EvoAir Holdings Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS EVOAIR HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S. Dollars, except share data or otherwise stated) AS OF FEBRUARY 28, 2026 AND AUGUST 31, 2025 February 28, 2026 August 31, 2025 ASSETS Current assets Cash and cash equivalents $ 45,835 $ 93,329 Accounts receivable, net 57,458 56,235 Inventories 339,937 316,508 Deposit, prepayments and other receivables 62,185 61,676 Total current assets 505,415 527,748 Non-current assets Property, plant and equipment, net 250,887 264,557 Operating lease right-of-use assets 63,413 91,408 Deferred offering cost 3,230,576 3,225,464 Technology-related intangible assets, net 40,306,927 41,579,778 Total non-current assets 43,851,803 45,161,207 TOTAL ASSETS $ 44,357,218 $ 45,688,955 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and accruals $ 463,061 $ 548,194 Other payables 218,514 149,034 Deferred revenue 31,812 11,005 Hire purchase creditor 748 4,852 Amounts due to shareholders 3,299,033 2,436,407 Operating lease liability - current 58,778 63,262 Total current liabilities 4,071,946 3,212,754 Non-current liabilities Operating lease liabilities 9,670 34,774 Total non-current liabilities 9,670 34,774 TOTAL LIABILITIES 4,081,616 3,247,528 Commitments and contingencies (Note 14) - - Shareholders’ equity Common stock, 250,000,000 authorized; $ 0.001 par value, 27,180,631 and 27,180,631 shares issued and outstanding as at February 28, 2026 and August 31, 2025 * 27,181 27,181 Additional paid in capital 97,492,063 97,492,063 Accumulated other comprehensive loss ( 154,197 ) ( 85,598 ) Accumulated deficit ( 55,945,881 ) ( 54,028,719 ) Non-controlling interest ( 1,143,564 ) ( 963,500 ) Total shareholders’ equity 40,275,602 42,441,427 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 44,357,218 $ 45,688,955 * Retroactively presented to reflect 1-for-4 reverse stock split effective on September 11,2024. The accompanying footnotes are an integral part of these consolidated financial statements. 3 | Page EVOAIR HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In U.S. Dollars, except share data or otherwise stated) FOR THE THREE AND SIX MONTH PERIODS ENDED FEBRUARY 28, 2026 AND 2025 February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025 Three months ended Six months ended February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025 Revenue $ 67,588 $ 71,124 $ 88,039 $ 123,053 Cost of revenue 62,144 70,066 84,829 160,176 Gross profit/(loss) 5,444 1,058 3,210 ( 37,123 ) Operating expenses: Selling and marketing expenses 3,708 4,955 4,095 14,698 General and administrative expenses 1,006,147 1,271,390 2,042,414 5,864,523 Total operating expenses 1,009,855 1,276,345 2,046,509 5,879,221 Loss from operation ( 1,004,411 ) ( 1,275,287 ) ( 2,043,299 ) ( 5,916,344 ) Other income Interest income / (expenses) ( 12 ) 91 ( 12 ) 179 Other income 145 2,208 318 2,273 Total other income 133 2,299 306 2,452 Loss from operation before income taxes ( 1,004,278 ) ( 1,272,988 ) ( 2,042,993 ) ( 5,913,892 ) Income tax expenses - - - - Net loss $ ( 1,004,278 ) $ ( 1,272,988 ) $ ( 2,042,993 ) $ ( 5,913,892 ) Less: Net loss attributable to non-controlling interests ( 65,258 ) ( 67,166 ) ( 125,831 ) ( 152,669 ) Net loss attributable to equity holders of the Company ( 939,020 ) ( 1,205,822 ) ( 1,917,162 ) ( 5,761,223 ) Other comprehensive (loss)/income: Foreign currency translation adjustment ( 156,523 ) ( 4,532 ) ( 122,832 ) 14,238 Total comprehensive loss ( 1,095,543 ) ( 1,210,354 ) ( 2,039,994 ) ( 5,746,985 ) Less: net comprehensive income attributable to non-controlling interests ( 40,959 ) 1,302 ( 54,233 ) 12,235 Net comprehensive loss attributable to equity holders of the Company ( 1,054,584 ) ( 1,211,656 ) ( 1,985,761 ) ( 5,759,220 ) Net loss attributable to equity holders of the Company per common share: Basic and diluted* ( 0.03 ) ( 0.04 ) ( 0.07 ) ( 0.22 ) Weighted average number of common shares outstanding: Basic and diluted* 27,180,631 27,180,631 27,180,631 26,470,324 * Retroactively presented to reflect 1-for-4 reverse stock split effective on September 11,2024. The accompanying footnotes are an integral part of these consolidated financial statements. 4 | Page EVOAIR HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT) (In U.S. Dollars, except share data or otherwise stated) FOR THE THREE AND SIX MONTH PERIODS ENDED FEBRUARY 28, 2026 AND 2025 shares amount capital deficit income interests Total Common Stock Additional paid in Accumulated Accumulated other comprehensive Non-controlling Shares* Amount capital deficit income interests Total Balance as of August 31, 2024 25,685,591 $ 25,686 $ 91,513,818 $ ( 39,401,857 ) $ ( 48,827 ) $ ( 607,558 ) $ 51,481,262 Issuance of common stock for consulting service 1,494,935 1,495 5,978,245 - - - 5,979,740 Fraction shares issued due to reverse stock split 105 - - - - - - Foreign currency translation adjustment - - - - 7,837 10,933 18,770 Net loss - - - ( 4,555,401 ) - ( 85,503 ) ( 4,640,904 ) Balance as of November 30, 2024 27,180,631 $ 27,181 $ 97,492,063 $ ( 43,957,258 ) $ ( 40,990 ) $ ( 682,128 ) $ 52,838,868 Foreign currency translation adjustment - - - - ( 5,834 ) 1,302 ( 4,532 ) Net loss - - - ( 1,205,822 ) - ( 67,166 ) ( 1,272,988 ) Balance as of February 28, 2025 27,180,631 $ 27,181 $ 97,492,063 $ ( 45,163,080 ) $ ( 46,824 ) $ ( 747,992 ) $ 51,561,348 * Retroactively presented to reflect 1-for-4 reverse stock split effective on September 11,2024. The accompanying footnotes are an integral part of these consolidated financial statements. shares amount capital deficit income interests Total Common Stock Additional paid in Accumulated Accumulated other comprehensive Non-controlling Shares* Amount capital deficit income interests Total Balance as of August 31, 2025 27,180,631 $ 27,181 $ 97,492,063 $ ( 54,028,719 ) $ ( 85,598 ) $ ( 963,500 ) $ 42,441,427 Foreign currency translation adjustment - - - - 46,965 ( 13,274 ) 33,691 Net loss - - - ( 978,142 ) - ( 60,573 ) ( 1,038,715 ) Balance as of November 30, 2025 27,180,631 $ 27,181 $ 97,492,063 $ ( 55,006,861 ) $ ( 38,633 ) $ ( 1,037,347 ) $ 41,436,403 Balance 27,180,631 $ 27,181 $ 97,492,063 $ ( 55,006,861 ) $ ( 38,633 ) $ ( 1,037,347 ) $ 41,436,403 Foreign currency translation adjustment - - - - ( 115,564 ) ( 40,959 ) ( 156,523 ) Net loss - - - ( 939,020 ) - ( 65,258 ) ( 1,004,278 ) Balance as of February 28, 2026 27,180,631 $ 27,181 $ 97,492,063 $ ( 55,945,881 ) $ ( 154,197 ) $ ( 1,143,564 ) $ 40,275,602 Balance 27,180,631 $ 27,181 $ 97,492,063 $ ( 55,945,881 ) $ ( 154,197 ) $ ( 1,143,564 ) $ 40,275,602 * Retroactively presented to reflect 1-for-4 reverse stock split effective on September 11,2024. The accompanying footnotes are an integral part of these consolidated financial statements. 5 | Page EVOAIR HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. Dollars, except share data or otherwise stated) FOR THE SIX MONTHS PERIODS ENDED FEBRUARY 28, 2026 AND 2025 February 28, 2026 February 28, 2025 Cash flows from operating activities Net loss $ ( 2,042,993 ) ( 5,913,892 ) Adjustments for non-cash income and expenses: Depreciation 75,590 50,074 Amortization 1,272,851 1,804,838 Stock based compensation - 3,261,676 Changes in operating assets and liabilities: Accounts receivables ( 1,223 ) 4,944 Inventories ( 23,429 ) 79,394 Deposit, prepayments and advances to suppliers ( 509 ) 26,788 Operating lease right-of-use assets 27,995 51,299 Accounts payable and accruals ( 85,133 ) ( 105,622 ) Deferred revenue 20,807 ( 1,325 ) Operating lease liabilities ( 29,588 ) ( 51,409 ) Other payables 69,480 54,840 Net cash used in operations $ ( 716,152 ) $ ( 738,395 ) Cash flows from investing activity Purchase of property, plant and equipment ( 61,920 ) - Cash used in investing activity $ ( 61,920 ) $ - Cash flows from financing activities Amounts due to shareholders 862,626 749,086 Payments of hire purchase ( 4,104 ) ( 4,358 ) Payment of deferred offering costs ( 5,112 ) - Net cash generated from financing activities $ 853,410 $ 744,728 Net in crease in cash and cash equivalents 75,338 6,333 Effect of exchange rate changes ( 122,832 ) 40,143 Cash and cash equivalents at start of period 93,329 152,985 Cash and cash equivalents at end of period 45,835 199,461 The accompanying footnotes are an integral part of these consolidated financial statements. 6 | Page EVOAIR HOLDINGS INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2026 AND 2025 NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS EvoAir Holdings Inc. (formerly Unex Holdings Inc.) (the “Company”, “EVOH”, “we”, “us”, or “our”) is a corporation established under the corporation laws in the State of Nevada, United States of America (“U.S”) on February 17, 2017. The Company has adopted an August 31 fiscal year - end. On December 20, 2021, the Company and Low Wai Koon (“Dr. Low”) entered into a share transfer agreement, (the “EvoAir International Share Transfer Agreement”), pursuant to which Dr. Low agreed to sell all of his ordinary shares of EvoAir International Limited (“EvoAir International”) to the Company for a consideration of US$ 100 (“EvoAir Transaction”). EvoAir International, through its subsidiaries upon completion of the Transactions (defined hereunder), is engaged in the research and development (“R&D”), manufacturing, trading, sale of heating, ventilation and air conditioning (“HVAC”) products and related services in Asia. Pursuant to the terms of a share transfer agreement dated December 20, 2021, Dr. Low, the then sole executive officer and director of the Company and the owner of 2,000,000 restricted shares of common stock, with par value of $ 0.001 per share (“Common Stock”) of the Company (“EvoAir 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 (“Change of Control Transaction”). 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 (“Then Enlarged Share Capital”): (A) On December 20, 2021, Dr. Low and Chan Kok Wei entered into a share exchange agreement with WKL Eco Earth Holdings Pte Ltd (“WKL Eco Earth Holdings”), pursuant to which Dr. Low and Chan Kok Wei agreed to sell all their ordinary shares of WKL Green Energy Sdn Bhd (“WKL Green Energy”) to WKL Eco Earth Holdings in consideration for the allotment and issuance to WKL Global and Allegro Investment (BVI) Limited (“Allegro Investment”), a company incorporated in the British Virgin Islands (“BVI”) with 50 % shareholdings held by Chan Kok Wei and Ong Bee Chen, respectively, of 24,000 shares and 6,000 EvoAir Shares, respectively, or approximately 0.02 % and 0.01 % of the Then Enlarged Share Capital, respectively. (B) On December 20, 2021, Dr. Low, Chan Kok Wei, Ong Bee Chen and certain sellers (“WKLEE Sellers”) entered into a share exchange agreement with WKL Eco Earth Holdings, pursuant to which Dr. Low, Chan Kok Wei, Ong Bee Chen and WKLEE Sellers agreed to sell all their ordinary shares of WKL Eco Earth Sdn Bhd (“WKL Eco Earth”) to WKL Eco Earth Holdings in consideration for the allotment and issuance to WKL Global, Allegro Investment and WKLEE Sellers of 49,320 EvoAir Shares, 8,280 EvoAir Shares and in aggregate 14,400 shares, respectively, or approximately 0.05 %, 0.009 % and in aggregate 0.014 %, respectively, of the Then Enlarged Share Capital. (C) On December 20, 2021, Tan Soon Hock, Ivan Oh Joon Wern and certain relevant interest holders (“Relevant Interest Holders”) entered into an investment exchange agreement with WKL Eco Earth Holdings, pursuant to which Tan Soon Hock, Ivan Oh Joon Wern and the Relevant Interest Holders agreed to sell all relevant interests in the EVOH and its subsidiaries (“EvoAir Group” or the “Group”) to WKL Eco Earth Holdings in consideration for the allotment and issuance of 7,037,762 EvoAir Shares, 2,520,000 EvoAir Shares and in aggregate 6,001,794 EvoAir shares, respectively, or approximately 6.91 %, 2.48 % and in aggregate 5.90 %, respectively, of the Then Enlarged Share Capital. The board of directors and majority shareholders of the Company have approved the transaction. (D) On December 20, 2021, Dr. Low entered into two deeds of assignment of intellectual properties with WKL Eco Earth Holdings, in respect of Dr. Low’s patents and patent applications relating to eco-friendly air-conditioner condenser (external unit), evoair TM and the trademarks and trademark applications described in the deeds of assignment thereunder, and in respect of Dr. Low’s patents and patents applications relating to the portable air-conditioner, e-Cond EVO TM and the trademarks and trademark applications as described in the deeds of assignment thereunder (together, the “IP Assignments”). Pursuant to the IP Assignments, WKL Global, Allegro Investment and certain nominees shall be allotted and issued 63,362,756 EvoAir Shares, 14,297,259 EvoAir Shares and in aggregate 5,487,752 EvoAir Shares, respectively or approximately 62.25 %, 14.05 % and in aggregate 5.39 %, respectively of the Then Enlarged Share Capital in consideration for the IP Assignments. 7 | Page EvoAir Transaction, Change of Control Transaction and Allotment Transactions are collectively to be referred to as the “Transactions”. The closing of the Transactions (“Closing”) occurred on December 20, 2021 (the “Closing Date”). From and after the Closing Date, at which time EvoAir International transferred its HVAC business to the Company, the Company’s primary operations will consist of the prior operations of EvoAir International and its subsidiaries. EvoAir International is a company incorporated in BVI on November 17, 2021. Effective from the December 20, 2021, it wholly owns WKL Eco Earth Holdings, a company incorporated in Singapore on July 12, 2018, which in turn wholly owns (a) WKL Eco Earth, a Malaysian company incorporated on May 17, 2017, and (b) WKL Green Energy, a Malaysian company incorporated on October 24, 2017. WKL Eco Earth Holdings acquired (c) EvoAir Manufacturing (M) Sdn Bhd (“EvoAir Manufacturing”) on April 19, 2021, a Malaysian company incorporated on March 22, 2019, as well as acquiring (d) WKL EcoEarth Indochina Co Ltd (“WKL EcoEarth Indochina”), a Cambodia company incorporated on February 4, 2021, (e) WKL Guanzhe Green Technology Guangzhou Co Ltd (“WKL Guanzhe”), a Chinese company incorporated on April 6, 2021. EvoAir Manufacturing wholly owns (f) Evo Air Marketing (M) Sdn Bhd (“Evo Air Marketing”), a Malaysian company incorporated on February 2, 2021. On June 15, 2022, the Company filed a Certificate of Amendment (the “Amendment”) to the Articles of Incorporation with Nevada’s Secretary of State to change the name of the Company from Unex Holdings Inc. to EvoAir Holdings Inc. (the “Name Change”), and the Name Change became market effective on November 4, 2022. Effective on November 11, 2022, the Company’s shares began trading under the new ticker symbol “EVOH”. On November 21, 2023, the Company issued in aggregate, 52,107 shares of Common Stock to 15 referral agents (“Referral Agents”) in consideration for their referral to the Company of certain investors. Each Referral Agent is a “non-U.S. Persons” as defined in Regulation S. On November 21, 2023, the Company issued, in aggregate, 5,500 shares of Common Stock to two individuals in consideration for marketing services provided to the Company by Artisan Creative Studio, a marketing entity based in Malaysia. Each of the individuals is a “non-U.S. Persons” as defined in Regulation S. On August 14, 2024, the WKL Eco Earth Holdings has increased its investment in WKL Guanzhe Green Technology Guangzhou Co Ltd (China) by injecting an additional RMB 2,000,000 into its registered capital. This investment has resulted in an increase in WKL Eco Earth Holding’s equity interest in WKL Guanzhe Green Technology to 62.5 %. On February 6, 2026, the WKL Eco Earth Holdings has increased its investment in WKL Guanzhe Green Technology Guangzhou Co Ltd (China) by injecting an additional RMB 1,500,000 into its registered capital. This investment has resulted in an increase in WKL Eco Earth Holding’s equity interest in WKL Guanzhe Green Technology to 66.67 %. Round 2 Stockholders The Company entered into a series of offerings for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $ 2.50 , as follows: ● On February 15, 2022, the Company entered into certain share subscription agreement with Ms. Ang Lee Kim Jane, who is a “non-U.S. Persons” as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to which the Company agreed to issue and sell 74,074 shares of Common Stock, at a per share purchase price of $ 2.50 , 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 gross proceeds were $ 185,185 . 8 | Page ● On June 3, 2022, the Company entered into certain share subscription agreement with Mr. Wong Hon Wai who is a “non-U.S. Persons” as defined in Regulation S of the Securities Act pursuant to which the Company agreed to issue and sell 5,000 shares of Common Stock, at a per share purchase price of $ 2.50 , 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 gross proceeds were $ 12,500 . ● On October 25, 2022, the Company entered into Regulation S share subscription agreements with eight investors, each of whom represented that it was a “non-U.S. Persons” as defined in Securities Act. On the same date, the Company entered into Regulation D share subscription agreements with two investors, each of whom represented that it was an “Accredited Investors” as defined in Regulation D of the Securities Act. Pursuant to the share subscription agreements, the Company agreed to issue and sell in aggregate, (i) 129,621 shares of Common Stock to the Regulation S investors, and (ii) 15,000 shares of Common Stock to the Regulation D investors, respectively, at a per share purchase price of $ 2.50 , 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 gross proceeds in aggregate were $ 361,553 . ● On February 20, 2023, the Company entered into Regulation S share subscription agreements with eleven investors, each of whom represented that it was a “non-U.S. Persons” as defined in Regulation S of the Securities Act. Pursuant to the share subscription agreements, the Company agreed to issue and sell in aggregate, (i) 57,783 shares of Common Stock to the Regulation S investors, at a per share purchase price of $ 2.50 as part of a series of the 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 gross proceeds in aggregate were $ 144,443 . ● On July 13, 2023, the Company entered into Regulation S share subscription agreements with 31 investors, each of whom represented that it was a “non-U.S. Persons” as defined in Regulation S of the Securities Act. Pursuant to the share subscription agreements, the Company agreed to issue and sell in aggregate, (i) 250,132 shares of Common Stock to the Regulation S Investors, at a per share purchase price of $ 2.50 as part of a series of the 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 gross proceeds in aggregate were approximately $ 625,330 . ● On September 7, 2023, the Company entered into Regulation S share subscription agreements with 71 investors, each of whom represented that it was a “non-U.S. Persons” as defined in Regulation S of the Securities Act. Pursuant to the share subscription agreements, the Company agreed to issue and sell in aggregate, 365,164 shares of Common Stock to the Regulation S investors, at a per share purchase price of $ 2.50 as part of a series of the 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 gross proceeds in aggregate were approximately $ 912,889 . ● On November 21, 2023, the Company entered into a Regulation S share subscription agreement with Wong Chun Shoong who represented that he was a “non-U.S. Persons” as defined in Regulation S of the Securities Act. Pursuant to the share subscription agreement, the Company agreed to issue and sell in aggregate, 8,658 shares of Common Stock to the Regulation S investors, at a per share purchase price of $ 2.50 as part of a series of the 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 gross proceeds in aggregate were approximately $ 21,645 . Reverse Stock Split On April 12, 2024, the Company’s board of directors (the “Board”) unanimously resolved to effect a reverse stock split of the Company’s common stock, par value $ 0.001 per share (the “Common Stock”), at a ratio of 1-for-4. Following such resolution, on September 9, 2024, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada to effect the reverse stock split, with an effective time of 9:00AM. Eastern Time on September 11, 2024 (the “Reverse Stock Split”). 9 | Page Split Adjustment; Treatment of Fractional Shares As a result of the 1:4 Reverse Stock Split, each 4 pre-split shares of Common Stock outstanding will automatically combine into one new share of Common Stock without any action on the part of the holders, and the number of outstanding shares of Common Stock was reduced from 102,742,362 shares to 25,685,591 shares (subject to rounding up of fractional shares to the nearest whole number). No fractional shares were issued in connection with the Reverse Stock Split. Fractional shares were rounded up to the nearest whole number. Share Issuance On November 25, 2024, the Company issued, in aggregate, 679,516 shares of Common Stock, representing 2.5 % of the issued and outstanding shares of Common Stock to certain project management consultant in consideration for their services in relation to proposed initial public offering. On November 25, 2024, the Company issued, in aggregate, 815,419 shares of Common Stock, representing 3.0 % of the issued and outstanding shares of Common Stock to certain corporate and business consultant in consideration for their consulting services. Details of the Company’s 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 Guanzhe Green Technology Guangzhou Co Ltd (China) 66.67 % Subsidiary of EvoAir Manufacturing (M) Sdn Bhd Evo Air Marketing (M) Sdn Bhd (Malaysia) 100 % * Shareholding of WKL Guanzhe Green Technology Guangzhou Co Ltd (China) has increased from 62.5 % to 66.67 % on February 6, 2026. 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 approximately 67.34 % of the Company’s then issued and outstanding shares, sold his entire shareholding of the Company to WKL Global for an aggregate consideration of $ 100 . Upon completion of the Change of Control Transaction, WKL Global then owned 2,000,000 shares, or approximately 67.34 % of the Company’s then issued and outstanding shares, which resulted in a change of control of the Company. NOTE 3 – GOING CONCERN The Company’s financial statements as of February 28, 2026 are prepared using generally accepted accounting principles in the United States of America (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established a sustainable ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. As of February 28, 2026 and August 31, 2025, the Company had an accumulated deficit of $ 55,945,881 and $ 54,028,719 , respectively. The Company incurred a net loss of $ 1,004,278 and $ 1,272,988 for the three months ended February 28, 2026 and 2025, respectively, and $ 2,042,993 for the six months ended February 28, 2026 compared to $ 5,913,892 for the six months ended February 28, 2025. 10 | Page 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 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 the Company in accordance with U.S. GAAP for financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The 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 66.67 % owned WKL Guanzhe. 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 credit losses and product returns, allowance 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. 11 | Page 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 high credit quality financial institutions. WKL Guanzhe business is primarily conducted in China and substantially all of revenue 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 February 28, 2026, and August 31, 2025, 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. 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. Credit Losses In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, specifically Financial Instruments – Credit Losses (Topic 326), denoted as ASC 326. This regulatory framework supersedes the incurred loss methodology with the Current Expected Credit Loss (CECL) methodology. CECL necessitates the derivation of credit loss estimates for the remaining projected life of financial assets, encompassing historical data, prevailing conditions, and substantiated forecasts. Broadly applicable to financial assets assessed at amortized cost, including trade receivables, loan receivables, and held-to-maturity debt securities, CECL also extends its purview to certain off-balance sheet credit exposures, such as unfunded commitments to extend credit. In adherence to this methodology, financial assets measured at amortized cost are to be presented on financial statements at the net amount anticipated to be collected, incorporating an allowance for credit losses as a means of accounting for the estimated credit losses. The Company adopted ASU 2016-13 on September 1, 2023, using the modified retrospective method. See below allowance for credit losses for more information. Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the net value of the face amount less any allowance for expected credit loss. The allowance for expected credit loss is the Company’s best estimate of the amount of probable credit losses in our existing accounts receivable. An allowance for credit losses 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 credit losses on a regular basis, and all past due balances are reviewed individually for collectability. An account receivable is written off after all collection efforts have ceased. Recoveries of receivables previously written off are recorded when received. Interest is not charged on past due accounts. As of February 28, 2026 , and August 31, 2025, our net accounts receivable totaled $ 57,458 and $ 56,235 , respectively, after deducting allowances for credit losses of $ 26,977 and $ 25,409 , respectively. The modest increase in the allowance for credit losses was attributable to foreign currency translation adjustments. 12 | Page Inventories Inventories consist primarily of finished goods, raw materials, and work-in-process (“WIP”) from WKL Eco Earth, WKL EcoEarth Indochina, WKL Guanzhe, and EvoAir Manufacturing. We value inventories at the lower of cost or net realizable value. We determine the costs of inventory using the standard cost method, which approximates actual cost based on a first-in, first-out method. All other costs, including administrative costs, are expensed as incurred. Deposit, prepayments, and other receivables Deposit, prepayments and other receivables are comprised of prepayments paid to vendors to initiate orders and prepaid services fees and are classified as current assets if such amounts are to be recognized within one year from the balance sheet date. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related capitalized assets. Property and equipment are depreciated over 5 to 10 years. 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. 13 | Page 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 customer deposits in advance for certain business contracts. These advance payments are initially recorded as deferred revenue on the balance sheet. As of February 28, 2026 , and August 31, 2025, the Company recorded a deferred revenue balance of $ 31,812 and $ 11,005 , respectively. Deferred Offering Costs The Company follows the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering”. Deferred offering costs consist of underwriting, legal and other expenses incurred through the balance sheet date that are directly related to the intended initial public offering (“IPO”). Deferred offering costs will be charged to shareholders’ equity netted against the proceeds upon the completion of the IPO. Should the IPO prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations. The Company deferred $ 3,230,576 and $ 3,225,464 of offering costs as of February 28, 2026and August 31, 2025 respectively. Such costs will be deferred and offset against the offering proceeds upon the completion of the IPO. Leases We have entered into operating agreements primarily for the 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 February 28, 2026 . Operating lease assets and liabilities are recognized at the present value of future lease payments as of 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 the 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. 14 | Page 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 reflect 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 February 28, 2026, the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, by introducing key amendments to enhance disclosures in public entities’ reportable segments. Notable changes include the mandatory disclosure of significant segment expenses regularly provided to the chief operating decision maker (“CODM”), disclosure of other segment items, and requirements for consistency in reporting measures used by the CODM. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Accordingly, the Company adopted the provisions of ASU 2023-07 as of January 31, 2025. The adoption of the new standard had no impact on the Company’s financial position, results of operations or cash flows on the date of transition. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which introduces more detailed requirements for annual disclosures for income taxes. The ASU requires public business entities to present specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose the amounts of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the effects, if any, that the adoption of ASU 2023-09 may have on its financial position, results of operations, cash flows, or disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose specific information about certain costs and expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effects, if any, that the adoption of ASU 2024-03 may have on its financial position, results of operations, cash flows, or disclosures. In September 2025, the FASB issued ASU 2025-06 -Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06), which is intended to simplify the capitalization guidance for internal-use software by removing references to project stages and clarifying when the capitalizing of eligible costs is required. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its disclosures. There are no other recently issued accounting pronouncements that have not yet been adopted that the Company considers material to its consolidated financial statements. 15 | Page NOTE 5 INVENTORIES Inventories consist of the following: SCHEDULE OF INVENTORIES February 28, 2026 August 31, 2025 Finished goods $ 205,986 $ 145,533 Raw materials and supplies 133,951 170,975 Total $ 339,937 $ 316,508 NOTE 6 DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES Deposit s , prepayments and other receivables consists of the following: SCHEDULE OF DEPOSIT PREPAYMENTS AND OTHER RECEIVABLES February 28, 2026 August 31, 2025 Deposits and Prepayments $ 55,720 $ 51,055 Other receivables (Advances to suppliers) 6,465 10,621 Total $ 62,185 $ 61,676 NOTE 7 PROPERTY, PLANT AND EQUIPMENT, NET Property, plant , and equipment consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT February 28, 2026 August 31, 2025 Plant and machineries $ 640,334 $ 603,972 Office equipment 72,897 67,750 Vehicles 92,377 85,127 Furniture and equipment 26,818 24,479 Renovation 137,908 127,086 Property, plant and equipment gross 970,334 908,414 Less: Accumulated depreciation ( 719,447 ) ( 643,857 ) Property, plant, and equipment, net $ 250,887 $ 264,557 Depreciation expense for the six months ended February 28, 2026, was $ 75,590 . Depreciation expense for the six months ended February 28, 2025 , was $ 50,074 . NOTE 8 – INTANGIBLE ASSETS The below table summarizes the identifiable intangible assets as of February 28, 2026 and August 31, 2025: SUMMARY OF INTANGIBLE ASSETS February 28, 2026 August 31, 2025 Technology 1-Portable Air Cooler $ 27,438,763 $ 27,438,763 Technology 2-Condensing Unit 55,709,004 55,709,004 Finite- lived intangible assets, gross 83,147,767 83,147,767 Less: Accumulated technology-related intangible asset impairment ( 27,511,542 ) ( 27,511,542 ) Adjusted carrying amount 55,636,225 55,636,225 Less: Accumulated amortization ( 15,329,298 ) ( 14,056,447 ) Intangible assets, net $ 40,306,927 $ 41,579,778 Amortization expenses for intangible assets for the three months ended February 28, 2026 , and 2025 were $ 1,272,851 and $ 1,804,838 respectively. 16 | Page NOTE 9 ACCOUNTS PAYABLE, ACCRUALS, AND OTHER PAYABLES Accounts payable and accruals, and other payables consist of the following: SCHEDULE OF ACCOUNTS PAYABLES ACCRUALS AND OTHER PAYABLE February 28, 2026 August 31, 2025 Accounts payable $ 141,198 $ 224,949 Accruals 321,863 323,245 Other payables 218,514 149,034 Total $ 681,575 $ 697,228 NOTE 10 RELATED PARTY TRANSACTIONS Amounts due to shareholders Amounts due to shareholders are unsecured, with interest of 3% to 8% per annum accruing on a daily basis and tenure of 6 months, until the successful uplisting or terms mutually between the parties. The Company reported amount s due to shareholders of $ 3,299,033 and $ 2,436,407 as of February 28, 2026, and August 31, 2025, respectively. NOTE 11 STOCKHOLDERS’ EQUITY On December 16, 2021, the Company 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. On April 12, 2024, the Company’s board of directors unanimously resolved to effect a reverse stock split of the Company’s common stock, par value $ 0.001 per share, at a ratio of 1-for-4. Following such resolution, on September 9, 2024, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada to effect the reverse stock split, with effective on September 11, 2024. On November 25, 2024, the Company issued, in aggregate, 679,516 shares of Common Stock, representing 2.5 % of the issued and outstanding shares of Common Stock, to certain project management consultant s in consideration for their services in relation to the proposed initial public offering. On November 25, 2024, the Company issued, in aggregate, 815,419 shares of Common Stock, representing 3.0 % of the issued and outstanding shares of Common Stock in consideration for their corporate and business development consulting services. As a result of the 1:4 Reverse Stock Split, each 4 pre-split shares of Common Stock outstanding will automatically combine into one new share of Common Stock without any action on the part of the holders. Therefore, as of February 28, 2026, and August 31, 2025, the Company had 27,180,631 and 27,180,631 shares of its common stock issued and outstanding, respectively. NOTE 12 INCOME TAXES The Company’s operating subsidiaries are governed by the Income Tax Law (defined hereunder), which concerns Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (“Income Tax Laws”). We routinely undergo 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: 17 | Page 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 February 28, 2026 August 31, 2025 Years Ended February 28, 2026 August 31, 2025 US Statutory rate 21 % 21 % Effect of reconciling items for tax purposes ( 21 )% ( 21 )% Effective income tax rate - % - % The components of net deferred tax assets are as follows: SCHEDULE OF COMPONENTS OF NET DEFERRED TAX ASSETS February 28, 2026 August 31, 2025 Net operating loss carry-forward $ 55,900,000 $ 54,000,000 Less: valuation allowance ( 55,900,000 ) ( 54,000,000 ) Net deferred tax asset - - The Company had net operating loss carry forwards for tax purposes of approximately $ 55,900,000 as of February 28, 2026, and approximately $ 54,000,000 as of August 31, 2025, 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. 18 | Page NOTE 13 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. 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 not to 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, the Company discounted lease payments using its estimated incremental borrowing rate of 10 %. In January 2025, the Company entered into a supplemental agreement amending its existing PRC factory lease agreement (original Contract effective from 2021) with the lessor. The amendment reduces the leased area of the existing factory space. The Company determined that the amendment qualifies as a lease modification under ASC 842-10-25-8 because it decreases the scope of the leased asset (reduced factory space) without granting additional rights of use, and the decrease in consideration is commensurate with the reduced scope, adjusted for market conditions and the Company’s circumstances. This modification is accounted for as a partial termination of the existing lease. The amendments were accounted for as lease modifications effective February 1, 2025. Per ASC 842-10-25-8, the lease liability was remeasured at the modification date as the present value of the revised lease payments over the remaining term, discounted using the Company’s incremental borrowing rate of 4.75 % (the rate implicit in the lease was not readily determinable). The ROU asset was adjusted proportionately to reflect the reduction in leased area, with any difference between the reduction in the ROU asset and the lease liability recognized as a loss of $ 19,396 in net loss. The following is a summary of ROU asset and operating lease liabilities: SUMMARY OF ROU ASSET AND OPERATING LEASE LIABILITIES February 28, 2026 August 31, 2025 Assets: ROU asset $ 63,413 $ 91,408 Liabilities: Current: Operating lease liabilities $ 58,778 $ 63,262 Operating lease liabilities current $ 58,778 $ 63,262 Non-current Operating lease liabilities 9,670 34,774 Operating lease liabilities non-current 9,670 34,774 Total lease liabilities $ 68,448 $ 98,036 As of February 28, 2026, the remaining maturities of lease liabilities were as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Operating lease 2026 $ 58,778 2027 9,670 Total $ 68,448 NOTE 14 COMMITMENTS AND CONTINGENCIES During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of February 28, 2026, the Company is not aware of any contingent liabilities that should be reflected in the financial statements. NOTE 15 SUBSEQUENT EVENTS In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to February 28, 2026, 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. 19 | Page