PART I FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the three months ended March 31, 2021, and 2020 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased slightly, while a significant rise in liabilities led to a decrease in stockholders' equity Consolidated Balance Sheet Summary (in USD) | Metric | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$108,797,989** | **$107,211,921** | | Total Current Assets | $86,617,433 | $84,956,535 | | Properties under Development | $18,104,033 | $20,505,591 | | **Total Liabilities** | **$23,252,927** | **$9,533,735** | | Notes Payable - Related Parties | $14,837,252 | $2,350,031 | | **Total Stockholders' Equity** | **$85,545,062** | **$97,678,186** | - The most significant change was the increase in 'Notes Payable - Related Parties' from $2.35 million to $14.84 million, contributing to a **144% increase in total liabilities**[6](index=6&type=chunk) [Consolidated Statements of Operations and Other Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Income%20(Loss)) The company reported a net loss of $9.8 million due to unrealized investment losses, despite an 89% increase in revenue Consolidated Statement of Operations Summary (in USD) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Total Revenue** | **$5,606,914** | **$2,965,171** | | Property Sales | $3,894,131 | $2,954,389 | | Biohealth Product Sales | $1,712,783 | $10,782 | | **Operating Loss** | **($403,445)** | **($422,391)** | | Unrealized (Loss) Gain on Securities | ($9,535,009) | $458,422 | | **Net (Loss) Income** | **($9,804,748)** | **$2,255,565** | | Net (Loss) Income Per Share | ($0.73) | $0.16 | - The swing from a **net income of $2.3 million** in Q1 2020 to a **net loss of $9.8 million** in Q1 2021 was mainly due to a significant **unrealized loss on securities investments of ($9.5) million**[10](index=10&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased to $85.5 million, primarily driven by a net loss and foreign currency translation adjustments - A significant non-cash transaction recorded was a **$50.8 million Beneficial Conversion Feature**, which increased Additional Paid-in Capital[12](index=12&type=chunk) - The **net loss for the period was $9.8 million**, with $6.2 million attributable to common stockholders and $3.6 million to non-controlling interests[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and restricted cash decreased by $1.9 million, reflecting cash used in operations and financing activities Consolidated Statement of Cash Flows Summary (in USD) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($3,304,857) | ($182,597) | | Net Cash Provided by Investing Activities | $2,352,536 | $101,963 | | Net Cash (Used in) Provided by Financing Activities | ($956,264) | $2,030,592 | | **Net Change in Cash and Restricted Cash** | **($1,908,585)** | **$1,949,958** | | Cash and Restricted Cash - End of Period | $29,005,083 | $9,949,980 | - The sale of investment securities to a related party generated **$2.48 million in cash from investing activities**[17](index=17&type=chunk) - Financing activities shifted from providing cash in 2020 to using cash in 2021, primarily due to a **$1.2 million repayment of notes payable** to related parties[18](index=18&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting policies, segment information, related-party transactions, and subsequent events - The company operates in four segments: **property development, digital transformation technology, biohealth, and other business activities**[25](index=25&type=chunk) - On March 12, 2021, the company entered into a significant securities purchase agreement with its CEO for four transactions totaling **$63.9 million**, payable in convertible promissory notes[34](index=34&type=chunk) - For the three months ended March 31, 2021, **two customers accounted for approximately 97% and 3%** of the company's property and development revenue[95](index=95&type=chunk) - Subsequent to the quarter end, the company completed a public offering in May 2021, raising net proceeds of approximately **$29.2 million**[179](index=179&type=chunk)[182](index=182&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses an 89% revenue increase driven by biohealth sales, alongside a net loss caused by investment performance Revenue by Segment (in USD) | Segment | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Property development | $3,894,131 | $2,954,389 | $939,742 | 32% | | Biohealth | $1,712,783 | $10,782 | $1,702,001 | 15,786% | | **Total revenue** | **$5,606,914** | **$2,965,171** | **$2,641,743** | **89%** | - The significant increase in total revenue was primarily driven by the expansion of the **biohealth segment in the Korean market**, which recognized $1.7 million in revenue in Q1 2021[198](index=198&type=chunk) - The shift from a net income of $2.3 million in Q1 2020 to a **net loss of $9.4 million** in Q1 2021 was mainly caused by a **$9.5 million unrealized loss on securities investment**[204](index=204&type=chunk)[205](index=205&type=chunk) - Cash and cash equivalents decreased from $24.5 million to **$20.4 million**, while total liabilities increased from $9.5 million to **$23.3 million** during the quarter[206](index=206&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) As a smaller reporting company, this disclosure is not required - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a **"smaller reporting company"**[217](index=217&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of the end of the reporting period - Management concluded that the company's **disclosure controls and procedures were not effective** as of March 31, 2021[218](index=218&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that materially affected, or are reasonably likely to materially affect, these controls[219](index=219&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) There were no legal proceedings to report for the period - The company reports **no legal proceedings** during the quarter[219](index=219&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section is not applicable as the company is a smaller reporting company - As a smaller reporting company, **disclosure of risk factors is not required** in this Form 10-Q[219](index=219&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company disclosed several unregistered equity transactions and the use of proceeds from a subsequent public offering - On January 19, 2021, **10,000 shares of common stock were issued for public relations services** under a Section 4(2) exemption[220](index=220&type=chunk) - In May 2021, the company's CEO exchanged **6,380,000 common shares for Series A Preferred Stock** and a **$13 million convertible note for Series B Preferred Stock**[220](index=220&type=chunk)[221](index=221&type=chunk) - A public offering in May 2021 generated net proceeds of approximately **$29.2 million**, of which about **$28.5 million was used to exercise warrants** in its subsidiary[225](index=225&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - The company reports **no defaults upon senior securities**[225](index=225&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Mine safety disclosures are **not applicable** to the company's operations[226](index=226&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) There is no other information to report for the period - The company reports **no other information** for the quarter[227](index=227&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the report, including agreements and officer certifications

PART I [Business](index=5&type=section&id=Item%201.%20Business) A diversified holding company focused on property development, digital technology, and biohealth through its subsidiary Alset International - The company operates through three main segments: Property Development, Digital Transformation Technology, and Biohealth[11](index=11&type=chunk) - Operations are managed primarily through its **60.2% owned subsidiary**, Alset International Limited, which is traded on the Singapore Stock Exchange[11](index=11&type=chunk) - The company's growth strategy focuses on acquiring majority stakes in innovative businesses where its management has expertise and can add value[12](index=12&type=chunk) - Effective February 5, 2021, the company changed its name from HF Enterprises Inc to Alset EHome International Inc, and its Nasdaq ticker changed from "HFEN" to "AEI"[14](index=14&type=chunk) [Property Development Business](index=7&type=section&id=Property%20Development%20Business) The primary revenue driver, focusing on land development and lot sales to homebuilders in Texas and Maryland Revenue Contribution from Property Development | Year | Revenue Contribution | | :--- | :--- | | 2020 | 84% | | 2019 | 94% | - The Black Oak project in Texas is a 162-acre development planned for 550-600 residential lots; the company sold 124 lots in January 2019 for **$6.175 million** but incurred project impairments of approximately **$5.2 million** in 2019[19](index=19&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The Ballenger Run project in Maryland is a 197-acre development with 479 entitled residential lots, all of which are under a purchase agreement with NVR, Inc; **388 lots have been sold** as of December 31, 2020[29](index=29&type=chunk)[39](index=39&type=chunk) - The company is exploring expanding its property business to include building homes for sale or rent, incorporating eco-friendly features, and offering ancillary services[28](index=28&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [Digital Transformation Technology](index=13&type=section&id=Digital%20Transformation%20Technology) This segment provides B2B solutions like enterprise messaging and e-commerce platforms through its subsidiary GigWorld Inc - The business focuses on B2B solutions like communications, workflow, e-commerce, and payment systems through its GigWorld platform[49](index=49&type=chunk) - GigWorld has a revenue-sharing agreement with iGalen Inc to provide a customized secure app for communication and management, which it plans to market to other network marketing companies[52](index=52&type=chunk) - The company is exploring providing technology consulting for Security Token Offerings (STOs), including white paper development and technology design, but has no plans to launch its own token[53](index=53&type=chunk) [Biohealth Business](index=15&type=section&id=Biohealth%20Business) This division develops and distributes biohealth products, with its main assets transferred to DSS in a 2020 share exchange - Key assets include the 'Linebacker' universal therapeutic drug platform, 'Laetose' low-calorie natural sugar, and a mosquito-repellent fragrance[56](index=56&type=chunk)[57](index=57&type=chunk) - In August 2020, the company completed a share exchange with Document Security Systems, Inc (DSS), transferring its subsidiary Impact BioMedical to DSS, which **reduced direct ownership in the biohealth assets** but increased the company's stake in DSS[59](index=59&type=chunk)[60](index=60&type=chunk)[63](index=63&type=chunk) - The company sold its **53% ownership stake** in iGalen International Inc on December 30, 2020[71](index=71&type=chunk) - The company held an indirect 13.1% equity interest in Vivacitas Oncology Inc, which was subsequently sold to a subsidiary of DSS on March 18, 2021[72](index=72&type=chunk) [Expansion into New Business Areas](index=21&type=section&id=Expansion%20into%20New%20Business%20Areas) The company is strategically expanding into financial services through significant acquisitions in asset management, fund management, and banking - On March 12, 2021, the company agreed to purchase several assets from CEO Chan Heng Fai, financed by issuing convertible notes totaling approximately **$63.9 million**[99](index=99&type=chunk)[101](index=101&type=chunk) - Acquisitions include 100% of LiquidValue Development Pte Ltd (LVD) for asset management, 15.5% of True Partner Capital Holding Limited for fund management, and 86.4% of American Pacific Bancorp Inc (APB) to enter the banking sector[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from internal control weaknesses, a history of losses, customer concentration, and high ownership concentration - Management identified a **material weakness in internal controls** due to a small number of accounting staff, which could lead to material misstatements in financial reports[106](index=106&type=chunk)[108](index=108&type=chunk) - The company has a history of annual net losses, reporting a **net loss of $4.4 million in 2020** and **$8.1 million in 2019**[111](index=111&type=chunk)[112](index=112&type=chunk) - There is a significant revenue concentration risk, with homebuilder **NVR Inc being the sole purchaser** of 479 residential lots at the Ballenger project[149](index=149&type=chunk) - The company's success is **highly dependent on its founder, Chairman, and CEO**, Chan Heng Fai[128](index=128&type=chunk)[129](index=129&type=chunk) - As of April 14, 2021, CEO Chan Heng Fai beneficially owns approximately **74.8% of the company's common stock**, making it a 'controlled company' under Nasdaq rules[198](index=198&type=chunk)[199](index=199&type=chunk) [Properties](index=39&type=section&id=Item%202.%20Properties) The company's principal assets are its two real estate development projects in Texas and Maryland - The Black Oak property in Texas totals approximately 168 acres and is planned for about 648 lots (excluding the 124 already sold)[206](index=206&type=chunk)[207](index=207&type=chunk) - The Ballenger Run property in Maryland is approximately 197 acres and is entitled for 689 residential units (479 lots and 210 multi-family units)[209](index=209&type=chunk) [Legal Proceedings](index=41&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ongoing litigation through a former subsidiary concerning a breach of contract dispute - iGalen International Inc (a subsidiary sold on Dec 30, 2020) and Gara Group, Inc are involved in mutual lawsuits regarding a services agreement[210](index=210&type=chunk)[211](index=211&type=chunk) - Gara Group's complaint seeks **$9 million in general damages** and **$50 million in liquidated damages** against iGalen, Alset International, and certain executives[212](index=212&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on Nasdaq, with an IPO completed in November 2020, and no dividends are anticipated - The company's common stock began trading on the Nasdaq Capital Market on November 24, 2020; the ticker symbol was changed from "HFEN" to "AEI" following a name change[217](index=217&type=chunk) - The company completed its IPO on November 27, 2020, raising gross proceeds of **$15.12 million** by selling 2,160,000 shares at $7.00 per share, with net proceeds of approximately **$13.2 million**[221](index=221&type=chunk)[222](index=222&type=chunk) - The company has not paid any dividends since inception and does not plan to in the foreseeable future[218](index=218&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue decreased in 2020 due to lower property sales, but net loss narrowed, and the cash position improved significantly post-IPO Financial Performance Summary (2020 vs 2019) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Total Revenue | $16,238,200 | $24,257,953 | | Net Loss | ($4,398,435) | ($8,053,428) | Revenue by Segment (2020 vs 2019) | Segment | 2020 Revenue | 2019 Revenue | Change (%) | | :--- | :--- | :--- | :--- | | Property Development | $13,643,689 | $22,855,446 | -40% | | Biohealth | $2,594,511 | $1,371,298 | +89% | | Other | $0 | $31,209 | -100% | | **Total** | **$16,238,200** | **$24,257,953** | **-33%** | - The decrease in 2020 revenue was mainly driven by a **$9.2 million (40%) decline** in the property development segment, as 2019 included a large one-time sale of 124 lots from the Black Oak project for $6.175 million[268](index=268&type=chunk) - The net loss improved in 2020 primarily because operating expenses decreased significantly, which was mainly due to a **$5.2 million impairment of real estate** recognized in 2019 that was not repeated in 2020[276](index=276&type=chunk)[278](index=278&type=chunk) - The company's cash position increased from $2.8 million at year-end 2019 to **$22.1 million** at year-end 2020, driven by **$13.2 million in net proceeds from its IPO** and $11.4 million from the exercise of subsidiary warrants[289](index=289&type=chunk)[305](index=305&type=chunk) [Financial Statements and Supplementary Data](index=65&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The 2020 balance sheet shows substantial growth in assets and equity, driven by IPO proceeds and investment activities Consolidated Balance Sheet Highlights (As of Dec 31) | Account | 2020 | 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $22,124,491 | $2,774,587 | | Investment in Securities at Fair Value | $48,857,483 | $3,015,698 | | Real Estate Properties under Development | $20,505,591 | $23,884,704 | | **Total Assets** | **$103,316,578** | **$35,872,780** | | **Liabilities & Equity** | | | | Total Liabilities | $8,592,724 | $13,649,449 | | Total Stockholders' Equity | $94,723,854 | $22,223,331 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Total Revenue | $16,238,200 | $24,257,953 | | Total Operating Expenses | $17,928,641 | $31,200,994 | | *Impairment of Real Estate* | *$0* | *$5,230,828* | | Net Loss | ($4,398,435) | ($8,053,428) | | Net Loss Per Share | ($0.30) | ($0.52) | - The company deconsolidated and then reconsolidated its subsidiary Alset International during 2020 due to ownership percentage changes, resulting in a recorded **gain of approximately $53 million** upon deconsolidation and a **loss of approximately $22 million** upon reconsolidation[559](index=559&type=chunk)[561](index=561&type=chunk) - Subsequent to year-end, on March 12, 2021, the company entered into a securities purchase agreement with its CEO to acquire assets valued at **$63.9 million**, financed through convertible promissory notes[630](index=630&type=chunk) [Controls and Procedures](index=120&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management identified a material weakness in internal controls due to limited accounting staff and plans remediation - Management concluded that **disclosure controls and procedures were ineffective** as of December 31, 2020[635](index=635&type=chunk) - A **material weakness exists in internal control** over financial reporting due to limited staff with US GAAP and SEC experience[638](index=638&type=chunk) - The company plans to remediate the weakness by hiring additional qualified personnel with relevant financial accounting and SEC experience[640](index=640&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=121&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company is led by its founder and CEO, Chan Heng Fai, and operates as a 'controlled company' under Nasdaq rules - The key executive is Chan Heng Fai, age 76, who serves as Founder, Chairman of the Board, and Chief Executive Officer[642](index=642&type=chunk)[644](index=644&type=chunk) - The company is a **'controlled company'** because CEO Chan Heng Fai controls a majority of the voting stock, exempting it from certain Nasdaq corporate governance requirements[665](index=665&type=chunk) - The Board has an Audit Committee and a Compensation Committee, both composed of directors determined to be independent[666](index=666&type=chunk) [Executive Compensation](index=126&type=section&id=Item%2011.%20Executive%20Compensation) CEO compensation is primarily performance-based, tied to market cap and net asset value growth, with no stock awards in 2020 2020 Named Executive Officer Compensation | Name | Position | 2020 Total Compensation | | :--- | :--- | :--- | | Chan Heng Fai | Chairman & CEO | $473,468 | | Lui Wai Leung Alan | Co-CFO | $122,534 | | Rongguo Wei | Co-CFO | $116,184 | | Charles MacKenzie | Chief Development Officer | $240,000 | - A new employment agreement for CEO Chan Heng Fai, effective February 2021, includes a nominal salary and a **bonus equal to 5% of the growth in market cap and 5% of the growth in net asset value** each year[677](index=677&type=chunk) - The company has a 2018 Incentive Compensation Plan reserving 500,000 shares, but **no options or awards were granted** to named executive officers in 2020[680](index=680&type=chunk)[681](index=681&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=129&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) CEO Chan Heng Fai holds a controlling interest of 74.4% of the company's outstanding common stock Beneficial Ownership (as of April 14, 2021) | Name | Shares Beneficially Owned | Percentage of Outstanding Shares | | :--- | :--- | :--- | | Chan Heng Fai | 6,380,000 | 74.4% | | All Directors and Officers (as a group) | 6,380,000 | 74.4% | - Beneficial ownership is based on **8,580,000 shares of common stock outstanding** as of April 14, 2021[687](index=687&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=130&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company has engaged in numerous related-party transactions, primarily with its CEO and his affiliated entities - In April 2020, the company agreed to sell its subsidiary Impact BioMedical to DSS, a company where Chan Heng Fai is Chairman, in a share exchange transaction[702](index=702&type=chunk) - Chan Heng Fai provided significant loans to the company; an outstanding loan balance of **$4.2 million** existed at year-end 2019, which was paid off in 2020[705](index=705&type=chunk) - On June 24, 2020, Chan Heng Fai and his holding company **surrendered a total of 3,601,000 shares** of common stock for no consideration, which were subsequently cancelled[697](index=697&type=chunk) - On August 20, 2020, the company acquired 30,000,000 shares of Alset International from Chan Heng Fai in exchange for a **$1.33 million note**, which was later repaid[698](index=698&type=chunk) [Principal Accountant Fees and Services](index=134&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Total fees paid to the principal accountant were $196,500 in 2020, a decrease from $224,591 in 2019 Accountant Fees (2020 vs 2019) | Fee Category | 2020 | 2019 | | :--- | :--- | :--- | | Audit Fees | $158,500 | $166,600 | | Audit-Related Fees | $0 | $37,991 | | Tax Fees | $0 | $0 | | All Other Fees | $38,000 | $20,000 | | **Total** | **$196,500** | **$224,591** | PART IV [Exhibits, Financial Statement Schedules](index=135&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed with the report, including key contracts and certifications - This section provides a list of all financial statements and exhibits filed as part of the annual report[724](index=724&type=chunk) - Key exhibits filed include corporate governance documents, material contracts such as the IPO underwriting agreement, and executive certifications[725](index=725&type=chunk)[730](index=730&type=chunk)

Revenue Performance - Revenue for the three months ended September 30, 2020, was $2,148,923, a decrease of $3,157,940 or 60% compared to $5,306,863 in the same period of 2019[270] - For the nine months ended September 30, 2020, revenue was $7,179,919, reflecting a decrease of $15,764,579 or 69% from $22,944,498 in the same period of 2019[270] - The property development segment generated $2,146,992 in revenue for the three months ended September 30, 2020, down 57% from $4,938,017 in 2019[270] - Revenue from the biohealth segment was $1,931 for the three months ended September 30, 2020, a decline of 99% from $360,351 in the same period of 2019[270] - Revenue from property development accounted for approximately 99% of total revenue in the first nine months of 2020, down from 94% in the same period of 2019[275] - The company anticipates a decline in revenue from property development as it expects greater contributions from digital transformation technology and biohealth businesses[276] Financial Position - Total assets rose to $101,474,030 as of September 30, 2020, from $35,872,780 as of December 31, 2019, mainly due to increases in cash and investments in securities[294] - Cash increased from $2,774,587 as of December 31, 2019, to $8,754,202 as of September 30, 2020[294] - Real estate assets increased to $24,990,366 as of September 30, 2020, from $23,884,704 as of December 31, 2019, primarily due to higher capitalized costs related to construction in progress[294] Operating Results - The company reported a net loss of $13,435,843 in the nine months ended September 30, 2020, compared to a net loss of $4,534,317 in the same period of 2019, reflecting an increase of 196%[293] - Gross margin decreased by $2,196,082 or 58% from $3,766,698 in the nine months ended September 30, 2019, to $1,570,616 in the same period of 2020[279] - Operating expenses decreased by $706,860 or 45% from $1,560,629 in the three months ended September 30, 2019, to $854,083 in the same period of 2020[283] - Other expenses increased by $14,144,735 or 1,181% in the three months ended September 30, 2020, compared to other income of $1,197,775 in the same period of 2019[284] Cash Flow - Net cash used in operating activities was $1,011,440 for the nine months ended September 30, 2020, compared to net cash provided of $8,964,900 in the same period of 2019, reflecting an increase in cash used of $9,976,340 or 111%[310] - Net cash provided by financing activities was $6,700,886 for the nine months ended September 30, 2020, compared to $3,032,489 net cash used in the same period of 2019, reflecting an increase of $9,733,375 or 321%[312] - The company received cash proceeds of $10,764,837 from the exercise of subsidiary warrants during the nine months ended September 30, 2020[312] Loans and Financing - The company received a loan of $68,502 under the Paycheck Protection Program, with $64,502 forgiven by the U.S. Small Business Administration[259] - SeD Maryland Development LLC entered into a Development Loan Agreement with M&T Bank for up to $8 million, with a cumulative loan advance amount of $18.5 million[323] - As of September 30, 2020, the principal balance of the loan from M&T Bank was $0, with loan origination fees of $381,823 capitalized into construction in process[325] - The Union Bank Revolving Loan had a maximum principal amount of $11 million, with a maturity date of December 31, 2019, and was fully repaid in January 2019[320][322] Project Development - The company is actively developing two significant real estate projects near Houston, Texas, and in Frederick, Maryland[249] - The total estimated construction costs for the Ballenger Run project are $39,316,000, with various phases completed or expected to complete by December 2021 and June 2022[313] - The Black Oak project is a 162-acre land infrastructure and subdivision project, with multiple phases expected to complete by November 2022 and April 2022[315][317] - The company is exploring alternate plans for the Black Oak project, which may lead to an expansion depending on market interest and capital availability[315] - The Perth project in Australia represents approximately 2% of total projects, with development contingent on local market conditions[316] - 150 CCM Black Oak, Ltd. received $4,592,079 in reimbursement for construction costs, with $1,650,000 remaining on deposit for future home construction[318] Investments and Ownership - The company has an indirect 16.8% equity interest in Holista CollTech Limited and a 13.1% equity interest in Vivacitas Oncology Inc.[250] - The acquisition of Impact BioMedical Inc. resulted in the company receiving 483,334 shares of DSS common stock valued at $67,208,173[289] - The company’s ownership of DSS increased to approximately 19.9% after converting shares of Series A Convertible Preferred Stock[291] Market Conditions and Risks - The COVID-19 pandemic has caused delays in construction and may impact the ability to obtain real estate permits and licenses[257] - The company has not reduced its staff due to the COVID-19 pandemic and has experienced minimal operational impact from remote work arrangements[266] - Foreign exchange rate fluctuations impacted intercompany loans of approximately $36.2 million and $41.1 million as of September 30, 2020, and December 31, 2019, respectively[327] - The real estate business is subject to seasonal shifts, which may impact expenses and sales spikes during home construction[330] - The company is classified as an "emerging growth company," allowing it to delay the adoption of certain accounting standards[329] Unrealized Losses - The company recognized unrealized losses on securities investment of $42,169,116 during the nine months ended September 30, 2020[284]