Quarterly Report for Quarter Ending September 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 September 30, 2025 as compared to the three months ended September 30, 2024

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

		Three Months Ended September 30,
		2025								2024
		$				% of Revenues				$				% of Revenues
Revenue		$	1,217,966				100	%		$	1,670,203				100	%
Cost of revenue			(137,310	)			(11	)%			(179,352	)			(11	)%
Gross profit			1,080,656				89	%			1,490,851				89	%
Selling, general and administrative expenses			(386,190	)			(32	)%			(425,341	)			(25	)%
Total other (expenses) income, net			(10,436	)			(1	)%			52,317				3	%
Income before income tax			684,030				56	%			1,117,827				67	%
Income tax expense			(288,917	)			(24	)%			(414,212	)			(25	)%
Net income		$	395,113				32	%		$	703,615				42	%

Revenue and cost of revenue

During the three months ended September 30, 2025, we generated revenue of $1,217,966, which represents a decrease of $452,237 or 27.1% as compared to the same period in the prior year. The decrease was mainly attributed to a $335,937 drop in our consultancy services related to facilitating client product sales, as well as a $119,388 decline in consultancy services for a client engaged in the live streaming business.

Cost of revenue for the three months ended September 30, 2025 was $137,310, which represented a decrease of $42,042 or 23.4% 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 has not recurred.

Profit margin for the three months ended September 30, 2025 was 88.7%, which represents a slight decrease of 0.5% as compared to the same period in the prior year.

As a result of the above, the gross profit was $1,080,656 for the three months ended September 30, 2025, which represented a decrease of $410,195 or 27.5% as compared to the same period in the prior year.

Selling, general and administrative expenses

During the three months ended September 30, 2025, we incurred $386,190 in selling, general and administrative expenses, which represented a decrease of $39,151 or 9.2% 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 (expenses) income, net

During the three months ended September 30, 2025, we recorded net other expenses of $10,436, which represented a difference of $62,753 or 119.9% 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 decrease in sundry income from trademark licensing and unrealized exchange loss of $23,363 resulting from the depreciation of the RMB against the HKD.

Income tax expense

During the three months ended September 30, 2025, we incurred income tax expense of $288,917, which represented a decrease of $125,295 or 30.2% 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 September 30, 2025, our income tax expenses comprised of current tax expenses and deferred tax expense of $214,207 and $74,710, respectively, compared to current tax expenses and deferred tax expenses of $279,343 and $134,869 for the same period in the prior year.

Net income

As a result of the above, we generated a net income of $395,113 and $703,615 for the three months ended September 30, 2025 and 2024, respectively.

Results of Operations for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024

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

		Nine Months Ended September 30,
		2025								2024
		$				% of Revenues				$				% of Revenues
Revenue		$	3,323,026				100	%		$	4,194,477				100	%
Cost of revenue			(444,011	)			(13	)%			(510,490	)			(12	)%
Gross profit			2,879,015				87	%			3,683,987				88	%
Selling, general and administrative expenses			(1,309,288	)			(39	)%			(1,303,367	)			(31	)%
Total other income, net			198,707				6	%			42,579				1	%
Income before income tax			1,768,434				53	%			2,423,199				58	%
Income tax expense			(766,984	)			(23	)%			(997,621	)			(24	)%
Net income		$	1,001,450				30	%		$	1,425,578				34	%

Revenue and cost of revenue

During the nine months ended September 30, 2025, we generated revenue of $3,323,026, which represents a decrease of $871,451 or 20.8% as compared to the same period in the prior year. The decrease was mainly attributed to a $363,365 drop in our consultancy services related to facilitating client product sales, as well as a $501,080 decline in consultancy services for a client engaged in the live streaming business.

Cost of revenue for the nine months ended September 30, 2025 was $444,011, which represented a decrease of $66,479 or 13% 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 and the completion of a consultation service with a service provider on March 31, 2025, which has not recurred.

Profit margin for the nine months ended September 30, 2025 was 86.6%, which represents a slight decrease of 1.2% as compared to the same period in the prior year.

As a result of the above, the gross profit was $2,879,015 for the nine months ended September 30, 2025, which represented a decrease of $804,972 or 21.9% as compared to the same period in the prior year.

Selling, general and administrative expenses

During the nine months ended September 30, 2025, we incurred $1,309,288 in selling, general and administrative expenses, which represented an increase of $5,921 or 0.5% 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, net

During the nine months ended September 30, 2025, we recorded total other income of $198,707, which represented a difference of $156,128 or 3.7 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 $95,709 resulting from the appreciation of the RMB against the HKD.

Income tax expense

During the nine months ended September 30, 2025, we incurred income tax expense of $766,984, which represented a decrease of $230,637 or 23.1% 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 nine months ended September 30, 2025, our income tax expenses comprised of current tax expenses and deferred tax expense of $641,901 and $125,083, respectively, compared to current tax expenses and deferred tax expenses of $719,168 and $278,453 for the same period in the prior year.

Net income

As a result of the above, we generated a net income of $1,001,450 and $1,425,578 for the nine months ended September 30, 2025 and 2024, respectively.

Liquidity and Capital Resources

Working Capital

		September 30, 2025				December 31, 2024
Cash and cash equivalents		$	9,564,938			$	8,488,063
Total current assets			10,181,322				9,220,110
Total assets			10,289,995				9,386,317
Total liabilities			794,701				977,348
Retained earnings			2,607,118				1,605,668
Total stockholders' equity			9,495,294				8,408,969

Cash flow

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

		Nine months ended September 30,
		2025				2024
Net cash generated from operating activities		$	998,609			$	1,059,204
Cash used in financing activities			-				(2,211,536	)
Effect of exchange rate changes on cash			78,266				103,546
Cash and cash equivalents at beginning of period			8,488,063				9,324,115
Cash and cash equivalents at end of period		$	9,564,938			$	8,275,329

Cash generated from operating activities

Net cash generated from operating activities for the nine months ended September 30, 2025 was $998,609, which represented a decrease of $60,595 or 5.7% 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 $1,001,450 for the nine months ended September 30, 2025, as compared to $1,425,578 for the same period in the prior year. The decrease of net income of $424,128 or 29.8% was primarily due to a $363,365 drop in our consultancy services related to facilitating client product sales, as well as a $501,080 decline in consultancy services for a client engaged in the live streaming business. This was partially offset by an increase in total other income of $156,128.

Cash outflow arising from deferred tax adjustment was $79,011 for the nine months ended September 30, 2025, as compared to cash outflow of $4,277 as compared to the same period in the prior year. The changes of deferred tax was majorly attributed to reversal of trademark income recognition with amount of $72,664.

Cash inflow of other receivables and prepayments was $133,887 for the nine months ended September 30, 2025, as compared to cash outflow of $111,519 for the same period in the prior year. The change in cash flow of $245,406 was primarily due to the recognition of prepaid expenses and collection of other receivables during the nine months ended September 30, 2025, whereas there were no such prepayments recognition in the prior period.

Cash inflow of tax payables was $102,008 for the nine months ended September 30, 2025, as compared to cash outflow of $54,072 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 nine months ended September 30, 2025, the income tax provision was $641,901 and exceeded the income tax paid of $539,893, leading to the cash inflow of $102,008. For the same period in the prior year, the income tax provision was $719,168, less than the income tax paid of $773,240, resulting the cash outflow of $54,072.

Cash flows used in financing activities

No cash movement of financing activities was resulted for the nine months ended September 30, 2025. The cash used in financing activities for the nine months ended September 30, 2024 was due to dividends paid of $2,211,536 to the shareholders.

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 September 30, 2025:

Contractual Obligations		Total				Less than 1 year				1-3 years				3-5 years				More than 5 years
Lease			85,012				48,578				36,434				-				-
TOTAL		$	85,012				48,578				36,434				-				-

Off-Balance Sheet Arrangements

As of September 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.