DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

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 $26,250,933. Pursuant to the stock purchase agreement the purchase price should be satisfied by (i) a cash payment from Alset Inc. to Alset EHome of $1,000,000 in immediate available funds; (ii) the offset of amount owned by Alset International to Alset Inc. in the amount of $13,900,000, and simultaneously Alset International will offset the same amount owed by Alset EHome to Alset International in an the same amount; and (iii) the issuance of the Promissory Note by Alset Inc. to Alset EHome in the amount of $11,350,933. The closing of this sale is subject to the approval of shareholders of Alset International. The difference between the selling price and AHR’s book value on the date of sale of $274,204 was recorded as additional paid in capital, considering that it was a related party transaction. The Company accrued $376,167 interest on note receivable from Alset Inc. on June 30, 2023.

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	$	-	$	4,908,590
Building and Improvements		-		21,933,889
Less: Accumulated Depreciation		-		(973,257	)
Total Real Estate		-		25,869,222
Cash		-		1,186,658
Accounts Receivable		-		34,743
Related Party Receivable		-		4,800
Prepaid Expenses		-		4,413
Total Assets	$	-	$	27,099,836
Liabilities:
Accounts Payable and Accrued Expenses	$	-	$	1,112,932
Total Liabilities	$	-	$	1,112,932

The aggregate financial results of discontinued operations were as follows:

	Period Ended January 13, 2023			Six Months Ended June 30, 2022
Rental Revenue	$	81,767		$	636,482
Expenses
General and Administrative		31,315			383,801
Cost of Revenues		31,506			221,254
Depreciation Expense		29,121			313,753
Total Operating Expenses		91,942			918,808
Loss From Operations		(10,175	)		(282,326	)
Bank Charges		-			3
Total Other Expense		-			3
Loss from Discontinued Operations	$	(10,175	)	$	(282,329	)

The cash flows attributable to the discontinued operations are as follows:

	Period Ended January 13, 2023		Six Months Ended June 30, 2022
Operating	$	10,175	$	257,407
Investing		-		(1,324,978	)
Financing		-		-
Net Change in Cash	$	10,175	$	(1,067,571	)