HWH International Inc. (HWH) - Q3 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2025. HWH International Inc. is an emerging growth company operating primarily in the Food and Beverage (F&B) sector through its "Hapi Café" locations in Singapore and South Korea. The company is also developing "Hapi Marketplace" (a B2C platform) and "Hapi Wealth Builder" (an educational program). During the quarter, the company ceased operations of several underperforming cafes and sold a majority stake in a subsidiary.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Revenue | $206,778 | $345,523 | $812,366 | $966,515 |
| Gross Profit | $123,582 | $159,869 | $420,066 | $488,079 |
| Net Loss | $(299,618) | $(537,143) | $(710,613) | $(2,277,303) |
| Net Loss Attributable to Common Stockholders | $(291,004) | $(548,492) | $(685,615) | $(2,273,253) |
| Cash and Cash Equivalents | $2,897,972 | N/A | $2,897,972 (End of Period) | $832,368 (End of Period) |
| Total Assets | $5,184,394 | N/A | $5,184,394 | $6,408,722 (Dec 31, 2024) |
| Total Liabilities | $2,276,968 | N/A | $2,276,968 | $3,531,523 (Dec 31, 2024) |
Operating Cash Flow (YTD): Net cash used in operating activities was $(728,326) for the nine months ended September 30, 2025, compared to $(1,404,073) in the prior year period.
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 40% in Q3 2025 compared to Q3 2024. This is primarily attributed to the cessation of operations for cafes in Singapore (Ketomei Pte. Ltd.) and South Korea (Hapi Café Korea Inc.) in August and September 2025 due to unsustainable revenue.
- Reduced Net Loss: Net loss improved significantly, decreasing from $(537,143) in Q3 2024 to $(299,618) in Q3 2025. This improvement is driven by lower operating expenses and a reduction in unrealized losses on related-party convertible notes.
- Asset Restructuring: The company sold 70% of its subsidiary, Alset F&B One Pte. Ltd., in September 2025 for approximately $170,754, resulting in a loss of $21,611 on the transaction. Conversely, the sale of HWH World Inc. in April 2025 generated a gain of $383,677.
- Goodwill Impairment: The company recorded a goodwill impairment loss of $122,482 related to the acquisition of L.E.H. Insurance Group, LLC.
Guidance, Outlook, and Risks
- Going Concern: Management notes 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.
- Strategic Pivot: The company is refocusing resources on F&B ventures with higher growth potential and developing the Hapi Marketplace and Hapi Wealth Builder platforms. Plans include taking over leases of existing Hapi Cafes not currently owned.
- Related Party Dependence: The company relies heavily on related parties for funding (advances from Alset Inc. and Alset International Limited) and holds significant assets in the form of convertible notes receivable from Sharing Services Global Corporation (SHRG).
- 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.
- Leadership Change: On October 3, 2025, John "JT" Thatch resigned as CEO, and Chan Heng Fai was appointed as the new CEO.
Investor Verification Checklist
- Related Party Transactions: Verify the valuation and collectability of the $1.17 million in convertible loans receivable from SHRG and the $4.2 million due from Alset Business Development Pte. Limited.
- Liquidity Runway: Confirm the status of the $700,000 remaining credit line with Alset Inc. and the enforceability of the letters of financial support.
- Revenue Sustainability: Assess the viability of the remaining F&B locations and the timeline for revenue generation from the new Hapi Marketplace and Wealth Builder initiatives.
- Internal Controls: Review the remediation plan for the identified material weaknesses in financial reporting and segregation of duties.
- Debt Obligations: Monitor the status of the promissory note to D. Boral Capital (formerly EF Hutton), which is currently in default due to a delayed payment.