EvoAir Holdings Inc 10-Q for FY2023 Q3
EvoAir Holdings Inc. (EVOH)
About this 10-Q
EvoAir Holdings Inc filed this 10-Q on July 14, 2023, covering the quarter ended May 31, 2023 (FY2023 Q3).
Headline figures
Quarter ended May 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $165.73K
- down 15.0% from $194.95K a year earlier
- Net loss
- $1.45M
- compared with a net loss of $1.29M a year earlier
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 ☐
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 June 27, 2023 | |
| Common Stock, $0.001 |
EvoAir Holdings Inc.
| Part I | FINANCIAL INFORMATION | |
| Item 1 | FINANCIAL STATEMENTS (UNAUDITED) | 3 |
| Item 2 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 18 |
| Item 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 23 |
| Item 4 | CONTROLS AND PROCEDURES | 23 |
| PART II | OTHER INFORMATION | |
| Item 1 | LEGAL PROCEEDINGS | 24 |
| Item 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 24 |
| Item 3 | DEFAULTS UPON SENIOR SECURITIES | 24 |
| Item 4 | MINE SAFETY DISCLOSURES | 24 |
| Item 5 | OTHER INFORMATION | 24 |
| Item 6 | EXHIBITS | 24 |
| SIGNATURES | 25 |
| 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, 2023 AND AUGUST 31, 2022
May 31, 2023 | August 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Deposit, prepayments and other receivables | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Technology-related intangible assets, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accruals | $ | $ | ||||||
| Income tax payable | ||||||||
| Other payables | ||||||||
| Deferred revenue | ||||||||
| Hire purchase creditor | ||||||||
| Amounts due to shareholders | ||||||||
| Operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Hire purchase creditor | ||||||||
| 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, 2023 and August 31, 2022 | ||||||||
| Additional paid in capital | ||||||||
| Shares to be issued | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited 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 MONTHS ENDED MAY 31, 2023 AND 2022
| Three months ended | Nine months ended | |||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income/(expense) | ||||||||||||||||
| Interest income/(expense) | ( | ) | ( | ) | ||||||||||||
| Other (expense)/income | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operation before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax credit | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: Net loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to equity holders of the Company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive (loss)/income: | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: net comprehensive income/(loss) 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 condensed 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 MONTHS ENDED MAY 31, 2023 AND 2022
| shares | amount | capital | deficit | income | issued | interests | Total | |||||||||||||||||||||||||
| Common Stock | Additional paid in | Accumulated | Accumulated other comprehensive | Shares to be | Non- controlling | |||||||||||||||||||||||||||
| shares | amount | capital | deficit | income | issued | interests | Total | |||||||||||||||||||||||||
| Balance as of August 31, 2022 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Capital contribution | - | |||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to capital raising | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of November 30, 2022 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to share subscription agreement | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of February 28, 2023 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Issuance of common stock for cash | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to share subscription agreement | - | |||||||||||||||||||||||||||||||
| Capital contribution by non-controlling interests | - | ( | ) | |||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of May 31, 2023 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
| 5 | 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 MONTHS ENDED MAY 31, 2023 AND 2022
| Common Stock | Additional paid in | Accumulated | Accumulated other comprehensive | Shares to be | Non- controlling | |||||||||||||||||||||||||||
| shares | amount | capital | deficit | income | issued | interests | Total | |||||||||||||||||||||||||
| Balance as of August 31, 2021 | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of November 30, 2021 | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Beneficial conversion feature on financial liability -convertible bonds | - | |||||||||||||||||||||||||||||||
| Issuance of common stock for convertible bonds | ||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to share exchange agreement | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock for technology-related intangible assets | ||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to capital raising | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of February 28, 2022 | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Issuance of common stock for cash | ||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of May 31, 2022 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 6 | 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 ENDED MAY 31, 2023 AND 2022
May 31, 2023 | May 31, 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | ( | ) | |||
| Adjustments for non-cash income and expenses: | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Property, plant and equipment impairment and abandonments | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Beneficial conversion feature of convertible bonds | ||||||||
| Decrease in accounts receivable | ||||||||
| Decrease/(Increase) in inventories | ( | ) | ||||||
| Decrease in deposit, prepayments and other receivables | ||||||||
| Decrease in operating lease right-of-use assets | ||||||||
| Decrease in accounts payable and accruals | ( | ) | ( | ) | ||||
| Decrease in deferred revenue | ( | ) | ||||||
| Decrease in operating lease liabilities | ( | ) | ( | ) | ||||
| (Decrease)/Increase in other payables | ( | ) | ||||||
| Increase/(Decrease) in amounts due to shareholders | ( | ) | ||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| Cash flows from investing activity | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Cash used in investing activity | $ | ( | ) | $ | ( | ) | ||
| Cash flows from financing activities | ||||||||
| Payments of hire purchase | ( | ) | ||||||
| Proceeds from issuance of common stock | ||||||||
| Proceeds from shares to be issued | ||||||||
| Proceeds from capital contribution | ||||||||
| Net cash generated from financing activities | $ | $ | ||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ||||||
| Effect of exchange rate changes | ( | ) | ||||||
| Cash and cash equivalents at start of year | ||||||||
| Cash and cash equivalents at end of year | ||||||||
| Supplemental disclosure of non-cash investing and financing information: | ||||||||
| Common stock issued for technology-related intangible assets | $ | $ | ||||||
| Common stock issued for convertible bonds | $ | $ | ||||||
| Right-of-use assets obtained in exchange for operating lease obligations | $ | $ | ||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 7 | Page |
EVOAIR HOLDINGS INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MAY 31, 2023, AND 2022
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 the Company’s ordinary 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 (“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 Limited and Allegro Investment (BVI) Limited of shares and shares of common stock, respectively, or approximately % and % of the 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 Limited, Allegro Investment (BVI) Limited and WKLEE Sellers of shares, shares and in aggregate shares, respectively, of the common stock of the Company, or approximately %, % and in aggregate %, respectively, of the 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 shares,
shares and in aggregate shares, respectively, of the common stock of the Company, or approximately |
| (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 Limited, Allegro Investment (BVI) Limited and certain nominees shall be allotted and issued shares,
shares and in aggregate shares, respectively of the Company’s common stock or approximately |
| 8 | Page |
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 will consist of the prior operations of EvoAir International and its subsidiaries.
EvoAir International is a company incorporated in the British Virgin Islands (“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”.
Details of the Company’s subsidiaries:
SUMMARY OF CONSOLIDATED 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
NOTE 3 – GOING CONCERN
The Company’s financial statements as of May 31, 2023, is prepared using generally accepted accounting principles in the U.S. (“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 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, 2023 and August 31, 2022, the Company had an accumulated deficit of $
| 9 | Page |
With the injection of a viable business into the Company (“HVAC Business”) contemplated under the Transactions (defined in Note 1), the Management believes that the actions to be taken by the Management to further implement the business plans for the HVAC Business including expansion in product offerings, geographical expansion, generate revenue through expansion of revenue streams and customer base (retail, commercial, industrial, projects as well as private label and licensing clientele), improvement of profitability by achieving economies of scale provide the opportunity for the Company to continue as a going concern. In addition, the Company is also working on raising additional funding to finance the operations as well as business expansion.
The unaudited condensed consolidated financial statements 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 unaudited condensed consolidated financial statements have been prepared by the Group 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
unaudited condensed consolidated financial statements include the accounts of EvoAir International, WKL Eco Earth Holdings and its subsidiaries
namely (i)
As WKL Eco Earth and WKL Green Energy were under common control at the time of the Transactions, it is required under U.S. GAAP to account for this common control acquisition in a manner similar to the pooling of interest method of accounting. Under this method of accounting, the Company’s condensed consolidated balance sheets as of May 31, 2023 and August 31, 2022, reflect WKL Eco Earth and WKL Green Energy on a historical carryover basis in the assets and liabilities instead of reflecting the fair market value of the assets and liabilities.
All intercompany accounts and transactions have been eliminated on 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 unaudited condensed consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interests in the results of the Company are presented on the face of the unaudited condensed consolidated statements of operations and comprehensive loss as an allocation of the total loss for the year between non-controlling interest holders and the shareholders of the Company.
Use of Estimates
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. Actual results could differ materially from these estimates.
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 a high credit quality financial institutions.
WKL Guanzhe’s business is primarily conducted in China and substantially all of its revenue is denominated in Chinese Renminbi (“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.
| 10 | Page |
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, 2023 and May 31, 2022, the Company established that there are items that represented components of comprehensive income and, therefore, has included a statement of comprehensive income/loss in the financial statements.
Foreign Currency Translation
The functional currency of Chinese operations is 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”). The 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 revenue and expenses.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on 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 (“US$”), 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/loss, a separate component of shareholders’ equity in the statement of changes in equity/deficit.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the net value of face amount less any allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in our existing accounts receivable. An allowance for doubtful accounts 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 doubtful accounts on a regular basis, and all past due balances are reviewed individually for collectability. An account receivable is written off after all collection effort has ceased. Recoveries of receivables previously written off are recorded when received. Interest is not charged on past due accounts.
As
of May 31, 2023, and August 31, 2022, our accounts receivable amounted to $
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. .
SUMMARY OF ESTIMATED USEFUL LIVES OF ASSETS
| Useful lives | ||||
| Plant and machineries | ||||
| Office equipment | ||||
| Vehicles | ||||
| Furniture and equipment | ||||
| Renovation |
| 11 | Page |
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, trademarks, patent
and trademark applications including patents, trademarks, patent and trademark applications 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.
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 revenue 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 deposits from customers in advance for some business contracts. The customer payments received in advance are recorded
as deferred revenue on the balance sheet. The Company recognized $
Leases
We have entered into operating agreements primarily for office and factory. We determine if an arrangement is a lease at inception. For all classes of underlying assets, we elect not to recognize ROU 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 unaudited condensed consolidated balance sheet as of May 31, 2023, and August 31, 2022.
Operating lease assets and liabilities are recognized at the present value of the future lease payments at 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 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.
| 12 | Page |
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 unaudited condensed 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 reflects 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, 2023, the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Recently Issued Accounting Pronouncements
Except for rules and interpretive releases of the SEC under the authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company’s present or future financial statements.
In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within the year of adoption. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company does not expect the application of the CECL impairment model to have a significant impact on its allowance for uncollectible amounts for accounts receivable.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. This ASU should be applied prospectively to acquisitions occurring on or after the effective date of December 15, 2022, and early adoption is permitted.
The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
| 13 | Page |
NOTE 5 INVENTORIES
Inventories consist of the following:
SUMMARY OF INVENTORIES
May 31, 2023 | August 31, 2022 | |||||||
| Finished goods | $ | $ | ||||||
| Raw materials and supplies | ||||||||
| WIP | ||||||||
| Total inventories on hand | $ | $ | ||||||
NOTE 6 DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES
Deposit, prepayments, and other receivables consists of the following:
SCHEDULE OF DEPOSIT PREPAYMENTS AND OTHER RECEIVABLES
May 31, 2023 | August 31, 2022 | |||||||
| Deposits and prepayment | $ | $ | ||||||
| Other receivables (Advances to suppliers) | ||||||||
| Total | $ | $ | ||||||
NOTE 7 PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant, and equipment consist of the following:
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
May 31, 2023 | August 31, 2022 | |||||||
| Plant and machineries | $ | $ | ||||||
| Office equipment | ||||||||
| Vehicles | ||||||||
| Furniture and equipment | ||||||||
| Renovation | ||||||||
| Property plant and equipment gross | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation
expense for the year ended August 31, 2022 was $
NOTE 8 – INTANGIBLE ASSETS
The below table summarizes the identifiable intangible assets as of May 31, 2023 and August 31, 2022:
SUMMARY OF INTANGIBLE ASSETS
May 31, 2023 | August 31, 2022 | |||||||
| Technology 1- Portable Air Cooler | $ | $ | ||||||
| Technology 2- Condensing Unit | ||||||||
| Finite- lived intangible assets, gross | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization
expense for the year ended August 31, 2022 was $
| 14 | Page |
NOTE 9 ACCOUNTS PAYABLE, ACCRUALS, AND OTHER PAYABLES
Account payables and accruals, and other payables consist of the following:
SCHEDULE OF ACCOUNTS PAYABLES ACCRUALS AND OTHER PAYABLE
May 31, 2023 | August 31, 2022 | |||||||
| Accounts payable | $ | $ | ||||||
| Accruals | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
NOTE 10 RELATED PARTY TRANSACTIONS
Amounts due to shareholders
Amounts
due to shareholders are non-interest bearing, unsecured, have no fixed repayment term, and are not evidenced by any written agreement.
The Company reported amount due to shareholders of $
Eco Awareness Sdn Bhd
Eco Awareness Sdn Bhd is related to a common shareholder. Eco Awareness Sdn Bhd was our main distributor for E-condLife product. Eco Awareness Sdn Bhd has been re-designated as distributor in October 2022.
The
sales generated from Eco Awareness Sdn Bhd amounted to $ and $
The
purchases from Eco Awareness Sdn Bhd amounted to $ and $
NOTE 11 SHAREHOLDERS’ 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.
During
the nine months ended May 31, 2022, the Company issued shares of common stock in connection with the conversion of $
During the nine months ended May 31, 2022, the Company issued shares of common stock in connection with Dr. Low’s two deeds of assignments of intellectual properties.
During the nine months ended May 31, 2022, the Company issued shares of common stock pursuant to investment exchange agreement with relevant interest holders in relation to capital raising undertaken by WKL Eco Earth Holdings in prior years.
During the nine months period ended May 31, 2022, the Company issued shares of common stock pursuant to share agreement with WKL Eco Earth Holdings for acquisition of WKL Green Energy and issued shares of common stock pursuant to share exchange agreement for the acquisition of WKL Eco Earth.
During
the nine months period ended May 31, 2023, the Company issued shares of common stock, par value $ per share at a per share
purchase price of $ for gross proceeds of $
During
the nine months period ended May 31, 2023, the Company received cash proceeds of $
During
the nine months period ended May 31, 2023, the Company also received cash proceeds of $
As of May 31, 2023, and May 31, 2022, 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, which concerns Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (“the Income Tax Laws”). We routinely undergo examinations in the jurisdictions in which we operate.
| 15 | Page |
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.
The components of net deferred tax assets are as follows:
SCHEDULE OF COMPONENTS ON NET DEFERRED TAX ASSET
May 31, 2023 | August 31, 2022 | |||||||
| 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 ASSETS 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. On February 28, 2022 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 offices and factories. The Company elected to not 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 as of May 31, 2023 and August 31, 2022, the Company discounted
lease payments using its estimated incremental borrowing rate of
On
March 28, 2023, the Company entered into a lease termination agreement to its Cambodia office lease at #65, 1st, 2nd
and 3rd Floor, Street 123, Sangkat Toul Tumpong I, Khan Chamkarman, Phnom Penh, Cambodia (the “Lease Termination”).
The Lease Termination terminated the Company’s rights and obligations with respect to the leased premises on April 15, 2023. As
such, the ROU assets and operating lease liabilities were remeasured and the Company recorded a gain of $
| 16 | Page |
The following is a summary of ROU assets and operating lease liabilities:
SUMMARY OF ROU ASSET AND OPERATING LEASE LIABILITIES
May 31, 2023 | August 31, 2022 | |||||||
| Assets: | ||||||||
| ROU assets | $ | $ | ||||||
| Liabilities: | ||||||||
| Current: | ||||||||
| Operating lease liabilities | $ | $ | ||||||
| Non-current: | ||||||||
| Operating lease liabilities | ||||||||
| Total lease liabilities | $ | $ | ||||||
As of May 31, 2023, remaining maturities of lease liabilities were as follows:
SCHEDULE OF MATURITIES OF LEASE LIABILITIES
| Operating lease | ||||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 and thereafter | ||||
| Total | $ | |||
NOTE 14 COMMITMENTS AND CONTINGENCIES
Litigation and Claims
On October 8, 2021, a filing (the “Filing”) was made with the Kuala Lumpur High Court by a reseller (the “Reseller”) of the Company’s INCU ionic nano copper solution (the “Solution”) and the Reseller’s related party (together with the Reseller, the “Plaintiffs”).
The Reseller was authorized by WKL Eco Earth’s sole distributor of the Solution (the “WKL Distributor”) to resell the Solution together with a diffuser with a capacity of not more than 1000ml through a tripartite agreement (the “Tripartite Agreement”) entered into between (a) the Reseller, (b) the WKL Distributor and (c) a solution packaging company (the “Packaging Company”). WKL Eco Earth was not a party to the Tripartite Agreement and did not directly authorize or engage the Reseller in the resale of the Solution.
In the Filing, the Plaintiffs claimed against (i) WKL Eco Earth; (ii) Dr. Low; (iii) Chan Kok Wei, (iv) the Packaging Company and (v) two directors of the Packaging Company for loss and damages arising from an alleged breach of contract, defamation and tort of inducement. The Plaintiffs also alleged that pursuant to the Tripartite Agreement, WKL Eco Earth was prohibited from selling the Solution to any party other than the WKL Distributor and allow for the resale of the Solution by the Plaintiffs without limitation, and that the Plaintiffs were not confined in their resale of the Solution to a diffuser with a capacity of not more than 1000ml.
The Company believes the claims are without merit and will defend itself against the claims.
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.
NOTE 15 SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to May 31, 2023, to the date these unaudited condensed consolidated financial statements were issued and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements, except as follows:
The
Company received gross proceeds of $
| 17 | Page |
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.
EvoAir International is a company incorporated in the British Virgin Islands 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”.
| 18 | Page |
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, 2023, as compared to the three and nine months ended May 31, 2022.
Three Months Ended May 31, 2023, versus Three Months Ended May 31, 2022
| Three Months Ended | ||||||||||||||||
| May 31, | ||||||||||||||||
| 2023 | 2022 | Changes | % | |||||||||||||
| Revenue | $ | 165,726 | $ | 194,954 | $ | (29,228 | ) | (15 | )% | |||||||
| Cost of revenue | 124,647 | 173,842 | (49,195 | ) | (28 | )% | ||||||||||
| Gross profit | 41,079 | 21,112 | 19,967 | 95 | % | |||||||||||
| Operating expenses | 1,468,153 | 1,440,623 | 27,530 | 2 | % | |||||||||||
| Loss from operation | (1,427,074 | ) | (1,419,511 | ) | 7,563 | 1 | % | |||||||||
| Other expenses | (86,349 | ) | (9,845 | ) | 76,504 | 777 | % | |||||||||
| Loss from operation before income taxes | $ | (1,513,423 | ) | $ | (1,429,356 | ) | 84,067 | 6 | % | |||||||
The Company generated revenues of $165,726 in the three months ended May 31, 2023, as compared to $194,954 in the three months ended May 31 2022, a decrease in revenue of $29,228. The decline in revenue is mainly due to the decrease in sales in air purifier products as a result of rollback of preventative measures taken by businesses and public from spreading infection as the World. The Company is building up its traction for the evoairTM hybrid air-conditioners for both residentials and industrial units.
Cost of revenue was $124,647 or 75% of revenue for the three months ended May 31, 2023, as compared to $173,842 or 89% of revenue in the same financial period in 2022. The decline in cost of revenue is in line with the decrease in sales for the air purifier products. Cost of revenues includes production costs and purchases of goods.
Gross profit was $41,079 or gross profit margin of 25% for the three months ended May 31, 2023, as compared to gross profit of $21,112 in the same financial period in 2022 or 11% of revenue. The increase in gross profit margin was attributable to the sales of new products, which contributed to a higher gross profit margin. The Company anticipates improvement of income and gross profit margin with the improvement of revenue streams from distributor and dealership model, projects as well as private labeling and licensing model.
Operating expenses were $1,468,153 for the three months ended May 31, 2023, compared to $1,440,623 in the corresponding period in 2022, an increase of $27,530. The change in operating expenses was not significant.
The loss from operation before income taxes for the three months ended May 31, 2023 was $1,513,423 as compared to $1,429,356 for the corresponding period in 2022. The continuous net loss is attributable to the Group’s focused effort in creating the infrastructure and resource to meet the business expansion needs of the Group’s as well as lack of economies of scale.
Nine Months Ended May 31, 2023, versus Nine Months Ended May 31, 2022
| Nine Months Ended | ||||||||||||||||
| May 31, | ||||||||||||||||
| 2023 | 2022 | Changes | % | |||||||||||||
| Revenue | $ | 379,323 | $ | 1,306,717 | $ | (927,394 | ) | (71 | )% | |||||||
| Cost of revenue | 376,445 | 1,075,841 | (699,396 | ) | (65 | )% | ||||||||||
| Gross profit | 2,878 | 230,876 | (227,998 | ) | (99 | )% | ||||||||||
| Operating expenses | (4,321,881 | ) | (3,253,759 | ) | 1,068,122 | 33 | % | |||||||||
| Loss from operation | (4,319,003 | ) | (3,022,883 | ) | 1,296,120 | 43 | % | |||||||||
| Other expense | (71,860 | ) | (978,203 | ) | (906,343 | ) | (93 | )% | ||||||||
| Loss from operation before income taxes | $ | (4,390,863 | ) | $ | (4,001,086 | ) | 389,777 | 10 | % | |||||||
| 19 | Page |
The Company generated revenues of $379,323 in the nine months ended May 31, 2023, as compared to $1,306,717 in the nine months ended May 31, 2022, a decrease in revenue of $927,394. The drop in revenue is mainly due to the decrease in sales in air purifier products as a result of rollback of preventative measures taken by businesses and public from spreading infection as the World and society progresses towards living with Covid-19. The Company is building up its traction for the evoairTM hybrid air-conditioners for both residentials and industrial units.
Cost of revenue was $376,445 or 99% of revenue for the nine months ended May 31, 2023 as compared to $1,075,841 or 82% of revenue in the same financial period in 2022. The decline in cost of revenue is in line with the drop in sales for the air purifier products. Cost of revenues includes production costs and purchases of goods.
Gross profit was $2,878 or gross profit margin of 1% for the nine months ended May 31, 2023 as compared to gross profit of $230,876 in the same financial period in 2022 or 18% of revenue. The decline in gross profit margin was attributable to the drop in sales of air purifier products, of which the product range contributed higher gross profit margin. Besides, the decrease of gross profit is mainly due to the Company commercialized evoairTM products with higher cost of revenue from manufacturing and related costs as well as lack of economy of scale during commercialization stage. The Company anticipates improvement of income and gross profit margin with the improvement of revenue streams from distributor and dealership model, projects as well as private labeling and licensing model.
Operating expenses were $4,321,881 for the nine months ended May 31, 2023 compared to $3,253,759 in the corresponding period in 2022, an increase of $1,068,122. The increase in operating expenses were mainly due to the commencement of amortization of intangible assets starting from January 2022.
The loss from operation before income taxes for the nine months ended May 31, 2023 was $4,390,863 as compared to $4,001,086 for the corresponding period in 2022. The continuous net loss is attributable to the Group’s focused effort in creating the infrastructure and resource to meet the business expansion needs of the Group’s as well as lack of economies of scale.
Liquidity and Capital Resources
Working Capital
| As of May 31, | As of August 31, | |||||||||||||||
| 2023 | 2022 | Changes | % | |||||||||||||
| Current assets | $ | 1,818,810 | $ | 1,688,926 | $ | 129,884 | 8 | % | ||||||||
| Current liabilities | 994,489 | 892,004 | 102,485 | 11 | % | |||||||||||
| Working capital | 824,321 | 796,922 | 27,399 | 3 | % | |||||||||||
As at 31 May, 2023, increase of current assets mainly due to additional cash received from the capital raising activities for the 9 months period ended May 31, 2023.
As at May 31, 2023, increase in current liabilities mainly due to loan from shareholders of $305,425.
As at May 31, 2023 our company had a positive working capital of $824,321 compared with the positive working capital of $796,922 as at August 31, 2022. The increase in working capital was mainly attributable to the increase in cash from issuance of common stock and capital contribution.
| 20 | Page |
Cash Flows
Nine Months Ended May 31, 2023, versus Nine Months Ended May 31, 2022
| May 31, | May 31, | |||||||||||||||
| 2023 | 2022 | Changes | % | |||||||||||||
| Cash flows used in operating activities | $ | (755,915 | ) | $ | (1,023,037 | ) | (267,122 | ) | (26 | )% | ||||||
| Cash flows used in investing activity | (29,473 | ) | (566,734 | ) | (537,261 | ) | (95 | )% | ||||||||
| Cash flows generated from financing activities | 1,219,513 | 185,185 | 1,034,328 | 559 | % | |||||||||||
| Net changes in cash | 434,125 | (1,404,586 | ) | 1,838,711 | 131 | % | ||||||||||
The Company’s cash and cash equivalents stood at $524,861 as of May 31, 2023. Cash used in operating activities for the nine months ended May 31, 2023, was $755,915. This resulted primarily from a net loss of $4,390,863 which was offset by depreciation of $126,139, amortization of $3,118,041, property, plant and equipment impairment and abandonments of $21,387, decrease in operating lease right-of-use assets of $148,286, decrease in operating leases liabilities of $165,987, decrease in inventories of $25,532, decrease in deferred revenue of $69,922, decrease in deposit, prepayment and other receivables of $205,214, decrease in accounts receivable of $11,928, decrease in accounts payable and accruals of $74,641, increase in amounts due to shareholders of $303,124, and decrease in other payables of $14,152.
Cash used in investing activity resulted from purchase of property plant and equipment amounting to $29,473 for the nine months ended May 31, 2023 which is lesser than comparative figure mainly due to most property plant and equipment being acquired during start up period.
Cash generated from financing activities resulted from the proceeds from capital raising amounting to $443,498, proceeds from share to be issued amounting to $625,330, proceeds from capital contribution amounting to $157,255 and payments of hire purchase amounting to $6,570 during the nine months ended May 31, 2023.
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.
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.
| 21 | Page |
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. Actual results could differ materially from these estimates.
Going Concern
As of May 31, 2023 and August 31, 2022, the Company had an accumulated deficit of $11,666,517 and $7,465,373 respectively. The Company incurred net loss of $4,390,863 and $4,001,086 for nine months ended May 31, 2023 and May 31, 2022, respectively. The cash used in operating activities were $755,915 and $1,023,037 for the nine months ended May 31, 2023 and May 31, 2022, respectively. It was brought to the attention of the Management to assess going concern considering all facts and circumstances about the foreseeable future of the Company as well as its assets and liabilities on the basis that it will be able to realize and discharge them in the normal course of business.
With the injection of a HVAC Business contemplated under the Transactions in Note 1 to the Financial Statements, the Management believes that the actions to be taken by the Management to further implement the business plans for the HVAC Business including expansion in product offerings, geographical expansion, generate revenue through expansion of revenue streams and customer base (retail, commercial, industrial, projects as well as private label and licensing clientele), improvement of profitability by achieving economies of scale provide the opportunity for the Company to continue as a going concern. In addition, the Company is also working on raising additional funding to finance the operations as well as business expansion.
The unaudited condensed 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, 2023.
Recent Accounting Pronouncements
Except for rules and interpretive releases of the SEC under the authority of federal securities laws and a limited number of grandfathered standards, the ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company’s present or future financial statements.
In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 adds the CECL impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within the year of adoption. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company does not expect the application of the CECL impairment model to have a significant impact on its allowance for uncollectible amounts for accounts receivable.
| 22 | Page |
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. This ASU should be applied prospectively to acquisitions occurring on or after the effective date of December 15, 2022, and early adoption is permitted.
The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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 May 31, 2023. 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 at May 31, 2023:
| ● | 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. |
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.
| 23 | Page |
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 8, 2021, a filing (the “Filing”) was made with the Kuala Lumpur High Court by a reseller (the “Reseller”) of the Company’s INCU ionic nano copper solution (the “Solution”) and the Reseller’s related party (together with the Reseller, the “Plaintiffs”).
The Reseller was authorized by WKL Eco Earth’s sole distributor of the Solution (the “WKL Distributor”) to resell the Solution together with a diffuser with a capacity of not more than 1000ml through a tripartite agreement (the “Tripartite Agreement”) entered into between (a) the Reseller, (b) the WKL Distributor and (c) a solution packaging company (the “Packaging Company”). WKL Eco Earth was not a party to the Tripartite Agreement and did not directly authorize or engage the Reseller in the resale of the Solution.
In the Filing, the Plaintiffs claimed against (i) WKL Eco Earth; (ii) Dr. Low; (iii) Chan Kok Wei, (iv) the Packaging Company and (v) two directors of the Packaging Company for loss and damages arising from an alleged breach of contract, defamation and tort of inducement. The Plaintiffs also alleged that pursuant to the Tripartite Agreement, WKL Eco Earth was prohibited from selling the Solution to any party other than the WKL Distributor and allow for the resale of the Solution by the Plaintiffs without limitation, and that the Plaintiffs were not confined in their resale of the Solution to a diffuser with a capacity of not more than 1000ml.
The Company believes the claims are without merit and will defend itself against the claims.
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 during the three-month period ended May 31, 2023.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our Company.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibits:
*Previously filed
| 24 | Page |
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 14, 2023 | By: | /s/ Low Wai Koon |
Low Wai Koon President and Chief Executive Officer | ||
| Dated: July 14, 2023 | By: | /s/ Ong Bee Chen |
Ong Bee Chen Chief Financial Officer | ||
| 25 | Page |
Exhibit 31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
I, Low Wai Koon, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of EvoAir Holdings Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| EvoAir Holdings Inc. | ||
| July 14, 2023 | By: | /s/ Low Wai Koon |
| Name: | Low Wai Koon | |
| Title: | President and Chief Executive Officer | |
Exhibit 31.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
I, Ong Bee Chen, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of EvoAir Holdings Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| EvoAir Holdings Inc. | ||
| July 14, 2023 | By: | /s/ Ong Bee Chen |
| Name: | Ong Bee Chen | |
| Title: | Chief Financial Officer | |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of EvoAir Holdings Inc. (the “Company”) on Form 10-Q for the quarter ended May 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Low Wai Koon, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| July 14, 2023 | By: | /s/ Low Wai Koon |
| Name: | Low Wai Koon | |
| Title: | President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of EvoAir Holdings Inc. (the “Company”) on Form 10-Q for the quarter ended May 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ong Bee Chen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| July 14, 2023 | By: | /s/ Ong Bee Chen |
| Name: | Ong Bee Chen | |
| Title: | Chief Financial Officer |