Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document And Entity Information | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2022 |
Current Fiscal Year End Date | --12-31 |
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 | Fernie Castle, Letham |
Entity Address, City or Town | Cupar, Fife, KY15 7RU |
Entity Address, Country | GB |
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 |
Amendment Flag | false |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Auditor Name | RBSM LLP |
Auditor Firm ID | 587 |
Auditor Location | New York, New York |
Business Contact | |
Document And Entity Information | |
Contact Personnel Name | Siping Xu |
City Area Code | 44 |
Contact Personnel Fax Number | 44-01337 829 349 |
Local Phone Number | 01337 829 349 |
Contact Personnel Email Address | charlie.cai@mdjmjh.com |
Consolidated Balance Sheets
Consolidated Balance Sheets ¥ in Millions | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Current Assets | ||
Cash, cash equivalents, and restricted cash | $ 1,433,158 | $ 5,744,078 |
Accounts receivable, net of allowance for doubtful accounts of $231,937 and $76,462, respectively | 967,819 | 2,137,711 |
Prepaid expenses | 26,721 | 29,031 |
Other receivables | 64,023 | 98,594 |
Total Current Assets | 2,491,721 | 8,009,414 |
Property and equipment, net | 3,129,884 | 49,012 |
Other Assets | ||
Deferred tax assets | 11,121 | 15,382 |
Operating lease assets, net | 224,127 | |
VAT credit | 2,349 | |
Receivable from related parties | 71,035 | |
Total Other Assets | 13,470 | 310,544 |
Total Assets | 5,635,075 | 8,368,970 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 313,086 | 1,028,210 |
VAT and other taxes payable | 136,126 | |
Deferred income | 20,179 | 23,091 |
Operating lease liabilities, current | 162,735 | |
Short-term loans payable | 372,679 | |
Total Current Liabilities | 705,944 | 1,350,162 |
Long-term operating lease liabilities | 61,392 | |
Total Liabilities | 705,944 | 1,411,554 |
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, 2022 and 2021, respectively | 11,675 | 11,675 |
Additional paid in capital | 6,845,394 | 6,845,394 |
Statutory reserve | 327,140 | 327,140 |
Retained earnings | (2,202,990) | (282,791) |
Accumulated other comprehensive (loss) income | (52,088) | 62,903 |
Total MDJM Ltd shareholders' equity | 4,929,131 | 6,964,321 |
Noncontrolling interest | (6,905) | |
Total Liabilities and Equity | $ 5,635,075 | $ 8,368,970 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Allowance for doubtful accounts, accounts receivable | $ 231,937 | $ 76,462 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Revenue | $ 450,634 | $ 4,466,233 | $ 5,868,725 |
Operating Expenses: | |||
Selling expenses | 10,219 | 47,480 | 95,207 |
Payroll, payroll taxes and others | 1,370,972 | 5,554,186 | 4,668,507 |
Professional fees | 555,657 | 460,274 | 404,850 |
Operating leases expenses | 0 | 117,686 | 116,532 |
Depreciation and amortization | 36,243 | 24,910 | 21,996 |
Allowance for doubtful accounts, net | 165,464 | 59,625 | 3,786 |
Other general and administrative | 261,610 | 471,557 | 316,989 |
Total Operating Expenses | 2,400,165 | 6,735,718 | 5,627,867 |
Loss from Operations | (1,949,531) | (2,269,485) | 240,858 |
Other Income (Expense): | |||
Gain on sale of asset | 10,954 | ||
Gain (loss) on foreign currency transactions | 43,548 | (14,402) | (31,109) |
Loss on deconsolidation | (240,431) | (8,350) | |
Interest (expense) income | (31,615) | 2,094 | 68,701 |
Other income | 16,011 | 47,340 | 8,343 |
Total Other Income (Expense) | (201,533) | 26,682 | 45,935 |
Income (Loss) before income tax | (2,151,064) | (2,242,803) | 286,793 |
Income tax | (3,020) | (9,963) | (32,900) |
Net income (loss) | (2,154,084) | (2,252,766) | 253,893 |
Net loss attributable to noncontrolling interest | (7,048) | (4,146) | |
Net income (loss) attributable to MDJM Ltd ordinary shareholders | $ (2,154,084) | $ (2,245,718) | $ 258,039 |
Net income (loss) per ordinary share attributable to MDJM Ltd ordinary shareholders - basic | $ (0.18) | $ (0.19) | $ 0.02 |
Net income (loss) per ordinary share attributable to MDJM Ltd ordinary shareholders - diluted | $ (0.18) | $ (0.19) | $ 0.02 |
Weighted-average shares outstanding: | |||
Basic (in dollars per share) | 11,675,216 | 11,675,216 | 11,652,882 |
Diluted (in dollars per share) | 11,675,216 | 11,675,216 | 11,652,882 |
Comprehensive income (loss): | |||
Net Income (loss) | $ (2,154,084) | $ (2,252,766) | $ 253,893 |
Other comprehensive income (loss), net of tax: | |||
Change in foreign currency translation adjustments | (101,200) | 94,694 | 251,919 |
Total other comprehensive income (loss) | (2,255,284) | (2,158,072) | 505,812 |
Comprehensive income (loss) attributable to non-controlling interest | 143 | 9,132 | |
Comprehensive income (loss) attributable to MDJM Ltd ordinary shareholders | $ (2,255,284) | $ (2,158,215) | $ 496,680 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Ordinary Shares | Additional Paid in Capital | Statutory Reserve | Retained Earnings (Deficits) | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Total |
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 | |||||||
Proceeds from Regulation S Offering, net of cost | $ 34 | 110,713 | 110,747 | ||||
Proceeds from Regulation S Offering, net of cost (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 | ||||||
Comprehensive income (loss): | |||||||
Acquired noncontrolling interest | (7,048) | 143 | $ 6,905 | ||||
Deconsolidated noncontrolling interest | 240,933 | (13,934) | 226,999 | ||||
Net income (loss) | (2,154,084) | (2,154,084) | |||||
Other comprehensive income (loss), net of tax: | |||||||
Change in foreign currency translation adjustments | (101,200) | (101,200) | |||||
Balance at Dec. 31, 2022 | $ 11,675 | $ 6,845,394 | $ 327,140 | $ (2,202,990) | $ (52,088) | $ 4,929,131 | |
Balance (shares) at Dec. 31, 2022 | 11,675,216 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Equity (Parenthetical) | Aug. 26, 2020 USD ($) |
Consolidated Statements of Changes in Equity | |
Net offering costs | $ 2,760 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows from Operating Activities: | |||
Net income (loss) | $ (2,154,084) | $ (2,252,766) | $ 253,893 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||
Depreciation and amortization | 36,243 | 24,910 | 21,996 |
Changes in allowance for doubtful accounts | 165,464 | 59,625 | 3,786 |
(Gain) loss on foreign currency transactions | (43,548) | 14,402 | 31,109 |
Gain on sale of asset | (10,954) | ||
Loss on deconsolidation | 240,431 | 8,350 | |
Non cash operating lease expense | 103,459 | 92,621 | |
Non cash interest expense (income) | 21,241 | 5,327 | (5,926) |
Changes in deferred tax assets | 3,020 | 9,963 | 10,180 |
Changes in operating assets and liabilities: | |||
Decrease (increase) in accounts receivables | 815,839 | 1,969,361 | (1,676,789) |
Decrease (increase) in other receivables | (2,788) | 16,190 | 24,282 |
Decrease (increase) in prepaid expense | 5,914 | (2,664) | 38,346 |
(Decrease) increase in accounts payable and accrued expenses | (537,442) | (162,279) | 622,118 |
(Decrease) increase in VAT and other tax payable | (125,453) | (85,526) | 87,761 |
Increase in operating lease liabilities | (46,474) | (92,621) | |
(Decrease) increase in deferred income | (1,000) | 3,841 | (8,889) |
Net Cash Used in Operating Activities | (1,587,117) | (334,281) | (598,133) |
Cash Flows from Investing Activities: | |||
Acquisition of real property and improvements in UK | (3,095,291) | ||
Purchase of office equipment and software | (45,507) | (6,600) | (13,416) |
Repayment from (advance to) related parties | (71,035) | ||
Proceeds from disposal of asset | 30,607 | ||
Loan repayment received | 742 | 23,724 | 14,492 |
Net Cash (Used in) Provided by Investing Activities | (3,109,449) | (53,911) | 1,076 |
Cash Flows from Financing Activities: | |||
Proceeds from Regulation S offering - August 26, 2020, net of offering costs of $2,760 | 110,747 | ||
Proceeds from short term loans | 381,754 | ||
Net Cash Provided by Financing Activities | 381,754 | 110,747 | |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 4,288 | 22,224 | 44,326 |
Net decrease in cash, cash equivalents and restricted cash | (4,310,524) | (365,968) | (441,984) |
Cash, cash equivalents, and restricted cash - beginning of the period * | 5,744,078 | 6,110,693 | 6,552,677 |
Cash, cash equivalents, and restricted cash - end of the period | 1,433,158 | 5,744,078 | 6,110,693 |
Cash and cash equivalents | 1,358,838 | 4,796,299 | 4,976,527 |
Restricted foreign currency | 74,320 | 947,779 | 1,134,166 |
Total cash, cash equivalents, and restricted cash | 1,433,158 | 5,744,078 | 6,110,693 |
Cash paid for: | |||
Interest | $ 5,256 | ||
Income taxes | $ 23,553 | $ 39 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Consolidated Statements of Cash Flows | |
Proceeds from divestiture businesses | $ 5,744,078 |
Cash divested from the deconsolidation | 396 |
Cash balance removed from deconsolidation | $ 5,743,682 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
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 the consolidated variable interest entity (the “VIE”), is principally engaged in providing end-to-end services in the life cycle of a residential real estate project, including primary real estate agency services, real estate consulting services, and training and evaluation with respect to primary agency sales services in the People’s Republic of China (the “PRC”). The Company engages in the hotel and restaurant businesses in the United Kingdom (the “UK”). In 2022, the Company, through its subsidiaries in the UK, acquired two real estate properties located in the UK, which are remodeled as hotels with restaurant facilities. The Company or MDJM, and its subsidiaries and the consolidated VIE are also collectively referred to as the “Group,” or where appropriate, the terms the “Group,” “we,” “our,” or “us” also refer to MDJM or the Company and its subsidiaries and the consolidated VIE as a whole. 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 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. Mansions Catering and Hotel LTD (“Mansions,” formerly known as Mansions Estate Agent Ltd) was incorporated pursuant to England laws as a limited company on June 15, 2021, to conduct residential property management and real estate agencies business. At the time of incorporation, MD UK held 51% of the equity interest in Mansions, Ocean Tide Wealth Limited, a specialist mortgage broker in the United Kingdom held 41% of the equity interest was held by Ocean Tide Wealth Limited, a specialist mortgage broker in the United Kingdom, and Mingzhe Zhang, an individual held the remaining 8%. On May 20, 2022, MD UK acquired the 41% ownership interests from Ocean Tide Wealth Limited with a consideration of one British pound sterling. On May 20, 2022, MD UK acquired the 8% ownership interests from Mingzhe Zhang with a consideration of one British pound sterling. After the acquisition, MD UK has held 100% ownership interests in Mansions. 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. For the year ended December 31, 2022, MD Japan incurred professional fees of $24,084 relating to the entity establishment in Japan and did not generated any revenue. On February 16, 2022, MD Lokal Global GmbH (“MD German”) was incorporated pursuant to German laws. MDJM holds 100% of the equity interest in MD German. For the year ended December 31, 2022, MD German incurred professional fees of $41,236 relating to the entity establishment in Germany and did not generated any revenue. 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 wholly-owned subsidiaries and the consolidated VIE of the Company: Date of Place of Percentage of Name of the Company Incorporation Incorporation Ownership MDJM Hong Kong February 9, 2018 Hong Kong 100% MDJM UK October 28, 2020 England and Wales 100% Mansions June 15, 2021 England and Wales 100% MD Japan January 14, 2022 Japan 100% MD German February 16, 2022 Germany 100% Mingda Beijing (WFOE) March 9, 2018 PRC 100% Mingda Tianjin (VIE) September 25, 2002 PRC VIE VIE Arrangements PRC regulations currently prohibit or restrict foreign ownership of companies that provide services in certain industries. To comply with these regulations, on April 28, 2018, Mingda Beijing entered into a series of contractual arrangements with Mingda Tianjin and shareholders of Mingda Tianjin (collectively, the “VIE Agreements”). Due to PRC legal restrictions on foreign ownership in the real estate sector, neither the Company nor its subsidiaries own any equity interest in Mingda Tianjin. Instead, for accounting purposes, the Company controls and receives the economic benefits of Mingda Tianjin’s business operation through the VIE Agreements, which enable the Company to consolidate the financial results of the VIE and its subsidiaries in the Company’s consolidated financial statements under the generally accepted accounting principles in the United States of America (“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 surplus 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 the Company to Control and Receive the Economic Benefits of Mingda Tianjin’s Business Operation for Accounting Purposes On April 28, 2018, each of the shareholders of the Mingda Tianjin entered into an “Exclusive Call Option Agreement” (collectively, the “Option Agreements”) 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” (collectively, the “Pledge Agreements”) with Mingda Beijing. Pursuant to the Pledge Agreements, the 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. Risks in Relation to the VIE Structure The Company believes that the VIE Agreements 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 the VIE Agreements and the interests of the shareholders of the VIE may diverge from those of the Company and that may potentially increase the risk that such shareholders 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, for accounting purposes, 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. The Company believes this power of attorney is legally enforceable but may not be as effective as direct equity ownership. In addition, if the VIE Agreements 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, 2022 | |
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 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, 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 Mingdajiahe (Tianjin) Co., Ltd. Suzhou Branch was dissolved in October 2022. Consequently, a $240,431 loss on deconsolidation was recorded in the year ended December 31, 2022. Mingda Tianjin included the following branch offices and/or subsidiaries in previous 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 Tianjin Mingdajiahe Real Estate 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. Cash in the 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 to $74,320 and $947,779 as of December 31, 2022 and 2021, respectively. The Company has not experienced any losses in the bank accounts and believes it is not exposed to any risks on its cash held in PRC banks. Property and Equipment, Net Property and equipment are carried at cost, less accumulated depreciation. Costs include any incremental costs that are directly attributable to the construction or acquisition of the item of property and equipment. Maintenance and repairs are expensed as incurred, while major maintenance and remodeling costs are capitalized if they extend the useful life of the asset. Depreciation is computed using the straight-line method over the estimated useful lives. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in the results of operations. Classification Estimated Useful Life Buildings 50 years Building fixtures and furniture 4 Office Equipment and Fixtures 3 Software 2 Vehicles 4 Revenue Recognition The Group adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”). 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 receives 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 generated by commission fees from selling real estate properties since its inception. 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 a certain percentage of the 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 commenced in August 2021. Mansions 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 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. Additionally, the Group provides consulting services to its clients, such as training, design and marketing. Revenue recognized from consulting is net of VAT. Segment ASC 280 “Segment Reporting” requires a public entity to report separately information about an operating segment that meets any of the following quantitative thresholds: (a) its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 percent or more of the combined revenue, internal and external, of all operating segments;and (b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount, of either: 1. the combined reported profit of all operating segments that did not report a loss, 2. the combined reported loss of all operating segments that did report a loss; (c) its assets are 10 percent or more of the combined assets of all operating segments. Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to readers of the financial statements. A company's operating segments are defined as components of the company that engage in business activities that generate revenue and incur expenses, and whose results are regularly reviewed by the company's chief operating decision maker in deciding how to allocate resources and assess performance. 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. 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 be 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 did not incur such expenses for the years ended December 31, 2022, 2021, and 2020, 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, 2022, 2021, and 2020, 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.was dissolved in 2021 and deconsolidated from the consolidated financial statements ended on December 31, 2021. Mansions was 49% owned by two unrelated parties as of December 31, 2021. On May 20, 2022, the Company acquired the 49% equity interests owned by the two unrelated parties. 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 a total of 126,082 underwriter’s warrants outstanding as of December 31, 2022 and 2021. The underwriter’s warrants are exercisable at a price of $6.25. As of December 31, 2022, and 2021, the Group’s closing stock price was $1.51 and $1.78, which had no dilutive impact. For the years ended December 31, 2022 and 2021, the Company incurred net losses, and all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact. The underwriter’s warrants will expire on November 13, 2023. December 31, December 31, 2022 2021 Numerator for earnings per share: Net loss attributable to the Company’s ordinary shareholders $ (2,154,084) $ (2,245,718) Denominator for basic and diluted earnings per share: Basic and weighted average ordinary shares 11,675,216 11,675,216 Per share amount Per share – basic and diluted $ (0.18) $ (0.19) 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 2022 2021 2020 At end of the period – RMB 6.8987 6.3524 6.5378 Average rate for the period ended – RMB 6.7347 6.4491 6.9003 1 US$ = GBP At end of the period – GBP 0.8315 0.7419 — Average rate for the period ended – GBP 0.8121 0.7327 — The financial records of certain of the Company’s subsidiaries and the VIE are maintained in local currencies other than the U.S. dollar, such as RMB in the PRC and GBP in the UK, 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 $43,548, ($14,402), and $(31,109) transaction gain, (loss), and (loss) recorded for the years ended December 31, 2022, 2021, and 2020, 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 in the PRC is maintained with state-owned banks within the PRC. Per PRC regulations, the maximum insured bank deposit amount is approximately $72,000 (RMB500,000 at the December 31, 2022 exchange rate) for each depositor. The Company’s total unprotected cash in the PRC banks amounted to approximately $5,225 and $2,268,000, as of December 31, 2022 and 2021, 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 in the UK has bank accounts in the UK. 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 $102,000 (translated at the December 31, 2022 exchange rate). The Company’s total unprotected cash in bank amounted to approximately $1,135,013 and $2,913,000, as of December 31, 2022 and 2021, 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. 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 a 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, 2022 | |
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. As of December 31, 2022 and 2021, accounts receivable and allowance for doubtful accounts consisted of the following: December 31, December 31, 2022 2021 Accounts receivable $ 1,199,756 $ 2,214,173 Allowance for doubtful accounts (231,937) (76,462) Accounts receivable, net $ 967,819 $ 2,137,711 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. The Group will reserve 5% of allowance for accounts receivable ages from seven months to 12 months and reserve 20% of allowance for accounts receivable ages over 365 days. As of December 31, 2022, the Group reserved $231,937 of allowance for doubtful accounts. As of December 31, 2021, the Group reserved $76,462 of allowance for doubtful accounts. The increase of allowance in 2022 was resulted from one client. The Group had adopted legal action to collect balance of receivable from this customer. Major Customers For the year ended December 31, 2022, the Group had one major customer (project), Ge Diao Ping Yuan. Revenue from this customer was approximately 79% of the Group’s total revenue. The accounts receivable from this customer (project) were $80,159, as of December 31, 2022. For the year 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. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE 4 – PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: December 31, December 31, 2022 2021 Land and buildings $ 2,972,256 $ — Building fixtures and furniture 128,448 — Office Equipment and Fixtures 35,160 99,404 Software 17,413 18,910 Auto 39,033 48,376 Total 3,192,310 166,690 Less accumulated depreciation (62,426) (117,678) Property and equipment, net $ 3,129,884 $ 49,012 For the years ended December 31, 2022 and 2021, depreciation expenses were $36,243 and $24,910, respectively. During the year ended December 31, 2022, the Group disposed the following assets and realized a net gain of $10,954: Total Disposed Office Assets Auto Equipment Cost $ 103,360 $ 45,630 $ 57,730 Accumulated depreciation (83,707) (30,705) (53,002) Cash received (30,607) (29,697) (910) Net (gain) loss $ (10,954) $ (14,772) $ 3,818 |
INCOME TAX AND DEFERRED TAX ASS
INCOME TAX AND DEFERRED TAX ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
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 the 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 the 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, 2022, and 2021, 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 its business in the PRC through its subsidiaries and the VIE. The operating entities located in the PRC are subject to PRC income taxes, a standard tax rate of 25%. At the beginning of 2019, China State Administration of Taxation issued a 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 tax abatement policy, the income tax rate was reduced to 5% for small business with taxable income less than RMB1 million, the income tax rate was reduced to 10% for small business with taxable income from RMB1 million to RMB3 million. In 2022, a new tax abatement policy was issued. From January 1, 2022 to December 31, 2022, the income tax rate was 2.5% for small business with taxable income under RMB1 million; and from January 1, 2022 to December 31, 2024, income tax rate will be 5% for small business with taxable income between RMB1 million to RMB3 million. 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. As of December 31, 2022, the Group had net operating losses of approximately $3,811,000 carried forward in the PRC operation and net operating losses of approximately $221,000 carried forward in the UK operation. The management believes these losses are more likely than not to be used to offset future operating income, and, therefore, the full amount of valuation is provided. Significant components of the Company’s deferred tax assets consisted of accounts receivable, net, and valuation allowance. The deferred tax assets were $11,121 and $15,382 as of December 31, 2022 and 2021, respectively. Significant components of the Group’s deferred tax assets consist of following: December 31, December 31, 2022 2021 Deferred tax items Accounts receivable, net $ 17,602 $ 19,115 Net operating loss – UK — 3,305 Valuation allowance (6,481) (7,038) Deferred tax assets, net $ 11,121 $ 15,382 The provision for income tax for the years ended December 31, 2022 and 2021 were summarized as follows: December 31, December 31, 2022 2021 Current $ — $ — Deferred tax adjustment (3,020) (9,963) Total income tax $ (3,020) $ (9,963) Reconciliation of the statutory income tax rate and the Company’s effective income tax rate for the years ended December 31, 2022 and 2021, respectively, were as follows: China 2022 2021 Hong Kong statutory income tax rate 16.50 % 16.50 % Valuation allowance recognized with respect to the loss in Hong Kong Company (16.50) % (16.50) % PRC statutory income tax rate 25.00 % 25.00 % Effect of income tax exemptions and reliefs in the PRC companies (25.00) % (25.00) % Effect of valuation and deferred tax adjustments 0.00 % (0.66) % Effective rate 0.00 % (0.66) % United Kingdom UK statutory income tax rate 19.00 % 19.00 % Valuation allowance recognized with respect to the loss in UK (19.00) % (10.86) % Effect of valuation and deferred tax adjustments (1.65) % 0.00 % Effective rate (1.65) % 8.14 % Aggregate undistributed earnings of the Company’s subsidiaries, the VIE, and the VIE’s subsidiaries located in the PRC that are available for distribution on December 31, 2022 and December 31, 2021 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, 2022, the Company had not declared any dividends. As of December 31, 2022, the Company had no significant uncertain tax positions that qualify for either recognition or disclosure in the financial statements. As of December 31, 2022, income tax returns for the tax years ended December 31, 2017 through December 31, 2021 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, 2022. 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 in 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 $15,000) is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is 10 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, 2022 and 2021. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021: 2022 2021 Payroll and social security payable $ 42,805 $ 167,470 Bonus payable 109,829 774,571 Other payables and accrued liabilities 160,452 86,169 Total Accounts Payable and Accrued Liabilities $ 313,086 $ 1,028,210 |
VAT AND OTHER TAXES PAYABLE
VAT AND OTHER TAXES PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021: 2022 2021 VAT payable $ — $ 121,602 Surcharge and fees — 14,524 Income tax payable — — Total VAT and Other Taxes Payable $ — $ 136,126 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, 2022 | |
LEASES | |
LEASES | NOTE 8 – LEASES The Group leases all of its offices under various non-cancelable lease agreements that expire on various dates through 2023. The Group evaluates contracts entered into to determine whether the contract involves the use of property which is either explicitly or implicitly identified in the contract. The Group evaluates whether it controls the use of the asset, which is determined by assessing whether it obtains substantially all economic benefits from the use of the asset, and whether it has the right to direct the use of the asset. If these criteria are met and the Group has identified a lease, it would be accounted for under the requirements of ASC 842. Upon the possession of a leased asset, the Group determines its classification as an operating or finance lease. All of its real estate leases are classified as operating leases. The Group’s real estate leases have initial terms ranging from one The Group had one long-term lease, which became effective on January 1, 2019, and will expire on December 31, 2023. The Group adopted the 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-year 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 at January 1, 2019, the date of adoption. At initial measurement, the Group recorded a non-cash ROU asset of $479,744 (RMB3,342,278 translated at the December 31, 2019 exchange rate, and a noncash lease liability of $479,744 (RMB3,342,278 translated at the December 31, 2019 exchange rate). On May 31, 2022, the Group terminated the lease agreement with the landlord. There was no penalty related to the termination of the lease. A summary of operating lease right-of-use assets and liabilities as of December 31, 2022 and 2021 were as follows: Operating Lease Assets 2022 2021 Main offices operating lease assets – initial measurement $ — $ 479,744 Less: accumulated amortization — (275,382) Foreign exchange effects — 19,765 Operating Lease Assets, net $ — $ 224,127 — Operating Lease Liabilities — Total operating lease liabilities – initial measurement $ — $ 479,744 Accrued interest — 41,124 Accumulated payment to liabilities — (316,506) Foreign exchange effects — 19,765 Total operating lease liabilities — 224,127 Less: operating lease liabilities, current — (162,735) Long-term Operating Lease Liabilities $ — $ 61,392 The Group 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 Group 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. Such operating lease expenses amounted to $0 for the year ended December 31, 2022. For the years ended December 31, 2021 and 2020, such operating lease expense amounted to $3,715 and $10,012, respectively For the years ended December 31, 2022, 2021, and 2020, total operating lease expenses amounted to $0, $117,686, and $116,532, respectively. |
SHORT-TERM LOANS
SHORT-TERM LOANS | 12 Months Ended |
Dec. 31, 2022 | |
SHORT-TERM LOANS | |
SHORT-TERM LOANS | NOTE 9 – SHORT-TERM LOANS On May 13, 2021, Mingda Tianjin entered into a small business line of credit agreement (the “LOC”) for a maximum amount of $144,955 (RMB1,000,000 translated at the December 31, 2022 exchange rate) credit line from China Construction Bank (“CCB”) with an interest rate of 4.2525% from May 13, 2021 to May 13, 2022. The LOC was used for short-term liquidity needs only. In May 2022, CCB agreed to extend LOC from May 13, 2022 to August 13, 2022 with an interest rate of 4.20% per annum. In August 2022, CCB agreed to extend LOC further from August 13, 2022 to November 13, 2022 with an interest rate of 3.95% per annum. On February 14, 2022, Mingda Tianjin borrowed $144,955 (RMB1,000,000) from CCB. The loan was repaid in full on March 1, 2023. From March 18, 2022 to June 20, 2022, Mingda Tianjin borrowed a total of $227,724 (RMB1,571,000) from an unrelated individual for working capital. This individual loan was due by September 30, 2022 and extended to December 31, 2022. The loan bears interest at 4.2525% per annum and was to be paid by the maturity date. The loan was repaid in full on March 8, 2023. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 10 – SHAREHOLDERS’ 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 (the “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 of $6.25, 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 will expire on November 13, 2023. 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, 2022 | |
NONCONTROLLING INTEREST | |
NONCONTROLLING INTEREST | NOTE 11 – NONCONTROLLING INTEREST Noncontrolling interests 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 49% ownership interests of Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. 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 49% ownership interests of Mansions owned by other two unrelated parties. Mansions commenced its business in the UK in August 2021. In May 2022, the Company acquired 49% of ownership interests in Mansions owned by two unrelated parties with a consideration of one dollar each. There was no noncontrolling interest as of December 31, 2022. Amount Noncontrolling interest as of 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 as of 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 as of December 31, 2021 $ (6,905) Reclassified to retained deficits – January 1, 2022 7,048 Reclassified to accumulated other comprehensive income – January 1, 2022 (143) Noncontrolling interest as of December 31, 2022 $ — |
STATUTORY RESERVE
STATUTORY RESERVE | 12 Months Ended |
Dec. 31, 2022 | |
STATUTORY RESERVE | |
STATUTORY RESERVE | NOTE 12 – 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, 2022 and 2021, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 - 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. New Businesses and New Market Risk Real estate agent service income was a major income source of the Group in the PRC market since its inception. The Group’s real estate agent service income declined 89.71% in 2022 as compared to 2021 and declined 28.55% in 2021 as compared to 2020. The decline of real estate agent service income was primarily attributed to the tightening policy on the real estate market adopted in recent years in the PRC and the negative impact of the COVID-19 pandemic. It is difficult to engage in a new real estate sales project in the PRC. While the Company has made efforts to develop new projects, it may not be able to recover to the level of 2022 in the future. In response to the shrinking of sales in new residential housing market in the PRC, the Company is shifting its focus to the UK and other non-PRC markets. In August 2022, the Company purchased “Fernie Castle,” a real property located in Scotland. The Company plans to remodel this property into a multi-functional cultural venue with functions for a fine dining restaurant, hotel, wedding events and gardening. In December 2022, the Company purchased a second real estate property located at Torquay England. The Company plans to remodel this property and operate it as a hotel with restaurant facilities. To achieve this goal, the Company needs to find experts and skilled workers in the UK local market and to obtain long-term financial support. There is no guarantee that these new businesses will be profitable in the short to medium term or that the Company will have sustainable financial sources to support such operations in the long term. In addition, the continuous increase in energy costs, the labor shortage in the UK, the war in Ukraine are all expected to have negative impacts on Company’s operations in the UK. 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 Group will file a civil complaint in local District’s court if there is a dispute on accounts receivable with customers. Historically, the Group has won the civil complaint and received the amounts awarded by court. During 2021, 10 of such complaint cases were closed and the Group collected approximately $1.07 million from customers. As of December 31, 2021, there was one case open. This case was resolved in May 2022. The Company received the full amount claimed. 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 was the unpaid base of $45,926 (RMB291,742.17 translated at the December 31, 2021 exchange rate), plus a 0.1‰ per day breaching late fee. The case was settled and Mingda Tianjin received the full amount claimed on May 19, 2022. 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 claimed amount was approximately $780,000 (RMB5,380,734). On July 15, 2022, the Court made a favorable judgment that Chengdu TEDA needed to pay the full amount claimed within five days. On July 29, 2022, Chengdu TEDA filed an appeal. On December 23, 2022, the Intermediate People's Court of Chengdu City, Sichuan Province made a final judgment, demanded that Chengdu TEDA pay RMB5,157,182 plus liquidated damages and interest to the Company in five days. The Company received the payment of $863,083 (RMB5,954,151) on February 27, 2023. On January 9, 2023, 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 claimed amount is approximately $271,000 (RMB1,872,419). |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 14 – 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. |
SEGMENT AND GEOGRAPHIC AREA INF
SEGMENT AND GEOGRAPHIC AREA INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT AND GEOGRAPHIC AREA INFORMATION | |
SEGMENT AND GEOGRAPHIC AREA INFORMATION | NOTE 15 – SEGMENT AND GEOGRAPHIC AREA INFORMATION The Group’s major income source was from real estate agent commission income as of December 31, 2022. The percentage of revenue from real estate agent services among the total consolidated revenue was 96%, 99%, and 98% for the years ended December 31, 2022, 2021, and 2020, respectively. Geographically, revenue was majorly generated in the PRC market. The percentage of revenue generated in the PRC among the total consolidated revenue was 96%, 100%, and 100% for the years ended December 31, 2022, 2021, and 2020, respectively. The value of assets located in the UK has increased since 2021. The percentage of the value of the assets located in the UK among the total consolidated assets was 79%, 37%, and 0% for the years ended December 31, 2022, 2021, and 2020, respectively. The Group operated in one reportable business segment – real estate agent services located in the PRC before 2022. The major assets in the UK subsidiaries were cash in 2021. The Group operated in two reportable business segments – real estate agent services and hospitality business after the Group bought two idle real estate properties located in the UK. The Company plans to remodel these properties into a multi-functions place with a fine dining restaurant, a hotel, wedding event venues, and gardening. There was no hospitality business operation in 2022 and no income from the hospitality business in 2022. 2022 2021 2020 US$ % US$ % US$ % Revenue by Categories Real estate agent service income 434,371 96 % 4,408,018 99 % 5,765,585 98 % Rental management income 16,263 4 % 19,469 — % Other income — — % 38,746 1 % 103,140 2 % Revenue by Categories 450,634 100 % 4,466,233 100 % 5,868,725 100 % Revenue by Geographic Region PRC 434,371 96 % 4,446,764 100 % 5,868,725 100 % UK 16,263 4 % 19,469 — % Revenue by Geographic Region 450,634 100 % 4,466,233 100 % 5,868,725 100 % Assets by Geographic Region PRC and Others 1,202,347 21 % 5,293,516 63 % 10,752,749 100 % UK 4,432,728 79 % 3,075,454 37 % 16 — % Assets by Geographic Region 5,635,075 100 % 8,368,970 100 % 10,752,765 100 % |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS On March 6, 2023, our registration statement on Form F-3 (File No. 333-261347) was declared effective by the SEC. We may, from time to time, in one or more offerings, offer and sell up to $70,000,000 of our ordinary shares, par value $0.001 per share, preferred shares, debt securities, warrants, rights, and units, or any combination thereof. Pursuant to General Instruction I.B.5 of Form F-3, in no event will we sell our securities in a public primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75 million. |
RESTRICTED NET ASSETS OR PARENT
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | NOTE 17 – RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION 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. As of December 31, 2022, the Company’s major operations were 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. With the Company’s operation and investment turned to the UK market via subsidiaries located in the UK, the net assets located out of PRC amounted to $4,358,441, or 89%, to consolidated net assets. The net assets located outside of the PRC are not considered as restricted assets. The amount of restricted net assets located in the PRC subsidiary decreased to approximately $478,346, as of December 31, 2022 (the most recently completed fiscal year), which was equivalent to 10% of the consolidated net assets as of December 31, 2022. Accordingly, the Parent Company’s condensed financial statements are not prepared in accordance with Rule 5-04 and Rule 12-04 of SEC Regulation S-X. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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 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, 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 Mingdajiahe (Tianjin) Co., Ltd. Suzhou Branch was dissolved in October 2022. Consequently, a $240,431 loss on deconsolidation was recorded in the year ended December 31, 2022. Mingda Tianjin included the following branch offices and/or subsidiaries in previous 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 Tianjin Mingdajiahe Real Estate 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. Cash in the 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 to $74,320 and $947,779 as of December 31, 2022 and 2021, respectively. The Company has not experienced any losses in the bank accounts and believes it is not exposed to any risks on its cash held in PRC banks. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are carried at cost, less accumulated depreciation. Costs include any incremental costs that are directly attributable to the construction or acquisition of the item of property and equipment. Maintenance and repairs are expensed as incurred, while major maintenance and remodeling costs are capitalized if they extend the useful life of the asset. Depreciation is computed using the straight-line method over the estimated useful lives. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in the results of operations. Classification Estimated Useful Life Buildings 50 years Building fixtures and furniture 4 Office Equipment and Fixtures 3 Software 2 Vehicles 4 |
Revenue Recognition | Revenue Recognition The Group adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”). 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 receives 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 generated by commission fees from selling real estate properties since its inception. 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 a certain percentage of the 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 commenced in August 2021. Mansions 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 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. Additionally, the Group provides consulting services to its clients, such as training, design and marketing. Revenue recognized from consulting is net of VAT. |
Segment | Segment ASC 280 “Segment Reporting” requires a public entity to report separately information about an operating segment that meets any of the following quantitative thresholds: (a) its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 percent or more of the combined revenue, internal and external, of all operating segments;and (b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount, of either: 1. the combined reported profit of all operating segments that did not report a loss, 2. the combined reported loss of all operating segments that did report a loss; (c) its assets are 10 percent or more of the combined assets of all operating segments. Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to readers of the financial statements. A company's operating segments are defined as components of the company that engage in business activities that generate revenue and incur expenses, and whose results are regularly reviewed by the company's chief operating decision maker in deciding how to allocate resources and assess performance. 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. |
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 be 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 did not incur such expenses for the years ended December 31, 2022, 2021, and 2020, 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, 2022, 2021, and 2020, 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.was dissolved in 2021 and deconsolidated from the consolidated financial statements ended on December 31, 2021. Mansions was 49% owned by two unrelated parties as of December 31, 2021. On May 20, 2022, the Company acquired the 49% equity interests owned by the two unrelated parties. |
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 a total of 126,082 underwriter’s warrants outstanding as of December 31, 2022 and 2021. The underwriter’s warrants are exercisable at a price of $6.25. As of December 31, 2022, and 2021, the Group’s closing stock price was $1.51 and $1.78, which had no dilutive impact. For the years ended December 31, 2022 and 2021, the Company incurred net losses, and all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact. The underwriter’s warrants will expire on November 13, 2023. December 31, December 31, 2022 2021 Numerator for earnings per share: Net loss attributable to the Company’s ordinary shareholders $ (2,154,084) $ (2,245,718) Denominator for basic and diluted earnings per share: Basic and weighted average ordinary shares 11,675,216 11,675,216 Per share amount Per share – basic and diluted $ (0.18) $ (0.19) |
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 2022 2021 2020 At end of the period – RMB 6.8987 6.3524 6.5378 Average rate for the period ended – RMB 6.7347 6.4491 6.9003 1 US$ = GBP At end of the period – GBP 0.8315 0.7419 — Average rate for the period ended – GBP 0.8121 0.7327 — The financial records of certain of the Company’s subsidiaries and the VIE are maintained in local currencies other than the U.S. dollar, such as RMB in the PRC and GBP in the UK, 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 $43,548, ($14,402), and $(31,109) transaction gain, (loss), and (loss) recorded for the years ended December 31, 2022, 2021, and 2020, 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 in the PRC is maintained with state-owned banks within the PRC. Per PRC regulations, the maximum insured bank deposit amount is approximately $72,000 (RMB500,000 at the December 31, 2022 exchange rate) for each depositor. The Company’s total unprotected cash in the PRC banks amounted to approximately $5,225 and $2,268,000, as of December 31, 2022 and 2021, 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 in the UK has bank accounts in the UK. 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 $102,000 (translated at the December 31, 2022 exchange rate). The Company’s total unprotected cash in bank amounted to approximately $1,135,013 and $2,913,000, as of December 31, 2022 and 2021, 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. |
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 a 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, 2022 | |
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 June 15, 2021 England and Wales 100% MD Japan January 14, 2022 Japan 100% MD German February 16, 2022 Germany 100% Mingda Beijing (WFOE) March 9, 2018 PRC 100% Mingda Tianjin (VIE) September 25, 2002 PRC VIE |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 Tianjin Mingdajiahe Real Estate 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 | Classification Estimated Useful Life Buildings 50 years Building fixtures and furniture 4 Office Equipment and Fixtures 3 Software 2 Vehicles 4 |
Schedule of basic and diluted loss per share | December 31, December 31, 2022 2021 Numerator for earnings per share: Net loss attributable to the Company’s ordinary shareholders $ (2,154,084) $ (2,245,718) Denominator for basic and diluted earnings per share: Basic and weighted average ordinary shares 11,675,216 11,675,216 Per share amount Per share – basic and diluted $ (0.18) $ (0.19) |
Schedule of foreign currency translation | December 31, December 31, December 31, 1 US$ = RMB 2022 2021 2020 At end of the period – RMB 6.8987 6.3524 6.5378 Average rate for the period ended – RMB 6.7347 6.4491 6.9003 1 US$ = GBP At end of the period – GBP 0.8315 0.7419 — Average rate for the period ended – GBP 0.8121 0.7327 — |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCOUNTS RECEIVABLE. | |
Schedule of accounts receivable and allowance for doubtful accounts | December 31, December 31, 2022 2021 Accounts receivable $ 1,199,756 $ 2,214,173 Allowance for doubtful accounts (231,937) (76,462) Accounts receivable, net $ 967,819 $ 2,137,711 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | December 31, December 31, 2022 2021 Land and buildings $ 2,972,256 $ — Building fixtures and furniture 128,448 — Office Equipment and Fixtures 35,160 99,404 Software 17,413 18,910 Auto 39,033 48,376 Total 3,192,310 166,690 Less accumulated depreciation (62,426) (117,678) Property and equipment, net $ 3,129,884 $ 49,012 |
Schedule of assets disposed | During the year ended December 31, 2022, the Group disposed the following assets and realized a net gain of $10,954: Total Disposed Office Assets Auto Equipment Cost $ 103,360 $ 45,630 $ 57,730 Accumulated depreciation (83,707) (30,705) (53,002) Cash received (30,607) (29,697) (910) Net (gain) loss $ (10,954) $ (14,772) $ 3,818 |
INCOME TAX AND DEFERRED TAX A_2
INCOME TAX AND DEFERRED TAX ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAX AND DEFERRED TAX ASSETS | |
Schedule of deferred tax assets | December 31, December 31, 2022 2021 Deferred tax items Accounts receivable, net $ 17,602 $ 19,115 Net operating loss – UK — 3,305 Valuation allowance (6,481) (7,038) Deferred tax assets, net $ 11,121 $ 15,382 |
Schedule of provision for income taxes | December 31, December 31, 2022 2021 Current $ — $ — Deferred tax adjustment (3,020) (9,963) Total income tax $ (3,020) $ (9,963) |
Schedule of reconciliation of the statutory income tax rate and the effective income tax rate | China 2022 2021 Hong Kong statutory income tax rate 16.50 % 16.50 % Valuation allowance recognized with respect to the loss in Hong Kong Company (16.50) % (16.50) % PRC statutory income tax rate 25.00 % 25.00 % Effect of income tax exemptions and reliefs in the PRC companies (25.00) % (25.00) % Effect of valuation and deferred tax adjustments 0.00 % (0.66) % Effective rate 0.00 % (0.66) % United Kingdom UK statutory income tax rate 19.00 % 19.00 % Valuation allowance recognized with respect to the loss in UK (19.00) % (10.86) % Effect of valuation and deferred tax adjustments (1.65) % 0.00 % Effective rate (1.65) % 8.14 % |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES. | |
Schedule of accounts payable and accrued liabilities | 2022 2021 Payroll and social security payable $ 42,805 $ 167,470 Bonus payable 109,829 774,571 Other payables and accrued liabilities 160,452 86,169 Total Accounts Payable and Accrued Liabilities $ 313,086 $ 1,028,210 |
VAT AND OTHER TAXES PAYABLE (Ta
VAT AND OTHER TAXES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
VAT AND OTHER TAXES PAYABLE | |
Schedule of vat and other taxes payable | 2022 2021 VAT payable $ — $ 121,602 Surcharge and fees — 14,524 Income tax payable — — Total VAT and Other Taxes Payable $ — $ 136,126 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Summary of operating lease right-of-use assets and liabilities | Operating Lease Assets 2022 2021 Main offices operating lease assets – initial measurement $ — $ 479,744 Less: accumulated amortization — (275,382) Foreign exchange effects — 19,765 Operating Lease Assets, net $ — $ 224,127 — Operating Lease Liabilities — Total operating lease liabilities – initial measurement $ — $ 479,744 Accrued interest — 41,124 Accumulated payment to liabilities — (316,506) Foreign exchange effects — 19,765 Total operating lease liabilities — 224,127 Less: operating lease liabilities, current — (162,735) Long-term Operating Lease Liabilities $ — $ 61,392 |
NONCONTROLLING INTEREST (Tables
NONCONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NONCONTROLLING INTEREST | |
Schedule of noncontrolling interest | Amount Noncontrolling interest as of 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 as of 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 as of December 31, 2021 $ (6,905) Reclassified to retained deficits – January 1, 2022 7,048 Reclassified to accumulated other comprehensive income – January 1, 2022 (143) Noncontrolling interest as of December 31, 2022 $ — |
SEGMENT AND GEOGRAPHIC AREA I_2
SEGMENT AND GEOGRAPHIC AREA INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT AND GEOGRAPHIC AREA INFORMATION | |
Schedule of segment and geographic area information | 2022 2021 2020 US$ % US$ % US$ % Revenue by Categories Real estate agent service income 434,371 96 % 4,408,018 99 % 5,765,585 98 % Rental management income 16,263 4 % 19,469 — % Other income — — % 38,746 1 % 103,140 2 % Revenue by Categories 450,634 100 % 4,466,233 100 % 5,868,725 100 % Revenue by Geographic Region PRC 434,371 96 % 4,446,764 100 % 5,868,725 100 % UK 16,263 4 % 19,469 — % Revenue by Geographic Region 450,634 100 % 4,466,233 100 % 5,868,725 100 % Assets by Geographic Region PRC and Others 1,202,347 21 % 5,293,516 63 % 10,752,749 100 % UK 4,432,728 79 % 3,075,454 37 % 16 — % Assets by Geographic Region 5,635,075 100 % 8,368,970 100 % 10,752,765 100 % |
ORGANIZATION AND DESCRIPTION _3
ORGANIZATION AND DESCRIPTION OF BUSINESS - Wholly-Owned Subsidiaries and Consolidated VIE (Details) | 12 Months Ended | |||
Dec. 31, 2022 | Oct. 28, 2020 | Mar. 09, 2018 | Feb. 09, 2018 | |
MDJM Hong Kong | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Percentage of Ownership | 100% | |||
MDJM Hong Kong | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Date of Incorporation | Feb. 09, 2018 | |||
Place of Incorporation | Hong Kong | |||
Percentage of Ownership | 100% | 100% | ||
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% | 100% | ||
Mansions | ||||
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 | 100% | |||
MD Japan | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Date of Incorporation | Jan. 14, 2022 | |||
Place of Incorporation | Japan | |||
Percentage of Ownership | 100% | |||
MD German | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Date of Incorporation | Feb. 16, 2022 | |||
Place of Incorporation | Germany | |||
Percentage of Ownership | 100% | |||
Mingda Beijing (WFOE) | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Date of Incorporation | Mar. 09, 2018 | |||
Place of Incorporation | PRC | |||
Percentage of Ownership | 100% | |||
Mingda Tianjin (VIE) | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||
Date of Incorporation | Sep. 25, 2002 | |||
Place of Incorporation | PRC | |||
Description of Ownership | VIE |
ORGANIZATION AND DESCRIPTION _4
ORGANIZATION AND DESCRIPTION OF BUSINESS - Additional Information (Details) - USD ($) | 12 Months Ended | |||||||
Apr. 28, 2018 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | May 20, 2022 | Jun. 15, 2021 | Oct. 28, 2020 | Feb. 09, 2018 | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Term of the business agreement | 10 years | |||||||
Professional Fees | $ 555,657 | $ 460,274 | $ 404,850 | |||||
Mansions Estate Agent Ltd | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Equity interests held | 100% | |||||||
Mingda Beijing | Mansions Estate Agent Ltd | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Equity interests held | 8% | 8% | ||||||
MDJM UK | Mansions Estate Agent Ltd | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Equity interests held | 51% | |||||||
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% | 41% | ||||||
MDJM Hong Kong | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Ownership interest held | 100% | |||||||
MDJM UK | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Ownership interest held | 100% | 100% | ||||||
MD Japan | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Ownership interest held | 100% | |||||||
Professional Fees | $ 24,084 | |||||||
MD German | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Ownership interest held | 100% | |||||||
Professional Fees | $ 41,236 | |||||||
Mingda Tianjin (VIE) | Mingda Beijing | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Term of the business agreement | 10 years | |||||||
Mingda Tianjin (VIE) | Mingda Beijing | Exclusive Business Cooperation Agreement | ||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | ||||||||
Ownership percent of variable interest entity | 100% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Variable interest entities (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | May 31, 2022 | Dec. 31, 2020 | |
Variable Interest Entity [Line Items] | ||||
Loss on deconsolidation | $ (240,431) | $ (8,350) | ||
MingdaJiahe (Tianjin) Co., Ltd. Suzhou Branch | ||||
Variable Interest Entity [Line Items] | ||||
Date of Incorporation | Oct. 13, 2017 | |||
Place of Incorporation | Suzhou, China | |||
Loss on deconsolidation | $ 240,431 | |||
MingdaJiahe (Tianjin) Co., Ltd. Chengdu Branch | ||||
Variable Interest Entity [Line Items] | ||||
Date of Incorporation | Jun. 24, 2019 | |||
Place of Incorporation | Chengdu, China | |||
MingdaJiahe (Tianjin) Co., Ltd. Yangzhou Branch | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Date of Incorporation | Oct. 18, 2017 | |||
Place of Incorporation | Yangzhou, China | |||
Xishe (Tianjin) Business Management Co., Ltd. | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Date of Incorporation | Oct. 20, 2017 | |||
Place of Incorporation | Tianjin, China | |||
Percentage of Ownership | 100% | |||
Xi She (Tianjin) Wen Hua Chuan Mei Co Ltd. | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Date of Incorporation | Jul. 25, 2018 | |||
Place of Incorporation | Tianjin, China | |||
Percentage of Ownership | 100% | |||
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | ||||
Variable Interest Entity [Line Items] | ||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 49% | 49% | 49% | |
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | VIEs | ||||
Variable Interest Entity [Line Items] | ||||
Date of Incorporation | Mar. 09, 2018 | |||
Place of Incorporation | Tianjin, China | |||
Percentage of Ownership | 51% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated useful life of fixed assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Building | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 50 years |
Building fixtures and furniture | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 4 years |
Building fixtures and furniture | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 10 years |
Office Equipment and Fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 3 years |
Office Equipment and Fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 5 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 2 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 10 years |
Vehicles | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 4 years |
Vehicles | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property and equipment | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basic and diluted loss per share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator for earnings per share: | |||
Net loss attributable to the Company's ordinary shareholders | $ (2,154,084) | $ (2,245,718) | |
Denominator for basic and diluted earnings per share: | |||
Weighted average ordinary shares - basic | 11,675,216 | 11,675,216 | 11,652,882 |
Per share amount | |||
Per share - basic | $ (0.18) | $ (0.19) | $ 0.02 |
Per share - diluted | $ (0.18) | $ (0.19) | $ 0.02 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign currency translation (Details) | Dec. 31, 2022 ¥ / $ | Dec. 31, 2022 £ / $ | Dec. 31, 2021 ¥ / $ | Dec. 31, 2021 £ / $ | Dec. 31, 2020 ¥ / $ |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
At end of the period | 6.8987 | 0.8315 | 6.3524 | 0.7419 | 6.5378 |
Average rate for the period ended | 6.7347 | 0.8121 | 6.4491 | 0.7327 | 6.9003 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 12 Months Ended | ||||||
Dec. 31, 2022 USD ($) segment $ / shares shares | Dec. 31, 2022 CNY (¥) segment | Dec. 31, 2022 GBP (£) segment | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) | May 31, 2022 | Dec. 26, 2018 USD ($) | |
Product Information [Line Items] | |||||||
Restricted cash | $ 74,320 | $ 947,779 | |||||
Restricted Cash Equivalents, Statement of Financial Position [Extensible Enumeration] | Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | |||||
Number of operating segment | segment | 2 | 2 | 2 | ||||
Percentage of total revenues | 79% | 79% | 79% | ||||
Standard VAT (as percent) | 20% | 20% | 20% | ||||
Rate of corporation tax | 19% | ||||||
Interest and penalties | $ 0 | $ 0 | $ 0 | ||||
Underwriter's warrants outstanding | shares | 126,082 | 126,082 | |||||
Underwriter's warrants exercisable price | $ / shares | $ 6.25 | ||||||
Share price | $ / shares | $ 1.51 | $ 1.78 | |||||
Foreign currency transaction gain (loss) | $ 43,548 | $ (14,402) | (31,109) | ||||
Maximum insured bank deposit | 72,000 | ¥ 500,000 | |||||
Total unprotected cash in bank | 5,225 | 2,268,000 | |||||
Financial services compensation scheme | £ | £ 85,000 | ||||||
Accrued interest and penalties | 0 | 0 | $ 0 | ||||
United Kingdom | |||||||
Product Information [Line Items] | |||||||
Total unprotected cash in bank | 1,135,013 | $ 2,913,000 | |||||
Financial services compensation scheme | $ 102,000 | ||||||
China | |||||||
Product Information [Line Items] | |||||||
Uniform tax rate | 25% | 25% | 25% | ||||
China | PRC | |||||||
Product Information [Line Items] | |||||||
Uniform tax rate | 25% | 25% | 25% | ||||
Rate of corporation tax | 19% | ||||||
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | |||||||
Product Information [Line Items] | |||||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49% | 49% | 49% | ||||
Major Customers | Net revenue | |||||||
Product Information [Line Items] | |||||||
Percentage of total revenues | 67% | 61% | |||||
IPO | |||||||
Product Information [Line Items] | |||||||
Deferred Offering Costs | $ 2,103,816 | ||||||
Subsidiaries and Consolidated Variable Interest Entities | |||||||
Product Information [Line Items] | |||||||
Applicable value added tax rates | 6% | 6% | 6% |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ACCOUNTS RECEIVABLE. | ||
Accounts receivable | $ 1,199,756 | $ 2,214,173 |
Allowance for doubtful accounts | (231,937) | (76,462) |
Accounts receivable, net | $ 967,819 | $ 2,137,711 |
ACCOUNTS RECEIVABLE - Additiona
ACCOUNTS RECEIVABLE - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) customer | Dec. 31, 2021 USD ($) customer | Dec. 31, 2020 USD ($) customer | |
Revenue, Major Customer | |||
Allowance for doubtful accounts | $ 231,937 | $ 76,462 | |
Number of customers | customer | 1 | ||
Accounts receivable | $ 80,159 | ||
Percentage of total revenues | 79% | ||
Accounts receivable aging from 7 months to 12 months | |||
Revenue, Major Customer | |||
Allowance for doubtful accounts receivable, reserve percentage | 5% | ||
Accounts receivable aging over 365 days | |||
Revenue, Major Customer | |||
Allowance for doubtful accounts receivable, reserve percentage | 20% | ||
Customer Two | |||
Revenue, Major Customer | |||
Number of customers | customer | 1 | ||
Major Customers | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 3 | |
Major Customers | Net revenue | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 3 | |
Percentage of total revenues | 67% | 61% | |
Major Customers | Net revenue | Taida Shang Qing Cheng | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 23% | 29% | |
Major Customers | Net revenue | Ge Diao Ping Yuan | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 34% | 16% | |
Major Customers | Net revenue | Ge Diao Liu Yuan | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 10% | ||
Major Customers | Net revenue | Wanke Xi Lu | |||
Revenue, Major Customer | |||
Percentage of concentration risk | 16% | ||
Major Customers | Accounts receivable | |||
Revenue, Major Customer | |||
Number of customers | customer | 3 | 3 | |
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 Ping Yuan | |||
Revenue, Major Customer | |||
Accounts receivable | 737,476 | 311,172 | |
Major Customers | Accounts receivable | Ge Diao Liu Yuan | |||
Revenue, Major Customer | |||
Accounts receivable | $ 10,643 | ||
Major Customers | Accounts receivable | Wanke Xi Lu | |||
Revenue, Major Customer | |||
Accounts receivable | $ 281,723 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property and equipment, net | ||
Total | $ 3,192,310 | $ 166,690 |
Less accumulated depreciation | (62,426) | (117,678) |
Property and equipment, net | 3,129,884 | 49,012 |
Land and buildings | ||
Property and equipment, net | ||
Total | 2,972,256 | |
Building fixtures and furniture | ||
Property and equipment, net | ||
Total | 128,448 | |
Office Equipment and Fixtures | ||
Property and equipment, net | ||
Total | 35,160 | 99,404 |
Software | ||
Property and equipment, net | ||
Total | 17,413 | 18,910 |
Auto | ||
Property and equipment, net | ||
Total | $ 39,033 | $ 48,376 |
PROPERTY AND EQUIPMENT, NET - A
PROPERTY AND EQUIPMENT, NET - Assets Disposed (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Property, Plant and Equipment [Line Items] | |
Cost | $ 103,360 |
Accumulated depreciation | (83,707) |
Cash received | (30,607) |
Net (gain) loss | 10,954 |
Auto | |
Property, Plant and Equipment [Line Items] | |
Cost | 45,630 |
Accumulated depreciation | (30,705) |
Cash received | (29,697) |
Net (gain) loss | 14,772 |
Office Equipment | |
Property, Plant and Equipment [Line Items] | |
Cost | 57,730 |
Accumulated depreciation | (53,002) |
Cash received | (910) |
Net (gain) loss | $ (3,818) |
PROPERTY AND EQUIPMENT, NET -_2
PROPERTY AND EQUIPMENT, NET - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT, NET | ||
Depreciation expenses of property and equipment | $ 36,243 | $ 24,910 |
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, 2022 | Dec. 31, 2021 |
Deferred tax items | ||
Accounts receivable, net | $ 17,602 | $ 19,115 |
Net operating loss - UK | 3,305 | |
Valuation allowance | (6,481) | (7,038) |
Deferred tax assets, net | $ 11,121 | $ 15,382 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAX AND DEFERRED TAX ASSETS | |||
Deferred tax adjustment | $ (3,020) | $ (9,963) | |
Total income tax | $ (3,020) | $ (9,963) | $ (32,900) |
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, 2022 | Dec. 31, 2021 | |
PRC | ||
Reconciliation of the statutory income tax rate and the Company's effective income tax | ||
statutory income tax rate | 16.50% | 16.50% |
Valuation allowance recognized with respect to the loss | (16.50%) | (16.50%) |
PRC statutory income tax rate | 25% | 25% |
Effect of income tax exemptions and reliefs in the PRC companies | (25.00%) | (25.00%) |
Effect of valuation and deferred tax adjustments | 0% | (0.66%) |
Effective rate | 0% | (0.66%) |
United Kingdom | ||
Reconciliation of the statutory income tax rate and the Company's effective income tax | ||
statutory income tax rate | 19% | 19% |
Valuation allowance recognized with respect to the loss | (19.00%) | (10.86%) |
Effect of valuation and deferred tax adjustments | (1.65%) | 0% |
Effective rate | (1.65%) | 8.14% |
INCOME TAX AND DEFERRED TAX A_6
INCOME TAX AND DEFERRED TAX ASSETS - Additional Information (Details) | 12 Months Ended | 48 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2022 CNY (¥) employee | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2020 USD ($) | |
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Rate of corporation tax | 19% | 19% | ||||
Taxable income | ¥ 3,000,000 | |||||
Number of employees | employee | 300 | |||||
Assets | $ 8,368,970 | $ 5,635,075 | ¥ 50,000,000 | $ 10,752,765 | ||
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 | 15,000 | ¥ 100,000 | ||||
Period for statute of limitations if tax liability exceeds RMB100,000 | 10 years | |||||
Minimum | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Taxable income | ¥ 1,000,000 | |||||
Maximum | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Taxable income | ¥ 3,000,000 | |||||
PRC tax Jurisdiction | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Examination Period | 5 years | |||||
PRC | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Net operating loss | $ | 3,811,000 | |||||
United Kingdom | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Net operating loss | $ | $ 221,000 | |||||
Income tax less than RMB 1 million | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Uniform tax rate | 2.50% | |||||
Taxable income | ¥ 1,000,000 | |||||
Income tax less than RMB 1 million to RMB 3 million | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Uniform tax rate | 5% | |||||
Income tax less than RMB 1 million to RMB 3 million | Minimum | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Taxable income | ¥ 1,000,000 | |||||
Income tax less than RMB 1 million to RMB 3 million | Maximum | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Taxable income | ¥ 3,000,000 | |||||
Hong Kong | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Uniform tax rate | 16.50% | 16.50% | ||||
China | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Uniform tax rate | 25% | |||||
China | Income tax less than RMB 1 million | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Uniform tax rate | 5% | |||||
Taxable income | ¥ 1,000,000 | |||||
China | Income tax less than RMB 1 million to RMB 3 million | ||||||
Income Tax And Deferred Tax Assets [Line Items] | ||||||
Uniform tax rate | 10% |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES. | ||
Payroll and social security payable | $ 42,805 | $ 167,470 |
Bonus payable | 109,829 | 774,571 |
Other payables and accrued liabilities | 160,452 | 86,169 |
Total Accounts Payable and Accrued Liabilities | $ 313,086 | $ 1,028,210 |
VAT AND OTHER TAXES PAYABLE (De
VAT AND OTHER TAXES PAYABLE (Details) | Dec. 31, 2021 USD ($) |
VAT AND OTHER TAXES PAYABLE | |
VAT payable | $ 121,602 |
Surcharge and fees | 14,524 |
Total VAT and Other Taxes Payable | $ 136,126 |
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% |
Value added tax percentages of urban maintenance and construction tax payable | 20% |
Value added tax percentages of education tax payable | 20% |
Value added tax percentages of local education tax payable | 20% |
LEASES (Details)
LEASES (Details) | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | |
LEASES | |||||
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 | $ 0 | $ 3,715 | $ 10,012 | ||
Operating leases expenses | $ 0 | $ 117,686 | $ 116,532 | ||
Minimum | |||||
LEASES | |||||
Initial term of lease | 1 year | ||||
Maximum | |||||
LEASES | |||||
Initial term of lease | 5 years |
LEASES - Summary of operating l
LEASES - Summary of operating lease right-of-use assets and liabilities (Details) | Dec. 31, 2021 USD ($) |
Operating Lease Assets | |
Main offices operating lease assets - initial measurement | $ 479,744 |
Less: accumulated amortization | (275,382) |
Foreign exchange effects | 19,765 |
Operating Lease Assets, net | 224,127 |
Total operating lease liabilities - initial measurement | 479,744 |
Accrued interest | 41,124 |
Accumulated payment to liabilities | (316,506) |
Foreign exchange effects | 19,765 |
Total operating lease liabilities | 224,127 |
Less: operating lease liabilities, current | (162,735) |
Long-term Operating Lease Liabilities | $ 61,392 |
SHORT-TERM LOANS (Details)
SHORT-TERM LOANS (Details) | 3 Months Ended | 12 Months Ended | |||||||
Feb. 14, 2022 USD ($) | Feb. 14, 2022 CNY (¥) | Jun. 30, 2022 USD ($) | Jun. 30, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Aug. 31, 2022 | May 31, 2022 | May 31, 2021 CNY (¥) | May 13, 2021 USD ($) | |
SHORT-TERM LOANS | |||||||||
Amount borrowed | $ 381,754 | ||||||||
LOC from China Construction Bank | |||||||||
SHORT-TERM LOANS | |||||||||
Maximum borrowing capacity under the LOC | ¥ 1,000,000 | $ 144,955 | |||||||
Interest rate (as a percent) | 3.95% | 4.20% | 4.2525% | ||||||
Amount borrowed | $ 144,955 | ¥ 1,000,000 | |||||||
Loan from unrelated individual | |||||||||
SHORT-TERM LOANS | |||||||||
Interest rate (as a percent) | 4.2525% | ||||||||
Amount borrowed | $ 227,724 | ¥ 1,571,000 |
SHAREHOLDERS' EQUITY - Ordinary
SHAREHOLDERS' EQUITY - Ordinary Shares (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Aug. 20, 2020 | Jan. 04, 2019 | Dec. 26, 2018 | Dec. 26, 2018 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 26, 2018 | |
STOCKHOLDERS' EQUITY | ||||||||
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 | ||||||
Proceeds from ordinary share amount | $ 110,747 | |||||||
Underwriter Warrants | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Warrants issued | 126,082 | |||||||
IPO | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Public offering price | $ 5 | $ 5 | ||||||
Proceeds from ordinary share amount | $ 6,207,295 | |||||||
Cost related to sold of ordinary shares | $ 2,103,816 | $ 2,103,816 | ||||||
IPO | Network 1 Financial Securities, Inc. | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Ordinary shares sold (in shares) | 19,361 | 1,241,459 | 1,241,459 | |||||
IPO | Underwriter Warrants | Network 1 Financial Securities, Inc. | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Public offering price | $ 5 | $ 5 | ||||||
Percentage of public offering price as warrants exercise price | 125% | |||||||
Warrants expiration period | 5 years | 5 years | ||||||
Period for registration rights | 5 years | |||||||
Percentage of total number of ordinary shares sold as warrants granted | 10% | |||||||
Second closing of IPO | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Ordinary shares sold (in shares) | 19,361 | |||||||
Proceeds from ordinary share amount | $ 96,805 | |||||||
Share price | $ 5 | |||||||
Payment on direct cost | $ 26,399 | |||||||
Security Purchase Agreement | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, shares authorized | 34,396 | |||||||
Common stock par value, per share | $ 3.3 | |||||||
Proceeds from ordinary share amount | $ 113,507 | |||||||
MDJCC Limited | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, shares issued | 10,380,000 |
SHAREHOLDERS' EQUITY - Addition
SHAREHOLDERS' EQUITY - Additional Information (Details) | Dec. 31, 2022 $ / shares | Jan. 04, 2019 USD ($) $ / shares |
STOCKHOLDERS' EQUITY | ||
Total value of underwriter warrants | $ | $ 190,384 | |
Exercise price of warrants | $ 6.25 | |
Price per warrant | ||
STOCKHOLDERS' EQUITY | ||
Warrants measurement input | 1.51 | |
Risk-free rate | ||
STOCKHOLDERS' EQUITY | ||
Warrants measurement input | 4.35 | |
Volatility | ||
STOCKHOLDERS' EQUITY | ||
Warrants measurement input | 35 |
NONCONTROLLING INTEREST (Detail
NONCONTROLLING INTEREST (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | May 31, 2022 | |
Movements in Noncontrolling interest | ||||
Noncontrolling interest at the beginning of the year | $ (6,905) | |||
Net loss attributable to noncontrolling interest | $ (7,048) | $ (4,146) | ||
Deconsolidated noncontrolling interest | 226,999 | |||
Noncontrolling interest at the end of the year | $ (6,905) | |||
Xishe Xianglin (Tianjin) Business Operation & Management Co., Ltd. | ||||
NONCONTROLLING INTEREST | ||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49% | 49% | 49% | |
Movements in Noncontrolling interest | ||||
Noncontrolling interest at the beginning of the year | (6,905) | $ (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 | ||
Reclassified to retained deficits - January 1, 2022 | 7,048 | |||
Reclassified to accumulated other comprehensive income - January 1, 2022 | $ (143) | |||
Noncontrolling interest at the end of the year | $ (6,905) | $ (173,820) |
STATUTORY RESERVE (Details)
STATUTORY RESERVE (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
STATUTORY RESERVE | ||
Statutory reserves | $ 327,140 | $ 327,140 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Legal Proceeding (Details) | 12 Months Ended | |||||||||
Feb. 27, 2023 USD ($) | Feb. 27, 2023 CNY (¥) | Jan. 09, 2023 USD ($) | Jan. 09, 2023 CNY (¥) | Dec. 23, 2022 CNY (¥) | Mar. 18, 2022 USD ($) | Mar. 18, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Feb. 17, 2022 USD ($) | Feb. 17, 2022 CNY (¥) | |
COMMITMENTS AND CONTINGENCIES | ||||||||||
Number of cases filed | 10 | |||||||||
Amount collected from accounts receivables | $ | $ 1,070,000 | |||||||||
Number of case still open | 1 | |||||||||
Liquidated damages and interest | ¥ | ¥ 5,157,182 | |||||||||
Subsequent Event | ||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
Company received the payment | $ 863,083 | ¥ 5,954,151 | ||||||||
Litigation amount claimed | $ 271,000 | ¥ 1,872,419 | ||||||||
Civil complaint alleging unpaid service fee and breach of contract against Tianfang (Suzhou) Real Estate Co., Ltd | ||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
Unpaid base fee amount claimed | $ 45,926 | ¥ 291,742.17 | ||||||||
Per day breaching late fee claimed | 0.10% | |||||||||
Civil complaint alleging breach of contract and unpaid service fee against Chengdu TEDA New City | ||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
Litigation amount claimed | $ 780,000 | ¥ 5,380,734 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | ||
Percentage of real estate agent income | 89.71% | 28.55% |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) | Dec. 31, 2022 | Feb. 09, 2018 |
MDJCC Limited | ||
RELATED PARTY TRANSACTIONS | ||
Noncontrolling Interest, Ownership Percentage by Parent | 100% | |
Mansions Estate Agent Ltd | ||
RELATED PARTY TRANSACTIONS | ||
Percentages of ownership controlled | 100% |
SEGMENT AND GEOGRAPHIC AREA I_3
SEGMENT AND GEOGRAPHIC AREA INFORMATION (Details) ¥ in Millions | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 CNY (¥) | |
SEGMENT AND GEOGRAPHIC AREA INFORMATION | ||||
Revenue | $ 450,634 | $ 4,466,233 | $ 5,868,725 | |
Percentage of revenue on the consolidated revenue | 100% | 100% | 100% | |
Assets | $ 5,635,075 | $ 8,368,970 | $ 10,752,765 | ¥ 50 |
Percentage of value of the assets on the consolidated assets | 100% | 100% | 100% | |
PRC | ||||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | ||||
Revenue | $ 434,371 | $ 4,446,764 | $ 5,868,725 | |
Percentage of revenue on the consolidated revenue | 96% | 100% | 100% | |
PRC and Others | ||||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | ||||
Assets | $ 1,202,347 | $ 5,293,516 | $ 10,752,749 | |
Percentage of value of the assets on the consolidated assets | 21% | 63% | 100% | |
UK | ||||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | ||||
Revenue | $ 16,263 | $ 19,469 | ||
Percentage of revenue on the consolidated revenue | 4% | |||
Assets | $ 4,432,728 | $ 3,075,454 | $ 16 | |
Percentage of value of the assets on the consolidated assets | 79% | 37% | ||
Real estate agent service income | ||||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | ||||
Revenue | $ 434,371 | $ 4,408,018 | $ 5,765,585 | |
Percentage of revenue on the consolidated revenue | 96% | 99% | 98% | |
Rental management income | ||||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | ||||
Revenue | $ 16,263 | $ 19,469 | ||
Percentage of revenue on the consolidated revenue | 4% | |||
Other income | ||||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | ||||
Revenue | $ 38,746 | $ 103,140 | ||
Percentage of revenue on the consolidated revenue | 1% | 2% |
SEGMENT AND GEOGRAPHIC AREA I_4
SEGMENT AND GEOGRAPHIC AREA INFORMATION - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment property | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
SEGMENT AND GEOGRAPHIC AREA INFORMATION | |||
Number of reportable segments | segment | 1 | ||
Number of operating segments | segment | 2 | ||
Number of idle real estate properties purchased | property | 2 | ||
Revenues | $ 450,634 | $ 4,466,233 | $ 5,868,725 |
Hospitality business | |||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | |||
Revenues | $ 0 | ||
PRC | |||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | |||
Percentage of revenue from real estate agent income | 96% | 99% | 98% |
Percentage of revenue from the total consolidated revenue | 96% | 100% | 100% |
Revenues | $ 434,371 | $ 4,446,764 | $ 5,868,725 |
UK | |||
SEGMENT AND GEOGRAPHIC AREA INFORMATION | |||
Percentage of value of the assets from the total consolidated assets | 79% | 37% | 0% |
Revenues | $ 16,263 | $ 19,469 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 12 Months Ended | |
Mar. 06, 2023 | Dec. 31, 2020 | |
Subsequent Event [Line Items] | ||
Ordinary shares sold | $ 110,747 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Ordinary shares sold | $ 70,000,000 | |
Public offering price | $ 0.001 | |
Public float remains | $ 75,000,000 |
RESTRICTED NET ASSETS OR PARE_2
RESTRICTED NET ASSETS OR PARENT COMPANY'S CONDENSED FINANCIAL INFORMATION (Details) | Dec. 31, 2022 USD ($) |
PRC Member | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
Restricted net assets | $ 478,346 |
Percentage of consolidated net assets | 10% |
UK | |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
Restricted net assets | $ 4,358,441 |
Percentage of consolidated net assets | 89% |