Alset Inc. 10-K

Item 8. Financial Statements Alset Inc. and Subsidiaries CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 and 2022 Table of Contents Reports of Independent Registered Public Accounting Firm (PCAOB ID: 606 ) 53 Consolidated Balance Sheets at December 31, 2023 and 2022 54 Consolidated Statements of Operations and Other Comprehensive Loss for the Years Ended December 31, 2023 and 2022 55 Consolidated Statements of Stockholders’ Equity for Two Year Period Ended December 31, 2023 56 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 57 Notes to Consolidated Financial Statements 58 52 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Alset Inc. and Subsidiaries Bethesda, Maryland Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Alset Inc. and Subsidiaries, (the “Company”) as of December 31, 2023, and 2022, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023 and 2022, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for the years for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Emphasis of Matter The Company has significant transactions with related parties which are described in Note 8 of the consolidated financial statements. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis, as the requisite condition of competitive, free market dealings may not exist. Grassi & Co., CPAs, P.C. We have served as the Company’s auditor since 2022. Jericho, New York April 1, 2024 53 Alset Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2023 December 31, 2022 Assets: Current Assets: Cash and cash equivalents $ 26,921,727 $ 17,827,383 Restricted Cash 967,566 694,520 Account Receivables, Net 77,517 46,522 Other Receivables, Net 2,576,454 446,798 Note Receivables - Related Parties, Net 1,693,946 3,617,176 Convertible Note Receivables at Fair Value – Related Party 1,207,627 - Prepaid Expenses 253,689 188,070 Inventory 5,561 35,020 Investment in Securities at Fair Value 2,148,500 6,288,236 Investment in Securities at Fair Value - Related Party 11,869,920 13,193,089 Investment in Securities at Cost 54,512 98,129 Investment in Equity Method Securities 7,551,153 52,987,224 Deposits 133,063 - Total Current Assets 55,461,235 95,422,167 Real Estate Rental Properties 31,770,386 31,169,031 Properties under Development 10,366,766 23,449,698 Operating Lease Right-Of-Use Assets, net 1,467,372 1,614,159 Deposits 337,606 536,947 Other Receivables, Net - Long Term 4,855,609 - Cash and Marketable Securities Held in Trust Account 21,252,639 - Goodwill 60,343 - Property and Equipment, Net 742,072 1,298,334 Total Assets $ 126,314,028 $ 153,490,336 Liabilities and Stockholders’ Equity: Current Liabilities: Accounts Payable and Accrued Expenses $ 4,372,792 $ 2,983,470 Deferred Underwriting Compensation 3,018,750 - Deferred Revenue 2,100 21,198 Operating Lease Liabilities - current 903,429 45,556 Notes Payable - current 30,744 181,846 Notes Payable - Related Parties 16,869 12,668 Notes Payable 16,869 12,668 Total Current Liabilities 8,344,684 3,244,738 Long-Term Liabilities: Operating Lease Liabilities - noncurrent 595,834 1,582,483 Notes Payable - noncurrent 126,182 - Total Liabilities 9,066,700 4,827,221 Temporary Equity Class A Common Stock of Alset Capital Acquisition Corp subject to possible redemption; 1,976,036 shares at approximately $ 10.35 per share as of December 31, 2023 20,457,011 - Stockholders’ Equity: Preferred Stock, $ 0.001 par value; 25,000,000 shares authorized, none issued and outstanding - - Common Stock, $ 0.001 par value; 250,000,000 shares authorized; 9,235,119 and 7,422,846 shares issued and outstanding on December 31, 2023 and December 31, 2022, respectively 9,235 7,423 Additional Paid in Capital 332,455,457 322,534,891 Accumulated Deficit ( 247,885,656 ) ( 188,724,411 ) Accumulated Other Comprehensive Income 3,609,719 3,836,063 Total Alset Inc. Stockholders’ Equity 88,188,755 137,653,966 Non-controlling Interests 8,601,562 11,009,149 Total Stockholders’ Equity 96,790,317 148,663,115 Total Liabilities and Stockholders’ Equity $ 126,314,028 $ 153,490,336 See accompanying notes to consolidated financial statements. 54 Alset Inc. and Subsidiaries Consolidated Statements of Operations and Other Comprehensive Loss For the Years Ended December 31, 2023 and 2022 2023 2022 Revenue Rental $ 2,776,911 $ 1,810,011 Property 18,186,750 1,278,617 Biohealth 12,758 753,651 Digital Transformation Technology - related party 28,117 69,915 Other 1,083,971 568,248 Total Revenue 22,088,507 4,480,442 Operating Expenses Cost of Sales 14,576,209 3,731,990 General and Administrative 9,529,100 7,837,826 Impairment of Note Receivables- Related Party and Investment 855,852 - Total Operating Expenses 24,961,161 11,569,816 Loss from Operations ( 2,872,654 ) ( 7,089,374 ) Other Income (Expense) Interest Income 394,553 67,470 Interest Income – Related Party 131,319 - Interest Income 131,319 - Interest Expense ( 3,979 ) ( 1,853 ) Foreign Exchange Transaction Loss ( 697,286 ) ( 547,845 ) Unrealized Gain (Loss) on Securities Investment 6,607,215 ( 7,794,139 ) Unrealized Loss on Securities Investment - Related Party ( 9,506,501 ) ( 23,556,219 ) Realized Loss on Securities Investment ( 11,375,747 ) ( 7,308,580 ) Loss on Equity Method Investment ( 24,483,374 ) ( 685,533 ) Loss on Consolidation of Alset Capital Acquisition ( 21,657,036 ) - Finance Costs - ( 450,000 ) Other Income 2,277,107 1,153,568 Total Other Expense, Net ( 58,313,729 ) ( 39,123,131 ) Net Loss Before Income Taxes ( 61,186,383 ) ( 46,212,505 ) Income Tax Expense ( 92,350 ) - Net Loss ( 61,278,733 ) ( 46,212,505 ) Net Loss Attributable to Non-Controlling Interest ( 2,332,352 ) ( 5,721,567 ) Net Loss Attributable to Common Stockholders $ ( 58,946,381 ) $ ( 40,490,938 ) Net Loss ( 61,278,733 ) ( 46,212,505 ) Other Comprehensive Loss Unrealized Income on Securities Investment - 40,201 Foreign Currency Translation Adjustment ( 301,579 ) 508,277 Total Comprehensive Loss ( 61,580,312 ) ( 45,664,027 ) Less Comprehensive Loss Attributable to Non-controlling Interests ( 2,393,093 ) ( 5,697,366 ) Total Comprehensive Loss Attributable to Common Shareholders ( 59,187,219 ) ( 39,966,661 ) Net Loss Per Share - Basic and Diluted $ ( 6.52 ) $ ( 6.22 ) Weighted Average Common Shares Outstanding - Basic and Diluted 9,041,786 6,513,453 See accompanying notes to consolidated financial statements. 55 Alset Inc. and Subsidiaries Consolidated Statements of Stockholders’ Equity For Two Year Period Ended December 31, 2023 Shares Par Value $0.001 Shares Par Value $0.001 Shares Par Value $0.001 Additional Paid in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Alset Stockholders’ Equity Non-Controlling Interests Total Stockholders’ Equity Series A Preferred Stock Series B Preferred Stock Common Stock Shares Par Value $0.001 Shares Par Value $0.001 Shares Par Value $0.001 Additional Paid in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Alset Stockholders’ Equity Non-Controlling Interests Total Stockholders’ Equity Balance at January 1, 2022 - $ - - $ - 87,368,446 $ 87,368 $ 296,181,977 $ 341,646 $ ( 148,233,473 ) $ 148,377,518 $ 21,912,268 $ 170,289,786 Issuance of Common Stock by Exercising Warrants - - - - 15,819,452 15,820 ( 11,925 ) - - 3,895 - 3,895 Issuance of Common Stock to Purchase Alset International Stock - - - - 35,319,290 35,319 ( 35,319 ) - - - - - Convert Related Party Note to Common Stock - - - - 10,000,000 10,000 6,203,000 - - 6,213,000 - 6,213,000 Reverse Stock Split 1 for 20 - - - - ( 141,084,342 ) ( 141,084 ) 141,084 - - - - - Deconsolidate Alset Capital Acquisition - - - - - - 14,536,215 - - 14,536,215 2,021,367 16,557,582 Gain from Purchase of DSS Stock - - - - - - 737,572 - - 737,572 - 737,572 Beneficial Conversion Feature Intrinsic Value, Net - - - - - - 450,000 - - 450,000 - 450,000 Change in Non-Controlling Interests - - - - - - 4,256,980 2,970,140 - 7,227,120 ( 7,227,120 ) - Change in Unrealized Loss on Investment - - - - - - - 35,110 - 35,110 5,091 40,201 Gain from Purchasing Value Exchange Stock from Related Party - - - - - - 75,307 - - 75,307 - 75,307 Foreign Currency Translations - - - - - - - 489,167 - 489,167 19,110 508,277 Net Loss - - - - - - - - ( 40,490,938 ) ( 40,490,938 ) ( 5,721,567 ) ( 46,212,505 ) Balance at December 31, 2022 - - - - 7,422,846 7,423 322,534,891 3,836,063 ( 188,724,411 ) 137,653,966 11,009,149 148,663,115 Balance - - - - 7,422,846 7,423 322,534,891 3,836,063 ( 188,724,411 ) 137,653,966 11,009,149 148,663,115 Issuance of Common Stock - - - - 1,812,273 1,812 3,432,109 - - 3,433,921 - 3,433,921 Acquisition of Hapi Travel Limited under Common Control - - - - - - - - ( 214,864 ) ( 214,864 ) - ( 214,864 ) Foreign Currency Translations - - - - - - - ( 240,838 ) - ( 240,838 ) ( 60,741 ) ( 301,579 ) Change in Non-Controlling Interests - - - - - - - 14,494 - 14,494 ( 14,494 ) - Gain from Conversion of VEII Promissory Note to Stock and Warrants - - - - - - 6,488,457 - - 6,488,457 - 6,488,457 Net Loss - - - - - - - - ( 58,946,381 ) ( 58,946,381 ) ( 2,332,352 ) ( 61,278,733 ) Balance at December 31, 2023 - $ - - $ - 9,235,119 $ 9,235 $ 332,455,457 $ 3,609,719 $ ( 247,885,656 ) $ 88,188,755 $ 8,601,562 $ 96,790,317 Balance - $ - - $ - 9,235,119 $ 9,235 $ 332,455,457 $ 3,609,719 $ ( 247,885,656 ) $ 88,188,755 $ 8,601,562 $ 96,790,317 See accompanying notes to consolidated financial statements. 56 Alset Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2023 and 2022 2023 2022 Cash Flows from Operating Activities Net Loss from Operations $ ( 61,278,733 ) $ ( 46,212,505 ) Adjustments to Reconcile Net Loss to Net Cash Provided By (Used in) Operating Activities: Depreciation 1,217,017 963,077 Non-Cash Lease Expenses 1,092,146 747,975 Amortization of Debt Discount - 450,000 Loss on Consolidation of Alset Capital Acquisition Corp. 21,657,036 - Impairment of Convertible Note Receivable- Related Party, and Equity Method Investment 855,852 - Foreign Exchange Transaction Loss 697,286 547,845 Unrealized (Gain) Loss on Securities Investment ( 6,607,215 ) 7,794,139 Unrealized Loss on Securities Investment - Related Party 9,506,501 23,556,219 Realized Loss on Securities Investment 11,375,747 7,308,580 (Gain) Loss on Exchange of Investment Securities ( 502,497 ) 417,468 PPP Loan Forgiveness - ( 68,502 ) Director Compensation Adjustment - ( 1,185,251 ) Loss on Equity Method Investment 24,483,374 685,533 Changes in Operating Assets and Liabilities, net of acquisitions Real Estate 13,082,932 ( 8,241,487 ) Real Estate Reimbursement Receivable ( 6,707,079 ) - Account Receivables 217,178 ( 221,869 ) Prepaid Expense 45,232 400,154 Deposits 3,108 ( 295,585 ) Trading Securities ( 752,406 ) ( 7,510,442 ) Inventory 32,149 13,164 Accounts Payable and Accrued Expenses 314,309 ( 9,535,319 ) Other Receivables - Related Parties ( 109,999 ) ( 91,925 ) Deferred Revenue ( 18,714 ) ( 707,145 ) Operating Lease Liabilities ( 1,124,401 ) ( 638,006 ) Builder Deposits - ( 31,553 ) Net Cash Provided by (Used in) Operating Activities 7,478,823 ( 31,855,435 ) Cash Flows from Investing Activities Purchase of Property and Equipment ( 29,105 ) ( 599,650 ) Purchase of Real Estate Properties - ( 6,057,493 ) Purchase of Real Estate Improvements ( 678,160 ) ( 767,237 ) Purchase of Investment Securities ( 756,078 ) ( 8,429,620 ) Proceeds from Sale of Investment Securities - 103,809 Issuing Loan Receivable - Related Party ( 3,338,081 ) ( 377,864 ) Proceeds from Loan Receivable - Related Party 2,672,438 1,005,014 Net Cash Used in Investing Activities ( 2,128,986 ) ( 15,123,041 ) Cash Flows from Financing Activities Proceeds from Common Stock Issuance 3,433,921 6,213,000 Borrowing from a Commercial Loan - 123,633 Deemed Distribution to Shareholder ( 214,933 ) - Repayment to Notes Payable ( 31,499 ) ( 279,152 ) Net Cash Provided by Financing Activities 3,187,489 6,057,481 Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash 8,537,326 ( 40,920,995 ) Effects of Foreign Exchange Rates on Cash and Cash Equivalents 830,064 ( 1,359,281 ) Cash and Cash Equivalents and Restricted Cash - Beginning of Year 18,521,903 60,802,179 Cash and Cash Equivalents and Restricted Cash- End of Year $ 27,889,293 $ 18,521,903 Cash and Cash Equivalents $ 26,921,727 $ 17,827,383 Restricted Cash $ 967,566 $ 694,520 Total Cash and Cash Equivalents and Restricted Cash $ 27,889,293 $ 18,521,903 Supplementary Cash Flow Information Cash Paid for Interest $ 3,979 $ 1,853 Cash Paid for Taxes $ - $ - Supplemental Disclosure of Non-Cash Investing and Financing Activities Unrealized Gain on Investment $ - $ 777,773 Initial Recognition of ROU / Lease Liability $ 911,308 $ 1,702,514 Deconsolidation of Alset Capital Acquisition $ - $ 16,557,582 Intrinsic Value of BCF $ - $ 450,000 Issuance of Stock by Exercising Warrants $ - $ 3,895 Conversion of Related Party Note Payable to Common Stock $ - $ 6,213,000 Conversion of VEII Note Receivable to Common Stock $ 1,300,000 $ - Gain from Conversion of VEII Promissory Note to Stock and Warrants $ 6,488,457 $ - See accompanying notes to consolidated financial statements. 57 Alset Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2023 and 2022 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Alset Inc. (the “Company” or “AEI”), formerly known as Alset EHome International Inc. and HF Enterprises Inc., was incorporated in the State of Delaware on March 7, 2018 and 50 shares of common stock were issued to Chan Heng Fai, the founder, Chairman and Chief Executive Officer of the Company. On October 4, 2022, through a merger transaction, the Company was reincorporated in Texas. AEI is a diversified holding company principally engaged through its subsidiaries in the development of EHome communities and other real estate, financial services, digital transformation technologies, biohealth activities and consumer products with operations in the United States, Singapore, Hong Kong, Australia and South Korea. The Company manages its principal businesses primarily through its subsidiary, Alset International Limited (“Alset International”, f.k.a. Singapore eDevelopment Limited), a company publicly traded on the Singapore Stock Exchange. On October 1, 2018, Chan Heng Fai transferred his 100 % interest in Alset Global Pte. Ltd. (“Alset Global”, formerly known as Hengfai International Pte. Ltd.) to Alset Inc. in exchange for 425,000 shares of the Company’s common stock. Alset Global holds a 100 % interest in Alset Business Development Pte. Ltd. (“Alset Business Development, formerly known as Hengfai Business Development Pte. Ltd.). Both Alset Global and Alset Business Development are holding companies with no business operations. On December 31, 2023, the Company held 2,984,493,265 shares of Alset International, which is the primary operating company of AEI. The Company held 2,983,918,265 shares of Alset International on December 31, 2022. On December 31, 2023 and 2022, the Company’s ownership of Alset International was 85.5 % and 85.4 %, respectively. Also, on October 1, 2018, Chan Heng Fai transferred his 100 % ownership interest in Impact Oncology Pte. Ltd. (“Impact Oncology”, formerly known as Heng Fai Enterprises Pte. Ltd.) and Global eHealth Limited (“Global eHealth”) to AEI in exchange for 25,000 and 50,000 shares of the Company’s common stock, respectively. The contributions to AEI on October 1, 2018 of Alset Global, Impact Oncology, and Global eHealth from Chan Heng Fai represented transactions under common control with a related party. On June 24, 2020, HFE Holdings Limited surrendered 180,000 shares of our common stock to the treasury of our Company, and Chan Heng Fai surrendered 50 shares of our common stock to the treasury of our Company, and all such shares were cancelled. On November 24, 2020 the Company held its initial public offering and the Company’s common stock began trading on Nasdaq Capital Market. As a result, 108,000 shares were issued to public investors. The Company’s net proceeds from this offering were approximately $ 13.2 million. On May 13, 2021, July 30, 2021, December 8, 2021, and February 8, 2023 the Company held follow up offerings of its common shares. As a result of the offerings, the Company issued a total of 5,101,897 shares to public investors. The Company’s net proceeds from these offerings were approximately $ 108 million. On December 13, 2021 the Company entered into a Securities Purchase Agreement with Chan Heng Fai for the issuance and sale of a convertible promissory note in favor of Chan Heng Fai, in the principal amount of $ 6,250,000 . The note bears interest of 3 % per annum and was due on the earlier of December 31, 2024 or when declared due and payable by Chan Heng Fai. The note could be converted in part or whole into common shares of the Company at the conversion price of $ 12.50 or into cash. The loan closed on January 26, 2022 after all closing conditions were met. Chan Heng Fai opted to convert all of the amount of such note into 500,000 shares of the Company’s common stock, which shares were issued on January 27, 2022. 58 On January 17, 2022 the Company entered into a securities purchase agreement with Chan Heng Fai, pursuant to which the Company agreed to purchase from Chan Heng Fai 293,428,200 ordinary shares of Alset International for a purchase price of 1,473,449 newly issued shares of the Company’s common stock. On February 28, 2022, the Company and Chan Heng Fai entered into an amendment to this securities purchase agreement pursuant to which the Company shall purchase these 293,428,200 ordinary shares of Alset International for a purchase price of 1,765,964 newly issued shares of the Company’s common stock. The closing of this transaction with Chan Heng Fai was subject to approval of the Nasdaq and the Company’s stockholders. These 293,428,200 ordinary shares of Alset International represent approximately 8.4 % of the 3,492,713,362 total issued and outstanding shares of Alset International. The Company had a Special Meeting of Stockholders to vote on the approval of this transaction on June 6, 2022.On December 6, 2022, the Company filed a Certificate of Amendment to the Company’s Certificate of Formation with the Texas Secretary of State to effect a 1-for-20 reverse stock split . The Reverse Stock Split was effective as of December 28, 2022. The par value of the common stock following the reverse stock split remains at $ 0.001 per share. The reverse stock split has been retroactively applied to all financial statements presented. On June 14, 2023, the Company’s subsidiary completed acquisition of Hapi Travel Limited (“HTL”), an online travel business started in Hong Kong and under common control of the Company. The accompanying consolidated financial statements include the operations of the acquired entity from its acquisition date. The acquisition has been accounted for as a business combination. Accordingly, consideration paid by the Company to complete the acquisition is initially allocated to the acquired assets and liabilities assumed based upon their estimated fair values on the acquisition date. The recorded amounts for assets acquired and liabilities assumed are provisional and subject to change during the measurement period, which is up to 12 months from the acquisition date. As a result of the acquisition of HTL, a deemed dividend of $ 214,174 was generated as a result of the business combination, which represents the purchase price of $ 214,993 in excess of identifiable equity. The common control transaction described above resulted in the following basis of accounting for the financial reporting periods: ● The acquisition of HTL was accounted for prospectively as of June 14, 2023 as this did not represent a change in reporting entity. ● The acquisition of HTL was under common control and was consolidated in accordance with ASC 850-50. The Consolidated financial statements were not retrospectively adjusted for the acquisition of HTL as of January 1, 2022 for comparative purposes because the historical operations of HTL were deemed to be immaterial to the Company’s consolidated financial statements. As of December 31, 2023 and 2022, the total outstanding common shares of the Company were 9,235,119 and 7,422,846 , respectively. The Company has four operating segments based on the products and services we offer, which include three of our principal businesses – real estate, digital transformation technology and biohealth – as well as a fourth category consisting of certain other business activities. Real Estate The Company’s real estate segment is comprised of LiquidValue Development Inc. (“LiquidValue Development”). In 2014, Alset International commenced operations developing property projects and participating in third-party property development projects. LiquidValue Development Inc., a 99.9 %-owned subsidiary of Alset International, owns, operates and manages real estate development projects with a focus on land subdivision developments and home rental projects. Development activities are generally contracted out, including planning, design and construction, as well as other work with engineers, surveyors, architects and general contractors. The developed lots are then sold to builders for the construction of new homes. LiquidValue Development’s primary real estate project is a subdivision development project near Houston, Texas, known as Lakes at Black Oak, currently projected to have approximately 550-600 units. Through 2022, Company’s subsidiaries purchased from builders 132 homes in different communities in Texas. The Company rents these homes to tenants. The Company pursued this new endeavor in part to improve cash flow and smooth out the inconsistencies of income in residential land development. In 2023 our direct subsidiary American Home REIT Inc. was the owner of most of our single-family rental homes. 59 Digital Transformation Technology The Company’s digital transformation technology segment is comprised of Hapi Metaverse Inc. and its subsidiaries. The Company’s digital transformation technology business is involved in mobile application product development and other businesses, providing information technology services to end-users, service providers and other commercial users through multiple platforms. This technology platform consists of instant messaging systems, social media, e-commerce and payment systems, direct marketing platforms, e-real estate, brand protection and counterfeit and fraud detection. Hapi Metaverse Inc. (“Hapi Metaverse”), our 99.7 %-owned subsidiary, focuses on business-to-business solutions such as enterprise messaging and workflow. Through Hapi Metaverse, the Company has successfully implemented several strategic platform developments for clients, including a mobile front-end solution for network marketing, a hotel e-commerce platform for Asia and a real estate agent management platform in China. Biohealth The Company’s biohealth segment is comprised of HWH International Inc. and its subsidiaries and is committed to both funding research and developing and selling products that promote a healthy lifestyle. In October 2019, the Company expanded its biohealth segment into the Korean market through one of the subsidiaries of HWH International Inc., HWH World Inc (“HWH World”). HWH World is in the business of sourcing and distributing dietary supplements and other health products through its network of members in the Republic of Korea (“South Korea”). HWH World generates product sales via its direct sale model as products are sold to its members. Through the use of a Hapi Gig platform that combines e-commerce, social media and a customized rewards system, HWH Korea equips, trains and empowers its members. We compete with numerous direct sales companies in South Korea. HWH World recognized $ 12,758 and $ 753,651 in revenue in the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the deferred revenue from biohealth segment was $ 0 and $ 21,198 , respectively. All this deferred revenue came from unrecognized sales. Other Business Activities In addition to the segments identified above, the Company provides corporate strategy and business development services, asset management services, corporate restructuring and leveraged buy-out expertise. These service offerings build relationships with promising companies for potential future collaboration and expansion. We believe that our other business activities complement our three principal businesses. The Company’s other business activities segment is primarily comprised of Alset International, SeD Capital Pte. Ltd., BMI Capital Partners International Limited, Singapore Construction & Development Pte. Ltd. and food and beverage part of HWH International Inc. The Company, through Alset F&B One Pte. Ltd. (“Alset F&B One”) and Alset F&B (PLQ) Pte. Ltd. (“Alset F&B PLQ”) each acquired a restaurant franchise licenses at the end of 2021 and 2022 respectively, both of which have since commenced operations. These licenses will allow Alset F&B One and Alset F&B PLQ each to operate a Killiney Kopitiam restaurant in Singapore. Killiney Kopitiam, founded in 1919, is a Singapore-based chain of mass-market, traditional kopitiam style service cafes selling traditional coffee and tea, along with a range of local delicacies such as Curry Chicken, Laksa, Mee Siam, and Mee Rebus. The Company, through Hapi Café Inc. (“HCI-T”), commenced operation of two cafés during 2022 and 2021, which are located in Singapore and South Korea. The cafes are operated by subsidiaries of HCI-T, namely Hapi Café SG Pte. Limited (“HCSG”) in Singapore and Hapi Café Korea Inc. (“HCKI”) in Seoul, South Korea. Hapi Cafes are distinctive lifestyle café outlets that strive to revolutionize the way individuals dine, work, and live, by providing a conducive environment for everyone to relish the four facets – health and wellness, fitness, productivity, and recreation all under one roof. In recent months the Company incorporated three new subsidiaries Shenzhen Leyouyou Catering Management Co., Ltd., Dongguan Leyouyou Catering Management Co., Ltd. and GuangZhou Leyouyou Catering Management Co., Ltd in the People’s Republic of China. The three companies will be principally engaged in the food and beverage business in Mainland China. 60 Additionally, through its subsidiary MOC HK Limited, the Company is focusing on operating café business in Hong Kong. During the years ended on December 31, 2023 and 2022, the revenue from the other business activities described above was approximately $ 1,083,971 and $ 568,248 , respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include all accounts of the Company and its majority owned and controlled subsidiaries. The Company consolidates entities in which it owns more than 50% of the voting common stock and controls operations. All intercompany transactions and balances among consolidated subsidiaries have been eliminated. The Company’s consolidated financial statements include the financial positions, results of operations and cash flows of the following entities as of December 31, 2023, and 2022 as follows: SCHEDULE OF SUBSIDIARIES Attributable interest State or other jurisdiction of as of, Name of subsidiary consolidated under AEI incorporation or organization December 31, 2023 December 31, 2022 % % Alset Global Pte. Ltd. Singapore 100 100 Alset Business Development Pte. Ltd. Singapore 100 100 Global eHealth Limited Hong Kong 100 100 Alset International Limited Singapore 85.5 85.4 Singapore Construction & Development Pte. Ltd. Singapore 85.5 85.4 Art eStudio Pte. Ltd. Singapore - * 43.6 * Singapore Construction Pte. Ltd. Singapore 85.5 85.4 Global BioMedical Pte. Ltd. Singapore 85.5 85.4 Alset Innovation Pte. Ltd. Singapore - 85.4 Health Wealth Happiness Pte. Ltd. Singapore 74.6 85.4 SeD Capital Pte. Ltd. Singapore 85.5 85.4 LiquidValue Asset Management Pte. Ltd. Singapore 85.5 85.4 Alset Solar Limited Hong Kong 85.5 85.4 Alset F&B One Pte. Ltd. Singapore 67.1 76.9 BMI Capital Partners International Limited Hong Kong 85.5 85.4 SeD Perth Pty Ltd Australia 85.5 85.4 SeD Intelligent Home Inc. United States of America 85.5 85.4 LiquidValue Development Inc. United States of America 85.4 85.4 Alset EHome Inc. United States of America 85.4 85.4 SeD USA, LLC United States of America 85.4 85.4 150 Black Oak GP, Inc. United States of America 85.4 85.4 SeD Development USA Inc. United States of America 85.4 85.4 150 CCM Black Oak, Ltd. United States of America 85.4 85.4 SeD Texas Home, LLC United States of America 100 85.4 61 SeD Ballenger, LLC United States of America 85.4 85.4 SeD Maryland Development, LLC United States of America 71.4 71.4 SeD Development Management, LLC United States of America 72.6 72.6 SeD Builder, LLC United States of America 85.4 85.4 Hapi Metaverse Inc. (f.k.a. GigWorld Inc.) United States of America 99.6 99.7 HotApp BlockChain Pte. Ltd. Singapore 99.6 99.7 HotApp International Limited Hong Kong 99.6 99.7 HWH International, Inc. Delaware, United States of America - 85.4 Health Wealth & Happiness Inc. United States of America - 85.4 HWH Multi-Strategy Investment, Inc. United States of America - 85.4 SeD REIT Inc. United States of America 85.4 85.4 Gig Stablecoin Inc. United States of America - 99.7 HWH World Inc. United States of America 74.6 99.7 HWH World Pte. Ltd. Singapore 74.6 85.4 UBeauty Limited Hong Kong 85.5 85.4 WeBeauty Korea Inc South Korea - 85.4 HWH World Limited Hong Kong 74.6 85.4 HWH World Inc. South Korea 74.6 85.4 Alset Energy Inc. (f.k.a. GDC REIT Inc.) United States of America 85.5 85.4 BioHealth Water Inc. United States of America 85.5 85.4 Impact BioHealth Pte. Ltd. Singapore 85.5 85.4 American Home REIT Inc. United States of America 100 85.4 Alset Solar Inc. United States of America 68.3 68.3 HWH KOR Inc. United States of America 74.6 85.4 Open House Inc. United States of America - 100 Open Rental Inc. United States of America - 100 Hapi Cafe Inc. Nevada, United States of America - 100 Global Solar REIT Inc. United States of America - 100 Alset Capital Inc. (f.k.a. OpenBiz Inc.) United States of America 100 100 Hapi Cafe Inc. United States of America 74.6 85.4 HWH (S) Pte. Ltd. Singapore 85.5 85.4 LiquidValue Development Pte. Ltd. Singapore 100 100 LiquidValue Development Limited Hong Kong 100 100 Alset EPower Inc. United States of America - 100 EPowerTech Inc. United States of America - 100 AHR Asset Management Inc. United States of America - 85.4 HWH World Inc. Delaware, United States of America - 85.4 Alset F&B Holdings Pte. Ltd. Singapore 74.6 85.4 Credas Capital Pte. Ltd. Singapore 64.1 42.7 * Credas Capital GmbH Switzerland 64.1 - Smart Reward Express Limited Hong Kong 74.1 49.8 * AHR Texas Two, LLC United States of America 100 85.4 AHR Black Oak One, LLC United States of America 85.4 85.4 Hapi Air Inc. United States of America - 92.7 AHR Texas Three, LLC United States of America 100 85.4 Alset Capital Pte. Ltd. Singapore - 100 Hapi Cafe Korea Inc. South Korea 74.6 85.4 Green Energy Inc. United States of America - 100 Green Energy Management Inc. United States of America - 100 Alset Metaverse Inc. United States of America - 97.2 62 Alset Management Group Inc. United States of America 77 83.4 Alset Acquisition Sponsor, LLC United States of America 93.5 93.4 Alset Capital Acquisition Corp. (now known as HWH International Inc.) Delaware, United States of America 53.7 23.4 Alset Spac Group Inc. United States of America 93.5 93.4 Hapi Travel Pte. Ltd. Singapore 74.6 85.4 Hapi WealthBuilder Pte. Ltd. Singapore 74.6 85.4 Alset eVehicle Pte. Ltd. (f.k.a. Alset Mining Pte. Ltd.) Singapore 85.5 85.4 HWH Marketplace Pte. Ltd. Singapore 74.6 85.4 HWH International Inc. Nevada, United States of America 74.6 85.4 Hapi Cafe SG Pte. Ltd. Singapore 74.6 85.4 Alset Reits Inc. United States of America 100 100 HWH Merger Sub, Inc. United States of America 53.7 - Alset Home REIT Inc. United States of America - 100 Hapi Metaverse Inc. Texas, United States of America 99.6 99.7 Hapi Cafe Limited Hong Kong 99.6 99.7 MOC HK Limited Hong Kong 99.6 99.7 AHR Texas Four, LLC United States of America 100 100 Alset F&B (PLQ) Pte. Ltd. Singapore 74.6 85.4 NewRetail-AI Inc. United States of America 99.6 - Hapi Acquisition Pte. Ltd. Singapore 99.6 - Hapi Travel Limited Hong Kong 99.6 - Shenzhen Leyouyou Catering Management Co., Ltd. China 99.6 - Dongguan Leyouyou Catering Management Co., Ltd. China 99.6 - GuangZhou Leyouyou Catering Management Co., Ltd China 99.6 - Robot Ai Trade Pte. Ltd. Singapore 85.5 - * Although the Company indirectly holds percentage of shares of these entities less than 50%, the subsidiaries of the Company directly hold more than 50% of shares of these entities, and therefore, they are still consolidated into the Company. During the year ended December 31, 2023, the Company disposed of few subsidiaries which had no or very minimal activities. The disposal of these entities had immaterial effect on the Company’s consolidated financial statements. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include, but are not limited to, allowance for doubtful accounts, valuation of real estate assets, allocation of development costs and capitalized interest to sold lots, fair value of the investments, the valuation allowance of deferred taxes, and contingencies. Actual results could differ from those estimates. In our property development business, land acquisition costs are allocated to each lot based on the area method, the size of the lot compared to the total size of all lots in the project. Development costs and capitalized interest are allocated to lots sold based on the total expected development and interest costs of the completed project and allocating a percentage of those costs based on the selling price of the sold lot compared to the expected sales values of all lots in the project. If the allocation of development costs and capitalized interest based on the projection and relative expected sales value is impracticable, those costs could also be allocated based on area method, the size of the lot compared to the total size of all lots in the project. 63 When the Company purchases properties but does not receive the assessment information from the county, the Company allocates the values between land and building based on the data of similar properties. The Company makes appropriate adjustments once the assessment from the county is received. At the same time, any necessary adjustments to depreciation expense are made in the income statement. On December 31, 2023 and 2022 the Company adjusted $ 951,349 and $ 4,791,997 between building and land, respectively. During the years 2023 and 2022, the Company adjusted depreciation expenses of $ 17,525 and $ 197,609 , respectively. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents include cash on hand and at the bank and short-term deposits with financial institutions that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in values. There were no cash equivalents as of December 31, 2023 and 2022. Restricted Cash As a condition to the loan agreement with the Manufacturers and Traders Trust Company (“M&T Bank”), the Company was required to maintain a minimum of $ 2,600,000 in an interest-bearing account maintained by the lender as additional security for the loans. The fund was required to remain as collateral for the loan and outstanding letters of credit until the loan and letters of credit are paid off in full and the loan agreement is terminated. The loan has expired during 2022 and only letters of credit were outstanding as of December 31, 2023 and 2022. On March 15, 2022 approximately $ 2,300,000 was released from collateral. On December 14, 2023 additional $ 201,751 was released from collateral. As of December 31, 2023 and 2022, the total balance of this account was $ 107,767 and $ 309,219 , respectively. The Company puts funds into a brokerage account specifically for equity investment. As of December 31, 2023 and 2022, the cash balance in that brokerage account was $ 859,799 and $ 385,304 , respectively. Account Receivables and Allowance for Credit Losses Account receivables is recorded at invoiced amounts net of an allowance for credit losses and do not bear interest. The allowance for credit losses is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The measurement and recognition of credit losses involves the use of judgment. Management’s assessment of expected credit losses includes consideration of current and expected economic conditions, market and industry factors affecting the Company’s customers (including their financial condition), the aging of account balances, historical credit loss experience, customer concentrations, customer creditworthiness, and the existence of sources of payment The Company also establishes an allowance for credit losses for specific receivables when it is probable that the receivable will not be collected and the loss can be reasonably estimated. Accounts receivable considered uncollectible are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2023 and 2022, the allowance for credit losses was an immaterial amount. The Company does not have any off-balance sheet credit exposure related to its customers. As of December 31, 2023 and 2022, the balance of account receivables was $ 77,517 and $ 46,522 , respectively. Other Receivables Other receivables include developer reimbursements for Lakes at Black Oak project. The Company records an allowance for credit losses based on previous collection experiences, the creditability of the organizations that are supposed to reimburse us, the forecasts from the third-party engineering company and Moody’s credit ratings. The allowance amount for these reimbursements was immaterial at December 31, 2023. 64 Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method and includes all costs in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. As of December 31, 2023 and 2022, inventory consisted of finished goods from subsidiaries of HWH International Inc. and Hapi Metaverse Inc. The Company continuously evaluates the need for reserve for obsolescence and possible price concessions required to write-down inventories to net realizable value. Investment Securities Investment Securities at Fair Value The Company records all equity investments with readily determinable fair values at fair value calculated by the publicly traded stock price at the close of the reporting period. Amarantus BioScience Holdings (“AMBS”) and Holista CollTech Limited (“Holista”) are publicly traded companies. The Company does not have significant influence over AMBS and Holista, as the Company holds approximately 4.3 % and 13 % of the common shares of AMBS and Holista, respectively. On April 12, 2021 the Company acquired 6,500,000 common shares of Value Exchange International, Inc. (“Value Exchange International” or “VEII”), an OTC listed company, for an aggregate subscription price of $ 650,000 . On October 17, 2022 the Company purchased additional 7,276,163 common shares of Value Exchange International for an aggregate purchase price of $ 1,743,734 . On September 6, 2023 the Company converted $ 1,300,000 of VEII loan into 7,344,632 common shares. After these transactions the Company owns approximately 48.7 % of Value Exchange International and exercises significant influence over it. Our Chief Executive Officer, Chan Heng Fai, is also an owner of the common stock of Value Exchange International (not including any common shares we hold). Additionally, certain members of our board of directors serve as directors of Value Exchange International. The stock’s fair value is determined by quoted stock prices. During the year ended December 31, 2021, the Company’s subsidiaries established a portfolio of trading securities. The objective is to generate profits on short-term differences in market prices. The Company does not have significant influence over any trading securities in our portfolio and fair value of these trading securities are determined by quoted stock prices. The Company has elected the fair value option for the equity securities noted below that would otherwise be accounted for under the equity method of accounting. DSS, Inc. (“DSS”), New Electric CV Corporation (“NECV”), Value Exchange International Inc. (“Value Exchange International” or “VEII”) and Sharing Services Global Corp. (“SHRG”) are publicly traded companies and fair value is determined by quoted stock prices. The Company has significant influence but does not have a controlling interest in these investments, and therefore, the Company’s investment could be accounted for under the equity method of accounting or elect fair value accounting. ● The Company has significant influence over DSS. As of December, 2023 and 2022, the Company owned approximately 44.4 % and 45.2 % of the common stock of DSS, respectively. Our CEO is a stockholder and the Chairman of the Board of Directors of DSS. Chan Tung Moe, our Co-Chief Executive Officer and the son of Chan Heng Fai, is also a director of DSS. William Wu, Wong Shui Yeung and Joanne Wong Hiu Pan, directors of the Company, are each also directors of DSS. ● The Company has significant influence over NECV as the Company holds approximately 0.5 % of the common shares of NECV and one officer from the Company holds a director position on NECV’s Board of Directors. ● The Company has significant influence over Value Exchange International as the Company holds approximately 48.7 % of the common shares of VEII. Mr. Chan and another member of the Board of Directors of Hapi Metaverse, Lum Kan Fai Vincent, are both members of the Board of Directors of VEII. In addition to Mr. Chan, two other members of the Board of Directors of Alset Inc. are also members of the Board of Directors of VEII (Wong Shui Yeung and Wong Tat Keung). ● The Company has significant influence over SHRG as the Company holds approximately 33.4 % of the common shares of SHRG, our CEO holds a director position on SHRG’s Board of Directors and one of the officers of the Company is the CFO of SHRG. Additionally, our CEO is a significant stockholder of SHRG shares. 65 On March 2, 2020 and October 29, 2021, the Company received warrants to purchase shares of American Medical REIT Inc. (“AMRE”), a related party private startup company, in conjunction with the Company lending two $ 200,000 promissory notes. For further details on this transaction, refer to Note 8 - Related Party Transactions, Note Receivable from a Related Party Company . As of December 31, 2023 and 2022, AMRE was a private company. Based on management’s analysis, the fair value of the AMRE warrants was $ 0 as of December 31, 2021. In March 2022 both loans, together with warrants were converted into common shares of AMRE. After the conversion, the Company owns approximately 15.8 % of AMRE. On August 8, 2023, DSS Inc. distributed shares of Impact Biomedical Inc. (“Impact”), beneficially held by DSS, in the form of a dividend to the shareholders of DSS common stock. As a result of this distribution, the Company and its majority owned subsidiaries received 4,568,165 shares of Impact, representing 6.5 % of the issued and outstanding shares of Impact Common Stock. Each share of Impact distributed as part of the distribution is not eligible for resale until 180 days from the date Impact’s initial public offering becomes effective under the Securities Act, subject to the discretion of DSS to lift the restriction sooner. As of December 31, 2023, Impact was a startup private company. Based on the management’s analysis, the fair value of Impact shares was approximately $ 0 at the distribution date and as of December 31, 2023. The Company accounts for certain of its investments in funds without readily determinable fair values in accordance with ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (“2015-07”). In the first six months of 2022 the Company invested $ 100,000 in Class A Shares of Novum Alpha Global Opportunity Digital Asset Fund I SP, a segregated portfolio of Novum Alpha SPC (“Novum Alpha Fund”). This fund invests in long-short digital assets. The Company subscribed in participating shares which are redeemable and non-voting. The Company closed the fund in July 2022 recording $ 74,827 loss on this investment. Investment Securities at Cost Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the amount by which the carrying value exceeds the fair value of the investment. On September 8, 2020, the Company acquired 1,666 shares, approximately 1.45 % ownership, from Nervotec Pte Ltd (“Nervotec”), a private company, at the purchase price of $ 37,826 . The Company applied ASC 321 and measured Nervotec at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. On September 30, 2020, the Company acquired 3,800 shares, approximately 19 % ownership, from HWH World Company Limited (f.k.a. Hyten Global (Thailand) Co., Ltd.) (“HWH World Co.”), a private company, at a purchase price of $ 42,562 . The Company’s subsidiary holding equity in HWH World Co. was sold on December 31, 2023. During 2021, the Company invested $ 19,609 in K Beauty Research Lab Co., Ltd (“K Beauty”) for 18 % ownership. K Beauty was established for sourcing, developing and producing variety of Korea-made beauty products as well as Korea - originated beauty contents for the purpose of distribution to HWH’s membership distribution channel. There has been no indication of impairment or changes in observable prices via transactions of similar securities and investments are still carried at cost. 66 Investment Securities under Equity Method Accounting The Company accounts for equity investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Company’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the equity method investment can be reduced below zero based on losses if the Company either be liable for the obligations of the investee or provide for losses in excess of the investment when imminent return to profitable operations by the investee appears to be assured. Otherwise, the Company does not recognize its share of equity method losses exceeding its carrying amount of the investment, but discloses the losses in the footnotes. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than-temporary. AMRE LiquidValue Asset Management Pte. Ltd. (“LiquidValue”), a subsidiary of the Company owns 15.8 % of AMRE as of December 31, 2023, a company concentrating on medical real estate. AMRE acquires state-of-the-art, purpose-built healthcare facilities and leases them to leading clinical operators with dominant market share under secure triple net leases. AMRE targets hospitals (both Critical Access and Specialty Surgical), Physician Group Practices, Ambulatory Surgical Centers, and other licensed medical treatment facilities. Chan Heng Fai, our CEO, is the executive chairman and director of AMRE. DSS, of which we own 44.4 % and have significant influence over, owns 80.4 % of AMRE. Therefore, the Company has significant influence on AMRE. American Pacific Bancorp, Inc. Pursuant to Securities Purchase Agreement from March 12, 2021 the Company purchased 4,775,523 shares of the common stock of American Pacific Bancorp Inc. (“APB”) and gained majority ownership in that entity. APB was consolidated into the Company under common control accounting (See Transactions between Entities under Common Control for details). On September 8, 2021 APB sold 6,666,700 shares Series A Common Stock to DSS, Inc. for $ 40,000,200 cash. As a result of the new share issuances, the Company’s ownership percentage of APB fell below 50% to 41.3% (and subsequently to 36.9%) and the entity was deconsolidated in accordance with ASC 810-10. Upon deconsolidation the Company elected to apply the equity method accounting as the Company still retained significant influence . During the year ended December 31, 2023 the investment loss was $ 24,241,856 . During the year ended December 31, 2022 the investment gain was $ 867,117 . As of December 31, 2023 and 2022, the investment in APB was $ 7,426,390 and $ 31,668,246 , respectively. The following table presents summarized unaudited financial information for APB. SCHEDULE OF UNAUDITED FINANCIAL INFORMATION Summarized Financial Information Assets Liabilities Net Income (Loss) December 31, 2023 18,057,196 309,066 ( 65,624,948 ) December 31, 2022 54,835,272 316,826 2,235,532 Ketomei Pte. Ltd. On June 10, 2021 the Company’s indirect subsidiary HCI-T lent $ 76,723 to Ketomei Pte. Ltd. (“Ketomei”). On March 21, 2022 Hapi Cafe entered into an agreement pursuant to which the principal of the loan together with accrued interest were converted into an investment in Ketomei. At the same time, Hapi Cafe invested an additional $ 179,595 in Ketomei. After the conversion and fund investment the Company now holds 28 % of Ketomei. Ketomei is in the business of selling cooked food and drinks. During the years ended December 31, 2023 and 2022 the investment gain was $ 36,438 and $ 48,916 loss, respectively. Investment in Ketomei was $ 155,369 at December 31, 2022. At December 31, 2023, the Company wrote off the investment in Ketomei of $ 121,471 , as the Company does not believe it will be able to recover this investment. 67 Sentinel Brokers Company Inc. On May 22, 2023 the Company’s indirect subsidiary, SeD Capital Pte Ltd (“SeD Capital”), entered into a Stock Purchase Agreement, pursuant to which SeD Capital purchased 39.8 shares ( 19.9 %) of the Common Stock of Sentinel Brokers Company Inc. (“Sentinel”) for the aggregate purchase price of $ 279,719 . Sentinel is a broker-dealer operating primarily as a fiduciary intermediary, facilitating institutional trading of municipal and corporate bonds as well as preferred stock, and is registered with the Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), and is a member of the Securities Investor Protection Corporation (“SIPC”). The Company has significant influence over Sentinel as its CEO holds a director position on Sentinel’s Board of Directors. Additionally, DSS, of which we own 44.4% and have significant influence over, owns 80.1% of Sentinel . During the year ended December 31, 2023 the investment loss in Sentinel was $ 154,956 . Investment in Sentinel was $ 124,763 at December 31, 2023. Investment in Debt Securities Debt securities are reported at fair value, with unrealized gains and losses (other than impairment losses) recognized in accumulated other comprehensive income or loss. Realized gains and losses on debt securities are recognized in the net income in the consolidated statements of comprehensive income. The Company monitors its investments for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends and other company-specific information. The Company invested $ 50,000 in a convertible promissory note of Sharing Services Global Corporation (“Sharing Services Convertible Note”), a company quoted on the US OTC market. The value of the convertible note was estimated by management using a Black-Scholes valuation model. The fair value of the note was $ 9,799 on December 31, 2021. The note was redeemed on July 14, 2022 and $ 50,000 principal together with $ 28,636 accrued interests were received from Sharing Services. On February 26, 2021, the Company invested approximately $ 88,599 in the convertible note of Vector Com Co., Ltd (“Vector Com”), a private company in South Korea. The interest rate is 2 % per annum . The conversion price is approximately $ 21.26 per common share of Vector Com. As of December 31, 2023 and 2022, the Management estimated the fair value of the note to be $ 88,599 and $ 77,307 , respectively. Variable Interest Entity Under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810, Consolidation , when a reporting entity is the primary beneficiary of an entity that is a variable interest entity (“VIE”), as defined in ASC 810, the VIE must be consolidated into the financial statements of the reporting entity. The determination of which owner is the primary beneficiary of a VIE requires management to make significant estimates and judgments about the rights, obligations, and economic interests of each interest holder in the VIE. The Company evaluates its interests in VIE’s on an ongoing basis and consolidates any VIE in which it has a controlling financial interest and is deemed to be the primary beneficiary. A controlling financial interest has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact its economic performance; and (ii) the obligation to absorb losses of the VIE that could potentially be significant to it or the right to receive benefits from the VIE that could be significant to the VIE. 68 Real Estate Assets Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a business combination in accordance with FASB ASC 805 - “Business Combinations”, which acquired assets are recorded at fair value. Interest, property taxes, insurance and other incremental costs (including salaries) directly related to a project are capitalized during the construction period of major facilities and land improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are reduced when lots are sold. The Company capitalized construction costs of approximately $ 1.2 million and $ 3.2 million for the years ended December 31, 2023 and 2022, respectively. The Company’s policy is to obtain an independent third-party valuation for each major project in the United States as part of our assessment of identifying potential triggering events for impairment. Management may use the market comparison method to value other relatively small projects, such as the project in Perth, Australia. In addition to the annual assessment of potential triggering events in accordance with ASC 360 – Property Plant and Equipment (“ASC 360”), the Company applies a fair value-based impairment test to the net book value assets on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have occurred. The Company did not record impairment on any of its projects during the years ended on December 31, 2023 and 2022. Properties under development Properties under development are properties being constructed for sale in the ordinary course of business, rather than to be held for the Company’s own use, rental or capital appreciation. Rental Properties Rental properties are acquired with the intent to be rented to tenants. As of December 31, 2023 and 2022, the Company owned 132 homes. The aggregate purchase cost of all the homes is $ 30,998,258 . These homes are located in Montgomery and Harris Counties, Texas. All of these purchased homes are properties of our rental business. Investments in Single-Family Residential Properties The Company accounts for its investments in single-family residential properties as asset acquisitions and records these acquisitions at their purchase price. The purchase price is allocated between land, building, improvements and existing leases based upon their relative fair values at the date of acquisition. The purchase price for purposes of this allocation is inclusive of acquisition costs which typically include legal fees, title fees, property inspection and valuation fees, as well as other closing costs. Building improvements and buildings are depreciated over estimated useful lives of approximately 10 to 27.5 years, respectively, using the straight-line method. The Company assesses its investments in single-family residential properties for impairment whenever events or changes in business circumstances indicate that carrying amounts of the assets may not be fully recoverable. When such events occur, management determines whether there has been impairment by comparing the asset’s carrying value with its fair value. Should impairment exist, the asset is written down to its estimated fair value. The Company did not recognize any impairment losses during the years ended on December 31, 2023 and 2022. Revenue Recognition and Cost of Sales ASC 606 - Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The Company adopted this new standard on January 1, 2018 under the modified retrospective method. The adoption of this new standard did not have a material effect on our financial statements. 69 In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which the determination of revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which the Company expects to be entitled in exchange for those goods or services. ASC 606 requires the Company to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, performance obligations are satisfied. The following represents the Company’s revenue recognition policies by Segments: Real Estate Property Sales Part of the Company’s real estate business is land development. The Company purchases land and develops it for building into residential communities. The developed lots are sold to builders (customers) for the construction of new homes. The builders enter a sales contract with the Company before they take the lots. The prices and timeline are determined and agreed upon in the contract. The builders do the inspections to make sure all conditions and requirements in contracts are met before purchasing the lots. A detailed breakdown of the five-step process for the revenue recognition of the Ballenger and Lakes at Black Oak projects, which represented approximately 82 % and 29 % of the Company’s revenue in the years ended December 31, 2023 and 2022, respectively, is as follows: ● Identify the contract with a customer. The Company has signed agreements with the builders for developing the raw land to ready to build lots. The agreements have agreed upon prices, timelines, and specifications for what is to be provided. ● Identify the performance obligations in the contract. Performance obligations of the Company include delivering developed lots to the customer, which are required to meet certain specifications that are outlined in the contract. The customer inspects all lots prior to accepting title to ensure all specifications are met. ● Determine the transaction price. The transaction price per lot is fixed and specified in the contract. Any subsequent change orders or price changes are required to be approved by both parties. ● Allocate the transaction price to performance obligations in the contract. Each lot or a group of lots is considered to be a separate performance obligation, for which the specified price in the contract is allocated to. ● Recognize revenue when (or as) the entity satisfies a performance obligation. The builders do the inspections to make sure all conditions/requirements are met before taking title of lots. The Company recognizes revenue at a point in time when title is transferred. The Company does not have further performance obligations or continuing involvement once title is transferred. Revenue is recognized at a point in time. 70 Rental Revenue The Company leases real estate properties to its tenants under leases that are predominately classified as operating leases, in accordance with ASC 842, Leases (“ASC 842”). Real estate rental revenue is comprised of minimum base rent and revenue from the collection of lease termination fees. Rent from tenants is recorded in accordance with the terms of each lease agreement on a straight-line basis over the initial term of the lease. Rental revenue recognition begins when the tenant controls the space and continues through the term of the related lease. Generally, at the end of the lease term, the Company provides the tenant with a one-year renewal option, including mostly the same terms and conditions provided under the initial lease term, subject to rent increases. The Company defers rental revenue related to lease payments received from tenants in advance of their due dates. These amounts are presented within deferred revenues and other payables on the Company’s consolidated balance sheets. Rental revenue is subject to an evaluation for collectability on several factors, including payment history, the financial strength of the tenant and any guarantors, historical operations and operating trends of the property, and current economic conditions. If our evaluation of these factors indicates that it is not probable that we will recover substantially all of the receivable, rental revenue is limited to the lesser of the rental revenue that would be recognized on a straight-line basis (as applicable) or the lease payments that have been collected from the lessee. Differences between rental revenue recognized and amounts contractually due under the lease agreements are credited or charged to straight-line rent receivable or straight-line rent liability, as applicable. In the year ended December 31, 2023 and 2022, the Company did not recognize any deferred revenue and collected all rents due. Sale of the Front Foot Benefit Assessments We have established a front foot benefit (“FFB”) assessment on all of the NVR lots. This is a 30-year annual assessment allowed in Frederick County which requires homeowners to reimburse the developer for the costs of installing public water and sewer to the lots. These assessments become effective as homes are settled, at which time we can sell the collection rights to investors who will pay an upfront lump sum, enabling us to more quickly realize the revenue. The selling prices range from $ 3,000 to $ 4,500 per home depending on the type of home. Our total revenue from the front foot benefit assessment is approximately $ 1 million. To recognize revenue of FFB assessment, both our and NVR’s performance obligation have to be satisfied. Our performance obligation is completed once we complete the construction of water and sewer facility and close the lot sales with NVR, which inspects these water and sewer facility prior to close lot sales to ensure all specifications are met. NVR’s performance obligation is to sell homes they build to homeowners. Our FFB revenue is recognized on quarterly basis after NVR closes sales of homes to homeowners. The agreement with these FFB investors is not subject to amendment by regulatory agencies and thus our revenue from FFB assessment is not either. During the years ended December 31, 2023 and 2022, we recognized revenue of $ 0 and $ 126,737 from FFB assessment, respectively. Cost of Revenue ● Cost of Real Estate Sale All of the costs of real estate sales are from our land development business. Land acquisition costs are allocated to each lot based on the area method, the size of the lot comparing to the total size of all lots in the project. Development costs and capitalized interest are allocated to lots sold based on the total expected development and interest costs of the completed project and allocating a percentage of those costs based on the selling price of the sold lot compared to the expected sales values of all lots in the project. If allocation of development costs and capitalized interest based on the projection and relative expected sales value is impracticable, those costs could also be allocated based on area method, the size of the lot comparing to the total size of all lots in the project. ● Cost of Rental Revenue 71 Cost of rental revenue consists primarily of the costs associated with management and leasing fees to our management company, repairs and maintenance, depreciation and other related administrative costs. Utility expenses are paid directly by tenants. Biohealth Product Direct Sales. The Company’s net sales consist of product sales. The Company’s performance obligation is to transfer ownership of its products to its members. The Company generally recognizes revenue when product is delivered to its members. Revenue is recorded net of applicable taxes, allowances, refund or returns. The Company receives the net sales price in cash or through credit card payments at the point of sale. If any member returns a product to the Company on a timely basis, they may obtain a replacement product from the Company for such returned products. We do not have buyback program. However, when the customer requests a return and management decides that the refund is necessary, we initiate the refund after deducting all the benefits that a member has earned. The returns are deducted from our sales revenue on our financial statements. Allowances for product and membership returns are provided at the time the sale is recorded. This accrual is based upon historical return rates for each country and the relevant return pattern, which reflects anticipated returns to be received over a period of up to 12 months following the original sale. Product and membership returns for the years ended December 31, 2023 and 2022 were approximately $ 1,183 and $ 41,755 , respectively. Annual Membership. The Company collects an annual membership fee from its members. The fee is fixed, paid in full at the time upon joining the membership; the fee is not refundable. The Company’s performance obligation is to provide its members the right to (a) purchase products from the Company, (b) access to certain back-office services, (c) receive commissions and (d) attend corporate events. The associated performance obligation is satisfied over time, generally over the term of the membership agreement which is for a one-year period. Before the membership fee is recognized as revenue, it is recorded as deferred revenue. Deferred revenue relating to membership was $ 0 and $ 21,198 at December 31, 2023 and 2022, respectively. Starting in 2020 the revenue from sale of membership declined to $ 0 in 2022. The Company is currently working on a new membership model. Other Businesses Food and Beverage . The Company, through Alset F&B One and Alset F&B PLQ each acquired a restaurant franchise licenses at the end of 2021 and 2022 respectively, both of which have since commenced operations. These licenses will allow Alset F&B One and Alset F&B PLQ each to operate a Killiney Kopitiam restaurant in Singapore. Killiney Kopitiam, founded in 1919, is a Singapore-based chain of mass-market, traditional kopitiam style service cafes selling traditional coffee and tea, along with a range of local delicacies such as Curry Chicken, Laksa, Mee Siam, and Mee Rebus. The Company, through HCI-T, commenced operation of two cafés during 2022 and 2021, which are located in Singapore and South Korea. The cafes are operated by subsidiaries of HCI-T, namely HCSG in Singapore and HCKI in Seoul, South Korea. Hapi Cafes are distinctive lifestyle café outlets that strive to revolutionize the way individuals dine, work, and live, by providing a conducive environment for everyone to relish the four facets – health and wellness, fitness, productivity, and recreation all under one roof. In recent months the Company incorporated three new subsidiaries Shenzhen Leyouyou Catering Management Co., Ltd., Dongguan Leyouyou Catering Management Co., Ltd. and GuangZhou Leyouyou Catering Management Co., Ltd in the People’s Republic of China. The three companies will be principally engaged in the food and beverage business in Mainland China. Additionally, through its subsidiary MOC HK Limited, the Company is focusing on operating café business in Hong Kong. 72 Remaining performance obligations. As of December 31, 2023 and 2022, there were no remaining performance obligations or continuing involvement, as all service obligations within the other business activities segment have been completed. Stock-Based Compensation The Company accounts for stock-based compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination. Effective January 1, 2019, the Company adopted ASU 2018-07 for the accounting of share-based payments granted to non-employees for goods and services. During the years ended on December 31, 2023 and 2022, the Company recorded $ 0 as stock-based compensation expense. Foreign Currency Functional and reporting currency Items included in the financial statements of each entity in the Company are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements of the Company are presented in U.S. dollars (the “reporting currency”). The functional and reporting currency of the Company is the United States dollar (“$”). The financial records of the Company’s subsidiaries located in Singapore, Hong Kong, Australia, South Korea and China are maintained in their local currencies, the Singapore Dollar (S$), Hong Kong Dollar (HK$), Australian Dollar (“AUD”), South Korean Won (“KRW”) and Chinese Yuan (CN¥), which are also the functional currencies of these entities. Transactions in foreign currencies Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the statement of operations. The majority of the Company’s foreign currency transaction gains or losses come from the effects of foreign exchange rate changes on the intercompany loans between Singapore entities and U.S. entities. The Company recorded $ 547,845 loss on foreign exchange during the year ended on December 31, 2022 and a $ 697,286 loss during the year ended on December 31, 2023. The foreign currency transactional gains and losses are recorded in operations. Translation of consolidated entities’ financial statements Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. The Company’s entities with functional currency of Singapore Dollar, Hong Kong Dollar, AUD, KRW and CN¥, translate their operating results and financial positions into the U.S. dollar, the Company’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenue, expense, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income (loss). The Company recorded other comprehensive gain of $ 508,277 from foreign currency translation for the year ended December 31, 2022 and $ 301,579 loss for the year ended December 31, 2023, in accumulated other comprehensive loss. 73 Income Taxes US Income Taxes Income tax expense represents the sum of the current tax expense and deferred tax expense. Income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. Deferred income tax is provided in full, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets and liabilities are recognized for all temporary differences, except: ● Where the deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither the accounting profit nor taxable profit or loss. ● In respect of temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be determined and it is probable that the temporary differences will not reverse in the foreseeable future; and ● In respect of deductible temporary differences and carry-forward of unutilized tax losses, if it is not probable that taxable profits will be available against which those deductible temporary differences and carry-forward of unutilized tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Current and deferred income tax are recognized as income or expense in the profit or loss, except to the extent that the tax arises from a business combination or a transaction which is recognized either in other comprehensive income or directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authorities on the same taxable entity, or on different tax entities, provided they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry-forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The differences relate primarily to net operating loss carryforward from date of acquisition and to the use of the cash basis of accounting for income tax purposes. The Company records an estimated valuation allowance on its deferred income tax assets if it is more likely than not that these deferred income tax assets will not be realized. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company has not recorded any unrecognized tax benefits. 74 The Company’s 2023, 2022 and 2021 tax returns remain open to examination. Income Taxes in other countries Significant judgement is involved in determining the income taxes mainly in Singapore. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for expected tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Earnings (loss) per Share The Company presents basic and diluted earnings (loss) per share data for its common shares. Basic earnings (loss) per share is calculated by dividing the profit or loss attributable to common stock shareholders of the Company by the weighted-average number of common shares outstanding during the year, adjusted for treasury shares held by the Company. Diluted earnings (loss) per share is determined by adjusting the profit or loss attributable to common stock shareholders and the weighted-average number of common shares outstanding, adjusted for treasury shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible securities, such as stock options, convertible bonds and warrants. At December 31, 2023 there were 425,216 potentially dilutive warrants outstanding. At December 31, 2022 there were 456,653 potentially dilutive warrants outstanding. Fair Value Measurements ASC 820, Fair Value Measurement and Disclosures , defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1: Observable inputs such as quoted prices (unadjusted) in an active market for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that are supported by little or no market activity; therefore, the inputs are developed by the Company using estimates and assumptions that the Company expects a market participant would use, including pricing models, discounted cash flow methodologies, or similar techniques. The carrying value of the Company’s financial instruments, including cash and restricted cash, accounts receivable and accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. The liabilities in connection with the conversion and make-whole features included within certain of the Company’s notes payable and warrants are each classified as a level 3 liability. Non-controlling Interests Non-controlling interests represent the equity in subsidiary not attributable, directly or indirectly, to shareholders of the Company, and are presented separately in the Consolidated Statements of Operation and Other Comprehensive Loss, and within equity in the Consolidated Balance Sheets, separately from equity attributable to shareholders of the Company. On December 31, 2023 and 2022, the aggregate non-controlling interests in the Company were $ 8,601,562 and $ 11,009,149 , respectively. 75 Impairment of Long-lived Assets Our policy is to obtain an independent third-party valuation for each major project in the United States to identify triggering events for impairment. Our management may use a market comparison method to value other relatively small projects, such as the project in Perth, Australia. In addition to the annual assessment of potential triggering events in accordance with ASC 360 – Property Plant and Equipment (“ASC 360”), we apply a fair value-based impairment test to the net book value assets on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have occurred. The company did not record any impairment for the year ended on December 31, 2023 and 2022. Capitalized Financing Costs Financing costs, such as loan origination fee, administration fee, interests and other related financing costs, should be capitalized and recorded on the balance sheet if these financing activities are directly associated with the development of real estates. Capitalized Financing Costs are allocated to lots sold based on the total expected development and interest costs of the completed project and allocating a percentage of those costs based on the selling price of the sold lot compared to the expected sales values of all lots in the project. If the allocation of capitalized financing costs based on the projection and relative expected sales value is impracticable, those costs could also be allocated based on an area method, which uses the size of the lots compared to the total project area and allocates costs based on their size. As of December 31, 2023 and 2022, the capitalized financing costs were $ 1,225,739 . Related Party Transactions The Company accounts for related party transactions in accordance with ASC 850 (“Related Party Disclosures”). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. Beneficial Conversion Features The Company evaluates the conversion feature for whether it was beneficial as described in ASC 470-30. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion. 76 Recent Accounting Pronouncements Accounting pronouncement adopted In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 2021-08 requires the company acquiring contract assets and contract liabilities obtained in a business combination to recognize and measure them in accordance with ASC 606, “Revenue from Contracts with Customers”. At the acquisition date, the company acquiring the business should record related revenue, as if it had originated the contract. Before the update such amounts were recognized by the acquiring company at fair value. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The Company adopted these requirements prospectively, effective on the first day of the year 2023. The application of the ASU 2021-08 has not had a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years, and a modified retrospective approach is required, with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. In November of 2019, the FASB issued ASU 2019-10, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company adopted these requirements prospectively, effective on the first day of the year 2023. The application of the ASU 2016-13 has not had a material impact on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Reference Rate Reform on Financial Reporting . The amendments in this Update provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The Company’s line of credit agreement provides procedures for determining a replacement or alternative rate in the event that LIBOR is unavailable. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2024. The Company does not believe that ASU 2020-04 will have significant impact on its future consolidated financial statements. Accounting pronouncement not yet adopted In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition is permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2023 for smaller reporting companies, including interim periods within those fiscal years. Early adoption is permitted no earlier than the fiscal year beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its future consolidated financial statements. 3. CONCENTRATIONS The Company maintains cash balances at various financial institutions in different countries. These balances are usually secured by the central banks’ insurance companies. At times, these balances may exceed the insurance limits. As of December 31, 2023 and 2022, uninsured cash and restricted cash balances were $ 23,748,169 and $ 15,723,599 , respectively. For the year ended December 31, 2023, three customers accounted for approximately 36 %, 36 %, and 28 % of the Company’s property and development revenue. For the year ended December 31, 2022, two customers accounted for approximately 81 %, and 19 % of the Company’s property and development revenue. 77 4. SEGMENTS Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-maker is the CEO. The Company operates in and reports four business segments: real estate, digital transformation technology, biohealth, and other business activities. The Company’s reportable segments are determined based on the services they perform and the products they sell, not on the geographic area in which they operate. The Company’s chief operating decision maker evaluates segment performance based on segment revenue. Costs excluded from segment income (loss) before taxes and reported as “Other” consist of corporate general and administrative activities which are not allocable to the four reportable segments. The following table summarizes the Company’s segment information for the following balance sheet dates presented, and for the years ended December 31, 2023 and 2022: SCHEDULE OF SEGMENT INFORMATION Real Estate Digital Transformation Technology Biohealth Business Other Total Year Ended on December 31, 2023 Revenue $ 20,963,661 $ 28,117 $ 12,758 $ 1,083,971 $ 22,088,507 Cost of Sales ( 13,915,144 ) ( 9,145 ) ( 54,529 ) ( 597,391 ) ( 14,576,209 ) Gross Margin 7,048,517 18,972 ( 41,771 ) 486,580 7,512,298 Operating Expenses ( 1,312,024 ) ( 468,679 ) ( 869,683 ) ( 7,734,566 ) ( 10,384,952 ) Operating Income (Loss) 5,736,493 ( 449,707 ) ( 911,454 ) ( 7,247,986 ) ( 2,872,654 ) Other Income (Expense) 47,363 ( 6,066,133 ) ( 593,994 ) ( 51,700,965 ) ( 58,313,729 ) Net Income (Loss) Before Income Tax 5,783,856 ( 6,515,840 ) ( 1,505,448 ) ( 58,948,951 ) ( 61,186,383 ) Real Estate Digital Transformation Technology Biohealth Business Other Total Year Ended on December 31, 2022 Revenue $ 3,088,628 $ 69,915 $ 753,651 $ 568,248 $ 4,480,442 Cost of Sales ( 3,016,200 ) ( 23,423 ) ( 523,534 ) ( 168,833 ) ( 3,731,990 ) Gross Margin 72,428 46,492 230,117 399,415 748,452 Operating Expenses ( 1,479,674 ) ( 414,167 ) ( 850,044 ) ( 5,093,941 ) ( 7,837,826 ) Operating Income (Loss) ( 1,407,246 ) ( 367,675 ) ( 619,927 ) ( 4,694,526 ) ( 7,089,374 ) Other Income (Expense) 5,885 ( 1,359,977 ) ( 4,669,309 ) ( 33,099,730 ) ( 39,123,131 ) Net Income (Loss) Before Income Tax ( 1,401,361 ) ( 1,727,652 ) ( 5,289,236 ) ( 37,794,256 ) ( 46,212,505 ) December 31, 2023 Cash and Restricted Cash $ 3,323,210 $ 430,807 $ 568,702 $ 23,566,574 $ 27,889,293 Total Assets 62,989,233 5,845,269 2,450,876 55,028,650 126,314,028 December 31, 2022 $ 2,592,577 $ 514,260 $ 1,338,404 $ 14,076,662 $ 18,521,903 Cash and Restricted Cash 57,951,324 3,184,416 4,861,615 87,492,981 153,490,336 Total Assets 78 5. REAL ESTATE ASSETS As of December 31, 2023 and 2022, real estate assets consisted of the following: SCHEDULE OF REAL ESTATE ASSETS December 31, 2023 December 31, 2022 Construction in Progress $ 6,983,974 $ 15,506,572 Land Held for Development 3,382,792 7,943,126 Rental Properties 31,770,386 31,169,031 Total Real Estate Assets $ 42,137,152 $ 54,618,729 Single family residential properties As of December 31, 2023 and 2022, the Company owns 132 Single Family Residential Properties (“SFRs”). The Company’s aggregate investment in those SFRs was $ 31 million. Depreciation expense was $ 1,050,897 and $ 882,814 in years ended December 31, 2023 and 2022, respectively. These homes are located in Montgomery and Harris Counties, Texas. The following table presents the summary of our SRFs as of December 31, 2023: SUMMARY OF SINGLE FAMILY RESIDENTIAL PROPERTIES Number of Homes Aggregate investment Average Investment per Home SFRs 132 $ 33,190,603 $ 251,444 6. BUILDER DEPOSITS In November 2015, SeD Maryland Development, LLC (“SeD Maryland”) entered into lot purchase agreements with NVR, Inc. (“NVR”) relating to the sale of single-family home and townhome lots to NVR in the Ballenger Run Project. The purchase agreements were amended three times thereafter. Based on the agreements, NVR is entitled to purchase 479 lots for a price of approximately $ 64,000,000 , which escalates 3% annually after June 1, 2018 . As part of the agreements, NVR was required to give a deposit in the amount of $ 5,600,000 . Upon the sale of lots to NVR, 9.9 % of the purchase price is taken as payback of the deposit. A violation of the agreements by NVR would cause NVR to forfeit the deposit. On January 3, 2019 and April 28, 2020, NVR gave SeD Maryland two more deposits in the amounts of $ 100,000 and $ 220,000 , respectively, based on the 3rd Amendment to the Lot Purchase Agreement. On December 31, 2023 and 2022, there was $ 0 held on deposit. Remaining balance of $ 31,553 was repaid during 2022. 7. NOTES PAYABLE As of December 31, 2023 and 2022, notes payable consisted of the following: SCHEDULE OF NOTES PAYABLE December 31, 2023 December 31, 2022 ($) ($) Motor Vehicle Loans 156,926 181,846 Total notes payable $ 156,926 $ 181,846 79 M&T Bank Loan On April 17, 2019, SeD Maryland Development LLC entered into a Development Loan Agreement with Manufacturers and Traders Trust Company (“M&T Bank”) in the principal amount not to exceed at any one time outstanding the sum of $ 8,000,000 , with a cumulative loan advance amount of $ 18,500,000 . The line of credit bore interest rate on LIBOR plus 375 basis points. SeD Maryland Development LLC was also provided with a Letter of Credit (“L/C”) Facility in an aggregate amount of up to $ 900,000 . The L/C commission will be 1.5 % per annum on the face amount of the L/C. Other standard lender fees will apply in the event L/C is drawn down. The loan is a revolving line of credit. The L/C Facility is not a revolving loan, and amounts advanced and repaid may not be re-borrowed. Repayment of the Loan Agreement is secured by $ 2,600,000 collateral fund and a Deed of Trust issued to the Lender on the property owned by SeD Maryland. The loan has expired during 2022 and only L/C is outstanding as of December 31, 2023 and 2022. On March 15, 2022 approximately $ 2,300,000 was released from collateral, leaving approximately $ 300,000 as collateral for outstanding letters of credit. On December 14, 2023 approximately $ 201,751 was released from collateral, leaving approximately $ 100,000 as collateral for outstanding letters of credit. Paycheck Protection Program Loan On February 11, 2021, the Company entered into a five year note with M&T Bank with a principal amount of $ 68,502 pursuant to the Paycheck Protection Program (“PPP Term Note”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan is evidenced by a promissory note. The PPP Term Note bears interest at a fixed annual rate of 1.00 %, with the first sixteen months of principal and interest deferred or until we apply for the loan forgiveness. The PPP Term Note may be accelerated upon the occurrence of an event of default. The PPP Term Note is unsecured and guaranteed by the United States Small Business Administration. The Company may apply to M&T Bank for forgiveness of the PPP Term Note, with the amount which may be forgiven equal to at least 60 % of payroll costs and other eligible payments incurred by the Company, calculated in accordance with the terms of the CARES Act. At this time, we are not in a position to quantify the portion of the PPP Term Note that will be forgiven. As of December 31, 2021, we owe $ 68,502 to M&T Bank. In April 2022 the Company received confirmation that the PPP Loan was fully forgiven. The Company may be subject to CARES Act specific lookbacks and audits of the loan forgiveness as part of the SBA’s audit process. Australia Loan On January 7, 2017, SeD Perth Pty Ltd (“SeD Perth”) entered into a loan agreement with National Australian Bank Limited (the “Australia Loan”) for the purpose of funding land development. The loan facility provides SeD Perth with access to funding of up to approximately $ 460,000 and matures on December 31, 2018 . The Australia Loan is secured by both the land under development and a pledged deposit of $ 35,276 . This loan is denominated in AUD. Personal guarantees amounting to approximately $ 500,000 have been provided by our CEO, Chan Heng Fai and by Rajen Manicka, the CEO of Holista CollTech and Co-founder of iGalen Inc. The interest rate on the Australia Loan is based on the weighted average interest rates applicable to each of the business markets facility components as defined within the loan agreement, ranging from 4.48 % to 4.49 % per annum for the year ended December 31, 2021. On September 7, 2017 the Australia Loan was amended to reduce the maximum borrowing capacity to approximately $ 179,000 . During 2020, the terms of the Australia Loan were amended to reflect an extended maturity date of April 30, 2022 . This was accounted for as a debt modification. The Company did not pay fees to the National Australian Bank Limited for the modification of the loan agreement. In February 2022, SeD Perth repaid the loan. Motor Vehicle Loans On May 17, 2021, Alset International Limited entered into a Hire Purchase Agreement with Hong Leong Finance Limited to purchase a car for business. The total purchase price of the car, including associated charges, was approximately $ 184,596 . Alset International paid an initial deposit of $ 78,640 , and would make monthly instalment of approximately $ 1,300 , including interest of 1.88 % per annum, for the 84 months. On September 22, 2022 Alset International entered into an agreement with United Overseas Bank Limited to purchase additional car for business. The total purchase price of the car, including associated charges, was approximately $ 182,430 . Alset International paid an initial deposit of $ 66,020 and would make monthly installments of approximately $ 1,472 , including interest of 1.88 % per annum, for the 84 months. 80 Future minimum principal payments under existing motor vehicle loans at December 31, 2023 in each calendar year through the end of their terms are as follows: SCHEDULE OF FUTURE MINIMUM PAYMENTS 2024 $ 30,744 2025 30,744 2026 30,744 2027 30,744 2028 21,424 Thereafter 12,526 Total Future Payments $ 156,926 8. RELATED PARTY TRANSACTIONS Purchase Shares and Warrants from NECV On July 17, 2020, the Company purchased 122,039,000 shares, approximately 9.99 % ownership, and 1,220,390,000 warrants with an exercise price of $ 0.0001 per share, from NECV, for an aggregated purchase price of $ 122,039 . We value NECV warrants under level 3 category through a Black Scholes option pricing model and the fair value of the warrants from NECV were $ 860,342 as of July 17, 2020, the purchase date and $ 430 and $ 327,565 as of December 31, 2023 and 2022, respectively. The difference of $ 945,769 of fair value of stock and warrants, total $ 1,067,808 and the purchase price $ 122,039 , was recorded as additional paid in capital as it was a related party transaction. Purchase and Sale of Stock in True Partner Capital Holding Limited On March 12, 2021, the Company purchased 62,122,908 ordinary shares of True Partners Capital Holding Limited for $ 6,729,629 from a related party. The fair market value of such stock on the acquisition date was $ 10,003,689 . The difference between the purchase price and the fair market value of $ 3,274,060 was recorded as an equity transaction on Company’s consolidated statement of stockholders’ equity at December 31, 2021. Pursuant to a Stock Purchase Agreement from February 2022, the Company sold 62,122,908 shares of True Partner to DSS Inc. (through the transfer of subsidiary and otherwise), for a purchase price of 17,570,948 shares of common stock of DSS. DSS shareholders approved the Stock Purchase Agreement on May 17, 2022 (which is deemed to be the effective date of this transaction). The transaction loss of $ 446,104 , which is the difference between the fair value of True Partner stock and fair value of DSS stock at the agreement’s effective date, was recorded as other expense in the Company’s Statement of Operations. Reorganization of Home Rental Business On December 9, 2022, the Company entered into an agreement with Alset EHome Inc. and Alset International Limited, two majority-owned subsidiaries of the Company, pursuant to which the Company agreed to reorganize the ownership of its home rental business. Previously, the Company and certain majority-owned subsidiaries collectively owned 132 single-family rental homes in Texas. 112 of these rental homes are owned by subsidiaries of American Home REIT Inc. (“AHR”). The Company owns 85.5 % of Alset International Limited, and Alset International Limited indirectly owns approximately 99.9 % of Alset EHome Inc. The closing of the transaction contemplated by this agreement was completed on January 13, 2023. Pursuant to this agreement, the Company became the direct owner of AHR and its subsidiaries that collectively own these 112 homes, instead of such homes being owned indirectly through Alset International Limited’s subsidiaries. Alset EHome Inc. sold AHR to the Company for a total consideration of $ 26,250,933 , including the forgiveness of debt in the amount of $ 13,900,000 , a promissory note in the amount of $ 11,350,933 and a cash payment of $ 1,000,000 . This purchase price represents the book value of AHR as of November 30, 2022. The promissory note carries interest rate of 7.2 % and matures on January 13, 2028 . The closing of the transaction was approved by the shareholders of Alset International Limited. Certain members of the Company’s Board of Directors and management are also members of the Board of Directors and management of each of Alset International Limited and Alset EHome Inc. 81 SHRG Shares Dividend Received from DSS On May 4, 2023, DSS distributed approximately 280 million shares of Sharing Services Global Corporation (“SHRG”) beneficially held by DSS and its subsidiaries in the form of a dividend to the shareholders of DSS common stock. As a result of this distribution, the Company directly received 70,426,832 shares of SHRG, and through its majority-owned subsidiary Alset International Limited, and certain subsidiaries of Alset International Limited, indirectly received additional 55,197,696 shares of SHRG. The Company and its majority-owned subsidiaries now collectively own 125,624,528 shares of SHRG, representing 33.4 % of the issued and outstanding shares of SHRG Common Stock (such number of SHRG shares held and ownership percentage do not include any shares held by affiliates of the Company which we do not hold a majority interest in). Additionally, our founder, Chairman and Chief Executive Officer, Chan Heng Fai, directly and indirectly is the owner of an additional 37,947,756 shares of SHRG and is a beneficial owner of approximately 43.5 % of SHRG shares (including those shares owned by Alset Inc. and its majority-owned subsidiaries). Consolidation of Alset Capital Acquisition Corp. On May 1, 2023, Alset Capital Acquisition Corp. (“Alset Capital”) held a Special Meeting of Stockholders. In connection with the Special Meeting and certain amendments to Alset Capital’s Amended and Restated Certificate of Incorporation, 6,648,964 shares of Alset Capital’s Class A Common Stock were rendered for redemption. Following the redemption, 2,449,786 shares of Class A Common Stock of Alset Capital remained issued and outstanding, including 473,750 shares held by the Company. The Company also owns 2,156,250 shares of Alset Capital’s Class B Common Stock. Following the redemptions, Company’s ownership in Alset Capital has increased from 23.4 % of the total shares of common stock to 58.0 % of the total number of outstanding shares of the two classes. The Company recognized $ 21,657,036 loss on the consolidation of Alset Capital. The loss is included in Company’s Consolidated Statement of Operations for the year ended December 31, 2023. Purchase of Hapi Travel Ltd. Stock On June 14, 2023, the Company’s subsidiary completed acquisition of Hapi Travel Limited (“HTL”), an online travel business started in Hong Kong and under common control of the Company. The accompanying consolidated financial statements include the operations of the acquired entity from its acquisition date. The acquisition has been accounted for as a business combination. Accordingly, consideration paid by the Company to complete the acquisition is initially allocated to the acquired assets and liabilities assumed based upon their estimated fair values on the acquisition date. The recorded amounts for assets acquired and liabilities assumed are provisional and subject to change during the measurement period, which is up to 12 months from the acquisition date. As a result of the acquisition of HTL, a deemed dividend of $ 214,174 was generated as a result of the business combination, which represents the purchase price of $ 214,993 in excess of identifiable equity. The common control transaction described above resulted in the following basis of accounting for the financial reporting periods: ● The acquisition of HTL was accounted for prospectively as of June 14, 2023 as this did not represent a change in reporting entity. ● The acquisition of HTL was under common control and was consolidated in accordance with ASC 850-50. The Consolidated financial statements were not retrospectively adjusted for the acquisition of HTL as of January 1, 2022 for comparative purposes because the historical operations of HTL were deemed to be immaterial to the Company’s consolidated financial statements. Convertible Notes to Value Exchange On January 27, 2023, the Company and New Electric CV Corporation (together with the Company, the “Lenders”) entered into a Convertible Credit Agreement (the “Credit Agreement”) with VEII. The Credit Agreement provides VEII with a maximum credit line of $ 1,500,000 with simple interest accrued on any advances of the money under the Credit Agreement at 8 %. The Credit Agreement grants conversion rights to each Lender. Each Advance shall be convertible, in whole or in part, into shares of VEII’s Common Stock at the option of the Lender who made that Advance (being referred to as a “Conversion”), at any time and from time to time, at a price per share equal the “Conversion Price”. In the event that a Lender elects to convert any portion of an Advance into shares of VEII Common Stock in lieu of cash payment in satisfaction of that Advance, then VEII would issue to the Lender five (5) detachable warrants for each share of VEII’s Common Stock issued in a Conversion (“Warrants”). Each Warrant will entitle the Lender to purchase one (1) share of Common Stock at a per-share exercise price equal to the Conversion Price. The exercise period of each Warrant will be five (5) years from date of issuance of the Warrant. On February 23, 2023, Hapi Metaverse loaned VEII $ 1,400,000 (the “Loan Amount”). The Loan Amount can be converted into shares of VEII pursuant to the terms of the Credit Agreement for a period of three years. There is no fixed price for the derivative security until Hapi Metaverse converts the Loan Amount into shares of VEII Common Stock. On September 6, 2023, the Company converted $ 1,300,000 of the principal amount loaned to VEII into 7,344,632 shares of VEII’s Common Stock. Under the terms of the Credit Agreement, Hapi Metaverse received Warrants to purchase a maximum of 36,723,160 shares of VEII’s Common Stock at an exercise price of $ 0.1770 per share. Such warrants expire five (5) years from date of their issuance. On December 31, 2023 the value of the remaining $ 100,000 of convertible note and warrants was $ 101,150 and $ 2,487,854 , respectively. 82 On December 14, 2023, Hapi Metaverse entered into a Convertible Credit Agreement (“Credit Agreement”) with VEII. On December 15, 2023, the company loaned VEII $ 1,000,000 . The Credit Agreement was amended pursuant to an agreement dated December 19, 2023. Under the Credit Agreement, as amended, this amount can be converted into VEII’s Common Shares pursuant to the terms of the Credit Agreement for a period of three years. In the event that Hapi Metaverse converts this loan into shares of VEII’s Common Stock, the conversion price shall be $ 0.045 per share. In the event that Hapi Metaverse elects to convert any portion of the loan into shares of VEII’s Common Stock in lieu of cash payment in satisfaction of that loan, then VEII will issue to Hapi Metaverse five (5) detachable warrants for each share of VEII’s Common Stock issued in a conversion (“Warrants”). Each Warrant will entitle the company to purchase one (1) share of VEII’s Common Stock at a per-share exercise price equal to the Conversion Price. The exercise period of each Warrant will be five (5) years from date of issuance of the Warrant. The value of this convertible note on December 31, 2023 was $ 1,106,477 . At the time of this filing, the company has not converted the Loan Amount. Notes Payable Chan Heng Fai provided an interest-free, due on demand advance to SeD Perth Pty. Ltd. for its general operations. On December 31, 2023 and 2022, the outstanding balance was $ 12,716 and $ 12,668 , respectively. Chan Heng Fai provided an interest-free, due on demand advance to Hapi Metaverse Inc. for its general operations. As of December 31, 2023 and December 31, 2022, the outstanding balance was $ 4,153 and $ 4,158 , respectively. Management Fees MacKenzie Equity Partners, LLC, an entity owned by Charles MacKenzie, a Director of the Company, has a consulting agreement with a majority-owned subsidiary of the Company. Pursuant to an agreement entered into in June of 2022, as supplemented in August, 2023, the Company’s subsidiary has paid $ 25,000 per month for consulting services. In addition, MacKenzie Equity Partners has been paid certain bonuses, including (i) a sum of $50,000 in June, 2022; (ii) a sum of $50,000 in August 2023; and (iii) a sum of $50,000 in December 2023 . The Company incurred expenses of $ 400,000 and $ 350,000 in the years ended December 31, 2023 and 2022, respectively, which were capitalized as part of Real Estate on the balance sheet as the services relate to property and project management. On December 31, 2023 and 2022, the Company owed this related party $ 27,535 and $ 25,000 , respectively. These amounts are included in Accounts Payable and Accrued Expenses in the accompanying consolidated balance sheets. Note Receivable from a Related Party Company On March 2, 2020 and on October 29, 2021, LiquidValue Asset Management Pte. Ltd. (“LiquidValue”) received two $ 200,000 Promissory Notes and on October 29, 2021 Alset International received $ 8,350,000 Promissory Note from AMRE, a company which is 15.8 % owned by LiquidValue as of December 31, 2022. Chan Heng Fai and Chan Tung Moe are directors of AMRE. The notes carry interest rates of 8 % and are payable in two, three years and 25 months, respectively. LiquidValue also received warrants to purchase AMRE shares at the exercise price of $ 5.00 per share. The amount of the warrants equals to the note principal divided by the exercise price. If AMRE goes to IPO in the future and IPO price is less than $10.00 per share, the exercise price shall be adjusted downward to fifty percent (50%) of the IPO price. In March 2022 the Company converted two $ 200,000 loans, together with associated warrants into 167,938 common shares of AMRE, and increased its ownership in AMRE from 3.4 % to 15.8 %. On July 12, 2022, pursuant to Assignment and Assumption Agreement from February 25, 2022, as amended on July 12, 2022, the Company sold the $ 8,350,000 loan, together with accrued interest, to DSS for a purchase price of 21,366,177 shares of DSS’s common stock. The loss from this transaction of $ 1,089,675 was calculated as the difference between the face value of promissory note together with accrued interest and the fair value of DSS stock on July 12, 2022, and was recorded under Other Expense in Statement of Operations. 83 As of December 31, 2022, the Company provided advances for operation of $ 236,699 to HWH World Co., a direct sales company in Thailand of which the Company holds approximately 19 % ownership. The subsidiary holding investment in HWH World Co. was sold during 2023. In the first quarter of 2022, a subsidiary of the Company made a non-interest bearing advance in the amount of $ 476,250 on behalf of Alset Investment Pte. Ltd., a company 100 % owned by one of our directors. Such advance was made in connection with a private placement into Alset Capital Acquisition Corp. by its sponsor, Alset Acquisition Sponsor, LLC. During 2022 Alset Investment repaid all balance due of $ 476,250 . In June 2022, Alset International Limited, a subsidiary of the Company, entered into a stock purchase agreement with one of our directors and paid $ 1,746,279 to one of our directors as the consideration for purchase of 7,276,163 common shares of Value Exchange International. This transaction was terminated under the agreement of both parties thereafter. On October 17, 2022 the Company purchased 7,276,163 common shares of Value Exchange International for an aggregate purchase price of $ 1,743,734 . After the transaction the Company owns approximately 48.7 % of Value Exchange International. Due to differences in purchase prices the director owes the Company $ 2,545 . On December 31, 2023, the total convertible note receivable from Ketomei was $ 368,299 . Considering ASC 326 and after reviewing the performance of Ketomei, the Company decided to record 100 % impairment for the convertible note receivable and investment in associate. On June 10, 2021, HCI-T signed a convertible loan agreement with Ketomei, pursuant to which HCI-T has agreed to grant Ketomei a loan of an aggregate principal amount of $ 75,525 (SG$ 100,000 ). On March 21, 2022, HCI-T signed a legally binding term sheet with Ketomei, and HCI-T has agreed to invest in Ketomei $ 258,186 (SG$ 350,000 ) for 28 % interest in Ketomei. The investment was partially paid by the $ 75,525 (SG$ 100,000 ) loan borrowed to Ketomei and the accrued interest of $ 6,022 (SG$ 6,433 ). The balance of $ 183,311 (SG$ 243,567 ) was paid in cash. On July 28, 2022 HCI-T entered into binding term sheet with Ketomei and Tong Leok Siong Constant, pursuant to which HCI-T lent Ketomei $ 43,254 (SG$ 60,000 ). This loan had a 0 % interest rate for the first 60 days and an interest rate of 8 % per annum afterwards. On August 4, 2022, the same parties entered into another binding term sheet (the “Second Term Sheet”) pursuant to which HCI-T agreed to lend Ketomei up to $ 260,600 (SG$ 360,000 ) pursuant to a convertible loan, with a term of 12 months. After the initial 12 months, the interest on such loan will be 8 %. As of August 31, 2023, the $ 263,766 (SG$ 360,000 ) loan was paid by the $ 214,903 (SG$ 293,310 ) loan borrowed to Ketomei and $ 48,862 (SG$ 66,690 ) was paid for the expenses on behalf of Ketomei. In addition, pursuant to the Second Term Sheet, the July 28, 2022, loan was modified to include conversion rights. The Parties agree that the conversion rate will be at approximately $ 0.022 per share. On August 31, 2023, the same parties entered into another binding term sheet pursuant to which HCI-T agreed to lend Ketomei up to $ 36,634 (SG$ 50,000 ) pursuant to a convertible loan, with a term of 12 months. After the initial 12 months, the interest on such loan will be 3.5 %. As of October 31, 2023, the $ 37,876 (SG$ 50,000 ) loan was paid to Ketomei. On October 26, 2023, the same parties entered into another binding term sheet pursuant to which HCI-T agreed to lend Ketomei up to $ 37,876 (SG$ 50,000 ) pursuant to a non- convertible loan, with a term of 12 months. After the initial 12 months, the interest on such loan will be 3.5 %. As of December 31, 2023, the $ 6,766 (SG$ 8,932 ) loan was paid to Ketomei. HCI-T will pay the balance of $ 31,110 (SG$ 41,068 ) to Ketomei in the future. The amount due from Ketomei at December 31, 2023 and 2022 are $ 0 and $ 198,125 respectively. On October 13, 2021 BMI Capital Partners International Limited (“BMI”) entered into loan agreement with Liquid Value Asset Management Limited (“LVAML”), a subsidiary of DSS, pursuant to which BMI agreed to lend $ 3,000,000 to LVAML. The loan has variable interest rate and matures on January 12, 2023 , with automatic three-month extensions. The purpose of the loan is to purchase a portfolio of trading securities by LVAM. BMI participates in the losses and gains from portfolio based on the calculations included in the loan agreement. As of December 31, 2023 and 2022 LVAML owes the Company $ 534,671 and $ 3,042,811 , respectively. 84 On September 28, 2023 Alset International Limited (“AIL”) entered into loan agreement with Value Exchange International Inc. (“VEII”), pursuant to which AIL agreed to lend $ 500,000 to VEII. The loan carries simple annual interest rate of 8 % and matures on March 28, 2024 . As of December 31, 2023 the Company accrued $ 10,000 interest and VEII owed AIL $ 510,000 . Note 9. GOODWILL The Company continually evaluates potential acquisitions that align with the Company’s plans, namely, starting the F&B business in Asia. Starting an F&B business in Hong Kong, China, and Taiwan can be an excellent opportunity due to the large consumer market, diverse food culture, high demand for international cuisine, favorable business environment, skilled labor force, and opportunities for growth. On October 4, 2022, The Company has completed its first F&B business acquisition of MOC HK Limited (“MOC”), a F&B business started in Hong Kong. The accompanying consolidated financial statements include the operations of the acquired entity from its acquisition date. The acquisition has been accounted for as a business combination. Accordingly, consideration paid by the Company to complete the acquisition is initially allocated to the acquired assets and liabilities assumed based upon their estimated acquisition date fair values. As a result of the acquisition of MOC, goodwill of $ 60,343 generated in a business combination represents the purchase price of $ 70,523 in excess of identifiable tangible and intangible assets. Goodwill and intangible assets that have an indefinite useful life are not amortized. Instead, they are reviewed periodically for impairment. The Company evaluates goodwill on an annual basis in the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management conducts a quantitative goodwill impairment test. The impairment test involves comparing the fair value of the applicable reporting unit with its carrying value. The Company estimates the fair values of its reporting units using a combination of the income, or discounted cash flows, approach and the market approach, which utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The Company’s evaluation of goodwill completed during the year resulted in no impairment losses. 85 The table below reflects the Company’s estimates of the acquisition date fair value of the assets acquired and liabilities assumed for the 2022 acquisition: SCHEDULE OF ESTIMATES OF ACQUISITION FAIR VALUE MOC Acquisition Date October 4, 2022 Purchase Price Cash $ 70,523 Total purchase consideration 70,523 Purchase Price Allocation Assets acquired Current assets 32,700 Property and Equipment, net 11,266 Operating lease right-of-use assets, net 114,232 Total assets acquired 158,198 Liabilities assumed: Current liabilities ( 33,437 ) Operating lease liability ( 114,232 ) Accrued taxes ( 349 ) Total liabilities assumed ( 148,018 ) Net assets acquired 10,180 Goodwill 60,343 Total purchase consideration $ 70,523 The following table summarizes changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022. SCHEDULE OF GOODWILL December 31, 2023 December 31, 2022 Balance at beginning of the year $ 60,343 $ - Acquisitions - 60,343 Balance as of end of the year $ 60,343 $ 60,343 10. EQUITY On June 14, 2021, the Company filed an amendment (the “Amendment”) to its Third Amended and Restated Certificate of Incorporation, as amended, to increase the Company’s authorized share capital. The Amendment increased the Company’s authorized share capital to 250,000,000 common shares and 25,000,000 preferred shares, from 20,000,000 common shares and 5,000,000 preferred shares, respectively. The Company has designated 6,380 preferred shares as Series A Preferred Stock and 2,132 as Series B Preferred Stock. On December 6, 2022 the Company filed a certificate of Amendment to the Company’s Certificate of Formation with the Texas Secretary of State to effect a 1-for-20 reverse stock split. The reverse stock split was effective as of December 28, 2022. 86 Holders of the Series A Preferred Stock shall be entitled to receive dividends equal, on an as-if-converted basis, to and in the same form as dividends actually paid on shares of the Company’s common stock, par value $ 0.001 per share (“Common Stock”) when, as and if paid on shares of Common Stock. Each holder of outstanding Series A Preferred Stock is entitled to vote equal to the number of whole shares of Common Stock into which each share of the Series A Preferred Stock is convertible. Holders of Series A Preferred Stock are entitled, upon liquidation of the Company, to receive the same amount that a holder of Series A Preferred Stock would receive if the Series A Preferred Stock were fully converted into Common Stock. Holders of the Series B Preferred Stock shall be entitled to receive dividends equal, on an as-if-converted basis, to and in the same form as dividends actually paid on shares of the Company’s common stock par value $ 0.001 per share (“Common Stock”) when, as and if paid on shares of Common Stock. Each holder of outstanding Series B Preferred Stock is entitled to vote equal to the number of whole shares of Common Stock into which each share of the Series B Preferred Stock is convertible. Holders of Series B Preferred Stock are entitled, upon liquidation of the Company, to receive the same amount that a holder of Series B Preferred Stock would receive if the Series B Preferred Stock were fully converted into Common Stock. The Company analyzed the Preferred stock and the embedded conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion option should be classified as equity. On February 6, 2023, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) in connection with an offering (the “Offering”) of its common stock, par value $ 0.001 per share (the “Common Stock”), with Aegis Capital Corp. (the “Underwriter”) as the underwriter, relating to an underwritten public offering of 1,727,273 shares of Common Stock at a public offering price of $ 2.20 per share. The Underwriting Agreement provides the Underwriter a 45-day option to purchase up to an additional 212,863 shares of Common Stock to cover over-allotments, if any. The net proceeds to the Company from the Offering were approximately $ 3.3 million, after deducting underwriting discounts and the payment of other offering expenses associated with the Offering that are payable by the Company. The Offering closed on February 8, 2023. The Common Stock was being offered pursuant to an effective registration statement on Form S-3 (File No. 333-264234), as well as a prospectus supplement in connection with the Offering filed with the Securities and Exchange Commission. On December 31, 2023, there were 9,235,119 common shares issued and outstanding. The following table summarizes the warrant activity for the year ended December 31, 2023. SCHEDULE OF WARRANT ACTIVITY Warrant for Common Shares Weighted Average Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Warrants Outstanding as of December 31, 2022 634,488 $ 80.40 3.23 $ - Warrants Vested and exercisable at December 31, 2022 634,488 $ 80.40 3.23 $ - Granted - - Exercised - - Forfeited, cancelled, expired 31,437 77.56 Warrants Outstanding as of December 31, 2023 603,051 $ 80.46 2.37 $ - Warrants Vested and exercisable at December 31, 2023 603,051 $ 80.46 2.37 $ - 87 Changes of Ownership of Alset International In the year ended December 31, 2023 and 2022 the Company purchased 575,000 and 6,670,200 shares of Alset International from the market, respectively. On January 17, 2022 the Company entered into a securities purchase agreement with Chan Heng Fai, pursuant to which the Company agreed to purchase from Chan Heng Fai 293,428,200 ordinary shares of Alset International for a purchase price of 29,468,977 newly issued shares of the Company’s common stock. On February 28, 2022, the Company and Chan Heng Fai entered into an amendment to this securities purchase agreement pursuant to which the Company shall purchase these 293,428,200 ordinary shares of Alset International for a purchase price of 35,319,290 newly issued shares of the Company’s common stock. The closing of this transaction with Chan Heng Fai was subject to approval of the Nasdaq and the Company’s stockholders. These 293,428,200 ordinary shares of Alset International represent approximately 8.4 % of the 3,492,713,362 total issued and outstanding shares of Alset International. The Company had a Special Meeting of Stockholders to vote on the approval of this transaction on June 6, 2022. Due to these transactions the Company’s ownership of Alset International changed from 76.8 % as of December 31, 2021 to 85.5 % as of December 31, 2023. Promissory Note Converted into Shares On December 13, 2021 the Company entered into a Securities Purchase Agreement with Chan Heng Fai for the issuance and sale of a convertible promissory note in favor of Chan Heng Fai, in the principal amount of $ 6,250,000 . The note bears interest of 3 % per annum and was due on the earlier of December 31, 2024 or when declared due and payable by Chan Heng Fai. The note could be converted in part or whole into common shares of the Company at the conversion price of $ 12.50 or into cash. The loan closed on January 26, 2022 after all closing conditions were met. Chan Heng Fai opted to convert all of the amount of such note into 500,000 shares of the Company’s common stock, which shares were issued on January 27, 2022. Registration Statement on Form S-3 On April 11, 2022 the Company filed a Registration Statement on Form S-3 using a “shelf” registration or continuous offering process. Under this shelf registration process, the Company may, from time to time, sell any combination of the securities (common stock, preferred stock, warrants, rights, units) described in the filed prospectus in one or more offerings up to a total aggregate offering price of $ 75,000,000 . Class A Common Stock of Alset Capital Acquisition Corp. Subject to Possible Redemption The Company accounts for its, and its subsidiaries’ common stock subject to possible redemption in accordance with the guidance enumerated in ASC 480 “ Distinguishing Liabilities from Equity ”. Common stock subject to possible redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including shares of common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares of common stock are classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at December 31, 2023, the Class A common stock of Alset Capital Acquisition Corp. subject to possible redemption in the amount of $ 20,457,011 , are presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets. On May 1, 2023, after the redemptions (for further details on this transaction refer to Note 8. – Related Party Transactions, Consolidation of Alset Capital Acquisition Corp.), the Company consolidated Alset Capital. 88 11. ACCUMULATED OTHER COMPREHENSIVE INCOME The following is a summary of the changes in the balances of accumulated other comprehensive income, net of tax: SCHEDULE OF CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX Unrealized Gains and Losses on Security Investment Foreign Currency Translations Change in Minority Interest Total Balance at January 1, 2023 $ ( 54,921 ) $ 121,272 $ 3,769,712 $ 3,836,063 Other Comprehensive (Loss) Income - ( 240,838 ) 14,494 ( 226,344 ) Balance at December 31, 2023 $ ( 54,921 ) $ ( 119,566 ) $ 3,784,206 $ 3,609,719 Unrealized Gains and Losses on Security Investment Foreign Currency Translations Change in Minority Interest Total Balance at January 1, 2022 $ ( 90,031 ) $ ( 367,895 ) $ 799,572 $ 341,646 Balance $ ( 90,031 ) $ ( 367,895 ) $ 799,572 $ 341,646 Other Comprehensive Income 35,110 489,167 2,970,140 3,494,417 Balance at December 31, 2022 $ ( 54,921 ) $ 121,272 $ 3,769,712 $ 3,836,063 Balance $ ( 54,921 ) $ 121,272 $ 3,769,712 $ 3,836,063 12. LEASE INCOME The Company generally rents its SFRs under lease agreements with a term of one year . Future minimum rental revenue under existing leases on our properties at December 31, 2023 in each calendar year through the end of their terms are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS 2024 1,349,732 Total Future Receipts $ 1,349,732 Property Management Agreements The Company has entered into property management agreement with the property managers under which the property managers generally oversee and direct the leasing, management and advertising of the properties in our portfolio, including collecting rents and acting as liaison with the tenants. The Company pays its property managers a monthly property management fee for each property unit and a leasing fee. For the years ended December 31, 2023 and 2022, property management fees incurred by the property managers were $ 137,340 and $ 90,630 , respectively. For the years ended December 31, 2023 and 2022, leasing fees incurred by the property managers were $ 121,900 and $ 174,850 , respectively. 13. INVESTMENTS MEASURED AT FAIR VALUE Financial assets measured at fair value on a recurring basis are summarized below and disclosed on the consolidated balance sheets as of December 31, 2023 and 2022: SCHEDULE OF FINANCIAL ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS Fair Value Measurement Using Level 1 Level 2 Level 3 Amount at Fair Value December 31, 2023 Assets Investment Securities- Fair Value Option $ 7,537,472 $ 2,100,720 $ - $ 9,638,192 Investment Securities- Trading 35,036 1,779,601 - 1,814,637 Warrants - NECV - - 430 430 Convertible Note Receivable - - 77,307 77,307 Warrants - VEII - 2,487,854 - 2,487,854 Total Investment in Securities at Fair Value $ 7,572,508 $ 6,368,175 $ 77,737 $ 14,018,420 89 Fair Value Measurement Using Level 1 Level 2 Level 3 Amount at Fair Value December 31, 2022 Assets Investment Securities- Fair Value Option $ 13,749,957 $ - $ - $ 13,749,957 Investment Securities- Trading 5,315,204 - - 5,315,204 Convertible Note Receivable - - 88,599 88,599 Warrants - NECV - - 327,565 327,565 Warrants - AMRE - - - - Total Investment in Securities at Fair Value $ 19,065,161 $ - $ 416,164 $ 19,481,325 Realized loss on investment securities for the year ended December 31, 2023 and 2022 was $ 11,375,747 and $ 7,308,580 , respectively. Unrealized loss on securities investment was $ 2,899,286 and $ 31,350,358 in the years ended December 31, 2023 and 2022, respectively. These losses were recorded directly to net loss. The change in fair value of the convertible note receivable in the years ended December 31, 2023 and 2022 was $ 0 and $ 40,201 gain, respectively, and was recorded in consolidated statements of stockholders’ equity. For U.S. trading stocks, we use Bloomberg Market stock prices as the share prices to calculate fair value. For overseas stock, we use the stock price from local stock exchange to calculate fair value. The following chart shows details of the fair value of equity security investments at December 31, 2023 and 2022, respectively. SCHEDULE OF FAIR VALUE OF EQUITY SECURITY INVESTMENT Share price Market Value 12/31/2023 Shares 12/31/2023 Valuation DSS (Related Party) $ 0.120 62,812,264 $ 7,537,472 Investment in Securities at Fair Value Trading Stock $ 35,036 Investment in Securities at Fair Value Total Level 1 Equity Securities $ 7,572,508 Holista $ 0.007 36,159,845 $ 246,556 Investment in Securities at Fair Value New Electric CV (Related Party) $ 0.000 354,039,000 $ 0 Investment in Securities at Fair Value AMBS $ 0.001 20,000,000 $ 10,000 Investment in Securities at Fair Value Value Exchange (related Party) $ 0.067 21,179,275 $ 1,429,602 Investment in Securities at Fair Value Sharing Services (Related Party) $ 0.003 125,624,528 $ 414,562 Investment in Securities at Fair Value Trading Stock $ 1,779,601 Investment in Securities at Fair Value Total Level 2 Equity Securities $ 3,880,321 Nervotech N/A 1,666 $ 37,876 Investment in Securities at Cost K Beauty N/A 3,600 $ 16,636 Investment in Securities at Cost Total Equity Securities $ 11,507,341 90 Share price Market Value 12/31/2022 Shares 12/31/2022 Valuation DSS (Related Party) $ 0.164 62,812,264 $ 10,301,211 Investment in Securities at Fair Value AMBS (Related Party) $ 0.002 20,000,000 $ 34,000 Investment in Securities at Fair Value Holista (Related Party) $ 0.20 42,999,621 $ 850,432 Investment in Securities at Fair Value New Electric CV (Related Party) $ 0.001 354,039,000 $ 212,423 Investment in Securities at Fair Value Value Exchange (Related Party) $ 0.170 13,834,643 $ 2,351,889 Investment in Securities at Fair Value Trading Stock $ 5,315,204 Investment in Securities at Fair Value Total Level 1 Equity Securities $ 19,065,161 Nervotech N/A 1,666 $ 35,958 Investment in Securities at Cost HWH World Co. N/A 3,800 $ 42,562 Investment in Securities at Cost K Beauty N/A 3,600 $ 19,609 Investment in Securities at Cost Total Equity Securities $ 19,163,290 Changes in the observable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments. A significant increase (decrease) in this likelihood would result in a higher (lower) fair value measurement. The table below provides a summary of the changes in fair value which are recorded through other income (loss), including net transfers in and/or out of all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2023 and 2022: SCHEDULE OF CHANGE IN FAIR VALUE Total Balance at January 1, 2022 $ 1,108,252 Net gain ( 692,088 ) Balance at December 31, 2022 $ 416,164 Net gain ( 338,427 ) Balance at December 31, 2023 $ 77,737 Sharing Services Convertible Note The fair value of the Sharing Services Convertible Note under level 3 category was calculated using a Black-Scholes valuation model. We assumed dividend yield rate of 0.00 % in Sharing Services. The volatility was based on the historical volatility of the Sharing Services’ common stock. Risk-free interest rates were obtained from U.S. Treasury rates for the applicable periods. The Sharing Services Convertible Note was redeemed in July 2022. Vector Com Convertible Bond On February 26, 2021, the Company invested approximately $ 88,599 in the convertible bond of Vector Com Co., Ltd (“Vector Com”), a private company in South Korea. The interest rate is 2 % per annum and maturity is two years . The conversion price is approximately $ 21.26 , per common share of Vector Com. As of December 31, 2022 and 2023, the Management estimated the fair value of the note to be $ 88,599 and $ 77,307 , respectively. Warrants AMRE On March 2, 2020 and October 29, 2021, the Company received warrants to purchase shares of AMRE, a related party private company, in conjunction with the Company lending two $ 200,000 promissory notes. For further details on this transaction, refer to Note 8 - Related Party Transactions, Note Receivable from a Related Party Company . As of December 31, 2023 and 2022, AMRE was a private company. Based the management’s analysis, the fair value of the warrants was $ 0 as of December 31, 2021. All warrants were converted into common shares in March 2022. NECV On July 17, 2020, the Company purchased 122,039,000 shares, approximately 9.99 % ownership, and 1,220,390,000 warrants with an exercise price of $ 0.0001 per share, from NECV, for an aggregated purchase price of $ 122,039 . During 2021, the Company exercised 232,000,000 of the warrants to purchase 232,000,000 shares of NECV for the total consideration of $ 232,000 , leaving the balance of outstanding warrants of 988,390,000 at December 31, 2021. The Company did not exercise any warrants during years ended December 31, 2023 and 2022. We value NECV warrants under level 3 category through a Black Scholes option pricing model and the fair value of the warrants from NECV was $ 430 as of December 31, 2023 and $ 327,565 as of December 31, 2022. The fair value of the NECV warrants under level 3 category as of December 31, 2023 and 2022 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions: SCHEDULE OF SIGNIFICANT INPUTS AND ASSUMPTIONS December 31, 2023 December 31, 2022 Stock Price $ 0.0001 $ 0.0006 Exercise Price $ 0.001 $ 0.001 Risk-free Interest Rate 4.62 % 3.95 % Annualized volatility 869.4 % 186.1 % Dividend Yield 0.00 0.00 Year to Maturity 6.56 7.56 91 VEII On September 6, 2023, the Company received warrants to purchase shares of VEII, a related party listed company. For further details on this transaction, refer to Note 8 - Related Party Transactions, Note Receivable from a Related Party Company . As of December 31, 2023, the fair value of the warrants was $ 2,487,854 . The Company did not exercise any warrants during the year ended December 31, 2023. The Company values VEII warrants under level 3 category through a Black Scholes option pricing model. The fair value of the VEII warrants under level 3 category as of September 6, 2023, and December 31, 2023 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions: SCHEDULE OF SIGNIFICANT INPUTS AND ASSUMPTIONS December 31, 2023 September 6, 2023 Stock Price $ 0.0677 $ 0.1770 Exercise Price $ 0.1770 $ 0.1770 Risk-free Interest Rate 8.50 % 8.50 % Annualized volatility 275.85 % 273.79 % Dividend Yield 0.00 0.00 Year to Maturity 4.68 5.00 The following table presents summarized unaudited financial information for our investments that we elected the fair value option that would otherwise be accounted for under the equity method of accounting. SCHEDULE OF FAIRVALUE OF FINANCIAL INVESTMENTS Summarized Financial Information Assets Liabilities Net Income (Loss) December 31, 2023 NECV* $ 872,366 $ 2,726,168 $ ( 594,014 ) Holista $ 3,893,309 $ 4,737,129 $ ( 2,376,748 ) DSS* $ 196,551,000 $ 68,804,000 $ ( 70,719,000 ) VEII* $ 7,236,206 $ 4,913,744 $ ( 1,495,625 ) SHRG $ 7,821,341 $ 8,641,133 $ ( 11,695,044 ) December 31, 2022 NECV $ 1,418,000 $ 2,678,000 $ ( 94,000 ) Holista $ 5,473,040 $ 3,916,466 $ ( 1,522,130 ) DSS $ 248,916,000 $ 92,235,000 $ ( 69,662,000 ) VEII $ 5,739,861 $ 3,485,118 $ 3,366 * Data derived from Financial Statement as of September 30, 2023 which was the latest available date source we could reach. 12-month Net Income (Loss) was estimated by adding one-third of 9-month Net Loss. 92 14. INCOME TAXES US Income Taxes The components of income tax expense and the effective tax rates for the years ended December 31, 2023 and 2022 are as follows: SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) 2023 2022 Year Ended December 31, 2023 2022 Current: Federal $ 92,350 $ - State - - Total Current 92,350 - Deferred: Federal 6,176,130 ( 3,905,452 ) State ( 454,675 ) 1,163,407 Total Deferred 5,721,455 ( 2,742,045 ) Valuation Allowance ( 5,721,455 ) 2,742,045 Total Income Tax Expense $ 92,350 $ - Pre-tax Loss $ ( 61,186,383 ) $ ( 46,212,505 ) Effective Income Tax Rate - 0.2 % 0.0 % A reconciliation of our income tax expense at federal statutory income tax rate of 21 % to our income tax expense at the effective tax rate is as follows: SCHEDULE OF RECONCILIATION OF INCOME TAX 2023 2022 Year Ended December 31, 2023 2022 Federal Statutory Tax Rate 21.0 % 21.0 % Capitalized Construction Costs 1.5 % 0.0 % Deferred Finance Costs - 4.0 % - 0.4 % Miscellaneous Permanent Items 0.0 % 0.2 % Non includible foreign entities loss/(income) - 7.9 % - 13.8 % Valuation Allowance - 10.8 % - 7.1 % Effective Income Tax Rate - 0.2 % 0.0 % Deferred tax assets consist of the following at December 31, 2023 and 2022: SCHEDULE OF DEFERRED TAX ASSETS 2023 2022 Deferred tax assets: Accrued Interest Expense 6,310,548 5,802,873 Accrued Expense 423,311 1,102,779 Partnership Gain 13,175 13,175 Real Estate Impairment 729,312 2,253,228 Other Amortization 1,160,710 1,160,710 Unrealized Loss on Investment 9,856,139 4,324,883 Others 353,693 377,180 Net Operating Loss 2,846,999 1,297,770 Total deferred tax assets: 21,693,887 16,332,597 Deferred tax liabilities: Accrued Interest Income ( 7,148,090 ) ( 6,304,175 ) Accumulated Depreciation and Amortization ( 204,192 ) ( 140,886 ) Total deferred tax assets: ( 7,352,282 ) ( 6,445,060 ) Deferred Tax Assets / (Liabilities), net 14,341,605 9,887,537 Less valuation allowance ( 14,341,605 ) ( 9,887,537 ) Deferred Tax Asset c/f - - As of December 31, 2023, the Company has Federal and State net operating loss carry-forwards of approximately $ 12.36 million, which will begin to expire in 2031. The Maryland net operating loss carry-forward of approximately $ 3.01 million will begin to expire in 2031. The full utilization of the deferred tax assets in the future is dependent upon the Company’s ability to generate taxable income. Accordingly, a valuation allowance of an equal amount has been established. During the year ended December 31, 2023, the valuation allowance increased by $ 5,721,455 . 93 As of December 31, 2023, total tax payable is $ 1,390 , including federal income tax payable of $ 33,613 , and Maryland state income tax receivable of $ 32,223 . As of December 31, 2022, total tax receivable is $ 143,574 , including federal income tax receivable $ 111,351 , and Maryland state income tax receivable $ 32,223 . Net operating loss carryforwards may be limited upon the ownership change under IRS Section 382. IRS Section 382 places limitations (the “Section 382 Limitation”) on the amount of taxable income which can be offset by net operating loss carry-forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. Generally, after a change in control, a loss corporation cannot deduct operating loss carry-forwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the net operating loss may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has not concluded its analysis of Section 382 through December 31, 2023 but believes the provisions will not limit the availability of losses to offset future income. We are subject to U.S. federal income tax as well as income tax of certain state jurisdictions. We have substantially concluded all U.S. federal income tax and state tax matters through 2019. However, our federal tax returns for the years 2020 through 2022 remain open to examination. State tax jurisdiction tax years remain open to examination as well, though we believe that any additional assessment would be immaterial to the Consolidated Financial Statements. Income taxes – Other Countries On December 31, 2023 and 2022, foreign subsidiaries have tax losses of approximately $ 0.9 million and $ 4.27 million, respectively, which are available for offset against future taxable profits, subject to the agreement of the tax authorities and compliance with the relevant provisions. The deferred tax assets arising from these tax losses have not been recognized because it is not probable that future taxable profits will be available to use these tax assets. The following charts show the details in different regions as of December 31, 2022 and 2023. As of December 31, 2023: SCHEDULE OF OTHER COUNTRY INCOME TAXES SG Companies HK Companies KR Companies AU Companies Total Calculation: Cumulative loss & other deferred tax assets before tax $ ( 5,016,561 ) $ - $ - $ - $ ( 5,016,561 ) Effective tax rates 17.00 % 16.50 % 25.00 % 30.00 % Tax at the domestic tax rates applicable to profits in the countries where the Company operates $ ( 852,815 ) $ - $ - $ - $ ( 852,815 ) Adjustments: Deferred tax assets not recognized $ 852,815 $ - $ - $ - $ 852,815 Income tax expenses recognized in profit or loss $ - $ - $ - $ - $ - As of December 31, 2022: SG Companies HK Companies KR Companies AU Companies Total Calculation: Cumulative loss & other deferred tax assets before tax $ ( 25,140,421 ) $ - $ - $ - $ ( 25,140,421 ) Effective tax rates 17.00 % 16.50 % 25.00 % 30.00 % Tax at the domestic tax rates applicable to profits in the countries where the Company operates $ ( 4,273,872 ) $ - $ - $ - $ ( 4,273,872 ) Adjustments: Deferred tax assets not recognized $ 4,273,872 $ - $ - $ - $ 4,273,872 Income tax expenses recognized in profit or loss $ - $ - $ - $ - $ - 94 15. COMMITMENTS AND CONTINGENCIES Leases The Company leases offices in Maryland, Singapore, Texas, Hong Kong, South Korea and China through leased spaces aggregating approximately 30,000 square feet, under leases expiring on various dates from March 2024 to February 2027. The leases have rental rates ranging from $ 283 to $ 23,020 per month. Our total rent expense under these office leases was $ 1,087,585 and $ 685,724 in 2023 and 2022, respectively. Total cash paid for operating leases was $ 1,136,713 and $ 829,540 for the years ended December 31, 2023 and 2022, respectively. The following table outlines the details of lease terms: SCHEDULE OF OPERATING AND RENEWED LEASE TERMS RENTAL Office Location Lease Term as of December 31, 2022 Singapore - AI June 2023 to May 2026 Singapore – F&B October 2021 to September 2024 Singapore – Four Seasons Park July 2022 to July 2024 Singapore – Hapi Cafe July 2022 to June 2024 Singapore - PLQ December 2022 to July 2024 Hong Kong - Office October 2022 to October 2024 Hong Kong - Warehouse November 2022 to October 2024 Hong Kong - Shop October 2022 to September 2024 Hong Kong – Hapi Travel September 2023 to August 2025 South Korea - Hapi Café August 2022 to August 2025 South Korea - HWH World August 2022 to July 2025 Bethesda, Maryland, USA January 2021 to March 2024 China - Office March 2023 to March 2027 China - Cafe December 2023 to November 2024 The Company adopted ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) to recognize a right-of-use asset and a lease liability for all the leases with terms greater than twelve months. We elected the practical expedient to not recognize operating lease right-of-use assets and operating lease liabilities for lease agreements with terms less than 12 months. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As our leases do not provide a readily determinable implicit rates, we estimate our incremental borrowing rates to discount the lease payments based on information available at lease commencement. Our incremental borrowings rates are at a range from 0.35% to 3.9% per annum in 2023 and 2022, which were used as the discount rates . At December 31, 2023 the weighted average remaining lease term is 1.95 years and weighted average discount rate is 3.71 % . The balances of operating lease right-of-use assets and operating lease liabilities as of December 31, 2023 were $ 1,467,372 and $ 1,499,263 . The balances of operating lease right-of-use assets and operating lease liabilities as of December 31, 2022 were $ 1,614,159 and $ 1,628,039 , respectively. The table below summarizes future payments due under these leases as of December 31, 2023. For the Years Ended December 31: SCHEDULE OF LEASE PAYMENTS 2024 $ 929,911 2025 450,347 2026 116,305 2027 7,358 Total Minimum Lease Payments 1,503,921 Less: Effect of Discounting ( 4,658 ) Present Value of Future Minimum Lease Payments 1,499,263 Less: Current Obligations under Leases ( 903,429 ) Long-term Lease Obligations $ 595,834 95 Lots Sales Agreement On November 23, 2015, SeD Maryland Development LLC completed the $ 15,700,000 acquisition of Ballenger Run, a 197 -acre land sub-division development located in Frederick County, Maryland. Previously, on May 28, 2014, the RBG Family, LLC entered into a $ 15,000,000 assignable real estate sales contract with NVR, by which RBG Family, LLC would facilitate the sale of the 197 acres of Ballenger Run to NVR. On December 10, 2014, NVR assigned this contract to SeD Maryland through execution of an assignment and assumption agreement and entered into a series of lot purchase agreements by which NVR would purchase 443 subdivided residential lots from SeD Maryland. On December 31, 2018, SeD Maryland entered into the Third Amendment to the Lot Purchase Agreement for Ballenger Run with NVR. Pursuant to the Third Amendment, SeD Maryland converted the 5.9 acre CCRC parcel to 36 lots (the 28 feet wide villa lot) and sell to NVR. SeD Maryland pursued the required zoning approval to change the number of such lots from 85 to 121, which was approved in July 2019. Subsequently, SeD Maryland Development signed the Fourth Amendment to the Lot Purchase Agreement, pursuant to which NVR agreed to purchase all of the new 121 lots . During the years ended on December 31, 2023 and 2022, NVR purchased 0 and 3 lots, respectively. Through December 31, 2023 and 2022, NVR had purchased a total of 479 and 479 lots, respectively. Certain arrangements for the sale of buildable lots to NVR require the Company to credit NVR with an amount equal to one year of the FFB assessment. Under ASC 606, the credits to NVR are not in exchange for a distinct good or service and accordingly, the amount of the credit was recognized as the reduction of revenue. As of December 31, 2023 and 2022, the accrued balance due to NVR was $ 189,475 . Recent Agreements to Sell 142 Lots at Lakes at Black Oak and 63 Lots at Alset Villas On November 13, 2023, 150 CCM Black Oak Ltd. (the “Seller”), a Texas Limited Partnership and an indirect, majority owned subsidiary of Alset Inc., entered into two Contracts for Purchase and Sale and Escrow Instructions (each an “Agreement,” collectively, the “Agreements”) with Century Land Holdings of Texas, LLC, a Colorado limited liability company (the “Buyer”). Pursuant to the terms of one of the aforementioned Agreements, the Seller has agreed to sell approximately 142 single-family detached residential lots (the “Section 4 Agreement”) comprising a section of a residential community in the city of Magnolia, Texas known as the “Lakes at Black Oak.” Pursuant to the other Agreement, the Seller has agreed to sell 63 single-family detached residential lots (the “Alset Villas Agreement”) in the city of Magnolia, Texas. In 2021, our subsidiary Alset EHome Inc. acquired approximately 19.5 acres of partially developed land near Houston, Texas which was used to develop a community named Alset Villas (“Alset Villas”). Alset EHome was in the process of developing the 63 lots at Alset Villas in 2023. Pursuant to the terms of each of the agreements, the lots will be sold at a fixed per-lot price, and the Seller will also be entitled to receive a community enhancement fee for each lot sold. The aggregate purchase price and community enhancement fees are anticipated to equal to combined total of approximately $ 11 million for the two Agreements together; however, the purchase prices for each of the Agreements will be adjusted accordingly, if the total number of lots increases or decreases prior to the closing of the transactions contemplated by the Agreements. The closing of the transactions described above depends on the satisfaction of certain conditions, and is expected to take place during the second quarter of 2024. Security Deposits Our rental-home lease agreements require tenants to provide a one-month security deposits. The property management company collects all security deposits and maintains them in a trust account. The Company also has obligation to refund these deposits to the renters at the time of lease termination. As of December 31, 2023 and 2022, the security deposits held in the trust account were $ 309,688 and $ 271,480 , respectively. 96 16. DIRECTORS AND EMPLOYEES’ BENEFITS Stock Option plans AEI The Company previously reserved 25,000 shares of common stock under the Incentive Compensation Plan for high-quality executives and other employees, officers, directors, consultants and other persons who provide services to the Company or its related entities. This plan is meant to enable such persons to acquire or increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Company’s shareholders, and providing such persons with performance incentives to expand their maximum efforts in the creation of shareholder value. As of December 31, 2023 there have been no options granted. The reservation of shares under the Incentive Compensation Plan was cancelled in May of 2021. Alset International Stock Option plans On November 20, 2013, Alset International approved a Stock Option Plan (the “2013 Plan”). Employees, executive directors, and non-executive directors (including the independent directors) are eligible to participate in the 2013 Plan. The following tables summarize stock option activity under the 2013 Plan for the year ended December 31, 2023: SCHEDULE OF OPTION ACTIVITY Options for Common Shares Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of January 1, 2022 1,061,333 $ 0.09 2.00 $ - Vested and exercisable at January 1, 2022 1,061,333 $ 0.09 2.00 $ - Granted - - Exercised - - Forfeited, cancelled, expired - - Outstanding as of December 31, 2022 1,061,333 $ 0.09 1.00 $ - Vested and exercisable at December 31, 2022 1,061,333 $ 0.09 1.00 $ - Granted - - Exercised - - Forfeited, cancelled, expired ( 1,061,333 ) 0.09 Outstanding as of December 31, 2023 - $ - 0.00 $ - Vested and exercisable at December 31, 2023 - $ - 0.00 $ - 17. SUBSEQUENT EVENTS Sale of 95 Lots On March 17, 2023, 150 CCM Black Oak Ltd. has sold 95 single-family detached residential lots comprising a section of a residential community in the city of Magnolia, Texas known as the “Lakes at Black Oak” to VPDHL LABO LB LLC, a Delaware limited liability company. The lots were sold at a fixed per-lot price, and the Seller also received a community enhancement fee for each lot sold. The aggregate purchase price and community enhancement fees, minus certain expenses, equaled a combined total of $ 5,033,390.04 . The sale of the lots closed on January 4, 2024. 97 Consummation of the Merger of Alset Capital Acquisition Corp. and HWH International Inc. On January 9, 2024, two entities affiliated with Alset Inc. completed a previously announced transaction. On September 9, 2022, Alset Capital Acquisition Corp., a Delaware corporation (“Alset Capital”) entered into an agreement and plan of merger (the “Merger Agreement”) with our indirect subsidiary HWH International Inc., a Nevada corporation (“HWH”) and HWH Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of Alset Capital (“Merger Sub”). The Company and its 85.5 % owned subsidiary Alset International Limited own Alset Acquisition Sponsor, LLC, the sponsor (the “Sponsor”) of Alset Capital. Pursuant to the Merger Agreement, on January 9, 2024, a business combination between Alset Capital and HWH was effected through the merger of Merger Sub with and into HWH, with HWH surviving the merger as a wholly owned subsidiary of Alset Capital (the “Merger”), and Alset Capital changing its name to HWH International Inc. (“New HWH”). The total consideration paid at the closing of the Merger by New HWH to the HWH shareholders was 12,500,000 shares of New HWH common stock. Alset International Limited owned the majority of the outstanding shares of HWH at the time of the business combination, and received 10,900,000 shares of New HWH as consideration for its shares of HWH. New HWH currently has 16,223,301 shares of common stock issued and outstanding. Of these shares, a total of 13,577,375 shares of New HWH common stock are now owned by the Sponsor and Alset International Limited together. In addition, the Sponsor owns warrants convertible into up to 236,875 shares of New HWH common stock upon exercise. New HWH is in the midst of implementing the new membership model described below (the “New Model”), that operates on a yearly subscription basis. New HWH intends to resume membership sales, albeit under the New Model, in approximately 2nd quarter of 2024. HWH Members get exclusive discounts on HWH Marketplace products, priority invites to product launch events and other parties, and can earn passive income when a member’s referral signs up for membership or makes an initial purchase through the HWH Marketplace products through them. Its segments include: HWH Marketplace, which offers certain products manufactured by our affiliate companies, at a discounted price to our members. It is substantially in the development stage, as we have been in discussions regarding the import and export of these products internationally. The various aspects of the HWH Marketplace will be launched in phases across the various regions, each with their own timeline, depending on the completion of the establishment of the logistical aspects for implementation (i.e., payment gateway systems, business licenses, banking set up, import licenses, managerial resources, etc.) This will be an on-going process as we expand our product and service offering range. There are, however, certain limited products currently for sale at our Hapi Cafés, including spaghetti, a gig-economy business book and certain skincare products. Hapi Cafés, which are, and will be, in-person, location-based social experiences, offer members the opportunity to build a sense of community with like-minded customers who share a potential interest in our products. The cafes expose our members to and educate them about the products and services of our affiliates, providing us with the chance to significantly increase our membership base as well as increase the amounts spent by our members on our affiliates’ products and services. Each of our cafés is a “Hapi Café.” We opened proof-of-concept Hapi Café locations in Seoul, the Republic of Korea and Singapore in May and July 2022, respectively, and plan to open additional Hapi Cafés as we beta test and further improve our business concept. We intend to grow our memberships as we grow the number of Hapi Cafés around the world. Currently, Hapi Cafe branded outlets span across Asia, including Singapore, Republic of China (Taiwan), Hong Kong, the People’s Republic of China, and South Korea, Hapi Cafe is positioned to be an integral part of HWH’s business model. As at the date of this filing, the Company is in the midst of closing the acquisition of 2nd Hapi Café outlet in Seoul, the Republic of Korea. Hapi Travel is in the planning stage as we are working with our affiliates to determine the market-by-market services. Through Hapi Travel, we plan to offer exclusive access to unpublished rates and discounts on air travel, cruises, car rentals, hotels, and resorts for members. Hapi Travel offers vacation packages, hotels, cruises, and other travel products exclusively for HWH members. 98 Hapi Wealth Builder is also in the planning stage as we are exploring the options of providing services to our members through financial educational materials aimed at various types of investing opportunities. We have been establishing Hapi Cafés as venues and destinations that help build the credibility and reputation of the Company and its Hapi Wealth Builder business, which we intend to launch in 2024. Resignation of Anthony S. Chan as Chief Operating Officer On March 10, 2024, Anthony S. Chan resigned as Chief Operating Officer of Alset Inc., effective immediately, due to personal reasons. Mr. Chan’s resignation is not the result of any disagreement with the Company. Mr. Chan shall remain as a consultant to the Company. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable.