
PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements of HWH International Inc. and its subsidiaries for the periods ended June 30, 2025, and December 31, 2024 (for balance sheets), and for the three and six months ended June 30, 2025 and 2024 (for statements of operations, comprehensive loss, changes in stockholders' equity, and cash flows). It also includes detailed notes explaining the company's organization, business operations, significant accounting policies, and specific financial statement line items Consolidated Balance Sheets The balance sheets detail the company's financial position, showing changes in assets, liabilities, and equity between periods - Total Assets increased slightly from $10,522,422 at December 31, 2024, to $10,602,700 at June 30, 20258 - Current Assets decreased from $9,588,697 to $9,177,600, primarily due to a decrease in Cash8 | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :---------------- | :---------------- | | Cash | $4,341,746 | $3,729,873 | | Total Current Assets | $9,588,697 | $9,177,600 | | Total Non-Current Assets | $933,725 | $1,425,100 | | TOTAL ASSETS | $10,522,422 | $10,602,700 | | Total Current Liabilities | $7,424,974 | $7,146,791 | | Total Non-Current Liabilities | $220,249 | $135,386 | | Total Stockholders' Equity | $2,877,199 | $3,320,523 | Consolidated Statements of Operations and Other Comprehensive Loss These statements present the company's revenues, expenses, and net income or loss over specified interim periods - For the three months ended June 30, 2025, the company reported a net income of $75,977, a significant improvement from a net loss of $(403,641) in the same period of 202410 - For the six months ended June 30, 2025, the net loss decreased substantially to $(410,995) from $(1,740,160) in the prior year period10 | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 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 | | Net income (loss) | $75,977 | $(403,641) | $(410,995) | $(1,740,160) | | Basic Loss per common share | $(0.01) | $(0.12) | $(0.06) | $(0.55) | Consolidated Statements of Changes in Stockholders' Equity This statement outlines the changes in the company's equity components, including common stock and accumulated deficit - Total Stockholders' Equity increased from $2,877,199 at December 31, 2024, to $3,320,523 at June 30, 202514 - The increase was primarily driven by the issuance of Common Stock ($1,409,858) and warrants exercised ($125), partially offset by net loss and foreign currency translation adjustments14 | Metric | December 31, 2024 | June 30, 2025 | | :------------------------------------------ | :---------------- | :---------------- | | Common Stock (shares) | 5,593,920 | 6,476,420 | | Common Stock (value) | $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 | | Total Stockholders' Equity | $2,877,199 | $3,320,523 | Consolidated Statements of Cash Flows This statement details cash inflows and outflows from operating, investing, and financing activities for the period - 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 subsidiaries17 - Net cash used in investing activities was $(741,523) in H1 2025, a substantial change from net cash provided by investing activities of $20,554,735 in H1 2024, mainly due to cash withdrawn from trust account for redemptions in 202417 | Cash Flow Activity | 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 | Notes to Unaudited Consolidated Financial Statements These notes provide essential details on the company's accounting policies, business operations, and specific financial items - The Company operates a food and beverage (F&B) business in Singapore and South Korea, including three cafés and an online healthy food store19 - HWH International Inc. was originally a SPAC, Alset Capital Acquisition Corp., and completed its business combination on January 9, 2024, changing its name to HWH International Inc2021 - The Company incurred a net loss and negative cash flow from operating activities in the six months ended June 30, 2025, raising substantial doubt about its ability to continue as a going concern, though management believes available cash and related party financing are sufficient for the next 12 months7374 NOTE 1 — DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS This note describes the company's core business, operational structure, and recent corporate transactions - HWH International Inc. operates a food and beverage (F&B) business in Singapore and South Korea, including three cafés and an online healthy food store19 - The Company was originally incorporated as Alset Capital Acquisition Corp. and completed a business combination on January 9, 2024, merging with HWH International Inc. (Nevada) and changing its name2021 - The total consideration for the merger was $125,000,000, paid in 12,500,000 shares of common stock valued at $10.00 per share23 NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and methods used in preparing the consolidated financial statements - The consolidated financial statements are prepared in conformity with US GAAP and include all accounts of the Company and its majority-owned and controlled subsidiaries2628 - The Company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards3334 - Revenue is primarily generated from F&B product sales, recognized when control is transferred to customers, net of taxes, allowances, refunds, or returns5153 NOTE 3 — ACCOUNTS RECEIVABLE, NET This note details the composition and changes in the company's net accounts receivable balance - Accounts receivable, net, was $22,948 at June 30, 2025, and $17,546 at December 31, 202484 - These amounts primarily represent collections received by credit card processors in the F&B business and rent receivable84 - The allowance for credit losses was an immaterial amount for both periods84 NOTE 4 — INVENTORY This note provides information on the company's inventory valuation methods and balances - The balance of finished goods inventory was $6,369 at June 30, 2025, an increase from $1,574 at December 31, 202485 - Inventory is stated at the lower of cost or net realizable value, using the first-in, first-out (FIFO) method42 - No provision for slow-moving or obsolete inventory was recorded during the three and six months ended June 30, 2025 and 202485 NOTE 5 — PROPERTY AND EQUIPMENT, NET This note details the company's property and equipment, including depreciation and disposals - Net property and equipment decreased from $33,588 at December 31, 2024, to $31,876 at June 30, 202586 - Depreciation expenses for the six months ended June 30, 2025, were $6,662, significantly lower than $30,209 for the same period in 202486 - In 2024, the Company recorded a $5,820 loss on disposal of PPE due to the closure of the F&BPLQ café86 NOTE 6 — INVESTMENTS AT COST This note describes the company's cost-method investments, including impairments and disposals of subsidiaries - The Company impaired its $14,010 investment in Ideal Food & Beverage Pte. Ltd. (IFBPL) to $0 as of December 31, 2024, due to IFBPL's net liabilities88 - On April 23, 2025, the Company completed the sale of HWH World Inc. (HWHKOR) to AES Group Inc., generating a $383,667 gain recorded in other non-operating income90 - In exchange for HWHKOR, AES Group Inc. issued new shares representing 19.9% of its enlarged share capital to the Company, valued at $1,35490 NOTE 7 – LOAN DUE TO THIRD PARTY This note details the terms and status of a promissory note owed to a third-party underwriter - On December 18, 2023, the Company settled a $3,018,750 deferred underwriting fee with EF Hutton LLC (now D. Boral Capital LLC) by paying $325,000 cash, issuing 149,443 common shares, and a $1,184,375 promissory note91 - The promissory note carries an interest rate of SOFR plus 1% and matures partially upon future offerings or in installments through October 202891 - The Company defaulted on the first installment of the note due in October 2024, which was paid in January 2025, and is currently negotiating to resolve the default status91 NOTE 8 — DUE TO ALSET INC. This note explains the company's short-term working capital advances and credit facility with Alset Inc - The amount due to Alset Inc. (AEI), the ultimate holding company, for short-term working capital advances increased from $209,614 at December 31, 2024, to $459,614 at June 30, 202592 - AEI provided a non-revolving credit facility of up to $1,000,000 to the Company, bearing a 3% simple interest rate, with $700,000 remaining available as of June 30, 20259394 - On September 24, 2024, $300,000 of debt due to AEI was converted into 476,190 shares of the Company's common stock at $0.63 per share95 NOTE 9 — DUE TO/FROM RELATED PARTIES This note outlines balances and transactions with various related entities, including debt conversions - Due to Alset International Limited (AIL), a fellow subsidiary, decreased from $5,096,047 at December 31, 2024, to $5,052,090 at June 30, 202595 - AIL's debt of $3,501,759 was fully converted into 5,558,347 shares of the Company's common stock at $0.63 per share on September 24, 202496 - Due from Alset Business Development Pte. Limited (ABD) increased from $4,113,701 at December 31, 2024, to $4,231,148 at June 30, 202598 NOTE 10 — RELATED PARTY TRANSACTIONS This note details significant transactions and agreements with related parties, including convertible notes and acquisitions - The Company has purchased multiple convertible promissory notes (CN 1-7) from Sharing Services Global Corporation (SHRG) totaling $1,210,000, along with warrants, between March 2024 and June 2025102103105 - SHRG is a related party, as Alset Inc. and Alset International Limited are significant stockholders, and HWH's CEO is also SHRG's CEO114 - The Company acquired a 60% interest in L.E.H. Insurance Group, LLC (LEH) from SHRG for $75,000 on February 27, 2025, and recorded $77,480 of goodwill which was immediately written off123124 NOTE 11 — STOCKHOLDERS' EQUITY This note provides information on the company's capital structure, stock issuances, and equity changes - As of June 30, 2025, the Company had 55,000,000 authorized common shares and 1,000,000 authorized preferred shares, with no preferred shares outstanding129 - A 1-for-5 reverse stock split was approved on January 16, 2025, and became effective on February 24, 2025143 - The Company completed a public offering on January 6, 2025, pricing 3,162,500 shares of common stock and 1,250,000 pre-funded warrants, generating approximately $1.76 million in gross proceeds139 NOTE 12 —LEASES This note describes the company's operating lease arrangements for office spaces and F&B stores - The Company has operating leases for office spaces and F&B stores in South Korea and Singapore144 - The weighted-average remaining lease term is 1.78 years, with a weighted-average discount rate of 2.95%144 - Total lease expenses for the six months ended June 30, 2025, were $174,679, down from $260,139 in the same period of 2024146 NOTE 13 — COMMITMENTS AND CONTINGENCIES This note discloses any material commitments or contingent liabilities, including pending legal matters - As of the report date, no legal proceedings, government actions, administrative actions, investigations, or claims are pending against the Company that are expected to have a material adverse effect on its business and financial condition147 NOTE 14 — CONCENTRATION RISK This note identifies significant concentrations of risk related to cash balances and key suppliers - Uninsured cash balances were $3,143,531 at June 30, 2025, and $3,861,339 at December 31, 2024149 - 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 concentration150 NOTE 15– CORRECTION OF AN IMMATERIAL ERRORS IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS This note explains the correction of immaterial errors in prior financial statements and their impact - The Company identified an immaterial error in its Q1 2024 financial statements, resulting in an overstatement of Retained Earnings and understatement of Temporary Equity by approximately $645,860152153 - Two immaterial errors were identified for the year ended December 31, 2024: an understatement of G&A expenses and overstatement of foreign currency translation adjustment by $159,263, and an understatement of unrealized gain on convertible note receivable and overstatement of additional paid-in capital by $287,812154155156 - These errors were deemed immaterial to previously issued financial statements and have been corrected through revision in the accompanying comparative 2024 financial statements157 NOTE 16— SUBSEQUENT EVENTS This note discloses any significant events or transactions occurring after the balance sheet date - The Company evaluated events after the balance sheet date through the report date and found no subsequent events or transactions requiring recognition or disclosure158 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the same periods in 2024. It covers business overview, revenue model, key factors affecting the business, significant accounting policies, detailed analysis of operating results, liquidity, cash flows, Nasdaq compliance, and the impact of external factors like inflation and foreign exchange rates Overview This section provides a general business overview, including new initiatives and operational strategies - The Company launched Hapi Marketplace on November 4, 2024, a business-to-consumer marketplace featuring over forty-seven product categories, with plans for expansion to South Korea, Hong Kong, and other parts of Asia162163 - Hapi Cafés, operating in Seoul and Singapore, serve as in-person social experiences to build community and raise awareness for HWH products and services, with plans for additional locations165 - Hapi Wealth Builder, a program for equity investment and wealth-building strategies, is scheduled for a rollout in selected regions later in 2025, with a China headquarters opening for tutorials and workshops166167168 Our Revenue Model This section describes the company's primary sources of revenue and their performance over the period - Total revenue for the three months ended June 30, 2025, was $310,391, a decrease from $334,882 in the prior year. For the six months, revenue was $605,588, down from $620,992169 - Net loss for the three months ended June 30, 2025, was $675,774, compared to $403,641 in 2024. For the six months, net loss was $1,162,746, an improvement from $1,740,160 in 2024169 - Food and beverage sales accounted for approximately 100% of revenue for both the three and six months ended June 30, 2025 and 2024170 Matters that May or Are Currently Affecting Our Business This section discusses key internal and external factors influencing the company's business and financial performance - The Company's financial results are affected by its ability to improve revenue through cross-selling and revenue-sharing arrangements within its group of companies172 - Challenges include identifying complementary businesses for acquisition, securing additional financing for these acquisitions, and profitably integrating them172 - The ability to attract competent technical and sales personnel at acceptable compensation levels and control operating expenses during business expansion are also critical factors172 Summary of Significant Accounting Policies This section reiterates the critical accounting policies and estimates used in financial reporting - The consolidated financial statements are prepared in accordance with U.S. GAAP and include all accounts of the Company and its wholly-owned subsidiaries, with intercompany transactions eliminated173 - Management makes significant estimates and assumptions, including allowance for credit losses, recoverability and useful lives of property, plant and equipment, deferred tax valuation allowances, contingencies, and equity compensation174 - Revenue from product sales and food and beverage is recognized when control is transferred to customers, net of applicable taxes, allowances, refunds, or returns175177 Results of Operations This section analyzes the company's financial performance, including revenue, expenses, and net income/loss - Revenue for the three months ended June 30, 2025, decreased to $310,391 from $334,882 in 2024. For the six months, revenue decreased to $605,588 from $620,992180 - Operating expenses significantly decreased from $654,740 to $488,681 for the three months and from $2,150,123 to $1,230,403 for the six months, primarily due to lower professional fees183 - The Company reported a net income of $75,977 for the three months ended June 30, 2025, compared to a net loss of $(403,641) in 2024. The six-month net loss decreased from $1,740,160 to $410,995185 Liquidity and Capital Resources This section assesses the company's ability to meet short-term and long-term obligations and fund operations - Cash decreased from $4,341,746 at December 31, 2024, to $3,729,873 at June 30, 2025. Total liabilities decreased, while total assets increased slightly186 - Management believes available cash, anticipated cash from operations, and financing from related parties are sufficient to fund operations for at least the next 12 months, despite prior net losses and negative operating cash flow187 - The Company has a $1,000,000 credit facility with Alset Inc., its majority stockholder, with $700,000 remaining available as of June 30, 2025188 Summary of Cash Flows This section summarizes the cash flow activities from operations, investing, and financing for the period - Net cash used in operating activities decreased to $(528,424) in H1 2025 from $(1,129,040) in H1 2024, primarily due to a gain on disposal of subsidiaries192193 - Net cash used in investing activities was $(741,523) in H1 2025, a significant change from net cash provided of $20,554,735 in H1 2024, mainly due to cash withdrawn from a trust account for redemptions in the prior year192194 - Net cash provided by financing activities was $578,857 in H1 2025, a reversal from net cash used of $(19,741,963) in H1 2024, driven by proceeds from common stock and warrant issuance192195 Nasdaq Compliance This section details the company's compliance status with Nasdaq listing requirements and related actions - The Company received multiple notices from Nasdaq regarding non-compliance with minimum market value of listed securities (MVLS), market value of publicly held shares, and minimum bid price requirements between February and September 2024197199201 - A 1-for-5 reverse stock split was effected on February 24, 2025, to address the bid price deficiency202 - On March 10, 2025, Nasdaq notified the Company that it had regained compliance with the minimum bid price requirement (Rule 5550(a)(2)) and is currently listed on the Nasdaq Capital Market203 Contractual Obligations This section outlines the company's material contractual commitments and payment obligations - As of June 30, 2025, the Company did not have any long-term debt obligations, capital lease obligations, purchase obligations, or long-term liabilities204 Administrative Services Agreement This section describes the administrative services agreement and related payments with a management group - The Company previously paid Alset Management Group Inc. $10,000 per month for office space, utilities, and administrative support, but ceased these payments upon completion of the initial Business Combination205 Underwriting Agreement This section details the settlement of deferred underwriting fees and related agreements with an underwriter - The Company settled a $3,018,750 deferred underwriting fee with EF Hutton (now D. Boral Capital LLC) by paying $325,000 cash, issuing 149,443 common shares, and a $1,184,375 promissory note, effective January 9, 2024207 - EF Hutton was granted an irrevocable right of first refusal to act as the sole investment banker, book-runner, and/or placement agent for future public and private equity and debt offerings for 24 months after the Business Combination closing207 Merger Agreement This section describes the terms and completion of the company's business combination and merger - The Company completed its Business Combination on January 9, 2024, through the merger of HWH Merger Sub Inc. with HWH International Inc. (Nevada), with the latter surviving as a wholly-owned subsidiary208 - Certain closing conditions, including minimum cash available from the Trust Account ($30,000,000) and minimum net tangible assets ($5,000,001), were waived by the parties208 Registration Rights Agreement This section outlines the company's obligations to register certain securities held by investors - The Company is obligated to register certain securities, including common stock and warrants held by the Sponsor and those issued in the Private Placement, under a Registration Rights Agreement dated January 31, 2022209 - The Company was required to file a resale registration statement within 15 business days and use best efforts to make it effective within 60 business days after the Business Combination closing209 Lock-Up Agreements This section details restrictions on the transfer of securities by certain stockholders and management - HWH Holders with more than 5% of HWH Common Stock and certain management team members entered into Lock-Up Agreements, restricting the transfer of Restricted Securities211 - The lock-up period ends on the earlier of nine months after closing, when the common stock price equals or exceeds $12.00 for 20 trading days within a 30-day period (commencing at least 150 days after closing), or upon a liquidation/merger transaction211 Impact of Inflation This section assesses the current and potential future effects of inflation on the company's 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, 2024212 - However, there is no assurance that future inflation will not adversely impact operating results and financial condition212 Impact of Foreign Exchange Rates This section discusses the influence of foreign currency fluctuations on the company's financial performance - Fluctuations in foreign currency transaction gains or losses, included in the Consolidated Statements of Operations, are primarily due to the effects of foreign exchange rate changes on intercompany loans between Singapore and South Korea213 - These intercompany loans were approximately $0.8 million at June 30, 2025, and $0.9 million at December 31, 2024213 - The Company expects foreign exchange rate volatility to continue impacting results in 2025, as intercompany loan balances are expected to remain around $1 million in the short term213 Emerging Growth Company Status This section clarifies the company's status as an emerging growth company and its elected exemptions - The Company is an 'emerging growth company' as defined in the JOBS Act214 - It has elected to take advantage of exemptions from various reporting requirements, including the extended transition period for complying with new or revised accounting standards214 Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, HWH International Inc. is not required to provide the detailed quantitative and qualitative disclosures regarding market risk typically required under this item - The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is therefore not required to provide information on market risk220 Item 4. Controls and Procedures This section details the Company's evaluation of its disclosure controls and procedures and changes in internal control over financial reporting. Management concluded that disclosure controls and procedures were effective as of June 30, 2025, but identified material weaknesses in internal control over financial reporting related to limited accounting personnel and inadequate policies/procedures - Management, with the participation of the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of June 30, 2025222 - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect internal control over financial reporting during the fiscal interim ended June 30, 2025223 - Management identified material weaknesses in internal control over financial reporting, including limited accounting personnel leading to improper segregation of duties and a lack of well-defined accounting policies and procedures, resulting in untimely or inadequate financial close procedures224 PART II. OTHER INFORMATION This section provides additional disclosures, including legal proceedings, risk factors, and exhibit listings Item 1. Legal Proceedings The Company reported no material legal proceedings pending against it as of the reporting date - No legal proceedings are pending against the Company226 Item 1A. Risk Factors As a smaller reporting company, HWH International Inc. is not required to provide the risk factors information typically required under this item - The Company is a smaller reporting company and is not required to provide risk factors227 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 applicable228 Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities for the reporting period - No defaults upon senior securities229 Item 4. Mine Safety Disclosures This item is not applicable to the Company - This item is not applicable230 Item 5. Other Information The Company reported no other information required under this item - No other information231 Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including amendments to the Certificate of Incorporation, certifications of principal officers, and XBRL documents - Exhibits include amendments to the Amended and Restated Certificate of Incorporation (3.1, 3.2)233 - Certifications of Principal Executive Officer and Principal Financial Officer are filed pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (31.1, 31.2, 32.1, 32.2)233 - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) and the Cover Page Interactive Data File are also included233 PART III. SIGNATURES This section contains the official signatures of the company's principal executive and financial officers - The report is signed on behalf of HWH International Inc. by John Thatch, Chief Executive Officer (Principal Executive Officer), and Rongguo Wei, Chief Financial Officer (Principal Accounting and Financial Officer), on August 13, 2025236