QSJC 10-K & 10-Q changes, risk factors and insider trading

On December 16, 2021, pursuant to the HFCA Act, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in the PRC and Hong Kong, because of a position taken by one or more authorities in such jurisdictions. In addition, the PCAOB’s report identified specific registered public accounting firms which are subject to these determinations. Either our current or former registered public accounting firm is not headquartered in the PRC or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. Our current auditorauditor, Guangdong Prouden CPAs GP, is aheadquartered Singapore-basedin accountingGuangzhou, firmGuangdong Province, thatChina, and is registered with the PCAOB and can be inspected by the PCAOB. WeOn haveDecember no15, current2022, intentionthe ofPCAOB engagingvacated anyits auditorDecember based16, 2021 determination and confirmed that it is currently able to inspect and investigate completely registered public accounting firms in the mainland China orand Hong Kong. Accordingly, Kongour andcurrent notauditor is subject to regularPCAOB inspection by the PCAOB.inspection. Furthermore, the PCAOB is able to inspect the audit workpapers of our PRC subsidiaries, as such workpapers are electronic files possessed by our registered public accounting firms. However, if the PCAOB determines in the future after the offering that it cannot inspect or fully investigate our auditor at such future time, trading in our securities would be prohibited under the HFCA Act.

On August 26, 2022, CSRC, the MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we were not identified as a Commission-Identified Issuer after we filed on March 29,26, 20242025 the annual report on Form 10-K for the fiscal year ended December 31, 20232024 (the “2024 Annual Report”) and do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this Annual Report on Form 10-K.Report. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. Notwithstanding,.Notwithstanding, as our current auditor, OnestopGuangdong Assurance PAC,Prouden CPAs GP, is headquartered in Singapore,Guangzhou, China, and the PCAOB has confirmed its ability to inspect registered public accounting firms in mainland China following the December 15, 2022 determination, we expectbelieve that Guangdong Prouden CPAs GP is currently subject to PCAOB inspection. However, because our auditor is headquartered in mainland China, if the PCAOB reverses its determination and concludes that it willis remainno subjectlonger able to completeinspect inspectionor andinvestigate investigationcompletely byregistered PCAOBpublic accounting firms in mainland China in the foreseeable future, and thus, that the risk of our shares being prohibited from trading pursuant to the HFCAA iswould low.be heightened. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the relevant fiscal year. In accordance with the HFCAA, as amended, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our common stock when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our common stock. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

The market for sales of cultural products ,products, and planned planned recreational tourism programs is highly fragmented and rapidly evolving. If other market participants introduce new or improved products products or services that are more compelling or widely accepted than ours in the regions we operate, our ability to grow our revenue and remain profitable could suffer. The Company faces competition from other companies that provide similar offerings. These competitors may acquire market share, which could potentially reduce demand for our products and offerings.

Cost of revenue was $365,606$162,364 for the year ended December 31, 20242025 compared to $1,608,247$365,606 for the year ended December 31, 2023.2024. Cost of revenue mainly consists of cost of products sold and labor cost. The decrease in cost of revenue by $1,242,641$203,242 or 77.3%55.6% was mainly due to a decrease in the purchase price of our main product, “Chinese Twelve Zodiac Pendants”, and a decline in the volume of products sold, as reflected relatively in line with the decrease in revenue.

General and administrative expensesexpense

By far the most significant component of our operating operating expenses for both the years ended December 31, 20242025 and 20232024 was general and administrative expenses in the amount of $397,782 $398,574 and $623,879, $397,782, respectively. The decreaseincrease of $226,097$792 or 36.2%0.2% was mainly due to a decrease in legal and professional fees. For the year ended December 31, 2023, we incurred legal and professional fees in connection with the execution and completionpayment of thechamber Contribution transaction, because of whichcommerce wemembership ceased being a shell company. By contrast, we incurred only small legal and professional fees related to our regular SEC reporting obligations for the year ended December 31, 2024.fees.

Our principal sources of liquidity and capital resources 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.

Net cash used in operating activities was $(586,597)$449,137 for the year ended December 31, 2024.2025. The difference between our net loss of $(288,160)$371,187 and net cash outflows from operating activities was due to the adjustment of non-cash depreciation of a motor vehicle in the amount of $26,748$26,760 and the cash used in operating assets and liabilities in an aggregate amount of $(325,185).$104,710.

The cash used in operating assets and liabilities was generally attributable to (i) increase in inventories of $(87,122)$26,747 due to the purchaselower ofsales newvelocity productsassociated nearwith theour fiscalstrategic yearslowdown in endexternal market development; (ii) increase decrease in advance to suppliers of $(60,101)$34,118 related to thethat prepaymentwe madecurtailed forour procurement volume in response to the consultancy services to be renderedslowdown in fiscal year 2025.sales; (iii) decrease in accounts payables of $(89,381)$62,219 due to the scale down of vendors’ balances; and (iv) decrease in advance from customers of $(89,017)$49,252 due to fewer unfulfilled sales orders.

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, revenuerevenues 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

Comparison for The Three Months Ended March 31,June 30, 2026 and 2025

The following table sets forth key components of our results of operations during the three months ended MarchJune 31,30, 2026 and 2025.

We recognized no revenue for the three months ended MarchJune 31,30, 2026, representing a decrease of $144,733,$19,097, or 100.0%, from the comparable period in 2025. The decrease was driven by a strategic strategic shift in our business operations. Beginning in the second half of 2025, we reallocated resources from external sales efforts toward internal process enhancements,enhancements and quality control .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 was $0nil for the three months ended MarchJune 31,30, 2026 compared to $105,221$15,660 for the three months ended MarchJune 31,30, 2025. Cost of revenue primarily comprises cost of products sold. The decrease in cost of revenue by $105,221$15,660 or 100.0% was commensurate with the absence of revenue generated during the current quarter.

We incurred a gross profit of $0nil for the three months ended MarchJune 31,30, 2026, compared to gross profit of 39,512$3,437 for the three months ended MarchJune 31,30, 2025. Gross margin was not meaningful for the firstsecond quarter of 2026 due to the lack of recognized revenue, compared to a gross margin of 27.3%18.0% for the comparable period in 2025. The decrease in gross profit to zeronil was entirely attributable to the aforementioned halt in sales, which resulted in a 100.0% corresponding decrease in both revenues and cost of revenues.

General and administrative expenses constituted the primary component of our operating expenses for the three months ended MarchJune 31,30, 2026, and 2025, amounting to $151,933$86,168 and $155,106,$81,760, respectively. TheGeneral decreaseand ofadministrative $3,173,expenses increased by $4,408, or 2.0%,5.4%, wascompared primarilywith attributablethe tothree amonths reductionended inJune audit30, fees.2025, and were relatively stable between the periods.

We reported a net loss of $158,114$91,078 for the three months ended MarchJune 31,30, 2026 compared to a net loss of $122,207$85,157 for the three months ended MarchJune 31,30, 2025. This increase in net loss of $5,921 $35,907 was primarily attributable to the absence of revenue generation for the quarter.second quarter of 2026. As we strategically slowed down our external market development to focus on internal realignment and product line consolidation,realignment, our gross profit declined accordingly.

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. 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 MarchJune 31,30, 2026, we had cash and cash equivalents of $23,706.$244,143. The following table provides detailed information about our net cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:

Net cash used in operating activities was $192,447$266,559 for the threesix months ended MarchJune 31,30, 2026. The difference between our net loss of $158,114$249,192 and net cash outflows from operating activities was due to the adjustmentadd-back of non-cash depreciation of a motor vehicle in the amount of $6,947$14,015 and the cash used in operating assets and liabilities in an aggregate amount of $41,280.$31,382.

Net cash used in operating activities was $212,513$276,693 for the threesix months ended MarchJune 31,30, 2025. The difference between our net loss of $122,207$207,364 and net cash outflows from operating activities was due to the adjustmentadd-back of non-cash depreciation of a motor vehicle in the amount of $6,611$13,260 and the cash used in operating assets and liabilities in an aggregate amount of $96,917.$82,589.

No cash movement on investing activities both for the threesix months ended MarchJune 31,30, 2026 and 2025.