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:
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, Zip Code)
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(Registrant’s telephone number, including area code)
N/A
(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
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
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Smaller reporting company
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Emerging growth company
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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. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares as of November 14th, 2025.
TABLE OF CONTENTS
| 2 |
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TANCHENG GROUP CO., LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except share data or otherwise stated)
AS OF SEPTEMBER 30, 2025 (UNAUDITED) AND DECEMBER 31, 2024 (AUDITED)
| September 30, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
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$ |
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| Other receivables |
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| Inventories |
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| Advance to suppliers |
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| Total current assets |
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| Non-current assets: | ||||||||
| Motor vehicle |
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| Total non-current assets |
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| Total assets | $ |
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$ |
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| LIABILITIES AND DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ |
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$ |
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| Other payables and accruals |
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| Advance from customers |
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| Amounts due to related parties |
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| Total current liabilities |
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| Total liabilities |
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| COMMITMENTS AND CONTINGENCIES | ||||||||
| DEFICIT | ||||||||
| Share capital ( shares of Common Stock, par value $ per share, authorized, of which shares are issued and outstanding as of September 30, 2025 and December 31, 2024) |
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| Additional paid in capital |
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| Foreign currency translation reserves |
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| Accumulated deficit |
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| Total deficit |
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| Total liabilities and deficit | $ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
| 3 |
TANCHENG GROUP CO., LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In U.S. Dollars, except share data or otherwise stated)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (UNAUDITED)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| REVENUE | $ |
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$ |
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$ |
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$ |
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| COST OF REVENUE |
(
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(
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(
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(
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| GROSS PROFIT |
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| Selling and marketing expenses |
(
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(
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| General and administrative expenses |
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| Total operating expenses |
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| LOSS FROM OPERATIONS |
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| OTHER INCOME |
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| LOSS BEFORE INCOME TAXES |
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| INCOME TAXES |
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| NET LOSS | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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| Foreign currency translation differences | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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| TOTAL COMPREHENSIVE LOSS | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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| 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 condensed consolidated financial statements.
| 4 |
TANCHENG GROUP CO., LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT
(In U.S. Dollars, except share data or otherwise stated)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (UNAUDITED)
| Common Stock |
Additional
Paid in |
Foreign Currency Translation | Accumulated | Total | ||||||||||||||||||||
| Shares | Amount | Capital | Reserve | Deficit | Deficit | |||||||||||||||||||
| Balance at January 1, 2024 |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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| Net loss for the period | – |
(
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(
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| Other comprehensive (loss) | – |
(
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(
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| Balance at September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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| Balance at January 1, 2025 |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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| Net loss for the period | – |
(
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(
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| Other comprehensive loss | – |
(
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(
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| Balance at September 30, 2025 |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | |||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 5 |
TANCHENG GROUP CO., LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars, except share data or otherwise stated)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (UNAUDITED)
| Nine months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(
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) | $ |
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| Adjustment for: | ||||||||
| Depreciation |
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| Changes in operating assets and liabilities: | ||||||||
| Other receivables |
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| Inventories |
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| Advance to suppliers |
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| Accounts payable |
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| Other payables and accruals |
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| Advance from customers |
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| Cash used in operating activities |
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| Cash flows from financing activities: | ||||||||
| Amounts due to related parties |
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| Cash provided by financing activities |
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| Effect of exchange rate changes on cash and cash equivalents |
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| Net decrease in cash and cash equivalents |
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| Cash and cash equivalents at the beginning of the year |
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| Cash and cash equivalents at the end of the period | $ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
| 6 |
TANCHENG GROUP CO., LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 and 2024 (UNAUDITED)
| 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.
Qiansui International Group Limited (“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 People’s Republic of China (the “PRC”). Qiansui Consulting is a wholly owned foreign entity 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.
The Company operates through its wholly-owned PRC subsidiary Qiansui Media and the principal activity is the sale of self-designed ornament and adornment products in the PRC.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
(a) Basis of Presentation and Going Concern
The accompanying 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 interim consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto that are included in our Annual Report on Form 10-K for the year ended December 3l, 2024 (the Annual Report on Form 10-K) filed with the SEC.
The accompanying 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 net loss of $
| - | The Company will obtain financial support from the related parties. | |
| - | Since 2024, management has strategically focused on selling high-margin product, resulting in improved gross profit and operating cash flows. Management anticipates that this trend will continue to enhance overall profitability, positively impacting the Company’s financial health by generating sustainable operating cash flows and supporting future growth. |
The board of directors believes the Company has adequate financial resources to continue in operational existence for at least 12 months from the date of the release of these condensed consolidated financial statements. Accordingly, the going concern basis of accounting continues to be used in preparing the condensed consolidated financial statements for the nine months ended September 30, 2025.
| 7 |
(b) 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.
(c) 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 condensed consolidated financial statements include economic lives and impairment of property, plant and equipment and allowance for doubtful accounts. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
(d) 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 deposited in bank accounts in mainland China at September 30, 2025 and December 31, 2024. Cash balance in bank accounts in mainland
China are insured by the People’s Bank of China Financial Stability Department (“FSD”) where there is a RMB500,000 deposit
insurance limit for a legal entity’s aggregated balance at each bank. As a result, the amounts not covered by FSD were $
and
$
The Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Company is permitted to exchange Renminbi for foreign currencies through banks that are authorized to conduct foreign exchange business.
(e) Motor Vehicle
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. Gains or losses on disposals are reflected as gain or loss in the period of disposal. All ordinary repair and maintenance costs are expensed as incurred.
Depreciation of the motor vehicle is provided using
the straight-line method over the estimated useful lives of
| 8 |
(f) 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. |
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 reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. 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. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery or service being rendered.
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 September 30, 2025 and December
31, 2024, 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.
(g) 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 exchange rates for the reporting period 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:
| September 30, 2025 | September 30, 2024 | |||||||
| Period-end RMB exchange rate |
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| Annual average RMB exchange rate |
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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.
| 9 |
(h) 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.
(i) 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.
(j) Fair Value of Financial Instruments
The Company’s financial instruments consist primarily of cash and cash equivalents, other receivables, accounts payable, and other payables and accruals. The carrying amounts of these balances approximate their fair values due to the short-term maturities of these instruments.
(k) 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.
| 10 |
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.
(l) Comprehensive Income or Loss
Comprehensive income or loss includes net income and foreign currency translation adjustments. Comprehensive income or loss is reported in the statements of comprehensive income or loss.
(m) 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 other receivables. As of September
30, 2025 and December 31, 2024, 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 nine months ended September 30, 2025, revenue amounting to $
Details of customer who accounted for 10% or more of the Company’s total revenue for the three and nine months ended September 30, 2025 and 2024 are as follows:
| For the three months ended September 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Amount | % of total revenue | Amount | % of total revenue | |||||||||||||
| Customer A | $ |
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$ |
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| For the nine months ended September 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Amount | % of total revenue | Amount | % of total revenue | |||||||||||||
| Customer A | $ |
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$ |
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| Customer B |
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| Customer C |
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| Customer D |
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| $ |
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$ |
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| 11 |
Details of supplier who accounted for 10% or more of the Company’s total purchase for the three and nine months ended September 30, 2025 and 2024 are as follows:
| For the three months ended September 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Amount | % of total purchase | Amount | % of total purchase | |||||||||||||
| Supplier A | $ |
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$ |
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| For the nine months ended September 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Amount | % of total purchase | Amount | % of total purchase | |||||||||||||
| Supplier A | $ |
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$ |
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(n) Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2023. The Company adopted ASU 2023-07 as of January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various aspects related to accounting for income taxes. ASU 2023-09 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in ASU 2023-09 are effective for public business entities for fiscal years beginning after December 15, 2024, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
In March 2024, the FASB issued ASU 2024-01, “Compensation — Stock Compensation (Topic 718) — Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
| 12 |
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements — Amendments to Remove References to the Concept Statements” (“ASU 2024-02”). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Group is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from contracts with customers. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company’s annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
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 condensed consolidated financial statements.
| 3. | INVENTORIES |
| September 30, 2025 | December 31, 2024 | |||||||
| Ornament and adornment products | $ |
|
$ |
|
||||
| 4. | MOTOR VEHICLE |
| September 30, 2025 | December 31, 2024 | |||||||
| Motor vehicle | $ |
|
$ |
|
||||
| Less: Accumulated depreciation |
(
|
) |
(
|
) | ||||
| Net book value | $ |
|
$ |
|
||||
Depreciation expense recorded for this motor vehicle
for the three and nine months ended September 30, 2025 and 2024 was $
| 13 |
| 5. | 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
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 three and nine months ended September 30, 2025 and 2024 is as follows:
|
For the three months ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Loss before tax | $ |
(
|
) | $ |
(
|
) | ||
| PRC statutory income tax rate |
|
|
||||||
| Provision for income taxes |
(
|
) |
(
|
) | ||||
| Non-deductible expenses |
|
|
||||||
| Change in valuation allowance |
|
|
||||||
| Tax effect on tax losses expired |
|
|
||||||
| Income tax expense | $ |
|
$ |
|
||||
|
For the nine months ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Loss before tax | $ |
(
|
) | $ |
(
|
) | ||
| PRC statutory income tax rate |
|
|
||||||
| Provision for income taxes |
(
|
) |
(
|
) | ||||
| Non-taxable income |
|
|
||||||
| 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.
| 14 |
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.
As of September 30, 2025 and December 31, 2024, the
Company’s deferred tax assets solely represent the tax loss carried forward using the PRC statutory rate of
(b) Value Added Tax (“VAT”)
The Company was subject to the standard VAT rate of
| 6. | RELATED PARTIES TRANSACTIONS |
The table below sets forth the related parties and their relationships with the Company as of September 30, 2025 and December 31, 2024:
| Name of related parties | Relationship with the Company | |
| Yu Yang (“Mr. Yang”) | Controlling shareholder | |
| Jiaocheng Xinmu Trade Co., Ltd (“Jiaocheng Xinmu”) | Controlled by Mr. Yang | |
| All Weather (Hainan) Network Sports Co., Ltd (“All Weather”) | Controlled by Mr. Yang | |
| Taiyuan Tuohang Logistics Co., Ltd (“Taiyuan Tuohang”) | Controlled by Mr. Yang | |
| Shanxi Xiliu Catering Management Co., Ltd (“Shanxi Xiliu”) | Controlled by Mr. Yang |
The related party balances and transactions are as follows:
Amounts due to related parties:
| September 30, 2025 | December 31, 2024 | |||||||||
| Yu Yang | (a) | $ |
|
$ |
|
|||||
| Jiaocheng Xinmu Trade Co., Ltd | (b) |
|
|
|||||||
| Taiyuan Tuohang Logistics Co., Ltd | (c) |
|
|
|||||||
| $ |
|
$ |
|
|||||||
| (a) |
|
| (b) |
|
| (c) |
|
| 15 |
Related party transactions:
During the three and nine months ended September 30,
2025 and 2024, there were expenses paid on behalf by the related parties as described above. In addition, during the three and nine months
ended September 30, 2025 and 2024, the Company sold products to All Weather (Hainan) Network Sports Co., Ltd in aggregate amounts of $
| 7. | EQUITY |
Authorized Shares
As of September 30, 2025 and December 31, 2024, the Company has authorized ordinary shares, par value $ per share.
Ordinary Shares
As of September 30, 2025 and December 31, 2024, the Company’s outstanding number of ordinary shares was .
The Company did t issue any shares during the three and nine months ended September 30, 2025 and 2024.
| 8. | RESERVES |
(a) Legal reserve
Pursuant to the laws applicable to the PRC’s Foreign Investment Enterprises, the Company must make appropriations from after-tax profit to non-distributable reserve funds. Subject to certain cumulative limits, the general reserve requires annual appropriations of 10% of after-tax profits as determined under the PRC laws and regulations at each year-end until the balance reaches 50% of the PRC entity registered capital; the other reserve appropriations are at the Company’s discretion. These reserves can only be used for specific purposes of enterprise expansion and are not distributable as cash dividends. As of September 30, 2025 and December 31, 2024, the paid-up statutory reserve was $ .
(b) 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.
| 9. | SEGMENT INFORMATION |
The Company operates in Mainland China. Due to the integrated structure of the Company’s business, the Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The Company determined it has one reportable segment, as the CODM regularly reviews operations and financial performance on an aggregate basis at a consolidated level for the purposes of allocating resources and to make business decisions.
| 16 |
The following table provides information about the Company’s segment:
|
For the three months ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Segment revenue | $ |
|
$ |
|
||||
| Less: | ||||||||
| Cost of inventories |
(
|
) |
(
|
) | ||||
| Salaries and related costs |
(
|
) |
(
|
) | ||||
| Depreciation |
(
|
) |
(
|
) | ||||
| Legal and professional fees |
(
|
) |
(
|
) | ||||
| Other segment items |
(
|
) |
(
|
) | ||||
| Segment loss |
(
|
) |
(
|
) | ||||
| Reconciliation: | ||||||||
| Other operating income |
|
|
||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
|
For the nine months ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Segment revenue | $ |
|
$ |
|
||||
| Less: | ||||||||
| Cost of inventories |
(
|
) |
(
|
) | ||||
| Salaries and related costs |
(
|
) |
(
|
) | ||||
| Depreciation |
(
|
) |
(
|
) | ||||
| Legal and professional fees |
(
|
) |
(
|
) | ||||
| Other segment items |
(
|
) |
(
|
) | ||||
| Segment loss |
(
|
) |
(
|
) | ||||
| Reconciliation: | ||||||||
| Other operating income |
|
|
||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| 10. | COMMITMENTS AND CONTINGENCIES |
As of September 30, 2025, the Company did
| 11. | SUBSEQUENT EVENTS |
The Company has evaluated subsequent events from September 30, 2025 to the date of the release of these condensed consolidated financial statements and has determined that there are no items to disclose.
| 17 |
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.
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.
| 18 |
Results of Operation
Comparison for The Three Months Ended September 30, 2025 and 2024
The following table sets forth key components of our results of operations during the three months ended September 30, 2025 and 2024.
| 2025 | 2024 |
Increase/
Decrease |
||||||||||
| Revenue | $ | 52,198 | $ | 145,764 | $ | (93,566 | ) | |||||
| Cost of revenue | (38,774 | ) | (105,123 | ) | (66,349 | ) | ||||||
| Gross profit | 13,424 | 40,641 | (27,217 | ) | ||||||||
| Selling and marketing expenses | (6,879 | ) | (7,095 | ) | (216 | ) | ||||||
| General and administrative expenses | (78,245 | ) | (87,558 | ) | (9,313 | ) | ||||||
| Loss from operations | (71,700 | ) | (54,012 | ) | (17,688 | ) | ||||||
| Other income | 4 | 71 | (67 | ) | ||||||||
| Net loss | $ | (71,696 | ) | $ | (53,941 | ) | $ | (17,755 | ) | |||
Revenue
We generated $52,198 in revenue for the three months ended September 30, 2025 compared to $145,764 for the three months ended September 30, 2024, representing decrease in revenue of $93,566 or 64.2% compared to the three months ended September 30, 2024. The decrease was mainly due to the decrease in the quantity of ornament and adornment products sold during the three months ended September 30, 2025. Since 2024, we have been experiencing intensified competition, resulting in increased price sensitivity among our customers. We are redefining and adjusting our business strategy to gain a competitive advantage in the market.
Cost of Revenue
Cost of revenue was $38,774 for the three months ended September 30, 2025 compared to $105,123 for the three months ended September 30, 2024. Cost of revenue mainly consists of the cost of products sold and labor costs. The decrease in cost of revenue by $66,349 or 63.1% was mainly due to an decrease in the volume of products sold, as reflected in the decrease in revenue.
Gross profit
Gross profit for the three months ended September 30, 2025 was $13,424 compared with $40,641 for the three months ended September 30, 2024. As a percentage of revenue, our gross margin decreased from a gross profit of 27.9% for the three months ended September 30, 2024 to a gross profit of 25.7% for the three months ended September 30, 2025, primarily because the decrease in revenue was unable to cover the fixed overhead costs included in cost of revenue.
Operating Expenses
General and administrative expenses
By far the most significant component of our operating expenses for both the three months ended September 30, 2025 and 2024 was general and administrative expenses in the amount of $78,245 and $87,558, respectively. The decrease of $9,313 or 10.6% was mainly due to our success in maintaining our cost structure.
| 19 |
Net Loss
We reported a net loss of $71,696 for the three months ended September 30, 2025 compared to a net loss of $53,941 for the three months ended September 30, 2024. Although we operated at a loss, we expect to see a positive trend in our future results.
Comparison for The Nine Months Ended September 30, 2025 and 2024
The following table sets forth key components of our results of operations during the nine months ended September 30, 2025 and 2024.
| 2025 | 2024 |
Increase/
Decrease |
||||||||||
| Revenue | $ | 216,028 | $ | 302,899 | $ | (86,871 | ) | |||||
| Cost of revenue | (159,655 | ) | (222,642 | ) | (62,987 | ) | ||||||
| Gross profit | 56,373 | 80,257 | (23,884 | ) | ||||||||
| Selling and marketing expenses | (20,358 | ) | (20,681 | ) | (323 | ) | ||||||
| General and administrative expenses | (315,111 | ) | (314,651 | ) | 460 | |||||||
| Loss from operations | (279,096 | ) | (255,075 | ) | 24,021 | |||||||
| Other income | 36 | 179 | (143 | ) | ||||||||
| Net loss | $ | (279,060 | ) | $ | (254,896 | ) | $ | 24,164 | ||||
Revenue
We generated $216,028 in revenue for the nine months ended September 30, 2025 compared to $302,899 for the nine months ended September 30, 2024, representing an decrease in revenue of $86,871 or 28.7% compared to the nine months ended September 30, 2024. The decrease was mainly due to the decrease in the quantity of ornament and adornment products sold during the nine months ended September 30, 2025. Since 2024, we have been experiencing intensified competition, resulting in increased price sensitivity among our customers. We are redefining and adjusting our business strategy to gain a competitive advantage in the market.
Cost of Revenue
Cost of revenue was $159,655 for the nine months ended September 30, 2025 compared to $222,642 for the nine months ended September 30, 2024. Cost of revenue mainly consists of the cost of products sold and labor costs. The decrease in cost of revenue by $62,987 or 28.3% was in line with the decrease in revenue.
Gross profit
Gross profit for the nine months ended September 30, 2025 was $56,373 compared with $80,257 for the nine months ended September 30, 2024. As a percentage of revenue, our gross margin slightly decreased from a gross profit of 26.5% for the nine months ended September 30, 2024 to 26.1% for the nine months ended September 30, 2025, primarily because of the decrease in the cost of revenue was less than the decrease in revenue.
| 20 |
Operating Expenses
General and administrative expenses
By far the most significant component of our operating expenses for both the nine months ended September 30, 2025 and 2024 was general and administrative expenses in the amount of $315,111 and $314,651, respectively. The increase of $460 or 0.1% was mainly due to our success in maintaining our cost structure.
Net Loss
We reported a net loss of $279,060 for the nine months ended September 30, 2025 compared to $254,896 for the nine months ended September 30, 2024. Although we operated at a loss, we expect to see a positive trend in our future results.
Liquidity and Capital Resources
| September 30, 2025 | December 31, 2024 | |||||||
| Working capital: | ||||||||
| Total current assets | $ | 1,443,490 | $ | 1,479,137 | ||||
| Total current liabilities | (3,283,089 | ) | (3,030,046 | ) | ||||
| Working capital deficiency | $ | (1,839,599 | ) | $ | (1,550,909 | ) | ||
Our principal sources of liquidity and capital resources have been, and are expected to continue to be, cash flow from operations and cash advances from related parties. Our principal uses of cash have been, and we expect will continue to be, for working capital to support a reasonable increase in our scale of operations.
Management has estimated our cash flow from 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. There can be no assurances, however, that any of the financial resources we may be contemplating as being available to us in the future will, in fact, be available to us on acceptable terms, if at all. We believe there will be sufficient funds to run our operations for the next 12 months.
As of September 30, 2025, we had cash and cash equivalents of $24,678. The following table provides detailed information about our net cash flows for the nine months ended September 30, 2025 and 2024:
| For the nine months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows: | ||||||||
| Net cash used in operating activities | $ | (376,322 | ) | $ | (443,053 | ) | ||
| Net cash provided by financing activities | 298,904 | 221,592 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,443 | (851 | ) | |||||
| Net decrease in cash and cash equivalents | (75,975 | ) | (222,312 | ) | ||||
| Cash and cash equivalents at the beginning of the year | 100,653 | 412,154 | ||||||
| Cash and cash equivalents at the end of the period | $ | 24,678 | $ | 189,842 | ||||
| 21 |
Operating Activities
Net cash used in operating activities was $(376,322) for the nine months ended September 30, 2025. The difference between our net loss of $(279,060) and net cash outflows from operating activities was due to the adjustment of non-cash depreciation of a motor vehicle in the amount of $19,978 and the cash used in operating assets and liabilities in an aggregate amount of $(117,240).
The cash used in operating assets and liabilities was mainly attributable to (i) an increase in inventories of $(26,625) due to more purchase was made during the nine months ended September 30, 2025 to maintain sufficient inventories level for future sales; (ii) a decrease in accounts payables of $(61,935) due to our timely payment to settle our vendors’ balance upon the receipt of inventories; and (iii) an increase in advance from customers of $22,108 due to more sales order received during the period end that was undelivered.
Financing Activities
Net cash generated from financing activities was $298,904 for the nine months ended September 30, 2025, which was attributable to the funds from related parties to support our business operations.
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, revenue or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.
Critical Accounting Policies and Estimates
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. |
| 22 |
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 reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. 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. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery or service being rendered.
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 September 30, 2025 and December 31, 2024, the balance of advance from customers was $2,809 and $51,237, respectively. For the nine months ended September 30, 2025 and 2024, $51,237 and $142,889 of revenue recognized was included in the Company’s advance from customers’ balance as of December 31, 2024 and 2023, respectively.
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.
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.
Recent accounting pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2023. The Company adopted ASU 2023-07 as of January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various aspects related to accounting for income taxes. ASU 2023-09 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in ASU 2023-09 are effective for public business entities for fiscal years beginning after December 15, 2024, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
In March 2024, the FASB issued ASU 2024-01, “Compensation — Stock Compensation (Topic 718) — Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
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In March 2024, the FASB issued ASU 2024-02, “Codification Improvements — Amendments to Remove References to the Concept Statements” (“ASU 2024-02”). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Group is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from contracts with customers. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company’s annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s condensed consolidated financial statements.
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 condensed consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
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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 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.
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 September 30, 2025. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2025 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 September 30, 2025 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.
Other than as previously disclosed in current reports on Form 8-K, 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 September 30, 2025, 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: November 14th, 2025 | By: | /s/ Yu Yang |
| Yu Yang | ||
| Chief Executive Officer | ||
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