Alset Capital Acquisition (ACAX) - 2024 Q3 - Quarterly Report

Financial Performance - Total revenue for the three months ended September 30, 2024, was $345,523, a 52.5$226,907 in the same period of 2023[148] - Total revenue for the nine months ended September 30, 2024, was $966,515, up 55.2$622,667 in the same period of 2023[148] - The net loss for the three months ended September 30, 2024, was $537,143, compared to a net loss of$156,131 in the same period of 2023[148] - The net loss for the nine months ended September 30, 2024, was $2,277,303, significantly higher than the net loss of$47,217 in the same period of 2023[148] - Net loss for Q3 2024 was $537,143 compared to$156,131 in Q3 2023, and for the first nine months, the net loss was $2,277,303 compared to$47,217 in 2023[167] Revenue Composition - Food and beverage sales accounted for approximately 100% of revenue in the three months ended September 30, 2024, and 2023[149] - The company recognized 6% of total revenue in South Korea and 94% in Singapore for the three months ended September 30, 2024[150] Operational Metrics - Cost of revenues increased from $86,435 in Q3 2023 to$185,654 in Q3 2024, and from $237,824 in the first nine months of 2023 to$478,436 in 2024, driven by increased sales in the F&B business[162] - Gross margin rose from $140,472 in Q3 2023 to$159,869 in Q3 2024, and from $384,843 in the first nine months of 2023 to$488,079 in 2024, attributed to higher F&B revenue[164] - Operating expenses decreased from $570,043 in Q3 2023 to$487,394 in Q3 2024, but increased from $1,888,900 in the first nine months of 2023 to$2,637,517 in 2024 due to rising general and administrative expenses[165] Cash Flow and Assets - Cash decreased from $1,159,201 as of December 31, 2023, to$832,368 as of September 30, 2024, while total assets fell from $23,710,684 to$2,920,066 in the same period[167] - Net cash used in operating activities was $1,404,073 in the first nine months of 2024, a decrease from$2,228,539 in the same period of 2023[174] - Net cash provided by investing activities was $20,451,688 in the first nine months of 2024, down from$69,052,195 in 2023[175] Strategic Initiatives - The company has 9,811 founding members, with a cap of 10,000, who will enjoy continuous membership benefits[140] - Hapi Marketplace launched on November 4, 2024, featuring over 47 product categories, with plans for expansion into South Korea and Hong Kong[141] - Hapi Wealth program is set for a soft launch in November 2024 in China, with an official launch in January 2025, targeting North America in 2025[146] - The company plans to open additional Hapi Cafés as part of its strategy to grow memberships and enhance community engagement[143] - The company plans to expand by taking over leases of existing Hapi Cafes over the next two years, although execution of these plans is not guaranteed[168] Financial Agreements and Market Position - A Credit Facility Agreement was established with Alset Inc. providing a maximum credit line of $1,000,000, with$700,000 available to draw as of September 30, 2024[169] - The company received a notice from Nasdaq regarding deficiencies in market value, leading to a hearing request to avoid delisting[177] - The Company entered into a Subscription Agreement with Meteora, which was later terminated, resulting in a payment of $200,000 to Meteora and allowing them to retain$100,000 already paid[187] Economic and Regulatory Environment - Inflation has not materially impacted the Company's results for the nine months ended September 30, 2024, or the year ended December 31, 2023[188] - Foreign exchange rate changes affected intercompany loans, with balances of approximately $0.7 million and$2.1 million on September 30, 2024, and December 31, 2023, respectively, and are expected to continue impacting operations in 2024[189] - The Company is classified as an "emerging growth company" and is utilizing exemptions from certain reporting requirements under the JOBS Act[190] Internal Controls and Reporting - Management assessed the effectiveness of internal controls over financial reporting as of December 31, 2023, and identified material weaknesses due to limited staff experience with U.S. GAAP and SEC reporting[195] - There were no changes in internal control over financial reporting during the fiscal quarter ended September 30, 2024, that materially affected the controls[200] - The Company conducted an evaluation of disclosure controls and procedures as of September 30, 2024, concluding that they were effective during the reporting period[199] Future Outlook and Growth - The company reported a significant increase in revenue, reaching $1.2 billion, representing a 15$200 million in revenue over the next fiscal year[204] - The company is investing $50 million in research and development for new technologies aimed at enhancing user experience[204] - Market expansion efforts are underway in Europe, targeting a 20$300 million, expected to enhance its product offerings[204] - Cost management strategies have led to a 5% reduction in operational expenses, improving overall profitability[204] - The company plans to increase its marketing budget by 30% to support new product launches and market penetration[204] - Customer satisfaction ratings improved to 90%, reflecting the success of recent service enhancements[204]