Alset Inc. 10-Q

Item 1. Financial Statements. Alset Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) June 30, 2024 December 31, 2023 Assets: Current Assets: Cash and Cash Equivalents $ 18,932,861 $ 26,921,727 Restricted Cash 830,519 967,566 Account Receivables, Net 79,220 77,517 Other Receivables, Net 6,678,578 2,576,454 Note Receivables - Related Parties, Net 1,636,823 1,693,946 Convertible Loan Receivables at Fair Value - Related Party 1,620,657 1,207,627 Prepaid Expense 142,138 253,689 Inventory 6,033 5,561 Investment in Securities at Fair Value 3,517,765 2,148,500 Investment in Securities at Fair Value - Related Party 8,719,925 11,869,920 Investment in Securities at Fair Value 8,719,925 11,869,920 Investment in Securities at Cost 67,515 54,512 Investment in Equity Method Securities 5,587,759 7,551,153 Deposits 130,002 133,063 Total Current Assets 47,949,795 55,461,235 Real Estate Rental Properties 31,233,027 31,770,386 Properties under Development 9,508,868 10,366,766 Operating Lease Right-Of-Use Assets, Net 1,815,543 1,467,372 Deposits 467,193 337,606 Other Receivables - Long Term, Net 1,759,268 4,855,609 Cash and Marketable Securities Held in Trust Account - 21,252,639 Goodwill 60,278 60,343 Property and Equipment, Net 666,849 742,072 Total Assets $ 93,460,821 $ 126,314,028 Liabilities and Stockholders’ Equity: Current Liabilities: Accounts Payable and Accrued Expenses $ 2,455,899 $ 4,372,792 Deferred Underwriting Compensation - 3,018,750 Deferred Revenue 2,100 2,100 Operating Lease Liabilities 928,830 673,049 Notes Payable 318,745 30,744 Notes Payable - Related Parties 16,629 16,869 Notes Payable 16,629 16,869 Total Current Liabilities 3,722,203 8,114,304 Long-Term Liabilities: Operating Lease Liabilities 951,355 826,214 Notes Payable 1,091,060 126,182 Total Liabilities 5,764,618 9,066,700 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 9,235,119 shares issued and outstanding on June 30, 2024 and December 31, 2023, respectively 9,235 9,235 Additional Paid in Capital 333,755,463 332,455,457 Accumulated Deficit ( 255,894,428 ) ( 247,885,656 ) Accumulated Other Comprehensive Income 1,548,473 3,609,719 Total Alset Inc. Stockholders’ Equity 79,418,743 88,188,755 Non-controlling Interests 8,277,460 8,601,562 Total Stockholders’ Equity 87,696,203 96,790,317 Total Liabilities and Stockholders’ Equity $ 93,460,821 $ 126,314,028 See accompanying notes to condensed consolidated financial statements. F- 1 Alset Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Other Comprehensive Loss For the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited) 2024 2023 2024 2023 Three- Months Ended June 30, Six- Months Ended June 30, 2024 2023 2024 2023 Revenue Rental $ 705,011 $ 690,967 $ 1,425,505 $ 1,324,778 Property - 18,190,950 5,032,500 18,190,950 Biohealth - - - 12,786 Other 422,035 271,931 755,248 552,270 Total Revenue 1,127,046 19,153,848 7,213,253 20,080,784 Operating Expenses Cost of Sales 829,958 11,738,493 5,488,325 12,427,774 General and Administrative 2,798,137 2,305,859 6,048,990 4,633,244 Impairment of Note Receivable, Goodwill and Investment 308,423 - 751,922 - Total Operating Expenses 3,936,518 14,044,352 12,289,237 17,061,018 (Loss) Income from Operations ( 2,809,472 ) 5,109,496 ( 5,075,984 ) 3,019,766 Other Income (Expense) Interest Income 122,415 92,388 343,155 131,666 Interest Income - Related Party 55,849 - 84,438 - Interest Income 55,849 - 84,438 - Interest Expense ( 94,091 ) - ( 113,214 ) - Foreign Exchange Transaction Gain 845,350 1,150,830 2,038,986 362,528 Unrealized Gain on Securities Investment 247,319 9,027,846 423,953 6,543,729 Unrealized Gain (Loss) on Securities Investment - Related Party 1,429,392 9,812,880 ( 4,013,059 ) 11,109,151 Unrealized Gain (Loss) on Securities Investment 1,429,392 9,812,880 ( 4,013,059 ) 11,109,151 Realized Loss on Securities Investment ( 192,205 ) ( 10,557,229 ) ( 344,673 ) ( 10,688,542 ) (Loss) Gain on Equity Method Investment ( 856,724 ) 219,888 ( 1,978,142 ) ( 48,388 ) Loss on Consolidation of Alset Capital Acquisition Corp. - ( 21,657,036 ) - ( 21,657,036 ) Other Expense ( 36,999 ) - ( 38,570 ) - Other Income 139,201 987,531 209,354 1,090,538 Total Other Income (Expense), Net 1,659,507 ( 10,922,902 ) ( 3,387,772 ) ( 13,156,354 ) Net Loss Before Income Taxes ( 1,149,965 ) ( 5,813,406 ) ( 8,463,756 ) ( 10,136,588 ) Income Tax Expense - - - - Net Loss ( 1,149,965 ) ( 5,813,406 ) ( 8,463,756 ) ( 10,136,588 ) Net Income (Loss) Attributable to Non-Controlling Interest 89,149 ( 5,556 ) ( 454,985 ) ( 470,852 ) Net Loss Attributable to Common Stockholders $ ( 1,239,114 ) $ ( 5,807,850 ) $ ( 8,008,771 ) $ ( 9,665,736 ) Net Loss $ ( 1,149,965 ) $ ( 5,813,406 ) $ ( 8,463,756 ) $ ( 10,136,588 ) Other Comprehensive Loss Foreign Currency Translation Adjustment ( 1,253,895 ) ( 2,183,883 ) ( 2,064,408 ) ( 1,087,940 ) Total Comprehensive Loss ( 2,403,860 ) ( 7,997,289 ) ( 10,528,164 ) ( 11,224,528 ) Less Comprehensive Loss Attributable to Non-controlling Interests ( 93,209 ) ( 320,903 ) ( 351,419 ) ( 626,520 ) Total Comprehensive Loss Attributable to Common Shareholders ( 2,310,651 ) ( 7,676,386 ) ( 10,176,745 ) ( 10,598,008 ) Net Loss Per Share - Basic and Diluted $ ( 0.13 ) $ ( 0.63 ) $ ( 0.87 ) $ ( 1.09 ) Weighted Average Common Shares Outstanding - Basic and Diluted 9,235,119 9,235,119 9,235,119 8,845,250 See accompanying notes to condensed consolidated financial statements. F- 2 Alset Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity For the Six Months Ended June 30, 2024 (Unaudited) 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, 2024 - $ - - $ - 9,235,119 $ 9,235 $ 332,455,457 $ 3,609,719 $ ( 247,885,656 ) $ 88,188,755 $ 8,601,562 $ 96,790,317 Issuance of HWH Common Stock to EF Hutton LLC for Deferred Underwriting Compensation - - - - - - 1,098,952 - - 1,098,952 410,423 1,509,375 Gain from SHRG Convertible Notes and Warrants - - - - - - 157,402 - - 157,402 58,786 216,188 Change in Non-Controlling Interest after HWH De SPAC - - - - - - - ( 13,888 ) - ( 13,888 ) 13,888 - Foreign Currency Translations - - - - - - - ( 992,871 ) - ( 992,871 ) ( 169,061 ) ( 1,161,932 ) Net Loss - - - - - - - - ( 6,769,658 ) ( 6,769,658 ) ( 544,134 ) ( 7,313,792 ) Balance at March 31, 2024 - $ - - $ - 9,235,119 $ 9,235 $ 333,711,811 $ 2,602,960 $ ( 254,655,314 ) $ 81,668,692 $ 8,371,464 $ 90,040,156 Adjustment of Gain from SHRG Convertible Notes - - - - - - 43,652 - - 43,652 16,255 59,907 Change in Non-Controlling Interest - - - - - - - 17,050 - 17,050 ( 17,050 ) - Foreign Currency Translations - - - - - - - ( 1,071,537 ) - ( 1,071,537 ) ( 182,358 ) ( 1,253,895 ) Net Loss (Income) - - - - - - - - ( 1,239,114 ) ( 1,239,114 ) 89,149 ( 1,149,965 ) Balance at June 30, 2024 - $ - - $ - 9,235,119 $ 9,235 $ 333,755,463 $ 1,548,473 $ ( 255,894,428 ) $ 79,418,743 $ 8,277,460 $ 87,696,203 Alset Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity For the Six Months Ended June 30, 2023 (Unaudited) 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, 2023 - $ - - $ - 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 Foreign Currency Translations - - - - - - - 936,265 - 936,265 159,678 1,095,943 Net Loss - - - - - - - - ( 3,857,886 ) ( 3,857,886 ) ( 465,296 ) ( 4,323,182 ) Balance at March 31, 2023 - $ - - $ - 9,235,119 $ 9,235 $ 325,967,000 $ 4,772,328 $ ( 192,582,297 ) $ 138,166,266 $ 10,703,531 $ 148,869,797 Balance - $ - - $ - 9,235,119 $ 9,235 $ 325,967,000 $ 4,772,328 $ ( 192,582,297 ) $ 138,166,266 $ 10,703,531 $ 148,869,797 Foreign Currency Translations - - - - - - - ( 1,849,049 ) - ( 1,849,049 ) ( 334,834 ) ( 2,183,883 ) Net Loss - - - - - - - - ( 5,807,850 ) ( 5,807,850 ) ( 5,556 ) ( 5,813,406 ) Net Loss (Income) - - - - - - - - ( 5,807,850 ) ( 5,807,850 ) ( 5,556 ) ( 5,813,406 ) Balance at June 30, 2023 - $ - - $ - 9,235,119 $ 9,235 $ 325,967,000 $ 2,923,279 $ ( 198,390,147 ) $ 130,509,367 $ 10,363,141 $ 140,872,508 Balance - $ - - $ - 9,235,119 $ 9,235 $ 325,967,000 $ 2,923,279 $ ( 198,390,147 ) $ 130,509,367 $ 10,363,141 $ 140,872,508 See accompanying notes to condensed consolidated financial statements. F- 3 Alset Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2024 and 2023 (Unaudited) 2024 2023 Cash Flows from Operating Activities Net Loss from Operations $ ( 8,463,756 ) $ ( 10,136,588 ) Adjustments to Reconcile Net Loss to Net Cash (Used in) Provided by Operating Activities: Depreciation 616,640 606,434 Non-Cash Lease Expenses 619,913 523,591 Loss on Consolidation of Alset Capital Acquisition Corp. - 21,657,036 Impairment of Note Receivable, Goodwill and Investment 751,922 - Foreign Transaction Gain ( 2,038,986 ) ( 362,528 ) Unrealized Gain on Securities Investment ( 423,953 ) ( 6,543,729 ) Unrealized Loss (Gain) on Securities Investment - Related Party 4,013,059 ( 11,109,151 ) Realized Loss on Securities Investment 344,673 10,688,542 Gain on Exchange of Investment Securities - ( 502,497 ) Loss on Equity Method Investment 1,978,142 48,388 Changes in Operating Assets and Liabilities, net of acquisitions Real Estate 857,898 15,393,185 Real Estate Reimbursement Receivable ( 601,996 ) ( 7,280,286 ) Account Receivables ( 62,112 ) - Prepaid Expense 29,928 ( 11,664 ) Deposits ( 96,026 ) 2,935 Trading Securities ( 1,355,972 ) ( 4,593,961 ) Inventory 517 ( 3,889 ) Accounts Payable and Accrued Expenses ( 1,458,880 ) ( 364,372 ) Other Receivables - Related Parties - ( 55,000 ) Deferred Revenue - ( 19,098 ) Operating Lease Liabilities ( 608,260 ) ( 527,578 ) Net Cash (Used in) Provided by Operating Activities ( 5,897,249 ) 7,409,770 Cash Flows from Investing Activities Purchase of Fixed Assets ( 35,489 ) ( 11,726 ) Purchase of Real Estate Improvements - ( 734,688 ) Purchase of Investment Securities ( 16,478 ) ( 692,219 ) Advance to Related Party ( 550,000 ) - Collection of Advance to Related Party 467,107 - Acquisition of Subsidiary - ( 214,993 ) Issuing Loan Receivable ( 577,285 ) - Issuing Loan Receivable - Related Party ( 1,118,864 ) ( 1,628,010 ) Proceeds from Loan Receivable - Related Party 101,096 2,674,653 Cash Withdrawn from Trust Account for Redemptions 21,102,871 - Cash Withdrawn from Trust Account Available to the Company 243,897 - Net Cash Provided by (Used in) Investing Activities 19,616,855 ( 606,983 ) Cash Flows from Financing Activities Proceeds from Common Stock Issuance - 3,433,921 Borrowing from a Commercial Loan 130,261 - Repayment to Notes Payable ( 378,960 ) ( 16,950 ) Repayment of Class A Common Stock ( 21,102,871 ) - Net Cash (Used in) Provided by Financing Activities ( 21,351,570 ) 3,416,971 Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash ( 7,631,964 ) 10,219,758 Effects of Foreign Exchange Rates on Cash and Cash Equivalents and Restricted Cash ( 493,949 ) 750,474 Cash and Cash Equivalents and Restricted Cash - Beginning of Period 27,889,293 18,521,903 Cash and Cash Equivalents and Restricted Cash- End of Period $ 19,763,380 $ 29,492,135 Cash $ 18,932,861 $ 28,827,961 Restricted Cash $ 830,519 $ 664,174 Total Cash and Restricted Cash $ 19,763,380 $ 29,492,135 Supplementary Cash Flow Information Cash Paid for Interest $ 38,246 $ 2,007 Cash Paid for Taxes $ - $ - Supplemental Disclosure of Non-Cash Investing and Financing Activities Initial Recognition of ROU / Lease Liability $ 597,487 $ 157,647 Promissory Notes Received in Exchange for Sale of HWH Common Stock to Investors $ 16,160,000 $ - Issuance of HWH Common Stock to EF Hutton LLC for Deferred Underwriting Compensation $ 1,509,375 $ - Conversion of Ketomei Note Payable to Common Stock $ 310,796 $ - Gain from SHRG Convertible Notes $ 276,095 $ - See accompanying notes to condensed consolidated financial statements. F- 4 Alset Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements For the Six Months Ended June 30, 2024 and 2023 (Unaudited) 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. 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, South Korea, and the People’s Republic of China. We manage a significant portion of our businesses through our 85.5 % owned subsidiary, Alset International Limited (“Alset International”), a public company traded on the Singapore Stock Exchange. 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Company’s condensed 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”) for interim reporting. These interim financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or any other interim periods or for any other future years. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2023 filed on April 1, 2024. The condensed 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. F- 5 The Company’s condensed consolidated financial statements include the financial position, results of operations and cash flows of the following entities as of June 30, 2024 and December 31, 2023, as follows: SCHEDULE OF SUBSIDIARIES Name of subsidiary State or other jurisdiction of incorporation or Attributable interest as of, consolidated under AEI organization June 30, 2024 December 31, 2023 % % 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 85.5 Singapore Construction & Development Pte. Ltd. Singapore 85.5 85.5 Singapore Construction Pte. Ltd. Singapore 85.5 85.5 Global BioMedical Pte. Ltd. Singapore 85.5 85.5 Health Wealth Happiness Pte. Ltd. Singapore 81.6 74.6 SeD Capital Pte. Ltd. Singapore 85.5 85.5 LiquidValue Asset Management Pte. Ltd. Singapore 85.5 85.5 Alset Solar Limited Hong Kong 85.5 85.5 Alset F&B One Pte. Ltd Singapore 74.3 67.1 BMI Capital Partners International Limited. Hong Kong 85.5 85.5 SeD Perth Pty. Ltd. Australia 85.5 85.5 SeD Intelligent Home Inc. United States of America 85.5 85.5 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 100 100 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. United States of America 99.6 99.6 HotApp BlockChain Pte. Ltd. Singapore 99.6 99.6 HotApp International Limited Hong Kong 99.6 99.6 SeD REIT Inc. United States of America 85.4 85.4 HWH World Inc. United States of America - 74.6 HWH World Pte. Ltd. Singapore 81.6 74.6 UBeauty Limited Hong Kong 85.5 85.5 HWH World Limited Hong Kong 81.6 74.6 HWH World Inc. Korea 81.6 74.6 Alset Energy Inc. United States of America 85.5 85.5 NewRetail-AI Inc. United States of America 99.6 99.6 BioHealth Water Inc. United States of America 85.5 85.5 Impact BioHealth Pte. Ltd. Singapore 85.5 85.5 American Home REIT Inc. United States of America 100 100 Alset Solar Inc. United States of America 68.3 68.3 HWH KOR Inc. United States of America 81.6 74.6 Alset Capital Inc. United States of America - 100 Hapi Cafe Inc. United States of America (Texas) 81.6 74.6 HWH (S) Pte. Ltd. Singapore 85.5 85.5 LiquidValue Development Pte. Ltd. Singapore 100 100 LiquidValue Development Limited Hong Kong 100 100 Alset F&B Holdings Pte. Ltd. Singapore 81.6 74.6 Credas Capital Pte. Ltd. Singapore 64.1 64.1 Credas Capital GmbH Switzerland 64.1 64.1 Smart Reward Express Limited Hong Kong 74.1 74.1 AHR Texas Two LLC United States of America 100 100 AHR Black Oak One LLC United States of America 85.4 85.4 AHR Texas Three, LLC United States of America 100 100 Hapi Cafe Korea, Inc. Korea 81.6 74.6 Alset Management Group Inc. United States of America 83.5 83.5 Alset Acquisition Sponsor, LLC United States of America 93.5 93.5 HWH International Inc. (f.k.a. Alset Capital Acquisition Corp.) United States of America 81.6 53.7 Alset Spac Group Inc. United States of America 93.5 93.5 Alset eVehicle Pte. Ltd. Singapore 85.5 85.5 Hapi Travel Pte. Ltd. Singapore 81.6 74.6 Hapi WealthBuilder Pte. Ltd. Singapore 81.6 74.6 HWH Marketplace Pte. Ltd. Singapore 81.6 74.6 HWH International Inc. United States of America (Nevada) 81.6 74.6 Hapi Cafe SG Pte. Ltd. Singapore 81.6 74.6 Alset Reits Inc. United States of America - 100 Hapi Metaverse Inc. United States of America (Texas) 99.6 99.6 Hapi Cafe Limited Hong Kong 99.6 99.6 MOC HK Limited Hong Kong 99.6 99.6 AHR Texas Four, LLC United States of America 100 100 Alset F&B (PLQ) Pte. Ltd. Singapore 81.6 74.6 Hapi Cafe Sdn. Bhd. Malaysia 81.6 74.6 Shenzhen Leyouyou Catering Management Co., Ltd. China 99.6 99.6 Dongguan Leyouyou Catering Management Co., Ltd. China 99.6 99.6 Guangzho Leyouyou Catering Management Co., Ltd. China 99.6 99.6 Hapi Travel Ltd. Hong Kong 99.6 99.6 Hapi Acquisition Pte. Ltd. Singapore 99.6 99.6 Robot Ai Trade Pte. Ltd. Singapore 85.5 85.5 Ketomei Pte Ltd Singapore 45.5 * - Hapi MarketPlace Inc. United States of America 81.6 - Hapi Cafe Co., Ltd. Taiwan 99.6 - * Although the Company indirectly holds less than 50% of shares of these entities, the subsidiaries of the Company directly hold more than 50% of shares of these entities, and therefore, they are still consolidated into the Company. F- 6 Use of Estimates The preparation of 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 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 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. 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 June 30, 2024 and December 31, 2023, the Company adjusted $ 0 and $ 951,349 between building and land, respectively. During the three months ended June 30, 2024 and 2023, the Company adjusted depreciation expenses of $ 0 and $ 17,525 , respectively. During the six months ended June 30, 2024 and 2023, the Company adjusted depreciation expenses of $ 0 and $ 17,525 , 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. 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 June 30, 2024 and December 31, 2023. 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 June 30, 2024 and December 31, 2023, the total balance of this account was $ 107,820 and $ 107,767 , respectively. The Company puts money into brokerage accounts specifically for equity investment. As of June 30, 2024 and December 31, 2023, the cash balance in these brokerage accounts was $ 722,699 and $ 859,799 , respectively. Investments held in Trust Account At June 30, 2024 and December 31, 2023, the Company had approximately $ 0 and $ 21.0 million, respectively, in investments in treasury securities held in the Trust Account. The funds in the Trust Account were subject to redemption by investors of HWH International Inc. (formerly known as Alset Capital Acquisition Corp.) F- 7 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. Account receivables 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 June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, the balance of account receivables was $ 79,220 and $ 77,517 , 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 June 30, 2024 and December 31, 2023. On January 9, 2024, the Company sold 1,600,000 shares of HWH International Inc. (“HWH”) to two investors ( 800,000 shares to each). The consideration for each of the two purchases of stock was $ 8,000,000 , which was paid through the issuance of promissory notes at the purchase price of $ 10 per share. These promissory notes carry interest of 1.5 % and have maturity dates two years from the date of the notes. Each investor also entered into a Security Agreement. Security interest in the brokerage account into which each investor deposited the Shares (the “Collateral”) shall in each case serve as security for the Company’s repayment of their respective promissory notes, and repossession of such Collateral by the Company shall be the sole recourse for non-payment. As of June 30, 2024, the share price of HWH’s stock is $ 1.02 . The Company does not expect that investors will repay the promissory notes when due, as the value of the shares is significantly lower than the original purchase price of $ 10 per share. The Company expects that all the shares will be returned to the Company at the notes’ maturity date and the notes will be canceled as well. Accordingly, the Company has not recognized the receivable or any gain or loss related to the transaction. 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 June 30, 2024 and December 31, 2023, 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. F- 8 On March 20, 2024, HWH International Inc., a subsidiary of the Company, entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Sharing Services Global Corp. (“SHRG”), pursuant to which HWH purchased from SHRG a (i) Convertible Promissory Note in the amount of $ 250,000 , convertible into 208,333,333 shares of SHRG’s common stock at the option of HWH, and (ii) certain warrants exercisable into 208,333,333 shares of SHRG’s common stock at an exercise price of $ 0.0012 per share, the exercise period of the warrant being five (5) years from the date of the Securities Purchase Agreement, for an aggregate purchase price of $ 250,000 . At the time of this filing, HWH has not converted any of the debt contemplated by the Convertible Note nor exercised any of the warrants. The Company has 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. and Sharing Services Global Corp. 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 fair value accounting. ● The Company has significant influence over DSS. As of June 30, 2024 and December, 2023, the Company owned approximately 44.4 % and 44.4 % 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. Additionally, our Chief Executive Officer, Chan Heng Fai, is a majority owner of the common stock of NECV (not including any common shares we hold) and one employee and one officer from the Company hold director positions 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. Chan Heng Fai and another member of the Board of Directors of Hapi Metaverse Inc., 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 and our CEO holds a director position on SHRG’s Board of Directors. Additionally, our CEO is a significant stockholder of SHRG shares. F- 9 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’s 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 June 30, 2024 and December 31, 2023, Impact was a start-up private company. Based on the management’s analysis, the fair value of Impact shares was approximately $ 0 at the distribution date and as of June 30, 2024 and December 31, 2023. 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 similar investments 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 condensed 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, representing 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. On March 14, 2024, the Company entered into shares subscription agreement to subscription of shares in Ideal Food & Beverage Pte. Ltd. (“IFBPL”) with the subscription of 19,000 shares constituting 19 % of the shares of IFBPL. The subscription fee of $ 14,010 was paid to IFBPL on May 23, 2024. On April 25, 2024, the Company entered into a binding term sheet (the “Term Sheet”) through its subsidiary Health Wealth Happiness Pte Ltd. (“HWHPL”) outlining a joint venture with Chen Ziping, an experienced entrepreneur in the travel industry, and Chan Heng Fai Ambrose, the Company’s Executive Chairman, as a part of the Company’s strategy of building its travel business in Asia. The planned joint venture company (referred to here as the “JVC”) will be known as HapiTravel Holding Pte. Ltd. The JVC will be initially owned as follows: (a) HWHPL will hold 19% of the shares in the JVC; (b) Mr. Chan will hold 11%; and (c) the remaining 70% of the shares in the JVC are to be held by Mr. Chen. As of June 30, 2024, there hasn’t been any accounting impact on the Company due to HapiTravel Holding Pte. Ltd. being under registration. There has been no indication of impairment or changes in observable prices via transactions of similar securities and investments are still carried at cost. Equity Method Investment 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 condensed 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 is liable for the obligations of the investee or provides 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. 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 Company 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. American Medical REIT Inc. LiquidValue Asset Management Pte. Ltd. (“LiquidValue”), a subsidiary of the Company, owns 16.4 % of American Medical REIT Inc. (“AMRE”) as of June 30, 2024, 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 Chairman and CEO, is the executive chairman and director of AMRE. DSS, of which we own 44.8 % and have significant influence over, owns 80.8 % of AMRE. Therefore, the Company has significant influence on AMRE. F- 10 American Pacific Financial, Inc. Pursuant to a securities purchase agreement dated March 12, 2021, the Company purchased 4,775,523 shares of the common stock of American Pacific Financial, Inc., formerly known as American Pacific Bancorp, Inc. (“APF”) and gained majority ownership in that entity. APF was consolidated into the Company under common control accounting. On September 8, 2021 APF 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 APF 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 over APF. During the three months ended June 30, 2024 and 2023, the investment loss was $ 843,667 and $ 136,751 gain, respectively. During the six months ended June 30, 2024 and 2023, the investment loss was $ 1,923,604 and $ 119,002 gain, respectively. As of June 30, 2024 and December 31, 2023, the investment in APF was $ 5,502,786 and $ 7,426,390 , respectively. Ketomei Pte Ltd On June 10, 2021 the Company’s indirect subsidiary Hapi Café Inc. (“HCI-T” or “Hapi Café”) lent $ 76,723 to Ketomei Pte. Ltd. (“Ketomei”). On March 21, 2022 HCI-T 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 HCI-T held 28 % of Ketomei as of December 31, 2023. Ketomei is in the business of selling cooked food and drinks through a subscription model. 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. On February 20, 2024, Hapi Cafe invested $ 312,064 for an additional 38.41 % ownership interest in Ketomei by converting $ 312,064 of convertible loan. The loan was impaired at the year ended of December 31, 2023, therefore, $ 312,064 was transferred from impairment of convertible loan to impairment of equity method investment. After this additional investment, Hapi Cafe owns 55.65 % (the Company owns indirectly 45.5 %) of Ketomei’s outstanding shares and Ketomei is consolidated into the financial statements of the Company beginning on February 20, 2024. 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 ( 11.6 %) 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 our 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 three and six months ended June 30, 2024, the investment loss in Sentinel was $ 13,054 and $ 39,791 , respectively. During three and six months ended June 30, 2023 the investment loss in Sentinel was $ 7,990 and $ 7,990 , respectively. Investment in Sentinel was $ 84,973 and $ 124,763 at June 30, 2024 and December 31, 2023, respectively. 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 condensed 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. F- 11 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, the Management estimated the fair value of the note to be $ 88,599 . The Company wrote off this loan on March 31, 2024. 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 VIEs 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. 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 $ 1.7 million and $ 6.3 million for the three months ended June 30, 2024 and 2023, respectively. The Company capitalized construction costs of approximately $ 4.7 million and $ 8.8 million for the six months ended June 30, 2024 and 2023, 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. 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 no t record impairment on any of its projects during the three and six months ended on June 30, 2024 and 2023. 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 June 30, 2023 and December 31, 2023, 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. F- 12 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 and improvements 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 three and six months ended June 30, 2024 and 2023. Rental of Model Houses In May 2023, the Company entered into lease agreement for one of its model houses located in Montgomery County, Texas. On July 14, 2023, 150 CCM Black Oak Ltd entered into a model home lease agreement with Davidson Homes, LLC (“Davidson”). On August 3, 2023, 150 CCM Black Oak Ltd entered into a development and construction agreement with Davidson Homes, LLC to build a model house located in Montgomery County, Texas. On January 4, 2024, 150 CCM Black Oak Ltd sent $ 220,076 to Davidson as reimbursement for final construction cost and the contractor’s fee. The model home lease commenced on January 1, 2024, lease term is twenty-four ( 24 ) full months and annual base rent equals to twelve percentage (12%) of the total of the final cost of construction and the contractor’s fee. Revenue Recognition and Cost of Revenue 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. 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: F- 13 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. 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. 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 Lakes at Black Oak project, which represented approximately 70 % and 91 %, of the Company’s revenue in the six months ended on June 30, 2024 and 2023, 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 contract has 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. 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 condensed 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. For the months ended June 30, 2024 and the year ended December 31, 2023, the Company did not recognize any deferred revenue and collected all rents due. F- 14 Cost of Revenues Real Estate ● 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 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 product. 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 three months ended June 30, 2024 and 2023 were approximately $ 0 and $ 0 , respectively. Product and membership returns for the six months ended June 30, 2024 and 2023 were approximately $ 0 and $ 1,143 , 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. Starting in 2020 the revenue from sale of membership declined to $ 0 in 2022. The Company is currently working on a new membership model. F- 15 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 2023, 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 are 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. In the second quarter of 2024, the Company ceased operations of its subsidiary Alset F&B (PLQ) Pte. Ltd. Due to the closure of this subsidiary the Company wrote off $ 5,820 of fixed assets, which is included in general and administrative expenses and recorded a gain on termination of lease of $ 246 , which is included in other income on the Company’s Statement of Operations for the six months ended June 30, 2024. ● Remaining performance obligations As of June 30, 2024 and December 31, 2023, 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. During the three and six months ended on June 30, 2024 and 2023, 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 (“U.S. dollar”). The financial records of the Company’s subsidiaries located in Singapore, Hong Kong, Australia, South Korea, and the People’s Republic of 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. F- 16 Transactions in foreign currencies Transactions in currencies other than the functional currency during the periods 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 foreign exchange gain of $ 845,350 and $ 1,150,830 during the three months ended on June 30, 2024 and 2023, respectively. The Company recorded foreign exchange gain of $ 2,038,986 and $ 362,528 during the six months ended on June 30, 2024 and 2023, respectively. 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 S$, HK$, 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 loss of $ 1,253,895 from foreign currency translation for the three months ended June 30, 2024 and $ 2,183,883 loss for the three months ended June 30, 2023, in accumulated other comprehensive loss. The Company recorded other comprehensive loss of $ 2,064,408 from foreign currency translation for the six months ended June 30, 2024 and $ 1,087,940 loss for the six months ended June 30, 2023, in accumulated other comprehensive loss. 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 June 30, 2024, there were 425,216 potentially dilutive warrants outstanding. At December 31, 2023 there were 425,216 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. F- 17 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 owners of the Company, and are presented separately in the condensed consolidated statements of operation and comprehensive income, and within equity in the Condensed Consolidated Balance Sheets, separately from equity attributable to owners of the Company. On June 30, 2024 and December 31, 2023, the aggregate non-controlling interests in the Company were $ 8,277,460 and $ 8,601,562 , respectively. 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 estate. 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 June 30, 2024 and December 31, 2023, the capitalized financing costs were $ 756,942 and $ 1,225,739 , respectively. Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. We do not expect the adoption of this guidance to have a material impact on our condensed 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. In the three months ended June 30, 2024, the Company’s did not recognize revenue from its property development business. For the three months ended June 30, 2023, three customers accounted for approximately 37 %, 36 % and 27 % of the Company’s property development revenue. For the six months ended June 30, 2023, one customer accounted for approximately 100 % of the Company’s property development revenue. For the six months ended June 30, 2023, three customers accounted for approximately 37 %, 36 %, and 27 % of the Company’s property development revenue. 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. F- 18 The following table summarizes the Company’s segment information for the following balance sheet dates presented, and for the six months ended June 30, 2024 and 2023: SCHEDULE OF SEGMENT INFORMATION Real Estate Digital Transformation Technology Biohealth Business Other Total Six Months Ended on June 30, 2024 Revenue $ 6,458,005 $ - $ - $ 755,248 $ 7,213,253 Cost of Sales ( 5,181,322 ) - ( 3,387 ) ( 303,616 ) ( 5,488,325 ) Gross Profit (Loss) 1,276,683 - ( 3,387 ) 451,632 1,724,928 Operating Expenses ( 939,866 ) ( 290,635 ) ( 1,115,063 ) ( 4,455,348 ) ( 6,800,912 ) Operating Income (Loss) 336,817 ( 290,635 ) ( 1,118,450 ) ( 4,003,716 ) ( 5,075,984 ) Other Income (Expense) 422,319 ( 1,850,609 ) ( 99,845 ) ( 1,859,637 ) ( 3,387,772 ) Net Income (Loss) Before Income Tax 759,136 ( 2,141,244 ) ( 1,218,295 ) ( 5,863,353 ) ( 8,463,756 ) Real Estate Digital Transformation Technology Biohealth Business Other Total Six Months Ended on June 30, 2023 Revenue $ 19,515,728 $ 28,074 $ 12,786 $ 524,196 $ 20,080,784 Cost of Sales ( 12,168,470 ) ( 9,139 ) ( 109,657 ) ( 140,508 ) ( 12,427,774 ) Gross Profit (Loss) 7,347,258 18,935 ( 96,871 ) 383,688 7,653,010 Operating Expenses ( 992,201 ) ( 202,430 ) ( 477,917 ) ( 2,960,696 ) $ ( 4,633,244 ) Operating Income (Loss) 6,355,057 ( 183,495 ) ( 574,788 ) ( 2,577,008 ) 3,019,766 Operating Income (Loss) 6,355,057 ( 183,495 ) ( 574,788 ) ( 2,577,008 ) 3,019,766 Other Income (Expense) 215,306 ( 1,091,514 ) 835,888 ( 13,116,034 ) $ ( 13,156,354 ) Net Income (Loss) Before Income Tax 6,570,363 ( 1,275,009 ) 261,100 ( 15,693,042 ) ( 10,136,588 ) Net Income (Loss) Before Income Tax 6,570,363 ( 1,275,009 ) 261,100 ( 15,693,042 ) ( 10,136,588 ) June 30, 2024 Cash and Restricted Cash $ 4,024,232 $ 198,995 $ 450,636 $ 15,089,517 $ 19,763,380 Total Assets 52,381,204 3,690,191 2,839,056 34,550,370 93,460,821 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 5. REAL ESTATE ASSETS As of June 30, 2024 and December 31, 2023, real estate assets consisted of the following: SCHEDULE OF REAL ESTATE ASSETS June 30, 2024 December 31, 2023 Construction in Progress $ 7,180,389 $ 6,983,974 Land Held for Development 2,328,479 3,382,792 Rental Properties, net 31,233,027 31,770,386 Total Real Estate Assets $ 40,741,895 $ 42,137,152 F- 19 Single family residential properties As of June 30, 2024 and December 31, 2023, the Company owned 132 Single Family Residential Properties (“SFRs”). The Company’s aggregate investment in those SFRs was $ 31 million. Depreciation expense was $ 264,052 and $ 276,125 in the three months ended June 30, 2024 and 2023, respectively. Depreciation expense was $ 528,103 and $ 519,827 in the six months ended June 30, 2024 and 2023, respectively. These homes are located in Montgomery and Harris Counties, Texas. The following table presents the summary of our SFRs as of June 30, 2024: SUMMARY OF SINGLE FAMILY RESIDENTIAL PROPERTIES Number of Homes Aggregate investment Average Investment per Home SFRs 132 $ 31,388,691 $ 237,793 6. NOTES PAYABLE As of June 30, 2024 and December 31, 2023, notes payable consisted of the following: SCHEDULE OF NOTES PAYABLE June 30, 2024 December 31, 2023 Motor Vehicle Loans $ 137,787 $ 156,926 Loans for Operations 51,910 - Promissory Note to EF Hutton LLC 1,220,108 - Total notes payable $ 1,409,805 $ 156,926 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 the 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 expired during 2022 and only L/C is outstanding as of June 30, 2024 and December 31, 2023. 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. Motor Vehicle Loans On May 17, 2021, Alset International entered into an 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 pays monthly installments of approximately $ 1,300 , including interest of 1.88 % per annum, for 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 pays monthly installments of approximately $ 1,472 , including interest of 1.88 % per annum, for 84 months. F- 20 Future minimum principal payments under existing motor vehicle loans at June 30, 2024 in each calendar year through the end of their terms are as follows: SCHEDULE OF FUTURE MINIMUM PAYMENTS 2025 29,926 2026 29,926 2027 29,926 2028 27,649 Thereafter 20,360 Total Future Receipts $ 137,787 Loans for Operations The Company’s subsidiary, Ketomei Pte Ltd (“Ketomei”) has a loan from DBS Bank Limited, which was used to fund Ketomei’s current operations. Ketomei owes the bank $ 47,486 at June 30, 2024. Ketomei borrowed also funds from an individual to whom Ketomei owns $ 4,424 at June 30, 2024. Promissory Note to EF Hutton LLC On December 18, 2023, the Company’s subsidiary, HWH International Inc. entered into a Satisfaction and Discharge of Indebtedness Agreement in connection with an underwriting agreement previously entered into by HWH and EF Hutton LLC (“EF Hutton”), a division of Benchmark Investments, LLC, under which in lieu of HWH tendering the full amount due of $ 3,018,750 , the underwriters accepted a combination of $ 325,000 in cash paid upon the closing of Business Combination, 149,443 shares of the Company’s common stock and a $ 1,184,375 promissory note as full satisfaction. This agreement was effective at the closing of Business Combination on January 9, 2024. The 149,443 shares were issued as of the price of $ 10.10 , totaling the amount of $ 1,509,375 . The fair value of the HWH shares at issuance on January 9, 2024 was $ 2.82 per share or $ 421,429 . No gain or loss was recognized upon issuance of the shares on January 9, 2024 as this was an adjustment to prior underwriting costs accounted for in equity. The promissory note carries interest rate equal to SOFR (secured overnight financing rate for U.S. Government Securities Business Day published by the Federal Reserve Bank of New York) plus a margin of one percent. The principal amount of the promissory note and any accrued interest shall mature (i) partially in the event HWH completes an offering within one year of the date of the promissory note, the amount of outstanding debt maturing being proportionate to the amount of proceeds of the future offering, or (ii) in partial installments through October of 2028, the outstanding balance being paid annually until the balance owed is paid in full. As of June 30, 2024, the Company accrued $ 35,733 in interest on the promissory note and owed $ 1,220,108 to EF Hutton. 7. RELATED PARTY TRANSACTIONS Purchase of Shares and Warrants from NECV On July 17, 2020, the Company purchased 122,039,000 shares, approximately 9.99 % ownership, and warrants to purchase 1,220,390,000 shares with an exercise price of $ 0.0001 per share, from NECV, for an aggregate purchase price of $ 122,039 . We value the NECV warrants under level 3 category through a Black Scholes option pricing model and the fair value of the NECV warrants were $ 860,342 as of July 17, 2020, the purchase date, $ 973 as of June 30, 2024 and $ 430 as of December 31, 2023. 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 at December 31, 2021, as it was a related party transaction. F- 21 Reorganization of Home Rental Business On December 9, 2022, the Company entered into an agreement with Alset EHome Inc. and Alset International, 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, and Alset International 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’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. 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 and Alset EHome Inc. SHRG Shares Dividend Received from DSS On May 4, 2023, DSS distributed approximately 280 million shares of Sharing Services Global Corporation 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, and certain subsidiaries of Alset International, 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 HWH International Inc. (f.k.a. Alset Capital Acquisition Corp.) On May 1, 2023, HWH International Inc. (then known as Alset Capital Acquisition Corp., or “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 owned 2,156,250 shares of Alset Capital’s Class B Common Stock. Following the redemptions, the 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 the Company’s Consolidated Statement of Operations for the year ended December 31, 2023. Business Combination 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 entered into an agreement and plan of merger (the “Merger Agreement”) with our indirect subsidiary HWH International Inc., a Nevada corporation 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 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”). F- 22 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 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 together. In addition, the Sponsor owns warrants convertible into up to 236,875 shares of New HWH common stock upon exercise. The transaction described above was a transaction between entities under common control. In the transactions under common control, financial statements and financial information were presented as of the beginning of the period as though the assets and liabilities had been transferred at that date. The Company controlled both entities and accordingly, the equity was eliminated in consolidation. 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 condensed 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 condensed 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 condensed consolidated financial statements. Convertible Notes to Value Exchange On January 27, 2023, Hapi Metaverse and New Electric CV Corporation (together with Hapi Metaverse , 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. F- 23 On September 6, 2023, Hapi Metaverse 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 June 30, 2024 the fair value of the remaining $ 100,000 of convertible note and warrants was $ 25,685 and $ 1,833,979 , respectively. On December 31, 2023 the fair value of the remaining $ 100,000 of convertible note and warrants was $ 101,150 and $ 2,487,854 , respectively. (For further details on fair value valuation refer to Note 12. – Investments Measured at Fair Value, Convertible Note Receivables). On December 14, 2023, Hapi Metaverse entered into a Convertible Credit Agreement (“Credit Agreement”) with VEII. On December 15, 2023, Hapi Metaverse 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 Hapi Metaverse 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 fair value of this convertible note on June 30, 2024 and December 31, 2023 was $ 457,772 and $ 1,106,477 , respectively. (For further details on fair value valuation refer to Note 12. – Investments Measured at Fair Value, Convertible Note Receivables). At the time of this filing, the Company has not converted the Loan Amount. Convertible Notes to Sharing Services On January 17, 2024, the Company received a Convertible Promissory Note (the “Convertible Note”) from Sharing Services Global Corp., an affiliate of the Company, in exchange for a $ 250,000 loan made by the Company to SHRG. The Company may convert a portion or all of the outstanding balance due under the Convertible Note into shares of SHRG’s common stock at the average closing market price of SHRG stock within the last three (3) days from the date of conversion notice. The Convertible Note bears a 10 % interest rate and has a scheduled maturity six (6) months from the date of the Convertible Note, or July 17, 2024 . The maturity date was subsequently extended. The fair value of this Convertible Note on June 30, 2024 was $ 268,607 . (For further details on fair value valuation refer to Note 12. – Investments Measured at Fair Value, Convertible Note Receivables). On March 20, 2024, HWH International Inc., a subsidiary of the Company, entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a (i) Convertible Promissory Note in the amount of $ 250,000 , convertible into 208,333,333 shares of SHRG’s common stock at the option of HWH, and (ii) certain warrants exercisable into 208,333,333 shares of SHRG’s common stock at an exercise price of $ 0.0012 per share, the exercise period of the warrant being five (5) years from the date of the securities purchase agreement, for an aggregate purchase price of $ 250,000 . At the time of this filing, HWH has not converted any of the debt contemplated by the Convertible Note nor exercised any of the warrants. On June 30, 2024 the fair value of the convertible note and warrants was $ 310,362 and $ 137,500 , respectively. (For further details on fair value valuation refer to Note 12. – Investments Measured at Fair Value, Convertible Note Receivables). On May 9, 2024, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “Convertible Note”) in the amount of $ 250,000 , convertible into 125,000,000 shares of SHRG’s common stock at the option of HWH for an aggregate purchase price of $ 250,000 . The Convertible Note bears an 8 % interest rate and has a scheduled maturity three years from the date of the Convertible Note. Additionally, upon signing the Convertible Note, SHRG owns the Company commitment fee of 8 % of the principal amount, which will be paid either in cash or in common stock of SHRG, at the discretion of the Company. At the time of this filing, HWH has not converted any of the debt contemplated by the Convertible Note. On June 30, 2024 the fair value of the convertible note was $ 282,486 . (For further details on fair value valuation refer to Note 12. – Investments Measured at Fair Value, Convertible Note Receivables.) F- 24 On June 6, 2024, the Company entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “Convertible Note”) in the amount of $ 250,000 , convertible into 125,000,000 shares of SHRG’s common stock at the option of HWH for an aggregate purchase price of $ 250,000 . The Convertible Note bears an 8 % interest rate and has a scheduled maturity three years from the date of the Convertible Note. Additionally, upon signing the Convertible Note, SHRG owns the Company commitment fee of 8 % of the principal amount $ 20,000 in total, which will be paid either in cash or in common stock of SHRG, at the discretion of the Company. At the time of this filing, HWH has not converted any of the debt contemplated by the Convertible Note. On June 30, 2024, the fair value of the convertible note was $ 275,745 . (For further details on fair value valuation refer to Note 12. – Investments Measured at Fair Value, Convertible Note Receivables.) Advance to Related Party On February 20, 2024, the Company sent $ 550,000 to Sentinel Brokers Company Inc. (“Sentinel”). The initial purpose of the transfer was to invest in shares of this company. The transaction did not close as planned and the funds were returned. The Company has significant influence over Sentinel as it holds 11.6 % of outstanding shares of Sentinel and its CEO holds a director position on Sentinel’s Board of Directors. Apartment Rental for the CEO The Company is renting an apartment in Singapore for its CEO and Chairman, Chan Heng Fai, as part of the compensation for his services. The Company paid $ 20,908 deposit for the apartment and had expenses of $ 30,315 and $ 30,644 in the three months ended June 30, 2024 and 2023, respectively. The Company had expenses of $ 60,631 and $ 61,289 in the six months ended June 30, 2024 and 2023, respectively. Notes Payable Chan Heng Fai provided an interest-free, due on demand advance to SeD Perth Pty. Ltd. for its general operations. As of June 30, 2024 and December 31, 2023, the outstanding balance was $ 12,440 and $ 12,716 , respectively. Chan Heng Fai provided an interest-free, due on demand advance to Hapi Metaverse Inc. for its general operations. As of June 30, 2024 and December 31, 2023, the outstanding balance was $ 4,189 and $ 4,153 , respectively. Management Fees MacKenzie Equity Partners, LLC, an entity owned by Charles MacKenzie, Chief Development Officer 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; (iii) a sum of $50,000 in December 2023; and (iv) a sum of $60,000 in June 2024 . The Company incurred expenses of $ 135,000 and $ 210,000 in the three and six months ended June 30, 2024, respectively, and $ 75,000 and $ 150,000 in the three and six months ended June 30, 2023, respectively, which were capitalized as part of Real Estate on the balance sheet as the services relate to property and project management. On June 30, 2024 and December 31, 2023, the Company owed this related party $ 87,535 and $ 27,535 , respectively. These amounts are included in Accounts Payable in the accompanying condensed consolidated balance sheets. CA Global Consulting Inc., an entity owned by Anthony Chan, the former Chief Operating Officer of the Company, had a consulting agreement with the Company dated April 8, 2021, as amended on May 6, 2022. As of June 13, 2024, the Company terminated the consulting agreement with CA Global Consulting Inc., and the Company ceased paying consulting fees in the amount of $ 15,000 per month. The Company incurred expenses of $ 32,500 and $ 45,000 in the three months ended June 30, 2024 and 2023, respectively, and $ 77,500 and $ 90,000 in the six months ended June 30, 2024 and 2023, respectively. F- 25 Notes Receivable from Related Party On December 31, 2023, the total convertible note receivable from Ketomei, prior to impairment charges, 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 equity method investment in 2023. 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 in an aggregate principal amount of $ 75,525 . 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 for 28 % interest in Ketomei. The investment was partially paid by the $ 75,525 loan borrowed to Ketomei and the accrued interest of $ 6,022 . The balance of $ 183,311 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 . 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 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 loan was paid by the $ 214,903 loan borrowed to Ketomei and $ 48,862 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 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 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 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 loan was paid to Ketomei. HCI-T agreed to pay the balance of $ 31,110 to Ketomei in the future. The amount due from Ketomei at December 31, 2023 was $ 0 . On February 20, 2024, HCI-T invested $ 312,064 for an additional 38.41 % ownership interest in Ketomei by converting $ 312,064 of convertible loan. The loan was impaired at the year ended of December 31, 2023, therefore, $ 312,064 was transferred from impairment of convertible loan to impairment of equity method investment. After this additional investment, Hapi Cafe owns 55.65 % (the Company owns indirectly 45.5 %) of Ketomei’s outstanding shares and Ketomei is consolidated into the financial statements of the Company beginning on February 20, 2024. On October 13, 2021 BMI Capital Partners International Limited (“BMI”) entered into a 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 matured 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 June 30, 2024 and December 31, 2023 LVAML owes the Company $ 460,765 and $ 534,671 , respectively. On September 28, 2023 Alset International Limited (“Alset International”) entered into loan agreement with Value Exchange International Inc., pursuant to which Alset International agreed to lend $ 500,000 to VEII. The loan carries simple annual interest rate of 8 %. As of June 30, 2024 and December 31, 2023 the Company accrued $ 20,000 and $ 10,000 interest, respectively, and VEII owed $ 530,000 and $ 510,000 , respectively to Alset International. F- 26 8. 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 completed its F&B business acquisition of MOC HK Limited (“MOC”), a F&B business started in Hong Kong. The accompanying condensed 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. On April 18, 2024, Hapi Acquisition Pte Ltd (“HAPL”), the Company’s subsidiary, completed acquisition of Hapi Café Company Limited (“HCTW”), an F&B business started in Taiwan. The accompanying condensed 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 HAPL to complete the acquisition is initially allocated to the acquired assets and liabilities assumed based upon their estimated acquisition date fair values. As of the date of acquisition, HCTW had a total of $ 429,962 due to a related party, Alset Business Development Pte. Ltd, (“ABDPL”) a subsidiary of the Company. HCTW borrowed the money from ABDPL since 2022 for its business start-up and daily operations. As a result of the acquisition of HCTW, the Company eliminated amounts due to ABDPL. As a result of the acquisition of HCTW, goodwill of $ 353,616 generated in a business combination represents the purchase price of $ 3,300 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 impaired the goodwill $ 353,616 as a loss during the six months ended June 30, 2024 due to the poor financial situation of HCTW. The table below reflects the Company’s estimates of the acquisition date fair value of the assets acquired and liabilities assumed for the 2024 acquisition: SCHEDULE OF ESTIMATES OF ACQUISITION FAIR VALUE HCTW Purchase Price Cash $ 3,300 Total purchase consideration $ 3,300 Purchase Price Allocation Assets acquired Current assets $ 24,175 Deposit 41,987 Property and Equipment, net 47,890 Operating lease right-of-use assets, net 379,424 Total assets acquired $ 493,476 Liabilities assumed: Current liabilities $ ( 2,680 ) Due to related party ( 429,962 ) Operating lease liability ( 411,150 ) Total liabilities assumed $ ( 843,792 ) Net assets acquired $ ( 350,316 ) Goodwill $ 353,616 Total purchase consideration $ 3,300 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. F- 27 The following table summarizes changes in the carrying amount of goodwill for the six months ended June 30, 2024 and the year ended December 31, 2023. SCHEDULE OF GOODWILL June 30, 2024 December 31, 2023 Balance at beginning of the period $ 60,273 $ 60,343 Add: acquisition of HCTW 353,616 - Less: impairment loss of goodwill of HCTW ( 353,616 ) - Foreign currency exchange adjustment 5 ( 70 ) Balance as of end of the period $ 60,278 $ 60,273 9. 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 . 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. F- 28 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 $ 3.4 million, after deducting underwriting discounts and the payment of other offering expenses associated with the Offering that were 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 June 30, 2024, there were 9,235,119 common shares issued and outstanding. The following table summarizes the warrant activity for the six months ended June 30, 2024. 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, 2023 603,051 $ 80.46 2.37 $ - Warrants Vested and exercisable at December 31, 2023 603,051 $ 80.46 2.37 $ - Granted - - Exercised - - Forfeited, cancelled, expired - - Warrants Outstanding as of June 30, 2024 603,051 $ 80.46 1.87 $ - Warrants Vested and exercisable at June 30, 2024 603,051 $ 80.46 1.87 $ - Class A Common Stock of HWH International Inc. 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 HWH International Inc. 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 June 30, 2024, following redemptions and closing of Business Combination the temporary equity is $ 0 . On May 1, 2023, after the redemptions (for further details on this transaction refer to Note 7. – Related Party Transactions, Consolidation of HWH International Inc.), the Company consolidated HWH International Inc. F- 29 Issuance of HWH Shares to EF Hutton On December 18, 2023, the Company’s subsidiary, HWH International Inc. entered into a Satisfaction and Discharge of Indebtedness Agreement in connection with an underwriting agreement previously entered into by HWH and EF Hutton, a division of Benchmark Investments, LLC, under which in lieu of HWH tendering the full amount due of $ 3,018,750 , the underwriters accepted a combination of $ 325,000 in cash paid upon the closing of the Business Combination, 149,443 shares of the Company’s common stock and a $ 1,184,375 promissory note as full satisfaction. This agreement was effective at the closing of Business Combination on January 9, 2024. The 149,443 shares were issued as of the price of $ 10.10 , totaling the amount of $ 1,509,375 . The fair value of the HWH shares at issuance on January 9, 2024 was $ 2.82 per share or $ 421,429 . No gain or loss was recognized upon issuance of the shares on January 9, 2024 as this was an adjustment to prior underwriting costs accounted for in equity. 10. LEASE INCOME The Company generally rents its SFRs under lease agreements with a term of one or two years. Future minimum rental revenue under existing leases on our properties at June 30, 2024 in each calendar year through the end of their terms are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS 2024 898,729 2025 424,134 Total Future Receipts $ 1,322,863 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 three months ended June 30, 2024 and 2023, property management fees incurred by the property managers were $ 35,730 and $ 34,650 , respectively. For the six months ended June 30, 2024 and 2023, property management fees incurred by the property managers were $ 70,740 and $ 66,600 , respectively. For the three months ended June 30, 2024 and 2023, leasing fees incurred by the property managers were $ 24,005 and $ 41,745 , respectively. For the six months ended June 30, 2024 and 2023, leasing fees incurred by the property managers were $ 34,265 and $ 66,755 , respectively. 11. ACCUMULATED OTHER COMPREHENSIVE INCOME 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, 2024 $ ( 54,921 ) $ ( 119,566 ) $ 3,784,206 $ 3,609,719 Other Comprehensive Loss - ( 992,871 ) ( 13,888 ) ( 1,006,759 ) Balance at March 31, 2024 $ ( 54,921 ) $ ( 1,112,437 ) $ 3,770,318 $ 2,602,960 Other Comprehensive (Loss) Income - ( 1,071,829 ) 17,342 ( 1,054,487 ) Balance at June 30, 2024 $ ( 54,921 ) $ ( 2,184,266 ) $ 3,787,660 $ 1,548,473 F- 30 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 Income - 936,265 - 936,265 Balance at March 31, 2023 $ ( 54,921 ) $ 1,057,537 $ 3,769,712 $ 4,772,328 Balance Beginning $ ( 54,921 ) $ 1,057,537 $ 3,769,712 $ 4,772,328 Other Comprehensive Loss - ( 1,849,049 ) - ( 1,849,049 ) Other Comprehensive (Loss) Income - ( 1,849,049 ) - ( 1,849,049 ) Balance at June 30, 2023 $ ( 54,921 ) $ ( 791,512 ) $ 3,769,712 $ 2,923,279 Balance at Ending $ ( 54,921 ) $ ( 791,512 ) $ 3,769,712 $ 2,923,279 12. ASSETS MEASURED AT FAIR VALUE Financial assets measured at fair value on a recurring basis are summarized below and disclosed on the condensed consolidated balance sheet as of June 30, 2024 and December 31, 2023: SCHEDULE OF FINANCIAL ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS Fair Value Measurement Using Amount at Level 1 Level 2 Level 3 Fair Value June 30, 2024 Assets Investment Securities- Fair Value Option $ 5,401,855 $ 1,468,357 $ - $ 6,870,212 Investment Securities- Trading 1,085,361 2,309,665 - 3,395,026 Warrants – NECV - - 973 973 Warrants - VEII - 1,833,979 - 1,833,979 Warrants - SHRG - 137,500 - 137,500 Convertible Loan Receivable - VEII - 483,457 - 483,457 Convertible Loan Receivable - SHRG - 1,137,200 - 1,137,200 Total Assets at Fair Value $ 6,487,216 $ 7,370,158 $ 973 $ 13,858,347 Fair Value Measurement Using Amount at Level 1 Level 2 Level 3 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 Convertible Note Receivable - - 77,307 77,307 Warrants - NECV - - 430 430 Warrants- VEII - 2,487,854 - 2,487,854 Convertible Loan Receivable - VEII - 1,207,627 - 1,207,627 Total Assets at Fair Value $ 7,572,508 $ 7,575,802 $ 77,737 $ 15,226,047 Realized loss on investment securities for the three months ended June 30, 2024 was $ 192,205 and realized loss on investment securities for the three months ended June 30, 2023 was $ 10,557,229 . Realized loss on investment securities for the six months ended June 30, 2024 was $ 344,673 and realized loss on investment securities for the six months ended June 30, 2023 was $ 10,688,542 . Unrealized gain on securities investment was $ 1,676,711 and $ 18,840,726 in the three months ended June 30, 2024 and 2023, respectively. Unrealized loss on securities investment was $ 3,589,106 and $ 17,652,880 gain in the six months ended June 30, 2024 and 2023, respectively. These gains and losses were recorded directly to net loss. F- 31 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 the local stock exchange to calculate fair value. The following chart shows details of the fair value of equity security investment at June 30, 2024 and December 31, 2023, respectively. SCHEDULE OF FAIR VALUE OF EQUITY SECURITY INVESTMENT Share price Market Value 6/30/2024 Shares 6/30/2024 Valuation DSS (Related Party) $ 1.720 3,140,613 $ 5,401,855 Investment in Securities at Fair Value – Related Party Trading Stocks $ 1,085,361 Investment in Securities at Fair Value Total Level 1 Equity Securities $ 6,487,216 AMBS $ 0.000 20,000,000 $ 2,000 Investment in Securities at Fair Value Holista $ 0.003 36,199,845 $ 120,739 Investment in Securities at Fair Value Value Exchange (Related Party) $ 0.050 21,179,275 $ 1,058,964 Investment in Securities at Fair Value – Related Party New Electric CV (Related Party) $ 0.000 354,039,000 $ 35,404 Investment in Securities at Fair Value – Related Party Sharing Services (Related Party) $ 0.002 125,624,528 $ 251,250 Investment in Securities at Fair Value – Related Party Trading Stocks $ 2,309,665 Investment in Securities at Fair Value Total Level 2 Equity Securities $ 3,778,022 Nervotec N/A 1,666 $ 36,868 Investment in Securities at Cost UBeauty N/A 3,600 $ 16,637 Investment in Securities at Cost Ideal Food and Beverages N/A 19,000 $ 14,010 Investment in Securities at Cost Total Equity Securities $ 10,332,753 F- 32 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 – Related Party Trading Stocks $ 35,036 Investment in Securities at Fair Value Total Level 1 Equity Securities $ 7,572,508 AMBS $ 0.001 20,000,000 $ 10,000 Investment in Securities at Fair Value Holista $ 0.007 36,159,845 $ 246,556 Investment in Securities at Fair Value Value Exchange (Related Party) $ 0.067 21,179,275 $ 1,429,602 Investment in Securities at Fair Value – Related Party Sharing Services (Related Party) $ 0.003 125,624,528 $ 414,562 Investment in Securities at Fair Value – Related Party New Electric CV (Related Party) $ 0.000 354,039,000 $ - Investment in Securities at Fair Value – Related Party Trading Stocks $ 1,779,601 Investment in Securities at Fair Value Total Level 2 Equity Securities $ 3,880,321 Nervotec N/A 1,666 $ 37,876 Investment in Securities at Cost UBeauty N/A 3,600 $ 16,636 Investment in Securities at Cost Total Equity Securities $ 11,507,341 F- 33 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 as other comprehensive 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 six months ended June 30, 2024 and 2023: SCHEDULE OF CHANGE IN FAIR VALUE Total Balance at January 1, 2024 $ 77,737 Impairment ( 77,307 ) Total Gains 543 Balance at March 31, 2024 $ 973 Total Gains - Balance at June 30, 2024 $ 973 Total Balance at January 1, 2023 $ 416,164 Total gains 62,348 Balance at March 31, 2023 $ 478,512 Total Losses ( 342,798 ) Net gains (losses) Balance at June 30, 2023 $ 135,714 Vector Com Convertible Bond 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, the Management estimated the fair value of the note to be $ 88,599 . The Company wrote off this loan at March 31, 2024 Warrants 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, 2022. The Company did not exercise any warrants during six months ended June 30, 2024 and the year ended December 31, 2023. 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 $ 973 as of June 30, 2024 and $ 430 as of December 31, 2023. The fair value of the NECV warrants under level 3 category as of June 30, 2024 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 June 30, 2024 December 31, 2023 Stock Price $ 0.0001 $ 0.0001 Exercise price $ 0.001 $ 0.001 Risk free interest rate 4.62 % 4.62 % Annualized volatility 869.4 % 869.4 % Dividend Yield $ 0.00 $ 0.00 Year to maturity 6.06 6.56 F- 34 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 7 - Related Party Transactions, Note Receivable from a Related Party Company . As of June 30, 2024 and December 31, 2023, the fair value of the warrants was $ 1,833,979 and $ 2,487,854 , respectively. The Company did not exercise any warrants during the six months June 30, 2024 and the year ended December 31, 2023. The fair value of the VEII warrants under level 2 category as of June 30, 2024, 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 June 30, 2024 December 31, 2023 Stock price $ 0.0500 $ 0.0677 Exercise price $ 0.1770 $ 0.1770 Risk free interest rate 8.50 % 8.50 % Annualized volatility 329.13 % 275.85 % Dividend Yield $ 0.00 $ 0.00 Year to maturity 4.18 4.68 SHRG On March 20, 2024, HWH International Inc., entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a (i) Convertible Promissory Note in the amount of $ 250,000 , convertible into 208,333,333 shares of SHRG’s common stock at the option of HWH, and (ii) certain warrants exercisable into 208,333,333 shares of SHRG’s common stock at an exercise price of $ 0.0012 per share, the exercise period of the warrant being five ( 5 ) years from the date of the securities purchase agreement, for an aggregate purchase price of $ 250,000 . At the time of this filing, HWH has not converted any of the debt contemplated by the Convertible Note nor exercised any of the warrants. As of June 30, 2024, the fair value of the warrants was $ 137,500 . The fair value of the SHRG warrants under level 2 category as of June 30, 2024, was calculated using binomial option pricing model valued with the following weighted average assumptions: SCHEDULE OF SIGNIFICANT INPUTS AND ASSUMPTIONS June 30, 2024 Stock price $ 0.0020 Exercise price $ 0.0012 Risk free interest rate 4.40 % Annualized volatility 141.48 % Dividend Yield $ 0.00 Year to maturity 4.71 Convertible Loan Receivables The Company has elected to recognize the convertible loan receivables at fair value and therefore there was no further evaluation of embedded features for bifurcation. The Company engaged third party valuation firm to perform the valuation of convertible loans. The fair value of the convertible loans is calculated using the binomial tree model based on probability of remaining as straight debt using discounted cash flow. F- 35 13. COMMITMENTS AND CONTINGENCIES Lots Sales Agreement ● Ballenger Project 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 June 30, 2024 and December 31, 2023, the accrued balance due to NVR was $ 189,475 . ● Lakes at Black Oak Project - Agreement to Sell 142 Lots and 63 Lots On November 13, 2023, 150 CCM Black Oak Ltd. (the “Seller”), a Texas Limited Partnership, 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 comprising a section of a residential community in the city of Magnolia, Texas known as the “Lakes at Black Oak.” The selling price of these lots is anticipated to equal approximately $ 7.4 million. Pursuant to the other Agreement, the Seller has agreed to sell 63 single-family detached residential lots 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. The selling price of these lots is anticipated to equal approximately $ 3.3 million. The closing of the transactions described above depends on the satisfaction of certain conditions. The sale of the first 70 lots closed on July 1, 2024 generating approximately $ 3.8 million. Leases The Company leases offices in Maryland, Singapore, Hong Kong, South Korea and China through leased spaces aggregating approximately 30,000 square feet, under leases expiring on various dates from July 2024 to April 2029. The leases have rental rates ranging from $ 283 to $ 23,020 per month. Our total rent expense under these office leases was $ 313,955 and $ 266,103 in the three months ended June, 2024 and 2023, respectively. Our total rent expense under these office leases was $ 606,674 and $ 525,781 in the six months ended June, 2024 and 2023, respectively. Total cash paid for operating leases was $ 602,584 and $ 525,781 for the six months ended June 30, 2024 and 2023, respectively. The following table outlines the details of lease terms: SCHEDULE OF OPERATING AND RENEWED LEASE TERMS RENTAL Office Location Lease Term as of June 30, 2024 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 Cafe August 2022 to August 2025 South Korea – HWH World August 2022 to July 2025 South Korea - Cafe April 2024 to February 2027 Bethesda, Maryland April 2024 to March 2027 China - Cafe December 2023 - November 2024 China - Office March 2023 – March 2027 China - Shop June 2024 to April 2029 Taiwan - Cafe May 2024 to October 2027 F- 36 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 7.2% in 2024 and 2023, which were used as the discount rates . The Company’s weighted-average remaining lease term relating to its operating leases are 2.4 years, with a weighted-average discount rate of the 3.92 %. The balances of operating lease right-of-use assets and operating lease liabilities as of June 30, 2024 were $ 1,815,543 and $ 1,880,185 respectively. 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 , respectively. The table below summarizes future payments due under these leases as of June 30, 2024. For the Years Ended June 30: SCHEDULE OF LEASE PAYMENTS 2025 1,009,639 2026 614,738 2027 278,108 2028 71,572 2029 26,245 Total Minimum Lease Payments $ 2,000,302 Less: Effect of Discounting ( 120,117 ) Present Value of Future Minimum Lease Payments 1,880,185 Less: Current Obligations under Leases ( 928,830 ) Long-term Lease Obligations $ 951,355 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 June 30, 2024 and December 31, 2023, the security deposits held in the trust account were $ 307,343 and $ 309,688 , respectively. 14. DIRECTORS AND EMPLOYEES’ BENEFITS AEI Stock Option plans Under our 2018 Incentive Compensation Plan (the “Plan”), adopted by our board of directors and holders of a majority of our outstanding shares of common stock in September 2018, 25,000 shares of common stock (subject to certain adjustments) were reserved for issuance upon exercise of stock options and grants of other equity awards. No options or other equity awards have been granted under the Plan. The reservation of shares under the Incentive Compensation Plan was cancelled in May 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 three months ended June 30, 2024: SCHEDULE OF OPTION ACTIVITY Options for Common Shares Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of January 1, 2023 1,061,333 $ 0.09 1.00 $ - Vested and exercisable at January 1, 2023 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 $ - Granted - - Exercised - - Forfeited, cancelled, expired - - Outstanding as of June 30, 2024 - $ - - $ - Vested and exercisable at June 30, 2024 - $ - - $ - 15. SUBSEQUENT EVENTS Closing of Lot Sale On July 1, 2024, 150 CCM Black Oak Ltd. (the “Seller”), a wholly owned subsidiary of LiquidValue Development Inc., closed the sale of 70 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 Century Land Holdings of Texas, LLC. 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 approximately $ 3.8 million. Loan to VEII On July 15, 2024, a subsidiary of the Company entered into a Convertible Credit Agreement (the “Credit Agreement”) with VEII. On July 15, 2024, this subsidiary of the Company loaned VEII $ 110,000 (the “Loan Amount”). Pursuant to the Credit Agreement, this amount can be converted into shares of VEII for a period of three years at a conversion price of $ 0.06 per share. As of the date of this filing, the Loan Amount has not been converted. F- 37