Alset(AEI) - 2024 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Presents unaudited financial statements, management's discussion, market risk, and controls for Q1 2024 Item 1. Financial Statements (Unaudited) Presents Alset Inc.'s unaudited condensed consolidated financial statements for Q1 2024, showing increased revenue but a wider net loss Condensed Consolidated Balance Sheets Total assets decreased to $96.7 million from $126.3 million, primarily due to reduced trust account cash after redemptions Condensed Consolidated Balance Sheet Highlights (in USD) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $48,132,390 | $55,461,235 | | Total Assets | $96,710,288 | $126,314,028 | | Total Current Liabilities | $4,635,740 | $8,114,304 | | Total Liabilities | $6,670,132 | $9,066,700 | | Total Stockholders' Equity | $90,040,156 | $96,790,317 | - The significant decrease in total assets was mainly driven by the reduction of 'Cash and Marketable Securities Held in Trust Account' from $21.3 million to $0 after the HWH International Inc. business combination and related redemptions[6][27] Condensed Consolidated Statements of Operations and Other Comprehensive Loss Revenue increased to $6.1 million, but net loss widened to $6.8 million due to unrealized investment losses Q1 2024 vs Q1 2023 Performance (in USD) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenue | $6,086,207 | $926,936 | | Loss from Operations | ($2,266,513) | ($2,089,730) | | Net Loss | ($7,313,792) | ($4,323,182) | | Net Loss Attributable to Common Stockholders | ($6,769,658) | ($3,857,886) | | Net Loss Per Share (Basic and Diluted) | ($0.73) | ($0.46) | - The increase in net loss was significantly impacted by a $5.4 million unrealized loss on related-party securities investments in Q1 2024, compared to a $1.3 million gain in Q1 2023[8] Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $90.0 million from $96.8 million, primarily due to net loss and foreign currency translation - Total stockholders' equity decreased by approximately $6.8 million during Q1 2024, from $96,790,317 to $90,040,156[10][11] - Key changes in equity included a net loss of $7.3 million and an other comprehensive loss of $1.2 million from foreign currency translation adjustments[11] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities decreased to $1.5 million, while investing activities reversed to a net use of $1.8 million Cash Flow Summary (in USD) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($1,509,247) | ($3,289,083) | | Net Cash (Used in) Provided by Investing Activities | ($1,758,503) | $671,484 | | Net Cash (Used in) Provided by Financing Activities | ($240,182) | $3,433,921 | | Net (Decrease) Increase in Cash | ($3,507,932) | $816,322 | Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed accounting policies, significant events including the HWH business combination, related-party transactions, and segment information - The company operates through four segments: real estate, digital transformation technology, biohealth, and other business activities, with a significant portion managed through its 85.5% owned subsidiary, Alset International Limited[19][66] - On January 9, 2024, the business combination between Alset Capital Acquisition Corp. and HWH International Inc. was completed, with HWH surviving as a subsidiary[86] - The company has agreements to sell a total of 205 lots (142 lots and 63 lots) from its Lakes at Black Oak and Alset Villas projects, with closings expected in Q2 2024[118] - For the three months ended March 31, 2024, one customer accounted for approximately 100% of the Company's property development revenue[65] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses diversified operations, strategic developments, and financial performance, highlighting increased revenue but wider net loss Business Overview and Recent Developments Details the company's diversified holdings and recent strategic actions, including the HWH merger and convertible loan issuances - The company is a diversified holding company with significant equity interests in APF (36.9%), Holista (13%), DSS (44.4%), VEII (48.7%), and SHRG (33.4%)[126] - Completed the merger of Alset Capital Acquisition Corp. and HWH International Inc. on January 9, 2024, with the combined entity named HWH International Inc. ("New HWH")[127][128] - Issued convertible loans to affiliates Value Exchange International, Inc. (VEII) and Sharing Services Global Corp. (SHRG) in Q1 2024 and late 2023[137][139] Results of Operations Revenue surged 557% to $6.1 million driven by real estate sales, but net loss increased to $7.3 million due to higher expenses Revenue by Segment (in USD) | Segment | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Real Estate | $5,752,994 | $633,811 | 808% | | Biohealth | $535 | $12,786 | -96% | | Digital Transformation Technology | $0 | $14,040 | -100% | | Other | $332,678 | $266,299 | 25% | | Total Revenue | $6,086,207 | $926,936 | 557% | - The increase in property sales from the Lakes at Black Oak Project was the primary contributor to the significant revenue growth in Q1 2024[143] - Gross margin increased from $237,655 in Q1 2023 to $1,427,840 in Q1 2024 due to higher sales from the Lakes at Black Oak Project[145] Liquidity and Capital Resources Cash decreased to $23.7 million, and total assets declined to $96.7 million, though management expects sufficient liquidity for 12 months Key Liquidity Metrics (in USD) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash | $23,727,542 | $26,921,727 | | Total Assets | $96,710,288 | $126,314,028 | | Total Liabilities | $6,670,132 | $9,066,700 | - Management believes that available cash and favorable cash revenue from real estate projects are sufficient to fund operations for at least the next 12 months[147] - Future development of the Lakes at Black Oak project is contingent on funds raised from capital markets, third-party loans, and government reimbursements[147] Item 3. Quantitative and Qualitative Disclosure About Market Risk The company is exempt from market risk disclosure requirements due to its status as a smaller reporting company - The company is exempt from this disclosure requirement due to its status as a "smaller reporting company" as defined by Regulation S-K[156] Item 4. Controls and Procedures Management concluded that disclosure controls were not effective as of March 31, 2024, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2024[156] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[156] PART II OTHER INFORMATION Covers legal proceedings, risk factors, exhibits, and other required disclosures for the reporting period Items 1-5: Legal Proceedings, Risk Factors, and Other Disclosures No legal proceedings, unregistered sales, defaults, or other material information to report, with risk factors not applicable - Item 1. Legal Proceedings: Not applicable[156] - Item 1A. Risk Factors: Not applicable to smaller reporting companies[156] - Items 2, 3, 4, 5: No information to report[156] Item 6. Exhibits Lists filed exhibits, including CEO and CFO certifications and Inline XBRL documents for interactive data - Exhibits filed include certifications from the Chief Executive Officers and Chief Financial Officers pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[157] - The filing includes Inline XBRL Instance, Schema, Calculation, Definition, Label, and Presentation documents[157]