HWH International Inc. (HWH) - Q2 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2025. HWH International Inc. is an emerging growth company operating primarily in the Food and Beverage (F&B) sector through three cafés (two in Singapore, one in South Korea) and an online healthy food store. The company recently regained compliance with Nasdaq listing requirements following a 1-for-5 reverse stock split effective February 24, 2025.
Key Financial Metrics
| Metric | Q2 2025 (3 Months) | YTD 2025 (6 Months) | Q2 2024 (3 Months) | YTD 2024 (6 Months) |
|---|---|---|---|---|
| Revenue | $310,391 | $605,588 | $334,882 | $620,992 |
| Gross Profit | $148,890 | $296,484 | $164,913 | $328,210 |
| Net Income (Loss) | $75,977 | $(410,995) | $(403,641) | $(1,740,160) |
| Net Income (Loss) Attributable to Common Stockholders | $83,389 | $(394,611) | $(387,923) | $(1,724,761) |
| Cash and Cash Equivalents | $3,729,873 | As of June 30, 2025 | ||
| Total Assets | $10,602,700 | As of June 30, 2025 | ||
| Total Liabilities | $7,282,177 | As of June 30, 2025 | ||
| Stockholders' Equity | $3,320,523 | As of June 30, 2025 |
Material Changes vs. Prior Period
- Profitability Turnaround: The company reported a net income of $75,977 for Q2 2025, a significant improvement from a net loss of $403,641 in Q2 2024. This was driven primarily by a $383,667 gain on the disposal of a subsidiary (HWH World Inc.) and a $241,621 foreign exchange transaction gain.
- Operating Expenses: Operating expenses decreased significantly to $488,681 in Q2 2025 from $654,740 in Q2 2024, largely due to reduced professional fees related to regulatory filings.
- Revenue: Revenue declined slightly by 7.3% in Q2 2025 compared to Q2 2024 ($310,391 vs. $334,882), attributed to the closure of an underperforming café in 2024 and ongoing operational adjustments.
- Cash Flow: Net cash used in operating activities improved to $(528,424) for the six months ended June 30, 2025, compared to $(1,129,040) in the prior year period.
Guidance, Outlook, and Risks
- Going Concern: Management notes that while the company incurred a net loss and negative operating cash flow, available cash and financing from related parties are sufficient to fund operations for at least the next 12 months. Letters of financial support have been obtained from majority owners Alset Inc. and Alset International Limited.
- Expansion Plans: The company plans to expand its Hapi Café footprint and launch "Hapi Marketplace" (a B2C marketplace) and "Hapi Wealth Builder" (investment education) in phases throughout 2025.
- Related Party Transactions: The company has significant financial exposure to related parties, including convertible notes receivable from Sharing Services Global Corporation (SHRG) valued at approximately $1.08 million and substantial amounts due to/from related entities (Alset Inc., Alset International Limited).
- Internal Controls: Management identified material weaknesses in internal controls, specifically regarding the segregation of duties due to limited accounting personnel and the lack of well-defined accounting policies.
- Correction of Errors: The filing includes corrections for immaterial errors in previously issued financial statements related to foreign currency translation adjustments and unrealized gains on convertible notes.
Investor Verification Checklist
- Sustainability of Earnings: Verify if the Q2 2025 net income is sustainable without the one-time $383,667 gain from subsidiary disposal and the $241,621 FX gain.
- Related Party Exposure: Assess the collectability of the $1.08 million in convertible notes receivable from SHRG and the terms of the $5.5 million in amounts due to related parties.
- Liquidity Dependence: Confirm the enforceability and duration of the financial support letters from Alset Inc. and Alset International Limited.
- Internal Control Remediation: Review the company's plan to address the material weaknesses in internal controls over financial reporting.
- Revenue Concentration: Note that 90% of revenue is generated in Singapore and 10% in South Korea; monitor the performance of the specific café locations driving these figures.