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, 2025. HWH International Inc. is an emerging growth company and smaller reporting company incorporated in Nevada (reincorporated from Delaware in November 2025). The Company operates primarily in the Food and Beverage (F&B) sector through its "Hapi Cafés" in Singapore and South Korea, though it has recently closed several locations due to unsustainable revenue. The Company is developing two new initiatives: Hapi Marketplace (a B2C e-commerce platform) and Hapi Wealth Builder (an educational program), neither of which had generated revenue as of year-end.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Revenue | $866,926 | $1,253,577 |
| Net Loss | $(2,657,929) | $(2,765,767) |
| Gross Profit | $459,727 | $601,856 |
| Operating Expenses | $3,648,405 | $3,186,287 |
| Cash and Equivalents | $2,085,918 | $4,341,746 |
| Total Assets | $4,567,858 | $6,408,722 |
| Total Liabilities | $1,883,133 | $3,531,523 |
| Working Capital | $(1,692,996) | $(1,836,277) |
| Shares Outstanding | 7,476,400 | 5,593,920 |
Note: Working capital is calculated as Current Assets minus Current Liabilities. The 2025 figures reflect a 1-for-5 reverse stock split effective February 24, 2025.
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased by approximately 31% to $866,926, primarily due to the cessation of operations at cafés in Singapore and South Korea in August and September 2025.
- Operating Expenses Increase: Operating expenses rose to $3.65 million from $3.19 million. This increase was driven largely by a non-cash stock-based compensation expense of $1.58 million (1 million shares issued to the CEO) and increased general and administrative costs.
- Non-Operating Income: The Company recorded $578,221 in non-operating income in 2025, compared to an expense of $181,336 in 2024. This shift was due to a $383,667 gain on the disposal of a subsidiary (HWH World Inc.) and a reduction in unrealized losses on related-party convertible notes.
- Capital Structure: The Company completed a 1-for-5 reverse stock split to regain compliance with Nasdaq listing requirements. It also raised approximately $1.76 million in gross proceeds via a public offering of common stock and pre-funded warrants in January 2025.
- 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 common stock.
Guidance, Outlook, Risks, and Contingencies
- Going Concern: The Company has incurred continuing losses and has a working capital deficit. These conditions raise substantial doubt about its ability to continue as a going concern. Management believes available cash and financing from related parties (specifically Alset Inc.) are sufficient to fund operations for the next 12 months.
- Financial Support: Alset Inc., the majority stockholder, has provided a letter of financial support committing to provide additional funding as required and not demanding repayment for 12 months. A $1 million credit facility exists with $700,000 remaining available.
- Internal Controls: Management identified material weaknesses in internal controls over financial reporting, citing limited accounting personnel, lack of segregation of duties, and inadequate period-end review procedures.
- Related Party Transactions: The Company has significant transactions with related parties, including loans, debt conversions, and investments in Sharing Services Global Corporation (SHRG). These transactions are not presumed to be at arm's length.
- Future Strategy: The Company plans to refocus on F&B ventures with higher growth potential and expand Hapi Marketplace and Hapi Wealth Builder, though these new ventures are not yet revenue-generating.
Key Facts for Investor Verification
- Liquidity Dependency: Verify the enforceability and sufficiency of the financial support letter from Alset Inc., as the Company relies on this to maintain operations given its negative cash flow from operations ($1.75 million used in 2025).
- Revenue Sustainability: Assess the viability of the remaining F&B operations and the timeline for revenue generation from Hapi Marketplace and Hapi Wealth Builder, as current revenue is declining.
- Related Party Exposure: Review the valuation and recoverability of the $1.48 million in convertible notes receivable from SHRG (a related party) and the $4.2 million due from Alset Business Development Pte. Ltd.
- Stock-Based Compensation: Note the significant impact of the $1.58 million stock award to the CEO on operating expenses and the potential for future dilution.
- Internal Control Remediation: Monitor the Company's progress in hiring qualified personnel to remediate the identified material weaknesses in internal controls.