Tianci International, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto. The management’s discussion and analysis contain forward-looking statements, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report.

 

Overview

 

On March 3, 2023, we acquired ownership of RQS United Group Limited, a company organized under the laws of the Republic of Seychelles (“RQS United”), pursuant to the Share Exchange Agreement dated March 3, 2023 among the Company, RQS United and RQS Capital Limited, the prior owner of RQS United.

 

RQS United is a holding company incorporated in the Republic of Seychelles. RQS United has no operations other than holding 90% of the outstanding share capital of its subsidiary, Roshing International Co., Limited, a company organized under the laws of Hong Kong (“Roshing”). Roshing was incorporated on June 22, 2011 and was initially engaged in providing business services, such as software development, consulting and the sale of electronic parts. Since 2023 Roshing has been primarily engaged in logistics solutions, including shipping operation management. Commencing in the first quarter of fiscal year 2026, Roshing has also been engaged in the resale of mineral ores, specifically chromium and manganese. Roshing also continues to generate a small portion of our revenue from providing business services.

 

Our primary line of business is global shipping logistics. The Company, through its subsidiary, Roshing, provides global logistics services encompassing booking, the transportation arrangement, and related logistics solutions. Roshing’s customized logistics solutions are tailored to meet the diverse needs of its customers.

 

For the container shipping service, Roshing charters cargo space from shipping suppliers (such as shipowners, ship carriers or non-vessel operating common carriers) and then sub-charters that space to its customers (cargo owners or cargo agents). For the bulk goods shipping service, Roshing issues fixture notes to customers, and then arranges the booking of ships, and signs chartering contracts with suppliers (such as shipowners). Roshing also tailors the selection of transport options, and arranges to transport the goods from the port of loading to the port of destination, so as to complete the performance of the contract. 

 

Roshing currently does not own or operate any transportation assets. By leveraging our senior management’s expertise in the global logistics industry and adopting an asset-light strategy at the early stage, Roshing has seen a significant growth in logistics revenue since 2023. Shufang Gao, our Chief Executive Officer, previously worked for a globally renowned shipping conglomerate, acquiring over 20 years of management experience. His expertise spans shipping operation management and logistics transportation. Leveraging this experience, he has provided the Company with the managerial framework to expand its global logistics business, as well as access to relevant customer and supplier resources in the shipping industry. Roshing’s business is primarily carried out in Hong Kong and other locations in the Asia-Pacific region, mainly in Japan, South Korea and China. Roshing’s logistics services also include the shipment of goods to African countries.

 

Roshing also generates a small portion of its revenue from the sale of electronic parts, and certain business and technical consulting services, independent from its global logistics business.

 

 

 

 

 

Starting in this fiscal year, we have expanded into global trade of bulk chrome and manganese ore by sourcing high-grade minerals directly from resource-rich regions for resale. We intend to utilize optimized bulk vessel and container shipping, and provide end-to-end supply chain solutions for metallurgical and steelmaking customers. The introduction of the mineral trade business is expected to generate operational and strategic synergies with our existing logistics business lines, enhancing overall efficiency and value creation.

 

On April 11, 2025, we completed a $7 million public offering and became a listed company on Nasdaq.

 

Key factors that affect operating results

 

Our performance of operations and financial conditions have been, and are expected to continue to be, affected by a multitude of factors. Among the significant factors are:

 

Economic Conditions in Hong Kong. We are a Nevada corporation with operations conducted by our subsidiary Roshing, which is based in Hong Kong. Accordingly, if Hong Kong experiences any adverse economic, political or regulatory conditions, such as local economic downturn, natural disasters, contagious disease outbreaks, terrorist attacks, or if the government adopts regulations that place restrictions or burdens on us or on our industry in general, our business, financial condition, results of operations and prospects may be materially and adversely affected.

 

International Trade Environment. The demand for our shipping operation services is driven by the levels of international trade, which is in turn affected by global political, economic and social conditions. Any changes in a particular country’s trade policy could trigger retaliatory actions by affected countries, potentially eventually resulting in a trade war, which could increase the cost of goods and thus reduce customer demand for products if the parties have to pay tariffs which increase their prices or if trading partners limit their trade with the particular country. Our business is also susceptible to downturns and disruptions in the business activities of our direct customers, which are beyond our control. If sales decline in a particular geographical market in which our direct customers operate, due to unstable regional and/or global political and economic conditions, such decline will likely lead to a corresponding plunge in the international trade volume which, in turn, could reduce the demand for freight forward services and adversely affect our results of operations.

 

Our Ability to Source Cargo Space from Vendors on a Cost-Efficient Manner. A significant portion of our cost of revenue is the fees that we pay to our vendors. As a result, our results of operation depend on our ability to source vendors in a cost-efficient manner by obtaining a favorable price and effectively controlling the cost.

 

Development of Our Mineral Trading Business. In addition to our global logistics services, we have recently expanded into mineral trading, under which we source mineral products at competitive prices and resell them to downstream customers. The successful performance of this new business line will depend on a number of factors. First, our ability to identify reliable upstream suppliers and obtain stable mineral supply at favorable prices is critical to maintaining adequate margins. Volatility in global commodity prices, changes in supply–demand dynamics, or disruptions in mineral production regions could significantly affect our purchase costs and profitability. Second, our mineral trading activities rely heavily on maritime logistics, and we seek to utilize our own arranged shipping whenever possible to optimize cost efficiency. Therefore, increases in freight rates, port congestion, vessel availability, geopolitical tensions affecting sea routes, or unexpected disruptions in international logistics may materially impact our operating results. Third, mineral trading is subject to various international trade, customs, and inspection regulations. Any changes in export or import controls, environmental or product-quality requirements, sanctions, or other compliance obligations could restrict our ability to trade certain minerals or increase compliance costs. If we are unable to secure stable sources of mineral products at reasonable prices, or if logistics conditions or regulatory requirements become less favorable, our financial performance and growth prospects related to this business line may be materially and adversely affected. 

 

 

 

 

Results of Operation

 

Comparison of results for the three months ended April 30, 2026 and 2025

  

	For the three months ended April 30,							Change			Change
	2026				2025			Amounts			Percentage
Revenues	$	4,310,521			$	1,948,215		$	2,362,306			121%
Cost of Revenues		3,613,032				1,890,232			1,722,800			91%
Gross profit		697,489				57,983			639,506			1,103%
Selling and marketing		30,000				63,700			(33,700	)		(53%	)
General and administrative		552,141				960,583			(408,442	)		(43%	)
(Loss) income from operations		115,348				(966,300	)		1,081,648			(112-%	)
Other (loss) net		(86	)			–			(86	)		–
Provision for income taxes		23,717				(6,891	)		30,608			(444%	)
Net (loss) income		91,545				(959,409	)		1,050,954			(110%	)
Less: net (loss) income attributable to non-controlling interest		42,819				(11,422	)		54,241			(475%	)
Net (loss) income attributable to Tianci	$	48,726			$	(947,987	)	$	996,713			(105%	)

 

Comparison of results for the nine months ended April 30, 2026 and 2025

 

	For the nine months ended April 30,							Change			Change
	2026				2025			Amounts			Percentage
Revenues	$	12,013,432			$	7,008,358		$	5,005,074			71%
Cost of Revenues		10,841,382				6,641,966			4,199,416			63%
Gross profit		1,172,050				366,392			805,658			220%
Selling and marketing		119,580				163,924			(44,344	)		(27%	)
General and administrative		1,623,053				1,392,187			230,866			17%
(Loss) from operations		(570,583	)			(1,189,719	)		619,136			(52%	)
Other (loss) income, net		(153	)			27,391			(27,544	)		(101%	)
Provision for income taxes		23,717				–			23,717
Net (loss) income		(594,453	)			(1,162,328	)		567,875			(49%	)
Less: net (loss) income attributable to non-controlling interest		24,817				(7,934	)		32,751			(413%	)
Net (loss) attributable to Tianci	$	(619,270	)		$	(1,154,394	)	$	535,124			(46%	)

 

Revenues

 

For the three months ended April 30, 2026, our total revenue increased significantly to $4,310,521 from $1,948,215 for the three months ended April 30, 2025. The increase was primarily attributable to the launch of our global mineral trading business, which contributed $1,418,552 to our total revenue for the three months ended April 30, 2026, representing approximately 33% of our revenue in the quarter ended April 30, 2026. Revenue generated from our core global logistics services increased $369,371 or 19%, to $2,271,363 from $1,901,992. The logistics service revenue represented 53% of our total revenue in the three months ended April 30, 2026. Other service revenue, which contributed 14.4% of our total revenue for the three months ended April 30, 2026, increased by $574,383, approximately 1200%, from $46,223 for the three months ended April 30, 2025 to $620,606 for the three months ended April 30, 2026. The increase in other service revenue was primarily driven by growth in business consulting services resulting from increased client demand for international business development. Going forward, we expect that our business consulting services will continue to make a significant contribution to our revenue, and we believe our consulting services revenue will expand.

 

 

 

 

For the nine months ended April 30, 2026, our total revenue increased significantly to $12,013,432 from $7,008,358 for the nine months ended April 30, 2025. The increase was primarily attributable to the launch of our global mineral trading business, which contributed $3,239,872 to our total revenue for the nine months ended April 30, 2026, representing approximately 27% of our revenue in nine months ended April 30, 2026. Revenue generated from our core global logistics services increased $1,286,836 or 19%, to $8,018,604 from $6,731,768. The logistics service revenue represented 67% of our total revenue in the nine months ended April 30, 2026.

 

	For the Three Months Ended April 30,						For the Nine Months Ended April 30,
	2026				2025		2026				2025
Global Logistics Service Revenue	$	2,271,363			$	1,901,992	$	8,018,604			$	6,731,768
Sales of Mineral Products		1,418,552				–		3,239,872				–
Other Service Revenue		620,606				46,223		754,956				276,590
Total	$	4,310,521			$	1,948,215	$	12,013,432			$	7,008,358

 

Cost of Revenues

 

Our cost of revenues from our revenue categories are summarized as follows:

 

	For the Three Months Ended April 30,						For the Nine Months Ended April 30,
	2026				2025		2026				2025
Cost of Global Logistics Service	$	2,186,753			$	1,886,564	$	7,791,053			$	6,472,998
Cost of Mineral Products		1,415,118				–		3,016,808				–
Cost of Other Service		11,161				3,668		33,521				168,968
Total	$	3,613,032			$	1,890,232	$	10,841,382			$	6,641,966

  

Our cost of global logistics services represented 60.5% and 99.8% of total cost of revenues during the three months ended April 30, 2026 and 2025, respectively. Our cost of global logistics services represented 72% and 97% of total cost of revenues during the nine months ended April 30, 2026 and 2025, respectively. Cost of global logistics services primarily includes cargo space charged by direct ocean carriers, freight forwarders and ancillary logistics services fees. Our cost of revenues from cost of mineral products represented 39.2% of total cost of revenues during the three months ended April 30, 2026. Our cost of revenues from cost of mineral products represented 28% of total cost of revenues during the nine months ended April 30, 2026.

 

Total cost of revenue increased by 91% from $1,890,232 to $3,613,032 for the three months ended April 30, 2026, and increased by 63% from $6,641,966 to $10,841,382 for the nine months ended April 30, 2026. The increase was primarily attributable to the launch of our new global mineral trading business as source mineral products from suppliers. Cost of logistics services increased $300,189, or 16% for the three months ended April 30, 2026 and increased $1,318,055, or 20% for the nine months ended April 30, 2026, which was in line with the increase in logistics business revenue in the same period.

 

 

 

 

 

Gross Profit

 

Our gross profit from each of our revenue categories is summarized as follows:

 

Margins

 

	For the Three Months Ended April 30,						For the Nine Months Ended April 30,
	2026				2025		2026				2025
Global Logistics Service
Gross Profit Margin	$	84,610			$	15,428	$	227,551			$	258,770
Gross Profit Percentage		3.73%				0.81%		2.84%				3.84%
Sales of Mineral Products
Gross Profit Margin	$	3,434			$	–	$	223,064			$	–
Gross Profit Percentage		0.24%				–		6.88%				–
Other Services
Gross Profit Margin	$	609,445			$	42,555	$	721,435			$	107,622
Gross Profit Percentage		98.20%				92.06%		95.56%				38.91%
Total
Gross Profit Margin	$	697,489			$	57,983	$	1,172,050			$	366,392
Gross Profit Percentage		16.18%				2.98%		9.76%				5.23%

 

Our total gross profit increased by $639,506, or approximately 1100%, to $697,489 for the three months ended April 30, 2026, and increased by $805,658, or approximately 220%, to $1,172,050 for the nine months ended April 30, 2026. For the three and nine months ended April 30, 2026, our overall gross profit margin was 16.18% and 9.76%, an increase from gross profit margin of 2.98% for the three months ended April 30, 2025 and an increase from gross profit margin of 5.23% for the nine months ended April 30, 2025. The Company's overall gross profit margin is affected by both the gross profit margins achieved within each business line and the revenue mix among its business segments. Because Other Services typically generate higher gross profit margins than Global Logistics Services and Sales of Mineral Products, an increase in the proportion of revenue from Other Services generally results in a higher consolidated gross profit margin.

 

Gross margin from our core logistic service operations increased for the three months ended April 30, 2026 compared to the same period of the prior year, which was driven by improved market condition and relatively higher pricing in this quarter. Gross margin from our mineral products decreased for the three months ended April 30, 2026 compared to that for the nine months ended April 30, 2026, which was mainly attributable to higher cost of mineral products sold from the chrome ore core business. We believe the cost of mineral products will continue to grow in the near future, putting downward pressure on our mineral sales margin. The Company is actively expanding and diversifying its supplier base for its mineral products sales business in an effort to enhance procurement flexibility, improve pricing competitiveness, and achieve greater control over procurement costs. Looking forward, our consolidated gross margin performance will depend largely on our ability to optimize our logistics route mix, effectively manage mineral procurement costs, and maintain a favorable business matrix.

 

 

 

 

 

Operating Expenses

 

There was a decrease in operating expenses in the three months ended April 30, 2026, but an increase in the nine months ended April 30, 2026 as compared to the same periods last year. Our operating expenses primarily include payroll expenses, commissions, advertising, rent, and professional fees relating to our obligations as a public company. The decrease of $408,442 in our general and administrative expenses, from $960,583 for the three months ended April 30, 2025 to $552,141 in the three months ended April 30, 2026, was primarily attributable to expenses we incurred in the three months ended April 30, 2026 as an indirect result of the public offering we completed in that quarter, including audit expenses, merger and acquisition consulting expenses, and public relations expenses. The increase of $230,866 in our general and administrative expenses, from $1,392,187 for the nine months ended April 30, 2025 to $1,623,053 in the nine months ended April 30, 2026 was primarily attributable to increases in payroll, rent expenses, and certain professional services fees as we scale up our operations as a public listed company. Management expects that general and administrative expenses will remain elevated in the foreseeable future as we continue to incur additional costs associated with operating as a public company.

 

The increase in general and administrative expenses was partially offset by a decrease in selling and marketing expenses, which were $119,580 for the nine months ended April 30, 2026, as compared to $163,924 for the same period in last fiscal year. The reduction evidences our continuing efforts to operate with less dependence on brokers for business development and to reduce commission-based expenses.

 

Income Tax Expense

 

Our income tax expense amounted to $23,717 for the three and nine months ended April 31, 2026, as compared to income tax benefits of $6,891 and $nil for the three and nine months ended April 31, 2025, respectively. The change was due to the increase in operating income generated by Roshing during this period.

 

Net Income (Loss)

 

As a result of the foregoing, we incurred a net income of $91,545 and a net loss of $594,453 for the three and nine months ended April 30, 2026, and a net loss of $959,409 and $1,162,328 for the three and nine months ended April 30, 2025, respectively. As the Company owns 90% of its operating subsidiary, Roshing, 10% of the net income or loss realized by Roshing was attributed to minority interest. Therefore, the net income for the three months ended April 30, 2026 attributable to the shareholders of the Company was $48,726, and the net loss for the nine months ended April 30, 2026 attributable to the shareholders of the Company was $619,270.

 

Liquidity and Capital Resources

 

In assessing our liquidity, we monitor and analyze our cash on-hand and our operating expenditure commitments. Our liquidity needs are to meet our working capital requirements and operating expenses obligations. As of April 30, 2026, we had working capital of $2,596,047. To date, we have financed our operations primarily through capital contributions from shareholders, private placements of equity, and the public offering of common stock.

 

We believe that our liquidity and working capital will be sufficient to sustain our business operations for the next twelve months. We may, however, need additional cash resources in the future if there are changes in business conditions or other adverse developments or if the Company finds and wishes to pursue opportunities for investment, acquisition, capital expenditure, or similar actions.

 

We started providing shipping & freight forwarding services in 2023 and entered the global mineral trading business in July, 2025. Although the shipping and mineral business has been growing, we may require significant capital expenditure, such as acquiring transportation assets, for developing our market share. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity may result in dilution to our shareholders. Any loans that we may secure would result in increased fixed obligations and could result in operating covenants that would restrict our operations. Our obligation to bear credit risk for certain financing transactions we facilitate may also strain our operating cash flow. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. 

 

 

 

 

The following table summarizes the key components of our cash flows for the nine months ended April 30, 2026 and 2025.

 

	For the nine months ended
	April 30,
	2026				2025
Net cash used in operating activities	$	(1,687,149	)		$	(2,000,182	)
Net cash used in investing activities		–				–
Net cash provided by financing activities		–				5,217,937
Net change in cash and restricted cash	$	(1,687,149	)		$	3,217,755

 

Operating activities

 

Net cash of $1,687,149 used in operating activities for the nine months ended April 30, 2026 was primarily the result of our net loss of $594,453, an increase of $334,084 in prepayment and other current assets, and an increase of $957,881 in accounts receivable, partially offset by a $221,207 decrease in inventory. 

 

Net cash of $2,000,182 used in operating activities for the nine months ended April 30, 2025 was primarily the result of net loss of $1,162,328, an increase of $166,752 in accounts receivable, an increase of $723,733 in prepaid expense, a decrease of $51,920 in income taxes payable, and a decrease of $53,861 in accrued liabilities following payments from the Company, partially offset by a non-cash adjustment of $158,412 representing the value of the warrant we issued to our underwriter.

 

Investing activities

 

The company had no investing activities during the nine months ended April 30, 2026 or 2025.

 

Financing activities

 

Net cash provided by financing activities for the nine months ended April 30, 2026 and 2025 was nil and $5,217,937, which was attributable to the to the proceeds from our public offering in 2025.

 

Critical Accounting Estimates

 

Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

In connection with the preparation of our financial statements for the three and nine months ended April 30, 2026, there was no accounting estimate we made that was subject to a high degree of uncertainty and was critical to our results.

 

Recently Issued Accounting Pronouncements

 

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. The Company does not believe that any recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets.