Hapi Metaverse Narrows Losses, Relies on Parent for Survival

TL;DR

**Hapi Metaverse is still burning cash and needs its parent to stay afloat; avoid this speculative play.**

AI Summary

Hapi Metaverse Inc. reported a net loss of $1,169,077 for the six months ended June 30, 2025, a significant improvement from the $2,843,452 net loss in the same period of 2024. Despite this, the company incurred negative working capital of $1,295,953 and used $683,977 in cash from operating activities for the six months ended June 30, 2025. Total revenues decreased to $127,830 for the six months ended June 30, 2025, down from $134,256 in the prior year, primarily due to a decline in Food & Beverage revenue from $131,876 to $127,689 and the cessation of travel business which generated $2,380 in 2024. A notable strategic change was the acquisition of the remaining 50% of Smart Reward Express Limited for $0 on February 4, 2025, making it a wholly-owned subsidiary. The company's ability to continue as a going concern relies on ongoing financial support from its corporate parent, Alset Inc., which has committed to providing additional funding and not demanding repayment for the next twelve months.

Why It Matters

Hapi Metaverse's continued reliance on its parent company, Alset Inc., for financial support highlights significant liquidity concerns, posing a high risk for investors. While the reduction in net loss from $2.84 million to $1.17 million is a positive sign, the negative working capital of $1.3 million and declining revenue in its core Food & Beverage segment indicate ongoing operational challenges. This financial instability could impact employees through potential restructuring and limit the company's ability to invest in its metaverse and e-commerce ventures, affecting customers. In a competitive metaverse and F&B market, Hapi's precarious financial position makes it vulnerable to larger, better-capitalized players.

Risk Assessment

Risk Level: high — The company reported negative working capital of $1,295,953 and used $683,977 in cash from operating activities for the six months ended June 30, 2025. Its ability to continue as a going concern is explicitly stated to raise "substantial doubt," only alleviated by a letter of financial support from Alset Inc., indicating severe financial instability.

Analyst Insight

Investors should exercise extreme caution and likely avoid Hapi Metaverse Inc. given its significant liquidity issues and reliance on related-party funding. Monitor Alset Inc.'s financial health closely, as Hapi's survival is directly tied to its parent's continued support.

Financial Highlights

debt To Equity

N/A

revenue

$127,830

operating Margin

N/A

total Assets

$3,213,685

total Debt

$3,330,120

net Income

-$1,169,077

eps

N/A

gross Margin

N/A

cash Position

$431,350

revenue Growth

-4.8%

Revenue Breakdown

Key Numbers

• $1,169,077 — Net Loss (for the six months ended June 30, 2025, an improvement from $2,843,452 in 2024)
• $1,295,953 — Negative Working Capital (as of June 30, 2025, indicating liquidity issues)
• $683,977 — Net Cash Used in Operating Activities (for the six months ended June 30, 2025)
• $127,830 — Total Revenues (for the six months ended June 30, 2025, down from $134,256 in 2024)
• $431,350 — Cash and Cash Equivalents (as of June 30, 2025, a slight increase from $428,660 as of December 31, 2024)
• 507,610,326 — Shares Outstanding (as of August 13, 2025)
• $0 — Acquisition Cost (for the remaining 50% of Smart Reward Express Limited)

Key Players & Entities

• Hapi Metaverse Inc. (company) — registrant
• Alset Inc. (company) — corporate parent providing financial support
• Smart Reward Express Limited (company) — subsidiary fully acquired by Hapi Metaverse Inc.
• Value Exchange Int'l (China) Limited (company) — seller of 50% stake in Smart Reward Express Limited
• Value Exchange International Inc. (company) — company in which Hapi Metaverse Inc. owns 45.69%
• SEC (regulator) — Securities and Exchange Commission
• HotApp International Limited (company) — wholly-owned subsidiary of HotApp BlockChain Pte. Ltd.
• HotApp BlockChain Pte. Ltd. (company) — wholly-owned subsidiary of Hapi Metaverse Inc.

FAQ

Risk Factors

• Going Concern Uncertainty [high — financial]: The company's ability to continue as a going concern is dependent on financial support from its corporate parent, Alset Inc. Alset Inc. has committed to providing funding and not demanding repayment for the next twelve months. Without this support, the company may not be able to meet its obligations.
• Negative Working Capital [high — financial]: As of June 30, 2025, Hapi Metaverse Inc. reported negative working capital of $1,295,953. This indicates that current liabilities exceed current assets, posing a short-term liquidity risk.
• Declining Revenues [medium — operational]: Total revenues decreased to $127,830 for the six months ended June 30, 2025, down from $134,256 in the same period of 2024. This decline is primarily driven by a decrease in Food & Beverage revenue and the discontinuation of the travel business.
• Net Cash Used in Operations [high — financial]: The company used $683,977 in cash from operating activities for the six months ended June 30, 2025. This outflow of cash from core operations, coupled with negative working capital, highlights ongoing cash burn.
• Significant Accumulated Deficit [medium — financial]: As of June 30, 2025, the company has an accumulated deficit of $19,053,626. This substantial deficit reflects a history of net losses and impacts the company's overall equity position.
• Related Party Transactions [medium — financial]: The company has significant balances due to and from related parties, including convertible promissory notes and investments in securities. The reliance on related parties for funding and the nature of these transactions warrant careful scrutiny.

Industry Context

The metaverse industry is characterized by rapid technological advancement, significant investment in virtual environments, and evolving monetization strategies. Companies in this space often face high development costs, user acquisition challenges, and regulatory uncertainties. Competition is fierce, with established tech giants and numerous startups vying for market share and user engagement.

Regulatory Implications

As a company operating in the digital and potentially virtual asset space, Hapi Metaverse Inc. may be subject to evolving regulations concerning data privacy, digital currencies, and consumer protection. Compliance with these regulations can be complex and costly, and changes in the regulatory landscape could impact business operations and profitability.

What Investors Should Do

1. Monitor Alset Inc.'s financial support and commitments.
2. Analyze the path to profitability and revenue diversification.
3. Assess the impact of the Smart Reward Express Limited acquisition.
4. Evaluate the company's cash burn rate and liquidity.

Key Dates

• 2025-02-04: Acquisition of remaining 50% of Smart Reward Express Limited — Made Smart Reward Express Limited a wholly-owned subsidiary at no cash cost, potentially consolidating control or future earnings.
• 2025-06-30: Balance Sheet Date — Reflects negative working capital of $1,295,953 and total assets of $3,213,685.
• 2025-06-30: End of Six-Month Reporting Period — Reported net loss of $1,169,077 and net cash used in operating activities of $683,977.
• 2024-06-30: End of Prior Year Six-Month Reporting Period — Reported net loss of $2,843,452 and total revenues of $134,256.

Glossary

Going Concern

An assumption that a company will continue to operate for the foreseeable future, typically at least the next 12 months. If there are substantial doubts about this, it must be disclosed. (Hapi Metaverse Inc.'s ability to continue as a going concern is explicitly stated to rely on financial support from its parent company, Alset Inc.)

Working Capital

The difference between a company's current assets and current liabilities. Positive working capital indicates a company's ability to meet short-term obligations. (Hapi Metaverse Inc. has negative working capital of $1,295,953 as of June 30, 2025, signaling potential liquidity issues.)

Accumulated Deficit

The cumulative net losses of a company since its inception, minus any net profits. It represents a negative balance in retained earnings. (The company has a significant accumulated deficit of $19,053,626 as of June 30, 2025, indicating a history of unprofitability.)

Related Party

A person or entity that has the ability to control or significantly influence the operating decisions of another entity. Transactions between related parties must be disclosed. (Hapi Metaverse Inc. engages in significant transactions with related parties, including funding and investments, which are detailed in the financial statements.)

Non-controlling Interest

The portion of equity in a subsidiary that is not attributable to the parent company. It represents the ownership interest of other shareholders in the subsidiary. (A small non-controlling interest of $4,303 existed as of December 31, 2024, but was eliminated by June 30, 2025, likely due to the acquisition of Smart Reward Express Limited.)

Year-Over-Year Comparison

For the six months ended June 30, 2025, Hapi Metaverse Inc. reported a net loss of $1,169,077, a significant improvement from the $2,843,452 net loss in the same period of 2024. However, total revenues declined to $127,830 from $134,256, primarily due to a decrease in Food & Beverage revenue and the discontinuation of the travel business. The company also faced persistent liquidity challenges, with negative working capital of $1,295,953 and $683,977 in cash used from operations in the current period, compared to the prior year's operational cash flow which is not explicitly detailed but implied to be less negative given the larger net loss.

Key Financial Figures

• $0 — aining 5,000 shares of Smart Reward for $0, representing 50% of the total issued a

Filing Documents

• form10-q.htm (10-Q) — 918KB
• ex31-1.htm (EX-31.1) — 11KB
• ex31-2.htm (EX-31.2) — 11KB
• ex32-1.htm (EX-32.1) — 6KB
• 0001641172-25-023632.txt ( ) — 5335KB
• htpn-20250630.xsd (EX-101.SCH) — 35KB
• htpn-20250630_cal.xml (EX-101.CAL) — 60KB
• htpn-20250630_def.xml (EX-101.DEF) — 179KB
• htpn-20250630_lab.xml (EX-101.LAB) — 309KB
• htpn-20250630_pre.xml (EX-101.PRE) — 251KB
• form10-q_htm.xml (XML) — 892KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION 4

INTERIM FINANCIAL STATEMENTS

ITEM 1. INTERIM FINANCIAL STATEMENTS 4 CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2025 (UNAUDITED) AND DECEMBER 31, 2024 5 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) 6 CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS' DEFICIT FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) 7 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) 8 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 9

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 22

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 31

CONTROLS AND PROCEDURES

ITEM 4. CONTROLS AND PROCEDURES 31

OTHER INFORMATION

PART II OTHER INFORMATION 32

LEGAL PROCEEDINGS

ITEM 1. LEGAL PROCEEDINGS 32

RISK FACTORS

ITEM 1A. RISK FACTORS 32

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 32

DEFAULTS UPON SENIOR SECURITIES

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 32

MINE SAFETY DISCLOSURES

ITEM 4. MINE SAFETY DISCLOSURES 32

OTHER INFORMATION

ITEM 5. OTHER INFORMATION 32

EXHIBITS

ITEM 6. EXHIBITS 33 3 PART I FINANCIAL INFORMATION ITEM 1. INTERIM FINANCIAL STATEMENTS Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024 5 Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 and 2024 (Unaudited) 6 Consolidated Statements of Change in Stockholders' Deficit for the three and six months ended June 30, 2025 and 2024 (Unaudited) 7 Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited) 8

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 9 4 HAPI METAVERSE INC. CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2025 (UNAUDITED) AND DECEMBER 31, 2024 (Unaudited) June 30, 2025 December 31, 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 431,350 $ 428,660 Prepaid expenses and other current assets 102,355 109,656 Interest receivable - related party 206,203 158,201 Investment in securities at fair value – related party - current - 2,047,649 Investment in securities at fair value – related party Current - 2,047,649 TOTAL CURRENT ASSETS 739,908 2,744,166 Property and equipment, net 180,467 106,264 Other non-current assets 47,150 46,230 Promissory note receivable – related party 81,722 82,635 Investment in securities at fair value – related party 1,145,138 - Investment in securities at fair value – Noncurrent 1,145,138 - Convertible promissory note receivable – related party 557,341 569,630 Operating lease right-of-use assets, net 461,959 520,119 TOTAL ASSETS $ 3,213,685 $ 4,069,044 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable and accrued expenses $ 77,265 110,634 Amount due to related parties 344,531 7,954,733 Convertible promissory note payable – related party 1,400,000 1,400,000 Operating lease liabilities – current 214,065 191,234 TOTAL CURRENT LIABILITIES 2,035,861 9,656,601 NON-CURRENT LIABILITIES: Operating lease liabilities- non-current 294,259 370,898 Promissory note payable – related party 1,000,000 1,000,000 TOTAL NON-CURRENT LIABILITIES: 1,294,259 1,370,898 TOTAL LIABILITIES $ 3,330,120 $ 11,027,499 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' (DEFICIT): Preferred stock, $ 0.0001 par value, 15,000,000 shares authorized, 0 issued and outstanding as of June 30, 2025 and December 31, 2024 $ - $ - Common stock, $ 0.0001 par value, 1,000,000,000 shares authorized, 507,610,326 shares issue

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