Item 1A. Risk Factors
RISK FACTORS
Investing in our common
stock involves a high degree of risk. Before investing in our common stock, you should carefully consider the risks described below, as
well as the other information in this Report, including our consolidated financial statements and the related notes. In addition, we may
face additional risks and uncertainties not currently known to us, or which as of the date of this registration statement we might not
consider significant, which may adversely affect our business. If any of the following risks occur, our business, financial condition
and results of operations could be materially adversely affected. In such case the trading price of our common stock could decline due
to any of these risks or uncertainties, and you may lose part or all 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 involves 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 facilitating 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. For further details,
please refer to the section titled “Regulations related to employment and labor protection” beginning on page 83.
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 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, 2025, two customers accounted for 68.9% of our revenue. During the year ended July 31, 2024,
three customers accounted for approximately 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.
An evaluation was conducted under the supervision
and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures
as of July 31, 2025. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective
as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded,
processed, summarized and reported within the time periods specified in SEC rules and forms as a result of the following material weaknesses:
Our management
will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial
reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary
and as funds allow.
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 the 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.
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 are aware 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 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.
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 measures 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