EvoAir Holdings Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of EvoAir Holdings Inc. Opinion on the Financial Statements We have audited the accompanying balance sheet of EvoAir Holdings Inc. (the “Company”) as of August 31, 2022, the related statements of income, comprehensive income, shareholders’ equity, and cash flows for the year then ended August 31, 2022, and the related notes to the financial statements and schedule (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2022, and the results of its operations and its cash flows for the year ended August 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Going concern uncertainty The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in Note 3 to the financial statements, the Company had an accumulated deficit of $7,465,373. The Company incurred net loss of $5,231,877 for year ended August 31, 2022. The cash used in operating activities were $1,540,167 for the year ended August 31, 2022. The Company has accumulated loss since inception which raise doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Audit Alliance LLP We have served as the Company’s auditor since 2021. Singapore December 14, 2022 (PCAOB ID No. 3487 ) 30 | Page EVOAIR HOLDINGS INC. CONSOLIDATED BALANCE SHEETS (In U.S. Dollars, except share data or otherwise stated) AS OF AUGUST 31, 2022 AND AUGUST 31, 2021 August 31, 2022 August 31, 2021 ASSETS Current assets Cash and cash equivalents $ 152,304 $ 1,714,890 Account receivables 85,960 127,802 Inventories 618,996 142,519 Deposit, prepayments and other receivables 831,666 1,239,561 Total current assets 1,688,926 3,224,772 Non-current assets Property, plant and equipment, net 602,755 136,598 Operating lease right-of-use assets 442,020 - Technology-related intangible assets, net 80,376,175 - Total non-current assets 81,420,950 136,598 TOTAL ASSETS $ 83,109,876 $ 3,361,370 Current liabilities Accounts payable and accruals $ 216,830 $ 111,894 Other payables 31,980 33,078 Deferred revenue 513,072 426,777 Hire purchase creditor 10,135 6,861 Financial liability - Convertible Bonds - 1,007,999 Amounts due to shareholders 2,301 52,481 Operating lease liability - current 117,686 - Total current liabilities 892,004 1,639,090 Non-current liabilities Non-current hire purchase creditor 18,207 26,789 Non-current operating lease liabilities 355,186 - Total non-current liabilities 373,393 26,789 TOTAL LIABILITIES 1,265,397 1,665,879 Commitments and contingencies (Note 16) - - Shareholders’ equity Common stock, 1,000,000,000 authorized; $ 0.001 par value, 101,853,397 and 2,970,000 shares issued and outstanding as at August 31, 2022 and August 31, 2021 101,854 2,970 Additional paid in capital 89,125,872 2,890,471 Shares to be issued 75,000 861,883 Accumulated other comprehensive income 65,880 5,696 Accumulated deficit ( 7,465,373 ) ( 2,233,496 ) Non-controlling interest ( 58,754 ) 167,967 Total shareholders’ equity 81,844,479 1,695,491 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 83,109,876 $ 3,361,370 The accompanying footnotes are an integral part of these consolidated financial statements. 31 | Page EVOAIR HOLDINGS INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In U.S. Dollars, except share data or otherwise stated) FOR THE YEARS ENDED AUGUST 31, 2022 AND 2021 August 31, 2022 August 31, 2021 Revenue $ 1,190,616 774,805 Cost of revenue 952,228 503,116 Gross profit 238,388 271,689 Operating expenses: Selling and marketing expenses 41,171 31,663 General and administrative expenses 4,814,868 1,382,015 Total operating expenses 4,856,039 1,413,678 Loss from operation ( 4,617,651 ) ( 1,141,989 ) Other income/(expense) Interest expense ( 1,005,498 ) ( 25,659 ) Other income 66,522 2,623 Total other income/(expense) ( 938,976 ) ( 23,036 ) Loss from operation before income taxes ( 5,556,627 ) ( 1,165,025 ) Income tax expenses - - Net loss $ ( 5,556,627 ) ( 1,165,025 ) Less: Net loss attributable to non-controlling interests 324,750 80,139 Net loss attributable to equity holders of the Company ( 5,231,877 ) ( 1,084,886 ) Other comprehensive income: Foreign currency translation adjustment 87,731 21,043 Total comprehensive loss ( 5,144,146 ) ( 1,063,843 ) Less: net comprehensive income attributable to non-controlling interests 27,547 1,971 Net comprehensive loss attributable to equity holders of the Company ( 5,116,599 ) ( 1,061,872 ) Net loss attributable to equity holders of the Company per common share: Basic and diluted ( 0.08 ) ( 0.37 ) Weighted average number of common shares outstanding: Basic and diluted 62,181,538 2,970,000 The accompanying footnotes are an integral part of these consolidated financial statements. 32 | Page EVOAIR HOLDINGS INC. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT) (In U.S. Dollars, except share data or otherwise stated) FOR THE YEARS ENDED AUGUST 31, 2022 AND 2021 Shares Amount capital Income deficit be issued interests Total Common stock Additional paid in Accumulated other comprehensive Accumulated Shares to Non-controlling Shares Amount capital Income deficit be issued interests Total Balance at August 31, 2020 2,970,000 $ 2,970 $ 730,814 $ ( 13,376 ) $ ( 1,148,610 ) $ - $ - $ ( 428,202 ) Forgiveness of loan from related party and stock refund payable - - 13,292 - - - - 13,292 Capital contribution - - 2,146,365 - - - 246,135 2,392,500 Issuance of common stock for cash - - - - - 861,883 - 861,883 Foreign currency translation adjustment - - - 19,072 - - 1,971 21,043 Net loss - - - - ( 1,084,886 ) - ( 80,139 ) ( 1,165,025 ) Balance at August 31, 2021 2,970,000 2,970 2,890,471 5,696 ( 2,233,496 ) 861,883 167,967 1,695,491 Beneficial conversion feature on financial liability -convertible bonds - - 1,005,645 - - - - 1,005,645 Capital contribution - - 129,363 - - - 70,482 199,845 Issuance of common stock for convertible bonds 1,116,055 1,116 1,003,326 - - - 1,004,442 Issuance of common stock pursuant to share exchange agreement 102,000 102 ( 102 ) - - - - - Issuance of common stock for Intellectual Assets 83,147,767 83,148 83,064,619 - - - - 83,147,767 Issuance of common stock for Cash 14,517,575 14,518 1,032,550 - - ( 786,883 ) - 260,185 Foreign currency translation adjustment - - - 60,184 - - 27,547 87,731 Net loss - - - - ( 5,231,877 ) - ( 324,750 ) ( 5,556,627 ) Balance at August 31, 2022 101,853,397 $ 101,854 $ 89,125,872 $ 65,880 $ ( 7,465,373 ) 75,000 $ ( 58,754 ) $ 81,844,479 33 | Page EVOAIR HOLDINGS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. Dollars, except share data or otherwise stated) FOR THE YEARS ENDED AUGUST 31, 2022 AND 2021 August 31, 2022 August 31, 2021 Cash flows from operating activities Net loss $ ( 5,556,627 ) ( 1,165,025 ) Adjustments for non-cash income and expenses: Depreciation 95,158 25,414 Amortization 2,854,953 - Beneficial conversion feature of convertible bonds 1,005,645 - Changes in operating assets and liabilities: Decrease / (Increase) in accounts receivables 41,842 ( 88,652 ) Increase in inventories ( 476,477 ) ( 48,378 ) Decrease/ (Increase) in deposit, prepayments and advances to suppliers 407,895 ( 1,185,426 ) Increase in operating lease right-of-use assets ( 525,381 ) - Increase in accounts payable and accruals 104,936 95,475 Increase in deferred revenue 86,295 426,777 Decrease in stock refund payable - ( 1,950 ) Increase in operating lease liabilities 472,872 - Decrease in other payables ( 1,098 ) ( 54,753 ) Decrease in amounts due to related party ( 50,180 ) ( 4,735 ) Net cash used in operations $ ( 1,540,167 ) $ ( 2,001,253 ) Cash flows from investing activity Purchase of property and equipment ( 561,315 ) ( 94,045 ) Net cash used in investing activity $ ( 561,315 ) $ ( 94,045 ) Cash flows from financing activities Proceeds from hire purchase - 33,650 Payments of hire purchase ( 5,308 ) - Proceeds from issuance of common stock 185,185 - Proceeds from shares to be issued 75,000 861,883 Proceeds from capital contribution 199,845 2,392,500 Net cash generated from financing activities $ 454,722 $ 3,288,033 Net (decrease)/increase in cash and cash equivalents ( 1,646,760 ) 1,192,735 Effect of exchange rate changes 84,174 31,838 Cash and cash equivalents at start of year 1,714,890 490,317 Cash and cash equivalents at end of year 152,304 1,714,890 Supplemental disclosure of non-cash investing and financing information : Common stock issued for technology-related intangible assets $ 83,147,767 $ - Common stock issued for convertible bonds $ 1,007,999 $ - Increase in additional paid in capital due to forgiveness of loan from related party and stock refund payable $ - $ 13,292 The accompanying footnotes are an integral part of these consolidated financial statements. 34 | Page EVOAIR HOLDINGS INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED AUGUST 31, 2022, AND 2021 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 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 the consideration of US$ 100 (“EvoAir Transaction”). EvoAir International, through its subsidiaries upon completion of the Transactions (defined hereunder), is engaged in the sale of heating, ventilation and air conditioning (“HVAC”) products 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 Limited (“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 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 101,779,323 (“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 Limited and Allegro Investment (BVI) Limited of 24,000 shares and 6,000 shares of common stock, respectively, or approximately 0.02 % and 0.01 % 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 to WKL Eco Earth Holdings in consideration for the allotment and issuance to WKL Global Limited, Allegro Investment (BVI) Limited and WKLEE Sellers of 49,320 shares, 8,280 shares and in aggregate 14,400 shares, respectively, of the common stock of the Company, or approximately 0.05 %, 0.009 % and in aggregate 0.014 %, 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 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 Enlarged Share Capital. The board of directors and majority shareholders of the Company have approved the transaction. 35 | 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 relating to eco-friendly air-conditioner condenser (external unit), evoair TM 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 EVO TM and the trademarks as described in the deed of assignments 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 63,362,756 shares, 14,297,259 shares and in aggregate 5,487,752 shares, respectively of the Company’s common stock or approximately 62.25 %, 14.05 % and in aggregate 5.39 %, respectively of the 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 Transaction (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. EvoAir International is a company incorporated in the British Virgin Islands on November 17, 2021. Effective from the December 20, 2021, it wholly owned 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 in April 6, 2021 and (f) Evo Air Marketing, a Malaysian company incorporated in February 2, 2021, is a wholly owned subsidiary of EvoAir Manufacturing. 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”. The Company consolidates the following subsidiaries: SUMMARY OF CONSOLIDATED SUBSIDIARIES Subsidiaries of EVOH Attributable interest EvoAir International Limited (British Virgin Islands) 100 % Subsidiary of EvoAir International Limited WKL Eco Earth Holdings Pte Ltd (Singapore) 100 % Subsidiaries of WKL Eco Earth Holdings Pte Ltd WKL Eco Earth Sdn Bhd(Malaysia) 100 % WKL Green Energy Sdn Bhd (Malaysia) 100 % EvoAir Manufacturing (M) Sdn Bhd (Malaysia) 67.5 % WKL EcoEarth Indochina Co Ltd (Cambodia) 55 % WKL Guanzhen Green Technology Guangzhou Co Ltd (China) 55 % Subsidiary of EvoAir Manufacturing (M) Sdn Bhd Evo Air Marketing (M) Sdn Bhd (Malaysia) 100 % 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 2,000,000 restricted shares of the Company’s ordinary shares representing 67.34 % of the Enlarged Share Capital, 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 Limited then owned 2,000,000 shares, or approximately 67.34 % of Enlarged Share Capital, which resulted in a change of control of the Company. 36 | Page NOTE 3 – GOING CONCERN The Company’s financial statements as of August 31, 2022, is prepared using generally accepted accounting principles in the United States of America 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 revenues sufficient to cover its operating costs and allow it to continue as a going concern. As of August 31, 2022, and August 31, 2021, the Company had an accumulated deficit of $ 7,465,373 and $ 2,233,496 respectively. The Company incurred net loss of $ 5,231,877 and $ 1,084,886 for years ended August 31, 2022, and August 31, 2021, respectively. The cash used in operating activities were $ 1,540,167 and $ 2,001,253 for the years ended August 31, 2022, and August 31, 2021, 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 viable business into the Company (“New Business”) contemplated under the Transaction (defined in Note 1), the Management believes that the actions to be taken by the new Management to further implement the business plans for the New Business including expansion in product offerings, geographical expansion, generate revenue through expansion of revenue streams and customer base (retail, commercial and industrial 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 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 EVOH and its subsidiaries (the “Group” or “EvoAir Group”) in accordance with U.S. generally accepted accounting principles (“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 67.5 % owned EvoAir Manufacturing which included a 100 % owned subsidiary Evo Air Marketing, 55 % owned WKL EcoEarth Indochina, and its 55 % owned WKL Guanzhe as part of the Transaction contemplated in Note 1. As WKL Eco Earth and WKL Green Energy were under common control at the time of the Transaction, 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, EVOH’s consolidated balance sheets as of August 31, 2022, and August 31, 2021, 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. 37 | Page 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 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 institution. WKL Guanzhe business is primarily conducted in China and substantially all of revenues 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 August 31, 2022, and August 31, 2021, 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. Beneficial Conversion Features (“BCF”) In accordance with FASB ASC 470-20, “Debt with Conversion and Other Options”, the BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The intrinsic value is generally calculated at the commitment date as the difference between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. If certain other securities are issued with the convertible security, the proceeds are allocated among the different components. The portion of the proceeds allocated to the convertible security is divided by the contractual number of the conversion shares to determine the effective conversion price, which is used to measure the BCF. The effective conversion price is used to compute the intrinsic value. The value of the BCF is limited to the basis that is initially allocated to the convertible security. 38 | Page 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. 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 August 31, 2022, and August 31, 2021, our accounts receivable amounted to $ 85,960 and $ 127,802 , respectively, with no allowance for doubtful accounts for both periods. 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 inventory at the lower of cost or net realizable value. We determine the cost 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 5 to 10 years . 39 | Page SUMMARY OF ESTIMATED USEFUL LIVES OF ASSETS Useful lives Plant and machineries 5 years Office equipment 5 years Vehicles 5 years Furniture and equipment 10 years Renovation 10 years 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 20 years for both patents and trademarks. 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 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 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 deferred revenue of $ 426,777 recorded as of August 31, 2021, was subsequently recognized as revenue in October 2021.The Company recognized $ 513,072 deferred revenue as of August 31, 2022, with $ 112,176 recognized as revenue as of the report date. 40 | Page 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 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 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. 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. Earnings (Loss) per Share 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 August 31, 2022, the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding. 41 | Page Recently Issued Accounting Pronouncements Except for rules and interpretive releases of the U.S. Securities and Exchange Commission (“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. There is no material impact on the Company’s financial statements. NOTE 5 INVENTORIES Inventories consist of the following: SUMMARY OF INVENTORIES August 31, 2022 August 31, 2021 Finished goods $ 385,102 $ 79,306 Raw materials and supplies 162,820 63,213 Work in progress 71,074 - Total inventory on hand $ 618,996 $ 142,519 NOTE 6 DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES Deposit, prepayments, and other receivables consists of the following: SCHEDULE OF DEPOSIT PREPAYMENTS AND OTHER RECEIVABLES August 31, 2022 August 31, 2021 Deposits and Prepayment 61,270 15,208 Other receivables (Advances from suppliers) 770,396 1,224,353 Total 831,666 1,239,561 42 | Page NOTE 7 PROPERTY, PLANT AND EQUIPMENT, NET Property, plant, and equipment consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT August 31, 2022 August 31, 2021 Plant and machineries $ 464,019 $ - Office equipment 55,587 46,375 Vehicles 71,860 58,247 Furniture and equipment 26,577 23,864 Renovation 134,309 62,551 Property plant and equipment gross 752,352 191,037 Less: Accumulated depreciation ( 149,597 ) ( 54,439 ) Property, plant and equipment, net $ 602,755 $ 136,598 Depreciation expense for the year ended August 31, 2021, was $ 25,414 . Depreciation expense for the year ended August 31, 2022, was $ 95,158 . NOTE 8 – INTANGIBLE ASSETS The below table summarizes the identifiable intangible assets as of August 31, 2022, and August 31, 2021: SUMMARIZES OF INTANGIBLE ASSETS August 31, 2022 August 31, 2021 Technology 1-Portable Air Cooler $ 27,438,763 $ - Technology 2-Condensing Unit 55,709,004 - Finite- lived intangible assets, gross 83,147,767 - Less: Accumulated amortization ( 2,771,592 ) - Intangible assets, net $ 80,376,175 $ - Amortization expense for intangible assets for the year ended August 31, 2022, was $ 2,771,592 . 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 August 31, 2022 August 31, 2021 Accounts payable $ 110,782 $ 102,394 Accruals 106,048 9,500 Other payables 31,980 33,078 Total $ 248,810 $ 144,972 43 | Page NOTE 10 CONVERTIBLE BONDS Convertible bonds consist of the following: SCHEDULE OF CONVERTIBLE BONDS August 31, 2022 August 31, 2021 Convertible bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to issue 66,667 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion $ - $ 44,601 Convertible bonds payable to a private investor bearing interest at 10 %. Accrued interests were paid on November 15, 2020 . The Company issued 49,383 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction. $ - $ 44,601 Convertible bonds payable to a private investor bearing interest at 10 %. Accrued interests were paid on November 15, 2020 . The Company issued 205,762 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction - 185,840 Convertible bonds payable to a private investor bearing interest at 10 %. Accrued interests were paid on November 15, 2020 . The Company issued 1,647 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction - 1,487 Convertible bonds payable to a private investor bearing interest at 10 %. Accrued interests were paid on November 15, 2020 ,. The Company issued 82,305 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction - 74,336 Convertible bonds payable to a private investor bearing interest at 10 %. Accrued interests were paid on November 15, 2020 ,. The Company issued 24,692 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction - 22,301 Convertible bonds payable to a private investor bearing interest at 10 %. Accrued interests were paid on November 15, 2020 . The Company issued 205,762 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction - 185,841 Convertible bonds payable to a private investor bearing interest at 10 %. Accrued interests were paid on November 15, 2020 . The Company issued 329,219 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction - 297,345 Convertible bonds payable to a private investor,interest free. The Company issued 205,762 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction - 185,841 Convertible bonds payable to a private investor bearing interest at 10 %. Accrued interests were paid on November 15, 2020 . The Company issued 15,523 shares of common stock pursuant to the conversion of convertible bonds at 10 % discount to the issue price upon completion of the Transaction - 10,407 $ - $ 1,007,999 All accrued interests from above convertible bonds have been settled on November 15, 2020. All principals were converted into a total of 1,116,055 shares at S$ 0.9 per share based on 10 % discount to issue price of US 1.00 , i.e. (US$ 0.90 ) (“Conversion Price”) at the closing date. The company determined a contingent BCF existed at the date of issuance of the convertible bonds, which allowed the holders to purchase equity at a discount to the offering price. While such contingent BCF is measured on the basis of the commitment-date stock price, it is not recognized until the contingency occurs. 44 | Page During the year ended August 31, 2022, upon the completion of the Transactions, the conversion feature has been realized. The Company recorded the beneficial conversion feature of U$ 1,005,645 . NOTE 11 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 $ 2,301 and $ 52,481 as of August 31, 2022, and August 31, 2021, respectively. ECo Awareness Sdn Bhd ECo Awareness Sdn Bhd is related to a common shareholder. ECo Awareness Sdn Bhd was our main distributor for E-cond Life product. Eco Awareness Sdn Bhd has been re-designated as distributor in October 2021. The sales generated from ECo Awareness Sdn Bhd amounted to $ 22,903 and $ 190,640 during the years ended August 31, 2022, and August 31, 2021, respectively. The accounts receivable from ECo Awareness Sdn Bhd amounted to $ 0 and $ 77,830 as of August 31, 2022, and August 31, 2021, respectively. The purchases from ECo Awareness Sdn Bhd amounted to $ 15,904 and $ 70,820 during the years ended August 31, 2022, and August 31, 2021, respectively. The accounts payable due to ECo Awareness Sdn Bhd amounted $ 0 and $ 70,650 as of August 31, 2022, and August 31, 2021, respectively. NOTE 12 STOCKHOLDERS’ EQUITY On December 16, 2021, the Company has increased the authorized common stock from 75,000,000 shares with a par value of $ 0.001 per share to 1,000,000,000 shares with a par value of $ 0.001 per share. During the year ended August 31, 2021, a related party forgive a loan and stock refund payable amounting to $ 13,292 , which were written off against additional paid-in capital. During the year ended August 31, 2021, the Company received cash proceeds of $ 2,392,500 from capital contribution. The Company also received cash proceeds of $ 861,883 from shares to be issued, and those shares were issued during year ended August 31, 2022. During the year ended August 31, 2022, the Company issued 1,116,055 shares of common stock in connection with the conversion of $ 1,004,442 in principal related to its convertible bonds. During the year ended August 31, 2022, the Company issued 83,147,767 shares of common stock in connection with Dr. Low’s two deeds of assignments of intellectual properties. During the year ended August 31, 2022, the Company issued 14,443,501 shares of common stock pursuant to investment exchange agreements with relevant interest holders in relation to capital raising undertaken by WKL Eco Earth Holdings in prior years. During the year ended August 31, 2022, the Company issued 30,000 shares of common stock pursuant to share exchange agreement with WKL Eco Earth Holdings for acquisition of WKL Green Energy and issued 72,000 shares of common stock pursuant to share exchange agreement for the acquisition of WKL Eco Earth. 45 | Page During the year ended August 31, 2022, the Company issued 74,074 shares of common stock, par value $ 0.001 per share (“Common Stock”), at a per share purchase price of $ 2.50 (the “Offering”) for gross proceeds of $ 185,185 , 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 . During the year ended August 31, 2022, the Company received cash proceeds of $ 199,845 from capital contribution. The Company also received cash proceeds of $ 75,000 from 30,000 shares to be issued, and those shares were issued on October 26, 2022. As of August 31, 2022, and August 31, 2021, the Company had 101,853,397 and 2,970,000 shares of its common stock issued and outstanding, respectively. NOTE 13 INCOME TAXES The Company’s operating subsidiaries are governed by the Income Tax Law, which is concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (“the Income Tax Laws”). We are routinely undergoing 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 17 %. Malaysia WKL Eco Earth, WKL Green Energy and Evoair Manufacturing (including its 100 % subsidiary Evo Air Marketing) are incorporated in Malaysia and are subject to common corporate income tax rate at 24 %. Cambodia WKL EcoEarth Indochina is incorporated in Cambodia, and under the current tax laws of Cambodia, its standard corporate tax rate is 20 %. 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 25 %. 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: SCHEDULE OF RECONCILIATION BETWEEN THE STATUTORY TAX RATE AND THE ACTUAL PROVISION Twelve Months Ended August 31, 2022 2021 US Statutory rate 21 % 21 % Effect of reconciling items for tax purposes ( 21 )% ( 21 )% Effective income tax rate - % - % 46 | Page The components of net deferred tax assets are as follows: SCHEDULE OF COMPONENTS ON NET DEFERRED TAX ASSET August 31, 2022 August 31, 2021 Net operating loss carry-forward $ 7,470,000 $ 2,230,000 Less: valuation allowance ( 7,470,000 ) ( 2,230,000 ) Net deferred tax asset - - The Company had net operating loss carry forwards for tax purposes of approximately $ 7,470,000 at August 31, 2022, and approximately $ 2,230,000 at August 31, 2021, which may be available to offset future taxable income. Utilization of the net operating loss carry forwards may be subject to substantial annual limitations due to the ownership change limitations provided by Section 381 of the Internal Revenue Code of 1986, as amended. The annual limitation may result in the expiration of net operating loss carry forwards before utilization. NOTE 14 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. 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 office and factory. 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 August 31, 2022, the Company discounted lease payments using its estimated incremental borrowing rate of 10 %. The following is a summary of ROU asset and operating lease liabilities: SUMMARY OF ROU ASSET AND OPERATING LEASE LIABILITIES August 31, 2022 August 31, 2021 Assets: ROU asset $ 442,020 $ - Liabilities: Current: Operating lease liabilities $ 117,686 $ - Non-current Operating lease liabilities 355,186 - Total lease liabilities $ 472,872 $ - As of August 31, 2022, remaining maturities of lease liabilities were as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Operating lease 2023 $ 117,686 2024 135,821 2025 112,235 2026 78,291 2027 and thereafter 28,839 Total $ 472,872 47 | Page NOTE 15 CONCENTRATIONS Revenues For the years ended August 31, 2022, and 2021, the following customers comprised more than 10% of total sales: SCHEDULE OF CUSTOMERS COMPRISED OF TOTAL SALES For the years August 31, 2022 August 31, 2021 Customer #1 - * 25 % Customer #2 - * 21 % Customer #3 27 % - * Customer #4 13 % - * * Accounted for less than 10% for the period Accounts receivable As of the years ended August 31, 2022, and 2021, the following customers comprised more than 10% of total accounts receivable: SCHEDULE OF CUSTOMERS COMPRISE OF TOTAL ACCOUNTS RECEIVABLE For the year ended August 31, 2022 August 31, 2021 Customer #5 19 % - * Customer #1 - * 47 % Customer #6 14 % - * Customer #2 - * 17 % Customer #7 12 % - * * Accounted for less than 10 % for the year end Purchases For the years ended August 31, 2022, and 2021, the following vendors comprised more than 10% of total purchases: SCHEDULE OF VENDORS COMPRISED OF TOTAL PURCHASES For the years August 31, 2022 August 31, 2021 Vendor #1 - * 45 % Vendor #2 - * 35 % Vendor #3 37 % - * Vendor #4 18 % - * Vendor #5 15 % - * Vendor #6 15 % - * * Accounted for less than 10% for the period NOTE 16 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. The outcome of the above case very much depends on the evidence produced and the weight of the Court places on the evidence. As it stands, WKL has a probability of success in its Counterclaim against the parties. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. NOTE 17 SUBSEQUENT EVENTS In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to August 31, 2022, 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, except as follow: In September 2022, the Company agreed to issue and sell 119,621 shares (the “Shares”) of its common stock, par value $ 0.001 per share (“Common Stock”), at a per share purchase price of $ 2.50 (the “Offering”), 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 Company received the gross proceeds from the Offering of $ 299,055 on September 14, 2022, September 15, 2022, and September 27, 2022, respectively. Those shares were issued to the Investors on October 26, 2022. 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”. 48 | Page ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.