10-Q: Zhanling International Reports Q2 2026 Losses, Going Concern Doubts

Zhanling International Ltd. reported increased net losses and a significant accumulated deficit for the quarter ended November 30, 2025, raising substantial doubt about its ability to continue as a going concern.

Summary

• Reported a net loss of $11,053 for the three months ended November 30, 2025, an increase from $10,596 in the prior year period.
• Incurred a net loss of $19,179 for the six months ended November 30, 2025, compared to $16,566 for the same period in 2024.
• The accumulated deficit reached $449,246 as of November 30, 2025, with a stockholders deficit of $33,732.
• Cash used in operating activities for the six months ended November 30, 2025, was $33,243, an increase from $27,039 in the prior year.
• The company had no cash on hand as of November 30, 2025, and May 31, 2025.
• Issued 3,441,000 shares of common stock in settlement of $33,678 of accounts payable, including $32,985 to the Chief Executive Officer (a related party).
• Identified material weaknesses in internal control over financial reporting due to inadequate segregation of duties.
• The company is a development-stage entity with no revenues from operations since incorporation, focused on identifying merger or acquisition opportunities in China's large consumption platform.

Sentiment

Score: 2

Explanation: The company is a development-stage entity with no revenue, recurring losses, a significant accumulated deficit, and no cash on hand. It faces substantial doubt about its ability to continue as a going concern and has identified material weaknesses in internal controls. While there was an improvement in stockholders deficit due to debt-to-equity conversions, the overall financial health and operational status are highly precarious.

Positives

• Total stockholders deficit improved from $(48,231) as of May 31, 2025, to $(33,732) as of November 30, 2025, primarily due to the conversion of payables into equity.
• Total liabilities decreased from $48,397 as of May 31, 2025, to $42,862 as of November 30, 2025.

Negatives

• Increased net loss for both the three-month ($11,053 vs $10,596) and six-month ($19,179 vs $16,566) periods ended November 30, 2025, compared to 2024.
• Accumulated deficit grew to $449,246 as of November 30, 2025.
• Continued stockholders deficit of $33,732 as of November 30, 2025.
• No cash on hand as of November 30, 2025, and May 31, 2025.
• Increased net cash used in operating activities to $33,243 for the six months ended November 30, 2025.
• No revenues generated from operations since incorporation.
• Substantial doubt about the company's ability to continue as a going concern.
• Reliance on related party loans and equity conversions for financing.

Risks

• Substantial doubt exists regarding the company's ability to continue as a going concern due to recurring losses, an accumulated deficit of $449,246, a stockholders deficit of $33,732, and negative operating cash flows of $33,243 for the six months ended November 30, 2025.
• The company does not have sufficient cash on hand to fund ongoing operational expenses beyond 12 months and will need to raise additional funds, posing a significant liquidity risk.
• If the company is successful in completing equity financing, existing shareholders will experience dilution of their interest.
• There are no assurances that the company will be able to raise sufficient funding, and in the absence of such financing, its business will likely fail.
• Material weaknesses in internal control over financial reporting were identified, specifically inadequate segregation of duties, which could lead to material misstatements not being prevented or detected.
• As a development-stage company, there is no assurance that it will be able to commence profitable operations or successfully complete a merger or acquisition.

Future Outlook

The company is a development-stage entity with the sole purpose of targeting and completing a merger or acquisition with a private entity in China's large consumption platform. Management plans to obtain additional capital through a private placement of common stock and/or director loans to meet minimal operating expenses and fund a potential exploration program. There is no assurance that these plans will be effectively implemented or yield sufficient results, and no revenues are anticipated until a business plan is implemented.

Management Comments

• Management has included projections and estimates in this Form 10-Q, which are based primarily on management's experience in the industry, assessments of results of operations, discussions and negotiations with third parties and a review of information filed by competitors with the SEC or otherwise publicly available.
• Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made, and the company disclaims any obligation to revise such statements to reflect future events or circumstances.
• Management's plan is to obtain additional capital resources by seeking a private placement of its common stock and/or director loans sufficient to meet its minimal operating expenses.
• Management has taken certain mitigating actions to improve liquidity, including potential financial support from related parties.
• The company is now in the process of evaluating potential business opportunities, though there is no assurance that it will be able to commence profitable operations.
• The company does not have sufficient cash on hand to fund ongoing operational expenses beyond 12 months and will need to raise funds to commence its exploration program and fund ongoing operational expenses.

Industry Context

As a development-stage company with no current operations or revenue, Zhanling International Ltd. is not actively participating in any specific industry trends beyond its stated intention to acquire companies in China's large consumption platform. Its current state reflects the challenges faced by shell companies seeking suitable merger or acquisition targets, often characterized by minimal assets, recurring losses, and reliance on external financing. The company's focus on the 'large consumption platform in China' suggests an intent to enter a potentially high-growth market, but it currently lacks the operational foundation to capitalize on such trends.

Comparison to Industry Standards

• NA. The company is a development-stage entity with no operations or revenue, making direct comparisons to established industry benchmarks or specific comparable companies/projects impractical and irrelevant at this stage. Its financial performance is typical of a shell company seeking a business combination.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently subject to any legal proceedings that are likely to have a material adverse effect on its business, financial condition, or results of operations.

Related Party Transactions

• As of November 30, 2025, the company owed $34,230 to its former Chief Executive Officer, Mr. YongQing Liu. These amounts are unsecured, non-interest bearing, and have no fixed payment term, with no intention to repay within the next 12 months.
• During the six months ended November 30, 2025, 3,298,500 shares of common stock were issued to the company's Chief Executive Officer (a related party) in settlement of $32,985 of accounts payable.

Stakeholder Impact

• Shareholders: Existing shareholders face significant dilution risk if the company raises capital through equity financing. The company's going concern issues and lack of operations pose a high risk to investment value.
• Creditors (Related Parties): Mr. YongQing Liu, as a related party creditor, has advanced funds and converted debt to equity, indicating continued support but also exposure to the company's financial instability. The company does not intend to repay related party debt within 12 months.
• Potential Investors: High risk due to the company's development stage, lack of revenue, recurring losses, and internal control weaknesses.

Next Steps

• Seek additional capital through a private placement of common stock.
• Obtain director loans to meet minimal operating expenses.
• Continue evaluating potential business opportunities to complete a merger or acquisition with a private entity in China's large consumption platform.

Key Dates

Recommendation

The company is a development-stage entity with no revenue, recurring losses, and a significant accumulated deficit. It explicitly states 'substantial doubt' about its ability to continue as a going concern and has 'no cash on hand.' Furthermore, material weaknesses in internal controls over financial reporting were identified. While some liabilities were converted to equity, this merely shifts the financial structure without addressing the fundamental lack of a profitable business. The reliance on future capital raises, with no assurance of success, and the high risk of business failure make this a highly speculative and distressed investment.

Keywords

Development-stage company, Going concern, Net loss, Accumulated deficit, Stockholders deficit, SEC filing, 10-Q, Financial reporting, Internal controls, Capital raise, Merger and acquisition, China consumption platform, Zhanling International