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, 2022 and 2021:





                             March 31,       March 31,
                                2022           2021
Revenue                      $  849,499     $ 3,894,131
Cost of Revenue              $  680,038     $ 3,825,042
General and Administrative   $  431,813     $   456,852
Other (Expense) Income       $ (234,244 )   $       208
Net Loss                     $ (496,596 )   $  (387,555 )




Revenue

Revenue was $849,499 for the three months ended March 31, 2022 as compared to $3,894,131 for the three months ended March 30, 2021. The decrease in revenue is caused mainly by the decrease in property sales from the Ballenger project in 2022. In the first three months of 2022 the last three homes in Ballenger Project were sold. In this project, builders were required to purchase a minimum number of lots based on their applicable sale agreements. We collected 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 Run project lots, decreased from $107,071 in the three months ended March 31, 2021 to $77,012 in three months ended March 31, 2022. The decrease is a result of the decreased sale of properties to homebuyers in 2022.

In the second quarter of 2021, the Company started renting homes to tenants. Revenue from rental business was $232,582 in the three months ended March 31, 2022. The company expects that the revenue from this business will continue to increase as we acquire more rental houses and successfully rent them.





Cost of Revenue

All cost of revenue in the three months ended on March 31, 2022 came from our Ballenger and SeD Texas projects. The cost of revenue in the three months ended on March 31, 2021 came from our Ballenger project. The gross margin ratio for Ballenger project in first three months of 2022 and 2021 were approximately 25% and 7%, respectively. The different types of lots usually have different gross margins, the main reason which led to the increase in 2022. The gross margin ratio for SeD Texas project in first three months of 2022 and 2021 were approximately 7% and 0%, respectively.

General and Administrative Expenses

General and administrative expenses decreased from $456,852 in the three months ended March 31, 2021 to $431,813 in the three months ended March 31, 2022.





Net Income (Loss)

In the three months ended March 31, 2022, the Company had net loss of $496,596 compared to net loss of $387,555 in the three months ended March 31, 2021. The increase in net loss was caused by the decreased sales in our Ballenger Project.





  16


   Table of Contents

Liquidity and Capital Resources

Our real estate assets have increased to $40,845,912 as of March 31, 2022 from $40,034,933 as of December 31, 2021. This increase primarily reflects the acquisition of 3 new rental properties in the first three months of 2022, which will be used in the Company's rental business. Our rental properties assets were $25,663,582 as of March 31, 2022. Additionally, in September 2021 we purchased a house which currently serves as the model house with some office space for a property manager. This property asset was $419,019 as of March 31, 2022.

Our liabilities decreased from $23,278,817 at December 31, 2021 to $21,286,321 at March 31, 2022. Our total assets have decreased to $45,691,015 as of March 31, 2022 from $48,180,107 as of December 31, 2021.

As of March 31, 2022, we had cash of $2,226,924 and restricted cash of $2,082,860 compared to $3,055,745 and $4,399,984 as of December 31, 2021, respectively.

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, 2022 and December 31, 2021, the revolver loan balance was $0.

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, 2021, the M&T loan balance was $685,896. The loan was paid off in May 2021.

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.

The PPP Term Note is unsecured and guaranteed by the United States Small Business Administration. The Company applied 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. The PPP loan was forgiven in April, 2022

During 2021 the Company signed multiple purchase agreements to acquire 109 homes in Montgomery and Harris Counties, Texas. By December 31, 2021, the acquisition of the 109 homes was completed with an aggregate purchase cost of $24,940,764. The Company borrowed $19,122,471 from SeD Intelligent Home Inc. to fund most of these acquisitions.

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.

The management believes that the available cash in bank accounts and favorable cash revenue from real estate projects are sufficient to fund our operations for at least the next 12 months.





  17


   Table of Contents

© Edgar Online, source Glimpses