Executive Summary / Key Takeaways

• HWH International Inc. ($HWH) is undergoing a significant strategic transformation, shifting from a struggling Food and Beverage (F&B) business to developing a diversified "health, wealth, and happiness" digital ecosystem through its Hapi Marketplace and Hapi Wealth Builder initiatives.
• Despite a decline in F&B revenue for the nine months ended September 30, 2025, the company reported a reduced net loss and improved gross margins, driven by operational restructuring and the divestiture of underperforming café units.
• The company faces substantial doubt about its ability to continue as a going concern, though management asserts sufficient liquidity for the next 12 months, primarily through available cash and continued financing support from related parties.
• HWH's competitive positioning relies on its integrated platform approach and niche differentiation, aiming to foster customer loyalty, but it contends with the vast scale and established operational efficiencies of larger, specialized rivals in e-commerce, travel, and financial services.
• Key risks include execution challenges for its new digital ventures, potential default on a promissory note, and identified material weaknesses in internal controls, all of which could impact its long-term viability and growth trajectory.

The Genesis of a New Vision: From Cafés to a Digital Ecosystem

HWH International Inc. ($HWH) is embarking on a transformative journey, evolving from its foundational Food and Beverage (F&B) operations into an ambitious digital ecosystem centered around "health, wealth, and happiness." Originally incorporated in October 2021 as Alset Capital Acquisition Corp., the company formalized its current identity through a merger on January 9, 2024, adopting the name HWH International Inc. This strategic pivot is a direct response to the challenges faced by its initial F&B ventures and represents a high-stakes play to capture value in the burgeoning digital economy.

The company's overarching strategy is to build an integrated platform that connects consumers with diverse product categories and educational programs. This vision is embodied in its two primary growth initiatives: Hapi Marketplace and Hapi Wealth Builder. Hapi Marketplace, a business-to-consumer (B2C) platform, offers a wide array of products, including wellness, elderly care, and auto accessories, with an announced expansion into robotics for consumer and commercial markets. Concurrently, Hapi Wealth Builder is being developed as an educational program designed to provide in-person courses, workshops, and coaching sessions focused on equity investment and wealth-building strategies. These initiatives are currently in phased rollouts, with digital content development, partner collaborations, and regional infrastructure setup underway.

Technological Differentiators and Strategic Integration

HWH's core technological differentiation lies not in a single, groundbreaking invention, but in its strategic commitment to developing an integrated digital platform ecosystem. This approach aims to create a cohesive user experience across its diverse offerings, fostering a sticky environment where customers can seamlessly transition between health-focused products, financial education, and lifestyle services. The company's emphasis on "digital content development" for both Hapi Marketplace and Hapi Wealth Builder is foundational to this strategy, enabling scalable delivery of information and products.

The expansion of Hapi Marketplace into "robotics for consumer and commercial markets" signals a future technological differentiator. While specific quantifiable benefits or performance metrics for this robotics initiative are not yet disclosed, the strategic intent is clear: to leverage advanced automation and intelligent systems to enhance product offerings and potentially streamline operations within its marketplace. For investors, the "so what" of this technological roadmap is the potential for HWH to build a robust, cross-selling environment that drives customer lifetime value and creates a competitive moat through integrated services. This integration could lead to higher customer retention and improved capital efficiency by optimizing cross-platform recommendations, thereby enhancing future revenue stability and margins.

Navigating a Competitive Arena

HWH operates within highly competitive sectors, facing formidable rivals across its various business segments. In e-commerce, its Hapi Marketplace competes with giants like Amazon.com Inc. (AMZN), which boasts unparalleled scale, logistics, and data-driven personalization. While HWH aims for niche differentiation with its curated "health, wealth, and happiness" focus, Amazon's established infrastructure provides notably faster delivery and a wider product selection, making it a dominant force for everyday consumers. HWH's strategy emphasizes a more tailored, user-friendly experience, but it lags in overall market share capture and research and development investment compared to Amazon's vast resources.

Similarly, in the lifestyle and café space, HWH's remaining Hapi Cafés contend with global brands such as Starbucks Corporation (SBUX). Starbucks excels in brand recognition, operational efficiency, and global reach, offering consistent profitability and strong cash flow. HWH's cafés, while aiming to build community and educate customers about its broader offerings, operate on a significantly smaller scale. In financial education, Hapi Wealth Builder enters a market with established players like SoFi Technologies Inc. (SOFI), which offers advanced digital financial tools and has demonstrated rapid growth in its user base and revenue. HWH's integrated approach to wealth-building, combining it with health and happiness elements, provides a unique value proposition, but it likely lags in technological capabilities and user experience compared to SoFi's sophisticated applications.

The company's competitive strength is moderate, with its niche differentiation providing some resilience. However, HWH's smaller scale and potential operational inefficiencies could lead to higher costs and reduced margins, making it challenging to compete on price or speed against its larger rivals. The ability to effectively execute its integrated platform strategy and leverage its unique value proposition will be critical to gaining market share and improving its financial standing against these established competitors.

Financial Performance and Operational Realities

HWH's recent financial performance reflects a company in transition, marked by strategic divestitures and ongoing operational challenges. For the nine months ended September 30, 2025, total revenue decreased to $812,366, down from $966,515 in the same period of 2024. This decline was primarily attributed to the cessation of operations for several cafés in Singapore and South Korea, including Ketomei Pte. Ltd. and Hapi Café Korea Inc., due to "unsustainable revenue." Despite the revenue contraction, the company reported a reduced net loss of $710,613 for the nine months ended September 30, 2025, a significant improvement from the $2.28 million net loss in the prior year.

Interestingly, gross margins saw an improvement, rising to 51.7% for the nine months ended September 30, 2025, from 50.5% in the comparable period of 2024. Operating expenses also decreased substantially, from $2.64 million to $1.60 million, primarily due to lower professional fees and the closure of underperforming cafés.

The company's cash position decreased from $4.34 million at December 31, 2024, to $2.90 million as of September 30, 2025.

Net cash used in operating activities improved, falling to $728,326 for the nine months ended September 30, 2025, from $1.40 million in the prior year, indicating a slower cash burn rate.

HWH also engaged in strategic asset management, including the sale of HWH World Inc. for a $383,667 gain and the divestiture of 70% of Alset FB One Pte. Ltd. The acquisition of L.E.H. Insurance Group, LLC for a total of $115,000, an early-stage entity with no employees and yet to turn a profit, resulted in an immediate write-off of $122,482 in goodwill, highlighting the speculative nature of some of its expansion efforts.

Outlook and Growth Initiatives

HWH's future hinges on the successful execution and expansion of its Hapi Marketplace and Hapi Wealth Builder initiatives. The Hapi Marketplace, initially launched in the United States, is slated for expansion into South Korea, Hong Kong, and across Asia, with a strategic move into robotics for consumer and commercial markets. The Hapi Wealth Builder program is targeting a rollout in selected regions later in 2025, supported by the establishment of a China headquarters to facilitate in-person tutorials and workshops. The company also plans to expand its Hapi Cafés footprint by taking over leases of existing locations and adding more over the next two years, although there is no guarantee these plans will be achieved.

Management anticipates that foreign exchange rate fluctuations will continue to impact results in 2025 due to intercompany loan balances between Singapore and South Korea. While specific quantitative guidance for future revenue or profitability is not provided, the company's outlook is firmly rooted in the belief that these new digital ventures will drive future growth and profitability, leveraging cross-selling opportunities within its integrated ecosystem.

Key Risks and Challenges

Investing in HWH International Inc. carries significant risks, reflecting its early-stage nature and ongoing strategic transformation. The company's incurred net loss, loss from operations, and negative cash flow from operating cafés in the nine months ended September 30, 2025, "raise substantial doubt about our ability to continue as a going concern." While management believes available cash, anticipated operations, and related-party financing will provide sufficient liquidity for the next 12 months, the reliance on related-party support introduces a dependency risk.

Operational execution of the Hapi Marketplace and Hapi Wealth Builder initiatives is paramount, and there is "no guarantee" that expansion plans for Hapi Cafés will be achieved. Furthermore, the company is "currently in negotiations with EF Hutton to resolve the default status" on a promissory note, indicating potential financial strain and reputational risk.

Material weaknesses in internal control over financial reporting, including "limited accounting personnel" and a lack of "well-defined accounting policies and procedures," pose a risk to financial accuracy and operational efficiency. The company also holds uninsured cash balances of $2.42 million as of September 30, 2025, and faces supplier concentration risk, with five suppliers accounting for a significant portion of its cost of revenue. These factors collectively present a challenging environment for HWH as it seeks to establish its new business model.

Conclusion

HWH International Inc. stands at a critical juncture, attempting to pivot from a struggling F&B operator to a diversified digital platform focused on health, wealth, and happiness. The company's strategic shift, marked by the development of Hapi Marketplace and Hapi Wealth Builder, represents a bold attempt to create an integrated ecosystem designed for customer loyalty and cross-selling opportunities. While recent financial results show a reduced net loss and improved gross margins, these gains are largely a consequence of operational streamlining and divestitures rather than robust top-line growth from its new ventures.

The investment thesis for HWH is inherently high-risk, hinging on the successful execution of its digital strategy and the ability to differentiate itself in highly competitive markets dominated by much larger players. The company's reliance on related-party financing underscores its precarious liquidity position, and identified internal control weaknesses add layers of operational uncertainty. For discerning investors, HWH represents a speculative opportunity, where the potential for long-term growth from its integrated digital platforms must be weighed against significant operational hurdles, intense competition, and fundamental going concern doubts. The coming quarters will be crucial in demonstrating tangible progress in its new initiatives and solidifying its financial foundation.