HWH

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

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 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). The company reincorporated in Nevada in November 2025. As of July 30, 2026, there were 7,726,400 shares of common stock outstanding.

Key Financial Metrics

Other Key Metrics:

• EPS (Basic/Diluted): $0.03 for the three months ended June 30, 2026; $(0.06) for the six months ended June 30, 2026.
• Operating Cash Flow: Net cash provided by operating activities was $285,469 for the six months ended June 30, 2026.
• Debt: No long-term debt obligations as of June 30, 2026. A $500,000 settlement of a promissory note to D. Boral Capital was completed in April 2026.

Material Changes vs. Prior Period

• Revenue Decline: Revenue decreased significantly from $310,391 (Q2 2025) to $64,200 (Q2 2026) due to the cessation of café operations in Singapore and South Korea in late 2025.
• Profitability Shift: While the company reported a net loss of $416,116 for the six months ended June 30, 2026, it reported a net income of $210,657 for the quarter ended June 30, 2026. This quarterly income was driven primarily by a $339,185 gain on debt extinguishment from settling the D. Boral Capital obligation.
• Operating Expenses: Decreased from $383,868 in Q2 2025 to $249,063 in Q2 2026, largely due to the closure of underperforming café locations.
• Accounting Revision: The company revised prior period financial statements to reclassify payroll costs from General & Administrative expenses to Cost of Revenue, reducing reported gross profit for 2025 comparables.

Guidance, Outlook, Risks, and Unusual Items

• Going Concern: Management notes substantial doubt about the company's ability to continue as a going concern due to operating losses and negative cash flow from operations. However, they believe available cash and financing from related parties (Alset Inc.) are sufficient for the next 12 months.
• Nasdaq Compliance: The company received a notice of non-compliance with Nasdaq Listing Rule 5550(b)(1) regarding minimum stockholders' equity ($2.5M). As of June 30, 2026, equity was $2.79M, exceeding the requirement. Nasdaq granted an extension to evidence compliance by September 30, 2026.
• Pending Financing: A $10 million investment from Smart Dynamics Technology Limited (20M shares + warrants) was approved by shareholders in June 2026 but had not closed as of June 30, 2026. Closing is subject to Nasdaq compliance.
• Unusual Items: The $339,185 gain on debt extinguishment is a non-recurring item significantly impacting the Q2 2026 net income. Additionally, the company recorded a $542,371 loss from a related party balance write-off in the cash flow statement.
• Internal Controls: Management concluded that disclosure controls and procedures were not effective as of June 30, 2026.

Investor Verification Checklist

• Debt Extinguishment Gain: Verify the sustainability of Q2 2026 profitability, as it relies heavily on the one-time $339k gain from settling the D. Boral Capital note.
• Nasdaq Status: Confirm the company maintains stockholders' equity above $2.5M and successfully closes the Smart Dynamics financing to secure long-term listing status.
• Related Party Transactions: Review the significant balances "Due to/from related parties" (netting to $1.2M liability) and the reliance on Alset Inc. for liquidity support.
• Revenue Sustainability: Assess the viability of the single remaining Singapore café and the timeline for launching Hapi Marketplace and Hapi Wealth Builder to replace lost revenue.
• Internal Controls: Investigate the specific deficiencies leading to the conclusion that disclosure controls were ineffective.