What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-11-29 compared with 2023-12-14 · 208 added, 120 removed, 91 unchanged (78% of the section changed)

18 unchanged sentences

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

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

research and development;

(ii) expansion of product offerings;

(iii) geographical expansion;

and (iv) marketing expenses.

to finance these expenses with further issuances of securities.

to finance these expenses with further issuances of securities and advances.

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

generate revenues to meet long-term operating requirements.

generate revenue to meet long-term operating requirements.

Additional issuances of equity will result in dilution to our current

11 unchanged sentences

Year Ended August 31,

Cost of revenues

Gross (loss)/profit

Cost of revenue

Operating expenses

Loss from operations

Other expense

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, 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

(26,319,806 )

(20,186,636 )

Other income/(expense)

(26,315,396 )

(19,998,023 )

The Group recorded a revenue of $314,719 for FYE 2024,

representing a decrease of approximately $73,319, or 19%, compared to FYE 2023 revenue of $388,038.

This decline was primarily driven

by a reduction in sales of our eco-friendly air-conditioning units, particularly our flagship product, EvoAir™, which is a pioneering

hybrid air-conditioner designed with a proprietary HECS system.

As the first mover in the eco-friendly air-conditioning

market, the Group encountered both significant opportunities and challenges during the year.

The EvoAir™ air-conditioner, which

is either granted a patent or utility model pending, presented unique challenges related to its certifications and testings.

Specifically,

while working with relevant authorities and organizations to apply for the necessary safety and performance certifications and approvals,

the Group encountered difficulties in having our product appropriately categorized within the existing frameworks for conventional air

conditioners.

In certain cases, the authorities lacked the equipment or resources to conduct the required tests.

Despite these challenges, the Group actively engaged

in educating and collaborating with these organizations to resolve compliance and testing issues.

A positive outcome of this effort was

the recommendation from one of the authorities to apply under a newly established category:

‘Hybrid Air Conditioners.’ However,

this process, due to its novelty, was more time-consuming than the typical certification processes for traditional air-conditioning systems.

In addition to certification challenges, the adoption

of EvoAir™ by corporate clients also experienced delays.

While the Group received significant interest from several corporate clients

who were impressed with the product’s potential for energy savings and performance, many of them undertook additional studies to evaluate

the long-term benefits of EvoAir™.

This independent research and assessment by potential customers resulted in extended decision-making

Despite these hurdles, the Group remains optimistic

about the long-term potential of EvoAir™.

We are steadily building momentum and expanding the product’s reach across various

markets, including residential, commercial, and industrial sectors.

This is being achieved through the development of strategic distribution

channels, project collaborations, and private labelling and licensing models.

The Group remains committed to strengthening the traction

of EvoAir™ and driving its adoption across diverse market segments, positioning ourselves for future growth in the emerging eco-friendly

air-conditioning space.

confident in the long-term prospects of EvoAir™ and are focused on continuing to innovate and address challenges, with a view to

establishing the product as a leading solution in the sustainable cooling market.

Cost of revenue

The Company recorded a cost of revenue of $323,038

for FYE 2024, which represents 103% of total revenue, compared to $424,189, or 109% of revenue, in FYE 2023.

The decrease in cost of revenue

is consistent with the decline in sales of our eco-friendly air conditioning products and reflects improvements in our overall cost structure.

The cost of revenue encompasses production costs and

the purchase of goods.

The reduction in cost of revenue as a percentage of sales reflects both the lower volume of sales and the Company’s

ongoing efforts to optimize production efficiencies and manage costs.

These efforts include streamlining procurement processes and enhancing

cost management, which have contributed to the improvement in our overall cost of revenue despite the sales decline.

Looking ahead, the Company remains focused on further

optimizing its cost structure and maintaining efficiencies as it continues to scale its operations and expand its product offerings.

The Company reported a gross loss of $8,319 for FYE

2024, representing 3% of revenue.

This reflects a significant improvement compared to the gross loss of $36,151 in the FYE 2023, which

constituted 9% of revenue.

The improvement in gross loss margin from FYE 2023

to FYE 2024 was primarily driven by a strategic reduction in the overall cost of revenue.

These efforts included more efficient cost management,

supplier renegotiations, and optimized production processes.

This progress underscores the Company’s commitment to enhancing operational

efficiency and moving toward sustained profitability.

Management will continue to focus on cost control

measures and revenue growth initiatives to build on this positive momentum in the upcoming financial periods.

Operating expenses

Operating expenses for FYE 2024 amounted to $26,311,487,

reflecting a 332% increase compared to $6,097,019 recorded in FYE 2023.

This increase of $20,214,468 was primarily attributable to an

increase in technology-related intangible asset impairment and net off with the decrease in general administrative expenses since the

IPO related offering cost has been capitalized.

Key components of operating expenses included salaries

and related expenses, commissions, rental costs, patent and trademark application/renewal fees, professional and compliance fees.

The Company remains focused on prudent cost management

to maintain operational efficiency while supporting strategic initiatives for growth and value creation.

Other income/ (expenses)

Other income for FYE 2024 was not material.

By comparison,

in FYE 2023, other income primarily comprised realized foreign exchange losses.

The minimal impact of other income in FYE 2024 reflects

a limited exposure to foreign exchange fluctuations.

Management remains committed to monitoring external factors that may affect foreign

exchange losses and will take proactive measures to mitigate any potential risks in the future.

The Company reported a loss from operations before

income taxes of $26,315,369 for FYE 2024, compared to $6,317,373 for FYE 2023.

Apart from the technology-related intangible asset

impairment, the continued net loss is primarily attributable to the Company’s strategic investments in building the necessary infrastructure

and resources to support its business expansion objectives.

Additionally, the lack of economies of scale during this growth phase has

impacted the bottom line.

Management remains confident that these investments

will position the Company for long-term growth and profitability as it scales operations and capitalizes on emerging opportunities.

to enhance operational efficiencies and achieve economies of scale are key priorities moving forward.

and Capital Resources

Current assets

$ (1,280,412 )

Current liabilities

Working capital

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

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

$ (1,674,395 )

As of August 31, 2024, our company’s current liabilities stood at

$1,684,638, which included accounts payable and accruals of $267,900, other payables of $95,831, deferred revenue $10,012, current portion

hire purchase creditor $ 8,758 , amount due to shareholders $1,202,692, and current portion

operating lease liabilities of $ 99.445 .

The increase in current liabilities was mainly

attributable to amount due to shareholders.

As of August 31, 2024, the Company had a deficit working capital of $ 893,886

compared with the positive working capital of $1,106,522 as of August 31, 2023.

The drop in working capital for the comparative

figures was mainly attributable to the decrease in cash proceeds from issuance of common stock or capital contribution, decrease in deposits,

prepayments and other receivables, increase in accounts payable and accruals and the increase in amount owing to shareholders.

The decline in working capital underscores the Company’s

strategic use of resources to support ongoing operations and investments during a critical growth phase.

Management is actively monitoring

the Company’s liquidity position and evaluating strategies to enhance working capital and ensure sustainable financial stability.

Cash flows generated from / (used in) operating activities

$ (1,674,395 )

Cash flows used in investing activities

Cash flows generated from financing activities

Cash flows (used in) / generated from financing activities

Net changes in cash

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

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.

The Company generated net cash from operating activities

of $30,822 for FYE 2024, compared to a net cash outflow of $1,674,395 in FYE 2023.

The improvement in cash flow from operating activities

mainly attributable to a reduction of $170,431 in inventory levels, significant decreases in

deposits, prepayments, and advances to suppliers, contributing $502,701 to cash flow and increased support from shareholders, with amounts

due to shareholders rising by $970,597.

These improvements were partially offset by reductions in deferred revenue

and increased accounts payable and accruals.

As of August 31, 2024, the Company’s cash and cash equivalents stood at $152,985.

improved operating cash flow reflects the Company’s ongoing efforts to optimize cost efficiency positioning it for sustainable growth.

During the FYE 2024, cash used in investing activities amounted to $146,269.

This was primarily attributable to capital expenditures for the purchase of property, plant and equipment, reflecting the company’s

continued investments in operational infrastructure to support its long-term growth stategy.

Cash used in financing activities for FYE 2024 totaled $456,253, consisting

of $6,677 for hire purchase payments and $449,576 related to the payment of offering cots.

Company’s business is not subject to seasonality.

38 unchanged sentences

assets and inventory write-offs.

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

Company’s financial statements as of August 31, 2024, is prepared using generally accepted accounting principles in the United States of America (“U.S.

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

1 unchanged sentence

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 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.

of August 31, 2024, and 2023, the Company had an accumulated deficit of $39,401,857 and $13,523,266 respectively.

The Company incurred

net loss of $26,315,396 and $6,317,373 for the years ended August 31, 2024, and 2023, respectively.

The cash generated from operating

activities was $30,822 for the year ended August 31, 2024, the cash used in operating activities was $1,674,395 for the year ended August

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.

To address these challenges and ensure the Company’s

long-term viability, Management has developed a strategic plan focused on the continued development and expansion of its HVAC business.

Key initiatives include:

● Expansion of Product Offerings:

Broadening the range of HVAC products to meet diverse market needs.

● Geographical Expansion:

Penetrating new markets to drive revenue growth.

● Revenue Diversification:

Expanding customer segments across retail, commercial, industrial, and project-based

clients, as well as private label and licensing opportunities.

● Improved Profitability:

Achieving economies of scale through operational efficiencies and growth.

Additionally, the Company is actively pursuing plans

to raise additional funding to support operations and business expansion.

This includes preparations to uplist on the Nasdaq Capital Market,

which is expected to enhance access to capital and further strengthen the Company’s financial position.

The consolidated financial 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, 2024.

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.

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.

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):

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.

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.

Issued Accounting Pronouncements – Adopted

August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging

– Contracts in Entity’s Own Equity (Subtopic 815-40).

This ASU reduces the number of accounting models for convertible debt

instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts in an entity’s

own equity to reduce form-over-substance-based accounting conclusions.

In addition, this ASU improves and amends the related earnings

per share guidance.

This standard becomes effective for the Company beginning on October 1, 2024.

Adoption is either a modified retrospective

method or a fully retrospective method of transition.

The Company adopted this guidance effective September 1, 2023, and the adoption

of this standard did not have a material impact on its consolidated financial statements.

June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

Instruments (“ASU 2016-13”).

ASU 2016-13 provides guidance for recognizing credit losses on financial instruments based on

an estimate of current expected credit losses model.

The amendments are effective for fiscal years beginning after December 15, 2019.

Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies for discal years beginning after December 15,

We adopted ASU 2016-13 on September 1, 2023, and it did not have a material impact on out consolidated financial statements and

related disclosures.

Issued Accounting Pronouncements – Unadopted

November 2023, the FASB issued ASU 2023-07, Improvement to Reportable Segment Disclosures.

This ASU aims to improve segment disclosures

through enhanced disclosures about significant segment expenses.

The standard requires disclosure of significant expense categories and

amounts for such expenses, including those segment expenses that are regularly provided to the chief operating decision maker, easily

computable from information that is regularly provided, or significant expenses that are expressed in a form other than actual amounts.

This standard will be effective for the Company in Fiscal Year 2025 and is required to be applied retrospectively to all prior periods

presented in the financial statements.

The Company is currently evaluating the impact of the additional disclosure requirements on the

Company’s consolidated financial statements.

December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, a final standard on improvements to income tax disclosures

which applies to all entities subject to income taxes.

The standard requires disaggregated information about a reporting entity’s

effective tax rate reconciliation as well as information on income taxes paid.

The standard is intended to benefit investors by providing

more detailed income tax disclosures that would be useful in making capital allocation decisions.

This standard will be effective for

the Company in Fiscal Year 2026 and should be applied prospectively.

The Company is currently evaluating the impact of the additional

disclosure requirements on the Company’s consolidated financial statements.

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

Accountants, and the Securities and Exchange Commission did not or are not believed by Management to have a material impact on the Company’s

present or future financial statements.

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