10-Q: HWH International Inc. Q2 2026 Financial Update

HWH International Inc. reports a net income of $210,657 for Q2 2026, a significant increase from the prior year, despite a year-to-date net loss.

Summary

• HWH International Inc. reported a net income of $210,657 for the three months ended June 30, 2026, a substantial increase from $75,977 in the same period of 2025.
• However, for the six months ended June 30, 2026, the company incurred a net loss of $416,116, compared to a net loss of $410,995 in the prior year.
• Revenue for the three months ended June 30, 2026, was $64,200, a decrease from $310,391 in the prior year, attributed to the cessation of operations of cafes in Singapore and Korea.
• Cost of revenue and operating expenses also decreased significantly due to the cafe closures.
• The company's cash balance decreased to $1,506,036 as of June 30, 2026, from $2,085,918 as of December 31, 2025.
• Despite the net loss and operating cash flow concerns, the company believes it has sufficient resources to continue operations for at least the next 12 months, supported by existing cash, anticipated operations, and related party financing.
• The company received a notice from Nasdaq regarding non-compliance with minimum stockholders equity requirements but has submitted a plan to regain compliance and expects to do so by September 30, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the continued net loss, significant revenue decline, and ongoing going concern doubts, despite a positive quarterly net income and progress on Nasdaq compliance.

Positives

• Reported a net income of $210,657 for the three months ended June 30, 2026, a significant improvement from $75,977 in the prior year's quarter.
• Secured a $500,000 investment from its majority stockholder, Alset Inc., on June 8, 2026, which helped increase stockholders' equity.
• Successfully settled its outstanding obligation to D. Boral Capital LLC for $500,000, resolving a significant debt.
• The company's total stockholders' equity as of June 30, 2026, was $2,798,599, exceeding the Nasdaq minimum requirement of $2,500,000.
• Received an extension from Nasdaq to regain compliance with the stockholders' equity listing requirement, with a deadline of September 30, 2026.
• The company has a plan to regain compliance with Nasdaq listing rules and expects to do so within the granted extension period.

Negatives

• Incurred a net loss of $416,116 for the six months ended June 30, 2026, compared to a net loss of $410,995 in the same period of 2025.
• Revenue for the three months ended June 30, 2026, decreased to $64,200 from $310,391 in the prior year, primarily due to the closure of cafes in Singapore and Korea.
• Gross profit for the three months ended June 30, 2026, turned into a loss of $20,364 from a profit of $44,077 in the prior year.
• Cash balance decreased to $1,506,036 as of June 30, 2026, from $2,085,918 as of December 31, 2025.
• The company's disclosure controls and procedures were found to be not effective as of June 30, 2026.
• The company received a notice from Nasdaq on May 29, 2026, for non-compliance with the minimum stockholders equity requirement.

Risks

• The company's ability to continue as a going concern is subject to substantial doubt due to net loss, loss from operations, and negative cash flow from operating cafes in the six months ended June 30, 2026.
• The company's ability to maintain stockholders' equity above the Nasdaq minimum requirement in future periods depends substantially on the closing of a pending financing transaction.
• The company is subject to the risks associated with early-stage and emerging growth companies.
• The company's expansion plans, including taking over leases of existing Hapi Cafes, require significant investment and there is no guarantee of successful execution.
• The company's financial results could be affected by its ability to improve revenue through cross-selling and revenue-sharing arrangements, identify and integrate complementary businesses, attract skilled personnel, and control operating expenses.
• Foreign exchange rate volatility is expected to impact results of operations in 2026 due to intercompany loans.

Future Outlook

The company plans to expand its Hapi Marketplace and Hapi Wealth Builder initiatives, with digital content development and partner collaborations underway. Expansion plans also include taking over leases of existing Hapi Cafes to add more locations over the next two years. The company expects to regain compliance with Nasdaq listing requirements by September 30, 2026, contingent on the closing of a pending financing transaction.

Management Comments

• The company believes that the available cash, anticipated cash from operations, and financing availability from related parties are sufficient to alleviate substantial doubt about the Company's ability to continue as a going concern for at least the next 12 months.
• The company expects to evidence compliance with Nasdaq's stockholders equity requirement within the extension granted by Nasdaq.
• The company's disclosure controls and procedures are not effective as of June 30, 2026.

Industry Context

StockSavvy.ai notes that HWH International Inc.'s performance in the food and beverage sector continues to be impacted by strategic decisions to cease operations in certain locations, leading to revenue declines but also cost reductions. The company's diversification into digital platforms like Hapi Marketplace and educational programs like Hapi Wealth Builder represents a pivot towards potentially higher-margin, scalable businesses, though these are still in early development stages.

Comparison to Industry Standards

• The company's revenue decline in the food and beverage sector contrasts with general industry trends of recovery and growth in many regions, particularly in Asia.
• The significant decrease in cost of revenue and operating expenses, while positive for short-term cost management, is a direct consequence of scaling back operations, which is not a sustainable growth strategy.
• The company's reliance on related party financing for liquidity and continued operations is a common characteristic of early-stage companies but is viewed with caution by investors compared to traditional debt or equity markets.
• The company's net loss for the six-month period is a concern, especially when compared to more established players in the F&B or technology sectors that are reporting profitability.

Corporate Governance

Legal Proceedings

• No legal proceedings, government actions, administrative actions, investigations, or claims are currently pending against the Company that management believes could have a material adverse effect on its business and financial condition.

Related Party Transactions

• The company received advances from Alset Inc. ($574,086 as of June 30, 2026) and Alset International Limited ($4,694,762 as of June 30, 2026) for working capital.
• The company has outstanding amounts due from Alset Business Development Pte. Limited ($4,083,643 as of June 30, 2026) and Hapi Metaverse Inc. (none as of June 30, 2026).
• The company purchased multiple convertible promissory notes and warrants from Sharing Services Global Corporation (SHRG) totaling significant principal amounts, with interest rates ranging from 6% to 8%.
• The company provided loans to Sharing Services Global Corporation (SHRG) totaling $30,000 and $250,000, which have matured and remain outstanding.
• Alset Inc., the majority stockholder, invested $500,000 in the company on June 8, 2026.
• The company has convertible notes receivable from SHRG valued at $1,497,620 as of June 30, 2026.

Stakeholder Impact

• Shareholders: The pending $10 million investment and the $500,000 investment from Alset Inc. could impact share dilution but also provide necessary capital. The Nasdaq compliance issue poses a risk to share price and liquidity.
• Creditors: The settlement of the D. Boral Capital debt resolves a significant obligation. The company's reliance on related party financing may affect external creditworthiness.
• Employees: The amendment to the incentive compensation plan allows for future equity grants, potentially impacting employee motivation and retention.
• Suppliers: Five suppliers accounted for a significant portion of the cost of revenue in both 2025 and 2026, indicating a concentration risk.

Next Steps

• The company plans to expand its Hapi Marketplace and Hapi Wealth Builder initiatives.
• The company aims to take over leases of existing Hapi Cafes to add more locations over the next two years.
• The company must furnish a specified public report to the SEC and Nasdaq by August 31, 2026, to demonstrate compliance with the stockholders equity requirement.
• The company expects to evidence compliance with Nasdaq's stockholders equity requirement by the time it files its periodic report for the period ending September 30, 2026.
• The pending $10,000,000 investment from Smart Dynamics Technology Limited is expected to close in the near term, subject to closing conditions.

Key Dates

Recommendation

The company shows signs of operational improvement with a positive net income in the quarter and progress on Nasdaq compliance. However, the persistent net loss for the year-to-date, declining revenues, and ongoing going concern doubts warrant a cautious 'hold' stance. The successful closing of the pending $10 million investment is critical for future stability and growth.

Keywords

HWH International, Quarterly Report, Form 10-Q, Financial Statements, Food and Beverage, Hapi Marketplace, Nasdaq Compliance, Related Party Transactions