Corporate Structure and Compliance - The company operates as a holding entity incorporated in the Cayman Islands, with no material operations of its own, conducting operations through subsidiaries in the UK and a VIE in China until March 2025[18]. - The VIE Agreements allowed the company to consolidate financial results of the VIE under U.S. GAAP for fiscal years ending December 31, 2024, 2023, and 2022[22]. - The Exclusive Business Cooperation Agreement with Mingda Tianjin provided WFOE with exclusive rights to manage operations and collect service fees equivalent to Mingda Tianjin's net income after statutory reserves[23]. - The Share Pledge Agreement secured WFOE's rights over Mingda Tianjin's equity interests, allowing it to collect dividends and dispose of pledged interests in case of default[26]. - The company is not currently subject to cybersecurity reviews as it does not have over one million users' personal information, nor does it anticipate reaching that threshold in the foreseeable future[34]. - The company is categorized as an existing enterprise under the Trial Administrative Measures, meaning it is not immediately required to file for compliance following its overseas listing[34]. - The company’s auditor, RBSM LLP, is subject to PCAOB inspections, and there are no current restrictions on trading its Ordinary Shares under the HFCA Act[36]. - The company has not received any inquiries or sanctions regarding its overseas listing from the CSRC or other PRC authorities as of the report date[34]. - The VIE structure provided a means for foreign investment in China-based companies, which is restricted by Chinese law[22]. - The company has the option to purchase equity interests in Mingda Tianjin under the Exclusive Option Agreement, ensuring control over its operations[30]. - The VIE has received all requisite licenses and permissions from PRC authorities to operate in China, including a Business License and Registration Certificate[38]. - The Company is not required to obtain permission from PRC authorities for securities operations, but may face future compliance requirements due to evolving regulations[44]. - The CSRC's Trial Measures require domestic companies to complete filing procedures for overseas offerings within three working days of submission[40]. - The revised Provisions on confidentiality and archives administration require domestic companies to obtain approval for disclosing documents containing state secrets[42]. - The Company may face difficulties in remitting foreign currency for dividend payments due to PRC government controls[52]. - The Company intends to apply for a tax resident certificate to potentially benefit from a reduced withholding tax rate on dividends[54]. - The company is classified as an Existing Issuer and is not immediately required to file for compliance with the CSRC, but must comply for future offerings[107][108]. - The CSRC's Trial Measures require domestic companies to complete filing procedures within three working days for overseas offerings, with penalties for non-compliance[105]. - The revised Provisions on Strengthening Confidentiality require approval for disclosing documents containing state secrets to foreign entities[109]. - The PCAOB currently has access to inspect the company's auditor, RBSM LLP, but uncertainties remain regarding future inspections due to regulatory changes[118]. - The HFCA Act mandates that if the PCAOB cannot inspect the company's auditors for two consecutive years, trading of its securities may be prohibited[118]. - The company may face significant risks of delisting if it fails to comply with the HFCA Act, potentially leading to a total loss of the value of its securities[118]. - The Protocol signed by the CSRC, MOF, and PCAOB aims to facilitate inspections of audit firms in mainland China and Hong Kong, but future access may still be obstructed[120]. - PRC regulations may limit the ability of the company to acquire PRC companies or inject capital into its PRC subsidiary, potentially affecting business operations[121]. - The company’s PRC subsidiary must comply with SAFE regulations for foreign exchange activities, which may restrict capital inflows and dividend distributions[125]. - There is no statutory limit on the amount of capital contribution to the PRC subsidiary, but approvals from MOFCOM and local banks are required[125]. - Foreign loans to the PRC subsidiary must be registered with SAFE, and the current foreign debt mechanism limits loans to 200% of the net assets of the subsidiary[126]. - The company faces uncertainties regarding indirect transfers of equity interests in PRC resident enterprises, which may incur a 10% withholding tax[131]. - The M&A Rules require offshore special purpose vehicles to obtain approval from MOFCOM for acquisitions of PRC domestic companies[150]. - The company’s legal counsel indicates that CSRC approval is not required for listing on the Nasdaq, as the PRC subsidiary was established through direct investment[151]. - Compliance with M&A Rules may complicate future acquisitions, requiring notifications to MOFCOM for certain transactions[157]. - The company may face regulatory actions if it fails to comply with PRC regulations regarding mergers and acquisitions, potentially affecting its operations and financial condition[153]. Financial Performance - Revenue decreased by 90% in 2022 compared to 2021, primarily due to the impact of the COVID-19 pandemic and declining consumer demand in China[69]. - Revenue generated through PRC operating entities for 2023 was 41,954,adecreaseof90434,371 in 2022[72]. - The PRC operating entities reported nilrevenuefor2024,a10041,954 in 2023, due to cessation of operations in China[71]. - As of the date of the annual report, no dividends or distributions have been made to the Company or its shareholders, and future earnings are intended to finance business expansion[47]. - Current PRC regulations allow WFOE to pay dividends to MDJH Hong Kong only from accumulated profits, and at least 10% of after-tax profits must be set aside for statutory reserves[50]. - The company does not intend to pay dividends for the foreseeable future, opting to retain earnings for business operation and expansion[161]. - The PRC operating entities reported revenue of nilin2024,41,954 in 2023, and 434,371in2022,withanetlossof(631,355) in 2024, (662,821)in2023,and(1,847,047) in 2022[200]. - The PRC operating entities generated 0%, 29.0%, and 96.4% of their total revenue through primary agency sales services in fiscal years ended December 31, 2024, 2023, and 2022, respectively[199]. - The total value of contracts for new properties sold by the PRC operating entities was 0million,8.97 million, and 83.12millionfortheyearsendedDecember31,2024,2023,and2022,respectively[215].−ThePRCoperatingentities′totalgrossfloorareaofnewpropertiesundercontractwas0,1.24thousandsquaremeters,and13.98thousandsquaremetersfortheyearsendedDecember31,2024,2023,and2022,respectively[215].MarketExpansionandOperations−ThecompanyhasexpandedintoEuropeanmarketsbyestablishingsubsidiariesintheUKandGermanyandacquiringpropertiessuchasFernieCastleandtheRobinHillProperty[69].−TheUKsubsidiariesfacechallengesinidentifyingandmanagingadditionalhotelproperties,whichcouldimpairgrowthstrategies[60].−Compliancewithhospitalityindustryregulationsiscritical,asnon−compliancemayleadtofinesoroperationalsuspensions,adverselyaffectingfinancialresults[61].−Thecompanyisexposedtorisksfrominternationaltradedisputesandtariffs,whichcouldincreaseoperationalcostsandnegativelyimpactprofitmargins[67].−TheUKsubsidiariesmustmaintainpropertyconditionstoattractcustomers;failuretodosocouldleadtodecreasedoccupancyratesandmarketshare[63].−Thecompanyreliesheavilyontheexperienceofitsseniormanagementteam,andlossofkeypersonnelcouldhinderbusinessoperations[74].−TheJapanesesubsidiaryMDJapanhasnotyetcommencedoperationsandfacesrisksfromeconomicinstabilityandnaturaldisasters,whichcouldadverselyaffectfuturebusiness[77].−MDGerman,thecompany′sGermansubsidiary,hasnotcommencedoperationsorgeneratedrevenue,makingitvulnerabletoeconomicdownturnsanduncertainties[81].−ThecompanyhasestablishedasignificantstepforglobalexpansionthroughtheestablishmentofMansions,whichprovidescomprehensiveUKrealestate−relatedservices[197].−ThecompanyplanstocontinuesearchingforpotentialacquisitiontargetsintheUKandotherEuropeancountries,focusingonpropertieswithrichhistoricalvalue[206].−Thenewlylaunchede−commerceplatform,www.uokaus.com,aimstointegratecommercewithculturalheritageandoffershandcraftedproductsreflectingcraftsmanshipandartistictraditions[202].−ThecompanyaimstodevelopuniqueculturalassetsandenhancemarketcompetitivenessthroughthecreationofEasternculturallandscapegardensatFernieCastle[206].−Thecompanyplanstostrategicallyexpanditsculturaloperationsworldwidebycollaboratingwithartisansandcraftsmentodevelopadiversecollectionofproducts[206].GovernanceandShareholderMatters−TheChiefExecutiveOfficer,Mr.SipingXu,owns38.701.00 per share[171]. - A private placement completed on September 18, 2024, involved the issuance of 2,722,224 units at 0.90perunit,totalingapproximately2.45 million[173]. - The company has issued an aggregate of 12,918,667 Ordinary Shares in connection with the private placement[173]. - The company may face significant consequences if delisted from the Nasdaq Capital Market, including reduced liquidity and increased trading restrictions[173]. - The company may incur significant resources to address scrutiny and negative publicity associated with U.S.-listed Chinese companies, potentially harming its operations and stock price[163].
