Alset Capital Acquisition (ACAX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents HWH International Inc.'s unaudited consolidated financial statements and related disclosures for Q2 2025 and 2024 Item 1. Financial Statements (Unaudited) Presents HWH International Inc.'s unaudited consolidated financial statements and detailed notes for the periods ended June 30, 2025 and 2024 Consolidated Balance Sheets Details HWH International Inc.'s financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheets (in US Dollars) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :----------------------------------- | :------------------------ | :------------------ | | Assets | | | | Total Current Assets | $9,177,600 | $9,588,697 | | Total Non-Current Assets | $1,425,100 | $933,725 | | TOTAL ASSETS | $10,602,700 | $10,522,422 | | Liabilities & Stockholders' Equity | | | | Total Current Liabilities | $7,146,791 | $7,424,974 | | Total Non-Current Liabilities | $135,386 | $220,249 | | Total Stockholders' Equity | $3,320,523 | $2,877,199 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $10,602,700 | $10,522,422 | - Total assets increased slightly from $10,522,422 at December 31, 2024, to $10,602,700 at June 30, 2025[8] - Total liabilities decreased from $7,645,223 to $7,282,177, while total stockholders' equity increased from $2,877,199 to $3,320,523[8][185] Consolidated Statements of Operations and Other Comprehensive Loss Reports HWH International Inc.'s revenues, expenses, and net income or loss for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Operations and Other Comprehensive Loss (in US Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $310,391 | $334,882 | $605,588 | $620,992 | | Cost of revenue | $(161,501) | $(169,969) | $(309,104) | $(292,782) | | Gross profit | $148,890 | $164,913 | $296,484 | $328,210 | | Total Operating expenses | $(488,681) | $(654,740) | $(1,230,403) | $(2,150,123) | | Total Other non-operating income | $415,768 | $86,186 | $565,872 | $81,753 | | Income (loss) before income taxes | $75,977 | $(403,641) | $(368,047) | $(1,740,160) | | Net income (loss) | $75,977 | $(403,641) | $(410,995) | $(1,740,160) | | Net income (loss) attributable to common stockholders | $83,389 | $(387,923) | $(394,611) | $(1,724,761) | | Basic Loss per common share | $(0.01) | $(0.12) | $(0.06) | $(0.55) | | Diluted Loss per common share | $(0.01) | $(0.12) | $(0.06) | $(0.55) | - The company reported a net income of $75,977 for the three months ended June 30, 2025, a significant improvement from a net loss of $(403,641) in the same period of 2024[10][184] - For the six months ended June 30, 2025, the net loss decreased to $(410,995) from $(1,740,160) in the prior year period[10][184] - Revenue decreased slightly for both the three-month and six-month periods ended June 30, 2025, compared to 2024, while gross profit also saw a decrease[10][179][181] - Operating expenses significantly decreased, and other non-operating income saw a substantial increase, primarily due to a gain on disposal of subsidiaries[10][182][183] Consolidated Statements of Changes in Stockholders' Equity Outlines the changes in HWH International Inc.'s stockholders' equity for the six months ended June 30, 2025 and 2024 Consolidated Statements of Changes in Stockholders' Equity (in US Dollars) | Metric | December 31, 2024 | June 30, 2025 | | :----------------------------------- | :------------------ | :------------------------ | | Common Stock | $559 | $647 | | Additional Paid-in Capital | $9,051,601 | $10,749,308 | | Accumulated Other Comprehensive Loss | $(257,598) | $(811,200) | | Accumulated Deficit | $(6,029,198) | $(6,711,621) | | Total HWH International Inc. Stockholders' Equity | $2,765,364 | $3,227,134 | | Non-controlling Interests | $111,835 | $93,389 | | Total Stockholders' Equity | $2,877,199 | $3,320,523 | - Total stockholders' equity increased from $2,877,199 at December 31, 2024, to $3,320,523 at June 30, 2025, driven by an increase in additional paid-in capital from common stock issuance and warrants exercised, despite an increase in accumulated other comprehensive loss and accumulated deficit[14] Consolidated Statements of Cash Flows Summarizes HWH International Inc.'s cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows (in US Dollars) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(528,424) | $(1,129,040) | | Net cash (used in) / provided by investing activities | $(741,523) | $20,554,735 | | Net cash provided by / (used in) financing activities | $578,857 | $(19,741,963) | | Net decrease in cash | $(691,090) | $(316,268) | | Cash at end of period | $3,729,873 | $821,353 | - Net cash used in operating activities decreased significantly from $(1,129,040) in H1 2024 to $(528,424) in H1 2025, primarily due to a gain on disposal of subsidiaries[17][191][192] - Investing activities shifted from a net cash provided of $20.55 million in H1 2024 to a net cash used of $(741,523) in H1 2025, mainly due to convertible note and loan receivables to related parties and purchase of financial assets[17][193] - Financing activities also saw a major swing, providing $578,857 in H1 2025 compared to using $(19.74) million in H1 2024, largely due to proceeds from common stock and warrants issuance[17][194] Notes to Unaudited Consolidated Financial Statements Provides detailed explanations of HWH International Inc.'s accounting policies and specific financial statement line items NOTE 1 — DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS Describes HWH International Inc.'s business, recent corporate actions, and operational structure - HWH International Inc. operates a food and beverage (F&B) business in Singapore and South Korea, including three cafés and an online healthy food store[19] - The company was originally incorporated as Alset Capital Acquisition Corp. in October 2021 and completed a business combination with HWH International Inc. (Nevada) on January 9, 2024, changing its name to HWH International Inc[20][21] - The total merger consideration was $125,000,000, paid in 12,500,000 shares of common stock[23] - 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 proceeds[24] - A 1-for-5 reverse stock split was effective on February 24, 2025[24] NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Outlines HWH International Inc.'s key accounting principles, revenue recognition, and going concern considerations - The company's financial statements are prepared in conformity with US GAAP and consolidate all majority-owned and controlled subsidiaries[26][28] - Substantially all revenue for the six months ended June 30, 2025 and 2024, was generated by the F&B business, primarily from subsidiaries in Singapore (F&B1, HCSGPL, KPL) and South Korea (HCKI)[31] - HWH is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[33][34] - The functional and reporting currency is the U.S. dollar, while subsidiaries maintain records in local currencies[35] - Revenue is primarily generated from F&B product sales, recognized when control is transferred to customers[51][53] - Cost of revenue includes finished goods, shipping, handling, contractor fees, and franchise commissions[59][61] - Advertising expenses significantly increased from $6,566 in H1 2024 to $107,094 in H1 2025[63] - The company's net loss, operating loss, and negative cash flow from operations raise substantial doubt about its ability to continue as a going concern[73][74] - Management believes available cash, anticipated cash from operations, and financing from related parties (Alset Inc.) are sufficient for the next 12 months, including a $700,000 remaining credit line[76][78] NOTE 3 — ACCOUNTS RECEIVABLE, NET Details the composition and changes in HWH International Inc.'s net accounts receivable Accounts Receivable, Net (in US Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :------------------ | | Accounts receivable, net | $22,948 | $17,546 | - Accounts receivable, net, primarily from credit card processors in the F&B business and rent, increased to $22,948 as of June 30, 2025, from $17,546 as of December 31, 2024[84] - The allowance for credit losses remains immaterial[84] NOTE 4 — INVENTORY Provides information on HWH International Inc.'s inventory balances and valuation policies Inventory (in US Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :------- | :------------ | :------------------ | | Inventory | $6,369 | $1,574 | - Inventory, consisting of finished goods, increased to $6,369 as of June 30, 2025, from $1,574 as of December 31, 2024[85] - No provision for slow-moving or obsolete inventory was recorded[85] NOTE 5 — PROPERTY AND EQUIPMENT, NET Presents HWH International Inc.'s property and equipment balances and associated depreciation expenses Property and Equipment, Net (in US Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Total Property and equipment, net | $31,876 | $33,588 | | Depreciation expenses (3 months) | $3,380 | $15,666 | | Depreciation expenses (6 months) | $6,662 | $30,209 | - Net property and equipment decreased slightly to $31,876 at June 30, 2025, from $33,588 at December 31, 2024[86] - Depreciation expenses for the three and six months ended June 30, 2025, were $3,380 and $6,662, respectively, significantly lower than the prior year periods[86] NOTE 6 — INVESTMENTS AT COST Discusses HWH International Inc.'s investments and the gain from the disposal of a subsidiary - The company impaired its $14,010 investment in Ideal Food & Beverage Pte. Ltd. to $0 due to net liabilities as of December 31, 2024[88] - On April 23, 2025, HWH completed the sale of HWH World Inc. to AES Group Inc., generating a $383,667 gain recorded in other non-operating income[90] NOTE 7 – LOAN DUE TO THIRD PARTY Details HWH International Inc.'s loan obligations to a third party and current negotiation status - The company entered into a Satisfaction and Discharge of Indebtedness Agreement with EF Hutton LLC (now D. Boral Capital LLC) on December 18, 2023, settling a $3,018,750 underwriting fee with $325,000 cash, 149,443 common shares, and a $1,184,375 promissory note[91] - The first installment of the promissory note, due October 2024, was paid in January 2025, resulting in a default that is currently under negotiation[91] NOTE 8 — DUE TO ALSET INC. Reports amounts owed to Alset Inc. and the terms of the credit facility Due to Alset Inc. (in US Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :------------------ | | Amount due to AEI | $459,614 | $209,614 | | Outstanding interest on Credit Facility | $3,164 | $0 | - The amount due to Alset Inc. (AEI), the ultimate holding company, for short-term working capital advances increased to $459,614 at June 30, 2025, from $209,614 at December 31, 2024[92][94] - A $1,000,000 credit facility from AEI was amended on April 14, 2025, extending the due date for advances to April 14, 2026, with $700,000 remaining available for draw[93][94] NOTE 9 — DUE TO/FROM RELATED PARTIES Summarizes HWH International Inc.'s balances with various related parties for working capital and other transactions Due To/From Related Parties (in US Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Due to Alset International Limited | $5,052,090 | $5,096,047 | | Due from Alset Business Development Pte. Limited | $4,231,148 | $4,113,701 | | Due from HotApp International Limited | $250,653 | $0 | - Amounts due to Alset International Limited (AIL) for working capital advances decreased slightly to $5,052,090 at June 30, 2025[95] - AIL was released from its financial support obligations to the company on April 14, 2025[97] - Amounts due from Alset Business Development Pte. Limited increased to $4,231,148, and a new amount of $250,653 is due from HotApp International Limited as of June 30, 2025[98][99] NOTE 10 — RELATED PARTY TRANSACTIONS Describes HWH International Inc.'s transactions with related parties, including convertible notes and new acquisitions - The company has multiple convertible promissory notes (CN 1-7) and warrants with Sharing Services Global Corporation (SHRG), a related party[102][103][105][106][109][110][111][112][113] - As of June 30, 2025, the total fair value of warrants and convertible loans receivable from SHRG was $1,084,861, up from $757,924 at December 31, 2024[116] - The company also provided loans to SHRG totaling $280,000 in April 2025[116] - HWH acquired a 60% interest in L.E.H. Insurance Group, LLC (LEH) on February 27, 2025, for $75,000, recording $77,480 of goodwill which was immediately written off[123][124] - LEH is an early-stage insurance agency with no employees and no profit yet[125] - The company also has a joint venture, HapiTravel Holding Pte. Ltd. (HTHPL), and HTHPL owed HWH $171,343 as of June 30, 2025[126][127] NOTE 11 — STOCKHOLDERS' EQUITY Details HWH International Inc.'s capital structure, including common stock, warrants, and recent equity offerings - The company's authorized capital stock consists of 55,000,000 shares of common stock and 1,000,000 shares of preferred stock, with no preferred stock outstanding[129] - A 1-for-5 reverse stock split was effected on February 24, 2025[138] - As of June 30, 2025, there were 909,874 warrants outstanding with a weighted average exercise price of $57.5 and a remaining contractual term of 3.53 years[143] - 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 proceeds before expenses[139] NOTE 12 —LEASES Provides information on HWH International Inc.'s operating lease assets, liabilities, and expenses Leases (in US Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Right-of-use assets | $325,130 | $548,757 | | Lease liabilities - current | $197,235 | $340,651 | | Lease liabilities - non-current | $135,386 | $220,249 | | Total lease liabilities | $332,621 | $560,900 | - The company has operating leases for office spaces and F&B stores in South Korea and Singapore[144] - The weighted-average remaining lease term is 1.78 years with a weighted-average discount rate of 2.95%[146] - Total lease expenses for the six months ended June 30, 2025, were $174,679, down from $260,139 in the prior year[146] NOTE 13 — COMMITMENTS AND CONTINGENCIES States that HWH International Inc. is not currently involved in any material litigation or claims - As of the report date, the company is not a party to any pending material litigation, government actions, administrative actions, investigations, or claims that are expected to have a material adverse effect on its business and financial condition[147] NOTE 14 — CONCENTRATION RISK Highlights HWH International Inc.'s concentration risks related to cash balances and key suppliers - The company maintains uninsured cash balances of $3,143,531 as of June 30, 2025, and $3,861,339 as of December 31, 2024, at various financial institutions[149] - For the three and six months ended June 30, 2025, five suppliers accounted for over 59% and 70% of the company's total costs of revenue, respectively, indicating significant supplier concentration[150] NOTE 15– CORRECTION OF AN IMMATERIAL ERRORS IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS Explains the correction of immaterial errors in HWH International Inc.'s prior financial statements - The company identified and corrected immaterial errors in previously issued financial statements for the three months ended March 31, 2024, and the year ended December 31, 2024[152] - These corrections included an overstatement of Retained Earnings by $645,860, an understatement of general and administrative expenses by $159,263, and an understatement of unrealized gain on convertible note receivable by $287,812[153][154][155] - The corrections did not materially impact net income or total equity for the periods presented[156][157] NOTE 16— SUBSEQUENT EVENTS Confirms that HWH International Inc. has evaluated and found no subsequent events requiring disclosure - The company has evaluated events occurring after the balance sheet date through the report date and determined that no subsequent events or transactions require recognition or disclosure in the consolidated financial statements[158] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, results of operations, liquidity, capital resources, and Nasdaq compliance for Q2 2025 and 2024 Cautionary Note Regarding Forward-Looking Statements Warns that this report contains forward-looking statements subject to risks and uncertainties - This report contains forward-looking statements based on current expectations and projections, which are subject to known and unknown risks, uncertainties, and assumptions that may cause actual results to differ materially[161] Overview Provides an overview of HWH International Inc.'s business initiatives, including Hapi Marketplace and Hapi Wealth Builder program - HWH International Inc. launched its business-to-consumer Hapi Marketplace on November 4, 2024, initially in the U.S. with plans to expand to South Korea, Hong Kong, and other parts of Asia, featuring over 47 product categories and expanding into robotics[162][163] - The company operates Hapi Cafés in Seoul and Singapore, with a new café opened in Seoul in May 2024, aiming to build community and raise awareness for HWH products[164][165] - The Hapi Wealth Builder program, targeting a rollout in selected regions in late 2025, will offer education in equity investment and wealth-building strategies, with a China headquarters opening to support this initiative[166][167] Our Revenue Model Describes HWH International Inc.'s primary revenue sources and geographical distribution Revenue and Net Loss (in US Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenue | $310,391 | $334,882 | $605,588 | $620,992 | | Net Loss | $(675,774) | $(403,641) | $(1,162,746) | $(1,740,160) | - Food and beverage sales accounted for approximately 100% of the company's revenue for both the three and six months ended June 30, 2025 and 2024[169] - Geographically, 90% of total revenue for the six months ended June 30, 2025, was recognized in Singapore, with 10% in South Korea[170] Matters that May or Are Currently Affecting Our Business Identifies key factors influencing HWH International Inc.'s business performance and growth - Ability to improve revenue through cross-selling and revenue-sharing arrangements within the group[171] - Ability to identify and integrate complementary businesses for acquisition, and obtain necessary financing[171] - Ability to attract skilled technical and sales personnel at acceptable compensation levels[171] - Ability to control operating expenses while expanding businesses and product/service offerings[171] Summary of Significant Accounting Policies Summarizes HWH International Inc.'s critical accounting policies and management estimates - The consolidated financial statements are prepared in accordance with U.S. GAAP, consolidating all wholly-owned subsidiaries[172] - Management's significant estimates include allowance for credit losses, recoverability and useful lives of property, plant and equipment, deferred tax valuation allowance, contingencies, and equity compensation[173][174] - Revenue from product sales and food and beverage is recognized when control is transferred to customers, net of taxes, allowances, and returns[175][176] - Cost of revenue includes finished goods, shipping, and handling fees[177] Results of Operations Analyzes HWH International Inc.'s financial performance for the three and six months ended June 30, 2025 and 2024 Revenue Details HWH International Inc.'s revenue trends for the three and six months ended June 30, 2025 and 2024 Revenue (in US Dollars) | Period | 2025 Revenue | 2024 Revenue | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | | Three Months Ended June 30 | $310,391 | $334,882 | -7.31% | | Six Months Ended June 30 | $605,588 | $620,992 | -2.48% | - Revenue decreased slightly for both the three and six months ended June 30, 2025, compared to the same periods in 2024[179] - The company attributes the increase in 2025 revenue (relative to the prior year's trend) to increased F&B business in Singapore following a new café opening in April 2024[179] Cost of revenue Examines HWH International Inc.'s cost of revenue and gross margin changes for the reporting periods Cost of Revenue and Gross Margin (in US Dollars) | Period | 2025 Cost of Revenue | 2024 Cost of Revenue | Change (%) | | :-------------------- | :------------------- | :------------------- | :--------- | | Three Months Ended June 30 | $161,501 | $169,969 | -4.98% | | Six Months Ended June 30 | $309,104 | $292,782 | +5.57% | | Gross Margin (3 months) | $148,890 | $164,913 | -9.72% | | Gross Margin (6 months) | $296,484 | $328,210 | -9.67% | - Cost of revenues decreased for the three months ended June 30, 2025, but increased for the six months ended June 30, 2025, reflecting changes in F&B sales[180] - Gross margin decreased for both periods, despite the increase in F&B revenue[181] Operating expenses Analyzes HWH International Inc.'s operating expenses, highlighting significant decreases Operating Expenses (in US Dollars) | Period | 2025 Operating Expenses | 2024 Operating Expenses | Change (%) | | :-------------------- | :---------------------- | :---------------------- | :--------- | | Three Months Ended June 30 | $488,681 | $654,740 | -25.36% | | Six Months Ended June 30 | $1,230,403 | $2,150,123 | -42.78% | - Operating expenses significantly decreased for both the three and six months ended June 30, 2025, primarily due to lower general and administrative expenses, specifically reduced professional fees related to 10-Q and S-4 filings[182] Other non-operating income (expense) Discusses HWH International Inc.'s other non-operating income, primarily from subsidiary disposal Other Non-Operating Income (in US Dollars) | Period | 2025 Other Non-Operating Income | 2024 Other Non-Operating Income | Change (%) | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | | Three Months Ended June 30 | $415,768 | $86,186 | +382.42% | | Six Months Ended June 30 | $565,872 | $81,753 | +592.10% | - Other non-operating income saw a substantial increase for both periods, mainly driven by a $383,667 gain on disposal of subsidiaries in 2025[183] Net income (loss) Reports HWH International Inc.'s net income or loss and significant improvements for the reporting periods Net Income (Loss) (in US Dollars) | Period | 2025 Net Income (Loss) | 2024 Net Income (Loss) | Change ($) | | :-------------------- | :--------------------- | :--------------------- | :--------- | | Three Months Ended June 30 | $75,977 | $(403,641) | +$479,618 | | Six Months Ended June 30 | $(410,995) | $(1,740,160) | +$1,329,165 | - The company achieved a net income of $75,977 for the three months ended June 30, 2025, a significant improvement from a net loss in the prior year[184] - The net loss for the six months ended June 30, 2025, also substantially decreased compared to the same period in 2024[184] Liquidity and Capital Resources Assesses HWH International Inc.'s cash position, liabilities, and ability to meet short-term obligations Liquidity and Capital Resources (in US Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--------- | :------------ | :------------------ | | Cash | $3,729,873 | $4,341,746 | | Liabilities | $7,282,177 | $7,645,223 | | Total Assets | $10,602,700 | $10,522,422 | - Cash decreased from $4,341,746 at December 31, 2024, to $3,729,873 at June 30, 2025[185] - Liabilities decreased, while total assets slightly increased[185] - Despite a net loss and negative operating cash flow, management believes current cash, anticipated operations, and related-party financing (including a $700,000 available credit line from Alset Inc.) are sufficient for the next 12 months[186][187][188][189][190] Summary of Cash Flows for the Six Months Ended June 30, 2025 and 2024 Provides a summary of HWH International Inc.'s cash flow activities for the six-month periods Cash Flows from Operating Activities Details HWH International Inc.'s cash flows from operating activities and key drivers of change Net Cash Used in Operating Activities (in US Dollars) | Period | Net Cash Used in Operating Activities | | :-------------------- | :---------------------------------- | | Six Months Ended June 30, 2025 | $(528,424) | | Six Months Ended June 30, 2024 | $(1,129,040) | - Net cash used in operating activities decreased by over 50% to $(528,424) in H1 2025, primarily due to a $383,667 gain on disposal of subsidiaries[191][192] Cash Flows from Investing Activities Explains HWH International Inc.'s cash flows from investing activities, including shifts in investment patterns Net Cash (Used in) / Provided by Investing Activities (in US Dollars) | Period | Net Cash (Used in) / Provided by Investing Activities | | :-------------------- | :------------------------------------------ | | Six Months Ended June 30, 2025 | $(741,523) | | Six Months Ended June 30, 2024 | $20,554,735 | - Investing activities shifted from a net cash provided of $20,554,735 in H1 2024 to a net cash used of $(741,523) in H1 2025[191][193] - This change was driven by payments for convertible note receivables ($360,000), loan receivables ($280,000), and financial asset purchases ($100,152) in 2025, contrasting with significant cash withdrawals from trust accounts in 2024[193] Cash Flows from Financing Activities Summarizes HWH International Inc.'s cash flows from financing activities and major funding sources Net Cash Provided by / (Used in) Financing Activities (in US Dollars) | Period | Net Cash Provided by / (Used in) Financing Activities | | :-------------------- | :------------------------------------------ | | Six Months Ended June 30, 2025 | $578,857 | | Six Months Ended June 30, 2024 | $(19,741,963) | - Financing activities generated $578,857 in cash in H1 2025, a significant turnaround from a net cash outflow of $(19,741,963) in H1 2024[191][194] - This was primarily due to proceeds from common stock and warrants issuance ($1,409,983) and advances from related parties ($1,055,702) in 2025, offsetting repayments to related parties and notes payable[194] Nasdaq Compliance Reports on HWH International Inc.'s compliance status with Nasdaq listing requirements - HWH received multiple notices from Nasdaq regarding non-compliance with listing rules, including minimum market value of listed securities (MVLS), market value of publicly held shares, and minimum bid price[196][197][198] - Following a 1-for-5 reverse stock split effective February 24, 2025, the company regained compliance with the minimum bid price requirement on March 10, 2025, and is currently listed on the Nasdaq Capital Market[199][200][201][202] Contractual Obligations States HWH International Inc.'s contractual obligations as of June 30, 2025 - As of June 30, 2025, the company did not have any long-term debt obligations, capital lease obligations, purchase obligations, or long-term liabilities[203] Administrative Services Agreement Describes the termination of HWH International Inc.'s administrative services agreement - The company ceased paying monthly fees of $10,000 to Alset Management Group Inc. for administrative services upon the completion of the initial Business Combination[204] Underwriting Agreement Details HWH International Inc.'s settlement of underwriting fees and related agreements - The company settled a deferred underwriting fee of $3,018,750 with EF Hutton (now D. Boral Capital LLC) through a combination of cash, common stock, and a promissory note[205] - EF Hutton also holds an irrevocable right of first refusal for future equity and debt offerings for 24 months post-Business Combination[206] Merger Agreement Summarizes the key terms and closing of HWH International Inc.'s business combination - The Business Combination, approved by stockholders on August 1, 2023, and closed on January 9, 2024, involved the merger of HWH Merger Sub Inc. into HWH International Inc. (Nevada)[207] - Certain closing conditions, including minimum cash in the Trust Account and net tangible assets, were waived by the parties[207] Registration Rights Agreement Outlines HWH International Inc.'s obligations regarding the registration of certain securities - Under the Registration Rights Agreement, the company is obligated to register certain securities, including common stock and warrants held by the Sponsor and those issued in the Private Placement, within 15 business days after the Business Combination closing and use best efforts to make the registration statement effective within 60 business days[208] Lock-Up Agreements Describes the lock-up restrictions on HWH International Inc.'s common stock held by certain parties - HWH Holders with over 5% of common stock and certain management team members entered Lock-Up Agreements, restricting the transfer of their shares for a period commencing from the Closing and ending on the earlier of nine months after closing, or when the stock price reaches $12.00 per share for 20 trading days within a 30-trading day period after 150 days post-closing, or upon a liquidation/merger event[210] Impact of Inflation Assesses the impact of inflation on HWH International Inc.'s operations and financial results - Management believes inflation has not had a material impact on the company's results of operations for the six months ended June 30, 2025, or the year ended December 31, 2024, but cannot assure that future inflation will not have an adverse impact[211] Impact of Foreign Exchange Rates Discusses the impact of foreign exchange rate fluctuations on HWH International Inc.'s intercompany loans - Fluctuations in foreign currency transaction gains or losses are primarily due to the effects of foreign exchange rate changes on intercompany loans between Singapore and South Korea, which were approximately $0.8 million at June 30, 2025[212] - These fluctuations are expected to continue in 2025 due to anticipated volatility in exchange rates, as the intercompany loan balances are not expected to be repaid in the short term[212] Emerging Growth Company Status Explains HWH International Inc.'s status as an emerging growth company and related exemptions - As an 'emerging growth company' under the JOBS Act, HWH has elected to take advantage of exemptions from certain reporting requirements, including delaying the adoption of new or revised accounting standards until they apply to private companies[213] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, HWH is exempt from market risk disclosures - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures regarding market risk[219] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures, finding them effective, but noted material weaknesses in internal control over financial reporting - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of June 30, 2025[220][221] - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect the company's internal control over financial reporting during the fiscal interim ended June 30, 2025[222] - Material weaknesses identified in internal control over financial reporting include: limited accounting personnel preventing proper segregation of duties, and lack of well-defined accounting policies and procedures leading to untimely or ineffective financial close procedures[223] PART II. OTHER INFORMATION Presents additional information not included in the financial statements, such as legal proceedings and exhibits Item 1. Legal Proceedings The company reported no material legal proceedings - There are no legal proceedings pending against the company that could reasonably be expected to have a material adverse effect on its business and financial condition[225] Item 1A. Risk Factors As a smaller reporting company, HWH International Inc. is not required to provide risk factor disclosures - As a smaller reporting company, HWH International Inc. is not required to provide the information regarding risk factors[226] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to the company for the reporting period - This item is not applicable[227] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[228] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[229] Item 5. Other Information The company reported no other information required under this item - No other information is reported under this item[230] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q - Exhibits filed include amendments to the Certificate of Incorporation, certifications of principal executive and financial officers (pursuant to Sarbanes-Oxley Act Sections 302 and 906), and various Inline XBRL documents[231][232] SIGNATURES Provides the official signatures for the report Signatures The report is signed on behalf of HWH International Inc. by its CEO and CFO on August 13, 2025 - The report was signed by John Thatch, Chief Executive Officer, and Rongguo Wei, Chief Financial Officer, on August 13, 2025[234][235]