UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________to ____________________

333-194748

Commission file number

Hapi Metaverse Inc.

(Exact name of registrant as specified in its charter)

Delaware		45-4742558
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4800 Montgomery Lane, Suite 210 Bethesda MD		20814
(Address of principal executive offices)		(Zip Code)

301-971-3940

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each the registrant’s classes of common stock, as of the latest practicable date. As of ~~August 11,~~November 7, 2023, there were 507,610,326 shares outstanding of the registrant’s common stock $0.0001 par value.

Throughout this Report on Form 10-Q, the terms “Company,” “we,” “us” and “our” refer to Hapi Metaverse Inc. and “our board of directors” refers to the board of directors of Hapi Metaverse Inc.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve a number of risks and uncertainties. Although our forward-looking statements reflect the good faith judgment of our management, these statements can be based only on facts and factors of which we are currently aware. Consequently, forward-looking statements are inherently subject to risks and uncertainties. Actual results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements.

Forward-looking statements can be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. Such forward-looking statements are based on our management’s current plans and expectations and are subject to risks, uncertainties and changes in plans that may cause actual results to differ materially from those anticipated in the forward-looking statements. You should be aware that, as a result of any of these factors materializing, the trading price of our common stock may decline. These factors include, but are not limited to, the following:

●	the availability and adequacy of capital to support and grow our business;
●	economic, competitive, business and other conditions in our local and regional markets;
●	actions taken or not taken by others, including competitors, as well as legislative, regulatory, judicial and other governmental authorities;
●	competition in our industry;
●	changes in our business and growth strategy, capital improvements or development plans;
●	the availability of additional capital to support development; and
●	other factors discussed elsewhere in this annual report.

The cautionary statements made in this quarterly report are intended to be applicable to all related forward-looking statements wherever they may appear in this report.

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION	4
ITEM 1. INTERIM FINANCIAL STATEMENTS	4
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF ~~JUNE~~SEPTEMBER 30, 2023 AND DECEMBER 31, 2022 (UNAUDITED)	5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)	6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS’ DEFICIT FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)	7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)	8
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29
ITEM 4. CONTROLS AND PROCEDURES	29
PART II OTHER INFORMATION	29
ITEM 1. LEGAL PROCEEDINGS	29
ITEM 1A. RISK FACTORS	29
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	30
ITEM 4. MINE SAFETY DISCLOSURES	30
ITEM 5. OTHER INFORMATION	30
ITEM 6. EXHIBITS	30

PART I FINANCIAL INFORMATION

ITEM 1. INTERIM FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2023 and December 31, 2022 ~~(unaudited)~~	5

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 (unaudited)	6

Condensed Consolidated Statements of Change in Stockholders’ Deficit for the three and ~~six~~nine months ended ~~June 31,~~September 30, 2023 and 2022 (unaudited)	7

Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 (unaudited)	8

Notes to Unaudited Condensed Consolidated Financial Statements	9

HAPI METAVERSE INC. (FORMERLY KNOWN AS GIGWORLD INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF ~~JUNE~~SEPTEMBER 30, 2023 AND DECEMBER 31, 2022 ~~(UNAUDITED)~~

							(UNAUDITED)
	June 30, 2023			December 31, 2022			September 30, 2023			December 31, 2022
ASSETS

CURRENT ASSETS:
Cash	$	485,776		$	514,260		$	684,053		$	514,260
Prepaid expenses and other current assets		116,420			118,933			123,878			118,933
Prepaid expenses and other current assets – related party		55,799			2,802			61,052			2,802
Prepaid expenses and other current assets		55,799			2,802
Investment in Securities – related party		1,377,616			2,341,948			10,174,808			2,341,948
TOTAL CURRENT ASSETS		2,035,611			2,977,943			11,043,791			2,977,943

Property and Equipment, net		5,847			10,305			7,427			10,305
Convertible promissory note receivable - related party		1,400,000			-			100,000			-
Goodwill		274,234			60,343			274,445			60,343
Operating lease right-of-use assets, net		240,606			129,478			304,546			129,478
TOTAL ASSETS	$	3,956,298		$	3,178,069		$	11,730,209		$	3,178,069

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	36,770		$	24,601		$	42,296		$	24,601
Accounts payable and accrued expenses – related party		7,692			7,838			7,698			7,838
Accounts payable and accrued expenses		7,692			7,838
Accrued taxes		1,674			3,816			1,226			3,816
Amount due to related parties		5,445,154			4,886,507			5,871,756			4,886,507
Convertible promissory note payable - related party		1,400,000			-			1,400,000			-
Operating lease liabilities-Current		119,966			71,899			162,896			71,899
TOTAL CURRENT LIABILITIES		7,011,256			4,994,661			7,485,872			4,994,661

NON- CURRENT LIABILITIES:
Operating lease liabilities - Non-current	$	125,468		$	59,196		$	147,659		$	59,196
TOTAL NON-CURRENT LIABILITIES		125,468			59,196			147,659			59,196

TOTAL LIABILITIES		7,136,724			5,053,857			7,633,531			5,053,857

STOCKHOLDERS’ DEFICIT:
Preferred stock, $0.0001 par value, 15,000,000 shares authorized, 0 issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Common stock, $0.0001 par value, 1,000,000,000 shares authorized, 507,610,326 and 506,898,576 shares issued and outstanding, as of June 30, 2023 and December, 31 2022, respectively		50,761			50,690
COMMITMENTS AND CONTINGENCIES								-			-
STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock, $0.0001 par value, 15,000,000 shares authorized, 0 issued and outstanding as of September 30, 2023 and December 31, 2022								-			-
Common stock, $0.0001 par value, 1,000,000,000 shares authorized, 507,610,326 and 506,898,576 shares issued and outstanding, as of September 30, 2023 and December, 31 2022, respectively								50,761			50,690
Additional paid-in capital		4,680,139			4,679,498			11,168,596			4,679,498
Accumulated other comprehensive loss		(271,327	)		(315,241	)		(248,870	)		(315,241	)
Accumulated deficit		(7,637,279	)		(6,288,884	)		(6,870,674	)		(6,288,884	)
TOTAL HAPI METAVERSE INC STOCKHOLDERS’ DEFICIT		(3,177,706	)		(1,873,937	)
TOTAL HAPI METAVERSE INC STOCKHOLDERS’ EQUITY (DEFICIT)								4,099,813			(1,873,937	)
NON-CONTROLLING INTERESTS		(2,720	)		(1,851	)		(3,135	)		(1,851	)
TOTAL STOCKHOLDERS’ DEFICIT		(3,180,426	)		(1,875,788	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)								4,096,678			(1,875,788	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	3,956,298		$	3,178,069
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)							$	11,730,209		$	3,178,069

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HAPI METAVERSE INC. (FORMERLY KNOWN AS GIGWORLD INC.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)

	Three Months Ended June 30, 2023			Three Months Ended June 30, 2022			Six Months Ended June 30, 2023			Six Months Ended June 30, 2022			Three Months Ended 30-Sep-23			Three Months Ended 30-Sep-22			Nine Months Ended 30-Sep-23			Nine Months Ended 30-Sep-22

Revenues:
Food & Beverage	$	52,904		$	-		$	101,427		$	-		$	51,433		$	-		$	152,860		$	-
Services Rendered – related party		14,034			7,701			28,074			7,701			20			6,365			28,094			14,066
Total of Revenue		66,938			7,701			129,501			7,701			51,453			6,365			180,954			14,066

Cost of revenues
Food & Beverage - Depreciation	$	(1,578	)	$	-		$	(6,391	)	$	-		$	(5	)	$	-		$	(6,396	)	$	-
Food & Beverage - Cost of revenues		(14,706	)		-			(28,873	)		-			(13,646	)		-			(42,519	)		-
Services Rendered – Cost of revenues		(4,570	)		(2,792	)		(9,138	)		(2,792	)		(7	)		(1,781	)		(9,145	)		(4,573	)
Total Cost of Revenue		(20,854	)		(2,792	)		(44,402	)		(2,792	)		(13,658	)		(1,781	)		(58,060	)		(4,573	)

Gross profit	$	46,084		$	4,909		$	85,099		$	4,909		$	37,795		$	4,584		$	122,894		$	9,493

Operating expenses:
Depreciation	$	618		$	415		$	1,089		$	580		$	842		$	471		$	1,931		$	1,051
General and administrative		172,444			55,237			426,297			158,748			253,739			95,317			680,036			254,065
Total operating expenses		173,062			55,652			427,386			159,328			254,581			95,788			681,967			255,116

(Loss) from operations		(126,978	)		(50,743	)		(342,287	)		(154,419	)		(216,786	)		(91,204	)		(559,073	)		(245,623	)

Other income (loss):
Interest income		27,944			1			39,000			2			21,558			1			60,558			3
Other income		10			1,022			11			1,022			-			1,736			11			2,757
Interest expense		(27,923	)		-			(38,970	)		-			(28,231	)		-			(67,201	)		-
Foreign exchange (loss)		(49,046	)		(24,769	)		(42,699	)		(34,710	)		(19,085	)		(96,182	)		(61,784	)		(130,892	)
Unrealized (loss) gain on Securities Investment		68,881			(279,500	)		(964,331	)		(734,500	)
Unrealized gain (loss) on Securities Investment – related party														1,008,735			(500,500	)		44,404			(1,235,000	)
Gain on disposal of a subsidiary		-			3,218			-			3,218			-			-			-			3,218
Total other (loss) income		19,866			(300,028	)		(1,006,989	)		(764,968	)
Total other income (loss)														982,977			(594,945	)		(24,012	)		(1,359,914	)

(Loss) Income before taxes		(107,112	)		(350,771	)		(1,349,276	)		(919,387	)
Income (Loss) before taxes														766,191			(686,149	)		(583,085	)		(1,605,537	)
Current income tax expense		-			-			-			-			-			-			-			-
Net (loss) income from Continuing Operations	$	(107,112	)	$	(350,771	)	$	(1,349,276	)	$	(919,387	)
Net income (loss) from Discontinuing Operations, Net of Tax		-			(3	)		-			(648	)
Net income (loss) from Continuing Operations													$	766,191		$	(686,149	)	$	(583,085	)	$	(1,605,537	)
Net loss from Discontinuing Operations, Net of Tax														-			-			-			(648	)
Net (loss) attributable to Non-controlling interests		(678	)		(16	)		(881	)		(27	)		(414	)		(31	)		(1,295	)		(58	)
Net (loss) income applicable to common shareholders	$	(106,434	)	$	(350,758	)	$	(1,348,395	)	$	(920,008	)
Net income (loss) applicable to common shareholders													$	766,605		$	(686,118	)	$	(581,790	)	$	(1,606,127	)

Comprehensive Income (Loss):
Net (loss) income	$	(107,112	)	$	(350,774	)	$	(1,349,276	)	$	(920,035	)
Foreign currency translation gain (loss)		62,008			89,537			43,926			106,467
Total comprehensive (loss) income	$	(45,104	)	$	(261,237	)	$	(1,305,350	)	$	(813,568	)
Comprehensive Income (Loss) – Common shareholder:
Net income (loss)													$	762,766		$	(684,041	)	$	(580,816	)	$	(1,601,251	)
Foreign currency translation gain														22,356			103,774			66,124			209,914
Total comprehensive income (loss)													$	785,122		$	(580,267	)	$	(514,692	)	$	(1,391,337	)

Net (loss) income per share - basic and diluted
Comprehensive Income (Loss) – Non-controlling interest:
Net income (loss)													$	3,425		$	(2,108	)	$	(2,269	)	$	(4,934	)
Foreign currency translation gain														100			320			258			647
Total comprehensive income (loss)													$	3,525		$	(1,788	)	$	(2,011	)	$	(4,287	)

Net income (loss) per share - basic and diluted
Continuing Operations	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	0.00		$	(0.00	)	$	(0.00	)	$	(0.00	)
Discontinuing Operations	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Basic Net (loss) income per share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Basic and diluted Net (loss) income per share													$	0.00		$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted number of shares outstanding -
Basic and diluted		507,430,433			506,898,576			507,165,974			506,898,576
Basic														507,610,326			506,898,576			507,315,719			506,898,576
Diluted														510,410,326			506,898,576			507,315,719			506,898,576

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HAPI METAVERSE INC. (FORMERLY KNOWN AS GIGWORLD INC.)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)

	Common Shares		Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Hapi Metaverse Inc Stockholders’ Deficit			Non-Controlling Interests			Stockholders’ Equity (Deficit)			Common Shares		Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Hapi Metaverse Inc Stockholders’ Deficit			Non-Controlling Interests			Stockholders’ Equity (Deficit)
Balance December 31, 2022		506,898,576	$	50,690	$	4,679,498	$	(315,241	)	$	(6,288,884	)	$	(1,873,937	)	$	(1,851	)	$	(1,875,788	)		506,898,576	$	50,690	$	4,679,498	$	(315,241	)	$	(6,288,884	)	$	(1,873,937	)	$	(1,851	)	$	(1,875,788	)
Net loss for the period		-		-		-		-			(1,241,961	)		(1,241,961	)		(203	)		(1,242,164	)		-		-		-		-			(1,241,961	)		(1,241,961	)		(203	)		(1,242,164	)
Foreign currency translation adjustment		-		-		-		(18,082	)		-			(18,082	)		15			(18,067	)		-		-		-		(18,082	)		-			(18,082	)		15			(18,067	)

Balance March 31, 2023		506,898,576	$	50,690	$	4,679,498	$	(333,323	)	$	(7,530,845	)	$	(3,133,980	)	$	(2,039	)	$	(3,136,019	)		506,898,576	$	50,690	$	4,679,498	$	(333,323	)	$	(7,530,845	)	$	(3,133,980	)	$	(2,039	)	$	(3,136,019	)
Issuance of common stock		711,750		71		641								712			-			712			711,750		71		641								712			-			712
Net (loss) for the period		-		-		-		-			(106,434	)		(106,434	)		(678	)		(107,112	)		-		-		-		-			(106,434	)		(106,434	)		(678	)		(107,112	)
Foreign currency translation adjustment		-		-		-		61,996			-			61,996			(3	)		61,993			-		-		-		61,996			-			61,996			(3	)		61,993

Balance June 30, 2023		507,610,326	$	50,761	$	4,680,139	$	(271,327	)	$	(7,637,279	)	$	(3,177,706	)	$	(2,720	)	$	(3,180,426	)		507,610,326	$	50,761	$	4,680,139	$	(271,327	)	$	(7,637,279	)	$	(3,177,706	)	$	(2,720	)	$	(3,180,426	)
Acquisition of VEII warrants via loan conversion																							-		-		6,488,457		-			-			6,488,457						6,488,457
Net income (loss) for the period																							-		-		-		-			766,605			766,605			(414	)		766,191
Foreign currency translation adjustment																							-		-		-		22,457			-			22,457			(1	)		22,456

Balance September 30, 2023																							507,610,326	$	50,761	$	11,168,596	$	(248,870	)	$	(6,870,674	)	$	4,099,813		$	(3,135	)	$	4,096,678

	Common Shares		Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss)			Accumulated Deficit			Total Hapi Metaverse Inc Stockholders’ Deficit			Non-Controlling Interests			Stockholders’ Equity (Deficit)			Common Shares		Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss)			Accumulated Deficit			Total Hapi Metaverse Inc Stockholders’ Deficit			Non-Controlling Interests			Stockholders’ Equity (Deficit)
Balance December 31, 2021		506,898,576	$	50,690	$	4,604,191	$	(299,398	)	$	(4,560,449	)	$	(204,966	)	$	(1,618	)	$	(206,584	)		506,898,576	$	50,690	$	4,604,191	$	(299,398	)	$	(4,560,449	)	$	(204,966	)	$	(1,618	)	$	(206,584	)
Net loss for the period		-		-		-		-			(569,250	)		(569,250	)		(11	)		(569,261	)		-		-		-		-			(569,250	)		(569,250	)		(11	)		(569,261	)
Foreign currency translation adjustment		-		-		-		16,924			-			16,924			6			16,930			-		-		-		16,924			-			16,924			6			16,930

Balance March 31, 2022		506,898,576	$	50,690	$	4,604,191	$	(282,474	)	$	(5,129,699	)	$	(757,292	)	$	(1,623	)	$	(758,915	)		506,898,576	$	50,690	$	4,604,191	$	(282,474	)	$	(5,129,699	)	$	(757,292	)	$	(1,623	)	$	(758,915	)
Balance		506,898,576	$	50,690	$	4,604,191	$	(282,474	)	$	(5,129,699	)	$	(757,292	)	$	(1,623	)	$	(758,915	)		506,898,576	$	50,690	$	4,604,191	$	(282,474	)	$	(5,129,699	)	$	(757,292	)	$	(1,623	)	$	(758,915	)
Net loss for the period		-		-		-		-			(350,758	)		(350,758	)		(16	)		(350,774	)		-		-		-		-			(350,758	)		(350,758	)		(16	)		(350,774	)
Foreign currency translation adjustment		-		-		-		89,532			-			89,532			5			89,537			-		-		-		89,532			-			89,532			5			89,537

Balance June 30, 2022		506,898,576	$	50,690	$	4,604,191	$	(192,942	)	$	(5,480,457	)	$	(1,018,518	)	$	(1,634	)	$	(1,020,152	)		506,898,576	$	50,690	$	4,604,191	$	(192,942	)	$	(5,480,457	)	$	(1,018,518	)	$	(1,634	)	$	(1,020,152	)
Balance		506,898,576	$	50,690	$	4,604,191	$	(192,942	)	$	(5,480,457	)	$	(1,018,518	)	$	(1,634	)	$	(1,020,152	)		506,898,576	$	50,690	$	4,604,191	$	(192,942	)	$	(5,480,457	)	$	(1,018,518	)	$	(1,634	)	$	(1,020,152	)
Net loss for the period																							-		-		-		-			(686,118	)		(686,118	)		(31	)		(686,149	)
Net income (loss) for the period																							-		-		-		-			(686,118	)		(686,118	)		(31	)		(686,149	)
Foreign currency translation adjustment																							-		-		-		104,094			-			104,094			-			104,094

Balance September 30, 2022																							506,898,576	$	50,690	$	4,604,191	$	(88,848	)	$	(6,166,575	)	$	(1,600,542	)	$	(1,665	)	$	(1,602,207	)
Balance																							506,898,576	$	50,690	$	4,604,191	$	(88,848	)	$	(6,166,575	)	$	(1,600,542	)	$	(1,665	)	$	(1,602,207	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HAPI METAVERSE INC. (FORMERLY KNOWN AS GIGWORLD INC.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)

Nine Months Ended
30-Sep-23
Nine Months Ended
30-Sep-22
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) from operation including non-controlling interests $ (583,085 ) $ (1,605,537 )
Adjustments to reconcile net (loss) to cash used in operations:
Depreciation 8,327 1,051
Non-cash lease expenses 105,517 -
Provision for impairment of account receivable 3,263 -
Common stock issued for services 712 -
(Gain) on disposal of subsidiary - (3,218 )
Unrealized (gain) loss on securities investment (44,404 ) 1,235,000

Change in operating assets and liabilities, net of acquisitions:
Prepaid expenses and other current assets 2,240 (82,313 )
Prepaid expenses and other current assets – related party (68,700 ) (80,365 )
Accounts payable, other payable and accrued expenses 15,124 8,059
Accounts payable, other payable and accrued expenses-related parties (159 ) -
Change in Operating Lease Liability (101,124 ) -
Receipt in advance – related party - 23,036
Net cash used in operating activities $ (662,289 ) $ (504,287 )
Net cash used in Discontinued Operating Activities - (648 )
Net cash used in operating activities $ (662,289 ) $ (504,935 )

CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,999 ) (3,704 )
Acquisition of Hapi Travel (214,993 ) -
Net cash inflow on disposal of subsidiary - 1
Net cash used in investing activities $ (218,992 ) $ (3,703 )

CASH FLOW FROM FINANCING ACTIVITIES:
Advance from related parties 1,058,136 507,052
Net cash provided by financing activities $ 1,058,136 $ 507,052

NET INCREASE/(DECREASE) IN CASH 176,855 (1,586 )
Effects of exchange rates on cash (7,062 ) 144,923
CASH at beginning of period 514,260 245,780
CASH at end of period $ 684,053 $ 389,118

Supplemental schedule of non-cash investing and financing activities
VEII common shares acquired via conversion of note receivable $ 1,300,000
VEII warrants acquired via conversion of note receivable $ 6,488,457
Convertible promissory note - related party, issued in exchange with convertible promissory note payable - related party $ 1,400,000 $ -
Initial Recognition of Operating Lease Right-Of-Use Asset and Lease Liability $ 271,504 $ -
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

HAPI METAVERSE INC. (FORMERLY KNOWN AS GIGWORLD INC.)
~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (UNAUDITED)~~
Six Months Ended
June 30, 2023 Six Months Ended
June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) from operation including non-controlling interests $ (1,349,276 ) $ (919,387 )
Adjustments to reconcile net (loss) to cash used in operations:
Depreciation 7,480 580
Non-cash lease expenses 59,520 -
Provision for impairment of account receivable 3,272 -
Common stock issued for services 712 -
(Gain) on disposal of subsidiary - (3,218 )
Unrealized loss on securities investment 964,332 734,500

Change in operating assets and liabilities, net of acquisitions:
Prepaid expenses and other current assets 6,800 6,800
Prepaid expenses and other current assets – related party (57,285 ) (30,720 )
Accounts payable, other payable and accrued expenses 10,040 5,516
Accounts payable, other payable and accrued expenses-related parties (159 ) -
Change in Operating Lease Liability (56,309 ) -
Net cash used in operating activities $ (410,873 ) $ (205,929 )
Net cash used in Discontinued Operating Activities - (24 )
Net cash used in operating activities $ (410,873 ) $ (205,953 )

CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,587 ) (3,704 )
Acquisition of Hapi Travel (214,993 ) -
Net cash inflow on disposal of subsidiary - 1
Net cash used in investing activities $ (216,580 ) $ (3,703 )

CASH FLOW FROM FINANCING ACTIVITIES:
Advance from related parties 625,973 142,284
Net cash provided by financing activities $ 625,973 $ 142,284

NET INCREASE/(DECREASE) IN CASH (1,480 ) (67,372 )
Effects of exchange rates on cash (27,004 ) 36,568
CASH at beginning of period 514,260 245,780
CASH at end of period $ 485,776 $ 214,976

Supplemental schedule of non-cash investing and financing activities
Convertible promissory note - related party, issued in exchange with convertible promissory note payable - related party $ 1,400,000 $ -
Initial Recognition of Operating Lease Right-Of-Use Asset and Lease Liability $ 157,647 $ -
~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~
8
~~HAPI METAVERSE INC. (FORMERLY KNOWN AS GIGWORLD INC.)~~
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. THE COMPANY HISTORY AND NATURE OF THE BUSINESS

Hapi Metaverse Inc., formerly GigWorld Inc. (the “Company” or “Group”) was incorporated in the State of Delaware on March 7, 2012 and established a fiscal year end of December 31. The Company’s business is focused on serving business-to-business (B2B) needs in e-commerce, collaboration and social networking functions.

Going Concern

These financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. Since inception, the Company has incurred net losses of $~~7,637,279~~6,870,674 and has net working capital deficit of $~~4,975,645~~3,557,919 at ~~June~~September 30, 2023. Management has evaluated the significance of the conditions in relation to the Company’s ability to meet its obligations and believes that its current cash balance along with its current operations will not provide sufficient capital to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon achieving sales growth, management of operating expenses and ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.

Our majority shareholder has advised us not to depend solely on them for financing. The Company has increased its efforts to raise additional capital through equity or debt financing from other sources. However, the Company cannot be certain that such capital (from its shareholders or third parties) will be available to us or whether such capital will be available on terms that are acceptable to the Company. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The ~~accompanying~~Company’s condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“~~U.S.~~US GAAP”). ~~These condensed consolidated~~The unaudited financial ~~statements~~information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and ~~additional information as contained~~notes thereto included in ~~our Annual Report on~~the Company’s Form 10-K for the year ended December 31, 2022 filed on March 29, 2023. ~~Results~~The Company assumes that the users of ~~operations~~the interim financial information herein have read or have access to the audited consolidated financial statements for the ~~six months ended June 30, 2023 are not necessarily indicative~~preceding fiscal year and the adequacy of ~~the operating~~additional disclosure needed for a fair presentation may be determined in that context. The consolidated balance sheet at December 31, 2022 was derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The ~~other information in these condensed consolidated financial statements is unaudited but, in~~results of operations for the ~~opinion~~interim periods presented are not necessarily indicative of ~~management, reflects all adjustments necessary for a fair presentation of the~~ results for the ~~periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise.~~year ending December 31, 2023.

Basis of consolidation

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.

9

The Company’s condensed consolidated financial statements include the financial position, results of operations and cash flows of the following entities as of ~~June~~September 30, 2023 and December 31, 2022, as follows:
SCHEDULE FOR SUBSIDIARY’S CONSOLIDATION OF FINANCIAL STATEMENTS
Name of subsidiary consolidated State or other jurisdiction of Attributable interest as of, State or other jurisdiction of Attributable interest as of,
under Hapi Metaverse Inc. incorporation or organization
June 30, 2023
December 31, 2022 incorporation or organization September 30, 2023 December 31, 2022
% % % %
HotApp BlockChain Pte.Ltd. (f.k.a. HotApps International Pte. Ltd.) Singapore 100.0 100.0 Singapore 100.0 100.0
HotApp International Limited Hong Kong 100.0 100.0 Hong Kong 100.0 100.0
Gig Stablecoin Inc. (f.k.a. Crypto Exchange Inc.) Nevada 100.0 100.0 Nevada 100.0 100.0
HWH World Inc. Delaware 100.0 100.0 Delaware 100.0 100.0
Smart Reward Express Limited Hong Kong 50.0*¹ 50.0*1 Hong Kong 50.0*¹ 50.0*1
Hapi Café Limited Hong Kong 100.0*² 100.0*2 Hong Kong 100.0*² 100.0*2
MOC HK Limited Hong Kong 100.0*³ 100.0*3 Hong Kong 100.0*³ 100.0*3
Shenzhen Leyouyou Catering Management Co., Ltd. People’s Republic of China 100.0*⁴ 100.0*4 People’s Republic of China 100.0*⁴ 100.0*4
Hapi Metaverse Inc. Texas 100.0*⁵ 100.0*5 Texas 100.0*⁵ 100.0*5
Dongguan Leyouyou Catering Management Co., Ltd. People’s Republic of China 100.0*⁶ - People’s Republic of China 100.0*⁶ -
Guangzho Leyouyou Catering Management Co., Ltd. People’s Republic of China 100.0*⁷ - People’s Republic of China 100.0*⁷ -
Hapi Travel Ltd. Hong Kong 100.0*⁸ - Hong Kong 100.0*⁸ -
Hapi Acquisition Pte. Ltd. Singapore 100.0*⁹ -
NewRetail-AI Inc. Nevada 100.0*¹⁰

*¹ Smart Reward Express Limited (“Smart Reward”) was incorporated in Hong Kong on July 13, 2021 with an issued and paid-up share capital of $1,288 (HK$10,000) comprising 10,000 ordinary shares.

Smart Reward plans to be principally engaged in the business of developing a platform allowing small and medium sized merchants to set-up their own reward program, with the aim of creating a loyalty exchange program for participating merchants.

HotApp International Limited is the owner of 50% of the issued and outstanding shares of Smart Reward. The remaining 50% of the issued and outstanding shares of Smart Reward are held by Value Exchange Int’l (China) Limited, a wholly-owned subsidiary of VEII.

HotApp International Limited holds 5,000 shares of Smart Reward, representing 50% of the total issued and outstanding shares of Smart Reward. HotApp International Limited is a wholly-owned subsidiary of HotApp BlockChain Pte. Ltd., which is a wholly-owned subsidiary of Hapi Metaverse Inc. The remaining 5,000 shares of Smart Reward, representing 50% of the total issued and outstanding shares of Smart Reward, are held by Value Exchange Int’l (China) Limited, a wholly-owned subsidiary of Value Exchange International Inc. Hapi Metaverse Inc. owns ~~38.1~~18% of the total issued and outstanding shares of Value Exchange International Inc.

Accordingly, the Company in total holds more than 50% of Smart Reward, and Smart Reward is consolidated in the Company’s financial statements.

*² Hapi Cafe Limited (“HCHK”) was incorporated in Hong Kong on July 5, 2022 with an issued and paid-up share capital of $0.26 (HK$2) comprising 2 ordinary shares. HCHK plans to be principally engaged in the food and beverage business in Hong Kong.

10

HotApp BlockChain Pte. Ltd. is the owner of 100% of the issued and outstanding shares of HCHK. This business was acquired on September 5, 2022.

*³ MOC HK Limited (“MOC”) was incorporated in Hong Kong on February 16, 2020 with an issued and paid-up share capital of $1.28 (HK$10) comprising 10 ordinary shares. MOC plans to be principally engaged in the food and beverage business in Hong Kong Hapi Cafe Ltd. is the owner of 100% of the issued and outstanding shares of MOC. This business was acquired on October 5, 2022. The acquisition generated a goodwill of $60,343 for the Company.
*⁴ Shenzhen Leyouyou Catering Management Co., Ltd. (“HCCN”) was incorporated in People’s Republic of China on October 10, 2022. HCCN plans to be principally engaged in the food and beverage business in Mainland China.

Hapi Cafe Ltd. is the owner of HCCN. This business was acquired on October 10, 2022.

*⁵ Hapi Metaverse Inc. was incorporated in Texas on November 28, 2022 with an issued and paid-up share capital of $0.1 comprising 100 ordinary shares.

*⁶ Dongguan Leyouyou Catering Management Co., Ltd. (“HCDG”) was incorporated in People’s Republic of China on March 1, 2023. HCDG plans to be principally engaged in the food and beverage business in Mainland China.

HCCN is the owner of HCDG. This business was acquired on March 1, 2023.

*⁷ Guangzhou Leyouyou Catering Management Co., Ltd. (“HCGZ”) was incorporated in People’s Republic of China on May 19, 2023. HCDG plans to be principally engaged in the food and beverage business in Mainland China.

HCCN is the owner of HCGZ. This business was acquired on May 19, 2023.

*⁸ Hapi Travel Ltd. (“HTL”) was incorporated in Hong Kong on September 27, 2019. HTL plans to be principally engaged in the travel business in Hong Kong.

HotApp BlockChain Pte. Ltd. is the owner of HTL. This business was acquired on June 14, 2023. The acquisition generated a goodwill of $214,174 for the Company.
*⁹ Hapi Acquisition Pte. Ltd. was incorporated in Singapore on June 30, 2023 with an issued and paid-up share capital of $2 comprising 2 ordinary shares.
*10 NewRetail-AI Inc. was incorporated in Nevada on July 31, 2023 with an issued and paid-up share capital of $1,000 comprising 10,000,000 ordinary shares.

Use of estimates

The preparation of condensed 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 revenues, cost and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s condensed consolidated financial statements include revenue recognition, the useful lives and impairment of property and equipment, valuation allowance for deferred tax assets.

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. There were no cash equivalents as of ~~June~~September 30, 2023 and December 31, 2022.

11

Leases

The Company follows Accounting Standards Update (“ASU”) 2016-02 (FASB ASC Topic 842) in accounting for its operating lease right-of-use assets and operating lease liabilities. At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Company assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset. The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Company recognizes operating lease expenses on a straight-line basis over the lease term.

Right-of-use of assets

The right-of-use of asset is measured at cost, which comprises the amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.

Lease liabilities

Lease liability is measured at the present value of the outstanding lease payments at the commencement date, discounted using the Company incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise mainly fixed lease payments.

Foreign currency risk

Because of its foreign operations, the Company holds cash in non-US dollars. As of ~~June~~September 30, 2023, cash and cash equivalents of the Group includes, on an as converted basis to US dollars, $~~329,230~~534,686, $~~10,430~~10,353 and $~~3,557~~4,713 in Hong Kong Dollars (“HK$”), Singapore Dollars (“S$”) and Chinese Yuan (“¥”), respectively. As of December 31,2022, cash of the Group includes, on an as converted basis to US dollars, $359,266, and $10,719, in Hong Kong Dollars (“HK$”), and Singapore Dollars (“S$”), respectively.

Investment Securities

Investments represent equity investments with readily determinable fair values.

The Company account for investments in equity securities that have readily determinable fair values are measured at fair value, with unrealized gains and losses from fair value changes recognized in net income in the condensed consolidated statements of comprehensive income.

Equipment

Property and equipment are recorded at cost, less depreciation. Repairs and maintenance are expensed as incurred. Expenditures incurred as a consequence of acquiring or using the asset, or that increase the value or productive capacity of assets are capitalized (such as removal, and restoration costs). When property and equipment is retired, sold, or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the estimated useful lives of the respective assets as follows:
SCHEDULE OF ESTIMATED USEFUL LIVES OF ASSETS
Computer equipment 3 years
Leasehold improvement 3 years

12

Concentrations

Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash. Although the cash at each particular bank in the United States is insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), the Group is exposed to risk due to its concentration of cash in foreign countries. The Group places its cash with financial institutions with high-credit ratings and quality.

Fair value

Fair Value of Financial Instruments

The carrying value of cash, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the condensed consolidated financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed. The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:

● Level 1 - quoted prices in active markets for identical assets and liabilities;

● Level 2 - observable market based inputs or unobservable inputs that are corroborated by market data; and

● Level 3 - significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Revenue recognition

Accounting Standards Codification 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 or catering service to customers. The Company adopted this new standard on January 1, 2018 under the modified retrospective method. The adoption did not have a material effect on our financial statements.

Revenue is recognized when (or as) the Company transfers promised goods or services or catering service to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services or catering service to its customers. Costs to obtain or fulfill a contract are expensed as incurred.

The Company began generating revenue from F&B business by providing quality catering service and a project providing services to Value Exchange Int’l (Hong Kong) Limited, a subsidiary of Value Exchange International, Inc. (“VEII”) located in Hong Kong, on a monthly basis in 2022. VEII is a related party of the Company. Upon receipt of purchase order from this customer, we issue the corresponding invoice and provide the service accordingly. Any payment received from this customer in advance is presented within other payables on the Company’s condensed consolidated balance sheets.

Income taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the condensed consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as non-current based on their characteristics.

13

The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The Group did not recognize any income tax due to uncertain tax position or incur any interest and penalties related to potential underpaid income tax expenses for the period ended ~~June~~September 30, 2023 or 2022, respectively.

Foreign currency translation

Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“functional 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 and Mainland China are maintained in their local currencies, the Singapore Dollar (S$), Hong Kong Dollar (HK$) and Chinese Yuan (CN ¥), which are also the functional currencies of these entities.

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. Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the statement of operations.

The Company’s entities with functional currency of Singapore Dollar, Hong Kong Dollar and Chinese Yuan, 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. Revenues, expenses, 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).

For the three and ~~six~~nine months ended ~~June~~September 30, 2023, the Company recorded other comprehensive loss from translation gain of $~~62,008~~66,382 and $~~43,926~~22,456 in the condensed consolidated financial statements. For the ~~six~~three and nine months ended ~~June~~September 30, 2022, the Company recorded other comprehensive income from translation gain of $~~89,537~~104,094 and $~~106,467~~210,561 in the condensed consolidated financial statements.

Comprehensive income (loss)

Comprehensive income (loss) includes gains (losses) from foreign currency translation adjustments. Comprehensive income (loss) is reported in the condensed consolidated statements of operations and comprehensive loss.

Earnings (Loss) per share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to stockholders by the weighted average number of shares outstanding during the year.

The basic and diluted losses per ordinary share were the same as the outstanding convertibles as of ~~June~~September 30, 2023 were anti-dilutive.

Non-controlling interests

Non-controlling interests represent the equity in a 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~~September 30, 2023 and December 31, 2022, the aggregate non-controlling interests in the Company were $~~(2,720)~~(3,135) and $(1,851), respectively.

14

Recent accounting pronouncements

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

Note 3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accrued expenses and other current liabilities consisted of the following:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
June 30, December 31, September 30, December 31,
2023 2022 2023 2022
Accrued payroll $ 5,030 $ 3,309 $ 10,143 $ 3,309
Accrued professional fees 8,860 18,905 15,241 18,905
Other account payable and accrued expenses 22,880 2,387 16,912 2,387
Receipt in advance from customer – related party 7,692 7,838 7,698 7,838
Total $ 44,462 $ 32,439 $ 49,994 $ 32,439

Note 4. PROPERTY AND EQUIPMENT, NET

Property and Equipment, net consisted of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT
June 30, December 31, September 30, December 31,
2023 2022 2023 2022
Cost
Leasehold improvement $ 11,266 $ 11,266 $ 11,266 $ 11,266
Computer equipment 8,731 5,685 11,644 5,685
Total cost $ 19,997 $ 16,951 $ 22,910 $ 16,951

Less: accumulated depreciation #
Leasehold improvement# $ 11,266 $ 4,840 $ 11,266 $ 4,840
Computer equipment# 2,884 1,806 4,217 1,806
Total accumulated depreciation# $ 14,150 $ 6,646 $ 15,483 $ 6,646

NBV at the end of year
Leasehold improvement $ - $ 6,426 $ - $ 6,426
Computer equipment 5,847 3,879 7,427 3,879
Total NBV $ 5,847 $ 10,305 $ 7,427 $ 10,305

# –Total of depreciation expenses charged for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were $~~7,480~~8,327 and $~~580~~1,051, respectively.

Note 5. INVESTMENT IN RELATED PARTY

In April of 2021, the Company acquired 6,500,000 shares of Value Exchange International, Inc.’s common stock for an aggregate subscription price of $650,000. On October 17, 2022, the Company entered into a Stock Purchase Agreement (the “Agreement”) with Chan Heng Fai, who is the Chairman of the Company’s Board of Directors and the Chairman, Chief Executive Officer and largest stockholder of Alset Inc., the Company’s majority stockholder. Pursuant to the Agreement, the Company bought an aggregate of 7,276,163 shares of ~~Value Exchange International, Inc.~~VEII with an aggregate purchase price of $~~1,743,734.12~~1,743,734.
On September 6, 2023, the Company converted $1,300,000 of the principal amount loaned to VEII into 7,344,632 shares of VEII’s common stock. Under the terms of the Credit Agreement, the Company received common stock warrants to purchase a maximum of 36,723,160 shares of VEII common stock at an exercise price of $0.1770 per share. Such warrants expire five (5) years from date of their issuance.
On September 30, 2023, The Company owned 21,120,795 shares of VEII’s outstanding common stock and 36,723,160 warrants with an exercise price of $0.1770 per share.
Financial assets measured at fair value on a recurring basis are summarized below and disclosed on the condensed consolidated balance sheet as of ~~June~~September 30, 2023 and December 31, 2022:
SCHEDULE OF ~~INVESTMENT~~ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS
Level 1 Level 2 Level 3 Fair Value
Fair Value Measurement Using Amount at
Level 1 Level 2 Level 3 Fair Value
September 30, 2023
Asset
Investment Securities – Fair Value $ 3,725,708 $ - $ - $ 3,725,708
Warrants - VEII 6,449,100 6,449,100

Total Investment in securities at Fair Value $ 3,725,708 $ - $ 6,449,100 $ 10,174,808
Level 1 Level 2 Level 3 Fair Value
Fair Value Measurement Using Amount at
Level 1 Level 2 Level 3 Fair Value
June 30, 2023
Asset
Investment Securities – Fair Value $ 1,377,616 $ - $ - $ 1,377,616
Total Investment in securities at Fair Value $ 1,377,616 $ - $ - $ 1,377,616
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Level 1 Level 2 Level 3 Fair Value
Fair Value Measurement Using Amount at
Level 1 Level 2 Level 3 Fair Value
December 31, 2022
Asset
Investment Securities – Fair Value $ 2,341,948 $ - $ - $ 2,341,948
Total Investment in securities at Fair Value $ 2,341,948 $ - $ - $ 2,341,948
Fair value gain on securities investment was $44,404 and fair value loss on securities investment $1,235,000 in the nine months ended September 30, 2023 and 2022, respectively. These gains and losses were recorded directly to net loss.
Warrants
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 Balance and Transactions, As of September 30, 2023, and December 31, 2022, the fair value of the warrants was $6,449,100 and $0 respectively. The Company did not exercise any warrants during nine months ended September 30, 2023. We value VEII warrants under level 3 category through a Black Scholes option pricing model.
The fair value of the VEII warrants under level 3 category as of September 6, 2023, and September 30, 2023 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:
SCHEDULE OF FAIR VALUE OF WARRANTS
September 30, September 6,
2023 2023

Stock price $ 0.1756 $ 0.1770
Exercise price 0.1770 0.1770
Risk free interest rate 8.50 % 8.50 %

Annualized volatility 270.02 % 273.79 %
Dividend Yield 0.00 $ 0.00
Year to maturity 4.94 5.00
Warrants and rights outstanding, measurement input 4.94 5.00
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 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 three and nine months ended September 30, 2023:
SCHEDULE OF CHANGE IN FAIR VALUE
Total
Balance at January 1, 2023 $ -
Acquisition at September 6, 2023 6,488,457
Total losses 39,357
Balance at September 30, 2023 $ 6,449,100
Note 6. SHARE CAPITALIZATION

The Company is authorized to issue 1 billion shares of common stock and 15 million shares of preferred stock. The authorized share capital of the Company’s common stock was increased from 500 million to 1 billion on May 5, 2017. Both share types have a $0.0001 par value. As of ~~June~~September 30, 2023 and December 31, 2022, the Company had issued and outstanding, 507,610,326 and 506,898,576 of common stock, 0 and 0 shares of preferred stock respectively.

Common Shares:

Pursuant to the Purchase Agreement, dated October 15, 2014, the Company issued 1,000,000 shares of common stock to AIL. Such amount represented 19% ownership in the Company.

On July 13, 2015, AIL acquired 777,687 shares of the Company’s common stock by converting outstanding loans made to the Company into common stock of the Company at a rate of $5.00 per share (rounded to the nearest full share). After such transactions AIL owned 98.17% of the Company.

On March 27, 2017, the Company entered into a Loan Conversion Agreement with AIL, pursuant to which AIL agreed to convert $450,890 of debt owed by the Company to AIL into 500,988,889 common shares at a conversion price of $0.0009. The captioned shares were issued on June 9, 2017, and AIL owned 99.979% of the Company after such transactions.

On December 20, 2018, the Board of Directors of AIL announced its intention to sell up to 3,200,000 shares of the Company to independent third parties at US$0.50 per share for an aggregate cash consideration of up to US$1,600,000. The purpose of this proposed sale was to raise funds to continue to support the general corporate and working capital of the Company, including but not limited to the operating costs of the Company. During 2021, AIL has sold 1,449,200 shares of the Company to independent third parties, and AIL owned 99.693% of the Company after such transactions. On August 30, 2022, Alset International Limited entered into a stock purchase with its controlling stockholder, Alset Inc. (formerly known as Alset EHome International Inc.) in relation to the disposal of 505,341,376 shares of the Company’s common stock, representing approximately 99.69% of the total issued and paid-up share capital of the Company, to Alset Inc. After this transaction, Alset Inc. became our largest stockholder.

On April 24, 2023, the Company completed the issuance of 711,750 shares of the Company’s common stock to 4,736 individuals for services rendered to the Company. The share-based compensation related to this share issuance is approximately $712.

Preferred Shares:

No Preferred Stock were issued as of ~~June~~September 30, 2023 and December 31, 2022.
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Note 7. RELATED PARTY BALANCES AND TRANSACTIONS

Effective as of September 1, 2020, Chan Heng Fai resigned as the Acting Chief Executive Officer of the Company, and the Company’s Board of Directors appointed Lee Wang Kei (“Nathan”) as the Company’s Chief Executive Officer. Alset International Limited is the Company’s former majority stockholder. On August 30, 2022, Alset International Limited entered into a stock purchase with its controlling stockholder, Alset Inc. (formerly known as Alset EHome International Inc.) in relation to the disposal of 505,341,376 shares of the Company’s common stock, representing approximately 99.69% of the total issued and paid-up share capital of the Company, to Alset Inc. After this transaction, Alset Inc. became our largest stockholder. Chan Heng Fai, the Chairman of the Company’s Board of Directors, is also the Chief Executive Officer and Chairman of Alset Inc.’s Board, as well as the majority stockholder of Alset Inc. Lui Wai Leung Alan, the Company’s Chief Financial Officer, is also the Co-Chief Financial Officer of Alset Inc. Chan Heng Fai is compensated by Alset Inc. and Alset International Limited. Lui Wai Leung Alan is compensated by Alset International Limited. Our Chief Executive Officer, Lee Wang Kei, is paid $2,000 per month by HotApp International Limited, a subsidiary of the Company. Alset Inc. has provided staff to our Company without charge since becoming our majority stockholder.

The Company sold one of its subsidiaries, HWH World Pte. Limited, to Health Wealth Happiness Pte. Ltd (a subsidiary of former majority stockholder Alset International Limited) for consideration of $1.48 (S$2.00) on April 18, 2022. The Company has acquired a company, Hapi Café Limited, from Chan Heng Fai (the majority stockholder of Alset Inc.) for consideration of $1.48 (S$2.00) on September 5, 2022. Hapi Cafe is a coffee shop chain initiative in China, Hong Kong and Taiwan consisting of a four-in-one concept, comprising a coffee shop, co-working place, travel, and metaverse show case. Hapi Metaverse technology will be utilized by the Hapi Cafe membership program.

The Company has a project with an affiliate (a subsidiary of Value Exchange International, Inc.) that commenced in 2022. ~~Value Exchange International, Inc.~~VEII provides IT services and solutions for customers in Asia, covering Helpdesk, Managed Operations, Systems Integration, and Consulting Services. The project has generated ~~unpaid revenue under account receivable of $14,040, an interest receivable from VEII for $38,970, a receivable including customer’s deposit and prepayment of $2,789~~ ~~and~~ a payable of $~~7,692~~7,698 from the affiliate. As of ~~June~~September 30, 2023, the Company has an amount due to Alset Inc. of $~~1,758,896~~1,787,107, Alset International Limited of $2,506,676, an amount due to fellow subsidiaries of $~~1,175,348~~1,573,736, an amount due to director of $~~4,138~~4,141 plus an amount due to 2 associated companies of Alset International Limited of $96. As of December 31, 2022, the Company has an amount due to Alset Inc. of $1,743,734, Alset International Limited of $2,506,676, an amount due to fellow subsidiaries of $631,838, an amount due to director of $4,158 plus an amount due to an associated company of Alset International Limited of $102. The above amounts due to related parties were interest free and no repayment schedule and deadline have been adopted.

On January 27, 2023, the Company and New Electric CV Corporation (together with the Company, the “Lenders”) entered into a Convertible Credit Agreement (the “Credit Agreement”) with Value Exchange International, Inc. (“Value Exchange”), a Nevada corporation. The Credit Agreement provides Value Exchange with a maximum credit line of $1,500,000 (“Maximum Credit Line”) with simple interest accrued on any advances of the money under the Credit Agreement at 8%. The principal amount of any advance of money under the Credit Agreement (each being referred to as an “Advance”) is due in a lump sum, balloon payment on the third annual anniversary of the date of the Advance (“Advance Maturity Date”). Accrued and unpaid interest on any Advance is due and payable on a semi-annual basis with interest payments due on the last business day of June and last business day of December of each year. A Lender may demand that any portion or all of the unpaid principal amount of any Advance as well as accrued and unpaid interest thereon may be paid by shares of Value Exchange Common Stock in lieu of cash payment. As of ~~June~~September 30, 2023, $~~1,400,000.00~~100,000.00 credit was advanced, and interest income of $~~38,970~~60,361 is included in interest income for the ~~six~~nine months ended ~~June~~September 30, 2023. Alset Inc acted as an intermediary to pay the money directly to VEII, A corresponding note payable to Alset Inc. was entered into in connection with this transaction. See the following paragraph for a description of the note payable to Alset Inc.

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On February 23, 2023, the Company and Alset Inc., a Texas corporation (NASDAQ: AEI) (“Alset”) entered into a Subscription Agreement (the “Subscription Agreement”). Pursuant to the Subscription Agreement, the Company has borrowed $1,400,000.00 (the “Loan Amount”) from Alset in exchange for a Convertible Promissory Note (the “Note”). The term of the Note is three years with simple interest at a rate of 8% percent per annum. Alset may require repayment upon 30 days’ notice. The Company shall be entitled to repay all or any portion of the Loan Amount to Alset early and without penalty. As of ~~June~~September 30, 2023, $1,400,000.00 remains unpaid, and interest expense of $~~38,970~~67,200 is included in interest expense for the ~~six~~nine months ended ~~June~~September 30, 2023. The Loan Amount borrowed from Alset was used by the Company to fulfill the Credit Agreement between the Company and VEII.

On June 14, 2023, the Company acquired Hapi Travel Ltd. from Business Mobile Intelligence Ltd., a company wholly owned by Chan Heng Fai (the ~~Chairman of the Company and the Chairman, Chief Executive Officer and~~ majority stockholder of Alset Inc.), for a consideration of $214,993.47 (HK$1,684,656.78). On November 17, 2021, Chan Heng Fai had acquired Hapi Travel Ltd. (formerly known as Travel Panda Ltd.) from Chan Hei Wai, an individual unaffiliated with the Company.
On September 6, 2023, the Company converted $1,300,000 of the principal amount loaned to VEII into 7,344,632 shares of VEII’s common stock. Under the terms of the Credit Agreement, the Company received common stock warrants to purchase a maximum of 36,723,160 shares of VEII common stock at an exercise price of $0.1770 per share. Such warrants expire five (5) years from date of their issuance.
Our Chairman, Chan Heng Fai, and another member of our Board of Directors, Lum Kan Fai, 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., our majority stockholder, are also members of the Board of Directors of VEII (Mr. Wong Shui Yeung and Mr. Wong Tat Keung).

Note 8. DISCONTINUED OPERATIONS

Director’s resolutions of HotApp Blockchain Pte Limited passed on April 18, 2022 for the disposal of its investments of 100,000 shares in HWH World Pte. Limited, representing 100% of the share capital of HWH World Pte. Limited, for a consideration amount of $1.48 (S$2.00). The shares were disposed to Health Wealth Happiness Pte. Ltd, a subsidiary of Alset International Limited.

There were no assets or liabilities included in discontinued operations as of ~~June~~September 30, 2023 and December 31, 2022.

The aggregate financial results of discontinued operations were as follows:
SCHEDULE OF AGGREGATE FINANCIAL RESULT DISCONTINUED OPERATION
Three Months Ended June 30, 2023 Three Months Ended June 30, 2022
Six Months Ended June 30, 2023

Six Months Ended June 30, 2022

Three Months Ended
September 30, 2023

Three Months Ended
September 30, 2022

Nine Months Ended
September 30, 2023

Nine Months Ended
September 30, 2022

Operating expenses:
General and administrative $ - $ (3 )^* $ - $ 648 $ - $ (3 )* $ - $ 648
Total operating expenses - (3 ) - 648 - (3 ) - 648

Income (Loss) from operations - 3 - (648 ) - 3 - (648 )

Income (Loss) from discontinued operations $ - $ 3 $ - $ (648 ) $ - $ 3 $ - $ (648 )

* There was no expenses incurred during the three months and nine months ended ~~June~~September 30, 2022. The negative amount was arisen due to the different exchange rate used in converting from its functional currency to U.S. dollar.

Note 9. GOODWILL

The Company continually evaluates potential acquisitions that align with the Company’s plans, namely, starting the F&B business in Asia and online travel business. 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 first F&B business acquisition of MOC HK Limited, a F&B business started in Hong Kong. The accompanying consolidated financial statements include the operations of the acquired entity from its acquisition date. The acquisition has been accounted for as a business combination. Accordingly, consideration paid by the Company to complete the acquisition is initially allocated to the acquired assets and liabilities assumed based upon their estimated acquisition date fair values. 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 MOC, goodwill of $60,060 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 June 14, 2023, the Company completed its online travel business acquisition of Hapi Travel Limited, an online travel business started in Hong Kong. The accompanying consolidated financial statements include the operations of the acquired entity from its acquisition date. The acquisition has been accounted for as a business combination. Accordingly, consideration paid by the Company to complete the acquisition is initially allocated to the acquired assets and liabilities assumed based upon their estimated acquisition date fair values. 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, goodwill of $214,174 generated in a business combination represents the purchase price of $214,993 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.

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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 period resulted in no impairment losses.

The table below reflects the Company’s estimates of the acquisition date fair value of the assets acquired and liabilities assumed for the 2022 and 2023 acquisition:
SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
MOC HTL
Acquisition Date October 4, 2022 June 14, 2023

Purchase Price
Cash $ 70,523 $ 214,993
Total purchase consideration 70,523 214,993

Purchase Price Allocation
Assets acquired
Current assets 32,700 15,098
Property and Equipment, net 11,266 1,485
Operating lease right-of-use assets, net 114,232 16,516
Total assets acquired 158,198 33,099

Liabilities assumed:
Current liabilities (33,437 ) (20,885 )
Operating lease liability (114,232 ) (11,395 )
Accrued taxes (349 ) -
Total liabilities assumed (148,018 ) (32,280 )

Net assets acquired 10,180 819
Goodwill 60,343 214,174
Total purchase consideration $ 70,523 $ 214,993

The following table summarizes changes in the carrying amount of goodwill at ~~June~~September 30, 2023 and December 31, 2022
SCHEDULE OF GOODWILL
June 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Balance at beginning of the period/year $ 60,343 $ - $ 60,343 $ -
Acquisitions 214,174 60,343 214,174 60,343
Foreign currency exchange adjustment (283 ) (72 )
Balance as of end of the period/year $ 274,234 $ 60,343 $ 274,445 $ 60,343
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Note 10. LEASES

The Company has operating leases for its F&B stores & warehouse, and online travel back office in Hong Kong and China. The related lease agreements do not contain any material residual value guarantees or material restrictive covenants. Since the Company’s leases do not provide an implicit rate that can be readily determined, management uses a discount rate based on the incremental borrowing rate. The Company’s weighted-average remaining lease term relating to its operating leases are ~~2.58~~2.32 years, with a weighted-average discount rate of the ~~4.38~~4.53%.

The current portion of operating lease liabilities and the non-current portion of operating lease liabilities are presented on the balance sheets. Total lease expenses amounted to $~~54,875~~105,516 and $0 which was included in general and administrative expenses in the statements of operations for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. Total cash paid for operating leases amounted to $~~56,362~~91,444 and $0 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. Supplemental balance sheet information related to operating leases was as follows (in $):
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO OPERATING LEASES
June 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Right-of-use assets $ 240,606 $ 129,478 $ 304,546 $ 129,478

Lease liabilities - current 119,966 71,899 162,896 71,899
Lease liabilities - non-current 125,468 59,196 147,659 59,196
Total lease liabilities $ 245,434 $ 131,095 $ 310,555 $ 131,095

As of ~~June~~September 30, 2023, the aggregate future minimum rental payments under non-cancelable agreement are as follows (in $):
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS UNDER NON-CANCELABLE AGREEMENT
Maturity of Lease Liabilities Total Total

12 months ended June 30, 2024 $ 127,198
12 months ended June 30, 2025 130,582
12 months ended September 30, 2024 $ 173,077
12 months ended September 30, 2025 93,787
12 months ended September 30, 2026 41,781
12 months ended September 30, 2027 17,409
Total undiscounted lease payments 257,780 326,054
Less: Imputed interest (12,346 ) (15,499 )
Present value of lease liabilities $ 245,434 $ 310,555
Operating lease liabilities - Current 119,966 162,896
Operating lease liabilities - Non-current $ 125,468 $ 147,659

Note 11. SUBSEQUENT EVENTS

The Company has evaluated events that have occurred after the balance sheet date through the date of this report and determined that there were no subsequent events or transactions that required recognition or disclosure in the condensed consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:

1. our future operating results;
2. our business prospects;
3. any contractual arrangements and relationships with third parties;
4. the dependence of our future success on the general economy;
5. any possible financings; and
6. the adequacy of our cash resources and working capital.

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of filing of this Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.

Background and business

Hapi Metaverse Inc., formerly known as GigWorld Inc. (the “Company” or “Group”), was incorporated in the State of Delaware on March 7, 2012. The Company’s initial business plan was to be a financial acquisition intermediary which would serve buyers and sellers for companies that are in highly fragmented industries. Our Board determined it was in the best interest of the Company to expand our business plan. On October 15, 2014, through a sale and purchase agreement, the Company acquired all the issued and outstanding stock of HotApp BlockChain Pte. Ltd., formerly known as HotApps International Pte Ltd (“HIP”) from Alset International Limited (“AIL”). AIL is our former largest stockholder. HIP owned certain intellectual property relating to instant messaging for portable devices (referred to herein as the “HotApp Application”). On August 30, 2022, Alset International Limited entered into a stock purchase with its controlling stockholder, Alset Inc. in relation to the disposal of 505,341,376 shares of the Company’s common stock, representing approximately 99.69% of the total issued and paid-up share capital of the Company, to Alset Inc. After this transaction, Alset Inc. became our largest stockholder.

The HotApp Application is a cross-platform mobile application that incorporates instant messaging and ecommerce. This application can be used on any mobile platform (i.e. IOS Online or Android). The HotApp Application offered messaging and calling services for HotApp Application users (text, photo, audio); however, the messaging and calling services we offered were terminated in 2017.

In December of 2017, the Company’s name was changed from “HotApp International, Inc.” to “HotApp Blockchain Inc.” to reflect the Board of Directors’ determination that it was in the best interest of the Company to expand its activities to include the development and commercialization of blockchain-related technologies.

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In 2018, one of our main developments was a broadening of our scope of planned operations into a digital transformation technology business. As a digital transformation technology business, we are committed to enabling enterprises we work with to engage in a digital transformation by providing consulting, implementation and development services with various technologies, including instant messaging, blockchain, e-commerce, social media and payment solutions. We continue to advise businesses in network marketing and brands in block chain services and mobile collaboration.

We are focused on serving business-to-business (B2B) needs in e-commerce, collaboration and supply chains. We will help enterprises and community users to transform their business model with digital economy in a more effective manner. With our platform, business operators, such as retail chains and brands with affiliate marketing initiatives or business with membership services will be able to build their own communities and create valuable content. Enterprises can in turn enhance the user experience with premium content, which is facilitated by the transactions of every stakeholder via e-commerce.

Our technology platform consists of content management, social media sharing, e-commerce and payment systems, business to business team collaboration, augmented reality, artificial intelligence, customer service and membership management. We are focused on business-to-business solutions such as enterprise collaboration and workflow. We have successfully implemented several strategic platform developments for clients, including a mobile front-end solution for network marketing, a hotel e-commerce platform for Asia and a real estate agent management platform in China, as well as membership service for retail including supermarkets, coffee chains and self-service kiosks. We have also enhanced our technological capability from mobile application development to include blockchain architectural design and artificially intelligent chatting and help desk services, allowing mobile-friendly front-end solutions to integrate with software platforms. Our main digital assets at the present time are our applications. We continue to strengthen our technology architecture and develop Application Development Interface (API) for integration with backend system such as network marketing backend and ERP in the retail industry. Additionally, we are continuing our development activities in customer experience enhancement such as Augmented Reality (AR) and Artificial Intelligence (AI).

In January 2017, we entered into a revenue-sharing agreement with iGalen, a network marketing company selling health products (AIL, our former majority stockholder, was a significant stockholder of iGalen). Under the agreement, we customized a secure app for iGalen’s communication and management system. The app enables mobile friendly back-end access for iGalen Inc. members, among other functions. We are continuing to improve this secure app. In particular, we intend to utilize blockchain supply logistics to improve its functions (the original iGalen app did not utilize the latest distributed ledger technology). Once the improvements to this technology are completed, and initially utilized by iGalen, We intend to then attempt to sell similar services to other companies engaged in network marketing, as members of our management have a particular experience offering services to that industry and we believe our solutions are particularly suited to that industry’s needs. This app can be modified to meet the specific needs of any network marketing company. We believe that these technologies will, among other benefits, make it easier for network marketing companies to securely and effectively manage their systems of compensation. Our current plan is to commence sales of this technology in 2023.

In February of 2021, the Company’s name was changed to “GigWorld Inc.”

The direct selling industry has been adopting gig economy practices and relying heavily on digital marketing technology in team development and customer engagement. We have positioned ourselves to serve the growing demand in the transformation of the direct selling industry towards the gig economy.

The Group has relied significantly on AIL, our former majority stockholder, as its principal sources of funding during the period. AIL, and later, our current majority stockholder, Alset Inc., advised us not to depend solely on it for financing. We have increased our efforts to raise additional capital through equity or debt financings from other sources. However, we cannot be certain that such capital (from our stockholders or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such, financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.

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On April 8, 2021, the Company entered into a Securities Purchase Agreement with Value Exchange International, Inc., a Nevada corporation (“VEII”) pursuant to which the Company purchased 6.5 million restricted shares of VEII Common Stock from VEII for an aggregate purchase price of $650,000. The closing of the transaction occurred on April 12, 2021. Pursuant to this Securities Purchase Agreement, the Company was entitled to appoint one nominee to the Board of Directors of VEII. The Company appointed Mr. Lum Kan Fai as its nominee. Mr. Lum is the Vice Chairman of the Company’s Board of Directors. VEII is a provider of customer-centric technology solutions for the retail industry in Hong Kong and certain regions of China and Philippines. On October 17, 2022, the Company entered into a Stock Purchase Agreement (the “Agreement”) with Chan Heng Fai, who is the Chairman of the Company’s Board of Directors and the Chairman, Chief Executive Officer and largest stockholder of Alset Inc., the Company’s majority stockholder. Pursuant to the Agreement, the Company bought an aggregate of 7,276,163 shares of VEII. The Company presently owns approximately 38.1% of the total issued and outstanding shares of Value Exchange International Inc.

In July of 2021, the Company’s indirect subsidiary HotApp International Limited incorporated Smart Reward Express Limited (“Smart Reward”) in Hong Kong. Smart Reward plans to be principally engaged in the business of developing a platform allowing small and medium sized merchants to set-up their own reward program, with the aim of creating a loyalty exchange program for participating merchants.

HotApp International Limited is the owner of 50% of the issued and outstanding shares of Smart Reward. The remaining 50% of the issued and outstanding shares of Smart Reward are held by Value Exchange Int’l (China) Limited, a wholly-owned subsidiary of VEII.

In September of 2022, the Company’s subsidiary HotApp BlockChain Pte. Ltd. acquired Hapi Cafe Ltd. (“HCHK”) in Hong Kong and plans to be principally engaged in the food and beverage business in Hong Kong and Mainland China. Afterward HCHK acquired MOC HK Ltd. (“MOC”) in Hong Kong and incorporated Shenzhen Leyouyou Catering Management Co., Ltd. (“HCCN”) in Mainland China, each in October ~~2022,~~2022. MOC focused on operating the café business and HCCN ~~targeted developing~~focused on targeting the development of the F&B business in Mainland China.

In March of 2023, the Company’s indirect subsidiary HCCN acquired Dongguan Leyouyou Catering Management Co., Ltd. (“HCDG”) in the People’s Republic of China to running the first café in Mainland China. The goal is to build a coffee culture community that offer membership services to include eCommerce, travel and education programs in the greater China region.

In March of 2023, the Company’s name was changed to “Hapi Metaverse Inc.”

In May of 2023, the Company’s indirect subsidiary HCCN acquired Guangzhou Leyouyou Catering Management Co., Ltd. (“HCGZ”) in People’s Republic of China to running the café business in Guangzhou, China.

In June of 2023, the Company’s subsidiary HotApp BlockChain Pte. Ltd. acquired Hapi Travel Ltd. (“HTL”) in Hong Kong. HTL plans to be principally engaged in the online travel business in Hong Kong and worldwide.

In September of 2023, the Company converted $1,300,000 of the principal amount loaned to VEII into 7,344,632 shares of VEII’s common stock. Under the terms of the Credit Agreement, the Company received common stock warrants to purchase a maximum of 36,723,160 shares of VEII common stock at an exercise price of $0.1770 per share. Such warrants expire five (5) years from date of their issuance.
Trends in the Market and Our Opportunity

Digital Transformation in the Retail Industry, sometimes called “New Retail,” is about retailers completely integrating and embedding end-to-end capabilities (digital and non-digital) to bring about innovation in the customer experience. As such, the consumer can actively participate in and influence the retail model. The Digital Transformation Market in Retail is expected to grow from USD $711.61 billion in 2023 to USD $1,719.67 billion by 2028, at a CAGR of 19.30% during the forecast period (2023-2028), according to Mordor Intelligence. The advent of digital technologies for collecting, storing, analyzing, and distributing information has created new dynamics in the digital transformation of the retail market and the full interaction with customer experience both online and offline.

● Rapidly increasing internet penetration is a key factor contributing to the market’s growth over the forecast period. An increase in smart gadgets and incremental technological advancements will pave the way for growth in this market by making this technology more accessible to small/medium-scale retail organizations. For instance, according to ITU 2022 report, internet users globally increased from 3.217 billion in 2016 to 4.901 billion in 2021.

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● Customers’ rising demands are pushing merchants to form strategic alliances with technology suppliers in order to capitalize on new prospects. These collaborations enable merchants to improve their technological competence and offer value to their operations. Retailers are progressively cooperating with tech suppliers to develop the most appropriate and long-term business solutions, which have contributed to market growth.

● The outbreak of COVID-19 had a favorable influence on industry development throughout and after the outbreak. The demand to improve operational productivity is significantly fueling the development of the digital transformation industry. Furthermore, the pandemic has boosted the growth of the retail e-commerce industry as consumers tend to purchase more retail products from e-commerce websites to prevent them from getting infected.

● Numerous shops focus on incorporating modern technology, including big data, Augmented Reality and AI, to help their company develop. Furthermore, a significant challenge they encounter is a need for more in-house competencies and knowledge. Employing IT expertise is challenging since leading technology businesses are competing for the finest people. These factors are expected to create obstacles to market growth over the coming years.

Based upon the above trends, we believe significant opportunities exist for:

● From purchase to entertainment: Retailers should ensure customers are no longer simply buying products, instead they embed purchases into an entire entertainment process, whether is from online or offline. Technology like Augmented Reality, gamification, interactive kiosks, and integration into customer loyalty programs will embrace a richer entertainment experience for shoppers both in retail and online space.
● From marketing or brand impression to an interactive continuous dialogue: Retailers should engage continuous dialogue with the customer rather than passively communicating with them through advertising. Technologies like AI Chatbot and data analytics offers huge competitive advantages to retailers and brands to strengthen their New Retail position.
● Transformation in workforce management: with the much higher expectation from consumer and the variety of various promotional programs and product offering both in Online and Offline, retail staff communication, collaboration and training become critical success factors for customer satisfaction. Technologies like collaborative management tool, Chatbot, and workforce task management help to boost the productivity of retail ~~staff.~~staff
● Cross industry membership services: while loyalty programs are popular in the retail industry, there are growing demand on the use of loyalty redemption program that could benefit consumer not just for their retail experience but broaden it to other activities, such as travel, lifestyle programs, etc. The ability to interchange loyalty reward across different industry and brands further increase customer satisfaction and ~~loyalty.~~loyalty

Our Plan of Operations and Growth Strategy

We believe that we have significant opportunities to further enhance the value we deliver to our users. We intend to pursue the following growth strategy:

● based on our previous development accomplishment and Value Exchange International Retail IT services experience, but a sustainability services and solutions satisfying the need of retail digital transformation for global retailers;
● partner with major IT vendors and IT service business provider by offering the Digital Transformation Expertise to them; and
● Through Hapi Café Membership program (our own invested coffee chain business in the greater China region) develop more customer oriented technology surrounding metaverse, augmented reality and artificial intelligence, use them as the first-hand experience as our proof of concept to other clients.

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Results of Operations

Summary of Key Results

For the unaudited three months period ending ~~June~~September 30, 2023 and 2022

Revenue

Revenue consists primarily of the services rendered to customers in the amount of ~~$14,034~~$20 and ~~$7,701,~~$6,365, respectively, for the three months ended ~~June~~September 30, 2023 and 2022.The Company began generating revenue from a project providing AI chatbot services to Value Exchange Int’l (Hong Kong) Limited, a related company of the company and a subsidiary of VEII located in Hong Kong, on a monthly basis in 2022. Additional revenue also generated from F&B business, MOC and HCDG, HCDG acquired on March 1, 2023 was ~~$52,904.~~$51,433. Total revenues were ~~$66,938~~$51,453 and ~~$7,701,~~$6,365, respectively, for the three months ended ~~June~~September 30, 2023 and 2022.

Cost of revenue

Cost of revenue consists primarily of outside service fees incurred directly to the project. The cost from F&B revenue were ~~$14,706~~$13,658 and $0 respectively, for the ~~six~~three months ended ~~June~~September 30, 2023 and 2022, of which ~~$1,578~~$5 and $0 were depreciation for leasehold improvement respectively. Total cost of revenue for the three months ended ~~June~~September 30, 2023 and 2022 were ~~$20,854~~$13,658 and ~~$2,792.~~$1,781.

Operating Expenses

Operating expenses consist primarily of salary and benefits, professional fees, consulting expenses and maintenance expenses of existing software framework. We expect to maintain our operating expenses with moderate changes in line with business activities. Total operating expenses for the three months ended ~~June~~September 30, 2023 and 2022 were ~~$172,474~~$254,580 and ~~$55,652,~~$95,788, of which ~~$618~~$842 and ~~$415~~$471 were depreciation expenses and ~~$1,769~~$2,093 and $0 were rent expense, respectively. The increase was mainly due to the increase in consulting expenses for the exploration of new projects and new markets.

Other (Expense) / Income

For the three months ended ~~June~~September 30, 2023 and 2022, we have incurred ~~$(49,046)~~$(19,085) and ~~$(24,769)~~$(96,182) in foreign exchange (loss), ~~$27,944~~$21,558 and $1 in interest income, ~~$(27,923)~~$(28,231) and $0 in interest expenses ~~$0 and $3,218 in gain on disposal of investment~~ and $ ~~68,881~~1,008,735 and ~~$(279,500)~~$(500,500) in unrealized gain (loss) on securities investment respectively.

For the unaudited ~~six~~nine months period ending ~~June~~September 30, 2023 and 2022

Revenue

Revenue consists primarily of the services rendered to customers in the amount of ~~$28,074~~$28,094 and ~~$7,701,~~$14,066, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.The Company began generating revenue from a project providing AI chatbot services to Value Exchange Int’l (Hong Kong) Limited, a related company of the company and a subsidiary of VEII located in Hong Kong, on a monthly basis in 2022. Additional revenue also generated from F&B business, MOC and HCDG, HCDG acquired on March 1, 2023 was ~~$101,427.~~$152,860. Total revenues were ~~$129,501~~$180,954 and ~~$7,701,~~$14,066, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

Cost of revenue

Cost of revenue consists primarily of outside service fees incurred directly to the project. The cost from F&B revenue were ~~$28,873~~$48,915 and $0 respectively, for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, of which ~~$6,391~~$6,396 and $0 were depreciation for leasehold improvement respectively. Total cost of revenue for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were ~~$44,402~~$58,060 and ~~$2,792.~~$4,573.

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Operating Expenses

Operating expenses consist primarily of salary and benefits, professional fees, consulting expenses and maintenance expenses of existing software framework. We expect to maintain our operating expenses with moderate changes in line with business activities. Total operating expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were ~~$427,386~~$681,966 and ~~$159,976,~~$255,116, of which ~~$1,089~~$1,931 and ~~$580~~$1,051 were depreciation expenses and ~~$3,564~~$5,657 and $0 were rent expense, respectively. The increase was mainly due to the increase in consulting expenses for the exploration of new projects and new markets.

Other (Expense) / Income

For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, we have incurred ~~$(42,699)~~$(61,784) and ~~$(34,710)~~$(130,892) in foreign exchange (loss), ~~$39,000~~$60,558 and $2$3 in interest income, ~~$(38,970)~~$(67,201) and $0 in interest expenses, $0 and $3,218 in gain on disposal of investment and $ ~~(964,331)~~44,404 and ~~$(734,500)~~$(1,235,000) in unrealized gain (loss) on securities investment respectively.

Liquidity and Capital Resources

At ~~June~~September 30, 2023, we had cash of ~~$485,776~~$684,053 and working capital deficit of ~~$(4,975,645).~~$3,557,919.

We had a total stockholders’ deficit of ~~$3,177,706~~$4,096,678 and an accumulated deficit of ~~$7,637,279~~$6,870,673 as of ~~June~~September 30, 2023 compared with a total stockholders’ deficit of $1,875,788 and an accumulated deficit of $6,288,884 as of December 31, 2022. This difference is primarily due to the unrealized loss on securities investment during the period.

For the ~~six~~nine months ended ~~June~~September 30, 2023, we recorded a net loss of ~~$1,349,276.~~$583,085.

We had net cash used in operating activities of ~~$410,873~~$662,289 for the ~~six~~nine months ended ~~June~~September 30, 2023. We had a negative change of ~~$58,174~~$101,124 in operating lease liability, a negative change of $69,590 in accounts receivable, a negative change of $1,250 in inventories, a positive change of ~~$7,689~~$4,379 in deposit, prepaid expenses and other receivable and a positive change of ~~$9,881~~$14,965 due to accounts payable and accrued expenses.

For the ~~six~~nine months ended ~~June~~September 30, 2022, we recorded a net loss of ~~$920,035.~~$1,606,185.

We had net cash used in operating activities of ~~$205,929~~$504,935 for the ~~six~~nine months ended ~~June~~September 30, 2022. We had a negative change of ~~$30,720~~$85,723 in accounts receivable, a negative change of ~~$7,940~~$76,955 in deposit, prepaid expenses and other receivable, and a positive change of ~~$20,880~~$8,059 due to accounts payable and accrued expenses.

For the ~~six~~nine months ended ~~June~~September 30, 2023, we had net cash used in investing activities of ~~$216,580,~~$218,992, of which ~~$1,587~~$3,999 was due to the acquired new property and equipment, and $214,993 was due to the acquisition of HTL. For the ~~six~~nine months ended ~~June~~September 30, 2022, we had net cash used in investing activities of $3,703, of which $3,704 was due to the acquired new property and equipment.

For the ~~six~~nine months ended ~~June~~September 30, 2023, we had net cash provided by financial activities of ~~$625,973,~~$1,058,136, of which ~~$625,973~~$1,058,136 was due to advances from related parties. For the ~~six~~nine months ended ~~June~~September 30, 2022, we had net cash provided by financial activities of ~~$142,284,~~$507,052, of which ~~$142,284~~$507,052 was due to advances from related parties.

As of ~~June~~September 30, 2023, we have the fixed operating office lease agreements in Hong Kong and the People’s Republic of China.

We will need to raise additional capital through equity or debt financing. However, we cannot be certain that such capital (from our largest shareholder or third party) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing shareholders and could result in significant financial and operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business and pursue our business plan.

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We have included disclosures which discuss the matters which create substantial doubt as to whether we will be able to continue to operate as a going concern including the facts that the Company has incurred net operating losses of ~~$7,637,279~~$6,870,673 from inception though ~~June~~September 30, 2023 and has not yet established an ongoing source of revenue sufficient to cover its operating costs. The ability of the Company to continue as a going concern is dependent on the Company obtaining the adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

Critical Accounting Policies

Our discussion and analysis of the financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for revenue recognition, allowance for doubtful accounts, inventory reserves and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.

Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

Revenue recognition

Accounting Standards Codification (“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. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The Company adopted this new standard on January 1, 2018 under the modified retrospective method to all contracts not completed as of January 1, 2018 and the adoption did not have a material effect on our financial statements but we expanded our disclosures related to contracts with customers below.

Revenue is recognized when (or as) the Company transfers promised goods or services or catering service to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services or catering service, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services or catering service to its customers. Costs to obtain or fulfill a contract are expensed as incurred.

The Company began generating revenue from F&B business by providing quality catering service and a project providing services to Value Exchange Int’l (Hong Kong) Limited, a subsidiary of Value Exchange International, Inc. (“VEII”) located in Hong Kong, on a monthly basis in 2022. VEII is a related party of the Company. Upon receipt of purchase order from this customer, we issue the corresponding invoice and provide the service accordingly. Any payment received from this customer in advance is presented within other payables on the Company’s condensed consolidated balance sheets.

Income taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the condensed consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as non-current based on their characteristics.

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The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The Group did not recognize any income tax due to uncertain tax position or incur any interest and penalties related to potential underpaid income tax expenses for the period ended ~~June~~September 30, 2023 or 2022, respectively.

Investment in Securities - related party

The Company entered into Securities Purchase Agreements with pursuant to which the Company purchased 6,500,000 and 7,276,163 shares of Value Exchange International, Inc., a Nevada corporation (“VEII”) on April 8, 2021 and October 17, 2022 respectively, which are recorded in fair value of $1,377,616 and $2,341,948 at June 30, 2023 and December 31, 2022, respectively. $964,331 and $734,500 in unrealized loss were recognized at the six months ended June 30, 2023 and 2022 respectively.

On January 27, 2023, the Company and New Electric CV Corporation (together with the Company, the “Lenders”) entered into a Convertible Credit Agreement (the “Credit Agreement”) with VEII. The Credit Agreement provides VEII with a maximum credit line of $1,500,000 (“Maximum Credit Line”) with simple interest accrued on any advances of the money under the Credit Agreement at 8%. The principal amount of any advance of money under the Credit Agreement (each being referred to as an “Advance”) is due in a lump sum, balloon payment on the third annual anniversary of the date of the Advance (“Advance Maturity Date”). Accrued and unpaid interest on any Advance is due and payable on a semi-annual basis with interest payments due on the last business day of June and last business day of December of each year. A Lender may demand that any portion or all of the unpaid principal amount of any Advance as well as accrued and unpaid interest thereon may be paid by shares of VEII Common Stock in lieu of cash payment.

VEII must request Advances from the Lenders. Either Lender may elect to separately, fully fund the Advance, or both Lenders may jointly elect to fund the Advance based on Lenders’ agreement on the portion of the Advance to be funded by each Lender. Lenders may severally or jointly reject any request for an Advance and neither Lender has an obligation to fund any Advance under the Credit Agreement. Accordingly, the Company will determine how much to loan to VEII pursuant to the Credit Agreement.

The Credit Agreement grants conversion rights to each Lender. Each Advance shall be convertible, in whole or in part, into shares of VEII 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” (as defined below). The Conversion Price for a Conversion shall be the average closing price of the VEII Common Stock for the three (3) consecutive trading days prior to date of the Notice of Conversion. The Lenders shall also have certain conversion rights upon a change of control of VEII, or a breach of the Credit Agreement by VEII.

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 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 September 6, 2023, the Company converted $1,300,000 of the principal amount loaned to VEII into 7,344,632 shares of VEII’s common stock. Under the terms of the Credit Agreement, the Company received common stock warrants to purchase a maximum of 36,723,160 shares of VEII common stock at an exercise price of $0.1770 per share. Such warrants expire five (5) years from date of their issuance.
Our Chairman, Chan Heng Fai, and another member of our Board of Directors, Lum Kan Fai, are both members of the Board of Directors of VEII. In addition to Mr. Chan, two other members of the Board of Directors of our majority stockholder, Alset Inc., are also members of the Board of Directors of VEII (Mr. Wong Shui Yeung and Mr. Wong Tat Keung). The Company currently owns a total of ~~13,776,163~~21,120,795 shares (representing ~~38.1%~~48.55%) of VEII. which are recorded in fair value of $3,725,708 and $2,341,948 at September 30, 2023 and December 31, 2022, respectively. $44,404 and ($1,235,000) in unrealized gain (loss) were recognized at the nine months ended September 30, 2023 and 2022, respectively.

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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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of our Quarterly Report on Form 10-Q, an evaluation was carried out by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of ~~June~~September 30, 2023. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

During evaluation of disclosure controls and procedures as of ~~June~~September 30, 2023 conducted as part of our preparation of our interim financial statements, management conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective. Management determined that at ~~June~~September 30, 2023, we had a material weakness in our internal control over financial reporting because our small accounting team, currently furnished by a related-party, manages both bookkeeping and accounting functions and therefore prevents us from segregating duties within our internal control system.

Changes in the Company’s Internal Controls Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any legal proceedings. Management is not aware of any legal proceedings proposed to be initiated against us. However, from time to time, we may become subject to claims and litigation generally associated with any business venture operating in the ordinary course.

ITEM 1A. RISK FACTORS

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share Issuances

On April 24, 2023, the Company completed the issuance of 711,750 shares of the Company’s common stock to 4,736 individuals for services rendered to the Company. In connection with the issuance of these securities, the Company relied upon the exemption from registration provided by Regulation S under the Securities Act of 1933, as amended.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

Not Applicable.

ITEM 6. EXHIBITS

~~Exhibit Number Description~~
Exhibit Number Description
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HAPI METAVERSE INC.

Date: ~~August 11,~~November 7, 2023 By: /s/ Lee Wang Kei
Lee Wang Kei
Chief Executive Officer
(Principal Executive Officer)

Date: ~~August 11,~~November 7, 2023 By: /s/ Lui Wai Leung, Alan
Lui Wai Leung, Alan

Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

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	Nine Months Ended 30-Sep-23			Nine Months Ended 30-Sep-22
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) from operation including non-controlling interests	$	(583,085	)	$	(1,605,537	)
Adjustments to reconcile net (loss) to cash used in operations:
Depreciation		8,327			1,051
Non-cash lease expenses		105,517			-
Provision for impairment of account receivable		3,263			-
Common stock issued for services		712			-
(Gain) on disposal of subsidiary		-			(3,218	)
Unrealized (gain) loss on securities investment		(44,404	)		1,235,000

Change in operating assets and liabilities, net of acquisitions:
Prepaid expenses and other current assets		2,240			(82,313	)
Prepaid expenses and other current assets – related party		(68,700	)		(80,365	)
Accounts payable, other payable and accrued expenses		15,124			8,059
Accounts payable, other payable and accrued expenses-related parties		(159	)		-
Change in Operating Lease Liability		(101,124	)		-
Receipt in advance – related party		-			23,036
Net cash used in operating activities	$	(662,289	)	$	(504,287	)
Net cash used in Discontinued Operating Activities		-			(648	)
Net cash used in operating activities	$	(662,289	)	$	(504,935	)

CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(3,999	)		(3,704	)
Acquisition of Hapi Travel		(214,993	)		-
Net cash inflow on disposal of subsidiary		-			1
Net cash used in investing activities	$	(218,992	)	$	(3,703	)

CASH FLOW FROM FINANCING ACTIVITIES:
Advance from related parties		1,058,136			507,052
Net cash provided by financing activities	$	1,058,136		$	507,052

NET INCREASE/(DECREASE) IN CASH		176,855			(1,586	)
Effects of exchange rates on cash		(7,062	)		144,923
CASH at beginning of period		514,260			245,780
CASH at end of period	$	684,053		$	389,118

Supplemental schedule of non-cash investing and financing activities
VEII common shares acquired via conversion of note receivable	$	1,300,000
VEII warrants acquired via conversion of note receivable	$	6,488,457
Convertible promissory note - related party, issued in exchange with convertible promissory note payable - related party	$	1,400,000		$	-
Initial Recognition of Operating Lease Right-Of-Use Asset and Lease Liability	$	271,504		$	-

*³		MOC HK Limited (“MOC”) was incorporated in Hong Kong on February 16, 2020 with an issued and paid-up share capital of $1.28 (HK$10) comprising 10 ordinary shares. MOC plans to be principally engaged in the food and beverage business in Hong Kong Hapi Cafe Ltd. is the owner of 100% of the issued and outstanding shares of MOC. This business was acquired on October 5, 2022. The acquisition generated a goodwill of $60,343 for the Company.

*⁴		Shenzhen Leyouyou Catering Management Co., Ltd. (“HCCN”) was incorporated in People’s Republic of China on October 10, 2022. HCCN plans to be principally engaged in the food and beverage business in Mainland China.

*⁹		Hapi Acquisition Pte. Ltd. was incorporated in Singapore on June 30, 2023 with an issued and paid-up share capital of $2 comprising 2 ordinary shares.
*10		NewRetail-AI Inc. was incorporated in Nevada on July 31, 2023 with an issued and paid-up share capital of $1,000 comprising 10,000,000 ordinary shares.

	●	Level 1 - quoted prices in active markets for identical assets and liabilities;

	●	Level 2 - observable market based inputs or unobservable inputs that are corroborated by market data; and

	●	Level 3 - significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Accrued payroll	$	5,030	$	3,309	$	10,143	$	3,309
Accrued professional fees		8,860		18,905		15,241		18,905
Other account payable and accrued expenses		22,880		2,387		16,912		2,387
Receipt in advance from customer – related party		7,692		7,838		7,698		7,838
Total	$	44,462	$	32,439	$	49,994	$	32,439

	Level 1		Level 2		Level 3		Fair Value
	Fair Value Measurement Using						Amount at
	Level 1		Level 2		Level 3		Fair Value
September 30, 2023
Asset
Investment Securities – Fair Value	$	3,725,708	$	-	$	-	$	3,725,708
Warrants - VEII						6,449,100		6,449,100

Total Investment in securities at Fair Value	$	3,725,708	$	-	$	6,449,100	$	10,174,808

	September 30,			September 6,
	2023			2023

Stock price	$	0.1756		$	0.1770
Exercise price		0.1770			0.1770
Risk free interest rate		8.50	%		8.50	%

Annualized volatility		270.02	%		273.79	%
Dividend Yield		0.00		$	0.00
Year to maturity		4.94			5.00
Warrants and rights outstanding, measurement input		4.94			5.00

	Total
Balance at January 1, 2023	$	-
Acquisition at September 6, 2023		6,488,457
Total losses		39,357
Balance at September 30, 2023	$	6,449,100

	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022			Six Months Ended June 30, 2023		Six Months Ended June 30, 2022			Three Months Ended September 30, 2023		Three Months Ended September 30, 2022			Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022

Operating expenses:
General and administrative	$	-	$	(3	)^*	$	-	$	648		$	-	$	(3	)*	$	-	$	648
Total operating expenses		-		(3	)		-		648			-		(3	)		-		648

Income (Loss) from operations		-		3			-		(648	)		-		3			-		(648	)

Income (Loss) from discontinued operations	$	-	$	3		$	-	$	(648	)	$	-	$	3		$	-	$	(648	)

	MOC			HTL
Acquisition Date	October 4, 2022			June 14, 2023

Purchase Price
Cash	$	70,523		$	214,993
Total purchase consideration		70,523			214,993

Purchase Price Allocation
Assets acquired
Current assets		32,700			15,098
Property and Equipment, net		11,266			1,485
Operating lease right-of-use assets, net		114,232			16,516
Total assets acquired		158,198			33,099

Liabilities assumed:
Current liabilities		(33,437	)		(20,885	)
Operating lease liability		(114,232	)		(11,395	)
Accrued taxes		(349	)		-
Total liabilities assumed		(148,018	)		(32,280	)

Net assets acquired		10,180			819
Goodwill		60,343			214,174
Total purchase consideration	$	70,523		$	214,993

Maturity of Lease Liabilities	Total			Total

12 months ended June 30, 2024	$	127,198
12 months ended June 30, 2025		130,582
12 months ended September 30, 2024				$	173,077
12 months ended September 30, 2025					93,787
12 months ended September 30, 2026					41,781
12 months ended September 30, 2027					17,409
Total undiscounted lease payments		257,780			326,054
Less: Imputed interest		(12,346	)		(15,499	)
Present value of lease liabilities	$	245,434		$	310,555
Operating lease liabilities - Current		119,966			162,896
Operating lease liabilities - Non-current	$	125,468		$	147,659

	●	From purchase to entertainment: Retailers should ensure customers are no longer simply buying products, instead they embed purchases into an entire entertainment process, whether is from online or offline. Technology like Augmented Reality, gamification, interactive kiosks, and integration into customer loyalty programs will embrace a richer entertainment experience for shoppers both in retail and online space.

	●	From marketing or brand impression to an interactive continuous dialogue: Retailers should engage continuous dialogue with the customer rather than passively communicating with them through advertising. Technologies like AI Chatbot and data analytics offers huge competitive advantages to retailers and brands to strengthen their New Retail position.

	●	Transformation in workforce management: with the much higher expectation from consumer and the variety of various promotional programs and product offering both in Online and Offline, retail staff communication, collaboration and training become critical success factors for customer satisfaction. Technologies like collaborative management tool, Chatbot, and workforce task management help to boost the productivity of retail ~~staff.~~staff

	●	Cross industry membership services: while loyalty programs are popular in the retail industry, there are growing demand on the use of loyalty redemption program that could benefit consumer not just for their retail experience but broaden it to other activities, such as travel, lifestyle programs, etc. The ability to interchange loyalty reward across different industry and brands further increase customer satisfaction and ~~loyalty.~~loyalty

	●	based on our previous development accomplishment and Value Exchange International Retail IT services experience, but a sustainability services and solutions satisfying the need of retail digital transformation for global retailers;

	●	partner with major IT vendors and IT service business provider by offering the Digital Transformation Expertise to them; and

	●	Through Hapi Café Membership program (our own invested coffee chain business in the greater China region) develop more customer oriented technology surrounding metaverse, augmented reality and artificial intelligence, use them as the first-hand experience as our proof of concept to other clients.

Exhibit Number		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	HAPI METAVERSE INC.

Date: ~~August 11,~~November 7, 2023	By:	/s/ Lee Wang Kei
		Lee Wang Kei
		Chief Executive Officer
		(Principal Executive Officer)

Date: ~~August 11,~~November 7, 2023	By:	/s/ Lui Wai Leung, Alan
		Lui Wai Leung, Alan
		Chief Financial Officer (Principal Financial Officer and
		Principal Accounting Officer)