20-F: MDJM Pivots to UK Cultural IP, Faces Nasdaq Delisting

MDJM LTD is undergoing a major strategic shift to a global cultural IP ecosystem and UK hospitality, while navigating a Nasdaq trading suspension and potential delisting.

Summary

• MDJM LTD has fully exited its PRC real estate operations, terminating VIE agreements on March 1, 2025, and dissolving related entities.
• The company is undergoing a significant strategic transformation to a global cultural IP ecosystem, integrating content creation, cultural tourism (Fernie Castle Animation Museum and Oriental Garden), international collaboration, and IP commercialization.
• Key agreements for this new strategy include a script contract for 'Journey to the West' animated short film (expected release July 2026), a co-production deal for an Eastern-themed animated short film with H5 S.A.R.L., and architectural design services for Fernie Castle with Kengo Kuma & Associates and Simpson & Brown LLP (estimated capital investment $10 million, expected completion May 2027).
• Revenue for the year ended December 31, 2025, increased by 85% to $89,664 from $48,375 in 2024, primarily due to a new third-party sales channel in UK hospitality.
• Net loss significantly improved by 99% to $41,321 in 2025, compared to a net loss of $3,189,205 in 2024, driven by increased revenue, reduced operating expenses (absence of stock-based compensation), and increased other income (gain on warrant valuation and deconsolidation).
• Operating expenses decreased by 56% to $1,260,002 in 2025, mainly due to the absence of $1,493,418 in stock-based compensation expenses recognized in 2024.
• Professional fees increased by 67% to $757,463 in 2025 due to increased financing activities and SEC filing compliance costs.
• Class A Ordinary Shares were suspended from trading on Nasdaq on March 20, 2026, and now trade on the OTC Markets under UOKAF, with an appeal hearing scheduled for April 23, 2026.
• A 35-for-1 reverse stock split became effective on March 16, 2026, and shareholders will vote on a further authorized share capital increase and another share consolidation mandate on April 21, 2026.
• Recent capital raises include $5.44 million net proceeds from a public offering in February 2026 and $2.17 million net proceeds from a registered direct offering in March 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging period marked by a significant strategic pivot and the immediate negative impact of Nasdaq delisting. While financial performance showed improvement in 2025, the unproven nature of the new business and the loss of a major exchange listing create substantial uncertainty for investors.

Positives

• Net loss improved significantly by 99% to $41,321 in 2025, from $3,189,205 in 2024.
• Revenue increased by 85% to $89,664 in 2025, driven by a new third-party sales channel in the UK.
• Successfully terminated VIE agreements and exited PRC operations, simplifying the corporate structure.
• Secured world-class international partners (Abano Producins S.L., H5 S.A.R.L., Kengo Kuma & Associates, Simpson & Brown LLP) for the new cultural IP ecosystem strategy.
• Successfully completed capital raises in February and March 2026, generating approximately $7.61 million in net proceeds.
• Management believes current cash position and recent proceeds are sufficient to support operations for at least the next 12 months.

Negatives

• Class A Ordinary Shares were suspended from trading on Nasdaq on March 20, 2026, and may be delisted, leading to reduced liquidity and market quotations.
• The company reported a net loss of $41,321 in 2025, despite significant improvement.
• The new cultural IP ecosystem strategy is complex, highly specialized, and unproven, with substantial execution and operational risks.
• Management team has limited or no prior experience operating a major cultural tourism site or directing large-scale international animation production.
• Heavy reliance on performance and continued participation of high-profile international partners for strategic goals.
• Intense competition in the creative industry from established global media companies and large technology platforms.
• UK hospitality operations are subject to various risks, including economic conditions, competition, adverse weather, and increases in operating costs.
• Japanese and German subsidiaries have not commenced operations or generated revenue and are exposed to economic and political risks in those regions.
• The company does not intend to pay dividends for the foreseeable future.
• Significant short sales of Class A Ordinary Shares could contribute to further price decline.
• The dual-class share structure with different voting rights limits the ability of Class A shareholders to influence corporate matters and may result in lower market price or adverse publicity.
• Potential for future issuances of Class B Ordinary Shares to be dilutive to Class A holders and further concentrate voting power.
• Unprotected cash in UK banks amounted to approximately $516,000 as of December 31, 2025, exceeding FSCS protection limits.

Risks

• The absence of PRC operations may adversely affect future business operations and financial condition.
• The new business strategy focused on the cultural IP ecosystem is complex, highly specialized, and unproven, with substantial execution and operational risks.
• Failure to manage construction timelines, production schedules, development budgets, or achieve regulatory/permitting approvals for multi-jurisdictional projects.
• Inability to create and monetize original content rooted in Eastern culture that achieves significant commercial success and resonates with global audiences.
• Entering new and highly competitive markets with limited or no prior management experience in cultural tourism or large-scale international animation production.
• Reliance on high-profile international partners and risks of partnership termination, delays, or failure to deliver expected quality or results.
• Intense competition in the creative industry from established global media companies and large technology platforms.
• UK subsidiaries' operating results are subject to conditions typically affecting hospitality service providers in the UK, including economic conditions, competition, local market conditions, adverse weather, natural disasters, diseases, capital availability, project delays, seasonality, and operating cost increases.
• Inability to successfully identify, secure, or operate additional hotel properties in the UK.
• Exposure to various hospitality industry, health and safety, construction, fire prevention, and environmental laws and regulations in the UK, with potential for liability and penalties for non-compliance.
• Accidents, injuries, or prohibited activities in hotels could adversely affect reputation, decrease occupancy, and increase costs.
• Inability to access funds to maintain the condition and appearance of hospitality properties, leading to reduced attractiveness and declining occupancy rates.
• Changes in international trade policies, trade disputes, barriers to trade, or trade wars may dampen growth in the UK and increase costs of supplies.
• Brexit's long-term effects and ongoing political and economic uncertainty in the UK and wider European markets.
• Risks of changing policies in residential property management, real estate agencies, and hospitality and butler service businesses in the UK.
• Exposure to natural disasters, health epidemics, and other outbreaks in the UK.
• Failure to hire, train, and retain qualified managerial and other employees, especially senior management.
• Japanese subsidiary (MD Japan) may incur losses if economic conditions in Japan worsen, and instability in the Japanese stock market and foreign currency exchange rates may adversely impact it.
• MD Japan's business operations are exposed to risks of natural disasters (especially earthquakes), terrorism, and other disruptions caused by external events.
• Potential political shocks and uncertainties in the EU, including Brexit developments, could have unpredictable consequences for the real estate market and wider economy, limiting MD German's ability to protect itself.
• Class A Ordinary Shares have been suspended from trading on Nasdaq and may be delisted, resulting in limited market quotations, reduced liquidity, 'penny stock' designation, limited news/analyst coverage, and decreased ability to raise future financing.
• The trading price of Class A Ordinary Shares is likely to be volatile, especially on OTC Markets, leading to substantial losses for investors.
• Difficulty in bringing action against the company or its officers/directors in the United States due to Cayman Islands incorporation and UK operations.
• No intention to pay dividends for the foreseeable future.
• If securities or industry analysts do not publish research or publish negative reports, the price and trading volume could decline.
• As a foreign private issuer, the company is exempt from certain Nasdaq corporate governance standards, potentially offering less protection to shareholders.
• If the company ceases to qualify as a foreign private issuer, it would incur significant additional legal, accounting, and other expenses.
• Failure to establish and maintain an effective system of internal control over financial reporting could harm business and reputation.
• Anti-takeover provisions in the memorandum and articles of association may discourage, delay, or prevent a change in control.
• The sale of Ordinary Shares could encourage short sales by third parties, contributing to future price decline.
• The board of directors may decline to register transfers of Class A Ordinary Shares in certain circumstances.
• The laws of the Cayman Islands may not provide shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.
• Limited shareholder rights to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.
• Potential classification as a Passive Foreign Investment Company (PFIC) could have adverse U.S. federal income tax consequences for U.S. taxpayers.
• The dual-class share structure with different voting rights will limit the ability to influence corporate matters and could discourage others from pursuing any change of control transactions.
• Future issuances of Class B Ordinary Shares may be dilutive to holders of Class A Ordinary Shares and further concentrate voting power.
• Unprotected cash in UK banks exceeding FSCS protection limits.
• Impact of inflation on operating costs and expenses.
• Foreign currency fluctuations affecting results of operations and financial condition.
• Liquidity risk: difficulty in meeting financial liabilities.

Future Outlook

The company intends to retain any future earnings to finance the expansion of its business and does not anticipate paying cash dividends in the foreseeable future. Management believes current cash and recent capital raise proceeds will be sufficient to support operations and meet obligations for at least the next 12 months. The 'Journey to the West' animated short film is expected to be released in July 2026, and the Fernie Castle Oriental Landscape Project is targeted for completion in May 2027. The company aims to build a globally influential cultural and artistic ecosystem that brings Eastern philosophy and aesthetics to the world through contemporary storytelling and immersive experience.

Management Comments

• We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.
• Management believes that the Company’s current cash position, together with other components of working capital, and the proceeds from the offerings successfully closed on February 11, 2026 and March 2, 2026, will be sufficient to support its operations and meet its obligations as they become due for at least the next 12 months from the date of issuance of this annual report.
• We believe an effective cybersecurity program is critical to guard the confidentiality, integrity, and availability of our information systems and data residing in those systems.
• The board encourages all departments and employees to provide timely and convenient feedback on cybersecurity issues. Once risks are identified, they are swiftly shared and discussed to formulate response strategies.
• Through the implementation of these comprehensive cybersecurity controls, we have effectively minimized significant cybersecurity risks to our operations. To date, we have not encountered any cybersecurity incidents which have affected or are reasonably likely to affect us.

Industry Context

StockSavvy.ai notes that MDJM's pivot from the volatile Chinese real estate market to a niche cultural IP and hospitality sector in the UK aligns with a broader trend among some smaller cap companies seeking to differentiate and capture value in specialized markets. The focus on 'Eastern philosophy and aesthetics' through animation and cultural tourism could tap into growing global interest in diverse cultural content, similar to the success seen by studios like Studio Ghibli, which the Fernie Castle Animation Museum explicitly references. However, this shift also places MDJM in highly competitive creative and hospitality industries, where established players with significantly greater resources dominate. The Nasdaq delisting and move to OTC Markets reflect challenges faced by many smaller foreign issuers in meeting stringent listing requirements and maintaining investor confidence amidst strategic overhauls.

Comparison to Industry Standards

• The Fernie Castle Animation Museum is explicitly 'inspired by the aesthetic and experiential philosophy of Japan's Ghibli Museum,' setting a high benchmark for quality and immersive experience.
• Collaboration with 'leading European creators, Isabel Herguera and Gianmarco Serra' and 'Abano Producins S.L., a leading animation studio in Galicia, Spain, recognized internationally for auteur animation, with works selected and awarded by major festivals including Annecy, San Sebastián, and Zagreb,' indicates an ambition to produce high-quality, critically acclaimed animation comparable to independent animation studios with strong festival presence.
• The co-production deal with 'H5 S.A.R.L., one of France's most influential, Academy Award-winning animation and creative studios' (known for Logorama) further reinforces the pursuit of top-tier creative talent and production quality, aiming for results comparable to award-winning animation projects.
• Architectural design by 'Kengo Kuma & Associates, Inc. (KKAA), a global architectural firm based in Tokyo, Japan,' and 'Simpson & Brown LLP, one of Scotland's most established and respected heritage architecture practices,' suggests a commitment to world-class design and preservation for the Fernie Castle project, comparable to high-end cultural and heritage site developments.
• In the UK real estate market, Mansions competes with 'five major global real estate companies with accumulated experiences and qualifications, such as Jones Lang LaSalle and Savills,' and 'agents with longer operation history and lower fees, such as Crown Home Buying & Letting and Hanland Global,' indicating a highly competitive landscape where Mansions aims to differentiate through customized services and humanized experiences at competitive fees.
• In hotel operations, UK subsidiaries compete with 'traditional hotel and resort operators, internet-based alternative lodging sites operators, and package holidays and tour operators,' including 'major hospitality chains with well-established and recognized brands,' highlighting the intense competition in the hospitality sector.

Management Changes

Corporate Governance

Legal Proceedings

• Initiated legal proceedings against Chengdu TEDA New City on January 9, 2023, for breach of contract and unpaid service fees totaling approximately $261,000.
• The court ruled in favor of the Company on March 28, 2023, ordering Chengdu TEDA to pay the full claimed amount within 10 days.
• Received a partial payment of $126,000 on September 1, 2023.
• As of December 31, 2024, the remaining balance from Chengdu TEDA New City was still outstanding, and management determined recovery was unlikely, applying a 100% CECL rate.

Related Party Transactions

• Mansions entered into lease agreements with MD UK (both wholly-owned subsidiaries) on January 1, 2023, to rent Fernie Castle and Robin Hill for hotel operations, with annual rents of approximately $241,000 and $199,000, respectively. These inter-company transactions are eliminated in consolidation.
• On May 31, 2024, 164 ordinary shares, valued at $181,585, were issued to Mr. Siping Xu (CEO) as part of his 2024 compensation package.
• On May 31, 2024, 164 ordinary shares, valued at $181,585, were issued to Mr. Mengnan Wang (CFO) as part of his 2024 compensation package.
• In 2024, net proceeds of $2,426,460 from a private placement and warrant exercises were deposited directly into MD UK's bank account instead of MDJM's.
• In February 2025, net proceeds of $324,000 from warrant exercises were deposited directly into MD UK's bank account instead of MDJM's.
• As of December 31, 2024, the company owed $3,395 to its officers for unreimbursed business expenses, which were reimbursed in 2025.

Stakeholder Impact

• Shareholders face negative impacts from the Nasdaq suspension and potential delisting, leading to reduced liquidity and market visibility, and less protection under Cayman Islands law. There is also a risk of dilution from future share issuances and no anticipated dividends. However, they could benefit from the long-term success of the strategic pivot.
• Employees saw an increase in overall headcount from 2 in 2024 to 10 in 2025, indicating growth in UK operations, and senior managers received bonuses in February 2026.
• Customers of UK hospitality operations benefit from ongoing hotel services (Robin Hill open, Fernie Castle under renovation), while former PRC real estate customers are no longer served. Future customers for the cultural IP ecosystem will experience new animation, art, and cultural tourism offerings.
• Suppliers and partners are impacted by new collaborations with architectural and animation studios for the cultural IP ecosystem, with risks related to partnership continuity and project delivery.
• Creditors are supported by management's belief that current cash and recent capital raises are sufficient to meet obligations for the next 12 months.

Next Steps

• An oral hearing with the Nasdaq Hearing Panel is scheduled for April 23, 2026, to appeal the suspension determination.
• An extraordinary general meeting of shareholders is scheduled for April 21, 2026, to vote on increasing authorized share capital and a new share consolidation mandate.
• The 'Journey to the West' animated short film is expected to be released in July 2026.
• The Fernie Castle Oriental Landscape Project is targeted for completion in May 2027.
• The dissolution process of MDJH Hong Kong is ongoing.
• Mr. Wei Guan intends to file his Form 3 promptly upon the SEC's approval of his EDGAR access credentials application.
• The company is considering all options available to regain compliance with Nasdaq's listing requirements.

Key Dates

Recommendation

The company is in a highly speculative transition phase. While the strategic pivot to a cultural IP ecosystem and UK hospitality offers potential long-term growth, it is unproven and carries significant execution risks. The immediate negative impact of the Nasdaq delisting and move to OTC Markets severely limits liquidity and market visibility, making it a high-risk investment. The recent capital raises provide some financial runway, and the improved net loss is a positive, but the overall uncertainty warrants a cautious 'Hold' stance for existing investors, while new investors should approach with extreme caution due to the speculative nature and market challenges.

Keywords

Cultural IP ecosystem, Hospitality, UK real estate, Animation production, Fernie Castle, Nasdaq delisting, OTC Markets, SEC filing, Financial results, Strategic shift, Corporate governance, Risk factors, Capital raise, Share consolidation, Cayman Islands, Foreign private issuer