Alset Capital Acquisition (ACAX) - 2025 Q3 - Quarterly Report

FORM 10-Q Cover Page This section details HWH International Inc.'s Form 10-Q filing for Q3 2025, identifying its filer status - HWH International Inc. filed its Form 10-Q for the quarterly period ended September 30, 2025. The company is a non-accelerated filer, a smaller reporting company, and an emerging growth company[1][2][3] Common Stock Information as of October 21, 2025 | Detail | Value | Market/Symbol | | :---------------------------------- | :---------- | :---------------------------------------- | | Common Stock, par value $0.0001 per share | HWH | The Nasdaq Capital Market | | Shares Issued and Outstanding | 6,476,400 shares | - | Part I. Financial Information This section presents the unaudited consolidated financial statements and management's discussion and analysis for the company Item 1. Financial Statements (Unaudited) This section presents HWH International Inc.'s unaudited consolidated financial statements for Q3 2025 and 2024 Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity, as of September 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (September 30, 2025 vs. December 31, 2024) | Metric | September 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :----------------------------------- | :----------------------------- | :------------------ | | ASSETS | | | | Total Current Assets | $3,858,340 | $5,474,997 | | Total Non-Current Assets | $1,326,054 | $933,725 | | TOTAL ASSETS | $5,184,394 | $6,408,722 | | LIABILITIES | | | | Total Current Liabilities | $2,252,884 | $3,311,274 | | Total Non-Current Liabilities | $24,084 | $220,249 | | Total Liabilities | $2,276,968 | $3,531,523 | | STOCKHOLDERS' EQUITY | | | | Total Stockholders' Equity | $2,907,426 | $2,877,199 | - Total assets decreased by approximately $1.22 million, primarily driven by a decrease in current assets, including cash and convertible loans receivable. Total liabilities decreased by approximately $1.25 million, mainly due to a reduction in current liabilities such as due to related parties and notes payable. Total stockholders' equity saw a slight increase of approximately $30,000[9] Consolidated Statements of Operations and Other Comprehensive Loss This section presents the company's financial performance, including revenue, expenses, and net loss, for Q3 2025 and 2024 Consolidated Statements of Operations Highlights (Three Months Ended September 30) | Metric | September 30, 2025 ($) | September 30, 2024 ($) | | :----------------------------------- | :------------------- | :------------------- | | Revenue | $206,778 | $345,523 | | Cost of revenue | $(83,196) | $(185,654) | | Gross profit | $123,582 | $159,869 | | Total Operating expenses | $(369,978) | $(487,394) | | Total Other non-operating (expense) income | $(48,698) | $(209,618) | | Net loss | $(299,618) | $(537,143) | | Net loss attributable to common stockholders | $(291,004) | $(548,492) | | Basic Loss per common share | $(0.04) | $(0.16) | | Diluted Loss per common share | $(0.04) | $(0.16) | Consolidated Statements of Operations Highlights (Nine Months Ended September 30) | Metric | September 30, 2025 ($) | September 30, 2024 ($) | | :----------------------------------- | :------------------- | :------------------- | | Revenue | $812,366 | $966,515 | | Cost of revenue | $(392,300) | $(478,436) | | Gross profit | $420,066 | $488,079 | | Total Operating expenses | $(1,600,381) | $(2,637,517) | | Total Other non-operating (expense) income | $517,174 | $(127,865) | | Net loss | $(710,613) | $(2,277,303) | | Net loss attributable to common stockholders | $(685,615) | $(2,273,253) | | Basic Loss per common share | $(0.11) | $(0.71) | | Diluted Loss per common share | $(0.11) | $(0.71) | - The company reported a reduced net loss for both the three and nine months ended September 30, 2025, compared to the same periods in 2024. Revenue decreased, but this was offset by a larger decrease in operating expenses and, for the nine-month period, a significant shift from other non-operating expense to income, primarily due to a gain on disposal of subsidiaries[11][13] Consolidated Statements of Changes in Stockholders' Equity This section details changes in the company's stockholders' equity for the nine months ended September 30, 2025 Changes in Stockholders' Equity (Nine Months Ended September 30, 2025) | Metric | December 31, 2024 ($) | September 30, 2025 ($) | | :----------------------------------- | :------------------ | :------------------- | | Common Stock | $559 | $647 | | Additional Paid in Capital | $9,339,413 | $10,891,400 | | Accumulated Other Comprehensive Loss | $(257,598) | $(1,050,287) | | Accumulated Deficit | $(6,317,010) | $(7,002,625) | | Total HWH International Inc. Stockholders' Equity | $2,765,364 | $2,839,135 | | Non-controlling Interests | $111,835 | $68,291 | | Total Stockholders' Equity | $2,877,199 | $2,907,426 | - Stockholders' equity increased slightly from $2.88 million at December 31, 2024, to $2.91 million at September 30, 2025. This was driven by an increase in additional paid-in capital from common stock issuance and warrant exercises, partially offset by an increase in accumulated other comprehensive loss and accumulated deficit[15] - Key activities impacting equity during the nine months ended September 30, 2025, included the issuance of common stock ($1,409,858), warrants exercised ($125), revaluation for SHRG note receivable and warrants ($87,131), and a net loss of $(565,131) for the first quarter, followed by a net income of $170,520 for the second quarter and a net loss of $(291,004) for the third quarter[15] Consolidated Statements of Cash Flows This section outlines the company's cash flows from operating, investing, and financing activities for Q3 2025 and 2024 Consolidated Statements of Cash Flows Highlights (Nine Months Ended September 30) | Cash Flow Activity | September 30, 2025 ($) | September 30, 2024 ($) | | :----------------------------------- | :------------------- | :------------------- | | Net cash used in operating activities | $(728,326) | $(1,404,073) | | Net cash (used in) / provided by investing activities | $(1,015,281) | $20,451,688 | | Net cash provided by / (used in) financing activities | $1,203,307 | $(19,405,313) | | Net decrease in cash | $(540,300) | $(357,698) | | Cash at end of period | $2,897,972 | $832,368 | - Net cash used in operating activities decreased significantly in 2025 compared to 2024, primarily due to a lower net loss and a gain on disposal of subsidiaries. Investing activities shifted from a large cash inflow in 2024 (due to trust account withdrawals) to a substantial cash outflow in 2025, driven by convertible loans receivable, investment in associates, and marketable securities purchases. Financing activities also reversed, providing cash in 2025 from common stock issuance and warrants, compared to a large cash outflow in 2024 due to redemptions of Class A Common Stock[19] Notes to Unaudited Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited consolidated financial statements NOTE 1 — DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS HWH International Inc. operates an F&B business and develops Hapi Marketplace and Hapi Wealth Builder platforms, following a merger and public offering - HWH International Inc. operates a food and beverage (F&B) business in Singapore, with one café. It is also developing Hapi Marketplace (a B2C platform) and Hapi Wealth Builder (an educational program)[22][23] - The company was originally Alset Capital Acquisition Corp., a SPAC, and completed a merger with HWH International Inc. (Nevada corporation) on January 9, 2024, changing its name to HWH International Inc.[24][25] - In January 2025, the company closed a public offering of 632,500 shares of common stock and 250,000 pre-funded warrants, generating approximately $1.76 million in gross proceeds[29] NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the company's significant accounting policies, including basis of presentation, revenue recognition, and emerging growth company status - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[38][39][215] - Effective September 30, 2025, the company revised its cash flow statement presentation for related party advances and repayments, now separating 'Advances to related parties' and 'Advances from related parties' for greater transparency. This change was applied retrospectively[32] - The company's F&B business generated substantially all revenue, with contributions from subsidiaries like Alset F&B One (42% in 2025), Hapi Café SG Pte. Ltd. (23% in 2025), and Ketomei Pte. Ltd. (27% in 2025). Several F&B subsidiaries ceased operations or were sold in 2024-2025[36] Revenue from Food and Beverage Business | Period | September 30, 2025 ($) | September 30, 2024 ($) | | :----------------------------------- | :------------------- | :------------------- | | Three Months Ended | $206,778 | $345,523 | | Nine Months Ended | $812,366 | $966,515 | - The company incurred a net loss, loss from operations, and negative cash flow from operating cafés in the nine months ended September 30, 2025, raising substantial doubt about its ability to continue as a going concern. However, management believes available cash, anticipated operations, and related party financing are sufficient for the next 12 months[75][76] NOTE 3 — ACCOUNTS RECEIVABLE, NET Accounts receivable, net, primarily from F&B business, decreased from $17,546 at December 31, 2024, to $7,771 at September 30, 2025 Accounts Receivable, Net | Date | Amount ($) | | :------------------- | :------- | | September 30, 2025 | $7,771 | | December 31, 2024 | $17,546 | NOTE 4 — INVENTORY Finished goods inventory decreased from $1,574 at December 31, 2024, to $1,113 at September 30, 2025 Inventory Balance (Finished Goods) | Date | Amount ($) | | :------------------- | :------- | | September 30, 2025 | $1,113 | | December 31, 2024 | $1,574 | NOTE 5 — PROPERTY AND EQUIPMENT, NET Net property and equipment decreased from $33,588 to $21,844, with depreciation falling due to asset disposals from café closures Property and Equipment, Net | Date | Amount ($) | | :------------------- | :------- | | September 30, 2025 | $21,844 | | December 31, 2024 | $33,588 | Depreciation Expenses (Nine Months Ended September 30) | Year | Amount ($) | | :------------------- | :------- | | 2025 | $22,881 | | 2024 | $45,529 | - The decrease in property and equipment and depreciation is partly due to the disposal of assets from the closure of the F&BPLQ café in 2024, resulting in a $5,882 loss on disposal[89] NOTE 6 — INVESTMENTS This note details investment activities, including impairment, a significant gain from HWH World Inc. sale, and a loss from Alset F&B One Pte. Ltd. sale - The company impaired its $14,010 investment in Ideal Food & Beverage Pte. Ltd. to $0 due to net liabilities as of December 31, 2024[91] - The sale of HWH World Inc. to AES Group Inc. on April 23, 2025, generated a $383,667 gain, recorded in other non-operating income[92] - On September 10, 2025, the company sold 70% of Alset F&B One Pte. Ltd. for $170,754, resulting in a $21,611 loss. The remaining 20% is now treated as an equity method investment valued at $54,961[93] NOTE 7 – LOAN DUE TO THIRD PARTY The company has a $1,184,375 promissory note with EF Hutton LLC, currently in default due to a late first installment payment - A $1,184,375 promissory note to EF Hutton LLC (now D. Boral Capital LLC) was part of a settlement for deferred underwriting compensation. The first installment due in October 2024 was paid late in January 2025, leading to a default status[94] NOTE 8 — DUE TO ALSET INC. Amounts due to Alset Inc. increased to $569,614, with a $1,000,000 credit facility extended to April 14, 2026 Amounts Due to Alset Inc. | Date | Amount ($) | | :------------------- | :------- | | September 30, 2025 | $569,614 | | December 31, 2024 | $209,614 | - Alset Inc. provides a $1,000,000 non-revolving line of credit facility to the company, bearing 3% simple interest. The due date for advances was extended to April 14, 2026[78][79][80][96][97] - In September 2024, $300,000 of debt due to Alset Inc. was converted into 476,190 shares of the company's common stock at $0.63 per share[98] NOTE 9 — DUE TO/FROM RELATED PARTIES This note details significant balances with related parties, including decreased amounts due to AIL and increased amounts due from ABD and HAIL Due to/from Related Parties | Related Party | September 30, 2025 ($) | December 31, 2024 ($) | | :----------------------------------- | :------------------- | :------------------- | | Due to Alset International Limited (AIL) | $4,651,995 | $5,096,047 | | Due from Alset Business Development Pte. Limited (ABD) | $4,233,165 | $4,113,701 | | Due from HotApp International Limited (HAIL) | $252,890 | - | - In September 2024, $3,501,759 of debt due to AIL was converted into 5,558,347 shares of the company's common stock at $0.63 per share[100] - AIL was released from its Letter of Continuing Financial Support to the Company on April 14, 2025[101] NOTE 10 — RELATED PARTY TRANSACTIONS This note details transactions with SHRG, including convertible notes and warrants, and the acquisition of L.E.H. Insurance Group, LLC, resulting in goodwill impairment - The company purchased eight convertible promissory notes (CN1-CN8) from Sharing Services Global Corporation (SHRG) between March 2024 and September 2025, totaling $1,480,000 in principal, along with associated warrants and commitment fees[106][107][109][110][113][114][118][119] - SHRG is a related party due to common significant stockholders (Alset Inc. and Alset International Limited) and shared former CEO (John Thatch)[120] - The company acquired a 60% interest in L.E.H. Insurance Group, LLC (LEH) in February 2025 for $75,000, and the remaining 40% in August 2025 for $40,000. Goodwill of $122,482 from these acquisitions was immediately written off[124][125][126] - A joint venture, HapiTravel Holding Pte. Ltd. (HTHPL), was formed in April 2024, with HWHPL holding 19%. The company provided a $137,658 loan to HTHPL in November 2024[127][128] NOTE 11 - FINANCIAL ASSETS AT FAIR VALUE This note details financial assets measured at fair value, including SHRG warrants, convertible loans, and marketable securities, with valuation methods and recognized gains/losses Financial Assets at Fair Value (September 30, 2025) | Asset | Level 1 ($) | Level 2 ($) | Fair Value ($) | | :----------------------------------- | :-------- | :---------- | :----------- | | Warrants – SHRG | - | $152 | $152 | | Convertible loans receivable – SHRG | - | $1,170,619 | $1,170,619 | | Marketable securities - Trading | $223,670 | - | $223,670 | | Total Investment in securities at Fair Value | $223,670 | $1,170,771 | $1,394,441 | - SHRG warrants and convertible loans receivable are classified as Level 2 financial instruments, with fair values calculated using binomial option pricing and binomial tree models, respectively, based on assumptions like risk-free interest rate, expected life, discount rate, and volatility[131][132] - For the nine months ended September 30, 2025, the convertible note receivable with SHRG increased from $744,652 to $1,170,619, with a revaluation loss of $4,033. The company also recognized $1,895 in realized gains and $8,607 in unrealized gains on marketable securities[134][137] NOTE 12 — STOCKHOLDERS' EQUITY This note details the company's capital structure, including authorized stock, warrant activity, and the impact of a 1-for-5 reverse stock split - The company's authorized capital stock consists of 55,000,000 shares of common stock and 1,000,000 shares of preferred stock. No preferred stock was outstanding as of September 30, 2025, or December 31, 2024[138] Warrant Activity (Nine Months Ended September 30, 2025) | Metric | Warrants for Common Shares (shares) | Weighted Average Exercise Price ($) | | :----------------------------------- | :------------------------- | :------------------------------ | | Warrants Outstanding as of Dec 31, 2024 | 909,874 | $57.5 | | Granted | 250,000 | $2.0 | | Exercised | (250,000) | $(2.0) | | Warrants Outstanding as of Sep 30, 2025 | 909,874 | $57.5 | - In January 2025, the company completed a public offering of 3,162,500 shares of common stock and 1,250,000 pre-funded warrants, generating approximately $1.76 million in gross proceeds. A 1-for-5 reverse stock split was effective on February 24, 2025[149][152] NOTE 13 —LEASES The company's operating lease liabilities decreased from $560,900 to $127,629, with lease expenses falling due to café closures Operating Lease Liabilities | Date | Right-of-use assets ($) | Lease liabilities - current ($) | Lease liabilities - non-current ($) | Total lease liabilities ($) | | :------------------- | :------------------ | :-------------------------- | :------------------------------ | :---------------------- | | September 30, 2025 | $124,034 | $103,545 | $24,084 | $127,629 | | December 31, 2024 | $548,757 | $340,651 | $220,249 | $560,900 | Total Lease Expenses (Nine Months Ended September 30) | Year | Amount ($) | | :------------------- | :------- | | 2025 | $223,046 | | 2024 | $377,945 | - The weighted-average remaining lease term is 1.12 years, with a weighted-average discount rate of 3.44%. The company utilizes practical expedients for short-term leases and non-lease components[153][154] NOTE 14 — COMMITMENTS AND CONTINGENCIES No material legal proceedings or claims are pending against the company that could materially affect its business or financial condition - No material legal proceedings or claims are pending against the company that could reasonably be expected to have a material adverse effect on its business and financial condition[156] NOTE 15 — CONCENTRATION RISK The company faces concentration risk from uninsured cash balances ($2,423,186) and reliance on five major suppliers (65% of cost of revenue) Uninsured Cash Balances | Date | Amount ($) | | :------------------- | :----------- | | September 30, 2025 | $2,423,186 | | December 31, 2024 | $3,861,339 | - Five suppliers accounted for approximately 65% of the company's total costs of revenue for the nine months ended September 30, 2025 (compared to 82% in 2024), indicating a significant supplier concentration risk[158] NOTE 16 — CORRECTION OF AN IMMATERIAL ERRORS IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS Immaterial errors in previously issued financial statements regarding non-controlling interests and related party balances were corrected, with no impact on net loss or investment fair value - Immaterial errors in the presentation of non-controlling interests and certain related party balances were reclassified for the period ended June 30, 2025, with no impact on net loss or investment fair value[159][160][161] NOTE 17— SUBSEQUENT EVENTS On October 6, 2025, the company purchased a $200,000 convertible promissory note from SHRG - On October 6, 2025, the company purchased a $200,000 convertible promissory note from SHRG, convertible into SHRG common stock at $0.006 per share[162] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, business developments, and liquidity Overview HWH International Inc. is expanding beyond F&B into Hapi Marketplace and Hapi Wealth Builder, while refocusing F&B operations due to café closures - The company launched Hapi Marketplace in November 2024, a B2C platform with over forty-seven product categories, initially in the US with plans to expand to South Korea, Hong Kong, and other parts of Asia[165][166] - Hapi Cafés, designed as standalone businesses and community hubs, have seen closures in Singapore (Alset F&B (PLQ) Pte. Ltd., Ketomei Pte. Ltd.) and South Korea (Hapi Café Korea Inc.) in 2024-2025 due to unsustainable revenue[167] - Hapi Wealth Builder, an educational program for equity investment and wealth-building, is developing digital content and targeting a rollout in selected regions later in 2025, with a China headquarters planned[168][169][170] Our Revenue Model The company's revenue is almost entirely from F&B sales, which decreased for Q3 2025, with Singapore accounting for the majority Total Revenue and Net Loss | Metric | Three Months Ended Sep 30, 2025 ($) | Three Months Ended Sep 30, 2024 ($) | Nine Months Ended Sep 30, 2025 ($) | Nine Months Ended Sep 30, 2024 ($) | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Revenue | $206,778 | $345,523 | $812,366 | $966,515 | | Net Loss | $(299,618) | $(537,143) | $(710,613) | $(2,277,303) | - Food and beverage sales accounted for approximately 100% of revenue for both the three and nine months ended September 30, 2025 and 2024[172] Revenue by Geography (Nine Months Ended September 30, 2025) | Region | Percentage of Total Revenue (%) | | :------------------- | :-------------------------- | | South Korea | 9% | | Singapore | 91% | Matters that May or Are Currently Affecting Our Business Key challenges include improving revenue, financing acquisitions, attracting skilled personnel, and controlling operating expenses during expansion - Challenges include improving revenue through cross-selling and revenue-sharing, identifying and financing complementary acquisitions, attracting skilled technical and sales personnel, and controlling operating expenses during business expansion[174] Summary of Significant Accounting Policies This section reiterates the company's adherence to U.S. GAAP, use of estimates, and policies for revenue recognition and cost of revenue - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make significant estimates and assumptions[175][176] - Revenue from F&B business is recognized when products are delivered to customers, net of taxes, allowances, refunds, or returns[177][179] - Cost of revenue includes the cost of procuring finished goods from suppliers and related shipping and handling fees[180] Results of Operations The company experienced decreased revenue and cost of revenue due to café closures, reduced operating expenses, and a significantly lower net loss from a gain on disposal of subsidiaries Summary of Statements of Operations (Three and Nine Months Ended September 30) | Metric | 3 Months Ended Sep 30, 2025 ($) | 3 Months Ended Sep 30, 2024 ($) | 9 Months Ended Sep 30, 2025 ($) | 9 Months Ended Sep 30, 2024 ($) | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $206,778 | $345,523 | $812,366 | $966,515 | | Cost of revenue | $83,196 | $185,654 | $392,300 | $478,436 | | Operating expenses | $369,978 | $487,394 | $1,600,381 | $2,637,517 | | Other non-operating expenses / (income) | $48,698 | $209,618 | $(517,174) | $127,865 | | Provision for income taxes | $4,524 | - | $47,472 | - | | Net loss | $299,618 | $537,143 | $710,613 | $2,277,303 | - Revenue decreased in 2025 due to the cessation of café operations in Singapore and Korea in August and September 2025[182] - Operating expenses decreased primarily due to lower professional fees related to filings and the closure of cafés[185] - Other non-operating expenses decreased for the three-month period due to a reduction in unrealized loss on convertible note receivable. For the nine-month period, it shifted to income due to a $383,677 gain on disposal of subsidiaries[186] Liquidity and Capital Resources Cash decreased, liabilities decreased, and total assets increased. Management believes available cash and related party financing are sufficient for the next 12 months Liquidity and Capital Resources Overview | Metric | September 30, 2025 ($) | December 31, 2024 ($) | | :------------------- | :------------------- | :------------------- | | Cash | $2,897,972 | $4,341,746 | | Liabilities | $2,276,968 | $3,531,523 | | Total Assets | $5,184,394 | $6,408,722 | - The company believes its available cash, anticipated cash from operations, and financing from related parties are sufficient to alleviate substantial doubt about its ability to continue as a going concern for at least the next 12 months[189][192] - A $1,000,000 credit facility from Alset Inc. has $700,000 available for draw as of September 30, 2025. Alset International Limited's commitment to provide additional funding was released as of September 30, 2025[190][193] Summary of Cash Flows Net cash used in operating activities decreased, investing activities shifted to a significant outflow, and financing activities provided cash from stock issuance Summary of Cash Flows (Nine Months Ended September 30) | Cash Flow Activity | 2025 ($) | 2024 ($) | | :----------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(728,326) | $(1,404,073) | | Net cash (used in) / provided by investing activities | $(1,015,281) | $20,451,688 | | Net cash provided by / (used in) financing activities | $1,203,307 | $(19,405,313) | - The decrease in cash used in operating activities in 2025 was primarily due to a $383,677 gain on disposal of HWH World Inc.[195] - Investing activities in 2025 included significant payments for convertible loans receivable ($430,000), loans receivable ($280,000), investment in associate ($54,621), and marketable securities ($207,933)[196] - Financing activities in 2025 were positively impacted by $1,409,983 from the issuance of common stock and warrants, while 2024 saw large cash outflows from redemptions of Class A Common Stock[197] Nasdaq Compliance The company addressed Nasdaq listing deficiencies, including minimum bid price, through a 1-for-5 reverse stock split, regaining compliance and maintaining its Nasdaq Capital Market listing - The company received 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[198][200][202] - A 1-for-5 reverse stock split was effectuated on February 24, 2025, to address the bid price deficiency[203] - On March 10, 2025, the company regained compliance with Nasdaq's minimum bid price rule and is currently listed on the Nasdaq Capital Market[204] Contractual Obligations As of September 30, 2025, the company had no long-term debt, capital lease, operating lease, purchase obligations, or other long-term liabilities - As of September 30, 2025, the company had no long-term debt, capital lease, operating lease, purchase obligations, or other long-term liabilities[205] Administrative Services Agreement Monthly fees to Alset Management Group Inc. for administrative services ceased upon completion of the Business Combination - Monthly fees of $10,000 to Alset Management Group Inc. for administrative services ceased upon completion of the Business Combination[207] Underwriting Agreement The company settled its deferred underwriting fee of $3,018,750 with EF Hutton, LLC through cash, common stock, and a promissory note, granting a right of first refusal - A deferred underwriting fee of $3,018,750 to EF Hutton, LLC was settled with $325,000 cash, 149,443 shares of common stock, and a $1,184,375 promissory note[209] - EF Hutton, LLC was granted an irrevocable right of first refusal for all future public and private equity and debt offerings for 24 months after the Business Combination closing[209] Merger Agreement The Business Combination, involving the merger of HWH Merger Sub Inc. into HWH International Inc. (Nevada), closed on January 9, 2024, with certain closing conditions waived - The Business Combination, involving the merger of HWH Merger Sub Inc. into HWH International Inc. (Nevada), closed on January 9, 2024, with certain closing conditions waived[210] Registration Rights Agreement The company is obligated to register certain securities held by the Sponsor and other holders, aiming for effectiveness within 60 business days post-closing - The company is obligated to register certain securities, including common stock and warrants held by the Sponsor and other holders, and to use best efforts to make the registration statement effective within 60 business days after the Business Combination closing[211] Lock-Up Agreements Certain HWH Holders and management are subject to Lock-Up Agreements, restricting common stock transfer for nine months post-closing, with early release conditions - Holders of more than 5% of HWH Common Stock and certain management are subject to Lock-Up Agreements, restricting transfer of their shares for nine months post-closing, with conditions for early release[212] Impact of Inflation Inflation has not materially impacted the company's results of operations for the nine months ended September 30, 2025, or the year ended December 31, 2024 - Inflation has not had a material impact on the company's results of operations for the nine months ended September 30, 2025, or the year ended December 31, 2024[213] Impact of Foreign Exchange Rates Fluctuations in foreign exchange rates on intercompany loans (approximately $0.23 million) are expected to continue impacting results due to volatility - Foreign exchange rate changes on intercompany loans (Singapore to South Korea, approximately $0.23 million as of September 30, 2025) are a primary reason for fluctuations in foreign currency transaction gains or losses[214] - These fluctuations are expected to continue impacting results due to exchange rate volatility, as intercompany loans are not expected to be repaid in the short term[214] Emerging Growth Company Status As an 'emerging growth company,' the company utilizes exemptions from certain reporting requirements, including delaying new accounting standard adoption - The company is an 'emerging growth company' and has elected to take advantage of the extended transition period for complying with new or revised accounting standards, delaying adoption until private companies are required to comply[215] Controls and Procedures Management identified material weaknesses in internal control due to limited accounting personnel and inadequate policies, but the company is exempt from independent auditor attestation - Management identified material weaknesses in internal control over financial reporting as of September 30, 2025, due to limited accounting personnel (lack of proper segregation of duties) and inadequately established accounting policies and procedures[220][228] - The company is not required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act due to its emerging growth company status[217] Resignation of Chief Executive Officer John 'JT' Thatch resigned as Chief Executive Officer on October 3, 2025 - John 'JT' Thatch resigned from the position of Chief Executive Officer on October 3, 2025[221] Appointment of New Chief Executive Officer Chan Heng Fai, Chairman of the Board, was appointed as the new Chief Executive Officer on October 3, 2025 - Chan Heng Fai, Chairman of the Board, was appointed as the Chief Executive Officer on October 3, 2025[222] Appointment of New Member of the Board of Directors Lim Sheng Hon Danny (Danny Lim), the company's Chief Operating Officer, was appointed to the Board of Directors on October 3, 2025 - Lim Sheng Hon Danny (Danny Lim), the Chief Operating Officer, was appointed as a member of the Board of Directors on October 3, 2025[223] 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 about market risk - As a smaller reporting company, HWH International Inc. is not required to provide quantitative and qualitative disclosures regarding market risk[224] Item 4. Controls and Procedures Management concluded disclosure controls were effective, but identified material weaknesses in internal control due to limited personnel and inadequate policies - Management concluded that disclosure controls and procedures were effective as of September 30, 2025[226] - Material weaknesses in internal control over financial reporting include limited accounting personnel leading to inadequate segregation of duties, and a lack of well-defined accounting policies and procedures[228] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the company's internal control during the fiscal interim ended September 30, 2025[229] Part II. Other Information This section provides additional information, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings There are no legal proceedings to report - None[231] 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 risk factor information[232] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to the company for this reporting period - Not applicable[233] Item 3. Defaults Upon Senior Securities There are no defaults upon senior securities to report - None[234] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable[235] Item 5. Other Information There is no other information to report under this item - None[236] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q Key Exhibits Filed | Exhibit | Description | | :------ | :---------- | | 10.1 | Sale and Purchase Agreement with Alset International Limited dated September 10, 2025 | | 31.1 | Certification of Principal Executive Officer | | 31.2 | Certification of Principal Financial Officer | | 32.1 | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 | | 32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 | | 101.INS | Inline XBRL Instance Document | | 104 | Cover Page Interactive Data File | SIGNATURES This section includes the signatures of the Principal Executive Officer and Principal Accounting and Financial Officer - The report was signed by Chan Heng Fai, Chief Executive Officer (Principal Executive Officer), and Rongguo Wei, Chief Financial Officer (Principal Accounting and Financial Officer), on October 21, 2025[241]