10-Q: Cloudweb Reports Q3 2025 Net Loss, Going Concern Doubts Persist
Quarterly Report
Cloudweb, Inc. reported a net loss of $14,845 for Q3 2025, with significant going concern doubts and ineffective disclosure controls, despite a slight reduction in nine-month net loss.
Summary
- Reported a net loss of $14,845 for the three months ended September 30, 2025, an increase from $12,441 in the same period of 2024.
- Net loss for the nine months ended September 30, 2025, was $55,542, a decrease from $57,476 in the prior year period.
- Total liabilities increased to $766,362 as of September 30, 2025, from $710,820 as of December 31, 2024.
- The company has no cash or assets as of September 30, 2025.
- A working capital deficiency of $699,036 was reported as of September 30, 2025.
- The company is still in the development stage for its web hosting and data storage services (Hostwizer.com, W8hosting.com, JeyCloud.com).
- Management has concluded that disclosure controls and procedures were not effective as of September 30, 2025.
Sentiment
Score: 1
Explanation: The company is in a dire financial state with no assets, significant liabilities, a large accumulated deficit, and ongoing losses. There is substantial doubt about its ability to continue as a going concern, and its disclosure controls are ineffective. While the nine-month net loss slightly decreased, the overall financial health is extremely poor, and it remains in the development stage with no revenue.
Positives
- Net loss for the nine months ended September 30, 2025, decreased slightly to $55,542 from $57,476 in the prior year, primarily due to a decrease in professional fees.
- Operating expenses for the nine months ended September 30, 2025, decreased by 6% to $28,415 from $30,250 in the prior year.
Negatives
- The company has no cash and no total assets as of September 30, 2025, and December 31, 2024.
- A significant working capital deficiency of $699,036 as of September 30, 2025, an increase from $643,494 as of December 31, 2024.
- Accumulated deficit increased to $233,516,449 as of September 30, 2025.
- Net loss for the three months ended September 30, 2025, increased to $14,845 from $12,441 in the prior year period, driven by higher professional fees.
- Disclosure controls and procedures were deemed not effective as of September 30, 2025.
- One convertible note (July 2017) is currently at default.
- High interest rates on promissory notes (30% to 60% per annum).
- The company is still in the development stage and has not commenced operations or generated revenue.
Risks
- Substantial doubt exists regarding the company's ability to continue as a going concern due to inadequate existing capital resources to execute its business plan.
- Failure to generate positive cash flow or obtain additional financing may lead to modification, delay, or abandonment of business and expansion plans.
- The company relies on advancements from its Director and unaffiliated parties for operating expenses, indicating a lack of independent funding.
- Ineffective disclosure controls and procedures pose a risk to the accuracy and timeliness of financial reporting.
- The company has significant outstanding promissory notes and convertible notes, some with high interest rates and one in default.
Future Outlook
The company is currently exploring different options for further developing and marketing its web hosting and data storage services, including plans to offer free hosting supported by advertiser content and white-labeling services. However, the ability to execute these plans is contingent on generating positive cash flow or obtaining additional financing.
Management Comments
- We are currently exploring different options of further developing and marketing our web hosting and data storage services.
- This includes plans to make hosting available for free while being supported by advertiser content.
- The Company will also look into white labeling its services to allow other brands to use our platforms for their own needs.
- Our existing capital resources may not be adequate to enable us to execute our business plan.
- If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.
- Our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (SEC) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Industry Context
Cloudweb operates in the highly competitive web hosting and data storage industry, which typically requires significant capital investment for infrastructure, marketing, and ongoing development. The company's current strategy of exploring free, ad-supported hosting and white-labeling suggests an attempt to find a niche or lower barriers to entry, but its lack of assets, revenue, and substantial accumulated deficit indicate it is far from being a competitive player. Most industry leaders are well-capitalized and have established customer bases, making it challenging for a development-stage company with no cash to gain traction.
Comparison to Industry Standards
- The company's complete lack of assets and revenue stands in stark contrast to established industry players like Amazon Web Services (AWS), Microsoft Azure, Google Cloud, or even smaller, profitable hosting providers like GoDaddy or Bluehost, which generate billions in revenue and have substantial asset bases.
- Cloudweb's accumulated deficit of over $233 million and ongoing net losses are indicative of a company that has failed to achieve operational viability, unlike successful startups in the cloud space that typically demonstrate revenue growth and a path to profitability within a few years.
- The reliance on related party advancements for operating expenses and the presence of high-interest, defaulted convertible notes are not standard practices for healthy, growing companies in the tech sector, which typically secure funding through equity rounds or conventional debt at much lower rates.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Disclosure Controls and Procedures Effectiveness | Management concluded that disclosure controls and procedures were not effective as of September 30, 2025, meaning information required for SEC reports is not consistently recorded, processed, summarized, or communicated timely. | 2025-09-30 | This indicates a significant weakness in internal controls over financial reporting and disclosure, potentially leading to inaccurate or untimely public disclosures and increased regulatory risk. |
Related Party Transactions
- The Director of the company advanced $31,315 during the nine months ended September 30, 2025, and $31,050 during the nine months ended September 30, 2024, to cover operating expenses.
- The loan from the related party is non-interest bearing and due on demand.
- The amount due to related party increased to $204,374 as of September 30, 2025, from $173,059 as of December 31, 2024.
Stakeholder Impact
- Shareholders: Face significant risk of total loss of investment due to the company's going concern issues, lack of assets, and accumulated deficit. The stock is effectively worthless given the financial state.
- Creditors: Promissory note holders and convertible note holders face high risk of non-repayment, especially given the company's lack of cash, assets, and one defaulted convertible note.
- Employees: (If any, not explicitly mentioned) Future employment is highly uncertain given the company's financial instability and reliance on external funding.
- Customers: (Potential future customers) The company's ability to reliably provide web hosting and data storage services is questionable given its development stage and financial distress.
Next Steps
- Further develop and market web hosting and data storage services (Hostwizer.com, W8hosting.com, JeyCloud.com).
- Implement plans to make hosting available for free, supported by advertiser content.
- Explore white-labeling services for other brands.
- Obtain additional cash resources from related parties and unaffiliated parties to address going concern issues and fund business plans.
Key Dates
| Date | Description |
|---|---|
| 2014-05-25 | Incorporation of Formigli, Inc. (later Cloudweb, Inc.) |
| 2015-12-01 | Name changed to Data Backup, Inc. |
| 2016-11-04 | Name changed to Data Backup Solutions Inc. |
| 2017-07-01 | Name changed to Cloudweb, Inc. and replacement of promissory notes with convertible notes. |
| 2018-01-02 | Four non-affiliated holders converted $20,000 principal of convertible notes into 4,000,000 common shares. |
| 2020-01-02 | Replaced a promissory note with a convertible note of $17,033. |
| 2020-03-04 | Convertible note originally issued on January 2, 2020, was sold to another unaffiliated party. |
| 2020-03-23 | Principal amount of $9,000 of a convertible note was converted into 15,000 shares of common stock. |
| 2020-03-31 | Issued a convertible note of $4,768 to an unaffiliated party. |
| 2020-06-30 | Issued a convertible note of $13,800 to an unaffiliated party. |
| 2020-09-30 | Issued a convertible note of $7,307 to an unaffiliated party. |
| 2020-12-31 | Issued a convertible note of $6,074 to an unaffiliated party. |
| 2022-12-31 | Company issued 2,500,000 shares for partial repayment of a convertible note of $2,500. |
| 2023-12-15 | Effective date for ASU 2020-06 for fiscal years beginning after this date. |
| 2023-12-15 | Effective date for ASU 2023-07 for fiscal years beginning after this date. |
| 2024-12-15 | Effective date for ASU 2023-07 for interim periods within fiscal years beginning after this date. |
| 2024-12-15 | Effective date for ASU 2023-09 for annual periods beginning after this date. |
| 2024-12-31 | Audited balance sheet date. |
| 2025-02-27 | Filing date of the company's Annual Report on Form 10-K. |
| 2025-09-30 | End of the quarterly period covered by this report. |
| 2025-10-28 | Date common shares outstanding were reported as 27,819,385. |
| 2025-11-06 | Filing date of this 10-Q report. |
Recommendation
strong sellCloudweb, Inc. presents an extremely high-risk investment profile. The company has no assets, a substantial and growing accumulated deficit, and a severe working capital deficiency. Management explicitly states there is 'substantial doubt' about its ability to continue as a going concern, and its disclosure controls are ineffective. It remains in the development stage with no revenue, relying solely on related party advancements for operations. The presence of high-interest and defaulted debt further exacerbates its precarious financial position. For any investor, this filing signals imminent financial collapse and a near-certain loss of capital. A strong sell or avoidance is warranted.
Keywords
web hosting, data storage, Cloudweb, 10-Q, financial reporting, going concern, startup, development stage, SaaS, cloud services
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