Tianci International, Inc. — Form 10-Q Summary
Business Context and Reporting Period
The filing covers the three and six months ended January 31, 2023, within the fiscal year ending July 31, 2023. At January 31, 2023, Tianci was a Nevada holding company with no subsidiaries and no business operations. It had been a shell company since October 2016. The financial statements are unaudited and presented in U.S. dollars under U.S. GAAP.
Key Financial Metrics
| Metric | Three Months Ended January 31, 2023 | Six Months Ended January 31, 2023 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $105,219 | $162,286 |
| Net loss | $105,219 | $162,286 |
| Basic and diluted loss per common share | $0.04 loss | $0.07 loss |
| Cash flow from operating activities | Not separately provided | $(75,857) |
| Cash flow from financing activities | Not separately provided | $80,021 |
| Net change in cash | Not separately provided | $4,164 |
There was no gross profit or operating margin because the Company generated no revenue. Operating expenses primarily consisted of executive compensation, professional fees, and office and miscellaneous expenses. No interest expense, income tax expense, investing cash flow, or other income or expense was reported.
As of January 31, 2023, cash was $13,164, total assets were $13,414, current liabilities were $374,837, and stockholders’ deficit was $361,423. Due to related parties totaled $250,909 and consisted of unsecured, non-interest-bearing amounts due on demand. Accounts payable and accrued liabilities were $123,928, including $120,800 of unpaid accrued compensation to officers and directors.
Material Changes Versus the Prior Comparable Period
- Quarterly operating expenses increased 82% to $105,219 from $57,957, primarily because of higher accounting and legal professional fees.
- Six-month operating expenses increased 54% to $162,286 from $105,103, and six-month net loss increased by $57,183.
- Cash used in operating activities improved to $75,857 from $98,309, mainly because higher accrued liabilities partially offset the larger net loss.
- Cash increased by $4,164 from July 31, 2022, supported by $56,021 of proceeds from related parties and $24,000 from the sale of Series A Preferred Stock.
- Total liabilities increased by $129,450 to $374,837, while the working capital deficit widened by $138,286 to $361,423.
- On January 27, 2023, the Company sold 80,000 Series A Preferred Shares to RQS Capital Limited for $24,000. The shares represented approximately 76.55% of the Company’s aggregate voting power and each share is convertible into 100 common shares, subject to adjustment.
Outlook, Risks, Contingencies, and Unusual Items
Management disclosed substantial doubt about the Company’s ability to continue as a going concern because of its minimal cash balance, absence of revenue, recurring losses, and operating cash requirements. The filing states that continuation depends on the profitability and expansion of the acquired operating business, additional acquisitions, and access to financing. The financial statements do not include adjustments that might result from this uncertainty.
Subsequent to the reporting date, the Company incorporated Tianci Group Holding Limited in Seychelles, sold 1,253,333 common shares to 13 investors for aggregate proceeds of $376,000, and acquired RQS United Group Limited on March 6, 2023. RQS United owns 90% of Roshing International Co., Ltd., an electronic-components distributor and software-services provider. Tianci issued 1,500,000 common shares and paid $350,000 for the acquisition, and issued an additional 700,000 common shares to Roshing employees or affiliates. Following the transaction, the Company ceased to be a shell company.
The filing provides no formal financial guidance. Management’s stated path forward depends on the acquired Roshing business operating profitably, expanding operations, pursuing additional acquisitions, and obtaining financing.
Management concluded that disclosure controls and procedures were not effective as of January 31, 2023. Reported material weaknesses included limited information-processing controls, inadequate segregation of duties, no audit committee financial expert, and insufficient formal procedures for reviewing significant accounting transactions.
The Company reported no legal proceedings, defaults upon senior securities, or off-balance-sheet arrangements. The filing does not provide a clear quantified debt balance separate from related-party obligations and accounts payable.
Investor Verification Items
- Verify the completion, accounting treatment, and current operating results of the March 2023 acquisition of RQS United and its 90%-owned Roshing subsidiary.
- Assess the terms, dilution, conversion rights, and voting impact of the Series A Preferred Stock and subsequent common-stock issuances.
- Confirm the Company’s post-acquisition cash position, funding needs, and ability to meet $374,837 of reported current liabilities and related-party amounts due on demand.
- Review subsequent consolidated financial statements for revenue, profitability, cash flow, and any acquisition-related purchase accounting.
- Evaluate remediation of the disclosed material weaknesses in internal controls.
- Reassess going-concern risk, including whether Roshing is profitable and whether additional financing has been obtained.