What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-11 compared with 2024-04-11 · 135 added, 148 removed, 172 unchanged (62% of the section changed)

25 unchanged sentences

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, is engaged in the R&D,

manufacturing, trading, sale of HVAC products and related services in Asia.

Low entered into the “EvoAir International Share Transfer Agreement, pursuant to which

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 of the Financial Statements, is engaged in the R&D, manufacturing, trading, sale of HVAC products and related services in Asia.

to the terms of a share transfer agreement dated December 20, 2021, Dr.

4 unchanged sentences

outstanding ordinary shares of the Company, which resulted in a change of control of the Company.

International is a company incorporated in the British Virgin Islands on November 17, 2021.

International is a company incorporated in the BVI on November 17, 2021.

Effective from the December 20, 2021, it

15 unchanged sentences

following summary of our operations should be read in conjunction with our unaudited condensed consolidated financial statements for

the three and six months ended February 29, 2024, as compared to the three and six months ended February 28, 2023.

Months Ended February 29, 2024, versus Three Months Ended February 28, 2023

Three Months Ended

February 29, 2024

February 28, 2023

the three and nine months ended May 31, 2024, as compared to the three and nine months ended May 31, 2023.

Months Ended May 31, 2024, versus Three Months Ended May 31, 2023

Three Months Ended May 31

Cost of revenue

1 unchanged sentence

Loss from operation

Other income/(expense)

Loss from operation before income taxes

$ (1,513,423 )

$ (1,437,297 )

Company generated revenues of $41,174 in the three months ended February 29, 2024, as compared to $70,912 in the three months ended February

Company generated revenues of $89,616 in the three months ended May 31, 2024, as compared to $165,726 in the three months ended May 31,

2023, a decrease in revenue of $76,110.

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 regime.

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 Conditioner.

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

air-conditioners.

Being 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 of 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 period, EvoAir

Manufacturing entered into an OEM supply agreement (the “OEM Agreement”) with Tadmonsori Holdings Sdn Bhd

(“THSB”) pursuant to which the parties have agreed for THSB to purchase certain products (the “Products”)

from EvoAir Manufacturing to resell directly under THSB’s branding, trademark, graphics, packaging designs and artwork, with

the insertion of the words “Powered by EvoAir” inserted at the back of each Product, to THSB end user customers.

Agreement will be renewable on a three-year basis, and upon the execution of the Agreement, THSB shall have made a minimum order of

3,000 units of the Products upon signing of the OEM Agreement, and to target a total sales turnover of 105,000,000 Malaysia Ringgit

(approximately US$22,522,522, as calculated at the Foreign Exchange Rate of US$1 = 4.6620 Malaysia Ringgit on December 8, 2023, as

published in H.10 statistical release of the United States Federal Reserve Board) over 3 years from January 1, 2024 to December 31,

of revenue was $87,075 or 211% of revenue for the three months ended February 29, 2024, as compared to $88,940 or 125% of revenue in

the same financial period in 2023.

The slight decline in cost of revenue is due to the lack of economy of scale for the production.

Cost of revenues includes production

costs and purchases of goods.

loss was $45,901 or negative gross profit margin of 111% for the three months ended February 29, 2024, as compared to gross loss of $18,028

in the same financial period in 2023 or 25% of revenue.

The increase in gross loss is

mainly due to the Company commercializing 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 were $1,473,759 for the three months ended February 29, 2024, compared to $1,426,781 in the corresponding period in 2023, an

increase of $46,978.

The increase in operating expenses was not significant as it’s within 5%.

income was $88,902 for the three months ended February 29, 2024, compared to $7,512 in the corresponding period in 2023, an increase

The change was mainly due to $82,389 realized foreign exchange gain from amounts due to shareholders.

loss from operation before income taxes for the three months ended February 29, 2024, was $1,430,758 as compared to $1,437,297 for the

The decline in revenue mainly due to decrease in sales of eco-friendly air-conditioners.

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 regime.

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 Conditioner.

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 of our products.

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.

the financial period, EvoAir Manufacturing entered into an OEM supply agreement (the “OEM Agreement”) with Tadmonsori Holdings

Sdn Bhd (“THSB”) pursuant to which the parties have agreed for THSB to purchase certain products (the “Products”)

from EvoAir Manufacturing to resell directly under THSB’s branding, trademark, graphics, packaging designs and artwork, with the

insertion of the words “Powered by EvoAir” inserted at the back of each Product, to THSB end user customers.

The OEM Agreement

will be renewable on a three-year basis, and upon the execution of the Agreement, THSB shall have made a minimum order of 3,000 units

of the Products upon signing of the OEM Agreement, and to target a total sales turnover of 105,000,000 Malaysia Ringgit (approximately

US$22,522,522, as calculated at the Foreign Exchange Rate of US$1 = 4.6620 Malaysia Ringgit on December 8, 2023, as published in H.10

statistical release of the United States Federal Reserve Board) over 3 years from January 1, 2024 to December 31, 2026.

cost of revenue was $56,741, or 63% of revenue, for the three months ended May 31, 2024, as compared to $124,647, or 75% of revenue,

in the same financial period in 2023.

The decline in cost of revenue for the comparative figures is in line with the drop in sales for

the eco-friendly air - conditioner

Cost of revenues includes production costs and purchases of goods.

profit was $32,875, or a gross profit margin of 37% for the three months ended May 31, 2024, as compared to gross profit of $41,079 in

the same financial period in 2023, or a gross profit margin of 25%.

The increase in gross profit margin for the comparative figures was

attributable to decrease in some of the production costs components such as freight charges.

expenses were $1,007,694 for the three months ended May 31, 2024, compared to $1,468,153 in the corresponding period in 2023, a decrease

The decrease in operating expenses was not primarily due to the decrease in general and administrative expenses since the

IPO-related offering cost was capitalized.

income increased significantly mainly due to $82,389 realized foreign exchange gain from amount due to shareholders wires.

loss from operation before income taxes for the three months ended May 31, 2024, was $974,441, compared to $1,513,423 for the

corresponding period in 2023.

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.

Months Ended February 29, 2024, versus Six Months Ended February 28, 2023

Six Months Ended

February 29, 2024

February 28, 2023

The continuous net loss is attributable to EVOH and its subsidiaries (“Group” or “EvoAir Group”)’s focused

effort in creating the infrastructure and resources to meet its business expansion needs and lack of economies of scale.

Months Ended May 31, 2024, versus Nine Months Ended May 31, 2023

Nine Months Ended May 31

Cost of revenue

Gross (loss)/profit

Operating expenses

Loss from operation

Other income/(expense)

Loss from operation before income taxes

$ (3,929,520 )

$ (2,877,440 )

Company generated revenues of $132,492 in the six months ended February 29, 2024, as compared to $213,597 in the six months ended February

Company generated revenues of $222,108 in the nine months ended May 31, 2024, as compared to $379,323 in the nine months ended May

31, 2023, a decrease in revenue of $157,215.