Tianci International, Inc. — Form 10-Q Summary
Business Context and Reporting Period
Tianci International, Inc. is a Nevada-incorporated holding company and shell company with no meaningful assets or substantive operating business. The company is seeking to identify and merge with an operating company. This unaudited Form 10-Q covers the three and six months ended January 31, 2022, the second quarter of fiscal 2022. The company’s fiscal year ends July 31.
On August 26, 2021, Silver Glory Group Limited acquired 73.18% of the company’s outstanding common stock for $525,000, resulting in a change of control. Former directors and officers resigned, forgave amounts owed to them, and new management and directors were appointed.
Key Financial Metrics
| Metric | Three Months Ended January 31, 2022 | Three Months Ended January 31, 2021 | Six Months Ended January 31, 2022 | Six Months Ended January 31, 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating expenses | $57,957 | $12,308 | $105,103 | $27,119 |
| Loss from operations | $(57,957) | $(12,308) | $(105,103) | $(27,119) |
| Net loss | $(57,957) | $(23,689) | $(105,103) | $(38,500) |
| Basic and diluted loss per share | $(0.02) | $(0.01) | $(0.04) | $(0.02) |
Profit margins are not meaningful because the company generated no revenue. Operating expenses primarily comprised executive compensation, professional fees, and general administrative costs.
| Balance Sheet Metric | January 31, 2022 | July 31, 2021 |
|---|---|---|
| Cash | $0 | $3,951 |
| Total assets | $18,500 | $17,951 |
| Total liabilities | $98,997 | $343,061 |
| Working capital | $(80,497) | $(325,110) |
| Accumulated deficit | $(1,557,764) | $(1,452,661) |
| Shareholders’ deficit | $(80,497) | $(325,110) |
For the six months ended January 31, 2022, operating cash flow was $(98,309), compared with $(39,561) in the prior-year period. Financing activities provided $94,358, including $95,560 of advances from related parties and $1,202 of repayments. The resulting net change in cash was $(3,951), leaving no cash at January 31, 2022. The filing reports no investing cash flow, interest payments, or income tax payments.
Related-party obligations were $77,807 at January 31, 2022, compared with $333,165 at July 31, 2021. These loans were unsecured, non-interest-bearing, and payable on demand. The company also recorded $349,716 of debt forgiveness by former related parties as additional paid-in capital.
Material Changes Versus the Prior Comparable Period
- Revenue remained zero for both the current and prior-year three- and six-month periods.
- Three-month operating expenses increased by $45,649, or approximately 371%, to $57,957. Six-month operating expenses increased by $77,984, or approximately 288%, to $105,103, primarily because of increased executive compensation.
- Three-month net loss increased by $34,268 to $57,957. Six-month net loss increased by $66,603 to $105,103.
- The prior-year periods included an $11,381 income tax penalty; no comparable other expense was recorded in 2022.
- Cash declined from $3,951 to zero, while total liabilities decreased by $244,064, primarily because of related-party debt forgiveness and reduced amounts owed to related parties.
- The company accrued $76,500 of compensation for its chief executive officer and five directors, paid $69,000 to the five directors, owed the chief executive officer $19,000 in unpaid compensation, and prepaid $11,500 for director compensation at January 31, 2022.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
Management stated that cash and expected revenues are insufficient to fund operating expenses for the twelve months following the report date. This condition raises substantial doubt about the company’s ability to continue as a going concern. Management plans to seek improved profitability, restructure operations, obtain additional working capital through equity or debt financing, and rely on loans from directors and/or private placements. The filing states that financing may not be available on acceptable terms or at all.
The company has incurred losses since inception, has no operating revenue, and depends on additional capital to continue operations. Potential equity financing could dilute existing shareholders. The financial statements do not include adjustments that might result from the going-concern uncertainty.
Management concluded that disclosure controls and procedures were not effective as of January 31, 2022. Reported material weaknesses included limited information-processing controls, inadequate segregation of duties, the absence of an audit committee financial expert, and a lack of formal policies for reviewing significant accounting transactions. Management stated that remediation will depend on available funds.
The company reported no material pending legal proceedings, no commitments or contingencies, no off-balance-sheet arrangements material to investors, and no subsequent events requiring disclosure through the date the financial statements were available for issuance.
Important Facts for Investors to Verify
- Whether the company can obtain sufficient financing to fund operations and avoid a going-concern failure.
- Whether Silver Glory Group Limited’s change in control leads to a substantive operating transaction or merger.
- The nature, timing, and terms of any future equity issuance, private placement, or director-related financing, including dilution and related-party implications.
- Whether the company develops revenue-generating operations; revenue was zero through January 31, 2022.
- The accuracy and remediation status of the disclosed internal-control material weaknesses.
- The terms and settlement status of the $77,807 of related-party obligations payable on demand and accrued management compensation.