10-Q: Cluster Group Holdings Reports Q3 2025 Loss, Seeks Merger

Cluster Group Holdings Limited Co., a development stage blank check company, reported a net loss of $18,673 for Q3 2025 and continues to seek a business combination, particularly in the food and ingredient industry.

Summary

• The Company reported a net loss of $18,673 for the three months ended September 30, 2025, compared to a net loss of $9,717 for the same period in 2024.
• For the nine months ended September 30, 2025, the net loss was $35,075, an improvement from a net loss of $41,414 for the nine months ended September 30, 2024.
• No revenues were generated for both the three and nine months ended September 30, 2025 and 2024.
• Total liabilities decreased to $44,455 as of September 30, 2025, from $89,380 as of December 31, 2024.
• The Company had zero cash as of September 30, 2025, and December 31, 2024.
• An accumulated deficit of $7,643,527 was reported as of September 30, 2025.
• The Company is a development stage blank check company actively seeking a merger, acquisition, or similar business combination, with a specific interest in the food and ingredient industry.
• A material weakness in internal control over financial reporting related to the segregation of duties was identified, rendering disclosure controls and procedures ineffective.

Sentiment

Score: 3

Explanation: The Company is a development-stage blank check entity with no revenue, significant accumulated losses, and a going concern warning. While liabilities decreased, the core business remains unestablished, and internal control weaknesses persist, indicating a high-risk profile.

Positives

• Total liabilities decreased significantly to $44,455 as of September 30, 2025, from $89,380 as of December 31, 2024.
• Total stockholders' deficit improved to $(44,455) as of September 30, 2025, from $(89,380) as of December 31, 2024.
• Net loss for the nine months ended September 30, 2025, decreased to $35,075 from $41,414 in the prior year period.
• Operating expenses for the nine months ended September 30, 2025, decreased to $35,075 from $41,414 in the prior year period.
• An outstanding payable of $80,000 due to a related party was settled through the issuance of 40,000,000 shares of common stock on June 13, 2025.

Negatives

• No revenues were generated for the three and nine months ended September 30, 2025 and 2024.
• Net loss for the three months ended September 30, 2025, increased to $18,673 from $9,717 in the prior year period.
• The Company reported a zero cash balance as of September 30, 2025.
• An accumulated deficit of $7,643,527 as of September 30, 2025, raises substantial doubt about the Company's ability to continue as a going concern.
• A material weakness in internal control over financial reporting due to a lack of segregation of duties was identified.
• The Company is a development stage and blank check company, lacking material operations or a definitive business combination target.

Risks

• Substantial doubts exist about the Company's ability to continue as a going concern due to an accumulated deficit and lack of revenues.
• The Company faces risks associated with early stage and emerging growth companies, including limited capital resources and potential delays in generating revenues.
• There is no assurance that the Company will successfully identify or consummate a suitable merger or acquisition transaction.
• The Company's internal control over financial reporting was not effective due to a material weakness in the segregation of duties, increasing the risk of financial misstatement.
• If a business combination is consummated, the Company may become subject to increased governmental regulations in both the United States and China.
• The utilization of net operating loss carryforwards may be subject to limitations based on past and future changes in ownership pursuant to Internal Revenue Code Section 382.

Future Outlook

The Company intends to seek a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses, particularly with a company engaged in the food and ingredient industry. It does not expect to engage in significant operations or generate revenues until a suitable business combination is completed and anticipates continued operating losses. Management intends to raise additional funds by public or private offering to support its business plan and operations.

Management Comments

• "Management intends to raise additional funds by public or private offering."
• "Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern."
• "Management has evaluated, and continues to evaluate, avenues for mitigating our internal controls weaknesses, but mitigating controls to completely mitigate internal control weaknesses have been deemed to be impractical and prohibitively costly, due to the size of our organization at the current time."
• "Management expects to continue to use reasonable care in following and seeking improvements to effective internal control processes that have been and continue to be in use at the Company."

Industry Context

Cluster Group Holdings Limited Co. operates as a blank check company, a type of special purpose acquisition company (SPAC) that has no commercial operations and is formed solely to raise capital via an initial public offering (IPO) for the purpose of acquiring an existing company. Its stated focus on the food and ingredient industry, and the 'cluster consumption' model, aligns with trends in supply chain optimization and community-based retail, particularly prevalent in markets like China. However, as a non-operational entity, it currently exists outside the competitive dynamics of the food and ingredient sector, positioning itself as a vehicle for future entry.

Comparison to Industry Standards

• As a blank check company with no current operations or revenue, direct financial performance comparison to established operating companies in the food and ingredient industry is not applicable.
• The Company's financial position, characterized by zero cash, an accumulated deficit of over $7.6 million, and a going concern warning, is typical for a development-stage blank check company prior to completing a business combination.
• The identified material weakness in internal controls due to a lack of segregation of duties is a common challenge for small, early-stage companies with limited staff, but it represents a significant governance deficiency compared to the robust internal control frameworks expected of established public companies.

Management Changes

Corporate Governance

Legal Proceedings

• The Company is not a party to any material legal proceeding, and, to its knowledge, none are contemplated or threatened.

Related Party Transactions

• Mr. Yan Ping Sheng, the Company's CEO, Secretary, Treasurer, and Director, has advanced working capital to pay Company expenses.
• The outstanding amount due to related parties was $36,246 as of September 30, 2025, reduced from $72,623 as of December 31, 2024.
• During the nine months ended September 30, 2025, expenses paid on behalf of the Company by Mr. Sheng totaled $43,623.
• On June 13, 2025, the Company settled an outstanding payable of $80,000 due to Mr. Yan Ping Sheng through the issuance of 40,000,000 shares of common stock at a conversion price of $0.002 per share to World Capital Holding, Ltd., an entity affiliated with Mr. Sheng.

Stakeholder Impact

• Shareholders face significant risk due to the Company's development stage, lack of operations, accumulated deficit, and going concern doubt. The issuance of 40,000,000 common shares for debt settlement represents substantial dilution.
• Creditors, particularly non-related parties, face high risk given the Company's zero cash balance and going concern status, although related party debt has been partially settled.
• Employees are minimally impacted as the Company operates with very limited staff and no significant commercial operations.
• Customers and suppliers are not directly impacted as the Company has not yet commenced material operations or generated revenues.

Next Steps

• Seek a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.
• Actively seek a business combination, particularly with a company engaged in the food and ingredient industry.
• Management intends to raise additional funds by public or private offering.
• Management expects to continue to use reasonable care in following and seeking improvements to effective internal control processes.

Key Dates

Recommendation

The Company is a blank check entity with no current operations, no revenue, and a significant accumulated deficit, leading to substantial doubt about its ability to continue as a going concern. While management is seeking a business combination, the uncertainty of such a transaction, coupled with zero cash and identified material weaknesses in internal controls, presents an extremely high-risk profile. The recent increase in net loss for the quarter and the reliance on related party financing further underscore the precarious financial position. A seasoned investor would likely view this as a speculative venture with significant downside risk and recommend selling or avoiding investment until a concrete, viable business combination is secured and operational stability is demonstrated.

Keywords

Blank Check Company, Merger, Acquisition, Food Industry, Ingredient Industry, Development Stage, SEC 10-Q, Corporate Governance, Internal Controls, Going Concern, Cluster Consumption