MDJM LTD Reports Full Year 2020 Financial Results


    TIANJIN, China, April 17, 2021 /PRNewswire/ -- MDJM LTD (Nasdaq: MDJH) (the "Company" or "MDJH"), a real estate services company in China, today announced its financial results for the fiscal year ended December 31, 2020.

    Fiscal Year 2020 Financial Highlights



    For the Years Ended December 31,

    ($'000, except per share data)


    2020


    2019


    % Change

    Revenue


    $5,869


    $5,680


    3.3%

    Operating expenses


    $5,628


    $5,321


    5.8%

    Income from operations


    $241


    $359


    -32.8%

    Operating profit margin


    4.1%


    6.3%


    -2.2%

    Net income attributable to MDJH ordinary shareholders


    $258


    $453


    -43.1%

    Earnings per share


    $0.02


    $0.04


    -50.0%








    • Revenue increased by 3.3% to $5.87 million for 2020, primarily attributable to the improvement of our commission rate in 2020.
    • Operating expenses increased by 5.8% to $5.63 million for 2020. The increase was primarily related to an increase in payroll expenses that offset the decrease in selling expenses, professional fees, operating lease expense, and other general and administrative expenses.
    • Operating profit margin was 4.1% for 2020, compared to 6.3% for the same period of last year.
    • Net income was $0.25 million for 2020, compared to $0.30 million for the same period of last year.
    • Net income attributable to MDJH ordinary shareholders was $0.26 million, or earnings per share of $0.02, for 2020, compared to $0.45 million, or earnings per share of $0.04, for the same period of last year.

    Mr. Siping Xu, Chairman and Chief Executive Officer of the Company, commented, "With revenue increasing by 3.3% year-over-year, our full-year 2020 financial results underscore continued strength in our primary real estate agency services business despite the negative impact of the COVID-19 pandemic on our operations and the overall economy. However, our profit margin and net income decreased as a result of the increased operating expenses. We continued our planned geographical expansion, with Chengdu, Suzhou, and Yangzhou markets contributing 35% of our total revenue in 2020, while closely monitoring opportunities entering into other geographic markets. Looking ahead, we are cautiously optimistic about 2021 as the Chinese economy, particularly its housing market, recovers from the pandemic."    

    Full Year 2020 Financial Results

    Revenue

    For 2020, revenue increased by $0.19 million, or 3.3%, to $5.87 million from $5.68 million for the same period of last year. The increase in revenue was primarily attributable to the improvement of our commission rate in 2020. Primary real estate agency services and consulting and other services accounted for 98.2% and 1.8% of revenue, respectively, for 2020, compared to 97.1% and 2.9%, respectively, for the same period of last year. On a geographical basis, revenue from primary real estate agency services in Tianjin, Chengdu, Yangzhou, and Suzhou accounted for 65%, 30%, 2%, and 3% of the primary real estate agency service revenue, respectively, for 2020, compared to 83%, 5%, 9%, and 3%, respectively, for the same period of last year. 

    Operating Expenses


    For the Years Ended December 31,

    ($'000)

    2020


    2019


    % Change

    Selling expenses

    $

    95


    $

    187


    -49.0%

    Payroll, payroll taxes and others


    4,669



    3,711


    25.8%

    Professional fees


    405



    634


    -36.2%

    Operating lease expense


    117



    185


    -36.9%

    Depreciation and amortization


    22



    15


    44.9%

    Provision (reduction) for doubtful accounts, net


    4



    (39) 


    -109.7%

    Other general and administrative


    317



    629


    -49.6%

    Total operating expenses

    $

    5,628


    $

    5,321


    -5.8%

    Selling expenses decreased by $0.09 million, or 49.0%, to $0.10 million for 2020 from $0.19 million for the same period of last year. The decrease in selling expenses was attributable to reduced selling activities in the first half of 2020 due to the impact of the Covid-19 pandemic.

    Payroll, payroll taxes and others increased by $0.96 million, or 25.8%, to $4.67 million for 2020 from $3.71 million for the same period of last year. Our employee compensation was based on sales performance, and our sales related compensation, such as bonuses and commission, increased primarily due to the increase of our revenue in 2020.

    Professional fees were $0.40 million for 2020, compared to $0.63 for the same period of last year. Professional fees consist of attorney, audit, investor relationship, and other expenses. The decrease in professional fees was due to the Company incurring the majority of its expenses associated with its initial public offering in 2019.

    Operating lease expenses decreased by $0.07 million, or 36.9%, to $0.12 million for 2020 from $0.18 million for the same period of last year. Currently, the Company has one long-term lease, which became effective on January 1, 2019, and will expire on December 31, 2023.

    Depreciation and amortization expenses were $21,966 for 2020, compared to $15,180 for the same period of last year. The increase in depreciation and amortization expenses was a result of new equipment purchased for $13,416 and $66,354 in 2020 and 2019, respectively.

    Changes in allowance for doubtful accounts was an increase of $3,786 for 2020, compared to the net decrease of $38,883 for the same period of last year.

    Other general and administrative expenses decreased by $0.31 million, or 49.6%, to $0.32 million for 2020 from $0.63 million for the same period of last year.

    As a result, total operating expenses increased by $0.31 million, or 5.8%, to $5.63 million for 2020 from $5.32 million for the same period of last year.

    Operating Income (Loss)

    Income from operations was $0.24 million for 2020, compared to $0.36 million for the same period of last year.

    The operating profit margin was 4.1% for 2020, compared to 6.3% for the same period of last year. The decrease in operating margin was due to the increases in operating expenses as discussed above.

    Other Income

    Total other income, including government grants, interest income, and other income (expenses), was $45,935 for 2020, compared to $42,176 for the same period of last year.

    Income before Income Tax

    Income before income tax was $0.29 million for 2020, compared to $0.40 million for the same period of last year.

    The Company incurred income tax of $0.03 million for 2020, compared to $0.10 million for the same period of last year.

    Net Income

    Net income was $0.25 million for 2020, compared to $0.30 million for the same period of last year. After deduction of non-controlling interest, net income attributable to MDJH ordinary shareholders was $0.26 million, or earnings per share of $0.02, for 2020, compared to $0.45 million, or earnings per share of $0.04, for the same period of last year.

    Financial Conditions

    As of December 31, 2020, the Company had cash and cash equivalents of $6.11 million, compared to $6.55 million as of December 31, 2019. Account receivable was $4.06 million as of December 31, 2020, compared to $2.16 million as of December 31, 2019. As of December 31, 2020, the Company had current assets of $10.29 million and current liabilities of $1.48 million, leading to working capital of $8.81 million, compared to current assets, current liabilities, and working capital of $8.84 million, $0.69 million and $8.15 million, respectively, as of December 31, 2019.

    Net cash used in operating activities was $0.60 million for 2020, compared to $1,501 for the same period of last year. Net cash provided by investing activities was $1,076 for 2020, compared to net cash used in investing activities of $0.19 million for the same period of last year. Net cash provided by financing activities was $0.11 million for 2020, compared to $0.07 million for the same period of last year.

    Recent Developments

    Because of the quarantines and travel restrictions mandated by the Chinese government in response to the COVID-19 pandemic, 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 prior to the COVID-19 outbreak and expects to continue its normal business operations going forward, any future development of the COVID-19 outbreak may further impact the Company's operations. If a new wave of the COVID-19 outbreak were to occur in the autumn and winter seasons, it could have a material adverse effect on the Company's business, results of operations, financial condition, and cash flows.

    About MDJM LTD

    With branch offices in Tianjin, Chengdu, Suzhou, and Yangzhou, China, MDJM provides primary real estate agency services to, as well as real estate consulting and independent training services to real estate developer clients. 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 press release contains forward-looking statements. All statements other than statements of historical fact in this press release are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties, including any future impact of the Covid-19 pandemic on our operations, 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:

    Sherry Zheng
    Weitian Group LLC
    Email: shunyu.zheng@weitian-ir.com
    Phone: +1-718-213-7386 

     

    MDJM LTD and Subsidiaries

    Consolidated Statements of Operations and Comprehensive Income (Loss)

    For the Years Ended December 31,




    2020



    2019



    2018


    Revenue


    $

    5,868,725



    $

    5,679,977



    $

    2,408,448















    Operating Expenses:













    Selling expenses



    95,207




    186,641




    82,225


    Payroll, payroll taxes and others



    4,668,507




    3,710,697




    2,214,975


    Professional fees



    404,850




    634,372




    -


    Operating leases expenses



    116,532




    184,802




    141,959


    Depreciation and amortization



    21,996




    15,180




    12,575


    Provision (reduction) for doubtful accounts, net



    3,786




    (38,883)




    (146,174)


    Other general and administrative



    316,989




    628,608




    667,267


    Total Operating Expenses



    5,627,867




    5,321,417




    2,972,827















    Income (loss) from Operations



    240,858




    358,560




    (564,379)















    Other income (Expense):













    Gain on sale of asset



    -




    1,705




    -


    (Loss) gain on foreign currency transactions



    (31,109)




    12,072




    -


    Loss on disposal of subsidiary



    -




    (4,970)




    -


    Interest income



    68,701




    30,662




    26,565


    Other income



    8,343




    2,707




    -


     Total other income



    45,935




    42,176




    26,565















    Income (loss) before income tax



    286,793




    400,736




    (537,814)


    Income tax



    (32,900)




    (101,372)




    -


    Net income (loss)



    253,893




    299,364




    (537,814)


    Net loss attributable to noncontrolling interest



    (4,146)




    (153,742)




    (21,843)


    Net income (loss) attributable to MDJM Ltd ordinary shareholders


    $

    258,039



    $

    453,106



    $

    (515,971)















    Net income (loss) per ordinary share attributable to MDJM Ltd ordinary shareholders


    $

    0.02



    $

    0.04



    $

    (0.05)















    Weighted-average shares outstanding, basic and diluted



    11, 652,882




    11,640,661




    10,400,408















    Comprehensive income (loss):













    Net income (loss)


    $

    253,893



    $

    299,364



    $

    (537,814)


    Other comprehensive income (loss), net of tax:













    Change in foreign currency translation adjustments



    251,919




    (53,156)




    (170,344)


    Comprehensive income (loss)



    505,812




    246,208




    (708,158)


    Comprehensive income (loss) attributable to non-controlling interest



    9,132




    (2,398)




    (823)


    Comprehensive income (loss) attributable to MDJM Ltd ordinary shareholders


    $

    496,680



    $

    248,606



    $

    (707,335)


     

    MDJM LTD and Subsidiaries

    Consolidated Balance Sheets




    December 31,
    2020



    December 31,
    2019


    Assets














    Current Assets









    Cash, cash equivalents, and restricted cash


    $

    6,110,693



    $

    6,552,677


    Accounts receivable, net of allowance for doubtful accounts of $15,477 and $10,774, respectively



    4,062,343




    2,155,158


    Prepaid expenses



    23,346




    60,020


    Other receivables



    92,168




    69,977


    Total Current Assets



    10,288,550




    8,837,832











    Property and equipment, net



    65,703




    70,154











    Other Assets









    Deferred tax assets



    24,890




    33,440


    Operating lease assets, net



    319,828




    391,871


    Other receivable - long term



    53,794




    99,532


    Total Other Assets



    398,512




    524,843











    Total Assets


    $

    10,752,765



    $

    9,432,829











    Liabilities and Equity


















    Current Liabilities:









    Accounts payable and accrued liabilities


    $

    1,147,530



    $

    460,690


    VAT and other taxes payable



    207,352




    107,662


    Deferred income



    18,780




    26,429


    Operating lease liabilities, current



    102,056




    91,737


    Total Current Liabilities



    1,475,718




    686,518











    Long-term operating lease liabilities



    161,559




    247,382











    Total Liabilities



    1,637,277




    933,900











    Equity:









    Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share,

    11,675,216 and 11,640,820 shares issued and outstanding as of December 31,

    2020 and 2019, respectively



    11,675




    11,641


    Additional paid in capital



    6,845,394




    6,734,681


    Statutory reserve



    327,140




    262,954


    Retained earnings



    2,142,657




    1,948,804


    Accumulated other comprehensive loss



    (37,558)




    (280,345)


    Total MDJM Ltd stockholders' equity



    9,289,308




    8,677,735


    Noncontrolling interest



    (173,820)




    (178,806)


    Total Liabilities and Equity


    $

    10,752,765



    $

    9,432,829











     

    MDJM LTD and Subsidiaries

    Consolidated Statements of Cash Flows

    For the Years Ended December 31,




    2020



    2019



    2018


    Cash Flows from Operating Activities:













    Net Income (loss)


    $

    253,893



    $

    299,364



    $

    (537,814)


    Adjustments to reconcile net income (loss) to net cash used in operating activities:













    Depreciation and amortization



    21,996




    15,180




    12,575


    Changes in allowance for doubtful accounts



    3,786




    (38,883)




    (146,174)


    Gain on foreign currency transactions



    31,109




    (12,072)




    -


    Gain on sale of asset



    -




    (1,705)




    -


    Non cash operating lease expense



    92,621




    88,632




    -


    Non cash interest income



    (5,926)




    -




    -


    Decrease in deferred tax assets



    10,180




    101,166




    72,975


    Changes in operating assets and liabilities:













    Increase in accounts receivables



    (1,676,789)




    (374,592)




    (83,189)


    Decrease (increase) in other receivables



    24,282




    (4,630)




    41,441


    Decrease (increase) in prepaid expense



    38,346




    174,113




    (150,273)


    Decrease (increase) in prepaid income tax



    -




    3,605




    (3,762)


    Increase (decrease) in accounts payable and accrued expenses



    622,118




    (107,980)




    131,876


    Increase (decrease) in VAT and other tax payable



    87,761




    (28,518)




    18,843


    Decrease in operating lease liabilities



    (92,621)




    (141,838)




    -


    (Decrease) increase in deferred income



    (8,889)




    26,657




    -


    Net Cash Used in Operating Activities



    (598,133)




    (1,501)




    (643,502)















    Cash Flows from Investing Activities:













    Purchase of office equipment and software



    (13,416)




    (66,354)




    (1,215)


    Advance made to deconsolidated subsidiary



    -




    (127,804)




    -


    Loan repayment received



    14,492




    -




    -


    Proceeds from disposal of asset



    -




    3,330




    -


    Net Cash Provided by (Used in) Investing Activities



    1,076




    (190,828)




    (1,215)















    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 and $2,103,816, respectively



    -




    70,406




    4,103,479


    Net Cash Provided by Financing Activities



    110,747




    70,406




    4,103,479















    Effect of exchange rate changes on cash, cash equivalents, and restricted cash



    44,326




    (17,957)




    116,055















    Net (decrease) increase in cash, cash equivalents and restricted cash



    (441,984)




    (139,880)




    3,574,817


    Cash, cash equivalents, and restricted cash - beginning of the period



    6,552,677




    6,692,557




    3,117,740


    Cash, cash equivalents, and restricted cash - end of the period


    $

    6,110,693



    $

    6,552,677



    $

    6,692,557















    Cash and cash equivalents


    $

    4,976,527



    $

    4,995,843



    $

    5,626,079


    Restricted foreign currency



    1,134,166




    1,556,834




    1,066,478


    Total cash, cash equivalents, and restricted cash


    $

    6,110,693



    $

    6,552,677



    $

    6,692,557















    Supplemental Disclosure Cash Flow Information:













    Cash paid for:













    Interest


    $

    -



    $

    -



    $

    -


    Income taxes


    $

    39



    $

    -



    $

    271,817


     

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