Tancheng Group (QSJC) reports Q2 2026 loss, zero sales and going concern risk
Tancheng Group Co., Ltd., which operates in China via subsidiary Qiansui Media, reported no revenue for the three and six months ended June 30, 2026, compared with $19,097 and $163,830 in the prior-year periods as it shifted resources from external sales to internal process and quality improvements.
The company posted a net loss of $91,078 for the quarter and $249,192 for the first half of 2026, versus losses of $85,157 and $207,364 a year earlier. Working capital deficit was $2,227,830 and accumulated deficit $2,321,765, with $4,118,222 due to related parties largely funding operations. Management concluded these conditions raise substantial doubt about the ability to continue as a going concern. Cash and cash equivalents increased to $244,143, mainly from related-party financing and customer advances for services operated by an affiliate. Management also determined disclosure controls and procedures were not effective due to limited internal resources.
Positive
- None.
Negative
- Going concern risk: six-month net loss of $249,192, working capital deficit of $2,227,830, and accumulated deficit of $2,321,765 led management to conclude there is substantial doubt about continuing as a going concern.
- Revenue collapse: revenue fell to nil for both the quarter and six months ended June 30, 2026, from $19,097 and $163,830 in the prior-year periods, while operating expenses remained broadly similar.
- Weak controls and related-party dependence: disclosure controls and procedures were deemed not effective, and liabilities include $4,118,222 due to related parties, indicating heavy reliance on affiliates for funding.
Filing Explained
As of June 30, no new shares were issued, while reported financing depended on related-party support and customer advances.
The Form 10-Q is an unaudited quarterly report covering the period ended
Because issuing additional shares can reduce an existing holder’s percentage ownership, this filing does not disclose a new share-count dilution event for existing common holders during the reporting period.
Cash used in operating activities was
At
Key Figures
Key Terms
going concern financial
working capital deficit financial
valuation allowance financial
related parties financial
ASC 606 financial
deferred tax assets financial
FAQ
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
For the transition period from _____________ to _____________
Commission File Number:
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
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Indicate by check mark whether the registrant
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| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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The number of shares outstanding of each of the
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TABLE OF CONTENTS
| Pages | ||
| PART I FINANCIAL INFORMATION |
||
| Item 1. | Financial Statements. | 3 |
| Condensed Consolidated Balance sheets as of June 30, 2026 (Unaudited) and December 31, 2025 (Audited) | 3 | |
| Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 and 2025 (Unaudited) | 4 | |
| Condensed Consolidated Statements of Changes in Deficit for the six months ended June 30, 2026 and 2025 (Unaudited) | 5 | |
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 (Unaudited) | 6 | |
| Notes to the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2026 and 2025 (Unaudited) | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 22 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 27 |
| Item 4. | Controls and Procedures. | 27 |
| PART II OTHER INFORMATION |
||
| Item 1. | Legal Proceedings. | 29 |
| Item 1A. | Risk Factors. | 29 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 29 |
| Item 3. | Defaults Upon Senior Securities. | 29 |
| Item 4. | Mine Safety Disclosures. | 29 |
| Item 5. | Other Information. | 29 |
| Item 6. | Exhibits. | 29 |
| 2 |
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TANCHENG GROUP CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except share data or otherwise stated)
| As of June 30, | As of December 31, | |||||||||
| Notes | 2026 | 2025 | ||||||||
| (Unaudited) | (Audited) | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | $ | ||||||||
| Inventory, net | 3 | |||||||||
| Advance to suppliers | 4 | |||||||||
| Amounts due from a related party | 8 | |||||||||
| Other current assets | ||||||||||
| Total current assets | ||||||||||
| Non-current assets: | ||||||||||
| Property and equipment | 5 | |||||||||
| Total non-current assets | ||||||||||
| Total assets | $ | $ | ||||||||
| LIABILITIES AND DEFICIT | ||||||||||
| Current liabilities: | ||||||||||
| Other payables and accruals | 6 | $ | $ | |||||||
| Advance from customers | ||||||||||
| Amounts due to related parties | 8 | |||||||||
| Total current liabilities | ||||||||||
| Total liabilities | ||||||||||
| COMMITMENTS AND CONTINGENCIES | 13 | – | ||||||||
| DEFICIT | ||||||||||
| Share capital ( | 9 | |||||||||
| Additional paid in capital | 10 | |||||||||
| Accumulated other comprehensive (loss) income | ( | ) | ||||||||
| Accumulated deficit | 11 | ( | ) | ( | ) | |||||
| Total deficit | ( | ) | ( | ) | ||||||
| Total liabilities and deficit | $ | $ | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 3 |
TANCHENG GROUP CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In U.S. Dollars, except share data or otherwise stated)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Unaudited | Unaudited | Unaudited | Unaudited | |||||||||||||
| REVENUE | $ | $ | $ | $ | ||||||||||||
| COST OF REVENUE | ( | ) | ( | ) | ||||||||||||
| GROSS PROFIT | ||||||||||||||||
| Selling and marketing expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER (EXPENSE)/INCOME | ( | ) | ( | ) | ||||||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME TAXES | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign currency translation differences | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TOTAL COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share: | ||||||||||||||||
| Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of shares used in computation: | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 4 |
TANCHENG GROUP CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT
(In U.S. Dollars, except share data or otherwise stated)
| Common Stock | Additional Paid in | Foreign Currency Translation | Accumulated | Total | ||||||||||||||||||||
| Shares | Amount | Capital | Reserve | Deficit | Deficit | |||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Net loss for the period | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||
| Other comprehensive loss | – | – | – | ( | ) | – | ( | ) | ||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Net loss for the period | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||
| Other comprehensive loss | – | – | – | ( | ) | – | ( | ) | ||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Net loss for the period | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||
| Other comprehensive loss | – | – | – | ( | ) | – | ( | ) | ||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Net loss for the period | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||
| Other comprehensive loss | – | – | – | ( | ) | – | ( | ) | ||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 5 |
TANCHENG GROUP CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars, except share data or otherwise stated)
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Unaudited | Unaudited | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash from operating activities: | ||||||||
| Depreciation of property and equipment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables | ||||||||
| Inventories, net | ( | ) | ||||||
| Advance to suppliers | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Other payables and accruals | ( | ) | ( | ) | ||||
| Advance from customers | ||||||||
| Cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Amounts due to related parties | ||||||||
| Amount due from a related party | ( | ) | ||||||
| Cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at the beginning of the period | ||||||||
| Cash and cash equivalents at the end of the period | $ | $ | ||||||
| Supplemental disclosures of non-cash activities: | ||||||||
| Offsetting of amounts due from related parties with amount due to related parties | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 6 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | DESCRIPTION OF BUSINESS |
TANCHENG GROUP CO., LTD. (“Company”), formerly named Bigeon Corp. (“Bigeon”) was incorporated on June 19, 2018 under the laws of Nevada. Prior to August 31, 2022, the Company was developing a new kind of messenger application. The product of the Company (“the App”) is intended to provide an entirely new way of sharing information.
The Company operates through its wholly-owned PRC subsidiary Shanxi Qiansui Tancheng Culture Media Co.,Ltd.(“Qiansui Media”). Since the second half of 2025, Qiansui Media has not conducted any business operations and has significantly scaled back its external sales activities of ornament and adornment products as management redirected resources toward internal process enhancements, quality control.
As of June 30, 2026, which is the date that these consolidated financial statements are available to be issued, the details of the Company’s subsidiaries are as follows.
| Schedule of subsidiaries | ||||||||||
| Name | Date of Incorporation | Place of Incorporation | Percentage of Direct or Indirect Ownership by the Company | Principal Activities | ||||||
| Qiansui International Group Limited (“Qiansui International”) | ||||||||||
| Qiansui (Hong Kong) Holdings Limited (“Qiansui HK”) | ||||||||||
| Shanxi Qiansui Tancheng Culture Consulting Co., Ltd. (“Qiansui Consulting”) | ||||||||||
| Shanxi Qiansui Tancheng Culture Media Co., Ltd. (“Qiansui Media”) | ||||||||||
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| (a) | Basis of Presentation |
The unaudited condensed consolidated financial statements include the accounts of Tancheng Group Co., Ltd. and its wholly owned subsidiaries (collectively the “Company”). In the opinion of the Company’s management, the unaudited condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these unaudited condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the use of management estimates. Certain prior period amounts in the unaudited condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Form 10-K”).
| 7 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (b) | Basis of Presentation and Going Concern |
The accompanying unaudited condensed consolidated financial statements include the balances and results of operations of the Company have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles in the U.S. (“US GAAP”).
The accompanying unaudited condensed consolidated financial statements are presented on the basis that the Company is a going concern. The going concern assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company incurred loss of $
| · | The Company has obtained financial support from the related parties. |
| · | The Company will accelerate the rollout of new business initiatives to revitalize its revenue generation capabilities. Specifically, the Company plans to enter into collaborative arrangements with affiliated entities to jointly develop and launch new cultural tourism projects. |
The Company cannot assure that it will be successful in obtaining adequate financial support from related parties or in achieving or maintaining profitability in the near term. The Company’s financial statements do not give effect to any adjustments relating to the carrying values and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern.
| (c) | Economic and Political Risks |
The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.
The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in government policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.
| 8 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (d) | Use of Estimates |
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent liabilities at the balance sheet date, and revenue and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include estimated useful lives and impairment of property and equipment, impairment provision for inventories and allowance for expected credit losses. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
| (e) | Cash and Cash Equivalents |
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. All cash and cash equivalents relate to cash on hand and cash at bank deposited in bank accounts in mainland China at June 30, 2026 and December 31, 2025.
| (f) | Property and equipment |
The Company has one motor vehicle, which is stated at cost less accumulated depreciation and accumulated impairment losses. Cost represents the purchase price of the motor vehicle and other costs incurred to bring the motor vehicle into its existing use. Maintenance and repairs are charged to expense.
Depreciation of the motor vehicle is provided
using the straight-line method over the estimated useful lives of
| (g) | Impairment of Long-Lived Assets |
The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets in an asset group may not be fully recoverable. The Company evaluates the recoverability of the long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value.
| (h) | Revenue Recognition |
The Company’s revenue recognition policy is compliant with ASC 606, Revenue from Contracts with Customers that revenue is recognized when a customer obtains control of promised goods and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount:
| (i) | identification of the goods and services in the contract; |
| (ii) | determination of whether the goods and services are performance obligations, including whether they are distinct in the context of the contract; |
| (iii) | measurement of the transaction price, including the constraint on variable consideration; |
| (iv) | allocation of the transaction price to the performance obligations; and |
| (v) | recognition of revenue when (or as) the Company satisfies each performance obligation. |
| 9 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (h) | Revenue Recognition (cont.) |
The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company identifies a single performance obligation, which is the sale and delivery of self-designed ornament and adornment products. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. The Company recognizes revenue at a point in time when the control of the goods are transferred to the customer. The Company's sales contracts include a one-month quality objection period, which is accounted for as a right of return and constitutes variable consideration. The Company estimates this variable consideration using the expected value method. Based on historical quality data and the zero returns, the Company has concluded that the expected returns are immaterial. Consequently, no refund liability is recorded, and the transaction price is not constrained at the time of revenue recognition.
Contract liabilities consist of advance from customers
related to cash received from customers for the future transfer of goods to customers. The balance of advance from customers represents
unfulfilled performance obligations in the sales agreement, i.e. products that have not yet been delivered. Once the related products
have been delivered, the amount in the advance from customers account is shifted to a revenue account. As of June 30, 2026 and December
31, 2025, the balance of advance from customers was $
For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
| (i) | Foreign Currency Translation |
The Company’s reporting currency is the U.S. dollar and the functional currency is the Chinese Renminbi (“RMB”). All assets and liabilities are translated at exchange rates at the balance sheet date and revenue and expenses are translated at the average yearly exchange rates and equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustments to other comprehensive income, a component of equity.
Transactions in currencies other than the functional currencies during the year are converted into the applicable functional currencies at the applicable rates of exchange prevailing at the dates of the transactions. Exchange gains and losses are recognized in the statements of operations.
The exchange rates utilized as follows:
| Schedule of exchange rates | ||||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Year-end RMB exchange rate | ||||||||
| Annual average RMB exchange rate | ||||||||
No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
| 10 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (j) | Foreign Currency Risk |
The RMB is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of the RMB into other currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. All the Company’s cash and cash equivalents are in RMB.
| (k) | Fair Value |
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when valuing the asset or liability. Authoritative literature provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
| (l) | Fair Value of Financial Instruments |
The Company’s financial instruments consist primarily of cash and cash equivalents, advance to suppliers, other current assets, amount due from a related party and due to related parties, and other payables and accruals. The carrying amounts of these balances approximate their fair values due to the short-term maturities of these instruments.
| 11 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (m) | Income Taxes |
Income tax expense comprises current and deferred taxation and is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized directly in other comprehensive income or equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable with respect to previous periods.
The Company accounts for income taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax basis of assets and liabilities, net of operating loss carry forwards and credits, by applying enacted tax rates that will be in effect for the period in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in the statements of operations in the period of change.
The Company accounts for uncertain tax positions by reporting liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Tax benefits are recognized from uncertain tax positions when the Company believes that it is more likely than not that the tax position will be sustained on examination by the tax authorities based on the technical merits of the position. The Company recognizes interest and penalties if any, related to unrecognized tax benefits in income tax expenses.
| (n) | Comprehensive Income or Loss |
Comprehensive income or loss includes net income or loss and foreign currency translation adjustments. Comprehensive income or loss is reported in the statements of comprehensive income or loss.
| (o) | Concentration of Credit Risk |
Financial instruments that potentially expose
the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents and advance to suppliers. As
of June 30, 2026 and December 31, 2025, substantially all of the Company’s cash and cash equivalents were deposited with financial
institutions with high-credit ratings and quality. During the three and six months ended June 30, 2026,
| 12 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (o) | Concentration of Credit Risk (cont.) |
Details of customer who accounted for 10% or more of the Company’s total revenue for the three months ended June 30, 2026 and 2025 are as follows:
| Schedule of revenue concentration | ||||||||||||||||
| For the three months ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Amount | % of total revenue | Amount | % of total revenue | |||||||||||||
| Customer A | $ | $ | ||||||||||||||
| Customer B | ||||||||||||||||
| Customer C | ||||||||||||||||
| $ | $ | |||||||||||||||
| For the six months ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Amount | % of total revenue | Amount | % of total revenue | |||||||||||||
| Customer A | $ | $ | ||||||||||||||
| $ | $ | |||||||||||||||
Details of supplier who accounted for 10% or more of the Company’s total purchase for the three months ended June 30, 2026 and 2025 are as follows:
| For the three months ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Amount | % of total purchase | Amount | % of total purchase | |||||||||||||
| Supplier A | $ | $ | ||||||||||||||
| For the six months ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Amount | % of total purchase | Amount | % of total purchase | |||||||||||||
| Supplier A | $ | $ | ||||||||||||||
| 13 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (p) | Segment Reporting |
In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Based on the criteria established by ASC 280, the Group’s CODM has been identified as chief executive officer of the Company, who reviews consolidated results of the Group when making decisions about allocating resources and assessing performance.
The Group’s CODM reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group operates and manages its business as a single operating and reportable segment. The Group’s CODM uses consolidated net income as the measure of profit or loss to monitor budget versus actual results and decide where to allocate and invest additional resources to continue growth. Significant segment expenses and other segment items are consistent with the financial information included on the consolidated statements of operations and comprehensive income. The measure of segment assets is reported on the consolidated balance sheet as total assets. As substantially all of the Group’s revenues are derived from within the PRC, no geographical revenue information is presented.
| (q) | Recent Accounting Pronouncements |
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability, form, content, and disclosure requirements for interim financial reporting under Topic 270. The amendments are effective for public business entities for interim reporting periods within annual reporting periods beginning after December 15, 2027, and for other entities after December 15, 2028. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its interim financial statement disclosures.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements — codification amendments in response to SEC’s disclosure Update and Simplification initiative which amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows — Overall, 250-10 Accounting Changes and Error Corrections — Overall, 260-10 Earnings Per Share — Overall, 270-10 Interim Reporting — Overall, 440-10 Commitments — Overall, 470-10 Debt — Overall, 505-10 Equity — Overall, 815-10 Derivatives and Hedging — Overall, 860-30 Transfers and Servicing — Secured Borrowing and Collateral, 932-235 Extractive Activities — Oil and Gas — Notes to Financial Statements, 946-20 Financial Services — Investment Companies — Investment Company Activities, and 974-10 Real Estate — Real Estate Investment Trusts — Overall. Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations. For entities subject to existing SEC disclosure requirements or those that must provide financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K. Early adoption is not allowed. For all other entities, the amendments will be effective two years later from the date of the SEC’s removal.
| 14 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (q) | Recent Accounting Pronouncements (cont.) |
In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In January 2025, the FASB issued ASU 2025-01, Clarifying the Effective Date of ASU 2024-03 (Subtopic 220-40). The ASU is effective concurrently with ASU 2024-03 for annual periods beginning after December 15, 2026 on a prospective basis. Early adoption is permitted. This ASU will result in aligned disclosure timing in the consolidated financial statements, once adopted. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements ("ASU 2025-12"). ASU 2025-12 makes thirty-three incremental improvements to generally accepted accounting principles. ASU 2025-12 is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its unaudited condensed consolidated financial statements.
| 3. | INVENTORIES |
| Schedule of inventories | ||||||||
As of June 30, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| Ornament and adornment products | $ | $ | ||||||
| 4. | ADVANCED TO SUPPLIERS |
Advance to suppliers mainly represents the amount that certain suppliers require the Company to pay in advance for the purchase of products or for the provision of services. Such advance is appropriate against future purchase orders or future services to be rendered. These advances are interest free, unsecured and short-term in nature.
| 15 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 5. | PROPERTY AND EQUIPMENT |
In April 2023, the Company purchased a motor vehicle
for approximately $
Depreciation of a motor vehicle is computed using
the straight-line method over the estimated useful lives of 5 years. Depreciation expense recorded for this motor vehicle for
the three and six months ended June 30, 2026 and 2025 was $
As of June 30, 2026 net book value of a motor
vehicle was $
| 6. | OTHER PAYABLES AND ACCRUALS |
Other payables and accruals were summarized as follows:
| Schedule of other payables and accruals | ||||||||
| As of | ||||||||
| June 30, 2026 | December 31, 2025 | |||||||
| US$ | US$ | |||||||
| Payroll payable | $ | $ | ||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| 7. | INCOME TAXES |
| (a) | Enterprise Income Tax (“EIT”) |
Tancheng Group Co., Ltd. was incorporated in the
State of Nevada. Tancheng Group Co., Ltd. is an U.S. entity and is subject to the United States federal income tax. No provision for income
taxes in the United States has been made as Tancheng Group Co., Ltd. had
Qiansui International was incorporated in the Cayman Islands. Under the current tax laws of Cayman Islands, Qiansui International is not subject to taxation.
Qiansui HK was incorporated in Hong Kong and is
subject to an income tax rate of
Qiansui Consulting and Qiansui Media were incorporated in the PRC and they are subject to profits tax rate at 25% for income generated and operation in the country.
| 16 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 7. | INCOME TAXES (cont.) |
| (a) | Enterprise Income Tax (“EIT”) (cont.) |
The Company operates its business through a subsidiary incorporated in the PRC which is subject to a corporate income tax rate of 25%. A reconciliation of the effective tax rates from 25% statutory tax rates for the six month period ended June 30, 2026 and 2025 is as follows:
| Schedule of reconciliation of tax expense | ||||||||
| For the three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Loss before tax | $ | ( | ) | $ | ( | ) | ||
| Tax benefit calculated at statutory tax rate | ||||||||
| Computed expected benefits | ( | ) | ( | ) | ||||
| Non-deductible expenses | ||||||||
| Change in valuation allowance | ||||||||
| Tax effect on tax losses expired | ||||||||
| Income tax expense | $ | $ | ||||||
| For the six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Loss before tax | $ | ( | ) | $ | ( | ) | ||
| Tax benefit calculated at statutory tax rate | ||||||||
| Computed expected benefits | ( | ) | ( | ) | ||||
| Non-deductible expenses | ||||||||
| Change in valuation allowance | ||||||||
| Tax effect on tax losses expired | ||||||||
| Income tax expense | $ | $ | ||||||
The full realization of the tax benefit associated with the losses carried forward depends predominantly upon the Company’s ability to generate taxable income during the carry-forward period.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits or that future deductibility is uncertain.
| 17 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 7. | INCOME TAXES (cont.) |
| (a) | Enterprise Income Tax (“EIT”) (cont.) |
As of June 30, 2026 and December 31, 2025, the
Company’s deferred tax assets solely represent the tax loss carried forward using the PRC statutory rate of 25%. As management of
the Company believes that it is more likely than not that the benefit from the tax loss carried forwards will not be realized, the Company
recorded a full valuation allowance for all the reporting periods. There were
As of June 30, 2026 and December 31, 2025, the significant components of the deferred tax assets are summarized below:
| Schedule of components of the deferred tax assets | ||||||||
| As of June 30, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carried forward | $ | $ | ||||||
| Total deferred tax assets | ||||||||
| Total deferred tax liabilities | ||||||||
| Total deferred tax assets, net | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net of valuation allowance | $ | $ | ||||||
Changes in valuation allowance are as follows:
| Schedule of changes in valuation allowance | ||||||||
| As of June 30, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| Balance at the beginning of the period | $ | $ | ||||||
| Increase | ||||||||
| Decrease | ( | ) | ( | ) | ||||
| Exchange differences | ||||||||
| Balance at end of the period | $ | $ | ||||||
| (b) | Value Added Tax (“VAT”) |
The Company is subject to VAT and related surcharges on revenue generated from sales of products. The Company records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Company to suppliers. Net VAT balance between input VAT and output VAT is recorded in the line item of accrued expenses and other current liabilities on the consolidated balance sheets. The Group incurs VAT related surcharges based on net VAT balance paid.
For revenue generated from the sales of goods,
the applicable value-added tax (“VAT”) rate is
| 18 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 8. | RELATED PARTIES TRANSACTIONS |
The table below sets forth the related parties and their relationships with the Company as of June 30, 2026 and December 31, 2025:
| Name of related parties | Relationship with the Company | |
| Yu Yang (“Mr. Yang”) | Controlling shareholder | |
| Jiaocheng Xinmu Trade Co., Ltd | Controlled by Mr. Yang | |
| All Weather (Hainan) Network Sports Co., Ltd | Controlled by Mr. Yang | |
| Taiyuan Tuohang Logistics Co., Ltd | Controlled by Mr. Yang | |
| Shanxi Xiliu Catering Management Co., Ltd | Controlled by Mr. Yang | |
| Shanxi Qiansui Fighting Co., Ltd. | Controlled by Mr. Yang | |
| Shanxi Qiansui Yonggu Construction Engineering Co., Ltd. | Controlled by Mr. Yang |
The related party balances and transactions as of and for the years ended June 30, 2026 and December 31, 2025 are as follows:
| Schedule of due from related party | ||||||||||
Amounts due from a related party: | ||||||||||
| As of June 30, | As of December 31, | |||||||||
| 2026 | 2025 | |||||||||
| All Weather (Hainan) Network Sports Co., Ltd | (a) | $ | $ | |||||||
| $ | $ | |||||||||
| Schedule of amounts due to related parties | ||||||||||
| Amounts due to related parties: | ||||||||||
| As of June 30, | As of December 31, | |||||||||
| 2026 | 2025 | |||||||||
| Yu Yang | (b) | $ | $ | |||||||
| Jiaocheng Xinmu Trade Co., Ltd | (c) | |||||||||
| Shanxi Xiliu Catering Management Co., Ltd | (d) | |||||||||
| Taiyuan Tuohang Logistics Co., Ltd | (e) | |||||||||
| Shanxi Qiansui Fighting Co., Ltd. | (e) | |||||||||
| Shanxi Qiansui Yonggu Construction Engineering Co., Ltd. | (e) | |||||||||
| $ | $ | |||||||||
| (a) |
| 19 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 8. | RELATED PARTIES TRANSACTIONS (cont.) |
| (b) | |
| (c) | |
| (d) |
|
| (e) |
Related party transactions:
During the three and six months ended June 30,
2026 and 2025, advances, payments, settlements and certain hotel business-related cash receipts collected on behalf of related parties
were made between the related parties and the Company as described above. In addition, during the three and six months ended June 30,
2026, the Company had
| 9. | EQUITY |
Authorized Shares
As of June 30, 2026 and December 31, 2025, the
Company has
Ordinary Shares
As of June 30, 2026 and December 31, 2025, the
Company’s outstanding number of ordinary shares was
The Company did
| 20 |
TANCHENG GROUP CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 10. | ADDITIONAL PAID IN CAPITAL |
On August 18, 2022, the former President of the
Company, Olegas Tunevicius signed an Assignment, Assumption, and Indemnity Agreement to assume all liabilities and debts and obligations
of Bigeon as of the Closing date of the Stock Purchase Agreement (Note 1). As of the Closing date, total liabilities amounting to $
| 11. | RESERVES |
Currency translation reserve
The currency translation reserve represents translation differences arising from the translation of foreign currency financial statements into the Company’s reporting currency.
| 12. | COMMITMENTS AND CONTINGENCIES |
As of June 30, 2026, the Company did
| 13. | SUBSEQUENT EVENTS |
The Company has evaluated subsequent events from June 30, 2026 to the date the unaudited condensed consolidated financial statements were issued and has determined that there are no items to disclose.
| 21 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management’s discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. Our financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “pursue,” “expect,” “predict,” “project,” “goals,” “strategy,” “future,” “likely,” “forecast,” “potential,” “continue,” negatives thereof or similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding business strategies, macro-economic and sector-specific trends, future cash flows, financing plans, plans and objectives of management and any other statements which are not statements of historical facts.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual future results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not put undue reliance on any of these forward-looking statements. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.
Unless otherwise indicated by the context, references to the “Company, “we,” “us,” “our” in this report are to Tancheng Group Co., Ltd., a Nevada corporation, and its consolidated subsidiaries.
Overview
Tancheng Group Co., Ltd. (formerly Bigeon), or Tancheng Group, was incorporated under the laws of Nevada on June 19, 2018. It remained a shell company until the completion of acquiring Qiansui International Group Limited, a Cayman Islands exempted company (“Qiansui International”), and Qiansui International’s subsidiaries on March 20, 2023, pursuant to a contribution agreement (the “Contribution Agreement”) entered into by and among Tancheng Group, and holders of 100% of the outstanding ordinary shares of Qiansui International who also held 79.9% of Tancheng Group’s outstanding common stock then (the “Contributors”). In accordance with the Contribution Agreement, the Contributors contributed all of their interests in Qiansui International to Tancheng Group (the “Contribution”).
Qiansui International was incorporated in the Cayman Islands on June 7, 2022. Qiansui (Hong Kong) Holdings Limited (“Qiansui HK”) was incorporated on July 21, 2022 in the Hong Kong SAR. Qiansui HK wholly owns Shanxi Qiansui Tancheng Culture Consulting Co., Ltd. (“Qiansui Consulting”) which was established on December 12, 2022 in the PRC. Qiansui Consulting is a wholly owned foreign entity, or WFOE, under PRC law. Qiansui Consulting wholly owns Shanxi Qiansui Tancheng Culture Media Co., Ltd. (“Qiansui Media”), which was established on June 14, 2017 in the PRC. Qiansui Consulting acquired Qiansui Media on December 28, 2022. Qiansui HK and Qiansui Consulting are intermediary holding companies. Qiansui International conducts its operations through Qiansui Media.
| 22 |
Following the consummation of the Contribution, our company, through its wholly owned PRC subsidiary Qiansui Media, has been engaged in the business of selling ornament and adornment products related to “Jue Cheng” culture and creating cultural tourism programs. Located in close proximity to PangQuanGou National Nature Reserve in Jiaocheng County, Shanxi Province, China, Qiansui Media has leveraged the rich heritage of “Jue Cheng” culture to develop innovative peripheral cultural products and large-scale recreational tourism projects.
Results of Operations
Comparison for The Three Months Ended June 30, 2026 and 2025
The following table sets forth key components of our results of operations during the three months ended June 30, 2026 and 2025.
| Three Months Ended June 30, | Change | |||||||||||
| 2026 | 2025 | (Decrease) Increase | ||||||||||
| Revenue | $ | – | $ | 19,097 | $ | (19,097 | ) | |||||
| Cost of revenue | – | (15,660 | ) | (15,660 | ) | |||||||
| Gross profit | – | 3,437 | (3,437 | ) | ||||||||
| Selling and marketing expenses | (4,739 | ) | (6,836 | ) | 2,097 | |||||||
| General and administrative expense | (86,168 | ) | (81,760 | ) | (4,408 | ) | ||||||
| Loss from operations | (90,907 | ) | (85,159 | ) | (5,748 | ) | ||||||
| Other (expense)/income | (171 | ) | 2 | (173 | ) | |||||||
| Net loss | $ | (91,078 | ) | $ | (85,157 | ) | $ | (5,921 | ) | |||
Revenue
We recognized no revenue for the three months ended June 30, 2026, representing a decrease of $19,097, or 100.0%, from the comparable period in 2025. The decrease was driven by a strategic shift in our business operations. Beginning in the second half of 2025, we reallocated resources from external sales efforts toward internal process enhancements and quality control. As a result of this intentional moderation in business expansion, we did not generate any new sales during the current quarter.
Cost of Revenue
Cost of revenue was nil for the three months ended June 30, 2026 compared to $15,660 for the three months ended June 30, 2025. Cost of revenue primarily comprises cost of products sold. The decrease in cost of revenue by $15,660 or 100.0% was commensurate with the absence of revenue generated during the current quarter.
Gross profit
We incurred a gross profit of nil for the three months ended June 30, 2026, compared to gross profit of $3,437 for the three months ended June 30, 2025. Gross margin was not meaningful for the second quarter of 2026 due to the lack of recognized revenue, compared to a gross margin of 18.0% for the comparable period in 2025. The decrease in gross profit to nil was entirely attributable to the aforementioned halt in sales, which resulted in a 100.0% corresponding decrease in both revenues and cost of revenues.
| 23 |
Operating Expenses
General and administrative expense
General and administrative expenses constituted the primary component of our operating expenses for the three months ended June 30, 2026, and 2025, amounting to $86,168 and $81,760, respectively. General and administrative expenses increased by $4,408, or 5.4%, compared with the three months ended June 30, 2025, and were relatively stable between the periods.
Net Loss
We reported a net loss of $91,078 for the three months ended June 30, 2026 compared to a net loss of $85,157 for the three months ended June 30, 2025. This increase in net loss of $5,921 was primarily attributable to the absence of revenue generation for the second quarter of 2026. As we strategically slowed down our external market development to focus on internal realignment, our gross profit declined accordingly.
Comparison for The Six Months Ended June 30, 2026 and 2025
The following table sets forth key components of our results of operations during the six months ended June 30, 2026 and 2025.
| Six Months Ended June 30, | Change | |||||||||||
| 2026 | 2025 | (Decrease) Increase | ||||||||||
| Revenue | $ | – | $ | 163,830 | $ | (163,830 | ) | |||||
| Cost of revenue | – | (120,881 | ) | (120,881 | ) | |||||||
| Gross profit | – | 42,949 | (42,949 | ) | ||||||||
| Selling and marketing expenses | (10,920 | ) | (13,479 | ) | 2,559 | |||||||
| General and administrative expense | (238,101 | ) | (236,866 | ) | 1,235 | |||||||
| Loss from operations | (249,021 | ) | (207,396 | ) | 41,625 | |||||||
| Other (expense)/income | (171 | ) | 32 | (203 | ) | |||||||
| Net loss | $ | (249,192 | ) | $ | (207,364 | ) | $ | (41,828 | ) | |||
Revenue
We recognized no revenue for the six months ended June 30, 2026, representing a decrease of $163,830, or 100.0%, from the comparable period in 2025. The decrease was driven by a strategic shift in our business operations. Beginning in the second half of 2025, we reallocated resources from external sales efforts toward internal process enhancements and quality control. As a result of this intentional moderation in business expansion, we did not generate any new sales during the current half year.
Cost of Revenue
Cost of revenue was nil for the six months ended June 30, 2026 compared to $120,881 for the six months ended June 30, 2025. Cost of revenue primarily comprises cost of products sold. The decrease in cost of revenue by $120,881 or 100.0% was commensurate with the absence of revenue generated during the current half year.
| 24 |
Gross profit
We incurred a gross profit of nil for the six months ended June 30, 2026, compared to gross profit of $42,949 for the six months ended June 30, 2025. Gross margin was not meaningful for the first half year of 2026 due to the lack of recognized revenue, compared to a gross margin of 26.2% for the comparable period in 2025. The decrease in gross profit by $42,949 was entirely attributable to the aforementioned halt in sales, which resulted in a 100.0% corresponding decrease in both revenues and cost of revenues.
Operating Expenses
General and administrative expense
General and administrative expenses constituted the primary component of our operating expenses for the six months ended June 30, 2026, and 2025, amounting to $238,101 and $236,866, respectively. The increase of $1,235, or 0.5%, was primarily attributable to an increase in professional service fees.
Net Loss
We reported a net loss of $249,192 for the six months ended June 30, 2026 compared to a net loss of $207,364 for the six months ended June 30, 2025. The net loss increased by $41,828, primarily attributable to the absence of revenue generation during the six months ended June 30, 2026. As we strategically slowed down our external market development to focus on internal realignment and product line consolidation, our gross profit declined accordingly.
Liquidity and Capital Resources
| As of June 30, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| Working capital: | ||||||||
| Total current assets | $ | 1,904,276 | $ | 1,448,264 | ||||
| Total current liabilities | (4,132,106 | ) | (3,397,217 | ) | ||||
| Working capital deficit | $ | (2,227,830 | ) | $ | (1,948,953 | ) | ||
Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. For the six months ended June 30, 2026 and 2025, the Group recognized nil and US$163,830 in revenues, respectively. As of June 30, 2026, the Group reported an accumulated deficit of US$2,321,765 and a working capital deficit of US$2,227,830. Additionally, the Group incurred net cash used in operating activities of US$266,559 for the six months then ended. The Group’s operating results for future periods are subject to numerous uncertainties and it is uncertain if the Group will be able to reduce or eliminate its net losses for the foreseeable future. These conditions raise substantial doubt about the Group’s ability to continue as a going concern.
Management has estimated our projected cash requirements for future operations and available support from related parties and has concluded that we have, or will have access to, sufficient financial resources to meet our financial obligations as and when they fall due in the coming twelve months.
| 25 |
Cash Flows
As of June 30, 2026, we had cash and cash equivalents of $244,143. The following table provides detailed information about our net cash flows for the six months ended June 30, 2026 and 2025:
| For the six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows: | ||||||||
| Net cash used in operating activities | $ | (266,559 | ) | $ | (276,693 | ) | ||
| Net cash provided by financing activities | 490,409 | 192,617 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 3,055 | 867 | ||||||
| Net increase/(decrease) in cash and cash equivalents | 226,905 | (83,209 | ) | |||||
| Cash and cash equivalents at the beginning of the period | 17,238 | 100,653 | ||||||
| Cash and cash equivalents at the end of the period | $ | 244,143 | $ | 17,444 | ||||
Operating Activities
Net cash used in operating activities was $266,559 for the six months ended June 30, 2026. The difference between our net loss of $249,192 and net cash outflows from operating activities was due to the add-back of non-cash depreciation of a motor vehicle in the amount of $14,015 and the cash used in operating assets and liabilities in an aggregate amount of $31,382.
Net cash used in operating activities was $276,693 for the six months ended June 30, 2025. The difference between our net loss of $207,364 and net cash outflows from operating activities was due to the add-back of non-cash depreciation of a motor vehicle in the amount of $13,260 and the cash used in operating assets and liabilities in an aggregate amount of $82,589.
The net changes in operating assets and liabilities for the six months ended June 30, 2025 were primarily attributable to (i) an increase in inventories of $32,178 due to more purchase was made during the first half of year 2025 to maintain sufficient inventories level for future sales and (ii) a decrease in accounts payables of $61,663 due to our timely payment to settle our vendors’ balance upon the receipt of inventories.
Investing Activities
No cash movement on investing activities both for the six months ended June 30, 2026 and 2025.
Financing Activities
Net cash provided by financing activities was $490,409 and net cash provided by financing activities was $192,617 for the six months ended June 30, 2026,and 2025, respectively. The net cash provided by financing activities during the six months ended June 30, 2026 was primarily attributable to advance payments received from individuals for hotel accommodation, bathing and wellness services, and health and wellness treatment programs at China Qiansui Juecheng Cultural Health-care Complex, which is operated by Shanxi Xiliu Catering Management Co., Ltd, a related party of the Company, and was partially offset by $153,023 of operating expenses paid on behalf of All Weather (Hainan) Network Sports Co., Ltd., another related party of the Company. The net cash provided by financing activities during the six months ended June 30, 2025 was primarily attributable to additional advances received from related parties to fund our working capital requirements and support ongoing operations.
| 26 |
Inflation
Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in our industry and continually maintain effective cost control in operations.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and accompanying footnotes. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liabilities in the future.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. The management determines there are no critical accounting estimates.
When reading our financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Our critical accounting policies and practices include revenue recognition. See “Note 2 — Summary of Significant Accounting Policies” to our financial statements for the disclosure of these accounting policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time 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.
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Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including the Company’s chief executive officer (“CEO”) and the Company’s chief financial officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of June 30, 2026. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2026 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.
Management is in the process of determining how best to change our current system and implement a more effective system to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act have been recorded, processed, summarized and reported accurately. Our management intends to develop procedures to address the current deficiencies to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.
Changes in Internal Control over Financial Reporting
Except for the matters described above, there were no changes in our internal controls over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. We are currently not aware of any legal proceedings or claims that would require disclosure under Item 103 of Regulation S-K. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
ITEM 1A. RISK FACTORS.
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
There were no unregistered sales of equity securities or repurchase of common stock during the period covered by this report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
During the quarter ended June 30, 2026, no director
or officer of the Company
ITEM 6. EXHIBITS.
The following exhibits are filed as part of this report or incorporated by reference:
| Exhibit No. | Description | |
| 31.1 | Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TANCHENG GROUP CO., LTD. | ||
| (Registrant) | ||
| Dated: August 14th, 2026 | By: | /s/ Yu Yang |
| Yu Yang | ||
| Chief Executive Officer | ||
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