10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

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: 000-55038

SED INTELLIGENT HOME INC.

(Exact name of registrant as specified in its charter)

Nevada	27-1467606
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

4800 Montgomery Lane, Suite 210
Bethesda, MD 20814	301-971-3940
(Address of Principal Executive Offices)	Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act: Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-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 ☐ No ☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. The Company’s common stock did not trade during the year ended December 31, 2018.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of April 1, 2019, there were 704,043,324 shares outstanding of the registrant’s common stock, $0.001 par value.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Throughout this Report on Form 10-K, the terms the “Company,” “we,” “us” and “our” refer to SeD Intelligent Home Inc., and “our board of directors” refers to the board of directors of SeD Intelligent Home Inc.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K contains forward-looking statements regarding, among other things, our future operating results and financial position, our business strategy, and other objectives for our future operations. The words “anticipate,” “believe,” “intend,” “expect,” “may,” “estimate,” “predict,” “project,” “potential” and similar expression are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.

You should read this Report on Form 10-K and the documents that we have filed as exhibits to this Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Report on Form 10-K are made as of the date of this Report on Form 10-K, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

SeD Intelligent Home Inc.

Form 10-K

For the Year Ended December 31, 2018

Table of Contents

			Page
		PART I
Item 1.		Business	2
Item 1A.		Risk Factors	10
Item 1B.		Unresolved Staff Comments	15
Item 2.		Properties	15
Item 3.		Legal Proceedings	15
Item 4.		Mine Safety Disclosures	15
		PART II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	16
Item 6.		Selected Financial Data	16
Item 7.		Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk	19
Item 8.		Financial Statements and Supplementary Data	20
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	36
Item 9A.		Controls and Procedures	36
Item 9B.		Other Information	36
		PART III
Item 10.		Directors, Executive Officers and Corporate Governance	37
Item 11.		Executive Compensation	41
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		43
Item 13.	Certain Relationships and Related Transactions, and Director Independence		44
Item 14.	Principal Accounting Fees and Services		46
	PART IV
Item 15.	Exhibits, Financial Statement Schedules		47
Item 16.	Form 10-K Summary		48
Signatures			49

PART I

Item 1. Business.

General

SeD Intelligent Home Inc., formerly known as Homeownusa, was incorporated in the State of Nevada on December 10, 2009 with the intention of entering into the home equity lease/rent to own business. The Company is no longer pursuing this business plan. Our address is 4800 Montgomery Lane, Suite 210, Bethesda, MD, 20814. Our telephone number is 301-971-3940.

On December 31, 2013, the Company’s sole director and officer and nine other shareholders sold their interest in the Company to CloudBiz International Pte, Ltd (“CloudBiz”), a Singapore corporation. The total number of shares purchased was 15,730 which represented a 69% interest in the Company’s issued and outstanding common stock (the “Transaction”). Along with the Transaction, the sole director and officer resigned and Mr. Conn Flanigan was appointed as the Company’s Chief Executive Officer and sole director. On July 7, 2014 CloudBiz invested $37,000 in the Company. For such investment, CloudBiz received an additional 74 million shares of the Company’s common stock. In October 2014, the Company issued 20,534 shares to 30 new investors for total proceeds of $2,053. On December 22, 2016 Cloudbiz International Pte. Ltd transferred 74,015,730 common shares to Singapore eDevelopment. Singapore eDevelopment subsequently contributed its ownership in the Company to its subsidiary SeD Home International, Inc. (which also owned SeD Home, Inc. until December 29, 2017, at which time SeD Home International, Inc. contributed its shares of SeD Home to the Company). The majority of the Company’s common stock continues to be owned by SeD Home International, Inc. On January 10, 2017, our board of directors appointed Fai H. Chan as Director. On March 10, 2017, Mr. Rongguo (Ronald) Wei, CPA, was appointed as Chief Financial Officer of the Company.

On March 10, 2017, our board of directors approved and ratified a change in the Company's fiscal year end from January 31 to December 31, effective immediately as of the date of the board approval. On September 5, 2017, the Company changed its name to SeD Intelligent Home Inc., and increased its number of authorized shares to 1,000,000,000 (the par value per share remained $.001).

On December 29, 2017, the Company, SeD Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Company (the “Merger Sub”), SeD Home Inc. (“SeD Home”), a Delaware corporation, and SeD Home International, 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 SeD Home, with SeD Home 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”). Effective as of the Closing, the Company ceased to be a “shell company” as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. The Company’s business operations became those operations that SeD Home is currently conducting, and may conduct in the future.

In connection with the acquisition of SeD Home, the Company appointed new officers and directors. Fai H. Chan and Moe T. Chan serve as co-Chief Executive Officers; Rongguo (Ronald) Wei and Alan W. L. Lui serve as Co-Chief Financial Officers, and our Board of Directors includes Fai H. Chan, Moe T. Chan, Conn Flanigan and Charles MacKenzie.

With the completion of the Company’s acquisition of SeD Home, we entered into the business of land development. While the Company will own real estate, the Company does not intend to be a REIT for federal tax purposes.

SeD Home was incorporated in Delaware on February 24, 2015, and was named SeD Home USA, Inc. before changing its name in May of 2015. Prior to the Closing, SeD Home was entirely owned and controlled by Singapore eDevelopment and certain of its subsidiaries since its incorporation. Since SeD Home’s incorporation, the management and funding of SeD Home has been directed by Singapore eDevelopment’s management, including Singapore eDevelopment’s Chief Executive Officer and controlling shareholder, Fai H. Chan. The officers and directors of SeD Home are the same six individuals who are the officers and directors of the Company (listed above). SeD Home’s Black Oak project is a 162-acre land sub-division development located north of Houston, Texas. SeD Home’s Ballenger Run project is a 197-acre sub-division development near Washington D.C. in Frederick County, Maryland. SeD Home conducts its operations through ten wholly and partially owned subsidiaries. SeD Home’s affiliates will provide project and asset management via separate agreements with consultants.

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The land development business involves converting undeveloped land into buildable lots. When possible, in future projects we will attempt to mitigate risk by attempting to enter into contracts with strategic home building partners for the sale of lots to be developed. In such circumstances, it is our intention that (i) we will conduct a feasibility study on a particular land development; (ii) both SeD Home and the strategic home building partners will work together in connection with acquisition of the appropriate land; (iii) strategic home building partners will typically agree to enter into agreements to purchase up to 100% of the buildable lots to be developed; (iv) SeD Home and the strategic home building partners will enter into appropriate agreements; and (v) SeD Home will proceed to acquire the land for development and will be responsible for the infrastructure development, ensuring the completion of the project and delivery of buildable lots to the strategic home building partner.

We also intend, to the fullest extent practicable, to source land where local government agencies (including county, district and other municipalities) and public authorities, such as improvement districts, will reimburse the majority of infrastructure costs incurred by the land developer for developing the land to build taxable properties. The developers and public authorities enter into agreements whereby the developers are reimbursed for their costs of infrastructure.

The Company will also consider the potential to purchase foreclosure property development projects from banks, if attractive opportunities should arise.

The Company, utilizing the extensive business network of its management and majority shareholder, may from time to time attempt to forge joint ventures with other parties. Through its subsidiaries, SeD Home may manage such joint ventures.

In addition to the completion of our current projects, we intend to seek additional land development projects in diverse regions across the United States. Such projects may be within both the for-sale and for-rent markets, and we may expand from residential properties to other property types, including but not limited to commercial and retail properties. We will consider projects in diverse regions across the United States, however, SeD Home and its management and consultants have longstanding relationships with local owners, brokers, managers, lenders, tenants, attorneys and accountants to help it source deals throughout Maryland and Texas. SeD Home will continue to focus on off-market deals and raise appropriate financing.

SeD Home, via a subsidiary, is presently exploring opportunities to expand its current portfolio by developing communities solely designed for renters. SeD Home is exploring the potential to pursue this new endeavor in part to improve cash flow and smooth out the inconsistencies of income in residential land development. SeD Home will continue to attempt to mitigate risk and maximize returns. At the present time, SeD Home owns one home through its subsidiary SeD USA, LLC which is rented. Previously, SeD Home owned other homes for rent which have been sold.

Entering into the business of building homes with the intention of owning and renting those homes would provide an opportunity for SeD Home to create value by (i) acquiring properties for horizontal and vertical development; (ii) providing fee generation via property management and leasing; and (iii) capturing rent escalations over long term periods. SeD Home and its affiliates would provide property management for customers seeking to offload home maintenance and lawn care.

Through our subsidiaries, we will explore the potential to pursue other business opportunities related to real estate. The Company is evaluating the potential to enter into activities related to real estate and home technologies, although we note that these potential opportunities remain at the exploratory stage, and we may not pursue these opportunities at the discretion of our management. The Company is particularly exploring opportunities related to smart home and eco-friendly home technologies.

We also intend to enlarge the scope of property-related services. Additional planned activities, which we intend to be carried out through SeD Home, include financing, home management, realtor services, insurance and home title validation. We may particularly provide these services in connection with homes we build. These activities are also in the planning stages.

The Company has expended minimal resources on the projects currently being explored as potential additions to our core land development business, consisting primarily of management time, payments for market studies and expenditures for the development of proposed floor plans for potential residential developments. The Company has not yet determined the estimated time frame for when it might commence operations in any such new business opportunities.

As of December 31, 2018, we had total assets of $48,600,709 and total liabilities of $13,733,045. Total assets as of December 31, 2017 were $58,166,606 and total liabilities were $24,561,292.

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Employees

At the present time, the Company has four full time employees. Much of our work is done by contractors retained for projects, and at the present time we have no part time employees.

Compliance with Government Regulation

The development of our real estate projects will require the Company to comply with federal, state and local environmental regulations. In connection with this compliance, our real estate acquisition and development projects will require environmental studies. To date, the Company has spent approximately $42,356 on environmental studies and compliance. Such costs are reflected in construction progress costs in our financial statements.

The cost of complying with governmental regulations is significant and will increase if we add additional real estate projects and become involved in homebuilding in the future and are required to comply with certain due diligence procedures related to third party lenders.

At the present time, we believe that we have all of the material government approvals that we need to conduct our business as currently conducted. We are subject to periodic local permitting that must be addressed, but we do not anticipate that such requirements for government approval will have a material impact on our business as presently conducted. We are required to comply with government regulations and to make filings from time to time with various government entities. Such work is typically handled by outside contractors we retain.

Intellectual Property

At the present time, the Company does not own any trademarks, but we anticipate filing trademark applications as we expand into new areas of business.

Corporate Organization

The following chart describes the Company’s ownership of various subsidiaries:

4

Black Oak

Our Black Oak project is a 162-acre land infrastructure development and sub-division project situated in Magnolia, Texas north of Houston. 150 Black Oak, Ltd. was a partnership formed by our former partner prior to our investment in this project. Black Oak had contracts to purchase seven contiguous parcels of land. Our initial equity investment was US$4.3 million for ownership of 60% of the partnership. Upon this initial investment in February 2014, we changed the name of the partnership to 150 CCM Black Oak, Ltd (“Black Oak”) and subsequently increased our ownership to 69%. On July 23, 2018, SeD Development USA, LLC, a wholly owned subsidiary of the Company, entered into two Partnership Interest Purchase Agreements through which it purchased an aggregate of 31% of Black Oak. Prior to the Partnership Interest Purchase Agreements, the Company owned and controlled Black Oak through its 68.5% limited partnership interest and its ownership of the General Partner, 150 Black Oak GP, Inc, a 0.5% owner in Black Oak. As a result of the purchase, the Company, through its subsidiaries, now owns 100% of Black Oak. 150 Black Oak GP, Inc., is wholly owned by SeD USA, LLC, which in turn is wholly owned by SeD Home. The limited partnership interests are owned by SeD Development USA, Inc., which is wholly owned by SeD Home. 150 Black Oak GP, Inc. was previously jointly owned with a partner, but is now entirely owned by SeD USA, LLC.

Black Oak was obligated, under the Limited Partnership Agreement (as amended) signed between previous limited partners of Black Oak, to pay a $6,500 per month management fee to Arete Real Estate and Development Company (Arete), and $2,000 per month to American Real Estate Investments LLC (AREI). Arete was also entitled to be paid a developer fee of 3% of all development costs excluding certain costs. The fees were to accrue until $1,000,000 in revenue and/or builder deposits relating to the Black Oak Project has received. On December 31, 2017, the Company had $314,630 owed to Arete and $48,000 to AREI in accounts payable and accrued expenses. On April 26, 2018, SeD Development USA, Arete and AREI reached an agreement to terminate the terms related to management fees and developer fees in the Limited Partnership Agreement. In July 2018, per the terms of the termination agreement, Black Oak LP paid Arete $300,000 and AREI $30,000 to fulfill the commitments. Following the termination of these agreements and the payments, no further management fees or developer fees have accrued or been paid.

5

In October 2015, the project obtained a $6.0 million construction loan from Revere High Yield Fund, LP. This loan was paid off in October of 2017. Currently the Black Oak project does not have any financing from third parties.

The site plan at Black Oak is being revised to allow for approximately 420-512 residential lots of varying sizes. We anticipate that our involvement in land development aspects of this project will take approximately three to five additional years to complete. Since February of 2015, we have completed several important tasks related to the project, including clearing certain portions of the property, paving certain roads within the project and complying with the local improvement district to ensure reimbursement of these costs. 

The estimated construction costs and completion date for each phase are as follows:

Black Oak	Estimated Construction Costs	Expected Completion Date
Phase 1	$7,080,000	April 2019
Phase 2	5,690,000	April 2020
Phase 3	3,850,000	August 2020
Phase 4	4,020,000	April 2021
Total	$20,640,000

On July 3, 2018, 150 CCM Black Oak Ltd. entered into a Purchase and Sale Agreement with Houston LD, LLC for the sale of 124 lots within the Black Oak project (the “Black Oak Purchase Agreement”). Pursuant to the Black Oak Purchase Agreement, it was agreed that 124 lots would be sold for a range of prices based on the lot type. In addition, Houston LD, LLC agreed to contribute a “community enhancement fee” for each lot, collectively totaling $310,000 which is held in escrow. 150 CCM Black Oak, Ltd. will apply these funds exclusively towards an amenity package on the property. The closing of the transactions contemplated by the Black Oak Purchase Agreement was subject to Houston LD, LLC completing due diligence to its satisfaction.

On July 20, 2018, Black Oak LP received $4,592,079 of district reimbursement for previous construction costs incurred in the land development. Of this amount, $1,650,000 will remain on deposit in the District’s Capital Projects Fund for the benefit of Black Oak LP and will be released upon receipt of the evidence of the: (a) execution of a purchase agreement between Black Oak LP and a home builder with respect to the Black Oak development and (b) of the completion, finishing and making ready for home construction of at least 105 unfinished lots in the Black Oak development. In 2018, $446,745 was released to reimburse the construction costs leaving a balance of $1,203,255 on December 31, 2018.

On October 12, 2018, 150 CCM Black Oak, Ltd. entered into an Amended and Restated Purchase and Sale Agreement (the “Amended and Restated Black Oak Purchase Agreement”) for these 124 lots. Pursuant to the Amended and Restated Black Oak Purchase Agreement, the purchase price remained at $6,175,000. 150 CCM Black Oak, Ltd. was required to meet certain closing conditions and the timing for the closing was extended.

On January 18, 2019, the sale of 124 lots at Black Oak was completed for $6,175,000 and the community enhancement fee equal to $310,000 was delivered to the escrow account.

At the present time, the Company is also considering expanding its current policy of selling buildable lots to include a strategy of building housing for sale or rent, particularly at our Black Oak property.

Ballenger Run

In November 2015, we completed the $15.65 million 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 the Assignable Real Estate Sales Contract with NVR, Inc. (“NVR”) by which RBG Family, LLC would sell the 197 acres for $15,000,000 to NVR. On December 10, 2014, NVR assigned this contract to SeD Maryland Development, LLC in the Assignment and Assumption Agreement and entered into a series of Lot Purchase Agreements by which NVR would purchase subdivided lots from SeD Maryland Development, LLC.

6

SeD Maryland Development’s acquisition of the 197 acres was funded in part from a $5.6 million deposit from NVR Inc. (“NVR”). The balance of $10.05 million was derived from a total equity contribution of $15.2 million by SeD Ballenger LLC (“SeD Ballenger”) and CNQC Maryland Development LLC (a unit of Qingjian International Group Co, Ltd, China, “CNQC”). The project is owned by SeD Maryland Development, LLC (“SeD Maryland”). SeD Maryland is 83.55% owned by SeD Ballenger and 16.45% by CNQC.

SeD Maryland entered into a Project Development and Management Agreement for Ballenger Run with MacKenzie Development Company, LLC and Cavalier Development Group, LLC on February 25, 2015. MacKenzie Development Company, LLC assigned its rights and obligations to this agreement to Adams Aumiller Properties, LLC on September 9, 2017. Pursuant to this Project Development and Management Agreement, Adams Aumiller, LLC and Cavalier Development Group, LLC coordinate and manage the construction, financing, and development of Ballenger Run. SeD Maryland compensates Adams Aumiller LLC and Cavalier Development Group, LLC with a monthly aggregate fee of $14,667 until all single family and townhome lots are sold. The monthly aggregate fee will then adjust to $11,000 which will continue for approximately eight months to allow all close out items to be finished including the release of guarantees and securities as required by the government authorities. The Project Development and Management Agreement for Ballenger Run also requires SeD Maryland to pay a fee of $1,200 and $500 for each single-family and townhome, respectively, sold to a third party. SeD Maryland also paid a fee of $50,000 after the sale of the parcel underlying the multi-family lots in August 2018.

This property is zoned for 443 entitled Residential Lots, 210 entitled Multifamily Units and 200 entitled continuing care retirement community units approved for twenty (20) years from the date of a Developers Rights & Responsibilities Agreement dated October 8, 2014, as amended on September 6, 2016. We are presently seeking to revise the zoning of this property to include 479 entitled residential lots and 210 entitled multi-family units, with no entitled continuing care retirement community units. We anticipate that the completion of our involvement in this project will take approximately three years from the date of this Annual Report.

Revenue from Ballenger Run is anticipated to come from three main sources:

● The sale of 479 entitled and constructed residential lots to NVR;

● The sale of the lot for the 210 entitled multi-family units; and

● The sale of 479 front foot benefit assessments.

Revenues may be adversely impacted, if we fail to attain certain goals, meet certain conditions or if market prices for this development unexpectedly begin to drop.

The estimated construction costs and completion date for each phase are as follows:

Ballenger Run	Estimated Construction Costs	Expected Completion Date
Phase 1	$13,786,000	Completed
Phase 2	10,210,000	December 2019
Phase 3	10,170,000	September 2020
Phase 4	3,460,000	March 2020
Phase 5	1,690,000	December 2021
Total	$39,316,000

Financing from Union Bank (f/k/a The Bank of Hampton Roads, Shore Bank and Xenith Bank) closed simultaneous with the settlement on the land on November 23, 2015, pursuant to a subsequent amendment to the terms of this loan, the loan provides (i) for a maximum of $11 million outstanding; (ii) that the maturity of this loan will be December 31, 2019; and (iii) includes an $800,000 letter of credit facility, with an annual rate of 1.5% on all issued letters of credit.

This loan is to fund the development of the first 276 lots, the multi-family parcel and senior living parcel, the amenities associated with these phases, and certain road improvements.

Expenses from Ballenger Run include, but are not limited to costs associated with land prices, closing costs, hard development costs, cost in lieu of construction, soft development costs and interest costs. We presently estimate these costs to be between $55 and $56 million. We may also encounter expenses which we have not anticipated, or which are higher than presently anticipated.

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This project will have five phases. The first phase has been completed and we are currently in the second phase for completion of this project.

The following chart describes the various phases of this project (the chart does not reflect our current attempt to revise the zoning at this project to reflect the addition of 36 villa lots to replace the 200 continuing care retirement community units originally planned):

Phase 1 construction of all infrastructure was completed in 2017. The initial model lot sales with NVR began in May 2017 and all lot sales of varying types as outlined in the chart set forth above are continuing through the first quarter of 2018. In the fourth quarter of 2017 all improvement plans and cost estimates were approved for Phases 2A, 2B, 2C and 2D. Phase 2B is the next phase of lot takedowns for NVR. Phase 2B plat recordation and final construction began in March of 2018. Lot sales to NVR also began in March of 2018. Phases 2A and 2C plat recordation and construction began in June of 2018. Phase 2D construction began in September.

Sale of Residential Lots

The 479 Residential Lots were contracted for sale under a Lot Purchase Agreement to NVR, a company based in the US and listed on the New York Stock Exchange. NVR is a home builder which is engaged in the construction and sale of single-family detached homes, townhouses and condominium buildings. It also operates a mortgage banking and title services business. Under the Lot Purchase Agreements, NVR provided SeD Home with an upfront deposit of $5.6 million and has agreed to purchase the lots at a range of prices. The lot types and quantities to be sold to NVR under the Lot Purchase Agreements include the following:

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Lot Type	Quantity
Single Family Detached Large	85
Single Family Detached Small	89
Single Family Detached Neo Traditional	33
Single Family Attached 28’ Villa	121
Single Family Attached 20’ End Unit	46
Single Family Attached 16’ Internal Unit	105
Total	479

There are five different types of Lot Purchase Agreements (“LPAs”), which are essentially the same except for the price and unit details for each type of lot. Under the LPAs, NVR shall purchase 30 available lots per quarter. The LPAs provide several conditions related to preparation of the lots which must be met so that a lot can be made available for sale to NVR. SeD Maryland is to provide customary lot preparation including but not limited to survey, grading, utilities installation, paving, and other infrastructure and engineering. In the event NVR does not purchase the lots under the LPAs, SeD Maryland would be entitled to keep the NVR deposit and terminate the LPAs. Should SeD Maryland breach the LPAs, it would have to return the remainder of the NVR deposit that has not already been credited to NVR for any sales of lots under the LPAs and NVR would be able to seek specific performance of the LPAs as well as any other rights available at law or in equity.

The sale of 13 model lots to NVR began in May of 2017. 102 lots were sold in the year ended December 31, 2018, compared to 42 lots sold in the year ended December 31, 2017.NVR has started marketing houses and has commenced sales. 

Sale of Lots for the Multi-family Units

In June 2016, SeD Maryland entered into a lot purchase agreement with Orchard Development Corporation relating to the sale of 210 multifamily units in the Ballenger Run Project for a total purchase price of $5,250,000, which closed on August 7, 2018.

Sale of the Front Foot Benefit Assessments

We have established a front foot benefit assessment on all of the NVR lots. This is a 30-year annual assessment allowed in Frederick County which requires homeowners to pay the developer to reimburse 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 the assessments to investors who will pay a lump sum up front so we can realize the revenue sooner. Front foot benefit assessments are subject to amendment by regulatory agencies, legislative bodies, and court rulings, and any changes to front foot benefit assessments could cause us to reassess these projections.

Wetland Impact Permit

The Ballenger project will require a joint wetland impact permit, which requires the review of several state and federal agencies, including the US Army Corps of Engineers. The permit is primarily required for Phase 3 construction which will not start until 2019 or later but it also affects a pedestrian trail at the Ballenger project and the multi-family sewer connection. The US Army Corps of Engineers allowed us to proceed with construction on Phase 1 but required archeological testing. As of the date of this report, the archeological testing has been completed with no further recommendations on Phase 1 of the project. Required architectural studies on the final phase of development will likely result in the loss of only one lot, however, we cannot be certain of future reviews and their impact on the project.

K-6 Grade School Site

In connection with getting the necessary approvals for the Ballenger Project, we agreed to transfer thirty acres of land that abuts the development for the construction of a local K-6 grade school. We will not be involved in the construction of such school.

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Home Incubation Project

Recognizing that large land sub-division projects have a longer time horizon, we previously introduced a home incubation initiative to market completed U.S. single-family homes, with existing tenants, to investors in Asia (the “Home Incubation Project”).

Under the Home Incubation Project, we purchased 27 homes, mostly located in Texas. We sold 24 of the homes by the end of 2016 and an additional two in 2017. SeD Home retains only one rental home at the present time.  

Competition

There are a number of companies engaged in the development of land. Should we expand our operations into the business of constructing homes ourselves, we will face increased competition, including competition from large, established and well-financed companies, some of which may have considerable ties and experience in the geographical areas in which we seek to operate. Similarly, as we consider other opportunities we may wish to pursue in addition to our current land development business, we anticipate that we will face experienced competitors.

We will compete in part on the basis of the skill, experience and innovative nature of our management team, and their track record of success in diverse industries.

Item 1A. Risk Factors.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this report before making a decision to invest in our common stock. If any of the following risks and uncertainties develop into actual events, our business, results of operations and financial condition could be adversely affected. In those cases, the trading price of our common stock could decline and you may lose all or part of your investment.

Risks Related to Our Company

We will need additional capital to expand our current operations or to enter into new fields of operations.

Both the expansion of our current land development operations into new geographic areas and the proposed expansion of the Company into new businesses in the real estate industry will require additional capital. We will need to seek additional financing either through borrowing, private offerings of our securities or through strategic partnerships and other arrangements with corporate partners. We cannot be assured that additional financing will be available to us, or if available, will be available to us on terms favorable to us. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or expand our operations.

We must retain key personnel for the success of our business.

Our success is highly dependent on the skills and knowledge of our management team, including their knowledge of our projects and network of relationships. If we are unable to retain the members of such team, or adequate substitutes, this could have a material adverse effect on our business and financial condition.

If we fail to effectively manage our growth our future business results could be harmed and our managerial and operational resources may be strained.

As we proceed with the expansion of our operations, we expect to experience significant and rapid growth in the scope and complexity of our business. We will need to hire additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business, or the failure to manage growth effectively, could have a materially adverse effect on our business and financial condition.

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There are risks related to conflicts of interest with our partners in the Ballenger Run Project.

The Company owns the Ballenger Run Project with another LLC member. This entity is controlled, however, by the Company not only through the Company’s majority voting interest in such project, but also through the control of the entity responsible for such project’s day-to-day operations. The project will be dependent upon SeD Development Management LLC, a subsidiary of SeD Home, for the services required for its operations. The Company’s control of both the voting control of this project as well as the control of the entity responsible for the day to day interests of the project could create conflicts of interest between our Company and our partner in the project. SeD Maryland, the owner of the project, has no employees, and this project will be dependent upon SeD Development Management LLC and its affiliates for the services required for its operations.

The terms of the Management Agreement between SeD Maryland and SeD Development Management LLC were not negotiated at arm’s-length, although it was adopted by CNQC, the other member. Pursuant to the Management Agreement, the owners of SeD Maryland, SeD Ballenger and CNQC, have delegated the day-to-day operations of developing Ballenger Run to SeD Development Management, LLC.

Despite this delegation, potential conflict between CNQC and SeD Development Management, LLC regarding the management of day-to-day operations of Ballenger Run could undermine our ability to effectively implement our vision for these projects, and could result in costly and time-consuming litigation.

Members of our management may face competing demands relating to their time, and this may cause our operating results to suffer.

Fai H. Chan, one of our Co-Chief Executive Officers, is both an officer and director of Singapore eDevelopment, the entity which owns SeD Home International, Inc., our majority shareholder. Mr. Chan is involved in a number of other projects other than our Company’s real estate business and will continue to be so involved. Moe T. Chan is a consultant to Singapore eDevelopment and will also be involved in projects other than our Company’s real estate business. Both of our Co-Chief Executive Officers have their primarily residences and business offices in Asia, and accordingly, there will be limits on how often they are able to visit the locations of our real estate projects. Similarly, our Co-Chief Financial Officers are both also engaged in non-real estate activities of Singapore eDevelopment, and only one of our Co-Chief Financial Officers resides and works in the United States (at an office located in Bethesda, MD).

Since some members of our board of directors are not residents of the United States, shareholders may not be able to enforce a U.S. judgment for claims brought against such directors.

Several members of our senior management team, including our Co-Chief Executive Officers, have their primary residences and business offices in Asia, and some portion of the assets of these directors are located outside the United States. As a result, it may be more difficult for shareholders to enforce a lawsuit within the United States against these non-U.S. residents than if they were residents of the United States. Also, it may be more difficult for shareholders to enforce any judgment obtained in the United States against the assets of our non-U.S. resident management located outside the United States than if these assets were located within the United States. A foreign court may not enforce liabilities predicated on U.S. federal securities laws in original actions commenced in certain foreign jurisdictions, or judgments of U.S. courts obtained in actions based upon the civil liability provisions of U.S. federal securities laws.

Concentration of ownership of our common stock by our majority shareholder will limit other investors from influencing significant corporate decisions.

Our majority shareholder will be able to make decisions such as (i) making amendments to our certificate of incorporation and by-laws, (ii) whether to issue additional shares of common stock and preferred stock, (iii) employment decisions, including compensation arrangements, (iv) whether to enter into material transactions with related parties, (v) election and removal of directors and (vi) any merger or other significant corporate transactions. The interests of our majority shareholder may not coincide with the interests of other shareholders.

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Our relationship with our majority shareholder and its parent and affiliates may be on terms which are perceived by investors as more or less favorable than those that could be obtained from third parties.

Our majority shareholder, SeD Home International, Inc., presently owns 99.99% of our issued and outstanding common stock. While we anticipate that such percentage will be diluted over time, our majority shareholder, its parent and affiliates will be perceived as having influence over our management and operations, and any loans or other agreements which we may enter into with our majority shareholder and its parent and affiliates may be perceived by investors as being on terms that are less favorable than we could otherwise receive; such perception could adversely impact the price of our common stock. Similarly, such agreements could be perceived as being on terms more favorable than those that could be obtained from third parties, and any unwillingness by our majority shareholder and its parent and affiliates to engage with our common stock could discourage investors.

Risks Relating to the Real Estate Industry

The market for real estate is subject to fluctuations that may impact the value of the land or housing inventory that we hold, which may impact the price of our common stock.

Investors should be aware that the value of any real estate we own may fluctuate from time to time in connection with broader market conditions and regulatory issues which we cannot predict or control, including interest rates, the availability of credit, the tax benefits of homeownership and wage growth, unemployment and demographic trends in the regions in which we conduct business. Should the price of real estate decline in the areas in which we have purchased land, the price at which we will be able to sell lots to home builders, or if we build houses, the price at which can sell such houses to buyers, will decline.

The regulation of mortgages could adversely impact home buyers’ willingness to buy new homes which we may be involved in building and selling.

If we become active in the construction and sale of homes to customers, the ability of home buyers to get mortgages could have an impact on our sales, as we anticipate that the majority of home buyers will be financed through mortgage financing.

An increase in interest rates will cause a decrease in the willingness of buyers to purchase land for building homes and completed homes.

An increase in interest rates will likely impact sales, reducing both the number of homes and lots we can sell and the price at which we can sell them.

Our business, results of operations and financial condition could be adversely impacted by significant inflation or deflation.

Significant inflation could have an adverse impact on us by increasing the costs of land, materials and labor. We may not be able to offset cost increases caused by inflation. In addition, our costs of capital, as well as those of our future business partners, may increase in the event of inflation, which may cause us to need to cancel projects. Significant deflation could cause the value of our inventories of land or homes to decline, which could sharply impact our profits.

New environmental regulations could create new costs for our land development business, and other business in which we may commence operations.

At the present time, we are subjected to a number of environmental regulations. If we expand into the business of building homes ourselves, we will be subjected to an increasing number of environmental regulations. The number and complexity of local, state and federal regulations may increase over time. Additional environmental regulations can add expenses to our existing business, and to businesses which we may enter into the future, which may reduce our profits.

Zoning and land use regulations impacting the land development and homebuilding industries may limit our activities and increase our expenses, which would adversely affect our profits.

We must comply with zoning and land use regulations impacting the land development and home building industries. We will need to obtain the approval of various government agencies to expand our operations as currently into new areas and to commence the building of homes. Our ability to gain the necessary approvals is not certain, and the expense and timing of approval processes may increase in ways that adversely impact our profits.

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The availability and cost of skilled workers in the building trades may impact the timing and profitability of projects that we participate in.

Should there be a lack of skilled workers to be retained by our Company and its partners, the ability to complete land development and potential construction projects may be delayed.

Shortages in required materials could impact the profitability of construction partnerships we may participate in.

Should a shortage of required materials occur, such shortage could cause added expense and delays that will undermine our profits.

Our ability to have a positive relationship with local communities could impact our profits.

Should we develop a poor relationship with the communities in which we will operate, such relationship will impact our profits.

We may face litigation in connection with either our current activities or activities which we may conduct in the future.

As we expand our activities, the likelihood of litigation shall increase. The expenses of such litigation may be substantial. We may be exposed to litigation for environmental, health, safety, breach of contract, defective title, construction defects, home warranty and other matters. Such litigation could include expensive class action matters. We could be responsible for matters assigned to subcontractors, which could be both expensive and difficult to predict.

As we expand operations, we will incur greater insurance costs and likelihood of uninsured losses.

If we expand our operations into home building, we may experience material losses for personal injuries and damage to property in excess of insurance limits. In addition, our premiums may raise.

Health and safety incidents that occur in connection with our potential expansion into the home building business could be costly.

If we commence operations in the homebuilding business, we will be exposed to the danger of health and safety risks to our employees and contractors. Health and safety incidents could result in the loss of the services of valued employees and contractors and expose us to significant litigation and fines. Insurance may not cover, or may be insufficient to cover, such losses.

Adverse weather conditions, natural disasters and man-made disasters may delay our projects or cause additional expenses.

The land development operations which we currently conduct and the construction projects which we may become involved in at a later date may be adversely impacted by unexpected weather and natural disasters, including but not limited to storms, hurricanes, tornados, floods, blizzards, fires or earthquakes. Man-made disasters including terrorist attacks, electrical outages and cyber-security incidents may also impact the costs and timing of the completion of our projects. Cyber-security incidents, including those that result in the loss of financial or other personal data, could expose us to litigation and reputational damage. If insurance is unavailable to us on acceptable terms, or if our insurance is not adequate to cover business interruptions and losses from the conditions described above and similar incidents, or results of operations will be adversely affected. In addition, damage to new homes caused by these conditions may cause our insurance costs to increase.

We have a concentration of revenue and credit risk with one customer.

We have been highly dependent on sales of residential lots to NVR. Pursuant to agreements between NVR and SeD Maryland Development, LLC, NVR will be the sole purchaser of 479 residential lots at our Ballenger project (subject to an increase in zoning approvals for the number of residential lots from 443 to 479). During 2018, we received $12.0 million in revenue from lot sales to NVR. Therefore, at the present time, a significant portion of our business depends largely on NVR’s continued relationship with us. A decision by NVR to discontinue or limit its relationship with us could have a material adverse impact on the Company.

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Risks Associated with Real Estate Related Debt and Other Investments

Any real estate debt security that we originate or purchase is subject to the risks of delinquency and foreclosure.

We may originate and purchase real estate debt securities, which are subject to numerous risks including delinquency and foreclosure. We will not have recourse to the personal assets of our tenants. The ability of a lessee to pay rent depends primarily upon the successful operation of the property, rather than upon the existence of independent income or assets of the tenant.

Any hedging strategies we utilize may not be successful in mitigating our risks.

We may enter into hedging transactions to manage, for example, the risk of interest rate or price changes. To the extent that we may occasionally use derivative financial instruments, we will be exposed to credit, basis and legal enforceability risks. Derivative financial instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract. We may not be able to manage these risks effectively.

Risks Related to Our Potential Expansion into New Fields of Operations

If we pursue the development of new technologies, we will be required to respond to rapidly changing technology and customer demands.

In the event that the Company enters the business of developing “Smart Home” and similar technologies (an area which we are presently exploring), the future success of such operation will depend on our ability to adapt to technological advances, anticipate customer demands and develop new products. We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of products. Also, we may not be able to adapt new or enhanced services to emerging industry standards, and our new products may not be favorably received.

Risks Related to Our Common Stock

The shares of our common stock are currently not being traded and there can be no assurance that there will be an active market in the future.

Our shares of common stock are not publicly traded, and if trading commences, the price may not reflect our value. There can be no assurance that there will be an active market for our shares of common stock in the future. As a result, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business.

It is possible that we will not establish an active market unless our stock is listed for trading on an exchange, and we cannot assure shareholders that we will ever satisfy exchange listing requirements.

It is possible that a significant trading market for our shares will not develop unless the shares are listed for trading on a national exchange. Exchange listing would require us to satisfy a number of tests as to corporate governance, public float, shareholders, equity, assets, market makers and other matters, some of which we do not currently meet. We cannot assure shareholders that we will ever satisfy listing requirements for a national exchange or that there ever will be significant liquidity in our shares.

If we issue additional shares of our common stock, shareholders will experience dilution of their ownership interest.

We may issue shares of our authorized but unissued equity securities in the future. Such shares may be issued in connection with raising capital, acquiring assets or firing or retaining employees or consultants. If we issue such shares, shareholders’ ownership will be diluted.

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We do not intend to pay dividends in the foreseeable future, and investors should not purchase our stock expecting to receive dividends.

We have not paid any dividends on our common stock in the past, and we do not anticipate that we will pay dividends in the foreseeable future. Accordingly, some investors may decline to invest in our common stock, and this may reduce the liquidity of our stock.

The limitations on liability for officers, directors and employees under the laws of the State of Nevada and the existence of indemnification rights for our officers, directors and employees could result in substantial expenditures by the Company and could discourage lawsuits against our officers, directors and employees.

Our Articles of Incorporation contain a specific provision that eliminates the liability of our officers and directors for monetary damages to our company and shareholders. Further, we intend to provide indemnification to our officers and directors to the fullest extent permitted by the laws of the State of Nevada. We may also enter into employment and other agreements in the future pursuant to which we will have indemnification obligations. The foregoing indemnification obligations could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against officers and directors. These obligations may discourage the filing of derivative litigation by our shareholders against our officers and directors even where such litigation may be perceived as beneficial by our shareholders.

Item 1B. Unresolved Staff Comments.

Not Applicable.

Item 2. Properties.

Black Oak

The Black Oak property is located in Montgomery County in Magnolia, Texas. This property is located east of FM 2978 via Standard Road to Dry Creek Road and South of the Woodlands, one of the most successful, fastest growing master planned communities in Texas. This residential land development consists of approximately 450 lots on 162acres. Black Oak LP is the primary developer responsible for all infrastructure development. This property is included in Harris County Improvement District #17.

Ballenger Run

Ballenger Run is a residential land development project located in Frederick County in Frederick, Maryland. This property is located approximately 40 miles from Washington, DC, 50 miles from Baltimore and is located less than four miles from I-70 and I-270. Ballenger Run is situated on approximately 197 acres of land and entitled for 853 residential units consisting of 443 residential Lots, 210 multi-family units and 200 age restricted units, however, we are presently seeking to revise the zoning of this property to include 479 entitled residential lots and 210 entitled multi-family units, with no entitled continuing care retirement community units. SeD Maryland Development, LLC is the primary developer responsible for all infrastructure development. SeD Maryland will pursue the required zoning approval to change the number of lots.

Development of Properties

At the present time, the Company is considering expanding its current policy of selling buildable lots to include a strategy of building housing for sale or rent, particularly at our Black Oak property.

Office Space

At the present time, the Company is renting offices in Houston, Texas and Bethesda, Maryland through SeD Home. At the present time, our office space is sufficient for our operations as presently conducted, however, as we expand into new projects and into new areas of operations we anticipate that we will require additional office space.

Item 3. Legal Proceedings.

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

There are no material proceedings to which any director, officer or affiliate of the Company, or any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Company’s Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

Market Information

There is presently no established public trading market for our shares of common stock. We do plan to reapply for quoting of our common stock on the OTC Bulletin Board. However, we can provide no assurance that our shares of common stock will be quoted on the Bulletin Board or, if traded, that a public market will materialize. In connection with the change of the Company’s name from Homeownusa to SeD Intelligent Home Inc., the Company’s symbol changed from HMUS to SEDH on December 13, 2017.

Holders

At March 22, 2019, the Company had 53 shareholders.

Dividends

Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our board of directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our board of directors may deem relevant.

Securities authorized for issuance under equity compensation plans.

The Company does not have securities authorized for issuance under any equity compensation plans

Performance graph

Not applicable to smaller reporting companies.

Recent sales of unregistered securities; use of proceeds from registered securities

On December 29, 2017, we issued 630,000,000 shares of our Common Stock to SeD Home International, Inc., the sole shareholder of SeD Home, in exchange for all 500,000,000 of the issued and outstanding shares of SeD Home. Such securities were not registered under the Securities Act of 1933 and were issued pursuant to the exemption under Section 4(2) of the Securities Act.

Purchases of Equity Securities by the issuer and affiliated purchasers

The Company did not repurchase any shares of the Company’s common stock during 2018.

Item 6. Selected Financial Data.

Not applicable to smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Form 10-K 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-K 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.

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Results of Operations

Results of Operations for the Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

	Year Ended
	December 31, 2018	December 31, 2017
Revenue	$17,675,034	$6,957,042
Operating Expenses	$16,389,804	$7,336,319
Net Income (Loss)	$1,322,350	$(249,769)

Revenue

Revenue was $17,675,034 for the period ended December 31, 2018 as compared to $6,957,042 for the period ended December 31, 2017. This increase in revenue is primarily attributable to the Company having an increase in property sales from the Ballenger Project. We anticipate even higher level of revenue from sales in 2019. Builders are required to purchase minimum numbers of lots based on sales agreements we enter into with them. We collect revenue from the sale of lots to builders; we do not build any houses ourselves at the present time.

Income from the sale of Front Foot Benefits, assessed on Ballenger Run project lots, increased from $0 in the year ended December 31, 2017 to $413,613 in year ended December 31, 2018. The increase is a result of the increased sale of properties in 2018. The revenue is expected to further increase in 2019 as we sell more lots.

Rental income declined from $88,438 in the period ended December 31, 2017 to $8,730 in the period ended December 31, 2018 as certain rental properties were sold (we now own only one rental property). Unless we acquire additional rental-income producing assets, such rental income may decline further in 2019 if this remaining rental home is sold.

Operating Expenses

Cost of sales increased from $6,217,779 in the period ended December 31, 2017 to $ 15,641,324 in the period ended December 31, 2018. The Company had a gross margin of 12% in 2018 compared to 11% in 2017, as there have not been any significant changes to projected project costs.

The general and administrative expenses decreased from $1,118,540 for the period ended December 31, 2017 to $748,480 for the period ended December 31, 2018 due to a decrease in professional fees.

Net Income (Loss)

After a net loss of $249,769 for the period ended December 31, 2017, we had a net income of $1,322,350 for the period ended on December 31, 2018, in large part because of our increased property sales from our Ballenger project.

Liquidity and Capital Resources

Our real estate assets have decreased to $43,764,545 of December 31, 2018 from $52,543,092 as of December 31, 2017. This decrease primarily reflects a higher increase in the cost of sales than in the capitalized costs related to the construction in progress. Our liabilities declined from $24,561,292 at December 31, 2017 to $13,733,045 at December 31, 2018. Our total assets have decreased to $48,600,709 as of December 31, 2018 from $58,166,606 as of December 31, 2017.

As of December 31, 2018, we had cash in the amount of $715,754, compared to $358,233 as of December 31, 2017. Our Ballenger Run revolver loan balance from Union Bank was $13,899 at December 31, 2018 and $8,132,020 at December 31, 2017 and the credit limit is $11 million. In addition, we owed $6 million to Revere High Yield Fund, which was paid off in October 2017 with related party debt. The interest of related party loans is accruing and the due date of these loans could be extended.

Based on the sales contract with NVR, the 2019 revenue from Ballenger project is expected to be approximately $17.2 million. The loan from Union Bank was repaid in January of 2019.

Currently the Black Oak project does not have any financing from third parties. On July 20, 2018, Black Oak was reimbursed $4,592,079 from the Harris County Improvement District 17 (“HC17”) for previous expenses incurred by Black Oak in the development and installation of infrastructure within the Black Oak project. The future development timeline of Black Oak is based on multiple limiting conditions, such as the amount of the funds raised from capital market, the loans from third party financial institutions, and the government reimbursements, etc. The development will be step by step and expenses will be contingent on the amount of funding we will receive.

 

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Summary of Cash Flows

A summary of cash flows from operating, investing and financing activities for the years ended December 31, 2018 and 2017 are as follows:

	2018	2017
Net cash Provided by (Used in) Operating Activities	$12,209,666	$(2,688,056)
Net Cash Used in Investing Activities	$(3,000)	$(7,892)
Net Cash (Used in) Provided by financing activities	$(10,576,405)	$2,654,542
Net Increase (Decrease) in Cash	$1,630,261	$(41,406)
Cash and restricted cash at beginning of the year	$3,014,903	$3,056,309
Cash and restricted cash at end of the year	$4,645,164	$3,014,903

Cash Flows from Operating Activities

Cash flows from operating activities include costs related to assets which we plan to sell, such as land purchased for development and resale. In 2018, cash provided by operating activities was $12,209,666 compared with 2017, in which the cash we used was $2,688,056. The increased sales at our Ballenger project were the main reason for our increase of cash flows from operating activities. With the completion of Phase One of our Black Oak project, development speed was adjusted with our development funding conditions and development costs went down as well.

Cash Flows from Investing Activities

Cash flows used in investing activities include purchases of office fixture and computer equipment.

Cash Flows from Financing Activities

In 2017, SeD Home borrowed $7.5 million from SeD Home International to pay off Revere Loan of $6 million and to support the land development of Black Oak and Ballenger projects. Ballenger Run also borrowed about $1 million from the Union Bank for its land development. In 2018 SeD Maryland Development paid down the Union Bank loan by $8.3 million and Black Oak also paid back approximately $2.2 million of related party borrowings.

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Seasonality

The real estate business is subject to seasonal shifts in costs as certain work in more likely to be performed at certain times of year. This may impact the expenses of SeD Home 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.

Off-Balance Sheet Arrangements

As of December 31, 2018, we did not have any off balance sheet arrangements, as defined under applicable SEC rules.

Critical Accounting Policies and Estimates

We have established various accounting policies under US GAAP. Some of these policies involve judgments, assumptions and estimates by management. We base these estimates on historical experience, available current market information and on various other assumptions that management believes are reasonable under the circumstances. Additionally, we evaluate the results of these estimates on an ongoing basis. We are subject to uncertainties such as the impact of future events, economic, environmental and political factors and changes in our business environment. Accordingly, actual results could differ from these estimates. The accounting policies that we deem most critical as follows:

Revenue Recognition and Cost of Sales

Accounting Standards Codification ("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 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 weexpect 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 was approximately all the revenue of the Company in 2018 and 2017, is as follows:

Identify the contract with a customer

The Company has signed agreements with the builders for developing the raw land to ready to build lots.  The contract has agreed upon prices, timelines, and specifications for what is to be provided.

Identify the performance obligations in the contract

Performance obligations of the company include delivering developed lots to the customer, which are required to meet certain specifications that are outlined in the contract. The customer inspects all lots prior to accepting title to ensure all specifications are met.

Determine the transaction price

The transaction price is fixed specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties.

Allocate the transaction price to performance obligations in the contract

Each lot is considered to be a separate performance obligation, for which the specified price in the contract is allocated to. 

Recognize revenue when (or as) the entity satisfies a performance obligation

The builders do the inspections to make sure all conditions/requirements are met before taking title of lots. The Company recognizes revenue when title is transferred. The Company does not have further performance obligations once title is transferred.

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 in the statement of financial position.

Cost of Sales

Land acquisition costs are allocated to each lot based on 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.

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Real Estate Assets

Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with Financial Accounting Standards Board (“FASB”) ASC 805, “Business Combinations,” which acquired assets are recorded at fair value. Interest, property taxes, insurance and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are reduced when lots are sold.

See following chart for details of the capitalized construction costs of Ballenger and Black Oak projects as of December 31, 2018 and 2017:

	As of December 31, 2018		As of December 31, 2017
	Ballenger Run	Black Oak	Ballenger Run	Black Oak
	($)	($)	($)	($)
Hard Construction Costs	14,842,910	1,216,069	9,779,906	5,203,427
Engineering	2,173,718	1,505,118	1,601,280	1,287,882
Consultation	328,663	134,687	283,400	122,314
Project Management	2,352,754	800,506	1,712,954	966,928
Legal	275,311	205,199	225,986	99,758
Taxes	708,386	838,382	479,791	145,462
Other Services	413,794	55,811	244,463	35,554
Construction - Sold Lots	(12,242,418)		(3,337,582)
Total	8,853,118	4,755,772	10,990,198	7,861,325

The Company capitalized interest from related party borrowings of $409,006 and $211,005 for the years ended December 31, 2018 and 2017, respectively. The Company capitalized interest from the third-party borrowings of $245,844 and $1,008,220 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, total capitalized finance related costs were $10,855,379 and $11,252,678, respectively.

The following tables show the Company’s forecasts of the phases of the development and costs for each phase of development:

Ballenger Run	Estimated Construction Costs	Expected Completion Date
Phase 1	$13,786,000	Completed
Phase 2	$10,210,000	December 2019
Phase 3	$10,170,000	September 2020
Phase 4	$3,460,000	December 2020
Phase 5	$1,690,000	December 2021
Total	$39,316,000
Black Oak	Estimated Construction Costs	Expected Completion Date
Phase 1	$7,080,000	April 2019
Phase 2	$5,690,000	April 2020
Phase 3	$3,850,000	August 2020
Phase 4	$4,020,000	April 2021
Total	$20,640,000

A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met:

(1)        management, having the authority to approve the action, commits to a plan to sell the property;

(2) 

the property is available for immediate sale in its present condition, subject only to terms that are usual and customary;

(3)         an active program to locate a buyer and other actions required to complete the plan to sell, have been initiated;

(4) 

the sale of the property is probable and is expected to be completed within one year or the property is under a contract to be sold;

(5) 

the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

(6) 

actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

When all of these criteria have been met, the property is classified as “held for sale”. “Real estate held for sale” only includes El Tesoro project, a project owned by SeD USA, LLC.

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. 

At December 31, 2017 and 2018, there was no impairment recognized for any of the projects.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

20

Item 8. Financial Statements

SeD Intelligent Home Inc. and Subsidiaries

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018 and 2017

Contents	Page(s)
Report of Independent Registered Public Accounting Firm	21
Consolidated Balance Sheets at December 31, 2018 and 2017	22
Consolidated Statements of Operations for the Year Ended December 31, 2018 and 2017	23
Consolidated Statements of Stockholders’ Equity at December 31, 2018 and 2017	24
Consolidated Statements of Cash Flows for the Year Ended December 31, 2018 and 2017	25
Notes to the Consolidated Financial Statements	26

21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of SeD Intelligent Home Inc. and Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of SeD Intelligent Home Inc. and Subsidiaries (the Company) as of December 31, 2018 and 2017, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2018, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2014.

/s/ Rosenberg Rich Baker Berman, P.A.

Somerset, New Jersey

April 1, 2019

22

SeD Intelligent Home Inc. and Subsidiaries

Consolidated Balance Sheets

	December 31,	December 31,
	2018	2017
Assets:
Real Estate
Construction in Progress	$24,464,269	$30,104,201
Land Held for Development	19,164,028	24,302,643
Real Estate Held For Sale	136,248	136,248
	43,764,545	54,543,092
Cash	715,754	358,233
Restricted Cash	3,929,410	2,656,670
Accounts Receivable	112,706	513,043
Prepaid Expenses	46,443	49,903
Fixed Assets, Net	8,248	22,062
Deposits	23,603	23,603
Total Assets	$48,600,709	$58,166,606
Liabilities and Stockholders' Equity:
Liabilities:
Accounts Payable and Accrued Expenses	$1,749,268	$1,131,116
Accrued Interest - Related Parties	2,344,227	1,935,222
Tenant Security Deposits	1,225	2,625
Builder Deposits	3,878,842	5,356,718
Notes Payable, Net of Debt Discount	13,899	8,132,020
Notes Payable - Related Parties	5,745,584	8,003,591
Total Liabilities	13,733,045	24,561,292
Stockholders' Equity:
Common Stock, at par $0.001, 1,000,000,000 shares authorized and 704,043,324 issued, and outstanding at December 31, 2018 and 2017, respectively	704,043	704,043
Additional Paid In Capital	32,542,720	32,739,017
Accumulated Deficit	(1,266,427)	(2,092,837)
Total Stockholders' Equity	31,980,336	31,350,223
Non-controlling Interests	2,887,328	2,255,091
Total Stockholders' Equity	34,867,664	33,605,314
Total Liabilities and Stockholders' Equity	$48,600,709	$58,166,606
See accompanying notes to consolidated financial statements.

23

SeD Intelligent Home Inc. and Subsidiaries

Consolidated Statements of Operations

For the Years Ended December 31, 2018 and 2017

	2018	2017
Revenue
Rental	$8,730	$88,438
Property	17,666,304	6,868,604
	17,675,034	6,957,042
Operating Expenses
Cost of Sales	15,641,324	6,217,779
General and Administrative	748,480	1,118,540
	16,389,804	7,336,319
Income (Loss) From Operations	1,285,230	(379,277)
Other Income
Interest Income	31,437	24,909
Other Income	5,683	104,599
	37,120	129,508
Net Income (Loss) Before Income Taxes	1,322,350	(249,769)
Provision for Income Taxes	-	-
Net Income (Loss)	1,322,350	(249,769)
Net Income (Loss) Attributable to Non-controlling Interests	495,940	(22,791)
Net Income (Loss) Attributable to Common Stockholders	$826,410	$(226,978)
Net Income (Loss) Per Share - Basic and Diluted	$0.00	$(0.00)
Weighted Average Common Shares Oustanding - Basic and Diluted	704,043,324	704,043,324
See accompanying notes to consolidated financial statements.

24

SeD Intelligent Home Inc. and Subsidiaries

 Statements of Stockholders’ Equity

For Two Year Period ended on December 31, 2018

	Common Stock
	Shares	Par Value $0.001	Additional Paid in Capital	Accumulated Deficit	Minority Interest	Total Stockholders Equity
Balance at January 1, 2017	704,043,324	$704,043	$27,970,331	$(1,865,859)	$2,277,882	$29,086,397
Proceeds from majority shareholders			178,601			178,601
Forgiveness of debt -related party			4,590,085			4,590,085
Net loss				(226,978)	(22,791)	(249,769)
Balance at December 31, 2017	704,043,324	$704,043	$32,739,017	$(2,092,837)	$2,255,091	$33,605,314
Acquisition of Minority Interest			(196,297)		136,297	(60,000)
Net Income				826,410	495,940	1,322,350
Balance at December 31, 2018	704,043,324	$704,043	$32,542,720	$(1,266,427)	$2,887,328	$34,867,664

See accompanying notes to consolidated financial statements.

25

SeD Intelligent Home Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2018 and 2017

	2018	2017
Cash Flows From Operating Activities
Net Income (Loss)	$1,322,350	$(249,769)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	16,814	20,453
Changes in Operating Assets and Liabilities
Real Estate	10,918,824	(1,302,568)
Accounts Receivable	400,337	(494,783)
Prepaid Expenses	3,460	35,546
Accounts Payable and Accrued Expenses	618,152	(362,108)
Accrued Interest - Related Parties	409,005	211,005
Tenant Security Deposits	(1,400)	(2,550)
Builder Deposits	(1,477,876)	(543,282)
Net Cash Provided By (Used In) Operating Activities	12,209,666	(2,688,056)
Cash Flows From Investing Activities
Purchase of Fixed Assets	(3,000)	(7,892)
Net Cash Used In Investing Activities	(3,000)	(7,892)
Cash Flows From Financing Activities
Acquisition of Minority Interest	(60,000)	-
Financing Fees Paid	-	(110,000)
Capital Contribution - Related Party	-	178,601
Proceeds from Notes Payable	-	1,052,350
Repayments to Note Payable	(8,258,398)	(6,000,000)
Net Proceeds from Notes Payable - Related Parties	-	7,533,591
Repayment to Notes Payable - Related Parties	(2,258,007)	-
Net Cash (Used In) Provided By Financing Activities	(10,576,405)	2,654,542
Net Increase (Decrease) in Cash	1,630,261	(41,406)
Cash and Restricted Cash - Beginning of Year	3,014,903	3,056,309
Cash and Restricted Cash - End of Year	$4,645,164	$3,014,903
Supplementary Cash Flow Information
Cash Paid For Interest	$287,738	$905,376
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Forgiveness of Notes Payable - Related Parties	$-	$4,560,085
Amortization of Debt Discount Capitalized	$140,277	$324,958
See accompanying notes to consolidated financial statements.

26

SeD Intelligent Home Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017

1. 

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

SeD Intelligent Home Inc. (the “Company”), formerly known as Homeownusa, was incorporated in the State of Nevada on December 10, 2009. On December 29, 2017, the Company, acquired SeD Home Inc. (“SeD Home”) by reverse merger. SeD Home, a Delaware corporation, formed on February 24, 2015 and named SeD Home USA, Inc. before changing its name in May of 2015, 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 Home International, Inc., which is wholly – owned by Singapore eDevelopment Limited (“SeD Ltd”), a multinational public company, listed on the Singapore Exchange Securities Trading Limited (“SGXST”).

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, 2018	Attributable interest as of December 31, 2017
SeD Home Inc.	The State of Delaware, U.S.A.	February 24, 2015	100%	100%
SeD USA, LLC	The State of Delaware, U.S.A.	August 20, 2014	100%	100%
150 Black Oak GP, Inc.	The State of Texas, U.S.A.	January 23, 2014	100%	100%
SeD Development USA, Inc.	The State of Delaware, U.S.A.	March 13, 2014	100%	100%
150 CCM Black Oak Ltd.	The State of Texas, U.S.A.	January 23, 2014	100%	69%
SeD Ballenger, LLC	The State of Delaware, U.S.A.	July 7, 2015	100%	100%
SeD Maryland Development, LLC	The State of Delaware, U.S.A.	October 16, 2014	83.55%	83.55%
SeD Development Management, LLC	The State of Delaware, U.S.A.	June 18, 2015	85%	85%
SeD Builder, LLC	The State of Delaware, U.S.A.	October 21, 2015	100%	100%
SeD Texas Home, LLC	The State of Delaware, U.S.A.	June 16, 2015	100%	100%

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 December 31, 2018 and 2017, the aggregate non­controlling interest was $2,887,328 and $2,255,091, which are separately disclosed on the Consolidated Balance Sheet.

On December 29, 2017, the Company, SeD Acquisition Corp., a Delaware corporation and wholly­owned subsidiary of the Company (the “Merger Sub”), SeD Home, Inc. (“SeD Home”), a Delaware corporation, and SeD Home International, 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 SeD Home, with SeD Home 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 Home International, Inc. was the owner of 100% of the issued and outstanding common stock of SeD Home 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 SeD Home from SeD Home International, Inc. in exchange for issuing to SeD Home International, Inc. 630,000,000 shares of the Company’s common stock. Accordingly, SeD Home International, Inc. remains the Company’s largest shareholder, and the Company is now the sole shareholder of SeD Home. The Agreement and the transactions contemplated thereby were approved by the Board of Directors of each of the Company, the Merger Sub, SeD Home International, Inc., and SeD Home.

27

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 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, 2018 or 2017.

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, 2018 and 2017.

Restricted Cash

As a condition to the loan agreement with the Union Bank (formerly known as Xenith Bank, f/k/a The Bank of Hampton Roads), 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 funds will remain as collateral for the loans until the loans are paid off in full. As of December 31, 2018 and 2017, the balance of the account was $2,726,154 and $2,656,670, respectively.

On July 20, 2018, Black Oak LP received $4,592,079 of district reimbursement for previous construction costs incurred in the land development. Of this amount, $1,650,000 will remain on deposit in the District’s Capital Projects Fund for the benefit of Black Oak LP and will be released upon receipt of the evidence of the: (a) execution of a purchase agreement between Black Oak LP and a home builder with respect to the Black Oak development and (b) of the completion, finishing and making ready for home construction of at least 105 unfinished lots in the Black Oak development. In 2018, $446,745 was released to reimburse the construction costs leaving a balance of $1,203,256 on December 31, 2018.

28

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, 2018 and 2017.

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

Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with Financial Accounting Standards Board (“FASB”) ASC 805, “Business Combinations,” which acquired assets are recorded at fair value. Interest, property taxes, insurance and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are reduced when lots are sold.

The Company capitalized interest from related party borrowings of $409,005 and $211,005 for the years ended December 31, 2018 and 2017, respectively. The Company capitalized interest from the third-party borrowings of $245,844 and $1,008,220 for the years ended December 31, 2018 and 2017, respectively.

A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met:

(1) management, having the authority to approve the action, commits to a plan to sell the property. (2) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary. (3) an active program to locate a buyer and other actions required to complete the plan to sell, have been initiated. (4) the sale of the property is probable and is expected to be completed within one year or the property is under a contract to be sold. (5) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value. and (6) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When all of these criteria have been met, the property is classified as “held for sale”. “Real estate held for sale” only includes El Tesoro project and D street project.

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.

As of December 31, 2018 and 2017, there was no impairment recognized for any of the projects.

Revenue Recognition

Accounting Standards Codification ("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 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 was approximately all the revenue of the Company in 2018 and 2017, is as follows:

29

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.

Identify the performance obligations in the contract

Performance obligations of the company include delivering developed lots to the customer, which are required to meet certain specifications that are outlined in the contract. The customer inspects all lots prior to accepting title to ensure all specifications are met.

Determine the transaction price

The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties.

Allocate the transaction price to performance obligations in the contract

Each lot is considered to be a separate performance obligation, for which the specified price in the contract is allocated to.

Recognize revenue when (or as) the entity satisfies a performance obligation

The builders do the inspections to make sure all conditions/requirements are met before taking title of lots. The Company recognizes revenue when title is transferred. The Company does not have further performance obligations once title is transferred.

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 in the statement of financial position.

Cost of Sales

Land acquisition costs are allocated to each lot based on 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.

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.

30

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 2018, 2017, 2016 and 2015 remain open to examination.

Recent Accounting Pronouncements

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires that restricted cash and cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. ASU 2016-18 was effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and a retrospective transition method is required. This guidance did not impact financial results, but resulted in a change in the presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The Company adopted this guidance in the 2018 and 2017 Consolidated Statement of Cash Flows.

On February 25, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No. 2016-02, Leases (Topic 842) (the Update). This ASU requires an entity to recognize a right-of-use asset (“ROU”) and lease liability for all leases with terms of more than 12 months. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective for the Company on January 1, 2019, with early adoption permitted. While the Company continues to assess all of the effects of adoption, it currently believes the most significant effects relate to: the recognition of new ROU assets and lease liabilities on its balance sheet for one of our office rental leases. The Company does not expect a significant change in its leasing activities between now and adoption. On adoption, the Company currently expects to recognize operating lease liabilities less than $200,000 with corresponding ROU assets of the same amount based on the present value of the remaining rental payments for our Bethesda Office lease on the consolidated balance sheet.

In May 2014, the FASB issued accounting standard update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under previous guidance. This may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In July 2015, the FASB approved the proposal to defer the effective date of ASU 2014-09 standard by one year. Early adoption was permitted after December 15, 2016, and the standard became effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations (ASU No. 2016-08), accounting for licenses of intellectual property and identifying performance obligations (ASU No. 2016-10), narrow-scope improvements and practical expedients (ASU No. 2016-12) and technical corrections and improvements to ASU 2014-09 (ASU No. 2016-20) in its new revenue standard. The Company has performed a review of the requirements of the new revenue standard and is monitoring the activity of the FASB and the transition resource group as it relates to specific interpretive guidance. The Company reviewed customer contracts, applied the five-step model of the new standard to its contracts, and compared the results to its current accounting practices. The adoption of this standard required increased disclosures related to the disaggregation of revenue.

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740) – Amendments to SEC paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 118.” ASU 2018-05 amends the Accounting Standards Codification to incorporate various SEC paragraphs pursuant to the issuance of SAB 118, which addresses the application of generally accepted accounting principles in situations when a registrant does not have necessary information available, prepared, or analyzed (including computation) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. The ASU does not have material impact on the Company.

In February 2018, the FASB issued ASU No. 2018-02, Reporting Comprehensive Income - Reclassification of Certain tax Effects from Accumulated Other Comprehensive Income to help businesses present some effects form the Tax Act's reduction in the corporate tax rate in their income statements. ASU 2018-02 gives the option of reclassifying what are called the “stranded” tax effects within accumulated other comprehensive income (loss) to retained earnings (deficit) during each fiscal year or quarter in which the effect of the lower tax rate is recorded. ASU 2018-02 instructs businesses to provide a disclosure in their financial statement footnotes that describes the accounting policy they used to release the income tax effects form accumulated other comprehensive income (loss), whether they are reclassifying the stranded income tax effects from the Tax Act, and information about the other effects on taxes from the reclassification. The update is effective for fiscal years beginning after December 15, 2018, and the interim periods in those years, and early adoption is permitted. We are evaluating the impact on the Company.

31

Subsequent Events

The Company evaluated the events and transactions subsequent to December 31, 2018, the balance sheet date, through April 1, 2019, the date the consolidated financial statements were available to be issued.

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. On December 31, 2018 and 2017, uninsured cash balances were $3,783,330 and $2,514,903, respectively.

The Comapany’s Ballenger project only has two purchasers: NVR Inc. (“NVR”), a NYSE publicly listed US homebuilding and mortgage company, is the only purchaser of 479 residential lots of Ballenger project; Orchard Development Corporation is the purchaser of the parcel of 210 multifamily units. During the year ended December 31, 2018, the Company earned revenues from property sales from these two customers representing approximately 70% and 30%, respectively. During the year ended December 31, 2017, the Company earned revenues from property sales from these two customers representing approximately 100% and 0% of gross sales, respectively. As of December 31, 2018, no accounts receivable was outstanding from these two customers. As of December 31, 2017, the above two customers represented approximately 100% and 0% of receivables, respectively.

3. 

PROPERTY AND EQUIPMENT

Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following:

	December 31, 2018	December 31, 2017
Computer Equipment	$41,597	$41,597
Furniture and Fixtures	24,393	21,393
	65,990	62,990
Accumulated Depreciation	(57,742)	(40,928)
Fixed Assets Net	$8,248	$22,062

Depreciation expense was $16,814 and $20,453 for the years ended December 31, 2018 and 2017, respectively.

4. 

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 over a 21-year period, which escalates 3% annually after June 1, 2018.

As part of the agreements, NVR provided 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 December 31, 2018 and 2017, there was $3,878,842 and $5,056,718 outstanding, respectively.

Black Oak LP received a deposit of $300,000 from Lexington 26 LP (Colina), a building company located in Texas. On December 31, 2018 and 2017, there was $0 and $300,000 outstanding, respectively. In February 2018, the deposit $300,000 was refunded to Colina since both sides agreed to the changed development plan of Colina.

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5. 

NOTES PAYABLE

Revere Loan

On October 7, 2015, the Company entered into a note for $6,000,000, bearing interest at 13%, with a maturity date of October 7, 2016 with Revere High Yield Fund, LP (“Revere”). In connection with the loan, the Company incurred origination and closing fees of $524,233, which were recorded as debt discount and are amortized over the life of the loan. The loan is secured by a deed of trust on the property and a Limited Guarantee Agreement with related parties of the Company. On October 1, 2016, the loan was extended to April 1, 2017 for fees of $109,285. These fees were recorded as a debt discount under debt modification accounting are amortized over the extension period. On April 1, 2017, the loan was again extended until October 1, 2017 for a fee of $110,000. These fees were recorded as a debt discount under debt modification accounting and were amortized over the extension period. As of October 1, 2017, the loan was fully repaid and there is no outstanding principal or unamortized debt discount.

Union Bank Loan

On November 23, 2015, SeD Maryland Development LLC entered into a Revolving Credit Note with the Union Bank in the original principal amount of $8,000,000. During the term of the loan, cumulative loan advances may not exceed $26,000,000. The line of credit bears interest at LIBOR plus 3.8% with a floor rate of 4.5%. The interest rate at December 31, 2018 was 6.125%.

Beginning December 1, 2015, interest only payments are due on the outstanding principal balance. The entire unpaid principal and interest sum is due and payable on November 22, 2018, with the option of one twelve-month extension period. The loan is secured by a deed of trust on the property, $2,600,000 of collateral cash, and a Limited Guaranty Agreement with SeD Ballenger. The Company also has an $800,000 letter of credit from the Union Bank. The letter of credit is due on November 22, 2018 and bears interest at 15%. In September 2017, Maryland Development LLC and the Union Bank modified the Revolving Credit Note, which increased the original principal amount from $8,000,000 to $11,000,000 and extended the maturity date of the loan and letter of credit to December 31, 2019.

As of December 31, 2018 and 2017, the principal balance were $13,899 and $8,272,297, respectively. As part of the transaction, the Company incurred loan origination fees and closing fees, totaling $480,947, which were recorded as debt discount and are amortized over the life of the loan. The unamortized debt discount was $0 and $140,277 on December 31, 2018 and December 31, 2017, respectively.

6. 

RELATED PARTY TRANSACTIONS

Notes Payable before Intercompany Loan Restructuring

SeD Home received advances from SeD Ltd (which was the 100% owner of the Company) to fund development costs and operation costs. The advances were unsecured, bear interest at 18% per annum and are payable on demand. As of December 31, 2015, SeD Home had outstanding principal due of $12,293,715 and accrued interest of $2,161,055 due to this related party.

SeD Home received advances from SCDPL (owned 100% by SeD Ltd) to fund development costs and operation costs. The advances were unsecured, bear interest at 18% per annum and were payable on demand. As of December 31, 2015, SeD Home had outstanding principal due of $4,300,930 and accrued interest of $1,461,058 due to this related party.

On September 30, 2015, SeD Home received $10,500,000 interest free loan, with a maturity date of March 31, 2016, from Hengfai Business Development Pte, Ltd, owned by the Chief Executive Officer of SeD Ltd and is also the majority shareholder of SeD Ltd, specifically for Ballenger Run project. SeD Home imputed interest at 13%, which is the interest rate on the Revere Loan noted in Note 5. The imputed interest resulted in a debt discount of $622,431 which is amortized over the life of the note. At December 31, 2015, SeD Home had $10,500,000 outstanding on the note and unamortized debt discount of $311,216. On April 1, 2016, SeD Home extended the note on the same terms through December 31, 2016. This resulted in an additional $933,647 of new imputed interest which was amortized during 2016.

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Intercompany Loans Restructuring

At December 31, 2016, considering the long-term development and short-term debt repayment, SeD Home restructured the loans from these affiliates. The restructuring process was done to transfer the loans to SeD Home International (99.99 % owner of the Company), the principal of which, $26,913,525, was then forgiven and recorded into additional paid in capital. SeD Home still owed the accrued interest of $6,283,207 to SeD Home International. The remaining accrued interest does not bear interest. On August 30, 2017, an additional $4,560,085 of this interest was forgiven and recorded into additional paid in capital. The remaining amount of $1,723,122 was still outstanding as of December 31, 2018 and 2017

Loan from SeD Home Limited

SeD Home receives advances from SeD Home Limited (an affiliate of SeD Ltd), to fund development and operation costs. The advances bear interest at 10% and are payable on demand. As of December, 2018 and 2017, SeD Home had outstanding principal due of $1,116,406 and $1,050,000 and accrued interest of $193,382 and $86,425.

Loan from SeD Home International

SeD Home receives advances from SeD Home International. The advances bore interest at 18% until August 30, 2017 when the interest rate was adjusted to 5% and have no set repayment terms. On December 31, 2018 and 2017, there was $4,629,178 and $6,953,591 of principal and $2,150,845 and $1,848,797 of accrued interest outstanding. Both accrued outstanding interests include the remaining amount $1,723,122 after interest was forgiven on August 30, 2017 as discussed in previous paragraph.

During 2017, prior to the Reverse Merger, SeD Intelligent Home Inc. borrowed $30,000 from SeD Home International Inc. The borrowings did not bear any interest. In November 2017, the debt was forgiven by SeD Home International Inc. and was recognized into additional paid in capital.

Other Transactions

On November 29, 2016 an affiliate of SeD Home entered into three $500,000 bonds for a total of $1.5 million that are to incur annual interest at 8% and the principal shall be paid in full on November 29, 2019. SeD Home agreed to guarantee the payment obligations of these bonds. Further, at the maturity date, the bondholder has the right to propose to acquire a property built by SeD Home, and SeD will facilitate that transaction. The proposed acquisition purchase price would be at SeD Home's cost. If the cost price is more than $1.5 million, the proposed acquirer would pay the difference, and if the cost price is below $1.5 million, the affiliate of SeD would pay the difference in cash.

The Reverse Merger

As described in Note 1, the Reverse Merger was done with a related party through common control and ownership.

Management Fees

Black Oak LP is obligated under the Limited Partnership Agreement (as amended) to pay a $6,500 per month management fee to Arete Real Estate and Development Company (Arete), a related party through common ownership and $2,000 per month to American Real Estate Investments LLC (AREI), a related party through common ownership. Arete is also entitled to a developer fee of 3% of all development costs excluding certain costs. The fees are to be accrued until $1,000,000 is received in revenue and/or builder deposits relating to the Black Oak Project. 

On December 31, 2017, the Company had $314,630 owed to Arete and $48,000 to AREI in accounts payable and accrued expenses.

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On April 26, 2018, SeD Development USA, Arete and AREI reached an agreement to terminate the terms related to management fees and developer fees in the Limited Partnership Agreement. In July 2018, per the terms of the termination agreement, Black Oak LP paid Arete $300,000 and AREI $30,000 to fulfill the commitments.

MacKenzie Equity Partners, owned by a Charlie MacKenzie, a Director of the Company, has a consulting agreement with the Company since 2015. Per the current terms of the agreement, as amended on January 1, 2018, the Company pays a monthly fee of $15,000 with an additional $5,000 per month to be paid when the property development cashflow milestones have been met. The Company incurred expenses of $240,000 and $222,930 for the years 2018 and 2017, respectively, which were capitalized as part of Real Estate on the balance sheet as the services relate to property and project management. On December, 2018 and 2017, the Company owed this related party $60,000 and $0, respectively.

Purchase of Minority Interest of Black Oak LP

On July 23, 2018, SeD Development USA, LLC, a wholly owned subsidiary of the Company, entered into two Partnership Interest Purchase Agreements through which it purchased an aggregate of 31% of Black Oak LP for $60,000. In addition, if and when Black Oak LP receives at least $15 million in net reimbursement receivable proceeds from HC17 and/or Aqua Texas, Inc. (net of any expenses Harris County Improvement District 17 and/or Aqua Texas, Inc. may deduct), Black Oak LP shall pay Fogarty Family Trust II, one of two previous partners of Black Oak LP, an amount equal to 10% of the net reimbursement receivable proceeds received from HC17 and/or Aqua Texas, Inc. that exceeds $15 million; provided however, this obligation shall only apply to reimbursement revenue received on or before December 31, 2025. Prior to the Partnership Interest Purchase Agreements, the Company owned and controlled Black Oak LP through its 68.5% limited partnership interest and its ownership of the General Partner, 150 Black Oak GP, Inc, a 0.5% owner in Black Oak LP. As a result of the purchase, the Company, through its subsidiaries, now owns 100% of Black Oak LP.

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 $101,979 and $110,334 for the years ended December 31, 2018 and 2017, respectively. On December 31, 2018 and December 31, 2017, the Company owed this related party $8,000 and $18,000, respectively.

7. 

SHAREHOLDERS’ EQUITY

On August 28, 2017 the Company increased its authorized shares from 75,000,000 to 1,000,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.

In 2017, SeD Home International, a related party through common ownership, contributed $178,600 into the Company. The related party also forgave $4,560,085 of accrued interest as of August 30, 2017, which was recorded as additional paid in capital.

Per Note 1, 630,000,000 shares of common stock were issued on December 29, 2017 in connection with the Reverse Merger.

On July 23, 2018, the Company entered into two Partnership Interest Purchase Agreements through which it purchased an aggregate of 31% of Black Oak LP for $60,000 and fulfilled the agreement thereafter.

8. 

COMMITMENTS AND CONTINGENCIES

Leases

The Company leases office space in Texas and Maryland. The leases expire in 2018 and 2020, respectively and have monthly rental payments ranging between $2,284 and $8,205. Rent expense was $120,071 and $116,870 for the year ended December 31, 2018 and 2017, respectively. The below table summarizes future payments due under these leases as of December 31, 2018.

For the Years Ended December 31:

2019	118,410
2020	96,924
Total	$215,334

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Lot Sale Agreements

On February 19, 2018, SeD Maryland entered into a contract to sell the Continuing Care Retirement Community Assisted Independent Living parcel to Orchard Development Corporation. It was agreed that the purchase price for the 5.9 acre lot would be $2,900,000 with a $50,000 deposit. It was also agreed that Orchard Development Corporation would have the right to terminate the transaction during the feasibility study period, which would last through May 30, 2018, and receive a refund of its deposit. On April 13, 2018, Orchard Development Corporation indicated that it would not be proceeding with the purchase of the CCRC parcel. On December 31, 2018, SeD Maryland entered into the Third Amendment to the Lot Purchase Agreement for Ballenger Run with NVR. Pursuant to the Third Amendment, SeD Maryland will convert the 5.9 acre CCRC parcel to 36 lots (the 28 feet wide villa lot) and sell to NVR. SeD Maryland will pursue the required zoning approval to change the number of such lots from 85 to 121.

On July 3, 2018, 150 CCM Black Oak entered into a Purchase and Sale Agreement with Houston LD, LLC for the sale of 124 lots located at its Black Oak project. Pursuant to the Purchase and Sale Agreement, it was agreed that 124 lots would be sold for a range of prices based on the lot type. In addition, Houston LD, LLC agreed to contribute a “community enhancement fee” for each lot, collectively totaling $310,000, which is currently held in escrow. 150 CCM Black Oak will apply these funds exclusively towards an amenity package on the property. The closing of the transactions contemplated by the Purchase and Sale Agreement was subject to Houston LD, LLC completing due diligence to its satisfaction. On October 12, 2018, 150 CCM Black Oak, Ltd. entered into an Amended and Restated Purchase and Sale Agreement (the “Amended and Restated Purchase and Sale Agreement”) for these 124 lots. Pursuant to the Amended and Restated Purchase and Sale Agreement, the purchase price remained $6,175,000, 150 CCM Black Oak, Ltd. was required to meet certain closing conditions and the timing for the closing was extended.

9. 

INCOME TAXES

On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act” (TCJA) that significantly reformed the Internal Revenue Code of 1986, as amended. The TCJA reduces the corporate tax rate to 21 percent beginning with years starting January 1, 2018. Because a change in tax law is accounted for in the period of enactment, the deferred tax assets and liabilities have been adjusted to the newly enacted U.S. corporate rate, and the related impact to the tax expense has been recognized in the current year.

Deferred tax assets and (liabilities) consist of the following at December 31, 2018 and 2017:

	2018	2017
Interest Income	(4,023,599)	(2,957,688)
Interest Expense	3,928,264	3,355,098
Depreciation and Amortization	6,302	2,510
Management Fees	404,342	276,741
Others	113,633	239,482
Net Operating Loss	4,547	499,230
	433,489	1,415,373
Valuation Allowance	(433,489)	(1,415,373)
Net Deferred Tax Asset	-	-

As of December 31, 2018, the Company has federal net operating loss carry-forwards of approximately $111,769 which will begin to expire in 2038. The Maryland did not have net operating loss carry-forwards. 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 years ended December 31, 2018 and 2017, the valuation allowance decreased by $616,332 and $871,109, respectively.

The expected tax expense (benefit) based on the statuary rate is reconciled with actual tax benefit as follows:

	2018	2017
US Federal statutory rate	21%	21%
State income tax rate	8.25%	8.25%
Federal Benefit	(1.73)%	(1.73)%
Valuation Allowance	(27.52)%	(27.52)%
Income tax provision (benefit)	-%	-%

10. 

SUBSEQUENT EVENTS

Black Oak completed Sale with Houston LD, LLC

On July 3, 2018, 150 CCM Black Oak entered into a Purchase and Sale Agreement with Houston LD, LLC for the sale of 124 lots located at its Black Oak project. On October 12, 2018, 150 CCM Black Oak, Ltd. entered into an Amended and Restated Purchase and Sale Agreement for these 124 lots. Pursuant to the Amended and Restated Purchase and Sale Agreement, the purchase price remained $6,175,000, 150 CCM Black Oak, Ltd. was required to meet certain closing conditions and the timing for the closing was extended. On January 18, 2019, the sale of 124 lots in Magnolia, Texas was completed.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not Applicable.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of our Report on Form 10-K, an evaluation was carried out by management, with the participation of our Chief Executive Officers and Chief Financial Officers, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) as of December 31, 2018. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that such information is accumulated and communicated to management, including the Chief Executive Officers and Chief Financial Officers, to allow timely decisions regarding required disclosure.

During evaluation of disclosure controls and procedures as of December 31, 2018 conducted as part of our annual audit and preparation of our annual financial statements, management conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were ineffective for those reasons set forth below.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for the preparation and fair presentation of the financial statements included in this annual report. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and reflect management’s judgment and estimates concerning effects of events and transactions that are accounted for or disclosed.

Management is also responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting includes those policies and procedures that pertain to our ability to record, process, summarize and report reliable data. Management recognizes that there are inherent limitations in the effectiveness of any internal control over financial reporting, including the possibility of human error and the circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement presentation. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

In order to ensure that our internal control over financial reporting is effective, management regularly assesses controls and did so most recently for its financial reporting as of December 31, 2018. This assessment was based on criteria for effective internal control over financial reporting described in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. In connection with management’s evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018, management determined that the Company did not maintain effective controls over financial reporting due to limited staff with US GAAP and SEC Reporting experience. Management determined that the ineffective controls over financial reporting constitute a material weakness.

This annual report filed on Form 10-K does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

We continue taking steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this Annual Report on Form 10-K, we have not been able to completely remediate the material weaknesses identified above. To remediate such weaknesses, we plan to appoint additional qualified personnel to the audit committee with financial accounting, GAAP, and SEC experience.

Item 9B. Other Information.

Not Applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Identification of directors and executive officers

On December 31, 2013 Pieter du Plooy resigned as an officer and director of the Company. There were no disagreements with Mr. du Plooy. Immediately prior to Mr. du Plooy’s resignation the Company’s board of directors appointed Conn Flanigan as a director until the next annual meeting of shareholders and until his successor is duly elected and qualified or until his resignation or removal. In addition, the board of directors then appointed Conn Flanigan as Chief Executive Officer and Chief Financial Officer.

On January 10, 2017, our board of directors appointed Fai H. Chan as Director to hold office until the next annual meeting of shareholders and until his successor is duly elected and qualified or until his resignation or removal. On March 10, 2017, Mr. Conn Flanigan resigned as the Chief Financial Officer. Mr. Flanigan continues to serve as the President and Secretary of the Company, and as a member of our board of directors. Effective as of March 10, 2017, Mr. Rongguo (Ronald) Wei, CPA, has been appointed as Chief Financial Officer of the Company.

In connection with the acquisition of SeD Home on December 29, 2017, the Company appointed new officers and directors. Fai H. Chan and Moe T. Chan serve as co-Chief Executive Officers; Rongguo (Ronald) Wei and Alan W. L. Lui serve as Co-Chief Financial Officers, and our Board of Directors include Fai H. Chan, Moe T. Chan, Conn Flanigan and Charles MacKenzie.

The board of directors has no nominating or compensation committees. The company’s current Audit Committee consists of Conn Flanigan.

The name, age and position of our officers and directors are set forth below:

Name	Age	Position(s)
Fai H. Chan	74	Co-Chief Executive Officer and Chairman of the Board of Directors
Moe T. Chan	40	Co-Chief Executive Officer and Member of the Board of Directors
Conn Flanigan	50	Secretary and Member of the Board of Directors
Charles MacKenzie	47	Member of the Board of Directors
Rongguo (Ronald) Wei	47	Co-Chief Financial Officer
Alan W. L. Lui	48	Co-Chief Financial Officer

The mailing address for each of the officers and directors named above is c/o of the Company at: 4800 Montgomery Lane, Suite 210, Bethesda, MD, 20814.

Business Experience

Fai H. Chan. Mr. Chan has served as a member of our Board of Directors since January 10, 2017 and has served as Co-Chief Executive Officer of the Company since December 29, 2017. Mr. Chan is an expert in banking and finance, with 45 years of experience in these industries. He has also restructured numerous companies in various industries and countries during the past 40 years. Mr. Chan has served as the Chief Executive Officer of Singapore eDevelopment Limited, a diversified holding company listed on the Catalist of the Singapore Exchange Securities Trading Limited, since April 2014, and has served as a director of that company since May of 2013. Since March, 2018, Mr. Chan has served as a Chairman of the Board and Chief Executive Officer of HF Enterprises Inc. Additionally, Mr. Chan has served as a member of the Board of Directors of HotApp Blockchain Inc., a technology company since October of 2014, as Executive Chairman since December 2017 and has served as the Acting Chief Executive Officer of HotApp Blockchain since August 2018, having previously served as Chief Executive Officer from December of 2014 until June of 2017. He has served as a non-executive director of Document Security Systems, Inc., an NYSE listed company, since January 2017 and as Chairman of the Board since March of 2019. Mr. Chan has also served as a non-executive director of Holista CollTech Ltd., an ASX listed company, since July 2013 and has served as a director of Vivacitas Oncology Inc. since May of 2017. Mr. Chan has served as a director of OptimumBank Holdings, Inc. and Optimum Bank since June 2018.

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Mr. Chan’s previous experiences include serving as Managing Chairman of ZH International Holdings Limited (formerly known as Heng Fai Enterprises Limited), an investment holding company listed on the HKSE, from 1992 to 2015. Mr. Chan was formerly the Managing Director of SingHaiyi Group Ltd., a property development, investment and management company listed on the Singapore Exchange Mainboard, from November 2003 to September 2013, and the Executive Chairman of China Gas Holdings Limited, a Hong Kong listed investor and operator of city gas pipeline infrastructure in China from 1997 to 2002. Mr. Chan served on the Board of RSI International Systems, Inc., the developer of RoomKeyPMS, a web-based property management system, from June 2014 to February 2019.

Mr. Chan has also served as a director of Global Medical REIT Inc., a healthcare facility real estate company, from December 2013 to July 2015. He was a director of American Housing REIT Inc. from October of 2013 to July of 2015. He served as a director of Skywest Ltd., a public Australian airline company from 2005 to 2006. Mr. Chan was a director of Global Med Technologies, Inc., a medical company engaged in the design, development, marketing and support information for management software products for healthcare-related facilities, from May 1998 until December 2005.

Director Qualifications of Fai H. Chan:

The board of directors appointed Mr. Chan in recognition of his abilities to assist the Company in expanding its business and the contributions he can make to the Company’s strategic direction.

Moe T. Chan. Moe Chan was appointed Co-Chief Executive Officer of our Company and a member of our Board of Directors on December 29, 2017. Moe Chan served as the Group Chief Development Officer of Singapore eDevelopment from July of 2015 until August of 2018.  Moe Chan now serves as a Consultant to Singapore eDevelopment and continues to be responsible for Singapore eDevelopment’s international property development business (including serving as Co-Chief Executive Officer and a member of the Board of SeD Home). Moe Chan served as an Executive Director of Singapore eDevelopment from January of 2016 until August of 2018. From April 2014 to June 2015 Moe Chan was the Chief Operating Officer of HKSE listed ZH International Holdings Limited (formerly known as Heng Fai Enterprises Limited) and was responsible for that company’s global business operations consisting of REIT ownership and management, property development, hotels and hospitality, as well as property and securities investment and trading. Prior to that, he was an executive director (from March 2006 to February 2014) and the Chief of Project Development (from April 2013 to February 2014) of Singapore Exchange Mainboard listed SingHaiyi Group Ltd, overseeing its property development projects. He was also a non-executive director of the Toronto Stock Exchange-listed RSI International Systems Inc., a hotel software company, from July 2007 to August 2016.

Moe T. Chan has a diverse background and experience in the fields of property, hospitality, investment, technology and consumer finance. He holds a Master’s Degree in Business Administration with honors from the University of Western Ontario, a Master’s Degree in Electro-Mechanical Engineering with honors and a Bachelor’s Degree in Applied Science with honors from the University of British Columbia. Moe Chan is the son of Fai H. Chan.

Director Qualifications of Moe T. Chan:

The board of directors appointed Moe Chan in recognition of his extensive knowledge of real estate and ability to assist the Company in expanding its business.

Conn Flanigan. Mr. Flanigan is a member of our Board of Directors and a practicing attorney specializing in corporate, real estate, and securities law. Mr. Flanigan is a legal advisor to Singapore eDevelopment and has served as officer and director to several US subsidiaries of Singapore eDevelopment. Mr. Flanigan served as the Secretary and General Counsel for Global Medical REIT Inc. (NYSE:GMRE) from December 2013 to May 2017. From September 2013 to May 2017, Mr. Flanigan also served as Chief Executive Officer, General Counsel and Secretary, and as a director, of American Housing REIT Inc. Mr. Flanigan served as a member of the Board Directors of Amarantus Bioscience Holdings, Inc., a biotech company, from February 2017 until May 2017. Mr. Flanigan served as a director of HotApp Blockchain Inc. from October 2014 until September 2018 and as legal counsel and Secretary from December 2014 until September 2018. From February 2000 until May 2017, Mr. Flanigan was employed as General Counsel by subsidiaries of ZH International Holdings, Ltd., including eBanker USA.com, Inc. and ZH USA, LLC.  In this role, he served as General Counsel and Secretary for other ZH International Holdings, Ltd. subsidiaries.  Mr. Flanigan received a B.A. in International Relations from the University of San Diego in 1990 and a Juris Doctor Degree from the University of Denver Sturm College of Law in 1996.

39

Director Qualifications of Conn Flanigan:

Mr. Flanigan’s service as an officer, director and employee of various entities has provided him with significant knowledge and experience regarding corporate financial and governance matters.

Charles MacKenzie. Mr. MacKenzie has served as a member of the Company’s Board of Directors since December 29, 2017 and serves as the Chief Development Officer for SeD Development Management, a subsidiary of SeD Home, since July of 2015. Mr. MacKenzie also serves as a member of the Board of Directors of SeD Home since October of 2017. He was previously the Chief Development Officer for Inter-American Development (IAD), a subsidiary of Heng Fai Enterprises from April of 2014 to June of 2015. Mr. MacKenzie was the owner of Smartbox Portable Storage, a residential moving and storage company from October 2006 to a successful sale in February 2017. Mr. MacKenzie focuses on acquisitions and development of residential and mixed-use projects within the United States. Mr. MacKenzie specializes in site selection, contract negotiations, marketing and feasibility analysis, construction and management oversight, building design and investor relations. Mr. MacKenzie has developed over 1,300 residential units inclusive of single-family homes, multi-family, and senior living dwellings totaling more than $110M and over 650,000 square feet of commercial valued at over $100M. Mr. MacKenzie received a BA and graduate degree from St. Lawrence University where he served on Board of Trustees from 2003-2007.

Director Qualifications of Charles MacKenzie:

The board of directors appointed Charles MacKenzie in recognition of his extensive knowledge of real estate and ability to assist the Company in expanding its business.

Rongguo (Ronald) Wei. Mr. Wei has served as the Company’s Chief Financial Officer since March 10, 2017. Mr. Wei is a finance professional with more than 15 years of experience working in public and private corporations in the United States. As the Chief Financial Officer of SeD Development Management LLC, Mr. Wei is responsible for oversight of all finance, accounting, reporting, and taxation activities for that company. Prior to joining SeD Development Management LLC in August of 2016, Mr. Wei worked for several different US multinational and private companies including serving as Controller at American Silk Mill, LLC, a textile manufacturing and distribution company, from August of 2014 to July of 2016, serving as a Senior Financial Analyst at Air Products & Chemicals, Inc., a manufacturing company, from January of 2013 to June of 2014 and serving as a Financial/Accounting Analyst at First Quality Enterprise, Inc., a personal products company, from 2011 to 2012. Before Mr. Wei came to United States, he worked as an equity analyst in Hong Yuan Securities, an investment bank, in Beijing, China, concentrating on industrial and public company research and analysis. Mr. Wei is a Certified Public Accountant and received his Master of Business Administration from the University of Maryland and a Master of Business Taxation from the University of Minnesota. Mr. Wei also holds a Master in Business degree from Tsinghua University and a Bachelor degree from Beihang University. Mr. Wei served as a member of the Board Directors of Amarantus Bioscience Holdings, Inc., a biotech company, from February 2017 until May 2017, and has served as Chief Financial Officer of such company since February, 2017 to November, 2017. Mr. Wei has also served as Co-Chief Financial Officer of HF Enterprises Inc. since March, 2018.

Alan W. L. Lui. Mr. Lui has served as the Company’s Co-Chief Financial Officer since December 29, 2017 and has served as the Co-Chief Financial Officer of SeD Home since October of 2017. Mr. Lui has served as Chief Financial Officer of HotApp Blockchain Inc., a technology company since May 12, 2016 and has served as a director of one of HotApp’s subsidiaries since July of 2016. Mr. Lui has been Chief Financial Officer of Singapore eDevelopment, the Company’s majority shareholder since November 1, 2016 and served as its Acting Chief Financial Officer since June 22, 2016. Since October of 2016, Mr. Lui has also served as a director of BMI Capital Partners International Ltd, a Hong Kong investment consulting company. He has also served as a director of LiquidValue Asset Management Pte Limited (formerly known as Hengfai Asset Management Pte. Ltd.), a Singapore fund management company, since April, 2018. Mr. Lui has also served a Co-Chief Financial Officer of HF Enterprises Inc. since March, 2018. From June of 1997 through March of 2016, Mr. Lui served in various executive roles at ZH International Holdings Ltd. (a Hong Kong-listed company formerly known as Heng Fai Enterprises Ltd), including as Financial Controller. Mr. Lui oversaw the financial and management reporting and focusing on its financing operations, treasury investment and management. He has extensive experience in financial reporting, taxation and financial consultancy and management in Hong Kong. He also managed all financial forecasts and planning. Mr. Lui is a Certified Practicing Accountant in Australia and received a Bachelor’s Degree in Business Administration from the Hong Kong Baptist University in 1993.

40

Section 16(a) Beneficial Ownership Reporting Compliance

To our knowledge, no director, officer or beneficial owner of more than ten percent of any class of our equity securities, failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended December 31, 2018, except as follows:

On December 29, 2017, we issued 630,000,000 shares of our Common Stock to SeD Home International, Inc., the sole shareholder of SeD Home, in exchange for all 500,000,000 of the issued and outstanding shares of SeD Home. SeD Home International, Inc. is a subsidiary of Singapore eDevelopment.

The Form 4 Singapore eDevelopment and Fai H. Chan filed to report this transaction was filed late. 

Moe T. Chan was appointed our Co-Chief Executive Officer on December 29, 2017. His Form 3 was filed late.

Code of Ethics

We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. We intend to adopt a code of ethics in the immediate future.

Corporate Governance

There have been no changes in any state law or other procedures by which security holders may recommend nominees to our board of directors. We do not have a nominating committee, however we intend to appoint one in the immediate future.

Audit Committee

Our board of directors has an Audit Committee consisting of Mr. Flanigan. The Audit Committee does not at the present time have an audit committee financial expert serving on its Audit Committee; however, our board intends to appoint an audit committee financial expert in the immediate future.

Family Relationships

Fai H. Chan, our Co-Chief Executive Officer, Chairman of our Board and Chairman of the Board and Chief Executive Officer of our majority shareholder and its corporate parent is the father of Moe T. Chan, our other Co-Chief Executive Officer and a Member of our Board.

Involvement in Certain Legal Proceedings

None of our directors, executive officers and control persons has been involved in any of the following events during the past ten years:

● Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,

● Any conviction in a criminal proceeding or being subject to any pending criminal proceeding (excluding traffic violations and other minor offenses);

● Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or

● Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

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Conflicts of Interest

Except as provided for in Article XI of the Company’s By-Laws: Board Director Compensation, no officer, director or security holder of the company may be involved in pecuniary interest in any investment acquired or disposed of by the registrant or in any transaction to which the registrant or any of its subsidiaries is party or has an interest.

None of the directors, officers, security holders or affiliates of the registrant may engage, for their own account, business activities of the types conducted by the registrant and its subsidiaries.

Item 11. Executive Compensation.

At the present time, neither SeD Intelligent Home Inc. nor SeD Home and its subsidiaries is a party to any compensation arrangements with any officer or director of either entity and has made no provisions for paying cash or non-cash compensation to such officers and directors, except for Charles MacKenzie and Rongguo (Ronald) Wei. A subsidiary of SeD Home is paying salaries to four employees at the present time, which includes Mr. Wei, and has consulting arrangements with certain individuals, including Mr. MacKenzie.

Mr. Wei was compensated by SeD Development Management LLC for his services to SeD Home at a rate of $118,800 per year, plus benefits valued at approximately $10,000 per year. Mr. Wei has been compensated by SeD Development Management LLC since 2016.  Mr. Wei was not paid by SeD Intelligent Home Inc. prior to its acquisition of SeD Home. SeD Development Management LLC will now continue to compensate Mr. Wei at the same rate, and he will perform services for SeD Intelligent Home Inc. as well as its subsidiary SeD Home.

A company controlled by Mr. MacKenzie was paid consulting fees of approximately $20,000 per month in 2017 and $15,000 per month in 2018, which includes payment for his services to SeD Home and its subsidiaries.

Mr. Flanigan serves in various director and officer positions with subsidiaries of Singapore eDevelopment. Mr. Flanigan’s law firm has been paid legal fees by various subsidiaries of Singapore eDevelopment in the past, including those fees paid to his law firm by SeD Home and its subsidiaries that are described in Item 13.

Mr. Fai H. Chan is compensated by Singapore eDevelopment, where he serves as Chief Executive Officer. Mr. Alan Lui is also employed and compensated by Singapore eDevelopment. Mr. Moe T. Chan serves as a consultant to Singapore eDevelopment. As part of their duties as officers or consultants of Singapore eDevelopment, each of these three individuals works on a number of matters for Singapore eDevelopment, including devoting various amounts of time to the management of Singapore eDevelopment’s various subsidiaries and divisions, such as SeD Intelligent Home and SeD Home. The amount of time each of these individuals spends on matters related to SeD Intelligent Home and SeD Home has varied greatly based on the Company’s needs, and no definite statement may be made as to what percentage of these three individuals’ time has been spent or will be spent in the future on matters related to SeD Intelligent Home and SeD Home. SeD Intelligent Home and SeD Home and its subsidiaries do not compensate these three individuals for their services. Neither SeD Intelligent Home Inc. nor SeD Home and its subsidiaries is charged for the services of Fai H. Chan, Moe T. Chan and Alan Lui and Singapore eDevelopment does not have a management contract with SeD Intelligent Home, SeD Home or any of its subsidiaries. Neither SeD Intelligent Home Inc. nor SeD Home and its subsidiaries is charged for the services of Fai H. Chan, Moe T. Chan and Alan Lui and Singapore eDevelopment does not have a management contract with SeD Intelligent Home, SeD Home or any of its subsidiaries.

In connection with the acquisition of SeD Home by SeD Intelligent Home Inc., SeD Intelligent Home Inc. and its subsidiaries intend to enter into revised compensation agreements with officers, directors and certain employees in the immediate future.

The table below summarizes all compensation awarded to, earned by, or paid to SeD Intelligent Home Inc.’s named executive officer for all services rendered in all capacities to us for the period from January 1, 2017 through December 31, 2018.

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SUMMARY COMPENSATION TABLE

Name and Principal Position (1)	Year	Salary	Bonus	Stock Awards	Option Awards	Non-Equity Incentive Plan Comp	Nonqualified deferred Comp Earnings	All Other Comp	Total
Fai H. Chan (2) Chairman of the Board and Co-Chief Executive Officer	2018	__	__	__	__	__	__	__	__
	2017	__	__	__	__	__	__	__	__
Moe T. Chan (2) Director and Co-Chief Executive Officer	2018	__	__	__	__	__	__	__	__
	2017	__	__	__	__	__	__	__	__
Conn Flanigan (3) Director and Former Chief Executive Officer	2018	__	__	__	__	__	__
	2017	__	__	__	__	__	__	$110,334(4)	$110,334(4)
Rongguo (Ronald) Wei (5)Co-Chief Financial Officer	2018	$118,800	__	__	__	__	__		$118,800
	2017	$112,800	__	__	__	__	__	$10,000	$122,800
Alan W. L. Lui (2)(6) Co-Chief Financial Officer	2018	__	__	__	__	__	__	__	__
	2017	__	__	__	__	__	__	__	__
Charles MacKenzie (7)Director	2018	__	__	__	__	__	__	$240,000	240,000(8)
	2017	__	__	__	__	__	__	$222,930(8)	$222,930(8)

(1) Effective as of December 29, 2017, Mr. Fai H. Chan was appointed as our Chairman and Co-Chief Executive Officer; Moe T. Chan was appointed as a member of our Board and as Co-Chief Executive Officer; Rongguo (Ronald) Wei and Alan W. L. Lui were appointed as our Co-Chief Financial Officers; and Charles MacKenzie joined the Company’s Board of Directors.

(2) Singapore eDevelopment compensates Mr. Fai H. Chan, Mr. Moe T. Chan and Mr. Lui for their services to a number of divisions and subsidiaries of Singapore eDevelopment. Each of these three individuals works on a number of matters for Singapore eDevelopment, including devoting various amounts of time to matters related to SeD Intelligent Home Inc. SeD Intelligent Home Inc. does not compensate these individuals and Singapore eDevelopment does not charge SeD Intelligent Home Inc. for their services.

(3) Mr. Flanigan resigned as Chief Executive Officer on December 29, 2017 but continues to serve as a member of our Board of Directors.

(4) Mr. Flanigan’s law firm was paid $110,334 in total fees by various subsidiaries of SeD Home for Mr. Flanigan’s services in 2017 and $101,979 in 2018.

(5) Mr. Wei was compensated by SeD Home’s subsidiary SeD Development Management LLC in 2017 and 2018, but did not commence serving as an officer of SeD Home until October of 2017.

(6) Mr. Lui was appointed Co-Chief Financial Officer of SeD Home in October of 2017.

(7) Mr. MacKenzie joined SeD Home’s Board of Directors in October of 2017.

(8) A company controlled by Mr. MacKenzie was paid total consulting fees of $222,930 in 2017 and $240,000 in 2018 by SeD Home.

As of the date of this Report, the Company does not have any stock option plans, retirement, pension, or profit sharing plans for the benefit of any of our officers or directors.

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Outstanding Equity Awards at Fiscal Year-End

There were no grants of stock options through the date of this report.

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

The board of directors of the Company has not adopted a stock option plan. The company has no plans to adopt it but may choose to do so in the future. If such a plan is adopted, this may be administered by the board or a committee appointed by the board (the “Committee”). The committee would have the power to modify, extend or renew outstanding options and to authorize the grant of new options in substitution therefore, provided that any such action may not impair any rights under any option previously granted. The Company may develop an incentive based stock option plan for its officers and directors.

Stock Awards Plan

The company has not adopted a Stock Awards Plan but may do so in the future. The terms of any such plan have not been determined. 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Security Ownership

The following table sets forth, as of December 31, 2018, and as of April 1, 2019, the number and percentage of our outstanding shares of common stock owned by (i) each person known to us to beneficially own more than 5% of its outstanding common stock, (ii) each director, (iii) each named executive officer and significant employee, and (iv) all officers and directors as a group.

The number of shares listed below includes shares that each shareholder listed in the table has the right to acquire beneficial ownership of within 60 days.

Name and Address (2)	Number of Common Shares Beneficially Owned	Percentage of Outstanding Common Shares (1)
Fai H. Chan (3)	704,015,730	99.99%
Moe T. Chan	0	0.00%
Conn Flanigan	0	0.00%
Charles MacKenzie	0	0.00%
Rongguo (Ronald) Wei	0	0.00%
Alan W. L. Lui	0	0.00%
All Directors and Officers (6 individuals)	704,015,730	99.99%
Singapore eDevelopment (3)	704,015,730	99.99%
SeD Home International, Inc. (3)	704,015,730	99.99%

(1) Based upon 704,043,324 outstanding common shares as of December 31, 2018 and April 1, 2019.

(2) The mailing address for each individual and entity set forth above is c/o SeD Intelligent Home Inc., 4800 Montgomery Lane, Suite 210, MD 20814.

(3) Fai H. Chan may be deemed to be the beneficial owner of those 704,015,730 shares held by Singapore eDevelopment’s subsidiary SeD Home International, Inc., as he is the Chief Executive Officer and majority shareholder of Singapore eDevelopment. Mr. Chan owns a majority of the issued and outstanding shares of Singapore eDevelopment indirectly through an entity he owns.

44

Change of Control

The Company is not aware of any arrangement which may at a subsequent date result in a change in control of the Company.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Family Relationships

Fai H. Chan, our Co-Chief Executive Officer, Chairman of our Board and Chairman of the Board and Chief Executive Officer of our majority shareholder and its corporate parent is the father of Moe T. Chan, our other Co-Chief Executive Officer and a Member of our Board.

Policies and Procedures for Transactions with Related Persons

Our board of directors intends to adopt a written related person transaction policy to set forth the policies and procedures for the review and approval or ratification of related person transactions. Related persons include any executive officer, director or a holder of more than 5% of our common stock, including any of their immediate family members and any entity owned or controlled by such persons. Related person transactions refer to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which (i) we were or are to be a participant, (ii) the amount involved exceeds $120,000, and (iii) a related person had or will have a direct or indirect material interest. Related person transactions include, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness, and employment by us of a related person, in each case subject to certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act.

We expect that the policy will provide that in any related person transaction, our audit committee and board of directors will consider all of the available material facts and circumstances of the transaction, including: the direct and indirect interests of the related persons; in the event the related person is a director (or immediate family member of a director or an entity with which a director is affiliated), the impact that the transaction will have on a director’s independence; the risks, costs and benefits of the transaction to us; and whether any alternative transactions or sources for comparable services or products are available. After considering all such facts and circumstances, our audit committee and board of directors will determine whether approval or ratification of the related person transaction is in our best interests. For example, if our audit committee determines that the proposed terms of a related person transaction are reasonable and at least as favorable as could have been obtained from unrelated third parties, it will recommend to our board of directors that such transaction be approved or ratified.Our audit committee will recommend that our board of directors reject any transaction if it could affect our ability to comply with securities laws and regulations.

Transactions with Related Persons, Promoters, and Certain Control Persons

Notes Payable before Intercompany Loan Restructuring

SeD Home received advances from Singapore eDevelopment (which was the 100% owner of the Company) to fund development costs and operation costs. The advances were unsecured, bear interest at 18% per annum and are payable on demand. As of December 31, 2015, SeD Home had outstanding principal due of $12,293,715 and accrued interest of $2,161,055 due to this related party.

SeD Home received advances from Singapore Construction & Development Pte Ltd (a wholly-owned subsidiary of Singapore eDevelopment) to fund development costs and operation costs. The advances were unsecured, bear interest at 18% per annum and were payable on demand. As of December 31, 2015, SeD Home had outstanding principal due of $4,300,930 and accrued interest of $1,461,058 due to this related party.

On September 30, 2015, SeD Home received $10,500,000 interest free loan, with a maturity date of March 31, 2016, from Hengfai Business Development Pte, Ltd, owned by the Chief Executive Officer of Singapore eDevelopment and is also the majority shareholder of Singapore eDevelopment, specifically for Ballenger Run project. SeD Home imputed interest at 13%, which is the interest rate on the Revere Loan noted in Note 5. The imputed interest resulted in a debt discount of $622,431 which is amortized over the life of the note. At December 31, 2015, SeD Home had $10,500,000 outstanding on the note and unamortized debt discount of $311,216. On April 1, 2016, SeD Home extended the note on the same terms through December 31, 2016. This resulted in an additional $933,647 of new imputed interest which was amortized during 2016.

45

Intercompany Loans Restructuring

At December 31, 2016, considering the long-term development and short-term debt repayment, SeD Home restructured the loans from these affiliates. The restructuring process was done to transfer the loans to SeD Home International (99.99 % owner of the Company), the principal of which, $26,913,525, was then forgiven and recorded into additional paid in capital. SeD Home still owed the accrued interest of $6,283,207 to SeD Home International. The remaining accrued interest does not bear interest. On August 30, 2017, an additional $4,560,085 of this interest was forgiven and recorded into additional paid in capital. The remaining amount of $1,723,122 was still outstanding as of December 31, 2018 and 2017

Loan from SeD Home Limited

SeD Home receives advances from SeD Home Limited (a subsidiary of Singapore eDevelopment), to fund development and operation costs. The advances bear interest at 10% and are payable on demand. As of December 31, 2018 and 2017, SeD Home had outstanding principal due of $1,116,406 and $1,050,000 and accrued interest of $193,382 and $86,425, respectively.

Loan from SeD Home International Inc.

SeD Home receives advances from SeD Home International Inc. The advances bore interest at 18% until August 30, 2017 when the interest rate was adjusted to 5% and have no set repayment terms. On December 31, 2018 and 2017, there was $4,629,178 and $6,953,591 of principal and $2,150,845 and $1,848,797 of accrued interest outstanding. Both accrued outstanding interests include the remaining amount $1,723,122 after interest was forgiven on August 30, 2017 as discussed in previous paragraph.

During 2017, prior to the Reverse Merger, SeD Intelligent Home Inc. borrowed $30,000 from SeD Home International Inc. The borrowings did not bear any interest. In November 2017, the debt was forgiven by SeD Home International Inc. and was recognized into additional paid in capital.

Other Transactions

On November 29, 2016 an affiliate of SeD Home entered into three $500,000 bonds for a total of $1.5 million that are to incur annual interest at 8% and the principal shall be paid in full on November 29, 2019. SeD Home agreed to guarantee the payment obligations of these bonds. Further, at the maturity date, the bondholder has the right to propose to acquire a property built by SeD Home, and SeD Home will facilitate that transaction. The proposed acquisition purchase price would be at SeD Home's cost. If the cost price is more than $1.5 million, the proposed acquirer would pay the difference, and if the cost price is below $1.5 million, the affiliate of SeD Home would pay the difference in cash.

The Reverse Merger

As described in Note 1, the Reverse Merger was done with a related party through common control and ownership.

Management Fees

Black Oak LP is obligated under the Limited Partnership Agreement (as amended) to pay a $6,500 per month management fee to Arete Real Estate and Development Company (Arete), a related party through common ownership and $2,000 per month to American Real Estate Investments LLC (AREI), a related party through common ownership. Arete is also entitled to a developer fee of 3% of all development costs excluding certain costs. The fees are to be accrued until $1,000,000 is received in revenue and/or builder deposits relating to the Black Oak Project.

On December 31, 2017, the Company had $314,630 owed to Arete and $48,000 to AREI in accounts payable and accrued expenses.

46

On April 26, 2018, SeD Development USA, Arete and AREI reached an agreement to terminate the terms related to management fees and developer fees in the Limited Partnership Agreement. In July 2018, per the terms of the termination agreement, Black Oak LP paid Arete $300,000 and AREI $30,000 to fulfill the commitments.

MacKenzie Equity Partners, owned by Charles MacKenzie, a Director of the Company, has had a consulting agreement with the Company’s subsidiary SeD Development Management LLC since 2015. Per the current terms of the agreement, as amended on January 1, 2018, the Company pays a monthly fee of $15,000 with an additional $5,000 per month to be paid when the property development cash flow milestones have been met. The Company incurred expenses of $240,000 and $222,930 for the years 2018 and 2017, respectively, which were capitalized as part of Real Estate on the balance sheet as the services relate to property and project management. As of December 31, 2018 and December 31, 2017, the Company owed this related party $60,000 and $0, respectively.

Purchase of Minority Interest of Black Oak LP

On July 23, 2018, SeD Development USA, LLC, a wholly owned subsidiary of the Company, entered into two Partnership Interest Purchase Agreements through which it purchased an aggregate of 31% of Black Oak LP for $60,000. In addition, if and when Black Oak LP receives at least $15 million in net reimbursement receivable proceeds from HC17 and/or Aqua Texas, Inc. (net of any expenses Harris County Improvement District 17 and/or Aqua Texas, Inc. may deduct), Black Oak LP shall pay Fogarty Family Trust II, one of two previous partners of Black Oak LP, an amount equal to 10% of the net reimbursement receivable proceeds received from HC17 and/or Aqua Texas, Inc. that exceeds $15 million; provided however, this obligation shall only apply to reimbursement revenue received on or before December 31, 2025. Prior to the Partnership Interest Purchase Agreements, the Company owned and controlled Black Oak LP through its 68.5% limited partnership interest and its ownership of the General Partner, 150 Black Oak GP, Inc, a 0.5% owner in Black Oak LP. As a result of the purchase, the Company, through its subsidiaries, now owns 100% of Black Oak LP.

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 $101,979 and $110,334 for the years ended December 31, 2018 and 2017, respectively. On December 31, 2018 and December 31, 2017, the Company owed this related party $8,000 and $18,000, respectively.

Item 14. Principal Accounting Fees and Services

The following table indicates the fees paid by us for services performed for the years ended December 31, 2018 and December 31, 2017:

	Year Ended December 31, 2018	Year Ended December 31, 2017
Audit Fees	$61,500	$52,455
Audit-Related Fees	$0	$0
Tax Fees	$25,000	$57,000
All Other Fees	$0	$0
Total	$86,500	$109,455

Audit Fees. This category includes the aggregate fees billed for professional services rendered by the independent auditors during the years ended December 31, 2018 and December 31, 2017 for the audit of our financial statements and review of previous years’ Form 10-Qs.

Tax Fees. This category includes the aggregate fees billed for tax services rendered in the preparation of our federal and state income tax returns.

All Other Fees. This category includes the aggregate fees billed for all other services, exclusive of the fees disclosed above, rendered during the year ended December 31, 2018 and December 31, 2017.

47

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)(1) List of Financial statements included in Part II hereof:

Balance Sheets as of December 31, 2018 and December 31, 2017

Statements of Operations for the twelve months ended December 31, 2018 and December 31, 2017

Statements of Stockholders' Equity (Deficit) for the period December 31, 2017 through December 31, 2018

Statements of Cash Flows for the twelve months ended December 31, 2018 and December 31, 2017

(a)(2) List of Financial Statement schedules included in Part IV hereof:

None.

(a)(3) Exhibits

The following exhibits are filed with this report or incorporated by reference:

Exhibit No.	Description
2.1	Acquisition Agreement and Plan of Merger dated December 29, 2017 by and among SeD Intelligent Home Inc., SeD Acquisition Corp., SeD Home International, Inc. and SeD Home Inc. incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
3.1	Certificate of Incorporation of the Company, incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-11 filed with the Securities and Exchange Commission on October 20, 2010.
3.2	Bylaws of the Company, incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-11 filed with the Securities and Exchange Commission on October 20, 2010.
3.3	Amendment to the Company’s Articles of Incorporation, incorporated herein by reference to Exhibit 3.3 to Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 2, 2017.
3.4	Certificate of Incorporation of SeD Home Inc. incorporated herein by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
3.5	Bylaws of SeD Home Inc. incorporated herein by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
10.1	Agreement of Limited Partnership of 150 CCM Black Oak, Ltd., dated as of March 20, 2014, by and between 150 Black Oak GP, Inc. and CCM Development USA Corporation, American Real Estate Investments, LLC and the Fogarty Family Trust II incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
10.2	Amendment of Agreement of Limited Partnership of 150 CCM Black Oak, Ltd., dated as of November 7, 2014, by and between 150 Black Oak GP, Inc. and CCM Development USA Corporation, American Real Estate Investments, LLC and the Fogarty Family Trust II incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.

48

10.3	Amendment of Agreement of Limited Partnership of 150 CCM Black Oak, Ltd., by and between 150 Black Oak GP, Inc. and CCM Development USA Corporation, American Real Estate Investments, LLC and the Fogarty Family Trust II incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
10.4	Amendment of Agreement of Limited Partnership of 150 CCM Black Oak, Ltd., dated as of September 26, 2014, by and between 150 Black Oak GP, Inc. and CCM Development USA Corporation, American Real Estate Investments, LLC and the Fogarty Family Trust II incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
10.5	Form of Lot Purchase Agreement for Ballenger Run, entered into as of December 10, 2014, by and among SeD Maryland Development, LLC and NVR, Inc. d/b/a Ryan Homes incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
10.6	Management Agreement, entered into as of July 15, 2015, by and between SeD Maryland Development, LLC and SeD Development Management, LLC incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
10.7	Amended and Restated Limited Liability Company Agreement of SeD Maryland Development, LLC, dated as of September 16, 2015, by and between SeD Maryland Development, LLC and SeD Development Management, LLC incorporated herein by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2017.
10.8	Consulting Services Agreement, dated as of May 1, 2017, between SeD Development Management LLC and MacKenzie Equity Partners LLC incorporated herein by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 1, 2018.
10.9	Project Development and Management Agreement for Ballenger Run PUD, dated as of February 25, 2015 by and between MacKenzie Development Company, LLC and Cavalier Development Group, LLC, incorporated herein by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2018.
10.10	Assignment and Assumption Agreement, dated as of September 15, 2017, by and between MacKenzie Development Company, LLC and Adams-Aumiller Properties, LLC, incorporated herein by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2018.
10.11	Lot Purchase Agreement, dated as of July 20, 2016, by and between SeD Maryland Development, LLC and Orchard Development Corporation, incorporated herein by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 14, 2018.
10.12	Partnership Interest Purchase Agreement, dated as of July 23, 2018, by and between SeD Development USA, Inc. and American Real Estate Investors, LLC, incorporated herein by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 14, 2018.
10.13	Partnership Interest Purchase Agreement, dated as of July 23, 2018, by and between SeD Development USA, Inc. and Fogarty Family Trust II, incorporated herein by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 14, 2018.
10.14	Purchase and Sale Agreement, by and among 150 CCM Black Oak, Ltd. and Houston LD, LLC, dated as of July 3, 2018.
10.15	Amended and Restated Purchase and Sale Agreement, by and among 150 CCM Black Oak, Ltd. and Houston LD, LLC, dated as of October 12, 2018.
21	Subsidiaries of the Company
31.1a	Certification of Co-Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.1b	Certification of Co-Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2a	Certification of Co-Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2b	Certification of Co-Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Item 16. Form 10-K Summary

None.

49

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	SeD Intelligent Home Inc.
Dated: April 1, 2019	By:	/s/ Rongguo (Ronald) Wei
		Name:  Rongguo (Ronald) Wei
		Title:    Co-Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Fai H. Chan	Co-Chief Executive Officer, Director	April 1, 2019
Fai H. Chan	(Principal Executive Officer)
/s/ Moe T. Chan	Co-Chief Executive Officer, Director	April 1, 2019
Moe T. Chan	(Principal Executive Officer)
/s/ Conn Flanigan	Secretary, Director	April 1, 2019
Conn Flanigan
/s/ Charley MacKenzie	Director	April 1, 2019
Charley MacKenzie
/s/ Rongguo (Ronald) Wei	Co-Chief Financial Officer	April 1, 2019
Rongguo (Ronald) Wei	(Principal Financial Officer and Principal Accounting Officer)
/s/ Alan W. L. Lui	Co-Chief Financial Officer	April 1, 2019
Alan W. L. Lui	(Principal Financial Officer and Principal Accounting Officer)

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EX-10.14

  Exhibit 10.14

PURCHASE AND SALE AGREEMENT

(DEVELOPED - BULK)

This Purchase and Sale Agreement (“Agreement”) is made between 150 CCM Black Oak, Ltd. a Texas limited partnership (collectively “Seller” and/or “Developer”, whether one or more) and Houston LD, LLC (“Buyer”).

1.Sale of Property/Lots.Seller agrees to sell and Buyer agrees to purchase, subject to the terms and conditions of this Agreement, certain property more particularly described as follows:

124 Lots located in the Lakes at Black Oak Subdivision, Magnolia, Montgomery County, Texas, as more particularly referenced and described on the “Plat” attached hereto as Exhibit A, and specifically including the Lot Numbers listed on Exhibit A.

together with all improvements thereon and all appurtenant rights of Seller including, without limitation, any rights of ingress and egress through the adjacent streets, roads, infrastructure, alleys and right-of-ways and such other rights as may be specified in this Agreement (collectively the “Property”, which may refer also to the lots included therein). Buyer and Seller acknowledge and understand the location and description of the Property referenced and described herein, regardless of the sufficiency of any legal description.

2.Purchase Price. The Purchase Price for Property shall be $6,175,000.00 and allocated as follows:

50 lf Lot	$44,000	Number of lots: 53	$2,332,000
60 lf Lot	$54,000	Number of lots: 70	$3,780,000
70 lf Lot	$63,000	Number of lots: 1	$63,000

The Purchase Price shall be payable as follows:

a.

Within two (2) business days of the Effective Date, Buyer shall deliver $50,000 to Texas State Title, attn. Cody Sobieski, Pres. 281-640-7660 (“Escrow Agent”) as earnest money to be credited toward the Purchase Price at the Closing. In addition, Buyer shall deliver along with the earnest money the independent consideration for the inspection period in Paragraph 4 below.

b.

Within two (2) business days after the expiration of the Inspection Period, Buyer shall deliver to the Escrow Agent an additional $100,000 non-refundable earnest money deposit, which shall be considered earnest money for all purposes under this Agreement, except that it is non-refundableunless Seller defaults.

c.

The remaining balance of the Purchase Price shall be paid in cash or its equivalent at Closing as specified below, as adjusted for prorations and closing costs described below, and subject to exceptions contained herein.

d.

In addition to the Purchase Price, Buyer agrees to pay $2,500 per lot at Closing as a “community enhancement fee” which Seller will apply exclusively towards funding an amenity package on the Property. The current proposed amenity package is attached on Exhibit B hereto.

The Purchase Price to be paid by Buyer for the Property is conditioned upon Seller’s delivery of the Property in compliance with the terms and conditions of this Agreement.

3.Effective Date. The Effective Date shall be the date when the last one of the Buyer or Seller executes this Agreement.

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4.Due Diligence Inspection Period. For the independent consideration of $500 paid to the Escrow Agent in accordance with Paragraph 2.a above, Buyer shall have forty-five (45) days from the Effective Date (“Inspection Period”) in which the Buyer may perform inspections and non-invasive testing, at its sole expense, to determine if the Property and lots located therein, in its sole discretion, is suitable for Buyer’s proposed development, use and business purposes and that the lots within Property are in compliance with all standards, conditions and terms hereof and herein. Buyer and its representatives shall have access to the Property during this Inspection Period and up until Closing. Buyer agrees to restore the Property substantially to its original condition after completion of such inspection and testing, which obligation shall survive termination of this Agreement. Buyer may cancel or terminate this Agreement at any time during the Inspection Period for any reason by delivering written notice of termination to Seller prior to the expiration of the Inspection Period and the parties shall be released from any further rights, obligations, and liabilities hereunder (except for those which expressly survive termination) and all earnest money on deposit shall be returned to the Buyer.

Buyer shall indemnify, defend, and hold Seller and its employees, representatives, and agents harmless from and against all claims, liabilities, liens, costs, fees, and expenses, including, without limitation, court costs, litigation expenses, and attorneys’ fees, related to or anyway arising from any of the inspections, tests, or entry on the Property. This obligation to indemnify and hold harmless shall survive the termination of this Agreement.

Within ten (10) days of the Effective Date, Seller agrees to disclose and provide to Buyer copies of any third party materials that Seller identifies in its possession that relate to the Property, which may include (but Seller does not represent that it has all of these materials) a current survey, boundary and topographical surveys, plats, HOA, restrictive covenants and conditions, engineering reports by electronic format in PDF, CAD (including but not limited to .dwg and/or .dgn format) or other media, environmental reports, flood zone certifications, soils reports, easement agreements, encroachments or encumbrances, municipal zoning related documents, improvement/management district information, requirements and fees, mineral leases, oil/gas wells/lines, property line discrepancies, and homeowners or community association documents, but Seller is under no obligation to disclose or provide documents of record in the real property records. Buyer may perform Phase I (but not Phase II environmental assessments on Property during the Inspection Period at its own expense.

If Buyer does not terminate this Agreement prior to the expiration of the Inspection Period, then the earnest money deposit shall become non-refundable (subject only to Seller’s ability to convey clear title and deliver the Property in compliance with the terms and conditions of this Agreement), and which shall be applied towards the Purchase Price at closing.

5.Title Commitment. Within seven (7) days after the Effective Date, Seller, at its expense, shall order and deliver to Buyer a title commitment for the Property in the amount of the Purchase Price from Escrow Agent and obtain a copy of all documents which constitute exceptions to the title commitment. Buyer shall give Seller written notice within twenty (20) days following receipt of the Title Commitment of any condition of title (exceptions or requirements) that is not satisfactory to Buyer. Seller may, but shall not be obligated, to resolve such matters; provided, however, that mortgage liens may be resolved at closing. If Seller is unable or unwilling to resolve such matters before the expiration of the Inspection Period as defined above, then Buyer may, at Buyer’s sole option, either (1) accept title subject to the objections raised by Buyer and such accepted objections shall become Permitted Exceptions (“Permitted Exceptions”) without any adjustment in the Purchase Price, or (2) terminate this Agreement prior to the expiration of the Inspection Period pursuant to Paragraph 4 above, whereupon the earnest monies shall be immediately returned to Buyer by Escrow Agent, or (3) work with Seller, if mutually agreeable, to satisfy unacceptable matters and postpone the end of the Inspection Period and/or Closing Date to satisfy these matters. At Closing, Seller shall provide Buyer with an owner’s policy of title insurance in the amount of the Purchase Price. Seller shall pay the cost for the basic cost of the owner’s policy of title insurance, and Buyer shall pay the cost for all endorsements, changes, and modifications to the owner’s policy of title insurance.

6.Closing. Closing shall occur within thirty (30) days after the expiration of the Inspection Period (“Closing Date”) subject to the Property being delivered in compliance with all terms herein.

7.Title & Deliveries. At or prior to Closing, Seller shall deliver to the Escrow Agent and/or Buyer the following items for the Property, duly executed and acknowledged where required:

A.Conveyance Deed. A special warranty deed in the form satisfactory to Buyer, specifically stating all approved exceptions to title, if any, subject but not limited to, zoning or deed restrictions, easements and encumbrances of record by either Buyer or Seller, or future assessments if applicable.

B.Foreign Person Tax Withholding. Documentation or information required for compliance with Section 1445 of the Internal Revenue Code.

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C.Additional Documents. Such additional documents as might be reasonably required by the Buyer, Buyer’s Lender, or the Escrow Agent to consummate the sale of the Property and convey clear title to the Buyer with all appurtenant rights.

D.Insurance Policy and Costs. Seller will pay the costs of Seller’s counsel, preparation of any deeds and any bill of sale, deliver and pay the basic costs for a title insurance policy in an amount equal to the Purchase Price, transfer taxes for the conveyance, and one half of the escrow or closing fees. Buyer will pay the cost of Buyer’s counsel, all loan costs required by Buyer’s lender, including title policy cost in excess of owner’s policy, Buyer’s portion of the cost of the owner’s policy of title insurance, one half of any escrow or closing fee, and recording fees for any deeds and mortgage, and any applicable mortgage tax.

E.Tax Prorations.All taxes and assessments (including pending assessments if the related improvement is substantially completed as of the Closing Date), whether payable in installments or not, for the year of closing will be prorated to the Closing Date based on the latest available tax rate and assessment valuation (with the parties signing a proration agreement as to adjustments when actual taxes are known).

8.Obligations of Seller & Conditions Precedent to Closing. Seller shall complete and deliver the Property in compliance with all terms and requirements stated herein, if not already done so. Buyer’s obligation to close on the Property or any lots within same is subject to and conditioned upon the compliance and satisfaction, as of the Closing Date, of each of the requirements described herein and below. Unless specifically stated otherwise, the satisfaction of these conditions shall be at Seller’s expense. Buyer shall cooperate with Seller to satisfy these conditions as needed.

A.Correctness of Representations and Warranties. Seller represents and warrants that (i) to its knowledge it holds good and marketable title in fee simple to the Property, (ii) all closing documents signed by Seller will be valid, authorized and binding upon Seller, (iii) to its knowledge no outstanding contracts, fees, debts or liens exist on the Property (except mortgage liens to be satisfied at closing and other items related to the development of the Property); and (iv) to Seller’s knowledge there are no leases or third-party rights/interests on the Property and Seller is in sole possession. These representations and warranties of Seller shall be evaluated by Buyer during its title review and the Inspection Period and shall not create any obligations of Seller or rights of Buyer, outside of those specified in Paragraphs 4 and 5 of this Agreement.

B.Final Plat Recording & 911 Addresses. Finalization and recording of the proposed plat and Seller’s delivering a copy thereof to Buyer on or before the Closing Date. The plat shall be deemed finalized after all required governmental approvals have been obtained, said plat has been duly recorded in the real property records of the applicable County Clerk’s office, corresponding 911 addresses have been provided by the Seller to the Buyer.

C.Covenants, Conditions, and Restrictions (“CC&Rs”). Seller shall draft CC&Rs for Buyer’s review prior to the expiration of the Inspection Period, and Buyer shall approve the CC&Rs so long as they are reasonable. If buyer does not believe that the CC&Rs are reasonable, it shall give Seller written notice specifying its objections and Seller and Buyer shall attempt to negotiate a final set of CC&Rs prior to the expiration of the Inspection Period. If Seller or its affiliate is the declarant and/or governing architectural review authority under the CC&Rs, then upon Buyer’s submittal from time to time, Seller shall approve Buyer’s submittals so long as they are in accordance with the CC&Rs.

D.Completion/Compliance. The Property and lots therein have been completed in full compliance with all terms hereof. All requirements by applicable local, state and federal governmental authorities will have been met or exceeded for the Property and each lot therein, including but not limited to, preliminary and final plat approval, proper construction and availability of fully operational utilities including roads, water, sanitary sewer, storm, sewer with all necessary permits and fully compliant (no violations) with all applicable rules, regulations, and ordinances of applicable authorities, and a written statement from the engineer of record that building permits are obtainable from the appropriate governmental agencies for the construction of single-family houses on the lots. A preliminary and final plat of the development, approved construction drawings from the municipal authority and an “AS BUILT” survey will be provided in “PDF” and “CAD” format to the Buyer as they become available. Each lot pin shall have a flagged wooden lathe to mark the pin location. Provided that Buyer provides Seller adequate and appropriate utility easements over and under the Property, as reasonably determined by Seller, Seller will cause permanent underground electric power and telecommunication facilities (collectively, the “Permanent Utilities”) to be installed and available to the perimeter of each lot within the Property within ninety (90) days after Buyer has poured the slab for a residence on a lot and has given Seller written notice that Buyer is ready for the Permanent Utilities for the lot. This post-closing obligation of Seller to provide Permanent Utilities shall expressly survive Closing for twenty-four (24) months.

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E.Permits and Environmental Concerns. Seller will obtain and complete all requirements related to Storm Water Pollution Prevention Plans (“SWPPP”) as required by applicable local, state and federal authorities and maintain the same during the development of the lots within the Property. Upon Closing, Seller will deliver to Buyer satisfactory approval from the appropriate authority/agency regarding storm water quality that all BMP’s are installed and maintained per the SWPPP. Upon Closing, Seller shall transfer (to the extent transferrable) the stormwater permit to Buyer and Buyer shall assume all responsibility for future maintenance and installation and Seller shall be released from liability thereon. Seller shall have caused all FEMA requirements to have been met for a home on any lot to be exempted from purchasing flood insurance and no portion of any house pad site (it being understood that some portions of some lots are within a flood plain) is to be located in a FEMA defined flood plain. Seller’s principals have no actual knowledge that the Property has been or is presently used for handling, storage, manufacturing, refining, transportation or disposal of “toxic material”, “hazardous substances”, or “hazardous waste”. If “hazardous wastes”, “hazardous substances”, or “hazardous material” is located on the Property, as determined by a Phase I or permitted Phase II environmental assessment obtained by the Buyer, then Buyer shall have the right to terminate this Agreement during the Inspection Period pursuant to Paragraph 4 above.

F.Trash, Trees, Brush & Debris. The Property is being sold “as-is” and Buyer shall be responsible for mowing, brush hogging, and removing, clearing, and disposing of all trees, trash and debris on the Property, except that Seller will remove any construction debris of which Buyer notifies Seller in writing prior to the expiration of the Inspection Period.

9. Offsite Water Flow. Seller will deliver the Property at Closing with proper offsite water flow on and to the Property and which will be managed through the appropriate infrastructure.

10.Subsurface Rock. Prior to expiration of the Inspection Period, Buyer may terminate this Agreement pursuant to Paragraph 4 above and recover the earnest money upon the discovery of subsurface rock underlying the Property in any quantity deemed excessive by the Buyer, unless Seller has remedied the same to Buyer’s satisfaction.

11.Assessments. So long as Developer is in control under the CC&Rs, Buyer shall be exempt from paying any and all applicable assessments (but will have to pay TAP fees and the amenity assessment) in the CC&Rs to the Developer during the Seller’s period of ownership, including, but not limited to regular and special assessments. Seller also agrees to exempt bona fide home builders from assessments in the CC&Rs, during the same time period.

12.Notice. All notices will be in writing and served by electronic transmission to the addresses shown below, until notification of a change of such addresses. All such notices shall be deemed delivered on the date initiated.

For Bu David C. Frye, Manager David.frye@rauschcoleman.com 479.455.9090 Dana Danvers, Director of Acquisitions Dana.danvers@rauschcoleman.com John Maberry John.maberry@rauschcoleman.com Josh Carson Josh.carson@rauschcoleman.com Julie Bias, Financial Coordinator Julie.bias@rauschcoleman.com   For Seller: Charley MacKenzie   charley@sed.com.sg Daryl Robinson drobinson@newquestcrosswell.com Moe Chan moe@sed.com.sg Shamar O’Bryant shamar@sed.com.sg Frank Heuszel fheuszel@yahoo.com Randy Farber rfarber@jw.com

13.Disclosure by Buyer and Seller. One or more individuals representing the Buyer or Seller may hold real estate licenses from multiple states.

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14.Default. If Seller has performed all of Seller’s obligations and fulfilled the conditions under this Agreement and, if within five (5) days after the date specified for Closing, the Buyer fails to make payment as required herein, through no fault of Seller, then Seller may, as its sole and exclusive remedy, cancel and terminate this Agreement and keep the earnest money deposit paid by the Buyer as liquidated damages. If Seller breaches this Agreement or fails to perform any of Seller’s obligations hereunder, then Buyer may as its sole remedy, (i) terminate this Agreement and receive a refund of all of the earnest money, or (ii) seek specific performance of this Agreement pursuant to the remainder of this Paragraph 14.

a.

Buyer may enforce specific performance of Seller’s obligation to execute the documents required to convey the Property to Buyer but waiving any uncured title or survey objections or matters and without any offset against, deduction from, or reduction in the Purchase Price (except for the costs Buyer will incur to complete the Property in accordance with the terms hereof), and Seller’s warranty of title in the special warranty deed and the owner policy of title insurance to be delivered under this Agreement shall be subject to the permitted title exceptions and all uncured title or survey objections or matters, and Buyer expressly waives its rights to seek damages if it files a lawsuit for specific performance.

b.

Buyer shall be deemed to have elected to terminate this Agreement under clause (i) above if Buyer fails to file suit for specific performance in accordance with Sub-Paragraph a above (against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before 60 days after the date upon which closing was to have occurred.

15.Binding Effect/Assignment. This Agreement will inure to the benefit of and bind the respective successors of the parties. Seller may not assign this Agreement or any obligations hereunder. Buyer may assign this Agreement and any and all rights and obligations hereunder at any time prior to closing to any person or entity controlling, controlled by, or under common control with Buyer. For purposes of this Paragraph a person or entity shall control an entity, if it, directly or indirectly, holds a majority interest in the entity to be controlled.

16.No Waiver. Failure of either party to exercise any rights under this Agreement shall not constitute a waiver of any right, nor excuse the other party’s full performance. No express waiver of any matter shall affect any other matter under this Agreement. Express waivers are only effective if in writing.

17.Brokerage. Buyer represents that it has not contracted with any real estate broker in connection with the transaction contemplated by this Agreement. Seller shall be responsible for paying a 4% Broker’s commission based on the Purchase Price to Dave Ramsey with Home Asset, Inc. Each party shall indemnify and hold the other party harmless from all claims, losses, liabilities, costs, fees, and expenses (including, but not limited to, court costs, litigation expenses, and attorneys’ fees) related to or incurred in connection with any claims for brokerage commissions arising by, through, or under the indemnifying party.

18.Entire Agreement. This document constitutes the entire agreement between the parties, incorporating all prior agreements, and may only be amended in writing executed by both parties. The exhibits attached to this Agreement are incorporated into this Agreement for all purposes.

19.Attorney’s Fees. If either party prevails against the other in a legal action concerning any part of this Agreement, the successful party shall be entitled to its reasonable attorney’s fees and costs connected with such action, through appellate and bankruptcy proceedings, in addition to all other recovery or relief. Costs shall include all deposition costs and expert fees, even if not used at trial.

20.Governing Law. This Agreement shall be governed and enforced in accordance with the law of the state where the Property is located.

21.Time. Buyer and Seller understand that “Time is of the Essence” for this Agreement.

22.ADA Compliant Ramps. Seller shall be responsible for installation of any and all required ADA sidewalk ramps for sidewalks installed by Seller. Said ramps shall meet all the ADA Guidelines, Code and Specifications for such ramps.

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23.Special Stipulations.

a.

Within 30 days after Closing, Seller shall commence construction of the Black Oak Community Entry on Black Oak Drive, including the landscaping and amenities in Paragraph 1. This provision shall expressly survive Closing and remain a continuing obligation of Seller until complete.

b.

During the Inspection Period, Buyer shall propose its signage to Seller for approval, as to type, size, appearance, and placement. Seller shall not unreasonably withhold its approval of the signage, so long as the signage meets all applicable governmental requirements and is limited so as not to clutter the Property. After approval by Seller, Buyer may place the signage in the agreed locations prior to closing.

c.

Seller’s obligations under this Paragraph 23 and any liabilities therefore shall survive Closing.

d.

The terms of this Agreement shall be kept confidential by both parties, subject to the remainder of this Paragraph 23.d. Each party may disclose the terms of this Agreement (including information about the parties) where disclosure is required by (or advisable to comply with) applicable law or regulation, rule of stock exchange, governmental agency, or self-regulatory agency, by a court of competent jurisdiction, or by any other regulatory body, and the terms may be disclosed to the parties’ respective counselors, attorneys, accountants, brokers, and other persons with a need to know.

24.AS-IS. Subject to the representations and covenants, stated herein to expressly survive Closing, and the specific provisions of Paragraph 8.D, the parties intend that the sale of the Property will be made on an “As Is, Where Is” basis with all faults, in accordance with the terms and provisions of Exhibit C.

25.Statutory Notices. To the extent applicable, Seller gives Buyer the notices set forth in Exhibit D.

SELLER: 150 CCM BLACK OAK LP, a Texas limited partnership By:     150 Black Oak GP, Inc., a Texas corporation Its:      General Partner By:      /s/ Charley MacKenzie  Charley MacKenzie, Chief Development Officer Date: 7/2/18                                                            BUYER: HOUSTON LD, LLC By: /s/ David C. Frye                                                          David C. Frye, Manager Date: 7-2-18                                                         

EXHIBIT A 

Description and Plat of Property

and List of Lots

Purchase and Sale Agreement                                                                                                                                                                

150 CCM Black Oak, Ltd.

Houston LD, LLC                                                                       

Exhibit A-

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   EXHIBIT B 

Proposed Amenity Package

Purchase and Sale Agreement                                                                                                                                                                

150 CCM Black Oak, Ltd.

Houston LD, LLC                                                                        

Exhibit B-

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EXHIBIT C 

As-Is, Where-Is

1.

BUYER ACKNOWLEDGES AND AGREES THAT SELLER AND ITS AGENTS HAVE NOT MADE, DO NOT MAKE, WILL NOT MAKE AND SPECIFICALLY NEGATE AND DISCLAIM ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED, OR STATUTORY, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (A) THE NATURE, QUALITY, OR CONDITION OF THE PROPERTY OR ANY PART THEREOF, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, AND GEOLOGY; (B) THE ECONOMIC FEASIBILITY OF THE PROPERTY OR THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (D) EXCEPT FOR ANY WARRANTIES OF TITLE CONTAINED IN THE SPECIAL WARRANTY DEED TO BE DELIVERED BY SELLER AT THE CLOSING, THE NATURE AND EXTENT OF ANY RIGHT-OF-WAY; (E) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES, OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, INCLUDING, WITHOUT LIMITATION, THE STATUS OF ANY PERMITS AND GOVERNMENTAL APPROVAL; (F) THE RENTABILITY, HABITABILITY, MARKETABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (G) THE PRESENCE OF ANY ENDANGERED OR THREATENED SPECIES ON THE PROPERTY, AS WELL AS THE SUITABILITY OF THE PROPERTY AS HABITAT FOR ANY OF THOSE SPECIES; OR (H) ANY OTHER MATTER WITH RESPECT TO THE PROPERTY. WITHOUT LIMITING THE FOREGOING, SELLER AND ITS AGENTS HAVE NOT MADE, DO NOT MAKE, WILL NOT MAKE AND SPECIFICALLY NEGATE AND DISCLAIM ANY REPRESENTATION OR WARRANTY REGARDING THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS (AS HEREINAFTER DEFINED) ON, UNDER, OR ABOUT THE PROPERTY OR THE COMPLIANCE OF THE PROPERTY WITH ANY OF THE ENVIRONMENTAL LAWS (AS HEREINAFTER DEFINED). THE TERM “HAZARDOUS MATERIALS” MEANS ANY SUBSTANCE, COMPOUND, MATERIAL OR WASTE, WHETHER SOLID, LIQUID OR GASEOUS: (1) THE PRESENCE OF WHICH REQUIRES INVESTIGATION, MONITORING OR REMEDIATION UNDER ANY ENVIRONMENTAL LAW (DEFINED BELOW); (2) WHICH IS OR BECOMES DEFINED AS A “HAZARDOUS SUBSTANCE”, “HAZARDOUS MATERIAL”, “HAZARDOUS WASTE”, “EXTREMELY HAZARDOUS WASTE”, “SOLID WASTE”, “TOXIC SUBSTANCE”, “CHEMICAL SUBSTANCE”, “REGULATED SUBSTANCE”, “POLLUTANT”, OR “CONTAMINANT”, OR IS OTHERWISE CLASSIFIED AS HAZARDOUS OR TOXIC, IN OR PURSUANT TO ANY ENVIRONMENTAL LAW; (3) WHICH IS EXPLOSIVE, CORROSIVE, FLAMMABLE, RADIOACTIVE, OR OTHERWISE HAZARDOUS AND IS OR BECOMES REGULATED BY ANY GOVERNMENTAL AUTHORITY, AGENCY, DEPARTMENT, COMMISSION, BOARD, AGENCY OR INSTRUMENTALITY OF THE UNITED STATES, THE STATE OF TEXAS OR ANY POLITICAL SUBDIVISION THEREOF; (4) THE PRESENCE OF WHICH ON THE PROPERTY CAUSES OR THREATENS TO CAUSE A NUISANCE UPON THE PROPERTY OR TO ADJACENT PROPERTIES OR POSES OR THREATENS TO POSE A HAZARD TO THE HEALTH OR SAFETY OF PERSONS ON OR ABOUT THE PROPERTY; (5) THAT CONTAINS PETROLEUM HYDROCARBONS, ASBESTOS, RADON, POLYCHLORINATED BIPHENYLS, UREA FORMALDEHYDE FOAM INSULATION, LEAD, OR MOTOR FUEL OR OTHER VOLATILE ORGANIC COMPOUNDS; (6) WHICH CAUSES OR POSES A THREAT TO CAUSE A HAZARD TO THE ENVIRONMENT OR TO THE HEALTH, SAFETY OR WELFARE OF PERSONS ON OR ABOUT THE PROPERTY, OR (7) WHICH IS A SHARP (E.G. NEEDLE) OR AN INFECTIOUS, MEDICAL OR RADIOACTIVE WASTE. THE TERM “ENVIRONMENTAL LAWS” MEANS ANY FEDERAL, STATE OR LOCAL LAW, STATUTE, GUIDANCE OR POLICY STATEMENT, ORDINANCE, CODE, RULE, REGULATION, LICENSE, AUTHORIZATION, DECISION, ORDER, INJUNCTION OR DECREE, WHICH PERTAINS TO HEALTH, SAFETY OR THE ENVIRONMENT (INCLUDING, BUT NOT LIMITED TO, GROUND, AIR, WATER OR NOISE POLLUTION OR CONTAMINATION, AND UNDERGROUND OR ABOVEGROUND TANKS) AND SHALL INCLUDE WITHOUT LIMITATION, THE CLEAN WATER ACT, 33 U.S.C. § 1251 ET SEQ.; THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT, 42 U.S.C. § 9601 ET SEQ.; THE RESOURCE CONSERVATION AND RECOVERY ACT, 42 U.S.C. § 6901 ET SEQ.; THE TOXIC SUBSTANCE CONTROL ACT, 15 U.S.C. §§ 2601 ET SEQ; THE OCCUPATIONAL HEALTH AND SAFETY ACT; THE TEXAS WATER CODE; AND THE TEXAS SOLID WASTE DISPOSAL ACT, TEXAS HEALTH AND SAFETY CODE CHAPTER 361, ALL AS AMENDED.

2.

BUYER AGREES THAT IT HAS EXAMINED AND INVESTIGATED THE PROPERTY PRIOR TO EXECUTION HEREOF OR THAT IT WILL INVESTIGATE THE PROPERTY PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD AND THAT IN PURCHASING THE PROPERTY BUYER WILL RELY SOLELY UPON ITS INDEPENDENT EXAMINATION, STUDY, INSPECTION AND KNOWLEDGE OF THE PROPERTY, AND BUYER IS RELYING SOLELY UPON ITS OWN EXAMINATION, STUDY, INSPECTION, AND KNOWLEDGE OF THE PROPERTY AND BUYER’S DETERMINATION OF THE VALUE OF THE PROPERTY AND USES TO WHICH THE PROPERTY MAY BE PUT, AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER.

3.

BUYER AGREES TO PAY FOR AND HAS MADE OR CAUSED TO BE MADE (OR WILL MAKE OR CAUSE TO BE MADE) ALL INSPECTIONS, INVESTIGATIONS AND ANALYSES NECESSARY OR APPROPRIATE FOR THE PURPOSE OF DETERMINING COMPLIANCE OR NON-COMPLIANCE BY THE PROPERTY WITH ALL BUILDING, HEALTH, ENVIRONMENTAL, ZONING AND LAND USE LAWS, ORDINANCES, RULES AND REGULATIONS, AND SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, CONCERNING THE PROPERTY’S COMPLIANCE WITH SUCH BUILDING, HEALTH, ENVIRONMENTAL, ZONING AND LAND USE LAWS, ORDINANCES, RULES AND REGULATIONS.

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4.

BUYER FURTHER ACKNOWLEDGES THAT THE INFORMATION, IF ANY, PROVIDED AND TO BE PROVIDED WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND SELLER (A) HAS NOT MADE AND WILL NOT BE OBLIGATED TO MAKE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND (B) DOES NOT MAKE ANY REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. BUYER ACKNOWLEDGES AND AGREES THAT ALL MATERIALS, DATA AND INFORMATION DELIVERED AT ANY TIME BY SELLER TO BUYER IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY ARE PROVIDED TO BUYER AS A CONVENIENCE ONLY AND THAT ANY RELIANCE ON OR USE OF SUCH MATERIALS, DATA OR INFORMATION BY BUYER SHALL BE AT THE SOLE RISK OF BUYER. BUYER ACKNOWLEDGES AND AGREES THAT IT WILL CONDUCT ITS OWN VERIFICATION OF THE INFORMATION, EITHER INDEPENDENTLY OR THROUGH AGENTS OF BUYER’S CHOOSING. NEITHER SELLER, NOR ITS AGENTS, NOR THE PERSON OR ENTITY WHICH PREPARED ANY REPORT OR REPORTS DELIVERED BY SELLER TO BUYER SHALL HAVE ANY LIABILITY TO BUYER FOR ANY INACCURACY IN OR OMISSION FROM ANY SUCH REPORTS.

5.

BUYER RELEASES, ACQUITS AND FOREVER DISCHARGES SELLER FROM, AND WAIVES, ANY AND ALL LIABILITIES, CLAIMS, CAUSES OF ACTION, DAMAGES, AND OTHER RELIEF, WHETHER AT LAW OR IN EQUITY AND WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, AND WHETHER PAST, PRESENT, OR FUTURE, IN CONNECTION WITH, AS A RESULT OF OR OTHERWISE WITH REGARD TO THE CONDITION OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO ITS ENVIRONMENTAL CONDITION. THIS GENERAL RELEASE SHALL BE APPLICABLE, WITHOUT LIMITATION, TO ANY AND ALL LIABILITIES, CLAIMS, CAUSES OF ACTION, DAMAGES AND OTHER RELIEF UNDER ANY OF THE ENVIRONMENTAL LAWS.

6.

THE OCCURRENCE OF A CLOSING SHALL CONSTITUTE AN ACKNOWLEDGMENT BY BUYER THAT THE PROPERTY WAS ACCEPTED WITHOUT REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED (EXCEPT FOR THE SPECIAL WARRANTIES OF TITLE SET FORTH IN THE SPECIAL WARRANTY DEED), AND OTHERWISE IN AN “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS” CONDITION. THE PROVISIONS OF THIS EXHIBIT SHALL SURVIVE CLOSING.

Purchase and Sale Agreement                                                                                                                                                                

150 CCM Black Oak, Ltd.

Houston LD, LLC                                                                       

Exhibit C-

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EXHIBIT D

Statutory Notices

1.

Abstract or Title Policy. Buyer should have an abstract covering the Property examined by an attorney of Buyer’s selection, or Buyer should be furnished with or obtain a title policy.

2.

Notice Regarding Possible Liability for Additional Taxes (§5.010 Texas Property Code). If the Property is vacant land, then pursuant to Section 5.010 of the Texas Property Code Seller notifies Buyer: “If for the current ad valorem tax year the taxable value of the land that is the subject of this Agreement is determined by a special appraisal method that allows for appraisal of the land at less than its market value, the person to whom the land is transferred may not be allowed to qualify the land for that special appraisal in a subsequent tax year and the land may then be appraised at its full market value. In addition, the transfer of the land or a subsequent change in the use of the land may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the land. The taxable value of the land and the applicable method of appraisal for the current tax year is public information and may be obtained from the tax appraisal district established for the county in which the land is located.”

3.

Notice Regarding Possible Annexation (§5.011 Texas Property Code). If the Property is located outside the limits of a municipality, the Property may now or later be included in the extra-territorial jurisdiction (“ETJ”) of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and ETJ. To determine if the Property is located within a municipality’s ETJ or is likely to be located within a municipality’s ETJ, Buyer should contact all municipalities located in the general proximity of the Property for further information.

4.

Notice of Water Level Fluctuations (§5.019 Texas Property Code). If the Property adjoins an impoundment of water, including a reservoir or lake, constructed and maintained under Chapter 11 of the Texas Water Code, that has a storage capacity of at least 5,000 acre-feet at the impoundment’s normal operating level, then pursuant to Section 5.019 of the Texas Property Code Seller notifies Buyer: “The water level of the impoundment of water adjoining the Property fluctuates for various reasons, including as a result of: (1) an entity lawfully exercising its right to use the water stored in the impoundment; or (2) drought or flood conditions.”

5.

Notice of Private Transfer Fee (§5.205 Texas Property Code). If the Property is subject to a private transfer fee, then pursuant to Section 5.205 of the Texas Property Code Seller notifies Buyer that the private transfer fee obligation may be governed by Chapter 5, Subchapter G of the Texas Property Code.

6.

Notice Required by §13.257 of the Texas Water Code Regarding Certificated Water or Sewer Service. Pursuant to Section 13.257 of the Texas Water Code Seller notifies Buyer: “The real property, described below, that you are about to purchase may be located in a certificated water or sewer service area, which is authorized by law to provide water or sewer service to the properties in the certificated area. If your property is located in a certificated area there may be special costs or charges that you will be required to pay before you can receive water or sewer service. There may be a period required to construct lines or other facilities necessary to provide water or sewer service to your property. You are advised to determine if the Property is in a certificated area and contact the utility service provider to determine the cost that you will be required to pay and the period, if any, that is required to provide water or sewer service to your property. The undersigned Buyer hereby acknowledges receipt of the foregoing notice at or before the execution of a binding Agreement for the purchase of the real property described in the notice or at closing of purchase of the real property.” The real property referred to in this notice is the Property defined in this Agreement.

7.

Notice Regarding Taxing Districts (§49.452 Texas Water Code). If the Property is located in a district created under Title 4 of the Texas Water Code (currently Chapters 49 through 68) or by a special act of the legislature, that is providing or proposing to provide water, sanitary sewer, drainage, or flood control or protection facilities or services, or any of these facilities or services that have been financed or are proposed to be financed with bonds of the district payable in whole or part from taxes of the district, or by imposition of a standby fee, if any, then pursuant to Section 49.452 of the Texas Water Code Seller gives Buyer the notice in the attached Exhibit E, which is incorporated into this Agreement for all purposes.

8.

Notice of Obligation to Pay Public Improvement District Assessment (§5.014 Texas Property Code). If the Property is located in a public improvement district established under Subchapter A, Chapter 372, Local Government Code, or Chapter 382, Local Government Code, and consists of not more than one dwelling unit, then pursuant to Section 5.014 of the Texas Property Code Seller notifies Buyer that as a Buyer of the Property you are obligated to pay an assessment to a municipality or county for an improvement project undertaken by a public improvement district under Subchapter A, Chapter 372, Local Government Code, or Chapter 382, Local Government Code. The assessment may be due annually or in periodic installments. More information concerning the amount of the assessment and the due dates of that assessment may be obtained from the municipality or county levying the assessment. The amount of the assessments is subject to change. Your failure to pay the assessments could result in a lien on and the foreclosure of your property.

Purchase and Sale Agreement                                                                                                                                                                

150 CCM Black Oak, Ltd.

Houston LD, LLC                                                                       

Exhibit D-

10

EXHIBIT E 

Notice of Utility or Other Statutorily Created District

(§49.452 and § 54.812 Texas Water Code)

NOTICE TO BUYER OF REAL ESTATE

SITUATED IN

HARRIS COUNTY IMPROVEMENT DISTRICT NO. 17

The real property, described below, which you are about to purchase is located Harris County Improvement District No. 17 (the “District”). The District has taxing authority separate from any other taxing authority, and may, subject to voter approval, issue an unlimited amount of bonds and levy an unlimited rate of tax in payment of such bonds. As of this date, the rate of taxes levied by the District on real property located in the District is $1.25 on each $100 of assessed valuation. The total amount of bonds, excluding refunding bonds and any bonds or any portion of bonds issued that are payable solely from revenues received or expected to be received under a contract with a governmental entity, approved by the voters and that has been or may be issued, at this date, is $200,000,000 for water, sewage and drainage purposes, $670,000,000 for roads, and $80,000,000 for parks and recreational facilities, and the aggregate initial principal amount of all bonds issued for one or more of the specified facilities of the District and payable in whole or in part from property taxes is $-0-.

The District also has the authority to adopt and impose a standby fee on property in the District that has water, sanitary sewer, or drainage facilities and services available but not connected and which does not have a house, building or other improvement located thereon and does not substantially utilize the utility capacity available to the property. The District may exercise the authority without holding an election on the matter. As of this date, the most recent amount of the standby fee is $-0-. An unpaid standby fee is a personal obligation of the person that owned the property at the time of imposition and is secured by a lien on the property. Any person may request a certificate from the District stating the amount, if any, of unpaid standby fees on a tract of property in the District.

The District has the authority to levy an assessment on property within the District. The District may exercise this authority without holding an election the matter. As of this date, the amount of the assessment is $-0- per $100 valuation for real property and improvements thereon. The District is located in whole or in part within the extra-territorial jurisdiction of the Cities of Houston and Tomball. By law, a district located in the extraterritorial jurisdiction of a municipality may be annexed without the consent of a district or the voters in the District. When a district is annexed, it is dissolved.

The purpose of this District is to provide water, sewer, drainage or flood control facilities, roads, services, and park and recreation facilities within the District through the issuance of bonds payable in whole or in part from property taxes. The cost of these utility facilities is not included in the purchase price of your property, and these utility facilities are owned or to be owned by the District.

See the legal description of the Property in the contract to which this notice is attached.

Buyer is advised that the information shown on this form is subject to change by the district at any time. The district routinely establishes tax rates during the months of September through December of each year, effective for the year in which the tax rates are approved by the district. Buyer is advised to contact the district to determine the status of any current or proposed changes to the information shown on this form.

The Buyer hereby acknowledges receipt of the foregoing notice at or prior to execution of a binding contract for the purchase of the real property described in such notice or at closing of purchase of the real property.

07/02/2018	By:	/s/ Charley MacKenzie
Date		Signature of Seller

The undersigned Buyer hereby acknowledges receipt of the foregoing at or prior to execution of a binding contract for the purchase of the real property described in such notice or at closing of purchase of the real property.

07/02/2018	By:	/s/ David C. Frye
Date		Signature of Buyer

150 CCM Black Oak, Ltd.

Houston LD, LLC                                                                        

Exhibit E-

11

EX-10

EXHIBIT 10.15

AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT

(DEVELOPED - BULK)

This Amended and Restated Purchase and Sale Agreement (“Agreement”) is made between 150 CCM Black Oak, Ltd. a Texas limited partnership (collectively “Seller” and/or “Developer”, whether one or more) and Houston LD, LLC (“Buyer”).

WHEREAS, the parties entered into that certain Purchase & Sale Agreement on July 2, 2018 (“Original Agreement”) involving the purchase and sale of the same developed real property described herein and that is the subject of this Agreement; and

WHEREAS, during the Inspection Period as defined in the Original Agreement, Buyer was made aware of certain pending and on-going agreements and operations with third parties relating to the development and construction of the water, sewer, and other infrastructure/utilities that will serve the lots within the real property, and which still requires substantial work in order to complete development of the lots; and

WHEREAS, the parties amended the Original Agreement on several occasions to extend the dates and deadlines within the Original Agreement to allow Seller to continue its development work and to discuss the terms for this Agreement; and

WHEREAS, the parties now wish to amend and restate the terms of the Original Agreement to account for Seller’s pending and on-going development work.

NOW THEREFORE, for Ten Dollars ($10.00) and other valuable consideration received and acknowledged by the parties, the parties do hereby amend and re-state the Original Agreement in its entirety as set forth in this Agreement, which shall replace and supersede the Original Agreement, except for Buyer’s acknowledgement of receipt of the notice set forth on the attached Exhibit E, which shall not be superseded.

1.      Sale of Property/Lots.Seller agrees to sell and Buyer agrees to purchase, subject to the terms and conditions of this Agreement, certain property more particularly described as follows:

124 Lots located in the Lakes at Black Oak Subdivision, Magnolia, Montgomery County, Texas, as more particularly referenced and described on the “Plat” attached hereto as Exhibit A, and specifically including the Lot Numbers listed on Exhibit A.

together with all improvements thereon and all appurtenant rights of Seller including, without limitation, any rights of ingress and egress through the adjacent streets, roads, infrastructure, alleys and right-of-ways and such other rights as may be specified in this Agreement (collectively the “Property”, which may refer also to the lots included therein). Buyer and Seller acknowledge and understand the location and description of the Property referenced and described herein, regardless of the sufficiency of any legal description.

2.      Purchase Price.  The Purchase Price for the Property shall be $6,175,000.00 and allocated as follows:

50 lf Lot	$44,000	Number of lots: 53	$2,332,000
60 lf Lot	$54,000	Number of lots: 70	$3,780,000
70 lf Lot	$63,000	Number of lots: 1	$63,000

The Purchase Price shall be payable as follows:

A. 

Both parties acknowledge that Buyer has already delivered $150,000.00 (an original payment of $50,000 and a subsequent payment of $100,000) to Texas State Title, attn. Cody Sobieski, Pres. 281-640-7660 (“Escrow Agent”) as earnest money to be credited toward the Purchase Price at the Closing. In addition, Buyer has already delivered along with the earnest money the independent consideration for the pre-closing period in Paragraph 4 below.

B. 

Within two (2) business days after execution of this Agreement, Buyer shall deliver to the Escrow Agent an additional $100,000.00 earnest money deposit, which shall be considered earnest money for all purposes under this Agreement.

C. 

The remaining balance of the Purchase Price shall be paid in cash or its equivalent at Closing as specified below, as adjusted for prorations and closing costs described below, and subject to conditions and exceptions contained herein.

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D. 

In addition to the Purchase Price, Buyer agrees to deliver to Escrow Agent $2,500 per lot ($310,000 total) at Closing as a “community enhancement fee” to be held by Escrow Agent in order to help compensate/reimburse Seller for funding an amenity package on the Property after Closing. The current proposed amenity package is attached on Exhibit B hereto. Prior to Closing, Seller shall provide Buyer with a copy of the final plans & specifications for the amenity package (“Amenity Plans”) and Buyer will review, comment and approve of the Amenity Plans within seven (7) days after receipt. Seller shall commence construction of the amenity package improvements within 30 days after Closing and complete same within 6 months after Closing, subject to “Force Majeure” (which in this Agreement is defined as that term is defined in the USA reference below but as such definition is applicable to Seller). If Seller has not completed the amenity package improvements within this 6 month period, then Seller shall have an additional thirty (30) days to complete, during which time Buyer and the Escrow Agent may withhold any remaining escrowed portions of the community enhancement fee until completed (as further described in the process below). As Seller constructs and completes the components of the amenity package, Seller may submit periodic draw requests to the Escrow Agent (with a copy to Buyer) requesting a draw from the community enhancement fee held in escrow to pay for/reimburse Seller’s contractor for the completed components of the amenity package for which the draw is being requested. Each draw request shall be accompanied by (i) a certification by the engineer/architect that the portion of the amenity package for which the draw request is being made has been completed substantially in accordance with the Amenity Plans and (ii) fully executed conditional lien waiver from the general contractor for the work performed. Upon submission of a draw request with the information/documentation required above, then Escrow Agent shall pay the draw with the community enhancement fee funds held in escrow, subject to availability. The parties may enter into a separate Community Enhancement Fee Escrow Agreement as necessary which shall be subject to these terms. All parties acknowledge that the community enhancement fee contributed by Buyer herein does not necessarily represent the total cost of completion of the amenity package but is merely Buyer’s agreed upon contribution toward said costs, and Seller is obligated to complete the amenity package and pay for all costs over and above the amount of the community enhancement fee contributed by Buyer as stated herein. All parties acknowledge that the obligations under this provision shall survive Closing.

The Purchase Price to be paid by Buyer for the Property, and Seller’s right to retain any of the earnest money other than the independent consideration (so long as Buyer is not in default), is conditioned upon Seller’s delivery of the Property and fulfillment of all other conditions and obligations in compliance with the terms of this Agreement.

3.      Effective Date. The Effective Date shall be the date when the last one of the Buyer or Seller executes this Agreement.

4.       Pre-Closing Period & Initial Acceptance. Within sixty (60) days after execution hereof by all parties (“Pre-Closing Period”), Seller will (i) obtain the initial acceptance of such roads by Montgomery County (the “County”) subject to a one-year maintenance bond period and a performance bond, both as required by the County, and furnish the County required bond, and (ii) obtain initial acceptance of the internal water and sewer facilities, including the internal water/sewer utility lines, onsite lift station, and water well(s), that will service the Property to Aqua Texas, Inc. (the “Utility” or “Aqua”) and cause Aqua to accept same for maintenance and operation subject to a one-year performance bond and/or letter of credit and warranty of Seller, as required by Aqua, and furnish Aqua the required bond and/or letter of credit (Seller’s “Initial Dedications”). If necessary, the Pre-Closing Period may be extended one time by Seller for an additional thirty (30) days in order to fulfill its obligations stated herein. During the Pre-Closing Period, Buyer’s representatives shall have access to the Property to continue its inspections and review of the Property, so long as to not unreasonably interfere with Seller’s completion of the Initial Dedications and other Pre-Closing Period work. Prior to Closing, Buyer agrees to restore the Property substantially to its pre-existing condition after completion of any inspections. Buyer agrees to share copies of any tests, inspections and reports with Seller upon request. Buyer shall indemnify, defend, and hold Seller and its employees, representatives and agents harmless from and against all claims, liabilities, liens, costs, fees and expenses, including attorney fees, related to or in any way arising from Buyer’s inspections or entry on the Property, and this obligation shall survive termination of this Agreement or Closing, as applicable. Following the one-year period after each of the Initial Dedications, Seller shall cause the County to agree to final acceptance for maintenance of the above-described roads, and shall cause Aqua to agree to final acceptance for maintenance of the above described utilities (the “Final Acceptances”), this obligation of Seller to survive Closing. Buyer shall be liable for and reimburse Seller for (A) the cost to repair any damages to the above-described roads and the above-described utilities that is caused by Buyer or Buyer’s agents and that is suffered by Seller prior to the Final Acceptances and (B) costs incurred by Seller related to Buyer’s failure to construct improvements on the Property in accordance with the standards of the County and the Utility that delay or cause Seller to incur additional costs to obtain Final Acceptances from either or both of the County and the Utility. This obligation of Seller shall survive Closing.

Buyer acknowledges that Seller has disclosed and provided to Buyer copies of any third party materials that Seller identified in its possession that relate to the Property and that Seller has not already provided, which may include (but Seller does not represent that it has all of these materials) a current survey, boundary and topographical surveys, plats, HOA, restrictive covenants and conditions, engineering reports by electronic format in PDF, CAD (including but not limited to .dwg and/or .dgn format) or other media, environmental reports, flood zone certifications, soils reports, easement agreements, encroachments or encumbrances, municipal zoning related documents, improvement/management district information & agreements, utility agreements, construction agreements, requirements and fees, mineral leases, oil/gas wells/lines, property line discrepancies, and homeowners or community association documents, but Seller is under no obligation to disclose or provide documents of record in the real property records.

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5.      Title Commitment. Buyer acknowledges receipt of the Title Commitment (the “Current Title Commitment”) with an effective date of September 4, 2018, issued on September 13, 2018, by Texas State Title, LLC. Prior to expiration of the Pre-Closing Period, , Buyer, at its expense, may order an updated title commitment for the Property in the amount of the Purchase Price from Escrow Agent and obtain a copy of all documents which constitute exceptions to the title commitment. Buyer shall give Seller written notice within five (5) days following receipt of the updated title commitment of any condition of title (exceptions or requirements) that is not shown on the Current Title Commitment and that is not satisfactory to Buyer. Seller may, but shall not be obligated, to resolve such matters; provided, however, that mortgage liens may be resolved at closing. If Seller is unable or unwilling to resolve such matters before the expiration of the Pre-Closing Period as defined above, then Buyer may, at Buyer’s sole option, either (1) accept title subject to the objections raised by Buyer and such accepted objections (along with the matters not objected to) shall become permitted exceptions (“Permitted Exceptions”) without any adjustment in the Purchase Price, or (2)  terminate this Agreement prior to the expiration of the Pre-Closing Period, whereupon the earnest monies (less the independent consideration) shall be immediately returned to Buyer by Escrow Agent, or (3) work with Seller, if mutually agreeable, to satisfy unacceptable matters and postpone the end of the Pre-Closing Period and/or Closing Date to satisfy these matters. At Closing, Seller shall provide Buyer with an owner’s policy of title insurance in the amount of the Purchase Price. Seller shall pay the cost for the basic cost of the owner’s policy of title insurance, and Buyer shall pay the cost for all endorsements, changes, and modifications to the owner’s policy of title insurance.

6.      Closing.  Closing (the “Closing”) shall occur within ten (10) days after expiration of the Pre-Closing Period or ten (10) days after Buyer receives written confirmation and verification that the Initial Dedications have been made and accepted, whichever is earlier (“Closing Date”), subject to the Property being delivered in compliance with all terms herein and the satisfaction and fulfillment of all other pre-Closing conditions and obligations stated herein.

7.      Title & Deliveries.  At or prior to Closing, Buyer and Seller, as applicable, shall deliver to the Escrow Agent and/or each other the following items for the Property, duly executed and acknowledged where required:

A.      Conveyance Deed.  A special warranty deed in the form satisfactory to Buyer, specifically stating all approved exceptions to title, if any, subject but not limited to, zoning or deed restrictions, easements and encumbrances of record by either Buyer or Seller, or future assessments if applicable, with an acknowledgment of the Post-Closing Work to be performed hereunder.

B.      Foreign Person Tax Withholding.  Documentation or information required for compliance with Section 1445 of the Internal Revenue Code.

C.      Additional Documents.  Such additional documents as might be reasonably required by the Seller, Buyer, Buyer’s Lender, or the Escrow Agent to consummate the sale of the Property and convey clear title to the Buyer with all appurtenant rights, including but not limited to the Community Enhancement Fee Escrow Agreement referenced above.

D.      Insurance Policy and Costs.  Seller will pay the costs of Seller’s counsel, preparation of any deeds and any bill of sale, deliver and pay the basic costs for a title insurance policy in an amount equal to the Purchase Price, transfer taxes for the conveyance, and one half of the escrow or closing fees. Buyer will pay the cost of Buyer’s counsel, all loan costs required by Buyer’s lender, including title policy cost in excess of owner’s policy, Buyer’s portion of the cost of the owner’s policy of title insurance, one half of any escrow or closing fee, and recording fees for any deeds and mortgage, and any applicable mortgage tax.

E.      Tax Prorations.All taxes and assessments (including pending assessments if the related improvement is substantially completed as of the Closing Date), whether payable in installments or not, for the year of the Closing will be prorated to the Closing Date based on the latest available tax rate and assessment valuation (with the parties signing a proration agreement as to adjustments when actual taxes are known).

F.       Take Over Assignments. On or before Closing, Seller, Buyer and any necessary third parties will execute and deliver assignments of the “Aqua Texas, Inc. Black Oak Force Main Agreement” (“FMA”) between Aqua Texas Inc. and Seller pertaining to the construction of the Improvements as defined herein and listed on Exhibit F attached hereto, including specifically an assignment of the right to and ownership of District funds being held in escrow (approximately $1,200,000) for the costs of completion of the offsite water and sewer facilities to service the Property (“Escrow Funds”) (but excluding all other reimbursables and reimbursements) as referenced in the agreements listed on Exhibit F attached hereto (the “Ancillary Agreements”), said assignments and deliveries to be a condition of Buyer’s obligation to close and to be held in escrow by the Escrow Agent and subject to the provisions of Paragraph 9 and Buyer’s Take Over Rights.

8.      Obligations of Seller and Buyer & Conditions Precedent to Closing.  On or prior to Closing, Seller shall complete and deliver the Property in compliance with all terms and requirements stated herein, if not already done so, including specifically providing the Initial Dedications. Buyer’s obligation to close on the Property and Seller’s right to retain any of the earnest money deposit (other than the independent consideration) is subject to and conditioned upon the completion, compliance and satisfaction, as of the Closing Date, of each of the requirements described herein and below, and compliance with all delivery requirements of Paragraph 7 above. Unless specifically stated otherwise, the satisfaction of these conditions shall be at Seller’s expense. Buyer shall cooperate with Seller to satisfy these conditions as needed.

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A.      Correctness of Representations and Warranties.  Seller represents and warrants that (i) to its knowledge, it holds good and marketable title in fee simple to the Property, (ii) all closing documents signed by Seller will be valid, authorized and binding upon Seller, (iii) to its knowledge, no outstanding contracts, fees, debts or liens exist on the Property (except mortgage liens to be satisfied at closing and other items related to the development of the Property); and (iv) to its knowledge, there are no leases or third-party rights/interests on the Property and Seller is in sole possession. These representations and warranties of Seller shall be evaluated by Buyer during its title review and shall not create any obligations of Seller or rights of Buyer, outside of those specified in Paragraph 5 of this Agreement.

B.      Final Plat Recording & 911 Addresses.  Finalization and recording of the proposed plat and Seller’s delivering a copy thereof to Buyer on or before the Closing Date, which Buyer acknowledges has been delivered. The plat shall be deemed finalized after all required governmental approvals have been obtained, said plat has been duly recorded in the real property records of the applicable County Clerk’s office, corresponding 911 addresses have been provided by the Seller to the Buyer.

C.      Covenants, Conditions, and Restrictions (“CC&Rs”). Seller shall draft CC&Rs for Buyer’s review prior to the expiration of the Pre-Closing Period, and Buyer shall approve the CC&Rs so long as they are reasonable. If Buyer does not believe that the CC&Rs are reasonable, it shall give Seller written notice specifying its objections and Seller and Buyer shall attempt to negotiate a final set of CC&Rs prior to the expiration of the Pre-Closing Period. If Seller or its affiliate is the declarant and/or governing architectural review authority under the CC&Rs, then upon Buyer’s submittal from time to time, Seller shall approve Buyer’s submittals so long as they are in accordance with the CC&Rs.

D.      Completion/Compliance. With the exception of the incomplete Post Closing Work defined below, the Property and lots therein, including all work and Post Closing Work performed by Seller as of Closing, have been completed in full compliance with all terms hereof. All requirements by applicable local, state and federal governmental authorities, as certified by a certified professional engineer, will have been met or exceeded for the Property and each lot therein, including but not limited to, preliminary and final plat approval, proper construction and availability of fully operational utilities including roads, water, sanitary sewer, storm, sewer with all necessary permits and fully compliant (no violations) with all applicable rules, regulations, and ordinances of applicable authorities, and a written statement from the engineer of record that building permits are obtainable from the appropriate governmental agencies for the construction of single-family houses on the lots. A preliminary and final plat of the development, approved construction drawings from the municipal authority and an “AS BUILT” survey will be provided in “PDF” and “CAD” format to the Buyer as they become available. Each lot pin shall have a flagged wooden lathe to mark the pin location. Provided that Buyer provides Seller adequate and appropriate utility easements over and under the Property and has graded the Property and staked all of the lots in the Property, all as reasonably determined by Seller, Seller will cause permanent underground electric power and telecommunication facilities (collectively, the “Permanent Utilities”) to be installed and available to the perimeter of each lot within the Property within ninety (90) days after Buyer has poured the slab for a residence on a lot and has given Seller written notice that Buyer is ready for the Permanent Utilities for the lot. This post-Closing obligation of Seller for Permanent Utilities shall be performed at Seller’s expense and shall expressly survive Closing for twenty-four (24) months and shall not merge into the deed or Closing.

E.      Permits and Environmental Concerns. With the exception of the incomplete Post Closing Work defined below, Seller will obtain and complete all requirements related to Storm Water Pollution Prevention Plans (“SWPPP”) as required by applicable local, state and federal authorities and maintain the same during the development of the lots within the Property. Upon Closing, Seller will deliver to Buyer Seller’s most recent reports from its compliance inspector regarding storm water quality that all BMP’s are installed and maintained per the SWPPP. Upon Closing, Seller will close out its storm water permit for the Property and Buyer shall assume all responsibility for future maintenance and installation and Seller shall be released from liability thereon. Seller shall have caused all FEMA requirements to have been met for a home on any lot to be exempted from purchasing flood insurance and no portion of any house pad site (it being understood that some portions of some lots are within a flood plain) is to be located in a FEMA defined flood plain. Seller’s principals have no actual knowledge that the Property has been or is presently used for handling, storage, manufacturing, refining, transportation or disposal of “toxic material”, “hazardous substances”, or “hazardous waste”. If “hazardous wastes”, “hazardous substances”, or “hazardous material” is located on the Property, as determined by a Phase I or permitted Phase II environmental assessment obtained by the Buyer, then Buyer shall have the right to terminate this Agreement during the Pre-Closing Period pursuant to Paragraph 4 above. Without diminishing the obligations still to be performed by Seller hereunder, Buyer otherwise acknowledges Seller’s delivery of the Property in compliance with this Paragraph.

F.      Trash, Trees, Brush & Debris. The Property is being sold “as-is” and Buyer shall be responsible for mowing, brush hogging, and removing, clearing, and disposing of all trees, trash and debris on the Property, except that Seller will remove any construction debris of which Buyer notifies Seller in writing prior to the expiration of the Pre-Closing Period, and Buyer acknowledges Seller’s delivery of the Property in compliance with this Paragraph.

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9.      Seller’s Post Closing Obligations. The Property lies within the boundaries and jurisdiction of the Harris County Improvement District No. 17 (the “District”). The District was created to, amongst other things, provide sewer and utility infrastructure to the Property. Pursuant to that certain agreement titled the “Harris County Improvement District No. 17 – Black Oak Utility Service Agreement” (the “USA”) and the FMA, and other Ancillary Agreements between the District, the Seller, and Aqua Texas, Inc. (the “Utility”) which are referenced herein and incorporated herein by reference in Exhibit F, the Seller is obligated to construct certain sewer and water utility infrastructure improvements, including internal sewer/water lines within the Property subdivision, a lift station, a force main, and other onsite and offsite improvements (such improvements, insofar as those improvements pertain to, service, and/or if not completed would have a negative impact on servicing the Property, are collectively, the “Improvements”). After Seller’s completion of the Improvements, the Utility is to take over, accept and operate the Improvements, along with separate facilities constructed by the Utility, in order to provide water and sewer service to the lots within the Property subdivision. To facilitate the construction of the Improvements, the Escrow Funds held by the District are or will be accessible by Seller to complete the construction. The parties acknowledge that the Improvements may not be complete prior to Closing. However, Seller will continue its work on the Improvements and complete the Improvements after Closing, in accordance with the terms and schedules stated herein and in the USA, the FMA,and other Ancillary Agreements with specific regard to the Property ..

A. 

Post Closing Work. Following the Closing, Seller, at its cost and expense (subject to approved disbursements from the District and otherwise), shall perform the Post Closing Work as set forth on Exhibit G hereto and in accordance with all terms, conditions and schedules stated herein and in the USA, the FMA, and other Ancillary Agreements as that work pertains to the Property. All parties, including specifically Seller, acknowledge and agree that Seller’s performance of the Post Closing Work and all other terms of this Paragraph 9 shall expressly survive Closing and shall not merge with any deed, and these provisions may be construed separately as needed to give surviving effect and full validity to these terms after Closing.

B. 

Performance of the Post Closing Work. Time is of the essence with respect to performance of the Post Closing Work pursuant to the schedules on Exhibit G and the applicable schedules in the USA and Ancillary Agreements, subject to Force MajeureSeller shall not permit any liens or encumbrances to arise against the Property in connection with or as a result of the performance of the Post Closing Work. Seller shall protect, indemnify, defend and hold Buyer and the Property harmless of and from any and all losses, liabilities, costs, expenses (including attorney fees), damages, liens, claims, actions or causes of action arising from or relating to Seller or its contractors entering upon the Property to complete the Post Closing Work. At all times prior to completion of the Post Closing Work, Seller, at its cost and expense, shall maintain commercial general liability insurance on an occurrence basis covering Seller and its agents, contractors, subcontractors and licensees, against claims of bodily injury, personal injury and property damage for limits not less than $1,000,000 each occurrence, which insurance shall name Buyer as additional insured if allowable by insurance company.

C. 

Completion of Post Closing Work. The parties acknowledge that Seller has commenced performance of the Post Closing Work and Seller shall use its commercially reasonable, good faith efforts to complete the Post Closing Work by August 1, 2019 (“Completion Date”), and the various components thereof by the dates set forth on Exhibit G (the “Progress Dates”), subject to Force Majeure.

D. 

Delay or Failure to Complete Post Closing Work. In the event Seller (i) fails to complete the Post Closing Work by the Completion Date and/or (ii) fails to complete any portion of the Post Closing Work by the applicable Progress Date on which that portion of work was to be completed as set forth on Exhibit G and/or (iii) ceases continuous and diligent performance and construction of the Post Closing Work for a period of ten (10) days or more without a definable excuse under the applicable Force Majeure provisions, then Buyer may deliver written notice of default to Seller and if Seller fails to resume continuous and diligent construction of the Post Closing Work within fifteen (15) days of receiving notice, then Buyer, as its sole remedy, shall be immediately entitled to notify Seller, the Utility, the District and any other interested parties that Buyer is exercising its right to step in, take over all right, title and interest to all parts, plans and components of the Post Closing Work and the Improvements, receive all payments, benefits and funds from the Escrow Funds , and complete the Post Closing Work itself (“Take Over Rights”). If exercised, Seller will fully cooperate with Buyer and any other parties to effectuate the Take Over Rights and Seller shall relinquish any claims or rights under the Ancillary Agreements or otherwise and to any and all equipment, personal property, plans/specs or otherwise related to, connected with or to be connected with the Improvement. This shall also include Seller’s assignment and delivery of all construction plans and any necessary licenses and permits connected to the Post Closing Work and the Improvements. To accommodate Buyer’s exercise of its Take Over Rights and Buyer’s right to receive the Escrow Funds in connection therewith, Seller shall execute, on or before Closing, all documents necessary and shall assign all of its rights and entitlements to Buyer, with an assumption by Buyer, in all of the Ancillary Agreements listed on Exhibit F and as referenced in Paragraph 7.F above. These assignments shall be held in escrow by the Escrow Agent pursuant to an escrow agreement (the “Take-Over Escrow Agreement”) and shall entitle Buyer to receive all Escrow Funds referenced in the Ancillary Agreements to assist and compensate Buyer in and for the completion of the Improvements. All parties acknowledge that fully executed assignments of the Ancillary Agreements, including all third party signatures necessary, and documentation assuring Buyer’s access to the Escrow Funds and the Take Over Rights is an express condition precedent of Buyer’s obligation to close under this Agreement (so long as Buyer negotiates a reasonable form of such assignments and documents in good faith), otherwise Buyer may terminate and receive its earnest money deposits (other than the independent consideration) or seek specific performance as provided herein.

5

E. 

Take Over Rights Limitation. With respect to Buyer’s Take Over Rights and assumption of rights and obligations under the Ancillary Agreements, all parties acknowledge that Buyer’s obligations to perform under the Ancillary Agreements shall be limited to the Improvements (onsite and offsite) which specifically pertain to the Property being purchased hereunder by Buyer, and shall in no way extend to or obligate any work or Improvements that are beyond the scope of the FMA and that service or pertain to any separate property, including Seller’s other real property. However, this limitation shall not be interpreted to relieve Buyer from performing all obligations and constructing all improvements under the FMA in the event Buyer exercises its Take Over Rights. A statement to this effect shall be included in any assignments of the Ancillary Agreements as provided herein.

10.           Offsite Water Flow. Seller will deliver the Property at Closing with proper offsite water flow on and to the Property and which will be managed through the appropriate infrastructure, and Buyer acknowledges Seller’s compliance with this Paragraph.

11.           Subsurface Rock. Prior to expiration of the Pre-Closing Period, Buyer may terminate this Agreement pursuant to Paragraph 4 above and recover the earnest money (less the independent consideration) upon the discovery of subsurface rock underlying the Property in any quantity deemed excessive by the Buyer, unless Seller has remedied the same to Buyer’s satisfaction, Buyer acknowledges Seller’s delivery of the Property in compliance with this Paragraph.

12.           Assessments. So long as Developer is in control under the CC&Rs, Buyer shall be exempt from paying any and all applicable assessments (but will have to pay TAP fees and the amenity assessment) in the CC&Rs to the Developer during the Seller’s period of ownership, including, but not limited to regular and special assessments. Seller also agrees to exempt bona fide home builders from assessments in the CC&R’s during the same time period.

13.           Notice.  All notices will be in writing and served by electronic transmission to the addresses shown below, until notification of a change of such addresses. All such notices shall be deemed delivered on the date initiated.

For Buyer:

David C. Frye, Manager

David.frye@rauschcoleman.com

479.455.9090

Dana Danvers, Director of Acquisitions

Dana.danvers@rauschcoleman.com

John Maberry

John.maberry@rauschcoleman.com

Josh Carson

Josh.carson@rauschcoleman.com

Julie Bias, Financial Coordinator

Julie.bias@rauschcoleman.com

For Seller:

Charley MacKenzie

charley@sed.com.sg

Daryl Robinson

drobinson@newquestcrosswell.com

Moe Chan

moe@sed.com.sg

Shamar O’Bryant

shamar@sed.com.sg

Frank Heuszel

fheuszel@yahoo.com

Randy Farber

rfarber@jw.com

Ronald Wei

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14.           Disclosure by Buyer and Seller.  One or more individuals representing the Buyer or Seller may hold real estate licenses from multiple states.

15.           Default. If Seller has performed all of Seller’s obligations and fulfilled the conditions under this Agreement and, if within five (5) days after the date specified for Closing, the Buyer fails to make payment as required herein, through no fault of Seller, then Seller may, as its sole and exclusive remedy, cancel and terminate this Agreement and keep the earnest money deposit paid by the Buyer as liquidated damages. Subject to Buyer’s separate post closing rights and remedies discussed in Paragraph 9, if Seller breaches this Agreement or fails to perform any of Seller’s obligations hereunder, then Buyer may as its sole remedy, (i) terminate this Agreement and receive a refund of all of the earnest money (less the independent consideration), or (ii) seek specific performance of this Agreement pursuant to the remainder of this Paragraph 15.

A. 

Buyer may enforce specific performance of Seller’s obligation to execute the documents required to convey the Property to Buyer, including the Take Over Assignments, but waiving any uncured title or survey objections or matters and without any offset against, deduction from, or reduction in the Purchase Price (except for the costs Buyer will incur to complete the Property and Improvements in accordance with the terms hereof), and Seller’s warranty of title in the special warranty deed and the owner policy of title insurance to be delivered under this Agreement shall be subject to the permitted title exceptions and all uncured title or survey objections or matters, and Buyer expressly waives its rights to seek damages if it files a lawsuit for specific performance. After Closing, Buyer may also seek specific performance of Seller’s obligation to (i) complete the post-closing Permanent Utilities as defined in Paragraph 8.D (or to recover the costs to complete same), and (ii) complete the Final Acceptances (or to recover the costs to complete same).

B. 

Buyer shall be deemed to have elected to terminate this Agreement under clause (i) above if Buyer fails to file suit for specific performance in accordance with Sub-Paragraph A above against Seller in a court having jurisdiction in the county and state in which the Property is located on or before 60 days after the date upon which closing was to have occurred.

16.           Binding Effect/Assignment.  This Agreement will inure to the benefit of and bind the respective successors of the parties, including specifically the post closing provisions stated herein which shall survive Closing. Seller may not assign this Agreement or any obligations hereunder. Buyer may assign this Agreement and any and all rights and obligations hereunder at any time prior to closing to any person or entity controlling, controlled by, or under common control with Buyer. For purposes of this Paragraph a person or entity shall control an entity, if it, directly or indirectly, holds a majority interest in the entity to be controlled. Notwithstanding anything stated herein to the contrary, either Buyer or Seller (or both) may unilaterally execute and record a simple notice of this Agreement with the land records office for the purpose of providing notice hereof and both parties shall deem any such notice as sufficient, lawful and proper pursuant to all applicable state and local laws. If this Agreement is properly terminated prior to Closing in accordance with the terms herein pertaining to termination rights, then Seller may file a release of any such notice without the consent of Buyer, and any such release may be relied upon by any third party.

17.           No Waiver.  Failure of either party to exercise any rights under this Agreement shall not constitute a waiver of any right, nor excuse the other party’s full performance. No express waiver of any matter shall affect any other matter under this Agreement. Express waivers are only effective if in writing.

18.           Brokerage.  Buyer represents that it has not contracted with any real estate broker in connection with the transaction contemplated by this Agreement. Seller shall be responsible for paying a 4% Broker’s commission based on the Purchase Price to Dave Ramsey with Home Asset, Inc. Each party shall indemnify and hold the other party harmless from all claims, losses, liabilities, costs, fees, and expenses (including, but not limited to, court costs, litigation expenses, and attorneys’ fees) related to or incurred in connection with any claims for brokerage commissions arising by, through, or under the indemnifying party.

19.           Entire Agreement.  This document constitutes the entire agreement between the parties, incorporating all prior agreements, and may only be amended in writing executed by both parties. The exhibits attached to this Agreement are incorporated into this Agreement for all purposes.

20.           Attorney’s Fees.  If either party prevails against the other in a legal action concerning any part of this Agreement, the successful party shall be entitled to its reasonable attorney’s fees and costs connected with such action, through appellate and bankruptcy proceedings, in addition to all other recovery or relief. Costs shall include all deposition costs and expert fees, even if not used at trial.

21.           Governing Law.  This Agreement shall be governed and enforced in accordance with the law of the state where the Property is located.

22.           Time. Buyer and Seller understand that “Time is of the Essence” for this Agreement.

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23.           ADA Compliant Ramps. Seller shall be responsible for installation of any and all required ADA sidewalk ramps for sidewalks installed by Seller. Said ramps shall meet all the ADA Guidelines, Code and Specifications for such ramps.

24.           Special Stipulations.

A. 

Within 30 days after Closing, Seller shall commence construction of the Black Oak Community Entry on Black Oak Drive, including the landscaping and amenities in Paragraph 2.c. This provision shall expressly survive Closing and remain a continuing obligation of Seller until complete.

B. 

Prior to Closing, Buyer shall propose its signage to Seller for approval, as to type, size, appearance, and placement. Seller shall not unreasonably withhold its approval of the signage, so long as the signage meets all applicable governmental requirements and is limited so as not to clutter the Property. After approval by Seller, Buyer may place the signage in the agreed locations prior to closing.

C. 

Seller’s obligations under this Paragraph 24 and any liabilities therefore shall survive Closing.

D. 

The terms of this Agreement shall be kept confidential by both parties, subject to the remainder of this paragraph. Each party may disclose the terms of this Agreement (including information about the parties) where disclosure is required by (or advisable to comply with) applicable law or regulation, rule of stock exchange, governmental agency, or self-regulatory agency, by a court of competent jurisdiction, or by any other regulatory body, and the terms may be disclosed to the parties’ respective counselors, attorneys, accountants, brokers, and other persons with a need to know. The provisions of this paragraph shall survive termination of this Agreement and Closing, as applicable.

25.           AS-IS. Subject to the representations and covenants stated herein to expressly survive Closing, including those set forth in Paragraph 8.D and the Post Closing Work, the parties intend that the sale of the Property will be made on an “As Is, Where Is” basis with all faults, in accordance with the terms and provisions of Exhibit C.

26.           Statutory Notices. To the extent applicable, Seller gives Buyer the notices set forth in Exhibit D.

SELLER:	BUYER:
150 CCM BLACK OAK LP,	HOUSTON LD, LLC
a Texas limited partnership
	By: /s/ David C. Frye
By: 150 Black Oak GP, Inc.,	David C. Frye,
a Texas corporation	Manager
Its: General Partner
	Date: 10-12-2018
By: /s/ Charley MacKenzie
Charley MacKenzie,
Chief Development Officer
Date: 10/12/18

8

EXHIBIT A

Description and Plat of Property

and List of Lots

9

10

EXHIBIT B

Proposed Amenity Package

11

EXHIBIT C

As-Is, Where-Is

1. 

BUYER ACKNOWLEDGES AND AGREES THAT SELLER AND ITS AGENTS HAVE NOT MADE, DO NOT MAKE, WILL NOT MAKE AND SPECIFICALLY NEGATE AND DISCLAIM ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED, OR STATUTORY, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (A) THE NATURE, QUALITY, OR CONDITION OF THE PROPERTY OR ANY PART THEREOF, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, AND GEOLOGY; (B) THE ECONOMIC FEASIBILITY OF THE PROPERTY OR THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (D) EXCEPT FOR ANY WARRANTIES OF TITLE CONTAINED IN THE SPECIAL WARRANTY DEED TO BE DELIVERED BY SELLER AT THE CLOSING, THE NATURE AND EXTENT OF ANY RIGHT-OF-WAY; (E) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES, OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, INCLUDING, WITHOUT LIMITATION, THE STATUS OF ANY PERMITS AND GOVERNMENTAL APPROVAL; (F) THE RENTABILITY, HABITABILITY, MARKETABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (G) THE PRESENCE OF ANY ENDANGERED OR THREATENED SPECIES ON THE PROPERTY, AS WELL AS THE SUITABILITY OF THE PROPERTY AS HABITAT FOR ANY OF THOSE SPECIES; OR (H) ANY OTHER MATTER WITH RESPECT TO THE PROPERTY. WITHOUT LIMITING THE FOREGOING, SELLER AND ITS AGENTS HAVE NOT MADE, DO NOT MAKE, WILL NOT MAKE AND SPECIFICALLY NEGATE AND DISCLAIM ANY REPRESENTATION OR WARRANTY REGARDING THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS (AS HEREINAFTER DEFINED) ON, UNDER, OR ABOUT THE PROPERTY OR THE COMPLIANCE OF THE PROPERTY WITH ANY OF THE ENVIRONMENTAL LAWS (AS HEREINAFTER DEFINED). THE TERM “HAZARDOUS MATERIALS” MEANS ANY SUBSTANCE, COMPOUND, MATERIAL OR WASTE, WHETHER SOLID, LIQUID OR GASEOUS: (1) THE PRESENCE OF WHICH REQUIRES INVESTIGATION, MONITORING OR REMEDIATION UNDER ANY ENVIRONMENTAL LAW (DEFINED BELOW); (2) WHICH IS OR BECOMES DEFINED AS A “HAZARDOUS SUBSTANCE”, “HAZARDOUS MATERIAL”, “HAZARDOUS WASTE”, “EXTREMELY HAZARDOUS WASTE”, “SOLID WASTE”, “TOXIC SUBSTANCE”, “CHEMICAL SUBSTANCE”, “REGULATED SUBSTANCE”, “POLLUTANT”, OR “CONTAMINANT”, OR IS OTHERWISE CLASSIFIED AS HAZARDOUS OR TOXIC, IN OR PURSUANT TO ANY ENVIRONMENTAL LAW; (3) WHICH IS EXPLOSIVE, CORROSIVE, FLAMMABLE, RADIOACTIVE, OR OTHERWISE HAZARDOUS AND IS OR BECOMES REGULATED BY ANY GOVERNMENTAL AUTHORITY, AGENCY, DEPARTMENT, COMMISSION, BOARD, AGENCY OR INSTRUMENTALITY OF THE UNITED STATES, THE STATE OF TEXAS OR ANY POLITICAL SUBDIVISION THEREOF; (4) THE PRESENCE OF WHICH ON THE PROPERTY CAUSES OR THREATENS TO CAUSE A NUISANCE UPON THE PROPERTY OR TO ADJACENT PROPERTIES OR POSES OR THREATENS TO POSE A HAZARD TO THE HEALTH OR SAFETY OF PERSONS ON OR ABOUT THE PROPERTY; (5) THAT CONTAINS PETROLEUM HYDROCARBONS, ASBESTOS, RADON, POLYCHLORINATED BIPHENYLS, UREA FORMALDEHYDE FOAM INSULATION, LEAD, OR MOTOR FUEL OR OTHER VOLATILE ORGANIC COMPOUNDS; (6) WHICH CAUSES OR POSES A THREAT TO CAUSE A HAZARD TO THE ENVIRONMENT OR TO THE HEALTH, SAFETY OR WELFARE OF PERSONS ON OR ABOUT THE PROPERTY, OR (7) WHICH IS A SHARP (E.G. NEEDLE) OR AN INFECTIOUS, MEDICAL OR RADIOACTIVE WASTE. THE TERM “ENVIRONMENTAL LAWS” MEANS ANY FEDERAL, STATE OR LOCAL LAW, STATUTE, GUIDANCE OR POLICY STATEMENT, ORDINANCE, CODE, RULE, REGULATION, LICENSE, AUTHORIZATION, DECISION, ORDER, INJUNCTION OR DECREE, WHICH PERTAINS TO HEALTH, SAFETY OR THE ENVIRONMENT (INCLUDING, BUT NOT LIMITED TO, GROUND, AIR, WATER OR NOISE POLLUTION OR CONTAMINATION, AND UNDERGROUND OR ABOVEGROUND TANKS) AND SHALL INCLUDE WITHOUT LIMITATION, THE CLEAN WATER ACT, 33 U.S.C. § 1251 ET SEQ.; THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT, 42 U.S.C. § 9601 ET SEQ.; THE RESOURCE CONSERVATION AND RECOVERY ACT, 42 U.S.C. § 6901 ET SEQ.; THE TOXIC SUBSTANCE CONTROL ACT, 15 U.S.C. §§ 2601 ET SEQ; THE OCCUPATIONAL HEALTH AND SAFETY ACT; THE TEXAS WATER CODE; AND THE TEXAS SOLID WASTE DISPOSAL ACT, TEXAS HEALTH AND SAFETY CODE CHAPTER 361, ALL AS AMENDED.

2. 

BUYER AGREES THAT IT HAS EXAMINED AND INVESTIGATED THE PROPERTY PRIOR TO EXECUTION HEREOF OR THAT IT WILL INVESTIGATE THE PROPERTY PRIOR TO THE EXPIRATION OF THE PRE-CLOSING PERIOD AND THAT IN PURCHASING THE PROPERTY BUYER WILL RELY SOLELY UPON ITS INDEPENDENT EXAMINATION, STUDY, INSPECTION AND KNOWLEDGE OF THE PROPERTY, AND BUYER IS RELYING SOLELY UPON ITS OWN EXAMINATION, STUDY, INSPECTION, AND KNOWLEDGE OF THE PROPERTY AND BUYER’S DETERMINATION OF THE VALUE OF THE PROPERTY AND USES TO WHICH THE PROPERTY MAY BE PUT, AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER.

12

3. 

BUYER AGREES TO PAY FOR AND HAS MADE OR CAUSED TO BE MADE (OR WILL MAKE OR CAUSE TO BE MADE) ALL INSPECTIONS, INVESTIGATIONS AND ANALYSES NECESSARY OR APPROPRIATE FOR THE PURPOSE OF DETERMINING COMPLIANCE OR NON-COMPLIANCE BY THE PROPERTY WITH ALL BUILDING, HEALTH, ENVIRONMENTAL, ZONING AND LAND USE LAWS, ORDINANCES, RULES AND REGULATIONS, AND SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, CONCERNING THE PROPERTY’S COMPLIANCE WITH SUCH BUILDING, HEALTH, ENVIRONMENTAL, ZONING AND LAND USE LAWS, ORDINANCES, RULES AND REGULATIONS.

4. 

BUYER FURTHER ACKNOWLEDGES THAT THE INFORMATION, IF ANY, PROVIDED AND TO BE PROVIDED WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND SELLER (A) HAS NOT MADE AND WILL NOT BE OBLIGATED TO MAKE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND (B) DOES NOT MAKE ANY REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. BUYER ACKNOWLEDGES AND AGREES THAT ALL MATERIALS, DATA AND INFORMATION DELIVERED AT ANY TIME BY SELLER TO BUYER IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY ARE PROVIDED TO BUYER AS A CONVENIENCE ONLY AND THAT ANY RELIANCE ON OR USE OF SUCH MATERIALS, DATA OR INFORMATION BY BUYER SHALL BE AT THE SOLE RISK OF BUYER. BUYER ACKNOWLEDGES AND AGREES THAT IT WILL CONDUCT ITS OWN VERIFICATION OF THE INFORMATION, EITHER INDEPENDENTLY OR THROUGH AGENTS OF BUYER’S CHOOSING. NEITHER SELLER, NOR ITS AGENTS, NOR THE PERSON OR ENTITY WHICH PREPARED ANY REPORT OR REPORTS DELIVERED BY SELLER TO BUYER SHALL HAVE ANY LIABILITY TO BUYER FOR ANY INACCURACY IN OR OMISSION FROM ANY SUCH REPORTS.

5. 

BUYER RELEASES, ACQUITS AND FOREVER DISCHARGES SELLER FROM, AND WAIVES, ANY AND ALL LIABILITIES, CLAIMS, CAUSES OF ACTION, DAMAGES, AND OTHER RELIEF, WHETHER AT LAW OR IN EQUITY AND WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, AND WHETHER PAST, PRESENT, OR FUTURE, IN CONNECTION WITH, AS A RESULT OF OR OTHERWISE WITH REGARD TO THE CONDITION OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO ITS ENVIRONMENTAL CONDITION. THIS GENERAL RELEASE SHALL BE APPLICABLE, WITHOUT LIMITATION, TO ANY AND ALL LIABILITIES, CLAIMS, CAUSES OF ACTION, DAMAGES AND OTHER RELIEF UNDER ANY OF THE ENVIRONMENTAL LAWS.

6. 

THE OCCURRENCE OF A CLOSING SHALL CONSTITUTE AN ACKNOWLEDGMENT BY BUYER THAT THE PROPERTY WAS ACCEPTED WITHOUT REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED (EXCEPT FOR THE SPECIAL WARRANTIES OF TITLE SET FORTH IN THE SPECIAL WARRANTY DEED), AND OTHERWISE IN AN “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS” CONDITION. THE PROVISIONS OF THIS EXHIBIT SHALL SURVIVE CLOSING.

13

EXHIBIT D

Statutory Notices

1. 

Abstract or Title Policy. Buyer should have an abstract covering the Property examined by an attorney of Buyer’s selection, or Buyer should be furnished with or obtain a title policy.

2. 

Notice Regarding Possible Liability for Additional Taxes (§5.010 Texas Property Code). If the Property is vacant land, then pursuant to Section 5.010 of the Texas Property Code Seller notifies Buyer: “If for the current ad valorem tax year the taxable value of the land that is the subject of this Agreement is determined by a special appraisal method that allows for appraisal of the land at less than its market value, the person to whom the land is transferred may not be allowed to qualify the land for that special appraisal in a subsequent tax year and the land may then be appraised at its full market value. In addition, the transfer of the land or a subsequent change in the use of the land may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the land. The taxable value of the land and the applicable method of appraisal for the current tax year is public information and may be obtained from the tax appraisal district established for the county in which the land is located.”

3. 

Notice Regarding Possible Annexation (§5.011 Texas Property Code). If the Property is located outside the limits of a municipality, the Property may now or later be included in the extra-territorial jurisdiction (“ETJ”) of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and ETJ. To determine if the Property is located within a municipality’s ETJ or is likely to be located within a municipality’s ETJ, Buyer should contact all municipalities located in the general proximity of the Property for further information.

4. 

Notice of Water Level Fluctuations (§5.019 Texas Property Code). If the Property adjoins an impoundment of water, including a reservoir or lake, constructed and maintained under Chapter 11 of the Texas Water Code, that has a storage capacity of at least 5,000 acre-feet at the impoundment’s normal operating level, then pursuant to Section 5.019 of the Texas Property Code Seller notifies Buyer: “The water level of the impoundment of water adjoining the Property fluctuates for various reasons, including as a result of: (1) an entity lawfully exercising its right to use the water stored in the impoundment; or (2) drought or flood conditions.”

5. 

Notice of Private Transfer Fee (§5.205 Texas Property Code). If the Property is subject to a private transfer fee, then pursuant to Section 5.205 of the Texas Property Code Seller notifies Buyer that the private transfer fee obligation may be governed by Chapter 5, Subchapter G of the Texas Property Code.

6. 

Notice Required by §13.257 of the Texas Water Code Regarding Certificated Water or Sewer Service. Pursuant to Section 13.257 of the Texas Water Code Seller notifies Buyer: “The real property, described below, that you are about to purchase may be located in a certificated water or sewer service area, which is authorized by law to provide water or sewer service to the properties in the certificated area. If your property is located in a certificated area there may be special costs or charges that you will be required to pay before you can receive water or sewer service. There may be a period required to construct lines or other facilities necessary to provide water or sewer service to your property. You are advised to determine if the Property is in a certificated area and contact the utility service provider to determine the cost that you will be required to pay and the period, if any, that is required to provide water or sewer service to your property. The undersigned Buyer hereby acknowledges receipt of the foregoing notice at or before the execution of a binding Agreement for the purchase of the real property described in the notice or at closing of purchase of the real property.” The real property referred to in this notice is the Property defined in this Agreement.

7. 

Notice Regarding Taxing Districts (§49.452 Texas Water Code). If the Property is located in a district created under Title 4 of the Texas Water Code (currently Chapters 49 through 68) or by a special act of the legislature, that is providing or proposing to provide water, sanitary sewer, drainage, or flood control or protection facilities or services, or any of these facilities or services that have been financed or are proposed to be financed with bonds of the district payable in whole or part from taxes of the district, or by imposition of a standby fee, if any, then pursuant to Section 49.452 of the Texas Water Code Seller gives Buyer the notice in the attached Exhibit E, which is incorporated into this Agreement for all purposes.

8. 

Notice of Obligation to Pay Public Improvement District Assessment (§5.014 Texas Property Code). If the Property is located in a public improvement district established under Subchapter A, Chapter 372, Local Government Code, or Chapter 382, Local Government Code, and consists of not more than one dwelling unit, then pursuant to Section 5.014 of the Texas Property Code Seller notifies Buyer that as a Buyer of the Property you are obligated to pay an assessment to a municipality or county for an improvement project undertaken by a public improvement district under Subchapter A, Chapter 372, Local Government Code, or Chapter 382, Local Government Code. The assessment may be due annually or in periodic installments. More information concerning the amount of the assessment and the due dates of that assessment may be obtained from the municipality or county levying the assessment. The amount of the assessments is subject to change. Your failure to pay the assessments could result in a lien on and the foreclosure of your property.

14

EXHIBIT E

Notice of Utility or Other Statutorily Created District

(§49.452 and § 54.812 Texas Water Code)

NOTICE TO BUYER OF REAL ESTATE

SITUATED IN

HARRIS COUNTY IMPROVEMENT DISTRICT NO. 17

The real property, described below, which you are about to purchase is located Harris County Improvement District No. 17 (the “District”). The District has taxing authority separate from any other taxing authority, and may, subject to voter approval, issue an unlimited amount of bonds and levy an unlimited rate of tax in payment of such bonds. As of this date, the rate of taxes levied by

the District on real property located in the District is $1.25 on each $100 of assessed valuation. The total amount of bonds, excluding refunding bonds and any bonds or any portion of bonds issued that are payable solely from revenues received or expected to be received under a contract with a governmental entity, approved by the voters and that has been or may be issued, at this date, is

$200,000,000 for water, sewage and drainage purposes, $670,000,000 for roads, and $80,000,000 for parks and recreational facilities, and the aggregate initial principal amount of all bonds issued for one or more of the specified facilities of the District and payable in whole or in part from property taxes is $-0-.

The District also has the authority to adopt and impose a standby fee on property in the District that has water, sanitary sewer, or drainage facilities and services available but not connected and which does not have a house, building or other improvement located thereon and does not substantially utilize the utility capacity available to the property. The District may exercise the authority without

holding an election on the matter. As of this date, the most recent amount of the standby fee is $-0-. An unpaid standby fee is a personal obligation of the person that owned the property at the time of imposition and is secured by a lien on the property. Any person may request a certificate from the District stating the amount, if any, of unpaid standby fees on a tract of property in the District.

The District has the authority to levy an assessment on property within the District. The District may exercise this authority without holding an election the matter. As of this date, the amount of the assessment is $-0- per $100 valuation for real property and improvements thereon. The District is located in whole or in part within the extra-territorial jurisdiction of the Cities of Houston and Tomball. By law, a district located in the extraterritorial jurisdiction of a municipality may be annexed without the consent of a district or the voters in the District. When a district is annexed, it is dissolved.

The purpose of this District is to provide water, sewer, drainage or flood control facilities, roads, services, and park and recreation facilities within the District through the issuance of bonds payable in whole or in part from property taxes. The cost of these utility facilities is not included in the purchase price of your property, and these utility facilities are owned or to be owned by the District.

See the legal description of the Property in the contract to which this notice is attached.

Buyer is advised that the information shown on this form is subject to change by the district at any time. The district routinely establishes tax rates during the months of September through December of each year, effective for the year in which the tax rates are approved by the district. buyer is advised to contact the district to determine the status of any current or proposed changes to the information shown on this form.

The Buyer hereby acknowledges receipt of the foregoing notice at or prior to execution of a binding contract for the purchase of the real property described in such notice or at closing of purchase of the real property.

Date Signature of Seller

The undersigned buyer hereby acknowledges receipt of the foregoing at or prior to execution of a binding contract for the purchase of the real property described in such notice or at closing of purchase of the real property.

Date Signature of Buyer

15

EXHIBIT F

List of Ancillary Agreements

(not in chronological order)

1. 

“Development, Financing and Construction Agreement by and between Harris County Improvement District No. 17 and 150 CCM Black Oak, Ltd.” dated September 15, 2014.

2. 

“Aqua Texas, Inc. Black Oak Force Main Agreement” dated ________________, 2017

3. 

Assignment of HCID No. 17 Reimbursement & Escrow Funds (to be prepared)

4. 

Agreement/Declaration from HCID No. 17 and Preston Hollow Capital for Periodic Disbursements of District Escrow Funds (to be prepared)

5. 

Other agreements/assignments as necessary for Buyer’s Take Over Rights.

16

EXHIBIT G

Seller’s Post Closing Work and Schedule

Definition, Explanation, Details & Interpretations of all work referenced herein shall be as described in the Ancillary Agreements, when in doubt or further explanation is needed. The Force Majeure provisions of the USA (as revised to apply to Seller) shall apply to the Post Closing Work and Schedule outlined below. The term “Post Closing Work” means the construction and completion of the lift stations, force main, and related improvements under the FMA in accordance with the requirements of the FMA and the applicable requirements of the other Ancillary Documents.

Post Closing Work – General Description	Progress Date Deadline
All construction plans & specifications (“Plans”) for the Post Closing Work (lift stations, all portions of Force Main, etc.) shall have been approved by certified engineer with contract awarded to Project Contractor; all necessary County and/or other municipal approvals are obtained for the construction of the Post Closing Work; copies of approved Plans delivered to Buyer	January 1, 2019
Re-commence/continue diligent construction work on lift stations and all remaining incomplete portions of the Force Main	to start within 60 days after Closing (but no later than February 1, 2019)
Continuous and diligent construction work on lift stations and Force Main	February 1, 2019 – August 1, 2019
Completion and dedication/acceptance of all Post Closing Work (lift stations, Force Main, etc.) in fully operational state, with all permits and capacity to accept water/sewer from Property	August 1, 2019

17

EX-21.1

  Exhibit 21

Subsidiaries

Name of Subsidiary	State or Other Jurisdiction of Incorporation or Organization
SeD Home Inc.	Delaware
SeD USA, LLC	Delaware
150 Black Oak GP, Inc.	Texas
SeD Development USA, Inc.	Delaware
150 CCM Black Oak Ltd.	Texas
SeD Ballenger, LLC	Delaware
SeD Maryland Development, LLC	Delaware
SeD Development Management, LLC	Delaware
SeD Builder, LLC	Delaware
SeD Texas Home, LLC	Delaware
SedHome Rental Inc	Texas

EX-31.1A

Exhibit 31.1a

Certification of Chief Executive Officer

Pursuant to

Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934

as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Fai H. Chan, certify that:

1.

I have reviewed this annual report on Form 10-K of SeD Intelligent Home Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) 

All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  April 1, 2019	By:	/s/ Fai H. Chan
		Fai H. Chan Co-Chief Executive Officer

EX-31.1B

Exhibit 31.1b

Certification of Chief Executive Officer

Pursuant to

Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934

as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Moe T. Chan, certify that:

1.

I have reviewed this annual report on Form 10-K of SeD Intelligent Home Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) 

All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date:  April 1, 2019	By:	/s/ Moe T. Chan
		Moe T. Chan Co-Chief Executive Officer

EX-31.2A

Exhibit 31.2a

Certification of Chief Financial Officer

Pursuant to

Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934

as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Rongguo Wei, certify that:

1.            

I have reviewed this annual report on Form 10-K of SeD Intelligent Home Inc.;

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. 

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) 

All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 1, 2019	By:	/s/ Rongguo (Ronald) Wei
		Rongguo (Ronald) Wei Co-Chief Financial Officer

EX-31.2

Exhibit 31.2b

Certification of Chief Financial Officer

Pursuant to

Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934

as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Alan W. L. Lui, certify that:

1.            

I have reviewed this annual report on Form 10-K of SeD Intelligent Home Inc.;

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. 

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) 

All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 1, 2019	By:	/s/ Alan W. L. Lui
		Alan W. L. Lui Co-Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of SeD Intelligent Home Inc. (the “Company”) for the twelve month period ended December 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officers hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of his or her knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  April 1, 2019	By:	/s/ Fai H. Chan
		Fai H. Chan
		Co-Chief Executive Officer

Date: April 1, 2019	By:	/s/ Moe T. Chan
		Moe T. Chan
		Co-Chief Executive Officer

Date: April 1, 2019	By:	/s/ Rongguo (Ronald) Wei
		Rongguo (Ronald) Wei
		Co-Chief Financial Officer

Date: April 1, 2019	By:	/s/ Alan W. L. Lui
		Alan W. L. Lui Co-Chief Financial Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2018	Apr. 01, 2019
Document And Entity Information
Entity Registrant Name	SeD Intelligent Home Inc.
Entity Central Index Key	0001503658
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Public Float	$ 0
Entity Common Stock, Shares Outstanding		704,043,324
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2018

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Real Estate
Construction in Progress	$ 24,464,269	$ 30,104,201
Land Held for Development	19,164,028	24,302,643
Real Estate Held For Sale	136,248	136,248
Real Estate Assets	43,764,545	54,543,092
Cash	715,754	358,233
Restricted Cash	3,929,410	2,656,670
Accounts Receivable	112,706	513,043
Prepaid Expenses	46,443	49,903
Fixed Assets, Net	8,248	22,062
Deposits	23,603	23,603
Total Assets	48,600,709	58,166,606
Liabilities
Accounts Payable and Accrued Expenses	1,749,268	1,131,116
Accrued Interest - Related Parties	2,344,227	1,935,222
Tenant Security Deposits	1,225	2,625
Builder Deposits	3,878,842	5,356,718
Notes Payable, Net of Debt Discount	13,899	8,132,020
Notes Payable - Related Parties, Net of Debt Discount	5,745,584	8,003,591
Total Liabilities	13,733,045	24,561,292
Stockholders' Equity
Common Stock, at par $0.001, 1,000,000,000 shares authorized and 704,043,324 issued, and outstanding at December 31, 2018 and 2017, respectively	704,043	704,043
Additional Paid In Capital	32,542,720	32,739,017
Accumulated deficit	(1,266,427)	(2,092,837)
Total Stockholders' Equity	31,980,336	31,350,223
Non-controlling Interest	2,887,328	2,255,091
Total Stockholders' Equity	34,867,664	33,605,314
Total Liabilities and Stockholders' Equity	$ 48,600,709	$ 58,166,606

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common stock, Par Value	$ .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

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Revenue
Rental	$ 8,730	$ 88,438
Property	17,666,304	6,868,604
Total Revenue	17,675,034	6,957,042
Operating Expenses
Cost of Sales	15,641,324	6,217,779
General and Administrative Expenses	748,480	1,118,540
Total Operating Expenses	16,389,804	7,336,319
Income (Loss) From Operations	1,285,230	(379,277)
Other Income
Interest Income	31,437	24,909
Other Income	5,683	104,599
Total Other Income	37,120	129,508
Net Income (Loss) Before Income Taxes	1,322,350	(249,769)
Provision for Income Taxes	0	0
Net Income (Loss)	1,322,350	(249,769)
Net Income (Loss) Attributable to Non-controlling Interests	495,940	(22,791)
Net Income (Loss) Attributable to Common Stockholders	$ 826,410	$ (226,978)
Net Loss Per Share - Basic and Diluted	$ 0.00	$ 0.00
Weighted Average Common Shares Outstanding - Basic and Diluted	704,043,324	704,043,324

XML

Consolidated Statements of Stockholders' Deficit - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Non-controlling Interest	Total
Beginning Balance, Shares at Dec. 31, 2016	704,043,324
Beginning Balance, Amount at Dec. 31, 2016	$ 704,043	$ 27,970,331	$ (1,865,859)	$ 2,277,882	$ 29,086,397
Proceeds from majority stockholders		178,601			178,601
Forgiveness of debt - related party		4,590,085			4,590,085
Acquisition of Minority Interest					0
Net income (loss)			(226,978)	(22,791)	(249,769)
Ending Balance, Shares at Dec. 31, 2017	704,043,324
Ending Balance, Amount at Dec. 31, 2017	$ 704,043	32,739,017	(2,092,837)	2,255,091	33,605,314
Acquisition of Minority Interest		(196,297)		136,297	60,000
Net income (loss)			826,410	495,940	1,322,350
Ending Balance, Shares at Dec. 31, 2018	704,043,324
Ending Balance, Amount at Dec. 31, 2018	$ 704,043	$ 35,542,720	$ (1,266,427)	$ 2,887,328	$ 34,867,664

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cash Flows From Operating Activities
Net Income (Loss)	$ 1,322,350	$ (249,769)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	16,814	20,453
Changes in Operating Assets and Liabilities
Real Estate	10,918,824	(1,302,568)
Accounts Receivable	400,337	(494,783)
Prepaid Expenses	3,460	35,546
Accounts Payable and Accrued Expenses	618,152	(362,108)
Accrued Interest - Related Parties	409,005	211,005
Tenant Security Deposits	(1,400)	(2,550)
Builder Deposits	(1,477,876)	(543,282)
Net Cash Provided By (Used In) Operating Activities	12,209,666	(2,688,056)
Cash Flows From Investing Activities
Purchase of Fixed Assets	(3,000)	(7,892)
Net Cash Used In Investing Activities	(3,000)	(7,892)
CASH FLOW FROM FINANCING ACTIVITIES
Acquisition of Minority Interest	(60,000)	0
Financing Fees Paid	0	(110,000)
Capital Contribution - Related Party	0	178,601
Proceeds from Notes Payable	0	1,052,350
Repayments to Note Payable	(8,258,398)	(6,000,000)
Net Proceeds from Notes Payable - Related Parties	0	7,533,591
Repayment to Notes Payable - Related Parties	(2,258,007)	0
Net Cash (Used In) Provided By Financing Activities	(10,576,405)	2,654,542
Net Increase (Decrease) in Cash	1,630,261	(41,406)
Cash and Restricted Cash - Beginning of Year	3,014,903	3,056,309
Cash and Restricted Cash - End of Year	4,645,164	3,014,903
Supplementary Cash Flow Information
Cash Paid For Interest	287,738	905,376
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Forgiveness of Notes Payable - Related Parties	0	4,560,085
Amortization of Debt Discount Capitalized	$ 140,277	$ 324,958

XML

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

SeD Intelligent Home Inc. (the “Company”), formerly known as Homeownusa, was incorporated in the State of Nevada on December 10, 2009. On December 29, 2017, the Company, acquired SeD Home Inc. (“SeD Home”) by reverse merger. SeD Home, a Delaware corporation, formed on February 24, 2015 and named SeD Home USA, Inc. before changing its name in May of 2015, 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 Home International, Inc., which is wholly – owned by Singapore eDevelopment Limited (“SeD Ltd”), a multinational public company, listed on the Singapore Exchange Securities Trading Limited (“SGXST”).

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, 2018			Attributable interest as of December 31, 2017
SeD Home Inc.	The State of Delaware, U.S.A.	February 24, 2015		100	%		100	%
SeD USA, LLC	The State of Delaware, U.S.A.	August 20, 2014		100	%		100	%
150 Black Oak GP, Inc.	The State of Texas, U.S.A.	January 23, 2014		100	%		100	%
SeD Development USA, Inc.	The State of Delaware, U.S.A.	March 13, 2014		100	%		100	%
150 CCM Black Oak Ltd.	The State of Texas, U.S.A.	January 23, 2014		100	%		69	%
SeD Ballenger, LLC	The State of Delaware, U.S.A.	July 7, 2015		100	%		100	%
SeD Maryland Development, LLC	The State of Delaware, U.S.A.	October 16, 2014		83.55	%		83.55	%
SeD Development Management, LLC	The State of Delaware, U.S.A.	June 18, 2015		85	%		85	%
SeD Builder, LLC	The State of Delaware, U.S.A.	October 21, 2015		100	%		100	%
SeD Texas Home, LLC	The State of Delaware, U.S.A.	June 16, 2015		100	%		100	%

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 December 31, 2018 and 2017, the aggregate noncontrolling interest was $2,887,328 and $2,255,091, which are separately disclosed on the Consolidated Balance Sheet.

On December 29, 2017, the Company, SeD Acquisition Corp., a Delaware corporation and whollyowned subsidiary of the Company (the “Merger Sub”), SeD Home, Inc. (“SeD Home”), a Delaware corporation, and SeD Home International, 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 SeD Home, with SeD Home 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 Home International, Inc. was the owner of 100% of the issued and outstanding common stock of SeD Home 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 SeD Home from SeD Home International, Inc. in exchange for issuing to SeD Home International, Inc. 630,000,000 shares of the Company’s common stock. Accordingly, SeD Home International, Inc. remains the Company’s largest shareholder, and the Company is now the sole shareholder of SeD Home. The Agreement and the transactions contemplated thereby were approved by the Board of Directors of each of the Company, the Merger Sub, SeD Home International, Inc., and SeD Home.

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 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, 2018 or 2017.

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, 2018 and 2017.

Restricted Cash

As a condition to the loan agreement with the Union Bank (formerly known as Xenith Bank, f/k/a The Bank of Hampton Roads), 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 funds will remain as collateral for the loans until the loans are paid off in full. As of December 31, 2018 and 2017, the balance of the account was $2,726,154 and $2,656,670, respectively.

On July 20, 2018, Black Oak LP received $4,592,079 of district reimbursement for previous construction costs incurred in the land development. Of this amount, $1,650,000 will remain on deposit in the District’s Capital Projects Fund for the benefit of Black Oak LP and will be released upon receipt of the evidence of the: (a) execution of a purchase agreement between Black Oak LP and a home builder with respect to the Black Oak development and (b) of the completion, finishing and making ready for home construction of at least 105 unfinished lots in the Black Oak development. In 2018, $446,745 was released to reimburse the construction costs leaving a balance of $1,203,256 on December 31, 2018.

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, 2018 and 2017.

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

Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with Financial Accounting Standards Board (“FASB”) ASC 805, “Business Combinations,” which acquired assets are recorded at fair value. Interest, property taxes, insurance and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are reduced when lots are sold.

The Company capitalized interest from related party borrowings of $409,005 and $211,005 for the years ended December 31, 2018 and 2017, respectively. The Company capitalized interest from the third-party borrowings of $245,844 and $1,008,220 for the years ended December 31, 2018 and 2017, respectively.

A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met:

(1) management, having the authority to approve the action, commits to a plan to sell the property. (2) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary. (3) an active program to locate a buyer and other actions required to complete the plan to sell, have been initiated. (4) the sale of the property is probable and is expected to be completed within one year or the property is under a contract to be sold. (5) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value. and (6) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When all of these criteria have been met, the property is classified as “held for sale”. “Real estate held for sale” only includes El Tesoro project and D street project.

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.

As of December 31, 2018 and 2017, there was no impairment recognized for any of the projects.

Revenue Recognition

Accounting Standards Codification ("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 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 was approximately all the revenue of the Company in 2018 and 2017, is as follows:

Identify the contract with a customer

The Company has signed agreements with the builders for developing the raw land to ready to build lots. The contract has agreed upon prices, timelines, and specifications for what is to be provided.

Identify the performance obligations in the contract

Performance obligations of the company include delivering developed lots to the customer, which are required to meet certain specifications that are outlined in the contract. The customer inspects all lots prior to accepting title to ensure all specifications are met.

Determine the transaction price

The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties.

Allocate the transaction price to performance obligations in the contract

If there are multiple performance obligations to the contract, the costs must be allocated appropriately and consistently to each performance obligation. In the Company’s land developing business, each lot is considered to be a separate performance obligation, for which the specified price in the contract is allocated to. If there were multiple services provided for one client, the company would split out the services over multiple contracts.

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.

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 in the statement of financial position.

Cost of Sales

Land acquisition costs are allocated to each lot based on 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.

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 2018, 2017, 2016 and 2015 remain open to examination.

Recent Accounting Pronouncements

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires that restricted cash and cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. ASU 2016-18 was effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and a retrospective transition method is required. This guidance did not impact financial results, but resulted in a change in the presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The Company adopted this guidance in the 2018 and 2017 Consolidated Statement of Cash Flows.

On February 25, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No. 2016-02, Leases (Topic 842) (the Update). This ASU requires an entity to recognize a right-of-use asset (“ROU”) and lease liability for all leases with terms of more than 12 months. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective for the Company on January 1, 2019, with early adoption permitted. While the Company continues to assess all of the effects of adoption, it currently believes the most significant effects relate to: the recognition of new ROU assets and lease liabilities on its balance sheet for one of our office rental leases. The Company does not expect a significant change in its leasing activities between now and adoption. On adoption, the Company currently expects to recognize operating lease liabilities less than $200,000 with corresponding ROU assets of the same amount based on the present value of the remaining rental payments for our Bethesda Office lease on the consolidated balance sheet.

In May 2014, the FASB issued accounting standard update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under previous guidance. This may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In July 2015, the FASB approved the proposal to defer the effective date of ASU 2014-09 standard by one year. Early adoption was permitted after December 15, 2016, and the standard became effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations (ASU No. 2016-08), accounting for licenses of intellectual property and identifying performance obligations (ASU No. 2016-10), narrow-scope improvements and practical expedients (ASU No. 2016-12) and technical corrections and improvements to ASU 2014-09 (ASU No. 2016-20) in its new revenue standard. The Company has performed a review of the requirements of the new revenue standard and is monitoring the activity of the FASB and the transition resource group as it relates to specific interpretive guidance. The Company reviewed customer contracts, applied the five-step model of the new standard to its contracts, and compared the results to its current accounting practices. The adoption of this standard required increased disclosures related to the disaggregation of revenue.

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740) – Amendments to SEC paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 118.” ASU 2018-05 amends the Accounting Standards Codification to incorporate various SEC paragraphs pursuant to the issuance of SAB 118, which addresses the application of generally accepted accounting principles in situations when a registrant does not have necessary information available, prepared, or analyzed (including computation) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. The ASU does not have material impact on the Company.

In February 2018, the FASB issued ASU No. 2018-02, Reporting Comprehensive Income - Reclassification of Certain tax Effects from Accumulated Other Comprehensive Income to help businesses present some effects form the Tax Act's reduction in the corporate tax rate in their income statements. ASU 2018-02 gives the option of reclassifying what are called the “stranded” tax effects within accumulated other comprehensive income (loss) to retained earnings (deficit) during each fiscal year or quarter in which the effect of the lower tax rate is recorded. ASU 2018-02 instructs businesses to provide a disclosure in their financial statement footnotes that describes the accounting policy they used to release the income tax effects form accumulated other comprehensive income (loss), whether they are reclassifying the stranded income tax effects from the Tax Act, and information about the other effects on taxes from the reclassification. The update is effective for fiscal years beginning after December 15, 2018, and the interim periods in those years, and early adoption is permitted. We are evaluating the impact on the Company.

Subsequent Events

The Company evaluated the events and transactions subsequent to December 31, 2018, the balance sheet date, through April 1, 2019, the date the consolidated financial statements were available to be issued.

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2. CONCENTRATION OF CREDIT RISK

12 Months Ended

Dec. 31, 2018

Risks and Uncertainties [Abstract]

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. On December 31, 2018 and 2017, uninsured cash balances were $3,783,330 and $2,514,903, respectively.

The Company’s Ballenger project only has two purchasers: NVR Inc. (“NVR”), a NYSE publicly listed US homebuilding and mortgage company, is the only purchaser of 479 residential lots of Ballenger project; Orchard Development Corporation is the purchaser of the parcel of 210 multifamily units. During the year ended December 31, 2018, the Company earned revenues from property sales from these two customers representing approximately 70% and 30%, respectively. During the year ended December 31, 2017, the Company earned revenues from property sales from these two customers representing approximately 100% and 0% of gross sales, respectively. As of December 31, 2018, no accounts receivable was outstanding from these two customers. As of December 31, 2017, the above two customers represented approximately 100% and 0% of receivables, respectively.

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3. PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following:

	December 31, 2018			December 31, 2017
Computer Equipment	$	41,597		$	41,597
Furniture and Fixtures		24,393			21,393
		65,990			62,990
Accumulated Depreciation		(57,742	)		(40,928	)
Fixed Assets Net	$	8,248		$	22,062

Depreciation expense was $16,814 and $20,453 for the years ended December 31, 2018 and 2017, respectively.

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4. BUILDER DEPOSITS

12 Months Ended

Dec. 31, 2018

Builder Deposits Abstract

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 over a 21-year period, which escalates 3% annually after June 1, 2018.

As part of the agreements, NVR provided 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 December 31, 2018 and 2017, there was $3,878,842 and $5,056,718 outstanding, respectively.

Black Oak LP received a deposit of $300,000 from Lexington 26 LP (Colina), a building company located in Texas. On December 31, 2018 and 2017, there was $0 and $300,000 outstanding, respectively. In February 2018, the deposit $300,000 was refunded to Colina since both sides agreed to the changed development plan of Colina.

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5. NOTES PAYABLE

12 Months Ended

Dec. 31, 2018

Notes Payable [Abstract]

NOTES PAYABLE

Revere Loan

On October 7, 2015, the Company entered into a note for $6,000,000, bearing interest at 13%, with a maturity date of October 7, 2016 with Revere High Yield Fund, LP (“Revere”). In connection with the loan, the Company incurred origination and closing fees of $524,233, which were recorded as debt discount and are amortized over the life of the loan. The loan is secured by a deed of trust on the property and a Limited Guarantee Agreement with related parties of the Company. On October 1, 2016, the loan was extended to April 1, 2017 for fees of $109,285. These fees were recorded as a debt discount under debt modification accounting are amortized over the extension period. On April 1, 2017, the loan was again extended until October 1, 2017 for a fee of $110,000. These fees were recorded as a debt discount under debt modification accounting and were amortized over the extension period. As of October 1, 2017, the loan was fully repaid and there is no outstanding principal or unamortized debt discount.

Union Bank Loan

On November 23, 2015, SeD Maryland Development LLC entered into a Revolving Credit Note with the Union Bank in the original principal amount of $8,000,000. During the term of the loan, cumulative loan advances may not exceed $26,000,000. The line of credit bears interest at LIBOR plus 3.8% with a floor rate of 4.5%. The interest rate at December 31, 2018 was 6.125%.

Beginning December 1, 2015, interest only payments are due on the outstanding principal balance. The entire unpaid principal and interest sum is due and payable on November 22, 2018, with the option of one twelve-month extension period. The loan is secured by a deed of trust on the property, $2,600,000 of collateral cash, and a Limited Guaranty Agreement with SeD Ballenger. The Company also has an $800,000 letter of credit from the Union Bank. The letter of credit is due on November 22, 2018 and bears interest at 15%. In September 2017, Maryland Development LLC and the Union Bank modified the Revolving Credit Note, which increased the original principal amount from $8,000,000 to $11,000,000 and extended the maturity date of the loan and letter of credit to December 31, 2019.

As of December 31, 2018 and 2017, the principal balance were $13,899 and $8,272,297, respectively. As part of the transaction, the Company incurred loan origination fees and closing fees, totaling $480,947, which were recorded as debt discount and are amortized over the life of the loan. The unamortized debt discount was $0 and $140,277 on December 31, 2018 and December 31, 2017, respectively.

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6. RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

Notes Payable before Intercompany Loan Restructuring

SeD Home received advances from SeD Ltd (which was the 100% owner of the Company) to fund development costs and operation costs. The advances were unsecured, bear interest at 18% per annum and are payable on demand. As of December 31, 2015, SeD Home had outstanding principal due of $12,293,715 and accrued interest of $2,161,055 due to this related party.

SeD Home received advances from SCDPL (owned 100% by SeD Ltd) to fund development costs and operation costs. The advances were unsecured, bear interest at 18% per annum and were payable on demand. As of December 31, 2015, SeD Home had outstanding principal due of $4,300,930 and accrued interest of $1,461,058 due to this related party.

On September 30, 2015, SeD Home received $10,500,000 interest free loan, with a maturity date of March 31, 2016, from Hengfai Business Development Pte, Ltd, owned by the Chief Executive Officer of SeD Ltd and is also the majority shareholder of SeD Ltd, specifically for Ballenger Run project. SeD Home imputed interest at 13%, which is the interest rate on the Revere Loan noted in Note 5. The imputed interest resulted in a debt discount of $622,431 which is amortized over the life of the note. At December 31, 2015, SeD Home had $10,500,000 outstanding on the note and unamortized debt discount of $311,216. On April 1, 2016, SeD Home extended the note on the same terms through December 31, 2016. This resulted in an additional $933,647 of new imputed interest which was amortized during 2016.

Intercompany Loans Restructuring

At December 31, 2016, considering the long-term development and short-term debt repayment, SeD Home restructured the loans from these affiliates. The restructuring process was done to transfer the loans to SeD Home International (99.99 % owner of the Company), the principal of which, $26,913,525, was then forgiven and recorded into additional paid in capital. SeD Home still owed the accrued interest of $6,283,207 to SeD Home International. The remaining accrued interest does not bear interest. On August 30, 2017, an additional $4,560,085 of this interest was forgiven and recorded into additional paid in capital. The remaining amount of $1,723,122 was still outstanding as of December 31, 2018 and 2017

Loan from SeD Home Limited

SeD Home receives advances from SeD Home Limited (an affiliate of SeD Ltd), to fund development and operation costs. The advances bear interest at 10% and are payable on demand. As of December, 2018 and 2017, SeD Home had outstanding principal due of $1,116,406 and $1,050,000 and accrued interest of $193,382 and $86,425.

Loan from SeD Home International

SeD Home receives advances from SeD Home International. The advances bore interest at 18% until August 30, 2017 when the interest rate was adjusted to 5% and have no set repayment terms. On December 31, 2018 and 2017, there was $4,629,178 and $6,953,591 of principal and $2,150,845 and $1,848,797 of accrued interest outstanding. Both accrued outstanding interests include the remaining amount $1,723,122 after interest was forgiven on August 30, 2017 as discussed in previous paragraph.

During 2017, prior to the Reverse Merger, SeD Intelligent Home Inc. borrowed $30,000 from SeD Home International Inc. The borrowings did not bear any interest. In November 2017, the debt was forgiven by SeD Home International Inc. and was recognized into additional paid in capital.

Other Transactions

On November 29, 2016 an affiliate of SeD Home entered into three $500,000 bonds for a total of $1.5 million that are to incur annual interest at 8% and the principal shall be paid in full on November 29, 2019. SeD Home agreed to guarantee the payment obligations of these bonds. Further, at the maturity date, the bondholder has the right to propose to acquire a property built by SeD Home, and SeD will facilitate that transaction. The proposed acquisition purchase price would be at SeD Home's cost. If the cost price is more than $1.5 million, the proposed acquirer would pay the difference, and if the cost price is below $1.5 million, the affiliate of SeD would pay the difference in cash.

The Reverse Merger

As described in Note 1, the Reverse Merger was done with a related party through common control and ownership.

Management Fees

Black Oak LP is obligated under the Limited Partnership Agreement (as amended) to pay a $6,500 per month management fee to Arete Real Estate and Development Company (Arete), a related party through common ownership and $2,000 per month to American Real Estate Investments LLC (AREI), a related party through common ownership. Arete is also entitled to a developer fee of 3% of all development costs excluding certain costs. The fees are to be accrued until $1,000,000 is received in revenue and/or builder deposits relating to the Black Oak Project. 

On December 31, 2017, the Company had $314,630 owed to Arete and $48,000 to AREI in accounts payable and accrued expenses.

On April 26, 2018, SeD Development USA, Arete and AREI reached an agreement to terminate the terms related to management fees and developer fees in the Limited Partnership Agreement. In July 2018, per the terms of the termination agreement, Black Oak LP paid Arete $300,000 and AREI $30,000 to fulfill the commitments.

MacKenzie Equity Partners, owned by a Charlie MacKenzie, a Director of the Company, has a consulting agreement with the Company since 2015. Per the current terms of the agreement, as amended on January 1, 2018, the Company pays a monthly fee of $15,000 with an additional $5,000 per month to be paid when the property development cashflow milestones have been met. The Company incurred expenses of $240,000 and $222,930 for the years 2018 and 2017, respectively, which were capitalized as part of Real Estate on the balance sheet as the services relate to property and project management. On December, 2018 and 2017, the Company owed this related party $60,000 and $0, respectively.

Purchase of Minority Interest of Black Oak LP

On July 23, 2018, SeD Development USA, LLC, a wholly owned subsidiary of the Company, entered into two Partnership Interest Purchase Agreements through which it purchased an aggregate of 31% of Black Oak LP for $60,000. In addition, if and when Black Oak LP receives at least $15 million in net reimbursement receivable proceeds from HC17 and/or Aqua Texas, Inc. (net of any expenses Harris County Improvement District 17 and/or Aqua Texas, Inc. may deduct), Black Oak LP shall pay Fogarty Family Trust II, one of two previous partners of Black Oak LP, an amount equal to 10% of the net reimbursement receivable proceeds received from HC17 and/or Aqua Texas, Inc. that exceeds $15 million; provided however, this obligation shall only apply to reimbursement revenue received on or before December 31, 2025. Prior to the Partnership Interest Purchase Agreements, the Company owned and controlled Black Oak LP through its 68.5% limited partnership interest and its ownership of the General Partner, 150 Black Oak GP, Inc, a 0.5% owner in Black Oak LP. As a result of the purchase, the Company, through its subsidiaries, now owns 100% of Black Oak LP.

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 $101,979 and $110,334 for the years ended December 31, 2018 and 2017, respectively. On December 31, 2018 and December 31, 2017, the Company owed this related party $8,000 and $18,000, respectively.

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7. SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2018

Stockholders' Equity Attributable to Parent [Abstract]

SHAREHOLDERS' EQUITY

On August 28, 2017 the Company increased its authorized shares from 75,000,000 to 1,000,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.

In 2017, SeD Home International, a related party through common ownership, contributed $178,600 into the Company. The related party also forgave $4,560,085 of accrued interest as of August 30, 2017, which was recorded as additional paid in capital.

Per Note 1, 630,000,000 shares of common stock were issued on December 29, 2017 in connection with the Reverse Merger.

On July 23, 2018, the Company entered into two Partnership Interest Purchase Agreements through which it purchased an aggregate of 31% of Black Oak LP for $60,000 and fulfilled the agreement thereafter.

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8. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Leases

The Company leases office space in Texas and Maryland. The leases expire in 2018 and 2020, respectively and have monthly rental payments ranging between $2,284 and $8,205. Rent expense was $120,071 and $116,870 for the year ended December 31, 2018 and 2017, respectively. The below table summarizes future payments due under these leases as of December 31, 2018.

For the Years Ended December 31:

2019		118,410
2020		96,924
Total	$	215,334

Lot Sale Agreements

On February 19, 2018, SeD Maryland entered into a contract to sell the Continuing Care Retirement Community Assisted Independent Living parcel to Orchard Development Corporation. It was agreed that the purchase price for the 5.9 acre lot would be $2,900,000 with a $50,000 deposit. It was also agreed that Orchard Development Corporation would have the right to terminate the transaction during the feasibility study period, which would last through May 30, 2018, and receive a refund of its deposit. On April 13, 2018, Orchard Development Corporation indicated that it would not be proceeding with the purchase of the CCRC parcel. On December 31, 2018, SeD Maryland entered into the Third Amendment to the Lot Purchase Agreement for Ballenger Run with NVR. Pursuant to the Third Amendment, SeD Maryland will convert the 5.9 acre CCRC parcel to 36 lots (the 28 feet wide villa lot) and sell to NVR. SeD Maryland will pursue the required zoning approval to change the number of such lots from 85 to 121.

On July 3, 2018, 150 CCM Black Oak entered into a Purchase and Sale Agreement with Houston LD, LLC for the sale of 124 lots located at its Black Oak project. Pursuant to the Purchase and Sale Agreement, it was agreed that 124 lots would be sold for a range of prices based on the lot type. In addition, Houston LD, LLC agreed to contribute a “community enhancement fee” for each lot, collectively totaling $310,000, which is currently held in escrow. 150 CCM Black Oak will apply these funds exclusively towards an amenity package on the property. The closing of the transactions contemplated by the Purchase and Sale Agreement was subject to Houston LD, LLC completing due diligence to its satisfaction. On October 12, 2018, 150 CCM Black Oak, Ltd. entered into an Amended and Restated Purchase and Sale Agreement (the “Amended and Restated Purchase and Sale Agreement”) for these 124 lots. Pursuant to the Amended and Restated Purchase and Sale Agreement, the purchase price remained $6,175,000, 150 CCM Black Oak, Ltd. was required to meet certain closing conditions and the timing for the closing was extended.

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9. INCOME TAXES

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act” (TCJA) that significantly reformed the Internal Revenue Code of 1986, as amended. The TCJA reduces the corporate tax rate to 21 percent beginning with years starting January 1, 2018. Because a change in tax law is accounted for in the period of enactment, the deferred tax assets and liabilities have been adjusted to the newly enacted U.S. corporate rate, and the related impact to the tax expense has been recognized in the current year.

Deferred tax assets and (liabilities) consist of the following at December 31, 2018 and 2017:

	2018			2017
Interest Income		(4,023,599	)		(2,957,688	)
Interest Expense		3,928,264			3,355,098
Depreciation and Amortization		6,302			2,510
Management Fees		404,342			276,741
Others		113,633			239,482
Net Operating Loss		4,547			499,230
		433,489			1,415,373
Valuation Allowance		(433,489	)		(1,415,373	)
Net Deferred Tax Asset		-			-

As of December 31, 2018, the Company has federal net operating loss carry-forwards of approximately $111,769 which will begin to expire in 2038. The Maryland did not have net operating loss carry-forwards. 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 years ended December 31, 2018 and 2017, the valuation allowance decreased by $616,332 and $871,109, respectively.

The expected tax expense (benefit) based on the statuary rate is reconciled with actual tax benefit as follows:

	2018			2017
US Federal statutory rate		21	%		21	%
State income tax rate		8.25	%		8.25	%
Federal Benefit		(1.73	)%		(1.73	)%
Valuation Allowance		(27.52	)%		(27.52	)%
Income tax provision (benefit)		-	%		-	%

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10. SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

Black Oak completed Sale with Houston LD, LLC

On July 3, 2018, 150 CCM Black Oak entered into a Purchase and Sale Agreement with Houston LD, LLC for the sale of 124 lots located at its Black Oak project. On October 12, 2018, 150 CCM Black Oak, Ltd. entered into an Amended and Restated Purchase and Sale Agreement for these 124 lots. Pursuant to the Amended and Restated Purchase and Sale Agreement, the purchase price remained $6,175,000, 150 CCM Black Oak, Ltd. was required to meet certain closing conditions and the timing for the closing was extended. On January 18, 2019, the sale of 124 lots in Magnolia, Texas was completed.

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1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Nature of Operations

SeD Intelligent Home Inc. (the “Company”), formerly known as Homeownusa, was incorporated in the State of Nevada on December 10, 2009. On December 29, 2017, the Company, acquired SeD Home Inc. (“SeD Home”) by reverse merger. SeD Home, a Delaware corporation, formed on February 24, 2015 and named SeD Home USA, Inc. before changing its name in May of 2015, 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 Home International, Inc., which is wholly – owned by Singapore eDevelopment Limited (“SeD Ltd”), a multinational public company, listed on the Singapore Exchange Securities Trading Limited (“SGXST”).

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, 2018			Attributable interest as of December 31, 2017
SeD Home Inc.	The State of Delaware, U.S.A.	February 24, 2015		100	%		100	%
SeD USA, LLC	The State of Delaware, U.S.A.	August 20, 2014		100	%		100	%
150 Black Oak GP, Inc.	The State of Texas, U.S.A.	January 23, 2014		100	%		100	%
SeD Development USA, Inc.	The State of Delaware, U.S.A.	March 13, 2014		100	%		100	%
150 CCM Black Oak Ltd.	The State of Texas, U.S.A.	January 23, 2014		100	%		69	%
SeD Ballenger, LLC	The State of Delaware, U.S.A.	July 7, 2015		100	%		100	%
SeD Maryland Development, LLC	The State of Delaware, U.S.A.	October 16, 2014		83.55	%		83.55	%
SeD Development Management, LLC	The State of Delaware, U.S.A.	June 18, 2015		85	%		85	%
SeD Builder, LLC	The State of Delaware, U.S.A.	October 21, 2015		100	%		100	%
SeD Texas Home, LLC	The State of Delaware, U.S.A.	June 16, 2015		100	%		100	%

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 December 31, 2018 and 2017, the aggregate noncontrolling interest was $2,887,328 and $2,255,091, which are separately disclosed on the Consolidated Balance Sheet.

On December 29, 2017, the Company, SeD Acquisition Corp., a Delaware corporation and whollyowned subsidiary of the Company (the “Merger Sub”), SeD Home, Inc. (“SeD Home”), a Delaware corporation, and SeD Home International, 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 SeD Home, with SeD Home 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 Home International, Inc. was the owner of 100% of the issued and outstanding common stock of SeD Home 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 SeD Home from SeD Home International, Inc. in exchange for issuing to SeD Home International, Inc. 630,000,000 shares of the Company’s common stock. Accordingly, SeD Home International, Inc. remains the Company’s largest shareholder, and the Company is now the sole shareholder of SeD Home. The Agreement and the transactions contemplated thereby were approved by the Board of Directors of each of the Company, the Merger Sub, SeD Home International, Inc., and SeD Home.

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 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, 2018 or 2017.

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, 2018 and 2017.

Restricted Cash

As a condition to the loan agreement with the Union Bank (formerly known as Xenith Bank, f/k/a The Bank of Hampton Roads), 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 funds will remain as collateral for the loans until the loans are paid off in full. As of December 31, 2018 and 2017, the balance of the account was $2,726,154 and $2,656,670, respectively.

On July 20, 2018, Black Oak LP received $4,592,079 of district reimbursement for previous construction costs incurred in the land development. Of this amount, $1,650,000 will remain on deposit in the District’s Capital Projects Fund for the benefit of Black Oak LP and will be released upon receipt of the evidence of the: (a) execution of a purchase agreement between Black Oak LP and a home builder with respect to the Black Oak development and (b) of the completion, finishing and making ready for home construction of at least 105 unfinished lots in the Black Oak development. In 2018, $446,745 was released to reimburse the construction costs leaving a balance of $1,203,256 on December 31, 2018.

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, 2018 and 2017.

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

Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with Financial Accounting Standards Board (“FASB”) ASC 805, “Business Combinations,” which acquired assets are recorded at fair value. Interest, property taxes, insurance and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are reduced when lots are sold.

The Company capitalized interest from related party borrowings of $409,005 and $211,005 for the years ended December 31, 2018 and 2017, respectively. The Company capitalized interest from the third-party borrowings of $245,844 and $1,008,220 for the years ended December 31, 2018 and 2017, respectively.

A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met:

(1) management, having the authority to approve the action, commits to a plan to sell the property. (2) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary. (3) an active program to locate a buyer and other actions required to complete the plan to sell, have been initiated. (4) the sale of the property is probable and is expected to be completed within one year or the property is under a contract to be sold. (5) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value. and (6) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When all of these criteria have been met, the property is classified as “held for sale”. “Real estate held for sale” only includes El Tesoro project and D street project.

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.

As of December 31, 2018 and 2017, there was no impairment recognized for any of the projects.

Revenue Recognition

Accounting Standards Codification ("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 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 was approximately all the revenue of the Company in 2018 and 2017, is as follows:

Identify the contract with a customer

The Company has signed agreements with the builders for developing the raw land to ready to build lots. The contract has agreed upon prices, timelines, and specifications for what is to be provided.

Identify the performance obligations in the contract

Performance obligations of the company include delivering developed lots to the customer, which are required to meet certain specifications that are outlined in the contract. The customer inspects all lots prior to accepting title to ensure all specifications are met.

Determine the transaction price

The transaction price is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties.

Allocate the transaction price to performance obligations in the contract

If there are multiple performance obligations to the contract, the costs must be allocated appropriately and consistently to each performance obligation. In the Company’s land developing business, each lot is considered to be a separate performance obligation, for which the specified price in the contract is allocated to. If there were multiple services provided for one client, the company would split out the services over multiple contracts.

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.

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 in the statement of financial position.

Cost of Sales

Land acquisition costs are allocated to each lot based on 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.

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 2018, 2017, 2016 and 2015 remain open to examination.

Recent Accounting Pronouncements

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires that restricted cash and cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. ASU 2016-18 was effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and a retrospective transition method is required. This guidance did not impact financial results, but resulted in a change in the presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The Company adopted this guidance in the 2018 and 2017 Consolidated Statement of Cash Flows.

On February 25, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No. 2016-02, Leases (Topic 842) (the Update). This ASU requires an entity to recognize a right-of-use asset (“ROU”) and lease liability for all leases with terms of more than 12 months. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective for the Company on January 1, 2019, with early adoption permitted. While the Company continues to assess all of the effects of adoption, it currently believes the most significant effects relate to: the recognition of new ROU assets and lease liabilities on its balance sheet for one of our office rental leases. The Company does not expect a significant change in its leasing activities between now and adoption. On adoption, the Company currently expects to recognize operating lease liabilities less than $200,000 with corresponding ROU assets of the same amount based on the present value of the remaining rental payments for our Bethesda Office lease on the consolidated balance sheet.

In May 2014, the FASB issued accounting standard update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under previous guidance. This may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In July 2015, the FASB approved the proposal to defer the effective date of ASU 2014-09 standard by one year. Early adoption was permitted after December 15, 2016, and the standard became effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations (ASU No. 2016-08), accounting for licenses of intellectual property and identifying performance obligations (ASU No. 2016-10), narrow-scope improvements and practical expedients (ASU No. 2016-12) and technical corrections and improvements to ASU 2014-09 (ASU No. 2016-20) in its new revenue standard. The Company has performed a review of the requirements of the new revenue standard and is monitoring the activity of the FASB and the transition resource group as it relates to specific interpretive guidance. The Company reviewed customer contracts, applied the five-step model of the new standard to its contracts, and compared the results to its current accounting practices. The adoption of this standard required increased disclosures related to the disaggregation of revenue.

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740) – Amendments to SEC paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 118.” ASU 2018-05 amends the Accounting Standards Codification to incorporate various SEC paragraphs pursuant to the issuance of SAB 118, which addresses the application of generally accepted accounting principles in situations when a registrant does not have necessary information available, prepared, or analyzed (including computation) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. The ASU does not have material impact on the Company.

In February 2018, the FASB issued ASU No. 2018-02, Reporting Comprehensive Income - Reclassification of Certain tax Effects from Accumulated Other Comprehensive Income to help businesses present some effects form the Tax Act's reduction in the corporate tax rate in their income statements. ASU 2018-02 gives the option of reclassifying what are called the “stranded” tax effects within accumulated other comprehensive income (loss) to retained earnings (deficit) during each fiscal year or quarter in which the effect of the lower tax rate is recorded. ASU 2018-02 instructs businesses to provide a disclosure in their financial statement footnotes that describes the accounting policy they used to release the income tax effects form accumulated other comprehensive income (loss), whether they are reclassifying the stranded income tax effects from the Tax Act, and information about the other effects on taxes from the reclassification. The update is effective for fiscal years beginning after December 15, 2018, and the interim periods in those years, and early adoption is permitted. We are evaluating the impact on the Company.

Subsequent Events

The Company evaluated the events and transactions subsequent to December 31, 2018, the balance sheet date, through April 1, 2019, the date the consolidated financial statements were available to be issued.

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1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

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, 2018			Attributable interest as of December 31, 2017
SeD Home Inc.	The State of Delaware, U.S.A.	February 24, 2015		100	%		100	%
SeD USA, LLC	The State of Delaware, U.S.A.	August 20, 2014		100	%		100	%
150 Black Oak GP, Inc.	The State of Texas, U.S.A.	January 23, 2014		100	%		100	%
SeD Development USA, Inc.	The State of Delaware, U.S.A.	March 13, 2014		100	%		100	%
150 CCM Black Oak Ltd.	The State of Texas, U.S.A.	January 23, 2014		100	%		69	%
SeD Ballenger, LLC	The State of Delaware, U.S.A.	July 7, 2015		100	%		100	%
SeD Maryland Development, LLC	The State of Delaware, U.S.A.	October 16, 2014		83.55	%		83.55	%
SeD Development Management, LLC	The State of Delaware, U.S.A.	June 18, 2015		85	%		85	%
SeD Builder, LLC	The State of Delaware, U.S.A.	October 21, 2015		100	%		100	%
SeD Texas Home, LLC	The State of Delaware, U.S.A.	June 16, 2015		100	%		100	%

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3. PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Property and equipment

	December 31, 2018			December 31, 2017
Computer Equipment	$	41,597		$	41,597
Furniture and Fixtures		24,393			21,393
		65,990			62,990
Accumulated Depreciation		(57,742	)		(40,928	)
Fixed Assets Net	$	8,248		$	22,062

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8. COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Future payments due under leases

2019		118,410
2020		96,924
Total	$	215,334

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9. INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Deferred tax assets (liabilities)

	2018			2017
Interest Income		(4,023,599	)		(2,957,688	)
Interest Expense		3,928,264			3,355,098
Depreciation and Amortization		6,302			2,510
Management Fees		404,342			276,741
Others		113,633			239,482
Net Operating Loss		4,547			499,230
		433,489			1,415,373
Valuation Allowance		(433,489	)		(1,415,373	)
Net Deferred Tax Asset		-			-

Income tax rate reconciliation

	2018			2017
US Federal statutory rate		21	%		21	%
State income tax rate		8.25	%		8.25	%
Federal Benefit		(1.73	)%		(1.73	)%
Valuation Allowance		(27.52	)%		(27.52	)%
Income tax provision (benefit)		-	%		-	%

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1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2018
Subsidiary 1
Name of consolidated subsidiary	SeD Home Inc.
State or other jurisdiction of incorporation or organization	The State of Delaware, U.S.A.
Date of incorporation or formation	Feb. 24, 2015
Attributable interest	100.00%
Subsidiary 2
Name of consolidated subsidiary	SeD USA, LLC
State or other jurisdiction of incorporation or organization	The State of Delaware, U.S.A.
Date of incorporation or formation	Aug. 20, 2014
Attributable interest	100.00%
Subsidiary 3
Name of consolidated subsidiary	150 Black Oak GP, Inc.
State or other jurisdiction of incorporation or organization	The State of Texas, U.S.A.
Date of incorporation or formation	Jan. 23, 2014
Attributable interest	100.00%
Subsidiary 4
Name of consolidated subsidiary	SeD Development USA, Inc.
State or other jurisdiction of incorporation or organization	The State of Delaware, U.S.A.
Date of incorporation or formation	Mar. 13, 2014
Attributable interest	100.00%
Subsidiary 5
Name of consolidated subsidiary	150 CCM Black Oak Ltd.
State or other jurisdiction of incorporation or organization	The State of Texas, U.S.A.
Date of incorporation or formation	Jan. 23, 2014
Attributable interest	69.00%
Subsidiary 6
Name of consolidated subsidiary	SeD Ballenger, LLC
State or other jurisdiction of incorporation or organization	The State of Delaware, U.S.A.
Date of incorporation or formation	Jul. 07, 2015
Attributable interest	100.00%
Subsidiary 7
Name of consolidated subsidiary	SeD Maryland Development, LLC
State or other jurisdiction of incorporation or organization	The State of Delaware, U.S.A.
Date of incorporation or formation	Oct. 16, 2014
Attributable interest	83.55%
Subsidiary 8
Name of consolidated subsidiary	SeD Development Management, LLC
State or other jurisdiction of incorporation or organization	The State of Delaware, U.S.A.
Date of incorporation or formation	Jun. 18, 2015
Attributable interest	85.00%
Subsidiary 9
Name of consolidated subsidiary	SeD Builder, LLC
State or other jurisdiction of incorporation or organization	The State of Delaware, U.S.A.
Date of incorporation or formation	Oct. 21, 2015
Attributable interest	100.00%
Subsidiary 10
Name of consolidated subsidiary	SeD Texas Home, LLC
State or other jurisdiction of incorporation or organization	The State of Delaware, U.S.A.
Date of incorporation or formation	Jun. 16, 2015
Attributable interest	100.00%

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1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Non-controlling interest	$ 2,887,328	$ 2,255,091
Restricted cash	3,929,410	2,656,670
Capitalized interest from related party borrowings	409,005	211,005
Capitalized interest from third party borrowings	$ 245,844	$ 1,008,220

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2. CONCENTRATION OF CREDIT RISK (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Risks and Uncertainties [Abstract]
Uninsured cash balances	$ 3,783,330	$ 2,514,903

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3. PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Property and equipment, gross	$ 65,990	$ 62,990
Accumulated depreciation	(57,742)	(40,928)
Property and equipment, net	8,248	22,062
Computer Equipment
Property and equipment, gross	41,597	41,597
Furniture and Fixtures
Property and equipment, gross	$ 24,393	$ 21,393

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3. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 16,814	$ 20,453

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5. NOTES PAYABLE (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Notes Payable [Abstract]
Principal	$ 13,899	$ 8,272,297
Unamortized debt discount	$ 0	$ 140,277

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6. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Related Party Transactions [Abstract]
Consulting expenses	$ 101,979	$ 110,334
Due to related party	$ 8,000	$ 18,000

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8. COMMITMENTS AND CONTINGENCIES (Details)	Dec. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 118,410
2020	96,924
Total	$ 215,334

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8. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Rent expenses	$ 120,071	$ 116,870

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9. INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Interest income	$ (4,023,599)	$ (2,957,688)
Interest expense	3,928,264	3,355,098
Depreciation and amortization	6,302	2,510
Management fees	404,342	276,741
Others	113,633	239,482
Net operating losses	4,547	499,230
Deferred tax assets, gross	433,489	1,415,373
Valuation allowance	(433,489)	(1,415,373)
Net deferred tax asset	$ 0	$ 0

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9. INCOME TAXES (Details 1)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
US Federal statutory rate	21.00%	21.00%
State income tax rate	8.25%	8.25%
Federal Benefit	(1.73%)	1.73%
Valuation Allowance	(27.52%)	(27.52%)
Income tax provision (benefit)	0.00%	0.00%