HWH International Inc. (HWH) - 10-K Summary
Business Context and Reporting Period
This Annual Report on Form 10-K covers the fiscal year ended December 31, 2024. HWH International Inc. (formerly Alset Capital Acquisition Corp.) consummated a business combination on January 9, 2024, transitioning from a SPAC to an operating company. The Company operates a Food and Beverage (F&B) business with four cafés in South Korea and Singapore, and an online marketplace ("Hapi Marketplace") launched in November 2024. The Company is classified as an emerging growth company and a smaller reporting company.
Key Financial Metrics
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenue | $1,253,577 | $830,519 |
| Cost of Revenue | $651,721 | $334,825 |
| Gross Profit | $601,856 | $495,694 |
| Operating Expenses | $3,027,024 | $3,402,793 |
| Net Loss | $(2,606,504) | $(1,076,662) |
| Cash and Equivalents (Year End) | $4,341,746 | $1,159,201 |
| Total Assets | $6,408,722 | $23,710,684 |
| Total Liabilities | $3,531,523 | $6,207,178 |
| Working Capital Deficit | $(2,163,723) | $(4,686,944) |
Note: 2023 figures are recast to reflect the business combination. Revenue is derived almost entirely (100% in 2024) from Food and Beverage sales.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 51% to $1.25 million, driven by the acquisition of Ketomei Pte. Limited in Singapore and the opening of a new café in South Korea.
- Increased Net Loss: Net loss widened to $2.61 million from $1.08 million. This was primarily due to a decrease in interest income (from $2.03M to $64k) following the closure of the Trust Account, and an unrealized loss of $380k on a convertible note receivable from a related party.
- Asset Reduction: Total assets decreased significantly from $23.7M to $6.4M, largely due to the withdrawal of $21.1M from the Trust Account for shareholder redemptions upon the business combination closing.
- Debt Conversion: In September 2024, the Company converted approximately $3.8 million of debt owed to related parties (Alset Inc. and Alset International Limited) into 6.03 million shares of common stock.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern: The Company has incurred continuing losses and has a working capital deficit. While management believes available cash and financing from related parties are sufficient for the next 12 months, these conditions raise substantial doubt about the Company's ability to continue as a going concern.
- Nasdaq Compliance: The Company faced multiple listing deficiencies regarding market value and bid price. It successfully regained compliance with the Nasdaq Capital Market bid price requirement ($1.00) in March 2025 following a 1-for-5 reverse stock split effective February 24, 2025.
- Internal Controls: Management identified a material weakness in internal control over financial reporting due to limited accounting personnel and a lack of segregation of duties. Remediation plans include hiring additional qualified personnel.
- Strategic Outlook: The Company plans to expand the Hapi Café footprint, resume membership sales under a new model, and launch "Hapi Wealth Builder" (financial education) and travel services in 2025.
- Subsequent Events: In January 2025, the Company completed a public offering raising approximately $1.76 million. In February 2025, it acquired a 60% interest in L.E.H. Insurance Group, LLC.
Investor Verification Checklist
- Liquidity Sustainability: Verify the sufficiency of the $4.34M cash balance against the $2.16M working capital deficit and ongoing operating losses.
- Related Party Dependence: Assess the extent of reliance on Alset Inc. and Alset International Limited for funding, debt conversions, and the $1M credit facility.
- Revenue Concentration: Confirm the sustainability of F&B revenue, which accounts for 100% of current revenue, as membership and marketplace sales are currently suspended or nascent.
- Internal Control Remediation: Monitor progress on hiring qualified accounting staff to address the material weakness in financial reporting.
- Stock Split Impact: Review the impact of the 1-for-5 reverse stock split on liquidity and trading volume on the Nasdaq Capital Market.