Alset(US:AEI)2025-08-14 20:07PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's analysis of Alset Inc.'s financial condition and operations Item 1. Financial Statements (Unaudited) This section presents Alset Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed explanatory notes Condensed Consolidated Balance Sheets This subsection provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change ($) | Percentage Change (%) | | :-------------------------------- | :-------------- | :---------------- | :----- | :---------------- | | Total Current Assets | $44,006,537 | $59,760,342 | $(15,753,805) | -26.36% | | Total Assets | $86,011,525 | $96,761,977 | $(10,750,452) | -11.11% | | Total Current Liabilities | $4,071,022 | $5,476,601 | $(1,405,579) | -25.67% | | Total Liabilities | $4,738,149 | $6,563,126 | $(1,824,977) | -27.81% | | Total Stockholders' Equity | $81,273,376 | $90,198,851 | $(8,925,475) | -9.90% | - Cash and Cash Equivalents decreased from $27,243,787 at December 31, 2024, to $25,584,862 at June 30, 20259 - Investment in Securities at Fair Value - Related Party decreased significantly from $12,342,624 to $0 in current assets, but a new noncurrent asset of $4,961,358 appeared for the same category, indicating reclassification or changes in related party investments9 Condensed Consolidated Statements of Operations and Other Comprehensive Loss This subsection details the company's financial performance over specific periods, including revenue, expenses, and net loss Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenue | $1,098,962 | $1,127,046 | $2,167,265 | $7,213,253 | | Loss from Operations | $(2,755,461) | $(2,809,472) | $(6,687,579) | $(5,075,984) | | Total Other Non-Operating (Expense) Income, Net | $(6,085,681) | $1,659,507 | $(11,615,507) | $(3,387,772) | | Net Loss | $(8,841,142) | $(1,149,965) | $(18,346,034) | $(8,463,756) | | Net Loss Attributable to Common Stockholders | $(8,221,441) | $(1,239,114) | $(16,554,918) | $(8,008,771) | | Net Loss Per Share - Basic and Diluted | $(0.71) | $(0.13) | $(1.49) | $(0.87) | - Total Revenue decreased by 2% for the three months ended June 30, 2025, compared to the same period in 2024, and by 70% for the six months ended June 30, 2025, primarily due to reduced property sales11259 - The Company experienced a significant increase in Net Loss, from $(1,149,965) to $(8,841,142) for the three months, and from $(8,463,756) to $(18,346,034) for the six months ended June 30, 2025, largely driven by foreign exchange transaction losses and other non-operating expenses11269270 Condensed Consolidated Statements of Stockholders' Equity This subsection outlines changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity Highlights | Metric | Balance at January 1, 2025 ($) | Balance at June 30, 2025 ($) | Change ($) | | :--------------------------------- | :------------------------- | :----------------------- | :----- | | Common Stock (Shares) | 9,235,119 | 11,709,219 | +2,474,100 | | Common Stock (Par Value) | $9,235 | $11,709 | +$2,474 | | Additional Paid in Capital | $334,023,233 | $337,071,493 | +$3,048,260 | | Accumulated Deficit | $(251,851,540) | $(268,406,458) | $(16,554,918) | | Accumulated Other Comprehensive Income (Loss) | $(849,862) | $4,138,435 | +$4,988,297 | | Total Alset Inc. Stockholders' Equity | $81,331,066 | $72,815,179 | $(8,515,887) | | Total Stockholders' Equity | $90,198,851 | $81,273,376 | $(8,925,475) | - The Company issued 1,500,000 shares of common stock in January 2025, generating $1,205,000 in net proceeds for working capital and general corporate purposes14173175 - Accumulated Other Comprehensive Income (Loss) significantly improved from a loss of $(849,862) to a gain of $4,138,435, primarily due to foreign currency translation adjustments1493 Condensed Consolidated Statements of Cash Flows This subsection presents the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 ($) | 2024 ($) | | :----------------- | :------------ | :------------- | | Operating Activities | $(6,374,812) | $(5,897,249) | | Investing Activities | $1,675,912 | $19,616,855 | | Financing Activities | $2,326,244 | $(21,351,570) | | Net Decrease in Cash and Cash Equivalents and Restricted Cash | $(2,372,656) | $(7,631,964) | - Net cash used in operating activities increased in 2025, mainly due to purchases of trading securities and paying off payables278 - Net cash provided by investing activities significantly decreased in 2025 compared to 2024, primarily because 2024 included large cash withdrawals from a trust account for redemptions ($21,102,871)279 - Net cash provided by financing activities in 2025 was driven by proceeds from common stock issuance ($2,614,983), contrasting with net cash used in 2024 due to repayment of HWH's shares280 Notes to Condensed Consolidated Financial Statements This subsection provides detailed explanations of the accounting policies, significant transactions, and other relevant information supporting the financial statements - Alset Inc. is a diversified holding company with operations in real estate, financial services, digital transformation technologies, biohealth activities, and consumer products across multiple countries21 - The Company has four operating segments: real estate, digital transformation technology, biohealth, and other business activities, with performance evaluated by Co-CEOs based on net income (loss) and operating income (loss)22115116 - Significant related party transactions include convertible loans to Value Exchange International Inc. (VEII) and Sharing Services Global Corp. (SHRG), and the acquisition of New Energy Asia Pacific Inc. (NEAPI) from the CEO for $83,000,000 in a convertible promissory note134139153 - As of June 30, 2025, the Company owned 132 single-family residential rental properties with an aggregate investment of $31,000,000, generating rental revenue64119120 - The Company recorded a $450,000 out-of-period adjustment to increase other non-operating expenses for an overpayment error in 2024, deemed immaterial to prior financial statements110 - Subsequent to June 30, 2025, the CEO converted the entire $83,000,000 Convertible Note for NEAPI acquisition into 27,666,667 restricted shares of the Company's common stock on July 23, 2025210212 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section offers management's analysis of the company's financial condition, operational results, liquidity, and the impact of various economic factors Business Overview This subsection describes Alset Inc.'s diversified business model, its subsidiaries, and strategic approach to investments - Alset Inc. is a diversified holding company operating through subsidiaries in real estate, financial services, digital transformation technologies, biohealth, and consumer products across the US, Singapore, Hong Kong, Australia, South Korea, and China216 - The company manages a significant portion of its principal businesses through its 85.8% owned subsidiary, Alset International Limited, traded on the Singapore Stock Exchange216 - Alset Inc. holds minority ownership interests in several public companies, including 36.9% in American Pacific Financial, Inc. (APF), 43.6% in DSS Inc., 45.8% in Value Exchange International Inc. (VEII), 0.5% in American Premium Water Corporation (APW), and 29% in Sharing Services Global Corporation (SHRG)217 - The company's strategy involves acquiring majority/control stakes in innovative businesses, providing global capital and management services, and actively managing a portfolio of trading securities for short-term profits218219 Recent Developments This subsection highlights key events and transactions that have recently impacted the company's operations and financial standing - On April 15, 2025, the CEO, Chan Heng Fai, was awarded 1,000,000 restricted shares of common stock valued at $840,000 as compensation for services223 - The Company regained compliance with Nasdaq's minimum $1 bid price requirement by July 17, 2025, after receiving a non-compliance notice on May 13, 2025224225 - On January 9, 2024, a business combination between Alset Capital Acquisition Corp. and HWH International Inc. (HWH-NV) was completed, resulting in HWH International Inc. becoming a Nasdaq-listed company (HWH) focused on lifestyle offerings226227229 - In September 2024, Alset Inc. and Alset International Limited converted $300,000 and $3,501,759 of HWH's debt, respectively, into HWH common stock at $0.63 per share230231 - The Company completed the sale of 70 lots in July 2024 ($3,800,000), 72 lots in October 2024 ($3,900,000), and 63 lots in December 2024 ($3,800,000) from its Lakes at Black Oak and Alset Villas projects235 - The Company entered into multiple convertible loan agreements with Value Exchange International, Inc. (VEII) and Sharing Services Global Corp. (SHRG) between July 2024 and June 2025, providing credit lines and loans with conversion options and warrants237238241242243244245246247248 - On May 8, 2025, the Company agreed to acquire New Energy Asia Pacific Inc. (NEAPI) from its CEO for $83,000,000 via a convertible promissory note, with the closing occurring on July 23, 2025250252 Matters that May or Are Currently Affecting Our Business This subsection discusses internal and external factors, including operational challenges and public health issues, that could influence the company's performance - Challenges include improving revenue through cross-selling, identifying and integrating complementary acquisitions, attracting skilled personnel, and controlling operating expenses256 - The company also considers the potential effects of public health issues, such as epidemics or pandemics, on its business256 Results of Operations This subsection provides a detailed analysis of the company's revenue, cost of revenues, gross margin, and operating expenses over specific periods Revenue Performance (YoY Change) | Segment | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Change (Dollars) ($) | Change (Percentage) (%) | | :---------- | :------------------------------- | :------------------------------- | :--------------- | :------------------ | | Real Estate | $716,042 | $705,011 | $11,031 | 2% | | Other | $382,920 | $422,035 | $(39,115) | -9% | | Total Revenue | $1,098,962 | $1,127,046 | $(28,084) | -2% | | Segment | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Change (Dollars) ($) | Change (Percentage) (%) | | :---------- | :----------------------------- | :----------------------------- | :--------------- | :------------------ | | Real Estate | $1,433,847 | $6,458,005 | $(5,024,158) | -78% | | Other | $733,418 | $755,248 | $(21,830) | -3% | | Total Revenue | $2,167,265 | $7,213,253 | $(5,045,988) | -70% | - The significant decrease in total revenue for the six months ended June 30, 2025, was primarily due to the sale of remaining properties in the Lakes at Black Oak and Alset Villas projects in 2024259260 Cost of Revenues and Gross Margin Performance (YoY Change) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Change (Dollars) ($) | Change (Percentage) (%) | | :----------------- | :------------------------------- | :------------------------------- | :--------------- | :------------------ | | Total Cost of Revenues | $843,046 | $829,958 | $13,088 | 2% | | Gross Margin | $255,916 | $297,088 | $(41,172) | -13.86% | | Metric | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Change (Dollars) ($) | Change (Percentage) (%) | | :----------------- | :----------------------------- | :----------------------------- | :--------------- | :------------------ | | Total Cost of Revenues | $1,620,575 | $5,488,325 | $(3,867,750) | -70% | | Gross Margin | $546,690 | $1,724,928 | $(1,178,238) | -68.30% | - Operating expenses for the six months ended June 30, 2025, increased by 6% to $7,234,269, primarily due to a bonus paid to the CEO268 - Other non-operating income shifted to a significant expense of $(6,085,681) for the three months and $(11,615,507) for the six months ended June 30, 2025, mainly due to foreign exchange transaction losses269 Liquidity and Capital Resources This subsection assesses the company's ability to meet its short-term and long-term financial obligations and fund its operations - Total assets decreased by 11.11% from $96,761,977 at December 31, 2024, to $86,011,525 at June 30, 2025, mainly due to decreases in cash and investment securities273 - Cash and cash equivalents decreased from $27,243,787 to $25,584,862 during the first six months of 2025273 - The Company expects to collect approximately $8,000,000 in developer reimbursements for the Lakes at Black Oak and Alset Villas projects within the next twelve months276 - Management believes that available cash and favorable cash revenue from real estate projects are sufficient to fund operations for at least the next 12 months276 Impact of Inflation This subsection evaluates the current and potential future effects of inflation on the company's financial results and operating condition - Inflation has not had a material impact on the Company's results of operations for the six months ended June 30, 2025, or the year ended December 31, 2024281 - The Company cannot assure that future inflation will not adversely impact its operating results and financial condition281 Impact of Foreign Exchange Rates This subsection explains the influence of foreign currency fluctuations on the company's financial performance, particularly concerning intercompany loans - Foreign exchange rate changes on intercompany loans (approximately $30,000,000 between Singapore and US entities) are the primary cause of significant fluctuations in foreign currency transaction gains or losses282 - The Company expects continued significant impact from foreign exchange rate volatility on its results of operations in 2025, as intercompany loans are not expected to be repaid in the short term282 Emerging Growth Company Status This subsection clarifies the company's status as an 'emerging growth company' and its election regarding accounting standard compliance - Alset Inc. is an 'emerging growth company' as defined by the JOBS Act283 - The Company has elected to take advantage of exemptions for complying with new or revised accounting standards, delaying adoption until they apply to private companies283 Seasonality This subsection describes how seasonal factors affect the company's real estate business costs and sales patterns - The real estate business is subject to seasonal shifts in costs, as certain work is more likely to be performed at specific times of the year284 - Periodic spikes in sales are anticipated when the company commences the sales process at a particular location for home building284 Item 3. Quantitative and Qualitative Disclosure About Market Risk As a smaller reporting company, Alset Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing market risk disclosures as it qualifies as a 'smaller reporting company' under Regulation S-K285 Item 4. Controls and Procedures This section evaluates the effectiveness of the company's disclosure controls and procedures and reports on changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This subsection presents management's conclusion on the effectiveness of the company's disclosure controls and procedures - Management concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025286 Changes in the Company's Internal Controls Over Financial Reporting This subsection reports on any material changes to the company's internal control over financial reporting during the quarter - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025287 PART II OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section states that there are no legal proceedings applicable to the Company - Not applicable288 Item 1A. Risk Factors As a smaller reporting company, Alset Inc. is not required to provide a discussion of risk factors - Risk factors disclosure is not applicable to smaller reporting companies289 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's common stock repurchase program and the activity during the quarter Common Stock Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Total Shares Purchased as Part of Publicly Announced Plans | Maximum Number of Shares Yet to be Purchased Under Plans ($) | | :---------------------- | :--------------------- | :--------------------------- | :--------------------------------------------------------- | :------------------------------------------------------- | | April 1 – April 30, 2025 | - | - | - | - | | May 1 – May 31, 2025 | - | - | - | - | | June 1 – June 30, 2025 | 25,900 | $1.0039 | 25,900 | $973,126 | | Total | 25,900 | $1.0039 | 25,900 | $973,126 | - On June 23, 2025, the Board approved a new stock repurchase program authorizing up to $1,000,000 of common stock repurchases until December 31, 2025290 Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities - None reported291 Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company - Not applicable292 Item 5. Other Information This section indicates that there is no other information to report - Not applicable293 Item 6. Exhibits This section lists all documents filed as exhibits to the Form 10-Q, including various agreements and certifications - Key exhibits include the Incentive Compensation Plan Stock Award Agreement, Amended Term Sheet, and certifications from executive officers (302 and 906 of Sarbanes-Oxley Act)294 SIGNATURES This section provides the official signatures of the company's executive officers, certifying the accuracy of the report - The report is signed by Chan Heng Fai (Chairman of the Board and CEO), Chan Tung Moe (Co-CEO), Rongguo Wei (Co-CFO), and Lui Wai Leung Alan (Co-CFO) on August 14, 2025299