EDGAR 10-K Filing

Company CIK: 1651958
Filing Year: 2023
Filename: 1651958_10-K_2023_0001575872-23-000487.json

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ITEM 1. BUSINESS
Item 1. Business.
Description of Business
General Information
EOS Inc. (“we,” “us,” “our,” or the “Company”) was incorporated in the State of Nevada on April 3, 2015.
On or about November 18, 2016, the Company formed EOS INC. TAIWAN BRANCH, a Taiwanese corporation (“EITB”) and the Company owns 100% of EITB.
On May 3, 2017, the Company entered into and closed a Share Purchase and Sale Agreement (the “Purchase Agreement”) with Emperor Star International Trade Co., Ltd., (“Emperor Star”), to acquire all of the issued and outstanding shares of Emperor Star in consideration of $30,562 in cash. As a result of the transaction, Emperor Star became the Company’s wholly owned subsidiary. Upon consummation of the transaction, the Company has assumed the business of Emperor Star and ceased to be a shell company. Yu-Hsiang Chia currently serves as the officer and director of Emperor Star. Emperor Star was incorporated on November 16, 2015 under the laws of Taiwan and is in the business of marketing and distributing various consumer products, including nutrition supplements and skin care products.
Yu-Hsiang Chia currently serves as the officer and director of Emperor Star. On May 26, 2020, EOS Inc. increased its investment in Emperor Star by $134,004 (NTD$4,000,000). The Company also received contributions to Emperor Star from non-controlling interests in the amount of $33,398 (NTD$1,000,000). As a result, the Company owns 83% equity interest of Emperor Star as of June 30, 2020, which is no longer a wholly-owned subsidiary.
On September 20, 2018, the Company set up another wholly-owned subsidiary, EOS International Inc. (“EOS(BVI)”), under the laws of British Virgin Islands. EOS(BVI) is in the business of marketing and distribution of various products, including nutrition supplements, skin care products, and water purifiers.
On March 1, 2019, EOS(BVI) set up a wholly-owned subsidiary, Shanghai Maosong Co., Ltd (“Maosong”), under the laws of People’s Republic of China. Maosong is in the business of marketing and distribution of various products, including nutrition supplements, skin care products, and water purifiers in China.
On June 2, 2020, EOS(BVI) 83.33% owner, and Shanghai Qifan Qiye Management Co., Ltd. (“Qifan”) 16.67% owner of Maosong resolute to change the registered capital of Maosong to RMB 1,200,000,000 (1.2 billion) and that EOS to contribute certain Intellectual Property as registered capital of Shanghai Maosong. Intellectual Property owned by EOS International Inc was valued at RMB 1,000,000,000 (1 billion) and Intellectual Property owned by Qifan was valued at RMB 200,000,000 (200 million).
On July 13, 2021, EOS(BVI), MaoSong, and Qifan entered into a Shareholder Agreement where Qifan (i) delegate its 16.67% equity voting rights, powers, or benefits in Maosong to EOS(BVI); (ii) grant EOS(BVI) an irrevocable, unconditional, exclusive option to purchase Maosong’s equity interest; (iii) the right to receive any proceeds from the Maosong’s Equity Interest; (iv) pledge its existing or any prospective Maosong equity interest to EOS Int’l; as a result EOS(BVI) retains 100% control of MaoSong and the 16.67% noncontrolling interest are consolidated.
Corporate Actions
On August 18, 2018 the Company filed a Certificate of Amendment to its Articles of Incorporation in which the Company elected not to be governed by 78.411 to 78.444, inclusive, of the Nevada Revised Statutes.
On March 16, 2021, the Company filed a Certificate of Change to the Company’s Articles of Incorporation to increase its authorized common stock from 75,000,000 to 575,000,000.
On March 31, 2021, the Company’s board of directors and stockholders authorized a reverse stock split of its outstanding common stock at a ratio of 1-for-1000 without any change in the par value per share which became effective on April 7, 2021 upon approval by FINRA.
On August 19, 2021, the Company filed a Certificate of Designation to establish a Series A preferred stock. The number of shares designated for the class of stock is 5,000,000 shares. The holders of these shares are entitled to 1,000 votes per each share of Series A stock owned.
Business Overview
We are a distributor of various consumer products. Our goal is to source and bring to our channel partners the most innovative products which aims to improve quality of life, achieve optimal health, and promote green energy.
In July 2022, we commenced to market, promote and sell the ginsenosides supplements manufactured by Wellhead Biological Technology Corp. (“Wellhead”), which is headquartered in Taiwan and specializes in
ginsenoside
R&D and production.
Ginsenosides are the active components in ginseng, and Wellhead owns the patented enzymatic degradation technology to manufacture and extract the pure rare ginsenosides which is deemed highly valuable in the space of Chinese medicines and healing. Ginsenosides are used to improve health and boost physical strength.
The ginsenosides supplements that we promote and sell are being named “Bodywafer” and the products are customized and manufactured specifically for EOS Inc.
We acquire the products from Wellhead and sell directly to our channel partners who will recognize the needs of their target customers in various regions in Asia, such as People’s Republic of China (“PRC”), Singapore and Malaysia. We also provide comprehensive sales training to our channel partners through onsite seminars and online webinars to effectively market our products.
On March 2, 2020, the Company, A-Best, and Ing-Ming Lai, a Taiwanese individual and the majority shareholder of A-Best (collectively, the “Parties”) entered into a strategic alliance agreement (the “Strategic Alliance Agreement”), pursuant to which the Parties redefined their cooperation with respect to the sales and distribution of A-Best’s micro-ceramic speakers. In accordance with the Strategic Alliance Agreement, A-Best, Mr. Ing-Ming Lai and the Company terminated the Investment Cooperation Agreement dated January 12, 2019 entered by and among the Parties and as a result the Company agreed to return 20% of the equity interest in A-Best to Mr. Ing-Ming Lai, which was valued at approximately $35,142 by the Parties.
Furthermore, subject to the terms and conditions of the Strategic Alliance Agreement, A-Best has granted the Company the exclusive sale and distribution right of A-Best’s micro-ceramic speakers in the world for one (1) year (the “Term”), which may be renewed with mutual consent of the Parties two months prior to the expiration of the Term, while A-Best retains its own right to sell and distribute the micro-ceramic speakers on its own. In consideration for the exclusive distribution right of A-Best’s speakers under the Strategic Alliance Agreement, the Company agreed to have A-Best keep the Company’s 10,000,000 shares of common stock, par value $0.001 per share, issued under the Investment Cooperation Agreement and the Company may keep the revenue and profits generated from the sale of A-Best speakers until the total revenue from such speakers reaches $15 million U.S. dollars. This Strategic Alliance Agreement contains A-Best’s and Mr. Ing-Ming Lai’s joint representation regarding their intellectual property rights to A-Best ceramic speakers.
On March 2, 2020, the Company returned 20% equity interest in A-Best to Mr. Ing-Ming Lai pursuant to the Strategic Alliance Agreement.
On April 12, 2021, the Company, A-Best, and Ing-Ming Lai signed the Termination Agreement, and Mr. Ing-Ming Lai returned the 10,000 EOSS common shares (originally 10,000,000 shares prior to EOS Inc. effecting a one-for-one thousand reverse split of the company stock) to EOS Inc. which was issued under the Investment Cooperation Agreement.
Investment Cooperation Agreement with AsiaSonic
On August 28, 2021, the Company and AsiaSonic International Industrial Co., LTD. (“AsiaSonic”), a corporation formed under the laws of Taiwan, ROC, entered into Investment Cooperation Agreement, and Business and Management Agreement, pursuant to which, subject to the terms and conditions therein, the Company and AsiaSonic shall cooperate in the sales and distribution of AsiaSonic’s automotive peripherals and accessories globally by acquisition of Fifty One percent (51%) equity interest of AsiaSonic.
In accordance with the Agreements and in consideration for the cooperation, the Company shall issue to AsiaSonic’s shareholders and designees One Million Five Hundred Thousand (1,500,000) restricted shares of its common stock in exchange for the equivalent value of Fifty One percent (51%) of the total issued shares of AsiaSonic. According to the Agreements, AsiaSonic shall assist and provide training and marketing materials to the Company for the distribution and sale of its products. AsiaSonic shall continue to appoint the officers or managers and be in charge of the business operations; and the Company may appoint a director who is entitled to one vote on the Board meetings or to express consent or dissent on Board resolutions.
On March 30, 2023, the Company and AsiaSonic entered into a Termination Agreement to terminate the Investment Cooperation Agreement and Business and Management Agreement. The decision is made primarily due to additional time required to mutually agree on terms with respect to sales strategies and business operations.
EMPLOYEES
As of March 27, 2023, we employ nine full-time and no part-time employees. In addition to our employees, we engage key consultants and utilize the services of independent contractors to perform various services on our behalf. Some of our executive officers and directors are engaged in outside business activities that we do not believe conflict with our business. Over time, we may be required to hire additional employees or engage independent contractors to execute various projects that are necessary to grow and develop our business. These decisions will be made by our officers and directors, if and when appropriate.
CORPORATE INFORMATION
Our principal executive office is presently located at 4F-1, No.5, Qingdao E. Rd., Zhongzheng Dist., Taipei City 100008 Taiwan (Republic of China).
Our telephone number is +8862-2586-8300. Our website is eosinc999.us. Our website’s information is not, and will not be deemed, a part of this Annual Report or incorporated into any other filings we make with the SEC.
AVAILABLE INFORMATION
Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents that we will file with or furnish to the SEC will be available free of charge by sending a written request to our Corporate Secretary at our corporate headquarters. Additionally, the documents we file with the SEC are or will be available free of charge at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Other information on the operation of the Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The SEC’s website is www.sec.gov.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
Not applicable for smaller reporting companies.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
We do not own any real property. Our principal executive office is presently located at 4F-1, No.5, Qingdao E. Rd., Zhongzheng Dist., Taipei City 100008 Taiwan (Republic of China). EITB and Emperor Star operate from this Taipei location. Emperor Star and EITB entered into the office leases which commenced on February 6, 2023 and will end on December 31, 2023. The office occupies approximately 2579.78 square feet and the average amount of office rent (including the maintenance fees) is approximately $2,000 per month.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, or proceeding by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or our subsidiary, threatened against or affecting our Company, our common stock, our subsidiary or of our companies or our subsidiary’s officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock is currently quoted on the OTCQB under the symbol “EOSS.” There has not been any significant trading to date in the Company’s common stock. The table below presents the high and low bid for our common stock for each quarter for the years ended December 31, 2022 and 2021. These prices reflect inter-dealer prices, without retail markup, markdown, or commission, and may not represent actual transactions.
High
Low
Year ended December 31, 2022
1st Quarter
$
6.50
$
6.50
2nd Quarter
$
6.50
$
6.50
3rd Quarter
$
7.01
$
6.50
4th Quarter
$
10.01
$
7.01
Year ended December 31, 2021
1st Quarter
$
4.21
$
3.75
2nd Quarter
$
18.00
$
2.25
3rd Quarter
$
1.01
$
1.01
4th Quarter
$
25.00
$
25.00
Security Holders
There were approximately 373 holders of record of our common stock as of March 27, 2023.
Common Stock
Each share of our common stock entitles the shareholder one vote on any and all matters such shareholder is entitled to vote at a shareholders’ annual or special meeting. There are no cumulative voting rights, which mean that the shareholder or shareholders owning 50% of the issued and outstanding shares in our capital stock can elect the entire board of directors. Therefore, any shareholder or shareholders, cumulatively with less than 50% of the voting power, cannot elect any director to the board of directors on their won. Pursuant to the provisions of Section 78.320 of the Nevada Revised Statues (the “NRS”), at least a majority of the outstanding shares of capital stock entitled to vote must be present, in person or by proxy, at any meeting in favor of the action exceeds the number of votes cast in opposition to the action, provided, however, that directors may be elected by a plurality of the votes of the shares present at the meeting and entitled to vote. Certain fundamental corporate changes, such as the liquidation and business combination, require the approval of holders of a majority of the outstanding shares entitled to vote.
Holders of our common stock have no pre-emptive rights nor conversion rights. There are no redemption or sinking fund provisions applicable to our common stock.
Preferred Stock
As of March 27, 2023
, the outstanding number of shares of our Series A preferred stock was 2,000,000. Each share
is entitled to 1,000 votes of common stock without dividend rights.
Dividends
The holders of our common stock are entitled to receive dividends on a pro rata based on the number of shares held, when and if declared by our Board of Directors, from funds legally available for that purpose. NRS Section 78.288 prohibits us from declaring dividends where, after giving effect to the distribution of the dividend we would not be able to pay our debts as they become due in the normal course of business; or except as may be allowed by our Articles of Incorporation, our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution. We do not, however, intend to pay any dividends in the foreseeable future and currently intend to retain all future earnings to finance our business.
Our shareholders are not entitled to preference as to dividends or interest; pre-emptive rights to purchase new issues of shares; preference upon liquidation; or any other special rights or preferences.
There are no restrictions on dividends under any loan or other financing arrangements.
We paid no dividends on our common stock in the fiscal year of 2022. We do not have a policy of paying regular dividends and do not expect to pay any dividends on our common stock in the foreseeable future. We currently intend to retain any future earnings for our business. The payment of any future dividends on our common stock will be determined by our Board of Directors and will depend on business conditions, our financial earnings and other factors.
Outstanding Stock Options, Warrants and Convertible Securities
We have no outstanding stock options, warrants or convertible securities as of December 31, 2022.
Recent Sales of Unregistered Securities
Common Stock
On May 19, 2022, the Company issued 3,601,306 shares of restricted common stock to non-employees, the amount is recorded as deferred (unearned) compensation of $38,534, due to the service has not been started.
On May 19, 2022, the Company issued 115,000 shares of restricted common stock to non-employees as compensation in the amount of $1,231.
On August 18, 2021, the Company completed and closed a series of transactions to reorganize the Company’s structure and to develop its business by acquiring certain minority control interest of its subsidiary and intellectual properties. Pursuant to the Intellectual Property Transfer Agreement, the Company to issue 75,000,000 shares of Common Stock to the transferors for the intellectual properties in consideration of the transfer. Pursuant to the Shareholders’ Agreement of Shanghai Maosong Trading Co., Ltd and Equity Pledge Agreements, the Company to issue 15,000,000 shares of Common Stock to the transferors for the minority controlling interests of its subsidiary. Upon completion of the transactions above, EOS International Inc became a wholly controlled subsidiary of the Company.
On July 8, 2021, the Company issued 75,000,000 shares of Common Stock at $0.001 per share to convert outstanding debt owed to Co-Innovation Group Limited in the amount of $75,000.
On July 8, 2021, the Company issued 15,000,000 shares of Common Stock at $0.001 per share to convert outstanding debt owed to World Capital Holding Ltd in the amount of $15,000.
On April 12, 2021, A-Best, and Mr. Ing-Ming Lai entered into a termination agreement (the “Termination Agreement”) to terminate the agreement of Strategic Alliance Agreement dated March 2, 2020. In the agreement, Ing-Ming Lai has proceeded to return a total of 10,000 shares in EOS Inc, back to the Company.
Warrants
On February 3, 2022, the Company granted the issuance of warrants to purchase 200,000 shares of the Company’s common stock at an exercise price of $2 per share with an expiration date of December 22, 2027 to a consultant or its designees as compensation. The warrants were fully vested upon issuance.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward Looking Statements
Some of the statements contained in this Form 10-K that are not historical facts are “forward-looking statements” which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-K, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties, and other factors affecting our operations, market growth, services, products, and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:
1.
Our ability to attract and retain management and key employees;
2.
Our ability to generate customer demand for our products;
3.
The intensity of competition; and
4.
General economic conditions.
All written and oral forward-looking statements made in connection with this Form 10-K that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.
Business Overview
We are a distributor of various consumer products. Our goal is to source and bring to our channel partners the most innovative products which aims to improve quality of life, achieve optimal health, and promote green energy.
In July 2022, we commenced to market, promote and sell the ginsenosides supplements manufactured by Wellhead Biological Technology Corp. (“Wellhead”), which is headquartered in Taiwan and specializes in
ginsenoside
R&D and production.
Ginsenosides are the active components in ginseng, and Wellhead owns the patented enzymatic degradation technology to manufacture and extract the pure rare ginsenosides which is deemed highly valuable in the space of Chinese medicines and healing. Ginsenosides are used to improve health and boost physical strength.
The ginsenosides supplements that we promote and sell are being named “Bodywafer” and the products are customized and manufactured specifically for EOS Inc.
We acquire the products from Wellhead and sell directly to our channel partners who will recognize the needs of their target customers in various regions in Asia, such as People’s Republic of China (“PRC”), Singapore and Malaysia. We also provide comprehensive sales training to our channel partners through onsite seminars and online webinars to effectively market our products.
Results of Operation
The following presents the consolidated result of the Company for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Net sales
Net sales were $652,547 for year ended December 31, 2022, representing an increase of $134,060, or 26%, as compared to $518,487 for the year ended December 31, 2021. The increase was primarily due to the increase in sales of nutrition supplement.
Cost of sales
Cost of sales was $365,282 for the year ended December 31, 2022, representing an increase of $52,331 or 17%, as compared to $312,951 for the year ended December 31, 2021.
The increase was primarily due to the cost of the variety products sold.
Gross profit
Gross profit was $287,265 for the year ended December 31, 2022, compared to $205,536 for the same period in 2021. Gross profit as a percentage of net sales was 44% for the year ended December 31, 2022, compared to 40% in the same period in 2021. The increase was primarily due to the increase in sales of nutrition supplement with higher margin.
Selling, general and administrative expenses
Selling, general and administrative expenses consist primarily of office rent, salary and related costs for personnel and facilities, and professional service fees. Selling, general and administrative expenses were $2,208,876 for the year ended December 31, 2022, representing an increase of $934,260 or 73%, as compared to $1,274,616 for the year ended December 31, 2021. The increase was primarily due to impairment of security deposits recognized for year ended December 31, 2022.
Income (loss) from operations
Loss from operations was $1,921,611 for the year ended December 31, 2022 compared to loss from operations of $1,069,080 for the year ended December 31, 2021, representing an increase of $852,531 or 80%. The increase was primarily due to impairment of security deposits.
Other income (expense)
Other expenses were $641 for the year ended December 31, 2022, reflecting a decrease of $15,252, or 96%, compared to other expenses of $15,893 for the year ended December 31, 2021. The decrease was mainly attributable to
additional currency exchange
gain
recognized for the year ended December 31, 2021
and $nil for the year ended December 31, 2022.
Net loss
As a result of the above factors, our net loss was $1,912,159 for the year ended December 31, 2022, as compared to net loss of $1,101,565 for the year ended December 31, 2021, representing an increase of $810,594 or 74%.
Liquidity and Capital Resources
Cash and cash equivalents were $18,169 at December 31, 2022 and $24,141 at December 31, 2021. Our total current assets were $425,916 at December 31, 2022, as compared to $2,037,901 at December 31, 2021. Our total current liabilities were $1,266,234 at December 31, 2022, as compared to $792,118 at December 31, 2021.
We had a working deficit of $840,318 on December 31, 2022, compared to the working capital of $1,245,783
on December 31, 2021. The decrease in working capital was primarily attributable to the decrease in security deposits with an increase in due to shareholders.
Net cash used in operating activities was $164,714 during the year ended December 31, 2022, as compared to $194,254
for the year ended December 31, 2021. The decrease in net cash used in operating activities in the amount of $29,540 was primary attributable to increase in impairments of assets offset with a decrease in account receivable, increase in net loss and inventory.
Net cash used in investing activities was $19,193 during the year ended December 31, 2022, as compared to $352
for the year ended December 31, 2021. The increase in net cash used in investing activities was due to the increase in the acquisition of equipment.
Net cash provided by financing activities was $180,146 during the year ended December 31, 2022, as compared to $95,271
for the year ended December 31, 2021. The increase in net cash provided by financing activities was due to the proceeds from related party payable and borrowings.
As a result of the above factors, net decrease in cash and cash equivalents was $5,972 for the year ended December 31, 2022, as compared to net decrease of $98,341 for the year ended December 31, 2021
.
Going concern
Our auditors have issued a “going concern” opinion, meaning that there is substantial doubt if we can continue as an on-going business for the next twelve months unless we obtain additional capital or generate sufficient revenues to fund for our operation.
The Company requires additional funding to meet its ongoing obligations and to fund its operations. Our auditor has expressed substantial doubt about our ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on generating revenues and raising capital to fund its business operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Critical Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements, including the accounts of EOS Inc. and its wholly owned subsidiaries in Taiwan, British Virgin Islands, and People’s Republic of China, have been prepared in conformity with accounting principles generally accepted in the United States of America. Since the Company and Emperor Star are entities under common control prior to the acquisition of Emperor Star, the transaction is accounted for as a restructuring transaction. All assets and liabilities of Emperor Star were transferred to the Company at their respective carrying amounts on the date of transaction. The Company has recast prior period financial statements to reflect the conveyance of Emperor Star’s common shares as if the restructuring transaction had occurred as of the earliest date of the consolidated financial statements. All material intercompany accounts, transactions, and profits have been eliminated in consolidation. The nature of and effects on earnings per share (EPS) of non-recurring intra-entity transactions involving long-term assets and liabilities is not required to be eliminated and EPS amounts have been recast to include the earnings (or losses) of the transferred net assets.
The functional currency of the subsidiaries in Taiwan is the New Taiwan dollars and the subsidiary in People’s Republic of China is the Chinese Yuan, or Renminbi; however, the accompanying consolidated financial statements have been translated and presented in United States Dollars ($). In the accompanying consolidated financial statements and notes, “$”, “US$” and “U.S. dollars” mean United States dollars, “NT$” and “NT dollars” mean New Taiwan dollars, and “RMB” means Chinese Yuan, or Renminbi.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash and all highly liquid instruments with original maturities of three months or less.
Accounts Receivable
Accounts receivable are stated at carrying value less estimates made for doubtful receivables. An allowance for impairment of trade receivables is established if the collection of a receivable becomes doubtful. Such receivable becomes doubtful when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. An impairment loss is recognized in the statement of income, as are subsequent recoveries of previous impairments.
Inventory
Inventory is stated at the lower of cost and net realizable value. Net realizable value (NRV) is defined as estimated selling prices less costs of completion, disposal, and transportation. Inventory consists mainly of finished goods held for resale. Cost is determined on a weighted average cost method. The Company periodically reviews the age and turnover of its inventory to determine whether any inventory has become obsolete or has declined in value, and incurs a charge to operations for known and anticipated inventory obsolescence.
Property and Equipment
Property and equipment are carried at cost net of accumulated depreciation. Expenditures that improve the functionality of the related asset or extend the useful life are capitalized. When property and equipment is retired or otherwise disposed of, the related gain or loss is included in operating income. Leasehold improvements are depreciated on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset. Depreciation is calculated on the straight-line method, including property and equipment under capital leases, generally over five years. Depreciation expense was $3,257 and $1,887 for the years ended December 31, 2022 and 2021, respectively. Impairment loss was $17,381 and $nil for the years ended December 31, 2022 and 2021, respectively.
Impairment of Long-Lived Assets
The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavourable changes in business conditions, recurring losses, or a forecasted inability to achieve breakeven operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell. Impairment loss on property and equipment was $17,381 and $nil for the years ended December 31, 2022 and 2021, respectively.
Revenue Recognition
Pursuant to ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines is within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration the Company is entitled to in exchange for the goods or services the Company transfers to the customers. At inception of the contract, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Merchandise sales: The Company recognizes sales revenues from merchandise sales when customers obtain control of the Company’s products, which typically occurs upon delivery to customer. Merchandise sales revenues are recorded at the sales price, or “transaction price”.
Software sales: The Company does not develop the software products on its own. When the Company receives a purchase order from the customer, the Company would engage with the third-party software company to customize and develop the software products. The Company recognizes software revenues upon completion of the installation and testing, and transfer the control of the software products to the customer. Software revenues are recorded at the fixed sales price, or “transaction price”, pursuant to the sales contracts. The Company may also charge the customer maintenance service fees on a straight-line basis over the service period pursuant to the sales contract. The Company concluded that the performance obligation for the maintenance service is distinct. Therefore, such maintenance service revenue can be separated from other elements in the arrangement.
Trade discount and allowances: The Company generally does not provide invoice discounts on product sales to its customers for prompt payment.
Product returns: The Company generally does not provide customers with the right to return a product for a full or partial refund, a credit, or an exchange for another product.
To date, product allowance and returns have been minimal and, based on its experience, the Company believes that returns of its products will continue to be minimal.
Since COVID-19 pandemic hit globally in 2020 and throughout first three quarters of financial year ended December 31, 2021, management assessed that the market conditions that it operated in was worsening. Credit risk on customers was determined to have deteriorated significantly as the majority of its customers were located in the PRC. Accordingly, management took the position that revenue would only be recognized when the consideration is received as to satisfy revenue recognition criteria related to reasonable certainty of collections.
During the fourth quarter of financial year ended December 31, 2021, the Covid pandemic was effectively controlled in the PRC. Management re-assessed the market conditions and determined that the overall market conditions were improving, and the Company’s collection history in the prior three quarters was positive, and in fourth quarter of 2021 reached sustainable recovery rate comparable to pre-COVID-19 environment. Accordingly, management decided that due to the improved conditions collection is now reasonably certain, and revenue is now recognized when risk and rewards are transferred to its customers.
Leases
The Company adopted FASB Accounting Standards Codification, Topic 842, Leases (“ASC 842”) using the modified retrospective approach, electing the practical expedient that allows the Company not to restate its comparative periods prior to the adoption of the standard on January 1, 2019. As such, the disclosures required under ASC 842 are not presented for periods before the date of adoption. For the comparative periods prior to adoption, the Company presented the disclosures which were required under ASC 842.
The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. The Company’s future minimum based payments used to determine the Company’s lease liabilities mainly include minimum based rent payments. As most of Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
In addition, the adoption of the standard did not have a material impact on the Company’s results of operations or cash flows. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in Selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur.
Advertising Costs
Advertising costs are expensed at the time such advertising commences. Advertising expenses were $1,966 and $399 for the years ended December 31, 2022 and 2021, respectively.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”). Under the fair value recognition provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as compensation expense on a straight-line basis over the requisite service period, based on the terms of the awards. The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the common stock.
In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the guidance in ASC 718 to include share-based payments for goods and services to non-employees and generally aligns it with the guidance for share-based payments to employees. In accordance with ASU 2018-07, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the underlying equity instrument. The fair value of the equity instrument is charged directly to compensation expense and additional-paid-in capital over the period during which services are rendered.
Post-retirement and Post-employment Benefits
The Company’s subsidiaries in Taiwan adopted the government mandated defined contribution plan pursuant to the Taiwan Labor Pension Act (the “Act”). Such labor regulations require that the rate of contribution made by an employer to the Labor Pension Fund per month shall not be less than 6% of the worker’s monthly salaries. Pursuant to the Act, the Company makes monthly contribution equal to 6% of employees’ salaries to the employees’ pension fund. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits, which were expensed as incurred, were $5,233 and $5,873 for the years ended December 31, 2022 and 2021, respectively. Other than the above, the Company does not provide any other post-retirement or post-employment benefits.
Fair Value Measurements
FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and non-financial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows:
Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available.
Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability.
The carrying values of certain assets and liabilities of the Company, such as cash and cash equivalents, accounts receivable, inventory, advance to suppliers, prepaid expenses, accounts payable, accrued expenses, and due to shareholders, approximate fair value because of to their relatively short maturities.
Earnings (Loss) Per Share
Basic income (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents, and potentially dilutive securities outstanding during each year. Dilutive shares are excluded the exercise price is greater than the average market price and when the Company incurred a net loss as the inclusion of such shares would have an anti-dilutive effect.
For the years ended December 31, 2022 and 2021, warrants were excluded as dilutive shares as the Company incurred a net loss.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when, in the opinion of management, it is more likely than not that some or all of any deferred tax assets will not be realized.
Foreign-currency Transactions
Foreign-currency transactions are recorded in New Taiwan dollars (“NTD”) and Renminbi (“RMB”) at the rates of exchange in effect when the transactions occur. Gains or losses resulting from the application of different foreign exchange rates when cash in foreign currency is converted into New Taiwan dollars and Renminbi, or when foreign-currency receivables or payables are settled, are credited or charged to income in the year of conversion or settlement. On the balance sheet dates, the balances of foreign-currency assets and liabilities are restated at the prevailing exchange rates and the resulting differences are charged to current income except for those foreign currencies denominated investments in shares of stock where such differences are accounted for as translation adjustments under stockholders’ equity.
Translation Adjustment
The accounts of the Company’s subsidiaries were maintained, and their financial statements were expressed in New Taiwan Dollar (“NTD”) and Chinese Yuan, or Renminbi (“RMB”). Such financial statements were translated into U.S. Dollars (“$” or “USD”) in accordance ASC 830, “Foreign Currency Matters”, with the NTD and RMB as the functional currency. According to the Statement, all assets and liabilities are translated at the current exchange rate, common stock and additional paid-in capital are translated at the historical rates, and income statement items are translated at an average exchange rate for the period. The resulting translation adjustments are reported under accumulated other comprehensive income (loss) as a component of stockholders’ equity.
Comprehensive Income (loss)
Comprehensive income (loss) includes accumulated foreign currency translation gains and losses. The Company has reported the components of comprehensive income (loss) on its consolidated statements of operations and other comprehensive income (loss).
Concentration of Credit Risk
Cash and cash equivalents
: The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments in high quality credit institutions in Taiwan, but these investments may be in excess of the insurance limits of Taiwan Central Deposit Insurance Corporation (the “TCDIC”). The Company does not enter into financial instruments for hedging, trading or speculative purposes. Concentration of credit risk with respect to trade and notes receivables is limited due to the wide variety of customers and markets in which the Company transacts business, as well as their dispersion across many geographical areas. As of December 31, 2022 and 2021, the Company had approximately $nil and $nil in excess of TCDIC insured limits. The Company has not experienced any losses in such accounts.
Customers
: The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. On November 19, 2019, the FASB issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), finalized various effective date delays for private companies, not-for-profit organizations, and certain smaller reporting companies applying the credit losses (CECL), the revised effective date is January 2023.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2022.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable to smaller reporting companies.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
FINANCIAL STATEMENT SCHEDULES
Report of Independent Registered Public Accounting Firm (PCAOB ID: 6732)
Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of EOS Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of EOS Inc. together with its subsidiaries (the “Company”) as of December 31, 2022, and the related consolidated statements of operation and comprehensive loss, stockholders' equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States.
Going Concern Uncertainty
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has net losses, negative working capital and accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Emphasis of Matter
The Company has significant transactions with related parties, which are described in Note 5 to the financial statements. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis, as the requisite conditions of competitive, free market dealings may not exist.
/s/
Onestop Assurance PAC
We have served as the Company’s auditor since 2021.
Singapore
March 31, 2023
EOS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2022 and 2021
December 31,
December 31,
ASSETS
Current Assets
Cash and cash equivalents
18,169
24,141
Accounts receivable
160,253
548,201
Inventory, net
46,196
29,573
Advances to suppliers
166,594
280,224
Security deposits
6,608
1,127,989
Prepaid expenses and other current assets
28,096
27,773
Total Current Assets
425,916
2,037,901
Non-Current Assets
Property, plant and equipment, net
4,692
6,739
Operating lease right of use asset
115,884
85,419
Total Non-Current Assets
120,576
92,158
Total Assets
546,492
2,130,059
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable
-
-
Other payable and accrued expenses
73,352
88,040
Due to shareholders
277,080
30,858
Income taxes payable
49,074
55,394
Other current liabilities
750,000
500,000
Operating lease liabilities - current
48,231
37,779
Current portion of long-term loan payables
68,497
80,047
Total Current Liabilities
1,266,234
792,118
Non-Current Liabilities
Long-term loan payables
116,012
204,133
Operating lease liabilities - non-current
80,538
47,640
Total Non-Current Liabilities
196,550
251,773
Total Liabilities
1,462,784
1,043,891
Commitments and Contingencies
-
-
Shareholders’ Equity
Preferred stock ($0.001 par value, 5,000,000 shares authorized, 1,500,000 shares issued and outstanding as of December 31, 2022 and 2021, respectively)
1,500
1,500
Common stock ($0.001 par value; 575,000,000 shares authorized, 183,781,560 and 180,065,254 shares issued and outstanding as of December 31, 2022 and 2021, respectively)
183,781
180,065
Additional paid in capital
67,249
29,060
Deferred stock compensation
(40,674
)
-
Accumulated income (loss)
(1,165,665
)
722,925
Accumulated other comprehensive loss
42,964
133,056
Total equity attributable to EOS, Inc.
(910,845
)
1,066,606
Non-controlling interest
(5,447
)
19,562
Total Equity
(916,292
)
1,086,168
Total Liabilities and Shareholders’ Equity
546,492
2,130,059
EOS, INC. AND SUBSIDIARIES
Consolidated Statements of Operation and Comprehensive Loss
For the Years Ended December 31, 2022,and 2021
Year ended
December 31,
Year ended
December 31,
Net sales
$
652,547
$
518,487
Cost of sales
365,282
312,951
Gross profit
287,265
205,536
Selling, general and administrative expenses
2,208,876
1,274,616
Income (Loss) from operations
(1,921,611
			)
(1,069,080
)
Other income (expense)
Interest income (expense)
(4,512
)
(1,797
)
Other income (expense)
3,871
(49,238
)
Gain (loss) on investment in equity securities
-
35,142
Total other income (expense)
(641
)
(15,893
)
Loss before income tax provision
(1,922,252
)
(1,084,973
)
Income tax expenses (benefits)
(10,093
)
16,592
Net Loss
$
(1,912,159
)
$
(1,101,565
)
Other Comprehensive Income (Loss):
Net income (loss) attributable to non-controlling interests
(41,294
)
(21,231
)
Net income (loss) attributable to EOS and subsidiaries
(1,870,865
)
(1,080,334
)
Foreign currency translation adjustment, net of tax
(91,532
)
21,768
Comprehensive loss
$
(2,003,691
)
$
(1,079,797
)
Net loss per share:
Basic and diluted
(0.01
)
(0.01
)
Weighted average number of common shares:
Basic and diluted
182,376,491
77,243,336
EOS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’ Equity
For the Years Ended December 31, 2022 and 2021
Common Stock
Preferred Stock
Deferred
Additional
Accumulated
other
Equity
attributable
Non-
Number of
Shares
Amount
Number of
Shares
Amount
Stock
Compensation
Paid-in
Capital
Retained
Earnings
Comprehensive
Income (Loss)
to
EOS, Inc.
Controlling
interest
Total
Equity
Balance at December 31, 2020
74,123
$
-
$
-
$
-
$
186,474
$
1,803,259
$
111,776
$
2,101,583
$
40,305
$
2,141,888
Cancellation of Common Stock
(10,000
)
(10
)
-
-
-
(35,132
)
-
-
(35,142
)
-
(35,142
)
Reverse Stock Split Adjustment
1,131
-
-
-
(1
)
-
-
-
-
-
Shares Issued for Liability Converted
90,000,000
90,000
-
-
-
(30,781
)
-
-
59,219
-
59,219
Shares Issued for minority controlling interests of its subsidiary
90,000,000
90,000
-
-
-
(90,000
)
-
-
-
-
-
Issuance of Preferred Stock to related party
-
-
1,500,000
1,500
-
(1,500
)
-
-
-
-
-
Foreign currency translation adjustment
-
-
-
-
-
-
-
21,280
21,280
21,768
Net loss
-
-
-
-
-
-
(1,080,334
)
-
(1,080,334
)
(21,231
)
(1,101,565
)
Balance at December 31, 2021
180,065,254
180,065
1,500,000
1,500
-
29,060
722,925
133,056
1,066,606
19,562
1,086,168
Balance at December 31, 2021
180,065,254
180,065
1,500,000
1,500
-
29,060
722,925
133,056
1,066,606
19,562
1,086,168
Share issued for compensation
115,000
-
-
-
1,116
-
-
1,231
-
1,231
Deferred compensation expense relating to issuance of restricted common stock
3,601,306
3,601
-
-
(38,534
)
34,933
-
-
-
-
-
Deferred compensation expense relating to issuance of warrant
-
-
-
-
(2,140
)
2,140
-
-
-
-
-
Foreign currency translation adjustment
-
-
-
-
-
-
-
(90,092
)
(90,092
)
(1,440
)
(91,532
)
Net loss
-
-
-
-
-
-
(1,888,590
)
-
(1,888,590
)
(23,569
)
(1,912,159
)
Balance at December 31, 2022
183,781,560
183,781
1,500,000
1,500
(40,674
)
67,249
(1,165,665
)
42,964
(910,845
)
(5,447
)
(916,292
)
EOS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2022 and 2021
Year ended
December 31,
Year ended
December 31,
Cash flows from operating activities
Net loss
(1,912,159
)
(1,101,565
)
Adjustments to reconcile net income to net cash provided by operating activities
Bad debt expenses
272,843
233,907
Depreciation
3,257
1,887
Amortization of right-of-use asset
26,296
27,963
Impairments of assets
1,060,300
-
Realized (gain) loss from investment
-
(35,142
)
Stock based compensation
1,231
-
Changes in assets and liabilities
Decrease (increase) in accounts receivable
88,021
341,157
Decrease (increase) in inventory
(20,006
)
186,455
Decrease (increase) in advance to suppliers
89,547
(85,318
)
Decrease (increase) in security deposits and other assets
(2,721
)
(950
)
Increase (decrease) in accounts payable
-
(18,524
)
Increase (decrease) in accrued expenses
243,517
255,542
Increase (decrease) in advances from customers
13,261
-
Increase (decrease) in income tax payable
(1,805
)
28,297
Increase (decrease) in operating lease liabilities
(26,296
)
(27,963
)
Net cash used in operating activities
(164,714
)
(194,254
)
Cash flows from investing activities
Purchase of equipment
(19,193
)
(352
)
Net cash used in investing activities
(19,193
)
(352
)
Cash flows from financing activities
Repayment to related party
-
(235,289
)
Proceeds from related party
254,835
216,467
Proceeds from borrowings
-
179,064
Repayment to borrowings
(74,689
)
(64,971
)
Net cash provided by financing activities
180,146
95,271
Effect of foreign currency translation on cash and cash equivalents
(2,211
)
Net decrease of cash and cash equivalents
(5,972
)
(98,341
)
Cash, cash equivalents, and restricted cash
Beginning
24,141
122,482
Ending
$
18,169
$
24,141
Supplemental Disclosure of Cash Flows
Cash paid during the periods for:
Interest
$
-
$
3,142
Income taxes
$
-
$
16,592
Non-cash financing and investing activities:
Related party debt converted to Common stock
$
-
$
59,219
Issuance of Common Stock for minority controlling interest
s of its subsidia
ry
$
-
$
90,000
Issuance of Preferred Stock to related party
$
-
$
1,500
Deferred compensation expense relating to issuance of restricted common stock
$
38,534
$
-
Deferred compensation expense relating to issuance of warrant
$
2,140
$
-
EOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDAED FINANCIAL STATEMENTS
Note 1. NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
Organization
EOS Inc. was incorporated on April 3, 2015 in the State of Nevada. The Company’s business plan is to market and distribute skin care products, including masks and serums.
On November 18, 2016, the Company set up a wholly-owned subsidiary in Taiwan to assist the Company to promote the business in Taiwan.
Emperor Star International Trade Co., Ltd., (“Emperor Star”), was incorporated on November 16, 2015 under the laws of Taiwan. Emperor Star is in the business of marketing and distribution of various products, including nutrition supplements, skin care products, and water purifiers.
On May 3, 2017, the Company entered into and closed a Share Purchase and Sale Agreement (the “Purchase Agreement”) with Emperor Star and the shareholder of Emperor Star to acquire all issued and outstanding shares of Emperor Star in consideration of $30,562 in cash. As a result of the Purchase Agreement, Emperor Star became the Company’s wholly owned subsidiary. Upon consummation of the transaction, the Company has assumed the business of Emperor Star and ceased to be a shell company.
On September 20, 2018, the Company set up another wholly-owned subsidiary, EOS International Inc. (“EOS(BVI)”), under the laws of British Virgin Islands. EOS(BVI) is in the business of marketing and distribution of various products, including nutrition supplements, skin care products, and water purifiers.
On March 1, 2019, EOS(BVI) set up a wholly-owned subsidiary, Shanghai Maosong Co., Ltd (“Maosong”), under the laws of People’s Republic of China. Maosong is in the business of marketing and distribution of various products, including nutrition supplements, skin care products, and water purifiers in China. As of the date of this report, Maosong has a registered capital of USD $100,000, but no capital has actually been paid into Maosong.
On June 2, 2020, EOS(BVI) 83.33% owner, and Shanghai Qifan Qiye Management Co., Ltd. (“Qifan”) 16.67% owner of Maosong resolute to change the registered capital of Maosong to RMB 1,200,000,000 (1.2 billion) and that EOS to contribute certain Intellectual Property as registered capital of Shanghai Maosong. Intellectual Property owned by EOS International Inc was valued at RMB 1,000,000,000 (1 billion) and Intellectual Property owned by Qifan was valued at RMB 200,000,000 (200 million).
On July 13, 2021, EOS(BVI), MaoSong, and Qifan entered into a Shareholder Agreement where Qifan (i) delegate its 16.67% equity voting rights, powers, or benefits in Maosong to EOS(BVI); (ii) grant EOS(BVI) an irrevocable, unconditional, exclusive option to purchase Maosong’s equity interest; (iii) the right to receive any proceeds from the Maosong’s Equity Interest; (iv) pledge its existing or any prospective Maosong equity interest to EOS Int’l; as a result EOS(BVI) retains 100
% control of MaoSong and the 16.67% noncontrolling interest are consolidated.
Principles of Consolidation
The accompanying consolidated financial statements, including the accounts of EOS Inc. and its wholly owned subsidiaries in Taiwan, British Virgin Islands, and People’s Republic of China, have been prepared in conformity with accounting principles generally accepted in the United States of America. Since the Company and Emperor Star are entities under common control prior to the acquisition of Emperor Star, the transaction is accounted for as a restructuring transaction. All assets and liabilities of Emperor Star were transferred to the Company at their respective carrying amounts on the date of transaction. The Company has recast prior period financial statements to reflect the conveyance of Emperor Star’s common shares as if the restructuring transaction had occurred as of the earliest date of the consolidated financial statements. All material intercompany accounts, transactions, and profits have been eliminated in consolidation. The nature of and effects on earnings per share (EPS) of non-recurring intra-entity transactions involving long-term assets and liabilities is not required to be eliminated and EPS amounts have been recast to include the earnings (or losses) of the transferred net assets.
The functional currency of the subsidiaries in Taiwan is the New Taiwan dollars and the subsidiary in People’s Republic of China is the Chinese Yuan, or Renminbi; however, the accompanying consolidated financial statements have been translated and presented in United States Dollars ($). In the accompanying consolidated financial statements and notes, “$”, “US$” and “U.S. dollars” mean United States dollars, “NT$” and “NT dollars” mean New Taiwan dollars, and “RMB” means Chinese Yuan, or Renminbi.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash and all highly liquid instruments with original maturities of three months or less.
Accounts Receivable
Accounts receivable are stated at carrying value less estimates made for doubtful receivables. An allowance for impairment of trade receivables is established if the collection of a receivable becomes doubtful. Such receivable becomes doubtful when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. An impairment loss is recognized in the statement of income, as are subsequent recoveries of previous impairments.
Inventory
Inventory is stated at the lower of cost and net realizable value. Net realizable value (NRV) is defined as estimated selling prices less costs of completion, disposal, and transportation. Inventory consists mainly of finished goods held for resale. Cost is determined on a weighted average cost method. The Company periodically reviews the age and turnover of its inventory to determine whether any inventory has become obsolete or has declined in value, and incurs a charge to operations for known and anticipated inventory obsolescence.
Property and Equipment
Property and equipment are carried at cost net of accumulated depreciation. Expenditures that improve the functionality of the related asset or extend the useful life are capitalized. When property and equipment is retired or otherwise disposed of, the related gain or loss is included in operating income. Leasehold improvements are depreciated on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset. Depreciation is calculated on the straight-line method, including property and equipment under capital leases, generally over five years. Depreciation expense was $3,257 and $1,887
for the years ended December 31, 2022 and 2021, respectively. Impairment loss was $17,381 and $nil for the years ended December 31, 2022 and 2021, respectively.
Impairment of Long-Lived Assets
The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve breakeven operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC
360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell. Impairment loss on property and equipment was $17,381 and $nil for the years ended December 31, 2022 and 2021, respectively.
Revenue Recognition
Pursuant to ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines is within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration the Company is entitled to in exchange for the goods or services the Company transfers to the customers. At inception of the contract, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the a
mount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Merchandise sales: The Company recognizes sales revenues from merchandise sales when customers obtain control of the Company’s products, which typically occurs upon delivery to customer. Merchandise sales revenues are recorded at the sales price, or “transaction price”.
Software sales: The Company does not develop the software products on its own. When the Company receives a purchase order from the customer, the Company would engage with the third-party software company to customize and develop the software products. The Company recognizes software revenues upon completion of the installation and testing, and transfer the control of the software products to the customer. Software revenues are recorded at the fixed sales price, or “transaction price”, pursuant to the sales contracts. The Company may also charge the customer maintenance service fees on a straight-line basis over the service period pursuant to the sales contract. The Company concluded that the performance obligation for the maintenance service is distinct. Therefore, such maintenance service revenue can be separated from other elements in the arrangement.
Trade discount and allowances: The Company generally does not provide invoice discounts on product sales to its customers for prompt payment.
Product returns: The Company generally does not provide customers with the right to return a product for a full or partial refund, a credit
, or an exchange for another product.
To date, product allowance and returns have been minimal and, based on its experience, the Company believes that returns of its products will continue to be minimal.
Since COVID-19 pandemic hit globally in 2020 and throughout first three quarters of financial year ended December 31, 2021, management assessed that the market conditions that it operated in was worsening. Credit risk on customers was determined to have deteriorated significantly as the majority of its customers were located in the PRC. Accordingly, management took the position that revenue would only be recognized when the consideration is received as to satisfy revenue recognition criteria related to reasonable certainty of collections.
During the fourth quarter of financial year ended December 31, 2021, the Covid pandemic was effectively controlled in the PRC. Management re-assessed the market conditions and determined that the overall market conditions were improving, and the Company’s collection history in the prior three quarters was positive, and in fourth quarter of 2021 reached sustainable recovery rate comparable to pre-COVID-19 environment. Accordingly, management decided that due to the improved conditions collection is now reasonably certain, and revenue is now recognized when risk and rewards are transferred to its customers.
The following tables provide details of revenue by major products and by geography.
Revenue by Major Products
For the year ended December 31, 2022:
Water purifier machine
$
11,664
Automobile carbon reduction machine
21,283
Nutrition supplement
581,307
Software
35,958
Other materials
2,335
Total
$
652,547
For the year ended December 31, 2021:
Water purifier machine
$
107,826
Automobile carbon reduction machine
305,868
Nutrition supplement
68,840
Software
35,953
Total
$
518,487
Revenue by Geography
For the year ended December 31, 2022:
Asia Pacific
$
652,547
Total
$
652,547
For the year ended December 31, 2021:
Asia Pacific
$
518,487
Total
$
518,487
Leases
The Company adopted FASB Accounting Standards Codification, Topic 842, Leases (“ASC 842”) using the modified retrospective approach, electing the practical expedient that allows the Company not to restate its comparative periods prior to the adoption of the standard on January 1, 2019. As such, the disclosures required under ASC 842 are not presented for periods before the date of adoption. For the comparative periods prior to adoption, the Company presented the disclosures which were required under ASC 842.
The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. The Company’s future minimum based payments used to determine the Company’s lease liabilities mainly include minimum based rent payments. As most of Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
In addition, the adoption of the standard did not have a material impact on the Company’s results of operations or cash flows. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in Selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur.
Advertising Costs
Advertising costs are expensed at the time such advertising commences. Advertising expenses were $1,966
and $399
for the years ended December 31, 2022 and 2021, respectively.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”). Under the fair value recognition provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as compensation expense on a straight-line basis over the requisite service period, based on the terms of the awards. The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the common stock.
In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the guidance in ASC 718 to include share-based payments for goods and services to non-employees and generally aligns it with the guidance for share-based payments to employees. In accordance with ASU 2018-07, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the underlying equity instrument. The fair value of the equity instrument is charged directly to compensation expense and additional-paid-in capital over the period during which services are rendered.
Post-retirement and Post-employment Benefits
The Company’s subsidiaries in Taiwan adopted the government mandated defined contribution plan pursuant to the Taiwan Labor Pension Act (the “Act”). Such labor regulations require that the rate of contribution made by an employer to the Labor Pension Fund per month shall not be less than 6% of the worker’s monthly salaries. Pursuant to the Act, the Company makes monthly contribution equal to 6% of employees’ salaries to the employees’ pension fund. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits, which were expensed as incurred, were $5,233
and $5,873 for the years ended December 31, 2022 and 2021, respectively. Other than the above, the Company does not provide any other post-retirement or post-employment benefits.
Fair Value Measurements
FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and non-financial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows:
Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available.
Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability.
The carrying values of certain assets and liabilities of the Company, such as cash and cash equivalents, accounts receivable, inventory, advance to suppliers, prepaid expenses, accounts payable, accrued expenses, and due to shareholders, approximate fair value because of to their relatively short maturities.
Earnings (Loss) Per Share
Basic income (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents, and potentially dilutive securities outstanding during each year. Dilutive shares are excluded the exercise price is greater than the average market price and when the Company incurred a net loss as the inclusion of such shares would have an anti-dilutive effect.
For the years ended December 31, 2022 and 2021, warrants were excluded as dilutive shares as the Company incurred a net loss.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when, in the opinion of management, it is more likely than not that some or all of any deferred tax assets will not be realized.
Foreign-currency Transactions
Foreign-currency transactions are recorded in New Taiwan dollars (“NTD”) and Renminbi (“RMB”) at the rates of exchange in effect when the transactions occur. Gains or losses resulting from the application of different foreign exchange rates when cash in foreign currency is converted into New Taiwan dollars and Renminbi, or when foreign-currency receivables or payables are settled, are credited or charged to income in the year of conversion or settlement. On the balance sheet dates, the balances of foreign-currency assets and liabilities are restated at the prevailing exchange rates and the resulting differences are charged to current income except for those foreign currencies denominated investments in shares of stock where such differences are accounted for as translation adjustments under stockholders’ equity.
Translation Adjustment
The accounts of the Company’s subsidiaries were maintained, and their financial statements were expressed in New Taiwan Dollar (“NTD”) and Chinese Yuan, or Renminbi (“RMB”). Such financial statements were translated into U.S. Dollars (“$” or “USD”) in accordance ASC 830, “Foreign Currency Matters”, with the NTD and RMB as the functional currency. According to the Statement, all assets and liabilities are translated at the current exchange rate, common stock and additional paid-in capital are translated at the historical rates, and income statement items are translated at an average exchange rate for the period. The resulting translation adjustments are reported under accumulated other comprehensive income (loss) as a component of stockholders’ equity.
Comprehensive Income (loss)
Comprehensive income (loss) includes accumulated foreign currency translation gains and losses. The Company has reported the components of comprehensive income (loss) on its consolidated statements of operations and other comprehensive income (loss).
Concentration of Credit Risk
Cash and cash equivalents
: The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments in high quality credit institutions in Taiwan, but these investments may be in excess of the insurance limits of Taiwan Central Deposit Insurance Corporation (the “TCDIC”). The Company does not enter into financial instruments for hedging, trading or speculative purposes. Concentration of credit risk with respect to trade and notes receivables is limited due to the wide variety of customers and markets in which the Company transacts business, as well as their dispersion across many geographical areas. As of December 31, 2022
and 2021, the Company had approximately $nil and $nil in excess of TCDIC insured limits. The Company has not experienced any losses in such accounts.
Customers
: The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral.
For the year ended December 31, 2022,
three customers accounted for more than 10% of the Company’s total revenues.
Customer
Net sales
for
year ended
December 31, 2022
% of Total
Accounts
receivable
balance as of
December 31, 2022
% of
Total
A
$
78,993
%
$
27,102
%
B
$
-
-
%
$
-
-
%
C
$
443,528
%
$
37,273
%
D
$
124,556
%
$
95,878
%
For the year ended December 31, 2021, two customers accounted for more than 10% of the Company’s total revenues.
Customer
Net sales
for
year ended
December 31, 2021
% of Total
Accounts
receivable
balance as of
December 31, 2021
% of
Total
A
$
290,749
%
$
382,189
%
B
$
204,018
%
$
134,655
%
Suppliers
: The Company’s inventory is purchased from various suppliers
.
For the year ended December 31, 2022, two suppliers accounted for more than 10% of the Company’s total net purchase:
Supplier
Net purchase
for
the
year ended
December 31, 2022
% of
Total¤
Accounts
payable
balance as of
December 31, 2022
% of
Total
A
$
256,664
%
$
-
-
%
B
$
110,194
%
$
-
-
%
C
$
-
-
%
$
-
-
%
For the year ended December 31, 2021, three suppliers accounted for more than 10% of the Company’s total net purchase:
Supplier
Net purchase
for year ended
December 31, 2021
% of
Total
Accounts
payable
balance as of
December 31, 2021
% of
Total
A
$
32,876
%
$
-
-
%
B
$
71,505
%
$
-
-
%
C
$
12,893
%
$
-
-
%
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. On November 19, 2019, the FASB issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), finalized various effective date delays for private companies, not-for-profit organizations, and certain smaller reporting companies applying the credit losses (CECL), the revised effective date is January 2023.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
Note 2. LEASE
As of December 31, 2022, the Company has operating lease agreement for its car with remaining lease terms of 39 months, photocopier with remaining lease terms of 45 months, and office lease with remaining lease terms of 24 months, respectively. The Company does not have any other leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term
.
Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on its lease term in Taiwan which is approximately 2.44%.
Operating lease expenses were $64,972 and $54,482 for the years ended December 31, 2022 and 2021, respectively.
The components of lease expense and supplemental cash flow information related to leases for the year ended are as follows:
Lease Cost
Year ended
December 31, 2022
Year ended
December 31, 2021
Operating lease cost (included in general and administrative expenses in the Company’s statement of operations)
$
38,947
29,582
Other Information
Right-of-use assets obtained in exchange for new operating leases liabilities
72,495
113,592
Cash paid for amounts included in the measurement of lease liabilities for the year ended
38,947
29,582
Weighted average remaining lease term - operating leases (in years)
3.00
3.08
Average discount rate - operating lease
2.44
%
2.44
%
The supplemental balance sheet information related to leases for the period is as follows:
December 31, 2022
December 31, 2021
Operating leases
Right-of-use assets, net
$
115,884
$
85,419
Operating lease liabilities
$
115,884
$
85,419
The future minimum lease payment schedule as follows:
For the y
ears
ending
December 31,
37,854
37,854
35,683
9,322
Total lease payments
120,713
Less: Interest
(4,829
)
Total
115,884
NOTE 3 - GOING CONCERN
The financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements, the Company had net losses for the year ended December 31, 2022, and had negative working capital and accumulated deficit as of December 31, 2022. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s cash position may not be sufficient to support the Company’s daily operations. Management has financed its operating costs with loans from director and officers. The Company intends to generate sufficient revenue and raise additional funds to support its operations, however there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further generate sufficient revenue and its ability to raise additional funds.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4
. SECURITY DEPOSITS
On November 21, 2019, the Company and Shuang Hua International Culture Media Co, Ltd. (“Shuang Hua”), a corporation formed under laws of Taiwan, entered into an exclusive copyright and distribution agreement (the “Agreement”), pursuant to which, subject to the terms and condition therein, Shuang Hua granted the Company an exclusive right to produce, market, distribute and sell the bilingual films and electronic books of which the copyrights are owned by Shuang Hua. In accordance to the agreement, the Company shall pay Shuang Hua a refundable deposit of in the aggregate amount of $2,894,000, before December 31, 2021.
As of December 31, 2022 and 2021, the Company has paid $1,013,541 and $1,030,000 to Shuang Hua, respectively, and are recorded as other long-term assets. Due to Covid-19 in 2020, the Company has not started its business plan with the exclusive copyright and distribution agreement.
The amount paid has been fully impaired as of December 31, 2022.
Note 5
. RELATED PARTY TRANSACTIONS
Related parties of the Company during the years ended December 31, 2022 and 2021 consist of the following:
Name of Related Party
Nature of Relationship
Yu Cheng Yang
Majority Shareholder, Director and Officer of the Company
Co-Innovation Group Limited
Company under control of Yu Cheng Yang
World Capital Holding Limited
Company under control by Shanghai Qifan Qiye Management Co., Ltd.’s shareholders, former non-controlling interest of the Company
Due to shareholders
The Company has advanced funds from its directors and shareholders Yu Cheng Yang for working capital purposes. As of December 31, 2022 and 2021, there were $277,080 and $30,858 advance outstanding, respectively. The Company has agreed that the outstanding balances bear 0% interest rate and are due upon demand after thirty days of written notice by the director and shareholder.
On July 8, 2021, the Company issued the 90,000,000 shares of common stock to convert $59,219 owed to Mr. Yang.
Mr. Yang advanced $433,300
to the Company as working capital, and the Company repaid $185,644
to Mr. Yang for the
year
ended Decem
ber 31, 2022.
Mr. Yang advanced $216,467 to the Company as working capital, and the Company repaid $294,508 to Mr. Yang for the year ended December 31, 2021.
Note 6
. TERM LOAN
Loan from First Commercial Bank
On September 30, 2020, TWD 3,000,000 (approximately $107,750) term loan was granted to the Company for working capital with repayment period of 60
months. The term loan is subject to an interest charge at 1% per annum for the first 9 months of the term loan; interest charges on the term loan from 10th
to 60th
is 3.5% per annum.
On September 30, 2020, TWD 2,000,000 (approximately $71,833) term loan was granted to the Company for employee salary with repayment period of 30
months. The term loan is subject to an interest charge at 1.5% per annum for the first 9 months of the term loan; interest charges on the term loan from 10th
to 60th
is 1.845% per annum.
Loan from Bank of Taiwan
On May 7, 2021, TWD 4,000,000 (approximately $143,666) term loan was granted to the Company for employee salary with repayment period of 60 months. The term loan is subject to an
interest charge at 1% per annum for the first 8 months of the term loan; interest charges on the term loan from 9th
to 60th
is 1.9% per annum.
On May 7, 2021, TWD 1,000,000 (approximately $35,917) term loan was granted to the Company for employee salary with repayment period of 60 months. The term loan is subject to an interest charge at 1.5% per annum forthe first 8 months of the term loan; interest charges on the term loan from 9th
to 60th
is 2% per annum.
As of December 31, 2022, the outstanding balance of the term loan is $184,509, of which $68,498 i
s due within one year and classified as short term, and $116,012 is due after one year, and has classified as long term, respectively.
As of December 31, 2021, the outstanding balance of the term loan is $284,180, of which $80,047 is due within one year and classified as short term, and $204,133 is due after one year, and has classified as long term.
Interest expenses were $4,558 and $3,142 for the years ended December 31, 2022 and 2021, respectively.
Note 7
. STOCKHOLDERS’ EQUITY
Preferred Stock
On July 8, 2021, the board of directors of the Company amended its stock designation and the Company is authorized to issue 5,000,000 shares of Series A Preferred Stock with par value $0.001. Each stock is entitled to 1,000 votes of common stock without dividend rights.
On July 8, 2021, the Company issued 1,500,000 shares of Series A Preferred Stock to Co-Innovation Group Limited for proceeds of $1,500, the amount is recorded as a reduction to additional paid-in capital of $1,500.
Common Stock
On May 19, 2022, the Company issued 3,601,306 shares of restricted common stock to non-employees, the amount is recorded as deferred (unearned) compensation of $38,534, due to the service has not been started.
On May 19, 2022, the Company issued 115,000 shares of restricted common stock to non-employees as compensation in the amount of $1,231.
On August 18, 2021, the Company completed and closed a series of transactions to reorganize the Company’s structure and to develop its business by acquiring certain minority control interest of its subsidiary and intellectual properties. Pursuant to the Intellectual Property Transfer Agreement, the Company to issue 75,000,000 shares of Common Stock to the transferors for the intellectual properties in consideration of the transfer. Pursuant to the Shareholders’ Agreement of Shanghai Maosong Trading Co., Ltd and Equity Pledge Agreements, the Company to issue 15,000,000 shares of Common Stock to the transferors for the minority controlling interests of its subsidiary. Upon completion of the transactions above, EOS International Inc became a wholly controlled subsidiary of the Company.
On July 8, 2021, the Company issued 75,000,000 shares of Common Stock at $0.001 per share to convert outstanding debt owed to Co-Innovation Group Limited in the amount of $75,000.
On July 8, 2021, the Company issued 15,000,000 shares of Common Stock at $0.001 per share to convert outstanding debt owed to World Capital Holding Ltd in the amount of $15,000.
On April 12, 2021, A-Best, and Mr. Ing-Ming Lai entered into a termination agreement (the “Termination Agreement”) to terminate the agreement of Strategic Alliance Agreement dated March 2, 2020. In the agreement, Ing-Ming Lai has proceeded to return a total of 10,000 shares in EOS Inc, back to the Company.
On March 31, 2021, the Company’s board of directors and stockholders authorized a reverse stock split of its outstanding common stock at a ratio of 1-for-1000 without any change in the par value per share which became effective on April 7, 2021 upon approval by FINRA. The number of shares and price per share in the financial statements have been retrospectively adjusted accordingly to reflect this reverse stock split.
On March 16, 2021, the authorized shares of common stock were increased from 75,000,000 to 575,000,000 shares and the par value remains at $0.001.
Warrants
On February 3, 2022, the Company granted the issuance of warrants to purchase 200,000 shares of the Company’s common stock at an exercise price of $2 per share with an expiration date of December 22, 2027 to a consultant or its designees as compensation. The warrants were fully vested upon issuance.
A summary of warrant activities as follows:
Number of
Shares
Weighted
Average
Exercise
Price
Weighted Average
Remaining
Contractual Term
(Years)
Warrants outstanding at December 31, 2021
-
$
-
-
Granted
200,000
2.00
4.98
Exercised
-
-
-
Expired
-
-
-
Warrants outstanding at December 31, 2022
200,000
$
2.00
4.98
Warrants exercisable at December 31, 2022
200,000
$
2.00
4.98
Note 8
. STOCK BASED COMPENSATION
Restricted Stock
On May 19, 2022, the Company issued 3,601,306 shares of restricted common stock to non-employees, the amount is recorded as deferred (unearned) compensation of $38,534
, due to the service has not been started. The fair value of the shares was determined based on
a contemporaneous valuation report
.
On May 19, 2022, the Company issued 115,000 shares of restricted common stock to non-employees as compensation in the amount of $1,231.
The shares were fully vested upon issuance as there were no other conditions required for the shares to vest. The fair value of the shares was determined based on a contemporaneous valuation report
Warrants
On February 3, 2022, the Company granted the issuance of warrants
to purchase 200,000 shares of the Company’s common stock at an exercise price of $2 per share with an expiration date of December 22, 2027 to a consultant or its designees as compensation. The warrants were fully vested upon issuance as there were no other conditions required for the warrants to vest.
In accordance to ASC 815-40, an equity-linked financial instrument can be classified in equity only if it (1) is indexed to the reporting entity’s own stock and (2) meets all other conditions for equity classification. The warrants are classified as equity instruments because a fixed amount of cash is exchanged for a fixed amount of equity.
The fair value of the warrants was determined using the Black-Scholes option pricing model which requires the input of subjective assumptions, the expected life of the warrants, and the expected stock price volatility. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards.
The assumptions used to determine the fair value of the Warrants as follows:
Years Ended
December 31,
Expected life (years)
5.89
N/A
Risk-free interest rate
0.76
%
N/A
Expected volatility
329.86
%
N/A
Dividend yield
%
N/A
The expected life of the warrants was estimated using the “simplified method,” as the Company has no historical information to develop reasonable expectations about future exercise patterns for its warrant grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. The expected life of awards that vest immediately use the contractual maturity since they are vested when issued.
For stock price volatility, the Company calculated its expected volatility based on historical closing price of its common stock, par value $0.001 per share. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the warrant at the grant-date.
Stock based compensation were $1,231 and $nil for the years ended December, 2022 and 2021, respectively.
Note 9
. INCOME TAXES
United States
EOS, Inc. is incorporated in the United States of America and is subject to United States federal taxation at tax rate of 21%. No provisions for income taxes have been made as the Company has no taxable income for the period. As of December 31, 2022, the Company had net operating loss carry forwards of $1,314,134
that may be available to reduce future years’ taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements as their realization is determined not likely to occur and, accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. No tax benefit has been realized since a 100% valuation allowance has offset deferred tax asset resulting from the net operating losses.
British Virgin Islands
EOS International Inc. is incorporated in British Virgin Islands and are not required to pay income tax.
Taiwan
The subsidiary of EOS Inc. and Emperor Star is incorporated in Taiwan. According to the amendments to the “Taiwan Income Tax Act” enacted by the office of the President of Taiwan on February 7, 2018, statutory income tax rate increased from 17% to 20% and undistributed earning tax decreased from 10% to 5%, effective from January 1, 2018.
People’s Republic of China (“PRC”)
Under the Enterprise Income Tax (“EIT”) Law of the PRC, the standard EIT rate is 25%. The PRC subsidiary of the Company is subject to PRC income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which they operate. No provision for income taxes have been made as Maosong had no taxable income as of and for the year ended December 31, 2022.
Provision for income tax consists of the following:
Years Ended
December 31,
Current income tax (benefit)
U.S.
$
-
$
-
Taiwan
(10,093
)
16,592
PRC
-
-
Sub total
(10,093
)
16,592
Deferred income tax
Deferred tax assets for NOL carry-forwards
284,605
58,003
Valuation allowance
(284,605
)
(58,003
)
Other adjustments
(10,093
)
-
Net changes in deferred income tax (benefit)
-
-
Total income tax provision
$
(10,093
)
$
16,592
The Company has an income tax benefit of $10,093
which was an
adjustment of
over estimated tax expense from prior year.
The net loss before income taxes and its provision for income taxes as follows:
`
Years Ended
December 31,
Net loss before income tax
(1,922,252
)
(1,084,973
)
Statutory tax rate
%
%
Income tax provision
(284,605
)
(216,995
)
Valuation allowance
284,605
58,003
Non-taxable income
-
180,283
Other adjustments
(10,093
)
(4,699
)
Income tax expenses, net
(10,093
)
16,592
Significant components of the Company’s deferred taxes assets as follows:
Years Ended
December 31,
Deferred tax assets:
Net operating loss carry-forwards
284,605
235,488
Less: Valuation allowance
(284,605
)
(235,488
)
Deferred tax assets, net
-
-
Note 10
. COMMITMENTS AND CONTINGENCIES
Sales Collaboration Agreement
On June 1, 2020, the Company and Fortune King entered into a sales collaboration agreement (the “Sales Collaboration Agreement”), pursuant to which, subject to the terms and condition therein, Fortune King agreed to provide promotional and marketing service of the Company’s products within six years from January 2020 to December 2025. Fortune King is obligated to perform such service regardless of whether the Company sells products to Fortune King during the designated period. In accordance with the Sales Collaboration Agreement and in consideration for the service provided by Fortune King, the Company shall issue 3,000,000 shares of common stock to Fortune King for the promotional and marketing service of $1,500,000. The 3,000,000 shares were issued on December 29, 2020.
The Company recognized the stock-based compensation of marketing expenses based on quarterly basis, with a quarterly marketing expense of $62,500. There are 24 quarters in total.
Copyright and Distribution Agreement
On November 21, 2019, the Company and Shuang Hua International Culture Media Co, Ltd. (“Shuang Hua”), a corporation formed under laws of Taiwan, entered into an exclusive copyright and distribution agreement (the “Agreement”), pursuant to which, subject to the terms and condition therein, Shuang Hua granted the Company an exclusive right to produce, market, distribute and sell the bilingual films and electronic books of which the copyrights owned by Shuang Hua. In accordance to the agreement, the Company shall pay Shuang Hua a refundable deposit of in the aggregate amount of $2,894,000, before December 31, 2021.
As of December 31, 2022 and 2021, the Company has paid $1,013,541 and $1,030,000 to Shuang Hua, respectively, and are recorded as other long-term assets. Due to Covid-19 in 2020, the Company has not started its business plan with the exclusive copyright and distribution agreement, and such amount paid has been fully impaired as of December 31, 2022.
Note 11
. SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date which the financial statements are available to be issued. All subsequent events requiring recognition as of December 31, 2022 have been incorporated into these consolidated financial statements and there are no other subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
.
Definition and Limitations of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2020, the end of the year covered by this annual report on Form 10-K. The Disclosure Controls evaluation was done under the supervision and with the participation of management, including our chief executive officer and chief financial officer, who is the same person. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, our chief executive officer and chief financial officer concluded that, due to our limited internal audit function and our very limited staff, our disclosure controls were not effective as of December 31, 2020, such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the chief executive officer/chief financial officer, as appropriate to allow timely decisions regarding disclosure. This Annual Report does not include an attestation report of the Company’s registered accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC.
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Management assessed the effectiveness of our internal control over financial reporting as of July 31, 2018. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. During our assessment of the effectiveness of internal control over financial reporting as of December 31, 2022, management identified material weaknesses related to (i) our internal audit functions (ii) inadequate levels of review of the financial statements, (iii) a lack of segregation of duties within accounting functions and (iv) the absence of any independent directors. Therefore, our internal controls over financial reporting were not effective as of December 31, 2022.
Management has determined that our internal controls contain material weaknesses due to the absence of segregation of duties, as well as lack of qualified accounting personnel and excessive reliance on third party consultants for accounting, financial reporting and related activities. The lack of any separation of duties, with the same person, who is our only employee who serves as both chief executive officer and chief financial officer, and who does not have an accounting background and serves on a part-time basis, makes it unlikely that we will be able to implement effective internal controls over financial reporting in the near future.
Due to our size and nature, segregation of all conflicting duties is not possible. However, to the extent possible, we plan to implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals if and when we have sufficient income to enable us to hire such individuals, and we cannot give any assurance that we will be able to hire such personnel. Our financial condition makes it difficult for us to implement a system of internal controls over financial reporting.
Until we generate significantly greater revenues and employ accounting personnel, it is doubtful that we will be able implement any system which provides us with any degree of internal controls over financial reporting. Due to the nature of this material weakness in our internal control over financial reporting, there is more than a remote likelihood that misstatements which could be material to our annual or interim financial statements could not be prevented or detected.
A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of the Independent Registered Public Accounting Firm
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the Dodd-Frank Act that permanently exempted smaller reporting companies from the auditor attestation requirement.

---

ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
None.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
Director and Executive Officer of the Company
The following table sets forth certain information regarding our current executive officers and directors as of
March 27, 2023:
Name
Age
Position
He-Siang Yang
Chief Executive Officer (CEO), Chief Financial Officer, President, Secretary, Treasurer and Chairman of the Board
Yu-Cheng Yang
Director and General Manager
Lai-Chen Kwok
Director
The term of office of each director of the Company ends at the next annual meeting of the Company’s stockholders or when such director’s successor is elected and qualifies. No date for the next annual meeting of stockholders is specified in the Company’s Bylaws or has been fixed by the Board of Directors. The term of office of each officer of the Company ends at the next annual meeting of stockholders, or when such officer’s successor is elected and qualifies.
The following information sets forth the background and business experience of our directors and executive officers.
He-Siang Yang, CEO, Chief Financial Officer, President, Secretary, Treasurer and Director
On April 3, 2017, Mr. Yang was appointed as the Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director of the Company.
From 2009 through 2015, Mr. Yang served as the president of U-Power in Taipei, Taiwan. Mr. Yang performed those duties normally associated with a president, including, but not limited to business development, management and business oversight. From 2015 to the present, Mr. Yang has been the president of EOS Trading Company Limited, a Hong Kong company.
From April 2021 to present, Mr. Yang has been the director of Co-Innovation Limited Inc., a British Virgin Island company. Both of these companies
are in the business of trading of consumer products, including supplements, and green technology-related products.
Mr. Yang obtained a Bachelor of Science degree in mathematics from the National Taiwan Ocean University in Taiwan. On April 3, 2017,
Yu Cheng Yang, Director and General Manager
From 2009 through 2015, Mr. Yang was on the board of directors of and employed as a General Manager of U-Power Co., located in Taipei, Taiwan, which was in the business of developing e-commerce platforms and related server maintenance. Mr. Yang’s duties with U-Power Co. were the development, implementation and management of various business policies. Currently, Mr Yang also serves as sole director of EITB.
In April, 2015, Mr. Yang became the President and sole director of the Company. On April 3, 2017, Mr. Yang resigned as President, Secretary and Treasurer of the Company. Mr. Yang is also the sole director of EITB.
From 2018 through present, serves as the General Manager of Emperor Star
International Trade Co., Ltd.
Mr. Yang graduated from Jin Wen University of Science and Technology in 2003 with a bachelor’s degree in Hotel Management.
Lai Chen Kwok, Director
On April 3, 2017, M
s
. Kwok was appointed as a Director of the Company. From 2008 through 2015, Mr. Kwok served as a financial planner at Prudential Hong Kong Limited, a Hong Kong insurance company.
M
s
. Kwok obtained a Bachelor of the Arts degree in English from the Overseas Chinese University, a private university in Taiwan.
Employment Agreements
The Company does not have any employment agreements with any of its employees.
Term of Office
The term of office of each director of the Company ends at the next annual meeting of the Company’s stockholders or when such director’s successor is elected and qualifies. No date for the next annual meeting of stockholders is specified in the Company’s Bylaws or has been fixed by the Board of Directors. The term of office of each officer of the Company ends at the next annual meeting of stockholders, or when such officer’s successor is elected and qualifies.
Family Relationships
There are no family relationships between or among any of our directors or executive officers or persons nominated or chosen by us to become directors or executive officers.
Director Independence
Our board of directors has reviewed the independence of our directors and has determined that we have no independent directors pursuant to Rule 5605(a)(2) of Nasdaq and applicable SEC rules and regulations. In making this determination, our board of directors considered the relationships that each of our directors has with us and all other facts and circumstances our board of directors deemed relevant in determining their independence.
Board Committees
Our board of directors has no separately designated committees and our board members carry out the functions of both an audit committee and a compensation committee. We do not have an audit committee financial expert serving on our board of directors. Due to our limited financial resources, we are not in a position to retain an independent director with the qualifications to serve as an audit committee financial expert at this time.
Risk Oversight
Our board of directors will oversee a company-wide approach to risk management. Our board of directors will determine the appropriate risk level for us generally, assess the specific risks faced by us and review the steps taken by management to manage those risks. While our board of directors will have ultimate oversight responsibility for the risk management process, its committees will oversee risk in certain specified areas.
Until we have established our compensation committee of our board of directors, our board of directors will be responsible for overseeing the management of risks relating to our executive compensation plans and arrangements, and the incentives created by the compensation awards it administers. Until we have established our audit committee, our board of directors will oversee management of enterprise risks and financial risks, as well as potential conflicts of interests. Our board of directors will be responsible for overseeing the management of risks associated with the independence of our board of directors.
Code of Ethics
The Company has not adopted a Code of Ethics.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, or in the past three years has served, as a member of the board of directors or compensation committee of another entity that has one or more executive officers serving on our board of directors or the compensation committee. No member of our compensation committee has any other business relationship or affiliation with us other than his or her service as a director.
Nominations to the Board of Directors
General
- Our directors take a critical role in guiding our strategic direction and oversee the management of the Company. Our board of directors’ candidates are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for the long-term interests of the shareholders, diversity, and personal integrity and judgment. In addition, directors must have time available to devote to our board of directors’ activities and to enhance their knowledge of our business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to our Company.
No Compensation to Directors.
No director has received any cash or other compensation for serving as a director, and we do not plan to pay any cash or other compensation to any person for serving as a director. Our directors are entitled to reimbursement for reasonable out-of-pocket expenses incurred in connection with our business. Our Board of Directors may award special remuneration to any director undertaking any special services on our behalf, other than services ordinarily required of a director.
Code of Ethics; Financial Expert
We do not have a Code of Ethics. We do not have a financial expert on our Board of Directors.
Committees of the Board of Directors
Concurrent with having sufficient members and resources, our Board of Directors will establish an audit committee and a compensation committee. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate our system of internal controls. The compensation committee will manage any stock option plan we may establish and review and recommend compensation arrangements for our officers. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members and resources to establish those committees.
Potential Conflicts of Interest
As we do not have an audit committee or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest, in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.
We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.
Term of Office
Each of our directors is appointed to hold office until the next annual meeting of our stockholders or until his or her respective successor is elected and qualified, or until he or she resigns or is removed in accordance with the applicable provisions of Nevada law. Our officers are appointed by our Board of Directors and hold office until removed by our Board of Directors or until their resignation.
Audit Committee Financial Expert
Our current directors act as our audit committee. The current directors are not independent. An informal search is under way to identify a suitable candidate for service on the Board of Directors as an independent director who would be qualified as an audit committee financial expert.
Audit Committee
We have not yet formed an audit committee, and all of our directors currently act as our audit committee. At the present time, we believe that our directors are capable of analyzing and evaluating our consolidated financial statements and understanding internal controls and procedures for financial reporting. The Company, however, recognizes the importance of good corporate governance and intends to add additional directors to the Board of Directors and appoint an audit committee comprised entirely of independent directors, including at least one financial expert.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Exchange Act, our directors and certain of our officers, and persons holding more than 10 percent of our common stock are required to file forms reporting their beneficial ownership of our common stock and subsequent changes in that ownership with the United States Securities and Exchange Commission.
Based solely upon a review of copies of such forms filed on Forms 3, 4, and 5 furnished to us, we believe that during the year ended December 31, 2022, our executive officers and directors were not in compliance with all Section 16(a) filing requirements.
Limitation on Liability and Indemnification of Directors and Officers
Our articles of incorporation provide that no director or officer shall have any liability to the Company if that person acted in good faith and with the same degree of care and skill as a prudent person in similar circumstances.
Our articles of incorporation and bylaws provide that we will indemnify our directors and officers and may indemnify our employees or agents to the fullest extent permitted by law against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices or positions with us. However, nothing in our articles of incorporation or bylaws protects or indemnifies a director, officer, employee or agent against any liability to which that person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of that person’s office or position. To the extent that a director has been successful in defense of any proceeding, the Nevada Revised Statutes provide that the director shall be indemnified against reasonable expenses incurred in connection with the proceeding.

---

ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
EXECUTIVE SUMMARY COMPENSATION TABLE BY THE COMPANY
The following table sets forth the compensation paid or accrued by us to our Executive Officers for the fiscal years ended December 31, 2022 and 2021.
Name and Principal Position
Year
Salary
FY
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive
Plan
Compensation
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
All
Other
Compensation
($)
Total
($)
He Siang Yang,
60,459
-
-
-
-
-
60,459
CEO, CFO, President, Secretary,
59,091
-
-
-
-
-
-
59,091
Treasurer, and Director
Yu Cheng Yang,
161,225
6,718
-
-
-
-
-
167,943
Director and General Manager
173,692
7,163
-
-
-
-
-
180,855
Equity Compensation Plans, Bonus Plans
As of December 31, 2022, we had no equity incentive plans outstanding. We have no Compensation Committee.
Pension Benefits
As of December 31, 2022, we did not have any defined benefit pension plans.
Nonqualified Deferred Compensation
We do not maintain any nonqualified deferred compensation plans.
Debt Securities
We have no debt securities outstanding.
Repurchase Programs
There is currently no share repurchase program pending.
Director Compensation
The directors do not receive any compensation. Directors are reimbursed for reasonable expenses incurred in attending meetings and carrying out duties as board members.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth information as of March 27, 2023
regarding the number of shares of our Common Stock beneficially owned by (i) each person that we know beneficially owns more than 5% of our outstanding Common Stock, (ii) each of our directors and named executive officer and (iii) all of our directors and named executive officers as a group.
The amounts and percentages of our Common Stock beneficially owned are reported on the basis of SEC rules governing the determination of beneficial ownership of securities. Under the SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right, and the conversion of preferred stock. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Unless otherwise indicated, each of the shareholders named in the table below, or his or her family members, has sole voting and investment power with respect to such shares of our Common Stock. Except as otherwise indicated, the address of each of the shareholders listed below is: c/o EOS Inc, 4F-1, No.5, Qingdao E. Rd., Zhongzheng Dist., Taipei City 100008 Taiwan (Republic of China).
Name and Address of Beneficial Owner
Common
Stock
Beneficially
Owned
Percentage
of
Common
Stock
Beneficially
owned (1)
Officers and directors as a group
Yu Cheng Yang
30,000
0.02
%
He Siang Yang
10,000
0.01
%
Lai Chen Kwok
0.00
%
All officers and directors as a group (3 person)
40,901
0.03
%
5% or more shareholders
Co-Innovation Group Limited
150,000,000
83.31
%
World Capital Holding Ltd.
30,000,000
16.66
%
Total
180,040,901
%
Beneficial ownership percentages are calculated based on shares of common stock issued and outstanding and is based on a total of
183,781,560
shares of common stock that were issued and outstanding as of March 27, 2023.
Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. The number of shares beneficially owned by a person includes shares of common stock underlying options or warrants held by that person that are currently exercisable or exercisable within 60 days of
March 27, 2023
. The shares issuable pursuant to the exercise of those options or warrants are deemed outstanding for computing the percentage ownership of the person holding those options and warrants but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite that person’s name, subject to community property laws, where applicable, unless otherwise noted in the applicable footnote.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Related Party Transactions
Related parties of the Company during the years ended December 31, 2022 and 2021 consist of the following:
Name of Related Party
Nature of Relationship
Yu Cheng Yang
Majority Shareholder, Director and Officer of the Company
Co-Innovation Group Limited
Company under control of Yu Cheng Yang
World Capital Holding Limited
Company under control by Shanghai Qifan Qiye Management Co., Ltd.’s shareholders, former non-controlling interest of the Company
The Company has advanced funds from its directors and shareholders Yu Cheng Yang for working capital purposes. As of December 31, 2022 and 2021, there were $277,080 and $30,858 advance outstanding, respectively. The Company has agreed that the outstanding balances bear 0% interest rate and are due upon demand after thirty days of written notice by the director and shareholder.
On July 8, 2021, the Company issued the 90,000,000 shares of common stock to convert $59,219 owed to Mr. Yang.
Mr. Yang advanced $353
,000
to the Company as working capital, and the Company repaid $106
,778
to Mr. Yang for the years ended December 31, 2022.
Mr. Yang advanced $216,467 to the Company as working capital, and the Company repaid $294,508 to Mr. Yang for the year ended December 31, 2021.
Directors Independence
Our Board of Directors is composed of three members, who do not qualify as independent directors in accordance with the published listing requirements of the NASDAQ rules. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the directors, not any of his or her family members has engaged in various types of business dealings with us. In addition, our Board of Directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. If our Board of Directors made these determinations, our Board of Directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services.
Summary of Principal Accounting Fees for Professional Services Rendered
The Company’s Board of Directors reviews and approves audit and permissible non-audit services performed by its independent registered public accounting firm, as well as the fees charged for such services. In its review of non-audit service and its appointment of Onestop Assurance PAC as our independent registered public accounting firm, the Board considered whether the provision of such services is compatible with maintaining independence. The following table shows the fees for the fiscal years ended December 31, 2022 and 2021:
Year
Ended
December
31,
Year
Ended
December
31,
Audit Fees
$
45,000
53.000
Audit Related Fees
-
----
-
Tax Fees
-
1,000
All Other Fees
-
-
Total
$
45,000
54.000
The SEC requires that before our independent registered public accounting firm is engaged by us to render any auditing or permitted non-audit related service, the engagement be either: (i) approved by our audit committee or (ii) entered into pursuant to pre-approval policies and procedures established by the audit committee, provided that the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee’s responsibilities to management.
Pre-Approval Policies and Procedures
We do not have an audit committee. Our Board pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees during the fiscal years ended June 30, 2022 and 2021 were reviewed and approved by our Board before the respective services were rendered.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
(a)
Exhibits
The following exhibits are included herewith:
Exhibit
Number
Description
3.1
Articles of Incorporation of the Company, filed with the Secretary of State of the State of Nevada on April 3, 2015(+)
3.2
Bylaws of the Company (1)
3.3
Certificate of Amendment, filed with the Secretary of State of the State of Nevada on August 18, 2015(+)
3.4
Certificate of Correction, filed with the Secretary of State of the State of Nevada on September 28, 2015 (+)
3.5
Certificate of Change, filed with the Secretary of State of the State of Nevada on March 16, 2021(+)
3.6
Certificate of Amendment, filed with the Secretary of State of the State of Nevada on April 7, 2021(+)
3.7
Certificate of Designation, filed with the Secretary of State of the State of Nevada on August 19, 2021(+)
10.1
Termination Agreement, by and between the Company and AsiaSonic Industrial Company Co. LTD, dated March 30, 2023(+)
31.1/31.2
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(+)
32.1/32.2
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act(+)
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
+
Filed herewith
(1)
Incorporated by reference to Exhibit 3.3 to the Company’s Form S-1 filed on September 10, 2015.
***
XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.