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Alset(AEI) - 2024 Q2 - Quarterly Report
AEIAlset(AEI)2024-08-13 20:38

Mergers and Acquisitions - Alset Inc. completed the merger with HWH International Inc. on January 9, 2024, resulting in the issuance of 12,500,000 shares of New HWH common stock, with Alset International receiving 10,900,000 shares[140]. - The acquisition of Hapi Travel Limited on June 14, 2023, was accounted for as a business combination, generating a deemed dividend of 214,174duetothepurchasepriceexceedingidentifiableequity[144].−AlsetInc.purchased112single−familyrentalhomesinTexasforatotalconsiderationof214,174 due to the purchase price exceeding identifiable equity[144]. - Alset Inc. purchased 112 single-family rental homes in Texas for a total consideration of 26,250,933, which included debt forgiveness of 13,900,000[142].RevenueandFinancialPerformance−ForthethreemonthsendedJune30,2024,thecompanyreportedrevenueof13,900,000[142]. Revenue and Financial Performance - For the three months ended June 30, 2024, the company reported revenue of 1,127,046, a decrease from 19,153,848forthesameperiodin2023[157].−TotalrevenueforthethreemonthsendedJune30,2024,was19,153,848 for the same period in 2023[157]. - Total revenue for the three months ended June 30, 2024, was 1,127,046, a decrease of 94% from 19,153,848inthesameperiodof2023[159].−RevenuefromtherealestatesegmentforthesixmonthsendedJune30,2024,was19,153,848 in the same period of 2023[159]. - Revenue from the real estate segment for the six months ended June 30, 2024, was 6,458,005, down 67% from 19,515,728in2023[159].−Revenuefromrentalbusinessincreasedto19,515,728 in 2023[159]. - Revenue from rental business increased to 705,011 for the three months ended June 30, 2024, compared to 690,967in2023[159].−Thecompanyrecognized690,967 in 2023[159]. - The company recognized 0 in revenue from its biohealth segment for the three months ended June 30, 2024, down from 12,786in2023[159].ExpensesandLosses−OperatingexpensesforthethreemonthsendedJune30,2024,were12,786 in 2023[159]. Expenses and Losses - Operating expenses for the three months ended June 30, 2024, were 3,936,518, compared to 14,044,352forthesameperiodin2023[157].−ThenetlossforthethreemonthsendedJune30,2024,was14,044,352 for the same period in 2023[157]. - The net loss for the three months ended June 30, 2024, was 1,149,965, down from a net loss of 5,813,406forthesameperiodin2023[157].−Operatingexpensesincreasedby355,813,406 for the same period in 2023[157]. - Operating expenses increased by 35% to 3,106,560 for the three months ended June 30, 2024, compared to 2,305,859in2023[162].−Thegrossmargindecreasedfrom2,305,859 in 2023[162]. - The gross margin decreased from 7,415,355 to 297,088forthethreemonthsendedJune30,2023,and2024,respectively[161].−Totalcostofrevenuesdecreasedby93297,088 for the three months ended June 30, 2023, and 2024, respectively[161]. - Total cost of revenues decreased by 93% to 829,958 for the three months ended June 30, 2024, from 11,738,493in2023[161].CashFlowandFinancialPosition−Cashdecreasedfrom11,738,493 in 2023[161]. Cash Flow and Financial Position - Cash decreased from 26,921,727 as of December 31, 2023, to 18,932,861asofJune30,2024[165].−Netcashusedinoperatingactivitieswas18,932,861 as of June 30, 2024[165]. - Net cash used in operating activities was 5,897,249 in the first six months of 2024, compared to 7,409,770providedinthesameperiodof2023[167].−Netcashprovidedbyinvestingactivitieswas7,409,770 provided in the same period of 2023[167]. - Net cash provided by investing activities was 19,616,855 in the first six months of 2024, a significant increase from 606,983usedinthesameperiodof2023[168].−Netcashusedinfinancingactivitieswas606,983 used in the same period of 2023[168]. - Net cash used in financing activities was 21,351,570 in the first six months of 2024, compared to 3,416,971providedinthesameperiodof2023[169].−Thecompanyissued3,416,971 provided in the same period of 2023[169]. - The company issued 1,118,864 in loans to related parties and withdrew 21,102,871fromatrustaccountforredemptionofsharesinthefirstsixmonthsof2024[168].InvestmentsandOwnership−Thecompanycurrentlyowns21,179,275sharesofVEII,representingapproximately48.721,102,871 from a trust account for redemption of shares in the first six months of 2024[168]. Investments and Ownership - The company currently owns 21,179,275 shares of VEII, representing approximately 48.7% of VEII's common stock[150]. - Alset Inc. holds a 36.9% equity interest in American Pacific Financial, Inc., and a 44.4% equity interest in DSS Inc., among other investments[139]. - On May 4, 2023, DSS distributed approximately 280 million shares of SHRG, resulting in the company receiving 70,426,832 shares directly and an additional 55,197,696 shares indirectly[151]. - The company and its subsidiaries now collectively own 125,624,528 shares of SHRG, representing 33.4% of the issued and outstanding shares of SHRG[151]. - Hapi Metaverse loaned VEII 1,400,000 on February 23, 2023, which can be converted into shares of VEII for a period of three years[150]. - Hapi Metaverse converted 1,300,000oftheprincipalamountloanedtoVEIIinto7,344,632sharesofVEII′sCommonStockonSeptember6,2023[150].−ThecompanyenteredintoaConvertiblePromissoryNotewithSHRGfora1,300,000 of the principal amount loaned to VEII into 7,344,632 shares of VEII's Common Stock on September 6, 2023[150]. - The company entered into a Convertible Promissory Note with SHRG for a 250,000 loan, convertible into shares at an average closing market price[152]. Strategic Focus and Challenges - The company is facing challenges in improving revenue through cross-selling and identifying complementary businesses for acquisition[155]. - The company plans to focus on lot sales to improve liquidity and strengthen its financial position[159]. - New HWH is implementing a new membership model that operates on a yearly subscription basis, offering exclusive discounts and passive income opportunities for members[141]. Other Considerations - The company expects foreign exchange rate fluctuations to significantly impact operations in 2024, with intercompany loans of approximately $37 million as of June 30, 2024[171]. - The company is classified as an "emerging growth company" and is utilizing exemptions from certain reporting requirements under the JOBS Act[172]. - The real estate business is subject to seasonal shifts, which may impact expenses and sales spikes when commencing new projects[173].