10-Q: Winning Catering Group Q3 Loss, Shell Status, Eyes Catering Merger

Winning Catering Group reported a significant Q3 net loss and became a shell company after distributing assets, with its future tied to a planned merger with Hong Kong's Wing Nin catering brand.

Summary

• Reported a net loss of $23,004 for the three months ended September 30, 2025, compared to a net income of $2,030,756 for the same period in 2024.
• For the nine months ended September 30, 2025, the company incurred a net loss of $1,006,245, a significant decline from a net income of $2,835,450 in the prior year period.
• Revenue plummeted to $3,479 for the three months ended September 30, 2025, from $3,827,902 in 2024, and to $21,290 for the nine months, down from $8,886,207, primarily due to the completion of property sales in 2024.
• On August 18, 2025, the company completed a special distribution of substantially all of its assets, including Alset Real Estate Holdings Inc. (valued at approximately $34.8 million), to shareholders.
• Following the asset distribution, the company is now considered a shell company with no material operations or revenue sources.
• Cash balances significantly decreased to $5,912 as of September 30, 2025, from $2,762,935 at December 31, 2024.
• The company entered into an Acquisition Agreement and Plan of Merger on May 30, 2025, to acquire Winning Catering Management Limited, a Hong Kong food and beverage brand (Wing Nin), which is expected to result in Winning Holdings owning 80% of the combined entity.
• Management concluded that disclosure controls and procedures were not effective as of September 30, 2025.

Sentiment

Score: 3

Explanation: The company reported substantial losses, a dramatic drop in revenue, and has become a shell company with minimal cash, raising significant going concern doubts. While a merger is planned to pivot into the catering industry, it is not yet consummated, leaving the company in a highly precarious state.

Positives

• Strategic merger with Winning Catering Management Limited (Wing Nin) offers a path to new business operations and addresses the company's going concern issues.
• The planned merger will bring a well-established Hong Kong food and beverage brand with eleven locations and a history of innovation into the company's portfolio.
• Repayment of $2,030,000 from a related party (SeD Intelligent Home) during the nine months ended September 30, 2025.

Negatives

• Significant net loss of $1,006,245 for the nine months ended September 30, 2025, compared to a net income of $2,835,450 in the prior year.
• Revenue declined drastically to $21,290 for the nine months ended September 30, 2025, from $8,886,207 in the same period of 2024, due to the completion of real estate property sales.
• Cash and total assets have been reduced to minimal levels ($5,912 cash, $5,912 total assets as of September 30, 2025) following the special asset distribution.
• The company is now a shell company with no material operations or sources of revenue, raising substantial doubt about its ability to continue as a going concern.
• Disclosure controls and procedures were deemed not effective by management.
• A $450,000 overpayment refund to a customer was recorded as an expense in Q1 2025.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to minimal cash resources and no material operations after the asset distribution.
• The planned merger with Winning Catering Management Limited has not been consummated as of the filing date, and its completion is crucial for the company's future existence.
• Reliance on additional capital or a strategic transaction to continue existence and satisfy ongoing reporting obligations.
• Ineffectiveness of disclosure controls and procedures, which could lead to material information not being recorded, processed, summarized, or reported timely.
• The real estate business is subject to seasonal shifts in costs, which may impact expenses.

Future Outlook

The company's future is entirely dependent on the successful consummation of the planned merger with Winning Catering Management Limited. This merger is management's strategy to secure new business operations and address the substantial doubt about the company's ability to continue as a going concern, as it currently operates as a shell company with minimal resources. The transaction had not been consummated as of the issuance date of this Quarterly Report.

Management Comments

• "The planned merger represents management's strategy to secure a new business operation and address the substantial doubt regarding the Company's ability to continue as a going concern."
• "While management is actively pursuing completion of the merger, the transaction had not been consummated as of the issuance date of this Quarterly Report on Form 10-Q and, therefore, does not currently alleviate the substantial doubt about the Company's ability to continue as a going concern."
• "Our management, including our Chief Executive Officers and Chief Financial Officers concluded that our disclosure controls and procedures are not effective..."

Industry Context

The company has transitioned from a real estate development and leasing business to a shell company. Its future industry context will shift dramatically to the food and beverage sector, specifically Hong Kong-style cart noodles, upon the successful completion of the merger with Winning Catering Management Limited (Wing Nin). This represents a complete pivot from its historical operations.

Comparison to Industry Standards

• Currently, as a shell company with minimal assets and no operations, direct comparison to industry standards is not applicable.
• The future business, Wing Nin, operates in the highly competitive Hong Kong food and beverage market, known for its street food culture and diverse culinary offerings. Wing Nin's eleven locations suggest a significant local presence, but its performance would need to be benchmarked against other established local chains and international quick-service restaurants in Hong Kong. Specific comparable companies or projects are not detailed in the filing.

Corporate Governance

Legal Proceedings

• No material pending legal proceedings.

Related Party Transactions

• Loan from SeD Home Limited (now Alset Solar Limited): Alset EHome received advances to fund development and operation costs, bearing 10% interest. Outstanding interest of $228,557 was forgiven on October 22, 2024.
• Loan to/from SeD Intelligent Home Inc.: The company receives advances from or loans funds to SeD Intelligent Home (99.99% owner). Loans bore 18% interest until August 30, 2017, then 5%. Repayment of $2,030,000 received in the nine months ended September 30, 2025. Net balance owed to company was $12,192,866 at December 31, 2024, reduced to $0 at September 30, 2025 after special distribution.
• Management Fees to MacKenzie Equity Partners, LLC: An entity owned by Charles MacKenzie (a Director) receives $25,000 per month for consulting services. Incurred $175,000 in the nine months ended September 30, 2025, and $285,000 in the nine months ended September 30, 2024.
• Note from Alset Inc.: On January 13, 2023, the company received a $11,350,933 note from Alset Inc. (85.8% owned by Alset International Limited, which indirectly owns 99.9% of the company) at 7.2% interest, maturing January 13, 2028. This note was part of the special distribution.
• Common management and board members across the company, Alset International Limited, and Alset Inc.

Stakeholder Impact

• Shareholders: Received a special distribution of shares in Alset Real Estate Holdings Inc. (valued at approximately $34.8 million). Existing shareholders will retain 15% ownership post-merger, while new shareholders (Winning Holdings and PTGL) will own 85%, leading to significant dilution of existing ownership percentage in the new entity.
• Creditors: The company's ability to continue as a going concern is in substantial doubt, which could impact creditors if the merger fails.

Next Steps

• Consummation of the merger with Winning Catering Management Limited.
• Winning Group surviving the merger as a wholly-owned subsidiary.
• Issuance of new common stock to Winning Holdings (80%) and PTGL (5%).
• Addressing the substantial doubt about the company's ability to continue as a going concern through the merger or other capital.
• Improving disclosure controls and procedures.

Key Dates

Recommendation

The company has effectively ceased its prior operations, distributed substantially all assets, and is now a shell company with minimal cash and significant going concern doubts. While a merger into the catering industry is planned, it is not yet complete and represents a highly speculative pivot. The dramatic decline in financial performance and the uncertainty surrounding the merger's completion and the future business's success make the stock a high-risk proposition. Existing shareholders have already received a distribution of the prior assets, and their remaining stake in the shell company is subject to extreme dilution and the success of an unproven (for this entity) business model.

Keywords

Winning Catering Group, 10-Q, Quarterly Report, Shell Company, Merger, Acquisition, Wing Nin, Catering, Food and Beverage, Real Estate, Asset Distribution, Going Concern, Financial Results, SEC Filing, Hong Kong