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]
Alset(AEI) - 2020 Q3 - Quarterly Report