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Summary of Significant Accounting Policies | 3 Months Ended
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Mar. 31, 2021
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies |
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. These interim financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or any other interim periods or for any other future years. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2020 filed on April 14, 2021. The consolidated financial statements include all accounts of the Company and its majority owned and controlled subsidiaries. The Company consolidates entities in which it owns more than 50% of the voting common stock and controls operations. All intercompany transactions and balances among consolidated subsidiaries have been eliminated. The Company’s consolidated financial statements include the financial position, results of operations and cash flows of the following entities as of March 31, 2021 and December 31, 2020, as follows:
|  |  |  | Attributable interest as of, |
Name of subsidiary consolidated under AEI |  | State or other jurisdiction of incorporation or organization |  | March 31, 2021 |  |  | December 31, 2020 |
|  |  |  |  | % |  |  |  | % |
Hengfai International Pte. Ltd |  | Singapore |  |  | 100 |  |  |  | 100 |
Hengfai Business Development Pte. Ltd |  | Singapore |  |  | 100 |  |  |  | 100 |
Heng Fai Enterprises Pte. Ltd. |  | Singapore |  |  | - |  |  |  | 100 |
Global eHealth Limited |  | Hong Kong |  |  | 100 |  |  |  | 100 |
Alset International Inc. (f.k.a. Singapore eDevelopment Limited) |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Singapore Construction & Development Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Art eStudio Pte. Ltd. |  | Singapore |  |  | 29.1 | * |  |  | 29.1 | *
Singapore Construction Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Global BioMedical Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Alset Innovation Pte. Ltd. (f.k.a. SeD Investment Pte. Ltd.) |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Health Wealth Happiness Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
SeD Capital Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
LiquidValue Asset Management Pte. Ltd. (f.k.a. HengFai Asset Management Pte. Ltd.) |  | Singapore |  |  | 64.8 |  |  |  | 46.9 | *
SeD Home Limited |  | Hong Kong |  |  | 57.1 |  |  |  | 57.1 |
SeD Management Pte. Ltd. (f.k.a. SeD Reits Management Pte. Ltd.) |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Global TechFund of Fund Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Singapore eChainLogistic Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
BMI Capital Partners International Limited. |  | Hong Kong |  |  | 57.1 |  |  |  | 57.1 |
SeD Perth Pty. Ltd. |  | Australia |  |  | 57.1 |  |  |  | 57.1 |
SeD Intelligent Home Inc. (f.k.a SeD Home International, Inc.) |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
LiquidValue Development Inc. (f.k.a. SeD Intelligent Home Inc.) |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Alset EHome Inc. (f.k.a. Alset iHome Inc., SeD Home & REITs Inc. and SeD Home, Inc.) |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
SeD USA, LLC |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
150 Black Oak GP, Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
SeD Development USA Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
150 CCM Black Oak, Ltd. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
SeD Texas Home, LLC |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
SeD Ballenger, LLC |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
SeD Maryland Development, LLC |  | United States of America |  |  | 47.7 | * |  |  | 47.8 | *
SeD Development Management, LLC |  | United States of America |  |  | 48.5 | * |  |  | 48.6 | *
SeD Builder, LLC |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
GigWorld Inc. (f.k.a. HotApp Blockchain Inc.) |  | United States of America |  |  | 56.9 |  |  |  | 57.0 |
HotApp BlockChain Pte. Ltd. (f.k.a. HotApps International Pte. Ltd.) |  | Singapore |  |  | 56.9 |  |  |  | 57.0 |
HotApp International Limited |  | Hong Kong |  |  | 56.9 |  |  |  | 57.0 |
HWH International, Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Health Wealth & Happiness Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
HWH Multi-Strategy Investment, Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
SeDHome Rental Inc |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
SeD REIT Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Gig Stablecoin Inc. (f.k.a. Crypto Exchange Inc.) |  | United States of America |  |  | 56.9 |  |  |  | 57.0 |
HWH World Inc. |  | United States of America |  |  | 56.9 |  |  |  | 57.0 |
HWH World Pte. Ltd. |  | Singapore |  |  | 56.9 |  |  |  | 57.0 |
UBeauty Limited |  | Hong Kong |  |  | 57.1 |  |  |  | 57.1 |
WeBeauty Korea Inc |  | Korea |  |  | 57.1 |  |  |  | 57.1 |
HWH World Limited |  | Hong Kong |  |  | 57.1 |  |  |  | 57.1 |
HWH World Inc. |  | Korea |  |  | 57.1 |  |  |  | 57.1 |
Alset BioHealth Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Alset Energy Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
Alset Payment Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Alset World Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
BioHealth Water Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Impact BioHealth Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | 57.1 |
American Home REIT Inc. |  | United States of America |  |  | 64.8 |  |  |  | 46.9 | *
Alset Solar Inc. |  | United States of America |  |  | 45.7 | * |  |  | 45.7 | *
HWH KOR Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Open House Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Open Rental Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Hapi Cafe Inc. (Nevada) |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Global Solar REIT Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
OpenBiz Inc. |  | United States of America |  |  | 57.1 |  |  |  | 57.1 |
Hapi Cafe Inc. (Texas) |  | United States of America |  |  | 100 |  |  |  | 100 |
HWH (S) Pte. Ltd. |  | Singapore |  |  | 57.1 |  |  |  | - |
American Pacific Bancorp Inc. |  | United States of America |  |  | 86.44 |  |  |  | - |
Hengfeng Finance Limited |  | Hong Kong |  |  | 86.44 |  |  |  | - |
Decentralize Finance Inc. |  | United States of America |  |  | 86.44 |  |  |  | - |
True Partner International Limited |  | Hong Kong |  |  | 100 |  |  |  | - |
LiquidValue Development Pte. Ltd. |  | Singapore |  |  | 100 |  |  |  | - |
LiquidValue Development Limited. |  | Hong Kong |  |  | 100 |  |  |  | - |
*Although the Company indirectly holds percentage of shares of these entities less than 50%, the subsidiaries of the Company directly hold more than 50% of shares of these entities, and therefore, they are still consolidated into the Company. 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. Significant estimates made by management include, but are not limited to, allowance for doubtful accounts, valuation of real estate assets, allocation of development costs and capitalized interest to sold lots, fair value of the investments, the valuation allowance of deferred taxes, and contingencies. Actual results could differ from those estimates. In our property development business, land acquisition costs are allocated to each lot based on the area method, the size of the lot compared to the total size of all lots in the project. Development costs and capitalized interest are allocated to lots sold based on the total expected development and interest costs of the completed project and allocating a percentage of those costs based on the selling price of the sold lot compared to the expected sales values of all lots in the project. If allocation of development costs and capitalized interest based on the projection and relative expected sales value is impracticable, those costs could also be allocated based on area method, the size of the lot compared to the total size of all lots in the project. Transactions between Entities under Common Control 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 Partner Capital Holding Limited (HKG: 8657) (“True Partner”), 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 the convertible promissory notes (“Alset CPNs”), which, subject to the terms and conditions of the Alset CPNs and the Company’s shareholder approval, shall be convertible into shares of the Company’s common stock (“AEI Common Stock”), par value $0.001 per share, at the conversion price of AEI’s Stock Market Price. AEI’s Stock Market Price shall be $5.59 per share, equivalent to the average of the five closing per share prices of AEI’s Common Stock preceding January 4, 2021 as quoted by Bloomberg L.P. The above four acquisitions from Chan Heng Fai are transactions between entities under common control. The common control transactions resulted in the following basis of accounting for the financial reporting periods:
| ● | The acquisitions of the Warrants and True Partner stock were accounted for prospectively as of March 12, 2021 and they did not represent a change in reporting entity.
| ● | The acquisitions of LVD and APB were under common control and is consolidated in accordance with ASC 850-50. The consolidated financial statements were retrospectively adjusted for the acquisition of LVD and APB, and the operating results of LVD and APB as of January 1, 2020 for comparative purposes.
AEI stock price was $10.03 on March 12, 2021, the commitment date. The Beneficial Conversion Feature (“BCF”) intrinsic value was $50,770,192 for the four convertible promissory notes and was recorded as debt discount of convertible notes after these transactions. The debt discount attributable to the BCF is amortized over period from issuance to the date that the debt becomes convertible using the effective interest method. If the debt is converted, the discounted is amortized to finance cost in full immediately. As of March 31, 2021, the promissory notes net of debt discount were $13,695,853 and accrued interest was $41,239. During the three months ended on March 31, 2021, the amortized debt discount recorded as finance cost was $545,916. 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. Cash and cash equivalents include cash on hand and at the bank and short-term deposits with financial institutions that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in values. There were no cash equivalents as of March 31, 2021 and December 31, 2020. Restricted Cash As a condition to the loan agreement with the Manufacturers and Traders Trust Company (“M&T Bank”), the Company is required to maintain a minimum of $2,600,000 in an interest-bearing account maintained by the lender as additional security for the loans. The fund is required to remain as collateral for the loan until the loan is paid off in full and the loan agreement is terminated. The Company also has an escrow account with M&T Bank to deposit a portion of cash proceeds from lot sales. The fund in the escrow account is specifically used for the payment of the loan from M&T Bank. The fund is required to remain in the escrow account for the loan payment until the loan agreement terminates. As of March 31, 2021 and December 31, 2020, the total balance of these two accounts was $8,099,097 and $5,729,067, respectively. As a condition to the loan agreement with National Australian Bank Limited in conjunction with the Perth project, an Australian real estate development project, the Company is required to maintain Australian Dollar 50,000, in a non-interest-bearing account. As of March 31, 2021 and December 31, 2020, the account balance was $38,043 and $38,550, respectively. These funds will remain as collateral for the loans until paid in full. The Company puts money into brokerage accounts specifically for equity investment. As of March 31, 2021 and December 31, 2020, the cash balance in these brokerage accounts was $499,251 and $1,001,916, respectively. Account Receivables and Allowance for Doubtful Accounts Account receivables is stated at amounts due from buyers, contractors, and all third parties, net of an allowance for doubtful accounts. As of March 31, 2021 and December 31, 2020, the balance of account receivables was $1,062,278 and $1,366,194, respectively. Approximately $0.9 million and $1.3 million of account receivables as of March 31, 2021 and December 31, 2020, respectively, was from DSS with a merchant agreement, under which the Company uses DSS credit card platform to collect money from our direct sales. The Company monitors its account receivables balances monthly to ensure that they are collectible. On a quarterly basis, the Company uses its historical experience to estimate its allowance for doubtful account receivables. The Company’s allowance for doubtful accounts represents an estimate of the losses expected to be incurred based on specifically identified accounts as well as nonspecific amount, when determined appropriate. Generally, the amount of the allowance is primarily decided by division management’s historical experience, the delinquency trends, the resolution rates, the aging of receivables, the credit quality indicators and financial health of specific customers. As of March 31, 2021 and December 31, 2020, the allowance was $0. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method and includes all costs in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. As of March 31, 2021 and December 31, 2020, inventory consisted of finished goods from HWH World Inc. The Company continuously evaluates the need for reserve for obsolescence and possible price concessions required to write-down inventories to net realizable value. Investment Securities Investment Securities at Fair Value The Company holds investments in equity securities with readily determinable fair values, equity investments without readily determinable fair values, investments accounted for under the equity method, and investments at cost. 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, investments in equity securities were classified as either 1) available-for-sale securities, stated at fair value, and unrealized holding gains and losses, net of related tax effects, were recorded directly to accumulated other comprehensive income (loss) or 2) trading securities, stated at fair value, and unrealized holding gains and losses, net of related tax benefits, were recorded directly to net income (loss). With the adoption of ASU 2016-01 on January 1, 2018, investments in equity securities are still stated at fair value, quoted by market prices, but all unrealized holding gains and losses are credited or charged to net income (loss) based on fair value measurement as the respective reporting date. The Company accounts for certain of its investments in equity securities in accordance with ASU 2016-01 Financial Instruments—Overall (Subtopic 825- 10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). In accordance with 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. Amarantus BioScience Holdings (“AMBS”) and Ture Partner Capital Holding Limited (“True Partner”) are publicly traded companies. The Company does not have significant influence over AMBS and True Partner, as the Company is the beneficial owner of approximately 5.4% of the common shares of AMBS and 15.5% of True Partner. The stock’s fair value is determined by quoted stock prices. The Company has elected the fair value option for the equity securities noted below that would otherwise be accounted for under the equity method of accounting. Holista CollTech Limited (“Holista”), Document Securities Systems Inc. (“DSS”), OptimumBank Holdings, Inc. (“OptimumBank”) and American Premium Water Corp (“APW”) are publicly traded companies and fair value is determined by quoted stock prices. The Company has significant influence but does not have a controlling interest in these investments, and therefore, the Company’s investment could be accounted for under the equity method of accounting or elect fair value accounting.
| ● | The Company has significant influence over DSS. As of March 31, 2021 and December 31, 2020, the Company owned the common stock of DSS and 42,575 shares of preferred stock, which could covert to 6,570,216 common shares, subject to a 19.9% beneficial ownership conversion limitation (a so-called “blocker”) based on the total issued outstanding shares of common stock of DSS beneficially owned by Global BioMedical Pte Ltd (“GBM”), one of our subsidiaries. Our CEO is a Stockholder and the Chairman of the Board of Directors of DSS. Chan Tung Moe, the son of Chan Heng Fai, is also a director of DSS.
| ● | The Company has significant influence over Holista as the Company and its CEO are the beneficial owner of approximately 16.8% of the outstanding shares of Holista and our CEO holds a position on Holista’s Board of Directors.
| ● | The Company has significant influence over OptimumBank. Our CEO is the beneficial owner of approximately 3.9% of the outstanding shares of OptimumBank and holds a position on OptimumBank’s Board of Directors.
| ● | The Company has significant influence over APW as the Company is the beneficial owner of approximately 8.7% of the common shares of APW and one officer from the Company holds a director position on APW’s Board of Directors.
The Company invested $50,000 in a convertible promissory note of Sharing Services, Inc. (“Sharing Services Convertible Note”), a company quoted on the US OTC market. The value of the convertible note was estimated by management using a Black-Scholes valuation model. The fair value of the note was $64,991 and $66,978 on March 31, 2021 and December 31, 2020, respectively. On February 26, 2021, the Company invested approximately $88,599 in the convertible note of Vector Com Co., Ltd (“Vector Com”), a private company in South Korea. The interest rate is 2% per annum and maturity is two years. The conversion price is approximately $21.26, per common share of Vector Com. As of March 31, 2021, the Management estimated that the fair value of the note to be $88,599, the initial transaction price. On March 2, 2020, the Company received warrants to purchase shares of American Medical REIT Inc. (“AMRE”), a related party private startup company, in conjunction with the Company lending a $200,000 promissory note. For further details on this transaction, refer to Note 8 - Related Party Transactions, Note Receivable from a Related Party Company. As of March 31, 2021 and December 31, 2020, AMRE was a private company. Based on management’s analysis, the fair value of the AMRE warrants and the stock option was $0 as of March 31, 2021 and December 31, 2020. The Company held a stock option to purchase 250,000 shares of Vivacitas common stock at $1 per share at any time prior to the date of a public offering by Vivacitas. As of December 31, 2020, Vivacitas was a private company. Based on management’s analysis, the fair value of the Vivacitas stock option was $0 as of December 31, 2020. On March 18, 2021 the Company sold the subsidiary holding the ownership in Vivacitas to an indirect subsidiary of DSS. For further details on this transaction, refer to Note 9 - Related Party Transactions, Sale of Investment in Vivacitas to DSS. In the first quarter of 2021, the Company subsidiaries established a portfolio of trading securities. The objective is to generate profits on short-term differences in market prices. During the three months ended March 31, 2021, the Company incurred approximately $4.6 million in purchase of trading securities, received approximately $1.9 million for sale and $285,245 was recognized as realized loss on securities investment. Investment Securities at Cost The Company had an equity holding in Vivacitas Oncology Inc. (“Vivacitas”), a private company that is currently not listed on an exchange. Vivacitas was acquired after the adoption of ASU 2016-01. The Company applied ASC 321, Investments – Equity Securities, and elected the measurement alternative for equity investments that do not have readily determinable fair values and do not qualify for the practical expedient in ASC 820 to estimate fair value using the NAV per share. Under the alternative, we measure Vivacitas at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Ownership in Vivacitas was sold on March 18, 2021 at the price of $2,480,000 to DSS. The difference of $2,279,872 between the selling price and our original investment cost was recorded as additional paid capital considering a related party transaction. For further details on this transaction, refer to Note 9 – Related Party Transactions. On September 8, 2020, the Company acquired 1,666 shares, approximately 1.45% ownership, from Nervotec Pte Ltd (“Nervotec”), a private company, at the purchase price of $37,826. The Company applied ASC 321 and measured Nervotec at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. On September 30, 2020, the Company acquired 20,000 shares, approximately 19% ownership, from Hyten Global (Thailand) Co., Ltd (“Hyten”), a private company, at a purchase price of $42,562. Hyten is a direct sales company in Thailand. The Company does not have significant influence over Hyten and applied ASC 321 and measured Hyten at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. In the first quarter of 2021, the Company invested $19,609 in K Beauty Research Lab Co., Ltd (“K Beauty”) for 18% ownership. K Beauty was established for sourcing, developing and producing variety of Korea-made beauty products as well as Korea - originated beauty contents for the purpose of distribution to HWH’s membership distribution channel. There has been no indication of impairment or changes in observable prices via transactions of similar securities and investments are still carried at cost. Investment Securities under Equity Method Accounting American Medical REIT Inc. LiquidValue Asset Management Pte. Ltd. (“LiquidValue”), a subsidiary of the Company owns 36.1% of American Medical REIT Inc. (“AMRE”), a startup REIT company concentrating on medical real estate. AMRE acquires state-of-the-art, purpose-built healthcare facilities and leases them to leading clinical operators with dominant market share under secure triple net leases. AMRE targets hospitals (both Critical Access and Specialty Surgical), Physician Group Practices, Ambulatory Surgical Centers, and other licensed medical treatment facilities. Chan Heng Fai, our CEO, is the executive chairman and director of AMRE. LiquidValue did not invest equity but provided a loan to AMRE (for further details on this transaction, refer to Note 9, Related Party Transactions). On balance sheet, the prorate loss from AMRE was recorded as a liability, accumulated losses on equity method investment. During three months ended March 31, 2021 and 2020, the investment losses from AMRE were $24,847 and $0, respectively. As of March 31, 2021 and December 31, 2020, the accumulated losses on equity method investment were $290,776 and $265,929, respectively. Real Estate Assets Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with Financial Accounting Standards Board (“FASB”) ASC 805 - “Business Combinations”, which acquired assets are recorded at fair value. Interest, property taxes, insurance and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are reduced when lots are sold. The Company capitalized construction costs of approximately $1.2 million and $2.4 million for the three months ended March 31, 2021 and 2020, respectively. The Company’s policy is to obtain an independent third-party valuation for each major project in the United States as part of our assessment of identifying potential triggering events for impairment. Management may use the market comparison method to value other relatively small projects, such as the project in Perth, Australia. In addition to the annual assessment of potential triggering events in accordance with ASC 360 – Property Plant and Equipment (“ASC 360”), the Company applies a fair value-based impairment test to the net book value assets on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have occurred. The Company did not record impairment on any of its projects during the three months ended on March 31, 2021 and 2020. Properties under development Properties under development are properties being constructed for sale in the ordinary course of business, rather than to be held for the Company’s own use, rental or capital appreciation. Rental Properties Rental properties are acquired with the intent to be rented to tenants. 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. All of these purchased homes are properties of our rental business. Revenue Recognition and Cost of Sales ASC 606 - Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The Company adopted this new standard on January 1, 2018 under the modified retrospective method. The adoption of this new standard did not have a material effect on our financial statements. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which the determination of revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which the Company expects to be entitled in exchange for those goods or services. ASC 606 requires the Company to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, performance obligations are satisfied. The following represents the Company’s revenue recognition policies by Segments: Property Development Property Sales The Company’s main business is land development. The Company purchases land and develops it for building into residential communities. The developed lots are sold to builders (customers) for the construction of new homes. The builders enter a sales contract with the Company before they take the lots. The prices and timeline are determined and agreed upon in the contract. The builders do the inspections to make sure all conditions and requirements in contracts are met before purchasing the lots. A detailed breakdown of the five-step process for the revenue recognition of the Ballenger and Black Oak projects, which represented approximately 69% and 100%, respectively, of the Company’s revenue in the three months ended on March 31, 2021 and 2020, is as follows:
| ● | Identify the contract with a customer.
The Company has signed agreements with the builders for developing the raw land to ready to build lots. The contract has agreed upon prices, timelines, and specifications for what is to be provided.
| ● | Identify the performance obligations in the contract.
Performance obligations of the Company include delivering developed lots to the customer, which are required to meet certain specifications that are outlined in the contract. The customer inspects all lots prior to accepting title to ensure all specifications are met.
| ● | Determine the transaction price.
The transaction price per lot is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties.
| ● | Allocate the transaction price to performance obligations in the contract.
Each lot or a group of lots is considered to be a separate performance obligation, for which the specified price in the contract is allocated to.
| ● | Recognize revenue when (or as) the entity satisfies a performance obligation.
The builders do the inspections to make sure all conditions/requirements are met before taking title of lots. The Company recognizes revenue at a point in time when title is transferred. The Company does not have further performance obligations or continuing involvement once title is transferred. Sale of the Front Foot Benefit Assessments We have established a front foot benefit (“FFB”) assessment on all of the NVR lots. This is a 30-year annual assessment allowed in Frederick County which requires homeowners to reimburse the developer for the costs of installing public water and sewer to the lots. These assessments become effective as homes are settled, at which time we can sell the collection rights to investors who will pay an upfront lump sum, enabling us to realize the revenue more quickly. The selling prices range from $3,000 to $4,500 per home depending on the type of the home. Our total revenue from the front foot benefit assessment is approximately $1 million. To recognize revenue of FFB assessment, both our and NVR’s performance obligation must be satisfied. Our performance obligation is completed once we complete the construction of water and sewer facility and close the lot sales with NVR, which inspects these water and sewer facility prior to close lot sales to ensure all specifications are met. NVR’s performance obligation is to sell homes they build to homeowners. Our FFB revenue is recognized on quarterly basis after NVR closes sales of homes to homeowners. The agreement with these FFB investors is not subject to amendment by regulatory agencies and thus our revenue from FFB assessment is not either. During the three months ended on March 31, 2021 and 2020, we recognized revenue $107,071 and $40,322 from FFB assessment, respectively. Cost of Sales Land acquisition costs are allocated to each lot based on the area method, the size of the lot comparing to the total size of all lots in the project. Development costs and capitalized interest are allocated to lots sold based on the total expected development and interest costs of the completed project and allocating a percentage of those costs based on the selling price of the sold lot compared to the expected sales values of all lots in the project. If allocation of development costs and capitalized interest based on the projection and relative expected sales value is impracticable, those costs could also be allocated based on area method, the size of the lot comparing to the total size of all lots in the project. Biohealth Product Direct Sales The Company’s net sales consist of product sales. The Company’s performance obligation is to transfer its products to its third-party independent distributors (“Distributors”). The Company generally recognizes revenue when product is shipped to its Distributors. The Company’s Distributors may receive distributor allowances, which are comprised of discounts, rebates and wholesale commission payments from the Company. Distributor allowances resulting from the Company’s sales of its products to its Distributors are recorded against net sales because the distributor allowances represent discounts from the suggested retail price. In addition to distributor allowances, the Company compensates its sales leader Distributors with leadership incentives for services rendered, relating to the development, retention, and management of their sales organizations. Leadership incentives are payable based on achieved sales volume, which are recorded in general and administrative expenses. The Company recognizes revenue when it ships products. The Company receives the net sales price in cash or through credit card payments at the point of sale. If a Distributor returns a product to the Company on a timely basis, he/she may obtain a replacement product from the Company for such returned products. In addition, the Company maintains a buyback program pursuant to which it will repurchase products sold to a Distributor who has decided to leave the business. Allowances for product returns, primarily in connection with the Company’s buyback program, are provided at the time the sale is recorded. This accrual is based upon historical return rates for each country and the relevant return pattern, which reflects anticipated returns to be received over a period of up to 12 months following the original sale. Annual Membership The Company collects an annual membership fee from its Distributors. The fee is fixed, paid in full at the time of joining the membership and non-refundable. The membership provides the member access to purchase products at a discount, use to certain back-office services, receive commissions for signing up new members, and attend corporate events. The Company recognizes revenue associated with the membership over the period of the membership. Before the membership fee is recognized as revenue, it is recorded as deferred revenue. Deferred revenue relating to membership was $3,430,893 and $2,867,226 at March 31, 2021 and December 31, 2020, respectively. Other Businesses Remaining performance obligations As of March 31, 2021 and December 31, 2020, there were no remaining performance obligations or continuing involvement, as all service obligations within the other business activities segment have been completed. Foreign currency Functional and reporting currency Items included in the financial statements of each entity in the Company are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements of the Company are presented in U.S. dollars (the “reporting currency”). The functional and reporting currency of the Company is the United States dollar (“U.S. dollar”). The financial records of the Company’s subsidiaries located in Singapore, Hong Kong, Australia and South Korea are maintained in their local currencies, the Singapore Dollar (S$), Hong Kong Dollar (HK$), Australian Dollar (“AUD”) and South Korean Won (“KRW”), which are also the functional currencies of these entities. Transactions in foreign currencies Transactions in currencies other than the functional currency during the periods are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the statement of operations. The majority of the Company’s foreign currency transaction gains or losses come from the effects of foreign exchange rate changes on the intercompany loans between Singapore entities and U.S. entities. The Company recorded foreign exchange gain of $1,462,697 and $2,260,482 during the three months ended on March 31, 2021 and 2020, respectively. The foreign currency transactional gains and losses are recorded in operations. Translation of consolidated entities’ financial statements Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. The Company’s entities with functional currency of Singapore Dollar, Hong Kong Dollar, AUD and KRW, translate their operating results and financial positions into the U.S. dollar, the Company’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenue, expense, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income (loss). For the three months ended on March 31, 2021, the Company recorded other comprehensive loss from foreign currency translation of $1,769,440 and a $1,674,021 loss in the three months ended March 31, 2020, in accumulated other comprehensive loss. Non-controlling interests Non-controlling interests represent the equity in subsidiary not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statements of operation and comprehensive income, and within equity in the Consolidated Balance Sheets, separately from equity attributable to owners of the Company. On March 31, 2021 and December 31, 2020, the aggregate non-controlling interests in the Company were $33,673,855 and $37,980,325, respectively. Capitalized Financing Costs Financing costs, such as loan origination fee, administration fee, interests and other related financing costs, should be capitalized and recorded on the balance sheet if these financing activities are directly associated with the development of real estates. Capitalized Financing Costs are allocated to lots sold based on the total expected development and interest costs of the completed project and allocating a percentage of those costs based on the selling price of the sold lot compared to the expected sales values of all lots in the project. If the allocation of capitalized financing costs based on the projection and relative expected sales value is impracticable, those costs could also be allocated based on an area method, which uses the size of the lots compared to the total project area and allocates costs based on their size. As of March 31, 2021 and December 31, 2020, the capitalized financing costs were $3,348,112 and $3,513,535, respectively. Beneficial Conversion Features The Company evaluates the conversion feature for whether it was beneficial as described in ASC 470-30. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion. Recent Accounting Pronouncements Accounting pronouncement not yet adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years, and a modified retrospective approach is required, with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. In November of 2019, the FASB issued ASU 2019-10, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company is currently evaluating the impact of ASU 2016-13 on its future consolidated 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 consolidated financial statements.

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