
PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for HWH International Inc. Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements and detailed notes for the reporting period Condensed Consolidated Balance Sheets This statement presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets | Metric (in USD) | March 31, 2025 (Unaudited) (in USD) | December 31, 2024 (in USD) | | :--------------------------------- | :-------------------------- | :----------------- | | Total Current Assets | $5,907,510 | $5,474,997 | | Total Non-Current Assets | $623,820 | $933,725 | | TOTAL ASSETS | $6,531,330 | $6,408,722 | | Total Current Liabilities | $2,660,503 | $3,311,274 | | Total Non-Current Liabilities | $175,235 | $220,249 | | TOTAL LIABILITIES | $2,835,738 | $3,531,523 | | Total Stockholders' Equity | $3,695,592 | $2,877,199 | Condensed Consolidated Statements of Operations and Other Comprehensive Loss This statement outlines the company's financial performance, including revenue, expenses, and net loss over a period Condensed Consolidated Statements of Operations and Other Comprehensive Loss | Metric (in USD) | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :------------------------------------------ | :--------------------------------- | :--------------------------------- | | Revenue | $295,197 | $286,110 | | Cost of revenue | ($147,603) | ($122,813) | | Gross profit | $147,594 | $163,297 | | Total Operating expenses | ($741,722) | ($1,495,383) | | Total Other income (expense) | $62,973 | ($4,433) | | Loss before provision for income taxes | ($531,155) | ($1,336,519) | | Income taxes | ($42,948) | $0 | | Net loss | ($574,103) | ($1,336,519) | | Net loss attributable to common stockholders | ($565,131) | ($1,336,838) | | Basic Loss per common share | ($0.09) | ($0.44) | | Diluted Loss per common share | ($0.09) | ($0.44) | Condensed Consolidated Statements of Changes in Stockholders' Equity This statement details the changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric (in USD) | December 31, 2024 (in USD) | March 31, 2025 (in USD) | | :------------------------------------------ | :----------------- | :----------------- | | Common stock, $0.0001 par value | $559 | $647 | | Additional paid in capital | $9,339,413 | $10,836,439 | | Accumulated other comprehensive loss | ($257,598) | ($360,547) | | Accumulated deficit | ($6,317,010) | ($6,882,141) | | Total HWH International Inc. Stockholders' Equity | $2,765,364 | $3,594,398 | | Non-controlling interests | $111,835 | $101,194 | | Total Stockholders' Equity | $2,877,199 | $3,695,592 | - The company issued 632,500 shares of common stock and 250,000 warrants, contributing to an increase in additional paid-in capital14 Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows | Cash Flow Activity (in USD) | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash used in operating activities | ($555,333) | ($638,211) | | Net cash used in investing activities | ($300,000) | ($252,072) | | Net cash provided by financing activities | $656,229 | $749,949 | | Net decrease in cash | ($199,104) | ($140,334) | | Cash at end of period | $4,176,546 | $999,506 | - Proceeds from the issuance of common stock and warrants amounted to $1.41 million in Q1 202517 Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements NOTE 1 — DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS This section provides key financial and operational details - HWH International Inc. operates an F&B business in Singapore and South Korea, including four cafés and an online healthy food store19 - The company completed a business combination on January 9, 2024, and changed its name from "Alset Capital Acquisition Corp." to "HWH International Inc."2021 - On January 6, 2025, the company closed a public offering of 632,500 shares of common stock and 250,000 pre-funded warrants, generating approximately $1.76 million in gross proceeds24 NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This section provides key financial and operational details - The company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised financial accounting standards3132 - The functional and reporting currency is the United States dollar, with subsidiaries maintaining records in their local currencies (Korean Won, Singapore Dollar, Hong Kong Dollar, Malaysian Ringgit)33 - Revenue is primarily generated from product sales and F&B business, recognized when control of goods or services is transferred to the customer495153 Cost of Revenue Component Details | Cost of Revenue Component | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :------------------------ | :--------------------------------- | :--------------------------------- | | Finished goods | $109,006 | $78,507 | | Related shipping | $12,931 | $2,275 | | Handling fee | $11,566 | $10,927 | | Contractor fee | $8,254 | $11,855 | | Franchise commission | $3,350 | $4,953 | | Depreciation | $2,496 | $14,530 | | Total Cost of revenue | $147,603 | $122,813 | - The company incurred a net loss and negative cash flow from operations in Q1 2025, raising substantial doubt about its ability to continue as a going concern, though management believes available cash and financing from related parties are sufficient for the next 12 months7071 NOTE 3 — ACCOUNTS RECEIVABLE, NET This section provides key financial and operational details Accounts Receivable, Net | Metric (in USD) | March 31, 2025 (in USD) | December 31, 2024 (in USD) | | :---------------------- | :----------------- | :----------------- | | Accounts receivable, net | $35,106 | $17,546 | NOTE 4 — INVENTORY This section provides key financial and operational details Inventory | Metric (in USD) | March 31, 2025 (in USD) | December 31, 2024 (in USD) | | :-------- | :----------------- | :----------------- | | Inventory | $2,585 | $1,574 | NOTE 5 — PROPERTY AND EQUIPMENT, NET This section provides key financial and operational details Property and Equipment, Net | Metric (in USD) | March 31, 2025 (in USD) | December 31, 2024 (in USD) | | :-------------------------- | :----------------- | :----------------- | | Property and equipment, net | $32,133 | $33,588 | - Depreciation expenses decreased significantly from $0.01 million in Q1 2024 to $0.003 million in Q1 202584 NOTE 6 — INVESTMENTS AT COST This section provides key financial and operational details - No impairment was recorded for investments at cost for the three months ended March 31, 202585 - In 2024, an investment of $0.01 million in Ideal Food & Beverage Pte. Ltd. was impaired to $0 due to net liabilities86 NOTE 7 – LOAN DUE TO THIRD PARTY This section provides key financial and operational details - Ketomei Pte Ltd owes DBS Bank Limited $0.03 million as of March 31, 202587 - The company defaulted on a promissory note to EF Hutton LLC due to a delayed payment in January 202588 NOTE 8 — DUE TO ALSET INC. This section provides key financial and operational details Due to Alset Inc. | Metric (in USD) | March 31, 2025 (in USD) | December 31, 2024 (in USD) | | :---------------- | :----------------- | :----------------- | | Due to Alset Inc. | $209,614 | $209,614 | - Alset Inc. provided a $1.00 million credit facility, with $0.70 million available as of March 31, 202590 - The due date for advances was extended to April 14, 202691 NOTE 9 — DUE TO/FROM RELATED PARTIES This section provides key financial and operational details Related Party Balances | Related Party (in USD) | March 31, 2025 (in USD) | December 31, 2024 (in USD) | | :--------------------------------- | :----------------- | :----------------- | | Due to Alset International Limited | $5,044,200 | $5,096,047 | | Due from Alset Business Development Pte. Limited | $4,111,623 | $4,113,701 | | Due from HotApp International Limited | $253,003 | N/A | | Due from Hapi Cafe Limited | $128,569 | N/A | - Alset International Limited was released from its financial support obligations to the company on April 14, 202594 NOTE 10 — RELATED PARTY TRANSACTIONS This section provides key financial and operational details - The company acquired an additional 38.41% ownership in Ketomei, increasing its stake to 55.65%, by converting a $0.31 million convertible loan101 - The company purchased multiple convertible promissory notes (CN 1-6) from Sharing Services Global Corporation (SHRG) totaling $1.30 million, bearing 8% interest102103105106109110111 - The company acquired a controlling 60% interest in L.E.H. Insurance Group, LLC (LEH) for $0.08 million, recording and immediately writing off $0.08 million in goodwill118 - John Thatch, the CEO, is also CEO of LEH and SHRG119 - The company entered a joint venture for HapiTravel Holding Pte. Ltd. (HTHPL), holding a 19% stake, and provided a loan of $0.14 million to HTHPL120121 NOTE 11 — STOCKHOLDERS' EQUITY This section provides key financial and operational details Warrant Activity | Warrant Activity | As of Dec 31, 2024 | Granted | Exercised | Forfeited, cancelled, expired | As of Mar 31, 2025 | | :--------------------------------- | :----------------- | :-------- | :-------- | :---------------------------- | :----------------- | | Warrants Outstanding | 909,874 | 250,000 | (250,000) | - | 909,874 | | Weighted Average Exercise Price | $57.5 | $2.0 | ($2.0) | - | $57.5 | - On January 3, 2025, the company priced a public offering of 3,162,500 common shares and 1,250,000 pre-funded warrants, generating approximately $1.76 million in gross proceeds134 - A 1-for-5 reverse stock split became effective on February 24, 2025139 NOTE 12 —LEASES This section provides key financial and operational details Lease Metrics | Lease Metric (in USD) | March 31, 2025 (in USD) | December 31, 2024 (in USD) | | :-------------------------- | :----------------- | :----------------- | | Right-of-use assets | $448,901 | $548,757 | | Lease liabilities - current | $285,084 | $340,651 | | Lease liabilities - non-current | $175,235 | $220,249 | | Total lease liabilities | $460,319 | $560,900 | - Total lease expenses decreased from $0.13 million in Q1 2024 to $0.11 million in Q1 2025143 NOTE 13 — COMMITMENTS AND CONTINGENCIES This section provides key financial and operational details - No material legal proceedings or claims are pending against the company144 NOTE 14 — CONCENTRATION RISK This section provides key financial and operational details Uninsured Cash Balances | Metric (in USD) | March 31, 2025 (in USD) | December 31, 2024 (in USD) | | :-------------------- | :----------------- | :----------------- | | Uninsured cash balances | $3,765,439 | $3,861,339 | - Five suppliers accounted for over 76% of total costs of revenue in Q1 2025, indicating significant supplier concentration146 NOTE 15 — CONVERTIBLE NOTES RECEIVABLE, RELATED PARTY This section provides key financial and operational details Convertible Note Receivable, Related Party | Metric (in USD) | December 31, 2024 (in USD) | Additions (in USD) | Unrealized Gain (in USD) | March 31, 2025 (in USD) | | :------------------------------------ | :----------------- | :-------- | :-------------- | :----------------- | | Convertible note receivable, related party | $744,652 | $300,000 | $16,720 | $1,061,372 | - The company recognized an unrealized gain of $0.02 million on convertible notes receivable from SHRG in Q1 2025149 NOTE 16 – CORRECTION OF AN IMMATERIAL ERROR IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS This section provides key financial and operational details - An immaterial error in Q1 2024 overstated Retained Earnings by $0.65 million, with no impact on net income or total equity151 - An immaterial error in FY 2024 understated general and administrative expenses by $0.16 million, increasing net loss and decreasing total equity by the same amount152 NOTE 17 — SUBSEQUENT EVENTS This section provides key financial and operational details - The Credit Facility Agreement with Alset Inc. was amended on April 14, 2025, extending the due date for advances to April 14, 2026154 - Alset International Limited was released from its Letter of Continuing Financial Support to the company on April 14, 2025154 - The company provided a $0.25 million loan to Sharing Services Global Corp. (SHRG) on April 17, 2025, bearing an 8% interest155 - On April 23, 2025, the company sold HWH World Inc. to AES Group Inc. in exchange for a 19.9% equity interest in AES156 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, results of operations, liquidity, and business outlook Cautionary Note Regarding Forward-Looking Statements This section provides key financial and operational details - The report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially159 Overview This section provides key financial and operational details Hapi Marketplace This section provides key financial and operational details - Hapi Marketplace, a B2C platform with over 47 product categories, launched in the U.S. on November 4, 2024, with plans for expansion into Asia and robotics160161 Hapi Cafés This section provides key financial and operational details - Hapi Cafés serve as in-person social experiences to build community and promote HWH's products, with plans for expansion162 - One Hapi Café location was closed in Q2 2024 due to unsustainable revenue, with efforts refocused on other growth ventures162 Hapi Wealth Builder This section provides key financial and operational details - Hapi Wealth Builder offers in-person courses and workshops on equity investment and wealth-building strategies, targeting a 2025 rollout in selected regions and opening a China headquarters163164165 Our Revenue Model This section provides key financial and operational details Revenue and Net Loss | Metric (in USD) | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :---------------- | :--------------------------------- | :--------------------------------- | | Total Revenue | $295,197 | $286,110 | | Net Loss | ($574,103) | ($1,336,519) | - Food and beverage sales accounted for 100% of revenue in both Q1 2025 and Q1 2024166 - In Q1 2025, 89% of revenue was from Singapore and 11% from South Korea, compared to 96% and 4% respectively in Q1 2024167 Matters that May or Are Currently Affecting Our Business This section provides key financial and operational details - Key challenges include improving revenue through cross-selling, integrating acquisitions, attracting skilled personnel, and controlling operating expenses during expansion168 Summary of Significant Accounting Policies This section provides key financial and operational details Basis of Presentation and Principles of Consolidation This section provides key financial and operational details - Consolidated financial statements include all accounts of the company and its wholly-owned subsidiaries, prepared under U.S. GAAP170 Use of Estimates and Critical Accounting Estimates and Assumptions This section provides key financial and operational details - Significant estimates include allowance for credit losses, asset recoverability and useful lives, deferred tax valuation, contingencies, and equity compensation171 Revenue Recognition and Cost of Sales This section provides key financial and operational details - Revenue from product sales and food & beverage is recognized upon delivery to customers172174 - Cost of revenue includes finished goods, shipping, and handling fees175 Results of Operations This section provides key financial and operational details Revenue This section provides key financial and operational details Revenue | Metric (in USD) | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :------- | :--------------------------------- | :--------------------------------- | | Revenue | $295,197 | $286,110 | - Revenue increase in Q1 2025 was driven by increased F&B business in Singapore due to a new café opening177 Cost of revenue This section provides key financial and operational details Cost of Revenue and Gross Margin | Metric (in USD) | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :-------------- | :--------------------------------- | :--------------------------------- | | Cost of revenue | $147,603 | $122,813 | | Gross margin | $147,594 | $163,297 | Operating expenses This section provides key financial and operational details Operating Expenses | Metric (in USD) | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :------------------------ | :--------------------------------- | :--------------------------------- | | Operating expenses | $741,722 | $1,495,383 | | General and administrative expenses | $664,242 | $1,129,191 | - The decrease in operating expenses was mainly due to lower professional fees related to 10-Q and S-4 filings179 Other income (expense) This section provides key financial and operational details Other Income (Expense) | Metric (in USD) | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Other income (expense) | $62,973 | ($4,433) | | Foreign exchange transaction gain (loss) | $66,070 | ($49,571) | Net loss This section provides key financial and operational details Net Loss | Metric (in USD) | Three Months Ended March 31, 2025 (in USD) | Three Months Ended March 31, 2024 (in USD) | | :------- | :--------------------------------- | :--------------------------------- | | Net loss | ($574,103) | ($1,336,519) | Liquidity and Capital Resources This section provides key financial and operational details Liquidity and Capital Resources | Metric (in USD) | March 31, 2025 (in USD) | December 31, 2024 (in USD) | | :----------------- | :----------------- | :----------------- | | Cash | $4,176,546 | $4,341,746 | | Liabilities | $2,835,738 | $3,531,523 | | Total Assets | $6,531,330 | $6,408,722 | - The company believes it has sufficient liquidity for the next 12 months through available cash, anticipated operations, and a $0.70 million remaining credit line from Alset Inc.183184 - Alset Inc. provides letters of financial support, committing to additional funding and not demanding repayment for 12 months187 Nasdaq Compliance This section provides key financial and operational details - The company received notices of non-compliance with Nasdaq's MVLS, market value of publicly held shares, and minimum bid price requirements192194196 - A 1-for-5 reverse stock split became effective on February 24, 2025197 - The company regained compliance with the Nasdaq minimum bid price requirement on March 10, 2025, and is now listed on the Nasdaq Capital Market198 Contractual Obligations This section provides key financial and operational details - As of March 31, 2025, the company had no long-term debt, capital lease, operating lease, purchase, or other long-term liabilities199 Administrative Services Agreement This section provides key financial and operational details - Monthly administrative service fees of $0.01 million to Alset Management Group Inc. ceased upon completion of the Business Combination200 Underwriting Agreement This section provides key financial and operational details - A deferred underwriting fee of $3.02 million to EF Hutton was satisfied with $0.33 million cash, 149,443 common shares, and a $1.18 million promissory note202 - EF Hutton was granted an irrevocable right of first refusal for future equity and debt offerings for 24 months post-Business Combination202 Merger Agreement This section provides key financial and operational details - The Business Combination was consummated on the Closing Date, with HWH Nevada becoming a wholly-owned subsidiary and the company changing its name to "HWH International Inc."203204 - Certain closing conditions, including minimum cash in the Trust Account ($30M) and net tangible assets ($5M), were waived204 Registration Rights Agreement This section provides key financial and operational details - The company is obligated to register common stock and warrants held by the Sponsor and other entities within 15 business days of the Business Combination closing, aiming for effectiveness within 60 business days205 Lock-Up Agreements This section provides key financial and operational details - HWH shareholders and management are subject to a nine-month lock-up period on common stock received from the Merger, with early release conditions207 Termination of Subscription Agreement This section provides key financial and operational details - The Subscription Agreement with Meteora was terminated, and a settlement of $0.30 million was paid/retained by Meteora208 Impact of Inflation This section provides key financial and operational details - Inflation has not had a material impact on operations for Q1 2025 or FY 2024, but future impact is uncertain209 Impact of Foreign Exchange Rates This section provides key financial and operational details - Foreign exchange rate fluctuations on intercompany loans (approx. $0.8 million between Singapore and South Korea) significantly impact transaction gains/losses and are expected to remain volatile in 2025210 Emerging Growth Company Status This section provides key financial and operational details - As an "emerging growth company," the company utilizes exemptions under the JOBS Act, including delaying adoption of new accounting standards211 Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, HWH International Inc. is not required to provide quantitative and qualitative disclosures regarding market risk - As a smaller reporting company, HWH International Inc. is exempt from providing quantitative and qualitative disclosures regarding market risk217 Item 4. Controls and Procedures Management evaluates disclosure controls and reports on internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section provides key financial and operational details - The company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025219 Changes in Internal Control over Financial Reporting This section provides key financial and operational details - No material changes in internal control over financial reporting occurred during Q1 2025220 - Management identified material weaknesses in internal control over financial reporting, including limited accounting personnel (leading to inadequate segregation of duties) and a lack of well-defined, timely financial close procedures216221 PART II. OTHER INFORMATION This section includes disclosures on legal proceedings, risk factors, sales of equity securities, defaults, mine safety, and exhibits Item 1. Legal Proceedings There are no legal proceedings pending against the company that are expected to have a material adverse effect on its business or financial condition - No material legal proceedings are pending against the company223 Item 1A. Risk Factors As a smaller reporting company, HWH International Inc. is exempt from providing risk factor disclosures - As a smaller reporting company, HWH International Inc. is exempt from providing risk factor disclosures224 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to the company for the reporting period - Not applicable225 Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred226 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable227 Item 5. Other Information No other information is reported under this item - No other information to report228 Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q - The exhibits include the Placement Agency Agreement, amendments to the Certificate of Incorporation, and certifications from executive officers230 PART III. Signatures This section contains the official certifications and signatures of the company's executive officers Signatures The report is signed by John Thatch, Chief Executive Officer, and Rongguo Wei, Chief Financial Officer, certifying its accuracy and compliance - The report was signed by John Thatch (CEO) and Rongguo Wei (CFO) on May 15, 2025233