What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-12-14 compared with 2022-12-14 · 151 added, 137 removed, 60 unchanged (83% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere

in this Annual Report.

following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in

this Annual Report.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or

contribute to such differences include but are not limited to those discussed below and elsewhere in this Annual Report.

consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally

Accepted Accounting Principles (“U.S.

results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to such

differences include but are not limited to those discussed below and elsewhere in this Annual Report.

Our audited consolidated financial

statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles

of Operation and Funding

expect that working capital requirements will continue to be funded through internally generated funds and proceeds from issuances of securities.

Our working capital requirements

are expected to increase in line with the growth of our business.

expect that working capital requirements will continue to be funded through internally generated funds and proceeds from issuances of

Our working capital requirements are expected to increase in line with the growth of our business.

working capital, proceeds from issuance of securities, further advances, and anticipated cash flow are expected to be adequate to

2 unchanged sentences

Generally, we have

financed operations to date through internally generated funds and proceeds from issuance of securities.

In connection with our

business plan, management anticipates additional increases in operating expenses and capital expenditures relating to:

and developmental, (ii) business expansion expenditure and (iii) marketing expenses.

We intend to finance these expenses with

further issuances of securities.

Thereafter, we expect we will need to raise additional capital and generate

revenues to meet long-term operating requirements.

Additional issuances of equity will result in

dilution to our current shareholders.

Further, such securities might have rights, preferences, or privileges senior to our common

Additional financing may not be available upon acceptable terms, or at all.

If adequate funds are not available or are not

available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which

could significantly and materially restrict our business operations.

financed operations to date through internally generated funds, advances and proceeds from issuance of securities.

In connection

with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to:

research and development, (ii) expansion of product offerings;

(iii) geographical expansion;

and (iv) marketing expenses.

to finance these expenses with further issuances of securities.

Thereafter, we expect we will need to raise additional capital and

generate revenues to meet long-term operating requirements.

Additional issuances of equity will result in dilution to our current

shareholders.

Further, such securities might have rights, preferences, or privileges senior to our common stock.

financing may not be available upon acceptable terms, or at all.

If adequate funds are not available or are not available on

acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could

significantly and materially restrict our business operations.

of Operations

following table sets forth certain selected statement of operations data for the financial year indicated in U.S.

In addition, we note that

the period-to-period comparison may not be indicative of future performance.

following summary of our operations should be read in conjunction with our audited financial statements for the financial years

ended August 31(“FYE”), 2022, and 2021, which are included herein.

we note that the year-to-year comparison may not be indicative of future performance.

following summary of our operations should be read in conjunction with our audited financial statements for the financial years ended

August 31 (“FYE”), 2023, and 2022, which are included herein.

Year Ended August 31,

Cost of revenues

Gross (loss)/profit

Operating expenses

Loss from operations

(3,475, 662 )

Other expense

for FYE 2022, were $1,190,616 compared to revenue in FYE 2021 of $774,805, an increase of $415,811 or approximately

Our sales increases in the 2022 is attributable to the expansion of customers base, increase of sales from existing customers and

expansion of product offerings.

of revenues was $952,228 or 80% of revenues in the FYE 2022, as compared to $503,116 or 65% of revenue in FYE 2021.

Cost of revenues

includes production cost and purchases of goods.

Higher cost of revenues was attributable to manufacturing and related costs for

evoairTM products, comprising material costs, labor cost, R&D for product improvement, product testing and inspection, factory

rental, depreciation expense as well as sample products for market penetration.

profit was $238,388 for FYE 2022 or 20% of revenues compared to $271,689 in FYE 2021 or 35% of revenues.

The decrease in

gross profit as a percentage of sales (“gross margin”) was attributable to the lower gross margin from new product line which has not achieved economy

The decrease of gross profit in 2022 is attributable to the commercialization of evoair productsTM 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 improvement of revenue streams from distributor and dealership model, projects, and licensing model.

for FYE 2023 was $388,038 compared to revenue in FYE 2022 of $1,190,616, a decrease of $802,578 or approximately 67%.

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.

Being first mover in launching EvoAir TM , first-of-its-kind eco-friendly

air-conditioner with granted patent or utility model/ patent or utility model pending HECS system proprietary system, the Group faced

both opportunities and challenges.

In the course of applying for some of the certifications, safety and performance testing, the relevant

authorities/ organizations faced the challenges in assigning our products in the appropriate category under conventional air-conditioner

There are instances whereby some of these authorities/ organizations do not possess the relevant equipment to conduct testings.

It took a lot of education, discussions, deliberations and working with the authorities/ organizations to work out solutions to resolve

compliance and testing matters.

On the positive note, one of the authorities advised us to apply under a new category, ‘Hybrid Air

The duration of the application processes were longer than that of typical certifications and testing for conventional air-conditioners.

a first mover, notwithstanding many of our corporate clients who were impressed and showed keen interest in our products,

EvoAir TM , many of them took a few months to conduct study on their own accord on performance and the energy savings by

our products.

The Company is building up its traction for the evoair TM hybrid air-conditioners for both residentials and

commercial/ industrial units through distribution channels, projects, building and businesses as well as private labelling and

licensing model.

During the financial year, we have entered into agreements with distributors, partners, customers to build up sales

of revenues was $424,189 or 109% of revenues in the FYE 2023, as compared to $952,228 or 80% of revenues in the FYE 2022.

in cost of revenue is in line with the drop in sales.

Cost of revenues includes production costs and purchases

(loss)/ profit

loss was $36,151 for FYE 2023 or 9% of revenues compared gross profit $238,388 for FYE 2022 or 20% of revenues.

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

Besides, the decrease of gross profit is mainly due to the Company’s evoair TM 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.

expenses totaled $6,097,019 for FYE 2023, compared to $4,856,039 in operating expenses for FYE 2022, or an increase of $1,240,980 or

The operating expenses include salary and related expenses, commissions, rental and professional fees.

increase in operating expenses was in line with the growth in business operations and business development, comprising

predominantly professional fee, amortization of intangible assets, and compliance cost in relation to our financial

reporting, patent, and trademark filings.

income and (expense)

income and expense are comprised of other income and interest expense.

Interest expenses was $1,005,498 for the FYE 2022, compared

to $25,659 in interest expense for FYE 2021.

The increases in other expense were primary attributable

to the amortization of beneficial conversion feature of convertible bonds $1,005,645 and offset with other income

The other income primarily included $26,357 government subsidy, $31,004

product line income, and $9,152 product testing income.

on the factors discussed above, the Company incurred a net loss from of

$5,556,627 for FYE 2022, compared to a net loss of $1,165,025 for FYE 2021.

The continuous net loss was attributable to building up of infrastructure and resource to meet the business expansion needs of the

Group’s as well as lack of economies of scale.

The operating expenses include salary and related expenses, commissions, rental, patents and trademarks application/renewal and

related fee and professional and compliance fees.

The increase in operating expenses were

mainly due to full year amortization of intangible assets in FYE2023 as compared to 8-month amortization of intangibles in

FYE 2022 as well as payment of commission for capital raising.

Other expense

expense decreased significantly mainly due to a one-time amortization of beneficial conversion feature of convertible bonds

$1,005,645 in FYE 2022.

Other expense in FYE2023 primarily included $205,949 realized foreign exchange loss net with $13,276 other

income received from Inland Revenue Authority of Singapore for Job Growth Incentive Payout.

on the factors discussed above, the Company incurred a net loss of $6,317,373 for FYE 2023, compared to a net loss of $5,556,627 for

The continuous net loss is attributable to the Group’s focused effort in building

up the traction and sales pipeline, applying necessary certifications, testings, patents and trademark and creating resources to meet the business expansion needs of the Group’s as well as lack of economies of

and Capital Resources

Current assets

$ (1,535,846 )

Current liabilities

1 unchanged sentence

of August 31, 2023, our company’s current liabilities stood at $964,642, which included accounts payable and accruals of $170,888,

$216,830, other payable of $31,980, deferred revenue $513,072, current portion hire purchase creditor

$10,135, amount due to shareholders $2,301, and current portion operating lease

liabilities of $117,686.

of August 31, 2022, the Company recorded a positive working capital of $796,922 compared with the positive working capital of $1,585,682 as

of August 31, 2021.

The decrease in working capital was primarily due to decrease in cash and the increase in operation activities.

other payables of $27,487, deferred revenue $440,069, current portion hire purchase creditor $9,224, amount due to shareholders $232,095,

and current portion operating lease liabilities of $84,879.

The increased in current liabilities was mainly attributable to amount due to shareholders.

of August 31, 2023, the Company recorded a positive working capital of $1,106,522 compared with the positive working capital of $796,922

as of August 31, 2022.

The increase in working capital was mainly attributable to the increase in cash from issuance of common stock

pursuant to capital raising activities.

Cash flows used in operating activities

5 unchanged sentences

Company’s cash and cash equivalents stood at $779,049 as of August 31, 2023.

Cash used in operating activities for the year ended

August 31, 2022, was $1,540,178.

The change was primarily due to increase in net loss offset with increased

ROU and intangible assets amortization and more inventories purchased this year.

used in investing activities resulted from purchase of fixed assets amounting to $561,315 for the year ended August 31, 2022.

the FYE 2022, cash generated from financing activities resulted from proceeds from issuance of common stock amounting

to $185,185, payments of hire purchase amounting to $5,308, proceeds from shares to be issued amounting to $75,000, and proceeds

from capital contribution amounting to $199,845.

Cash used in operating activities for FYE 2023,

was $1,674,395.

The change was primarily due to an increase in net loss offset with an increase in amortization of intangible assets.

used in investing activities arose from purchase of property, plant and equipment amounting to $14,189 for FYE 2023.

the FYE 2023, cash generated from financing activities resulted from proceeds from issuance of common stock amounting to $1,068,728,

payments of hire purchase amounting to $8,587, proceeds from shares to be issued amounting to $1,066,052, and proceeds from capital contribution

amounting to $266,517.

Company’s business is not subject to seasonality.

Sheet Arrangements.

As of the date of this Annual Report, 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,

revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

of the date of this Annual Report, 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.

Accounting Policies

revenue recognition policy is in compliance with ASC 606, Revenue from Contracts with Customers whereby 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

revenue recognition policy is in compliance with ASC 606, Revenue from Contracts with Customers whereby 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.

4 unchanged sentences

We apply the following five-step model to determine this amount:

identification of the promised

goods and services in the contract;

determination of whether

the promised goods and services are performance obligations, including whether they are distinct in the context of the contract;

measurement of the transaction

price, including the constraint on variable consideration;

allocation of the transaction

price to the performance obligations;

recognition of revenue

when (or as) the Company satisfies each performance obligation.

identification

of the promised goods and services in the contract;

determination

of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the

of the transaction price, including the constraint on variable consideration;

of the transaction price to the performance obligations;

of revenue when (or as) the Company satisfies each performance obligation.

only apply the five-step model to contracts when it is probable that we will collect the consideration it is entitled to in exchange

10 unchanged sentences

preparing our consolidated financial statements, we use estimates and assumptions that affect the reported amounts and disclosures.

estimates are often based on complex judgments, probabilities, and assumptions that we believe to be reasonable, but that are inherently

uncertain and unpredictable.

We are also subject to other risks and uncertainties that may cause actual results to differ from estimated

Significant estimates in 2022 and 2021 include the assumptions used to value tax liabilities, derivative financial instruments,

estimates of the allowance for deferred tax assets, accounts receivable allowance, impairment of long-lived assets and

inventory write-offs.

of August 31, 2022, and August 31, 2021, the Company had an accumulated deficit of $7,465,373 and $2,233,496 respectively.

incurred net loss of $5,556,627 and $1,165,025 for FYE 2022, and FYE 2021, respectively.

Our estimates are often based on complex judgments, probabilities, and assumptions that we believe to be reasonable, but that are

inherently uncertain and unpredictable.

We are also subject to other risks and uncertainties that may cause actual results to differ

from estimated amounts.

Significant estimates in FYE 2023 and 2022 include the assumptions used to value tax liabilities, derivative

financial instruments, estimates of the allowance for deferred tax assets, accounts receivable allowance, impairment of long-lived

assets and inventory write-offs.

Company’s financial statements as of August 31, 2023, is prepared using U.S.

applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of

The Company has not yet established a sustainable ongoing source of revenue sufficient to cover its operating costs and

allow it to continue as a going concern.

of August 31, 2023, and August 31, 2022, the

Company had an accumulated deficit of $13,523,266 and $7,465,373 respectively.

incurred net loss of $6,057,893 and $5,231,877 for the years ended August 31, 2023, and August 31, 2022, respectively.

The cash used

in operating activities for the year ended August 31, 2022, was $1,540,167.

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.

the injection of New Business into the Company contemplated under the Transactions (defined in Note 1 to the consolidated financial statements), the Management believes

that the actions to be taken by the 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), as well as 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.

consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly the 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.

in operating activities were $1, 674 , 395

and $1,540,167 for FYE 2023 and 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.

the injection of a HVAC business into the Company (“HVAC Business”) pursuant

to the Transactions (defined in Part I, Item I of this Form 10K ), 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.

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.

have no material commitments as of August 31, 2023.

Accounting Pronouncements

for rules and interpretive releases of the SEC under the authority of federal securities laws and a limited number of grandfathered

standards, the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification™

(“ASC”) is the sole source of authoritative U.S.

for rules and interpretive releases of the SEC under the authority of federal securities laws and a limited number of grandfathered standards,

the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification™ (“ASC”) is the sole

source of authoritative U.S.

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.

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.

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.

October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

4 unchanged sentences

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.

June 2016, the FASB issued ASU No.

2016-13 “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on

Financial Instruments”.

In November 2019, the FASB issued ASU No.

2019-10 “Financial Instruments—Credit Losses

(Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates”.

In March 2020, the FASB issued ASU

2020-03 “Codification Improvements to Financial Instruments”;

which modifies the measurement of expected credit

losses of certain financial instruments.

This ASU is effective for fiscal years and interim periods within those years beginning

after December 15, 2022.

The Company is currently assessing the impact of these ASUs on its consolidated financial

recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public

Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis