Exhibit 10.1


 





MDJM LTD Reports
2019 Financial Results


 





TIANJIN, China,
Apr. 28, 2020 /PRNewswire/ -- MDJM LTD (Nasdaq: MDJH) (the “Company” or “MDJH”), an integrated real estate
services company in China, today announced its financial results for the 12 months ended December 31, 2019.




  





	 	 	For the Year Ended December 31,	 
	($'000, except per share data)	 	2019	 	 	2018	 	 	% Change	 
	Revenue	 	$	5,680	 	 	$	2,408	 	 	 	135.8	%
	Operating expenses	 	$	5,321	 	 	$	2,973	 	 	 	79.0	%
	Income (loss) from operations	 	$	359	 	 	$	(564	)	 	 	163.7	% 
	Operating income (loss) margin	 	 	6.3	%	 	 	-23.4	%	 	 	126.9	%
	Net profit (loss) attributable to MDJH	 	$	453	 	 	$	(516	)	 	 	187.8	% 
	Net profit (loss) per share	 	$	0.04	 	 	$	(0.05	)	 	 	180.0	% 







  


* pp: percentage
points 





 


	 	·	Revenue increased by 135.8% to $5.68 million for 2019, primarily attributable to contribution from new projects acquired since 2018.
	 	·	The Company sold 1,960 units of properties for an aggregate of 186,971 square meters and $612.47 million in total sales value with an average commission rate of 0.94% in 2019, compared to 620 units for an aggregate of 86,533 square meters and $273.57 million in total sales value with an average commission rate of 0.87% in 2018.
		·	Operating expenses increased by 79.0%
to $5.32 million for 2019. The increase primarily resulted from increased payroll expenses and professional fees for being a Nasdaq
listed public company since January 2019. 
		·	Operating margin was 6.3% for 2019, compared
to operating loss margin of 23.4% for 2018. The improvement primarily resulted from increased revenue that more than offset increased
operating expenses.
		·	Net income attributable to shareholders
was $0.45 million, or earnings per share of $0.04, for 2019. This compared to net loss attributable to shareholders of $0.52 million,
or net loss per share of $0.05, for 2018. 
		·	As of December 31, 2019, the Company had
17 outstanding projects with total sales value of $1.11 billion and total square meters of 316,699.



 


“Following
a setback in 2018 against the backdrop of Chinese government’s tightening policies and regulations implemented in the real
estate market, we made a strong comeback in 2019 with the returns of both top-line growth and profitability, thanks to increased
sale volume as well as improvement in average commission rate in our primary real estate agency service business,” said Mr.
Siping Xu, Chairman and Chief Executive Officer of the Company.


 





“The Tianjin
market remained our stronghold, and we made inroads into the Yangzhou, Chengdu, and Suzhou markets with each contributing 9%, 5%,
and 3% of total revenue, respectively, in 2019. Our efforts in continuing to diversify our business also started to pay off with
the real estate consulting services business growing by 199.5% and contributing 2.7% of total revenue in 2019. We also made progress
in our tourism development services initiative with the signing of framework and cooperation agreements with several local governments
and third parties. Looking ahead, despite the near-term challenges brought by the COVID-19 pandemic, we are confident in our long-term
prospectus and strategy and look forward to another strong year in 2020,” concluded, Mr. Xu.


  




     


     


    

 


Financial Results
for the Full Year of 2019


 


Revenue


 





For the 12 months
ended December 31, 2019, revenue increased by $3.27 million, or 135.8%, to $5.68 million from $2.41 million for 2018. The increase
of revenue was primarily attributable to new projects acquired since 2018. During 2019, the Company facilitated sales of 1,960
units of properties for an aggregate of 186,971 square meters and RMB 4.27 billion ($612.47 million) in total sales value with
an average commission rate of 0.94%, compared to completed sales of 620 units for an aggregate of 86,533 square meters and RMB
1.88 billion ($273.57 million) in total sale value with an average commission rate of 0.87% for 2018.


 


As of December 31, 2019, the Company had
17 outstanding projects, including six ongoing projects from existing developer clients, five from new projects from existing developer
clients and six from new clients/developers. These outstanding projects have total sales value of RMB7.70 billion (or $1.11 billion)
and total square meters of 316,699. If all of the current outstanding projects were to be completed, the Company’s estimated
revenues from such projects would be approximately $10 million based on contracted commission rates. However, since a project will
normally take two to three years to be completed, and given the nature of its industry and the volatility of the market, the Company
cannot be certain of the length of time each project will take to complete, or whether the projects will be completed at all.


  


Operating Expenses


 





	 	 	For the Year Ended December 31,	 
	($'000)	 	2019	 	 	2018	 	 	% Change	 
	Selling expenses	 	$	187	 	 	$	82	 	 	 	127.0	%
	Payroll, payroll taxes and others	 	 	3,711	 	 	 	2,215	 	 	 	67.5	%
	Professional fees	 	 	634	 	 	 	-	 	 	 	100	% 
	Operating lease expense	 	 	185	 	 	 	142	 	 	 	30.2	%
	Depreciation and amortization	 	 	15	 	 	 	13	 	 	 	20.7	%
	(Reduction) provision for doubtful accounts, net	 	 	(39	)	 	 	(146	)	 	 	-73.4	%
	Other general and administrative	 	 	629	 	 	 	667	 	 	 	-5.8	%
	Total operating expenses	 	$	5,321	 	 	$	2,973	 	 	 	79.0	%







   


Selling expenses
increased by $0.10 million, or 127.0%, to $0.19 million for 2019 from $0.08 million for 2018. The increase of selling expenses
was in line with the increased revenue in 2019.


 


Payroll, payroll taxes and others increased
by $1.50 million, or 67.5%, to $3.71 million for 2019 from $2.21 million for 2018. Employee compensation is tied to sales. Sales
related compensation, such as bonus and commission, increased as a result of the increased revenue in 2019.


 


Professional fees were $0.63 million for
2019, compared to $nil for 2018. The increase in professional fees resulted from being a U.S. public traded company since January
2019. Professional fees consist of legal, U.S. GAAP audit, consulting, investors relations, and other U.S. SEC filing related fees.
Professional fees incurred in 2018 were included in offering costs, which was offset with additional paid in capital received in
the Company’s initial public offering.


 


Operating lease
expenses increased by $0.04 million, or 30.2%, to $0.18 million for 2019 from $0.14 million for 2018. The Company leases its offices
under various non-cancelable lease agreements. As of December 31, 2019, it had one long-term lease which became effective on January
1, 2019 and will be valid through December 31, 2023. For other leases with lease terms of 12 months or less, the Company made an
election to not recognize lease assets and lease liabilities.


 


Depreciation and amortization expense increased
to $0.02 million for 2019 from $0.01 million for 2018. The increase resulted from new purchases of fixed assets in the amount of
$0.07 million during 2019.


 






     


     


    

 


Reversal of allowance for doubtful accounts
was $0.04 million for 2019, compared to $0.15 million for 2018.


 


Other general
and administrative expenses decreased by $0.04 million, or 5.8%, to $0.63 million for 2019 from $0.67 million for 2018. The decrease
resulted from reduced office expenses.


 


As a result, total
operating expenses increased by $2.35 million, or 79.0%, to $5.32 million for 2019 from $2.97 million for 2018. The increase in
operating expenses was primarily related to increased payroll expenses and professional fees as mentioned above.


 


Operating margin
was 6.3% for 2019, compared to operating loss margin of 23.4% for 2018. The improvement in operating margin resulted from increased
revenue that more than offset increased operating expenses.


 


Other Income


 


Total other income,
including gain on disposal of asset, interest income and others, increased by $0.02 million, or 58.8%, to $0.04 million for 2019
from $0.03 million for 2018.


 


Income (Loss)
before Income Tax


 


Income before
income tax was $0.40 million for 2019, compared to loss before income tax of $0.54 million for 2018.


 


The Company paid
income tax of $0.10 million in 2019, compared to $nil in 2018.


 


Net Income
(Loss)


 


Net income was
$0.30 million for 2019, compared to net loss of $0.54 million for 2018. After deduction of noncontrolling interest, net income
attributable to shareholders was $0.45 million, or earnings per share of $0.04, for 2019. This compared to net loss attributable
to shareholders of $0.52 million, or net loss per share of $0.05, for 2018.


 


Financial Conditions


 


As of December
31, 2019, the Company had cash and cash equivalents of $6.55 million, compared to $6.69 million as of December 31, 2018. Account
receivable was $2.16 million at December 31, 2019, compared to $1.77 million as of December 31, 2018. As of December 31, 2019,
the Company had current assets of $8.84 million and current liabilities of $0.69 million, leading to working capital of $8.15 million,
compared to current assets, current liabilities and working capital of $8.74 million, $0.71 million and $8.03 million, respectively,
as of December 31, 2018.


 


Net cash used
in operating activities was $1,501 for 2019, compared to $0.64 million for 2018. Net cash used in investing activities was $0.19
million for 2019, compared to $1,215 for 2018. Net cash provided by financing activities was $0.07 million for 2019, compare to
$4.10 million for 2018. The Company received net proceeds of $4.10 million and $0.07 million from the first and second closing
of its initial public offering in late 2018 and January 2019, respectively.


 


Recent Developments


 


Because of the
quarantines and travel restrictions mandated by the Chinese government in response to COVID-19, from the end of January to mid-March
of 2020, many real estate projects the Company was promoting and selling were suspended, which adversely impacted its business
during that period. However, because the Company’s operating income and earnings have historically been lower during the
first quarter than other quarters due to the winter and the Chinese New Year holiday period, the Company believes this seasonality
partially mitigated the adverse impact on its full-year operating results. Starting from the end of March 2020, these real estate
projects began to reopen. Although the Company believes its operations have resumed to the level before the COVID-19 outbreak as
of April 2020 and even though it currently expects to continue the promotion and sales of real estate projects as it typically
did, to the extent that COVID-19 further impacts its promotion and sale of real estate projects, its financial condition, results
of operations, and cash flows could be adversely affected.


 






     


     


    

 


About MDJM LTD


 


With branch offices
in Tianjin, Chengdu, Suzhou, and Yangzhou, China, MDJM provides primary real estate agency services to real estate developer clients,
as well as as-needed real estate consulting and independent training services. The Company also provides tourism development services,
including real estate marketing and planning services, real estate agency services, and advertisement planning services. For more
information regarding the Company, please visit: http://ir.mdjhchina.com.


 


Forward-Looking Statements


 


This announcement
contains forward-looking statements. All statements other than statements of historical fact in this announcement are forward-looking
statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations
and projections about future events and financial trends that the Company believes may affect its financial condition, results
of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases
such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,”
 “intend,” “plan,” “believe,” “potential,” “continue,” “is/are
likely to” or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect
subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company
believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations
will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated
results and encourages investors to review other factors that may affect its future results in the Company’s annual report
on Form 20-F and in its other filings with the Securities and Exchange Commission.


 


For more information, please contact
Investor Relations at:


 


Tony Tian, CFA 


Weitian Group
LLC


Email: ttian@weitianco.com


Phone: +1-732-910-9692


 




     


     


    

 


MDJM LTD and Subsidiaries


Consolidated Statements of Operations
and Comprehensive Income (Loss)


For the Years Ended December 31,


 





	 	 	2019	 	 	2018	 	 	2017	 
	Revenue	 	$	5,679,977	 	 	$	2,408,448	 	 	$	5,532,244	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 
	Selling expenses	 	 	186,641	 	 	 	82,225	 	 	 	263,797	 
	Payroll, payroll taxes and others	 	 	3,710,697	 	 	 	2,214,975	 	 	 	3,067,837	 
	Professional fees	 	 	634,372	 	 	 	-	 	 	 	-	 
	Operating leases expenses	 	 	184,802	 	 	 	141,959	 	 	 	115,615	 
	Depreciation and amortization	 	 	15,180	 	 	 	12,575	 	 	 	7,232	 
	Reduction for doubtful accounts, net	 	 	(38,883	)	 	 	(146,174	)	 	 	194,149	 
	Other general and administrative	 	 	628,608	 	 	 	667,267	 	 	 	293,931	 
	Total Operating Expenses	 	 	5,321,417	 	 	 	2,972,827	 	 	 	3,942,561	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income (loss) from Operations	 	 	358,560	 	 	 	(564,379	)	 	 	1,589,683	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other income:	 	 	 	 	 	 	 	 	 	 	 	 
	Gain on disposal of asset	 	 	1,705	 	 	 	-	 	 	 	(1,213)	 
	Gain on foreign currency exchange	 	 	12,072	 	 	 	-	 	 	 	-	 
	Loss on disposal of subsidiary	 	 	(4,970	)	 	 	-	 	 	 	-	 
	Interest income	 	 	30,662	 	 	 	26,565	 	 	 	32,112	 
	Other income (expense)	 	 	2,707	 	 	 	-	 	 	 	(57,028	)
	Total other income	 	 	42,176	 	 	 	26,565	 	 	 	(26,129	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income (loss) before income tax	 	 	400,736	 	 	 	(537,814	)	 	 	1,563,554	 
	Income tax	 	 	(101,372	)	 	 	-	 	 	 	(396,552	)
	Net income (loss)	 	 	299,364	 	 	 	(537,814	)	 	 	1,167,002	 
	Net loss attributable to noncontrolling interest	 	 	(153,742	)	 	 	(21,843	)	 	 	-	 
	Net income (loss) attributable to MDJM Ltd shareholders	 	$	453,106	 	 	$	(515,971	)	 	$	1,167,002	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income (loss) per ordinary share attributable to MDJM Ltd shareholders	 	$	0.04	 	 	$	(0.05	)	 	$	0.11	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Weighted-average shares outstanding, basic and diluted	 	 	11,640,661	 	 	 	10,400,408	 	 	 	10,380,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Comprehensive income (loss):	 	 	 	 	 	 	 	 	 	 	 	 
	Net income (loss)	 	$	299,364	 	 	$	(537,814	)	 	$	1,167,002	 
	Other comprehensive income (loss), net of tax:	 	 	 	 	 	 	 	 	 	 	 	 
	Change in foreign currency translation adjustments	 	 	(53,156	)	 	 	(170,344	)	 	 	270,019	 
	Total other comprehensive income (loss)	 	 	246,208	 	 	 	(708,158	)	 	 	1,437,021	 
	Comprehensive loss attributable to noncontrolling interest	 	 	(2,398	)	 	 	(823	)	 	 	-	 
	Comprehensive income (loss) attributable to MDJM Ltd shareholders	 	$	248,606	 	 	$	(707,335	)	 	$	1,437,021	 







  




     


     


    

 


MDJM LTD and Subsidiaries


Consolidated Balance Sheets


As of December 31,


 


	 	 	2019	 	 	2018	 
	Assets	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Current Assets	 	 	 	 	 	 	 	 
	Cash and cash equivalents	 	$	6,552,677	 	 	$	6,692,557	 
	Accounts receivable, net of allowance for doubtful accounts $10,774 and $49,963, respectively	 	 	2,155,158	 	 	 	1,767,804	 
	Other receivables	 	 	69,977	 	 	 	38,701	 
	Prepaid expenses	 	 	60,020	 	 	 	235,642	 
	Prepaid income tax	 	 	-	 	 	 	3,620	 
	Total Current Assets	 	 	8,837,832	 	 	 	8,738,324	 
	 	 	 	 	 	 	 	 	 
	Property and equipment, net	 	 	70,154	 	 	 	21,302	 
	 	 	 	 	 	 	 	 	 
	Other Assets	 	 	 	 	 	 	 	 
	Deferred tax assets	 	 	33,440	 	 	 	135,471	 
	Operating lease assets, net	 	 	391,871	 	 	 	-	 
	Other receivable - long term	 	 	99,532	 	 	 	-	 
	Total Other Assets	 	 	524,843	 	 	 	135,471	 
	 	 	 	 	 	 	 	 	 
	Total Assets	 	$	9,432,829	 	 	$	8,895,097	 
	 	 	 	 	 	 	 	 	 
	Liabilities and Equity	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Current Liabilities:	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities	 	$	460,690	 	 	$	575,087	 
	VAT and other taxes payable	 	 	107,662	 	 	 	137,695	 
	Deferred income	 	 	26,429	 	 	 	-	 
	Operating lease liabilities, current	 	 	91,737	 	 	 	-	 
	Total Current Liabilities	 	 	686,518	 	 	 	712,782	 
	 	 	 	 	 	 	 	 	 
	Long-term operating lease liabilities	 	 	247,382	 	 	 	-	 
	 	 	 	 	 	 	 	 	 
	Total Liabilities	 	 	933,900	 	 	 	712,782	 
	 	 	 	 	 	 	 	 	 
	Equity:	 	 	 	 	 	 	 	 
	Ordinary shares: 50,000,000 shares authorized, par value: $0.001 per share, 11,640,820 and 11,621,459 shares issued and outstanding as of December 31, 2019 and 2018, respectively	 	 	11,641	 	 	 	11,621	 
	Additional paid in capital	 	 	6,734,681	 	 	 	6,664,295	 
	Statutory reserve	 	 	262,954	 	 	 	232,542	 
	Retained earnings	 	 	1,948,804	 	 	 	1,526,110	 
	Accumulated other comprehensive loss	 	 	(280,345	)	 	 	(229,587	)
	Total MDJM Ltd stockholders’ equity	 	 	8,677,735	 	 	 	8,204,981	 
	Noncontrolling interest	 	 	(178,806	)	 	 	(22,666	)
	Total Liabilities and Equity	 	$	9,432,829	 	 	$	8,895,097	 






 






     


     


    

 


MDJM LTD and Subsidiaries


Consolidated Statements of Cash Flows


For the Years Ended December 31,


  





	 	 	2019	 	 	2018	 	 	2017	 
	Cash Flows from Operating Activities:	 	 	 	 	 	 	 	 	 	 	 	 
	Net income (loss)	 	$	299,364	 	 	$	(537,814	)	 	$	1,167,002	 
	Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:	 	 	 	 	 	 	 	 	 	 	 	 
	Depreciation and amortization	 	 	15,180	 	 	 	12,575	 	 	 	7,232	 
	(Reduction) increase of provision for doubtful accounts	 	 	(38,883	)	 	 	(146,174	)	 	 	194,149	 
	Gain on foreign currency exchange	 	 	(12,072	)	 	 	-	 	 	 	-	 
	(Gain) loss on disposal of assets	 	 	(1,705	)	 	 	-	 	 	 	1,213	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Decrease in deferred tax assets	 	 	101,166	 	 	 	72,975	 	 	 	102,099	 
	Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 
	(Increase) decrease in accounts receivables	 	 	(374,592	)	 	 	(83,189	)	 	 	516,593	 
	(Increase) decrease in other receivables	 	 	(4,630	)	 	 	41,441	 	 	 	103,603	 
	Decrease (increase) in prepaid expense	 	 	120,907	 	 	 	(150,273	)	 	 	(297,392	)
	Decrease (increase) in prepaid income tax	 	 	3,605	 	 	 	(3,762	)	 	 	-	 
	(Decrease) increase in accounts payable and accrued expenses	 	 	(107,980	)	 	 	131,876	 	 	 	(430,286	)
	(Decrease) increase in VAT and other tax payable	 	 	(28,518	)	 	 	18,843	 	 	 	(50,753	)
	Increase in deferred income	 	 	26,657	 	 	 	-	 	 	 	-	 
	Net Cash (Used in) Provided by Operating Activities	 	 	(1,501	)	 	 	(643,502	)	 	 	1,313,460	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash Flows from Investing Activities:	 	 	 	 	 	 	 	 	 	 	 	 
	Purchase of property and equipment	 	 	(66,354	)	 	 	(1,215	)	 	 	(19,659	)
	Advance made to deconsolidated subsidiary	 	 	(127,804	)	 	 	-	 	 	 	-	 
	Proceeds from disposal of asset	 	 	3,330	 	 	 	-	 	 	 	-	 
	Net Cash Used in Investing Activities	 	 	(190,828	)	 	 	(1,215	)	 	 	(19,659	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash Flows from Financing Activities:	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds from initial public offering - net of offering costs of $26,399, $2,103,816 and $0, respectively	 	 	70,406	 	 	 	4,103,479	 	 	 	-	 
	Net Cash Provided by Financing Activities	 	 	70,406	 	 	 	4,103,479	 	 	 	-	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Effect of exchange rate changes on cash and cash equivalents	 	 	(17,957	)	 	 	116,055	 	 	 	161,593	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net (decrease) increase in cash and cash equivalents	 	 	(139,880	)	 	 	3,574,817	 	 	 	1,455,394	 
	Cash and cash equivalents - beginning of the year	 	 	6,692,557	 	 	 	3,117,740	 	 	 	1,662,346	 
	Cash and cash equivalents - end of the year	 	$	6,552,677	 	 	$	6,692,557	 	 	$	3,117,740	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Supplemental Disclosure Cash Flow Information:	 	 	 	 	 	 	 	 	 	 	 	 
	Cash paid for:	 	 	 	 	 	 	 	 	 	 	 	 
	Interest	 	$	-	 	 	$	-	 	 	$	-	 
	Income taxes	 	$	-	 	 	$	271,817	 	 	$	294,454