EVOH 10-Q
EvoAir Holdings Inc. (EVOH)
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Mark One
For
the quarterly period ended
For the transition period from ______ to _______
COMMISSION
FILE NO.
(Exact name of registrant as specified in its charter)
| 8713 | ||||
| (State or Other Jurisdiction of | IRS Employer | Primary Standard Industrial | ||
| Incorporation or Organization) | Identification Number | Classification Code Number |
EvoAir Holdings Inc.
Tel.
(Address and telephone number of registrant’s executive office)
Copies to:
Lawrence
Venick, Esq.
Loeb & Loeb LLP
2206-19 Jardine House
1 Connaught Place, Central
Hong Kong SAR
Tel: +852.3923.1111
Fax: +852.3923.1100
Indicate
by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer ☐
Accelerated filer ☐
Smaller
reporting company
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years:
Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
Applicable Only to Corporate ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:
| Class | Outstanding as of July 10, 2026 | |
| Common Stock, $ |
EvoAir Holdings Inc.
| Part I | FINANCIAL INFORMATION | |
| Item 1 | FINANCIAL STATEMENTS | 3 |
| Item 2 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 21 |
| Item 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 31 |
| Item 4 | CONTROLS AND PROCEDURES | 31 |
| PART II | OTHER INFORMATION | |
| Item 1 | LEGAL PROCEEDINGS | 32 |
| Item 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 32 |
| Item 3 | DEFAULTS UPON SENIOR SECURITIES | 32 |
| Item 4 | MINE SAFETY DISCLOSURES | 32 |
| Item 5 | OTHER INFORMATION | 32 |
| Item 6 | EXHIBITS | 33 |
| SIGNATURES | 34 |
| 2 | Page |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EVOAIR HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except share data or otherwise stated)
AS OF MAY 31, 2026 AND AUGUST 31, 2025
| May 31, 2026 | August 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Deposit, prepayments and other receivables | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred offering cost | ||||||||
| Technology-related intangible assets, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accruals | $ | $ | ||||||
| Other payables | ||||||||
| Deferred revenue | ||||||||
| Hire purchase creditor | ||||||||
| Amounts due to shareholders | ||||||||
| Operating lease liability - current | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies (Note 14) | ||||||||
| Shareholders’ equity | ||||||||
| Common stock, authorized; $ par value, and shares issued and outstanding as at May 31, 2026 and August 31, 2025* | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| * |
The accompanying footnotes are an integral part of these consolidated financial statements.
| 3 | Page |
EVOAIR HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In U.S. Dollars, except share data or otherwise stated)
FOR THE THREE AND NINE MONTH PERIODS ENDED MAY 31, 2026 AND 2025
| Three months ended | Nine months ended | |||||||||||||||
| May 31, 2026 | May 31, 2025 | May 31, 2026 | May 31, 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit/(loss) | ( | ) | ||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Interest income/(expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income | ||||||||||||||||
| Total other income/(expense) | ||||||||||||||||
| Loss from operation before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expenses | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: Net loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to equity holders of the Company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive income/(loss): | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: net comprehensive income attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||||||
| Net comprehensive loss attributable to equity holders of the Company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to equity holders of the Company per common share: | ||||||||||||||||
| Basic and diluted* | ) | ) | ) | ) | ||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| * |
The accompanying footnotes are an integral part of these consolidated financial statements.
| 4 | Page |
EVOAIR HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
(In U.S. Dollars, except share data or otherwise stated)
FOR THE THREE AND NINE MONTH PERIODS ENDED MAY 31, 2026 AND 2025
| Common Stock | Additional paid in | Accumulated | Accumulated other comprehensive | Non-controlling | ||||||||||||||||||||||||
| Shares | Amount | capital | deficit | income | Interests | Total | ||||||||||||||||||||||
| Balance as of August 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Issuance of common stock for consulting service | ||||||||||||||||||||||||||||
| Fraction shares issued due to reverse stock split | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of November 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of February 28, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of May 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| * | Retroactively presented to reflect 1-for-4 reverse stock split effective on September 11, 2024. |
The accompanying footnotes are an integral part of these consolidated financial statements.
| Common Stock | Additional paid in | Accumulated | Accumulated other comprehensive | Non-controlling | ||||||||||||||||||||||||
| Shares | Amount | capital | deficit | income | Interests | Total | ||||||||||||||||||||||
| Balance as of August 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | |||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of November 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of February 28, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | |||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of May 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| * | Retroactively presented to reflect 1-for-4 reverse stock split effective on September 11, 2024. |
The accompanying footnotes are an integral part of these consolidated financial statements.
| 5 | Page |
EVOAIR HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars, except share data or otherwise stated)
FOR THE NINE MONTHS PERIODS ENDED MAY 31, 2026 AND 2025
| May 31, 2026 | May 31, 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | ( | ) | |||
| Adjustments for non-cash income and expenses: | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Stock based expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivables | ||||||||
| Inventories | ||||||||
| Deposit, prepayments and advances to suppliers | ||||||||
| Operating lease right-of-use assets | ||||||||
| Accounts payable and accruals | ||||||||
| Deferred revenue | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other payables | ||||||||
| Net cash used in operations | $ | ( | ) | $ | ( | ) | ||
| Cash flows from investing activity | ||||||||
| Purchase of property, plant and equipment | ( | ) | ||||||
| Cash used in investing activity | $ | $ | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Loan from shareholders | ||||||||
| Payments of hire purchase | ( | ) | ( | ) | ||||
| Payment of deferred offering costs | ( | ) | ( | ) | ||||
| Net cash generated from financing activities | $ | $ | ||||||
| Net decrease in cash and cash equivalents | ||||||||
| Effect of exchange rate changes | ( | ) | ( | ) | ||||
| Cash and cash equivalents at start of period | ||||||||
| Cash and cash equivalents at end of period | ||||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
| 6 | Page |
EVOAIR HOLDINGS INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2026 AND 2025
NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS
EvoAir Holdings Inc. (formerly Unex Holdings Inc.) (the “Company”, “EVOH”, “we”, “us”, or “our”) is a corporation established under the corporation laws in the State of Nevada, United States of America (“U.S”) on February 17, 2017. The Company has adopted an August 31 fiscal year-end.
On December 20, 2021, the Company and Low Wai Koon (“Dr. Low”) entered into a share transfer agreement, (the “EvoAir International Share Transfer Agreement”), pursuant to which Dr. Low agreed to sell all of his ordinary shares of EvoAir International Limited (“EvoAir International”) to the Company for a consideration of US$ (“EvoAir Transaction”). EvoAir International, through its subsidiaries upon completion of the Transactions (defined hereunder), is engaged in the research and development (“R&D”), manufacturing, trading, sale of heating, ventilation and air conditioning (“HVAC”) products and related services in Asia.
Pursuant
to the terms of a share transfer agreement dated December 20, 2021, Dr. Low, the then sole executive officer and director of the Company
and the owner of restricted shares of common stock, with par value of $ per share (“Common Stock”) of the
Company (“EvoAir Shares”) representing approximately
On December 20, 2021, several transactions took place (together, the “Allotment Transactions”) whereby the Company issued and allotted in aggregate ordinary shares of common stock to certain parties. On completion of the Allotment Transactions, the total number of issued and outstanding shares of common stock of the Company were (“Then Enlarged Share Capital”):
| (A) | On December 20, 2021, Dr. Low and Chan Kok Wei entered into a share exchange agreement with WKL Eco Earth Holdings Pte Ltd (“WKL Eco Earth Holdings”), pursuant to which Dr. Low and Chan Kok Wei agreed to sell all their ordinary shares of WKL Green Energy Sdn Bhd (“WKL Green Energy”) to WKL Eco Earth Holdings in consideration for the allotment and issuance to WKL Global and Allegro Investment (BVI) Limited (“Allegro Investment”), a company incorporated in the British Virgin Islands (“BVI”) with % shareholdings held by Chan Kok Wei and Ong Bee Chen, respectively, of shares and EvoAir Shares, respectively, or approximately % and % of the Then Enlarged Share Capital, respectively. |
| (B) | On December 20, 2021, Dr. Low, Chan Kok Wei, Ong Bee Chen and certain sellers (“WKLEE Sellers”) entered into a share exchange agreement with WKL Eco Earth Holdings, pursuant to which Dr. Low, Chan Kok Wei, Ong Bee Chen and WKLEE Sellers agreed to sell all their ordinary shares of WKL Eco Earth Sdn Bhd (“WKL Eco Earth”) to WKL Eco Earth Holdings in consideration for the allotment and issuance to WKL Global, Allegro Investment and WKLEE Sellers of EvoAir Shares, EvoAir Shares and in aggregate shares, respectively, or approximately %, % and in aggregate %, respectively, of the Then Enlarged Share Capital. |
| (C) | On December 20, 2021, Tan
Soon Hock, Ivan Oh Joon Wern and certain relevant interest holders (“Relevant Interest Holders”) entered into an investment
exchange agreement with WKL Eco Earth Holdings, pursuant to which Tan Soon Hock, Ivan Oh Joon Wern and the Relevant Interest Holders
agreed to sell all relevant interests in the EVOH and its subsidiaries (“EvoAir Group” or the “Group”) to
WKL Eco Earth Holdings in consideration for the allotment and issuance of EvoAir Shares, EvoAir Shares and in
aggregate EvoAir shares, respectively, or approximately |
| 7 | Page |
| (D) | On December
20, 2021, Dr. Low entered into two deeds of assignment of intellectual properties with WKL Eco Earth Holdings, in respect of Dr.
Low’s patents and patent applications relating to eco-friendly air-conditioner condenser (external unit), evoairTM and
the trademarks and trademark applications described in the deeds of assignment thereunder, and in respect of Dr. Low’s patents
and patents applications relating to the portable air-conditioner, e-Cond EVOTM and the trademarks and trademark applications
as described in the deeds of assignment thereunder (together, the “IP Assignments”). Pursuant to the IP Assignments,
WKL Global, Allegro Investment and certain nominees shall be allotted and issued EvoAir Shares, EvoAir Shares
and in aggregate EvoAir Shares, respectively or approximately |
EvoAir Transaction, Change of Control Transaction and Allotment Transactions are collectively to be referred to as the “Transactions”. The closing of the Transactions (“Closing”) occurred on December 20, 2021 (the “Closing Date”).
From and after the Closing Date, at which time EvoAir International transferred its HVAC business to the Company, the Company’s primary operations will consist of the prior operations of EvoAir International and its subsidiaries.
EvoAir International is a company incorporated in BVI on November 17, 2021. Effective from the December 20, 2021, it wholly owns WKL Eco Earth Holdings, a company incorporated in Singapore on July 12, 2018, which in turn wholly owns (a) WKL Eco Earth, a Malaysian company incorporated on May 17, 2017, and (b) WKL Green Energy, a Malaysian company incorporated on October 24, 2017. WKL Eco Earth Holdings acquired (c) EvoAir Manufacturing (M) Sdn Bhd (“EvoAir Manufacturing”) on April 19, 2021, a Malaysian company incorporated on March 22, 2019, as well as acquiring (d) WKL EcoEarth Indochina Co Ltd (“WKL EcoEarth Indochina”), a Cambodia company incorporated on February 4, 2021, (e) WKL Guanzhe Green Technology Guangzhou Co Ltd (“WKL Guanzhe”), a Chinese company incorporated on April 6, 2021. EvoAir Manufacturing wholly owns (f) Evo Air Marketing (M) Sdn Bhd (“Evo Air Marketing”), a Malaysian company incorporated on February 2, 2021.
On June 15, 2022, the Company filed a Certificate of Amendment (the “Amendment”) to the Articles of Incorporation with Nevada’s Secretary of State to change the name of the Company from Unex Holdings Inc. to EvoAir Holdings Inc. (the “Name Change”), and the Name Change became market effective on November 4, 2022. Effective on November 11, 2022, the Company’s shares began trading under the new ticker symbol “EVOH”.
On November 21, 2023, the Company issued in aggregate, shares of Common Stock to 15 referral agents (“Referral Agents”) in consideration for their referral to the Company of certain investors. Each Referral Agent is a “non-U.S. Persons” as defined in Regulation S.
On November 21, 2023, the Company issued, in aggregate, shares of Common Stock to two individuals in consideration for marketing services provided to the Company by Artisan Creative Studio, a marketing entity based in Malaysia. Each of the individuals is a “non-U.S. Persons” as defined in Regulation S.
On
August 14, 2024, the WKL Eco Earth Holdings has increased its investment in WKL Guanzhe Green Technology Guangzhou Co Ltd (China) by
injecting an additional RMB
On
February 6, 2026, the WKL Eco Earth Holdings has increased its investment in WKL Guanzhe Green Technology Guangzhou Co Ltd (China) by
injecting an additional RMB
Round 2 Stockholders
The Company entered into a series of offerings for an aggregate of up to shares of Common Stock at a per share purchase price of $, as follows:
| ● | On February
15, 2022, the Company entered into certain share subscription agreement with Ms. Ang Lee Kim Jane, who is a “non-U.S. Persons”
as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to which the Company
agreed to issue and sell shares of Common Stock, at a per share purchase price of $, as part of a series of offerings
by the Company for an aggregate of up to shares of Common Stock at a per share purchase price of $. The gross proceeds
were $ |
| 8 | Page |
| ● | On June 3,
2022, the Company entered into certain share subscription agreement with Mr. Wong Hon Wai who is a “non-U.S. Persons”
as defined in Regulation S of the Securities Act pursuant to which the Company agreed to issue and sell shares of Common Stock,
at a per share purchase price of $, as part of a series of offerings by the Company for an aggregate of up to shares
of Common Stock at a per share purchase price of $. The gross proceeds were $ | |
| ● | On October 25, 2022, the Company entered into Regulation S share subscription agreements with eight investors, each of whom represented that it was a “non-U.S. Persons” as defined in Securities Act. On the same date, the Company entered into Regulation D share subscription agreements with two investors, each of whom represented that it was an “Accredited Investors” as defined in Regulation D of the Securities Act. Pursuant to the share subscription agreements, the Company agreed to issue and sell in aggregate, (i) shares of Common Stock to the Regulation S investors, and (ii) shares of Common Stock to the Regulation D investors, respectively, at a per share purchase price of $, as part of a series of offerings by the Company for an aggregate of up to shares of Common Stock at a per share purchase price of $. The gross proceeds in aggregate were $. | |
| ● | On February 20, 2023, the
Company entered into Regulation S share subscription agreements with eleven investors, each of whom represented that it was a “non-U.S.
Persons” as defined in Regulation S of the Securities Act. Pursuant to the share subscription agreements, the Company agreed
to issue and sell in aggregate, (i) shares of Common Stock to the Regulation S investors, at a per share purchase price of
$ as part of a series of the offerings by the Company for an aggregate of up to shares of Common Stock at a per share
purchase price of $. The gross proceeds in aggregate were $ | |
| ● | On July 13, 2023, the Company
entered into Regulation S share subscription agreements with 31 investors, each of whom represented that it was a “non-U.S.
Persons” as defined in Regulation S of the Securities Act. Pursuant to the share subscription agreements, the Company agreed
to issue and sell in aggregate, (i) shares of Common Stock to the Regulation S Investors, at a per share purchase price of
$ as part of a series of the offerings by the Company for an aggregate of up to shares of Common Stock at a per share
purchase price of $. The gross proceeds in aggregate were approximately $ | |
| ● | On September 7, 2023, the
Company entered into Regulation S share subscription agreements with 71 investors, each of whom represented that it was a “non-U.S.
Persons” as defined in Regulation S of the Securities Act. Pursuant to the share subscription agreements, the Company agreed
to issue and sell in aggregate, shares of Common Stock to the Regulation S investors, at a per share purchase price of $
as part of a series of the offerings by the Company for an aggregate of up to shares of Common Stock at a per share purchase
price of $. The gross proceeds in aggregate were approximately $ | |
| ● | On November 21, 2023, the
Company entered into a Regulation S share subscription agreement with Wong Chun Shoong who represented that he was a “non-U.S.
Persons” as defined in Regulation S of the Securities Act. Pursuant to the share subscription agreement, the Company agreed
to issue and sell in aggregate, shares of Common Stock to the Regulation S investors, at a per share purchase price of $
as part of a series of the offerings by the Company for an aggregate of up to shares of Common Stock at a per share purchase
price of $. The gross proceeds in aggregate were approximately $ |
Reverse Stock Split
On April 12, 2024, the Company’s board of directors (the “Board”) unanimously resolved to effect a reverse stock split of the Company’s common stock, par value $ per share (the “Common Stock”), at a ratio of 1-for-4. Following such resolution, on September 9, 2024, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada to effect the reverse stock split, with an effective time of 9:00AM. Eastern Time on September 11, 2024 (the “Reverse Stock Split”).
| 9 | Page |
Split Adjustment; Treatment of Fractional Shares
As a result of the 1:4 Reverse Stock Split, each 4 pre-split shares of Common Stock outstanding will automatically combine into one new share of Common Stock without any action on the part of the holders, and the number of outstanding shares of Common Stock was reduced from shares to shares (subject to rounding up of fractional shares to the nearest whole number).
No fractional shares were issued in connection with the Reverse Stock Split. Fractional shares were rounded up to the nearest whole number.
Share Issuance
On
November 25, 2024, the Company issued, in aggregate, shares of Common Stock, representing
On
November 25, 2024, the Company issued, in aggregate, shares of Common Stock, representing
Details of the Company’s subsidiaries:
| Subsidiaries of EVOH | Attributable interest | |||
| EvoAir International Limited (British Virgin Islands) | % | |||
| Subsidiary of EvoAir International Limited | ||||
| WKL Eco Earth Holdings Pte Ltd (Singapore) | % | |||
| Subsidiaries of WKL Eco Earth Holdings Pte Ltd | ||||
| WKL Eco Earth Sdn Bhd (Malaysia) | % | |||
| WKL Green Energy Sdn Bhd (Malaysia) | % | |||
| EvoAir Manufacturing (M) Sdn Bhd (Malaysia) | % | |||
| WKL EcoEarth Indochina Co Ltd (Cambodia) | % | |||
| WKL Guanzhe Green Technology Guangzhou Co Ltd (China)* | % | |||
| Subsidiary of EvoAir Manufacturing (M) Sdn Bhd | ||||
| Evo Air Marketing (M) Sdn Bhd (Malaysia) | % | |||
| * |
NOTE 2 – CHANGE OF CONTROL
Pursuant
to the terms of a share transfer agreement dated December 20, 2021, Dr. Low, the then sole executive officer and director of the Company
and the owner of restricted shares of the Company’s ordinary shares representing approximately % of the Company’s
then issued and outstanding shares, sold his entire shareholding of the Company to WKL Global for an aggregate consideration of $.
Upon completion of the Change of Control Transaction, WKL Global then owned shares, or approximately
NOTE 3 – GOING CONCERN
The Company’s financial statements as of May 31, 2026 are prepared using generally accepted accounting principles in the United States of America (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established a sustainable ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern.
| 10 | Page |
As
of May 31, 2026 and August 31, 2025, the Company had an accumulated deficit of $
To address these challenges and ensure the Company’s long-term viability, Management has developed a strategic plan focused on the continued development and expansion of its HVAC business. Key initiatives include:
| ● | Expansion of Product Offerings: Broadening the range of HVAC products to meet diverse market needs. | |
| ● | Geographical Expansion: Penetrating new markets to drive revenue growth. | |
| ● | Revenue Diversification: Expanding customer segments across retail, commercial, industrial, and project-based clients, as well as private label and licensing opportunities. | |
| ● | Improved Profitability: Achieving economies of scale through operational efficiencies and growth. |
Additionally, the Company is actively pursuing plans to raise additional funding to support operations and business expansion. This includes preparations to uplist on the Nasdaq Capital Market, which is expected to enhance access to capital and further strengthen the Company’s financial position.
The consolidated financials have been prepared assuming that the Company will continue as a going concern and accordingly financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation:
The accompanying consolidated financial statements have been prepared by the Company in accordance with U.S. GAAP for financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”).
The
consolidated financial statements include the accounts of EvoAir International, WKL Eco Earth Holdings, WKL Eco Earth, WKL Green Energy,
and its
All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of the Management, the accompanying financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly all financial statements in accordance with U.S. GAAP.
The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the stockholders of the Company. Non-controlling interests in the results of the Company are presented on the face of the consolidated statements of operations and comprehensive loss as an allocation of the total loss for the year between non-controlling interest holders and the stockholders of the Company.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods. Key estimates in the accompanying consolidated financial statements include, among others, revenue recognition, allowances for credit losses and product returns, allowance for obsolete inventory, valuation of long-lived assets and Rights of Use (“ROU”) assets (including lease liabilities), and deferred income tax asset valuation allowances. Actual results could differ materially from these estimates.
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Fiscal Year End
The Company operates on a fiscal-year basis, with the fiscal year ending on August 31.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents. The Company places its cash with high credit quality financial institutions.
WKL Guanzhe business is primarily conducted in China and substantially all of revenue are denominated in RMB. The government of People’s Republic of China (“PRC”) imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade.
Comprehensive Gain or Loss
ASC 220 “Comprehensive Income,” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As of May 31, 2026, and August 31, 2025, the Company established that there are items that represented components of comprehensive income and, therefore, has included a statement of comprehensive income in the financial statements.
Foreign Currency Translation
The functional currency of Chinese operations is Chinese Renminbi, (“RMB”). The functional currency of the Company’s Singapore operations is Singapore dollars (“SGD”). The functional currency of the Company’s Malaysia operations is Ringgit Malaysia (“RM”). Management has adopted ASC 830 “Foreign Currency Matters” for transactions that occur in foreign currencies. Monetary assets denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Average monthly rates are used to translate revenues and expenses.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
Assets and liabilities of the Company’s operations are translated into the reporting currency, United States Dollars, at the exchange rate in effect at the balance sheet dates. Revenue and expenses are translated at average rates in effect during the reporting periods. Equity transactions are recorded at the historical rate when the transaction occurred. The resulting translation adjustment is reflected as accumulated other comprehensive income, a separate component of stockholders’ equity in the statement of stockholders’ equity.
Credit Losses
In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, specifically Financial Instruments – Credit Losses (Topic 326), denoted as ASC 326. This regulatory framework supersedes the incurred loss methodology with the Current Expected Credit Loss (CECL) methodology. CECL necessitates the derivation of credit loss estimates for the remaining projected life of financial assets, encompassing historical data, prevailing conditions, and substantiated forecasts. Broadly applicable to financial assets assessed at amortized cost, including trade receivables, loan receivables, and held-to-maturity debt securities, CECL also extends its purview to certain off-balance sheet credit exposures, such as unfunded commitments to extend credit. In adherence to this methodology, financial assets measured at amortized cost are to be presented on financial statements at the net amount anticipated to be collected, incorporating an allowance for credit losses as a means of accounting for the estimated credit losses. The Company adopted ASU 2016-13 on September 1, 2023, using the modified retrospective method. See below allowance for credit losses for more information.
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Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the net value of the face amount less any allowance for expected credit loss. The allowance for expected credit loss is the Company’s best estimate of the amount of probable credit losses in our existing accounts receivable. An allowance for credit losses is recorded in the period when loss is probable based on an assessment of specific evidence indicating troubled collection, historical experience, accounts aging and other factors. The Company reviews the allowance for credit losses on a regular basis, and all past due balances are reviewed individually for collectability. An account receivable is written off after all collection efforts have ceased. Recoveries of receivables previously written off are recorded when received. Interest is not charged on past due accounts.
As
of May 31, 2026, and August 31, 2025, our net accounts receivable totaled $
Inventories
Inventories consist primarily of finished goods, raw materials, and work-in-process (“WIP”) from WKL Eco Earth, WKL EcoEarth Indochina, WKL Guanzhe, and EvoAir Manufacturing.
We value inventories at the lower of cost or net realizable value. We determine the costs of inventory using the standard cost method, which approximates actual cost based on a first-in, first-out method. All other costs, including administrative costs, are expensed as incurred.
Deposit, prepayments, and other receivables
Deposit, prepayments and other receivables are comprised of prepayments paid to vendors to initiate orders and prepaid services fees and are classified as current assets if such amounts are to be recognized within one year from the balance sheet date.
Property, Plant and Equipment
Property,
plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of
the related capitalized assets. Property and equipment are depreciated over
| Useful lives | ||
| Plant and machineries | ||
| Office equipment | ||
| Vehicles | ||
| Furniture and equipment | ||
| Renovation |
Repair and maintenance costs are charged to expense as incurred. At the time of retirement or other disposition of property, plant and equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.
Intangible Assets and Other Long-Lived Assets
The
Company’s intangible assets consist of patents and trademarks related to assignments of intellectual properties by Dr. Low into
WKL Eco Earth Holdings under the IP Assignments as contemplated in Note 1. The intangible assets are recorded at fair market value and
are amortized using the straight-line method over an estimated life of
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value.
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Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company does not disaggregate its revenue streams as the economic factors underlying the contracts are similar and provide no significant distinction. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Deferred Revenue
The
Company collects customer deposits in advance for certain business contracts. These advance payments are initially recorded as deferred
revenue on the balance sheet. As of May 31, 2026, and August 31, 2025, the Company recorded a deferred revenue balance of $
Deferred Offering Costs
The
Company follows the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses
of Offering”. Deferred offering costs consist of underwriting, legal and other expenses incurred through the balance sheet date
that are directly related to the intended initial public offering (“IPO”). Deferred offering costs will be charged to shareholders’
equity netted against the proceeds upon the completion of the IPO. Should the IPO prove to be unsuccessful, these deferred costs, as
well as additional expenses to be incurred, will be charged to operations. The Company deferred $
Leases
We have entered into operating agreements primarily for the office and factory. We determine if an arrangement is a lease at inception. For all classes of underlying assets, we elect not to recognize right of use assets or lease liabilities when a lease has a lease term of 12 months or less at the commencement date and does not include an option to purchase the underlying asset that we are reasonably certain to exercise. Operating lease assets and liabilities are included on our consolidated balance sheet as of May 31, 2026.
Operating lease assets and liabilities are recognized at the present value of future lease payments as of the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in most of our leases is not readily determinable. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in the economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base, non-cancellable, lease term when determining the lease assets and liabilities. Operating lease expense is recognized on a straight-line basis over the lease term.
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Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We combine fixed payments for non-lease components with our lease payments and account for them together as a single lease component, which increases the amount of our lease assets and liabilities.
Income Taxes
The Company utilizes ASC Topic 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of operations.
Measurement of Fair Value
The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices, and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined in the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The Company computes basic and diluted earnings (loss) per share amounts in accordance with ASC Topic 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflect the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of May 31, 2026, the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, by introducing key amendments to enhance disclosures in public entities’ reportable segments. Notable changes include the mandatory disclosure of significant segment expenses regularly provided to the chief operating decision maker (“CODM”), disclosure of other segment items, and requirements for consistency in reporting measures used by the CODM. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Accordingly, the Company adopted the provisions of ASU 2023-07 as of January 31, 2025. The adoption of the new standard had no impact on the Company’s financial position, results of operations or cash flows on the date of transition.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which introduces more detailed requirements for annual disclosures for income taxes. The ASU requires public business entities to present specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose the amounts of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the effects, if any, that the adoption of ASU 2023-09 may have on its financial position, results of operations, cash flows, or disclosures.
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In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose specific information about certain costs and expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effects, if any, that the adoption of ASU 2024-03 may have on its financial position, results of operations, cash flows, or disclosures.
In September 2025, the FASB issued ASU 2025-06-Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06), which is intended to simplify the capitalization guidance for internal-use software by removing references to project stages and clarifying when the capitalizing of eligible costs is required. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its disclosures.
There are no other recently issued accounting pronouncements that have not yet been adopted that the Company considers material to its consolidated financial statements.
NOTE 5 INVENTORIES
Inventories consist of the following:
| May 31, 2026 | August 31, 2025 | |||||||
| Finished goods | $ | $ | ||||||
| Raw materials and supplies | ||||||||
| Total | $ | $ | ||||||
NOTE 6 DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES
Deposits, prepayments and other receivables consists of the following:
| May 31, 2026 | August 31, 2025 | |||||||
| Deposits and Prepayments | $ | $ | ||||||
| Other receivables (Advances to suppliers) | ||||||||
| Total | $ | $ | ||||||
NOTE 7 PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant, and equipment consist of the following:
| May 31, 2026 | August 31, 2025 | |||||||
| Plant and machineries | $ | $ | ||||||
| Office equipment | ||||||||
| Vehicles | ||||||||
| Furniture and equipment | ||||||||
| Renovation | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant, and equipment, net | $ | $ | ||||||
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Depreciation
expense for the nine months ended May 31, 2026, was $
NOTE 8 – INTANGIBLE ASSETS
The below table summarizes the identifiable intangible assets as of May 31, 2026 and August 31, 2025:
| May 31, 2026 | August 31, 2025 | |||||||
| Technology 1-Portable Air Cooler | $ | $ | ||||||
| Technology 2-Condensing Unit | ||||||||
| Less: Accumulated technology-related intangible asset impairment | ( | ) | ( | ) | ||||
| Adjusted carrying amount | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization
expenses for intangible assets for the nine months ended May 31, 2026, and 2025 were $
NOTE 9 ACCOUNTS PAYABLE, ACCRUALS, AND OTHER PAYABLES
Accounts payable and accruals, and other payables consist of the following:
| May 31, 2026 | August 31, 2025 | |||||||
| Accounts payable | $ | $ | ||||||
| Accruals | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
NOTE 10 RELATED PARTY TRANSACTIONS
Amounts due to shareholders
NOTE 11 STOCKHOLDERS’ EQUITY
On December 16, 2021, the Company increased the authorized common stock from shares with a par value of $ per share to shares with a par value of $ per share.
On April 12, 2024, the Company’s board of directors unanimously resolved to effect a reverse stock split of the Company’s common stock, par value $ per share, at a ratio of 1-for-4. Following such resolution, on September 9, 2024, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada to effect the reverse stock split, with effective on September 11, 2024.
On
November 25, 2024, the Company issued, in aggregate, shares of Common Stock, representing
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On
November 25, 2024, the Company issued, in aggregate, shares of Common Stock, representing
As a result of the 1:4 Reverse Stock Split, each 4 pre-split shares of Common Stock outstanding will automatically combine into one new share of Common Stock without any action on the part of the holders. Therefore, as of May 31, 2026, and August 31, 2025, the Company had and shares of its common stock issued and outstanding, respectively.
NOTE 12 INCOME TAXES
The Company’s operating subsidiaries are governed by the Income Tax Law (defined hereunder), which concerns Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (“Income Tax Laws”). We routinely undergo examinations in the jurisdictions in which we operate.
The Company has operations in Singapore, Malaysia, Cambodia, BVI, and China that are subject to taxes in the jurisdictions in which they operate, as follows:
Singapore
WKL
Eco Earth Holdings is incorporated in Singapore, and under the current tax laws of Singapore, its standard corporate income tax rate
is
Malaysia
WKL
Eco Earth, WKL Green Energy and Evoair Manufacturing (including its
Cambodia
WKL
EcoEarth Indochina is incorporated in Cambodia, and under the current tax laws of Cambodia, its standard corporate tax rate is
BVI
EvoAir International is incorporated in BVI, and a BVI Business Company is exempt from the BVI income tax.
China
WKL
Guanzhe is incorporated in China. Under the current tax law in the PRC, WKL Guanzhe is subject to the enterprise income tax rate of
Due to the Company’s net loss position, there was no provision for income taxes recorded. As a result of the Company’s losses to date, there exists doubt as to the ultimate realization of the deferred tax assets. Accordingly, a valuation allowance equal to the total deferred tax assets has been recorded.
Reconciliation between the statutory tax rate to income before income taxes and the actual provision for income taxes is as follows:
| Years Ended | ||||||||
| May 31, 2026 | August 31, 2025 | |||||||
| US Statutory rate | % | % | ||||||
| Effect of reconciling items for tax purposes | ( | )% | ( | )% | ||||
| Effective income tax rate | % | % | ||||||
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The components of net deferred tax assets are as follows:
| May 31, 2026 | August 31, 2025 | |||||||
| Net operating loss carry-forward | $ | $ | ||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | ||||||||
The
Company had net operating loss carry forwards for tax purposes of approximately $
NOTE 13 ROU ASSET AND LEASES
A lease is defined as a contract that conveys the right to control the use of identifiable tangible property for a period of time in exchange for consideration. The Company adopted ASC Topic 842 which primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee including the Company’s leases of office and factory. The Company elected not to recognize ROU assets and lease liabilities arising from short-term leases with initial lease terms of twelve months or less (deemed immaterial) on the accompanying consolidated balance sheets.
ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on the effective interest, the effective amortization on the lease liability. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.
When
measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated
incremental borrowing rate of
In January 2025, the Company entered into a supplemental agreement amending its existing PRC factory lease agreement (original Contract effective from 2021) with the lessor. The amendment reduces the leased area of the existing factory space.
The Company determined that the amendment qualifies as a lease modification under ASC 842-10-25-8 because it decreases the scope of the leased asset (reduced factory space) without granting additional rights of use, and the decrease in consideration is commensurate with the reduced scope, adjusted for market conditions and the Company’s circumstances. This modification is accounted for as a partial termination of the existing lease.
The
amendments were accounted for as lease modifications effective February 1, 2025. Per ASC 842-10-25-8, the lease liability was
remeasured at the modification date as the present value of the revised lease payments over the remaining term, discounted using the
Company’s incremental borrowing rate of
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The following is a summary of ROU asset and operating lease liabilities:
| May 31, 2026 | August 31, 2025 | |||||||
| Assets: | ||||||||
| ROU asset | $ | $ | ||||||
| Liabilities: | ||||||||
| Current: | ||||||||
| Operating lease liabilities | $ | $ | ||||||
| Non-current | ||||||||
| Operating lease liabilities | ||||||||
| Total lease liabilities | $ | $ | ||||||
As of May 31, 2026, the remaining maturities of lease liabilities were as follows:
| Operating lease | ||||
| 2026 | $ | |||
| 2027 | ||||
| Total | $ | |||
NOTE 14 COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of May 31, 2026, the Company is not aware of any contingent liabilities that should be reflected in the financial statements.
NOTE 15 SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to May 31, 2026, to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking Statements
This Quarterly Report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intends”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the U.S., we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.
In this report unless otherwise specified, all dollar amounts are expressed in US$ and all references to “common shares” or “common stock” refer to the common shares of our capital stock.
The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP.
General Overview
EvoAir Holdings Inc (formerly Unex Holdings Inc.) (the “Company”, “EVOH”, “we”, “us”, or “our”) is a corporation established under the corporation laws in the State of Nevada, U.S. on February 17, 2017. The Company has adopted an August 31 fiscal year end.
On December 20, 2021, the Company and Dr. Low entered into the EvoAir International Share Transfer Agreement, pursuant to which Dr. Low agreed to sell all of his ordinary shares of EvoAir International to the Company for the consideration of US$100 (“EvoAir Transaction”). EvoAir International, through its subsidiaries upon completion of the Transactions contemplated under Note 1 to Financial Statements, is engaged in the R&D, manufacturing, trading, sale of HVAC products and related services in Asia.
Pursuant to the terms of a share transfer agreement dated December 20, 2021, Dr. Low, the then sole executive officer and director of the Company and the owner of 2,000,000 restricted shares of the Company’s ordinary shares representing approximately 67.34% of the Company’s then issued and outstanding shares, sold his entire shareholding of the Company to WKL Global for an aggregate consideration of $100. Upon completion of the Change of Control Transaction, WKL Global owned 2,000,000 shares, or approximately 67.34% of the then issued and outstanding ordinary shares of the Company, which resulted in a change of control of the Company.
On December 20, 2021, several transactions took place (together, the “Allotment Transactions”) whereby the Company issued and allotted in aggregate 98,809,323 EvoAir Shares to certain parties. On completion of the Allotment Transactions, the total number of issued and outstanding EvoAir Shares were 101,779,323 (“Then Enlarged Share Capital”):
(A) On December 20, 2021, Dr. Low and Chan Kok Wei entered into a share exchange agreement with WKL Eco Earth Holdings, pursuant to which Dr. Low and Chan Kok Wei agreed to sell all their ordinary shares of WKL Green Energy to WKL Eco Earth Holdings in consideration for the allotment and issuance to WKL Global and Allegro Investment (BVI) Limited (“Allegro Investment”), a company incorporated in the British Virgin Islands with 50% shareholding held by Chan Kok Wei and Ong Bee Chen, respectively, of 24,000 EvoAir Shares and 6,000 EvoAir Shares, respectively, or approximately 0.02% and 0.01% of the Then Enlarged Share Capital, respectively.
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(B) On December 20, 2021, Dr. Low, Chan Kok Wei, Ong Bee Chen and certain sellers (collectively, the “WKLEE Sellers”) entered into a share exchange agreement with WKL Eco Earth Holdings, pursuant to which the WKLEE Sellers agreed to sell all their ordinary shares, amounting in aggregate, 240,000 shares or 80% shareholding of WKL Eco Earth to WKL Eco Earth Holdings in consideration for the allotment and issuance to WKL Global, Allegro Investment and WKLEE Sellers of 49,320 EvoAir Shares, 8,280 EvoAir Shares and in aggregate 14,400 EvoAir Shares, respectively, or approximately 0.05%, 0.009% and in aggregate 0.014%, respectively, of the Then Enlarged Share Capital.
(C) On December 20, 2021, Tan Soon Hock, Ivan Oh Joon Wern and certain relevant interest holders (“Relevant Interest Holders”) entered into an investment exchange agreement with WKL Eco Earth Holdings, pursuant to which the Tan Soon Hock, Ivan Oh Joon Wern and the Relevant Interest Holders agreed to sell all relevant interests in the EvoAir Group to WKL Eco Earth Holdings in consideration for the allotment and issuance of 7,037,762 shares, 2,520,000 shares and in aggregate 6,001,794 shares, respectively, of the common stock of the Company, or approximately 6.91%, 2.48% and in aggregate 5.90%, respectively, of the issued and outstanding ordinary shares of the Company. The board of directors and majority shareholders of the Company have approved the transaction.
(D) On December 20, 2021, Dr. Low entered into two deeds of assignment of intellectual properties with WKL Eco Earth Holdings, in respect of Dr. Low’s patents relating to eco-friendly air-conditioner condenser (external unit), EvoAirTM and the trademarks described in the deed of assignment thereunder, and in respect of Dr. Low’s patents relating to the portable air-conditioner, e-Cond EVOTM and the trademarks as described in the deed of assignments thereunder (together, the “IP Assignments”). Pursuant to the IP Assignments, WKL Global, Allegro Investment and certain nominees shall be allotted and issued 63,362,756 EvoAir Shares, 14,297,259 EvoAir Shares and in aggregate 5,487,752 EvoAir Shares, respectively or approximately 62.25%, 14.05% and in aggregate 5.39%, respectively of the Then Enlarged Share Capital in consideration for the IP Assignments.
EvoAir Transaction, Change of Control Transaction and Allotment Transactions are collectively to be referred to as the “Transactions”. The closing of the Transactions (the “Closing”) occurred on December 20, 2021 (the “Closing Date”).
From and after the Closing Date, at which time EvoAir International transferred its HVAC business to the Company, the Company’s primary operations consisted of the prior operations of EvoAir International.
EvoAir International is a company incorporated in BVI on November 17, 2021. Effective from the December 20, 2021, it wholly owns WKL Eco Earth Holdings, a company incorporated in Singapore on July 12, 2018, which in turn wholly owns (a) WKL Eco Earth, a Malaysian company incorporated on May 17, 2017, and (b) WKL Green Energy a Malaysian company incorporated on October 24, 2017. WKL Eco Earth Holdings acquired (c) EvoAir Manufacturing on April 19, 2021, a Malaysian company incorporated on March 22, 2019, as well as acquiring (d) WKL EcoEarth Indochina, a Cambodia company incorporated on February 4, 2021, (e) WKL Guanzhe Green Technology Guangzhou, a Chinese company incorporated on April 6, 2021. EvoAir Manufacturing wholly owns (f) Evo Air Marketing, a Malaysian company incorporated on February 2, 2021.
On June 15, 2022, the Company filed a Certificate of Amendment (the “Amendment”) to the Articles of Incorporation with Nevada’s Secretary of State to change the name of the Company from Unex Holdings Inc. to EvoAir Holdings Inc. (the “Name Change”), and the Name Change became market effective on November 4, 2022. Effective on November 11, 2022, the Company’s shares began trading under the new ticker symbol “EVOH”.
On November 21, 2023, the Company issued in aggregate, 52,107 shares of Common Stock to 15 referral agents (“Referral Agents”) in consideration for their referral to the Company of certain investors. Each Referral Agent is a “non-U.S. Persons” as defined in Regulation S.
On November 21, 2023, the Company issued, in aggregate, 5,500 shares of Common Stock to two individuals in consideration for marketing services provided to the Company by Artisan Creative Studio, a marketing entity based in Malaysia. Each of the individuals is a “non-U.S. Persons” as defined in Regulation S.
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On August 14, 2024, the WKL Eco Earth Holdings has increased its investment in WKL Guanzhe Green Technology Guangzhou Co Ltd (China) by injecting an additional RMB2,000,000 into its registered capital. This investment has resulted in an increase in WKL Eco Earth Holding’s equity interest in WKL Guanzhe Green Technology to 62.5%.
On February 6, 2026, the WKL Eco Earth Holdings has increased its investment in WKL Guanzhe Green Technology Guangzhou Co Ltd (China) by injecting an additional RMB1,500,000 into its registered capital. This investment has resulted in an increase in WKL Eco Earth Holding’s equity interest in WKL Guanzhe Green Technology to 66.67%.
Round 2 Stockholders
The Company entered into a series of offerings for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50, as follows:
| ● | On February 15, 2022, the Company entered into certain share subscription agreement with Ms. Ang Lee Kim Jane, who is a “non-U.S. Persons” (the “Investor”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to which the Company agreed to issue and sell 74,074 Shares, par value $0.001 per share, at a per share purchase price of $2.50, as part of a series of offerings by the Company for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50. The gross proceeds were $185,185. | |
| ● | On June 3, 2022, the Company entered into certain share subscription agreement with Mr. Wong Hon Wai who is a “non-U.S. Persons” (the “Investor”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to which the Company agreed to issue and sell 5,000 shares, par value $0.001 per share , at a per share purchase price of $2.50, as part of a series of offerings by the Company for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50. The gross proceeds were $12,500. | |
| ● | On October 25, 2022, the Company entered into Regulation S share subscription agreements with eight investors, each of whom represented that it was a “non-U.S. Persons” as defined in Securities Act. On the same date, the Company entered into Regulation D share subscription agreements with two investors, each of whom represented that it was an “Accredited Investors” as defined in Regulation D of the Securities Act. Pursuant to the share subscription agreements, the Company agreed to issue and sell in aggregate, (i) 129,621 shares of Common Stock, par value $0.001 per share to the Regulation S investors, and (ii) 15,000 shares of Common Stock to the Regulation D investors, respectively par value $0.001 per share, at a per share purchase price of $2.50, as part of a series of offerings by the Company for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50. The gross proceeds in aggregate were $361,553. | |
| ● | On February 20, 2023, the Company entered into Regulation S share subscription agreements with eleven investors, each of whom represented that it was a “non-U.S. Persons” as defined in Regulation S of the Securities Act. Pursuant to the agreements, the Company agreed to issue and sell in aggregate, (i) 57,783 shares of Common Stock, par value $0.001 per share to the Regulation S investors, at a per share purchase price of $2.50 as part of a series of the private placement offerings by the Company for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50. The gross proceeds in aggregate were $144,443. | |
| ● | On July 13, 2023, the Company entered into Regulation S share subscription agreements with 31 investors, each of whom represented that it was a “non-U.S. Persons” as defined in Regulation S of the Securities Act. Pursuant to the agreements, the Company agreed to issue and sell in aggregate, (i) 250,132 shares of Common Stock, par value $0.001 per share to the Regulation S Investors, at a per share purchase price of $2.50 as part of a series of the private placement offerings by the Company for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50. The gross proceeds in aggregate were approximately $625,330. | |
| ● | On September 7, 2023, the Company entered into Regulation S share subscription agreements with 71 investors, each of whom represented that it was a “non-U.S. Persons” as defined in Regulation S of the Securities Act. Pursuant to the agreements, the Company agreed to issue and sell in aggregate, 365,164 shares of Common Stock, par value $0.001 per share to the Regulation S investors, at a per share purchase price of $2.50 as part of a series of the private placement offerings by the Company for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50. The gross proceeds in aggregate was approximately $912,889. |
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| ● | On November 21, 2023, the Company entered into a Regulation S share subscription agreement with Wong Chun Shoong who represented that he was a “non-U.S. Persons” as defined in Regulation S of the Securities Act. Pursuant to the agreement, the Company agreed to issue and sell in aggregate, 8,658 shares of Common Stock, par value $0.001 per share to the Regulation S investors, at a per share purchase price of $2.50 as part of a series of the private placement offerings by the Company for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50. The gross proceeds in aggregate was approximately $21,645. |
Reverse Stock Split
On April 12, 2024, the Company’s board of directors (the “Board”) unanimously resolved to effect a reverse stock split of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-4. Following such resolution, on September 9, 2024, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada to effect the reverse stock split, with an effective time of 9:00AM. Eastern Time on September 11, 2024 (the “Reverse Stock Split”).
Split Adjustment; Treatment of Fractional Shares
As a result of the 1:4 Reverse Stock Split, each 4 pre-split shares of Common Stock outstanding will automatically combine into one new share of Common Stock without any action on the part of the holders, and the number of outstanding shares of Common Stock was reduced from 102,742,362 shares to 25,685,591 shares (subject to rounding up of fractional shares to the nearest whole number).
No fractional shares were issued in connection with the Reverse Stock Split. Fractional shares were rounded up to the nearest whole number
Share Issuance
On November 25, 2024, the Company issued, in aggregate, 679,516 shares of Common Stock, representing 2.5% of the issued and outstanding shares of Common Stock to certain project management consultant in consideration for their services in relation to proposed initial public offering.
On November 25, 2024, the Company issued, in aggregate, 815,419 shares of Common Stock, representing 3.0% of the issued and outstanding shares of Common Stock to certain corporate and business consultant in consideration for their consulting services.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through internally generated funds and proceeds from issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital proceeds from issuance of securities, further advances, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through internally generated funds, advances and proceeds from issuance of securities. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) research and development; (ii) expansion of product offerings; (iii) geographical expansion; and (iv) marketing expenses. We intend to finance these expenses with further issuances of securities and advances. Thereafter, we expect we will need to raise additional capital and generate revenue to meet long-term operating requirements. Additional issuances of equity will result in dilution to our current shareholders. Further, such securities might have rights, preferences, or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
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Results of Operations
The following summary of our operations should be read in conjunction with our unaudited condensed consolidated financial statements for the three and nine months ended May 31, 2026, as compared to the three and nine months ended May 31, 2025.
Three Months Ended May 31, 2026, versus Three Months Ended May 31, 2025
| Three Months Ended May 31 | ||||||||||||||||
| 2026 | 2025 | Changes | % | |||||||||||||
| Revenue | $ | 123,574 | $ | 37,306 | $ | 86,268 | 231 | % | ||||||||
| Cost of revenue | 116,751 | 8,505 | 108,246 | 1,273 | % | |||||||||||
| Gross profit | 6,823 | 28,801 | (21,978 | (76 | )% | |||||||||||
| Operating expenses | 1,086,651 | 1,237,464 | (150,813 | ) | (12 | )% | ||||||||||
| Loss from operation | (1,079,828 | ) | (1,208,663 | ) | 128,835 | (11 | )% | |||||||||
| Other income | 1,611 | 21,825 | (20,214 | ) | (93 | )% | ||||||||||
| Loss from operation before income taxes | $ | (1,078,217 | ) | $ | (1,186,838 | ) | $ | 108,621 | (9 | )% | ||||||
Revenue
Revenue increase significantly to $123,574 for the three months ended May 31, 2026 from $37,306 in the same period of 2025, an increase of 231%. The growth was primarily driven by and increase of in EvoAir air-conditioner sales.
We continue to build momentum through strategic distribution channels, project collaborations, private labelling and licensing models. The Group remains committed to strengthening traction of EvoAir™ and driving adoption across residential, commercial and industrial sectors.
We remain confident in the long-term prospects of EvoAir™ and are focused on continuing to innovate and address challenges, with a view to establishing the product as a leading solution in the sustainable cooling market.
Cost of revenue and Gross profit
Cost of revenue increased to $116,751 from $8,505, in line with increased revenue activity. Consequently, gross profit declined to $6,823 from $28,801 in the prior period. This gross margin compression was driven by higher production and product costs associated with elevated sales volumes in the current quarter.
The cost of revenue encompasses production costs and purchase of goods. The Company remains focused on further optimizing its cost structure and maintaining efficiencies as it continues to scale its operations and expand its product offerings.
The Company remains focused on optimizing its cost structure and enhancing operational efficiencies. As we continue to scale operations and expand our product offerings, we are positive that these efforts will improve gross margins and position the Company for profitability in the future.
Operating expenses
Operating expenses decreased by $150,813, or 12%, to $1,086,651 from $1,237,464. The reduction was primarily due to lower general and administrative expenses, including decreased professional fees, compliance costs, and other overheads. Selling and marketing expenses also declined modestly as the Company continued to exercise prudent cost control while supporting strategic initiatives.
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Key components of operating expenses included salaries and related expenses, commissions, rental costs, patent and trademark application/renewal fees, professional and compliance fees.
The Company remains focused on prudent cost management to maintain operational efficiency while supporting strategic initiatives for growth and value creation.
Other income
Other income for the three months ended May 31, 2026, and 2025 were not material.
Loss from operations before income taxes
Loss from operations improved by 11% to $1,079,828 from $1,208.663. After accounting for other income, the loss before income taxes improved by 21% to $1,078,217. The improvement was mainly due to lower operating expenses, partially offset by lower other income.
Management is encouraged by the strong revenue growth and continued operating-expense discipline in the third quarter. We remain focused on distribution expansion, private labelling/licensing and broader adoption of our eco-friendly HVAC solutions.
Nine Months Ended May 31, 2026, versus Nine Months Ended May 31, 2025
Nine Months Ended May 31 | ||||||||||||||||
| 2026 | 2025 | Changes | % | |||||||||||||
| Revenue | $ | 211,613 | $ | 160,359 | $ | 51,254 | 32 | % | ||||||||
| Cost of revenue | 201,580 | 168,681 | 32,899 | 20 | % | |||||||||||
| Gross profit/(loss) | 10,033 | (8,322 | ) | 18,355 | 221 | % | ||||||||||
| Operating expenses | 3,133,160 | 7,116,685 | (3,983,525 | ) | (56 | )% | ||||||||||
| Loss from operation | (3,123,127 | ) | (7,125,007 | ) | 4,001,880 | 56 | % | |||||||||
| Other income | 1,917 | 24,277 | (22,360 | ) | (92 | )% | ||||||||||
| Loss from operation before income taxes | $ | (3,121,210 | ) | $ | (7,100,730 | ) | $ | 3,979,520 | 56 | % | ||||||
Revenue
Revenue increased to $211,613 from $160,359, an improvement of 32%. The increase was primarily driven by growth in EvoAir™ air-conditioner sales, as we continue to expand reach via strategic distribution, project collaborations and private-labelling/licensing models, positioning the Group for future growth in the sustainable cooling market.
We remain confident in the long-term prospects of EvoAir™ and are focused on continuing to innovate and address challenges, with a view to establishing the product as a leading solution in the sustainable cooling market.
Cost of revenue and Gross profit
Cost of revenue increased 20% to $201,580 from $168,681, in line with higher revenue activity. Gross profit improved to $10,033 from a gross loss of $8,322 in the prior period, reflecting improved product mix and cost efficiency gains achieved through operational enhancements
The cost of revenue encompasses production costs and the purchase of goods. The Company remains focused on further optimizing its cost structure and maintaining efficiencies as it continues to scale its operations and expand its product offerings.
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The Company remains focused on optimizing its cost structure and enhancing operational efficiencies. As we continue to scale operations and expand our product offerings, we are positive that these efforts will improve gross margins and position the Company for profitability in the future.
Operating expenses
Operating expenses decreased substantially by $3,983,525, or 56%, to $3,133,160 from $7,116,685. The reduction was driven primarily by lower general and administrative expenses, including reduced stock-based compensation, professional fees, and other overhead costs relative to the prior period. Selling and marketing expenses also declined as the Company maintained disciplined cost control while supporting key growth initiatives.
Key components of operating expenses included salaries and related expenses, commissions, rental costs, patent and trademark application/renewal fees, professional and compliance fees.
The Company remains focused on prudent cost management to maintain operational efficiency while supporting strategic initiatives for growth and value creation.
Other income
Other income for the nine months ended May 31, 2026, and 2025 was not material.
Loss from operations before income taxes
Loss from operations improved 56% to $3,123,127 from $7,125,007. Loss before income taxes improved 56% to $3,121,210. The improvement was driven by higher gross profit and significantly lower operating expenses
The continued net loss reflects ongoing strategic investments in the HVAC business infrastructure. Management is encouraged by the revenue growth achievement and substantial operating-expense reductions over the nine-month period.
Revenue growth of 32% in the nine months ended May 31, 2026 reflects improving market traction for our eco-friendly HVAC products. Management is encouraged by the improvement in gross profitability and the substantial reduction in operating expenses. These positive trends demonstrate the effectiveness of our cost optimization efforts and channel expansion strategy.
We remain committed to expanding distribution channels, advancing private labeling and licensing opportunities, and increasing adoption of EvoAir™ solutions across diverse market segments. These strategic initiatives, combined with ongoing operational improvements, are expected to support a return to sustainable revenue growth and improved financial performance in future periods.
Liquidity and Capital Resources
Working Capital
| As of May 31, 2026 | As of August 31, 2025 | Changes | % | |||||||||||||
| Current assets | $ | 440,734 | $ | 527,748 | $ | (87,014 | ) | (17 | )% | |||||||
| Current liabilities | 4,413,744 | 3,212,754 | 1,200,990 | 37 | % | |||||||||||
| Working capital | (3,973,010 | ) | (2,685,006 | ) | (1,288,004 | ) | (48 | )% | ||||||||
As of May 31, 2026, current assets decreased by $87,014, or 17%, compared to August 31, 2025. The decline was primarily due to lower cash and cash equivalents and accounts receivable
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Current liabilities increased by $1,200,990, or 37%, mainly due to a rise in amounts due to shareholders from $2,436,407 to $3,544,333. This increase reflects continued shareholder funding to support operations during the current growth phase.
As a result, the Company’s working capital deficit widened to $3,973,010 as of May 31, 2026, compared to $2,685,006 as of August 31, 2025. The larger deficit is attributable to ongoing operational investments, only partially mitigated by improved revenue performance and cost control measures.
Cash Flows
Nine Months Ended May 31, 2026, versus Nine Months Ended May 31, 2025
| May 31, 2026 | May 31, 2025 | Changes | % | |||||||||||||
| Net cash used in operating activities | $ | (980,606 | ) | $ | (900,095 | ) | (80,511 | ) | (9 | )% | ||||||
| Cash flows used in investing activity | - | (5,902 | ) | 5,902 | 100 | % | ||||||||||
| Cash flows generated from financing activities | 1,094,886 | 923,588 | 171,298 | 19 | % | |||||||||||
| Net changes in cash | 114,280 | 17,591 | 96,689 | 550 | % | |||||||||||
Cash Flows from Operating Activities
Net cash used in operating activities increased to $980,606 in the nine months ended May 31, 2026, from $900,095 in the comparable period of 2025. The cash usage primarily reflects the net loss of $3,121,210, partially offset by non-cash adjustments, including amortization of $1,909,276 and depreciation of $93,738. Favorable working-capital movements provided a partial offset, including increases in accounts receivable of $21,833, deferred revenue of $14,924, and other payables of $66,650.
Cash Flows from Investing Activities
There were no investing activities in the nine months ended May 31, 2026. Net cash used in investing activities was $5,902 in the comparable period of 2025, related to the purchase of property, plant, and equipment.
Cash Flows from Financing Activities
Net cash generated from financing activities was $1,094,886, primarily from amounts due to shareholders of $1,107,926. This was partially offset by payments on hire purchase obligations of $4,852 and payment of deferred offering costs of $8,188.
Overall, cash and cash equivalents decreased from $93,329 as of August 31, 2025 to $35,811 as of May 31, 2026.
Seasonality
The Company’s business is not subject to seasonality.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
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Critical Accounting Policies
Revenue recognition
Our revenue recognition policy is in compliance with ASC 606, Revenue from Contracts with Customers that revenue is recognized when a customer obtains control of promised goods and is recognized in an amount that reflects the consideration that we expect to receive in exchange for those goods. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods.
We apply the following five-step model in order to determine this amount:
| (i) | identification of the promised goods and services in the contract; |
| (ii) | determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract; |
| (iii) | measurement of the transaction price, including the constraint on variable consideration; |
| (iv) | allocation of the transaction price to the performance obligations; and |
| (v) | recognition of revenue when (or as) the Company satisfies each performance obligation. |
We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, we review the contract to determine which performance obligations we must deliver and which of these performance obligations are distinct. We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, our performance obligations are transferred to customers at a point in time, typically upon delivery for local sales and upon shipment of the products for export sale.
For all reporting periods, we have not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP requires the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods. Key estimates in the accompanying unaudited condensed consolidated financial statements include, inter-alia, revenue recognition, allowances for doubtful accounts and product returns, provisions for obsolete inventory, valuation of long-lived assets and rights of use (“ROU”) assets (including lease liabilities), and deferred income tax asset valuation allowances. The actual results could differ materially from these estimates.
Going Concern
The Company’s financial statements as of May 31, 2026 are prepared using generally accepted accounting principles in the United States of America (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established a sustainable ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern.
As of May 31, 2026 and August 31, 2025, the Company had an accumulated deficit of $56,959,317 and $54,028,719, respectively. The Company incurred a net loss of $1,078,217 and $1,186,838 for the three months ended May 31, 2026 and 2025, respectively, and $3,121,210 for the nine months ended May 31, 2026 compared to $7,100,730 for the nine months ended May 31, 2025.
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To address these challenges and ensure the Company’s long-term viability, Management has developed a strategic plan focused on the continued development and expansion of its HVAC business. Key initiatives include:
| ● | Expansion of Product Offerings: Broadening the range of HVAC products to meet diverse market needs. | |
| ● | Geographical Expansion: Penetrating new markets to drive revenue growth. | |
| ● | Revenue Diversification: Expanding customer segments across retail, commercial, industrial, and project-based clients, as well as private label and licensing opportunities. | |
| ● | Improved Profitability: Achieving economies of scale through operational efficiencies and growth. |
Additionally, the Company is actively pursuing plans to raise additional funding to support operations and business expansion. This includes preparations to uplist on the Nasdaq Capital Market, which is expected to enhance access to capital and further strengthen the Company’s financial position.
The consolidated financials have been prepared assuming that the Company will continue as a going concern and accordingly financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Material Commitments
We have no material commitments as of May 31, 2026.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, by introducing key amendments to enhance disclosures in public entities’ reportable segments. Notable changes include the mandatory disclosure of significant segment expenses regularly provided to the chief operating decision maker (“CODM”), disclosure of other segment items, and requirements for consistency in reporting measures used by the CODM. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Accordingly, the Company adopted the provisions of ASU 2023-07 as of January 31, 2025. The adoption of the new standard had no impact on the Company’s financial position, results of operations or cash flows on the date of transition.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which introduces more detailed requirements for annual disclosures for income taxes. The ASU requires public business entities to present specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose the amounts of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the effects, if any, that the adoption of ASU 2023-09 may have on its financial position, results of operations, cash flows, or disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose specific information about certain costs and expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effects, if any, that the adoption of ASU 2024-03 may have on its financial position, results of operations, cash flows, or disclosures.
In September 2025, the FASB issued ASU 2025-06-Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06), which is intended to simplify the capitalization guidance for internal-use software by removing references to project stages and clarifying when the capitalizing of eligible costs is required. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its disclosures.
There are no other recently issued accounting pronouncements that have not yet been adopted that the Company considers material to its consolidated financial statements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our Management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-14(a)(e) and 15d-14(a) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s Management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our Management of the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2024. Based on our Management’s evaluation under the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, our Management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. In connection with the assessment described above, Management identified the following control deficiencies that represent material weaknesses as at November 30, 2024:
| ■ | Due to our limited resources, we do not have enough accounting personnel with extensive experience in maintaining books and records and preparing financial statements in accordance with U.S. GAAP which could lead to untimely identification and resolution of accounting matters inherent in our financial transactions in accordance with U.S. GAAP. |
| ■ | The Company has insufficient written policies and procedures for accounting and financial reporting, which led to inadequate financial statement closing process. |
| ■ | The Company has a lack of segregation of duties, a lack of audit committee or independent governance/oversight. |
The Company has initiated to implement measures to strengthen its internal control framework, including:
The Company has engaged experienced U.S. GAAP consultants to assist with technical accounting matters, SEC reporting requirements, and the review of financial statements. In addition, management is enhancing the technical capabilities of the Accounting and Finance Team through targeted U.S. GAAP training, professional development programs, and knowledge-sharing initiatives. The Company is also in the process of recruiting qualified accounting and finance personnel with relevant experience to strengthen financial reporting and compliance capabilities.
The Company is developing a comprehensive accounting and financial reporting policy and procedure manual. This manual is intended to document financial statement preparation, review, approval, and reporting processes. Management is also enhancing internal control activities over the financial statement close process and providing training to ensure appropriate implementation and consistent application of the policies. The manual will be reviewed and updated periodically to reflect changes in applicable accounting standards, regulatory requirements, and internal practices.
The Company plans to establish an Audit Committee, Compensation Committee, and Nomination Committee upon uplisting to enhance corporate governance and oversight. Management is reviewing and clarifying roles and responsibilities within the finance function and implementing an authorization matrix to improve segregation of duties over financial transactions. The Company also plans to recruit additional qualified personnel and is considering establishing an internal audit function, either internally or through outsourcing, to strengthen monitoring controls.
Changes in Internal Controls over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the three months period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on the Company’s properties, results of operations, or financial condition. Nor, to the best of our knowledge, are any of the Company’s officers or directors involved in any legal proceedings in which we are an adverse party.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Management is not aware of any unregistered sales of equity securities and use of proceeds.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No senior securities were issued and outstanding for the period ended May 31, 2026.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our Company.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
Exhibits:
*Previously filed
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| EvoAir Holdings Inc. | ||
| Dated: July 10, 2026 | By: | /s/ Low Wai Koon |
Low Wai Koon Chairman and Chief Executive Officer | ||
| Dated: July 10, 2026 | By: | /s/ Ong Bee Chen |
Ong Bee Chen Chief Financial Officer | ||
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