Alset Inc 8-K/A, filed May 3, 2021
Alset Inc. (AEI)
8-K/A
2021-05-03
For: 2021-03-12
View Original
Added on
April 11, 2026
About this 8-K/A
Alset Inc filed this 8-K/A on May 3, 2021, reporting on events of March 12, 2021.
Items reported
- Item 2.01: Completed an acquisition or sale of assets
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of
Report (Date of earliest event reported): May 3, 2021 (March 12,
2021)
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ALSET EHOME INTERNATIONAL INC.
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(Exact
name of registrant as specified in its charter)
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Delaware
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001-39732
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83-1079861
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(State
of incorporation or organization)
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(Commission
File
Number)
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(IRS
Employer Identification No.)
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4800 Montgomery Lane, Suite 210
Bethesda, Maryland 20814
(Address of principal executive offices) (Zip
Code)
Registrant’s
telephone number, including area code (301) 971-3940
N/A
(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
☐
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Common
Stock, $0.001 par value
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AEI
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The
Nasdaq Stock Market LLC
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of
1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.01. Completion of Acquisition or Disposition of
Assets.
On
March 18, 2021, Alset EHome International Inc., (the
“Company”), filed a current report on Form 8-K (the
“8-K”) with the United States Securities and Exchange
Commission to disclose that on March 12, 2021, the Company
consummated the acquisitions of (i) warrants (the
“Warrants”) to purchase 1,500,000,000 shares of Alset
International Limited (“Alset International”); (ii)
1,000,000 shares of LiquidValue Development PTE Ltd’s
(“LVD”) common stock, constituting all of the issued
and outstanding stock of LVD; (iii) 62,122,908 ordinary shares of
True Partners Capital Holding Limited (“True Partner”);
and (iv) 4,775,523 shares of American Pacific Bancorp, Inc.’s
(“APB”) Class B common stock, representing 86.44% of
the total issued and outstanding common stock of APB. The Company
herein amends the 8-K by filing the form 8-K/A (the “Form
8-K/A”) to include the required audited financial statements
of APB and unaudited combined pro forma financial statements for
the years ended December 31, 2020 and 2019, giving effect to the
four acquisitions set forth above as if the four acquisitions
had occurred on January 1, 2020 and
2019, respectively.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
The
audited financial statements of APB are included in this Form 8-K/A
as Exhibit 99.1.
The unaudited combined pro forma financial statements of the
Company for the years ended December 31, 2020 and 2019 are included
herein as Exhibit
99.2.
(d) Exhibits.
The
exhibits listed in the following Exhibit Index are filed as part of
this Current Report on Form 8-K/A.
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Exhibit No
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Description
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Consent of Lo and
Kwong C.P.A & Co.
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Audited Financial
Statements of American Pacific Bancorp, Inc. for the years ended
December 31, 2020 and December 31, 2019
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Unaudited Pro
Forma Combined Financial Statements of Alset EHome International
Inc. for the years ended December 31, 2020 and December 31
2019
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SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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ALSET EHOME INTERNATIONAL INC.
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Date:
May 3, 2021
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By:
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/s/ Rongguo Wei
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Name:
Rongguo Wei
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Title: Co-Chief
Financial Officer
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Exhibit
23.1
Exhibit 99.1
American
Pacific Bancorp, Inc.
Reports
and Financial Statements
For the
years ended December 31,
2020
and 2019
American Pacific Bancorp, Inc.
Contents
|
|
Pages
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Independent
Auditor’s Report
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1
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|
Balance
Sheets
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2
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|
Statements of
Operations
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3
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|
Statements of
Changes in Shareholders’ Equity
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4
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Statements of Cash
Flows
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5
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Notes to the
Financial Statements
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6-14
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Expressed in US
dollars (“$”)
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Report of Independent Registered Public Accounting
Firm
Board of Directors
American Pacific Bancorp, Inc.
4800
Montgomery Ln.
Suite
210
Bethesda,
MD 20814
United
States
Opinion on the Financial Statements
We have
audited the accompanying balance sheets of American Pacific
Bancorp, Inc. (the “Company”) as of December 31, 2020
and 2019 and the related statements of operations, statements of
changes in shareholders’ equity and statements of cash flows
for each of the two years ended December 31, 2020 and 2019, and the
related notes to the financial statements.
In our
opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31,
2020 and 2019, and the results of its operations and its cash flows
for each of the two years ended December 31, 2020 and 2019, in
conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these
financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are
required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or
fraud.
The
Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of
our audit we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures to respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Lo and Kwong C.P.A. & Co.
8/F.,
Catic Plaza
8
Causeway Road
Causeway
Bay
Hong
Kong
April
22, 2021
1
Balance Sheets
December 31, 2020 and 2019
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|
December 31,
2020
|
December 31,
2019
|
|
|
$
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$
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|
|
|
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ASSETS
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Non-Current
Assets
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Loan
receivables
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840,000
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-
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Total
Non-Current Assets
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840,000
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-
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Current
Assets
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Cash and cash
equivalents
|
1,848,455
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449,115
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Loan
receivables
|
269,610
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249,540
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Loan interest
receivables
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9,567
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6,600
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Due from a related
party
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24,583
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-
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Investment
securities - fair value
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313,343
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257,555
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Total
Current Assets
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2,465,558
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962,810
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TOTAL
ASSETS
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3,305,558
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962,810
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LIABILITIES
AND SHAREHOLDERS’ EQUITY
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Current
Liabilities
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Accounts payable
and accrued expenses
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117,188
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49,397
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Total
Current Liabilities
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117,188
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49,397
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Shareholders’
Equity
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|
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Common
stock, $0.01 par value; 200,000,000 and
100,000,000
shares authorized respectively,
none
of the shares and 5,033,123 shares issued
and
outstanding at December 31, 2020 and 2019,
respectively
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-
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50,331
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Class
A Common Stock, $0.01 par value,
100,000,000
shares and nil authorized respectively,
491,665
shares and nil outstanding at
December
31, 2020 and 2019, respectively
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4,917
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-
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Class
B Common Stock, $0.01 par value,
100,000,000
shares and nil authorized respectively,
5,033,123
shares and nil outstanding at
December
31, 2020 and 2019, respectively
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50,331
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-
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Preferred
stock, $0.01 par value, 100,000,000 and 100,000,000 shares
authorized respectively, 491,665 shares and nil outstanding at
December 31, 2020 and 2019, respectively
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4,917
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-
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Additional paid-in
capital
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4,142,448
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1,541,791
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Accumulated
deficit
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(1,014,243)
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(678,709)
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Total
Shareholders' Equity
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3,188,370
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913,413
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TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
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3,305,558
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962,810
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See
accompanying Notes to the financial statements.
2
Statements of Operations
For the years ended December 31, 2020 and 2019
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Year ended December
31, 2020
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Year ended December
31, 2019
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$
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$
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Interest
income:
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Interest on
loan
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44,914
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38,816
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Bank
interest
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4,106
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9,766
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Total
interest income
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49,020
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48,582
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Unrealized
gain (loss) on investment securities
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55,788
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(123,663)
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Other
income
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2,581
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1,490
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Operating
expenses:
|
|
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General and
administrative expenses
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(9,175)
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(197)
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Professional
fees
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(360,707)
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(347,292)
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Total
operating expenses
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(369,882)
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(347,489)
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Finance
cost
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(73,041)
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-
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Loss
before provision for income taxes
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(335,534)
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(421,080)
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Provision for
income taxes
|
-
|
-
|
|
|
|
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Net
loss
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(335,534)
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(421,080)
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|
|
|
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Net
loss per common share - basic and diluted
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(0.06)
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(0.13)
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|
|
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Shares
|
Shares
|
|
|
|
|
|
|
Weighted
average number of common stocks outstanding - basic and
diluted
|
5,402,377
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3,185,774
|
See
accompanying Notes to the financial statements.
3
Statements of Changes in Shareholders' Equity
For the years ended December 31, 2020 and 2019
|
|
Preferred
stock
|
Common
stock
|
Class
A
Common
Stock
|
Class
B
Common
Stock
|
|
|
|
||||
|
|
Shares
|
Amount
($0.01
Par)
|
Shares
|
Amount
($0.01
Par)
|
Shares
|
Amount
($0.01
Par) |
Shares
|
Amount
($0.01
Par) |
Additional
paid-in
capital
|
Accumulated
deficit
|
Total
shareholders’
(deficit)
equity
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
Balances
at December 31, 2018
|
-
|
-
|
100,000
|
1,000
|
-
|
-
|
-
|
-
|
-
|
(257,629)
|
(256,629)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
year
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(421,080)
|
(421,080)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares
for the acquisition of investment securities
|
-
|
-
|
1,906,090
|
19,061
|
-
|
-
|
-
|
-
|
362,157
|
-
|
381,218
|
|
Issuance of shares
for conversion of debt with related parties
|
-
|
-
|
3,027,033
|
30,270
|
-
|
-
|
-
|
-
|
1,179,634
|
-
|
1,209,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at December 31, 2019
|
-
|
-
|
5,033,123
|
50,331
|
-
|
-
|
-
|
-
|
1,541,791
|
(678,709)
|
913,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(335,534)
|
(335,534)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of
common stock to Class B Common Stock
|
-
|
-
|
(5,033,123)
|
(50,331)
|
-
|
-
|
5,033,123
|
50,331
|
-
|
-
|
-
|
|
Issuance of Class A
Common Stock and preferred stocks
|
491,665
|
4,917
|
-
|
-
|
491,665
|
4,917
|
-
|
-
|
2,600,657
|
-
|
2,610,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at December 31, 2020
|
491,665
|
4,917
|
-
|
-
|
491,665
|
4,917
|
5,033,123
|
50,331
|
4,142,448
|
(1,014,243)
|
3,188,370
|
See accompanying Notes to the financial statements.
4
Statements of Cash Flows
For the years ended December 31, 2020 and 2019
|
|
Year ended December
31, 2020
|
Year ended December
31, 2019
|
|
|
$
|
$
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
Net
loss
|
(335,534)
|
(421,080)
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash (used in) provided by operating
activities:
|
|
|
|
Unrealized (gain)
loss on investments securities
|
(55,788)
|
123,663
|
|
Dividend on
preferred stocks
|
73,041
|
-
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Loan originations
and payments, net
|
(860,070)
|
(389)
|
|
Loan interest
receivables
|
(2,967)
|
(6,600)
|
|
Amount due from
related party
|
(24,583)
|
-
|
|
Other
receivables
|
-
|
15,319
|
|
Accounts payable
and accrued expenses
|
67,791
|
151,021
|
|
|
|
|
|
Net
cash used in operating activities
|
(1,138,110)
|
(138,066)
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
Issuance of
shares
|
2,610,491
|
-
|
|
Dividend paid on
preferred stocks
|
(73,041)
|
-
|
|
|
|
|
|
Net
cash provided by financing activities
|
2,537,450
|
-
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
1,399,340
|
(138,066)
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
449,115
|
587,181
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
1,848,455
|
449,115
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Cash
paid for:
|
|
|
|
Interest
|
-
|
-
|
|
|
|
|
|
Income
taxes
|
-
|
-
|
See accompanying Notes to the financial statements.
5
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 1 - Nature of Operations and Basis of
Presentation
Nature of Operations
American
Pacific Bancorp Inc. (the “Company”) was incorporated
in the State of Texas as a for-profit Company on November 8, 2016
and established a fiscal year end of December 31. The Company was
organized to own shares of a number of community banks and to
provide other financial services. The Company’s current
primary source of revenue is from providing loans to its
customers.
As of
December 31, 2020, the Company has not hired any full-time
employees and not rented any office space for operations. All the
current work is done by contractors.
Basis of Presentation
The
financial statements present the balance sheets, the statements of
operations, the statements of changes in shareholders’ equity
and the statements of cash flows of the Company. These financial
statements and accompanying notes are presented in the United
States dollars and have been prepared in accordance with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”).
Note 2 - Summary of Significant Accounting and Reporting
Policy
Use of estimates
The
preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those
estimates.
Cash and cash equivalents
The
Company considers all highly liquid investments with a maturity of
three months or less at the date of acquisition to be cash
equivalents.
Loans receivables
Loans
that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at
their principal outstanding balance, net of origination fees and
costs, and an allowance for loan losses. Interest income is accrued
on the unpaid principal balance. Loan origination fees, net of
certain direct loan origination costs are deferred and recognized
in interest income using the level-yield method without
anticipating prepayments.
For
loans amortized at cost, interest income is accrued based on the
unpaid principal balance. The accrual of interest on loans is
discontinued at the time the loan is 90 days past due unless the
loan is well-secured and in process of collection. Past-due status
is based on contractual terms of the loan. In all cases, loans are
placed on nonaccrual or charged off at an earlier date if
collection of principal or interest is considered
doubtful.
All
interest accrued but not received for loans place on non-accrual is
reversed against interest income. Interest received on such loans
is accounted for on the cash-basis or cost-recovery method, until
qualifying for return to accrual. Under the cost-recovery method,
interest income is not recognized until the loan balance is reduced
to zero. Under the cash-basis method, interest income is recorded
when the payment is received in cash. Loans are returned to accrual
status when all the principal and interest amounts contractually
due are brought current and future payments are reasonably
assured.
6
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 2 - Summary of Significant Accounting and Reporting Policy -
continued
Allowance for Loan Losses
The
allowance for loan losses is a valuation allowance for probable
incurred credit losses. Loan losses are charged against the
allowance when management believes the uncollectibility of a loan
balance is confirmed. Subsequent recoveries, if any, are credited
to the allowance. Management estimates the allowance balance
required using past loan loss experience, the nature and volume of
the portfolio, information about specific borrower situations and
estimated collateral values, economic conditions, and other
factors. Allocations of the allowance may be made for specific
loans, but the entire allowance is available for any loan that, in
management’s judgment, should be charged off.
The
allowance consists of specific component. The specific component
relates to loans that are individually classified as impaired when,
based on current information and events, it is probable that the
Company will be unable to collect all amounts due according to the
contractual terms of the loan agreement. Loans for which the terms
have been modified resulting in a concession, and for which the
borrower is experiencing financial difficulties, are classified as
impaired.
Factors
considered by management in determining impairment include payment
status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. Loans that
experience insignificant payment delays and payment shortfalls
generally are not classified as impaired. Management determines the
significance of payment delays and payment shortfalls on
case-by-case basis, taking into consideration all of the
circumstances surrounding the loan and the borrower, including the
length of the delay, the reasons for the delay, the
borrower’s prior payment record, and the amount of the
shortfall in relation to the principal and interest
owed.
Investments Securities at Fair Value
The
Company holds investments in equity securities with readily
determinable fair values.
Prior
to the adoption of Financial Accounting Standards Board
(“FASB”) Accounting Standards Update
(“ASU”) 2016-01, Financial Instruments-Overall (Subtopic
825-10): Recognition and Measurement of Financial Assets and
Financial Liabilities (“ASU 2016-01”),
investments in equity securities were classified as trading
securities, stated at fair value, and unrealized holding gains and
losses, net of related tax benefits, were recorded directly to net
(loss).
Upon
the adoption of ASU 2016-01, the Company records all equity
investments with readily determinable fair values at fair value
calculated by the publicly traded stock price at the close of the
reporting period.
Earnings (loss) per share
The
Company presents basic and diluted earnings (loss) per share data
for its common stocks. Basic earnings (loss) per share is
calculated by dividing the profit or loss attributable to common
stockholders of the Company by the weighted-average number of
common stocks outstanding during the year, adjusted for treasury
shares held by the Company.
Diluted
earnings (loss) per share is determined by adjusting the profit or
loss attributable to common stockholders and the weighted-average
number of common stocks outstanding, adjusted for treasury shares
held, for the effects of all dilutive potential ordinary shares,
which comprise convertible securities, such as stock options,
convertible bonds and warrants. Due to the limited operations of
the Company, there are no potentially dilutive securities
outstanding on December 31, 2020 and 2019.
7
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 2 - Summary of Significant Accounting and Reporting Policy -
continued
Income taxes
The
provision for income taxes includes income taxes currently payable
and those deferred as a result of temporary differences between the
financial statements and the income tax basis of assets and
liabilities. Deferred income tax assets and liabilities are
measured using enacted income tax rates expected to apply to
taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect of a change in
income tax rates on deferred income tax assets and liabilities is
recognized in income or loss in the period that includes the
enactment date. A valuation allowance is provided to reduce
deferred tax assets to the amount of future tax benefit when it is
more likely than not that some portion or all of the deferred tax
assets will not be realized. Projected future taxable income and
ongoing tax planning strategies are considered and evaluated when
assessing the need for a valuation allowance. Any increase or
decrease in a valuation allowance could have a material adverse or
beneficial impact on the Company’s income tax provision and
net income or loss in the period the determination is
made.
Fair Value Measurements
ASC
820, Fair Value Measurement
and Disclosures, defines fair value as the exchange price
that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between market
participants on the measurement date. This topic also establishes a
fair value hierarchy which requires classification based on
observable and unobservable inputs when measuring fair value. There
are three levels of inputs that may be used to measure fair
value:
Level
1: Observable inputs such as quoted prices (unadjusted) in an
active market for identical assets or liabilities.
Level
2: Inputs other than quoted prices that are observable, either
directly or indirectly. These include quoted prices for similar
assets or liabilities in active markets and quoted prices for
identical or similar assets or liabilities in markets that are not
active.
Level
3: Unobservable inputs that are supported by little or no market
activity; therefore, the inputs are developed by the Company using
estimates and assumptions that the Company expects a market
participant would use, including pricing models, discounted cash
flow methodologies, or similar techniques.
The
carrying value of the Company’s financial instruments,
including cash and cash equivalents, loan receivables, loan
interest receivables, deposit paid, accounts payable and accrued
expenses and due to a related party approximate to their fair value
because of the short-term maturity of these financial
instruments.
8
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 2 - Summary of Significant Accounting and Reporting Policy -
continued
Recent Accounting Pronouncements
Accounting pronouncement adopted
In July
2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing
Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic
815): (Part I) Accounting for Certain Financial Instruments with
Down Round Features, (Part II) Replacement of the Indefinite
Deferral for Mandatorily Redeemable Financial Instruments of
Certain Nonpublic Entities and Certain Mandatorily Redeemable
Noncontrolling Interests with a Scope Exception (“ASU
2017-11”). ASU 2017-11 is intended to simplify the accounting
for financial instruments with characteristics of liabilities and
equity. Among the issues addressed are: (i) determining whether an
instrument (or embedded feature) is indexed to an entity’s
own stock; (ii) distinguishing liabilities from equity for
mandatorily redeemable financial instruments of certain nonpublic
entities; and (iii) identifying mandatorily redeemable
non-controlling interests. The Company adopted ASU 2017-11 on
January 1, 2019 and determined that this ASU does not have a
material impact on the financial statements.
In
August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure
Framework: Changes to the Disclosure Requirements for Fair Value
Measurement (“ASU 2018-13”). ASU 2018-13 is
intended to improve the effectiveness of fair value measurement
disclosures. ASU 2018-13 is effective for fiscal years beginning
after December 15, 2019, and interim periods within those fiscal
years. Early adoption is permitted. The Company determined that ASU
2018-13 did not have a material impact on its financial
statements.
In
response to the COVID-19 pandemic, the Coronavirus Aid, Relief and
Economic Security Act (“CARES Act”) was signed into law
in March 2020. The CARES Act lifts certain deduction limitations
originally imposed by the Tax Cuts and Jobs Act of 2017
(“2017 Tax Act”). Corporate taxpayers may carryback net
operating losses (NOLs) originating between 2018 and 2020 for up to
five years, which was not previously allowed under the 2017 Tax
Act. The CARES Act also eliminates the 80% of taxable income
limitations by allowing corporate entities to fully utilize NOL
carryforwards to offset taxable income in 2018, 2019 or 2020.
Taxpayers may generally deduct interest up to the sum of 50% of
adjusted taxable income plus business interest income (30% limit
under the 2017 Tax Act) for 2019 and 2020. The CARES Act allows
taxpayers with alternative minimum tax credits to claim a refund in
2020 for the entire amount of the credits instead of recovering the
credits through refunds over a period of years, as originally
enacted by the 2017 Tax Act.
In
addition, the CARES Act raises the corporate charitable deduction
limit to 25% of taxable income and makes qualified improvement
property generally eligible for 15-year cost-recovery and 100%
bonus depreciation. The enactment of the CARES Act did not result
in any material adjustments to our income tax provision for the
years ended December 31, 2020.
9
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 2 - Summary of Significant Accounting and Reporting Policy -
continued
Recent Accounting Pronouncements
Accounting pronouncement not yet adopted
In June
2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses
(Topic 326), which modifies the measurement of expected
credit losses of certain financial instruments. The Company will
adopt this ASU on January 1, 2023. Management is currently
evaluating this ASU to determine its impact to the Company's
financial statements.
In
December 2019, The FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the
Accounting for Income Taxes. The amendments in this Update
simplify the accounting for income taxes by removing certain
exceptions to the general principles in Topic 740. The amendments
also improve consistent application of and simplify GAAP for other
areas of Topic 740 by clarifying and amending existing guidance.
For non-public companies, the amendments in this Update are
effective for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2021. The Company is currently
evaluating the impact of ASU 2020-04 on its future financial
statements.
In
March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):
Facilitation of Reference Rate Reform on Financial
Reporting. The amendments in this Update provide optional
expedients and exceptions for applying generally accepted
accounting principles (GAAP) to contracts, hedging relationships,
and other transactions affected by reference rate reform if certain
criteria are met. The amendments in this Update apply only to
contracts, hedging relationships, and other transactions that
reference LIBOR or another reference rate expected to be
discontinued because of reference rate reform. The Company’s
line of credit agreement provides procedures for determining a
replacement or alternative rate in the event that LIBOR is
unavailable. The amendments in this Update are effective for all
entities as of March 12, 2020 through December 31, 2022. The
Company is currently evaluating the impact of ASU 2020-04 on its
future financial statements.
The
Company has implemented all new accounting pronouncements that are
in effect and that may impact its financial statements and does not
believe that there are any other new accounting pronouncements that
have been issued that might have a material impact on its financial
position or results of operations.
Note 3 - Loans
On June
13, 2019, the Company extended the credit in the form of a
promissory note for $249,540, bearing interest at 15%, with a
maturity date of May 15, 2020. On June 5, 2020, the Company further
extended the same credit in the form of a promissory note for
$249,540, bearing interest at 15%, with a maturity date of May 14,
2021. This promissory note is secured by a deed of trust on a piece
of land, which is approximately 315 acres, and located in Coke
County, Texas.
As of
December 31, 2019, the principal balance was $249,540, net of
unamortized deferred origination fees of Nil. As part of the
transaction, the Company charged loan origination fees of $2,514,
which was recorded as deferred revenue and is amortized over the
life of the loan.
On May
15, 2020, the Company provided a credit in the form of a promissory
note for $20,070, bearing interest at 15%, with a maturity date of
May 14, 2021. This promissory note is secured by a deed of trust on
a mobile home and lot located in Coke County, Texas.
On
November 24, 2020, the Company lend $560,000 to Mr. Chan Tung Moe,
son of Mr. Chan Heng Fai, Chairman of the Company, bearing interest
at 6%, with a maturity date of November 23, 2023. This loan is
secured by an irrevocable letter of instruction on 80,000 shares of
Alset EHome International Inc.
On
November 24, 2020, the Company lend $280,000 to Mr. Lim Sheng Hon
Danny, an employee of Alset International Limited, a company
connected with Mr. Chan Heng Fai, bearing interest at 6%, with a
maturity date of November 23, 2023. This loan is secured by an
irrevocable letter of instruction on 40,000 shares of Alset EHome
International Inc.
10
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 4 - Common Stocks
On
April 4, 2019, 550,000 shares of common stock were issued to the
Company’s Chairman with consideration of $110,000 in exchange
for the consultancy services provided by the Chairman. On the same
day, 1,906,090 shares of common stock were issued to the Chairman
in consideration for securities with a fair value of $381,218
acquired from the Chairman.
On June
30, 2019, 2,219,433 shares of common stock were issued to the
Chairman and 257,600 shares of common stock were issued to a
director of the Company in settlement of amounts due to related
parties in an aggregate amount of $1,099,904.
On
February 14, 2020, the Company increased its authorized shares of
common stock from 100,000,000 to 200,000,000 with a par value of
$0.01 per share which consists of 100,000,000 shares of Class A
Common Stock and 100,000,000 shares of Class B Common Stock. The
Class A Common Stock and Class B Common Stock shall have the same
rights, protections, and power; provided however, that each holder
of Class A Common Stock shall also have the right to one (1) vote
per share of Class A Common Stock held of record by such holder and
each holder of Class B Common Stock shall have the right to ten
(10) votes per share of Class B Common Stock held of record by such
holder. On the same day, 5,033,123 issued and outstanding shares of
common stock were converted into shares of Class B Common
Stock.
During
March and July, 2020, the Company completed a private offer (the
“Private Offer”) of 491,665 units. Each unit comprised
of one share of Class A Common Stock with par value of $0.01 per
share and one Series A 5% Cumulative Preferred Stock with a par
value of $0.01 per share (the “Series A Preferred
Stock”), at a subscription price of $6 per unit. The net
proceeds from the private offer were $2,610,491 from seven
investors, after transaction costs amounting to $339,499. A total
491,665 shares of Class A Common Stock and 491,665 shares of Series
A Preferred Stock were issued.
Note 5 - Preferred Stock
As
detailed in Note 4, during March and July, 2020, the Company issued
491,665 shares of Series A Preferred Stock to independent third
parties under the Private Offer.
The
holders of Series A Preferred Stock shall be entitled to receive,
on each share of Series A Preferred Stock, out of funds legally
available for the payment of dividends under Texas law, cumulative
cash dividends with respect to each dividend period at a per annum
rate of 5% on (i) the amount of $6 per share of Series A Preferred
Stock and (ii) the amount of accrued and unpaid dividends on such
share of Series A Preferred Stock, if any.
In the
event of any liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or involuntary, holders of Series
A Preferred Stock shall be entitled to receive for each share of
Series A Preferred Stock, out of the assets of the Company or
proceeds thereof (whether capital or surplus) available for
distribution to shareholders of the Company, and after satisfaction
of all liabilities and obligations to creditors of the Company,
before any distribution of such assets or proceeds is made to or
set aside for the holders of Common Stock and any other stock of
the Company ranking junior to the Series A Preferred Stock as to
such distribution, payment in full in an amount equal to the sum of
(i) $6 per share and (ii) the accrued and unpaid dividends thereon,
whether or not declared, to the date of payment.
11
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 5 - Preferred Stock - continued
The
Company, at its option, may redeem, in whole at any time or in part
from time to time, the shares of Series A Preferred Stock at the
time outstanding, upon notice given as provided in the certificate
of designation executed on February 7, 2020 (“Certificate of
designation”), at a redemption price equal to the sum of (i)
the twenty (20) day average closing bid price of the Series A
Preferred Stock for such period prior to the declaration of such
optional redemption, if the Series A Preferred Stock shall be
traded on a national securities exchange, (or, if the Series A
Preferred Stock is not traded on a national securities exchange,
the fair market value as determined by the Board of Directors of
the Company), and (ii) the accrued and unpaid dividends thereon,
whether or not declared, to the redemption date. The redemption
price for any shares of Series A Preferred Stock shall be payable
on the redemption date to the holder of such shares against
surrender of the certificate(s) evidencing such shares to the
Company or its agent. Any declared but unpaid dividends payable on
a redemption date that occurs subsequent to the dividend record
date for a dividend period shall not be paid to the holder entitled
to receive the redemption price on the redemption date, but rather
shall be paid to the holder of record of the redeemed shares on
such dividend record date relating to the dividend payment date as
provided in Certificate of Designation. The holders of the Series A
Preferred Stock will have no right to require redemption of any
shares of Series A Preferred Stock.
The
holders of Series A Preferred Stock shall not have any voting
rights except as provided in the Certificate of
Designation.
During
the year ended December 31, 2020, dividend of $73,041 was declared
and paid to the holders of Series A Preferred Stock.
Note 6 - Investment securities at fair value
Financial
assets measured at fair value on a recurring basis are summarized
below and disclosed on the balance sheets as of December 31, 2020
and 2019:
|
|
|
Fair Value
Measurement using
|
|
||
|
|
Amount
at
cost
|
Level
1
|
Level
2
|
Level
3
|
Amount at fair
value
|
|
December 31,
2020
|
$
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
|
|
Investment
securities - trading
|
381,218
|
313,343
|
-
|
-
|
313,343
|
|
|
|
Fair Value
Measurement using
|
|
||
|
|
Amount
at
cost
|
Level
1
|
Level
2
|
Level
3
|
Amount at fair
value
|
|
December 31,
2019
|
$
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
|
|
Investment
securities - trading
|
381,218
|
257,555
|
-
|
-
|
257,555
|
Unrealized
loss on investment securities for the year ended December 31, 2019
was $123,663. Unrealized gain on investment securities for the year
ended December 31, 2020 was $55,788.
12
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 6 - Investment securities at fair value -
continued
As the
investment securities are U.S. trading stocks, we use Bloomberg
Market stock prices as the share prices to calculate the fair
value. The following chart shows details of the fair value of
investment securities at December 31, 2020 and 2019.
|
|
Share
price
December 31,
2020
|
Shares
|
Market
Value
December 31,
2020
|
Valuation
|
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
OptimumBank
Holdings, Inc.
(Related
party)
|
3.37
|
92,980
|
313,343
|
Investment in
securities at fair value
|
|
|
Share
price
December 31,
2019
|
Shares
|
Market
Value
December 31,
2019
|
Valuation
|
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
OptimumBank
Holdings, Inc.
(Related
party)
|
2.77
|
92,980
|
257,555
|
Investment in
securities at fair value
|
OptimumBank
Holdings, Inc. and the Company have a common director during the
years ended December 31, 2020 and 2019.
Note 7 - Related Party Transactions
Other
than those disclosed elsewhere in the financial statements, the
Company had the following material transactions with related
parties during the years:
The
Company incurred $60,000 and $60,000 during the years ended
December 31, 2020 and 2019, respectively, to a shareholder, who is
also a director of the Company, for consultant services in addition
to reimbursements for out-of-pocket expenses and other reimbursable
costs.
The
Company paid $16,000 and $16,000 during the years ended December
31, 2020 and 2019, respectively, to the CFO of the Company for
consultant services.
The
Company paid $16,000 and $16,000 during the years ended December
31, 2020 and 2019, respectively, to the General Counsel of the
Company for consultant services.
The
Company had no loans to officers or directors during the years
ended December 31, 2020 and 2019.
Due from related parties
As of
December 31, 2020, the Company’s due from a related party
amounting to $24,583 represent the cash advance to American Premium
Water Corp. which is an affiliate of the Company. The receivable
balances are unsecured, due on demand, and bear no
interest.
13
Notes to the Financial Statements
For the years ended December 31, 2020 and 2019
Note 8 - Income Taxes
On
December 22, 2017, the “Tax Cuts and Jobs Act” (TCJA)
was signed into law that significantly reformed the Internal
Revenue Code of 1986, as amended. The TCJA reduces the corporate
tax rate to 21.0% beginning with years starting January 1, 2018.
The deferred tax assets and liabilities have been adjusted to the
newly enacted U.S. corporate rate.
The
following table reconciles the difference between the actual tax
provision and the amount per the statutory federal income tax rate
of 21.0% for the years ended December 31, 2020 and
2019.
|
|
Year ended December
31, 2020
|
Year ended December
31, 2019
|
|
|
$
|
$
|
|
|
|
|
|
Income tax at
statutory rate
|
(55,124)
|
(65,327)
|
|
Less: change in
valuation allowance
|
55,124
|
65,327
|
|
|
|
|
|
|
-
|
-
|
Deferred
tax assets consist of the followings at December 31, 2020 and
2019:
|
|
December 31,
2020
|
December 31,
2019
|
|
|
$
|
$
|
|
Deferred income tax
assets
|
|
|
|
Investments
|
14,254
|
25,969
|
|
Net operating loss
carryforward
|
160,299
|
93,460
|
|
Less: valuation
allowance
|
(174,553)
|
(119,429)
|
|
|
|
|
|
Net deferred tax
asset
|
-
|
-
|
As of
December 31, 2020, the Company has federal net operating loss
carry-forwards of approximately $763,327, for which 197,390 is
subject to a 20-year carryforward period, and will begin to expire
in 2036, and $565,937 will carry forward indefinitely The full
utilization of the deferred tax assets in the future is dependent
upon the Company’s ability to generate taxable income.
Accordingly, a valuation allowance of an equal amount has been
established.
Note 9 - Subsequent Event
On
October 15, 2020, the Company entered into an acquisition agreement
to acquire 3,500,001 common shares of Hengfeng Finance Limited
(“HFL”), representing 100% of the common shares of HFL,
in consideration for 250,000 shares of the Company’s Class A
Common Stock. HFL is incorporated in Hong Kong with limited
liability. The principal activities of HFL are money lending,
securities trading and investment. Pursuant to the terms of this
acquisition agreement, HLF’s ultimate shareholder, the
Chairman of the Company, was entitled to one share of the
Company’s Class A Common Stock in exchange for every 14
shares of HFL’s common stock. This transaction closed on
April 21, 2021.
14
Exhibit 99.2
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
On March 12, 2021, the Company entered into a Securities Purchase
Agreement (the “SPA”) with Chan Heng Fai, the founder,
Chairman and Chief Executive Officer of the Company, for four
proposed transactions, consisting of (i) purchase of certain
warrants (the “Warrants”) to purchase 1,500,000,000
shares of Alset International Limited (“Alset
International”), which was valued at $28,363,966; (ii)
purchase of all of the issued and outstanding stock of LiquidValue
Development Pte Ltd. (“LVD”), which was valued at
$173,395; (iii) purchase of 62,122,908 ordinary shares in True
Partners Capital Holding Limited (HKG: 8657) (“True
Partners”), which was valued at $6,729,629; and (iv) purchase
of 4,775,523 shares of the common stock of American Pacific Bancorp
Inc. (“APB”), which was valued at $28,653,138. The
total amount of above four transactions was $63,920,129, payable on
the Closing Date by the Company, in four convertible promissory
notes (collectively, the “Alset CPNs”). Subject to the
approval of the Company’s shareholders, the Alset CPNs shall
be convertible into shares of the Company’s common stock, par
value $0.001 per share, at a conversion price equal of $5.59 per
share. This conversion price is equivalent to the average of the
five closing share prices of the Company’s common stock
preceding January 4, 2021, as quoted by Bloomberg L.P.
The following unaudited pro forma combined financial statements
were prepared by applying certain pro forma adjustments to the
historical financial statements of the Company. The pro forma
adjustments give effect to the four transactions described
above.
The unaudited pro forma combined statements of operations for our
fiscal years ended December 31, 2020 and 2019, respectively, give
effect to the four transactions as if they had occurred on January
1st of each year.
We determined that the four transactions described above were
transactions between entities under common control, similar to a
pooling of interest under APB Opinion 16. FASB ASC Topic 805,
Business Combinations (“ASC 805”) provides guidance to
present financial statements.
These unaudited pro forma consolidated financial statements do not
purport to represent what our results of operations or financial
condition would have been had the four transactions actually
occurred on the assumed dates, nor do they purport to project our
results of operations or financial condition for any future period
or future date. You should read these unaudited pro forma combined
financial statements in conjunction with the historical financial statements, including the
related notes.
For the Years Ended December 31, 2020 and 2019
(Expressed in U.S. Dollars, except number of shares)
|
|
Alset EHome International 2020
|
American Pacific Bancorp 2020
|
Pro Forma Adjustments *
|
Pro Forma 2020
|
Alset EHome International 2019
|
American Pacific Bancorp 2019
|
Pro Forma Adjustments *
|
Pro Forma 2019
|
|
Revenue
|
(Audited)
|
(Audited)
|
|
(Unaudited)
|
(Audited)
|
(Audited)
|
|
(Unaudited)
|
|
Property
Sales
|
$13,643,689
|
$-
|
|
$13,643,689
|
$22,855,446
|
$-
|
|
$22,855,446
|
|
Biohealth
Product Sales
|
2,594,511
|
-
|
|
2,594,511
|
1,371,298
|
-
|
|
1,371,298
|
|
Others
|
-
|
-
|
|
-
|
31,209
|
-
|
|
31,209
|
|
Total
Revenue
|
16,238,200
|
-
|
|
16,238,200
|
24,257,953
|
-
|
|
24,257,953
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
Cost of
Sales
|
12,085,574
|
-
|
|
12,085,574
|
19,968,757
|
-
|
|
19,968,757
|
|
General and
Administrative
|
5,843,067
|
369,882
|
261,739
|
6,474,688
|
5,860,144
|
347,489
|
232,266
|
6,439,899
|
|
Inventory
Written Off
|
-
|
-
|
|
-
|
141,265
|
-
|
|
141,265
|
|
Impairment of
Real Estate
|
-
|
-
|
|
-
|
5,230,828
|
-
|
|
5,230,828
|
|
Other
Operating Expenses
|
-
|
-
|
600,270
|
600,270
|
-
|
-
|
327,477
|
327,477
|
|
Total
Operating Expenses
|
17,928,641
|
369,882
|
|
19,160,532
|
31,200,994
|
347,489
|
|
32,108,226
|
|
|
|
|
|
-
|
|
|
|
|
|
Operating
Losses From Continuing Operations
|
(1,690,441)
|
(369,882)
|
|
(2,922,332)
|
(6,943,041)
|
(347,489)
|
|
(7,850,273)
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
|
|
Interest
Income
|
16,321
|
49,020
|
|
65,341
|
52,145
|
48,582
|
|
100,727
|
|
Interest
Expense
|
(147,640)
|
-
|
|
(147,640)
|
(372,902)
|
-
|
|
(372,902)
|
|
Gain on
Disposal of Subsidiary
|
-
|
-
|
|
-
|
299,255
|
-
|
|
299,255
|
|
Net Gain in
the Unconsolidated Period
|
61,346
|
-
|
|
61,346
|
-
|
-
|
|
-
|
|
Foreign
Exchange Transaction Loss
|
(354,392)
|
-
|
|
(354,392)
|
(341,415)
|
-
|
|
(341,415)
|
|
Unrealized
Gain (Loss) on Securities Investment
|
(1,750,454)
|
55,788
|
(1,978,434)
|
(3,673,100)
|
320,032
|
(123,663)
|
|
196,369
|
|
Realized Gain
on Securities Investment
|
1,115
|
-
|
|
1,115
|
7,944
|
-
|
|
7,944
|
|
Loss on
Investment on Security by Equity Method
|
(227,643)
|
-
|
|
(227,643)
|
-
|
-
|
|
-
|
|
Other
Expense
|
|
(73,041)
|
|
(73,041)
|
-
|
-
|
|
-
|
|
Other
Income
|
119,334
|
2,581
|
543,490
|
665,405
|
17,414
|
1,490
|
115
|
19,019
|
|
Total
Other Income (Expense), Net
|
(2,282,013)
|
34,348
|
|
(3,682,609)
|
(17,527)
|
(73,591)
|
|
(91,003)
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss from
Continuing Operations Before Income Taxes
|
(3,972,454)
|
(335,534)
|
|
(6,604,941)
|
(6,960,568)
|
(421,080)
|
|
(7,941,276)
|
|
|
|
|
|
-
|
|
|
|
|
|
Income Tax
Expense from Continuing Operations
|
(8,543)
|
-
|
|
(8,543)
|
(431,388)
|
-
|
|
(431,388)
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Income from Continuing Operations
|
(3,980,997)
|
(335,534)
|
|
(6,613,484)
|
(7,391,956)
|
(421,080)
|
|
(8,372,664)
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
Discontinued Operations, Net of Tax
|
(417,438)
|
-
|
|
(417,438)
|
(661,472)
|
-
|
|
(661,472)
|
|
Net
Loss
|
(4,398,435)
|
(335,534)
|
|
(7,030,922)
|
(8,053,428)
|
(421,080)
|
|
(9,034,136)
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Attributable to Non-Controlling Interest
|
(1,881,559)
|
|
(45,498)
|
(1,927,057)
|
(2,822,963)
|
|
(57,098)
|
(2,880,061)
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Income Attributable to Common Stockholders
|
$(2,516,876)
|
|
|
$(5,103,865)
|
$(5,230,465)
|
|
|
$(6,154,075)
|
|
|
|
|
|
|
|
|
|
|
|
Other
Comprehensive Income (Loss), Net
|
|
|
|
|
|
|
|
|
|
Unrealized
Gain on Securities Investment
|
19,486
|
|
|
19,486
|
(55,213)
|
|
|
(55,213)
|
|
Foreign
Currency Translation Adjustment
|
1,148,898
|
|
|
1,148,898
|
10,028
|
|
|
10,028
|
|
Comprehensive
Loss
|
(3,230,051)
|
|
|
(5,862,538)
|
(8,098,613)
|
|
|
(9,079,321)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss Attributable to Non-controlling Interests
|
(1,314,761)
|
|
(45,498)
|
(1,360,259)
|
(2,836,998)
|
|
(57,098)
|
(2,894,096)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss Attributable to Common Stockholders
|
$(1,915,290)
|
|
|
$(4,502,279)
|
$(5,261,615)
|
|
|
$(6,185,225)
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) Per Share - Basic and Diluted
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$(0.27)
|
|
|
$(0.57)
|
$(0.47)
|
|
|
$(0.57)
|
|
Discontinued
Operations
|
$(0.03)
|
|
|
$(0.04)
|
$(0.05)
|
|
|
$(0.05)
|
|
Net Loss Per
Common Share
|
$(0.30)
|
|
|
$(0.61)
|
$(0.52)
|
|
|
$(0.61)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares Outstanding - Basic and
Diluted
|
8,352,425
|
|
|
8,352,425
|
10,001,000
|
|
|
10,001,000
|
Unaudited Pro Forma Consolidated Balance
Sheets
|
|
Alset EHome International as Reported December 31,
2020
|
American Pacific Bancorp as Reported December 31, 2020
(1)
|
Pro Forma Adjustments *
|
Pro Forma December 31, 2020
|
Alset EHome International as Reported December 31,
2019
|
American Pacific Bancorp as Reported December 31, 2019
(1)
|
Pro Forma Adjustments *
|
Pro Forma December 31, 2019
|
|
Assets:
|
(Audited)
|
(Audited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
(Audited)
|
(Unaudited)
|
(Unaudited)
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
$22,124,491
|
$1,848,455
|
$492,977
|
$24,465,923
|
$2,774,587
|
$449,115
|
$257,437
|
$3,481,139
|
|
Restricted
Cash
|
6,769,533
|
-
|
|
6,769,533
|
4,447,678
|
-
|
|
4,447,678
|
|
Account
Receivables, Net
|
1,366,194
|
-
|
|
1,366,194
|
170,442
|
-
|
|
170,442
|
|
Other
Receivables
|
270,222
|
279,177
|
95,177
|
644,576
|
681,677
|
256,140
|
|
937,817
|
|
Note
Receivables - Related Parties
|
624,986
|
24,583
|
|
649,569
|
-
|
-
|
|
-
|
|
Prepaid
Expenses
|
1,470,680
|
-
|
|
1,470,680
|
145,186
|
-
|
|
145,186
|
|
Inventory
|
90,068
|
-
|
|
90,068
|
116,698
|
-
|
|
116,698
|
|
Investment
in Securities at Fair Value
|
48,857,483
|
313,343
|
6,652,477
|
55,823,303
|
3,015,698
|
257,555
|
10,803,192
|
14,076,445
|
|
Investment
in Securities at Cost
|
280,516
|
-
|
|
280,516
|
200,128
|
-
|
|
200,128
|
|
Deposits
|
47,019
|
-
|
|
47,019
|
70,208
|
-
|
|
70,208
|
|
Current
Assets from Discontinued Operations
|
-
|
-
|
|
-
|
139,431
|
-
|
|
139,431
|
|
Total
Current Assets
|
81,901,192
|
2,465,558
|
|
91,607,381
|
11,761,733
|
962,810
|
|
23,785,172
|
|
|
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
|
|
|
|
|
|
|
|
Properties
under Development
|
20,505,591
|
-
|
|
20,505,591
|
23,884,704
|
-
|
|
23,884,704
|
|
Operating
Lease Right-Of-Use Asset
|
574,754
|
-
|
|
574,754
|
146,058
|
-
|
|
146,058
|
|
Deposit
|
249,676
|
-
|
|
249,676
|
-
|
-
|
|
-
|
|
Loan
Receivable
|
-
|
840,000
|
|
840,000
|
-
|
-
|
|
-
|
|
Property and
Equipment, Net
|
85,365
|
-
|
|
85,365
|
80,285
|
-
|
|
80,285
|
|
Total
Assets
|
$103,316,578
|
$3,305,558
|
|
$113,862,767
|
$35,872,780
|
$962,810
|
|
$47,896,219
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity:
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
Payable and Accrued Expenses
|
$1,553,132
|
$117,188
|
|
$1,670,320
|
$3,995,001
|
$49,397
|
$2,972
|
$4,047,370
|
|
Accrued
Interest - Related Parties
|
-
|
-
|
|
-
|
834,536
|
-
|
|
834,536
|
|
Deferred
Revenue
|
2,867,226
|
-
|
|
2,867,226
|
258,594
|
-
|
|
258,594
|
|
Builder
Deposits
|
1,262,336
|
-
|
|
1,262,336
|
890,069
|
-
|
|
890,069
|
|
Operating
Lease Liability
|
381,412
|
-
|
|
381,412
|
58,865
|
-
|
|
58,865
|
|
Notes
Payable
|
172,706
|
-
|
|
172,706
|
157,105
|
-
|
|
157,105
|
|
Notes
Payable - Related Parties
|
1,526,208
|
-
|
64,743,952
|
66,270,160
|
410,000
|
-
|
66,185,213
|
66,595,213
|
|
Income
Tax Payable
|
-
|
-
|
|
-
|
420,327
|
-
|
|
420,327
|
|
Current
Liabilities from Discontinued Operations
|
-
|
-
|
|
-
|
7,021
|
-
|
|
7,021
|
|
Total
Current Liabilities
|
7,763,020
|
117,188
|
|
72,624,160
|
7,031,518
|
49,397
|
|
73,269,100
|
|
Long-Term
Liabilities:
|
|
|
|
|
|
|
|
|
|
Builder
Deposits
|
-
|
-
|
|
-
|
1,555,200
|
-
|
|
1,555,200
|
|
Operating
Lease Liability
|
193,342
|
-
|
|
193,342
|
91,330
|
-
|
|
91,330
|
|
Note
Payable, Net of Discount
|
636,362
|
-
|
|
636,362
|
-
|
-
|
|
-
|
|
Notes
Payable - Related Parties
|
-
|
-
|
|
-
|
4,971,401
|
-
|
|
4,971,401
|
|
Total
Liabilities
|
8,592,724
|
117,188
|
|
73,453,864
|
13,649,449
|
49,397
|
|
79,887,031
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
-
|
4,917
|
(4,917)
|
-**
|
-
|
-
|
|
|
|
Common
Stock
|
8,570
|
55,248
|
(55,248)
|
8,570**
|
10,001
|
50,331
|
(50,331)
|
10,001
|
|
Additional
Paid In Capital
|
97,950,440
|
4,142,448
|
(55,057,499)
|
47,035,389
|
54,263,717
|
1,541,791
|
(54,726,709)
|
1,078,799
|
|
Accumulated
Deficit
|
(43,010,991)
|
(1,014,243)
|
(2,733,485)
|
(46,758,719)
|
(40,494,115)
|
(678,709)
|
(469,780)
|
(41,642,604)
|
|
Accumulated
Other Comprehensive Income
|
2,153,318
|
-
|
(9,980)
|
2,143,338
|
1,468,269
|
-
|
(4,593)
|
1,463,676
|
|
Equity
Attributable to Stockholders of the Company
|
57,101,337
|
3,188,370
|
|
2,428,578
|
15,247,872
|
913,413
|
|
(39,090,128)
|
|
Non-controlling
Interests
|
37,622,517
|
-
|
357,808
|
37,980,325
|
6,975,459
|
-
|
123,857
|
7,099,316
|
|
Total
Stockholders' Equity
|
94,723,854
|
3,188,370
|
|
40,408,903
|
22,223,331
|
913,413
|
|
(31,990,812)
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$103,316,578
|
$3,305,558
|
|
$113,862,767
|
$35,872,780
|
$962,810
|
|
$47,896,219
|
*Proforma Adjustments:
(1)
4,775,523
common shares of APB represented 86.4% of APB’s total
outstanding shares as of March 12, 2021, the date the PSA was
entered with Mr. Chan Heng Fai. In the Unaudited Proforma Financial
Statements, we assume the same ownership in the years of 2020 and
2019 and as of December 31, 2020 and 2019. We adjusted
non-controlling interest of APB in both Unaudited Pro Forma
Consolidated Balance Sheets and Unaudited Pro Forma Consolidated
Statements of Operations and Other Comprehensive Loss.
(2)
True
Partners Capital Holding Limited (HKG: 8657) started trading on
Hong Kong Stock Exchange at October 16, 2020. We assume the fair
value of 62,122,908 ordinary shares of Ture Partners was $8,629,280
on January 1, 2020 and 2019, the fair value on October 16, 2020,
which was calculated under the closing market price on that
day.
(3)
The Company started trading on November 24, 2020.
We assumed the market share price of the Company was $5.59 per
share or less, the conversion price on the four promissory notes,
as of January 1, 2020 and 2019. Based on this assumption, no
Beneficiary Conversion Feature (“BCF”) was recorded in
the pro forma financial statements. However, BCF may be recorded in
the future actual financial statements under ASU
2020-06, Debt—Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an
Entity’s Own Equity and may have huge impact on the
future actual financial statements. Based on the Company’s stock price on March
12, 2021, the agreement date as the commitment date of BCF, the BCF
intrinsic value is approximately $50 million, which will be
recorded as debt discount and amortized on a monthly basis until
the expiration date of the promissory notes or the conversion date,
whichever is earlier.
**Preferred Stock and Common Stock
In
both Unaudited Pro Forma Consolidated Balance Sheets and Unaudited
Pro Forma Consolidated Statements of Operations and Other
Comprehensive Loss, we do not include the transaction that Mr. Chan
Heng Fai exchanged his common stock to preferred stock on May 3,
2021. The management expects that he will convert the preferred
stock back to common stock in a short period.