Company: QSJC
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001683168-25-001892
Chunk: 384

Company: TANCHENG GROUP CO., LTD.
Filing Date: 2025-03-26
Form: 10-K
Item: Item 5
Chunk 384
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Cost of Revenue

Cost of revenue was $365,606 for the year ended
December 31, 2024 compared to $1,608,247 for the year ended December 31, 2023. Cost of revenue mainly consists of cost of products sold
and labor cost. The decrease in cost of revenue by $1,242,641 or 77.3% 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.

Gross profit

Gross profit for the year ended December 31, 2024
was $136,944 compared with $360,847 for the year ended December 31, 2023. As a percentage of revenue, our gross margin increased from
18.3% for the fiscal year 2023 to 27.2% for the fiscal year 2024, primarily because the percentage decrease in our cost of revenue was
greater than the reduction in revenue. During the year ended December 31, 2024, we purchased from one single supplier. Our supplier had
significantly reduced the purchase price of the products that we sold to our customers as our supplier was also experiencing intensified
competition among the other suppliers. In addition, there was a significant increase in revenue share deriving from the sale of the high-margin
product, the Chinese Twelve Zodiac Pendants in fiscal year 2024, which contributed to our overall profitability.

Operating Expenses

General and administrative expenses

By far the most significant component of our operating
expenses for both the years ended December 31, 2024 and 2023 was general and administrative expenses in the amount of $397,782 and $623,879,
respectively. The decrease of $226,097 or 36.2% 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 completion of the Contribution transaction, because
of which we 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.

Net Loss

We reported a net loss of $288,160 for the year
ended December 31, 2024 compared to a net loss of $289,666 for the year ended December