XML 25 R24.htm IDEA: XBRL DOCUMENT
v3.20.1

RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | 12 Months Ended
--- | ---
Dec. 31, 2019
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION |
RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | NOTE 16 – RESTRICTED NET ASSETS OR PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION As of December 31, 2019, the Company's operations are conducted through its PRC subsidiary and VIE, which can only pay dividends out of their retained earnings determined in accordance with the accounting standards and regulations in the PRC and after they have met the PRC requirements for appropriation to statutory reserve. In addition, a majority of the Company's businesses and assets are denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People's Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. Approval of foreign currency payments by the People's Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers' invoices, shipping documents, and signed contracts. These currency exchange control procedures imposed by the PRC government authorities may restrict the ability of the Company's PRC subsidiary to transfer their net assets to MDJM LTD (the "Parent Company") through loans, advances, or cash dividends. Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of this test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant's proportionate share of net assets of its consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company in the form of loans, advances or cash dividends without the consent of a third party. The restricted net assets of the Company's PRC subsidiary amounted to approximately $5,967,000 and $4,969,000 as of December 31, 2019 and 2018, respectively. The Company's PRC subsidiary' net assets as of December 31, 2019 and 2018 exceeded 25% of the Company's consolidated net assets. Accordingly, Parent Company's condensed financial statements have been prepared in accordance with Rule 5-04 and Rule 12-04 of SEC Regulation S-X, and are as follows. MDJM LTD CONDENSED BALANCE SHEETS As of December 31,
|  | 2019 |  | 2018
Assets |  |  |  |  |  |
Cash |  | $ | 4,995,834 |  | $ | 5,626,079
Prepaid expense |  |  | 1,532 |  |  | —
Current Assets |  |  | 4,997,366 |  |  | 5,626,079
Investment in subsidiaries |  |  | 4,621,653 |  |  | 4,144,076
Total Assets |  | $ | 9,619,019 |  | $ | 9,770,155
Liabilities and Equity |  |  |  |  |  |
Current liabilities |  | $ | 550 |  | $ | —
Due to subsidiaries |  |  | 940,734 |  |  | 1,565,174
Total liabilities |  |  | 941,284 |  |  | 1,565,174
Equity: |  |  |  |  |  |
Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share, 11,640,820 and 11,621,459 shares issued and outstanding as of December 31, 2019 and 2018, respectively |  |  | 11,641 |  |  | 11,621
Additional paid in capital |  |  | 6,734,681 |  |  | 6,664,295
Statutory reserve |  |  | 262,954 |  |  | 232,542
Retained earnings |  |  | 1,948,804 |  |  | 1,526,110
Accumulated other comprehensive loss |  |  | (280,345) |  |  | (229,587)
Total MDJM Ltd stockholders’ equity |  |  | 8,677,753 |  |  | 8,204,981
Total Liabilities and Equity |  | $ | 9,619,019 |  | $ | 9,770,155
MDJM LTD CONDENSED STATEMENTS OF OPERATIONS AND COMPEREHENAIVE INCOME (LOSS) For the Years Ended December 31,
|  | 2019 |  | 2018
Revenue |  | $ | — |  | $ | —
Share of profit (loss) in subsidiaries |  |  | 453,106 |  |  | (515,971)
Start-up fees |  |  | — |  |  | 42,574
Other general and administrative expenses |  |  | 101,948 |  |  | —
Total Operating Expenses |  |  | 101,948 |  |  | 42,574
Income (loss) from operations |  |  | 351,158 |  |  | (558,545)
Interest income |  |  | 26,719 |  |  | —
Net Income / (Loss) |  | $ | 377,877 |  | $ | (558,545)
Other comprehensive income (loss): |  |  |  |  |  |
Foreign currency translation adjustments |  |  | (50,758) |  |  | (169,521)
Comprehensive income (loss) |  | $ | 327,119 |  | $ | (728,066)
*There were no operating activities in 2017 as MDJMLTD was incorporated in January 2018. MDJM LTD CONDENSED STATEMENTS OF CASH FLOWS
|  | For the Years Ended December 31
|  | 2019 |  | 2018
Net Cash Used in Operating Activities |  | $ | (76,211) |  | $ | (42,574)
Net Cash (Used in) Provided by Investing Activities |  |  | (624,440) |  |  | 1,565,174
Net Cash Provided by Financing Activities |  |  | 70,406 |  |  | 4,103,479
Net (decrease) increase in cash and cash equivalents |  |  | (630,245) |  |  | 5,626,079
Cash and cash equivalents - beginning of the year |  |  | 5,626,079 |  |  | —
Cash and cash equivalents - end of the year |  | $ | 4,995,834 |  | $ | 5,626,079
*There were no operating activities in 2017 as MDJM LTD was incorporated in January 2018. Base of Preparation The condensed financial information of the Parent Company has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements. Certain information and footnote disclosures normally included in financial statements prepared in conformity with U.S. GAAP have been condensed or omitted. The Parent Company only financial information has been derived from the Group’s consolidated financial statements and should be read in conjunction with the Group’s consolidated financial statements. The Company records its investment in its subsidiary under the equity method of accounting as prescribed in ASC 323-10 Investment-Equity Method and Joint Ventures. Such investments are presented on the balance sheets as “Investments in subsidiaries” and share of the subsidiaries’ profit or loss are shown as “Share of profit in subsidiaries” on the statements of operation. Due from (to) subsidiaries Due from (to) subsidiaries represented the fund advanced to subsidiaries or expenses paid by subsidiaries on behalf of parent Company. Due from (to) subsidiaries is interest free and due on demand. The Company and its subsidiaries were included in the accompanying consolidated financial statements where the inter-company balances and transactions were eliminated upon consolidation. Initial Public Offering Pursuant to a registration statement filed with the SEC and declared effective by the SEC on November 13, 2018, the Company completed the first closing of its IPO on December 26, 2018. A total of 1,241,459 ordinary shares were sold at a price of $5 per share to the public at the first closing. The Company received a total of $6,207,295 in gross proceeds from its first closing of its IPO. In connection with this public offering, the Company incurred direct offering costs of $2,103,816, which included audit, legal, consulting, commission, and other expenses. Per ASC 505, the Company classified these direct offering costs in the equity section to offset additional paid in capital. On January 4, 2019, the Company completed the second closing of its IPO. A total of 19,361 additional ordinary shares were issued at a price of $5 per share. The total proceeds of this second closing were $96,805. There was a total of $26,399 direct cost in connection with the second closing.

X
- References No definition available. + Details
Name: | srt_CondensedFinancialInformationOfParentCompanyOnlyDisclosureAbstract
Namespace Prefix: | srt_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 3 -Subparagraph (SX 210.12-04) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e24072-122690 Reference 2: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=108774443&loc=d3e5283-111683 + Details
Name: | us-gaap_CondensedFinancialInformationOfParentCompanyOnlyDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration