Item 1A. Risk Factors
Investing in our common stock involves risk.
You should carefully consider the risks described below together with all of the other information contained in this Report, including
the financial statements and the related notes, before deciding whether to purchase any shares of our common stock. If any of the following
risks is realized, our business, financial condition or operating results could materially suffer. In that event, the trading price of
our common stock could decline and you may lose all or part of your investment.
RISKS RELATED TO OUR
BUSINESS
Risks Related to the
Global Logistics Services
Geopolitical conditions, such as political
instability or conflict, terrorist attacks and international hostilities can affect the Maritime transportation industry, which could
adversely affect our business.
We conduct most of our operations outside
of the United States and our business, results of operations, cash flows, financial condition and ability to pay dividends, if any, in
the future may be adversely affected by changing economic, political and government conditions in the countries and regions where we operate.
Moreover, we operate in a sector of the economy that has been and is likely to continue to be adversely impacted by the effects of geopolitical
developments, including political instability or conflict, terrorist attacks or international hostilities.
Currently, the world economy faces a number
of challenges, including tensions between the United States and China, new and continuing turmoil and hostilities in Russia, Ukraine,
the Middle and other geographic areas and countries, continuing economic weakness in the European Union and slowing growth in China and
the continuing threat of terrorist attacks around the world.
Trade barriers to protect domestic industries
against foreign imports depress shipping demand. Protectionist developments, such as the imposition of trade tariffs or the perception
they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Moreover,
increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, (b) the length of time required
to transport goods and (c) the risks associated with exporting goods. Such increases may significantly affect the quantity of
goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers’
business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us
and to renew and increase the number of their time charters with us. This could have a material adverse effect on our business, financial
condition and operating results. Further, protectionist policies in any country could impact global markets, including foreign exchange
and securities markets. Any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn
adversely impact our business, results of operations, financial condition and cash flows.
Any reduction in international commerce
or disruption in global trade may adversely impact our business and operating results.
The
Company primarily provides services to customers engaged in international commerce. Everything that affects international trade has the
potential to expand or contract our primary markets and adversely impact our operating results. For example, international trade is influenced
by:
· currency exchange rates and currency control regulations;
· interest rate fluctuations;
· wars, strikes, civil unrest, acts of terrorism, and other conflicts;
· changes in labor and other costs, including the impacts of inflation;
· changes in availability of credit; and
Our
industry is highly competitive, and failure to compete or respond to customer requirements could damage our business and the results of
operations.
The
global logistics services industry is intensely competitive and is expected to remain so for the foreseeable future. There are a large
number of companies competing in one or more segments of the industry, but the number of firms with a global network that offer a full
complement of logistics services is more limited. Nevertheless, many of these competitors have significantly more resources than the Company
and may pursue acquisition opportunities and are developing new technologies to gain competitive advantages. Depending on the location
of the shipper and the importer, we must compete against niche players, larger entities including carriers, and emerging technology companies.
The primary competitive factors are price and quality of service. Many larger customers utilize the services of multiple logistics providers.
Customers regularly solicit bids from competitors in order to improve service and to secure favorable pricing and contractual terms such
as: longer payment terms; flexible-price arrangements; and performance penalties. Increased competition and competitors’ acceptance
of expanded contractual terms coupled with customers’ dissatisfaction with elevated rates, scarce capacity, and extended transit
times could result in loss of business, reduced revenues, reduced margins, higher operating costs or loss of market share, any of which
would damage our results of operations, cash flows and financial condition.
Difficulty
in forecasting timing or volumes of customer shipments or rate changes by carriers could adversely impact our margins and operating results.
We are
not aware of any accurate means of forecasting short-term customer requirements. However, long-term customer satisfaction depends upon
our ability to meet these unpredictable short-term customer requirements. Personnel costs, one of our larger costs, are always less flexible
in the very near term as we must staff to meet uncertain demand. As a result, short-term operating results could be disproportionately
affected.
The
timing of our revenues is, to a large degree, impacted by factors out of our control, such as a sudden change in consumer demand for goods,
changes in trade tariffs, product launches and/or manufacturing production delays. Additionally, many customers ship a significant portion
of their goods at or near the end of a quarter, and therefore, we may not learn of a shortfall in revenues until late in a quarter. To
the extent that a shortfall in revenues or earnings was not expected by securities analysts or investors, any such shortfall from levels
predicted by securities analysts or investors could have an immediate and adverse effect on the trading price of our stock.
Volatile
market conditions can create situations where rate increases charged by carriers and other service providers are implemented with little
or no advance notice. We often cannot pass these rate increases on to our customers in the same time frame, if at all. As a result, our
yields and margins can be negatively impacted.
Climate
change, including measures to address climate change, could adversely impact our business and financial results.
The
long-term effects of climate change are difficult to predict and may be widespread. The impacts of climate change may include physical
risks (such as rising sea levels, which could affect port operations or frequency and severity of extreme weather conditions, which could
disrupt our operations and damage cargo and our facilities), compliance costs and transition risks (such as increased regulation and taxation
to support carbon emissions reduction investments), shifts in customer demands (such as customers requiring more fuel efficient transportation
modes or transparency to carbon emissions in their supply chains) and customer contractual requirements around environmental initiatives
and other adverse effects. Our non-asset model gives us flexibility and an ability to change locations, modes, and carriers based on evolving
operating conditions. However, such impacts may disrupt our operations by adversely affecting our ability to procure services that meet
regulatory or customer requirements, depending on the availability of sufficient appropriate logistics solutions.
In addition,
the increasing concern over climate change has resulted and may continue to result in more regulations relating to climate change, including
regulating greenhouse gas emissions, restrictions on modes of transportation, alternative energy policies and sustainability initiatives,
such as the FuelEU Maritime initiative or the EU Emissions Trading System. If Hong Kong imposes more stringent restrictions and requirements
than our current legal or regulatory obligations, we may experience disruptions in, or increases in the costs associated with delivering
our services, which may negatively affect our operating our results of operations, cash flows and financial condition.
Roshing faces risks associated with
the contents of shipments and inventories handled through its logistics services, including real or perceived quality or health issues
with the products that are handled through Roshing’s logistics services, and risks inherent in the logistics industry, including
personal injury, product damage, and transportation-related incidents.
The
logistics services Roshing provides are subject to accident risks, including ship collisions, cargo damage, and cargo loss. Such events
can result in significant financial costs, legal liability, and reputational damage. In addition, Roshing’s logistics service involve
handling a large volume of bulk merchandise and containers, through cargo and freights operated by third-party shipping suppliers across
Roshing’s logistics services, and face challenges with respect to the protection and examination of these bulk merchandise and containers.
Bulk merchandise and containers in its network may be delayed, stolen, damaged or lost during delivery for various reasons, and we may
be perceived or found liable for such incidents. Unsafe items, such as flammables and explosives, toxic or corrosive items and radioactive
materials, may damage other bulk merchandise and containers in shipping process, harm the personnel and facilities of the third-party
shipping suppliers, or even injure the recipients. Furthermore, if Roshing fails to prevent prohibited or restricted items from entering
into its network and if it participates in the facilitate transportation and delivery of such items unknowingly, Roshing may be subject
to administrative or even criminal penalties, and if any personal injury or property damage is concurrently caused, it may also be liable
for civil compensation.
The
logistics services for delivery of bulk merchandise and containers also involve inherent risks associated with transportation safety.
From time to time, the vessels and personnel of its third-party shipping suppliers may be involved in transportation and cargo accidents,
and the bulk merchandise and containers carried by them may be lost or damaged.
Roshing
is also subject to worker health and safety laws and regulations that may expose us to costs and liabilities, potentially affecting its
results of operations, competitive position, and financial condition adversely. These laws and regulations are stringent and comprehensive,
governing the health and safety of Roshing’s and workers of third-party shipping suppliers during operations.
Any
of the foregoing could disrupt Roshing’s logistics services, cause us to incur substantial expenses and divert the time and attention
of our management. Roshing may face claims and incur significant liabilities if found liable or partially liable for any injuries, damages
or losses. Any uninsured or underinsured loss could negatively influence our business and financial condition. Governmental authorities
may also impose significant fines on us or require us to adopt costly preventive measures. Furthermore, if Roshing’s logistics services
are perceived to be insecure or unsafe by its customers, its business volume may be significantly reduced, and our business, financial
condition and results of operations may be materially and adversely affected.
Roshing is subject to potential risks
arising from contractual obligations with shipping suppliers.
Roshing’s
contractual obligations with shipping suppliers encompass precise terms and conditions. Should either party fail to uphold these provisions,
it may result in legal disputes, financial penalties, and interruptions in service. These breaches, whether initiated by us or the shipping
suppliers, pose potential risks to the continuity and efficiency of Roshing’s operations. Adhering to the terms outlined in these
agreements is important to maintaining positive relationships with Roshing’s partners and ensuring the operation of Roshing’s
shipping activities and logistics services.
Roshing faces risks from changing customer
logistics needs, contractual obligations, and failure to meet customer requirements, which could lead to financial losses, legal liabilities,
and damage to Roshing’s reputation if not managed proactively.
Roshing’s
customers’ logistics needs are subject to constant change, influenced by market trends, technological advancements, and shifts in
consumer behavior. Failure to adapt to these evolving demands could lead to significant business losses. Moreover, Roshing’s contractual
obligations entail meeting specific performance standards, and any failure to do so may result in liability claims, financial setbacks,
and damage to its reputation. Ensuring the fulfillment of all customer requirements, including adherence to delivery schedules, maintenance
of cargo conditions, and compliance with regulatory standards, is paramount. Any lapses in meeting these requirements could not only result
in lost business opportunities but also expose us to potential legal liabilities. Therefore, proactive measures to address these customer-related
risks are essential for maintaining Roshing’s competitive edge and safeguarding its operations.
Our revenues, operating income and cash
flows are likely to fluctuate and are subject to uncertainty and potential volatility in demand and supply for cargo space and container
loads from time to time.
Roshing charters cargo space and container
loads from shipping suppliers based on a certain volume and then sub-charters that space to our customers under an order contract. Roshing
obtains cargo space and container loads through direct booking and block space arrangements. Pursuant to the block space agreements, it
is committed to paying for the agreed cargo space and container loads irrespective of whether it could fully utilize the allotted space.
In the event it cannot fully utilize the cargo space and container loads it sourced (i.e. the actual customers’ demand for the cargo
space and container loads is less than the amount of cargo space and container loads it sourced), Roshing has to sell excess cargo space
and container loads. Roshing however cannot assure that there will not be instances where, for example, due to (a) departure timetable
of the vessel; (b) popularity of the route; or (c) seasonality factors, it is unable to fully consolidate/co-load all the excess cargo
space and container loads it purchased from our suppliers. In case Roshing cannot fully utilize the cargo space and container loads it
obtained from its suppliers, Roshing may have to bear the costs of all the excess cargo space and container loads it purchased and its
business and results of operations could be adversely affected.
In the event of shortfall of the cargo space
and container loads to meet customers’ demand (i.e. the actual customers’ demand for the cargo space and container loads are
higher than the amount that Roshing has), Roshing has to source the cargo space and container loads from its suppliers at the prevailing
market rates. Since cargo space and container loads offered by Roshing’s suppliers through direct booking is normally on a first-come-first-served
basis, with no formal agreement for guaranteed supply of cargo space and container loads, there is no assurance that Roshing will be able
to source sufficient cargo space and container loads to meet its customers’ demand within the expected timeframe and at favorable
price. As a result of the shortfall of cargo space and container loads, its reputation and therefore its business, sales performance and
results of operations will be adversely affected.
In result, we may experience fluctuations
in our revenues and cost structure and the resulting operating income and cash flows and expect that this will continue to occur in the
future. We may experience fluctuations in our financial results, including revenues, operating income and earnings per share, for reasons
that may include: (i) the types and complexity, number, size, timing and duration of client engagements; (ii) the timing of revenue recognition
under U.S. GAAP; (iii) the utilization of revenue-generating professionals, including the ability to adjust staffing levels up or down
to accommodate the business and prospects of the applicable segment and practice; (iv) the geographic locations of our clients or the
locations where services are rendered; (v) the length of billing and collection cycles and changes in amounts that may become uncollectible;
(vi) changes in the frequency and complexity of government regulatory and enforcement activities; (vii) business and asset acquisitions;
(viii) fluctuations in the exchange rates of various currencies against the U.S. dollar; (ix) fee adjustments upon the renewal of expired
service contracts or acceptance of new clients due to the adjusted scope per our refined business strategy; and (x) economic factors beyond
our control.
The results of different segments and practices
may be affected differently by the above factors. The positive effects of certain events or factors on certain segments and practices
may not be sufficient to overcome the negative effects of those same events or factors on other parts of our business. In addition, our
mix of practice offerings adds complexity to the task of predicting revenues and results of operations and managing our staffing levels
and expenditures across changing business cycles and economic environments.
Our results are influenced by seasonal and
similar factors. Although we evaluate our annual guidance at the end of each quarter and adjust it as necessary, unforeseen future volatility
can lead to significant deviations from our guidance. This may occur even if our guidance encompasses a range of potential outcomes and
has been updated to consider operating results.
Seasonality and the impact of weather
and other catastrophic events adversely affect Roshing’s operations and profitability.
Roshing’s operation is influenced by
seasonal factors, with February to April being off-peak seasons, and June to October being peak seasons. Roshing’s operation is
affected by the winter season because inclement weather impedes operations, and some shippers reduce their shipments during winter. In
addition, in the lead-up to major holidays such as Christmas and Chinese Spring Festival, increased consumer demand often leads to a short-term
surge in cargo transportation volume. Conversely, in the later stages of holidays and traditional off-peak seasons, cargo transportation
volume may significantly decrease. At the same time, operating expenses increase due to, among other things, a decline in fuel efficiency
because of engine idling and harsh weather that creates higher accident frequency, increased claims and higher equipment repair expenditures.
Roshing also may suffers from weather-related or other events, such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes
and explosions, which may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies,
destroy its assets or the assets of its customers or otherwise adversely affect the business or financial condition of Roshing’s
customers, any of which developments could adversely affect its results or make its results more volatile.
Risk Related to Other
Products & Services
Roshing has a great dependence on a
limited number of suppliers and the loss of their manufacturing capability could materially impact on its operations.
Roshing is a distributor of hardware components
for electronic devices and generates revenue from reselling these components and is not engaged in innovative product development and
direct manufacturing business. Roshing markets off-the-shelf products, which ships directly from the manufacturer to Roshing’s customer.
In the event that the supply of components or finished products is interrupted or relations with any of its principal vendors is terminated,
there could be increased costs and considerable delay in finding suitable replacement sources to manufacture the electronic device hardware
components products (“Hardware Products”). Its Hardware Products mostly are shipped from facilities located in Guangdong,
China. The shipment of these products from Mainland China exposes us to the possibility of product supply disruption and increased costs
in the event of changes in the economics condition of China.
Defects in the Hardware Products Roshing
sells or failures in quality control related to its distribution of products could impair its ability to sell its products or could result
in product liability claims, litigation and other significant events involving substantial costs.
The detection of significant defects in Roshing’s
Hardware Products or failures in its quality control procedures, including those of its suppliers, carries several potential consequences.
These include delays in bringing products to market, decreased sales, and challenges in gaining market acceptance. Furthermore, such issues
may lead to the diversion of its development resources and damage to its reputation, with potential regulatory restrictions. Rectifying
product defects can incur substantial costs, and identifying suitable remedies may prove difficult. Moreover, errors or defects could
result in financial damage to its customers, potentially leading to litigation. Product liability lawsuits, regardless of the outcome,
may entail significant time and expenses for defense. In the absence of product liability insurance and without being named insured on
its suppliers’ policies, Roshing faces the risk of being unable to cover claims or seek reimbursement from suppliers, leaving us
potentially exposed to financial liabilities.
The software and website development
markets are highly competitive.
The management software and website development
industries are highly competitive. There are a number of larger companies, including computer manufacturers, computer service and software
companies that have greater operational, personnel and financial resources than we have. These companies currently offer and have the
technological ability to develop software products similar to those offered by us. These companies present a significant competitive challenge
to Roshing’s business. Because we do not have the same financial resources as these competitors, we may have a difficult time in
the future competing with these companies. We compete based on its fright shipping and logistics knowledge, products, service, price,
system functionality and performance and technological advances. Customized and special services according to customer needs, there is
technical weakness.
The industry in which Roshing operates has
low barriers to entry and is highly fragmented and very competitive. We anticipate that competition may intensify further as the freight
software industry matures and consolidates. Roshing’s key strength lies in providing tailored services to wholesalers, e-commerce
retailers and freight forwarders in market segments that share the value of Roshing’s technology. These services facilitate the
management of complex workflows and improve efficiency by enabling shipping workflow management, Marine container management, e-commerce
inventory and shipping management, and logistics data analytics. However, we cannot guarantee continuous improvement in technology and
services.
Roshing’s software and website
may not perform in line with customer specifications or expectations.
Roshing’s freight shipping and related
logistic software and websites may not perform in line with customers’ expectations. Future customers may also require customized
specifications that Roshing is unable to deliver. Some of these target specifications, such as those dependent on battery technology,
are constrained by the pace of general technological advancement and the capabilities of its suppliers, which are largely beyond its control.
Roshing’s software and website may contain
design or manufacturing defects that result in unsatisfactory performance or require repair. Roshing’s software and website use
a substantial amount of algorithms and software to operate. Software products are inherently complex and often contain defects and errors,
especially when first introduced. While Roshing have performed extensive internal testing on its software and website, we have a limited
frame of reference by which to evaluate the long-term performance of its software and website. There can be no assurance that Roshing
will be able to detect and fix any defects in its software and website before we sell products and services to customers.
If Roshing’s software and website is
defective or otherwise fails to perform as expected or in accordance with prescribed technical specifications and timetable, its customers
may experience accidents and suffer adverse publicity, revenue declines, ecommerce inventory disarray, breakdown of shipping workflows,
product liability claims, and significant additional expenses. These consequences could have a material adverse impact on its business,
financial condition, operating results, and prospects.
Additionally, Roshing’s software, along
with that of our third-party service provider, containing personal information of software customers, and others, could be breached, exposing
us to adverse publicity, costly government enforcement actions or private litigation, and expenses. Cyber criminals constantly devise
schemes to bypass IT security safeguards, and other retailers have experienced severe data breaches. Roshing may not anticipate all security
threats or implement preventive measures against them effectively. The costs to mitigate network security issues could be significant,
and while Roshing implemented security measures, addressing these issues may not always succeed. Unauthorized access to Roshing’s
networks or databases could result in theft, publication, deletion, modification, or blocking of sensitive information, adversely affecting
our business strategy, financial condition, or operations. While Roshing has not experienced cybersecurity incidents in the past three
years, we anticipate threats to persist and cannot assure such events will not occur or have material impacts on Roshing’s operations,
results of operations and financial condition in the future.
If Roshing does not continually update
its products and/or services, they may become obsolete and Roshing may not be able to compete with other companies.
Roshing cannot assure that it will be able
to keep pace with technological advances, or that its current suppliers will be able to keep pace with technological advances and as such,
its products and/or services may become obsolete. Roshing cannot assure you that competitors will not develop related or similar services
and offer them before Roshing does, or does so more successfully, or that they will not develop services and products more effective than
any that Roshing and/or its suppliers have or are intending to develop. In addition, although Roshing may be able to identify new suppliers
that can provide more effective services and products to be more competitive, Roshing may not be able to arrange satisfactory arrangements
in a timely manner, if at all. If that happens, its business, prospects, results of operations and financial condition will be materially
adversely affected.
Roshing may not be able to continue
to recruit, train and retain dedicated and qualified consultants who are essential to the success of its business and the effective delivery
of policy and business advisory services to its individual and corporate clients.
Roshing’s current talent policy advisory
and application services rely heavily on Roshing’s visa consultants, and the conduct of Roshing’s visa consultants is critical
to maintaining its reputation. Roshing seeks to hire qualified and dedicated consultants who have the necessary experience to provide
effective advice and guidance to its clients in accordance with government policies and business management expertise and experience.
The number of consultants with these qualities is limited and Roshing needs to implement a highly selective recruitment process.
A decline in the market for individual
clients of Roshing’s business consulting services and corporate business consulting could have a material adverse effect on its
business, prospects, financial condition and results of operations.
There is an anticipation of potential Hong
Kong talent introduction policy revisions or the cessation of policy benefits after the second half of 2024, which may lead to a reduction
or cessation of its consulting services for talent clients. Additionally, fluctuations in Hong Kong’s global business attractiveness
or other factors may impact the number of enterprises establishing business activities in Hong Kong, potentially slowing business demand
and affecting the growth of consulting enterprises we serve. Consequently, Roshing’s business, prospects, financial condition, and
operating results may be significantly and adversely affected.
General Business Risks
We have a limited operating history
and face significant challenges and will incur substantial expenses as we build our capabilities.
We have a limited operating history and are
subject to the risks inherent in a growing company, including, among other things, risks that we may not be able to hire sufficient qualified
personnel and establish operating controls and procedures. The company relies on few trained internal personnel as the company only has
11 full time employees. As we build our own capabilities, we expect to encounter risks and uncertainties frequently experienced by growing
companies in new and rapidly evolving fields, including the risks and uncertainties described herein. If we are unable to build our own
capabilities, our operating and financial results could differ materially from our expectations, and our business could suffer.
We are currently dependent on a small
group of customers for most of our revenue. If we cannot expand our customer base many-fold, our business growth will be challenged and
affected, resulting in adjustments to our business strategy.
As we
have not achieved significant scale, we had and expect to continue to have customer concentration. The revenue generated to
date by our business has come from a small number of customers. During the year ended July 31, 2023, two customers were responsible for
over 52% of our revenue. During the year ended July 31, 2024, three customers were responsible for over 84% of our revenue. In order for
Tianci to be viable as a public company, we must increase our revenue. To accomplish that, we must expand our customer base. If we fail
to multiply our customers, Tianci’s stock may have no significant value. There are inherent
risks whenever a large percentage of revenues are concentrated with a limited number of customers. We are unable to predict the future
level of demand for our services that will be generated by these customers. In addition, we cannot assure that any of our
customers in the future will not cease purchasing logistics services from us, or that our cooperating agents will continue introducing
clients to us. Should they favor logistics services from our competitors, significantly reduce orders, or seek price reductions in the
future, any such event could have a material adverse effect on our revenue, profitability, and results of operations.
We rely on shipping suppliers, cargo
owner and cargo agents and Hardware Products suppliers, if they become financially unstable or have reduced capacity to provide services
because of pandemics, such as COVID-19, it may adversely impact our business and operating results.
We depend on shipping suppliers, cargo owners,
cargo agents, and hardware products suppliers. The quality and profitability of our services and business depend on the effective selection
and oversight of these partners. Pandemics, such as COVID-19 have ever placed significant stress on our shipping suppliers,
cargo owners, cargo agents, and hardware products suppliers, which may continue to result in reduced carrier capacity or availability,
pricing volatility or more limited carrier transportation schedules which could adversely impact our operations and financial results.
During the pandemic, air carriers have been particularly affected having to cancel freights due to travel restrictions resulting in dramatic
drops in revenues, historical losses and liquidity challenges. Uncertainty over recovery of demand for passenger air travel, in particular
business travel, to pre-pandemic levels means ship carriers’ operations and financial stability may be adversely affected long
term.
Our business could be negatively affected
by rising inflation and interest rates.
Various macroeconomic factors could adversely
affect our business, financial condition and results of operations, including changes in inflation, interest rates and overall economic
conditions and uncertainties such as those resulting from the current and future conditions in the global financial markets.
For instance, recent inflationary environment
has negatively impacted us by slightly increasing (i) our labor costs, through higher wages, (ii) our borrowing costs, through higher
interest rates which we expect to continue to increase, and (iii) our other operating costs, such as through higher rates charged by our
service suppliers. Supply chain constraints have led to higher inflation, which if sustained, could have a negative impact on our operations.
To moderate effects of these increasing costs, we instituted proactive initiatives to optimize efficiencies in our daily operations. We
also replaced certain service suppliers with alternatives that offered more competitive rates while not compromising service quality.
In addition, we expect to modestly increase the rates we charge our customers in response to the inflationary environment should such
inflationary pressures further deteriorate in the near future. However, we cannot assure you that these measures we have taken or will
take will be effective, if at all, or that we will be able to effectively mitigate any inflationary pressures in the future. If inflation
or interest rates were to significantly increase, our business and the results of operations may be negatively affected.
Interest rates, liquidity of credit markets
and volatility of capital markets could also affect our business and results of operations as well as our ability to raise capital on
favorable terms, or at all.
If we are unable to hire, retain or
motivate qualified personnel, consultants, independent contractors, and advisors, we may not be able to grow effectively.
Our performance will be largely dependent
on the talents and efforts of highly skilled individuals that we attract to our company. Our future success depends on our continuing
ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization: technological as
well as entrepreneurial. Competition for such qualified employees is intense. If we do not succeed in attracting competent personnel or
in retaining or motivating them, we may be unable to grow effectively. In addition, our future success depends largely on our ability
to retain key consultants and advisors. Our inability to retain their services could negatively impact our business and our ability to
execute our business strategy.
The Company and its subsidiaries do
not presently maintain fire, theft, product liability or any other property insurance, which leaves us with exposure in the event of loss
or damage to our properties or claims filed against us.
The Company and its subsidiaries do not maintain
fire, theft, product liability or property insurance of any kind. The Company and its subsidiaries bear the economic risk with respect
to loss of or damage or destruction to our property and to the interruption of our business, as well as liability to third parties for
damage or destruction to them or their property that may be caused by our personnel or products. Such liability could be substantial and
the occurrence of such loss or liability may have a material adverse effect on our business, financial condition and prospects.
Our operating history may not be indicative
of our future growth or financial results and we may not be able to sustain our historical growth rates.
Our operating history may not be indicative
of our future growth or financial results. There is no assurance that we will be able to grow in future periods. Our growth rates may
decline for any number of possible reasons and some of them are beyond our control, including decreasing customer demand, increasing competition,
declining growth of the touchscreen industry in general, emergence of alternative business models, or changes in government policies or
general economic conditions. We will continue to expand our sales network and product offerings to bring greater convenience to our customers
and to increase our customer base and number of transactions. However, the execution of our expansion plan is subject to uncertainty and
the total number of items sold and number of transacting customers may not grow at the rate we expect for the reasons stated above. If
our growth rates decline, investors’ perceptions of our business and prospects may be adversely affected and the market price of
our common stock could decline.
We incur significant costs and demands
upon management and accounting and finance resources as a result of complying with the laws and regulations affecting public companies;
if we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements and otherwise
make timely and accurate public disclosure could be impaired, which could harm our operating results, our ability to operate our business
and our reputation.
Our
management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)
and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated
to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or
persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
If our internal control over financial reporting
or our disclosure controls are not effective, we may be unable to issue our financial statements in a timely manner, we may be unable
to obtain the required audit or review of our financial statements by our independent registered public accounting firm in a timely manner
or we may be otherwise unable to comply with the periodic reporting requirements of the SEC, our common stock intended to be listed on
Nasdaq could be suspended or terminated and our share price could materially suffer. In addition, we or members of our management could
be subject to investigation and sanction by the SEC and other regulatory authorities and to shareholder lawsuits, which could impose significant
additional costs on us and divert management attention.
We may fail to make necessary acquisitions
or investments or enter desirable strategic alliances, and we may not be able to achieve the anticipated benefits from such acquisitions,
investments or strategic alliances.
Our strategy for long-term growth, productivity
and profitability depends in part on our ability to make prudent decisions to make strategic acquisitions or investments or enter desirable
alliances and to realize the benefits we expect when we make those investments or acquisitions. We may evaluate and consider strategic
acquisitions and investments or enter strategic alliances to develop new services or solutions, with an aim to enhance our competitive
position and achieve long-term growth, productivity and profitability. However, we cannot assure you that we will make prudent decisions
on such acquisitions, investments, strategic alliances at all times. In addition, investments or acquisitions involve numerous risks,
including (i) potential failure to achieve the expected benefits of the integration or acquisition, (ii) difficulties in, and
the cost of, integrating operations, technologies, services and personnel, (iii) potential write-offs of acquired assets or
investments and (iv) downward effect on our operating results. These transactions will also divert management’s time and resources
from our normal course of operations, and we may have to incur unexpected liabilities or expenses. Strategic alliances with third parties
could also subject us to a number of risks, including risks associated with potential leakage of proprietary information, non-performance by
the counterparty and an increase in expenses incurred in establishing new strategic alliances, any of which may materially and adversely
affect our business.
If we cannot successfully execute or effectively
operate, integrate, leverage and grow the acquired businesses or strategic alliances, our financial results and reputation may be materially
and adversely affected. While we expect our future acquisitions, investments or strategic alliances to further enhance our value propositions
to customers and improve our long-term profitability, there can be no assurance that we will realize our expectations within the
time frame we envisage, if at all, or that we can continue to support the values we allocate to these acquired, invested or alliance businesses,
including their goodwill or other intangible assets.
We may not be able
to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.
We may become an attractive
target for intellectual property attacks in the future with the increasing recognition of our brand. Any of our intellectual property
rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide
us with competitive advantages. In addition, there can be no assurance that (i) all of our intellectual property rights will be adequately
protected, or (ii) our intellectual property rights will not be challenged by third parties or found by a judicial authority to be invalid
or unenforceable. As of the date of this report, we have only two domain names: roshing.com and tianci-ciit.com. We have not owned or
had rights to any other intellectual property, such as patents, copyrights, trademarks, etc.
We are a “smaller reporting company”
under Rule 12b-2 of the Securities Exchange Act of 1934, and we cannot be certain if the scaled disclosure requirements applicable to
smaller reporting companies will make our common stock less attractive to investors and make it more difficult to raise capital as and
when we need it.
We may continue to be a smaller reporting
company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take
advantage of these scaled disclosures for so long as (a) the market value of our common stock held by non-affiliates is equal to or less
than $250 million as of the last business day of the most recently completed second fiscal quarter, and (b) our annual revenues is equal
to or less than $100 million during the most recently completed fiscal year and the market value of our common stock held by non-affiliates
is equal to or less than $700 million as of the last business day of the most recently completed second fiscal quarter.
We cannot predict if investors will find our
common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result,
there may be a less active trading market for our common stock and our stock price may be more volatile. In addition, taking advantage
of reduced disclosure obligations may make the comparison of our financial statements with other public companies difficult or impossible.
If investors are unable to compare our business with other companies in our industry, we may not be able to raise additional capital as
and when we need it, which may materially and adversely affect our financial condition and results of operations.
Anti-takeover provisions contained
in our bylaws and articles of incorporation as well as provisions of Nevada law, could impair a takeover attempt.
Our bylaws, amended articles of incorporation
and Nevada law contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed
undesirable by our board of directors. Our corporate governance documents include provisions:
These provisions, alone or together, could
delay or prevent hostile takeovers and changes in control or changes in our management.
The Nevada Revised Statutes (“NRS”)
Sections 78.411 through 78.444, regulate business combinations with interested stockholders. The NRS defines an interested stockholder
as a beneficial owner (directly or indirectly) of 10% or more of the voting power of the outstanding shares of the corporation. Pursuant
to NRS Sections 78.411 through 78.444, combinations with an interested stockholder remain prohibited for two years after the person
became an interested stockholder unless (i) the transaction is approved by the board of directors or the holders of a majority of
the outstanding shares not beneficially owned by the interested party, or (ii) the interested stockholder satisfies certain fair
value requirements. NRS 78.434 permits a Nevada corporation to opt out of the statute with appropriate provisions in its articles
of incorporation.
NRS Sections 78.378 through 78.3793 regulates
the acquisition of a controlling interest in an issuing corporation. An issuing corporation is defined as a Nevada corporation with 200
or more stockholders of record, of which at least 100 stockholders have addresses of record in Nevada and does business in Nevada directly
or through an affiliated corporation. NRS Section 78.379 provides that an acquiring person and those acting in association with an
acquiring person obtain only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation,
approved at a special or annual meeting of the stockholders. Stockholders who vote against the voting rights have dissenters’ rights
in the event that the stockholders approve voting rights. NRS Section 78.378 provides that a Nevada corporation’s articles
of incorporation or bylaws may provide that these sections do not apply to the corporation.
Any damage to the reputation and recognition
of our brand names, including negative publicity against us, our services, operations and our directors, senior management and business
partners may materially and adversely affect our business operations and prospects.
We believe our brand image and corporate reputation
will play an increasingly important role in enhancing our competitiveness and maintaining business growth. Many factors, some of which
are beyond our control, may negatively impact our brand image and corporate reputation if not properly managed. These factors include
our ability to provide superior solutions and services to our customers, successfully conduct marketing and promotional activities, manage
relationship with and among our customers and business partners, and manage complaints and events of negative publicity, maintain positive
perception of our Company, our peers and supply chain solution industry in general. Any actual or perceived deterioration of our service
quality, which is based on an array of factors including customer satisfaction, rate of complaint or rate of incident, could subject us
to damages such as loss of important customers. Any negative publicity against us, our solutions and services, operations, directors,
senior management, employees, business partners or our peers could adversely affect customer perception of our brand, cause damages to
our corporate reputation and result in decreased demand for our solutions and services. If we are unable to promote our brand image and
protect our corporate reputation, we may not be able to maintain and grow our customer base, and our business and growth prospects may
be adversely affected.
We may from time to time be subject
to claims, disputes, lawsuits and other legal and administrative proceedings.
We and our management may be subject to claims,
disputes, lawsuits, investigations and other legal and administrative proceedings incidental to the conduct of our business from time
to time. We are currently not party to any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar
proceedings and those involving any third party, which may have, or have had in the recent past, material adverse effects on our financial
position or profitability. Any claims against us or our management, with or without merit, could be time-consuming and costly to defend
or litigate, divert our management’s attention and resources or harm our brand equity. Claims arising out of actual or alleged violations
of law, breach of contract or torts could be asserted against us by customers, business partners, suppliers, competitors, employees or
governmental entities in investigations and legal proceedings. These claims could be asserted under a variety of laws, including but not
limited to intellectual property laws, labor and employment laws, securities laws, tort laws, contract laws, property laws, and employee
benefit laws. If a lawsuit or governmental proceeding against us is successful, we may be required to pay substantial damages or fines.
We may also lose, or be limited in, the rights to offer some of our services. As a result, the scope of our services could be reduced,
which could adversely affect our ability to attract new customers, harm our reputation and have a material adverse effect on our business,
financial condition and results of operations. Even if we are successful in our attempt to defend ourselves in legal and administrative
actions or to assert our rights under various laws, enforcing our rights against the various parties involved may be expensive, time-consuming,
and ultimately futile.
We may engage in transactions that present
conflicts of interest.
The Company’s officers and directors
may enter into agreements with the Company from time to time which may not be equivalent to similar transactions entered into with an
independent third party. A conflict of interest arises whenever a person has an interest on both sides of a transaction. While we believe
that it will take prudent steps to ensure that all transactions between the Company and any officer or director is fair, reasonable, and
no more than the amount it would otherwise pay to a third party in an “arms-length” transaction, there can be no assurance
that any transaction will meet these requirements in every instance.
We may adjust our business strategies
and models in response to changing market conditions, competitive pressures, or regulatory changes. However, there is no guarantee that
these adjustments will be successful, and they may not achieve the desired results, potentially impacting our performance and financial
results.
As changes in our business environment occur, we
may adjust our business strategies to meet these changes, or we may otherwise decide to restructure our operations or businesses
or assets. In addition, external events such as shifts in demographics, alterations in consumer behavior, fluctuations in macroeconomic
conditions, and amendments to laws, regulations, and government policies governing international trade and commerce may impair the value
of our assets and increase our costs. When these changes or events occur, we may incur costs to modify our business strategy to respond
to those market dynamics and satisfactorily meet customers’ demands. To meet customer demand and implement our strategies and expansion
plan, we may shift to a Vessel-Operating Common Carrier. This shift aims to achieve cost efficiency by reducing transportation costs,
as owning and operating vessels can decrease dependency on third-party shipping companies, potentially lowering transportation costs over
time. Additionally, operating our own vessels can also provide a competitive advantage over companies that rely on third-party carriers.
However, this transition may result in significant expenses for the purchase of vessels and related infrastructure necessary for our business
growth. Such initiatives and enhancements may require substantial capital expenditures. If we are unable to successfully implement our
business strategies and effectively respond to changes in market dynamics, our future financial results will suffer. Furthermore, we have
incurred, and may continue to incur, increased operating expenses in connection with certain changes to our business strategies.
Risks Related to Doing
Business in Hong Kong
Most of our operations are in Hong
Kong. However, due to the long arm provisions under the current Mainland China laws and regulations, the Chinese government may
exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at
any time, or may exert more control over offerings conducted overseas and/or foreign investment in issuers like us, which could
result in a material change in our operations and/or the value of our common stock.
Tianci is a holding company and we conduct
our operation through our operating subsidiary Roshing in Hong Kong. Our operations are primarily located in Hong Kong and few of our
clients are Mainland China residents. At the present time, we are not materially affected by recent statements by the Mainland China Government
indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers.
However, due to long arm provisions under the current Mainland China laws and regulations, there remains regulatory uncertainty with respect
to the implementation of Chinese law in Hong Kong. The PRC government may choose to exercise significant oversight and discretion, and
the policies, regulations, rules, and the enforcement of laws of the PRC government to which we are subject may change rapidly and with
little advance notice to us or our stockholders. These laws and regulations may be interpreted and applied inconsistently by different
agencies or authorities, and inconsistently with our current policies and practices. New laws, regulations, and other government directives
in the PRC may also be costly to comply with.
We are aware that recently the PRC government
initiated a series of regulatory actions and statements to regulate business operations in certain areas in Mainland China with little
advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies
listed overseas using VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in
anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or
administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations
will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business
operation, the ability to accept foreign investments and list on a U.S. or other foreign exchange.
China’s government may intervene or
influence our operations at any time or may exert more control over offerings conducted overseas and foreign investment in Hong Kong-based
issuers, which may result in a material change in our operations and/or the value of our common stock. The promulgation of new laws or
regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the
ability or way we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could
decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates,
or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business,
financial condition and results of operations could be adversely affected as well as materially decrease the value of our common stock.
While we believe that we and our subsidiaries
are currently not required to obtain any other permissions or approvals from Hong Kong authorities for our business operations, we cannot
assure you that we or our subsidiaries will be able to obtain all such permissions or approvals if they are nevertheless required.
The Directors confirm that, as of the date
of this report, we and our subsidiaries have received all requisite permissions or approvals from the Hong Kong authorities to operate
its business in Hong Kong, including but not limited to obtaining a business registration certificate. However, we have been advised by
our Hong Kong counsel that laws, regulations, or policies in Hong Kong could change in the future. If (i) we or our subsidiaries
do not receive or maintain such permissions or approvals, (ii) we or our subsidiaries inadvertently conclude that any other permissions
or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions
or approvals in the future, our operations and financial condition could be materially adversely affected, and our ability to offer securities
to investors could be significantly limited or completely hindered and the securities currently being offered may substantially decline
in value and become worthless.
We will rely on dividends and other
distributions on equity paid by our Hong Kong subsidiary to fund any cash and financing requirements we may have. In the future, the PRC
government may impose restrictions on our ability to transfer funds out of Hong Kong to fund operations or for other use outside of Hong
Kong. Any limitation on the ability of our Hong Kong subsidiary to make payments to us could have a material adverse effect on our ability
to conduct our business and might materially decrease the value of our common stock.
We are a holding company incorporated in the
United States, and we rely on dividends and other distributions on equity paid by our subsidiary in Hong Kong for our cash and financing
requirements, including the funds necessary to pay dividends and other cash distributions to our stockholders and service any debt we
may incur. If our Hong Kong subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its
ability to pay dividends or make other distributions to us.
Under the current practice of the Inland Revenue
Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by Roshing. The Mainland China laws and
regulations do not currently have any material impact on transfers of cash from Roshing to Tianci or from Tianci to Roshing. However,
the Chinese government may, in the future, impose restrictions or limitations on our ability to transfer money out of Hong Kong, to distribute
earnings and pay dividends to and from the other entities within our organization, or to reinvest in our business outside of Hong Kong.
Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business to outside of Hong Kong
and may affect our ability to receive funds from our operating subsidiary in Hong Kong. The promulgation of new laws or regulations, or
the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way
we conduct our business, could require us to change certain aspects of our business to ensure compliance, which could decrease demand
for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject
us to additional liabilities. To the extent any new or more stringent measures are implemented, our business, financial condition and
results of operations could be adversely affected and such measured could materially decrease the value of our common stock.
Changes in international trade policies,
trade disputes, barriers to trade, or the emergence of a trade war may dampen growth in Hong Kong, China and other markets where the majority
of our clients reside.
Political events, international trade disputes,
and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse
effect on us and our customers, service providers, and other partners. International trade disputes could result in tariffs and other
protectionist measures which may materially and adversely affect our business.
Tariffs could increase the cost of the goods
and products which could affect customers’ investment decisions. In addition, political uncertainty surrounding international trade
disputes and the potential of the escalation to a trade war could have a negative effect on customer confidence, which could materially
and adversely affect our business. We may also have access to fewer business opportunities, and our operations may be negatively impacted
as a result. In addition, the current and future actions or escalations by either the United States or China that affect trade relations