Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 14, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Entity Registrant Name | LIQUIDVALUE DEVELOPMENT INC. | ||
Entity Central Index Key | 0001503658 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2021 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Entity Common Stock Shares Outstanding | 704,043,324 | ||
Entity Public Float | $ 0 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 000-55038 | ||
Entity Incorporation State Country Code | NV | ||
Entity Interactive Data Current | Yes | ||
Icfr Auditor Attestation Flag | false | ||
Entity Tax Identification Number | 27-1467606 | ||
City Area Code | 301 | ||
Local Phone Number | 971-3940 | ||
Entity Address Address Line 1 | 4800 Montgomery Lane, Suite 210 | ||
Entity Address City Or Town | Bethesda | ||
Entity Address State Or Province | MD | ||
Entity Address Postal Zip Code | 20814 | ||
Auditor Name | GRASSI & CO., CPAs, P.C. | ||
Auditor Location | Jericho, New York | ||
Auditor Firm Id | 606 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Investments in Single-family Residential Properties | ||
Land | $ 9,470,950 | $ 0 |
Building and Improvements | 15,469,814 | 0 |
Total Investments in Single-family Residential Properties | 24,940,764 | 0 |
Less: Accumulated Depreciation | (120,511) | 0 |
Investments in Single-family Residential Properties, Net | 24,820,253 | 0 |
Construction in Progress | 6,724,674 | 10,239,397 |
Land Held for Development | 8,068,624 | 10,376,840 |
Other Properties | 421,382 | 0 |
Total Real Estate Assets | 40,034,933 | 20,616,237 |
Cash | 3,055,745 | 2,375,180 |
Restricted Cash | 4,399,984 | 5,729,067 |
Accounts Receivable | 47,303 | 84,025 |
Other Receivable | 136,350 | 258,367 |
Related Party Receivable | 26,565 | 117,941 |
Prepaid Expenses | 258,700 | 11,563 |
Fixed Assets, Net | 4,945 | 3,802 |
Deposits | 23,603 | 23,603 |
Operating Lease Right-Of-Use Asset | 191,979 | 0 |
Total Assets | 48,180,107 | 29,219,785 |
Liabilities: | ||
Accounts Payable and Accrued Expenses | 2,832,340 | 563,843 |
Accrued Interest - Related Parties | 228,557 | 228,557 |
Builder Deposits | 31,553 | 1,262,336 |
Operating Lease Liability | 199,483 | 0 |
Note Payable, net of discount | 68,502 | 636,362 |
Note Payable - Related Parties | 19,918,382 | 0 |
Total Liabilities | 23,278,817 | 2,691,098 |
Stockholders' Equity: | ||
Common Stock, at par $0.001, 1,000,000,000 shares authorized and 704,043,324 issued, and outstanding at December 31, 2021 and December 31, 2020 | 704,043 | 704,043 |
Additional Paid In Capital | 32,542,720 | 32,542,720 |
Accumulated Deficit | (8,397,009) | (8,632,867) |
Total LiquidValue Development Inc. Stockholders' Equity | 24,849,754 | 24,613,896 |
Non-controlling Interests | 51,536 | 1,914,791 |
Total Stockholders' Equity | 24,901,290 | 26,528,687 |
Total Liabilities and Stockholders' Equity | $ 48,180,107 | $ 29,219,785 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Common stock, Par Value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, Issued | 704,043,324 | 704,043,324 |
Common stock, Outstanding | 704,043,324 | 704,043,324 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue | ||
Rental | $ 327,296 | $ 0 |
Property | 13,886,084 | 15,656,829 |
Total Revenue | 14,213,380 | 15,656,829 |
Operating Expenses | ||
Cost of Revenue | 11,551,301 | 14,326,252 |
General and Administrative | 1,498,052 | 1,185,368 |
Total Operating Expenses | 13,049,353 | 15,511,620 |
Income From Operations | 1,164,027 | 145,209 |
Other Income & Expense | ||
Interest (Expense) Income, net | (153,900) | 13,612 |
Other Income | 4,142 | 70,990 |
Total Other (Expense) Income | (149,758) | 84,602 |
Net Income Before Income Taxes | 1,014,269 | 229,811 |
Income Tax Expense | 91,916 | 9,622 |
Net Income | 922,353 | 220,189 |
Net Income Attributable to Non-controlling Interests | 686,495 | 50,980 |
Net Income Attributable to Common Stockholders | $ 235,858 | $ 169,209 |
Net Income Per Share - Basic and Diluted | $ 0 | $ 0 |
Weighted Average Common Shares Oustanding - Basic and Diluted | 704,043,324 | 704,043,324 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Total LiquidValue Development Inc., Stockholder's Equity | Noncontrolling Interest |
Balance, shares at Dec. 31, 2019 | 704,043,324 | |||||
Balance, amount at Dec. 31, 2019 | $ 26,719,748 | $ 704,043 | $ 32,542,720 | $ (8,802,076) | $ 24,444,687 | $ 2,275,061 |
Distribution to Non-Controlling Stockholder | (411,250) | 0 | 0 | 0 | 0 | (411,250) |
Net Income | 220,189 | $ 0 | 0 | 169,209 | 169,209 | 50,980 |
Balance, shares at Dec. 31, 2020 | 704,043,324 | |||||
Balance, amount at Dec. 31, 2020 | 26,528,687 | $ 704,043 | 32,542,720 | (8,632,867) | 24,613,896 | 1,914,791 |
Distribution to Non-Controlling Stockholder | (2,549,750) | 0 | 0 | 0 | 0 | (2,549,750) |
Net Income | 922,353 | $ 0 | 0 | 235,858 | 235,858 | 686,495 |
Balance, shares at Dec. 31, 2021 | 704,043,324 | |||||
Balance, amount at Dec. 31, 2021 | $ 24,901,290 | $ 704,043 | $ 32,542,720 | $ (8,397,009) | $ 24,849,754 | $ 51,536 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows From Operating Activities | ||
Net Income | $ 922,353 | $ 220,189 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||
Depreciation | 123,341 | 2,590 |
Amortization of Right -Of- Use Asset | 62,578 | 18,772 |
Amortization of Debt Discount | 42,907 | 87,193 |
PPP Loan Forgiveness | 0 | (64,502) |
Changes in Operating Assets and Liabilities | ||
Real Estate Development | 5,822,939 | 4,242,332 |
Accounts Receivable | 36,722 | 82,269 |
Related Party Receivable | (26,565) | 93,330 |
Prepaid Expenses | (244,766) | 21,656 |
Other Receivable | 122,017 | 0 |
Accounts Payable and Accrued Expenses | 2,268,498 | (219,733) |
Related Party Payable | 504,588 | (96,425) |
Operating Lease Liability | (57,445) | (91,330) |
Builder Deposits | (1,230,783) | (1,182,933) |
Income Tax Payable | 0 | (678,694) |
Net Cash Provided by Operating Activities | 8,346,384 | 2,434,714 |
Cash Flows From Investing Activities | ||
Purchase of Fixed Assets | (3,973) | (4,181) |
Purchase of Real Estate Properties | (25,362,146) | 0 |
Net Cash Used In Investing Activities | (25,366,119) | (4,181) |
Cash Flows From Financing Activities | ||
Borrowing from Note Payable | 68,502 | 686,092 |
Repayment of Note Payable | (679,269) | (4,000) |
Distribution to Non-controlling Interest Shareholders | 2,549,750 | 411,250 |
Borrowing from Notes Payable - Related Parties | 19,531,734 | 0 |
Net Cash Provided by Financing Activities | 16,371,217 | 270,842 |
Net (Decrease) Increase in Cash and Restricted Cash | (648,518) | 2,701,375 |
Cash and Restricted Cash at End of Year | 7,455,729 | 8,104,247 |
Cash and Restricted Cash - Beginning of Year | 8,104,247 | 5,402,872 |
Supplementary Cash Flow Information | ||
Cash Paid For Interest | 10,766 | 19,929 |
Cash Paid For Taxes | 0 | 688,316 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Initial Recognition of Operating Lease Right-Of-Use Asset and Liability | $ 256,928 | $ 0 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations LiquidValue Development Inc. (the “Company”), formerly known as SeD Intelligent Home Inc. and Homeownusa, was incorporated in the State of Nevada on December 10, 2009. On December 29, 2017, the Company, acquired Alset EHome Inc. (“Alset EHome”) by reverse merger. Alset EHome, a Delaware corporation, was formed on February 24, 2015 and named SeD Home USA, Inc. before changing its name to SeD Home, Inc. in May of 2015. On February 6, 2020, this name was changed to SeD Home & REITs Inc., on July 7, 2020 the name was changed to Alset iHome Inc. and on December 9, 2020 it was changed to Alset EHome Inc. Alset EHome is principally engaged in developing, selling, managing, and leasing residential properties in the United States in current stage and may expand from residential properties to other property types, including but not limited to commercial and retail properties. The Company is 99.99% owned by SeD Intelligent Home Inc., formerly known as SeD Home International, Inc., which is wholly-owned by Alset International Limited (formerly known as Singapore eDevelopment Limited “Alset International”), a multinational public company, listed on the Singapore Exchange Securities Trading Limited (“SGXST”). The Company’s current operations concentrate around two types of projects, land development and house rental business. Both of them are included in our only reporting segment – real state. In determination of segments, the Company, together with its chief operating decision maker, who is also our CEO, considers factors that include the nature of business activities, allocation of resources and management structure. Principles of Consolidation The consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting periods as follows: Name of consolidated subsidiary State or other jurisdiction of incorporation or organization Date of incorporation or formation Attributable interest as of December 31, 2021 Attributable interest as of December 31, 2020 Alset EHome Inc. Delaware February 24, 2015 100% 100% SeD USA, LLC Delaware August 20, 2014 100% 100% 150 Black Oak GP, Inc. Texas January 23, 2014 100% 100% SeD Development USA, Inc. Delaware March 13, 2014 100% 100% 150 CCM Black Oak Ltd. Texas January 23, 2014 100% 100% SeD Ballenger, LLC Delaware July 7, 2015 100% 100% SeD Maryland Development, LLC Delaware October 16, 2014 83.55% 83.55% SeD Development Management, LLC Delaware June 18, 2015 85% 85% SeD Builder, LLC Delaware October 21, 2015 100% 100% SeD Texas Home, LLC Delaware June 16, 2015 100% 100% SeD REIT Inc. Maryland August 20, 2019 100% 100% Alset Solar Inc. Texas September 21, 2020 80% 80% American Home REIT Inc. Maryland September 30, 2020 100% n/a AHR Texas Two, LLC Delaware September 28, 2021 100% n/a AHR Black Oak One, LLC Delaware September 29, 2021 100% n/a AHR Texas Three, LLC Delaware December 21, 2021 100% n/a All intercompany balances and transactions have been eliminated. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interests. As of December 31, 2021 and 2020, the aggregate noncontrolling interest was $51,536 and $1,914,791, respectively, which are separately disclosed on the Consolidated Balance Sheets. On December 29, 2017, the Company, SeD Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company (the “Merger Sub”), Alset EHome Inc., a Delaware corporation, and SeD Intelligent Home Inc., a Delaware corporation entered into an Acquisition Agreement and Plan of Merger (the “Agreement”) pursuant to which the Merger Sub was merged with and into Alset EHome, with Alset EHome surviving as a wholly owned subsidiary of the Company. The closing of this transaction (the “Closing”) also took place on December 29, 2017 (the “Closing Date”). Prior to the Closing, SeD Intelligent Home Inc. was the owner of 100% of the issued and outstanding common stock of Alset EHome and was also the owner of 99.96% of the Company’s issued and outstanding common stock. The Company acquired all of the outstanding common stock of Alset EHome from SeD Intelligent Home Inc. in exchange for issuing to SeD Intelligent Home Inc. 630,000,000 shares of the Company’s common stock. Accordingly, SeD Intelligent Home Inc. remains the Company’s largest shareholder, and the Company is now the sole shareholder of Alset EHome. The Agreement and the transactions contemplated thereby were approved by the Board of Directors of each of the Company, the Merger Sub, SeD Intelligent Home Inc., and Alset EHome. The Agreement is considered a business combination of companies under common control and therefore, the consolidated financial statements include the financial statements of both companies. Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Earnings (Loss) per Share Basic income (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders by weighted average number of shares of common stock outstanding during the period. Fully diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the periods ended December 31, 2021 or 2020. Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. 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. There were no cash equivalents as of December 31, 2021 and 2020. Restricted Cash As a condition to the loan agreement with the Manufacturers and Traders Trust Company (“M&T Bank”), the Company is required to maintain a minimum of $2,600,000 in an interest-bearing account maintained by the lender as additional security for the loans. The fund is required to remain as collateral for the loan until the loan is paid off in full and the loan agreement 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. Accounts Receivable Accounts receivable include all receivables from buyers, contractors and all other parties. The Company records an allowance for doubtful accounts based on a review of the outstanding receivables, historical collection information and economic conditions. No allowance was necessary at December 31, 2021 and 2020. Property and Equipment and Depreciation Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives, which are 3 years. Real Estate Assets · Land Development 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. In addition to our annual assessment of potential triggering events in accordance with 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 year ended on December 31, 2021, nor for the year ended December 31, 2020. · 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 year ended on December 31, 2021. Revenue Recognition · Land Development Revenue Recognition ASC 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The Company adopted this new standard on January 1, 2018 under the modified retrospective method. The adoption of this new standard did not have a material effect on our financial statements. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us 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, we satisfy the performance obligation. A detailed breakdown of the five-step process for the revenue recognition of our Ballenger project, which earned majority of the revenue of the Company in 2021 and 2020, is as follows: a) Identify the contract with a customer. The Company has signed agreements with the builders for developing the raw land to ready to build lots. The contract has agreed upon prices, timelines, and specifications for what is to be provided. b) 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. c) Determine the transaction price. The transaction price is specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. d) Allocate the transaction price to performance obligations in the contract. Each lot is considered to be a separate performance obligation, for which the specified price in the contract is allocated to. e) 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 when title is transferred. The Company does not have further performance obligations once title is transferred. · Rental Revenue Recognition 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. For 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 the type of the home. Our total revenue from the front foot benefit assessment is approximately $1 million. To recognize revenue of FFB assessment, both our and NVR’s performance obligation 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 on December 31, 2021 and 2020, we recognized revenue $289,375 and $273,620 from FFB assessment, respectively. Contract Assets and Contract Liabilities Based on our contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional. We disclose receivables from contracts with customers separately on the balance sheets. 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 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. · 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. Income Taxes 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 tax returns for 2020, 2019 and 2018 remain open to examination. Recent Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Reference Rate Reform on Financial Reporting In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." ASU 2021-08 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. |
CONCENTRATION OF CREDIT RISK
CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Dec. 31, 2021 | |
CONCENTRATION OF CREDIT RISK | |
2. CONCENTRATION OF CREDIT RISK | 2. CONCENTRATION OF CREDIT RISK The Company maintains cash balances at various financial institutions. These balances are secured by the Federal Deposit Insurance Corporation. At times, these balances may exceed the federal insurance limits. On December 31, 2021 and 2020, uninsured cash balances were $6,137,775 and $6,937,716, respectively. The Company had only three customers in the year ended December 31, 2020: the purchaser for Ballenger project, NVR Inc. (“NVR”), a NYSE publicly listed US homebuilding and mortgage company, who is the only purchaser of 479 residential lots, Western Utility, the purchaser of the FFBs of Ballenger project, and a private customer of the historic farmhouse located in Ballenger Project, which was not included under NVR contract. During the year ended December 31, 2020, the Company earned revenues from property sales from the first two customers representing approximately 98% and 2%, respectively. The Company had two customers in the year ended December 31, 2021: the purchaser for Ballenger project – NVR and the purchaser of the FFB of Ballenger project – Western Utility. During the year ended December 31, 2021, the Company earned revenues from property sales from these two customers representing approximately 97% and 3%, respectively. |
BUILDER DEPOSITS
BUILDER DEPOSITS | 12 Months Ended |
Dec. 31, 2021 | |
BUILDER DEPOSITS | |
3. BUILDER DEPOSITS | 3. BUILDER DEPOSITS In November 2015, SeD Maryland Development, LLC (“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 two times thereafter. Based on the agreements, NVR is entitled to purchase 479 lots for a price of approximately $64 million, 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 from 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 outstanding, respectively. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2021 | |
NOTES PAYABLE | |
4. NOTES PAYABLE | 4. NOTES PAYABLE 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. On June 18, 2020, Alset EHome Inc. entered into a Loan Agreement with M&T Bank. Pursuant to the Loan Agreement, M&T Bank provided a non-revolving loan to Alset EHome Inc. in an aggregate amount of up to $2,990,000. The line of credit bears interest rate on LIBOR plus 375 basis points. Repayment of this loan is secured by a Deed of Trust issued to M&T Bank on the property owned by certain subsidiaries of Alset EHome Inc. The maturity date of this Loan is July 1, 2022. The Company together with one of its subsidiaries, SeD Maryland Development LLC, are both the guarantors of this Loan. 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 first six months of 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. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
5. RELATED PARTY TRANSACTIONS | 5. RELATED PARTY TRANSACTIONS Loan from SeD Home Limited Alset EHome receives advances from SeD Home Limited (an affiliate of Alset International), to fund development and operation costs. The advances bear interest at 10% and are payable on demand. As of December 31, 2021 and 2020, Alset EHome had outstanding principal due of $0 and $0, respectively and accrued interest of $228,557 and $228,557, respectively. Loan to/from SeD Intelligent Home Inc. (f.k.a. SeD Home International) The Company receives advances from or loans funds to SeD Intelligent Home, the owner of 99.99% of the Company. The advances or the loans bore interest of 18% until August 30, 2017 when the interest rate was adjusted to 5% and have no set repayment terms. On December 31, 2021, the Company owed $19,891,734 of advance principal and $144,588 of accrued interest. On December 31, 2020, SeD Intelligent Home owed the Company $98,680 in loan principal and $19,261 in accrued loan interest. During the years ended December 31, 2021 and 2020, the Company earned interest income of $0 and $19,261, respectively. Management Fees MacKenzie Equity Partners, owned by a Charles MacKenzie, a Director of the Company, has 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 in the years ended December 31, 2021 and 2020, respectively, which were capitalized as part of Real Estate on the balance sheet as the services relate to property and project management. During 2021, MacKenzie Equity Partners was granted an additional $120,000 bonus payment. On December 31, 2021 and 2020, the Company owed this related party $80,000 and $0, respectively. On December 29, 2020, the Company entered into a Management Services Agreement (the “Management Services Agreement”) with Alset International, pursuant to which the Company agreed to pay Alset International a one-time payment of $360,000 for the services of certain Alset International staff members the Company received in 2020, and agreed to pay Alset International $30,000 per month for services to be provided in 2021. This Management Services Agreement has a term that ends December 31, 2021, and can be cancelled by either party on thirty days’ notice. Alset International will provide the Company with services related to the development of the Black Oak and Ballenger Run real estate projects near Houston, Texas and in Frederick, Maryland, respectively, and the potential development of future real estate projects. During the years ended December 31, 2021 and 2020 the Company incurred expense of $360,000 and $360,000, respectively. This balance due is included in the loan amount from SeD Intelligent Home Inc., which in turn owes the funds to Alset International. Advance to Alset EHome International Inc. The Company pays some operating expenses for Alset EHome International Inc., a related party under the common control of Chan Heng Fai, the CEO of the Company. The advances are interest free with no set repayment terms. On December 31, 2021 and December 31, 2020, the balance of these advances was $26,566 and $0, respectively. Consulting Services A law firm, owned by Conn Flanigan, a Director of the Company, performs consulting services for the Company. The Company incurred expenses of $0 and $12,645 for the years ended December 31, 2021 and 2020, respectively. On December 31, 2021 and December 31, 2020, the Company owed this related party $0. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity: | |
6. STOCKHOLDERS' EQUITY | 6. SHAREHOLDERS’ EQUITY Cash Dividend Distributions During the year ended December 31, 2021, the Board of Managers of SeD Maryland Development LLC (the 83.55% owned subsidiary of the Company which owns the Company’s Ballenger Project) authorized the payment of distributions to its members in the amount of $15,500,000. Accordingly, the minority member of SeD Maryland Development LLC received a distribution in the amount of $2,549,750, with the remainder being distributed to a subsidiary of the Company, which was eliminated upon consolidation. During the year ended December 31, 2020, SeD Maryland Development LLC Board approved three payment distribution plans to members and paid total of $411,250 in distributions to the minority shareholder. |
SINGLE FAMILY RESIDENTIAL PROPE
SINGLE FAMILY RESIDENTIAL PROPERTIES | 12 Months Ended |
Dec. 31, 2021 | |
SINGLE FAMILY RESIDENTIAL PROPERTIES | |
7. SINGLE FAMILY RESIDENTIAL PROPERTIES | 7. 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. The Company borrowed $19.5 million from SeD Intelligent Home Inc. to fund part of this acquisition. Depreciation expense was $120,511 and $0 in the years ended December 31, 2021 and 2020, respectively. The following table presents the summary of our SRFs as of December 31, 2021: Average Number of Investment Homes Aggregate investment per Home SFRs 109 $ 24,940,764 $ 228,814 |
LEASE INCOME
LEASE INCOME | 12 Months Ended |
Dec. 31, 2021 | |
LEASE INCOME | |
8. LEASE INCOME | 8. 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: 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 property management fee of $90 per month per property unit and a leasing fee equal to one month of each lease’s annual rent. 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. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
9. COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES Leases The Company leases office space in Texas and Maryland. Lease of our Texas office expires in 2022, while lease of our Maryland expires on December 31, 2024. The monthly rental payments ranged between $2,265 and $8,143, respectively. Rent expense was $116,379 and $113,651 for the year ended December 31, 2021 and 2020, respectively. The below table summarizes future payments due under these leases as of December 31, 2021. The balance of the operating lease right-of-use asset and operating lease liability as of December 31, 2021 was $191,979 and $199,483, respectively. Supplemental Cash Flow and Other Information Related to Operating Leases are as follows: Year Ended December 31, 2021 Weighted Average Remaining Operating Lease Term (in years) 2.16 The below table summarizes future payments due under these leases as of December 31, 2021. For the Years Ended December 31: 2022 101,899 2023 95,104 2024 24,430 Total Minimum Lease Payments $ 221,432 Less: Effect of Discounting (21,949 ) Present Value of Future Minimum Lease Payments 199,483 Less: Current Obligation under Lease - Long-term Lease Obligation 199,483 Lot Sale Agreements 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, 2015, 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. During years ended December 31, 2021 and 2020, NVR has purchased 88 and 121 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. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
INCOME TAXES | 10. 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: Year Ended December 31, 2021 2020 Current: Federal $ 45,736 $ - State 46,180 11,633 Total Current 91,916 11,633 Deferred: Federal 65,055 87,652 State 27,856 47,395 Total Deferred 92,911 135,047 Valuation Allowance (92,911 ) (135,047 ) Total Income Tax Expense $ 91,916 $ 11,633 Pre-tax Income (Loss) $ 1,014,269 $ 229,811 Effective Income Tax Rate 9.1 % 5.1 % 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: Year Ended December 31, 2021 2020 Tax at the Statutory Federal Rate 21.0 % 21.0 % State Income Taxes, Net of Federal Income Taxes 3.6 % -11.7 % Intercompany Management & Oversight Fees 9.6 % 42.4 % Capitalized Construction Costs -28.8 % -101.2 % Minority Interest in Partnerships -7.2 % -15.3 % Deferred Finance Cost 23.5 % 113.6 % Miscellaneous Permanent Items - -6.3 % Valuation Allowance -12.6 % -37.4 % Effective Income Tax Rate 9.1 % 5.1 % Deferred tax assets (liabilities) consist of the following at December 31, 2021 and 2020: Year Ended December 31, 2021 2020 Interest Income $ (5,660,333 ) $ (5,083,992 ) 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 Partnership Gain (Loss) 13,175 13,175 Others 31,173 31,173 1,787,547 1,880,459 Valuation Allowance (1,787,547 ) (1,880,459 ) Net Deferred Tax Asset $ - $ - As of December 31, 2021, the Company has Federal and Maryland State net operating loss carry-forwards of approximately $0 . 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 decreased by $92,912. 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 liabilities is $11,633, including federal income tax receivable $0 and Maryland state income tax receivable $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. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Operations | LiquidValue Development Inc. (the “Company”), formerly known as SeD Intelligent Home Inc. and Homeownusa, was incorporated in the State of Nevada on December 10, 2009. On December 29, 2017, the Company, acquired Alset EHome Inc. (“Alset EHome”) by reverse merger. Alset EHome, a Delaware corporation, was formed on February 24, 2015 and named SeD Home USA, Inc. before changing its name to SeD Home, Inc. in May of 2015. On February 6, 2020, this name was changed to SeD Home & REITs Inc., on July 7, 2020 the name was changed to Alset iHome Inc. and on December 9, 2020 it was changed to Alset EHome Inc. Alset EHome is principally engaged in developing, selling, managing, and leasing residential properties in the United States in current stage and may expand from residential properties to other property types, including but not limited to commercial and retail properties. The Company is 99.99% owned by SeD Intelligent Home Inc., formerly known as SeD Home International, Inc., which is wholly-owned by Alset International Limited (formerly known as Singapore eDevelopment Limited “Alset International”), a multinational public company, listed on the Singapore Exchange Securities Trading Limited (“SGXST”). The Company’s current operations concentrate around two types of projects, land development and house rental business. Both of them are included in our only reporting segment – real state. In determination of segments, the Company, together with its chief operating decision maker, who is also our CEO, considers factors that include the nature of business activities, allocation of resources and management structure. |
Principles of Consolidation | The consolidated financial statements include all accounts of the entities as of the reporting period ending dates and for the reporting periods as follows: Name of consolidated subsidiary State or other jurisdiction of incorporation or organization Date of incorporation or formation Attributable interest as of December 31, 2021 Attributable interest as of December 31, 2020 Alset EHome Inc. Delaware February 24, 2015 100% 100% SeD USA, LLC Delaware August 20, 2014 100% 100% 150 Black Oak GP, Inc. Texas January 23, 2014 100% 100% SeD Development USA, Inc. Delaware March 13, 2014 100% 100% 150 CCM Black Oak Ltd. Texas January 23, 2014 100% 100% SeD Ballenger, LLC Delaware July 7, 2015 100% 100% SeD Maryland Development, LLC Delaware October 16, 2014 83.55% 83.55% SeD Development Management, LLC Delaware June 18, 2015 85% 85% SeD Builder, LLC Delaware October 21, 2015 100% 100% SeD Texas Home, LLC Delaware June 16, 2015 100% 100% SeD REIT Inc. Maryland August 20, 2019 100% 100% Alset Solar Inc. Texas September 21, 2020 80% 80% American Home REIT Inc. Maryland September 30, 2020 100% n/a AHR Texas Two, LLC Delaware September 28, 2021 100% n/a AHR Black Oak One, LLC Delaware September 29, 2021 100% n/a AHR Texas Three, LLC Delaware December 21, 2021 100% n/a All intercompany balances and transactions have been eliminated. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interests. As of December 31, 2021 and 2020, the aggregate noncontrolling interest was $51,536 and $1,914,791, respectively, which are separately disclosed on the Consolidated Balance Sheets. On December 29, 2017, the Company, SeD Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company (the “Merger Sub”), Alset EHome Inc., a Delaware corporation, and SeD Intelligent Home Inc., a Delaware corporation entered into an Acquisition Agreement and Plan of Merger (the “Agreement”) pursuant to which the Merger Sub was merged with and into Alset EHome, with Alset EHome surviving as a wholly owned subsidiary of the Company. The closing of this transaction (the “Closing”) also took place on December 29, 2017 (the “Closing Date”). Prior to the Closing, SeD Intelligent Home Inc. was the owner of 100% of the issued and outstanding common stock of Alset EHome and was also the owner of 99.96% of the Company’s issued and outstanding common stock. The Company acquired all of the outstanding common stock of Alset EHome from SeD Intelligent Home Inc. in exchange for issuing to SeD Intelligent Home Inc. 630,000,000 shares of the Company’s common stock. Accordingly, SeD Intelligent Home Inc. remains the Company’s largest shareholder, and the Company is now the sole shareholder of Alset EHome. The Agreement and the transactions contemplated thereby were approved by the Board of Directors of each of the Company, the Merger Sub, SeD Intelligent Home Inc., and Alset EHome. The Agreement is considered a business combination of companies under common control and therefore, the consolidated financial statements include the financial statements of both companies. |
Basis of Presentation | The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. |
Earnings (Loss) per Share | Basic income (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders by weighted average number of shares of common stock outstanding during the period. Fully diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the periods ended December 31, 2021 or 2020. |
Fair Value of Financial Instruments | For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. |
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. There were no cash equivalents as of December 31, 2021 and 2020. |
Restricted Cash | As a condition to the loan agreement with the Manufacturers and Traders Trust Company (“M&T Bank”), the Company is required to maintain a minimum of $2,600,000 in an interest-bearing account maintained by the lender as additional security for the loans. The fund is required to remain as collateral for the loan until the loan is paid off in full and the loan agreement 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. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable include all receivables from buyers, contractors and all other parties. The Company records an allowance for doubtful accounts based on a review of the outstanding receivables, historical collection information and economic conditions. No allowance was necessary at December 31, 2021 and 2020. |
Property and Equipment and Depreciation | Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives, which are 3 years. |
Real Estate Assets | · Land Development 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. In addition to our annual assessment of potential triggering events in accordance with 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 year ended on December 31, 2021, nor for the year ended December 31, 2020. · 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 year ended on December 31, 2021. |
Revenue Recognition | · Land Development Revenue Recognition ASC 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The Company adopted this new standard on January 1, 2018 under the modified retrospective method. The adoption of this new standard did not have a material effect on our financial statements. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us 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, we satisfy the performance obligation. A detailed breakdown of the five-step process for the revenue recognition of our Ballenger project, which earned majority of the revenue of the Company in 2021 and 2020, is as follows: a) Identify the contract with a customer. The Company has signed agreements with the builders for developing the raw land to ready to build lots. The contract has agreed upon prices, timelines, and specifications for what is to be provided. b) 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. c) Determine the transaction price. The transaction price is specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. d) Allocate the transaction price to performance obligations in the contract. Each lot is considered to be a separate performance obligation, for which the specified price in the contract is allocated to. e) 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 when title is transferred. The Company does not have further performance obligations once title is transferred. · Rental Revenue Recognition 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. For 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 the type of the home. Our total revenue from the front foot benefit assessment is approximately $1 million. To recognize revenue of FFB assessment, both our and NVR’s performance obligation 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 on December 31, 2021 and 2020, we recognized revenue $289,375 and $273,620 from FFB assessment, respectively. Contract Assets and Contract Liabilities Based on our contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional. We disclose receivables from contracts with customers separately on the balance sheets. |
Cost of Sales | · 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 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. · 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. |
Income Taxes | 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 tax returns for 2020, 2019 and 2018 remain open to examination. |
Recent Accounting Pronouncements | In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Reference Rate Reform on Financial Reporting In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." ASU 2021-08 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. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Accounts of Entities | Name of consolidated subsidiary State or other jurisdiction of incorporation or organization Date of incorporation or formation Attributable interest as of December 31, 2021 Attributable interest as of December 31, 2020 Alset EHome Inc. Delaware February 24, 2015 100% 100% SeD USA, LLC Delaware August 20, 2014 100% 100% 150 Black Oak GP, Inc. Texas January 23, 2014 100% 100% SeD Development USA, Inc. Delaware March 13, 2014 100% 100% 150 CCM Black Oak Ltd. Texas January 23, 2014 100% 100% SeD Ballenger, LLC Delaware July 7, 2015 100% 100% SeD Maryland Development, LLC Delaware October 16, 2014 83.55% 83.55% SeD Development Management, LLC Delaware June 18, 2015 85% 85% SeD Builder, LLC Delaware October 21, 2015 100% 100% SeD Texas Home, LLC Delaware June 16, 2015 100% 100% SeD REIT Inc. Maryland August 20, 2019 100% 100% Alset Solar Inc. Texas September 21, 2020 80% 80% American Home REIT Inc. Maryland September 30, 2020 100% n/a AHR Texas Two, LLC Delaware September 28, 2021 100% n/a AHR Black Oak One, LLC Delaware September 29, 2021 100% n/a AHR Texas Three, LLC Delaware December 21, 2021 100% n/a |
SINGLE FAMILY RESIDENTIAL PRO_2
SINGLE FAMILY RESIDENTIAL PROPERTIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
SINGLE FAMILY RESIDENTIAL PROPERTIES (Tables) | |
Summary of SFR | Average Number of Investment Homes Aggregate investment per Home SFRs 109 $ 24,940,764 $ 228,814 |
LEASE INCOME (Tables)
LEASE INCOME (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
LEASE INCOME | |
Summary of future minimum rental revenue | 2022 464,343 Total Future Receipts $ 464,343 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
Supplemental cash flow and other information related to operating leases | Year Ended December 31, 2021 Weighted Average Remaining Operating Lease Term (in years) 2.16 |
Future payments due under leases | 2022 101,899 2023 95,104 2024 24,430 Total Minimum Lease Payments $ 221,432 Less: Effect of Discounting (21,949 ) Present Value of Future Minimum Lease Payments 199,483 Less: Current Obligation under Lease - Long-term Lease Obligation 199,483 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
Components of income tax expense | Year Ended December 31, 2021 2020 Current: Federal $ 45,736 $ - State 46,180 11,633 Total Current 91,916 11,633 Deferred: Federal 65,055 87,652 State 27,856 47,395 Total Deferred 92,911 135,047 Valuation Allowance (92,911 ) (135,047 ) Total Income Tax Expense $ 91,916 $ 11,633 Pre-tax Income (Loss) $ 1,014,269 $ 229,811 Effective Income Tax Rate 9.1 % 5.1 % |
Reconciliation of income tax expense | Year Ended December 31, 2021 2020 Tax at the Statutory Federal Rate 21.0 % 21.0 % State Income Taxes, Net of Federal Income Taxes 3.6 % -11.7 % Intercompany Management & Oversight Fees 9.6 % 42.4 % Capitalized Construction Costs -28.8 % -101.2 % Minority Interest in Partnerships -7.2 % -15.3 % Deferred Finance Cost 23.5 % 113.6 % Miscellaneous Permanent Items - -6.3 % Valuation Allowance -12.6 % -37.4 % Effective Income Tax Rate 9.1 % 5.1 % |
Deferred tax assets (liabilities) | Year Ended December 31, 2021 2020 Interest Income $ (5,660,333 ) $ (5,083,992 ) 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 Partnership Gain (Loss) 13,175 13,175 Others 31,173 31,173 1,787,547 1,880,459 Valuation Allowance (1,787,547 ) (1,880,459 ) Net Deferred Tax Asset $ - $ - |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Subsidiary 13 [Member] | ||
Name of Consolidated Subsidiary | American Home REIT Inc. | |
State or Other Jurisdiction of Incorporation or Organization | Maryland | |
Date of Incorporation or Formation | September 30, 2020 | |
Attributable Interest | 100.00% | |
Subsidiary 14 [Member] | ||
Name of Consolidated Subsidiary | AHR Texas Two, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | September 28, 2021 | |
Attributable Interest | 100.00% | |
Subsidiary 15 [Member] | ||
Name of Consolidated Subsidiary | AHR Black Oak One, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | September 29, 2021 | |
Attributable Interest | 100.00% | |
Subsidiary16 [Member] | ||
Name of Consolidated Subsidiary | AHR Texas Three, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | December 21, 2021 | |
Attributable Interest | 100.00% | |
Subsidiary 1 [Member] | ||
Name of Consolidated Subsidiary | Alset EHome Inc. | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | February 24, 2015 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 2 [Member] | ||
Name of Consolidated Subsidiary | SeD USA, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | August 20, 2014 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 3 [Member] | ||
Name of Consolidated Subsidiary | 150 Black Oak GP, Inc. | |
State or Other Jurisdiction of Incorporation or Organization | Texas | |
Date of Incorporation or Formation | January 23, 2014 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 4 [Member] | ||
Name of Consolidated Subsidiary | SeD Development USA, Inc. | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | March 13, 2014 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 5 [Member] | ||
Name of Consolidated Subsidiary | 150 CCM Black Oak Ltd. | |
State or Other Jurisdiction of Incorporation or Organization | Texas | |
Date of Incorporation or Formation | January 23, 2014 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 6 [Member] | ||
Name of Consolidated Subsidiary | SeD Ballenger, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | July 7, 2015 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 7 [Member] | ||
Name of Consolidated Subsidiary | SeD Maryland Development, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | October 16, 2014 | |
Attributable Interest | 0.835% | 83.55% |
Subsidiary 8 [Member] | ||
Name of Consolidated Subsidiary | SeD Development Management, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | June 18, 2015 | |
Attributable Interest | 85.00% | 85.00% |
Subsidiary 9 [Member] | ||
Name of Consolidated Subsidiary | SeD Builder, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | October 21, 2015 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 10 [Member] | ||
Name of Consolidated Subsidiary | SeD Texas Home, LLC | |
State or Other Jurisdiction of Incorporation or Organization | Delaware | |
Date of Incorporation or Formation | June 16, 2015 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 11 [Member] | ||
Name of Consolidated Subsidiary | SeD REIT Inc. | |
State or Other Jurisdiction of Incorporation or Organization | Maryland | |
Date of Incorporation or Formation | August 20, 2019 | |
Attributable Interest | 100.00% | 100.00% |
Subsidiary 12 [Member] | ||
Name of Consolidated Subsidiary | Alset Solar Inc. | |
State or Other Jurisdiction of Incorporation or Organization | Texas | |
Date of Incorporation or Formation | September 21, 2020 | |
Attributable Interest | 80.00% | 80.00% |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Non-controlling Interest | $ 51,536 | $ 1,914,791 |
Interest-bearing domestic deposit | 2,600,000 | |
Restricted Cash | $ 4,399,984 | 5,729,067 |
Estimated useful lives | 3 years | |
Revenues from FFB assessment | $ 289,375 | $ 273,620 |
Minimum [Member] | ||
Estimated useful lives | 10 years | |
Maximum [Member] | ||
Estimated useful lives | 27 years 6 months |
CONCENTRATION OF CREDIT RISK (D
CONCENTRATION OF CREDIT RISK (Details Narrative) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
CONCENTRATION OF CREDIT RISK | ||
Uninsured Cash Balances | $ 6,137,775 | $ 6,937,716 |
BUILDER DEPOSITS (Details Narra
BUILDER DEPOSITS (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Apr. 28, 2020 | Jan. 03, 2019 | |
BUILDER DEPOSITS | ||||
Purchase price of lots | $ 64 | |||
Percentage of annual escalates | 3.00% | |||
Required deposit amount of entity | $ 5,600,000 | |||
Percentage of payback deposite | 9.90% | |||
Builder Deposits | $ 31,553 | $ 1,262,336 | $ 220,000 | $ 100,000 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | ||||
Jun. 18, 2020 | Apr. 17, 2019 | Dec. 31, 2021 | Sep. 30, 2021 | Feb. 11, 2021 | |
Principal Loan Balance | $ 68,502 | ||||
PPP Loan [Member] | |||||
Interest rate | 1.00% | ||||
M&T Bank Loans [Member] | |||||
Principal Loan Balance | $ 664,810 | $ 8,000,000 | |||
Cumulative loan advance amount | $ 2,990,000 | $ 18,500,000 | |||
Interest rate description | LIBOR plus 375 basis points | LIBOR plus 375 basis points | |||
Letter of Credit | $ 900,000 | ||||
Percentage of commission on line of credit face amount per annum | 1.50% | ||||
Collateral fund | $ 2,600,000 | ||||
Outstanding balance of revolving loan | 0 | ||||
Maturity date of Loan | Jul. 1, 2022 | ||||
Accrued interest on loan | $ 25,225 | ||||
Unamortized debt discount | $ 42,907 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Consulting Expenses | $ 0 | $ 12,645 |
Due to related party | 0 | 0 |
Related party transaction | 26,566 | 0 |
SeD Home Limited | ||
Due to related party | $ 0 | 0 |
Bear interest rate | 10.00% | |
Accrued Interest | $ 228,557 | 228,557 |
SeD Home International | ||
Due to related party | $ 19,891,734 | 98,680 |
Bear interest rate | 18.00% | |
Accrued Interest | $ 144,588 | 19,261 |
Interest income | 0 | 19,261 |
Charles MacKenzie | ||
Consulting Expenses | 20,000 | 360,000 |
Management fees | 360,000 | 240,000 |
Additional bonus payment | 120,000 | |
Related party transaction | 80,000 | 0 |
Alset International | ||
Consulting Expenses | 360,000 | $ 360,000 |
Professional service expence per month | $ 30,000 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - SeD Maryland Development LLC [Member] - USD ($) | Dec. 31, 2021 | Feb. 21, 2020 |
Percentage of minority interest | 83.55% | |
Payment of distribution amount | $ 2,549,750 | $ 1,200,000 |
Distribution amount | 15,500,000 | $ 411,250 |
October 8, 2021 [Member] | ||
Distribution amount | $ 15,500,000 |
SINGLE FAMILY RESIDENTIAL PRO_3
SINGLE FAMILY RESIDENTIAL PROPERTIES (Details Narrative) | 12 Months Ended | |
Dec. 31, 2021USD ($)integer | Dec. 31, 2020USD ($) | |
Depreciation | $ 123,341 | $ 2,590 |
SFRs | ||
Number of Homes | integer | 109 | |
Aggregate investment in property | $ 24,900,000 | |
SeD Intelligent Home Inc | ||
Depreciation | 120,511 | $ 0 |
Amount borrowed | $ 19,500,000 |
SINGLE FAMILY RESIDENTIAL PRO_4
SINGLE FAMILY RESIDENTIAL PROPERTIES (Details) - SFRs | Dec. 31, 2021USD ($)integer | Sep. 30, 2021USD ($) |
Number of Homes | integer | 109 | |
Aggregate investment | $ 24,940,764 | |
Average Investment per Home | $ 228,814 |
LEASE INCOME (Details)
LEASE INCOME (Details) | Dec. 31, 2021USD ($) |
Total Future Receipts | $ 464,343 |
SFRs | |
2022 | $ 464,343 |
LEASE INCOME (Details Narrative
LEASE INCOME (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
LEASE INCOME | ||
Property management fee | $ 15,390 | $ 0 |
Leasing fees incurred by property managers | $ 63,880 | $ 0 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | 12 Months Ended |
Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
Weighted average remaining operating lease term (in years) | 2 years 1 month 28 days |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) | Dec. 31, 2021USD ($) |
COMMITMENTS AND CONTINGENCIES | |
2022 | $ 101,899 |
2023 | 95,104 |
2024 | 24,430 |
Total Minimum Lease Payments | 221,432 |
Less: effect of discounting | (21,949) |
Present value of future minimum lease payments | 199,483 |
Less: current obligation under leases | 0 |
Long-term lease obligations | $ 199,483 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lease Maturity | expires on December 31, 2024 | |
Monthly rental payment | $ 2,265 | $ 8,143 |
Rent expenses | 116,379 | 113,651 |
Operating lease right-of-use asset | 191,979 | 0 |
Operating lease liability | 199,483 | $ 0 |
Minimum [Member] | ||
Monthly rental payment | 2,265 | |
Maximum [Member] | ||
Monthly rental payment | 8,143 | |
Lot Sale Agreements [Member] | ||
Asset acquired | 15,700,000 | |
Real estate sales contract | $ 15,000,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
Valuation allowance | $ 92,911 | $ 135,047 |
Total deferred | 92,911 | 135,047 |
State | 27,856 | 47,395 |
Federal | 65,055 | 87,652 |
Total current | 91,916 | 11,633 |
Federal | 45,736 | 0 |
State | 46,180 | 11,633 |
Total income tax expense | 91,916 | 9,622 |
Net Income (Loss) Before Income Taxes | $ 1,014,269 | $ 229,811 |
Effective income tax rate | 9.10% | 5.10% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
Tax at the statutory federal rate | 21.00% | 2100.00% |
State Income Taxes, Net of Federal Income Taxes | 3.60% | 11.70% |
Intercompany Management & Oversight Fees | 9.60% | 42.40% |
Capitalized Construction Costs | 28.80% | 101.20% |
Minority Interest in Partnerships | 7.20% | 15.30% |
Deferred Finance Cost | 23.50% | 113.60% |
Miscellaneous Permanent Items | 0.00% | 6.30% |
Valuation Allowance | 12.60% | 37.40% |
Effective Interest Rate | 9.10% | 5.10% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
INCOME TAXES | |||
Interest income | $ 5,660,333 | $ 5,083,992 | |
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 | |
Partnership loss | 13,175 | 13,175 | |
Others | 31,173 | 31,173 | |
Deferred tax assets, gross | 1,787,547 | 1,880,459 | |
Valuation allowance | 1,787,547 | 1,880,459 | |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Net operating loss carry-forwards | $ 0 | |
Income tax liability | 151,211 | $ 11,633 |
Federal | ||
Net operating loss carry-forwards | 0 | |
Income tax liability | 77,390 | 0 |
Maryland | ||
Net operating loss carry-forwards | 0 | |
Income tax liability | $ 73,821 | $ 11,633 |