EOS INC.

EOS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDAED FINANCIAL STATEMENTS (UNAUDITED)

Note 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, 2021.

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.

F-6

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.

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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 is $636 and $1,109 for the six months ended June 30, 2022 and 2021, respectively.

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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.

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

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Advertising Costs

Advertising costs are expensed at the time such advertising commences. Advertising expenses were $

2,040

and $350 for the six months ended June 30, 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 $2,844 and $3,122 for the six months ended June 30, 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 per share is computed by dividing net income 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 period. 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 six months ended June 30, 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.

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 June 30, 2022, 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 six months ended June 30, 2022, two customers

accounted for more than 10% of the Company’s total revenues, representing approximately 81% of its total revenues, and 92% of accounts receivable in aggregate at June 30, 2022.

Customer	Net sales for the six months ended June 30, 2022		Accounts receivable balance as of June 30, 2022
A	$	59,254	$	289,735
B		47,805		-

For the six months ended June 30, 2021, one customer accounted for more than 10% of the Company’s total revenues, representing approximately 100% of its total revenues, and 95% of accounts receivable in aggregate at June 30, 2021.

Customer		Net sales for the six months ended June 30, 2021				Accounts receivable balance as of June 30, 2021
A		$	336,778			$	330,853

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Suppliers

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

For the six months ended June 30, 2022, two suppliers

accounted for more than 10% of the Company’s total net purchase, representing approximately 97% of total net purchase, and 100% of accounts payable in aggregate at June 30, 2022, respectively:

Supplier	Net purchase for the six months ended June 30, 2022		Accounts payable balance as of June 30, 2022
A	$	-	$	-
B	$	117,676	$	-
C	$	-	$	-
D	$	42,487	$	50,853

For the six months ended June 30, 2021, two suppliers accounted for more than 10% of the Company’s total net purchase, representing approximately 14.49% and 80.38% of total net purchase, and 0% of accounts payable in aggregate at June 30, 2021, respectively:

Supplier	Net purchase for the six months ended June 30, 2021		Accounts payable balance as of June 30, 2021
A	$	-	$	-
B	$	-	$	-
C	$	-	$	-
D	$	12,851	$	-
E	$	71,274	$	-

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.

F-13

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).

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 June 30, 2022, the Company has two operating lease agreement for its car with remaining lease terms of 21 months and photocopier with remaining lease terms of 9 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.

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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 $19,052 and $21,844 for the six months ended June 30,2022 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	Six Months Ended June 30, 2022			Six Months Ended June 30, 2021
Operating lease cost (included in general and administrative expenses in the Company’s statement of operations)	$	19,052			-

Other Information
Right-of-use assets obtained in exchange for new operating leases liabilities		82,678			-
Cash paid for amounts included in the measurement of lease liabilities for the year ended		-			-
Weighted average remaining lease term – operating leases (in years)		1.75			-
Average discount rate – operating lease		2.44	%		-

The supplemental balance sheet information related to leases for the period is as follows:

	June 30, 2022		December 31, 2021
Operating leases
Right-of-use assets	$	62,123	$	-

Operating lease liabilities	$	62,123	$	-

The undiscounted future minimum lease payment schedule as follows:

For the six months ending June 30,
2022	18,360
2023	36,751
2024	9,274
Total lease payments	64,385
Less: Interest	(2,262	)
Total	62,123

Note 3. 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.

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As of June 30, 2022 and December 31, 2021, the Company has paid $1,030,000 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 Company will extend it for another two years.

Note 4. RELATED PARTY TRANSACTIONS

Related parties of the Company during the six months ended June 30, 2022 and December 31, 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 J

une

30, 2022 and December 31, 2021, there were $212,979 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

$304,088

to the Company as working capital, and the Company repaid $114,378 to Mr. Yang for the six months ended June 30, 2022.

Note 5. 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 10

to 60

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 10

to 60

is 1.845% per annum.

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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 9

to 60

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 for the first 8 months of the term loan; interest charges on the term loan from 9

to 60

is 2% per annum.

As of June 30, 2022 and December 31, 2021, the outstanding balance of the term loan is $227,276 and $284,180, of which $75,456 and $80,047 is due within one year and classified as short term, and $151,820 and $204,133 is due after one year, and has classified as long term, respectively.

Interest expenses were $1,681 for the six months ended June 30, 2022.

Note 6. 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.

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.

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:



			Weighted Average Exercise		Weighted Average Remaining Contractual Term
	Number of Shares		Price		(Years)

Warrants outstanding at December 31, 2021		-	$	-		-
Granted		200,000		2.00		5.48
Exercised		-		-		-
Expired		-		-		-
Warrants outstanding at June 30, 2022		200,000	$	2.00		5.48
Warrants exercisable at June 30, 2022		200,000	$	2.00		5.48

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Note 7. 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

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:

	Six Months Ended June 30,
	2022			2021
Expected life (years)		5.89			N/A
Risk-free interest rate		0.76	%		N/A
Expected volatility		329.86	%		N/A
Dividend yield		0	%		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 $0 for the six months ended June 30, 2022 and 2021.

Note 8. INCOME TAXES

United States

EOS, Inc. is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the period. As of June 30, 2022, the Company had net operating loss carry forwards of $1,189134 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.

When the net profit is less than or equal to 30 million Taiwan dollars, income tax accrual amount is based on the gross profit rate of the industry according to the tax law in Taiwan. The company calculated the income tax accrual amount based on gross profit rate of 16%.

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 six months ended June 30, 2022.

Provision for income tax consists of the following:

	Six Months Ended June 30,
	2022			2021
Current income tax
U.S.	$	-		$	-
Taiwan		-			-
PRC		-			-
Sub total		-			-

Deferred income tax
Deferred tax assets for NOL carryforwards		(72,025	)		(23,624	)
Valuation allowance		72,025			23,624
Net changes in deferred income tax (benefit)		-			-
Total income tax provision	$	-		$	-

F-18

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

The following discussion and analysis of the results of operations and financial condition of EOS Inc. and its subsidiary(“EOS” or the “Company”) as of March 31, 2022 for the

three

months ended March 31, 2022 and 2021 should be read in conjunction with our unaudited financial statements and the notes to those unaudited financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”, “we”, “our” and similar terms refer to EOS. This Quarterly Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based.

Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

U.S. Dollars are denoted herein by “USD,” “$” and “dollars”.

Note on COVID- 19

The COVID-19 pandemic is a highly fluid situation and it is not currently possible for us to reasonably estimate the impact it may have on our financial and operating results. We will continue to evaluate the impact of the COVID-19 pandemic on our business as we learn more and the impact of COVID-19 on our industry becomes clearer. We are complying health guidelines regarding safety procedures, including, but are not limited to, social distancing, remote working, and teleconferencing. The extent of the future impact of the COVID-19 pandemic on our business is uncertain and difficult to predict. Adverse global economic and market conditions as a result of COVID-19 could also adversely affect our business. If the pandemic continues to cause significant negative impacts to economic conditions, our results of operations, financial condition and liquidity could be adversely impacted.

Overview

EOS Inc. 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. Yu-Cheng Yang, a shareholder and director of the Company, is the sole director of EITB. Yu-Hsiang Chia is the branch manager of EITB.

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 distributing various consumer products, including detergents, nutrition supplements, and skin care products.

Results of Operation

The following presents the consolidated result of the Company for the three months ended J

une

30, 2022 compared to the three months ended June 30, 2021.

Net sales

Net sales were $99,121 for three months ended June 30, 2022, representing an increase of $98,584, or 18358%, as compared to $537 for the three months ended June 30, 2021. The decrease was primarily due to the impact of the epidemic, the sales revenue of water purifier machine decreased compared with the prior period.

F-21

Cost of sales

Cost of sales was $42,224 for the three months ended June 30, 2022, representing a

increase

of $42,192 or 131850%, as compared to $32 for the three months ended June 30, 2021.

Gross profit

Gross profit was $56,897 for the three months ended June 30, 2022, compared to $505 for the same period in 2021. Gross profit as a percentage of net sales was 57.40% for the three months ended June 30, 2022, compared to 94.04% in the same period in 2021. The decrease was primarily due to the impact of the epidemic, the sales revenue of water purifier machine decreased compared with the prior period.

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 $210,571 for the three months ended June 30, 2022, representing a decrease of $56,225 or 21.07%, as compared to $266,796 for the three months ended June 30, 2021.

Income (loss) from operations

Loss from operations was $153,674 for the three months ended June 30, 2022 compared to loss from operations of $266,291 for the three months ended June 30, 2021, representing a decrease of $112,617 or 42

.29

. Such decrease was primarily due to the decrease in sales and cost of sales.

Other income (loss)

Other income was $6,581 for the three months ended June 30, 2022, reflecting a decrease of $23,241, or 77.93%, compared to other income of $29,822 for the three months June 30, 2021. The decrease was mainly attributable to the

no investment disposal income in the current period

Net income (loss)

As a result of the above factors, our net loss was $136,618 for the three months ended June 30, 2022, as compared to net loss of $185,510 for the three months ended June 30, 2021, representing a decrease in loss of $48,892 or 26.36%.

Results of Operation

The following presents the consolidated result of the Company for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Net sales

Net sales were $132,185 for six months ended June 30, 2022, representing a decrease of $204,593, or 60.75%, as compared to $336,778 for the six months ended June 30, 2021. The decrease was primarily due to the impact of the epidemic, the sales revenue of water purifier machine decreased compared with the prior period.

Cost of sales

Cost of sales was $48,899 for the six months ended June 30, 2022, representing an increase of $29,108 or 147.08%, as compared to $19,791 for the six months ended June 30, 2021.

Gross profit

Gross profit was $83,286 for the six months ended June 30, 2022, compared to $316,987 for the same period in 2021. Gross profit as a percentage of net sales was 63.01% for the six months ended June 30, 2022, compared to 94.12% in the same period in 2021. The decrease was primarily due to the impact of the epidemic, the sales revenue of water purifier machine decreased compared with the prior period.

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 $440,654 for the six months ended June 30, 2022, representing a decrease of $64,592 or 12.78%, as compared to $505,246 for the six months ended June 30, 2021.

Income (loss) from operations

Loss from operations was $357,368 for the six months ended June 30, 2022 compared to loss from operations of $188,259 for the six months ended June 30, 2021, representing a decrease of $169,109 or 89.83%. Such increase was primarily due to the decrease in sales and increase in cost of sales.

Other income (loss)

Other

income

was $3,196 for the six months ended June 30, 2022, reflecting a decrease of $21,520, or 87.07%, compared to other income of $24,716 for the three months June 30, 2021. The decrease was mainly attributable to

no investment disposal income in the current period

Net loss

As a result of the above factors, our net loss was $343,697 for the six months ended June 30, 2022, as compared to net loss of $112,584 for the six months ended June 30, 2021, representing a decrease in income of $231,113 or 205.28%.

Liquidity and Capital Resources

Cash and cash equivalents were $87

,328

at June 30, 2022 and $24,141 at December 31, 2021. Our total current assets were $1,841,639 at June 30, 2022, as compared to $2,037,901 at December 31, 2021. Our total current liabilities were $1,093,061 at June 30, 2022, as compared to $792,118 at December 31, 2021.

We had a working capital of $748,578 on June 30, 2022, compared to the working capital of $1,245,783 on December 31, 2021. The decrease in working capital was primarily attributable to the increase in amount due to shareholders and increased in inventory.

Net cash used in operating activities was $63,667 during the six months ended June 30, 2022, as compared to $336,082 for the six months ended June 30, 2021. The increase in net cash used in operating activities in the amount of $272,415 was primary attributable to the decrease in account receivable, increase in net loss and inventory.

Net cash used in investing activities was $19,919 during the six months ended June 30, 2022, as compared to $1,525 for the six months ended June 30, 2021. The

increase

in net cash used in investing activities was due to the

crease in the acquisition of equipment.

Net cash provided by financing activities was $150,718 during the six months ended June 30, 2022, as compared to $274,957 for the six months ended June 30, 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 increase in cash and cash equivalents were $63187

for the six months ended June 30, 2022, as compared to net decrease of $62,138 for the six months ended June 30, 2021.

Critical Accounting Policies

Principles of Consolidation

The accompanying unaudited 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 the 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 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 nonrecurring 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 unaudited consolidated financial statements have been translated and presented in United States Dollars ($). In the accompanying unaudited consolidated financial statements and notes, “$”, “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

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

Inventory

Property and Equipment

Property and equipment is carried at cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. 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 is five years. Depreciation expense is $636 and $1,109 for the six months ended June 30, 2022 and 2021, respectively.

Revenue Recognition

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.

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

Revenue by Major Products

For the six months ended June 30, 2022:
Water purifier machine	$	12,105
Automobile carbon reduction machine		8,993
Nutrition supplement		55,486
Software		53,161
Other materials		2,440
Total	$	132,185

For the six months ended June 30, 2021:
Water purifier machine	$	336,778
Automobile carbon reduction machine		-
Nutrition supplement		-
Software		-
Total	$	336,778

Revenue by Geography

For the six months ended June 30, 2022:
Asia Pacific	$	132,185
Total	$	132,185

For the six months ended June 30, 2021:
Asia Pacific	$	336,778
Total	$	336,778

Advertising Costs

Advertising costs are expensed at the time such advertising commences. Advertising expenses were $2,040 and $350 for the six months ended June 30, 2022 and 2021, respectively.

Post-retirement and Post-employment Benefits

,844

and $3,122 for the six months ended June 30, 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 nonfinancial 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:

Income Taxes

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 June 30, 2022, the Company had approximately $0 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 six months ended June 30, 2022, two customer’s accounted for more than 10% of the Company’s total revenues, representing approximately 81% of its total revenues, and 92% of accounts receivable in aggregate at June 30, 2022.

Customer	Net sales for the six months ended June 30, 2022		Accounts receivable balance as of June 30, 2022
A	$	59,254	$	289,735
B	$	47,805

Customer		Net sales for the six months ended June 30, 2021				Accounts receivable balance as of June 30, 2021
A		$	336,778			$	330,853

Suppliers

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

For the six months ended June 30, 2022, two supplier accounted for more than 10% of the Company’s total net purchase, representing approximately 97% of total net purchase, and 100% of accounts payable in aggregate at June 30, 2022, respectively:

Supplier	Net purchase for the six months ended June 30, 2022		Accounts payable balance as of June 30, 2022
A	$	-	$	-
B	$	117,675	$	-
C	$	-	$	-
D	$	42,457	$	50,853

Supplier	Net purchase for the six months ended June 30, 2021		Accounts payable balance as of June 30, 2021
A	$	-	$	-
B	$	-	$	-
C	$	-	$	-
D	$	12,851	$	-
E	$	71,274	$	-

Foreign-currency Transactions

Translation Adjustment

The accounts of the Company’s subsidiaries were maintained, and their financial statements were expressed in New Taiwan Dollar (“NTD”) and 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)

Recent Accounting Pronouncements

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

As a smaller reporting company, we are not required to provide this information.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We performed an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. During our assessment of the effectiveness of internal control over financial reporting as of June 30, 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 June 30, 2022.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures is also based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Material Weaknesses and Corrective Actions

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during our last fiscal quarter to which this Quarterly Report on Form 10-Q relates that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. 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.

Item 1A. Risk Factors.

As a smaller reporting company, we are not required to provide this information.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

There is no other information required to be disclosed under this item which has not been previously disclosed.

ITEM 6. EXHIBITS

The following exhibits are filed herewith:

Exhibit No.		Description

31.1		Certification of Chief Executive and Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1		Certification of Chief Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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

104		Cover Page Interactive Data File - the cover page from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, is formatted in Inline XBRL.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EOS Inc.

Date: A u gust 31 2022	By:	/s/ He-Siang Yang
		He-Siang Yang
		Principal Executive Officer, Principal Financial Officer, President and Chairman of the Board

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

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

Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited)	F-2

Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2022 and 2021(unaudited)	F-3

Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2022 and 2021(unaudited)	F-4

Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021(unaudited)	F-5

Notes to Consolidated Financial Statements for the six months ended June 30, 2022 and 2021(unaudited)	F-6

	June 30, 2022			December 31, 2021
Assets
Current Assets
Cash and cash equivalents		87,328			24,141
Accounts receivable		316,572			548,201
Inventory, net		140,495			29,573
Advance to suppliers		217,173			280,224
Security deposits		1,051,448			1,127,989
Prepaid expenses and other current assets		28,623			27,773
Total Current Assets		1,841,639			2,037,901
Non-Current Assets
Property and equipment, net		24,887			6,739
Operating lease right of use asset, net		62,123			85,419
Total Non-Current Assets		87,010			92,158
Total Assets	$	1,928,649		$	2,130,059

Liabilities and Stockholders’ Equity


Current Liabilities
Accounts payable		50,853			-
Other payable and accrued expenses		48,553			88,040
Due to shareholders		212,979			30,858
Income tax payable		44,780			55,394
Other current liabilities		625,000			500,000
Operating lease liabilities - current		35,440			37,779
Short-term loan		75,456			80,047
Total Current Liabilities		1,093,061			792,118
Non-Current Liabilities
Long-term loan		151,820			204,133
Operating lease liabilities - non-current		26,683			47,640
Total Non-Current Liabilities		178,503			251,773
Total liabilities		1,271,564			1,043,891


Commitments and Contingencies		-			-


Stockholders’ Equity
Preferred stock ($0.001 par value, 5,000,000 shares authorized, 1,500,000 shares issued and outstanding as of June 30, 2022 and December 31, 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 June 30, 2022 and December 31, 2021, respectively)		183,781			180,065
Additional paid-in capital		67,249			29,060
Deferred Stock Compensation		(40,674	)		-
Retained earnings		385,390			722,925
Accumulated other comprehensive income		47,996			133,056
Total stockholders’ equity		645,242			1,066,606
Non-controlling interest		11,843			19,562
Total Equity		657,085			1,086,168

Total Liabilities and Stockholders’ Equity	$	1,928,649		$	2,130,059

	For the Six Months						For the Three Months
	Ended June 30,						Ended June 30,
	2022			2021			2022			2021
Net sales		132,185			336,778		$	99,121			537

Cost of sales		48,899			19,791			42,224			32

Gross profit		83,286			316,987			56,897			505

Selling, general and administrative expenses		440,654			505,246			210,571			266,796

Income (Loss) from operations		(357,368	)		(188,259	)		(153,674	)		(266,291	)

Other income (expense)
Interest income (expense)		(1,669	)		(217	)		(789	)		(213	)
Other income (expense)		4,865			(8,478	)		7,370			(3,376	)
Gain (loss) on foreign currency exchange		-			-			-			-
Gain (loss) on investment in equity securities		-			33,411			-			33,411
Total other income (expense)		3,196			24,716			6,581			29,822

Loss before income tax provision		(354,172	)		(163,543	)		(147,093	)		(236,469	)

Income tax provision		(10,475	)		(50,959	)		(10,475	)		(50,959	)

Net Loss	$	(343,697	)		(112,584	)	$	(136,618	)		(185,510	)

Other Comprehensive Income (Loss):
Net income (loss)
Net income (loss) attributable to non-controlling interests	$	(6,162	)		(507	)	$	(2,071	)		(4,497	)
Net income (loss) attributable to EOS and subsidiaries		(337,535	)		(112,077	)		(134,547	)		(181,013	)
Foreign currency translation adjustment, net of tax		(86,619	)		9,046			(41,696	)		33,074
Comprehensive loss	$	(430,316	)		(103,538	)	$	(178,314	)		(152,436	)

Net loss per share:
Basic and diluted	$	（ 0.00 ）			（ 1.51 ）		$	（ 0.00	)		（ 2.09 ）

Weighted average number of common shares:
Basic and diluted		180,948,133			68,671			181,821,311			73,066

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

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

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	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	13

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	14

Item 1A.	Risk Factors	14

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3.	Defaults Upon Senior Securities	14

Item 4.	Mine Safety Disclosures	14

Item 5.	Other Information	14

Item 6.	Exhibits	15

SIGNATURES		16

	Common Stock						Preferred Stock					Stock Compensation		Accumulated Additional Paid-in			Retained			Accumulated Other Comprehensive Income/			Non-Controlling
	Shares			Amount			Shares		Amount		Reserve			Capital			Earning			(Loss)			Interest			Total
Balance at December 31, 2021		180,065,254		$	180,065			1,500,000	$	1,500	$	-		$	29,060		$	722,925		$	133,056		$	19,562		$	1,086,168
Foreign currency translation adjustment		-			-			-		-		-			-			-			(44,080	)		(843	)		(44,923	)
Net loss		-			-			-		-		-			-			(202,988	)		-			(4,091	)		(207,079	)
Balance at March 31, 2022		180,065,254		$	180,065			1,500,000	$	1,500	$	-		$	29,060		$	519,937		$	88,976		$	14,628		$	834,166
Share issued for compensation		115,000			115			-		-		-			1,116			-			-			-			1,231
Defe r red 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		-			-			-		-		-			-			-			(40,980	)		(714	)		(41,694	)
Net loss		-			-			-		-		-			-			(134,547	)		-			(2,071	)		(136,618	)
Balance at June 30, 2022		183,781,560		$	183,781			1,500,000	$	1,500	$	(40,674	)	$	67,249		$	385,390		$	47,996		$	11,843		$	657,085

Balance at December 31, 2020		74,123			74			-		-		-			186,474			1,058,090			87,051			24,544			1,356,233
Foreign currency translation adjustment		-			-			-		-		-			-			-			(23,514	)		(514	)		(24,028	)
Net loss		-			-			-		-		-			-			68,936			-			3,990			72,926
Balance at March 31, 2021		74,123		$	74			-	$	-	$	-		$	186,474		$	1,127,026		$	63,537		$	28,020		$	1,405,131
Cancellation of common stock		(10,000	)		(10	)		-		-		-			(33,401	)		-			-			-			(33,411	)
Reverse Stock Split Adjustment		1,131			1			-		-		-			(1	)		-			-			-			-
Foreign currency translation adjustment		-			-			-		-		-			-			-			32,370			704			33,074
Net loss		-			-			-		-		-			-			(181,013	)		-			(4,497	)		(185,510	)
Balance at June 30, 2021		65,254		$	65			-	$	-	$	-		$	153,072		$	946,013		$	95,907		$	24,227		$	1,219,284

	For the Six Months
	Ended June 30,
Cash Flows from Operating Activities	2022			2021
Net income (loss)	$	(343,697	)	$	(112,584	)
Adjustments to reconcile net income to net cash provided by operating activities
Bad Debt Expenses (Recovery)		(17,900	)		-
Depreciation		636			1,109
Loss on investment in equity securities		-			(33,411	)
Amortization of right-of-use asset		18,138			-
Stock based compensation/Shares issued for expenses		1,231			-
Changes in assets and liabilities:
Decrease (increase) in accounts receivable		235,129			(172,549	)
Decrease (increase) in inventory		(117,044	)		(68,886	)
Decrease (increase) in advance to suppliers		45,759			14,707
Decrease (increase) in security deposits and other assets		(2,834	)		11,232
Increase (decrease) in accounts payable		52,706			(267,501	)
Increase (decrease) in accrued expenses		90,258			344,947
Increase (decrease) in tax payable		(7,911	)		(53,146	)
Increase (decrease) in operating lease liabilities		(18,138	)		-
Net cash used in operating activities		(63,667	)		(336,082	)

Cash flows from Investing activities
Purchase of equipment		(19,919	)		(1,525	)
Net cash used in investing activities		(19,919	)		(1,525	)

Cash flows from Financing activities
Proceeds from related party payable		304,088			153,396
Repayment to related party		(114,378	)		-
Proceeds from borrowings		-			121,561
Repayment to borrowings		(38,992	)		-
Net cash provided by financing activities		150,718			274,957

Effect of exchange rate changes on cash and cash equivalents		(3,945	)		512
Net increase (decrease) in cash and cash equivalents		63,187			(62,138	)

Cash and Cash Equivalents
Beginning		24,141			122,482
Ending	$	87,328		$	60,344

Supplemental Disclosure of Cash Flows
Cash paid during the periods for:
Interest	$	1,682		$	-
Income taxes	$	-		$	-

Non-cash investing and financing activities:
Deferred compensation expense relating to issuance of restricted common stock	$	38,534		$	-
Deferred compensation expense relating to issuance of warrant	$	2,140		$	-

	For the Period Ended
	June 30, 2022			June 30, 2021
Net loss before income tax		(352,941	)		(112,584	)
Statutory tax rate		20	%		20	%
Income tax provision		(70,588	)		(22,517	)
Computed expected benefit		10,475			-
Valuation allowance		72,025			23,565
Other, primarily the difference in tax rates		(1,437	)		(1,048	)
Income tax expenses		10,475			-

	For the Period Ended
Deferred tax assets:	June 30, 2022			December 31, 2021
Net operating loss carryforwards		307,513			235,488
Less: Valuation allowance		(307,513	)		(235,488	)
Deferred tax assets, net		-			-