Alset(US:AEI)2025-03-31 20:06PART I Business Alset Inc. is a diversified holding company operating through its subsidiary in real estate, technology, and biohealth, with a strategy of acquiring and incubating businesses focused on sustainable living - Alset Inc. is a diversified holding company with three principal business segments: real estate, digital transformation technology, and biohealth, primarily managed through its 85.7% owned subsidiary, Alset International Limited1315 Revenue Contribution by Segment (FY 2024 vs FY 2023) | Segment | 2024 Revenue % | 2023 Revenue % | | :--- | :--- | :--- | | Property Development | 79% | 82% | | Other Business Activities | 7% | 5% | - The company holds significant equity interests in several other publicly traded companies, including DSS Inc. (48.9%), Value Exchange International, Inc. (indirect 48.7%), Sharing Services Global Corporation (29.0%), and Impact Biomedical Inc. (39.7%)14 - The real estate segment includes the development of EHome communities, with a key project being 'Lakes at Black Oak' near Houston, Texas, and a portfolio of 132 single-family rental homes253237 - A key strategic initiative is the planned acquisition of New Energy Asia Pacific Inc (NEAPI) from the company's CEO for $103.75 million to expand into the electric vehicle market565758 Risk Factors The company faces significant risks from a material weakness in internal controls, a history of net losses, and high dependence on its founder and CEO who holds majority ownership - Management has identified a material weakness in internal controls due to a limited number of staff, preventing proper segregation of duties and timely financial disclosure evaluation9899100 Recent Financial Performance | Fiscal Year | Revenue | Net Loss | | :--- | :--- | :--- | | 2024 | $21,115,899 | $(4,165,816) | | 2023 | $22,088,507 | $(61,278,733) | - The company operates as a holding company and is dependent on distributions from its subsidiaries to meet obligations103 - Several officers and directors serve in similar roles at subsidiaries and other non-majority owned businesses, creating potential conflicts of interest in time allocation115117 - The company's success is significantly dependent on its founder, Chairman, and CEO, Chan Heng Fai, whose loss could materially harm the business120 - The principal stockholder, Chan Heng Fai, owns approximately 62.6% of the outstanding common stock, giving him significant influence over corporate decisions176 Unresolved Staff Comments This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies180 Cybersecurity The company integrates cybersecurity into its risk management framework, with oversight by the Audit Committee and day-to-day management led by the CEO - Cybersecurity risk management is integrated into the company's broader risk management framework to foster a company-wide culture of security182 - The Board's Audit Committee has been delegated oversight of cybersecurity, data privacy, and other IT risks, receiving periodic reports from management184185 - The management team, led by the CEO, is responsible for assessing and managing material risks from cybersecurity threats186 - The company reports that it has not encountered any cybersecurity challenges that have materially impaired its operations or financial standing183 Properties The company's main properties include the 'Lakes at Black Oak' development and a portfolio of 132 single-family rental homes in Texas - The company's primary real estate development project is 'Lakes at Black Oak' in Magnolia, Texas, where it has retained four model lots to build single-family rental homes188189 - The 'Alset Villas' community, comprising 63 lots, was fully sold to Century Land Holdings of Texas, LLC in December 2024191 - The company owns 132 single-family rental homes in Montgomery and Harris Counties, Texas, acquired for a total cost of $30,998,258192193 Legal Proceedings The company is not a party to any pending legal proceedings, and none are known to be contemplated - The Company is not currently a party to any pending legal proceedings, and none are known to be contemplated196 Mine Safety Disclosures This section is not applicable to the company - Not applicable198 PART II Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's common stock (AEI) trades on Nasdaq, with five shareholders of record as of March 2025, and it does not anticipate paying dividends or repurchasing stock - The company's common stock trades on the Nasdaq Capital Market under the symbol 'AEI'200 - As of March 31, 2025, there were 5 shareholders of record, not including those holding shares in 'street name'201 - The company has never paid dividends on its common stock and does not plan to in the foreseeable future, retaining earnings for growth202 - The company did not repurchase any of its equity securities during 2024206 Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue decreased 4% to $21.1 million in 2024, but the net loss significantly narrowed to $4.2 million from $61.3 million due to gains on securities and investments Consolidated Financial Summary (FY 2024 vs FY 2023) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenue | $21,115,899 | $22,088,507 | | Net Loss | $(4,165,816) | $(61,278,733) | Revenue by Segment (FY 2024 vs FY 2023) | Segment | 2024 Revenue | 2023 Revenue | Change % | | :--- | :--- | :--- | :--- | | Real Estate | $19,608,184 | $20,963,661 | -6% | | Digital Transformation | $0 | $28,117 | -100% | | Biohealth | $0 | $12,758 | -100% | | Other | $1,507,715 | $1,083,971 | 39% | | Total | $21,115,899 | $22,088,507 | -4% | - The significant decrease in net loss was primarily due to a realized gain on securities investment of $461,247 in 2024 versus a loss of $11,375,747 in 2023273 - Cash and cash equivalents increased slightly to $27.2 million at year-end 2024, while total assets decreased to $96.8 million from $126.3 million276 - Net cash provided by operating activities was $5.2 million in 2024, down from $7.5 million in 2023, mainly from property sales282 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies329 Financial Statements and Supplementary Data Consolidated financial statements show decreased assets to $96.8 million and a narrowed net loss of $4.2 million in 2024, with stockholders' equity at $90.2 million Consolidated Balance Sheet Highlights | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $27,243,787 | $26,921,727 | | Total Assets | $96,761,977 | $126,314,028 | | Total Liabilities | $6,563,126 | $9,066,700 | | Total Stockholders' Equity | $90,198,851 | $96,790,317 | Consolidated Statement of Operations Highlights | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenue | $21,115,899 | $22,088,507 | | Loss from Operations | $(4,117,076) | $(2,872,654) | | Net Loss | $(4,165,816) | $(61,278,733) | | Net Loss Per Share | $(0.43) | $(6.52) | Consolidated Cash Flow Highlights | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,156,047 | $7,478,823 | | Net cash provided by (used in) investing activities | $17,468,306 | $(2,128,986) | | Net cash (used in) provided by financing activities | $(21,419,083) | $3,187,489 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures This section is not applicable to the company - Not applicable619 Controls and Procedures Management concluded disclosure controls were ineffective due to a material weakness from limited staffing, with plans to remediate by hiring additional qualified personnel - Management concluded that disclosure controls and procedures were ineffective as of December 31, 2024621 - A material weakness was identified due to limited staff, which prevents segregation of duties and restricts timely evaluation of financial statement disclosures624 - The company plans to remediate the material weakness by hiring additional qualified personnel with relevant financial and SEC reporting experience627 Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the fourth quarter of 2024 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended December 31, 2024628 Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This section is not applicable to the company - Not applicable629 PART III Directors, Executive Officers and Corporate Governance The company is led by founder and CEO Chan Heng Fai, with a board structure that includes Audit, Nominations, and Compensation committees composed of independent directors - The executive team is led by founder, Chairman, and CEO Chan Heng Fai, and Co-CEO Chan Tung Moe631 - Chan Heng Fai has extensive experience in banking, finance, and corporate restructuring and serves on the boards of several affiliated companies632633634 - The Board of Directors has three main committees: Audit, Nominations and Corporate Governance, and Compensation, with the Audit Committee including a designated financial expert663664 - The company has adopted a written code of ethics and an insider trading policy applicable to all directors, officers, and employees659662 Executive Compensation Executive compensation is led by CEO Chan Heng Fai's $448,430 salary, with bonuses tied to market cap growth and a new 2025 incentive plan for up to 2.1 million shares 2024 Named Executive Officer Compensation | Name | Position | 2024 Salary | 2024 Bonus | 2024 Total Compensation | | :--- | :--- | :--- | :--- | :--- | | Chan Heng Fai | Chairman & CEO | $448,430 | - | $448,430 | | Chan Tung Moe | Co-CEO | $293,640 | $83,141 | $376,781 | | Lui Wai Leung Alan | Co-CFO | $199,326 | - | $199,326 | | Rongguo Wei | Co-CFO | $232,073 | - | $232,073 | | Charles MacKenzie | Chief Development Officer | - | - | $360,000 (All Other) | - CEO Chan Heng Fai's employment agreement entitles him to bonus payments equal to 5% of the growth in market capitalization and 5% of the growth in net asset value annually678 - In 2024, compensation for independent members of the Board of Directors was increased to $5,000 per quarter695 - The 2018 Incentive Compensation Plan was replaced by the 2025 Incentive Compensation Plan, covering up to 2,147,024 shares of common stock689617 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Founder and CEO Chan Heng Fai beneficially owns 62.6% of outstanding common stock, giving him significant control over the company - As of March 31, 2025, there were 10,735,119 shares of common stock outstanding699 Beneficial Ownership of Principal Stockholder | Name | Shares Beneficially Owned | Percentage of Outstanding Shares | | :--- | :--- | :--- | | Chan Heng Fai | 6,718,742 | 62.6% | - All directors and executive officers as a group beneficially own 6,718,742 shares, representing 62.6% of the outstanding common stock701 Certain Relationships and Related Transactions, and Director Independence The company engages in numerous related-party transactions, notably the planned $103.75 million acquisition of a company from its CEO and various loans to affiliates - The company has a planned acquisition of New Energy Asia Pacific Inc from its CEO, Chan Heng Fai, for $103.75 million, to be paid in a convertible promissory note742743745 - On January 9, 2024, affiliated entities Alset Capital Acquisition Corp and HWH International Inc completed a business combination, with the combined entity now trading as HWH International Inc (Nasdaq: HWH)717719721 - The company reorganized its home rental business by purchasing American Home REIT Inc (AHR) from its subsidiary for $26.25 million729730731 - The company and its subsidiaries have provided multiple convertible loans to affiliates Value Exchange International Inc (VEII) and Sharing Services Global Corp (SHRG) throughout 2023 and 2024733747749 Principal Accounting Fees and Services The company paid its auditor, Grassi & Co, a total of $274,343 in 2024, down from $330,341 in 2023, primarily for audit services Accounting Fees Paid (FY 2024 vs FY 2023) | Fee Category | 2024 | 2023 | | :--- | :--- | :--- | | Audit Fees | $268,178 | $275,370 | | Audit-Related Fees | $0 | $48,806 | | Tax Fees | $6,165 | $6,165 | | All Other Fees | $0 | $0 | | Total | $274,343 | $330,341 | - The company engaged Grassi & Co., CPAs, P.C. as its independent registered public accounting firm for the fiscal year ending December 31, 2024759 PART IV Exhibit and Financial Statement Schedules This section lists the consolidated financial statements and all exhibits filed with the Form 10-K, including material contracts and required certifications - This section lists the consolidated financial statements filed with the report, including the Balance Sheets, Statements of Operations, Statements of Stockholders' Equity, and Statements of Cash Flows762 - A detailed list of exhibits is provided, including underwriting agreements, certificates of incorporation, bylaws, material contracts, incentive plans, and required certifications under the Sarbanes-Oxley Act763764769 Form 10-K Summary No Form 10-K summary is provided in this section - None768