MDJM LTD (Nasdaq: MDJH) (the “Company” or “MDJH”), an emerging,
integrated real estate services company in China, today announced
its financial results for the first six months of fiscal year 2019
ended June 30, 2019.
Mr. Siping Xu, Chairman and Chief Executive
Officer of the Company, commented, “In the first half of fiscal
year 2019, our revenue grew faster than that in the same period in
fiscal year 2018, in fact revenue in the first half of fiscal year
2019 was almost the same as the income for the entire fiscal year
2018. Although the Company recorded a net loss in the first half of
fiscal year 2019, we entered into additional real estate agency
services contracts which we believe could lead the Company to
additional revenues and profits.”
Financial Highlights for the First Six
Months of Fiscal Year 2019
|
● |
Revenue was US$2.23 million, an increase of US$1.54 million, or
225%, from US$0.69 million for the same period last year. |
|
● |
Net loss was US$0.57 million, a decrease of US$0.20 million, or
-26%, from US$0.77 million for the same period last year. |
|
● |
Basic and diluted loss per share were US$(0.05) compared with
US$(0.07) for the same period last year. |
Financial Results for the First Six
Months of Fiscal Year 2019
|
|
For the Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
Changes |
|
|
% of Change |
|
Revenue |
|
$ |
2,234,801 |
|
|
$ |
687,163 |
|
|
$ |
1,547,638 |
|
|
|
225% |
|
Total Operating Expenses |
|
|
2,792,044 |
|
|
|
1,460,739 |
|
|
|
1,331,305 |
|
|
|
91% |
|
Loss from Operations |
|
|
(557,243) |
|
|
|
(773,576) |
|
|
|
216,333 |
|
|
|
-28% |
|
Net Loss |
|
$ |
(566,656) |
|
|
$ |
(770,847) |
|
|
$ |
204,191 |
|
|
|
-26% |
|
Net loss per share
attributable to MDJM Ltd ordinary shareholders |
|
$ |
(0.05) |
|
|
$ |
(0.07) |
|
|
$ |
0.02 |
|
|
|
-29% |
|
Revenue
Revenue was US$2.23 million, an increase of
US$1.54 million, or 225%, from US$0.69 million for the same period
last year. Most of the revenue was generated from
commission-based services for the sales of real estate properties.
During the six months ended June 30, 2019, 57% of the revenue, or
US$1.28 million, was generated from new projects or new phases of
existing projects from existing developer clients, and 8% of the
revenue, or US$0.18 million, was generated from new projects of new
clients. For the six months ended June 30, 2019, the Company
acquired two new projects from one new client.
Operating Expenses
|
|
For the Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
Changes |
|
|
% of Change |
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
|
$ |
78,938 |
|
|
$ |
48,571 |
|
|
$ |
30,367 |
|
|
|
63% |
|
Payroll, payroll taxes and others |
|
|
1,841,326 |
|
|
|
1,207,868 |
|
|
|
633,458 |
|
|
|
52% |
|
Professional fees |
|
|
526,445 |
|
|
|
- |
|
|
|
526,445 |
|
|
|
- |
|
Operating leases expenses |
|
|
122,545 |
|
|
|
77,203 |
|
|
|
45,342 |
|
|
|
59% |
|
Depreciation and amortization |
|
|
6,178 |
|
|
|
6,482 |
|
|
|
(304) |
|
|
|
-5% |
|
Other general and administrative |
|
|
216,612 |
|
|
|
120,615 |
|
|
|
95,997 |
|
|
|
80% |
|
Total Operating Expenses |
|
$ |
2,792,044 |
|
|
$ |
1,460,739 |
|
|
$ |
1,331,305 |
|
|
|
91% |
|
Operating expenses were US$2.79 million, an
increase of US$1.33 million from US$1.46 million for the same
period last year. The increase in the operating expenses resulted
from the Company’s effort to increase revenue and expand its
business in the second-tier cites in China through subsidiary
entities.
Selling expenses were US$0.08 million, an
increase of US$0.03 million, or 63%, from US$0.05 million for the
same period last year. The increase of selling expenses was mainly
attributable to the Company’s effort to develop new markets.
Payroll and payroll taxes were US$1.84 million,
an increase of US$0.63 million, or 52%, from US$1.21 million for
the same period last year. The increase of payroll and payroll
taxes was mainly attributable to our increased sales. A portion of
the compensation is directly related to the result of sales.
Professional fees were US$0.53 million, compared
to US$0 in the same period last year. Professional fees consist of
attorney, audit, investor relationship, consulting, and other
expenses. The increase in professional fees resulted from the
Company being listed on the Nasdaq Capital Market and fulfilling
its U.S. SEC filing requirements.
The Company accounts its rental lease contracts
under the requirements of ASC 842. Currently, the Company has two
long-term leases, both of which were effective on January 1, 2019,
and will expire on December 31, 2023, and November 1, 2037,
respectively. The Company used Chinese bank long-term lending
annual rate of 4.35% for a five years lease and 4.9% for a 19 years
lease, respectively, in determining the present value of future
lease payments. The same rates were used as discount rate to
measure the lease liability at the measurement date. For leases
with a term of 12 months or less, the Company made an election not
to recognize lease assets and lease liabilities. The lease expense
for such leases is generally on a straight-line basis over the
lease term. Rent expense of US$77,203 for the six months ended June
30, 2018 was reclassified as operating lease expense.
Operating leases expense (office rent) was US$0.12 million, an
increase of US$0.05 million, or 59%, from US$0.08 million for the
same period last year. The increase in operating lease expense was
mainly attributable to a new US$0.06 million lease expense for the
office of Xishe Jiayuan (Tianjin) Business Operation &
Management Co., Ltd.
Other general and administrative expenses were
US$0.22 million, an increase of US$0.10 million, or 80%, from
US$0.12 million for the same period last year. The increase was
mainly attributable to the start-up costs of US$0.05 million and
US$0.03 million in human resource service fees resulted from the
Company’s efforts to expand its business in the second-tier cites
in China through subsidiary entities.
Net Loss
Net loss was US$0.57 million, a decrease of
US$0.2 million, or (26%), from US$0.77 million for the same period
last year. The decrease was mainly attributable to the increase of
revenue and offset by the increase in operating expenses discussed
above.
Basic and Diluted Loss per share
Basic and diluted loss per share was US$0.05, a
decrease of US$0.02 per share from US$0.07 per share for the same
period last year.
Cash Flow
Net cash used in operating activities was
US$0.64 million, a decrease of US$0.32 million, or 33%, from
US$0.96 million for the same period last year. The decrease was
mainly due to the decrease in loss of US$0.2 million. Net cash
provided by investing activities was US$3,389, compared with net
cash used in investing activities of US$1,262 for the same period
last year. The net cash provided by investing activities was from
the sale of an automobile in January 2019. Net cash provided by
financing activities was US$0.07 million for the six months ended
June 30, 2019. The Company received proceeds of US$0.1 million from
the second closing of its initial public offering on January 4,
2019, net of offering costs of US$26,399. In the same period of
2018, the Company had made US$0.69 million payments in connection
with its initial public offering.
Balance Sheet
As of June 30, 2019, the Company had cash and cash equivalents
of US$6.07 million, compared to US$6.69 million as of December 31,
2018.
Exchange Rate
This announcement contains translation of
certain Renminbi (RMB) amounts into U.S. dollars (US$) at a
specified rate solely for the convenience of the reader. Unless
otherwise noted, the translation of RMB into US$ has been made as
following:
|
|
June 30, |
|
|
June 30, |
|
|
December 31, |
|
US$ Exchange
Rate |
|
2019 |
|
|
2018 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
At end of the period -
RMB |
|
|
6.8704 |
|
|
|
6.6195 |
|
|
|
6.8778 |
|
Average rate for the period
ended - RMB |
|
|
6.7871 |
|
|
|
6.3701 |
|
|
|
6.6187 |
|
Recent Developments
On August 22, 2019, the Company entered into a
Primary Real Estate Agency Services Contract with Taida Xincheng
(Chengdu) Real Estate Co., Ltd. to act as the sole primary real
estate services agency for a real state project.
On June 6, 2019, the Company renewed a Primary
Real Estate Agency Services Contract with Tianjin Binhai New City
Investment Co., Ltd.
On March 1, 2019, the Company renewed a Primary
Real Estate Agency Services Contract with Tianfang (Suzhou) Real
Estate Co., Ltd. to act as the primary real estate services agency
for a real state project.
On April 19, 2019, the Company renewed a Primary
Real Estate Agency Services Contracts with Wan An Jianchuang Real
Estate Co., Ltd.
On April 16, 2019, the Company renewed Primary
Real Estate Agency Services Contracts separately with Wanhe
Huasheng Real Estate Co., Ltd. and Wanshun Jinan Real Estate Co.,
Ltd.
About MDJM LTD
Headquartered in Tianjin, China, MDJM is an
emerging, integrated real-estate services company in China. The
Company offers primary real estate agency services to real estate
developers including integrated marketing, advertising, and
strategy planning. The Company also provides real estate consulting
and independent training services on an as-needed basis. Currently,
the Company’s major market is Tianjin Autonomous Municipality.
Since 2014, the Company has expanded its presence from Tianjin to
other cities including Chengdu, Suzhou, and Yangzhou. In addition
to its existing core business, the Company also plans to provide
real estate marketing, branding, and planning services, real estate
agency services, beautiful village operating services, and
advertisement planning services through its subsidiaries, Xishe
(Tianjin) Business Management Co., Ltd., Xishe (Tianjin) Culture
and Media Co., Ltd., and Xishe Xianglin (Tianjin) Business
Operations & Management Co., Ltd. For more information
regarding the Company, please
visit: http://ir.mdjhchina.com.
Forward-Looking Statements
This announcement contains forward-looking
statements within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact in this announcement are
forward-looking statements. These forward-looking statements
involve known and unknown risks and uncertainties and are based on
current expectations and projections about future events and
financial trends that the Company believes may affect its financial
condition, results of operations, business strategy and financial
needs. Investors can identify these forward-looking statements by
words or phrases such as “may,” “will,” “expect,” “anticipate,”
“aim,” “estimate,” “intend,” “plan,” “believe,” “potential,”
“continue,” “is/are likely to” or other similar expressions. The
Company undertakes no obligation to update forward-looking
statements to reflect subsequent occurring events or circumstances,
or changes in its expectations, except as may be required by law.
Although the Company believes that the expectations expressed in
these forward-looking statements are reasonable, it cannot assure
you that such expectations will turn out to be correct, and the
Company cautions investors that actual results may differ
materially from the anticipated results and encourages investors to
review other factors that may affect its future results in the
Company’s annual report on Form 20-F and in its other filings with
the Securities and Exchange Commission.
For more information, please contact Investor Relations
at:
Tina Xiao Ascent Investor Relations LLC Phone:
+1-917-609-0333 Email: tina.xiao@ascent-ir.com
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