10-Q: Cloudweb Reports Q2 2025 Loss, Faces Going Concern
Quarterly Report
Cloudweb, Inc. reported a net loss of $14,745 for Q2 2025 and disclosed substantial doubt about its ability to continue as a going concern due to inadequate capital resources.
Summary
- Net loss for the three months ended June 30, 2025, was $14,745, an improvement from $19,093 for the same period in 2024.
- Net loss for the six months ended June 30, 2025, was $40,697, down from $45,035 for the same period in 2024.
- Total liabilities increased to $751,517 as of June 30, 2025, from $710,820 at December 31, 2024.
- The company reported no current assets or cash and cash equivalents as of June 30, 2025.
- A working capital deficiency of $684,191 was reported as of June 30, 2025, worsening from $643,494 at December 31, 2024.
- Operations are entirely funded by advancements from a related party (the Director), totaling $27,709 for the six months ended June 30, 2025.
- The company remains in the development stage for its web hosting and data storage services and has not yet commenced operations or generated revenue.
- Management concluded that disclosure controls and procedures were not effective as of June 30, 2025.
Sentiment
Score: 1
Explanation: The company is in a dire financial state with no assets, no revenue, increasing liabilities, and explicit going concern doubts. Its operations are entirely dependent on related party funding, and its disclosure controls are ineffective. While net loss slightly decreased, this is not indicative of operational improvement but rather reduced expenses in a non-revenue generating entity.
Positives
- Net loss decreased by 23% for the three months ended June 30, 2025, compared to the same period in 2024, from $19,093 to $14,745.
- Net loss decreased by 10% for the six months ended June 30, 2025, compared to the same period in 2024, from $45,035 to $40,697.
- Professional fees, a component of operating expenses, decreased by 16% for the six months ended June 30, 2025, compared to the same period in 2024.
Negatives
- Substantial doubt exists regarding the company's ability to continue as a going concern due to inadequate capital resources.
- The company has no current assets or cash and cash equivalents as of June 30, 2025.
- Working capital deficiency increased to $684,191 as of June 30, 2025, from $643,494 at December 31, 2024.
- Total liabilities increased by $40,697 to $751,517 as of June 30, 2025.
- The company is still in the development stage and has not commenced operations or generated revenue.
- Operations are entirely dependent on advancements from a related party.
- Disclosure controls and procedures were not effective as of June 30, 2025.
- Convertible notes from July 2017 are currently in default.
Risks
- Inability to generate positive cash flow or obtain additional financing, which may lead to modification, delay, or abandonment of business and expansion plans.
- Substantial doubt about the company's ability to continue as a going concern.
- Reliance on related party advancements for funding operations.
- Ineffective disclosure controls and procedures.
- Convertible notes from July 2017 are in default.
Future Outlook
The company is currently exploring options to further develop and market its web hosting and data storage services (Hostwizer.com, W8hosting.com, and JeyCloud.com). Plans include offering free hosting supported by advertiser content and white-labeling services for other brands.
Management Comments
- We are currently exploring different options of further developing and marketing our web hosting and data storage services Hostwizer.com, W8hosting.com, and JeyCloud.com.
- 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.
- The Company believes that its existing capital resources may not be adequate to enable it to execute its business plan. These conditions raise substantial doubt as to the Companys ability to continue as a going concern.
- The Company estimates that it will require additional cash resources from loan from related party and unaffiliated parties based on its current operating plan and condition.
- Our Chief Executive Officer has concluded that as of such date, our disclosure controls and procedures were not effective.
Industry Context
Cloudweb, Inc. operates in the highly competitive web hosting and data storage industry, which is characterized by rapid technological advancements and intense price competition. The company's strategy to offer free, ad-supported hosting and white-labeling services suggests an attempt to find a niche or alternative revenue model in a market dominated by established players and cloud giants. However, its current 'development stage' status and lack of revenue indicate it is far from being a significant competitor or trendsetter in this mature industry.
Comparison to Industry Standards
- Unlike established industry leaders such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud, or even smaller but profitable players like GoDaddy or DigitalOcean, Cloudweb, Inc. reports no revenue and zero assets, indicating it is not yet an operational entity by industry standards.
- The company's reliance on related party loans for all operational funding, with no external financing or revenue generation, is a stark contrast to typical industry growth models which involve significant capital investment, venture funding, or organic revenue growth.
- The stated 'development stage' for its services (Hostwizer.com, W8hosting.com, JeyCloud.com) suggests it is far behind competitors who offer mature, scalable, and revenue-generating cloud infrastructure and hosting solutions.
- The disclosure of ineffective disclosure controls and procedures is a significant governance weakness not typically seen in well-managed, publicly traded companies in this sector.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Disclosure Controls Effectiveness | Management concluded that disclosure controls and procedures were not effective as of June 30, 2025. | 2025-06-30 | This indicates a significant weakness in the company's ability to ensure timely and accurate reporting of material information, posing a high risk to investor confidence and regulatory compliance. |
Related Party Transactions
- The Director of the Company advanced $27,709 during the six months ended June 30, 2025, and $21,950 during the six months ended June 30, 2024, for paying operating expenses.
- The loan from the Director is non-interest bearing and due on demand.
- As of June 30, 2025, the amount due to related party was $200,768, an increase from $173,059 at December 31, 2024.
Stakeholder Impact
- Shareholders face a significant risk of complete loss of investment due to going concern doubts, zero assets, and no revenue. Existing shares are highly diluted by historical conversions and the company's inability to generate value.
- Creditors face a high risk of non-repayment given the company's dire financial state, increasing liabilities, and reliance on related party funding. Convertible notes are already in default.
- Potential customers for web hosting/data storage services face a high risk of service disruption or non-delivery given the company's financial instability and 'development stage' status.
- Suppliers face a high risk of non-payment for services or goods provided, as evidenced by increasing accounts payable and reliance on related party funding.
Next Steps
- Further developing and marketing web hosting and data storage services (Hostwizer.com, W8hosting.com, JeyCloud.com).
- Implementing plans to make hosting available for free, supported by advertiser content.
- Exploring white-labeling services for other brands.
- Seeking additional cash resources from related and unaffiliated parties.
Key Dates
| Date | Description |
|---|---|
| 2014-05-25 | Company incorporated as Formigli, Inc. |
| 2015-12-01 | Company changed its name to Data Backup, Inc. |
| 2016-11-04 | Company changed its name to Data Backup Solutions Inc. |
| 2017-07-01 | Company replaced promissory notes with convertible notes totaling $136,000; original expiry June 30, 2019, subsequently extended to June 30, 2022. |
| 2017-10-01 | Company changed its name to Cloudweb, Inc. |
| 2018-01-02 | Four non-affiliated holders converted $20,000 principal of convertible notes for 4,000,000 common shares. |
| 2020-01-02 | Company replaced a promissory note of $17,033 with a convertible note of the same amount. |
| 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 from a convertible note was converted into 15,000 shares of common stock. |
| 2020-03-31 | Company issued a convertible note of $4,768 to an unaffiliated party for operating expenses. |
| 2020-06-30 | Company issued a convertible note of $13,800 to an unaffiliated party for operating expenses. |
| 2020-09-30 | Company issued a convertible note of $7,307 to an unaffiliated party for operating expenses. |
| 2020-12-31 | Company issued a convertible note of $6,074 to an unaffiliated party for operating expenses. |
| 2022-12-31 | During the year ended, the company issued 2,500,000 shares for partial repayment of a convertible note of $2,500. |
| 2023-12-15 | ASU 2020-06 effective for fiscal years beginning after this date. |
| 2023-12-15 | ASU 2023-07 effective for fiscal years beginning after this date. |
| 2024-12-15 | ASU 2023-07 effective for interim periods within fiscal years beginning after this date. |
| 2024-12-15 | ASU 2023-09 effective for annual periods beginning after this date. |
| 2024-12-31 | Audited balance sheet date. |
| 2025-02-27 | Company's Annual Report on Form 10-K for fiscal year ended December 31, 2024, filed with the SEC. |
| 2025-06-30 | End of current quarterly period. |
| 2025-07-08 | Date common shares outstanding were reported (27,819,385 shares). |
| 2025-08-13 | Date of filing and certification by Zhi De Liao. |
Recommendation
strong sellCloudweb, Inc. presents an extremely high-risk investment profile. The company has zero assets, no revenue, and a rapidly increasing accumulated deficit. Management explicitly states 'substantial doubt' about its ability to continue as a going concern, and its operations are entirely dependent on non-interest bearing loans from a related party. Furthermore, disclosure controls are deemed ineffective, and some convertible notes are already in default. There is no clear path to profitability or sustainable operations, making the stock a strong sell for any investor.
Keywords
Cloudweb, 10-Q, web hosting, data storage, going concern, financial results, SEC filing, quarterly report, development stage, cloud services, Hostwizer, W8hosting, JeyCloud
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