing activities | 110,747 | 70,406 | |
Cash and Cash Equivalents, Period Increase (Decrease) | (365,968) | (441,984) | (139,880) |
Cash and cash equivalents - beginning of the period | 4,976,527 | 4,995,843 | |
Cash and cash equivalents - end of the period | 4,796,299 | 4,976,527 | 4,995,843 |
MDJM | |||
Cash Flows from Operating Activities: | |||
Net cash used in operating activities | (118,343) | (19,572) | (76,211) |
Cash Flows from Investing Activities: | |||
Net cash (used in) provided by investing activities | (3,114,756) | (110,498) | (624,440) |
Cash Flows from Financing Activities: | |||
Net cash provided by financing activities | 0 | 110,747 | 70,406 |
Cash and Cash Equivalents, Period Increase (Decrease) | (3,233,099) | (19,323) | (630,245) |
Cash and cash equivalents - beginning of the period | 4,976,511 | 4,995,834 | 5,626,079 |
Cash and cash equivalents - end of the period | $ 1,743,412 | $ 4,976,511 | $ 4,995,834 |
RESTRICTED NET ASSETS OR PARE_6
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL STATEMENTS - Additional Information (Details) - USD ($) | Aug. 26, 2020 | Aug. 20, 2020 | Jan. 04, 2019 | Dec. 26, 2018 | Dec. 26, 2018 | Dec. 31, 2020 | Dec. 31, 2021 |
Condensed Balance Sheet Statements, Captions [Line Items] | |||||||
Restricted net assets | $ 5,008,022 | $ 2,993,761 | |||||
Common stock, shares authorized | 50,000,000 | 50,000,000 | |||||
Common stock par value, per share | $ 0.001 | $ 0.001 | |||||
Selling price | $ 4.20 | $ 1.78 | |||||
Proceeds from issuance of shares | $ 110,747 | ||||||
Direct offering costs | $ 2,760 | $ 26,399 | |||||
IPO | |||||||
Condensed Balance Sheet Statements, Captions [Line Items] | |||||||
Number of shares sold | 19,361 | 1,241,459 | |||||
Selling price | $ 5 | $ 5 | $ 5 | ||||
Gross proceeds | $ 96,805 | $ 6,207,295 | |||||
Proceeds from issuance of shares | $ 6,207,295 | ||||||
Direct offering costs | $ 26,399 | $ 2,103,816 | |||||
Security Purchase Agreement | |||||||
Condensed Balance Sheet Statements, Captions [Line Items] | |||||||
Common stock, shares authorized | 34,396 | ||||||
Common stock par value, per share | $ 3.3 | ||||||
Proceeds from issuance of shares | $ 113,507 |