Alset Capital Acquisition (ACAX) - 2024 Q1 - Quarterly Report

Financial Performance - Total revenue for the three months ended March 31, 2024, was $286,110, an increase from$200,562 in the same period of 2023, representing a growth of approximately 42.7%[84] - The net loss for the three months ended March 31, 2024, was $1,336,519, compared to a net income of$171,849 for the same period in 2023, indicating a significant decline in profitability[86] - Revenue from food and beverage sales increased from $187,776 in Q1 2023 to$286,110 in Q1 2024, reflecting growth in the café business[88] - The company anticipates that revenue from membership sales will decline as a percentage of total revenue, with greater contributions expected from café operations and product sales[84] Operating Expenses - Operating expenses increased from $736,391 in Q1 2023 to$1,495,383 in Q1 2024, primarily due to higher general and administrative expenses related to the food and beverage business[87] Cash Flow and Financing - Cash decreased from $22,505,969 as of December 31, 2023, to$999,506 as of March 31, 2024, while liabilities increased from $4,372,803 to$5,526,158 during the same period[89] - Net cash used in investing activities was $252,072 for the three months ended March 31, 2024, compared to$8,227 for the same period in 2023, indicating a significant increase in investment spending[91] - Net cash provided by financing activities was $749,948 for the three months ended March 31, 2024, compared to$182,730 for the same period in 2023, reflecting a substantial increase in financing[92] - The company received $1,101,255 from a related party during the three months ended March 31, 2024, compared to$182,730 in the same period of 2023[92] Business Expansion and Programs - The company plans to expand its Hapi Café locations globally, having opened proof-of-concept cafés in Seoul and Singapore in 2022, with further openings planned as the business model is refined[83] - The Hapi Wealth Builder program is in the planning stage, with a launch expected in 2024, focusing on financial education and investment opportunities for members[83] - The company has capped the total number of founding members at 10,000, with 9,811 currently enrolled, who will receive ongoing membership benefits[81] Mergers and Obligations - The merger with HWH International Inc. was completed on January 9, 2024, with Alset changing its name to "HWH International Inc."[95] - The company has a deferred fee obligation of $3,018,750 to underwriters, which will be satisfied through a combination of cash, shares, and a promissory note[94] Internal Controls and Compliance - The company did not maintain effective controls over financial reporting as of December 31, 2023, due to a limited staff with U.S. GAAP and SEC reporting experience, constituting a material weakness[104] - The company plans to appoint additional qualified personnel to address the identified weaknesses in internal controls[104] - The company is classified as an "emerging growth company" and is taking advantage of certain exemptions from reporting requirements[102] Economic Factors - The company expects fluctuations in foreign exchange rates to impact operations in 2024, particularly due to intercompany loans totaling approximately$2.7 million[101] - Inflation has not had a material impact on the company's results of operations for the three months ended March 31, 2024[100] Signatures - The report was signed by John Thatch, CEO, and Rongguo Wei, CFO, on May 15, 2024[109]