Alset(AEI) - 2021 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Presents unaudited consolidated financial statements for Q2 2021, showing increased assets and a significant net loss Consolidated Balance Sheets Highlights the balance sheet as of June 30, 2021, showing increased total assets, cash, liabilities, and stockholders' equity Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2021 ($) | December 31, 2020 ($) | | :--- | :--- | :--- | | Total Assets | 127,338,547 | 107,713,745 | | Cash | 59,529,026 | 24,965,946 | | Properties under Development | 16,279,723 | 20,505,591 | | Total Liabilities | 12,273,761 | 9,718,930 | | Total Stockholders' Equity | 115,064,786 | 97,994,815 | Consolidated Statements of Operations and Other Comprehensive Income (Loss) Details the income statement for H1 2021, showing significant revenue growth but a substantial net loss due to other expenses Statement of Operations Summary (Six Months Ended June 30) | Metric | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Total Revenue | 12,150,346 | 5,030,996 | | Real Estate Revenue | 8,478,673 | 5,001,794 | | Biohealth Revenue | 3,671,673 | 29,202 | | Operating Loss | (5,082,288) | (2,550,454) | | Total Other Income (Expense), Net | (79,161,996) | 2,843,419 | | Net (Loss) Income | (84,696,885) | 178,312 | | Net (Loss) Income Per Share (Basic & Diluted) | (7.42) | 0.05 | Consolidated Statements of Stockholders' Equity Shows the increase in stockholders' equity driven by capital raising activities, despite a net loss for the period - Total stockholders' equity increased to $115.1 million at June 30, 2021, from $98.0 million at January 1, 2021[14][15] - The increase was primarily due to capital raising activities, including the issuance of 8,389,324 shares of common stock for $39.3 million and conversion of related party notes, which offset the net loss for the period[14][15] Consolidated Statements of Cash Flows Summarizes cash flows for H1 2021, indicating significant cash generation from financing activities offsetting operating cash usage Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (10,649,851) | 204,205 | | Net Cash from Investing Activities | 2,234,619 | 220,979 | | Net Cash from Financing Activities | 43,898,095 | 4,706,192 | | Net Increase in Cash and Restricted Cash | 34,482,863 | 5,131,376 | Notes to Consolidated Financial Statements Provides detailed explanations of accounting policies, diversified operations, going concern status, related party transactions, and equity financing - The company operates in four segments: real estate, digital transformation technology, biohealth, and other business activities[24][104] - Management concluded that initial substantial doubt about the company's ability to continue as a going concern has been alleviated due to a high cash balance ($59.5 million), an $8 million credit line, and positive revenue from operations[26][27] - The company engaged in significant related-party transactions, including the purchase of warrants, stock, and companies from its CEO, Chan Heng Fai, settled via convertible promissory notes totaling $63.9 million[35][133] - In May 2021, the company completed an underwritten public offering, raising net proceeds of $39.3 million through the sale of common units and pre-funded units[146][148][150] - A subsequent public offering in July 2021 raised approximately $28.8 million in net proceeds[192][197] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes the company's financial condition, operations, and liquidity, highlighting significant revenue growth, a substantial net loss, and improved cash position Business Overview Describes Alset EHome International as a diversified global holding company with key segments including EHome communities and biohealth - The company is a diversified holding company with operations in the US, Singapore, Hong Kong, South Korea, and Australia[201] - Key business segments include EHome communities, real estate, financial services, digital transformation, and biohealth[201] Results of Operations Analyzes revenue growth across segments for H1 2021, noting a substantial net loss primarily due to unrealized investment losses and finance costs Revenue by Segment - Six Months Ended June 30 | Segment | 2021 Revenue ($) | 2020 Revenue ($) | Change (%) | | :--- | :--- | :--- | :--- | | Real Estate | 8,478,673 | 5,001,794 | 70% | | Biohealth | 3,671,673 | 29,202 | 12,473% | | Total | 12,150,346 | 5,030,996 | 142% | - The net loss for the six months ended June 30, 2021, was $84.7 million, a significant increase from a loss of $183,073 in the same period of 2020[209][228] - The increased loss was primarily due to a $79.2 million 'Other Expense,' which included a $30.7 million unrealized loss on securities investment and $50.8 million in finance costs[222] Liquidity and Capital Resources Details the company's improved liquidity, driven by significant cash generation from financing activities, despite cash usage in operations - Cash increased from $24,965,946 (Dec 31, 2020) to $59,529,026 (June 30, 2021)[229] - Net cash from financing activities was $43.9 million for the six months ended June 30, 2021, mainly from stock issuance and warrant exercises[233] - Net cash used in operating activities was $10.6 million for the six months ended June 30, 2021[231] Item 3. Quantitative and Qualitative Disclosure About Market Risk The company is exempt from providing market risk disclosures as a smaller reporting company - As a "smaller reporting company," the company is exempt from providing quantitative and qualitative disclosures about market risk[239] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of June 30, 2021, with no material changes to internal controls - Management concluded that disclosure controls and procedures were not effective as of June 30, 2021[240] - No material changes were made to internal controls over financial reporting during the quarter[241] PART II OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings for the period covered by this report - Not Applicable for the period covered by this report[242] Item 1A. Risk Factors This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[242] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details equity transactions including a public offering raising $29.2 million and unregistered exchanges with the CEO, utilizing proceeds for subsidiary warrant exercises - In May 2021, the company completed an underwritten public offering of common units and pre-funded units, raising net proceeds of approximately $29.2 million[245][247] - The company conducted several unregistered equity exchanges with its CEO, Chan Heng Fai, involving the conversion of common stock to preferred stock and back, and the conversion of a $13 million note payable into Series B Preferred Stock[242][243] - On June 14, 2021, CEO Chan Heng Fai converted over $51.2 million in convertible promissory notes and accrued interest into 9,163,965 shares of common stock[247] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[248] Item 4. Mine Safety Disclosures This section is not applicable to the company - Not Applicable[248] Item 5. Other Information The company reported no other information - None[248] Item 6. Exhibits Lists all documents filed as part of the report, including agreements, certificates, and officer certifications - Lists various agreements and certifications filed with the report, such as the Underwriting Agreement, Certificates of Designation for Series A and B Preferred Stock, and Sarbanes-Oxley certifications[250] Signatures The report was signed on August 16, 2021, by the Chairman and CEO, Co-CEO, and two Co-CFOs - The report was signed on August 16, 2021, by Chan Heng Fai (Chairman & CEO), Chan Tung Moe (Co-CEO), Rongguo Wei (Co-CFO), and Lui Wai Leung Alan (Co-CFO)[253]