UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________to _________
Commission file number
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of November 3, 2023, there were shares of the registrant’s common stock $0.001 par value per share, issued and outstanding.
Table of Contents
| PART I FINANCIAL INFORMATION | ||
| Item 1. | Condensed Consolidated Financial Statements (Unaudited) | |
| Condensed Consolidated Balance Sheets (Unaudited) | 3 | |
| Condensed Consolidated Statements of Operations (Unaudited) | 4 | |
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) | 5 | |
| Condensed Consolidated Statements of Cash Flows (Unaudited) | 6 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
| Item 3. | Quantitative and Qualitative Disclosure About Market Risk | 22 |
| Item 4. | Controls and Procedures | 22 |
| PART II OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 22 |
| Item 1A. | Risk Factors | 22 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 22 |
| Item 3. | Defaults Upon Senior Securities | 22 |
| Item 4. | Mine Safety Disclosures | 23 |
| Item 5. | Other Information | 23 |
| Item 6. | Exhibits | 23 |
| SIGNATURES | 24 | |
2 |
Part I. Financial Information
LiquidValue Development Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets: | ||||||||
| Real Estate | ||||||||
| Construction in Progress | ||||||||
| Land Held for Development | ||||||||
| Other Properties | ||||||||
| Cash | ||||||||
| Restricted Cash | ||||||||
| Other Receivable | ||||||||
| Reimbursement Receivable | ||||||||
| Promissory Note Receivable - Related Party | ||||||||
| Prepaid Expenses | ||||||||
| Fixed Assets, Net | ||||||||
| Deposits | ||||||||
| Operating Lease Right-Of-Use Asset, Net | ||||||||
| Assets from Discontinued Operations | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Liabilities: | ||||||||
| Accounts Payable and Accrued Expenses | $ | $ | ||||||
| Accrued Interest - Related Parties | ||||||||
| Deferred Revenue | ||||||||
| Security Deposit | ||||||||
| Operating Lease Liability | ||||||||
| Note Payable - Related Parties | ||||||||
| Liabilities from Discontinued Operations | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Stockholders’ Equity: | ||||||||
| Common Stock, at par $, shares authorized and issued, and outstanding at September 30, 2023 and December 31, 2022 | ||||||||
| Additional Paid in Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total LiquidValue Development Inc. Stockholders’ Equity | ||||||||
| Non-controlling Interests | ||||||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
3 |
LiquidValue Development Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30 , | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | $ | ||||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of Revenue | ||||||||||||||||
| General and Administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| (Loss) Income from Operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Other Income and Expense | ||||||||||||||||
| Interest Income | ||||||||||||||||
| Interest Expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Other Income | ( | ) | ||||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||||||||||
| Net (Loss) Income from Continuing Operations Before Income Taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income Tax Expense | ||||||||||||||||
| Net (Loss) Income from Continuing Operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Income (Loss) from Discontinued Operations, Net of Tax | ( | ) | ( | ) | ||||||||||||
| Net (Loss) Income | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Income (Loss) Attributable to Non-controlling Interests | ( | ) | ||||||||||||||
| Net (Loss) Income Attributable to Common Stockholders | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Net (Loss) Income Per Share - Basic and Diluted | ||||||||||||||||
| Continuing Operations | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Discontinued Operations | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Net (Loss) Income per Share - Basic and Diluted | $ | ) | $ | ) | $ | $ | ) | |||||||||
| Weighted Average Common Shares Outstanding - Basic and Diluted | ||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
4 |
LiquidValue Development Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders’ Equity
For the Three- and Nine-Months Periods ended September 30, 2023 and 2022
| Common Stock | Additional | Total LiquidValue Development Inc. | Non- | Total | ||||||||||||||||||||||||
| Shares | Par
Value $0.001 | Paid in Capital | Accumulated Deficit | Stockholders’ | controlling Interests | Stockholders’ Equity | ||||||||||||||||||||||
| Balance at January 1, 2023 | $ | $ | ( | ) | | $ | | $ | ||||||||||||||||||||
| Gain on Disposal of Subsidiary to Related Party | - | $ | $ | $ | $ | |||||||||||||||||||||||
| Net Loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Net Income (Loss) | - | ( | ) | |||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Net (Loss) Income | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Common Stock | Additional | Total LiquidValue Development Inc. | Non- | Total | ||||||||||||||||||||||||
| Shares | Par
Value $0.001 | Paid in Capital | Accumulated Deficit | Stockholders’ | controlling Interests | Stockholders’ Equity | ||||||||||||||||||||||
| Balance at January 1, 2022 | $ | $ | | ( | ) | | $ | $ | ||||||||||||||||||||
| Net (Loss) Income | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Net (Loss) Income | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Net Loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
5 |
LiquidValue Development Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Income (Loss) | $ | $ | ( | ) | ||||
| Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: | ||||||||
| Depreciation | ||||||||
| Non-cash Lease Expense | ||||||||
| PPP Loan Forgiveness | ( | ) | ||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Real Estate Development | ( | ) | ||||||
| Accounts Receivable | ( | ) | ||||||
| Reimbursement Receivable | ( | ) | ||||||
| Related Party Receivable | ||||||||
| Promissory Note Receivable - Related Party | ||||||||
| Prepaid Expenses | ( | ) | ||||||
| Other Receivable | ||||||||
| Accounts Payable and Accrued Expenses | ( | ) | ( | ) | ||||
| Accrued Interest - Related Parties | ( | ) | ||||||
| Operating Lease Liability | ( | ) | ( | ) | ||||
| Deferred Revenue | ||||||||
| Security Deposits | ||||||||
| Builders Deposit | ( | ) | ||||||
| Net Cash Provided by (Used in) Continuing Operating Activities | ( | ) | ||||||
| Net Cash Provided by Discontinued Operating Activities | ||||||||
| Net Cash Provided by (Used in) Operating Activities | ( | ) | ||||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of Fixed Assets | ( | ) | ||||||
| Net Cash Used in Continuing Investing Activities | ( | ) | ||||||
| Net Cash Used in Discontinued Investing Activities | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ||||||
| Cash Flows from Financing Activities | ||||||||
| Borrowing from Notes Payable - Related Parties | ||||||||
| Repayment to Notes Payable - Related Parties | ( | ) | ( | ) | ||||
| Net Cash (Used in) Provided by Continuing Financing Activities | ( | ) | ||||||
| Net Cash Provided by Discontinued Financing Activities | ||||||||
| Net Cash (Used in) Provided by Financing Activities | ( | ) | ||||||
| Net Decrease in Cash and Restricted Cash | ( | ) | ( | ) | ||||
| Cash and Restricted Cash - Beginning of Period | ||||||||
| Cash and Restricted Cash - End of Period | $ | $ | ||||||
| Cash - Continuing Operation | ||||||||
| Restricted Cash - Continuing Operation | ||||||||
| Cash - Discontinued Operations | $ | $ | ||||||
| Total Cash and Restricted Cash | $ | $ | ||||||
| Supplementary Cash Flow Information | ||||||||
| Cash Paid for Interest | $ | $ | ||||||
| Cash Paid for Taxes | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Sale of AHR to Related Party | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
6 |
LiquidValue Development Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2023
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. Alset EHome is principally engaged in developing, selling, managing,
and leasing residential properties in the United States at the current time and may expand from residential properties to other property
types, including but not limited to commercial and retail properties. The Company is
The Company’s current operations concentrate around land development projects, included in our only reporting segment – real estate. 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.
The Company was also in the business of renting homes, however, on December 9, 2022, Alset EHome entered into a Stock Purchase Agreement with Alset International Limited and Alset Inc., pursuant to which Alset EHome agreed to sell all of the shares of American Home REIT Inc., the company holding all of the 112 rental properties, to Alset Inc. For further details on this transaction, refer to Note 5 to Company’s Financial Statements – Related Party Transactions and Note 7 – Discontinued Operations.
Going Concern
To
date, the Company has incurred operating losses since inception of $
In
late 2022 and early 2023, the Company entered into three contracts with builders to sell multiple lots from its Black Oak project. The
sales contemplated by these contracts are contingent on certain conditions which the parties to such contracts will need to meet and
are expected to generate approximately $
The Company plans to continue its near-term focus on lot sales to regional and national builders. Funds from such lot sales will substantially improve the Company’s liquidity, strengthen its financial position and meet is working capital requirements.
The Company will continue its business model of being flexible to market conditions and thus will entertain further sales of finished lots to builders with the highest and best pricing based on market demand. Concurrently, it will evaluate acquiring new homes from regional and national builders to further the build-to-rent business model for income producing product in surrounding markets within Houston and Maryland markets.
7 |
These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Principles of Consolidation
The condensed consolidated financial statements include all accounts of the following 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 | |||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
| % | ||||||||
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 interest.
As
of September 30, 2023 and December 31, 2022, the aggregate non-controlling interest in Alset
EHome Inc.’s subsidiaries was $
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”).
The unaudited financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2022 filed on March 28, 2023. The Company assumes that the users of the interim financial information herein have read or have access to the audited consolidated financial statements for the preceding fiscal year and the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The consolidated balance sheet at December 31, 2022 was derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the interim periods presented are not necessarily indicative of results for the year ending December 31, 2023.
8 |
Use of Estimates
The preparation of condensed 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 condensed consolidated financial statements. The Company’s significant estimates are made in connection with the valuation of real estate. Actual results could differ from those estimates.
When
the Company purchases properties but does not receive the assessment information from the county, the Company allocates the values between
land and building based on the data of similar properties. The Company makes appropriate adjustments once the assessment from the county
is received. At the same time, any necessary adjustments to depreciation expense are made in the income statement. On September
30, 2023 and December 31, 2022, the Company adjusted $
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 loss per share is computed similarly to basic 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 potentially dilutive financial instruments issued or outstanding for the periods ended September 30, 2023 or September 30, 2022.
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
Restricted Cash
As
a condition to the loan agreement with the Manufacturers and Traders Trust Company (“M&T Bank”), the Company was required
to maintain a minimum of $
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 either September 30, 2023 or December 31, 2022.
9 |
Property and Equipment and Depreciation
Property
and equipment are recorded at cost, less accumulated depreciation. Expenditures for major additions and betterments that extend the useful
life or functionality 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
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 nine months ended on September 30, 2023, nor for the nine months ended September 30, 2022.
On October 28, 2022, 150 CCM Black Oak Ltd. (the “Seller”), a Texas Limited Partnership and subsidiary of the Company, entered into a Contract for Purchase and Sale and Escrow Instructions (the “Agreement”) with Century Land Holdings of Texas, LLC, a Colorado limited liability company (the “Buyer”). Pursuant to the terms of the Agreement, the Seller agreed to sell approximately 242 single-family detached residential lots comprising a residential community in the city of Magnolia, Texas known as the “Lakes at Black Oak.” On November 28, 2022, the parties to the Agreement entered into an amendment to the Agreement (the “Amendment”). Pursuant to the Amendment, the parties agreed that the Buyer would purchase approximately 131 single-family detached residential lots, instead of 242 lots. This transaction closed on April 13, 2023.
On March 16, 2023, 150 CCM Black Oak Ltd. (the “Seller”) entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Rausch Coleman Homes Houston, LLC, a Texas limited liability company (“Rausch Coleman”). Pursuant to the terms of the Purchase and Sale Agreement, the Seller has agreed to sell approximately 110 single-family detached residential lots which comprise a section of the Lakes at Black Oak. The transaction closed on May 15, 2023.
On March 17, 2023, 150 CCM Black Oak Ltd. (the “Seller”) entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Davidson Homes, LLC, an Alabama limited liability company (“Davidson”). Pursuant to the terms of the Purchase and Sale Agreement, the Seller has agreed to sell approximately 189 single-family detached residential lots developed within section 2 of Black Oak project. The sale of the first 94 lots closed on May 30, 2023. The sale of remaining lots is estimated to close at the end of the year 2023.
| ● | 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 and improvements 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
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, 2022. The Company disposed this business to related party on January 13, 2023. For further details on this transaction, refer to Note 5 to Company’s Financial Statements – Related Party Transactions and Note 7 – Discontinued Operations.
10 |
Revenue Recognition
| ● | Land Development Revenue Recognition |
ASC 606, Revenue from Contracts with Customers, 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 and Black Oak project, which were essentially most of the revenue of the Company in 2022 and 2023, respectively, is as follows:
| a. | Identify the contract with a customer. |
In the event of a sale the Company has signed agreements with the builders for developing the raw land 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 fixed and 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 or a group of lots 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. |
In the event of a sale 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.
11 |
| ● | 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 condensed 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, 2022, the Company did not recognize any deferred revenue and collected all rents due. The Company disposed this business to related party on January 13, 2023. For further details on this transaction, refer to Note 5 to Company’s Financial Statements – Related Party Transactions and Note 7 – Discontinued Operations.
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 $
Contract Assets and Contract Liabilities
Based on our land development contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accounts receivable are recorded when the right to consideration becomes unconditional. We disclose receivables from contracts with customers separately on the balance sheets.
12 |
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.
| ● | 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. The Company disposed this business to related party on January 13, 2023. For further details on this transaction, refer to Note 5 to Company’s Financial Statements – Related Party Transactions and Note 7 – Discontinued Operations.
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. 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, 2024. The Company does not believe that ASU 2020-04 will have significant impact on its future consolidated financial statements.
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 has adopted these requirements, effective on the first day of year 2023. The application of the ASU 2021-08 has not had a material impact on our consolidated financial statements.
2. CONCENTRATION OF CREDIT RISK
The
group 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. At September 30, 2023 and December 31, 2022, uninsured cash and restricted
cash balances were $
3. 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 $
As
part of the agreements, NVR was required to give a deposit in the amount of $
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4. NOTES PAYABLE
M&T Bank Loans
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 $
Paycheck Protection Program Loan
On
February 11, 2021, the Company entered into a five year note with M&T Bank with a principal amount of $
The
PPP Term Note is unsecured and guaranteed by the United States Small Business Administration (“SBA”). The Company applied to M&T Bank
for forgiveness of the PPP Term Note, with the amount which may be forgiven equal to at least
The Company may be subject to CARES Act specific lookbacks and audits of the loan forgiveness as part of the SBA’s audit process.
5. RELATED PARTY TRANSACTIONS
Loan from SeD Home Limited
The
Company receives advances from SeD Home Limited (an affiliate of Alset International) to fund development and operation costs. The advances
bear interest of
Loan to/from SeD Intelligent Home Inc.
The
Company receives advances from or loans to SeD Intelligent Home, the owner of
Management Fees
MacKenzie Equity Partners, LLC, an entity owned by
Charles MacKenzie, a Director of the Company, has a consulting agreement with a majority-owned subsidiary of the Company. Pursuant to
an agreement entered into in June of 2022, as supplemented in August, 2023, the Company’s subsidiary has paid $
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The Company incurred expenses of $
On
December 29, 2020, the Company entered into a Management Services Agreement (the “Management Services Agreement”) with Alset
International, pursuant to which the Company paid Alset International a one-time payment of $
Advances to Alset Inc.
The
Company pays some operating expenses for Alset 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 September 30, 2023 and December 31, 2022, the balance of these advances
was $
Sale of Rental Business
On December 9, 2022, Alset EHome Inc., a subsidiary of LiquidValue Development Inc. (the “Company”), entered into an agreement with Alset International Limited and Alset Inc. pursuant to which Alset EHome Inc. agreed to sell its subsidiary American Home REIT Inc. (“AHR”), which owns 112 single-family rental homes, to Alset Inc. The closing of the transaction contemplated by this agreement was completed on January 13, 2023.
Alset
EHome Inc. sold AHR for a total consideration of $
Alset
Inc. owns
6. STOCKHOLDERS’ EQUITY
As of September 30, 2023, there were shares of the registrant’s common stock $ par value per share, issued and outstanding.
The Company did not authorize any distribution during nine months ended September 30, 2023 and nine months ended September 30, 2022.
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7. DISCONTINUED OPERATIONS
On
December 9, 2022 Alset EHome Inc. (Alset EHome), a subsidiary of the Company, entered into stock purchase agreement with Alset International
Limited (“Alset International”) and Alset Inc., pursuant to which Alset Inc. agreed to purchase all of the outstanding shares
of American Home REIT Inc., a wholly owned subsidiary of Alset EHome. American Home REIT Inc. is the owner of 112 rental homes. Alset
EHome is a majority-owned, indirect subsidiary of Alset International, while Alset International is a majority-owned, indirect subsidiary
of Alset Inc. The purchase price of the transaction was established at $
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”. |
American Home REIT Inc., is the owner of all rental properties of the Company’s rental business. The transaction described above is a disposal by sale and has a major effect on our financial results. Since it meets all of the test criteria set forth above, we have treated this disposal transaction as a discontinued operations in our financial statements.
The closing of this transaction was completed on January 13, 2023.
The composition of assets and liabilities included in discontinued operations are as follows:
| January 13, 2023 | December 31,2022 | |||||||
| ($) | ($) | |||||||
| Assets: | ||||||||
| Real Estate | ||||||||
| Land | $ | $ | ||||||
| Building and Improvements | ||||||||
| Less: Accumulated Depreciation | ( | ) | ||||||
| Total Real Estate | ||||||||
| Cash | ||||||||
| Accounts Receivable | ||||||||
| Related Party Receivable | ||||||||
| Prepaid Expenses | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities: | ||||||||
| Accounts Payable and Accrued Expenses | $ | $ | ||||||
| Total Liabilities | $ | $ | ||||||
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The aggregate financial results of discontinued operations were as follows:
Period Ended January 13, 2023 | Nine Months Ended
| |||||||
| Rental Revenue | $ | $ | ||||||
| Expenses | ||||||||
| General and Administrative | ||||||||
| Cost of Revenues | ||||||||
| Depreciation Expense | ||||||||
| Total Operating Expenses | ||||||||
| Loss From Operations | ( | ) | ( | ) | ||||
| Loss from Discontinued Operations | $ | ( | ) | $ | ( | ) | ||
The cash flows attributable to the discontinued operations are as follows:
Period Ended January 13, 2023 | Nine Months Ended | |||||||
| Operating | $ | $ | ||||||
| Investing | ( | ) | ||||||
| Financing | ||||||||
| Net Change in Cash | $ | $ | ( | ) | ||||
8. COMMITMENTS AND CONTINGENCIES
Leases
The
Company leases office space in Texas and Maryland. The lease for the Company’s Texas office was terminated on January 31, 2023
while the lease of the Company’s Maryland office expires on
The
balance of the operating lease right-of-use asset and operating lease liability as of September 30, 2023 was $
The below table summarizes future payments due under these leases as of September 30, 2023.
For the Years Ending September 30:
| 2024 | ||||
| Total Minimum Lease Payments | $ | |||
| Less: Effect of Discounting | ( | ) | ||
| Present Value of Future Minimum Lease Payments | ||||
| Less: Current Obligation under Lease | ||||
| Long-term Lease Obligation | $ |
The Company’s weighted-average remaining lease term relating to its operating leases is
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Lot Sale Agreements
| ● | Ballenger Project |
On
November 23, 2015, SeD Maryland Development LLC completed the $
Certain
arrangements for the sale of buildable lots to NVR require the Company to credit NVR with an amount equal to one year of the FFB assessment.
Under ASC 606, the credits to NVR are not in exchange for a distinct good or service and accordingly, the amount of the credit was recognized
as the reduction of revenue. As of September 30, 2023 and December 31, 2022, the accrued balance due to NVR was $
| ● | Black Oak Project |
| - | Agreement to Sell 189 Lots |
On
March 17, 2023, the Seller entered into a Contract of Sale (the “Contract of Sale”) with Davidson Homes, LLC, an Alabama
limited liability company (“Davidson Homes”). Pursuant to the terms of the Contract of Sale, the Seller has agreed to sell
approximately 189 single-family detached residential lots comprising an additional section of the Lakes at Black Oak. The price of the
lots and certain community enhancement fees the Seller will be entitled to receive are anticipated to equal an aggregate of $
The
closing of the transactions described in the Contract of Sale depends on the satisfaction of certain conditions set forth therein. There
can be no assurance that such closings will be completed on the terms outlined herein or at all. Davidson Homes has agreed to purchase
the lots in stages, comprising an initial closing of
The Seller shall be required to complete certain improvements at the property at the Seller’s cost prior to the closing of the remaining lots.
Security Deposits
Our
rental-home lease agreements require tenants to provide a one-month security deposits. The property management company collects all security
deposits and maintains them in a trust account. The Company also has obligation to refund these deposits to the renters at the time of
lease termination. As of December 31, 2022, the security deposits held in the trust account were $
9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the filing date of our Form 10-Q for the three and nine months ended September 30, 2023. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include by are not limited to economic conditions generally and in the industries in which we may participate, competition within our chosen industry, including competition from much larger competitors, technological advances and failure to successfully develop business relationships.
Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022:
Revenue
Revenue was $6,300 for the three months ended September 30, 2023 as compared to $9,967 for the three months ended September 30, 2022. Revenue was $18,197,250 for the nine months ended September 30, 2023 as compared to $664,609 for the nine months ended September 30, 2022. The increase in revenue is mainly caused by the increase in property sales from the Black Oak project in 2023.
In late 2022 and early 2023, the Company entered into three contracts with builders to sell multiple lots from its Black Oak project. The sales contemplated by these contracts are contingent on certain conditions which the parties to such contracts will need to meet and are expected to generate approximately $22 million of funds from operations, not including certain expenses that the Company will be required to pay. The sale of 335 lots closed in the first six months of 2023 generating approximately $18.1 million revenue.
The Company plans to continue its near-term focus on lot sales to regional and national builders. Funds from such lot sales will substantially improve the Company’s liquidity, strengthen its financial position and meet is working capital requirements.
In May 2023, the Company entered into lease agreement for its model house located in Montgomery County, Texas (AHR Black Oak Lease Agreement”). The revenue from the lease was $6,300 and $10,500 in the three and nine months ended September 30, 2023.
In 2022 the last three homes in Ballenger Project were sold. In this project, builders were required to purchase a minimum number of lots based on their applicable sale agreements. We collected revenue only from the sale of lots to builders. We are not involved in the construction of homes at the present time.
Income from the sale of Front Foot Benefits (“FFBs”), assessed on Ballenger Run project lots, decreased from $9,968 in the three months ended September 30, 2022 to $0 in the three months ended September 30, 2023. Income from the sale of FFBs decreased from $126,055 in the nine months ended September 30, 2022 to $0 in the nine months ended September 30, 2023. The decrease is a result of the decreased sale of properties to homebuyers in 2023.
Cost of Revenue
All cost of revenue in the nine months ended on September 30, 2023 and 2022 came from our Black Oak project and AHR Black Oak Lease Agreement. The gross margin ratio for Black Oak project in first nine months of 2023 and 2022 were approximately 40% and 0%, respectively. The increase in cost of revenue and increase in gross margin is caused by the increase in property sales from the Black Oak project in 2023. The gross margin ratio for AHR Black Oak Lease Agreement in first nine months of 2023 and 2022 were approximately 15% and 0%, respectively.
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General and Administrative Expenses
General and administrative expenses increased from $330,569 in the three months ended September 30, 2022 to $370,730 in the three months ended September 30, 2023. General and administrative expenses increased from $1,104,341 in the nine months ended September 30, 2022 to $1,257,809 in the nine months ended September 30, 2023. The increase in general and administrative expenses is mainly caused by the increase in bonuses paid.
Other Income (Expense)
In the three months ended September 30, 2022, the Company’s other expenses were $259,893 as compared to other income of $88,231 in the three months ended September 30, 2023. In the nine months ended September 30, 2023, the Company’s other income was $365,087 compared to other expense of $660,119 in the nine months ended September 30, 2022. The increase in other income was caused by increase in interest income from related party promissory note.
Loss from Discontinued Operations
In the three months ended September 30, 2023 and 2022, the discontinued operation income from American Home REIT Inc. was $0 and $73,310, respectively. In the nine months ended September 30, 2023 and 2022, the discontinued operation loss from American Home REIT Inc. was $10,175 and $209,020, respectively.
Net Income (Loss)
In the three months ended September 30, 2023, the Company had net loss of $279,689 as compared to net loss of $509,812 in the three months ended September 30, 2022. In the nine months ended September 30, 2023, the Company had net income of $6,334,639 as compared to net loss of $1,776,743 in the nine months ended September 30, 2022. The increase in net income was caused by increased sales from Black Oak project.
Liquidity and Capital Resources
Our real estate assets have decreased to $9,406,355 as of September 30, 2023 from $23,970,911 as of December 31, 2022. This decrease is primarily caused by property sales from the Black Oak project in 2023.
Our liabilities decreased from $30,289,784 at December 31, 2022 to $1,034,152 at September 30, 2023. Our total assets have decreased to $30,056,576 as of September 30, 2023 from $52,703,365 as of December 31, 2022.
As of September 30, 2023, we had cash of $945,764 and restricted cash of $309,450 compared to $1,034,611 and $309,219 as of December 31, 2022, respectively.
Our Ballenger Run project has a revolver loan from M&T Bank in the principal amount not to exceed at any one time outstanding the sum of $8,000,000, with a cumulative loan advance amount of $18,500,000. As of September 30, 2023 and December 31, 2022, the revolver loan balance was $0.
On February 11, 2021, the Company entered into a term note with M&T Bank with a principal amount of $68,502 pursuant to the Paycheck Protection Program (“PPP Term Note”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan was evidenced by a promissory note. The PPP Term Note bore 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 could be accelerated upon the occurrence of an event of default.
The PPP Term Note was unsecured and guaranteed by the United States Small Business Administration. The Company applied to M&T Bank for forgiveness of the PPP Term Note, with the amount which may be forgiven equal to at least 60% of payroll costs and other eligible payments incurred by the Company, calculated in accordance with the terms of the CARES Act. The PPP loan was forgiven in April, 2022
The future development timeline of Black Oak will be based on multiple conditions, including the amount of funds which may be raised from capital markets, the loans we may secure from third party financial institutions, and government reimbursements which we may receive. The development will be step by step and expenses will be contingent on the amount of funding we will receive.
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In late 2022 and early 2023, the Company entered into three contracts with builders to sell multiple lots from its Black Oak project. The sales contemplated by these contracts are contingent on certain conditions which the parties to such contracts will need to meet and are expected to generate approximately $22 million of funds from operations, not including certain expenses that the Company will be required to pay. In addition, the Company will be entitled to receive certain reimbursements in the year ended December 31, 2024. The sale of 335 lots closed in the first six months of 2023 generating approximately $18.1 million revenue.
The Company has obtained a letter of financial support from Alset Inc., an indirect owner of the Company. Alset Inc. committed to provide any additional funding required by the Company and would not demand repayment within the year 2023.
The management believes that the available cash in bank accounts and anticipated favorable cash revenue from real estate projects are sufficient to fund our operations for at least the next 12 months.
Summary of Cash Flows
A summary of cash flows from operating, investing and financing activities for the nine months ended September 30, 2023 and 2022 are as follows:
| 2023 | 2022 | |||||||
| Net Cash Provided by (Used in) Operating Activities | $ | 13,416,406 | $ | (6,094,223 | ) | |||
| Net Cash Used in Investing Activities | $ | - | $ | (1,806,345 | ) | |||
| Net Cash (Used in) Provided by Financing Activities | $ | (13,505,021 | ) | $ | 2,740,000 | |||
| Net Change in Cash | $ | (88,616 | ) | $ | (5,160,568 | ) | ||
| Cash and restricted cash at beginning of the period | $ | 1,343,830 | $ | 7,455,729 | ||||
| Cash and restricted cash at end of the period | $ | 1,255,214 | $ | 2,295,161 | ||||
Cash Flows from Operating Activities
Cash flows from operating activities include costs related to assets ultimately planned to be sold, including land purchased for development and resale, and costs related to construction, which were capitalized in the book. In the nine months ended September 30, 2023, cash provided by operating activities was $13,416,406 compared to cash used of $6,094,223 the nine months ended September 30, 2022. Property sales from the Black Oak project in 2023 was the main reason for the cash provided by operating activities in 2023.
Cash Flows from Investing Activities
Cash flows used in investing activities in the nine months ended September 30, 2022 include the purchase of properties and improvements for our discontinued operations, as well as small expenditures for purchases of office computer equipment. In the nine months ended September 30, 2023, cash used in investing activities was $0 compared to cash of 1,806,345 used in the nine months ended September 30, 2022.
Cash Flows from Financing Activities
In the nine months ended September 30, 2023, the Company repaid $18,105,021 and borrowed $4,600,000 from a related party loan. In the nine months ended September 30, 2022, the Company repaid $1,000,000 and subsequently borrowed $3,740,000 from a related party loan.
Seasonality
The real estate business is subject to seasonal shifts in costs as certain work is more likely to be performed at certain times of year. This may impact the expenses of Alset EHome Inc. from time to time. In addition, should we commence building homes, we are likely to experience periodic spikes in sales as we commence the sales process at a particular location.
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Critical Accounting Policy and Estimates
The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). For detail accounting policy and estimates information, please see Note 1 in the condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K, the Company is not required to provide the information required by this Item.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officers and Chief Financial Officers, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our management, including our Chief Executive Officers and Chief Financial Officers concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SECs”) rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officers and Chief Financial Officers, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in the Company’s Internal Controls Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the quarterly period ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceeding
The registrant is not a party to, and its property is not the subject of, any material pending legal proceedings.
Item 1A. Risk Factors
Not applicable to smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
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Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits
The following documents are filed as a part of this report:
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| LIQUIDVALUE DEVELOPMENT INC. | ||
| November 3, 2023 | By: | /s/ Fai H. Chan |
| Fai H. Chan | ||
| Co-Chief Executive Officer and Director | ||
| (Principal Executive Officer) | ||
| November 3, 2023 | By: | /s/ Moe T. Chan |
| Moe T. Chan | ||
| Co-Chief Executive Officer and Director | ||
| (Principal Executive Officer) |
| November 3, 2023 | By: | /s/ Rongguo (Ronald) Wei |
| Rongguo (Ronald) Wei | ||
| Co-Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
| November 3, 2023 | By: | /s/ Alan W. L. Lui |
| Alan W. L. Lui | ||
| Co-Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
24 |