Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

EUBG is a holding company for its operating subsidiaries that provide marketing consultancy services and e-commerce business in China. While substantially all of our operations are located in China, we currently do not, and we do not plan to use variable interest entities to execute our business plan or to conduct our China-based operations. However, because our operations are in China and our major shareholders are located in China, there is always a risk that the Chinese government may exert certain supervision over the operations of any company with any level of operations in China, including its ability to offer securities to investors, list its securities on a U.S. or other foreign exchange, conduct its business or accept foreign investment. If any or all of the foregoing were to occur, it could, in turn, result in a material change in the Company's operations and/or the value of its common stock and/or significantly limit or completely hinder its ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Segment and Related Information

We operate as a single reportable segment, which includes provision of consultancy services in China.

Results of Operations and Financial Condition

Results of Operations for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024

The following table represents our unaudited condensed consolidated statement of operations for the three months ended June 30, 2025 and 2024.

		Three Months Ended June 30,
		2025								2024
		$				% of Revenues				$				% of Revenues
Revenue		$	1,143,106				100	%		$	1,264,221				100	%
Cost of revenue			(134,430	)			(12	)%			(169,757	)			(13	)%
Gross profit			1,008,676				88	%			1,094,464				87	%
Selling, general and administrative expenses			(461,990	)			(40	)%			(455,537	)			(36	)%
Total other income (expenses), net			157,672				14	%			(4,105	)			0	%
Income before income tax			704,358				62	%			634,822				51	%
Income tax expense			(281,506	)			(25	)%			(286,355	)			(23	)%
Net income		$	422,852				37	%		$	348,467				28	%

Revenue and cost of revenue

During the three months ended June 30, 2025, we generated revenue of $1,143,106, which represents a decrease of $121,115 or 9.6% as compared to the same period in the prior year. The decrease was mainly attributed to our consultation services in connection with a client engaged in live streaming business which dropped by $92,163.

Cost of revenue for the three months ended June 30, 2025 was $134,430, which represented a decrease of $35,327 or 20.8% as compared to the same period in the prior year. The decrease in cost of revenue is primarily due to the completion of a consultation service with a service provider on March 31, 2025, which is not recurred.

Profit margin for the three months ended June 30, 2025 was 88.2%, which represents an increase of 1.7% as compared to the same period in the prior year. The increase is primarily attributed to decreased consultancy costs included in the cost of revenue, which outweighed the decrease in the overall revenue.

As a result of the above, the gross profit was $1,008,676 for the three months ended June 30, 2025, which represented a decrease of $85,788 or 7.8% as compared to the same period in the prior year.

Selling, general and administrative expenses

During the three months ended June 30, 2025, we incurred $461,990 selling, general and administrative expenses, which represented an increase of $6,453 or 1.4% as compared to the same period in the prior year. Our selling, general and administrative expenses consisted mainly of audit fees, professional fees, payroll expenses and consultancy fees.

Total other income (expenses), net

During the three months ended June 30, 2025, we recorded net other income of $157,672, which represented a difference of $161,777 or 39.4 times as compared to the same period in the prior year. Our net other income mainly consisted of bank interest income, exchange rate differences and sundry income. The difference is primarily attributed to the increase in sundry income from trademark licensing and unrealized exchange gain of $90,061 resulting from the appreciation of the RMB against the HKD.

Income tax expense

During the three months ended June 30, 2025, we incurred income tax expense of $281,506, which represented a decrease of $4,849 or 1.7% as compared to the same period in the prior year. The income tax expenses consisted of the Enterprise Income Tax charged in China and the withholding tax incurred in Hong Kong.

For the three months ended June 30, 2025, our income tax expenses comprised of current tax expenses and deferred tax expense of $216,412 and $65,094, respectively, compared to current tax expenses and deferred tax expenses of $223,674 and $62,681 for the same period in the prior year.

Net income

As a result of the above, we generated a net income of $422,852 and $348,467 for the three months ended June 30, 2025 and 2024, respectively.

Results of Operations for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024

The following table represents our unaudited condensed consolidated statement of operations for the six months ended June 30, 2025 and 2024.

		Six Months Ended June 30,
		2025								2024
		$				% of Revenues				$				% of Revenues
Revenue		$	2,105,060				100	%		$	2,524,274				100.0	%
Cost of revenue			(306,701	)			(14.6	)%			(331,138	)			(13.1	)%
Gross profit			1,798,359				85.4	%			2,193,136				86.9	%
Selling, general and administrative expenses			(923,098	)			(43.9	)%			(878,026	)			(34.8	)%
Total other income (expenses), net			209,143				10.0	%			(9,738	)			(0.4	)%
Income before income tax			1,084,404				51.5	%			1,305,372				51.7	%
Income tax expense			(478,067	)			(22.7	)%			(583,409	)			(23.1	)%
Net income		$	606,337				28.8	%		$	721,963				28.6	%

Revenue and cost of revenue

During the six months ended June 30, 2025, we generated revenue of $2,105,060, which represents a decrease of $419,214 or 16.6% as compared to the same period in the prior year. The decrease was mainly attributed to our consultation services in connection with a client engaged in live streaming business which dropped by $381,692.

Cost of revenue for the six months ended June 30, 2025 was $306,701, which represented a decrease of $24,437 or 7.4% as compared to the same period in the prior year. The decrease in cost of revenue is primarily due to the decrease in payroll for the direct staff.

Profit margin for the six months ended June 30, 2025 was 85.4%, which represents a decrease of 1.5% as compared to the same period in the prior year. The increase is primarily attributed to decreased overall revenue, which outweighed the decrease in payroll for the direct staff .

As a result of the above, the gross profit was $1,798,359 for the six months ended June 30, 2025, which represented a decrease of $394,777 or 18.0% as compared to the same period in the prior year.

Selling, general and administrative expenses

During the six months ended June 30, 2025, we incurred $923,098 selling, general and administrative expenses, which represented an increase of $45,072 or 5.1% as compared to the same period in the prior year. Our selling, general and administrative expenses consisted mainly of audit fees, professional fees, payroll expenses and consultancy fees.

Total other income (expenses), net

During the six months ended June 30, 2025, we recorded net other income of $209,143, which represented a difference of $218,881 or 22.5 times as compared to the same period in the prior year. Our net other income mainly consisted of bank interest income, exchange rate differences and sundry income. The difference is primarily attributed to the increase in sundry income from trademark licensing and unrealized exchange gain of $119,072 resulting from the appreciation of the RMB against the HKD.

Income tax expense

During the six months ended June 30, 2025, we incurred income tax expense of $478,067, which represented a decrease of $105,342 or 18.1% as compared to the same period in the prior year. The income tax expenses consisted of the Enterprise Income Tax charged in China and the withholding tax incurred in Hong Kong.

For the six months ended June 30, 2025, our income tax expenses comprised of current tax expenses and deferred tax expense of $427,694 and $50,373, respectively, compared to current tax expenses and deferred tax expenses of $439,825 and $143,584 for the same period in the prior year.

Net income

As a result of the above, we generated a net income of $606,337 and $721,963 for the six months ended June 30, 2025 and 2024, respectively.

Liquidity and Capital Resources

Working Capital

		June 30, 2025				December 31, 2024
Cash and cash equivalents		$	9,151,194			$	8,488,063
Total current assets			9,577,143				9,220,110
Total assets			9,705,656				9,386,317
Total liabilities			687,459				977,348
Retained earnings			2,212,005				1,605,668
Total stockholders' equity			9,018,197				8,408,969

Cash flow

The following table sets forth a summary of our cash flows for the periods indicated:

		Six months ended June 30,
		2025				2024
Net cash generated from operating activities		$	665,013			$	767,728
Effect of exchange rates on cash			(1,882	)			(62,077	)
Cash and cash equivalents at beginning of period			8,488,063				9,324,115
Cash and cash equivalents at end of period		$	9,151,194			$	10,029,766

Cash generated from operating activities

Net cash generated from operating activities for the six months ended June 30, 2025 was $665,013, which represented a decrease of $102,715 or 13.4% as compared to the same period in the prior year. The decrease of operating cash flows mainly resulted from a combination of below operating activities changes:

Net income was $606,337 for the six months ended June 30, 2025, as compared to $721,963 for the same period in the prior year. The decrease of net income of $115,626 or 16.0% was primarily due to the decrease in revenue attributed to our consultation services in connection with a client engaged in live streaming business which dropped by $381,692. This was partially offset by an increase in exchange gains of $161,332.

Cash inflow of other receivables and prepayments was $188,759 for the six months ended June 30, 2025, as compared to cash inflow of $13,028 for the same period in the prior year. The change in cash flow of $175,731 was primarily due to the recognition of prepaid expenses and collection of other receivables during the six months ended June 30, 2025, whereas there were no such prepayments recognition in the prior period.

Cash outflow of other payables and accrued liabilities was $224,282 for the six months ended June 30, 2025, as compared to cash outflow of $235,604 for the same period in the prior year. The cash outflow mainly represented the settlement of accrued audit fees and services fees.

Cash inflow of tax payables was $104,197 for the six months ended June 30, 2025, as compared to cash outflow of $114,592 for the same period in the prior year. Our tax payables consist of the Enterprise Income Tax charged in China, which is accrued on a quarterly basis and settled in the subsequent quarter. The changes in cash flow from tax payables were primarily influenced by the income tax provision and income tax paid during the year. For the six months ended June 30, 2025, the income tax provision was $427,694 and exceeded the income tax paid of $323,497, leading to the cash inflow of $104,197. For the same period in the prior year, the income tax provision was $583,409, more than the income tax paid of $554,417, resulting the cash outflow of $28,992.

Future Capital Requirements

We believe that our ability to generate cash from operations are adequate to fund working capital, capital spending and other cash needs for at least the next 12 months. Our ability to generate adequate cash from operations in the future, however, will depend on, among other things, our ability to successfully implement our business strategies while continuing to tightly control our expenses, and to manage the impact of changes to the PRC regulatory environment. We can give no assurance that we will be able to successfully implement those strategies and cost control initiatives, or successfully adjust to any changes to PRC laws and regulations impacting our business. In addition, changes in our operating plans, lower than anticipated sales, increased expenses, interest rate increases, acquisitions or other events may cause us to seek additional debt or equity financing in future periods. We can give no assurance that financing will be available on acceptable terms or at all. Additional equity financing could be dilutive to holders of the Company's common stock; debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions.

Contractual Obligations

We had the following contractual obligations and commercial commitments as of June 30, 2025:

Contractual Obligations		Total				Less than 1 year				1-3 years				3-5 years				More than 5 years
Lease			96,438				60,274				36,164				-				-
TOTAL		$	96,438				60,274				36,164				-				-

Off-Balance Sheet Arrangements

As of June 30, 2025 and December 31, 2024, we did not have any off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of Regulation S-K promulgated under the Securities Act.

Critical Accounting Policies and Estimates

The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. For a full description of our critical accounting policies, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our 2024 Form 10-K. While there have been no material changes to our critical accounting policies, or the methodologies or assumptions we apply under them, we continue to monitor such methodologies and assumptions.