ESYN 10-K & 10-Q changes, risk factors and insider trading

On September 9, 2022, the Company entered into an agreement and plan of merger (the “Merger Agreement”) by and among the Company, HWH International Inc., a Nevada corporation (the “HWH Nevada” or “Target”) and HWH Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of the Company (“Merger Sub”). The Company and Merger Sub are sometimes referred to collectively as the “ACAX Parties.” Pursuant to the Merger Agreement, athe Business Combination between the Company and the Target was effected through the merger of Merger Sub with and into HWH Nevada, with the Target surviving the merger as a wholly owned subsidiary of the Company (the “Merger”). Upon the closing of the Merger (the “Closing”) on January 9, 2024, the Company changed its name to “HWH International Inc.” The board of directors of the Company (i) approved and declared advisable the Merger Agreement, the Ancillary Agreements (as defined in the Merger Agreement) and the transactions contemplated thereby thereby and (ii) resolved to recommend approval of the Merger Agreement and related transactions by the stockholders of the Company.

The various aspects of the Hapi Marketplace will be launched in phases in different regions, each with their own timeline, depending on the the completion of logistical aspects for implementation (i.e., payment gateway systems, business licenses, banking set up, import licenses, licenses, managerial resources, etc.) We are expanding the product range into robotics for consumer and commercial markets. As of December 31, 2025, this project was not launched yet.

Hapi Cafés, which are, and will be, in-person, location-based social experiences, offer memberscustomers the opportunity to build a a sense of community with like-minded customers who share a potential interest in our products. The cafes are designed to operate sustainably as standalone businesses. The cafes also seek to be an avenue to create awareness to and educate potential and existing memberscustomers about the products and services of HWH, providing us with the chance to significantly increase our membershipcustomer base as well as increase the amounts amounts spent by our memberscustomers on our affiliates’ products and services. Each of our cafés is a “Hapi Café.” We opened proof-of-concept Hapi Café locations in Seoul, the Republic of Korea and Singapore in May and July 2022, respectively, and one more opened in Seoul, the Republic of Korea in May 2024. We plan to open additional Hapi Cafés as we beta test and further improve our business concept. We intend to grow our membershipscustomer base as we grow the number of Hapi Cafés around the world. Hapi Cafes are positioned to be integral parts of HWH’s business model. In June 2024, the Company’s decision to close the café under Alset F&B (PLQ) Pte. Ltd. (“F&BPLQ”) was driven by the unsustainable revenue it generated. In August 2025 and September 2025, the Company’s decision to close the café under Ketomei Pte. Ltd. (“KPL”) and Hapi Café Korea Inc. (“HCKI”), respectively, both were driven by the unsustainable revenue they generated. We believe it is more strategic to refocus our efforts and resources on other F&B business ventures that have greater growth potential. On September 10, 2025, Alset F&B Holdings Pte. Ltd., (the “Seller”), a Singapore subsidiary of the Company, entered into a sale and purchase agreement (the “Sale and Purchase Agreement”) with Alset International Limited (the “Buyer”), pursuant to which the Seller agreed to sell 70% of the outstanding shares of its subsidiary, Alset F&B One Pte. Ltd. (“Alset F&B One”) to the Buyer in exchange for S$218,941 Singapore Dollars (equal to approximately $170,754 U.S. Dollars). Alset F&B One was incorporated in Singapore on April 10, 2017, and operates a cafe in Singapore. It generated approximately $470,000 in revenue in 2024. Following this sale, the Seller continues to own 20% of Alset F&B One as of December 31, 2025.

We currently recognize revenue from food and beverage sales, salewhich of products, and memberships to customers. Sales of food and beverage accounted for approximately 100% and 98% of revenue in the years ended December 31, 2024,2025 and 2023, respectively. Sales of memberships accounted for approximately 0% of revenue in the year ended December 31, 2024, and 2% of revenue in the year ended December 31, 2023.2024.

From a geographical perspective, we recognized 8% and 92% of our total revenue in the year ended on December 31, 2025, in South Korea and Singapore, respectively, and 6% and 94% of our total revenue in the year ended on December 31, 2024, in South Korea and Singapore, respectively, and 8% and 92% in the year ended December 31, 2023, in South Korea and Singapore, respectively.

Summary of SignificantCritical Accounting Policies

Revenue Recognition and Cost of SalesRevenue

Product Sales: The Company’s performance obligation is to transfer ownership of its products to its members.customers. The Company generally recognizes revenue when a product is delivered to itsthe member.customer. Revenue is recorded net of applicable taxes, allowances, refund or returns. The Company receives the net sales price in cash or through credit card payments at the point of sale.

If any membercustomer returns a product to the Company on a timely basis, they may obtain a replacement product from the Company for such returned product. Allowances for product and membership returns are provided at the time the sale is recorded. This accrual is based upon historical return rates for each country and the relevant return pattern, which reflects anticipated returns to be received over a period of up to 12 months following the original sale. Product and membership returns for the years ended December 31, 2024,2025, and 20232024 were approximately $0 and $1,184, respectively.$0.

Revenue was $1,253,577$866,926 and $830,519$1,253,577 for the years ended December 31, 20242025 and 2023,2024, respectively. Word of mouth, a social media presence, and the availability of meeting spaces are significant drivers of our revenue and revenue potential. Our revenue increaseddecreased in 2024 2025 due to increased customer base from the acquisition cessation of Ketomeioperations Pte.of Limitedcafes located in Singapore and new café under Hapi Café Korea Inc. in SouthAugust Korea.and September 2025, respectively.

Cost of revenue increaseddecreased from $334,825 in the year ended December 31, 2023 to $651,721 in the year ended December 31, 2024.2024 to $407,199 in the year ended December 31, 2025. The increasedecrease is a result of the increasecessation of operations of cafes located in salesSingapore ofand F&BKorea business.in August and September 2025, respectively.

Operating expenses decreasedincreased from $3,402,793 to $3,027,024$3,186,287 in the yearsyear ended December 31, 2023 and 2024, respectively, due2024 to general and administrative expenses decreased from $2,908,895 to $2,646,627$3,648,405 in the yearsyear ended December 31, 20232025, due to the increase in general and 2024,administrative respectively.expenses from $2,805,890 in the year ended December 31, 2024 to $3,531,757 in the year ended December 31, 2025. The decreaseincrease ofin general and administrative expenses in 20242025 compared withto 20232024 was mostlyprimarily causeddue byto the decreasecost of a bonus of one million shares of our common stock issued in professional fees paid in relation to pursuing Business Combination by the Company.2025.

Other incomenon-operating (income) expense)

InOther non-operating expenses was $181,336 in the year ended December 31, 2024,2024 theand Company had other expenses of $181,336, compared to the othernon-operating income ofwas $2,245,820$578,221 in the year ended December 31, 2023.2025. ThisThe decreaseincrease in non-operating income is mainly due to thea decrease in interest income from $2,029,414 to $64,407, and unrealized loss on convertible note notereceivable receivableand warrants – related party from unrealized profit of $0$379,887 to unrealized loss of $379,887$146,550 in the years ended December 31, 2023 2024 and 2024,2025, respectively.and $383,667 gain on disposal of subsidiaries in the years ended December 31, 2025.

Our cash has increaseddecreased from $1,159,201 as of December 31, 2023 to $4,341,746 as of December 31, 2024.2024 to $2,085,918 as of December 31, 2025. Our liabilities decreased from $3,531,523 $6,207,178at December 31, 2024 to $1,883,133 at December 31, 2023 to $3,531,523 at December 31, 2024.2025. Our total assets have decreased from $23,710,684$6,408,722 as of December 31, 20232024 to $6,408,722 $4,567,858 as of December 31, 2024. 2025.

The Company believes that the available cash in the Company’s bank accounts, anticipated cash from operations, and financing availability from related parties are sufficient to fund our operations for at least the next 12 months. The Company’s capital requirements for the planned expansion are based on, among other items, geographical specific property costs, team requirements, and marketing steps needed. Our expansion consists of plans to take over leases of existing Hapi Cafes we currently do not own, as we look to add more Hapi Cafes over the next two (2) years. There is no guarantee that we will be able to execute on our plans as laid out above.

On April 24, 2024, the Company entered into a Credit Facility Agreement (the “Agreement”) with Alset Inc., a Texas corporation and the Company’s indirect, majority stockholder, pursuant to which Alset Inc. has provided the Company a line of credit facility (the “Credit Facility”) which provides a maximum, aggregate credit line of up to $1,000,000. As of December 31, 2024,2025, there are no outstanding amounts related to the Credit Facility, as the debt with Alset Inc. was converted to equity on September 24, 2024. This conversion is reflected under Advances from Related Parties in the cash flow statement. The remaining credit of $700,000 is available for draw as on December 31, 2024.2025.

The Company has obtained letters of financial support from Alset International Limited and Alset Inc., an indirect and direct owner of the Company, respectively. Alset International Limited andCompany. Alset Inc. committed to provide any additional funding required by the Company and would not demand repayment through twelve months from the issuance of these consolidated financial statements.

Net cash used in operating activities was $1,659,999$1,750,290 in the year ended of December 31, 2024,2025, as compared to net cash used in operating activities of $2,600,370$1,819,262 in the same period of 2023.2024. The increase of impairment loss on goodwill and unrealized loss on convertible note receivable – related party, which reflects the change in the value of the convertible note and was deducted from the net income, led to the decrease of cash used in operating activities in the year ended December 31, 2024.2025 was due to gain on disposal of subsidiary of $383,667 generated during disposal of HWH World Inc, and $292,890 in foreign exchange transaction gain.

Net cash providedused byin investing activities was $20,452,029$1,188,686 in the year of December 31, 2024,2025, as compared to net cash provided by investing activities of $68,431,427$20,452,029 in the same period of 2023.2024. In the year ended December 31, 2025 we paid $780,000 for convertible note receivable – related party, $280,000 paid for the loans to related party, and $85,872 for purchase of marketable securities. In the year ended December 31, 2024 we paid $30,394 for purchases of property and equipment, $850,000 for convertible note receivable – related party, $14,345 for investment in joint venture, $21,102,871 cash was withdrawn from Trust Account for redemptions and $243,897 cash withdrawn from Trust Account was available to the Company. In the year ended December 31, 2023 we paid $14,574 for purchases of property and equipment, $68,351,348 cash withdrawn was from Trust Account for redemptions, $299,958 cash withdrawn from Trust Account was available to the Company and $205,305 cash was deposited into Trust Account.

Net cash usedprovided inby financing activities was $15,756,940$934,714 in the year ended December 31, 2024,2025, compared to net cash used in financing activities of $67,463,957$15,597,681 in the same period of 2023.2024. In the year ended December 31, 2025 we received $1,409,983 from issuance of common stock and warrants and repaid $477,643 of note payable. In the year ended December 31, 2024 we received $2,170,993$2,330,252 from a related party, and repaid $21,102,872 of class A common stock. In the year ended December 31, 2023 we received $526,323 from a related party, received $205,305 from proceeds from extension loan and paid $68,351,348 for repayment of class A common stock.

On February 22, 2024, the Nasdaq Staff (the “Staff”) notified the Company that for the previous 30 consecutive trading days, the MVPHSmarket value of its publicly held shares had been below the minimum $15,000,000 required for continued listing as set forth in Listing Rule 5450(b)(2)(C) (the “Rule”). Therefore, in accordance with Marketplace Rule 5810(c)(3)(D), the Company was provided 180 calendar days, or until August 20, 2024, to regain compliance with the Rule. In that regard, on August 27, 2024, the Company received a notice from the Staff that the Company will be delisted from the Nasdaq Global Market, unless the Company requested an appeal of this determination by September 3, 2024.

The Company presented its compliance plan to the Panel at a hearing on October 15, 2024. On October 21, 2024, the Company received a notice from the Panel granting the Company an extension to phase down its securities to the Nasdaq Capital Market and demonstrate compliance with the market value of its publicly held shares (the “MVPHS”) and Stockholders’ Equity requirements as set forth in Nasdaq Listing Rules 5550(a)(5) and 5550(b)(1).

In addition, the underwriters, EFD. Hutton,Boral Capital, LLC (“EFD. HuttonBoral Capital”) (nowformerly known as D.EF Boral CapitalHutton, LLC), were entitled to a deferred fee of $0.35 per Unit, or $3,018,750 in the aggregate, however, on December 18, 2023, the Company entered into a Satisfaction and Discharge of Indebtedness Agreement in connection with the Underwriting Agreement, under which in lieu of the Company tendering the full amount, the underwriters accepted a combination of $325,000 in cash paid upon the closing of the Business Combination, 149,443 shares of the Company’s common stock and a $1,184,375 promissory note as full satisfaction. This agreement was effective at the closing of Business Combination on January 9, 2024. Additionally, the Company has granted EFD. HuttonBoral Capital an irrevocable right of first refusal (the “ROFR”) to act as the sole investment banker, sole book-runner, and/or sole placement agent, at EFD. Hutton’sBoral Capital’s sole discretion, for each and every future public and private equity and debt offering, including all equity linked financing for a period commencing on the date of the satisfaction and ending twenty-four (24) months after the closing of the Business Combination.

As previously disclosed, on August 1, 2023, the Company held the Special Meeting, at which the Company’s stockholders considered and adopted, among other matters, a proposal to approve the Business Combination. On the Closing Date, the parties consummated the Business Combination pursuant to the terms of that certain Agreement and Plan of Merger, dated September 9, 2022 (the “Merger Agreement”), by and among the Company, Merger Sub, and HWH Nevada.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of these exemptions until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of this exemption.

In order to ensure that our internal control over financial reporting is effective, management regularly assesses controls and did so most recently for its financial reporting as of December 31, 2024.2025. This assessment was based on criteria for effective internal control over financial reporting described in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. In connection with management’s evaluation of the effectiveness of our Company’s internal control over financial reporting as of December 31, 2024,2025, management determined that our Company did not maintain effective controls over financial reporting due to having a limited staff with U.S. GAAP and SEC reporting experience. Management determined that the ineffectivefollowing controls over financial reportingissues constitute aas material weakness. To remediate such weaknesses, we plan to appoint additional qualified personnel with financial accounting, U.S. GAAP and SEC experience.weakness:

The various aspects of the Hapi Marketplace will be launched in phases in different regions, each with their own timeline, depending on the completion of logistical aspects for implementation (i.e., payment gateway systems, business licenses, banking set up, import licenses, managerial resources, etc.) We are expanding the product range into robotics for consumer and commercial markets. As of MarchJune 31,30, 2026, this project washas not been launched yet.

Our total revenue for the three months ended MarchJune 31,30, 2026 and 2025 was $64,200 and $295,197,$310,391, respectively. Our total revenue for the six months ended June 30, 2026 and 2025 was $128,400 and $605,588, respectively. Our net income for the three months ended June 30, 2026 and 2025 was $210,657 and $75,977, respectively. Our net loss for the threesix months months ended MarchJune 31,30, 2026 and 2025 was $626,773$416,116 and $574,103,$410,995, respectively.

We currently recognize revenue from food and beverage sales, which accounted for approximately 100% of revenue in the threesix months ended June March 31,30, 2026 and 2025, respectively.

From a geographical perspective, we recognized 100% of our total revenue in the three and six months ended on MarchJune 31,30, 2026, in Singapore,Singapore. and 10% and 11% and 89%90% in the three and six months ended MarchJune 31,30, 2025, in South Korea and Singapore, respectively.

If any customer returns a product to the Company on a timely basis, they may obtain a replacement product from the Company for such returned product. Allowances for product returns are provided at the time the sale is recorded. This accrual is based upon historical return rates for each country and the relevant return pattern, which reflects anticipated returns to be received over a period of up to 12 months following the original sale. There were no product returns for the three and six months ended MarchJune 31,30, 2026, and 2025.

Food and Beverage: The revenue received from food and beverage business in the three months ended MarchJune 31,30, 2026 and 2025 was $64,200 and $310,391, respectively. The revenue received from food and beverage business in the six months ended June 30, 2026 and 2025 was $128,400 and $295,197,$605,588, respectively.

Summary of Statements of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Revenue was $64,200 and $295,197$310,391 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Revenue was $128,400 and $605,588 for the six months ended June 30, 2026 and 2025, respectively. Word of mouth, a social media presence, and the availability of meeting spaces are significant drivers of our revenue and revenue potential. Our revenue decreased in 2026 due to the cessation of operations of cafes located in Singapore and Korea in August and September 2025, respectively.

Cost of revenues decreased from $147,603$266,314 in the three months ended MarchJune 31,30, 2025 to $16,912$43,836 in the three months ended MarchJune 31,30, 2026. Cost of revenues decreased from $529,078 in the six months ended June 30, 2025 to $102,250 in the six months ended June 30, 2026. The decrease decrease is a result of the cessation of operations of cafes located in Singapore and Korea in August and September 2025, respectively.

Gross profit decreased from $147,594$44,077 for the three months ended MarchJune 31,30, 2025 to $47,288gross loss $20,364 for the three months ended MarchJune 31,30, 2026. Gross profit decreased from $76,510 for the six months ended June 30, 2025 to $26,150 for the six months ended June 30, 2026. The decrease decrease in gross margin was caused by the cessation of operations of cafes located in Singapore and Korea in August and September 2025, respectively.

Operating expenses decreased from $741,722$383,868 for the three months ended MarchJune 31,30, 2025 to $672,202$249,063 for the three months ended MarchJune 31,30, 2026. General General and administrative expenses increaseddecreased from $664,242$383,868 for the three months ended MarchJune 31,30, 2025 to $672,202$249,063 for the three months ended June 30, 2026. Operating expenses decreased from $1,010,429 for the six months ended June 30, 2025 to $879,763 for the six months ended June 30, 2026. General and administrative expenses decreased from $932,949 for the six months ended June 30, 2025 to $879,763 for the six months ended MarchJune 31,30, 2026. The increasedecrease in general and administrative expenses in 2026 compared with 2025 was mostly caused by the cessation lossof fromoperations relatedof partycafes balance written offlocated in Q1Singapore 2026.and Korea in August and September 2025, respectively. The Company recorded a goodwill impairment charge of $77,480 during the three six months ended MarchJune 31,30, 2025, which increased operating expenses for that period.

Other non-operating (income) expense

The Company recorded other non-operating expenseincome of $1,859$439,356 for the three months ended MarchJune 31,30, 2026, compared to other non-operatingincome of $415,768 for the same period in 2025. The Company recorded other income of $62,973$437,497 for the six months ended June 30, 2026, compared to other income of $565,872 for the same period in 2025. The change in non-operatingother income was primarily due to fluctuations in unrealized$339,185 gain (loss) on convertible note receivable and warrants – related party, which changed from adebt gain of $17,442extinguishment for the threesix months ended June 30, 2026, $383,667 gain on disposal of subsidiaries for the six months ended March 31,June 202530, to a loss of $49,238 for the three months ended March 31, 2026.2025. This was partially offset by foreign exchange transaction gain (loss), which changed from a gain of $66,070$307,691 in the threesix months ended MarchJune 31,30, 2025 to a loss of $21,540$33,161 in the threesix months ended March 31,June 30, 2026.

Net income (loss)

Net lossincome increased from $574,103$75,977 for the three months ended MarchJune 31,30, 2025 to $626,773$210,657 for the three months ended MarchJune 31,30, 2026. Net loss increased from $410,995 for the six months ended June 30, 2025 to $416,116 for the six months ended June 30, 2026.

Our cash has decreased from $2,085,918 as of December 31, 2025 to $1,459,799$1,506,036 as of MarchJune 31,30, 2026. Our liabilities increaseddecreased from $1,883,133 at December 31, 2025 to $2,132,077$1,711,444 at MarchJune 31,30, 2026. Our total assets have decreased from $4,567,858 as of December 31, 2025 to $4,210,297$4,510,043 as of MarchJune 31,30, 2026.

In the threesix months ended MarchJune 31,30, 2026, we incurred a net loss, a loss from operations and negative cash flow from operating cafés during the period. These factors raise substantial doubt about our ability to continue as a going concern.

On April 24, 2024, the Company entered into a Credit Facility Agreement (the “Credit Agreement”) with Alset Inc., a Texas corporation corporation and the Company’s majority stockholder, pursuant to which Alset Inc. has provided the Company a line of credit facility (the “Credit Facility”) which provides a maximum, aggregate credit line of up to $1,000,000. As of MarchJune 31,30, 2026, 2026, there are no outstanding amounts related to the Credit Facility, as the debt with Alset Inc. was converted to equity on September 24, 2024. The remaining credit of $700,000 is available for draw asexpired on MarchApril 31,14, 2026.

Pursuant to the Credit Agreement, the Company may request an advance (each, an “Advance”) on the Credit Facility. Each advanceAdvance shall bear bear a simple interest rate of three percent (3%) per annum. Each Advance and all accrued but unpaid interest shall be due and payable at at the first (1st) anniversary of the effective date of the Credit Agreement. HWHThe Company may at any time during the term of the theCredit Agreement prepay a portion or all amounts of its indebtedness without penalty. Each Advanceadvance shall not be secured by a lien or other encumbrance on any HWHof the Company’s assets, but shall be solely a general unsecured debt obligation of the Company.

Summary of Cash Flows for the ThreeSix Months Ended MarchJune 31,30, 2026 and 2025

Net cash usedprovided inby operating activities was $192,539$285,469 in the threesix months ended of MarchJune 31,30, 2026, as compared to net cash used in operating activities of $555,333$528,424 in the same period of 2025. The decreaseincrease in cash usedprovided inby operating activities during the threesix months ended June March 31,30, 2026 was primarily due to changes in working capital, including movements in accountdue receivableto andrelated operatingparties, lease liabilities.net.

Net cash used in investing activities was $305,416$406,369 in the threesix months ended of MarchJune 31,30, 2026, as compared to net cash used in investing activities of $300,000$741,523 in the same period of 2025. In the threesix months ended MarchJune 31,30, 2026 we paid $285,000 for convertible note receivable – related party with the remaining amount of cash outflows related to purchases of property and equipment, investments at cost, and purchases and sales of marketable securities. In the threesix months ended MarchJune 31,30, 2025 we paid $300,000 $360,000 for convertible note receivable – related party and paid $280,000 for loans receivable – related party.

Net cash used in financing activities was $148,432$488,972 in the threesix months ended MarchJune 31,30, 2026, compared to net cash provided by financing activities activities of $656,229$578,857 in the same period of 2025. In the threesix months ended MarchJune 31,30, 2026 we received $500,000 issuance of common stock, received advance from related party for $349,607 and paid $140,687$834,590 to related parties. In the threesix months ended MarchJune 31,30, 2025, we received $1,409,983 from the issuance of common stock and warrants and repaid $236,875$240,792 under the D. Boral Capital (f.k.a. EF Hutton) promissory note and $506,454$1,631,936 to related parties.

As of MarchJune 31,30, 2026, we did not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.

We believe that inflation has not had a material impact on our results of operations for the threesix months ended MarchJune 31,30, 2026 or the year ended December 31, 2025. We cannot assure you that future inflation will not have an adverse impact on our operating results and financial condition.

The effects of foreign exchange rate changes on the intercompany loans (under ASC 830), which mostly consist of loans between the subsidiaries and fellow subsidiaries under common control from Singapore, South Korea and Hong Kong and which were approximately $1.2$0.4 million and $0.7 million on MarchJune 31,30, 2026 and December 31, 2025, respectively, are the reason for the fluctuation in foreign currency transaction gains or losses which are included in the Consolidated Statements of Operations and Other Comprehensive Loss. Because the intercompany loan balances between the subsidiaries and fellow subsidiaries under common control from Singapore, South Korea and Hong Kong will remain at approximately $1 million over the next year, we expect this fluctuation of foreign exchange rates to still impact the results of operations in 2026, especially given that the foreign exchange rate may and is expected to be volatile. If the amount of intercompany loan is lowered in the future, the effect will also be reduced. However, at this moment, we do not expect to repay the intercompany loans in the short term.