HWH.NASDAQHwh International INC
10-Q: HWH International Narrows Losses, Restructures F&B Operations
Sentiment:
Quarterly Report
HWH International Inc. reported a significant reduction in net loss for the nine months ended September 30, 2025, despite declining revenue, driven by lower operating expenses and strategic divestitures in its F&B segment.
Delay expectedThe first installment of the promissory note to EF Hutton (now D. Boral Capital LLC) due in October 2024 was paid in January 2025, resulting in a default.The rollout of Hapi Wealth Builder in selected regions is targeted for later in 2025, implying it is still in development.
Capital raiseCompleted a public offering on January 6, 2025, raising approximately $1.76 million in gross proceeds from the sale of common stock and pre-funded warrants.Has a non-revolving credit facility with Alset Inc. for up to $1,000,000, with $700,000 remaining available for draw as of September 30, 2025.Entered into a securities purchase agreement with Sharing Services Global Corporation on October 6, 2025, for a $200,000 convertible promissory note.
Better than expectedNet loss significantly decreased for both the three and nine months ended September 30, 2025, compared to the prior year.Operating expenses were substantially lower, contributing to the reduced net loss.Cash used in operating activities decreased, indicating improved operational efficiency in cash management.
Summary
- Net loss for the nine months ended September 30, 2025, significantly decreased to $710,613 from $2,277,303 in the prior year.
- Revenue for the nine months ended September 30, 2025, was $812,366, a decrease from $966,515 in the same period of 2024.
- Operating expenses decreased substantially to $1,600,381 for the nine months ended September 30, 2025, from $2,637,517 in the prior year.
- Cash balance decreased to $2,897,972 as of September 30, 2025, from $4,341,746 at December 31, 2024.
- The company closed several F&B subsidiaries (Ketomei Pte. Ltd. in August 2025, Hapi Caf Korea Inc. in September 2025) due to unsustainable revenue.
- HWH International sold 70% of Alset F&B One Pte. Ltd. for approximately $170,754 USD, retaining a 20% stake.
- Acquired 100% of L.E.H. Insurance Group, LLC in two stages for a total of $115,000, with associated goodwill of $122,482 immediately written off.
- Successfully regained compliance with Nasdaq's minimum bid price rule after a 1-for-5 reverse stock split in February 2025 and is now listed on the Nasdaq Capital Market.
- Management identified material weaknesses in internal control over financial reporting, including limited accounting personnel and inadequate accounting policies.
Sentiment
Score: 4
Explanation: While the company significantly reduced its net loss and operating expenses, revenue declined, and it continues to face going concern doubts and internal control weaknesses. Strategic shifts are underway, but their success is yet to be proven, and the immediate write-off of goodwill from an acquisition is concerning. The reliance on related party financing and the release of a key financial support commitment also add to the cautious outlook.
Positives
- Net loss for both the three-month ($299,618 vs $537,143) and nine-month ($710,613 vs $2,277,303) periods ended September 30, 2025, significantly decreased compared to 2024.
- Operating expenses for the nine months ended September 30, 2025, substantially decreased to $1,600,381 from $2,637,517 in the prior year.
- Net cash used in operating activities decreased to $728,326 for the nine months ended September 30, 2025, from $1,404,073 in 2024, indicating improved operational cash management.
- Regained compliance with Nasdaq's minimum bid price requirement and maintained listing on the Nasdaq Capital Market.
- Completed a public offering in January 2025, raising approximately $1.76 million in gross proceeds.
- Secured a credit facility with Alset Inc. for up to $1,000,000, with $700,000 remaining available for draw as of September 30, 2025, and an extended maturity date to April 14, 2026.
Negatives
- Revenue decreased for both the three-month ($206,778 vs $345,523) and nine-month ($812,366 vs $966,515) periods ended September 30, 2025, compared to 2024.
- Gross profit decreased for both the three-month ($123,582 vs $159,869) and nine-month ($420,066 vs $488,079) periods ended September 30, 2025, compared to 2024.
- Cash balance declined to $2,897,972 as of September 30, 2025, from $4,341,746 at December 31, 2024.
- The company ceased operations of multiple F&B subsidiaries (Alset F&B (PLQ) Pte. Ltd. in 2024, Ketomei Pte. Ltd. in August 2025, Hapi Caf Korea Inc. in September 2025) due to unsustainable revenue.
- Incurred a $21,611 loss from the deconsolidation of Alset F&B One Pte. Ltd.
- Goodwill of $122,482 from the acquisition of L.E.H. Insurance Group, LLC was immediately written off, indicating potential overvaluation or poor performance.
- Defaulted on a promissory note to EF Hutton (now D. Boral Capital LLC) due to delayed payment of the first installment.
- Alset International Limited, a related party, was released from its commitment to provide additional financial support as of September 30, 2025.
Risks
- The company incurred a net loss, loss from operations, and negative cash flow from operating cafes, raising substantial doubt about its ability to continue as a going concern.
- Operational challenges include the ability to improve revenue through cross-selling, difficulty identifying and integrating complementary businesses, challenges in attracting skilled personnel, and controlling operating expenses as businesses expand.
- Fluctuations in foreign exchange rates, particularly on intercompany loans between Singapore and South Korea (approximately $0.23 million on September 30, 2025), are expected to continue impacting results of operations.
- Material weaknesses in internal control over financial reporting due to limited accounting personnel and lack of well-defined accounting policies and procedures, increasing the risk of financial misstatements.
- While management believes related party financing is available, the release of Alset International Limited from its financial support commitment adds uncertainty regarding future funding.
- Although currently compliant, the company has a history of non-compliance with Nasdaq listing rules (MVLS, publicly held shares, bid price), indicating ongoing vulnerability to market fluctuations.
- As an early stage and emerging growth company, HWH International Inc. is subject to all the inherent risks associated with such companies.
Future Outlook
The company is developing Hapi Marketplace, a business-to-consumer platform expanding product categories and regions, and Hapi Wealth Builder, an educational program for wealth-building strategies, targeting a rollout in selected regions later in 2025 with a China headquarters. Plans include taking over leases of existing Hapi Cafes and adding more over the next two years, requiring minimum investment per location.
Management Comments
- "We believe it is more strategic to refocus our efforts and resources on other F&B business ventures that have greater growth potential." (Regarding cafe closures)
- "The team has been diligently producing digital content for Hapi Wealth Builder and working to collaborate with the right partners to launch the program and make it available to customers."
- "Our unique community-centric approach will offer members tools for making informed financial decisions while creating pathways for sustained growth." (Regarding Hapi Wealth Builder)
- "We believe that the available cash in the Company’s bank accounts, 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."
Industry Context
The company is actively restructuring its traditional F&B operations by closing underperforming cafes and divesting stakes, while simultaneously expanding into digital platforms (Hapi Marketplace) and educational services (Hapi Wealth Builder). This reflects a broader trend of companies diversifying revenue streams and leveraging digital transformation, particularly in consumer-facing sectors, to adapt to changing market dynamics and seek higher-growth opportunities. The acquisition of an insurance group also indicates a strategic move into financial services for diversification.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Executive Officer | John JT Thatch | Chan Heng Fai | 2025-10-03 | Resignation of previous CEO, appointment of Chairman of the Board. |
| Board Member | NA | Lim Sheng Hon Danny | 2025-10-03 | Appointment of Chief Operating Officer to the board. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Internal Control Weaknesses | Identified material weaknesses including limited accounting personnel leading to improper segregation of duties and lack of well-defined accounting policies and procedures. | 2025-09-30 | Increases risk of financial misstatements and operational inefficiencies. |
| Nasdaq Listing Status | Regained compliance with Nasdaq's minimum bid price rule and transitioned to the Nasdaq Capital Market. | 2025-03-10 | Maintains public listing, but on a lower tier market, reflecting past compliance issues. |
Related Party Transactions
- Convertible Promissory Notes (CN 1-8) and warrants (WRNT 1-2) with Sharing Services Global Corporation (SHRG) totaling $1,230,000 in principal, bearing interest rates from 6% to 8%, with maturities between March 2027 and September 2028.
- Loans to SHRG totaling $280,000 (Loan Agreement 1 for $30,000 at 10% interest, Loan Agreement 2 for $250,000 at 8% interest), maturing April 2026.
- Credit Facility Agreement with Alset Inc. (majority stockholder) for up to $1,000,000, bearing 3% interest, with $700,000 available as of September 30, 2025, and maturity extended to April 14, 2026.
- Debt conversion agreements with Alset Inc. and Alset International Limited in September 2024, converting $300,000 and $3,501,759 of debt into common stock, respectively.
- Alset International Limited (fellow subsidiary) owed $4,651,995 as of September 30, 2025, for short-term working capital advances.
- Alset Business Development Pte. Limited (fellow subsidiary) owed $4,233,165 as of September 30, 2025.
- HotApp International Limited (fellow subsidiary) owed $252,890 as of September 30, 2025.
- Acquisition of L.E.H. Insurance Group, LLC from Sharing Services Global Corporation in two stages for a total of $115,000.
- Sale of 70% of Alset F&B One Pte. Ltd. to Alset International Limited for approximately $170,754 USD.
- HapiTravel Holding Pte. Ltd. (joint venture with Executive Chairman) owed $24,721 as of September 30, 2025.
- Corporate sales revenue from related parties for F&B business: $501 for the three months ended September 30, 2025, and $3,100 for the nine months ended September 30, 2025.
- Rental income from related parties: $0 for the three months ended September 30, 2025, and $2,072 for the nine months ended September 30, 2025.
Stakeholder Impact
- Shareholders experienced a 1-for-5 reverse stock split, potentially impacting share price and liquidity. Dilution occurred from a public offering and debt conversions. While reduced net loss is positive, revenue decline and a going concern warning are significant concerns.
- Employees in subsidiaries like Ketomei Pte. Ltd. and Hapi Caf Korea Inc. likely faced job losses due to cafe closures.
- Customers may experience changes in F&B service availability due to closures and divestitures, but new platforms like Hapi Marketplace and Hapi Wealth Builder could offer new products and services.
- Creditors, particularly D. Boral Capital LLC, face potential repayment risks due to a default on a promissory note. The company's reliance on related party financing is also notable.
- Regulatory bodies, including Nasdaq, have scrutinized the company's compliance with listing rules and its internal controls, highlighting areas requiring ongoing attention.
Next Steps
- Continue rolling out Hapi Marketplace in phases, expanding to South Korea, Hong Kong, and other parts of Asia.
- Expand the product range of Hapi Marketplace into robotics for consumer and commercial markets.
- Further develop and launch Hapi Wealth Builder in selected regions later in 2025, including opening a China headquarters.
- Take over leases of existing Hapi Cafes and add additional Hapi Cafes over the next two years.
- Negotiate with D. Boral Capital LLC to resolve the default status of the promissory note.
- Evaluate the impact of new accounting standards (ASU No. 2023-09 and ASU No. 2024-03) on consolidated financial statements.
Key Dates
| Date | Description |
|---|---|
| 2021-10-20 | HWH International Inc. (originally Alset Capital Acquisition Corp.) incorporated in Delaware. |
| 2022-02-03 | Company paid cash underwriting discount of $1,725,000. |
| 2022-05-01 | Opened proof-of-concept Hapi Caf location in Seoul, Republic of Korea. |
| 2022-07-01 | Opened proof-of-concept Hapi Caf location in Singapore. |
| 2022-09-09 | Entered into Merger Agreement with HWH International Inc. (Nevada) and HWH Merger Sub Inc. |
| 2023-08-01 | Held Special Meeting where stockholders adopted proposal to approve Business Combination. |
| 2023-12-18 | Entered into Satisfaction and Discharge of Indebtedness Agreement with EF Hutton LLC. |
| 2024-01-09 | Closing of the Merger and Business Combination; Company changed name to HWH International Inc. |
| 2024-01-09 | Promissory note to EF Hutton LLC became effective. |
| 2024-03-07 | Received Nasdaq notice of non-compliance with minimum market value of listed securities (MVLS) requirement. |
| 2024-03-14 | Entered into a share subscription agreement for 19,000 shares of Ideal Food & Beverage Pte. Ltd. (IFBPL). |
| 2024-03-20 | Entered into a securities purchase agreement with Sharing Services Global Corporation (SHRG) for Convertible Promissory Note (CN 1) and warrants (WRNT 1). |
| 2024-04-10 | Alset F&B One Pte. Ltd. incorporated in Singapore. |
| 2024-04-24 | Entered into a Credit Facility Agreement with Alset Inc. for up to $1,000,000. |
| 2024-04-25 | Entered into a binding term sheet for a joint venture (HapiTravel Holding Pte. Ltd.) with Chen Ziping and Chan Heng Fai. |
| 2024-05-01 | Opened another Hapi Caf in Seoul, Republic of Korea. |
| 2024-05-09 | Entered into a securities purchase agreement with SHRG for Convertible Promissory Note (CN 2). |
| 2024-05-23 | Paid subscription fee of $14,010 to IFBPL. |
| 2024-06-01 | Ceased operations of Alset F&B (PLQ) Pte. Ltd. (second quarter 2024). |
| 2024-06-06 | Entered into a securities purchase agreement with SHRG for Convertible Promissory Note (CN 3). |
| 2024-08-13 | Entered into a securities purchase agreement with SHRG for Convertible Promissory Note (CN 4). |
| 2024-08-20 | Deadline to regain compliance with Nasdaq's minimum market value of publicly held shares. |
| 2024-08-27 | Received Nasdaq notice of delisting from Nasdaq Global Market unless appealed. |
| 2024-09-03 | Deadline to regain compliance with Nasdaq's MVLS requirement. |
| 2024-09-04 | Received Nasdaq notice of non-compliance with minimum $1 bid price requirement. |
| 2024-09-09 | Received Nasdaq notice that MVLS deficiency would be considered at appeal. |
| 2024-09-24 | Debt of $300,000 due to Alset Inc. converted into 476,190 shares of common stock. |
| 2024-09-24 | Debt of $3,501,759 due to Alset International Limited converted into 5,558,347 shares of common stock. |
| 2024-10-15 | Presented compliance plan to Nasdaq Hearings Panel. |
| 2024-10-21 | Received notice from Nasdaq Panel granting extension to phase down to Nasdaq Capital Market. |
| 2024-10-31 | Announced scheduled launch of Hapi Wealth program. |
| 2024-11-04 | Announced launch of Hapi Marketplace. |
| 2024-11-06 | Signed a loan agreement with HapiTravel Holding Pte. Ltd. (HTHPL) for $137,658. |
| 2024-11-19 | Entered into a definitive agreement to acquire a controlling 60% interest in L.E.H. Insurance Group, LLC. |
| 2024-11-25 | Entered into a stock purchase agreement with Alset Inc. to purchase 4,411,764 shares for a total of $3,000,000. |
| 2024-12-03 | Stock purchase transaction with Alset Inc. completed. |
| 2024-12-18 | Sold Hapi Travel Pte. Ltd. (HTPL) to HTHPL for $834. |
| 2024-12-19 | Registration statement on Form S-1 declared effective. |
| 2024-12-24 | Entered into a stock purchase agreement with Alset Inc. to purchase 1,300,000 shares for a total of $585,000. |
| 2024-12-30 | Stock purchase transaction with Alset Inc. completed. |
| 2025-01-03 | Announced pricing of public offering of 3,162,500 shares and 1,250,000 pre-funded warrants. |
| 2025-01-06 | Public offering closed, raising approximately $1.76 million gross proceeds. |
| 2025-01-15 | Entered into a securities purchase agreement with SHRG for Convertible Promissory Note (CN 5). |
| 2025-01-16 | Stockholders approved 1-for-5 reverse stock split. |
| 2025-02-18 | Filed Certificate of Amendment for 1-for-5 reverse stock split. |
| 2025-02-24 | Reverse stock split became effective. |
| 2025-02-27 | Acquisition of controlling 60% interest in L.E.H. Insurance Group, LLC closed. |
| 2025-03-03 | Compliance Date for Nasdaq's bid price requirement. |
| 2025-03-10 | Received Nasdaq Compliance Notice for regaining minimum bid price. |
| 2025-03-31 | Entered into a securities purchase agreement with SHRG for Convertible Promissory Note (CN 6) and warrants (WRNT 2). |
| 2025-04-14 | Amendment to Credit Facility Agreement with Alset Inc. extended maturity to April 14, 2026. |
| 2025-04-14 | Alset International Limited released from Letter of Continuing Financial Support. |
| 2025-04-20 | Signed term sheet for sale of HWH World Inc. (HWHKOR) to AES Group Inc. |
| 2025-04-21 | Entered into Loan Agreement 1 with SHRG for $30,000. |
| 2025-04-23 | Completed sale of HWH World Inc. (HWHKOR) to AES Group Inc. |
| 2025-04-25 | Entered into Loan Agreement 2 with SHRG for $250,000. |
| 2025-06-27 | Entered into a securities purchase agreement with SHRG for Convertible Promissory Note (CN 7). |
| 2025-08-05 | Ceased operation of subsidiary Ketomei Pte. Ltd. |
| 2025-08-27 | Acquisition of remaining 40% interest in L.E.H. Insurance Group, LLC closed. |
| 2025-09-10 | Entered into a sale and purchase agreement to sell 70% of Alset F&B One Pte. Ltd. to Alset International Limited. |
| 2025-09-13 | Ceased operations of subsidiary Hapi Caf Korea Inc. |
| 2025-09-17 | Entered into a securities purchase agreement with SHRG for Convertible Promissory Note (CN 8). |
| 2025-10-03 | John JT Thatch resigned as Chief Executive Officer. |
| 2025-10-03 | Chan Heng Fai appointed as Chief Executive Officer. |
| 2025-10-03 | Lim Sheng Hon Danny appointed as a member of the Board of Directors. |
| 2025-10-06 | Entered into a securities purchase agreement with SHRG for a convertible promissory note of $200,000. |
| 2025-10-21 | Date consolidated financial statements were available to be issued. |
Recommendation
holdHWH International Inc. shows a positive trend in reducing its net loss and operating expenses, which is a step towards financial stability. However, the decline in revenue, continued going concern warning, and identified material weaknesses in internal controls present significant risks. The strategic shift towards Hapi Marketplace and Hapi Wealth Builder, along with the insurance group acquisition, represents diversification, but their profitability and integration success are unproven. The company's reliance on related party financing and past Nasdaq compliance issues suggest ongoing volatility. Given the mixed signals and unproven new ventures, a 'hold' recommendation is appropriate, advising investors to monitor the execution of new strategies and improvements in core financial health before making further investment decisions.
Keywords
HWH International, SEC Filing, 10-Q, Financial Results, Food & Beverage, F&B, Hapi Marketplace, Hapi Wealth Builder, Nasdaq Capital Market, Reverse Stock Split, Related Party Transactions, Goodwill Impairment, Going Concern, Internal Controls, Corporate Governance, Insurance Group Acquisition
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