The Waterhouse tokens were issued in Hawaii by John Thomas Waterhouse, a self-styled importer who ran two stores in Honolulu. Waterhouse probably ordered the tokens as advertising pieces, as they have no monetary value for redemption at his stores. The portrait on the obverse is that of King Kamehameha IV, who became the king of Hawaii in 1855. The legend "Hale Maikai" at the base of the reverse means "Good House."
A chronic problem with the Waterhouse Tokens is flatness on King Kamehameha's portrait. In many cases, the face is so flat that the King looks like a proboscis monkey. The flatness appears to be the result of engraving that was so deep that, when the tokens were struck, the metal was unable to fill in the recessed areas completely. The best strikes we've seen are on an AU58 and an MS63+ but, even then, the strike is not quite full. This problem was exascerbated as the coins circulated -- the softness of the metal flattened on the high points because of contact or wear.
According to Medcalf & Russell, the Waterhouse token is "virtually impossible to find above EF condition." PCGS alone has certified more than 15 examples above EF, so perhaps the statement should be revised to "virtually impossible to find above AU condition." In Mint State, the Waterhouse token is extremely rare; the best example is the afore-mentioned PCGS MS63+.