Tianci International, Inc. Commitments Disclosure

NOTE 9— COMMITMENTS AND CONTINGENCIES

 

Lease commitments

 

On January 13, 2023, the Company entered an operating lease agreement for office space in Hong Kong with a third party for two years with monthly rent of HKD 3,000 (approximately $382). Upon adoption of ASU 2016-02 effective August 1, 2022, the Company recognized a $8,704 right of use (“ROU”) asset and operating lease liabilities in January 2023 based on the present value of the future minimum rental payments of leases, using an incremental borrowing rate of 5%. The Company’s lease agreement did not contain any material residual value guarantees or material restrictive covenants. The lease did not contain an option to extend at the time of expiration. The lease was early terminated in September 2023, which resulted in a derecognition of $6,080 right of use (“ROU”) asset and operating lease liabilities in August 2023.

 

In September 2023, the Company entered into a one-year office rental service agreement with a monthly lease payment of approximately $828 (HKD 6,500). In September 2024, the Company further renewed the lease for one year with a monthly lease payment of approximately $847 (HKD 6,650).

 

Upon the expiration of the above lease, the Company entered a two-year lease for a new office in July 2025 with monthly rent of HKD 45,000 (approximately $5,733). The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The leases generally do not contain options to extend at the time of expiration. On July 1, 2025, the Company recognized $124,483 of right of use (“ROU”) assets and operating lease liabilities based on the present value of the remaining future minimum rental payments of leases, using an incremental borrowing rate of 5.50%.

 

As of July 31, 2025, the Company’s operating leases had a weighted average remaining lease term of approximately 2 years.

 

For the year ended July 31, 2025, rent expenses for the operating leases and short-term leases (less than one year) were $5,494 and $10,366, respectively.

 

For the year ended July 31, 2024, rent expense for the short term leases (less than one year) was $10,717.

 

The total future minimum lease payments under the non-cancellable operating leases as of July 31, 2025 are as follows:

 

Schedule of total future minimum lease payments
Year ending July 31,		Minimum lease payments
2026		$	63,063
2027			63,063
Thereafter			–
Total lease payments			126,126
Less: Interest			(6,820	)
Present value of lease liabilities		$	119,306

  

Future amortization of the Company’s ROU assets is presented below:

 

Schedule of future amortization
Year ending July 31,
2026		$	60,770
2027			58,775
After			–
Total		$	119,545

 

Contingencies

 

From time to time, the Company may be a party to legal proceedings, as well as certain asserted and un-asserted claims. The Company was not involved in any material legal proceedings nor asserted claims as of July 31, 2025.