HWH

HWH International Inc. (HWH) - Q1 2026 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended March 31, 2026. HWH International Inc. is an emerging growth company operating a Food & Beverage (F&B) business, currently running one café in Singapore. The company is developing "Hapi Marketplace" (a B2C platform) and "Hapi Wealth Builder" (an educational program), though these initiatives were not yet launched or generating revenue as of the period end. The company reincorporated in Nevada in November 2025.

Key Financial Metrics

Liquidity & Debt: The company holds $1.46 million in cash. Total debt includes $837,382 due to D. Boral Capital (promissory note) and significant amounts due to related parties ($901,568 current). A $1,000,000 credit facility with Alset Inc. exists, with $700,000 available.

Material Changes vs. Prior Period

• Revenue Decline: Revenue dropped 78% to $64,200, primarily due to the cessation of café operations in South Korea and Singapore in late 2025. Only one Singapore café remains operational.
• Operating Expenses: Total operating expenses decreased to $672,202 from $741,722. This reduction was driven by the absence of a $77,480 goodwill impairment charge recorded in Q1 2025. However, General and Administrative (G&A) expenses increased slightly to $672,202, largely due to a $415,770 write-off of a related party balance.
• Other Income/Expense: The company shifted from $62,973 of other income in Q1 2025 to $1,859 of other expense in Q1 2026. This was caused by a $49,238 unrealized loss on convertible notes receivable and warrants (related party) and a $21,540 foreign exchange loss, offsetting gains from marketable securities.
• Cash Flow: Net cash used in operating activities improved to $(192,539) from $(555,333) in the prior year, aided by working capital changes. However, investing activities consumed $305,416, largely due to purchases of convertible notes receivable and marketable securities.

Outlook, Risks, and Contingencies

• Going Concern: Management states that net losses and negative operating cash flows raise substantial doubt about the company's ability to continue as a going concern. However, they believe available cash and financing from related parties (Alset Inc.) are sufficient for the next 12 months.
• Subsequent Events:
  • Debt Settlement: On April 16, 2026, the company settled its indebtedness to D. Boral Capital with a one-time payment of $500,000, discharging the remaining principal and interest obligations.
  • Investment Term Sheet: On May 5, 2026, the company entered a term sheet to raise $10,000,000 via the sale of 20,000,000 shares and warrants to Smart Dynamics Technology Limited. Closing is subject to shareholder approval.
  • Acquisition Termination: The planned acquisition of Hapi Metaverse Inc. was terminated on May 6, 2026.
• Controls: Management concluded that disclosure controls and procedures were not effective as of March 31, 2026.

Investor Verification Checklist

• Going Concern Status: Verify the sufficiency of the $1.46M cash balance against the $626k quarterly burn rate and the reliability of the "letter of financial support" from Alset Inc.
• Related Party Transactions: Scrutinize the $415,770 write-off of related party balances and the valuation of $1.43M in convertible notes receivable from Sharing Services Global Corporation (SHRG).
• Revenue Sustainability: Confirm the operational status and profitability of the single remaining Singapore café, as it represents 100% of current revenue.
• Debt Settlement Impact: Assess the cash impact of the $500,000 settlement with D. Boral Capital paid in April 2026 on the company's liquidity.
• Equity Dilution: Review the terms of the proposed $10M investment from Smart Dynamics, including the anti-dilution rights and board seat allocation.