Alset Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate, competition within our chosen industry, including competition from much larger competitors, technological advances and failure to successfully develop business relationships. Business Overview We are a diversified holding company principally engaged through our 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 three principal businesses through our 85.8% owned subsidiary, Alset International Limited, a public company traded on the Singapore Stock Exchange. Through this subsidiary (and indirectly, through other public and private U.S. and Asian subsidiaries), we are actively developing real estate projects near Houston, Texas in our real estate segment. In our digital transformation technology segment, we focus on serving business-to-business (B2B) needs in e-commerce, collaboration and social networking functions. Our biohealth segment includes the sale of consumer products. Alset Inc. and Alset International Limited collectively own 73.3% of HWH International Inc. (described in further detail below). We also have certain wholly owned subsidiaries that collectively own 132 single family residential rental properties in Montgomery and Harris Counties, Texas. We also hold minority ownership interests, including a 36.9% equity interest in American Pacific Financial, Inc., formerly known as American Pacific Bancorp Inc. (“APF”), a 43.6% equity interest in DSS Inc. (“DSS”), an indirect 45.8% equity interest in Value Exchange International Inc. (“VEII”), a 0.5% equity interest in HIPH World Inc. (f.k.a. American Premium Water Corporation and New Electric CV Corporation), and a 29% equity interest in Sharing Services Global Corporation (“SHRG”). APF is a financial network holding company. DSS is a multinational company operating businesses with five divisions: product packaging, biotechnology, direct marketing, commercial lending, and securities and investment management. DSS Inc. is listed on the NYSE American (NYSE: DSS). Value Exchange International, Inc. is a provider of information technology services for businesses, and is traded on the OTC Markets. Sharing Services Global Corporation, is a publicly traded company dedicated to building shareholder value by developing or acquiring businesses, products and technologies in the direct selling industry and other industries that augment the Company’s product and services portfolio, business competencies, and geographic reach. Sharing Services Global Corporation is traded on the OTC Markets. We generally acquire majority and/or control stakes in innovative and promising businesses that are expected to appreciate in value over time. Our emphasis is on building businesses in industries where our management team has in-depth knowledge and experience, or where our management can provide value by advising on new markets and expansion. We have at times provided a range of global capital and management services to these companies in order to gain access to Asian markets. We have historically favored businesses that improve an individual’s quality of life or that improve the efficiency of businesses through technology in various industries. We believe our capital and management services provide us with a competitive advantage in the selection of strategic acquisitions, which creates and adds value for our Company and our stockholders. Additionally, the Company operates a portfolio of trading securities with the objective of generating profits from short-term fluctuations in market prices. The portfolio is actively managed, and securities are bought and sold with the intent to realize gains from price movements within a short-term horizon. 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 makers (the “CODMs”), or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision makers are the two Co-CEOs, who review and assess the performance of the Company as a whole. The Company reports its segment information to reflect the manner in which the CODMs review and assess performance. 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. In determination of segments, the Company, together with its CODMs, considers factors that include the nature of business activities, allocation of resources and management structure. 3 The primary financial measures used by the CODMs to evaluate performance and allocate resources are net income (loss) and operating income (loss). The CODMs use net income (loss) and operating income (loss) to evaluate the performance of the Company’s ongoing operations and as part of the Company’s internal planning and forecasting processes. Information on net income (loss) and operating income (loss) is disclosed in the Consolidated Statements of Operations. Segment expenses and other segment items are provided to the CODMs on the same basis as disclosed in the Consolidated Statements of Operations. The CODMs do not evaluate performance or allocate resources based on segment assets. Recent Developments Stock Compensation On April 15, 2025, the Board of Directors of the Company awarded Chairman and Chief Executive Officer Chan Heng Fai 1,000,000 restricted shares of the Company’s common stock (the “Shares”). The Shares were granted to Mr. Chan as compensation for services rendered to the Company pursuant to the Company’s 2025 Incentive Compensation Plan, as adopted on March 17, 2025. Under the terms and conditions of the award, the Shares may not be sold, assigned, transferred, pledged, encumbered or otherwise disposed of until April 15, 2026. The Shares are not part of Mr. Chan’s regular annual compensation and will not be awarded on a regularly recurring basis. As of the date of the issuance of the Shares, the fair value thereof was $840,000. Notice from NASDAQ On May 13, 2025, the Company received a letter from The Nasdaq Stock Market LLC indicating that the Company’s common stock had closed below the minimum $1.00 per share bid price requirement for 30 consecutive business days, and that the Company is therefore not in compliance with Nasdaq Listing Rule 5550(a)(2). The notification has no immediate effect on the listing of the Company’s common stock, and the Company has 180 calendar days to regain compliance with the minimum bid price requirement. On July 17, 2025, Alset Inc. (the “Company”) received notice from the Nasdaq Listing Qualifications Staff (the “Staff”) that the Staff has determined that the Company has regained compliance with Nasdaq’s minimum $1 bid price per share requirement. While the Company has regained compliance with the Minimum Bid Price Requirement, there can be no assurance that the Company will be able to maintain compliance with the Minimum Bid Price Requirement in the future. Consummation of the Merger of Alset Capital Acquisition Corp. and HWH International Inc. On January 9, 2024, two entities affiliated with Alset Inc. completed a previously announced transaction. On September 9, 2022, Alset Capital Acquisition Corp., a Delaware corporation (“Alset Capital”) entered into an agreement and plan of merger (the “Merger Agreement”) with our indirect subsidiary HWH International Inc., a Nevada corporation (“HWH Nevada”) and HWH Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of Alset Capital (“Merger Sub”). The Company and its 85.8% 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 Nevada was effected through the merger of Merger Sub with and into HWH Nevada, with HWH Nevada surviving the merger as a wholly owned subsidiary of Alset Capital (the “Merger”), and Alset Capital changing its name to HWH International Inc. (“New HWH”). The total consideration paid at the closing of the Merger by New HWH to the shareholders of HWH Nevada was 12,500,000 shares of New HWH common stock. Alset International owned the majority of the outstanding shares of HWH Nevada at the time of the business combination, and received 10,900,000 shares of New HWH as consideration for its shares of HWH Nevada. 4 Following these transactions, HWH International Inc. is now a purpose-driven lifestyle company encompassing differentiated offerings from four core pillars: Hapi Marketplace, Hapi Cafe, Hapi Travel and Hapi Wealth Builder. HWH International Inc. seeks to develop new pathways to help people in their pursuit of health, wealth and happiness. HWH International Inc. is listed on the Nasdaq under the symbol HWH. Stock Purchase Agreement and Debt Conversion Agreements On September 24, 2024, HWH entered into two (2) debt conversion agreements with creditors (each an “Agreement,” or collectively, the “Agreements”): (i) Alset International Limited (significant stockholder of HWH); and (ii) Alset Inc. (which in turn is Alset International Limited’s majority stockholder). Each Agreement converts debt owed by HWH to the respective creditor into shares of HWH’s common stock. Under the terms of their respective Agreements, Alset Inc. converted $300,000 of HWH’s debt into 476,190 shares of HWH’s common stock, and Alset International Limited converted $3,501,759 of HWH’s debt into 5,558,347 shares of HWH’s common stock. Under the Agreements, the debt conversions resulted in the issuance of newly issued shares of HWH’s common stock. The price at which the debt conversion was fixed was set at $0.63 per share of HWH common stock. Cumulatively, the newly issued shares contemplated by the Agreements represented 6,034,537 new shares of HWH’s common stock. On September 26, 2024, Alset Inc. entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the Company’s majority owned subsidiary, Alset International Limited. Pursuant to the Stock Purchase Agreement, the Company purchased 6,500,000 shares (the “Shares”) of HWH International Inc. (the Nasdaq-listed company). As consideration for the Shares, the Company issued a secured promissory note to Alset International Limited in the original principal amount of $4,095,000 (the “Promissory Note”). The Promissory Note bears an interest rate of 5% per annum and a maturity date of September 26, 2026, and is secured by collateral specified in a security agreement between the Company and Alset International Limited. Our Chairman, Chief Executive Officer and majority stockholder, Chan Heng Fai, is also the Chairman and Chief Executive Officer of Alset International Limited and the Chairman of HWH. In addition, certain other members of our board are also officers and/or directors of Alset International Limited and HWH. The closing of the transactions described herein was contingent upon the approval of the stockholders of Alset International Limited (which was approved on November 18, 2024) and the satisfaction of other closing conditions. The transactions closed on November 20, 2024. Sale of Certain Lots 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 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.” On July 1, 2024, the Seller closed the sale of 70 of the lots contemplated by the Agreement, generating approximately $3.8 million. Pursuant to the other Agreement, the Seller 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 sale of the first 70 lots closed on July 1, 2024 generating approximately $3.8 million. The sale of the additional 72 lots closed on October 10, 2024 generating approximately $3.9 million. The sale of 63 lots at Alset Villas closed on December 16, 2024 generating approximately $3.8 million. The Company has retained four model lots within Section 1 of the property. The Company intends to enter into contract-build agreements with local, regional or national builders to construct single-family, for rent homes. These elevations and floor plans will be carefully selected to suit the for-rent tenants and/or for-sale customers. The Company will also reserve the right to sell these homes in the event this is deemed to be the highest and best use in the marketplace. The Company expects to complete these homes within the next twelve months. 5 Issuance of Convertible Loans to Value Exchange International, Inc. On July 15, 2024, the Company entered into a Convertible Credit Agreement (“3 rd VEII Credit Agreement”) with VEII for an unsecured credit line in the maximum amount of $110,000. Advances of the principal under the 3 rd VEII Credit Agreement accrue simple interest at 8% per annum. Each Advance under the 3 rd VEII Credit Agreement and all accrued interest thereon may, at the election of VEII, or the Company, be: (1) repaid in cash; (2) converted into shares of VEII Common Stock; or (3) be repaid in a combination of cash and shares of VEII Common Stock. The principal amount of each Advance under the 3 rd VEII Credit Agreement is due and payable on the third (3rd) annual anniversary of the date that the Advance is received by VEII along with any unpaid interest accrued on the principal (the “Advance Maturity Date”). Prior to the Advance Maturity Date, unpaid interest accrued on any Advance shall be paid on the last business day of June and on the last business day of December of each year in which the Advance is outstanding and not converted into shares of VEII Common Stock. Company may prepay any Advance under the 3 rd VEII Credit Agreement and interests accrued thereon prior to Advance Maturity Date without penalty or charge. At the time of this filing, the Company has not converted the Loan Amount. VEII issued a Convertible Promissory Note (the “VEII Convertible Promissory Note”) for $30,000, dated as of March 28, 2025 to Alset Inc. as consideration for a loan in the same amount. This amount can be converted into shares of VEII pursuant to the terms of the VEII Convertible Promissory Note for a period of two years. In the event that Alset Inc. converts all or a portion of the indebtedness into shares of VEII Common Stock, the conversion price shall be $0.0166 per share. At the time of this filing, the Company has not converted the Loan Amount. The Company currently owns a total of 21,179,275 shares (representing approximately 45.8%) of VEII. Our founder, Chairman and Chief Executive Officer, Chan Heng Fai, and another member of the Board of Directors of Hapi Metaverse, Lum Kan Fai Vincent, are both members of the Board of Directors of VEII. In addition to Mr. Chan, three other members of the Board of Directors of Alset Inc. are also members of the Board of Directors of VEII (Wong Shui Yeung, Wong Tat Keung, and Lim Sheng Hon Danny). Issuance of Convertible Loans to Sharing Services Global Corp. On January 17, 2024, the Company received a Convertible Promissory Note (the “1 st SHRG 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 1 st SHRG 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 1 st SHRG Convertible Note bears a 10% interest rate and has a scheduled maturity six (6) months from the date of the 1 st SHRG Convertible Note, or July 17, 2024. The terms of the note and maturity date were subsequently extended. On March 20, 2024, the Company’s subsidiary HWH International Inc. entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a (i) Convertible Promissory Note (the “2 nd SHRG Convertible Note”) in the amount of $250,000, convertible into 148,810 shares of SHRG’s common stock at the option of HWH, and (ii) certain warrants exercisable into 148,810 shares of SHRG’s common stock at an exercise price of $1.68 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. “). The 2 nd SHRG Convertible Note bears a 6% interest rate and has scheduled maturity on March 20, 2027. At the time of this filing, HWH has not converted any of the debt contemplated by the 2 nd SHRG Convertible Note nor exercised any of the warrants. 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 “3 rd SHRG Convertible Note”) in the amount of $250,000, convertible into 89,286 shares of SHRG’s common stock at the option of HWH for an aggregate purchase price of $250,000. The 3 rd SHRG Convertible Note bears an 8% interest rate and has a scheduled maturity three years from the date of the 3 rd SHRG Convertible Note. Additionally, upon signing the 3 rd SHRG 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 3 rd SHRG Convertible Note. 6 On June 6, 2024, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “4 th SHRG Convertible Note”) in the amount of $250,000, convertible into 89,286 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 4 th SHRG Convertible Note. Additionally, upon signing the 4 th SHRG 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 4 th SHRG Convertible Note. On August 13, 2024, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “5 th SHRG Convertible Note”) in the amount of $100,000, convertible into 35,714 shares of SHRG’s common stock at the option of the Company for an aggregate purchase price of $100,000. The 5 th SHRG Convertible Note bears an 8% interest rate and has a scheduled maturity three years from the date of the 5 th SHRG Convertible Note. Additionally, upon signing the 5 th SHRG Convertible Note, SHRG owed the Company a commitment fee of 8% of the principal amount, $8,000 in total, to 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 5 th SHRG Convertible Note. On January 15, 2025, HWH entered into a Loan Agreement (the “1 st Loan Agreement”) with SHRG, under which HWH provided a loan to SHRG in the amount of $150,000. HWH may convert a portion or all of the outstanding balance due under the loan 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 maturity of the 1 st Loan Agreement, January 15, 2026. The 1 st Loan Agreement bears an 8% interest rate. On March 31, 2025, HWH entered into a securities purchase agreement with the SHRG, pursuant to which SHRG issued a convertible promissory note to HWH in the amount of $150,000 (the “6 th SHRG Convertible Note”). The 6 th SHRG Convertible Note is convertible into SHRG’s common stock at $0.80 per share at HWH’s option until maturity three (3) years from the date of the securities purchase agreement, March 31, 2028. In addition, SHRG granted HWH warrants exercisable into 937,500 shares of SHRG’s common stock. The warrants may be exercised for three (3) years from the date of the securities purchase agreement at an exercise price of $0.85 per share, for an aggregate purchase price of $796,875. The 6 th SHRG Convertible Note bears an 8% interest rate. At the time of filing, HWH has not converted any of the debt contemplated by the 6 th SHRG Convertible Note nor exercised any of the warrants. On June 27, 2025, HWH entered into a securities purchase agreement with SHRG pursuant to which the Company purchased from SHRG a Convertible Promissory Note (the “7 th SHRG Convertible Note”) in the amount of $60,000, convertible into 10,000,000 shares of SHRG’s common stock at the option of HWH for an aggregate purchase price of $60,000, Additionally, upon signing the 7 th SHRG Convertible Note, SHRG owed the Company a commitment fee of 8% of the principal amount $4,800 in total, to be paid either in cash or in common stock of SHRG, at the discretion of HWH. the 7 th SHRG Convertible Note bears an 8% interest rate and has scheduled maturity on June 27, 2028. At the time of filing, HWH has not converted any of the debt contemplated by the 7 th SHRG Convertible Note. On September 17, 2025, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “8 th SHRG Convertible Note”) in the amount of $70,000, convertible into 11,666,667 shares of SHRG’s common stock at HWH’s option for an aggregate purchase price of $70,000. The 8 th SHRG Convertible Note bears an 8% interest rate and has a scheduled maturity three years from the date of the note. Additionally, upon signing the 8 th SHRG Convertible Note, SHRG owed HWH a commitment fee of 8% of the principal amount, $5,600 in total, to be paid either in cash or in common stock of SHRG, at HWH’s discretion. At the time of filing, HWH has not converted any of the debt contemplated by the 8 th SHRG Convertible Note. 7 Acquisition of New Energy Asia Pacific Inc. On December 13, 2023 the Company entered into a term sheet with Chan Heng Fai (the “Seller”), the Chairman of the Board of Directors, Chief Executive Officer and largest stockholder of the Company. The Company had agreed to purchase from the Seller all of the issued and outstanding shares of New Energy Asia Pacific Inc. (“NEAPI”), a corporation incorporated in the State of Nevada, for the consideration of $103,750,000, to be paid in the form of a convertible promissory note to be issued to the Seller. NEAPI owns 41.5% of the issued and outstanding shares of New Energy Asia Pacific Limited (“New Energy”), a Hong Kong corporation. The parties mutually agreed to revise this agreement, and on May 8, 2025, the Company and the Seller entered into an Amended Term Sheet (the “Amended Term Sheet”). Under the terms of the Amended Term Sheet, the Company agreed to purchase from the Seller all of the outstanding shares of NEAPI through a stock purchase agreement for a purchase price of $83,000,000 in the form of a promissory note convertible into newly issued shares of the Company’s common stock (the “Convertible Note”). The Convertible Note had an interest rate of 1% per annum. Under the terms of the Convertible Note, the Seller was able to convert any outstanding principal and interest into shares of the Company’s common stock at $3.00 per share upon ten (10) days’ notice prior to maturity of the Convertible Note five (5) years from the date of the Amended Term Sheet, and upon maturity of the Convertible Note any outstanding principal and accrued interest accrued thereunder would automatically be converted into shares of the Company’s common stock at the conversion rate. New Energy focuses on distributing all-electric versions of special-purpose and transportation vehicles, charging stations and batteries. The Company intends for this to be a strategic move, in line with the Company’s commitment to advancing sustainable and eco-friendly solutions for the future. The Seller is a member of the Board of Directors of New Energy and is a stockholder of New Energy. The closing of the transactions contemplated by the Amended Term Sheet occurred on July 23, 2025. Purchase of DSS Shares On May 21, 2024, the Company entered into a Securities Purchase Agreement (the “DSS Securities Purchase Agreement”) with the Company’s Chairman and Chief Executive Officer, Chan Heng Fai, and Heng Fai Holdings Limited, a company wholly owned by Mr. Chan. Pursuant to the DSS Securities Purchase Agreement, the Company will purchase 982,303 shares of DSS Inc., a NYSE-listed company. These shares include 979,325 shares of DSS common stock to be acquired from Mr. Chan and 2,978 shares to be acquired from Heng Fai Holdings Limited (collectively, the “Shares”). The Shares represent approximately 13.9% of the total issued and outstanding shares of DSS as of the date hereof. As consideration for the Shares, the Company will issue a total of 3,316,488 shares of its common stock to Mr. Chan and Heng Fai Holdings Limited. The consideration to be paid for the Shares is based on the relevant market closing price of DSS common stock and the Company’s common stock as of May 3, 2024. Approval of the transactions described herein was granted by the Board of Directors of the Company (“the Board”) during a meeting of the Board held on May 6, 2024. Mr. Chan and Chan Tung Moe, another member of the Board and the son of Mr. Chan, recused themselves from discussion and voting on the approval of such transaction and the acquisition of the DSS Shares. The closing of the transactions contemplated by the DSS Securities Purchase Agreement remained subject to the approval of the Company’s stockholders and no objection from the Nasdaq. The parties subsequently mutually agreed not to proceed with this transaction. Reorganization of Real Estate Business and Spin-off On August 1, 2025, the Company’s indirect majority-owned subsidiary Winning Catering Group, Inc. (then known as LiquidValue Development Inc., or “LVD”) entered into a Contribution Agreement with Alset Real Estate Holdings Inc., its wholly owned subsidiary (“Alset Real Estate Holdings”). Pursuant to the terms of the Contribution Agreement, LVD agreed to transfer its ownership of all of the issued and outstanding shares of Alset EHome Inc., the company that owned substantially all of the assets and liabilities of LVD, to Alset Real Estate Holdings. On August 18, 2025, LVD completed the distribution of substantially all of its assets to holders of its common stock as of August 15, 2025, in the form of a one-time special dividend (the “Distribution”). The Distribution consisted of all of the issued and outstanding shares of Alset Real Estate Holdings Inc., having an aggregate fair market value of approximately $34.8 million as of the date of Distribution, and constituting substantially all of LVD’s net asset value. LVD shareholders received shares on a pro rata basis, based on the number of shares of the LVD’s common stock. Following this transaction, LVD had no material operations or sources of revenue and would be considered a shell company. Because of the Contribution Agreement and the Distribution, the Company’s ownership interest in Alset Real Estate Holdings Inc. mirrors its ownership interest in LVD at the time of the Distribution. Therefore, the Company’s ownership interest in Alset EHome Inc. and its real estate business remains unchanged following the transactions described above. On September 22, 2025, LiquidValue Development Inc. changed its name to “Winning Catering Group, Inc.” in anticipation of a planned merger pursuant to an Acquisition Agreement and Plan of Merger (the “Acquisition Agreement”) entered into on May 30, 2025 (such merger has not yet closed as of the date hereof). The Acquisition Agreement was entered into by LVD with (i) SeD Intelligent Home Inc., a Nevada corporation, the majority shareholder of LVD and an indirect majority-owned subsidiary of the Company (“SeD”); (ii) LVD Merger Corp., a Nevada corporation and wholly owned subsidiary of LVD (the “Merger Sub”); (iii) Winning Catering Management Limited, a British Virgin Islands corporation (“Winning Group”); (iv) Winning Holdings Limited, a British Virgin Islands corporation (“Winning Holdings”); and (iv) Pure Talent Group Limited, a British Virgin Islands corporation (“PTGL” and collectively, the “Parties”). Pursuant to the terms of the Acquisition Agreement, the Merger Sub will merge with and into Winning Group (the “Merger”), with Winning Group surviving the Merger. Following the Merger, Winning Group will become a wholly owned subsidiary of LVD. In connection with the Merger and as part of the transaction structure, the Parties also agreed that: 3,754,897,728 new fully paid, non-assessable shares of LVD’s common stock will be issued to Winning Holdings and 234,681,108 shares will be issued to PTGL. At the closing of these transactions, (i) Winning Holdings will own 80% of the issued and outstanding shares of LVD; (ii) SeD and other existing stockholders will retain 15% of the LVD’s shares; and (iii) PTGL will own 5% of LVD’s shares. Winning Group’s principal line of business is Wing Nin, a Hong Kong food and beverage brand. Renowned for its cart noodles, a Hong Kong staple, Wing Nin sells customizable bowls featuring a choice of noodle bases, a wide array of toppings, and a rich homemade spicy curry sauce. Wing Nin began as a street vendor in the 1960s and has expanded in recent years. Today, Wing Nin has thirteen locations across Hong Kong. Matters that May or Are Currently Affecting Our Business In addition to the matters described above, the primary challenges and trends that could affect or are affecting our financial results include: ● Our ability to improve our revenue through cross-selling and revenue-sharing arrangements among our diverse group of companies; 8 ● Our ability to identify complementary businesses for acquisition, obtain additional financing for these acquisitions, if and when needed, and profitably integrate them into our existing operations; ● Our ability to attract competent and skilled technical and sales personnel for each of our businesses at acceptable compensation levels to manage our overhead; ● Our ability to control our operating expenses as we expand each of our businesses and product and service offerings; and ● The effects of public health issues such as a major epidemic or pandemic, including the impact of COVID-19 on the economy and our business. Results of Operations Summary of Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 Three- Months Ended Nine-months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Revenue $ 998,828 $ 4,960,711 $ 3,166,093 $ 12,173,964 Operating Expenses $ (3,577,806 ) $ (5,924,492 ) $ (12,432,650 ) $ (18,213,728 ) Other Income (Expenses) $ 4,547,503 $ 2,433,020 $ (7,068,004 ) $ (954,752 ) Income Tax Expense $ (4,524 ) $ - $ (47,472 ) $ - Net Income (Loss) $ 1,964,001 $ 1,469,239 $ (16,382,033 ) $ (6,994,516 ) Revenue The following tables set forth period-over-period changes in revenue for each of our reporting segments: Three-months Ended Change September 30, 2025 September 30, 2024 Dollars Percentage Real Estate $ 692,890 $ 4,539,699 $ (3,846,809 ) -85 % Digital Transformation Technology 151 - 151 100 % Other 305,787 421,012 (115,225 ) -27 % Total Revenue $ 998,828 $ 4,960,711 $ (3,961,883 ) -80 % Nine-months Ended Change September 30, 2025 September 30, 2024 Dollars Percentage Real Estate $ 2,126,737 $ 10,997,704 $ (8,870,967 ) -81 % Digital Transformation Technology 151 - 151 100 % Other 1,039,205 1,176,260 (137,055 ) -12 % Total Revenue $ 3,166,093 $ 12,173,964 $ (9,007,871 ) -74 % Revenue was $998,828 and $4,960,711 for the three months ended September 30, 2025 and 2024, respectively. Revenue was $3,166,093 and $12,173,964 for the nine months ended September 30, 2025 and 2024, respectively. The decrease in revenue is mainly caused by the fact that the remaining properties in the Lakes at Black Oak and Alset Villas projects were sold in 2024. 9 In late 2022 and early 2023, the Company entered into three contracts with builders to sell multiple lots from its Lakes at Black Oak project. The sales contemplated by these contracts were contingent on certain conditions which the parties to such contracts had to meet and were expected to generate approximately $23 million of funds from operations, not including certain expenses that the Company was required to pay. The sale of 335 lots closed in the first nine months of 2023 generating approximately $18.1 million revenue. The sale of remaining lots closed on January 4, 2024 generating approximately $5.0 million revenue. Revenue from rental business was $692,890 and $724,699 in the three months ended September 30, 2025 and 2024, respectively. Revenue from rental business was $2,126,737 and $2,150,204 in the nine months ended September 30, 2025 and 2024, respectively. The Company expects that the revenue from this business will continue to increase as we acquire more rental houses and successfully rent them. The category described as “Other” includes corporate and financial services, food and beverage business, and new venture businesses. “Other” includes certain costs that are not allocated to the reportable segments, primarily consisting of unallocated corporate overhead costs, including administrative functions not allocated to the reportable segments from global functional expenses. The financial services, food and beverage businesses and new venture businesses are small and diversified, and accordingly they are not separately addressed as one independent category. In the three months ended September 30, 2025 and 2024, the revenue from other businesses was $305,938 and $421,012, respectively. In the nine months ended September 30, 2025 and 2024, the revenue from other businesses was $1,039,205 and $1,176,260, respectively, generated by Korean, Singaporean and Chinese café shops and restaurants. Cost of Revenues and Operating Expenses The following tables sets forth period-over-period changes in cost of revenues for each of our reporting segments: Three-months Ended Change September 30, 2025 September 30, 2024 Dollars Percentage Real Estate $ 650,329 $ 2,700,952 $ (2,050,623 ) -76 % Biohealth - 22 (22 ) -100 % Digital Transformation Technology 223 - 223 100 % Other 105,817 248,850 (143,033 ) -57 % Total Cost of Revenues $ 756,369 $ 2,949,824 $ (2,193,455 ) -74 % Nine-months Ended Change September 30, 2025 September 30, 2024 Dollars Percentage Real Estate $ 1,905,090 $ 7,882,274 $ (5,977,184 ) -76 % Biohealth - 3,409 (3,409 ) -100 % Digital Transformation Technology 223 - 223 100 % Other 471,631 552,466 (80,835 ) -15 % Total Cost of Revenues $ 2,376,944 $ 8,438,149 $ (6,061,205 ) -72 % Cost of revenues decreased from $2,949,824 in the three months ended September 30, 2024 to $756,369 in the three months ended September 30, 2025. Cost of revenues decreased from $8,438,149 in the nine months ended September 30, 2024 to $2,376,944 in the nine months ended September 30, 2025. The decrease in cost of revenue is caused by the decrease in property sales from the Lakes at Black Oak project in 2025. The last lots in Lakes at Black Oak project were sold during 2024. 10 The gross margin decreased from $2,010,887 to $242,459 in the three months ended September 30, 2024 and 2025, respectively. The gross margin decreased from $3,735,815 to $789,149 in the nine months ended September 30, 2024 and 2025, respectively. The decrease of gross margin was caused by the decrease in sales in the Lakes at Black Oak Project. The following tables sets forth period-over-period changes in operating expenses for each of our reporting segments. Three-months Ended Change September 30, 2025 September 30, 2024 Dollars Percentage Real Estate $ (8,527 ) $ 381,254 $ (389,781 ) -102 % Biohealth 44,219 (204,709 ) 248,928 -122 % Digital Transformation Technology 125,403 130,908 (5,505 ) -4 % Other 2,660,342 2,667,214 (6,873 ) 0 % Total Operating Expenses $ 2,821,436 $ 2,974,667 $ (153,231 ) -5 % Nine-months Ended Change September 30, 2025 September 30, 2024 Dollars Percentage Real Estate $ 1,369,966 $ 1,321,120 $ 48,846 4 % Biohealth 446,268 910,354 (464,087 ) -51 % Digital Transformation Technology 448,809 421,543 27,266 6 % Other 7,790,664 7,122,562 668,102 9 % Total Operating Expenses $ 10,055,706 $ 9,775,579 $ 280,127 3 % The increase of operating expenses in the first nine months of 2025 compared to the same period of 2024 was mostly caused by the bonus paid to CEO. Other Income (Expense) In the three months ended September 30, 2025, the Company had other income of $ 4,547,503 compared to other income of $2,433,020 in the three months ended September 30, 2024. In the nine months ended September 30, 2025, the Company had other expense of $ 7,068,004 compared to other expense of $954,752 in the nine months ended September 30, 2024 . The loss/gain on foreign exchange transaction is the primary reason for the volatility in these two periods. Foreign exchange transaction gain was $1,448,155 in the three months ended September 30, 2025, compared to $3,673,699 loss in the three months ended September 30, 2024. Foreign exchange transaction loss was $4,795,345 in the nine months ended September 30, 2025, compared to $1,634,713 loss in the nine months ended September 30, 2024. Net Loss In the three months ended September 30, 2025 the Company had net income of $1,964,001 compared to net income of $1,469,239 in the three months ended September 30, 2024. In the nine months ended September 30, 2025, the Company had net loss of $16,382,033 compared to net loss of $6,994,516 in the nine months ended September 30, 2024. Liquidity and Capital Resources Our real estate assets have decreased to $29,889,632 as of September 30, 2025 from $30,695,669 as of December 31, 2024. This decrease reflects depreciation expenses on the rental properties. 11 Our cash has decreased from $27,243,787 as of December 31, 2024 to $25,459,416 as of September 30, 2025. Our liabilities decreased from $6,563,126 at December 31, 2024 to $4,711,668 at September 30, 2025. Our total assets have increased to $169,106,722 as of September 30, 2025 from $96,761,977 as of December 31, 2024 mainly due to increase in value of investment securities and purchasing equity investment. 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 is 1.5% per annum on the face amount of the L/C. Other standard lender fees 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 a $2,600,000 collateral fund and a Deed of Trust issued to the Lender on the property owned by SeD Maryland. 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. On November 13, 2023, the Company 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 agreed to sell approximately 142 single-family detached residential lots comprising a section of a residential community in the Lakes at Black Oak. The selling price of these lots was anticipated to equal approximately $7.4 million. Pursuant to the other Agreement, the Seller 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 EHome was in the process of developing the 63 lots at Alset Villas in 2023. The closing of the transactions described above depended on the satisfaction of certain conditions. On July 1, 2024, the Seller closed the sale of 70 of the lots contemplated by that certain Agreement, generating approximately $3.8 million. The sale of the remaining 72 lots at Lakes at Black Oak closed on October 10, 2024 generating approximately $3.9 million. The sale of 63 lots at Alset Villas closed on December 16, 2024 generating approximately $3.8 million. Additionally, the Company is entitled to receive certain developer reimbursements for the Lakes at Black Oak and Alset Villas projects. The management believes that the available cash in bank accounts and favorable cash revenue from real estate projects are sufficient to fund our operations for at least the next 12 months. Summary of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 Nine-months Ended 2025 2024 Net cash (used in) provided by operating activities $ (5,491,443 ) $ (8,751,416 ) Net cash provided by investing activities $ 614,518 $ 18,707,934 Net cash provided by (used in) financing activities $ 1,997,810 $ (21,370,610 ) Cash Flows from Operating Activities Net cash used in operating activities was $5,491,443 in the first nine months of 2025, as compared to net cash used in operating activities of $8,751,416 in the same period of 2024. Purchase of trading securities and paying off payables in 2025 were the main reason for the cash used in operating activities in that period. Cash Flows from Investing Activities Net cash provided by investing activities was $18,707,934 in the nine months ended September 30, 2024, compared to net cash provided of $614,518 in the nine months ended September 30, 2025. In the nine months ended September 30, 2025, the Company issued $1,918,240 in loans to related parties and spent $205,851 to purchase fixed assets and $40,000 to purchase security investment. At the same time, we received $165,466 from repayment of related party loan and $2,613,143 from the sale of securities of a related party. In the nine months ended September 30, 2024, the Company issued $1,368,083 in loans to related parties and $1,212,021 in loans receivable. At the same time, we received $101,096 from repayment of related party loan and withdrew cash from trust account of $21,102,871 for redemption of HWH’s shares. 12 Cash Flows from Financing Activities Net cash provided by financing activities was $1,997,810 in the nine months ended September 30, 2025, compared to net cash used of $21,370,610 in the nine months ended September 30, 2024. The cash provided by financing activities in the first nine months of 2025 was from proceeds from issuing common stock of $2,614,983. In that same period, the Company repaid $275,374 of note payable, repurchased its own stock for $420,273 and borrowed $78,474 from commercial loan. The cash used in financing activities in the first nine months of 2024 is caused by repayment of $398,000 of note payable and repayment of HWH’s shares of $21,102,871. In that same period, the Company borrowed $130,261 from commercial loan. Impact of Inflation We believe that inflation has not had a material impact on our results of operations for the nine months ended September 30, 2025 or the year ended December 31, 2024. We cannot assure you that future inflation will not have an adverse impact on our operating results and financial condition. Impact of Foreign Exchange Rates The effect of foreign exchange rate changes on the intercompany loans (under ASC 830), which mostly consist of loans from Singapore to the United States and which were approximately $30 million and $30 million on September 30, 2025 and December 31, 2024, respectively, are the reason for the significant fluctuation of foreign currency transaction Gain or Loss on the Condensed Consolidated Statements of Operations and Other Comprehensive Loss. Because the intercompany loan balances between Singapore and United States will remain at approximately $30 million over the next year, we expect this fluctuation of foreign exchange rates to still significantly impact the results of operations in 2025, especially given that the foreign exchange rate may and is expected to be volatile. If the amount of intercompany loan is lowered in the future, the effect will be reduced. However, at this moment, we do not expect to repay the intercompany loans in the short term. Emerging Growth Company Status We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of these exemptions until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of this exemption. Seasonality The real estate business is subject to seasonal shifts in costs as certain work is more likely to be performed at certain times of the year. This may impact the expenses of our subsidiary Alset EHome Inc. from time to time. In addition, should we commence building homes, we are likely to experience periodic spikes in sales as we commence the sales process at a particular location. Item 3. Quantitative and Qualitative Disclosures about Market Risk As a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K, the Company is not required to provide the information required by this Item.