HWH.NASDAQHwh International INC
10-Q: HWH International Inc. Reports First Quarter 2025 Results, Citing Expansion Efforts and Strategic Realignment
Sentiment:
Quarterly Report
HWH International Inc. files its 10-Q report for Q1 2025, detailing financial results, strategic initiatives, and ongoing efforts to expand its food and beverage business and related ventures.
Delay expectedThe first installment of the promissory note that was due in October 2024 was paid in January 2025, resulting in a default due to the delay in payment.
Worse than expectedThe company continues to operate at a net loss, indicating that its current business model is not yet profitable.There is substantial doubt about the company's ability to continue as a going concern, raising concerns about its long-term viability.
Summary
- HWH International Inc. reported a net loss of $574,103 for the three months ended March 31, 2025, compared to a net loss of $1,336,519 for the same period in 2024.
- Revenue increased slightly to $295,197 from $286,110 year-over-year, primarily from food and beverage sales.
- Operating expenses decreased significantly from $1,495,383 to $741,722, mainly due to lower general and administrative expenses.
- The company closed a public offering on January 6, 2025, raising approximately $1.76 million before deducting fees and expenses.
- A reverse stock split of 1-for-5 was effectuated on February 24, 2025.
- The company is focusing on expanding its Hapi Caf business and developing its Hapi Marketplace and Hapi Wealth Builder programs.
- There is substantial doubt about the company's ability to continue as a going concern, but the company believes that available cash, anticipated cash from operations, and financing availability from related parties are sufficient to alleviate this doubt for at least the next 12 months.
Sentiment
Score: 4
Explanation: The document presents a mixed picture. While revenue increased slightly and operating expenses decreased, the company continues to operate at a net loss and faces significant challenges, including concerns about its ability to continue as a going concern. The company's reliance on related party transactions and the default on a promissory note are also negative factors.
Positives
- Revenue saw a slight increase year-over-year.
- Operating expenses were significantly reduced, contributing to a lower net loss compared to the previous year.
- The company successfully raised capital through a public offering.
- The launch of Hapi Marketplace and the development of Hapi Wealth Builder indicate efforts to diversify and expand the business.
- The company regained compliance with Nasdaq listing rules after implementing a reverse stock split.
Negatives
- The company continues to operate at a net loss.
- There is substantial doubt about the company's ability to continue as a going concern.
- The company is reliant on related party financing.
- The company wrote off goodwill of $77,480 related to the acquisition of LEH Insurance Group LLC.
- The company defaulted on a promissory note to EF Hutton LLC due to a delay in payment.
Risks
- The company's ability to continue as a going concern is uncertain.
- The company is dependent on related party financing, which may not always be available or on favorable terms.
- The company faces challenges in controlling operating expenses as it expands.
- The company's success depends on its ability to attract and retain competent personnel.
- The company's expansion plans may not be successful, and it may not be able to achieve its revenue targets.
- The company is subject to the risks associated with early-stage and emerging growth companies.
Future Outlook
The company plans to expand its Hapi Caf business, develop its Hapi Marketplace, and launch its Hapi Wealth Builder program. The company is targeting a rollout in selected regions later in 2025 for Hapi Wealth, a program dedicated to providing comprehensive education in equity investment and wealth-building strategies.
Management Comments
- We are expanding the product range into robotics for consumer and commercial markets.
- We believe it is more strategic to refocus our efforts and resources on other business ventures that have greater growth potential.
Industry Context
The company operates in the competitive food and beverage industry, with a focus on healthy food options. It is also venturing into e-commerce with Hapi Marketplace and financial education with Hapi Wealth Builder, aligning with trends in online retail and personal finance. The company's reliance on related party transactions is not uncommon for smaller companies, but it raises concerns about potential conflicts of interest.
Comparison to Industry Standards
- Comparing HWH International to industry peers is challenging due to its unique business model, which combines food and beverage with e-commerce and financial education.
- Traditional F&B companies like Starbucks or McDonald's have established global supply chains and brand recognition, which HWH International currently lacks.
- E-commerce platforms like Amazon or Shopify have vast resources and established customer bases, making it difficult for HWH International to compete directly.
- Financial education companies like The Motley Fool or Investopedia have a strong online presence and a wide range of educational resources, which HWH International is still developing.
- Given its size and stage of development, HWH International's financial performance is not directly comparable to these industry giants, but it can be benchmarked against other small-cap companies in the F&B and e-commerce sectors.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Amendment to Amended and Restated Certificate of Incorporation | The Company amended the text of Section 7.3 of Article VII of the Companys Amended and Restated Certificate of Incorporation with the State of Delaware to permit the stockholders of the Company to take action by majority written consent. | 2025-01-08 | This change could potentially streamline decision-making processes by allowing stockholders to take action by majority written consent, rather than requiring a formal meeting. |
Related Party Transactions
- The company has significant related party transactions, including loans and convertible notes receivable with Sharing Services Global Corporation (SHRG).
- Alset Inc., the company's indirect majority stockholder, has provided a line of credit facility to the company.
- The company sold Hapi Travel Pte. Ltd. (HTPL) to HTHPL, a joint venture company with related parties.
- The company acquired a controlling interest in L.E.H. Insurance Group, LLC (LEH) from Sharing Services Global Corp. (SHRG), a related party.
Stakeholder Impact
- Shareholders face the risk of continued losses and potential dilution.
- Employees' job security is uncertain due to the company's going concern risk.
- Customers may be affected by changes in the company's product and service offerings.
- Suppliers may face the risk of non-payment due to the company's financial difficulties.
- Creditors face the risk of default due to the company's going concern risk.
Next Steps
- The company plans to expand its Hapi Caf business.
- The company plans to develop its Hapi Marketplace.
- The company plans to launch its Hapi Wealth Builder program.
- The company is targeting a rollout in selected regions later in 2025 for Hapi Wealth, a program dedicated to providing comprehensive education in equity investment and wealth-building strategies.
Key Dates
| Date | Description |
|---|---|
| 2021-10-20 | HWH International Inc. was originally incorporated in Delaware under the name Alset Capital Acquisition Corp. |
| 2022-09-09 | The Company entered into an agreement and plan of merger (the Merger Agreement) by and among the Company, HWH International Inc., a Nevada corporation (the HWH Nevada or Target) and HWH Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of the Company (Merger Sub). |
| 2023-08-31 | Hapi Caf Inc. and Ketomei Pte. Ltd. entered into a binding term sheet pursuant to which HCI agreed to lend Ketomei up to $ 36,634 pursuant to a convertible loan, with a term of 12 months. |
| 2023-10-26 | HCI agreed to lend Ketomei up to $ 37,876 pursuant to a nonconvertible loan, with a term of 12 months. |
| 2023-12-18 | The Company entered into a Satisfaction and Discharge of Indebtedness Agreement in connection with an underwriting agreement previously entered into by HWH and EF Hutton LLC (EF Hutton) (now known as D. Boral Capital LLC). |
| 2024-01-09 | The Company consummated the Business Combination and changed its name from Alset Capital Acquisition Corp. to HWH International Inc. |
| 2024-02-20 | The Company invested additional $ 312,064 for an additional 38.41 % ownership interest in Ketomei by converting $ 312,064 of convertible loan. |
| 2024-03-07 | We received notice from Nasdaq Stock Market, LLC (Nasdaq) indicating that, because the market value of our common stock had been below $50,000,000 for the prior 37 consecutive business days, we no longer complied with the minimum market value of listed securities (the MVLS) requirement for continued listing on the Nasdaq Global Market under Rule 5450(b)(2)(A) of Nasdaq Listing Rules. |
| 2024-03-14 | The Company entered into a share subscription agreement through its subsidiary Alset F&B Holding Pte. Ltd. (F&BH) for 19,000 shares of Ideal Food & Beverage Pte. Ltd. (IFBPL), constituting 19 % of the issued shares of IFBPL. |
| 2024-03-20 | The Company entered into a securities purchase agreement with Sharing Services Global Corporation (SHRG), pursuant to which the Company purchased from SHRG a (i) Convertible Promissory Note (CN 1) in the amount of $ 250,000 , convertible into 208,333,333 shares of SHRGs common stock at the option of the Company (WRNT 1), and (ii) certain warrants exercisable into 208,333,333 shares of SHRGs common stock at an exercise price of $ 0.0012 per share, the exercise period of the warrant being five (5) years from the date of the securities purchase agreement, for an aggregate purchase price of $ 250,000 . |
| 2024-04-24 | The Company entered into a Credit Facility Agreement (the Credit Agreement) with Alset Inc., a Texas corporation and the Companys indirect, majority stockholder, pursuant to which Alset Inc. has provided the Company a non-revolving line of credit facility (the Credit Facility), which provides a maximum, aggregate credit line of up to $ 1,000,000 . |
| 2024-04-25 | The Company entered into a binding term sheet (the Term Sheet) through its subsidiary Health Wealth Happiness Pte. Ltd. (HWHPL) outlining a joint venture with Chen Ziping, an experienced entrepreneur in the travel industry, and Chan Heng Fai Ambrose, HWHs Executive Chairman, as a part of HWHs strategy of building its travel business in Asia. |
| 2024-05-09 | The Company entered into a securities purchase agreement with Sharing Services Global Corporation, pursuant to which the Company purchased from SHRG a Convertible Promissory Note (CN 2) in the amount of $ 250,000 , convertible into 125,000,000 shares of SHRGs common stock at the option of the Company for an aggregate purchase price of $ 250,000 . |
| 2024-05-23 | The subscription fee of $ 14,010 was paid to IFBPL on May 23, 2024. |
| 2024-06-06 | The Company entered into a securities purchase agreement with Sharing Services Global Corporation, pursuant to which the Company purchased from SHRG a Convertible Promissory Note (CN 3) in the amount of $ 250,000 , convertible into 125,000,000 shares of SHRGs common stock at the option of the Company for an aggregate purchase price of $ 250,000 . |
| 2024-08-13 | The Company entered into a securities purchase agreement with Sharing Services Global Corporation, pursuant to which the Company purchased from SHRG a Convertible Promissory Note (CN 4) in the amount of $ 100,000 , convertible into 50,000,000 shares of SHRGs common stock at the option of the Company for an aggregate purchase price of $ 100,000 . |
| 2024-09-04 | The Company received written notice (the Notice) from the Listing Qualifications Staff of Nasdaq notifying the Company that for the prior 30 consecutive business days prior to the date of the Notice, the Companys bid price was below the minimum $1 required for continued listing on the Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the Bid Price Requirement). |
| 2024-09-24 | On September 24, 2024 the Company drew $ 300,000 from the credit line and accrued $ 3,164 in interest. |
| 2024-10-15 | The Company presented its compliance plan to the Panel at a hearing on October 15, 2024. |
| 2024-10-21 | The Company received a notice from the Panel granting the Company an extension to phase down its securities to the Nasdaq Capital Market and demonstrate compliance with the market value of its publicly held shares and Stockholders Equity requirements as set forth in Nasdaq Listing Rules 5550(a)(5) and 5550(b)(1). |
| 2024-10-31 | We announced that the Company scheduled the launch of Hapi Wealth, a program dedicated to providing comprehensive education in equity investment and wealth-building strategies. |
| 2024-11-04 | The Company announced the launch of its business-to-consumer marketplace, Hapi Marketplace. |
| 2024-11-06 | The Company signed a loan agreement with HTHPL in the amount of $ 137,658 at a rate of 5 % per annum, the maturity date of which is on or before the second anniversary of the effective date. |
| 2024-11-19 | HWH entered definitive agreements to acquire a controlling 60 % interest in L.E.H. Insurance Group, LLC (LEH). |
| 2024-11-25 | The Company entered into a stock purchase agreement with Alset Inc. (AEI), pursuant to which Alset Inc. agreed to purchase 4,411,764 shares of the Companys common stock for a purchase price of $ 0.68 per share. |
| 2024-12-18 | The Company sold Hapi Travel Pte. Ltd. (HTPL) to HTHPL for a consideration of $ 834 . |
| 2024-12-24 | The Company entered into a Stock Purchase Agreement with AEI, pursuant to which AEI agreed to purchase 1,300,000 shares of the Companys common stock (the Shares) for a total of $ 585,000 , representing a purchase price of $ 0.45 per share. |
| 2025-01-03 | The Company announced the pricing of its public offering of 3,162,500 shares of common stock, par value $ 0.0001 per share (the Shares) and 1,250,000 pre-funded warrants to purchase shares of common stock (Pre-Funded Warrants). |
| 2025-01-06 | The offering closed on January 6, 2025. |
| 2025-01-08 | The Company amended the text of Section 7.3 of Article VII of the Companys Amended and Restated Certificate of Incorporation with the State of Delaware to permit the stockholders of the Company to take action by majority written consent. |
| 2025-01-15 | The Company entered into a securities purchase agreement with Sharing Services Global Corporation (SHRG), pursuant to which the Company purchased from SHRG a Convertible Promissory Note (CN 5) to the Company in the amount of $ 150,000 , convertible into 309,650 shares of SHRGs common stock at the option of the Company for an aggregate purchase price of $ 150,000 . |
| 2025-01-16 | The holders of a majority of the issued and outstanding shares of common stock of the Company, approved by written consent, an amendment of the Companys Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Companys common stock, par value $ 0.0001 per share, at a ratio of 1-for-5 (the Reverse Stock Split). |
| 2025-02-18 | The Company filed a Certificate of Amendment to the Companys Amended and Restated Certificate of Incorporation with the Delaware Secretary of State to effect a 1-for-5 reverse stock split (the Reverse Stock Split). |
| 2025-02-24 | The reverse stock split was effectuated on February 24, 2025. |
| 2025-02-27 | The acquisition of LEH closed on February 27, 2025. |
| 2025-03-10 | The Company received written notice (the Compliance Notice) from Nasdaq informing the Company that it has regained compliance with Nasdaq Listing Rule 5550(a)(2), which requires that companies listed on the Nasdaq Capital Market maintain a minimum bid price of $1.00 per share. |
| 2025-03-31 | The Company entered into a securities purchase agreement with Sharing Services Global Corporation (SHRG), pursuant to which the Company purchased from SHRG a (i) Convertible Promissory Note (CN 6) in the amount of $ 150,000 , convertible into 187,500 shares of SHRGs common stock at the option of the Company (WRNT 2), and (ii) certain warrants exercisable into 937,500 shares of SHRGs common stock at an exercise price of $ 0.85 per share, the exercise period of the warrant being three ( 3 ) years from the date of the securities purchase agreement. |
| 2025-04-14 | The Company entered into an amendment (the Amendment) to the Credit Facility Agreement with Alset Inc. dated April 24, 2024, pursuant to which Alset Inc. provided the Company a line of credit facility (the Credit Facility) which provides a maximum, aggregate credit line of up to $ 1,000,000 . |
| 2025-04-17 | The Company entered into a Loan Agreement (the Loan Agreement) with Sharing Services Global Corp., a related party of the Company (SHRG), under which the Company provided a loan to SHRG in the amount of $ 250,000 . |
| 2025-04-23 | The Company completed the sale of HWH World Inc.(HWHKOR) by Health Wealth Happiness Pte. Ltd. (HWHPL) to AES Group Inc. (AES), a Korean entity. |
Keywords
HWH International, Financial Results, 10-Q Filing, Food and Beverage, Hapi Caf, Hapi Marketplace, Hapi Wealth Builder, Reverse Stock Split, Related Party Transactions, Going Concern
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