TIANJIN, China, April 28, 2020 /PRNewswire/ -- MDJM LTD (Nasdaq:
MDJH) (the "Company" or "MDJH"), an integrated real estate services
company in China, today announced
its financial results for the 12 months ended
December 31, 2019.
|
For the Year Ended
December 31,
|
($'000, except per
share data)
|
2019
|
|
2018
|
|
%
Change
|
Revenue
|
$
|
5,680
|
|
|
$
|
2,408
|
|
|
|
135.8
|
%
|
Operating
expenses
|
$
|
5,321
|
|
|
$
|
2,973
|
|
|
|
79.0
|
%
|
Income (loss) from
operations
|
$
|
359
|
|
|
$
|
(564)
|
|
|
|
163.7
|
%
|
Operating income
(loss) margin
|
6.3
|
%
|
|
|
-23.4
|
%
|
|
|
126.9
|
%
|
Net profit (loss)
attributable to MDJH
|
$
|
453
|
|
|
$
|
(516)
|
|
|
|
187.8
|
%
|
Net profit (loss) per
share
|
$
|
0.04
|
|
|
$
|
(0.05)
|
|
|
|
180.0
|
%
|
* pp: percentage points
- Revenue increased by 135.8% to $5.68
million for 2019, primarily attributable to contribution
from new projects acquired since 2018.
- The Company sold 1,960 units of properties for an aggregate of
186,971 square meters and $612.47
million in total sales value with an average commission rate
of 0.94% in 2019, compared to 620 units for an aggregate of 86,533
square meters and $273.57 million in
total sales value with an average commission rate of 0.87% in
2018.
- Operating expenses increased by 79.0% to $5.32 million for 2019. The increase primarily
resulted from increased payroll expenses and professional fees for
being a Nasdaq listed public company since January 2019.
- Operating margin was 6.3% for 2019, compared to operating loss
margin of 23.4% for 2018. The improvement primarily resulted from
increased revenue that more than offset increased operating
expenses.
- Net income attributable to shareholders was $0.45 million, or earnings per share of
$0.04, for 2019. This compared to net
loss attributable to shareholders of $0.52
million, or net loss per share of $0.05, for 2018.
- As of December 31, 2019, the
Company had 17 outstanding projects with total sales value of
$1.11 billion and total square meters
of 316,699.
"Following a setback in 2018 against the backdrop of Chinese
government's tightening policies and regulations implemented in the
real estate market, we made a strong comeback in 2019 with the
returns of both top-line growth and profitability, thanks to
increased sale volume as well as improvement in average commission
rate in our primary real estate agency service business," said Mr.
Siping Xu, Chairman and Chief
Executive Officer of the Company.
"The Tianjin market remained
our stronghold, and we made inroads into the Yangzhou, Chengdu, and Suzhou markets with each
contributing 9%, 5%, and 3% of total revenue, respectively, in
2019. Our efforts in continuing to diversify our business also
started to pay off with the real estate consulting services
business growing by 199.5% and contributing 2.7% of total revenue
in 2019. We also made progress in our tourism development services
initiative with the signing of framework and cooperation agreements
with several local governments and third parties. Looking ahead,
despite the near-term challenges brought by the COVID-19 pandemic,
we are confident in our long-term prospects and strategy and look
forward to another strong year in 2020," concluded, Mr. Xu.
Financial Results for the Full Year of 2019
Revenue
For the 12 months ended December 31,
2019, revenue increased by $3.27
million, or 135.8%, to $5.68
million from $2.41 million for
2018. The increase of revenue was primarily attributable to new
projects acquired since 2018. During 2019, the Company facilitated
sales of 1,960 units of properties for an aggregate of 186,971
square meters and RMB 4.27 billion
($612.47 million) in total sales
value with an average commission rate of 0.94%, compared to
completed sales of 620 units for an aggregate of 86,533 square
meters and RMB 1.88 billion
($273.57 million) in total sale value
with an average commission rate of 0.87% for 2018.
As of December 31, 2019, the
Company had 17 outstanding projects, including six ongoing projects
from existing developer clients, five from new projects from
existing developer clients and six from new clients/developers.
These outstanding projects have total sales value of RMB7.70 billion (or $1.11
billion) and total square meters of 316,699. If all of the
current outstanding projects were to be completed, the Company's
estimated revenues from such projects would be approximately
$10 million based on contracted
commission rates. However, since a project will normally take two
to three years to be completed, and given the nature of its
industry and the volatility of the market, the Company cannot be
certain of the length of time each project will take to complete,
or whether the projects will be completed at all.
Operating Expenses
|
For the Year Ended
December 31,
|
($'000)
|
2019
|
|
|
2018
|
|
|
%
Change
|
Selling
expenses
|
$
|
187
|
|
|
$
|
82
|
|
|
|
127.0
|
%
|
Payroll, payroll
taxes and others
|
|
3,711
|
|
|
|
2,215
|
|
|
|
67.5
|
%
|
Professional
fees
|
|
634
|
|
|
|
-
|
|
|
|
100
|
%
|
Operating lease
expense
|
|
185
|
|
|
|
142
|
|
|
|
30.2
|
%
|
Depreciation and
amortization
|
|
15
|
|
|
|
13
|
|
|
|
20.7
|
%
|
(Reduction) provision
for doubtful accounts, net
|
|
(39)
|
|
|
|
(146)
|
|
|
|
-73.4
|
%
|
Other general and
administrative
|
|
629
|
|
|
|
667
|
|
|
|
-5.8
|
%
|
Total operating
expenses
|
$
|
5,321
|
|
|
$
|
2,973
|
|
|
|
79.0
|
%
|
Selling expenses increased by $0.10
million, or 127.0%, to $0.19
million for 2019 from $0.08
million for 2018. The increase of selling expenses was in
line with the increased revenue in 2019.
Payroll, payroll taxes and others increased by $1.50 million, or 67.5%, to $3.71 million for 2019 from $2.21 million for 2018. Employee compensation is
tied to sales. Sales related compensation, such as bonus and
commission, increased as a result of the increased revenue in
2019.
Professional fees were $0.63
million for 2019, compared to $nil for 2018. The increase in
professional fees resulted from being a U.S. public traded company
since January 2019. Professional fees
consist of legal, U.S. GAAP audit, consulting, investors relations,
and other U.S. SEC filing related fees. Professional fees incurred
in 2018 were included in offering costs, which was offset with
additional paid in capital received in the Company's initial public
offering.
Operating lease expenses increased by $0.04 million, or 30.2%, to $0.18 million for 2019 from $0.14 million for 2018. The Company leases its
offices under various non-cancelable lease agreements. As of
December 31, 2019, it had one
long-term lease which became effective on January 1, 2019 and will be valid through
December 31, 2023. For other leases
with lease terms of 12 months or less, the Company made an election
to not recognize lease assets and lease liabilities.
Depreciation and amortization expense increased to $0.02 million for 2019 from $0.01 million for 2018. The increase resulted
from new purchases of fixed assets in the amount of $0.07 million during 2019.
Reversal of allowance for doubtful accounts was $0.04 million for 2019, compared to $0.15 million for 2018.
Other general and administrative expenses decreased by
$0.04 million, or 5.8%, to
$0.63 million for 2019 from
$0.67 million for 2018. The decrease
resulted from reduced office expenses.
As a result, total operating expenses increased by $2.35 million, or 79.0%, to $5.32 million for 2019 from $2.97 million for 2018. The increase in operating
expenses was primarily related to increased payroll expenses and
professional fees as mentioned above.
Operating margin was 6.3% for 2019, compared to operating loss
margin of 23.4% for 2018. The improvement in operating margin
resulted from increased revenue that more than offset increased
operating expenses.
Other Income
Total other income, including gain on disposal of asset,
interest income and others, increased by $0.02 million, or 58.8%, to $0.04 million for 2019 from $0.03 million for 2018.
Income (Loss) before Income Tax
Income before income tax was $0.40
million for 2019, compared to loss before income tax of
$0.54 million for 2018.
The Company paid income tax of $0.10
million in 2019, compared to $nil in 2018.
Net Income (Loss)
Net income was $0.30 million for
2019, compared to net loss of $0.54
million for 2018. After deduction of noncontrolling
interest, net income attributable to shareholders was $0.45 million, or earnings per share of
$0.04, for 2019. This compared to net
loss attributable to shareholders of $0.52
million, or net loss per share of $0.05, for 2018.
Financial Conditions
As of December 31, 2019, the
Company had cash and cash equivalents of $6.55 million, compared to $6.69 million as of December 31, 2018. Account receivable was
$2.16 million at December 31, 2019, compared to $1.77 million as of December 31, 2018. As of December 31, 2019, the Company had current assets
of $8.84 million and current
liabilities of $0.69 million, leading
to working capital of $8.15 million,
compared to current assets, current liabilities and working capital
of $8.74 million, $0.71 million and $8.03
million, respectively, as of December
31, 2018.
Net cash used in operating activities was $1,501 for 2019, compared to $0.64 million for 2018. Net cash used in
investing activities was $0.19
million for 2019, compared to $1,215 for 2018. Net cash provided by financing
activities was $0.07 million for
2019, compare to $4.10 million for
2018. The Company received net proceeds of $4.10 million and $0.07
million from the first and second closing of its initial
public offering in late 2018 and January
2019, respectively.
Recent Developments
Because of the quarantines and travel restrictions mandated by
the Chinese government in response to COVID-19, from the end of
January to mid-March of 2020, many real estate projects the Company
was promoting and selling were suspended, which adversely impacted
its business during that period. However, because the Company's
operating income and earnings have historically been lower during
the first quarter than other quarters due to the winter and the
Chinese New Year holiday period, the Company believes this
seasonality partially mitigated the adverse impact on its full-year
operating results. Starting from the end of March 2020, these real estate projects began to
reopen. Although the Company believes its operations have resumed
to the level before the COVID-19 outbreak as of April 2020 and even though it currently expects
to continue the promotion and sales of real estate projects as it
typically did, to the extent that COVID-19 further impacts its
promotion and sale of real estate projects, its financial
condition, results of operations, and cash flows could be adversely
affected.
About MDJM LTD
With branch offices in Tianjin,
Chengdu, Suzhou, and Yangzhou,
China, MDJM provides primary real
estate agency services to real estate developer clients, as well as
as-needed real estate consulting and independent training services.
The Company also provides tourism development services, including
real estate marketing and planning services, real estate agency
services, and advertisement planning services. For more information
regarding the Company, please visit: http://ir.mdjhchina.com.
Forward-Looking Statements
This announcement contains forward-looking statements. 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:
Tony Tian, CFA
Weitian Group LLC
Email: ttian@weitianco.com
Phone: +1-732-910-9692
MDJM LTD and
Subsidiaries
Consolidated
Statements of Operations and Comprehensive Income
(Loss)
For the Years
Ended December 31,
|
|
2019
|
|
2018
|
|
2017
|
Revenue
|
$
|
5,679,977
|
|
$
|
2,408,448
|
|
$
|
5,532,244
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
186,641
|
|
|
82,225
|
|
|
263,797
|
Payroll, payroll
taxes and others
|
|
3,710,697
|
|
|
2,214,975
|
|
|
3,067,837
|
Professional
fees
|
|
634,372
|
|
|
-
|
|
|
-
|
Operating leases
expenses
|
|
184,802
|
|
|
141,959
|
|
|
115,615
|
Depreciation and
amortization
|
|
15,180
|
|
|
12,575
|
|
|
7,232
|
Reduction for
doubtful accounts, net
|
|
(38,883)
|
|
|
(146,174)
|
|
|
194,149
|
Other general and
administrative
|
|
628,608
|
|
|
667,267
|
|
|
293,931
|
Total Operating
Expenses
|
|
5,321,417
|
|
|
2,972,827
|
|
|
3,942,561
|
|
|
|
|
|
|
|
|
|
Income (loss) from
Operations
|
|
358,560
|
|
|
(564,379)
|
|
|
1,589,683
|
|
|
|
|
|
|
|
|
|
Other
income:
|
|
|
|
|
|
|
|
|
Gain on disposal of
asset
|
|
1,705
|
|
|
-
|
|
|
(1,213)
|
Gain on foreign
currency exchange
|
|
12,072
|
|
|
-
|
|
|
-
|
Loss on disposal of
subsidiary
|
|
(4,970)
|
|
|
-
|
|
|
-
|
Interest
income
|
|
30,662
|
|
|
26,565
|
|
|
32,112
|
Other income
(expense)
|
|
2,707
|
|
|
-
|
|
|
(57,028)
|
Total other
income
|
|
42,176
|
|
|
26,565
|
|
|
(26,129)
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income tax
|
|
400,736
|
|
|
(537,814)
|
|
|
1,563,554
|
Income tax
|
|
(101,372)
|
|
|
-
|
|
|
(396,552)
|
Net income
(loss)
|
|
299,364
|
|
|
(537,814)
|
|
|
1,167,002
|
Net loss attributable
to noncontrolling interest
|
|
(153,742)
|
|
|
(21,843)
|
|
|
-
|
Net income (loss)
attributable to MDJM Ltd shareholders
|
$
|
453,106
|
|
$
|
(515,971)
|
|
$
|
1,167,002
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
ordinary share attributable to MDJM Ltd shareholders
|
$
|
0.04
|
|
$
|
(0.05)
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding, basic and diluted
|
|
11,640,661
|
|
|
10,400,408
|
|
|
10,380,000
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss):
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
299,364
|
|
$
|
(537,814)
|
|
$
|
1,167,002
|
Other comprehensive
income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Change in foreign
currency translation adjustments
|
|
(53,156)
|
|
|
(170,344)
|
|
|
270,019
|
Total other
comprehensive income (loss)
|
|
246,208
|
|
|
(708,158)
|
|
|
1,437,021
|
Comprehensive
loss attributable to noncontrolling interest
|
|
(2,398)
|
|
|
(823)
|
|
|
-
|
Comprehensive income
(loss) attributable to MDJM Ltd shareholders
|
$
|
248,606
|
|
$
|
(707,335)
|
|
$
|
1,437,021
|
MDJM LTD and
Subsidiaries
Consolidated
Balance Sheets
As of December
31,
|
|
2019
|
|
2018
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
6,552,677
|
|
$
|
6,692,557
|
Accounts receivable,
net of allowance for doubtful accounts $10,774 and $49,963,
respectively
|
|
2,155,158
|
|
|
1,767,804
|
Other
receivables
|
|
69,977
|
|
|
38,701
|
Prepaid
expenses
|
|
60,020
|
|
|
235,642
|
Prepaid income
tax
|
|
-
|
|
|
3,620
|
Total Current
Assets
|
|
8,837,832
|
|
|
8,738,324
|
|
|
|
|
|
|
Property and
equipment, net
|
|
70,154
|
|
|
21,302
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
Deferred tax
assets
|
|
33,440
|
|
|
135,471
|
Operating lease
assets, net
|
|
391,871
|
|
|
-
|
Other receivable -
long term
|
|
99,532
|
|
|
-
|
Total Other
Assets
|
|
524,843
|
|
|
135,471
|
|
|
|
|
|
|
Total
Assets
|
$
|
9,432,829
|
|
$
|
8,895,097
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
460,690
|
|
$
|
575,087
|
VAT and other taxes
payable
|
|
107,662
|
|
|
137,695
|
Deferred
income
|
|
26,429
|
|
|
-
|
Operating lease
liabilities, current
|
|
91,737
|
|
|
-
|
Total Current
Liabilities
|
|
686,518
|
|
|
712,782
|
|
|
|
|
|
|
Long-term operating
lease liabilities
|
|
247,382
|
|
|
-
|
|
|
|
|
|
|
Total
Liabilities
|
|
933,900
|
|
|
712,782
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Ordinary shares:
50,000,000 shares authorized, par value: $0.001 per share,
11,640,820 and 11,621,459 shares issued and outstanding as of
December 31, 2019 and 2018, respectively
|
|
11,641
|
|
|
11,621
|
Additional paid in
capital
|
|
6,734,681
|
|
|
6,664,295
|
Statutory
reserve
|
|
262,954
|
|
|
232,542
|
Retained
earnings
|
|
1,948,804
|
|
|
1,526,110
|
Accumulated other
comprehensive loss
|
|
(280,345)
|
|
|
(229,587)
|
Total MDJM Ltd
stockholders' equity
|
|
8,677,735
|
|
|
8,204,981
|
Noncontrolling
interest
|
|
(178,806)
|
|
|
(22,666)
|
Total Liabilities and
Equity
|
$
|
9,432,829
|
|
$
|
8,895,097
|
MDJM LTD and
Subsidiaries
Consolidated
Statements of Cash Flows
For the Years
Ended December 31,
|
|
2019
|
|
2018
|
|
2017
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
299,364
|
|
$
|
(537,814)
|
|
$
|
1,167,002
|
Adjustments to
reconcile net income (loss) to net cash (used in) provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
15,180
|
|
|
12,575
|
|
|
7,232
|
(Reduction) increase
of provision for doubtful accounts
|
|
(38,883)
|
|
|
(146,174)
|
|
|
194,149
|
Gain on foreign
currency exchange
|
|
(12,072)
|
|
|
-
|
|
|
-
|
(Gain) loss on
disposal of assets
|
|
(1,705)
|
|
|
-
|
|
|
1,213
|
|
|
|
|
|
|
|
|
|
Decrease in deferred
tax assets
|
|
101,166
|
|
|
72,975
|
|
|
102,099
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease
in accounts receivables
|
|
(374,592)
|
|
|
(83,189)
|
|
|
516,593
|
(Increase) decrease
in other receivables
|
|
(4,630)
|
|
|
41,441
|
|
|
103,603
|
Decrease (increase)
in prepaid expense
|
|
120,907
|
|
|
(150,273)
|
|
|
(297,392)
|
Decrease (increase)
in prepaid income tax
|
|
3,605
|
|
|
(3,762)
|
|
|
-
|
(Decrease) increase
in accounts payable and accrued expenses
|
|
(107,980)
|
|
|
131,876
|
|
|
(430,286)
|
(Decrease) increase
in VAT and other tax payable
|
|
(28,518)
|
|
|
18,843
|
|
|
(50,753)
|
Increase in deferred
income
|
|
26,657
|
|
|
-
|
|
|
-
|
Net Cash (Used in)
Provided by Operating Activities
|
|
(1,501)
|
|
|
(643,502)
|
|
|
1,313,460
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(66,354)
|
|
|
(1,215)
|
|
|
(19,659)
|
Advance made to
deconsolidated subsidiary
|
|
(127,804)
|
|
|
-
|
|
|
-
|
Proceeds from
disposal of asset
|
|
3,330
|
|
|
-
|
|
|
-
|
Net Cash Used in
Investing Activities
|
|
(190,828)
|
|
|
(1,215)
|
|
|
(19,659)
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from initial
public offering - net of offering costs of $26,399, $2,103,816 and
$0, respectively
|
|
70,406
|
|
|
4,103,479
|
|
|
-
|
Net Cash Provided by
Financing Activities
|
|
70,406
|
|
|
4,103,479
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(17,957)
|
|
|
116,055
|
|
|
161,593
|
|
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(139,880)
|
|
|
3,574,817
|
|
|
1,455,394
|
Cash and cash
equivalents - beginning of the year
|
|
6,692,557
|
|
|
3,117,740
|
|
|
1,662,346
|
Cash and cash
equivalents - end of the year
|
$
|
6,552,677
|
|
$
|
6,692,557
|
|
$
|
3,117,740
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
|
|
|
Interest
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
Income
taxes
|
$
|
-
|
|
$
|
271,817
|
|
$
|
294,454
|
View original
content:http://www.prnewswire.com/news-releases/mdjm-ltd-reports-2019-financial-results-301048884.html
SOURCE MDJM LTD