Alset(AEI) - 2021 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for the three months ended March 31, 2021, and 2020 Consolidated Balance Sheets 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] Consolidated Statements of Operations and Other Comprehensive Income (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] Consolidated Statements of Stockholders' Equity 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] - 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] Consolidated Statements of Cash Flows 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] - 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] Notes to Consolidated Financial Statements 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] - 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] - 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] - Subsequent to the quarter end, the company completed a public offering in May 2021, raising net proceeds of approximately $29.2 million[179][182] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses an 89% revenue increase driven by biohealth sales, alongside a net loss caused by investment performance Revenue by Segment (in USD) | Segment | Q1 2021 | Q1 2020 | Change ($) | 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] - 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][205] - 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] Item 3. Quantitative and Qualitative Disclosure About Market Risk 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] Item 4. Controls and Procedures 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] - 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] PART II OTHER INFORMATION Item 1. Legal Proceedings There were no legal proceedings to report for the period - The company reports no legal proceedings during the quarter[219] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - 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][221] - 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] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the period - The company reports no defaults upon senior securities[225] Item 4. Mine Safety Disclosures This section is not applicable to the company's operations - Mine safety disclosures are not applicable to the company's operations[226] Item 5. Other Information There is no other information to report for the period - The company reports no other information for the quarter[227] Item 6. Exhibits This section lists all exhibits filed as part of the report, including agreements and officer certifications