Maitong Sunshine Cultural Development Co., Ltd 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. On an ongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets, bad debts, impairment, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates. Application of Critical Accounting Policies The discussion and analysis of the Company’s financial condition and results of operations is based upon its condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. In connection with the preparation of our financial statements for the nine months ended June 30, 2026, there was no accounting estimate made which was (a) subject to a high degree of uncertainty and (b) material to our results. Results of Operations Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025 The following table summarizes our operating results for three months ended June 30, 2026 and 2025. For the Three Months Ended June 30, 2026 2025 Change (Unaudited) (Unaudited) $ % Revenue $ - $ 82,485 $ (82,485 ) (100 )% Cost of revenue - 48,453 (48,453 ) (100 )% Gross Profit - 34,032 (34,032 ) (100 )% Selling, general and administrative expenses 37,739 75,750 (38,011 ) (50 )% Income (lo ss) from operations (37,739 ) (41,718 ) 3,979 (10 )% Other income(expense) - - - 0 % Income before provision for income taxes (37,739 ) (41,718 ) 3,979 (10 )% Provision for income taxes (55 ) - (55 ) 0.00 % Net Income (Loss) $ (37,684 ) $ (41,718 ) $ 4,034 (10 )% 2 Tongzhilian’s revenue was nil during the three months ended June 30, 2026. The Company recorded no operating income for the quarter (April to June), resulting from the combined impact of external market conditions and multiple key internal initiatives. Externally, consumer sentiment remained weak amid the macro environment, and consumers reduced discretionary spending on mid-to-high-end non-essential tourism. Geopolitical factors further fuelled market caution. Potential customers for customized travel postponed their travel plans, leading to an unfavourable transaction environment. Internally, the Company relocated its registered address to Zhejiang during the quarter, requiring substantial manpower to complete various change filings. Meanwhile, the Company conducted research on local industry policies in Zhejiang and preliminary outreach and surveys of surrounding market resources to lay the groundwork for future regional business expansion. Constrained by limited manpower, the Company also continued to serve pre-paid existing members with a focus on enhancing customer loyalty and repeat purchase intentions. With core operational resources occupied by multiple priorities, the Company proactively suspended large-scale new customer acquisition and order development. No new transaction orders were secured during the quarter, resulting in zero revenue. Revenue during the three months ended June 30, 2026 decreased by 100% compared to the operating revenue of $82,485 for the three months ended June 30, 2025. For the three months ended June 30, 2026, we realized a gross profit margin of 0%, as our gross profit amounted to nil. Operating expenses for the three months ended June 30, 2026 consisted primarily of salaries and benefits, office expenses and rentals and leases and professional fees. Our $37,739 in operating expenses during this period were primarily attributable to: ● $8,475 in professional fees and related expenses incurred as a result of our status as a reporting company in the United States. ● $10,262 in salaries and benefits. ● $9,974 in office expenses,. ● $8,588 in rentals and leases. For the reasons described above, our net loss for the three months ended June 30, 2026 was $37,684. Nine Months Ended June 30, 2026 Compared to Nine Months Ended June 30, 2025. The following table summarizes our operating results for nine months ended June 30, 2026 and 2025. For the Nine Months Ended June 30, 2026 2025 Change (Unaudited) (Unaudited) $ % Revenue $ 25,552 $ 1,176,532 $ (1,150,980 ) (98 )% Cost of revenue 13,174 735,678 (722,504 ) (98 )% Gross Profit 12,378 440,854 (428,476 ) (97 )% Selling, general and administrative expenses 376,978 333,945 43,033 13 % Income (lo ss) from operations (364,600 ) 106,909 (471,509 ) (441 )% Other income(expense) 104 0 104 0 % Income before provision for income taxes (364,496 ) 106,909 (471,405 ) (441 )% Provision for income taxes (523 ) 106,900 (107,423 ) (100 )% Net Income (Loss) $ (363,973 ) $ 9 $ (363,982 ) (4,044,244 )% 3 Tongzhilian’s revenue was $25,552 during the nine months ended June 30, 2026. All our revenue was generated by our subsidiary Tongzhilian, which was solely derived from product sales throughout the period. Revenue during the nine months ended June 30, 2026 decreased by 98% compared to the operating revenue of $1,176,532 for the nine months ended June 30, 2025. For the nine months ended June 30, 2026, we realized a gross profit margin of 48%, as our gross profit amounted to $ 12,378. Operating expenses for the nine months ended June 30, 2026 consisted primarily of salaries and benefits, office expenses and rentals and leases and professional fees. Our $376,978 in operating expenses during this period were primarily attributable to: ● $30,662 in professional fees and related expenses incurred as a result of our status as a reporting company in the United States. ● $115,6911in salaries and benefits. ● $203,948 in office expenses, which included $79,920 represented by the fair value of 3,600,000 shares of the Company’s common stock that we issued to EHCLGLOBAL in exchange for investor and public relations services. ● $25,325 in rentals and leases. For the reasons described above, our net loss for the nine months ended June 30, 2026 was $363,973. Liquidity and Capital Resources On June 30, 2026, the Company had $15,189 in cash and cash equivalents, an increase of $10,757 during the nine months then ended. 4 Cash Flows The following unaudited table summarizes our cash flows for the nine months ended June 30, 2026 and 2025. For the Nine Months Ended June 30, Change 2026 2025 $ Net cash provided by (used in) operating activities $ (123,591 ) $ (508,348 ) $ 277,857 Net cash (used in) Investing activities - - - Net cash provided by (used in) financing activities 124,982 (14,922 ) 139,904 Effect of exchange rate fluctuation on cash and cash equivalents 1,908 74,655 ) 34,153 Net increase in cash and cash equivalents 3,299 (448,615 ) 451,914 Cash and cash equivalents, beginning of period 73,368 698,307 (624,939 ) Cash and cash equivalents, end of period $ 76,667 $ 249,692 $ (173,025 ) During the nine months ended June 30, 2026, our operations used net cash of $123,591. Our financing activities during the nine months ended June 30, 2026 generated $124,809. This reflects interest-free loans provided to the Company by our CEO, Huang Fang, partially offset by the repayment of $72,000 to Shanghai Maitong. Our financing activities during the nine months ended June 30, 2026 used $(14,922). Trends, Events and Uncertainties The Company is expanding its product offerings to include more products. In addition, our marketing personnel are developing new customers with the intention of building a stable base of customers. In this manner, the Company hopes to increase sales to support the future operations and development of the Company. There is no guarantee that the Company’s new strategy will be successful. The U.S. government, including the SEC, has made statements and taken actions that have led to changes in relations between the U.S. and China, and will impact companies with connections to the United States or China. Those actions by the U.S. government included imposing several rounds of tariffs affecting certain products manufactured in China and imposing sanctions and restrictions in relation to China. Actions by the SEC included issuing statements indicating that it would make enhanced review of companies with significant China-based operations. It is unknown whether and to what extent new legislation, executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on U.S.-domiciled companies with significant connections to China, our industry or on us. Any unfavorable government policies on cross-border relations, including increased scrutiny on companies with significant China-based operations, capital controls or tariffs, may affect our ability to raise capital and the market price of our shares. If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated or if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tensions, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the market price of our shares. Changes in United States and China relations and/or regulations may adversely impact our business, our operating results, our ability to raise capital and the market price of our shares. Other than the factors listed above we do not know of any trends, events or uncertainties that have had or are reasonably expected to have a material impact on our net sales or revenues or income from continuing operations. 5 Recent Accounting Pronouncements There were no recent accounting pronouncements that we expect to have a material effect on the Company’s financial position or results of operations. Please refer to Note 2 of our condensed consolidated financial statements included in this quarterly report. Item 3. Quantitative and Qualitative Disclosures about Market Risk. Not applicable.