Alset Inc. current report, 06 January 2021

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Business Context and Reporting Period

This Form 8-K was filed by HF Enterprises Inc. (now identified in the request metadata as Alset Inc.) regarding events effective January 6, 2021. The filing concerns a binding term sheet with Chairman and CEO Chan Heng Fai for four proposed acquisitions funded through newly issued common stock.

Proposed Transactions and Key Financial Terms

  • Alset International warrants: Purchase of warrants to acquire 1.5 billion Alset International shares for the lesser of $28.364 million or the warrants’ appraised value. HF Enterprises then owned approximately 57.1% of Alset International.
  • LiquidValue Development Pte. Ltd.: Acquisition of all outstanding shares for SGD 229,245.36, stated as approximately USD 173,394.87.
  • True Partners Capital Holding Limited: Acquisition of 62,122,908 shares for approximately $6.730 million. True Partners reported more than $1.6 billion of assets under management, according to the filing.
  • American Pacific Bancorp Inc.: Acquisition of 4,775,523 shares, representing approximately 86.4% of APB’s equity, for the lesser of $28.653 million or the shares’ appraised value.

Consideration for each transaction is to be paid with newly issued HF Enterprises common stock priced at the company’s average closing price during the five days preceding execution of the term sheet. The filing does not provide the resulting number of shares to be issued.

Material Changes, Outlook, and Risks

  • The transactions would materially expand the company’s exposure to property development, biomedical products, asset management, digital banking, blockchain, and related businesses.
  • LiquidValue is expected to support creation of a U.S.-focused actively managed ETF emphasizing disruptive, long-term growth opportunities.
  • The transactions remain subject to definitive agreements, financial and legal due diligence, and HF Enterprises shareholder approval. Completion is not assured.
  • Chan Heng Fai is a related party, serving as HF Enterprises’ Chairman and CEO and owning or controlling interests in the relevant entities. He recused himself from deliberations and voting on the transactions.
  • The Audit Committee approved the proposed transactions and determined that they were advisable and in the company’s best interests; the Board approved the term sheet on January 6, 2021.
  • The filing includes customary forward-looking-statement warnings, including risks that proposed transactions may not close and that actual results may differ materially from expectations.

Revenue, Profit, Cash Flow, Margins, Debt, and Liquidity

This 8-K does not provide current-period or prior-period revenue, net income, operating cash flow, margins, debt, liquidity, or other conventional operating metrics. It also does not provide financial statements for the proposed acquisitions.

Most Important Facts to Verify

  • Whether definitive agreements were executed and shareholder approval was obtained.
  • The independent appraised values of the Alset International warrants and APB shares.
  • The final number of HF Enterprises shares issued and the resulting dilution to existing shareholders.
  • The financial condition, valuation, ownership, and liabilities of LiquidValue, True Partners, APB, and the warrant assets.
  • Whether any transaction was terminated, amended, or completed after the January 6, 2021 term sheet.
  • The relationship and potential conflicts involving Chan Heng Fai, including his ownership interests in Alset International and other counterparties.