Alset Inc. 10-K

Item 8. Financial Statements Alset EHome International Inc. and Subsidiaries CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 Table of Contents Reports of Independent Registered Public Accounting Firms (PCAOB ID: 606 ) 60 Consolidated Balance Sheets at December 31, 2021 and 2020 62 Consolidated Statements of Operations and Other Comprehensive Loss for the Years Ended December 31, 2021 and 2020 63 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021 and 2020 64 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 65 Notes to Consolidated Financial Statements 66 59 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Alset EHome International, Inc. and Subsidiaries Bethesda, Maryland Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Alset EHome International, Inc. and Subsidiaries (the “Company”) as of December 31, 2021, and the related consolidated statements of income, stockholders’ equity, and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as 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, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We also have audited the adjustments to the 2020 consolidated financial statements to retrospectively present certain 2021 common control transactions, as described in Note 5. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2020 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2020 financial statements taken as a whole. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit 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 audit provides a reasonable basis for our opinion. GRASSI & CO., CPAs, P.C. We have served as the Company’s auditor since 2022. Jericho, New York March 31, 2022 60 REPORT OF INDEPENDNT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Alset EHome International Inc. Opinion on the Financial Statements We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 5, the accompanying consolidated balance sheet of Alset EHome International Inc. (the Company) as of December 31, 2020, and the related consolidated statements of operations and other comprehensive loss, stockholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the financial statements and the 2020 financial statements before the effects of the adjustments discussed in Note 5 are not presented herein). In our opinion, the financial statements before the effects of the adjustments to retrospectively apply the change in accounting described in Note 5, present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting described in Note 5 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by GRASSI & CO., CPAs, P.C. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit 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 audit provides a reasonable basis for our opinion. /s/ Briggs & Veselka Co . We have served as the Company’s auditor since 2021. Houston, Texas April 14, 2021 61 Alset EHome International Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2021 December 31, 2020 (As Restated) Assets: Current Assets: Cash $ 56,061,309 $ 24,965,946 Restricted Cash 4,740,870 6,769,533 Account Receivables, Net 39,622 1,366,194 Other Receivables 334,788 644,576 Note Receivables - Related Parties 12,792,671 649,569 Prepaid Expense 1,202,451 1,470,680 Inventory 47,290 90,068 Investment in Securities at Fair Value 36,337,023 49,172,457 Investment in Securities at Cost 99,216 280,516 Investment in Securities at Equity Method 30,801,129 - Deposit 275,204 48,820 Total Current Assets 142,731,573 85,458,359 Real Estate Rental Properties 24,820,253 - Properties under Development 15,695,127 20,505,591 Operating Lease Right-Of-Use Asset 659,620 574,754 Deposit 39,653 249,676 Loan Receivable - Related Parties - 840,000 Property and Equipment, Net 263,917 85,365 Total Assets $ 184,210,143 $ 107,713,745 Liabilities and Stockholders’ Equity: Current Liabilities: Accounts Payable and Accrued Expenses $ 11,341,789 $ 1,671,265 Deferred Revenue 728,343 2,867,226 Builder Deposits 31,553 1,262,336 Operating Lease Liability 283,989 381,412 Notes Payable 317,671 172,706 Notes Payable - Related Parties 833,658 2,534,281 Total Current Liabilities 13,537,003 8,889,226 Long-Term Liabilities: Operating Lease Liability 383,354 193,342 Note Payable, Net of Discount - 636,362 Total Liabilities 13,920,357 9,718,930 Stockholders’ Equity: Preferred Stock, $ 0.001 par value; 25,000,000 shares authorized, none issued and outstanding - - Common Stock, $ 0.001 par value; 250,000,000 shares authorized; 87,368,446 and 8,570,000 shares issued and outstanding on December 31, 2021 and 2020, respectively 87,368 8,570 Additional Paid in Capital 296,181,977 102,729,944 Accumulated Deficit ( 148,233,473 ) ( 44,910,297 ) Accumulated Other Comprehensive Income 341,646 2,143,338 Total Alset EHome International Stockholders’ Equity 148,377,518 59,971,555 Non-controlling Interests 21,912,268 38,023,260 Total Stockholders’ Equity 170,289,786 97,994,815 Total Liabilities and Stockholders’ Equity $ 184,210,143 $ 107,713,745 See accompanying notes to condensed consolidated financial statements. 62 Alset EHome International Inc. and Subsidiaries Consolidated Statements of Operations and Other Comprehensive Loss For the Years Ended December 31, 2021 and 2020 2021 2020 (As Restated) Revenue Rental $ 327,296 $ - Property 13,886,083 13,643,689 Biohealth 5,543,066 2,594,511 Other 42,377 - Total Revenue 19,798,822 16,238,200 Operating Expenses Cost of Sales 11,301,814 12,085,574 General and Administrative 23,491,130 6,337,364 Total Operating Expenses 34,792,944 18,422,938 Operating Losses from Operations ( 14,994,122 ) ( 2,184,738 ) Other Income (Expense) Interest Income 183,636 65,751 Interest Expense ( 317,281 ) ( 147,640 ) Net Gain on Investment in Alset International during the Unconsolidated Period - 61,346 Foreign Exchange Transaction Gain (Loss) 1,363,061 ( 371,603 ) Unrealized Loss on Securities Investment ( 49,190,748 ) ( 1,694,535 ) Realized Loss on Securities Investment ( 4,698,078 ) ( 192,459 ) Loss on Investment on Security by Equity Method ( 51,999 ) ( 227,643 ) Finance Costs ( 50,871,869 ) ( 109,916 ) Other Income 93,823 127,100 Total Other Expense, Net ( 103,489,455 ) ( 2,489,599 ) Net Loss Before Income Taxes ( 118,483,577 ) ( 4,674,337 ) Income Tax Expense ( 534,014 ) ( 8,543 ) Net Loss from Continuing Operations ( 119,017,591 ) ( 4,682,880 ) Loss from Discontinued Operations, Net of Tax - ( 417,438 ) Net Loss ( 119,017,591 ) ( 5,100,318 ) Net Loss Attributable to Non-controlling Interest ( 15,694,415 ) ( 1,948,661 ) Net Loss Attributable to Common Stockholders $ ( 103,323,176 ) $ ( 3,151,657 ) Other Comprehensive (Loss) Income, Net Unrealized (Loss) Gain on Securities Investment ( 57,179 ) 19,486 Foreign Currency Translation Adjustment ( 3,974,966 ) 1,148,898 Comprehensive Loss ( 123,049,736 ) ( 3,931,934 ) Comprehensive Loss Attributable to Non-controlling Interests ( 16,933,170 ) ( 1,381,863 ) Comprehensive Loss Attributable to Common Stockholders $ ( 106,116,566 ) $ ( 2,550,071 ) Net Loss Per Share - Basic and Diluted Continuing Operations $ ( 3.69 ) $ ( 0.33 ) Discontinued Operations $ - $ ( 0.05 ) Basic Net Loss Per Share $ ( 3.69 ) $ ( 0.38 ) Weighted Average Common Shares Outstanding - Basic and Diluted 27,982,876 8,352,425 See accompanying notes to consolidated financial statements. 63 Alset EHome International Inc. and Subsidiaries Consolidated Statements of Stockholders’ Equity For Two Year Period Ended December 31, 2021 Series A Preferred Stock Series B Preferred Stock Common Stock Shares Par Value $0.001 Shares Par Value $0.001 Shares Par Value $0.001 Additional Paid in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Alset EHome International Stockholders’ Equity Non-Controlling Interests Total Stockholders’ Equity Balance at January 1, 2020 - $ - - $ - 10,001,000 $ 10,001 $ 56,786,713 $ 1,458,289 $ ( 41,758,640 ) $ 16,496,362 $ 7,163,857 $ 23,660,219 Cancellation of Outstanding Stock - - ( 3,601,000 ) ( 3,601 ) 3,601 - - - Issuance of Stock 2,170,000 2,170 13,199,953 13,202,123 13,202,123 Subsidiary’s Issuance of Stock - 13,439,082 13,439,082 8,748,744 22,187,826 Proceeds from Selling Subsidiary Equity - - 278,346 278,346 208,954 487,300 Sale of Impact BioMedical Inc. to Related Party 26,307,872 - 26,307,872 19,846,288 46,154,160 Contribution 539,088 - 539,088 406,681 945,769 Transfer iGalen International Inc. to Related Party - - - - 2,132,407 2,132,407 1,608,658 3,741,065 Change in Non-Controlling Interest ( 9,957,118 ) 19,047 ( 9,938,071 ) 1,897,608 ( 8,040,463 ) Change in Unrealized Gain on Investment - - - 11,130 11,130 8,356 19,486 Foreign Currency Translations 654,872 654,872 494,026 1,148,898 Distribution to Non-Controlling Shareholders - - - ( 411,250 ) ( 411,250 ) Net Loss - ( 3,151,657 ) ( 3,151,657 ) ( 1,948,661 ) ( 5,100,318 ) Balance at January 1, 2021 (As Restated) - $ - - $ - 8,570,000 $ 8,570 $ 102,729,944 $ 2,143,338 $ ( 44,910,297 ) $ 59,971,555 $ 38,023,260 $ 97,994,815 Balance - $ - - $ - 8,570,000 $ 8,570 $ 102,729,944 $ 2,143,338 $ ( 44,910,297 ) $ 59,971,555 $ 38,023,260 $ 97,994,815 Issuance of Common Stock - - - - 67,502,481 67,502 104,498,157 - - 104,565,659 - 104,565,659 Convert Common stock to Series A Preferred Stock 6,380 6 - - ( 6,380,000 ) ( 6,380 ) 6,374 - - - - - Convert Related Party Note Payable to Series B Preferred Stock - - 2,132 2 - - 12,999,998 - - 13,000,000 - 13,000,000 Convert Preferred Stock Series A and B to Common ( 6,380 ) ( 6 ) ( 2,132 ) ( 2 ) 8,512,000 8,512 ( 8,504 ) - - - - - Transactions under Common Control - - - - - - ( 57,190,499 ) - - ( 57,190,499 ) - ( 57,190,499 ) Sale of Vivacitas to Related Party - - - - - - 2,279,872 - - 2,279,872 - 2,279,872 Purchase Stock of True Partner from Related Party - - - - - - 3,274,060 - - 3,274,060 - 3,274,060 Beneficial Conversion Feature Intrinsic Value, Net - - - - - - 50,770,192 - - 50,770,192 - 50,770,192 Change in Non-Controlling Interest - - - - - - ( 5,729,539 ) 865,493 - ( 4,864,046 ) 2,664,056 ( 2,199,990 ) Convert Related Party Note Payable to Common Stock 9,163,965 9,164 51,217,402 - - 51,226,566 - 51,226,566 Subsidiary’s Issuance of Stock - - - - - - 2,328,707 - - 2,328,707 920,632 3,249,339 Proceeds from Selling Subsidiary Equity - - - - - - 164,107 - - 164,107 115,893 280,000 Deconsolidate American Pacific Bancorp - - - - - - 28,287,920 - - 28,287,920 ( 383,063 ) 27,904,857 Exercise American Premium Water Warrant to Purchase Stock - - - - - - 553,786 - - 553,786 180,614 734,400 Change in Unrealized Loss on Investment - - - - - - - ( 41,273 ) - ( 41,273 ) ( 15,906 ) ( 57,179 ) Change in Unrealized Gain (Loss) on Investment - - - - - - - ( 41,273 ) - ( 41,273 ) ( 15,906 ) ( 57,179 ) Foreign Currency Translations - - - - - - - ( 2,625,912 ) - ( 2,625,912 ) ( 1,349,054 ) ( 3,974,966 ) Distribution to Non-Controlling Shareholders - - - - - - - - - - ( 2,549,750 ) ( 2,549,750 ) Net Loss - - - - - - - - ( 103,323,176 ) ( 103,323,176 ) ( 15,694,415 ) ( 119,017,591 ) Balance at December 31, 2021 - $ - - $ - 87,368,446 $ 87,368 $ 296,181,977 $ 341,646 $ ( 148,233,473 ) $ 148,377,518 $ 21,912,268 $ 170,289,786 Balance - $ - - $ - 87,368,446 $ 87,368 $ 296,181,977 $ 341,646 $ ( 148,233,473 ) $ 148,377,518 $ 21,912,268 $ 170,289,786 See accompanying notes to consolidated financial statements. 64 Alset EHome International Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2021 and 2020 2021 2020 (As Restated) Cash Flows from Operating Activities Net Loss from Operations $ ( 119,017,591 ) $ ( 5,100,318 ) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Depreciation 166,451 24,309 Amortization of Right-Of-Use Asset 611,253 333,543 Amortization of Debt Discount 50,871,869 18,772 Shared-based Compensation & Expense 134,192 1,564,376 Impairment on Promissory Note 421,754 - Impairment on Life Insurance - 104,978 PPP Loan Forgiveness - ( 64,502 ) Foreign Exchange Transaction Gain ( 1,403,859 ) 354,392 Unrealized Loss on Securities Investment 49,190,748 1,690,086 Realized Loss on Securities Investment 4,698,078 - Loss on Equity Method Investment 51,999 227,643 Net Gain in the Unconsolidated Period - ( 61,346 ) Changes in Operating Assets and Liabilities Real Estate 4,810,464 4,227,504 Account Receivables 849,413 ( 1,629,544 ) Prepaid Expense 399,442 ( 1,521,281 ) Deposits ( 16,361 ) ( 226,487 ) Trading Securities ( 14,426,785 ) - Inventory 34,991 ( 36,873 ) Accounts Payable and Accrued Expenses 9,663,367 416,947 Deferred Revenue ( 2,199,477 ) 2,608,632 Operating Lease Liability ( 293,525 ) ( 329,404 ) Builder Deposits ( 1,230,783 ) ( 1,182,933 ) Income Tax Payable - ( 678,694 ) Net Cash (Used in) Provided by Operating Activities ( 16,684,360 ) 739,800 Net Cash Used in Discontinued Operating Activities - ( 422,188 ) Net Cash (Used in) Provided by Operating Activities ( 16,684,360 ) 317,612 Cash Flows from Investing Activities Purchase of Fixed Assets ( 227,821 ) ( 21,674 ) Purchase of Real Estate Properties ( 25,362,146 ) - Proceeds from Global Opportunity Fund Liquidation - 301,976 Sales of Investment Securities 110,718 2,102,048 Purchase of Investment Securities ( 19,390,318 ) ( 201,229 ) Investment in Life Insurance - ( 200,000 ) Sales of Investment Securities to Related Party 2,480,000 - Cash Loss in Deconsolidation of American Pacific Bancorp ( 1,235,953 ) - Issuing Loan Receivable - Related Party ( 11,878,605 ) - Proceed form Loan Receivable - Related Party ( 539,876 ) ( 200,000 ) Net Cash (Used in) Provided by Investing Activities ( 56,044,001 ) 1,781,121 Net Cash Used in Discontinued Investing Activities - - Net Cash (Used in) Provided by Investing Activities ( 56,044,001 ) 1,781,121 Cash Flows from Financing Activities Proceeds from Common Stock Issuance 104,565,659 13,202,123 Proceeds from Exercise of Subsidiary Warrants 3,249,339 11,380,460 Proceeds from Sale of Subsidiary Shares 280,000 3,097,791 Dividend Paid on Preferred Stock ( 73,750 ) ( 109,916 ) Borrowings from M&T Loan - 617,590 Borrowing from PPP Loan 68,502 68,502 Repayment of PPP Loan - ( 4,000 ) Distribution to Non-controlling Interest Shareholders ( 2,549,750 ) ( 411,250 ) Repayment to Notes Payable ( 610,767 ) ( 250,000 ) Proceeds from Notes Payable - Related Parties 5,545,495 201,273 Proceeds Repayment to Notes Payable - Related Parties ( 7,057,324 ) ( 6,644,542 ) Net Cash Provided by Financing Activities 103,417,404 21,148,031 Net Cash Provided by Discontinued Financing Activities - - Net Cash Provided by Financing Activities 103,417,404 21,148,031 Net Increase in Cash and Restricted Cash 30,689,043 23,246,764 Effects of Foreign Exchange Rates on Cash ( 1,622,343 ) 50,683 Cash and Restricted Cash - Beginning of Year 31,735,479 8,438,032 Cash and Restricted Cash- End of Period $ 60,802,179 $ 31,735,479 Supplementary Cash Flow Information Cash Paid for Interest $ 20,154 $ 855,381 Cash Paid for Taxes $ 446,757 $ 688,316 Supplemental Disclosure of Non-Cash Investing and Financing Activities Unrealized (Loss) Gain on Investment $ ( 57,179 ) $ 19,486 Initial Recognition of ROU / Lease Liability $ 256,928 $ 762,239 Acquiring True Partner Stock by Issuing Promissory Note $ 10,003,689 $ - Sales of Investment in Vivacitas to Related Party $ 2,279,872 $ - Transactions under Common Control $ 57,190,499 $ - Intrinsic Value of BCF $ ( 50,770,192 ) $ - Converting Notes to Stock $ 64,226,566 $ - American Pacific Bancorp Deconsolidation $ 27,904,857 $ - Gain from Exercise of American Premium Water Warrant $ 734,400 $ - Purchase of Fixed Asset by Issuing Promissory Note $ 95,000 $ - Disposal of Impact BioMedical Inc. to Related Party $ - $ 46,154,160 Disposal of iGalen International Inc. to Related Party $ - $ 3,741,065 Contribution $ - $ 945,769 Change in Non-Controlling Interest $ - $ 1,333,229 See accompanying notes to consolidated financial statements. 65 Alset EHome International Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2021 and 2020 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Alset EHome International Inc. (the “Company” or “AEI”), formerly known as HF Enterprises Inc., was incorporated in the State of Delaware on March 7, 2018 and 1,000 shares of common stock was issued to Chan Heng Fai, the founder, Chairman and Chief Executive Officer of the Company. AEI is a diversified holding company principally engaged through its subsidiaries in the development of EHome communities and other real estate, financial services, digital transformation technologies, biohealth activities and consumer products with operations in the United States, Singapore, Hong Kong, Australia and South Korea. The Company manages its principal businesses primarily through its subsidiary, Alset International Limited (“Alset International”, f.k.a. Singapore eDevelopment Limited), a company publicly traded on the Singapore Stock Exchange. On October 1, 2018, Chan Heng Fai transferred his 100 % interest in Alset Global Pte. Ltd. (“Alset Global”, formerly known as Hengfai International Pte. Ltd.) to Alset EHome International Inc. in exchange for 8,500,000 shares of the Company’s common stock. Alset Global holds a 100 % interest in Alset Business Development Pte. Ltd. (“Alset Business Development”), formerly known as Hengfai Business Development Pte. Ltd.). Both Alset Global and Alset Business Development are holding companies with no business operations. On December 31, 2021, the Company held 2,810,999,176 shares and 10,000,000 warrants of Alset International, which is the primary operating company of AEI. The Company held 1,011,150,294 shares and 139,834,471 warrants of Alset International on December 31, 2020. On December 31, 2021 and 2020, the Company’s ownership of Alset International was 76.8 % and 57.1 %, respectively. Also, on October 1, 2018, Chan Heng Fai transferred his 100 % ownership interest in Impact Oncology Pte. Ltd. (“Impact Oncology”, formerly known as Heng Fai Enterprises Pte. Ltd.) and Global eHealth Limited (“Global eHealth”) to AEI in exchange for 500,000 and 1,000,000 shares of the Company’s common stock, respectively. The contributions to AEI on October 1, 2018 of Alset Global, Impact Oncology, and Global eHealth from Chan Heng Fai represented transactions under common control with a related party. On June 24, 2020, HFE Holdings Limited surrendered 3,600,000 shares of our common stock to the treasury of our Company, and Chan Heng Fai surrendered 1,000 shares of our common stock to the treasury of our Company, and all such shares were cancelled. On November 24, 2020 the Company held its initial public offering and the Company’s common stock began trading on Nasdaq Capital Market. As a result, 2,160,000 shares were issued to public investors. The Company’s net proceeds from this offering were approximately $ 13.2 million. On May 13, 2021, July 30, 2021 and December 8, 2021 the Company held follow up offerings of its common shares. As a result of the offerings, the Company issued a total of 67,492,481 shares to public investors. The Company’s net proceeds from these offerings were approximately $ 105 million. As of December 31, 2021 and 2020, the total outstanding common shares of the Company were 87,368,446 and 8,570,000 , respectively. The Company has four operating segments based on the products and services we offered, which include three of our principal businesses – real estate, digital transformation technology and biohealth – as well as a fourth category consisting of certain other business activities. 66 Real Estate The Company’s real estate segment is comprised of LiquidValue Development Inc. (“LiquidValue Development”) and SeD Perth Pty Ltd. In 2014, Alset International commenced operations developing property projects and participating in third-party property development projects. LiquidValue Development Inc. (f.k.a. SeD Intelligent Home Inc.), a 99.9 %-owned subsidiary of Alset International, owns, operates and manages real estate development projects with a focus on land subdivision developments and house rental projects. Development activities are generally contracted out, including planning, design and construction, as well as other work with engineers, surveyors, architects and general contractors. The developed lots are then sold to builders for the construction of new homes. LiquidValue Development’s primary real estate projects are two subdivision development projects, one near Houston, Texas, known as Black Oak, currently projected to have approximately 550-600 units, and one in Frederick, Maryland, known as Ballenger Run, consisting of 197 acres and currently projected to have approximately 689 units. In 2021, LiquidValue Development’s subsidiaries purchased 109 homes in Texas from other builders in different communities. The Company intends to rent these homes. LiquidValue Development pursued this new endeavor in part to improve cash flow and smooth out the inconsistencies of income in residential land development. We intend to develop our subsidiary American Home REIT Inc. as the owner of single-family rental homes. Digital Transformation Technology The Company’s digital transformation technology segment is comprised of GigWorld Inc. and its subsidiaries. The Company’s digital transformation technology business is involved in mobile application product development and other businesses, providing information technology services to end-users, service providers and other commercial users through multiple platforms. This technology platform consists of instant messaging systems, social media, e-commerce and payment systems, direct marketing platforms, e-real estate, brand protection and counterfeit and fraud detection. GigWorld Inc. (“GigWorld”), a 99.9 %-owned subsidiary of Alset International, focuses on business-to-business solutions such as enterprise messaging and workflow. Through GigWorld, the Company has successfully implemented several strategic platform developments for clients, including a mobile front-end solution for network marketing, a hotel e-commerce platform for Asia and a real estate agent management platform in China. Biohealth The Company’s biohealth segment is comprised of Global BioMedical Pte. Ltd. and Health Wealth Happiness Pte. Ltd. and is committed to both funding research and developing and selling products that promote a healthy lifestyle. Impact BioMedical Inc., a subsidiary of Global BioMedical Pte. Ltd, is focusing on research in three main areas: (i) development of a universal therapeutic drug platform; (ii) a new sugar substitute; and (iii) a multi-use fragrance. Global BioLife established a joint venture, Sweet Sense, Inc., with Quality Ingredients, LLC for the development, manufacture, and global distribution of the new sugar substitute. On November 8, 2019, Impact BioMedical Inc. purchased 50 % of Sweet Sense Inc. from Quality Ingredients, LLC for $ 91,000 . Sweet Sense Inc. is an 81.8 % owned subsidiary of Impact BioMedical Inc. On April 27, 2020, Global BioMedical Pte Ltd (“GBM”), a wholly owned subsidiary of Alset International, entered into a share exchange agreement with DSS BioHealth Security, Inc. (“DBHS”), a wholly owned subsidiary of DSS, Inc. (“DSS”), pursuant to which, DBHS will acquire all of the outstanding capital stock of Impact BioMedical Inc., through a share exchange. The transaction was closed on August 21, 2020 and Impact BioMedical became a direct wholly owned subsidiary of DBHS. For further details on this transaction, refer to Note 13, Discontinued Operations. On December 30, 2020, Alset International’s ownership of 53 % of iGalen International was sold to one of the directors of iGalen International. The disposal of this entity does not meet the criteria of ASU 2014-08 and therefore is not treated as a discontinued operation. For more details, refer to Note 9 – Related Party Transactions. iGalen International Inc. owns 100 % of iGalen Inc. (f.k.a. iGalen USA, LLC). During the years ended December 31, 2021 and 2020, the revenue from iGalen Inc. was $ 0 and $ 89,567 , respectively. As of December 31, 2021 and 2020, the deferred revenue was $ 0 . 67 In October 2019, the Company expanded its biohealth segment to the South Korean market through one of the subsidiaries of Health Wealth Happiness Pte. Ltd., HWH World Inc (“HWH World”). HWH World, similarly to iGalen Inc., operates based on a direct sale model of health supplements. HWH World recognized $ 5,543,066 and $ 2,504,944 in revenue in the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the deferred revenue was $ 728,343 and $ 2,867,226 , respectively. All deferred revenue came from unrecognized sales. Other Business Activities In addition to the segments identified above, the Company provides corporate strategy and business development services, asset management services, corporate restructuring and leveraged buy-out expertise. These service offerings build relationships with promising companies for potential future collaboration and expansion. We believe that our other business activities complement our three principal businesses. The Company’s other business activities segment is primarily comprised of Alset International, SeD Capital Pte. Ltd., BMI Capital Partners International Limited and Singapore Construction & Development Pte. Ltd. 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”). 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 positions, results of operations and cash flows of the following entities as of December 31, 2021 and 2020 as follows: SCHEDULE OF SUBSIDIARIES Attributable interest as of, Name of subsidiary consolidated under AEI State or other jurisdiction of incorporation or organization December 31, 2021 December 31, 2020 % % Alset Global Pte. Ltd. (f.k.a. Hengfai International Pte. Ltd.) Singapore 100 100 Alset Business Development Pte. Ltd. (f.k.a. Hengfai Business Development Pte. Ltd.) Singapore 100 100 Impact Oncology Pte. Ltd. (f.k.a. Heng Fai Enterprises Pte. Ltd.) Singapore - 100 Global eHealth Limited Hong Kong 100 100 Alset International Limited Singapore 76.8 57.1 Singapore Construction & Development Pte. Ltd. Singapore 76.8 57.1 Art eStudio Pte. Ltd. Singapore 39.2 * 29.1 * Singapore Construction Pte. Ltd. Singapore 76.8 57.1 Global BioMedical Pte. Ltd. Singapore 76.8 57.1 Alset Innovation Pte. Ltd. Singapore 76.8 57.1 Health Wealth Happiness Pte. Ltd. Singapore 76.8 57.1 68 SeD Capital Pte. Ltd. Singapore 76.8 57.1 LiquidValue Asset Management Pte. Ltd. Singapore 76.8 46.9 * Alset Solar Limited (a.k.a. SeD Home Limited) Hong Kong 76.8 57.1 Alset F&B One Pte. Ltd. (a.k.a. SeD Reits Management Pte. Ltd.) Singapore 69.2 57.1 Global TechFund of Fund Pte. Ltd. Singapore 76.8 57.1 Singapore eChainLogistic Pte. Ltd. Singapore 76.8 57.1 BMI Capital Partners International Limited Hong Kong 76.8 57.1 SeD Perth Pty Ltd Australia 76.8 57.1 SeD Intelligent Home Inc. United States of America 76.8 57.1 LiquidValue Development Inc. United States of America 76.8 57.1 Alset EHome Inc. United States of America 76.8 57.1 SeD USA, LLC United States of America 76.8 57.1 150 Black Oak GP, Inc. United States of America 76.8 57.1 SeD Development USA Inc. United States of America 76.8 57.1 150 CCM Black Oak, Ltd. United States of America 76.8 57.1 SeD Texas Home, LLC United States of America 76.8 57.1 SeD Ballenger, LLC United States of America 76.8 57.1 SeD Maryland Development, LLC United States of America 64.2 47.8 * SeD Development Management, LLC United States of America 65.3 48.6 * SeD Builder, LLC United States of America 76.8 57.1 GigWorld Inc. (f.k.a. HotApp Blockchain Inc.) United States of America 76.8 57.0 HotApp BlockChain Pte. Ltd. (f.k.a. HotApps International Pte. Ltd.) Singapore 76.6 57.0 HotApp International Limited Hong Kong 76.6 57.0 HWH International, Inc. United States of America 76.8 57.1 Health Wealth & Happiness Inc. United States of America 76.8 57.1 HWH Multi-Strategy Investment, Inc. United States of America 76.8 57.1 SeDHome Rental Inc United States of America - 57.1 SeD REIT Inc. United States of America 76.8 57.1 Gig Stablecoin Inc. (a.k.a. Crypto Exchange Inc.) United States of America 76.6 57.0 HWH World Inc. United States of America 76.6 57.0 HWH World Pte. Ltd. Singapore 76.6 57.0 UBeauty Limited Hong Kong 76.8 57.1 WeBeauty Korea Inc South Korea 76.8 57.1 HWH World Limited Hong Kong 76.8 57.1 HWH World Inc. South Korea 76.8 57.1 Alset BioHealth Pte. Ltd. Singapore 76.8 57.1 Alset Energy Pte. Ltd. Singapore 76.8 57.1 Alset Payment Inc. United States of America 76.8 57.1 Alset World Pte. Ltd. Singapore 76.8 57.1 BioHealth Water Inc. United States of America 76.8 57.1 Impact BioHealth Pte. Ltd. Singapore 76.8 57.1 American Home REIT Inc. United States of America 76.8 46.9 * Alset Solar Inc. United States of America 61.5 45.7 * HWH KOR Inc. United States of America 76.8 57.1 Open House Inc. United States of America 76.8 57.1 69 Open Rental Inc. United States of America 76.8 57.1 Hapi Cafe Inc. (Nevada) United States of America 76.8 57.1 Global Solar REIT Inc. United States of America 76.8 57.1 OpenBiz Inc. United States of America 76.8 57.1 Hapi Cafe Inc. (Texas) United States of America 100 100 HWH (S) Pte. Ltd. Singapore 76.8 - True Partner International Limited Hong Kong 100 - LiquidValue Development Pte. Ltd. Singapore 100 - LiquidValue Development Limited Hong Kong 100 - Alset EPower Inc. United States of America 100 - EPowerTech Inc. United States of America 100 - AHR Asset Management Inc. United States of America 76.8 - HWH World Inc. (Nevada) United States of America 76.8 - Alset F&B Holdings Pte. Ltd. Singapore 76.8 - Credas Capital Pte. Ltd. Singapore 38.4 * - Smart Reward Express Limited Hong Kong 38.3 * - Partners HWH Pte. Ltd. Singapore 76.8 - AHR Texas Two, LLC United States of America 76.8 - AHR Black Oak One, LLC United States of America 76.8 - Hapi Air Inc. United States of America 88.4 - AHR Texas Three, LLC United States of America 76.8 - Alset Capital Pte. Ltd. Singapore 100 - Hapi Cafe Korea Inc. South Korea 100 - Green Energy Inc. United States of America 100 - Green Energy Management Inc. United States of America 100 - Alset Metaverse Inc. United States of America 95.6 - Alset Management Group Inc. United States of America 88.2 - Alset Acquisition Sponsor, LLC United States of America 79.6 - Alset Capital Acquisition Corp. United States of America 79.6 - * 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 consolidated 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 consolidated 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 the 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. 70 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, 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 were transactions between entities under common control. On October 15, 2020, American Pacific Bancorp (which subsequently became a majority-owned subsidiary of 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 $ 1,500,000 , to be satisfied by the issuance and allotment of 250,000 shares of the Class A Common Stock of American Pacific Bancorp. HFL is incorporated in Hong Kong with limited liability. The principal activities of HFL are money lending, securities trading and investment. This transaction closed on April 21, 2021. This transaction between the Company and Chan Heng Fai is under common control of Chan Heng Fai. The common control transactions resulted in the following basis of accounting for the financial reporting periods: ● The acquisition 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 acquisition of LVD, APB and HFL was under common control and was consolidated in accordance with ASC 850-50. The consolidated financial statements were retrospectively adjusted for the acquisition of LVD, APB and HFL, and the operating results of LVD, APB and HFL as of January 1, 2020 for comparative purposes. For details refer to Note 5 – Business Under Common Control. AEI’s 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 discount is amortized to finance cost in full immediately. On May 13, 2021 and June 14, 2021 all Alset CPNs of $ 63,920,128 and accrued interests of $ 306,438 were converted into 2,123 shares of series B preferred stock and 9,163,965 shares of common stock of the Company. 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 December 31, 2021 and 2020. 71 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 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 December 31, 2021 and 2020, the total balance of these two accounts was $ 4,399,984 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 December 31, 2021 and 2020, the account balance was $ 36,316 and $ 38,550 , respectively. These funds will remain as collateral for the loans until paid in full. The Company puts funds into a brokerage account specifically for equity investment. As of December 31, 2021 and 2020, the cash balance in that brokerage account was $ 304,570 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 December 31, 2021 and 2020, the balance of account receivables was $ 39,622 and $ 1,366,194 , respectively. Approximately $ 2,500 and $ 1.3 million of account receivables as of December 31, 2021 and 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 on a monthly basis 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 December 31, 2021 and 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 December 31, 2021 and 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 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 True 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 5.3 % of the common shares of AMBS and 15.5 % of True Partner. The stock’s fair value is determined by quoted stock prices. On April 12, 2021 the Company acquired 6,500,000 common shares of Value Exchange International, Inc. (“Value Exchange International”), an OTC listed company, for an aggregate subscription price of $ 650,000 . After the transaction the Company owns approximately 18 % of Value Exchange International and does not have significant influence on it. The stock’s fair value is determined by quoted stock prices. During the year ended December 31, 2021, the Company’s subsidiaries established a portfolio of trading securities. The objective is to generate profits on short-term differences in market prices. The Company does not have significant influence over any trading securities in our portfolio and fair value of these trading securities are determined by quoted stock prices. 72 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”), DSS, Inc. (“DSS”) 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 December, 2021 and December 31, 2020, the Company owned approximately 24.9 % and 19.9 % of the common stock of DSS, respectively. Our CEO is a stockholder and the Chairman of the Board of Directors of DSS. Chan Tung Moe, our Co-Chief Executive Officer and 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 15.8 % of the outstanding shares of Holista and our CEO held a position on Holista’s Board of Directors until June of 2021. ● The Company has significant influence over APW as the Company is the beneficial owner of approximately 17.5 % of the common shares of APW and one officer from the Company holds a director position on APW’s Board of Directors. On March 2, 2020 and October 29, 2021, 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 two $200,000 promissory notes. For further details on this transaction, refer to Note 9 - Related Party Transactions, Note Receivable from a Related Party Company . As of December 31, 2021 and December 31, 2020, AMRE was a private company. Based on management’s analysis, the fair value of the AMRE warrants was $ 0 as of December 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 and stock option 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 . Investment Securities at Cost Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the amount by which the carrying value exceeds the fair value of the investment. The Company had an equity holding in Vivacitas Oncology Inc. (“Vivacitas”), a private company that is currently not listed on an exchange. 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. Our ownership in Vivacitas was sold on March 18, 2021 to DSS for $ 2,480,000 . 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, Sale of Investment in Vivacitas to DSS . 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. 73 On September 30, 2020, the Company acquired 3,800 shares, approximately 19 % ownership, from HWH World Company Limited (f.k.a. Hyten Global (Thailand) Co., Ltd.) (“HWH World Co.”), a private company, at a purchase price of $ 42,562 . During 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 The Company accounts for equity investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Company’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the equity method investment can be reduced below zero based on losses if the Company either be liable for the obligations of the investee or provide for losses in excess of the investment when imminent return to profitable operations by the investee appears to be assured. Otherwise, the Company does not recognize its share of equity method losses exceeding its carrying amount of the investment, but discloses the losses in the footnotes. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than-temporary. American Medical REIT Inc. LiquidValue Asset Management Pte. Ltd. (“LiquidValue”), a subsidiary of the Company owns less than 3.4 % of American Medical REIT Inc. (“AMRE”) as of December 31, 2021, 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 not recorded as a liability because the Company is not liable for the obligations of AMRE and also not committed to provide additional financial support. Sweet Sense, Inc. BioLife Sugar, Inc. (“BioLife’), a subsidiary consolidated under Alset International, entered into a joint venture agreement on April 25, 2018 with Quality Ingredients, LLC (“QI”). The agreement created an entity called Sweet Sense, Inc. (“Sweet Sense”) which was 50 % owned by BioLife and 50 % owned by QI. Management believed its 50 % investment represents significant influence over Sweet Sense and accounts for the investment under the equity method of accounting. 74 On November 8, 2019, Impact BioMedical Inc., a subsidiary of the Company, purchased 50 % of Sweet Sense from QI for $ 91,000 and recorded a loss from acquisition of $ 90,001 . As of November 8, 2019, the total investment in joint venture was equal to $ 91,000 and the proportionate losses totaled $ 90,001 . The transaction was not in the scope of ASC 805 Business Combinations since the acquisition was accounted for an asset purchase instead of a business combination. As an asset acquisition, the Company recorded the transaction at cost and applied ASC 730 to expense in-process research and development cost, the major cost of Sweet Sense. Consequently, Sweet Sense was an 81.8 % owned subsidiary of Impact BioMedical Inc. and therefore, was consolidated into the Company’s condensed consolidated financial statements as of September 30, 2020. On August 20, 2020 Impact BioMedical Inc. was sold to one of DSS’s subsidiaries. As a subsidiary of Impact BioMedical Inc., Sweet Sense was in the discontinued operations of Impact BioMedical Inc. (See Note 13 Discontinued Operations). Joint Venture with Novum On April 20, 2021, one of Company’s indirect subsidiaries, SeD Capital Pte. Ltd. (“SeD Capital”), entered into joint venture agreement with a digital asset management firm Novum Alpha Pte Ltd (“Novum”). Pursuant to this agreement, SeD Capital will own 50 % of the issued and paid-up capital in the joint venture company, Credas Capital Pte Ltd (“Credas”) with the remaining 50 % shareholding stake held by Novum. On the consolidated balance sheet, the prorate loss from Credas was not recorded as a liability because the Company is not liable for the obligations of Credas and also not committed to provide additional financial support. American Pacific Bancorp, Inc. Pursuant to Securities Purchase Agreement from March 12, 2021 the Company purchased of 4,775,523 shares of the common stock of American Pacific Bancorp Inc. (“APB”) and gained majority ownership in that entity. APB was consolidated into the Company under common control accounting (See Transactions between Entities under Common Control for details). On September 8, 2021 APB sold 6,666,700 shares Series A Common Stock to DSS, Inc. for $ 40,000,200 cash. As a result of the new share issuances, the Company’s ownership percentage of APB fell below 50% to 41.3% and the entity was deconsolidated in accordance with ASC 810-10. Upon deconsolidation the Company elected to apply the equity method accounting as the Company still retained significant influence. As a result of the deconsolidation, the Company recognized gain of approximately $ 28.2 million . The gain represents the difference between the fair value of retained equity method investment of $ 30.8 million and the investment percentage of carrying amount of APB’s net assets of $ 2.9 million. Considering the transaction was between related parties, the Company recorded the gain as additional paid in capital in its equity. From September 8 to December 31, 2021, the investment loss was $ 51,999 . As of December 31, 2021, the investment in APB was $ 30,801,129 . Investment in Debt Securities Debt securities are reported at fair value, with unrealized gains and losses (other than impairment losses) recognized in accumulated other comprehensive income or loss. Realized gains and losses on debt securities are recognized in the net income in the consolidated statements of comprehensive income. The Company monitors its investments for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends and other company-specific information. The Company invested $ 50,000 in a convertible promissory note of Sharing Services Global Corporation (“Sharing Services Convertible Note”), a company quoted on the US OTC market. The value of the convertible note is estimated by management using a Black-Scholes valuation model. The fair value of the note was $ 9,799 and $ 66,978 on December 31, 2021 and 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 December 31, 2021, the Management estimated the fair value of the note to be $ 88,599 , the initial transaction price. Variable Interest Entity Under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810, Consolidation , when a reporting entity is the primary beneficiary of an entity that is a variable interest entity (“VIE”), as defined in ASC 810, the VIE must be consolidated into the financial statements of the reporting entity. The determination of which owner is the primary beneficiary of a VIE requires management to make significant estimates and judgments about the rights, obligations, and economic interests of each interest holder in the VIE. The Company evaluates its interests in VIE’s on an ongoing basis and consolidates any VIE in which it has a controlling financial interest and is deemed to be the primary beneficiary. A controlling financial interest has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact its economic performance; and (ii) the obligation to absorb losses of the VIE that could potentially be significant to it or the right to receive benefits from the VIE that could be significant to the VIE. HWH World Company Limited HWH World Co. is a direct sales company in Thailand. The Company has a 19 % ownership and lent a loan of $ 187,500 with zero interest and due on demand, to HWH World Co. The current level of equity in HWH World Co. is not sufficient to permit if to operate on its own without additional subordinated financial support. The Company has a variable interest in HWH World Co. However, The Company is not deemed to absorb losses or receive benefits that could potentially be significant to HWH World Co. Ltd. The Company does not also have the ultimate power over the activities which can impact VIE’s economic performance, like developing company budgets or overseen and controlling the management. The power to direct the activities are held by the manager in Thailand who owns 51 % of the HWH World Co. Therefore, the Company is not a primary beneficiary of this VIE and does not consolidate it. On December 31, 2021 and 2020 variable interest and amount receivable in the non-consolidated VIE was $ 236,699 and $ 42,562 , respectively, which represents the Company’s maximum risk of loss from non-consolidated VIE. The Company applied ASC 321 and measured HWH World Co. investment 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. American Medical REIT Inc. The Company has less than 3.4 % ownership in AMRE and lent two loans of $ 200,000 each and one loan of $ 8,350,000 , all with 8 % per annum interest rate. One of the $ 200,000 loans is due on March 3, 2022 , the other one is due on October 29, 2024. The $ 8,350,000 loan is due one on November 29, 2023. The Company has a variable interest in AMRE. However, The Company is not deemed to absorb losses or receive benefits that could potentially be significant to AMRE. The Company does not also have the ultimate power over the activities which can impact VIE’s economic performance, like developing company budgets or overseen and controlling the management. The power to direct these activities are held by the AMRE’s largest shareholder which owns approximately 93 % of AMRE and AMRE’s management team. Therefore, the Company is not a primary beneficiary of this VIE and does not consolidate it. On December 31, 2021 and 2020 variable interest and amount receivable in the non-consolidated VIE was $ 8,901,285 and $ 213,431 , respectively, which represents the Company’s maximum risk of loss from non-consolidated VIE. Credas Capital Pte Ltd The Company has a 50% ownership of Credas Capital Pte Ltd (“Credas”) and lent a loan of $ 135,720 with zero interest rate and due on demand. The current level of equity in Credas is not sufficient to permit if to operate on its own without additional subordinated financial support. The Company has a variable interest in Credas. However, The Company is not deemed to absorb losses or receive benefits that could potentially be significant to Credas. The Company does not also have the ultimate power over the activities which can impact VIE’s economic performance, like developing company budgets or overseen and controlling the management. Therefore, the Company is not a primary beneficiary of this VIE and does not consolidate it. On December 31, 2021 and 2020 variable interest and amount receivable in the non-consolidated VIE was $ 135,720 and $ 0 , respectively, which represents the Company’s maximum risk of loss from non-consolidated VIE. 75 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 $ 6.0 million and $ 10.3 million for the years ended December 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 years ended on December 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. During the year ended December 31, 2021, the Company signed multiple purchase agreements to acquire 109 homes in Montgomery and Harris Counties, Texas. By December 31, 2021, all of the 109 homes were closed with an aggregate purchase cost of $ 24,940,764 . All of these purchased homes are properties of our rental business. Investments in Single-Family Residential Properties The Company accounts for its investments in single-family residential properties as asset acquisitions and records these acquisitions at their purchase price. The purchase price is allocated between land, building, improvements and existing leases based upon their relative fair values at the date of acquisition. The purchase price for purposes of this allocation is inclusive of acquisition costs which typically include legal fees, title fees, property inspection and valuation fees, as well as other closing costs. Building improvements and buildings are depreciated over estimated useful lives of approximately 10 to 27.5 years, respectively, using the straight-line method. The Company assesses its investments in single-family residential properties for impairment whenever events or changes in business circumstances indicate that carrying amounts of the assets may not be fully recoverable. When such events occur, management determines whether there has been impairment by comparing the asset’s carrying value with its fair value. Should impairment exist, the asset is written down to its estimated fair value. The Company did not recognize any impairment losses during the years ended on December 31, 2021 and 2020. 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. 76 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: Real Estate 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 70 % and 84 %, respectively, of the Company’s revenue in the years ended December 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 agreements have 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. 77 Rental Revenue The Company leases real estate properties to its tenants under leases that are predominately classified as operating leases, in accordance with ASC 842, Leases (“ASC 842”). Real estate rental revenue is comprised of minimum base rent and revenue from the collection of lease termination fees. Rent from tenants is recorded in accordance with the terms of each lease agreement on a straight-line basis over the initial term of the lease. Rental revenue recognition begins when the tenant controls the space and continues through the term of the related lease. Generally, at the end of the lease term, the Company provides the tenant with a one year renewal option, including mostly the same terms and conditions provided under the initial lease term, subject to rent increases. The Company defers rental revenue related to lease payments received from tenants in advance of their due dates. These amounts are presented within deferred revenues and other payables on the Company’s consolidated balance sheets. Rental revenue is subject to an evaluation for collectability on several factors, including payment history, the financial strength of the tenant and any guarantors, historical operations and operating trends of the property, and current economic conditions. If our evaluation of these factors indicates that it is not probable that we will recover substantially all of the receivable, rental revenue is limited to the lesser of the rental revenue that would be recognized on a straight-line basis (as applicable) or the lease payments that have been collected from the lessee. Differences between rental revenue recognized and amounts contractually due under the lease agreements are credited or charged to straight-line rent receivable or straight-line rent liability, as applicable. In the year ended December 31, 2021, the Company did not recognize any deferred revenue and collected all rents due. 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 more quickly realize the revenue. The selling prices range from $ 3,000 to $ 4,500 per home depending on the type of 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 have to 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 years ended December 31, 2021 and 2020, we recognized revenue of $ 289,375 and $ 273,620 from FFB assessment, respectively. Cost of Revenue ● Cost of Real Estate Sale All of the costs of real estate sales are from our land development business. 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. 78 ● Cost of Rental Revenue Cost of rental revenue consists primarily of the costs associated with management and leasing fees to our management company, repairs and maintenance, depreciation and other related administrative costs. Utility expenses are paid directly by tenants. 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, they 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 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 $ 728,343 and $ 2,867,226 at December 31, 2021 and 2020, respectively. Other Businesses Remaining performance obligations As of December 31, 2021 and 2020, there were no remaining performance obligations or continuing involvement, as all service obligations within the other business activities segment have been completed. Stock-Based Compensation The Company accounts for stock-based compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination. Effective January 1, 2019, the Company adopted ASU 2018-07 for the accounting of share-based payments granted to non-employees for goods and services. During the years ended on December 31, 2021 and 2020, the Company recorded $ 73,292 and $ 1,564,376 as stock-based compensation expense. 79 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 year 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 $ 1,363,061 gain on foreign exchange during the year ended on December 31, 2021 and a $ 371,603 loss during the year ended on December 31, 2020. 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). The Company recorded other comprehensive loss of $ 3,974,966 from foreign currency translation for the year ended December 31, 2021 and $ 1,148,898 income for the year ended December 31, 2020, in accumulated other comprehensive loss. Income Taxes US Income Taxes Income tax expense represents the sum of the current tax expense and deferred tax expense. Income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. 80 Deferred income tax is provided in full, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets and liabilities are recognized for all temporary differences, except: ● Where the deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither the accounting profit nor taxable profit or loss. ● In respect of temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be determined and it is probable that the temporary differences will not reverse in the foreseeable future; and ● In respect of deductible temporary differences and carry-forward of unutilized tax losses, if it is not probable that taxable profits will be available against which those deductible temporary differences and carry-forward of unutilized tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Current and deferred income tax are recognized as income or expense in the profit or loss, except to the extent that the tax arises from a business combination or a transaction which is recognized either in other comprehensive income or directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authorities on the same taxable entity, or on different tax entities, provided they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry-forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The differences relate primarily to net operating loss carryforward from date of acquisition and to the use of the cash basis of accounting for income tax purposes. The Company records an estimated valuation allowance on its deferred income tax assets if it is more likely than not that these deferred income tax assets will not be realized. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement. The Company has not recorded any unrecognized tax benefits. The Company’s 2020, 2019 and 2018 tax returns remain open to examination. Income Taxes in other countries Significant judgement is involved in determining the income taxes mainly in Singapore. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for expected tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. 81 Earnings (loss) per Share The Company presents basic and diluted earnings (loss) per share data for its common shares. Basic earnings (loss) per share is calculated by dividing the profit or loss attributable to common stock shareholders of the Company by the weighted-average number of common shares 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 stock shareholders and the weighted-average number of common shares 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 during years ended December 31, 2020. At December 31, 2021 there were 24,976,446 potentially dilutive warrants outstanding. 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 restricted cash, accounts receivable and accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. The liabilities in connection with the conversion and make-whole features included within certain of the Company’s convertible notes payable and warrants are each classified as a level 3 liability. Non-controlling Interests Non-controlling interests represent the equity in subsidiary not attributable, directly or indirectly, to shareholders of the Company, and are presented separately in the Consolidated Statements of Operation and Other Comprehensive Loss, and within equity in the Consolidated Balance Sheets, separately from equity attributable to shareholders of the Company. On December 31, 2021 and 2020, the aggregate non-controlling interests in the Company were $ 21,912,268 and $ 38,023,260 respectively. Impairment of Long-lived Assets Our policy is to obtain an independent third-party valuation for each major project in the United States to identify triggering events for impairment. Our management may use a 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”), we apply 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 any impairment for the year ended on December 31, 2021 and 2020. 82 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 December 31, 2021 and 2020, the capitalized financing costs were $ 3,247,739 and $ 3,513,535 , respectively. Related Party Transactions The Company accounts for related party transactions in accordance with ASC 850 (“Related Party Disclosures”). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. 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 adopted 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. 83 In addition, the CARES Act raises t he 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 year ended December 31, 2020. 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. In October 2021, the FASB issued ASU No. 202108, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 202108 requires the company acquiring contract assets and contract liabilities obtained in a business combination to recognize and measure them in accordance with ASC 606, “Revenue from Contracts with Customers”. At the acquisition date, the company acquiring the business should record related revenue, as if it had originated the contract. Before the update such amounts were recognized by the acquiring company at fair value. The amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The Company plans to adopt these requirements prospectively, effective on the first day of year 2022. 3. CONCENTRATIONS The Company maintains cash balances at various financial institutions in different countries. These balances are usually secured by the central banks’ insurance companies. At times, these balances may exceed the insurance limits. As of December 31, 2021 and 2020, uninsured cash and restricted cash balances were $ 57,905,303 and $ 25,752,637 , respectively. For the year ended December 31, 2021, two customers accounted for approximately 97 % , and 3 % of the Company’s property and development revenue. For the year ended December 31, 2020, two customers accounted for approximately 98 % , and 2 % of the Company’s property and development revenue. 84 4. SEGMENTS Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-maker is the CEO. The Company operates in and reports four business segments: real estate, digital transformation technology, biohealth, and other business activities. The Company’s reportable segments are determined based on the services they perform and the products they sell, not on the geographic area in which they operate. The Company’s chief operating decision maker evaluates segment performance based on segment revenue. Costs excluded from segment income (loss) before taxes and reported as “Other” consist of corporate general and administrative activities which are not allocable to the four reportable segments. The following table summarizes the Company’s segment information for the following balance sheet dates presented, and for the years ended December 31, 2021 and 2020: SCHEDULE OF SEGMENT INFORMATION Real Estate Digital Transformation Technology Biohealth Business Other Total Year Ended December 31, 2021 Revenue $ 14,213,379 $ - $ 5,543,066 $ 42,377 $ 19,798,822 Cost of Sales ( 11,073,756 ) - ( 214,019 ) ( 14,039 ) ( 11,301,814 ) Gross Margin 3,139,623 - 5,329,047 28,338 8,497,008 Operating Expenses ( 1,136,031 ) ( 183,429 ) ( 3,624,200 ) ( 18,547,470 ) ( 23,491,130 ) Operating Income (Loss) 2,003,592 ( 183,429 ) 1,704,847 ( 18,519,132 ) ( 14,994,122 ) Other Income (Expense) ( 8,955 ) 1,286,962 ( 39,265,445 ) ( 65,502,017 ) ( 103,489,455 ) Net Income (Loss) Before Income Tax 1,994,637 1,103,533 ( 37,560,598 ) ( 84,021,149 ) ( 118,483,577 ) Real Estate Digital Transformation Technology Biohealth Business Other Total Year Ended December 31, 2020 (As Restated) Revenue $ 13,643,689 $ - $ 2,594,511 $ - $ 16,238,200 Cost of Sales ( 11,779,984 ) - ( 305,590 ) - ( 12,085,574 ) Gross Margin 1,863,705 - 2,288,921 - 4,152,626 Operating Expenses ( 660,647 ) ( 54,673 ) ( 1,545,244 ) ( 4,076,800 ) ( 6,337,364 ) Operating Income (Loss) 1,203,058 ( 54,673 ) 743,677 ( 4,076,800 ) ( 2,184,738 ) Other Income (Expense) 1,983 ( 77 ) ( 1,392,617 ) ( 1,098,888 ) ( 2,489,599 ) Net Income (Loss) Before Income Tax 1,205,041 ( 54,750 ) ( 648,940 ) ( 5,175,688 ) ( 4,674,337 ) December 31, 2021 Cash and Restricted Cash $ 7,493,921 $ 245,780 $ 2,629,464 $ 50,433,014 $ 60,802,179 Total Assets 55,465,600 2,199,466 11,056,779 115,488,298 184,210,143 December 31, 2020 Cash and Restricted Cash $ 8,150,769 $ 158,058 $ 1,590,265 $ 21,836,387 $ 31,735,479 Total Assets 28,954,484 158,160 524,603 78,076,498 107,713,745 5. BUSINESS UNDER COMMON CONTROL Due to the transactions with Chan Heng Fai on March 12, 2021 and acquisition of HengFeng Finance Limited (“HFL”) on April 21, 2021, transactions between entities under common control (for further details on these transactions, refer to Note 2 – Summary of Significant Accounting Policies), the Company has disclosed the Consolidated Statement of Operations and Other Comprehensive Income for the Year Ended on December 31, 2020 and Consolidated Balance Sheet as of December 31, 2020, to adjust the information on a consolidated basis as follows: 85 Consolidated Statement of Operations and Other Comprehensive Income for the Year Ended on December 31, 2020 SCHEDULE OF ADJUSTMENT INFORMATION As Previously Reported Acquisition of APB under Common Control Acquisition of LVD Ltd under Common Control As Restated Revenue Property Sales $ 13,643,689 $ - $ - $ 13,643,689 Biohealth Product Sales 2,594,511 - - 2,594,511 Total Revenue 16,238,200 - - 16,238,200 Operating Expenses Cost of Sales 12,085,574 - - 12,085,574 General and Administrative 5,843,067 385,735 108,562 6,337,364 Research and Development - - - - Total Operation Expenses 17,928,641 385,735 108,562 18,422,938 Loss From Continuing Operations ( 1,690,441 ) ( 385,735 ) ( 108,562 ) ( 2,184,738 ) Other Income (Expense) Interest Income 16,321 49,356 74 65,751 Interest Expense ( 147,640 ) - - ( 147,640 ) Net Gain on Investment in Alset International during the Unconsolidated Period 61,346 61,346 Foreign Exchange Transaction Loss ( 354,392 ) - ( 17,211 ) ( 371,603 ) Unrealized Gain (Loss) on Securities Investment ( 1,750,454 ) 55,788 131 ( 1,694,535 ) Realized Gain (Loss) on Securities Investment 1,115 ( 193,574 ) ( 192,459 ) Loss on Investment on Security by Equity Method ( 227,643 ) ( 227,643 ) Finance Costs - ( 109,916 ) - ( 109,916 ) Other Income 119,334 2,633 5,133 127,100 Total Other Expense, Net ( 2,282,013 ) ( 2,139 ) ( 205,447 ) ( 2,489,599 ) Net Loss from Continuing Operations Before Income Taxes ( 3,972,454 ) ( 387,874 ) ( 314,009 ) ( 4,674,337 ) Income Tax Expense from Continuing Operations ( 8,543 ) - - ( 8,543 ) Net Loss from Continuing Operations ( 3,980,997 ) ( 387,874 ) ( 314,009 ) ( 4,682,880 ) Loss from Discontinued Operations, Net of Tax ( 417,438 ) - - ( 417,438 ) Net Loss ( 4,398,435 ) ( 387,874 ) ( 314,009 ) ( 5,100,318 ) Net Loss Attributable to Non-Controlling Interest ( 1,881,559 ) ( 67,102 ) - ( 1,948,661 ) Net Loss Attributable to Common Stockholders $ ( 2,516,876 ) $ ( 320,772 ) $ ( 314,009 ) $ ( 3,151,657 ) Other Comprehensive Income (Loss), Net Unrealized Gain on Securities Investment 19,486 - - 19,486 Foreign Currency Translation Adjustment 1,148,898 - - 1,148,898 Comprehensive Loss ( 3,230,051 ) ( 387,874 ) ( 314,009 ) ( 3,931,934 ) Comprehensive Loss Attributable to Non-Controlling Interests ( 1,314,761 ) ( 67,102 ) - ( 1,381,863 ) Comprehensive Loss Attributable to Common Stockholders $ ( 1,915,290 ) $ ( 320,772 ) $ ( 314,009 ) $ ( 2,550,071 ) Net Loss Per Share - Basic and Diluted Continuing Operations $ ( 0.27 ) $ ( 0.33 ) Discontinued Operations $ ( 0.03 ) $ ( 0.04 ) Net Loss Per Common Share $ ( 0.30 ) $ ( 0.37 ) Weighted Average Common Shares Outstanding - Basic and Diluted 8,352,425 8,352,425 86 Consolidated Balance Sheet as of December 31, 2020 As Previously Reported Acquisition of APB under Common Control Acquisition of LVD Ltd under Common Control Eliminations As Restated Assets: Current Assets: Cash $ 22,124,491 $ 2,348,478 $ 492,977 $ - $ 24,965,946 Restricted Cash 6,769,533 - - - 6,769,533 Account Receivables, Net 1,366,194 - - - 1,366,194 Other Receivables 270,222 279,177 95,177 - 644,576 Note Receivables - Related Party 624,986 24,583 - - 649,569 Prepaid Expenses 1,470,680 - - - 1,470,680 Inventory 90,068 - - - 90,068 Investment in Securities at Fair Value 48,857,483 313,343 1,631 - 49,172,457 Investment in Securities at Cost 280,516 - - - 280,516 Investment in Securities on Equity Method - - 74,535 ( 74,535 ) - Deposits 47,019 1,801 - - 48,820 Total Current Assets 81,901,192 2,967,382 664,320 ( 74,535 ) 85,458,359 Real Estate Properties under Development 20,505,591 - - - 20,505,591 Operating Lease Right-Of-Use Asset 574,754 - - - 574,754 Deposit 249,676 - - - 249,676 Loan Receivable - 840,000 - - 840,000 Property and Equipment, Net 85,365 - - - 85,365 Total Assets $ 103,316,578 $ 3,807,382 $ 664,320 $ ( 74,535 ) $ 107,713,745 Liabilities and Stockholders’ Equity: Current Liabilities: Accounts Payable and Accrued Expenses $ 1,553,132 $ 118,133 $ - $ - $ 1,671,265 Deferred Revenue 2,867,226 - - - 2,867,226 Builder Deposits 1,262,336 - - - 1,262,336 Operating Lease Liability 381,412 - - - 381,412 Note Payable 172,706 - - - 172,706 Note Payable- Related Parties 1,526,208 184,250 823,823 - 2,534,281 Total Current Liabilities 7,763,020 302,383 823,823 - 8,889,226 Long-Term Liabilities: Operating Lease Liability 193,342 - - - 193,342 Notes Payable 636,362 - - - 636,362 Total Liabilities 8,592,724 302,383 823,823 - 9,718,930 Stockholders’ Equity: Common Stock 8,570 47,756 - ( 47,756 ) 8,570 Additional Paid in Capital 97,950,440 3,975,261 756,487 47,756 102,729,944 Accumulated Deficit ( 43,010,991 ) ( 993,296 ) ( 906,010 ) - ( 44,910,297 ) Accumulated Other Comprehensive Income 2,153,318 - ( 9,980 ) - 2,143,338 Total Stockholders’ Equity 57,101,337 3,029,721 ( 159,503 ) - 59,971,555 Non-controlling Interests 37,622,517 475,278 - ( 74,535 ) 38,023,260 Total Stockholders’ Equity 94,723,854 3,504,999 ( 159,503 ) ( 74,535 ) 97,994,815 Total Liabilities and Stockholders’ Equity $ 103,316,578 $ 3,807,382 $ 664,320 $ ( 74,535 ) $ 107,713,745 87 6. REAL ESTATE ASSETS As of December 31, 2021 and 2020, real estate assets consisted of the following: SCHEDULE OF REAL ESTATE ASSETS December 31, 2021 December 31, 2020 Construction in Progress $ 8,597,023 $ 9,567,841 Land Held for Development 7,098,104 10,937,750 Rental Properties 24,820,253 - Total Real Estate Assets $ 40,515,380 $ 20,505,591 Single family residential properties As of December 31, 2021, the Company owns 109 Single Family Residential Properties (“SFRs”) in Montgomery and Harris Counties, Texas. The Company’s aggregate investment in those SFRs was $ 24.9 million. Depreciation expense was $ 120,511 and $ 0 in years ended December 31, 2021 and 2020, respectively. The following table presents the summary of our SRFs as of December 31, 2021: SUMMARY OF SINGLE FAMILY RESIDENTIAL PROPERTIES Number of Homes Aggregate investment Average Investment per Home SFRs 109 $ 24,940,764 $ 228,814 7. BUILDER DEPOSITS In November 2015, SeD Maryland Development, LLC (“SeD Maryland”) entered into lot purchase agreements with NVR, Inc. (“NVR”) relating to the sale of single-family home and townhome lots to NVR in the Ballenger Run Project. The purchase agreements were amended three times thereafter. Based on the agreements, NVR is entitled to purchase 479 lots for a price of approximately $ 64,000,000 , which escalates 3 % annually after June 1, 2018. As part of the agreements, NVR was required to give a deposit in the amount of $ 5,600,000 . Upon the sale of lots to NVR, 9.9 % of the purchase price is taken as payback of the deposit. A violation of the agreements by NVR would cause NVR to forfeit the deposit. On January 3, 2019 and April 28, 2020, NVR gave SeD Maryland two more deposits in the amounts of $ 100,000 and $ 220,000 , respectively, based on the 3rd Amendment to the Lot Purchase Agreement. On December 31, 2021 and 2020, there was $ 31,553 and $ 1,262,336 held on deposit, respectively. 8. NOTES PAYABLE As of December 31, 2021 and 2020, notes payable consisted of the following: SCHEDULE OF NOTES PAYABLE December 31, 2021 December 31, 2020 ($) ($) M&T Bank Loan, Net of Debt Discount - 636,362 PPP Loan 68,502 - Australia Loan 162,696 172,706 Hire Purchase 86,473 - Total notes payable $ 317,671 $ 809,068 88 M&T Bank Loan On April 17, 2019, SeD Maryland Development LLC entered into a Development Loan Agreement with Manufacturers and Traders Trust Company (“M&T Bank”) in the principal amount not to exceed at any one time outstanding the sum of $ 8,000,000 , with a cumulative loan advance amount of $ 18,500,000 . The line of credit bears interest rate on LIBOR plus 375 basis points. SeD Maryland Development LLC was also provided with a Letter of Credit (“L/C”) Facility in an aggregate amount of up to $ 900,000 . The L/C commission will be 1.5 % per annum on the face amount of the L/C. Other standard lender fees will apply in the event L/C is drawn down. The loan is a revolving line of credit. The L/C Facility is not a revolving loan, and amounts advanced and repaid may not be re-borrowed. Repayment of the Loan Agreement is secured by $ 2,600,000 collateral fund and a Deed of Trust issued to the Lender on the property owned by SeD Maryland. As of December 31, 2021 and 2020, the outstanding balance of the revolving loan was $0 . As part of the transaction, the Company incurred loan origination fees and closing fees in the amount of $ 381,823 and capitalized it into construction in process. On June 18, 2020, Alset EHome Inc. (“Alset EHome”), a wholly owned subsidiary of LiquidValue Development Inc., entered into a Loan Agreement with Manufacturers and Traders Trust Company (the “Lender”). Pursuant to the Loan Agreement, the Lender provided a non-revolving loan to Alset EHome in an aggregate amount of up to $ 2,990,000 (the “Loan”). The line of credit bears interest rate of LIBOR plus 375 basis points. Repayment of the Loan is secured by a Deed of Trust issued to the Lender on the property owned by certain subsidiaries of Alset EHome. The maturity date of this Loan is July 1, 2022 . LiquidValue Development Inc. and one of its subsidiaries are guarantors of this Loan. The guarantors are required to maintain during the term of the loan a combined minimum net worth in an aggregate amount equal to not less than $ 20,000,000 . The Company was in compliance with this covenant as of December 31, 2020. During the year ended December 31, 2020, Alset EHome borrowed $ 664,810 from M&T Bank, incurring at the same time a loan origination fees of $ 61,679 which were amortized over the term of the loan. As of December 31, 2020, the remaining unamortized debt discount was $ 42,906 . The loan in the amount of $ 664,810 , together with all accrued interests of $ 25,225 , was paid off on May 28, 2021. The loan was closed in June 2021. Additionally, the debt discount of $ 42,907 was fully amortized during the year ended December 31, 2021. Paycheck Protection Program Loan On April 6, 2020, the Company entered into a term note with M&T Bank with a principal amount of $ 68,502 pursuant to the Paycheck Protection Program (“PPP Term Note”) under the Coronavirus Aid, Relief, and Economic Security Act. The PPP Loan is evidenced by a promissory note. The PPP Term note bears interest at a fixed annual rate of 1.00 % , with the first ten months of principal and interest deferred. On November 26, 2020, $ 64,502 of this loan was forgiven by the United States Small Business Administration and $ 64,502 was recorded as other income. The remaining balance of $ 4,000 was paid back in December 2020. On February 11, 2021, the Company entered into a five year note with M&T Bank with a principal amount of $ 68,502 pursuant to the Paycheck Protection Program (“PPP Term Note”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan is evidenced by a promissory note. The PPP Term Note bears interest at a fixed annual rate of 1.00 % , with the first sixteen months of principal and interest deferred or until we apply for the loan forgiveness. The PPP Term Note may be accelerated upon the occurrence of an event of default. The PPP Term Note is unsecured and guaranteed by the United States Small Business Administration. The Company may apply to M&T Bank for forgiveness of the PPP Term Note, with the amount which may be forgiven equal to at least 60 % of payroll costs and other eligible payments incurred by the Company, calculated in accordance with the terms of the CARES Act. At this time, we are not in a position to quantify the portion of the PPP Term Note that will be forgiven. As of December 31, 2021, we owe $ 68,502 to M&T Bank. 89 Australia Loan On January 7, 2017, SeD Perth Pty Ltd (“SeD Perth”) entered into a loan agreement with National Australian Bank Limited (the “Australia Loan”) for the purpose of funding land development. The loan facility provides SeD Perth with access to funding of up to approximately $ 460,000 and matures on December 31, 2018 . The Australia Loan is secured by both the land under development and a pledged deposit of $ 35,276 . This loan is denominated in AUD. Personal guarantees amounting to approximately $ 500,000 have been provided by our CEO, Chan Heng Fai and by Rajen Manicka, the CEO of Holista CollTech and Co-founder of iGalen Inc. The interest rate on the Australia Loan is based on the weighted average interest rates applicable to each of the business markets facility components as defined within the loan agreement, ranging from 4.48 % to 4.49 % per annum for the year ended December 31, 2021 and from 4.36 % to 5.57 % per annum for the year ended December 31, 2020. On September 7, 2017 the Australia Loan was amended to reduce the maximum borrowing capacity to approximately $ 179,000 . During 2020, the terms of the Australia Loan were amended to reflect an extended maturity date of April 30, 2022 . This was accounted for as a debt modification. The Company did not pay fees to the National Australian Bank Limited for the modification of the loan agreement. Singapore Car Loan On May 17, 2021, Alset International Limited entered into a Hire Purchase Agreement with Hong Leong Finance Limited to purchase a car for business. The total purchase price of the car, including associated charges, was approximately $ 184,596 . Alset International paid an initial deposit of $ 78,640 , and would make monthly instalment of approximately $ 1,300 , including interest of 1.88 % per annum, for the 84 months. 9. RELATED PARTY TRANSACTIONS Personal Guarantees by Director As of December 31, 2021 and 2020, a director of the Company had provided personal guarantees amounting to approximately $ 500,000 , respectively, to secure external loans from financial institutions for AEI and the consolidated entities. Sale of Impact Biomedical to DSS On April 27, 2020, Global BioMedical Pte Ltd (“GBM”), one of our subsidiaries, entered into a share exchange agreement with DSS BioHealth Security, Inc. (“DBHS”), a wholly owned subsidiary of DSS, Inc. (“DSS”), pursuant to which, DBHS agreed to acquire all of the outstanding capital stock of Impact BioMedical Inc., a wholly owned subsidiary of GBM, through a share exchange. It was agreed that the aggregate consideration to be issued to GBM for the Impact BioMedical shares would be the following: (i) 483,334 newly issued shares of DSS common stock; and (ii) 46,868 newly issued shares of a new series of DSS perpetual convertible preferred stock with a stated value of $ 46,868,000 , or $ 1,000 per share. The convertible preferred stock can be convertible into shares of DSS common stock at a conversion price of $ 6.48 of preferred stock stated value per share of common stock, 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 GBM. Holders of the convertible preferred stock will have no voting rights, except as required by applicable law or regulation, and no dividends will accrue or be payable on the convertible preferred stock. The holders of convertible preferred stock will be entitled to a liquidation preference of $ 1,000 per share, and DSS will have the right to redeem all or any portion of the then outstanding shares of convertible preferred stock, pro rata among all holders, at a redemption price per share equal to such liquidation value per share. 90 Under ASU 2014-08, a disposal transaction meets the definition of a discontinued operation if all of the following criteria are met: 1. The disposal group constitutes a component of an entity or a group of components of an entity 2. The component of an entity (or group of components of an entity) meets the held-for-sale classification criteria, is disposed of by sale, or is disposed of other than by sale (e.g., “by abandonment, in an exchange measured based on the recorded amount of the nonmonetary asset relinquished, or in a distribution to owners in a spinoff”). 3. The disposal of a component of an entity (or group of components of an entity) “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results”. Impact Biomedical Inc. is a group of subsidiaries of AEI and operates independently with its own financial reporting. The transaction is a disposal by sale and has a major effect on AEI’s financial results. Since it meets all above test criteria, we treated this disposal transaction as a discontinued operation in our financial statements. On August 21, 2020, the transaction closed and Impact BioMedical Inc became a direct wholly owned subsidiary of DBHS. GBM received 483,334 shares of DSS common stock and 46,868 shares of DSS preferred stock, which preferred shares could be converted to 7,232,716 common shares (however, any conversion will be subject to the blocker GBM has agreed to, as described above). After this transaction, we hold 500,001 shares of the common stock of DSS. Additionally, our CEO, Chan Heng Fai is the owner of the common stock of DSS and is the executive Chairman of the Board of Directors of DSS. The Company has elected the fair value option for the DSS common stock that would otherwise be accounted for under the equity method of accounting. ASC 820, Fair Value Measurement and Disclosures, defines the fair value of the financial assets. We value DSS common stock under level 1 category through quoted prices and preferred stock under level 3 category through an Option-Pricing Method valuation model. The quoted price of DSS common stock was $ 6.95 as of August 21, 2020. The total fair value of DSS common and preferred stocks GBM received as consideration for the disposal of Impact BioMedical was $ 46,248,171 . As of August 21, 2020, the net asset value of Impact BioMedical was $ 94,011 . The difference of $ 46,154,160 was recorded as additional paid in capital. We did not recognize gain or loss from this transaction as it was a related party transaction. For further details on this transaction, refer to Note 13 – Discontinued Operations. On October 16, 2020, GBM converted 4,293 shares of DSS Series A Preferred Stock having a par value of $ 0.02 per share in exchange for 662,500 restricted shares of DSS common stock based upon a liquidation value of $ 1,000 and a conversion price of $ 6.48 per share. Our ownership of DSS was 19.9 % after the conversion. Sale of iGalen International Inc. to an officer of the Company On December 30, 2020, Health, Wealth Happiness Pte Ltd (“HWH Pte Ltd”), a 100 % owned subsidiary of the Company, sold 530,000 shares (its 53 % ownership) of iGalen International Inc., which owns 100 % iGalen Inc., to an officer of the Company for $ 100 . The net asset of iGalen International was $( 3,741,065 ) at the time of sales and $ 3,741,065 was recorded as additional paid in capital since it was a related party transaction. No gain or loss was recognized. Under ASU 2014-08, the transaction did not meet the definition of a discontinued operation. For the Company, the disposal of the iGalen does not make a strategic shift on our operations and financial results. The Company did not recognize gain or Loss in the Statement of Operations as this is considered as a related party transaction. Purchase Shares and Warrants from APW On July 17, 2020, the Company purchased 122,039,000 shares, approximately 9.99 % ownership, and 1,220,390,000 warrants with an exercise price of $ 0.0001 per share, from APW, for an aggregated purchase price of $ 122,039 . We value APB warrants under level 3 category through a Black Scholes option pricing model and the fair value of the warrants from APW were $ 860,342 as of July 17, 2020, the purchase date and $ 1,009,854 and $ 862,723 as of December 31, 2021 and 2020, respectively. The difference of $ 945,769 of fair value of stock and warrants, total $ 1,067,808 and the purchase price $ 122,039 , was recorded as additional paid in capital as it was a related party transaction. 91 Sale of Investment in Vivacitas to DSS On March 18, 2021, the Company sold equity investment in Vivacitas, a U.S.-based biopharmaceutical company, equaling to 2,480,000 shares of common stock and 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, to a subsidiary of DSS for $ 2,480,000 . Chan Heng Fai, CEO and the founder of our Company, holds a director position on both Vivacitas and DSS. After this transaction, we do not own any investment in Vivacitas. Our original cost of common stock and stock option of Vivacitas was $ 200,128 . We did not recognize gain or loss in this transaction. The difference of $ 2,279,872 between the selling price and our original investment cost was recorded as additional paid capital considering it was a related party transaction. Purchase of stock in True Partner Capital Holding Limited On March 12, 2021, the Company purchased 62,122,908 ordinary shares of True Partner Capital Holding Limited for $ 6,729,629 from a related party. The fair market value of stock on acquisition date was $ 10,003,689 . The difference between purchase price and fair market value of $ 3,274,060 was recorded as equity transaction on Company’s consolidated statement of stockholders’ equity. Notes Payable Chan Heng Fai provided an interest-free, due on demand advance to LiquidValue Development Pte. Ltd. and its subsidiary LiquidValue Development Limited for the general operations. As of December 31, 2021 and 2020, the outstanding balance was approximately $ 820,113 and $ 823,823 , respectively. Chan Heng Fai provided interest-free due on demand advance to AEI for the general operations. On December 31, 2021 and 2020, the outstanding balance was $ 0 and $ 178,400 , respectively. Chan Heng Fai provided an interest-free, due on demand advance to SeD Perth Pty. Ltd. for its general operations. On December 31, 2021 and 2020, the outstanding balance was $ 13,546 and $ 14,379 , respectively. On August 20, 2020, the Company acquired 30,000,000 common shares of Alset International Limited from Chan Heng Fai in exchange for a two-year non-interest bearing note of $ 1,333,429 . On December 31, 2021 and 2020 the amount outstanding was $ 0 and $ 1,333,429 , respectively. On May 1, 2018, Rajen Manicka, CEO and one of the directors of iGalen International Inc., which holds 100 % of iGalen Inc., provided a loan of approximately $ 367,246 to iGalen Inc. (the “2018 Rajen Manicka Loan”). The term of 2018 Rajen Manicka Loan is ten years. The 2018 Rajen Manicka Loan has an interest rate of 4.7 % per annum. On March 8, March 27 and April 23, 2019, iGalen borrowed additional monies of $ 150,000 , $ 30,000 and $ 50,000 , respectively, from Rajen Manicka, total $ 230,000 (the “2019 Rajen Manicka Loan”). The 2019 Rajen Manicka Loan is interest free, not tradable, unsecured, and repayable on demand. On December 30, 2020, Company’s subsidiary Health Wealth Happiness Pte. Ltd., sold its 53 % interest in iGalen International to an officer of the Company. On August 13, 2019, iGalen International Inc., which holds 100 % of iGalen Inc., borrowed $ 250,000 from Decentralized Sharing Services, Inc., a company whose sole shareholder and director is Chan Heng Fai, our CEO. The term of the loan is 12 months, with an interest rate of 10 % per annum. In addition, Decentralized Sharing Services, Inc. received the right to receive 3 % of any revenue received by iGalen International Inc. for 99 years. During the year ended December 31, 2020 the Company incurred $ 9,729 of interest expense and $ 0 from the right to receive 3 % of revenue. The amount outstanding on the loan as of December 31, 2020 was $ 0 . The principal of $ 250,000 was paid off in June 2020. 92 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, 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”), at par value of $ 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 Common Stock preceding January 4, 2021 as quoted by Bloomberg L.P. AEI’s 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 the transaction. On May 13 and June 14, 2021 all Alset CPNs of $ 63,920,128 and accrued interests of $ 306,438 were converted into 2,123 shares of series B preferred stock and 9,163,965 shares of common stock of the Company. On May 14, 2021, the Company borrowed S$ 7,395,472 Singapore Dollars (equal to approximately $ 5,545,495 U.S. Dollars) from Chan Heng Fai. The unpaid principal amount of the Loan shall be due and payable on May 14, 2022 and the Loan shall have no interest. The loan was paid back in full during 2021 and the outstanding balance was $ 0 as of December 31, 2021. Chan Heng Fai provided an interest-free, due on demand advance to HengFeng Finance Limited for the general operations. As of December 31, 2021 and 2020, the outstanding balance was $ 0 and $ 184,250 , respectively. Management Fees MacKenzie Equity Partners, owned by Charles MacKenzie, a Director of the Company’s subsidiary LiquidValue Development, has had a consulting agreement with the Company since 2015. Per the terms of the agreement, as amended on January 1, 2018, the Company pays a monthly fee of $ 20,000 for the consulting services. The Company incurred expenses of $ 360,000 and $ 240,000 for the years ended December 31, 2021 and 2020, respectively, which were capitalized as part of Real Estate on the Company’s Consolidated Balance Sheet, as the services relate to property and project management. During 2021, MacKenzie Equity Partners was granted an additional $ 120,000 bonus payment. As of December 31, 2021 and 2020 the Company owed $ 80,000 and $ 0 , respectively to this entity. Consulting Services A law firm owned by Conn Flanigan, a Director of LiquidValue Development, performs consulting services to LiquidValue Development and some other subsidiaries of the Company. The Company incurred expenses of $ 0 and $ 12,645 for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020 there was no outstanding balance due to this entity. Chan Tung Moe, the consultant engaged with the Company through Pop Motion Consulting Pte. Ltd., is the son of Chan Heng Fai, a director and the CEO of the Company. In August of 2020 this consulting agreement was terminated, and Chan Tung Moe became an employee of Alset International as Chief Development Officer. The Company incurred expense of $ 140,758 for the years ended December 31, 2020. Investment in the Global Opportunity Fund On February 1, 2017, the Company invested $ 300,000 in Global Opportunity Fund (“Fund”), a mutual fund registered in the Cayman Islands and Chan Heng Fai is one of the directors of this fund. This Fund was closed during November 2019 and is being liquidated. LiquidValue Asset Management Pte. Ltd., one of the subsidiaries of the Company, is the investment manager of the Fund and receives a management fee from the Fund at 2 % per annum of the aggregated net asset value of the investments and a performance fee of 20 %. As of December 31, 2019, the Company recorded a receivable $ 307,944 from the Global Opportunity Fund. On January 23, 2020, the Company received $ 307,944 as a result of the liquidation of Global Opportunity Fund. 93 Note Receivable from a Related Party Company On March 2, 2020 and on October 29, 2021, LiquidValue Asset Management Pte. Ltd. (“LiquidValue”) received two $ 200,000 Promissory Notes and on October 29, 2021 Alset International received $ 8,350,000 Promissory Note from American Medical REIT Inc. (“AMRE”), a company which is less than 3.5 % owned by LiquidValue as of December 31, 2021. Chan Heng Fai and Chan Tung Moe are directors of American Medical REIT Inc. The notes carry interests of 8 % and are payable in two, three years and 25 months , respectively. LiquidValue also received warrants to purchase AMRE shares at the exercise price of $ 5.00 per share. The amount of the warrants equals to the note principle divided by the exercise price. If AMRE goes to IPO in the future and IPO price is less than $10.00 per share, the exercise price shall be adjusted downward to fifty percent (50%) of the IPO price . As of December 31, 2021 and 2020, the fair market value of the warrants was $ 0 . The Company accrued $ 130,000 and $ 13,431 interest income as of December 31, 2021 and 2020, respectively. On January 24, 2017, SeD Capital Pte Ltd, a 100 % owned subsidiary of Alset International lent $ 350,000 to iGalen Inc. The term of the loan was two years , with an interest rate of 3% per annum for the first year and 5% per annum for the second year. The expiration term was renewed as due on demand after two years with 5% per annum interest rate . As of December 31, 2020, the outstanding principle was $ 350,000 and accrued interest $ 61,555 . On December 31, 2021, the management of the Company evaluated the financial and the operation results of iGalen and concluded that possibility to repay this loan is not probable, and the principal and accrued interests total of $ 412,754 was recorded as bad debt expense. As of December 31, 2021, the Company provided advances for operation of $ 236,699 to HWH World Co., a direct sales company in Thailand of which the Company holds approximately 19 % ownership. On April 20, 2021, SeD Capital Pte Ltd entered into Joint Venture Agreement with Novum Alpha Pte Ltd., pursuant to which, each company owns 50 % of the joint venture company Credas Capital Pte Ltd. Based on the agreement, SeD Capital Pte Ltd contributed 90 % of the initial $ 150,000 shareholder loan to the joint venture, with the remaining balance contributed by Novum Alpha. The loan carries 0 % interest rate and will be repaid on a “first-in first-out” basis, out of the operating profits of the joint venture, with the immediate partial payment of $ 100,000 of the initial loan to SeD Capital, once the company achieves profitability. As of December 31, 2021, the outstanding balance was $ 135,720 . Loan to Employees On November 24, 2020, American Pacific Bancorp. Inc. lent $ 560,000 to Chan Tung Moe, an officer of one of the subsidiaries of the Company (who later also became our Co-Chief Executive Officer) and son of Chan Heng Fai, Chairman and Chief Executive Officer of the Company, bearing interest at 6 %, with a maturity date of November 23, 2023 . This loan was secured by an irrevocable letter of instruction on 80,000 shares of Alset EHome International . On November 24, 2020, American Pacific Bancorp. Inc. lent $ 280,000 to Lim Sheng Hon Danny, an employee of one of the subsidiaries of the Company, bearing interest at 6 %, with a maturity date of November 23, 2023. This loan was secured by an irrevocable letter of instruction on 40,000 shares of Alset EHome International . Subsequent to the making of these loans, the Company acquired the majority of the issued and outstanding common stock of American Pacific Bancorp. As of December 31, 2021, both principal and interest, $ 840,000 and $ 28,031 , of both loans to Chan Tung Moe and Lim Sheng Hong, were fully paid off. 10. EQUITY Pursuant to an agreement on June 24, 2020 with our stockholders HFE Holdings Limited and Chan Heng Fai, HFE Holdings Limited surrendered 3,600,000 shares of our common stock to the treasury of our company, and Chan Heng Fai surrendered 1,000 shares of our common stock to the treasury of our company, and all such shares were cancelled. No consideration was exchanged in connection with the surrender of the shares. As a result, the total number of outstanding shares of our common stock at June 24, 2020 was reduced to 6,400,000 shares from 10,001,000 shares. 94 On November 23, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp., as representative of the underwriters (“Aegis”), pursuant to which the Company agreed to sell to the underwriters in a firm commitment underwritten public offering (the “Offering”) an aggregate of 2,160,000 shares of the Company’s common stock, par value $ 0.001 per share (the “Common Stock”), at an initial public offering price of $ 7.00 per share. Aegis has a 60-day over-allotment option to purchase up to an additional 324,000 shares of Common Stock at $ 6.475 per share. The Offering closed on November 27, 2020. The Offering was the Company’s initial public offering and the Company’s common shares began trading on The Nasdaq Capital Market on November 24, 2020 under the symbol “HFEN.” The shares were offered by the Company pursuant to a registration statement on Form S-1, as amended (File No. 333-235693), filed with the Securities and Exchange Commission (the “Commission”), which was declared effective by the Commission on November 12, 2020 (the “Registration Statement”). Aegis acted as lead book-running manager for the Offering and Westpark Capital, Inc. acted as co-manager. The net proceeds to the Company from the Offering, after deducting the underwriting discount, underwriters’ fees and expenses and other expenses of the Offering, were approximately $ 13.2 million. The Company anticipates using the net proceeds from the Offering primarily to fund possible acquisitions of new companies and properties, and for working capital and other general corporate purposes. Also, under the terms of the Underwriting Agreement, the Company, upon closing of the Offering, issued to Aegis a warrant (the “Representative’s Warrant”) to purchase an aggregate of 108,000 shares of common stock ( 5 % of the total shares issued in the Offering). The Representative’s Warrant is exercisable at a per share price of $ 9.80 (equal to 140 % of the initial public offering price of the Common Stock) and is exercisable at any time and from time to time, in whole or in part, during the three-year period commencing from the date of issuance. The Company also issued 10,000 shares as the compensation for the legal service at a fair value of $ 70,000 . As a result of the Offering, the total number of outstanding shares of our common stock at December 31, 2020 was 8,570,000 . On June 14, 2021, the Company filed an amendment (the “Amendment”) to its Third Amended and Restated Certificate of Incorporation, as amended, to increase the Company’s authorized share capital. The Amendment increased the Company’s authorized share capital to 250,000,000 common shares and 25,000,000 preferred shares, from 20,000,000 common shares and 5,000,000 preferred shares, respectively. The Company has designated 6,380 preferred shares as Series A Preferred Stock and 2,132 as Series B Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to receive dividends equal, on an as-if-converted basis, to and in the same form as dividends actually paid on shares of the Company’s common stock, par value $ 0.001 per share (“Common Stock”) when, as and if paid on shares of Common Stock. Each holder of outstanding Series A Preferred Stock is entitled to vote equal to the number of whole shares of Common Stock into which each share of the Series A Preferred Stock is convertible. Holders of Series A Preferred Stock are entitled, upon liquidation of the Company, to receive the same amount that a holder of Series A Preferred Stock would receive if the Series A Preferred Stock were fully converted into Common Stock. Holders of the Series B Preferred Stock shall be entitled to receive dividends equal, on an as-if-converted basis, to and in the same form as dividends actually paid on shares of the Company’s common stock par value $ 0.001 per share (“Common Stock”) when, as and if paid on shares of Common Stock. Each holder of outstanding Series B Preferred Stock is entitled to vote equal to the number of whole shares of Common Stock into which each share of the Series B Preferred Stock is convertible. Holders of Series B Preferred Stock are entitled, upon liquidation of the Company, to receive the same amount that a holder of Series B Preferred Stock would receive if the Series B Preferred Stock were fully converted into Common Stock. 95 The Company analyzed the Preferred stock and the embedded conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion option should be classified as equity. On January 19, 2021, the Company issued 10,000 shares of its common stock as compensation for public relations services at a fair value of $ 60,900 . On May 3, 2021, the Company entered into a Loan and Exchange Agreement with its Chief Executive Officer, Chan Heng Fai pursuant to which he loaned the Company his shares of Common Stock of the Company by exchanging 6,380,000 shares of common stock which he owned for an aggregate of 6,380 shares of the Company’s newly designated Series A Convertible Preferred Stock. Effective upon the filing of the Amendment in June 2021, the Company issued an entity owned by Chan Heng Fai 6,380,000 shares of common stock upon the automatic conversion of all 6,380 outstanding shares of the Company’s Series A Convertible Preferred Stock. On May 12, 2021, the Company entered into an Exchange Agreement with Chan Heng Fai, pursuant to which he converted $ 13,000,000 of note payable for 2,132 shares of the Company’s newly designated Series B Preferred Stock. Effective upon the filing of the Amendment in June 2021, the Company issued Chan Heng Fai 2,132,000 shares of common stock upon the automatic conversion of all 2,132 outstanding shares of the Company’s Series B Convertible Preferred Stock. On May 10, 2021, the Company entered into an underwriting agreement with Aegis Capital Corp., as the sole book-running manager and representative of the underwriters named therein (the “Underwriters”), relating to an underwritten public offering (the “May Offering”) of (i) 4,700,637 common units (the “Common Units”), at a price to the public of $ 5.07 per Common Unit, with each Common Unit consisting of (a) one share of common stock, par value $ 0.001 per share (the “Common Stock”), (b) one Series A warrant (the “Series A Warrant” and collectively, the “Series A Warrants”) to purchase one share of Common Stock with an initial exercise price of $ 5.07 per whole share, exercisable until the fifth anniversary of the issuance date, and (c) one Series B warrant (the “Series B Warrant” and collectively, the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase one-half share of Common Stock with an initial exercise price of $ 6.59 per whole share, exercisable until the fifth anniversary of the issuance date and (ii) 1,611,000 pre-funded units (the “Pre-funded Units”), at a price to the public of $ 5.06 per Pre-funded Unit, with each Pre-funded Unit consisting of (a) one pre-funded warrant (the “Pre-funded Warrant” and collectively, the “Pre-funded Warrants”) to purchase one share of Common Stock, (b) one Series A Warrant and (c) one Series B Warrant. The shares of Common Stock, the Pre-funded Warrants, and the Warrants were offered together, but the securities contained in the Common Units and the Pre-funded Units were issued separately. Following the May Offering, all the investors exercised their Pre-funded Units and additional 1,611,000 shares of common stock and Series A and Series B Warrants were issued. The Company also granted the Underwriters a 45-day over-allotment option to purchase up to 808,363 additional shares of Common Stock and/or up to 808,363 additional Series A Warrants to purchase 808,363 shares of Common Stock, and/or up to 808,363 additional Series B warrants to purchase 404,181 shares of Common Stock. The May Offering, including the partial exercise of the Underwriters’ over-allotment option to purchase 808,363 Series A Warrants and 808,363 Series B Warrants, closed on May 13, 2021. During the month of June, 2021, Aegis exercised its option to purchase an additional 808,363 common shares at a price of $ 5.07 per common share and as of September 30, 2021 still holds 808,363 Series B Warrants. Through December 31, 2021, investors exercised 1,364,025 of Series A Warrants and 6,598 of Series B Warrants. As a result of the May Offering and subsequent exercise notice received for the pre-funded units and warrants, the Company issued 8,487,324 common shares. As a result of the May Offering and subsequent exercise notice received for the pre-funded units and warrants, and the net proceeds to the Company were $ 39,765,440 . The Company incurred approximately $ 88,848 in expenses related to the May Offering and subsequent warrants exercises, including SEC fees, FINRA fees, auditor fees and filing fees. 96 The following table presents net funds received from the May Offering and warrants exercised as of December 31, 2021. SCHEDULE OF NET FUNDS RECEIVED ON OFFERING AND WARRANTS EXERCISED Shares Par value Amount received Offering 4,700,637 $ 4,701 $ 29,145,056 Exercise of Pre-Funded Units 1,611,000 $ 1,611 $ 16,110 Exercise of Underwriter’s Series A Warrants 808,363 $ 808 $ 3,755,774 Exercise of Series A and Series B Warrants 1,367,324 $ 1,367 $ 6,937,347 Offering Expenses - $ - $ ( 88,848 ) Total 8,487,324 $ 8,487 $ 39,765,439 On July 27, 2021, the Company entered into another underwriting agreement with Aegis Capital Corp., as the sole book-running manager and representative of the underwriters named therein (the “Underwriters”), relating to an underwritten public offering (the “July Offering”) of (i) 5,324,139 shares of common stock, par value $ 0.001 per share (the “Common Stock”), at a price to the public of $ 2.12 per share of Common Stock and (ii) 9,770,200 pre-funded warrants (the “Pre-funded Warrants”) to purchase 9,770,200 shares of Common Stock, at a price to the public of $ 2.11 per Pre-funded Warrant. The July Offering closed on July 30, 2021. As a result of the July Offering and subsequent exercise notice received for the pre-funded warrants, the net proceeds to the Company were $ 33,392,444 . The Company granted the Underwriters a 45-day over-allotment option to purchase up to 2,264,150 additional shares of Common Stock. The Company also paid the Underwriters an underwriting discount equal to 7.0 % of the gross proceeds of the Offering and a non-accountable expense fee equal to 1.5 % of the gross proceeds of the Offering. In addition, the Company agreed to issue to the representative warrants (the “Representative’s Warrants”) to purchase a number of shares equal to 3.0% of the aggregate number of shares (including shares underlying the Pre-funded Warrants) sold under in the Offering, or warrants to purchase up to an aggregate of 520,754 shares, assuming the Underwriters exercise their over-allotment option in full. The Representative’s Warrants have an exercise price equal to 125 % of the public offering price, or $ 2.65 per share, with an exercise period of 24 months from issuance. On September 9, 2021 the Underwriters exercised their over-allotment option and were issued 2,264,150 shares of our Common Stock. On September 9, 2021 the Underwriters exercised the option and the Company received $ 4,386,998 proceeds from this exercise. The Pre-funded Warrants were offered and sold to purchasers whose purchase of Common Stock in the Offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of the Company’s outstanding Common Stock immediately following the consummation of the Offering in lieu of Common Stock that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99% of the Company’s outstanding Common Stock (or, at the election of the purchaser, 9.99%). Each Pre-funded Warrant is exercisable for one share of Common Stock at an exercise price of $0.01 per share. The Pre-funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-funded Warrants are exercised in full . All of the Pre-Funded Warrants were exercised as of December 31, 2021. The Company incurred approximately $ 49,553 in expenses related to the July Offering and subsequent warrants exercises, including SEC fees, FINRA fees, auditor fees and filing fees. The following table presents net funds received from the July Offering and warrants exercised as of December 31, 2021. Shares Par value Amount received Offering 5,324,139 $ 5,324 $ 28,957,297 Exercise of Pre-Funded Units 9,770,200 $ 9,770 $ 97,702 Exercise of Underwriter’s Over-Allotment Option 2,264,150 $ 2,264 $ 4,386,998 Offering Expenses - $ - $ ( 49,553 ) Total 17,358,489 $ 17,358 $ 33,392,444 97 On December 5, 2021, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp., as the sole book-running manager and representative of the underwriters named therein (the “Underwriters”), relating to an underwritten public offering (the “December Offering”) of (i) 18,076,666 shares of common stock, par value $ 0.001 per share (the “Common Stock”), at a price to the public of $ 0.60 per share of Common Stock and (ii) 31,076,666 pre-funded warrants (the “Pre-funded Warrants”) to purchase 31,076,666 shares of Common Stock, at a price to the public of $ 0.599 per Pre-funded Warrant. The December Offering closed on December 8, 2021. As a result of the December Offering and subsequent exercise notice received for the pre-funded warrants, the net proceeds to the Company were $ 27,231,875 . The Company granted the Underwriters a 45-day over-allotment option to purchase up to 7,500,000 additional shares of Common Stock. The Company also paid the Underwriters an underwriting discount equal to 7 % of the gross proceeds of the Offering and a non-accountable expense fee equal to 1 % of the gross proceeds of the Offering. On December 14, 2021, the Company consummated the sale of these 7,500,000 shares of Common Stock, representing 15 % of the shares of common stock and the shares underlying the Pre-funded Warrants sold in the offering, that were subject to the underwriters’ over-allotment option at a price of $ 0.60 per share, generating net proceeds of $ 4,115,000 . The Pre-funded Warrants were offered and sold to purchasers whose purchase of Common Stock in the Offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of the Company’s outstanding Common Stock immediately following the consummation of the Offering. Each Pre-funded Warrant is exercisable for one share of Common Stock at an exercise price of $0.001 per share. The Pre-funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-funded Warrants are exercised in full. At December 31, 2021 15,233,288 warrants were exercised, some in cashless exercise transactions . The Company incurred approximately $ 40,621 in expenses related to the December Offering and subsequent warrants exercises, including SEC fees, FINRA fees, auditor fees and filing fees. The following table presents net funds received from the December Offering and warrants exercised as of December 31, 2021. Shares Par value Amount received Offering 18,923,334 $ 18,923 $ 27,263,673 Exercise of Pre-Funded Units 15,223,333 $ 15,223 $ 8,823 Exercise of Underwriter’s Over-Allotment Option 7,500,000 $ 7,500 $ 4,115,000 Offering Expenses - $ - $ ( 40,621 ) Total 41,646,667 $ 41,647 $ 31,346,875 On December 31, 2021, there were 86,618,446 common shares issued and outstanding. The following table summarizes the warrant activity for the year ended December 31, 2021. SCHEDULE OF WARRANT ACTIVITY Warrant for Common Shares Weighted Average Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Warrants Outstanding as of December 31, 2020 108,000 $ 9.80 2.91 $ - Warrants Vested and exercisable at December 31, 2020 108,000 $ 9.80 2.91 $ - Granted 55,607,621 1.10 Exercised ( 27,182,474 ) 0.41 Forfeited, cancelled, expired - - Warrants Outstanding as of December 31, 2021 28,533,147 $ 1.79 1.88 $ - Warrants Vested and exercisable at December 31, 2021 28,533,147 $ 1.79 1.88 $ - 98 GigWorld Inc. Sale of Shares In year ended December 31, 2021 , the Company sold 280,000 shares of GigWorld to international investors for the amount of $ 280,000 , which was booked as addition paid-in capital. The Company held 505,381,376 shares of the total outstanding shares 506,898,576 before the sale. After the sale, the Company still owns approximately 99 % of GigWorld’s total outstanding shares. In year ended December 31, 2020, the Company sold 497,300 shares of GigWorld to international investors with the amount of $ 478,300 , which was booked as addition paid-in capital. The Company held 505,667,376 shares of the total outstanding shares 506,898,576 before the sale. After the sale, the Company still owns approximately 99 % of GigWorld’s total outstanding shares. During the years ended December 31, 2021 and 2020, the sales of GigWorld’s shares were de minimis compared to its outstanding shares and did not change the minority interest. Distribution to Minority Shareholder In 2021, SeD Maryland Development LLC Board approved the payment distribution plan to members and paid $ 2,549,750 in distribution to the minority shareholder. In 2020, SeD Maryland Development LLC Board approved the payment distribution plan to members and paid $ 411,250 in distribution to the minority shareholder. Changes of Ownership of Alset International In 2020, Alset International issued 563,197,062 common shares through warrants exercise with exercise price approximately $ 0.03 per share and received $ 18,012,959 . On March 27, 2020, Alset International granted 7,500,000 common shares to its employees in the performance share award plan. The fair value of $ 146,853 of these shares was based on the market price on the granted day and was recorded as both compensation expense and equity in the financial statements. On June 5, 2020, the shareholder meeting approved 35,278,600 shares granted to the directors. The fair value of $ 1,417,523 was based the June 5, 2020, the grant day, market price and was recorded as both compensation expense and equity in the financial statements. During the year ended December 31, 2020, the stock-based compensation expense was $ 1,564,376 . On August 20, 2020, the Company acquired 30,000,000 common shares from Chan Heng Fai in exchange for a two-year non-interest bearing note of $ 1,333,429 . On December 30, 2020, the Company exercised part of its warrants to purchase 220,000,000 shares of Alset International by paying of $ 6,632,499 . In the year ended December 31, 2021, Alset International issued 1,721,303,416 common shares through warrants exercise with exercise price of approximately $ 0.04 per share and received $ 60,300,464 cash, which included approximately $ 58 million from Alset EHome International to exercise its warrants to purchase Alset International common shares. The warrant exercise transactions between Alset EHome International and Alset International were intercompany transactions and only affected change in non-controlling interest on the consolidated statements of stockholders’ equity. During the year ended December 31, 2021, the stock-based compensation expense of Alset International was $ 73,292 with the issuance of 1,500,000 shares to an officer. The Company’s ownership of Alset International changed from 57.1 % as of December 31, 2020 to 76.8 % as of December 31, 2021. Changes of Ownership Percentage of Alset International On July 13, 2020, due to share grants and warrant exercises, the Company’s ownership percentage of Alset International fell below 50 % and the entity was deconsolidated in accordance with ASC 810-10-45-5. A gain of approximately $ 53 million was recorded as a result of the deconsolidation. Upon deconsolidation the Company elected to apply the Fair Value Option under ASU 2016-01 to the investment in Alset International as the Company still retained significant influence of the subsidiary. 99 11. ACCUMULATED OTHER COMPREHENSIVE INCOME The following is a summary of the changes in the balances of accumulated other comprehensive income, net of tax: SCHEDULE OF CHANGES IN THE BALANCES OF ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX Unrealized Gains and Losses on Security Investment Foreign Currency Translations Change in Minority Interest Total Balance at January 1, 2021 $ ( 48,758 ) $ 2,258,017 $ ( 65,921 ) $ 2,143,338 Other Comprehensive Income ( 41,273 ) ( 2,625,912 ) 865,493 ( 1,801,692 ) Balance at December 31, 2021 $ ( 90,031 ) $ ( 367,895 ) $ 799,572 $ 341,646 Unrealized Gains and Losses on Security Investment Foreign Currency Translations Change in Minority Interest Total Balance at January 1, 2020 $ ( 59,888 ) $ 1,603,145 $ ( 84,968 ) $ 1,458,289 Other Comprehensive Income 11,130 654,872 19,047 685,049 Balance at December 31, 2020 $ ( 48,758 ) $ 2,258,017 $ ( 65,921 ) $ 2,143,338 12. LEASE INCOME The Company generally rents its SFRs under lease agreements with a term of one year . Future minimum rental revenue under existing leases on our properties at December 31, 2021 in each calendar year through the end of their terms are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS 2022 464,343 Total Future Receipts $ 464,343 Property Management Agreements The Company has entered into property management agreement with the property managers under which the property managers generally oversee and direct the leasing, management and advertising of the properties in our portfolio, including collecting rents and acting as liaison with the tenants. The Company pays its property managers a monthly property management fee for each property unit and a leasing fee. For the years ended December 31, 2021 and 2020, property management fees incurred by the property managers were $ 15,390 and $ 0 , respectively. For the years ended December 31, 2021 and 2020, leasing fees incurred by the property managers were $ 63,880 and $ 0 , respectively. 13. DISCONTINUED OPERATIONS Impact BioMedical Inc. On April 27, 2020, Global BioMedical Pte Ltd (“GBM”), one of our subsidiaries, entered into a share exchange agreement with DSS BioHealth Security, Inc. (“DBHS”), a wholly owned subsidiary of DSS, Inc. (“DSS”), pursuant to which, DBHS will acquire all of the outstanding capital stock of Impact BioMedical Inc., wholly owned subsidiary of GBM, through a share exchange. The aggregate consideration to be issued to GBM for the Impact BioMedical shares will be the following: (i) 483,334 newly issued shares of DSS common stock; and (ii) 46,868 newly issued shares of a new series of DSS perpetual convertible preferred stock with a stated value of $ 46,868,000 , or $ 1,000 per share. The convertible preferred stock can be convertible into shares of DSS common stock at a conversion price of $ 6.48 of preferred stock stated value per share of common stock, 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 GBM. Holders of the convertible preferred stock will have no voting rights, except as required by applicable law or regulation, and no dividends will accrue or be payable on the convertible preferred stock. The holders of convertible preferred stock will be entitled to a liquidation preference of $ 1,000 per share, and DSS will have the right to redeem all or any portion of the then outstanding shares of convertible preferred stock, pro rata among all holders, at a redemption price per share equal to such liquidation value per share. 100 Under ASU 2014-08, a disposal transaction meets the definition of a discontinued operation if all of the following criteria are met: 1. The disposal group constitutes a component of an entity or a group of components of an entity 2. The component of an entity (or group of components of an entity) meets the held-for-sale classification criteria, is disposed of by sale, or is disposed of other than by sale (e.g., “by abandonment, in an exchange measured based on the recorded amount of the nonmonetary asset relinquished, or in a distribution to owners in a spinoff”). 3. The disposal of a component of an entity (or group of components of an entity) “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results”. Impact Biomedical Inc. is a group of subsidiaries of AEI and operates independently with its own financial reporting. The transaction is a disposal by sale and has a major effect on AEI’s financial results. Since it meets all above test criteria, we treated this disposal transaction as a discontinued operation in our financial statements. On August 21, 2020, the transaction closed and Impact BioMedical Inc became a direct wholly owned subsidiary of DBHS. GBM received 483,334 shares of DSS common stock and 46,868 shares of DSS preferred stock, which preferred shares could be converted to 7,232,716 common shares (however, any conversion will be subject to the blocker GBM has agreed to, as described above). After this transaction, we hold 500,001 shares of the common stock of DSS, representing 9.7 % of the outstanding common stock of DSS. Our CEO, Chan Heng Fai is the owner of the common stock of DSS (not including any common or preferred shares we hold) and is the executive chairman of the board of directors of DSS. The Company has elected the fair value option for the DSS common stock that would otherwise be accounted for under the equity method of accounting. ASC 820, Fair Value Measurement and Disclosures, defines fair value of the financial assets. We value DSS common stock under level 1 category through quoted prices and preferred stock under level 3 category through an Option-Pricing Method. Under the “blocker” term in the agreement, the Company could convert 4,293 shares Convertible Preferred Stock into 662,500 shares of the common stock of DSS as of September 30, 2020. The quoted price of DSS common stock was $ 6.95 as of August 21, 2020. The total fair value of DSS common and preferred stocks GBM received as consideration for the disposal of Impact BioMedical was $ 46,284,171 . As of August 21, 2020, the net asset value of Impact BioMedical was $ 94,011 . The difference of $ 46,190,160 was recorded as additional paid in capital. We did not recognize gain or loss from this transaction as it was a related party transaction. The composition of assets and liabilities included in discontinued operations is as follows: SCHEDULE OF ASSETS AND LIABILITIES IN DISCONTINUED OPERATIONS December 31, December 31, 2021 2020 Assets Cash $ - $ - Prepaid Expense - - Total Asset $ - $ - Liabilities Accounts Payable $ - $ - Total Liabilities $ - $ - 101 The financial results of discontinued operations are as follows: SCHEDULE OF FINANCIAL RESULTS DISCONTINUED OPERATIONS 2021 2020 Years Ended December 31, 2021 2020 Revenue $ - $ - Operating Expense Research & Development - 246,915 General & Administration - 170,035 Total Operating Expense - 416,950 Loss from Security Investment by Equity Method - - Loss from Acquisition - - Other Expense - 488 Loss from Discontinued Operations $ - $ ( 417,438 ) The cash flows attributable to the discontinued operation are as follows: SCHEDULE OF CASH FLOWS DISCONTINUED OPERATION Year Ended December 31, 2021 Year Ended December 31, 2020 Operating $ - $ ( 422,188 ) Investing - - Financing - - Net Change in Cash $ - $ ( 422,188 ) 14. INVESTMENTS MEASURED AT FAIR VALUE Financial assets measured at fair value on a recurring basis are summarized below and disclosed on the consolidated balance sheets as of December 31, 2021 and 2020: SCHEDULE OF FINANCIAL ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS Fair Value Measurement Using Amount at Cost Level 1 Level 2 Level 3 Amount at Fair Value December 31, 2021 Assets Investment Securities- Fair Value Option $ 72,000,301 $ 25,320,694 $ - $ - $ 25,320,694 Investment Securities- Trading 9,809,778 9,908,077 - - 9,908,077 Convertible Note Receivable 138,599 - - 98,398 98,398 Warrants - American Premium Water 696,791 - - 1,009,854 1,009,854 Warrants - AMRE - - - - - Total Investment in Securities at Fair Value $ 82,645,469 $ 35,228,771 $ - $ 1,108,252 $ 36,337,023 102 Fair Value Measurement Using Amount at Cost Level 1 Level 2 Level 3 Amount at Fair Value December 31, 2020 Assets Investment securities- Fair Value Option $ 7,404,911 $ 10,549,102 $ - $ - $ 10,549,102 Investment securities- Trading 17,650 18,654 - - 18,654 Convertible Preferred Stock 42,889,000 - - 37,675,000 37,675,000 Convertible Note Receivable 50,000 - - 66,978 66,978 Warrants - American Premium Water 860,342 - - 862,723 862,723 Warrants - AMRE - - - - - Stock Options - Vivacitas - - - - - Total Investment in Securities at Fair Value $ 51,221,903 $ 10,567,756 $ - $ 38,604,701 $ 49,172,457 Realized loss on investment securities for the year ended December 31, 2021 and 2020 was $ 4,698,078 and $ 192,459 , respectively. Unrealized loss on securities investment was $ 49,190,748 and $ 1,694,535 in the years ended December 31, 2021 and 2020, respectively. These losses were recorded directly to net loss. The change in fair value of the convertible note receivable in the years ended December 31, 2021 and 2020 was $ 57,179 and $ 19,486 , respectively, and was recorded in consolidated statements of stockholders’ equity. For U.S. trading stocks, we use Bloomberg Market stock prices as the share prices to calculate fair value. For overseas stock, we use the stock price from local stock exchange to calculate fair value. The following chart shows details of the fair value of equity security investments at December 31, 2021 and 2020, respectively. SCHEDULE OF FAIR VALUE OF EQUITY SECURITY INVESTMENT Share price Market Value 12/31/2021 Shares 12/31/2021 Valuation DSS (Related Party) $ 0.672 19,888,262 * $ 13,364,912 Investment in Securities at Fair Value AMBS (Related Party) $ 0.016 20,000,000 $ 328,000 Investment in Securities at Fair Value Holista (Related Party) $ 0.034 43,626,621 $ 1,489,179 Investment in Securities at Fair Value American Premium Water (Related Party) $ 0.002 354,039,000 $ 778,886 Investment in Securities at Fair Value True Partner $ 0.119 62,122,908 $ 7,409,717 Investment in Securities at Fair Value Value Exchange $ 0.300 6,500,000 $ 1,950,000 Investment in Securities at Fair Value Trading Stock $ 9,908,077 Investment in Securities at Fair Value Total Level 1 Equity Securities $ 35,228,771 Nervotech N/A 1,666 $ 37,045 Investment in Securities at Cost HWH World Co. N/A 20,000 $ 42,562 Investment in Securities at Cost K Beauty N/A 3,600 $ 19,609 Investment in Securities at Cost Total Equity Securities $ 35,327,987 Share price Market Value 12/31/2020 Shares 12/31/2020 Valuation DSS (Related Party) $ 6.240 1,162,501 * $ 7,254,006 Investment in Securities at Fair Value AMBS (Related Party) $ 0.008 20,000,000 $ 160,000 Investment in Securities at Fair Value Holista (Related Party) $ 0.055 46,226,673 $ 2,565,468 Investment in Securities at Fair Value American Premium Water (Related Party) $ 0.002 122,039,000 $ 256,284 Investment in Securities at Fair Value Optimum Bank (Related Party) $ 3.370 92,980 $ 313,343 Investment in Securities at Fair Value Trading Stock $ 18,654 Investment in Securities at Fair Value Total Level 1 Equity Securities $ 10,567,755 Vivacitas (Related Party) N/A 2,480,000 $ 200,128 Investment in Securities at Cost Nervotech N/A 1,666 $ 37,826 Investment in Securities at Cost HWH World Co. N/A 20,000 $ 42,562 Investment in Securities at Cost Total Equity Securities $ 10,848,271 * Ratio of 1-for-30 (the “Reverse Split”) was effective at 5:01 p.m. Eastern Time on May 7, 2020 (the “Effective Time”). 103 DSS convertible preferred stock The DSS convertible preferred stock under level 3 category was valued on Option Pricing Method (OPM) in determining the fair value. As of December 31, 2020, the Company held 42,575 shares of DSS convertible preferred stock, which could convert to 6,570,216 common shares, with fair market value $ 37,675,000 . As of August 21, 2020, the Company held 46,868 shares of DSS convertible preferred stock, which could convert to 7,232,716 common shares, with fair market value $ 42,889,000 . The following table shows the parameters adopted in the valuation at the valuation dates. SCHEDULE OF SIGNIFICANT INPUTS AND ASSUMPTIONS As of December 31, 2020 As of August 21, 2020 Stock price 6.24 6.95 Risk-free rate 0.93 % 0.63 % Volatility 113.69 % 111.99 % Expected Exit Date December 31, 2023 August 21,2023 Dividend Yield 0.00 0.00 The selected stock prices represent the close market bid price of DSS on the valuation date. Risk-free interest rates were obtained from Bloomberg. The volatility is based on the historical volatility of the DSS common stock. We assumed a three-year life for the preferred stock and assumed that after three-years the Company would desire to begin receiving a return on this investment – either through a conversion or liquidation. Given the Beneficial Ownership limited on the exercise of the Series A Preferred Shares, we have assumed that Alset International will sell their common stocks in the Target Company such that their shareholding does not exceed 19.99 % prior to conversion. We have assessed the Discount for Lack of Marketability (DLOM) of this interest using a put option method and adopted Black Scholes Option Pricing Model to estimate the DLOM During the year ended December 31, 2021, Global BioMedical Pte Ltd. converted 42,575 preferred stock of DSS into 6,570,170 common shares of DSS. Sharing Services Convertible Note The fair value of the Sharing Services Convertible Note under level 3 category as of December 31, 2021 and 2020 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions: SCHEDULE OF SIGNIFICANT INPUTS AND ASSUMPTIONS December 31, 2021 December 31, 2020 Dividend yield 0.00 % 0.00 % Expected volatility 138.85 % 210.07 % Risk free interest rate 3.25 % 0.13 % Contractual term (in years) 0.76 1.76 Exercise price $ 0.15 $ 0.15 We assumed dividend yield rate is 0.00 % in Sharing Services. The volatility is based on the historical volatility of the Sharing Services’ common stock. Risk-free interest rates were obtained from U.S. Treasury rates for the applicable periods. Changes in the observable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments. A significant increase (decrease) in this likelihood would result in a higher (lower) fair value measurement. The table below provides a summary of the changes in fair value which are recorded as other comprehensive income (loss), including net transfers in and/or out of all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2021 and 2020: 104 SCHEDULE OF CHANGE IN FAIR VALUE Total Balance at January 1, 2020 $ 26,209 Acquisition of APW Warrants 862,723 Net gain 40,769 Acquisition of DSS Preferred Stock 37,675,000 Balance at December 31, 2020 $ 38,604,701 Net loss ( 57,179 ) Conversion of DSS Preferred Stock ( 37,439,270 ) Balance at December 31, 2021 $ 1,108,252 Vector Com Convertible Bond On February 26, 2021, the Company invested approximately $ 88,599 in the convertible bond 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 December 31, 2021, the management estimated that the fair value of this note remained unchanged from its initial purchase price. Warrants On March 2, 2020 and October 29, 2021, the Company received warrants to purchase shares of AMRE, a related party private startup company, in conjunction with the Company lending two $ 200,000 promissory notes. For further details on this transaction, refer to Note 9 - Related Party Transactions, Note Receivable from a Related Party Company . As of December 31, 2021 and 2020, AMRE was a private company. Based the management’s analysis, the fair value of the warrants was $ 0 as of December 31, 2021 and 2020. On July 17, 2020, the Company purchased 122,039,000 shares, approximately 9.99 % ownership, and 1,220,390,000 warrants with an exercise price of $ 0.0001 per share, from APW, for an aggregated purchase price of $ 122,039 . During 2021, the Company exercised 232,000,000 of the warrants to purchase 232,000,000 shares of APW for the total consideration of 232,000 , leaving the balance of outstanding warrants of 988,390,000 at December 31, 2021. We value APB warrants under level 3 category through a Black Scholes option pricing model and the fair value of the warrants from APW was $ 862,723 as of December 31, 2020 and $ 1,009,854 as of December 31, 2021. The fair value of the APW warrants under level 3 category as of December 31, 2021 and 2020 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions: SCHEDULE OF SIGNIFICANT INPUTS AND ASSUMPTIONS As of As of December 31, 2021 December 31, 2020 Stock Price $ 0.0022 $ 0.0021 Exercise Price $ 0.001 $ 0.001 Risk-free Interest Rate 1.48 % 0.88 % Annualized volatility 186.5 % 178.86 % Dividend Yield 0.00 0.00 Year to Maturity 8.58 9.58 105 The following table presents summarized financial information for our investments that we elected the fair value option that would otherwise be accounted for under the equity method of accounting. SCHEDULE OF FAIR VALUE OF FINANCIAL INVESTMENTS Summarized Financial Information Assets Liabilities Net Income (Loss) December 31, 2021 APW (Unaudited)* $ 395,258 $ 3,990,098 $ ( 1,089,440 ) Holista** $ 5,012,451 $ 2,275,422 $ ( 989,391 ) DSS* $ 219,076,000 $ 19,784,000 $ ( 25,777,333 ) December 31, 2020 APW (Unaudited) $ 456,612 $ 3,872,860 $ ( 861,031 ) Holista $ 6,208,762 $ 2,628,463 $ 3,926,026 DSS $ 91,919,000 $ 15,374,000 $ 1,418,000 * Data derived from Financial Statement as of September 30, 2021 which was the latest available date source we could reach. 12-month Net Loss was estimated by adding one-third of 9-month Net Loss. ** Data derived from Financial Statement as of June 30, 2021 which was the latest available date source we could reach. 12-month Net Loss was estimated by doubling 6-month Net Loss. 15. INCOME TAXES US Income Taxes The components of income tax expense and the effective tax rates for the years ended December 31, 2021 and 2020 are as follows: SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) Year Ended December 31, 2021 2020 Current: Federal $ 45,736 $ - State 46,179 11,633 Total Current 91,916 11,633 Deferred: Federal ( 2,725,007 ) ( 1,488,666 ) State ( 1,266,545 ) ( 563,779 ) Total Deferred ( 3,991,553 ) ( 2,052,445 ) Valuation Allowance 3,991,553 2,052,445 Total Income Tax Expense $ 91,916 $ 11,633 Pre-tax Loss $ ( 118,483,577 ) $ ( 3,972,454 ) Effective Income Tax Rate - 0.1 % - 0.3 % 106 A reconciliation of our income tax expense at federal statutory income tax rate of 21% to our income tax expense at the effective tax rate is as follows: SCHEDULE OF RECONCILIATION OF INCOME TAX Year Ended December 31, 2021 2020 Federal Statutory Tax Rate 21.0 % 21.0 % State Income Tax, Net of Federal Income Taxes 0.0 % 0.4 % Intercompany Management & Oversight Fees - 0.1 % - 2.5 % Capitalized Construction Costs 0.2 % 5.9 % Minority interest in Partnerships 0.1 % 0.9 % Deferred Finance Costs - 0.2 % - 6.6 % Amort of BCF Debt Discount - 9.0 % 0.0 % Miscellaneous Permanent Items 0.0 % 0.4 % Non includible foreign entities loss/(income) - 9.6 % - 22.3 % Valuation Allowance - 2.5 % 2.5 % Effective Income Tax Rate - 0.1 % - 0.3 % Deferred tax assets consist of the following at December 31, 2021 and 2020: SCHEDULE OF DEFERRED TAX ASSETS 2021 2020 Interest Income ( 5,660,333 ) ( 5,083,993 ) Interest Expense 5,100,076 4,664,342 Depreciation and Amortization ( 10,434 ) ( 6,362 ) Impairment 2,253,228 2,253,228 Accrued Expense 60,662 8,895 Unrealized Loss on Investment 2,512,554 - Partnership Loss 13,175 13,175 Others ( 224,637 ) 16,178 Net Operating Loss 2,047,388 186,981 Total deferred tax asset 6,091,679 2,052,445 Valuation Allowance ( 6,091,679 ) ( 2,052,445 ) Net Deferred Tax Asset - - As of December 31, 2021, the Company has Federal and State net operating loss carry-forwards of approximately $ 7,660,000 , and $ 6,732,000 , respectively. 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. During the year ended December 31, 2021, the valuation allowance increased by $ 3,991,552 . As of December 31, 2021, total tax receivable is $ 151,211 , including federal income tax receivable $ 77,390 , and Maryland state income tax receivable $ 73,821 . As of December 31, 2020, total current tax liability is $ 11,633 , including federal income tax liability $ 0 , and Maryland state income tax liability $ 11,633 . We are subject to U.S. federal income tax as well as income tax of certain state jurisdictions. We have substantially concluded all U.S. federal income tax and state tax matters through 2017. However, our federal tax returns for the years 2018 through 2020 remain open to examination. State tax jurisdiction tax years remain open to examination as well, though we believe that any additional assessment would be immaterial to the Consolidated Financial Statements. 107 Income taxes – Other Countries On December 31, 2021 and 2020, foreign subsidiaries have tax losses of approximately $ 1.99 million and $ 337,000 , respectively, which are available for offset against future taxable profits, subject to the agreement of the tax authorities and compliance with the relevant provisions. The deferred tax assets arising from these tax losses have not been recognized because it is not probable that future taxable profits will be available to use these tax assets. The following charts show the details in different regions as of December 31, 2021 and 2020. As of December 31, 2021: SCHEDULE OF OTHER COUNTRY INCOME TAXES SG Companies HK Companies KR Companies AU Companies Total Calculation: Cumulative loss & other deferred tax assets before tax $ ( 11,692,089 ) $ - $ - $ - $ ( 11,692,089 ) Effective tax rates 17.00 % 16.50 % 19.24 % 30.00 % Tax at the domestic tax rates applicable to profits in the countries where the Company operates $ ( 1,987,655 ) $ - $ - $ - $ ( 1,987,655 ) Adjustments: Deferred tax assets not recognized $ 1,987,655 $ - $ - $ - $ 1,987,655 Income tax expenses recognized in profit or loss $ - $ - $ 442,098 $ - $ 442,098 As of December 31, 2020: SG Companies HK Companies KR Companies AU Companies Total Calculation: Cumulative loss & other deferred tax assets before tax $ ( 1,801,455 ) $ - $ ( 123,278 ) $ - $ ( 1,924,733 ) Effective tax rates 17.00 % 16.50 % 25.00 % 30.00 % Tax at the domestic tax rates applicable to profits in the countries where the Company operates $ ( 306,247 ) $ - $ ( 30,819 ) $ - $ ( 337,066 ) Adjustments: Deferred tax assets not recognized $ 306,247 $ - $ 30,819 $ - $ 337,066 Income tax expenses recognized in profit or loss $ - $ - $ - $ - $ - 16. COMMITMENTS AND CONTINGENCIES Leases The Company leases offices in Maryland, Singapore, Magnolia, Texas, Hong Kong and South Korea through leased spaces aggregating approximately 16,446 square feet, under leases expiring on various dates from April 2022 to September 2024. The leases have rental rates ranging from $ 2,265 to $ 21,500 per month. Our total rent expense under these office leases was $ 587,685 and $ 413,240 in 2021 and 2020, respectively. The following table outlines the details of lease terms: SCHEDULE OF OPERATING AND RENEWED LEASE TERMS RENTAL Office Location Lease Term as of December 31, 2021 Singapore - AI June 2021 to June 2022 Singapore – F&B October 2021 to October 2024 Hong Kong October 2020 to October 2022 South Korea August 2020 to August 2022 Magnolia, Texas, USA November 2021 to April 2022 Bethesda, Maryland, USA January 2021 to March 2024 The Company adopted ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) to recognize a right-of-use asset and a lease liability for all the leases with terms greater than twelve months. We elected the practical expedient to not recognize operating lease right-of-use assets and operating lease liabilities for lease agreements with terms less than 12 months. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As our leases do not provide a readily determinable implicit rates, we estimate our incremental borrowing rates to discount the lease payments based on information available at lease commencement. Our incremental borrowings rates are at a range from 0.5% to 4.5% per annum in 2021 and from 0.5% to 4.5% per annum in 2020 . The balances of operating lease right-of-use assets and operating lease liabilities as of December 31, 2021 were $ 659,620 and $ 667,343 , respectively. The balances of operating lease right-of-use assets and operating lease liabilities as of December 31, 2020 were $ 574,754 and $ 574,754 , respectively. The table below summarizes future payments due under these leases as of December 31, 2021. For the Years Ended December 31: SCHEDULE OF LEASE PAYMENTS 2022 $ 418,219 2023 163,351 2024 79,027 Total Minimum Lease Payments 660,596 Less: Effect of Discounting ( 6,747 ) Present Value of Future Minimum Lease Payments 667,343 Less: Current Obligations under Leases ( 283,989 ) Long-term Lease Obligations $ 383,354 108 Lots Sales Agreement On November 23, 2015, SeD Maryland Development LLC completed the $ 15,700,000 acquisition of Ballenger Run, a 197 -acre land sub-division development located in Frederick County, Maryland. Previously, on May 28, 2014, the RBG Family, LLC entered into a $ 15,000,000 assignable real estate sales contract with NVR, by which RBG Family, LLC would facilitate the sale of the 197 acres of Ballenger Run to NVR. On December 10, 2014, NVR assigned this contract to SeD Maryland Development, LLC through execution of an assignment and assumption agreement and entered into a series of lot purchase agreements by which NVR would purchase 443 subdivided residential lots from SeD Maryland Development, LLC. On December 31, 2018, SeD Maryland entered into the Third Amendment to the Lot Purchase Agreement for Ballenger Run with NVR. Pursuant to the Third Amendment, SeD Maryland converted the 5.9 acre CCRC parcel to 36 lots (the 28 feet wide villa lot) and sell to NVR. SeD Maryland pursued the required zoning approval to change the number of such lots from 85 to 121, which was approved in July 2019. Subsequently, SeD Maryland Development signed the Fourth Amendment to the Lot Purchase Agreement, pursuant to which NVR agreed to purchase all of the new 121 lots . During the years ended on December 31, 2021 and 2020, NVR purchased 88 lots and 121 lots, respectively. Through December 31, 2021 and 2020, NVR had purchased a total of 476 and 388 lots, respectively. As part of the contract with NVR, upon establishment of FFB assessments on the lots, the Company is obligated to credit NVR with an amount equal to one year of FFB assessment per each lot purchased by NVR. As of December 31, 2021 the accrued balance due to NVR was $ 188,125 . Promissory Note from Azure Pursuant to a Secured Promissory Note dated as of August 13, 2018, on October 13, 2019 Azure Holdings, LLC, was obligated to pay our subsidiary, 150 CCM Black Oak Ltd, $ 140,000 in principal, plus accrued interest at the rate of 2.5 % per annum through October 13, 2019. Azure Holdings, LLC failed to pay the amount due. Effective as of October 13, 2019, the interest rate increased to a default rate of 18% per annum. The Company has subsequently had numerous communications with Azure Holdings, LLC regarding the payment of this Secured Promissory Note, and attempts to set a schedule for Azure Holdings, LLC to repay the amount due. On August 16, 2021, the Company purchased a 19.5 acre tract of land located in Texas from Azure Holdings and the principal of the note together with all accrued interest was applied as a credit to the purchase price. 17. DIRECTORS AND EMPLOYEES’ BENEFITS Stock Option plans AEI The Company previously reserved 500,000 shares of common stock under the Incentive Compensation Plan for high-quality executives and other employees, officers, directors, consultants and other persons who provide services to the Company or its related entities. This plan is meant to enable such persons to acquire or increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Company’s shareholders, and providing such persons with performance incentives to expand their maximum efforts in the creation of shareholder value. As of December 31, 2021 and 2020, there have been no options granted. The reservation of shares under the Incentive Compensation Plan was cancelled in May of 2021. Alset International Stock Option plans On November 20, 2013, Alset International approved a Stock Option Plan (the “2013 Plan”). Employees, executive directors, and non-executive directors (including the independent directors) are eligible to participate in the 2013 Plan. 109 The following tables summarize stock option activity under the 2013 Plan for the year ended December 31, 2021: SCHEDULE OF OPTION ACTIVITY Options for Common Shares Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of January 1, 2020 1,061,333 $ 0.09 4.00 $ - Vested and exercisable at January 1, 2020 1,061,333 $ 0.09 4.00 $ - Granted - - Exercised - - Forfeited, cancelled, expired - - Outstanding as of December 31, 2020 1,061,333 $ 0.09 3.00 $ - Vested and exercisable at December 31, 2020 1,061,333 $ 0.09 3.00 $ - Granted - - Exercised - - Forfeited, cancelled, expired - - Outstanding as of December 31, 2021 1,061,333 $ 0.09 2.00 $ - Vested and exercisable at December 31, 2021 1,061,333 $ 0.09 2.00 $ - 18. SUBSEQUENT EVENTS Purchase of Alset International shares On January 17, 2022 the Company entered into securities purchase agreement with Chan Heng Fai, pursuant to which the Company agreed to purchase from Chan Heng Fai 293,428,200 ordinary shares of Alset International for a purchase price 29,468,977 newly issued shares of the Company’s common stock. On February 28, 2022, the Company and Mr. Chan entered into an amendment to this securities purchase agreement pursuant to which the Company shall purchase these 293,428,200 ordinary shares of Alset International for a purchase price of 35,319,290 newly issued shares of the Company’s common stock. The closing of this transaction with Mr. Chan is subject to approval of the Nasdaq and the Company’s stockholders. These 293,428,200 ordinary shares of Alset International represent approximately 8.4 % of the 3,492,713,362 total issued and outstanding shares of Alset International. Sale of Securities of True Partner Limited On January 18, 2022, the Company entered into a stock purchase agreement with DSS, Inc., pursuant to which the Company has agreed to sell, through the transfer of subsidiary and otherwise, 62,122,908 shares of stock of True Partner Capital Holding Limited in exchange for 11,397,080 shares of the common stock of DSS. On February 28, 2022 the Company entered into a revised Stock Purchase Agreement with DSS, Inc., pursuant to which the Company has agreed to replace the January 18, 2022 agreement with a new agreement to sell a subsidiary holding 44,808,908 shares of stock of True Partner Capital Holding Limited, together with an additional 17,314,000 shares of True Partner Capital Holding Limited (for a total of 62,122,908 shares) in exchange for 17,570,948 shares of common stock of DSS (the “DSS Shares”). The issuance of the DSS Shares will be subject to the approval of the NYSE American (on which the common stock of DSS is listed) and DSS’s shareholders. Issuance of Common Stock On January 24, 2022 the Company entered into stock purchase agreement with Chan Heng Fai, pursuant to which the Company agreed to issue to Chan Heng Fai 35,012,120 shares of the Company’s common stock for a purchase price of $ 0.3713 per share (for an aggregate purchase price of $ 13,000,000 ). On February 28, 2022 the Company entered into an agreement with Mr. Chan to terminate this stock purchase agreement. Issuance of Promissory Note On December 13, 2021 the Company entered into a Securities Purchase Agreement with Chan Heng Fai for the issuance and sale of a convertible promissory note in favor of Chan Heng Fai, in the principal amount of $ 6,250,000 . The note bears interest of 3 % per annum and is due on the earlier of December 31, 2024 or when declared due and payable by Chan Heng Fai. The note can be converted in part or whole into common shares of the Company at the conversion price of $ 0.625 or into cash. The loan closed on January 26, 2022 after all closing conditions were met. Mr. Chan opted to convert all of the amount of such note into 10,000,000 shares of the Company’s common stock, which shares were issued on January 27, 2022. Purchase of Shares of DSS On January 25, 2022, the Company agreed to purchase 44,619,423 shares of DSS’s common stock for a purchase price of $ 0.3810 per share, for an aggregate purchase price of $ 17,000,000 . On February 28, 2022, the Company and DSS agreed to amend this stock purchase agreement. The number of shares of the common stock of DSS that the Company will purchase has been reduced to 3,986,877 shares for an aggregate purchase price of $ 1,519,000 . Initial Public Offering of Alset Capital Acquisition Corp. On February 3, 2022 Alset Capital Acquisition Corp. (“Alset Capital”), a special purpose acquisition company sponsored by the Company and certain affiliates, closed its initial public offering of 7,500,000 units at $ 10 per unit. Each unit consisted of one of Alset Capital’s shares of Class A common stock, one-half of one redeemable warrant and one right to receive one-tenth of one share of Class A common stock upon the consummation of an initial business combination . Each whole warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $ 11.50 per share. Only whole warrants are exercisable. The underwriters exercised their over-allotment option in full for an additional 1,125,000 units on February 1, 2022, which closed at the time of the closing of the Offering. As a result, the aggregate gross proceeds of this offering, including the over-allotment, were $ 86,250,000 , prior to deducting underwriting discounts, commissions, and other offering expenses. On February 3, 2022, simultaneously with the consummation of Alset Capital’s initial public offering, Alset Capital consummated the private placement of 473,750 units (the “Private Placement Units”) to the Sponsor, which amount includes 33,750 Private Placement Units purchased by the Sponsor in connection with the underwriters’ exercise of the over-allotment option in full, at a price of $ 10.00 per Private Placement Unit, generating gross proceeds of approximately $ 4.7 million (the “Private Placement”) the proceeds of which were placed in the trust account. No underwriting discounts or commissions were paid with respect to the Private Placement. The Private Placement Units are identical to the units sold in the initial public offering, except that (a) the Private Placement Units and their component securities will not be transferable, assignable or saleable until 30 days after the consummation of Alset Capital’s initial business combination except to permitted transferees and (b) the warrants and rights included as a component of the Private Placement Units, so long as they are held by the Sponsor or its permitted transferees, will be entitled to registration rights, respectively. Purchase of Note from DSS On February 25, 2022, Alset International entered into an assignment and assumption agreement with DSS pursuant to which DSS has agreed to purchase a convertible promissory note from Alset International. The note has a principal amount of $ 8,350,000 and accrued but unpaid interest of $ 367,400 through May 15, 2022. The note was issued by American Medical REIT, Inc. The consideration to be paid for the note will be 21,366,177 shares of DSS’s common stock. The number of DSS shares to be issued as consideration was calculated by dividing $ 8,717,400 , the aggregate of the principal amount and the accrued but unpaid interest under the Note, by $0.408 per share. The number of shares of DSS common stock to be issued as consideration may be adjusted based on the accrued interest if the parties should agree to close this transaction on a date other than the anticipated date of May 15, 2022. The closing of the assumption agreement and the issuance of the DSS shares described above will be subject to the approval of the NYSE American and DSS’s shareholders. 110 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not Applicable.