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, the People’s Republic of China and Taiwan. 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 62.3% of HWH International Inc. 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), a 29% equity interest in Sharing Services Global Corporation (“SHRG”) and a 41.5% equity interest in New Energy Asia Pacific Company Limited (“New Energy”). 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. New Energy focuses on distributing all-electric versions of special-purpose and transportation vehicles, charging stations and batteries. 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. 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. Convertible Loan to Value Exchange International, Inc. 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). Convertible Loans to Sharing Services Global Corp. 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, which was extended to January 15, 2028. The 1 st Loan Agreement bears an 8% interest rate. 4 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 a 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. On October 6, 2025, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “9 th SHRG Convertible Note”) in the amount of $200,000, convertible into 33,333,333 shares of SHRG’s common stock at HWH’s option for an aggregate purchase price of $200,000. The 9 th SHRG Convertible Note bears an 8% interest rate and has a scheduled maturity three years from the date of the note, October 6, 2028. Additionally, upon signing the 9 th SHRG Convertible Note, SHRG owed HWH a commitment fee of 8% of the principal amount, $16,000 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 9 th SHRG Convertible Note. On December 10, 2025, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “10 th SHRG Convertible Note”) in the amount of $150,000, convertible into 25,000,000 shares of SHRG’s common stock at HWH’s option for an aggregate purchase price of $150,000. The 10 th SHRG Convertible Note bears an 8% interest rate and has a scheduled maturity three years from the date of the note, December 10, 2028. Additionally, upon signing the 10 th SHRG Convertible Note, SHRG owed HWH a commitment fee of 8% of the principal amount, $12,000 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 10 th SHRG Convertible Note. On January 2, 2026, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “11 th SHRG Convertible Note”) in the amount of $40,000, convertible into 6,666,667 shares of SHRG’s common stock at HWH’s option for an aggregate purchase price of $40,000. The 11 th SHRG Convertible Note bears an 8% interest rate and has a scheduled maturity three years from the date of the note, January 2, 2029. Additionally, upon signing the 11 th SHRG Convertible Note, SHRG owed HWH a commitment fee of 8% of the principal amount, $3,200 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 11 th SHRG Convertible Note. 5 On January 8, 2026, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “12 th SHRG Convertible Note”) in the amount of $120,000, convertible into SHRG common stock at $0.006 per share at HWH’s option. The 12 th SHRG Convertible Note bears an 8% interest rate and has a scheduled maturity three years from the date of the note, January 8, 2029. Additionally, upon signing the 12 th SHRG Convertible Note, SHRG owed HWH a commitment fee of 8% of the principal amount, $9,600 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 12 th SHRG Convertible Note. On February 4, 2026, HWH entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a Convertible Promissory Note (the “13 th SHRG Convertible Note”) in the amount of $125,000, convertible into SHRG common stock at $0.006 per share at HWH’s option. The 13 th SHRG Convertible Note bears an 8% interest rate and has a scheduled maturity three years from the date of the note, February 4, 2029. Additionally, upon signing the 13 th SHRG Convertible Note, SHRG owed HWH a commitment fee of 8% of the principal amount, $10,000 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 13 th SHRG Convertible Note. 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. During the year ended December 31, 2025, the Company recognized an impairment charge of approximately $30.1 million related to its investment in New Energy. The impairment was recognized after management determined that the decline in fair value below carrying value was other-than-temporary, based on factors including: ● delays in the execution and commercialization of New Energy’s taxi delivery projects; ● revised cash flow projections, including slower ramp-up and longer implementation timelines; and ● changes in market conditions in the distributed energy sector, including broader global geopolitical uncertainty. 6 The Company valued its investment using a discounted cash flow methodology based on updated assumptions. The impairment primarily reflects delays in execution and cash flow realization, rather than a fundamental change in business outlook. 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. Planned Sale of Shares of Hapi Metaverse Inc. to HWH International Inc. On February 5, 2026, the Company entered into a term sheet (the “Term Sheet”), with HWH International Inc. (“HWH”), a majority owned subsidiary of the Company. Pursuant to the Term Sheet, the Company agreed to sell to the HWH 505,341,376 issued and outstanding shares of common stock, par value $0.0001 (the “Shares”), of Hapi Metaverse Inc. (“Hapi Metaverse”), representing 99.55% of Hapi Metaverse’s outstanding capital. Under the terms of the Term Sheet, the Company agreed to sell the Shares through a stock purchase agreement for a purchase price of $19,910,603.00 in the form of a promissory note convertible into newly issued shares of HWH’s common stock (the “Stock Purchase Agreement,” and the “Convertible Note”). Under the terms of the Convertible Note, the Company could convert any outstanding principal and interest into shares of HWH’s common stock at $1.85 per share upon ten (10) days’ notice prior to maturity of the Convertible Note five (5) years from the date of the Term Sheet, and upon maturity of the Convertible Note any outstanding principal and accrued interest accrued thereunder would automatically be converted into shares of HWH’s common stock at the conversion rate. The closing of the transaction contemplated by the Term Sheet would be subject to standard closing conditions, including the approval by the stockholders of HWH holding a majority of HWH’s common stock. The Company and certain affiliates of the Company own the majority of HWH’s common stock. On February 5, 2026, the Company entered into the Stock Purchase Agreement with HWH, reflecting the terms set forth in the Term Sheet. The stockholders holding a majority of HWH’s issued and outstanding shares approved the proposed transaction. The Company and its subsidiary HWH subsequently agreed to terminate the purchase and sale of the Hapi Metaverse Shares, and the agreements contemplating the same, on the terms and subject to the conditions set forth in a Termination Agreement dated May 6, 2026. The management of the Company and HWH have determined that terminating the sale and purchase of the Hapi Metaverse Shares is in the best interests of both parties. Under the terms of the May 6, 2026 Termination Agreement, neither HWH nor the Company has any further rights or obligations pursuant to the Term Sheet, the Stock Purchase Agreement, or the Convertible Note. Neither the Company nor HWH paid any penalties or fees in connection with the termination. 7 Securities Purchase Agreement with DSS, Inc. On March 26, 2026, Alset International Limited (“Alset International”) entered into a securities purchase agreement (the “DSS SPA”) with DSS, Inc., pursuant to which Alset International lent DSS $2,450,000, in exchange for a convertible promissory note (the “DSS Note”) and warrants to purchase 16,554,055 shares of DSS common stock (the “DSS Warrants”). The DSS Note bears a simple interest rate of 3% per annum. Under the terms of the DSS Note, Alset International may convert any outstanding principal and interest into shares of DSS common stock at $0.74 per share upon notice prior to maturity of the DSS Note five (5) years from the date of thereof. The DSS Warrants to be issued to Alset International are to purchase up to 16,554,055 shares of DSS common stock at an exercise price of $0.93 per share. The DSS Warrants expire on their fifth anniversary. The Company holds a significant equity interest in DSS directly and through its subsidiaries. The Company and DSS are related parties under the common control of the Company’s Chairman and Chief Executive Officer, Chan Heng Fai, who is also the Chairman of DSS. Chan Tung Moe, a director and Co-Chief Executive Officer of the Company, is also a director of DSS. Lim Sheng Hon Danny, a director of the Company, is also a director of DSS. Three of the Company’s independent directors, Joanne Wong Hiu Pan, Wong Shui Yeung, and William Wu are also directors of DSS. The Transaction Documents were approved by the Company’s Board of Directors and Audit Committee. 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; ● 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 Months Ended March 31, 2026 and 2025 Three- Months Ended March 31, 2026 March 31, 2025 Revenue $ 980,778 $ 1,068,303 Operating Expenses $ (3,633,218 ) $ (5,000,421 ) Other Expenses $ (2,602,843 ) $ (5,529,826 ) Income Tax Expense $ - $ (42,948 ) Net Loss $ (5,255,283 ) $ (9,504,892 ) Revenue The following tables set forth period-over-period changes in revenue for each of our reporting segments: Three-months Ended Change March 31, 2026 March 31, 2025 Dollars Percentage Real Estate $ 726,659 $ 717,805 $ 8,854 1 % Other 254,119 350,498 (96,379 ) -27 % Total Revenue $ 980,778 $ 1,068,303 $ (87,525 ) -8 % Revenue was $980,778 and $1,068,303 for the three months ended March 31, 2026 and 2025, respectively. 8 Revenue from rental business was $726,659 and $717,805 in the three months ended March 31, 2026 and 2025, 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 March 31, 2026 and 2025, the revenue from other businesses was $254,119 and $350,498, respectively, generated by Korean, Singaporean and Chinese café shops and restaurants. Cost of Sales and Operating Expenses The following tables sets forth period-over-period changes in cost of sales for each of our reporting segments: Three-months Ended Change March 31, 2026 March 31, 2025 Dollars Percentage Real Estate $ 638,041 $ 602,785 $ 35,256 6 % Other 67,627 174,744 (107,117 ) -61 % Total Cost of Sales $ 705,668 $ 777,529 $ (71,861 ) -9 % Cost of sales decreased from $777,529 in the three months ended March 31, 2025 to $705,668 in the three months ended March 31, 2026. The decrease in cost of sales is caused by the decrease in cost from F&B business in 2025. The gross margin changed from $290,774 to $275,110 in the three months ended March 31, 2025 and 2026, respectively. The decrease of gross margin was caused by the decrease in revenue in 2025. The following tables sets forth period-over-period changes in operating expenses for each of our reporting segments. Three Months Ended Change March 31, 2026 March 31, 2025 Dollars Percentage Real Estate $ 668,431 $ 1,144,805 $ (476,374 ) -42 % Biohealth 97,620 512,932 (415,313 ) -81 % Digital Transformation Technology 49,389 163,554 (114,165 ) -70 % Other 2,112,111 2,401,601 (289,491 ) -12 % Total Operating Expenses $ 2,927,550 $ 4,222,892 $ (1,295,342 ) -31 % The decrease of operating expenses in the three months ended March 31, 2026 compared to the same period of 2025 was mostly caused by the decrease in impairments and bonuses. Other Income (Expense) In the three months ended March 31, 2026, the Company had other expense of $2,602,843 compared to other expense of $5,529,826 in the three months ended March 31, 2025 . The unrealized loss/gain on security investment is the primary reason for the volatility in these two periods. The unrealized loss on security investments was $2,571,644 in the three months ended March 31, 2026, compared to $3,520,747 loss in the three months ended March 31, 2025. 9 Net Loss In the three months ended March 31, 2026, the Company had net loss of $5,255,283 compared to net loss of $9,504,892 in the three months ended March 31, 2025. Liquidity and Capital Resources Our real estate assets have decreased to $29,352,273 as of March 31, 2026 from $29,620,952 as of December 31, 2025. This decrease reflects depreciation expenses on the rental properties. Our cash has decreased from $25,184,990 as of December 31, 2025 to $21,478,610 as of March 31, 2026. Our liabilities were $6,923,965 at December 31, 2025 and $3,985,867 at March 31, 2026. Our total assets have decreased to $131,741,859 as of March 31, 2026 from $136,587,114 as of December 31, 2025 mainly due to decrease 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 and February 11, 2026, approximately $201,751 and $107,991, respectively, was released from collateral for outstanding letters of credit. In February 2026, the remaining outstanding letter of credit was fully released, and the related letter-of-credit facility was closed. 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 twelve months from the filing of this Form 10-Q. Summary of Cash Flows for the Three Months Ended March 31, 2026 and 2025 Three Months Ended 2026 2025 Net cash used in operating activities $ (1,491,037 ) $ (3,756,154 ) Net cash used in investing activities $ (2,657,460 ) $ (461,505 ) Net cash (used in) provided by financing activities $ (6,152 ) $ 2,333,452 Cash Flows from Operating Activities Net cash used in operating activities was $1,491,037 in the three months ended March 31, 2026, as compared to net cash used in operating activities of $3,756,154 in the same period of 2025. Paying off payables in 2025 was the main reason for the cash used in operating activities in that period. 10 Cash Flows from Investing Activities Net cash used in investing activities was $461,505 in the three months ended March 31, 2025, compared to net cash used of $2,657,460 in the three months ended March 31, 2026. In the three months ended March 31, 2026, the Company issued $3,510,278 in loans to related parties and spent $6,870 to purchase fixed assets and $14,907 to purchase security investment. At the same time, we received $775,961 from repayment of related party loan and $98,634 from the sale of securities of a related party. In the three months ended March 31, 2025, the Company issued $479,297 in loans to related parties and spent $61,244 to purchase fixed assets. At the same time, we received $79,036 from repayment of related party loan. Cash Flows from Financing Activities Net cash used in financing activities was $6,152 in the three months ended March 31, 2026, compared to net cash provided of $2,333,452 in the three months ended March 31, 2025. The cash used in financing activities in the three months ended March 31, 2026 was for repayment of note payable of $10,968. At the same time the Company borrowed $4,816 from a note payable. The cash provided by financing activities in the first three months of 2025 was from proceeds from issuing common stock of $2,613,526. In that same period, the Company repaid $280,074 of note payable. Impact of Inflation We believe that inflation has not had a material impact on our results of operations for the three months ended March 31, 2026 or the year ended December 31, 2025. 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 March 31, 2026 and December 31, 2025, 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. 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.