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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED:

March 31

, 2024

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

FOR THE TRANSITION PERIOD FROM __________ TO __________

Commission File Number: 000-55661

EOS Inc.

(Exact name of registrant as specified in its charter)

Nevada		30-0873246
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2F., No. 157, Sec. 2, Nanjing E. Rd., Zhongshan Dist., 

Taipei City 104075 Taiwan (Republic of China) 

(Address of principal executive offices, Zip Code)

+8862-2586-8300

(Registrant’s telephone number, including area code)

	N/A
	(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

As of

May

202

, the number of shares of registrant’s common stock outstanding is 604,781,560.

EOS, Inc. 

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	F-1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	3

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12

Item 4.	Controls and Procedures	12

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	12

Item 1A.	Risk Factors	13

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13

Item 3.	Defaults Upon Senior Securities	13

Item 4.	Mine Safety Disclosures	13

Item 5.	Other Information	13

Item 6.	Exhibits	13

SIGNATURES		14

ART I — FINANCIAL INFORMATION

tem 1. Financial Statements.

The following unaudited interim condensed consolidated financial statements of EOS Inc. are included in this Quarterly Report on Form 10-Q:

INDEX TO FINANCIAL STATEMENT

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (unaudited)	F-2

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and 2023 (unaudited)	F-3

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited)	F-4

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)	F-5

Notes to Condensed Consolidated Financial Statements for the three months ended March 31, 2024 and 2023 (unaudited)	F-6

F-1

EOS, INC. AND SUBSIDIARIES

Condensed

onsolidated Balance Sheets

As of March 31, 2024 and December 31, 2023

(In U.S. Dollars, except share data or otherwise stated)

Unaudited

	March 31,			December 31,
	20 24			202 3
ASSETS
Current Assets
Cash and cash equivalents	$	64,506		$	14,307
Accounts receivable		51,424			224,590
Inventory, net		46,837			79,482
Advances to suppliers		164,098			161,179
Security deposits		76			3,802
Prepaid expenses and other current assets		3,703			3,959
Total Current Assets	$	330,644			487,319
Non-Current Assets
Property, plant and equipment, net	$	5,413		$	5,660
Operating lease right of use asset		3,393			4,192

Total Non-Current Assets	$	8,806		$	9,852
Total Assets	$	339,450		$	497,171
LIABILITIES AN D SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable	$	-		$	9,761
Other payable and accrued expenses		206,640			309,103
Due to shareholders		8,513			74,065
Income taxes payable		43,810			45,318
Other current liabilities		1,062,500			1,000,000
Operating lease liabilities - current		2,260			2,818
Current portion of long-term loan payables		49,876			53,165
Total Current Liabilities	$	1,373,599		$	1,494,230
Non-Current Liabilities
Long-term loan payables	$	50,976		$	65,210
Operating lease liabilities - non-current		1,133			1,374
Total Non-Current Liabilities	$	52,109		$	66,584
Total Liabilities	$	1,425,708		$	1,560,814
Commitments and Contingencies
Shareholders’ Deficit
Preferred stock ($ 0.001 par value, 5,000,000 shares authorized, 1,500,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)	$	1,500		$	1,500
Common stock ($0.001 par value; 1,000,000,000 shares authorized, 604,781,560 shares issued and outstanding as of March 31, 2024 and December 31, 2 0 23, respectively)		604,781			604,781
Additional paid in capital		175,268			175,268
Deferred stock compensation		(40,674	)		(40,674	)
Accumulated loss		(1,845,903	)		(1,802,695	)
Accumulated other comprehensive income (loss)		18,770			(1,823	)
Total S hareholders’ Deficit	$	(1,086,258	)	$	(1,063,643	)
Total Liabilities and Shareholders’ Deficit	$	339,450		$	497,171

F-2

EOS, INC. AND SUBSIDIARIES

Condensed

onsolidated Statements of Income and Comprehensive

Loss

For the Three Months Ended March 31, 2024 and 202

(In U.S. Dollars, except share data

otherwise stated)

Unaudited

	Three Months Ended			Three Months Ended
	March 31,			March 31,
	202 4			202 3
Net sales	$	54,124		$	171,079
Cost of sales		(50,506	)		(58,173	)
Gross profit		3,618			112,906
Selling, general and administrative expenses		(205,644	)		(242,326	)
Loss from operations		(202,026	)		(129,420	)
Other income (expense)
Interest expense		(832	)		(1,383	)
Other income		159,650			666
Total other income (expense)		158,818			(717	)
Net loss before income tax		(43,208	)		(130,137	)
Income tax expense		-			-
Net Loss	$	(43,208	)	$	(130,137	)
Other Comprehensive Loss:
Net loss attributable to non-controlling interests		-			(1,900	)
Net loss attributable to EOS and subsidiaries		(43,208	)		(128,237	)
Foreign currency translation adjustment, net of tax		20,593			(794	)
Comprehensive loss	$	(22,615	)	$	(130,931	)
Net loss per share:
Basic and diluted		(0.000	)		(0.001	)
Weighted average number of common shares:
Basic and diluted		323,047,313			183,781,560

F-3

EOS, INC. AND SUBSIDIARIES

Condensed

onsolidated Statements of Changes in Shareholders’ Equity

For the Three Months Ended March 31, 2024 and 202

(In U.S. Dollars, except share data or otherwise stated)

Unaudited

	Common Stock				Preferred Stock
	Number of Shares		Amount		Number of Shares		Amount		Deferred Stock Compensation			Additional Paid-in Capital		Accumulated loss			Accumulated other Comprehensive Income (Loss)			Equity attributable to EOS, Inc.			Non- Controlling interest			Total Equity

Balance at December 31, 202 2		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	)
Foreign currency translation adjustment		-		-		-		-		-			-		-			(727	)		(727	)		(67	)		(794	)
Net loss		-		-		-		-		-			-		(128,237	)					(128,237	)		(1,900	)		(130,137	)
Balance at March 31, 2023		183,781,560		183,781		1,500,000		1,500		(40,674	)		67,249		(1,293,902	)		42,237			(1,039,809	)		(7,414	)		(1,047,223	)

Balance at December 31, 2023		604,781,560		604,781		1,500,000		1,500		(40,674	)		175,268		(1,802,695	)		(1,823	)		(1,063,643	)		-			(1,063,643	)
Foreign currency translation adjustment		-		-		-		-		-			-		-			20,593			20,593			-			20,593
Net loss		-		-		-		-		-			-		(43,208	)					(43,208	)		-			(43,208	)
Balance at March 31, 2024		604,781,560	$	604,781	$	1,500,000	$	1,500	$	(40,674	)	$	175,268	$	(1,845,903	)	$	18,770		$	(1,086,258	)	$	-		$	(1,086,258	)

F-4

EOS, INC. AND SUBSIDIARIES

Condensed

onsolidated Statements of Cash Flows

For the Three Months Ended March 31, 2024 and 202

(In U.S. Dollars, except share data or otherwise stated)

Unaudited

	Three Months Ended			Three Months Ended
	March 31,			March 31,
	202 4			202 3
Cash flows from operating activities
Net loss	$	(43,208	)	$	(130,137	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation		241			192
Bad debt recovery		(129,364	)		-
Amortization of right-of-use asset		682			8,818
Changes in assets and liabilities
Decrease in accounts receivable		313,883			30,717
Decrease (increase) in inventory		29,836			(69,155	)
Decrease (increase) in advance to suppliers		(2,919	)		3,835
Decrease in security deposits and other assets		5,983			3,356
Increase (decrease) in accounts payable		(9,761	)		39,062
Increase (decrease) in accrued expenses		(39,963	)		33,486
Decrease in advances from customers		(2,001	)		(12,986	)
Increase (decrease) in income tax payable		(1,508	)		3,412
Decrease in operating lease liabilities		(799	)		(8,818	)
Net cash provided by (used in) operating acti viti es	$	121,102		$	(98,218	)
Cash flows from investing activit y
Purchase of equipment	$	-		$	(1,096	)
Net cash u s ed in investing activit y	$	-		$	(1,096	)
Cash flows from financing activities
Proceeds from related party	$	145,440			114,367
Repayment to related party		(183,004	)		-
Repayment to borrowings		(17,523	)		(18,301	)
Net cash (used in) provided by financing activities	$	(55,087	)	$	96,066
Effect of foreign currency translation on cash and cash equivalents		(15,816	)		109
Net increase (decrease) of cash and cash equivalents		50,199			(3,139	)
Cash and cash equivalents
Beginning		14,307			18,170
Ending	$	64,506		$	15,031

Supplemental Disclosure of Cash Flows
Cash paid during the periods for:
Interest	$	832		$	1,383
Income taxes	$	-		$	-

F-5

EOS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

ote 1. NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial reporting and in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited consolidated financial statements contained in this report reflect all adjustments that are normal and recurring in nature and considered necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The year-end balance sheet data were derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. The results of operations for the interim period are not necessarily indicative of the results expected for the full year. These unaudited consolidated financial statements, footnote disclosures, and other information should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Organization

EOS Inc. was incorporated on April 3, 2015 in the State of Nevada. The Company is a distributor of various consumer products, such as skin care products, dietary supplements, and water purifying machines.

mperor 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.

On July 1, 2023, the Company assumes effective control of Emperor Star International Trade Co., Ltd (Emperor Star), a commerce and trade company, through

execution of declaration of trust for Emperor Star’s 100% share capital. The primary reason the Company completed the equity transaction within owners is to invest

resources, expand the operations and turn Emperor Star into a profitable business.

F-6

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 amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 90 days and therefore all classified as current. Accounts receivable are stated at carrying value less estimates made for doubtful receivables. Accounts receivable are stated at the historical carrying amount net of allowance for expected credit losses.

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.

F-7

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 $

241

and $192 for the three months ended March 31, 2024 and 202

, 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 $nil and $nil for the three months ended March 31, 2024 and 202

, 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.

F-8

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.

The following tables provide details of revenue by major products and by geography.

Revenue by Major Products

For the three months ended March 31, 2024:
Nutrition supplement	$	54,124
Total	$	54,124

For the three months ended March 31, 2023:
Nutrition supplement	$	164,628
Software		5,978
Other		473
Total	$	171,079

Revenue by Geography

Revenue from external customers

The Company’s customers are mainly located in Taiwan and Hong Kong.

For the three months ended March 31, 2024:
Hong Kong	$	52,216
Taiwan		1,908
Total	$	54,124

For the three months ended March 31, 2023:
Hong Kong	$	18,346
Taiwan		152,733
Total	$	171,079

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.

F-9

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 $nil and $nil for three months ended March 31, 2024 and 202

, 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 $

961

and $1,175 for three months ended March 31, 2024 and 202

, respectively. Other than the above, the Company does not provide any other post-retirement or post-employment benefits.

F-10

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 three months ended March 31, 2024 and 202

, 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.

F-11

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).

Credit risk

(i) Risk management

The Company reviews the recoverability of its financial assets periodically to ensure that potential credit risk of the counterparty is managed at an early stage and sufficient provision for impairment allowance is made for possible defaults. In addition, receivable balances are monitored on an ongoing basis.

As of

31 March 2024 and 31 December 2023

, substantially all of the Group’s bank balances are deposited in major financial institutions. Management does not expect any losses from non-performance by these banks. The credit quality of bank balances has been assessed by reference to external credit ratings or to historical information about the counterparty default rates. The existing counterparties do not have defaults in the past.

The credit risk of the Group’s other financial assets, which comprises amounts advances to suppliers and security deposits and prepaid expenses and other current assets, arises from default of the counterparties, with a maximum exposure equal to the carrying amounts of these instruments.

(ii) Measurement of Credit Losses on Financial Instrument

The Company has Accounts receivable under Financial Instrument that are subject to the Measurement of Credit Losses.

The Company adopted ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” on January 1, 2023 using a modified retrospective approach. To estimate expected credit losses, the Company has identified the relevant risk characteristics of its customers and the related receivables. The Company considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in the Company’s customer collection trends.

The

provision for impairment loss and corresponding receivables were written off when they are determined to be uncollectible.).

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”) NT$ 3 million. 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 March 31, 2024, the Company had approximately $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 three months ended March 31, 2024, two customers accounted for more than 10% of the Company’s total revenues.

Customer	Net sales for the three months ended March 31, 2024		% of Total			Accounts receivable balance as of March 31, 2024		% of Total
A	$	47,447		88	%	$	46,727		91	%
B	$	1,908		4	%		-		-	%
C	$	4,769		9	%	$	4,697		9	%

For the three months ended March 31, 2023, one

customer

accounted for more than 10% of the Company’s total revenues.

Customer	Net sales for the three months ended March 31, 2023		% of Total			Accounts receivable balance as of March 31, 2023		% of Total
A	$	5,978		3	%	$	82,506		63	%
B	$	150,957		88	%	$	10,330		8	%

Suppliers

: The Company’s inventory is purchased from various suppliers. 

F-12

For the three months ended March 31, 2024, one supplier accounted for more than 10% of the Company’s total net purchase:

Supplier 

Net

purchase

for the

three

months

ended

March 31,

2024

EOS INC. 10-Q