Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. For this purpose, any
statements contained in this Form 10-Q that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, words such as "may", "will", "expect", "believe", "anticipate",
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors, many of which are not within our control. These factors
include by are not limited to economic conditions generally and in the
industries in which we may participate, competition within our chosen industry,
including competition from much larger competitors, technological advances and
failure to successfully develop business relationships.
Results of Operations for the Three Months Ended March 31, 2021 and 2020:
Three-months Ended
March 31, March 31,
2021 2020
Revenue $3,894,131 $2,954,389
Cost of Sales $3,825,042 $2,500,244
General and Administrative $456,852 $276,507
Other Income $208 $7,542
Net Income (Loss) $(387,555) $185,180
Revenue
Revenue was $3,894,131 for the three months ended March 31, 2021 as compared to
$2,954,389 for the three months ended March 31, 2020. This increase in revenue
is caused by an increase in property sales from the Ballenger project in the
first three months of 2021. In this project, builders are required to purchase a
minimum number of lots based on their applicable sale agreements. We collect
revenue only from the sale of lots to builders. We are not involved in the
construction of homes at the present time.
Income from the sale of Front Foot Benefits ("FFBs"), assessed on Ballenger
project lots, increased from $40,322 in the three months ended March 31, 2020 to
$107,071 in the three months ended March 31, 2021. The increase is a mixed
result of the increased sale of properties to homebuyers in 2021 and sale of
FFBs of a higher value.
16
Cost of Sales
All property sales revenue in the three months ended on March 31, 2021 and 2020
came from Ballenger project. The gross margin ratios for Ballenger project in
these periods were approximately 2% and 15%, respectively. The different types
of lots usually have different gross margins, the main reason which led to the
decrease in 2021.
General and Administrative Expenses
General and administrative expenses increased from $276,507 in the three months
ended March 31, 2020 to $456,852 in the three months ended March 31, 2021. The
increase in those expenses is caused mainly by the increase in the professional
fees in 2021.
Net Income
In the three months ended March 31, 2021, the Company had net loss of $387,555
compared to net income of $185,180 in the three months ended March 31, 2020. The
decrease in net income was caused by the increased cost of sales in 2021.
Liquidity and Capital Resources
Our real estate assets under development have decreased to $20,171,976 as of
March 31, 2021 from $20,616,237 as of December 31, 2020. This decrease reflects
increase in sales of lots and a higher increase in cost of sales than in
capitalized costs related to the construction in progress. On March 31, 2021, we
purchased 10 homes, which will be used in Company's rental business.
Our liabilities increased from $2,691,098 at December 31, 2020 to $4,682,057 at
March 31, 2021. Our total assets have increased to $30,740,939 as of March 31,
2021 from $29,219,785 as of December 31, 2020 due to the increase of the
restricted cash.
As of March 31, 2021, we had cash of $1,701,106 and restricted cash of
$8,099,096 compared to $2,237,180 and $5,729,067 as of December 31, 2020.
Our Ballenger Run project has a revolver loan from M&T Bank in the principal
amount not to exceed at any one time outstanding the sum of $8,000,000, with a
cumulative loan advance amount of $18,500,000. As of March 31, 2021 and December
31, 2020, the revolver loan balance was $0, respectively.
On June 18, 2020, Alset EHome Inc. (formerly known as SeD Home & REITs Inc. and
Alset iHome Inc.) entered into a Loan Agreement with M&T Bank. Pursuant to this
Loan Agreement, M&T Bank provided a non-revolving loan to Alset EHome Inc. in an
aggregate amount of up to $2,990,000. As of March 31, 2020, the M&T loan balance
was $685,896. It is intended that this loan will be utilized to commence our
residential initiatives.
On February 11, 2021, the Company entered into a term note with M&T Bank with a
principal amount of $68,502 pursuant to the Paycheck Protection Program ("PPP
Term Note") under the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act"). The PPP Loan is evidenced by a promissory note. The PPP Term Note
bears interest at a fixed annual rate of 1.00%, with the first sixteen months
of principal and interest deferred or until we apply for the loan forgiveness.
The PPP Term Note may be accelerated upon the occurrence of an event of default.
17
The PPP Term Note is unsecured and guaranteed by the United States Small
Business Administration. The Company may apply to M&T Bank for forgiveness of
the PPP Term Note, with the amount which may be forgiven equal to at least 60%
of payroll costs and other eligible payments incurred by the Company, calculated
in accordance with the terms of the CARES Act. At this time, we are not in a
position to quantify the portion of the PPP Term Note that will be forgiven.
On March 15, 2021 Alset EHome, Inc. signed twenty separate Purchase Agreements,
to acquire 20 homes in Montgomery County, Texas. On March 31, 2021, the first
batch of 10 homes was closed with the purchase cost of $2,161,680. The Company
borrowed $2,125,000 from SeD Intelligent Home Inc. to fund this acquisition.
Purchase of second batch of 10 homes is planned in the second quarter of 2021.
All of these purchased homes are properties of our rental business.
Our subsidiaries are reviewing plans for potential additional fundraising to
fund single family rental operations and the acquisition of additional real
estate projects.
The future development timeline of Black Oak will be based on multiple
conditions, including the amount of funds which may be raised from capital
markets, the loans we may secure from third party financial institutions, and
government reimbursements which may be received. The development will be step by
step and expenses will be contingent on the amount of funding we will receive.
Summary of Cash Flows
A summary of cash flows from operating, investing and financing activities for
the three months ended March 31, 2021 and 2020 are as follows:
2021 2020
© Edgar Online, source Glimpses